City of LonDONoghue - Village Magazine

October-November 2024 35

not any Authority. It has its own police force,

operates as its own planning authority, and

is headed up by the Lord Mayor, not London’s

directly elected mayor.

The current Lord Mayor, whom Donohoe

thanked in his acceptance speech, is Michael

Mainelli. Mainelli is an American-born British

accountant who has been a member of the

International Financial Services Industry

Advisory Committee to the Oﬃce of the

Taoiseach since 2015. He is also the former

‘Sheriﬀ’ of London (the successor to Dick

Whittington, not to be confused with the

Sheriﬀ of Nottingham).

Mainelli attended Trinity College Dublin

but was preceded by Dubliner Sir Nicholas

Lyons whose father, Dr Leland Lyons, was

actually its Provost. Sir Nicholas is described

as having descended from the landed gentry,

and before him there was the Irish commercial

lawyer, Vincent Keaveny CBE, who went to

Trinity (as well as UCD where he was in the

same class as Village’s editor) who also held

City of LonDONoghue

Paschal Donohoe enjoys some freedom in

the venerable but evil City of London

By Cillian Doyle

ast month was a big one for Paschal

Donohue. The President of the

Eurogroup, that informal body of

questionable legal standing but

wide discretionary powers, was

awarded the ‘Freedom of the City of London’.

The Business Post celebrated our Minister

receiving this ‘ancient British honour’ as part

of his ongoing eﬀorts to bring about the

European Capital Markets Union.

Before considering this award and the

reason it was given, we need to ﬁrst be clear

on who exactly granted it. This wasn’t simply

a ‘Freedom of the City’ award the like of what

New York gave to Bernadette McAliskey. Or

Dublin gave to Bob Geldof though it later

revoked it much to Sir Bob’s disgust, and

many others’ amusement, in a tiﬀ over Aung

San Suu Kyi Sun. No, this is diﬀerent. You

see, London is really two cities in one.

The ﬁrst is what most people think of as

London. Britain’s capital city, a large and

interconnected metropolitan area with a

diverse population of almost 9 million. It has

a directly elected mayor, Labour’s Sadiq

Khan, who is the CEO of its Greater London

Authority.

The second London, which was venerating

Our Man, was the City of London. In its

broadest sense, this is taken to mean the

ﬁnancial services district nestled in the heart

of the capital with over 300,000 workers.

However, when considering it we need to be

more precise, it more accurately refers to a

small jurisdiction known as the ‘Square

Mile’.

This tiny enclave of fewer than 9,000

residents is governed by the City of London

Corporation (hereafter ‘the Corporation’),

The last three Dick Whittingtons

have connections to Trinity College

and two are Dubliners

the titles of Sheriﬀ, Alderman for the Ward of

Farringdon Within, and member of Order of

the Holy Sepulchre. Which sounds like

something from a Dan Brown novel.

Such silly titles are commonplace in the

Corporation, with Chief Commoner, freeman

and livery companies (think guilds), still in

usage. These peculiar rights, titles and

privileges speak to its ancient history.

And yet it is inextricably linked with the

now vast, complex, and risky world of

oﬀshore ﬁnance. The Guardian’s George

Monbiot said the presence of the Corporation

helps explain “why regulation of the banks

is scarcely better than it was before the

crash…and why successive governments fail

to act against the UK’s dependent tax

havens”.

The Grandmother of all

parliaments

Britain’s parliament is often described as the

‘Mother of all parliaments’. That’s because

the so-called Westminster style of bicameral

governance (lower and upper house), ﬁrst

developed in the 14th century, and was

eventually exported by the British Empire to

its colonies like Ireland.

However, the Corporation refers to itself as

the ‘Grandmother of all parliaments’. For the

House of Lords was modelled on its Court of

Aldermen (elder men), while the House of

Commons drew inspiration from the Court of

Common Council which elects the mayor and

on which the Prime Minister’s oﬃce is based.

The Corporation likes to boast that it’s the

oldest municipal democracy in the world

stretching back before documented history,

whilst joking that it traces its modern period

to 1067!

When William the Conqueror invaded

England, he did not subjugate all of it. The

Square Mile kept its ancient rights,

maintained its freehold property, and was

allowed to maintain its own militias.

I’m not sure if, after his speech, Donohoe

Free

POLITICS

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36 October-November 2024

banking assets located in the IFSC. But these

assets are simply administered from Ireland,

the management of them takes place in

London, and other places like New York and

Frankfurt.

Donohoe

Someone once said that ﬁnance makes for a

good servant, but a bad master. Donohoe’s

ancient British honour was bestowed as a

kind of lifetime service award for his

assistance to today’s masters of ﬁnance.

He might like to give the impression that

he is of the Declan Costello ‘Just Society’

tradition of Fine Gael that brieﬂy ﬂirted with

a notion of Christian social democracy. He

reviews books which call for the reform of

economics as a discipline and he occasionally

says things which seem to throw shade on

economic orthodoxy.

For example, his acceptance speech

cautioned about the “growing dissatisfaction

about the role of market-based solutions’

and the need to ‘maintain the social licence”.

But what politicians say is generally far

less interesting than what they do. When it

comes to economic policy, tax legislation,

public spending, etc, deference is to global

ﬁnance.

His award was largely for trying to bring to

life the European Capital Markets Union. This

is intended to bring about an EU-wide union

for market-based forms of financing

(investment funds, hedge funds, pension

funds, etc), to provide an alternative to the

traditionally predominant bank-based

ﬁnance in Europe.

The assumption is that a union would help

to drive capital to SMEs and the real

economy, which they see as overly dependent

on bank ﬁnance. However, in the run up to

2008, capital markets had become highly

developed and it’s not clear at all that this led

to increased lending to SMEs or the real

economy.

What is clear is that it led to huge levels of

debt, the risk of which was masked in the

system through opaque and poorly

understood ﬁnancial engineering. And when

it went sour it led to massive contagion

eﬀects, which brought down many ﬁnancial

institutions leading to costly public bailouts.

Speaking from the Corporation’s Guildhall

Ireland’s Minister for Public Expenditure

stated: “When building the architecture of

our ﬁnancial future, we can draw inspiration

from this building”. And so, it seems, ancient

history meets contemporary policy, as the

past devours the future.

Cillian Doyle is a political economist and

policy advisor to Sinn Féin. The views

expressed are his own

In 1957 the Bank of

England permitted its

banks to engage in credit

transactions ‘nowhere’,

provided borrower and

lender were not UK- based,

sidestepping regulations

like capital controls

retired to the Lord Mayor’s residence — the

Mansion House — for some drinks, but if he

did, I wonder was he shown the stain glass

windows which depict a former Lord Mayor,

William Walworth executing Wat Tyler, the

leader of the Peasants Revolt of 1381.

One of the deﬁning moments in London’s

history as two cities in one was in 1637. This

event known as the ‘great refusal’ also

proved very signiﬁcant in Irish history. After

the great enclosures, large numbers of

people who had been removed from the land

they farmed began to ﬂock to London. The

Crown asked the Corporation to extend its

rights and privileges to the new and growing

numbers of inhabitants.

Instead, the Corporation, which did not

look fondly on these now landless peasants

took a radically diﬀerent approach. In a major

break with the Crown, it gathered forth its

large resources and through ‘the Honourable

the Irish Society’ — a consortium of livery

companies (guilds) — engaged in massive

population transfer to support the

colonisation of Derry.

Large numbers were sent to the Ulster

Plantation and the newly established

corporation of ‘Londonderry’, which was set

up to receive them.

The post-war Labour government of

Clement Attlee was hostile. The new prime

minister asserted “there is in this country

another power than that which has its seat in

Westminster”.

Attlee nationalised the Bank of England,

though the regulator still maintained its

overly friendly relationship with the City. In

1957 it permitted its banks to engage in

credit transactions with non-residents,

provided they were not denominated in

sterling and both the parties to the

transaction (borrow and lender) were not

UK- based.

According to Professor Ronen Palan, the

Bank of England “simply deemed certain

transactions as not taking place in the UK.

Where did the transactions take place for

regulatory purposes? Nowhere”. Suddenly

these banks could sidestep various

regulations like reserve requirements,

capital control and lending limits.

It created an oﬀshore market that was truly

global because it existed nowhere for

regulatory purposes. It was Foreign and

Commonwealth Oﬃce policy over many years

to encourage the UK’s small island

dependencies to develop as oﬀshore tax

havens.

Andrew Mitchell, Britain’s Deputy Foreign

Secretary, said earlier this year that 40% of

money laundering around the world “comes

through London and overseas territories and

crown dependencies”.

The rise of the Neoliberal order

A process of global ﬁnancial liberalisation

and innovation took oﬀ in the 1970s and

accelerated in the 1980s. Margaret

Thatcher’s major deregulation of the City as

part of the ‘Big Bang’ in 1986, was followed

a year later by the establishment of Ireland’s

International Financial Services Centre

(IFSC).

The establishment of the IFSC

strengthened Ireland’s connection to the

City, but in truth these linkages had been

historically tight. For example, after

foundation of the partitioned Irish state in

1922 Irish banks maintained their

headquarters in London for many years.

The Irish Central Bank wasn’t formed until

1943. Before that, banking and currency

policy were left to the banks themselves.

With the Irish banks left to their own

devices they prioritised maintaining the

Punt:Sterling parity at 1:1, and used

domestic savings to invest in the City’s

money markets. So, at a time when Irish

industry was being starved of credit

stymieing its expansion, when devaluation

could have made our exports to Britain more

competitive, our banks were speculating in

the City.

Ireland governs almost €5tn in shadow

They’re ll Dubliners

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