See no evil, hear no evil, speak no evil

 —  October – November 2013

EDITORIAL

HE Central Bank is one of the most bullish forces for austerity in

this society. “Any scaling back of the planned ﬁscal adjustment

runs the risk of starting to unwind the positive eﬀects of the con-

siderable consolidation eﬀort to date, amounting to around €

billion, for the sake of a relatively small short-term ﬁscal easing”, says the

Bank. Scrupulous stringency then. No slacking.

But the Central Bank has itself failed to meet such standards. It failed,

through its buﬀoonish regulator, to regulate wayward banks during the

so-called boom, it fails today dynamically to regulate the banks’ approach

to domestic mortgage arrears, elevating the risk of another bank bailout

if capital ratios are rendered inadequate, by mortgages with no prospect

of being repaid being allowed to compound out of control.

And it has failed to treat seriously its prosecutorial functions (which

can also be exercised by the DPP and indeed the private ‘common

informer’).

It is four months since the Irish Independent ﬁrst published the Anglo

tapes, showing how senior Anglo Irish Bank employees apparently pursued,

with disconcertingly cynical bravado, tactics of deception and bombast

before being bailed out by the taxpayer. The leaked tapes are inevitably

selective, focusing on Anglo’s former CEO David Drumm and former head

of capital markets, John Bowe.

Some of the shocking lows include when Bowe:

recalls what management told the Regulator during an evening

meeting:

“To cut a long story short…look, what we need is seven billion euros”.

does an impersonation of how the Regulator responded:

“Jesus that’s a lot of dosh…Jesus fucking hell and God…well do you know

the Central Bank only has € billion of total investments so that would

be going up …Gee…that would be seen. Jesus you’re kind of asking us

to play ducks and drakes with the regulations”.

notes what would happen if the money wasn’t made available:

“Well it has to happen. It has to happen, because if it doesn’t happen we’re

going to hit a wall in the next week….We’re already in breach, you know”.

claims (after his colleague Peter Fitzgerald asks how the ﬁgure of

€ billion was arrived at):

“Just, as Drummer [Anglo CEO David Drumm] would say, ‘I picked it

out of my arse’”.

notes of what the actual monetary requirement could be:

“That number is seven but the reality is we need more than that. But

you know, the strategy here is you pull them [the Central Bank] in, you

get them to write a big cheque and they have to keep, they have to support

their money, you know”. Mr Fitzgerald replies: “Yeah. They’ve got skin in

the game and that is the key”.

Mr Bowe then says: “If they (Central Bank) saw the enormity of it up

front, they might decide that they have a choice. They might say the cost

to the taxpayer is too high. But if it doesn’t look too big at the outset ... if

it looks big enough to be important, but not too big that it kind of spoils

everything, then, then I think you have a chance...”. Bowe and Fitzgerald

also hoped it would lead to the bank being nationalised so “we’d keep our

jobs”.

The bank was ultimately taken over by the State in January  at a

cost of € billion.

The uproar that followed the Independent articles, prompted an inves-

tigation by the Central Bank. But in September it said it had not found any

new issues (whatever that meant) relating to suspected criminal oﬀences,

following its examination of the contents of the tapes. Indeed it admitted

it had not even played all the tapes in its possession. Village wonders what

better matters the Central Bank feels should be occupying it, especially

against the background of the disgrace of its own complicity in banking

Armageddon.

Mr Honohan retreated somewhat from his comments after coming

under ﬁre at an Oireachtas Finance Committee meeting, and in the end

promised the Central Bank would make submissions to the Garda, explain-

ing why it has not proceeded or asked them to proceed, with a criminal

probe into the tapes. This, of course, is very far from saying it would play

all the tapes itself and reassess the appropriateness of prosecutions.

Clearly, at bottom, the Central Bank shares the DPP’s antipathy to com-

plex white-collar prosecution. When Village facilitated Jonathan Sugarman’s

complaints about regulatory delinquency and liquidity ratios, it encoun-

tered a Central Bank investigating team with the demeanour and zeal of

the backroom boys in David Brent’s ‘Oﬃce’.

Village considers not that these tapes disclose criminality but that they

disclose the need for a thorough investigation and a possible justiﬁcation

for a prosecution. It has commissioned a report on the prosecutability of

individuals at the centre of impropriety in the banking collapse. The idea

is that if the DPP or indeed the Central Bank will not pursue these prosecu-

tions, Village will promote common informers, with no interest bar the

public interest, to pursue them.

Village has engaged a solicitor’s ﬁrm and a senior counsel. The process

has been delayed because of legal holidays and the referendums, but we will

hold a press conference in the coming weeks to announce our approach.

The upcoming Oireachtas Inquiry into the guarantee is a diversion and

too late. The earlier banking inquiries should have been more stringent.

Another will be most noteworthy for getting in the way of prosecutions.

Because ultimately Democracy depends on the prosecutability of white-

collar crime.

***************

On the referendums, Village would have recommended we:

Keep the Seanad, whose net cost – if it averted the national addiction to

self-destructive policies – is a relative pittance; but enhance its monitoring

and policy-suggesting powers and change the composition to equal num-

bers from social, environmental, economic and cultural sectors – so we

get a force for balanced, sustainable development and an optimised long-

term quality of life. The Dáil will always ensure that short-term populism

gets its say. It needs a counterbalance.

Rebuﬀ a new Court of Appeal until a) legal costs are constrained so the

courts can become a force for justice for any but the plutocratic and the per-

son-of-straw, for justice delayed is no worse than justice at excessive cost;

and b) safeguards are installed so any replacement High Court judges are

appointed scrupulously without the regard to party-political orientation

that has characterised nearly all this government’s judicial appointments,

and which tends to subvert the appearance of justice.

‘See no evil, hear no evil,

speak no evil’