Democracy depends on justice. Justice must be dispensed evenly. This democracy is subverted by the flagrancy and impunity of white-collar crime – crime committed by the upper social classes, a type of crime that has ultimately ravaged this country. At every level the criminal system has been set up to ensure maintenance of the status quo, and certainly not to challenge the privileges of the wealthiest or most powerful in society. There is some sign that progressive legislation is being introduced but the culture in the criminal justice system and particularly among the prosecuting authorities has allowed white collar crime to fester and grow – from widespread tax evasion to deception on a gigantic scale causing the loss of billions.
Regulators raided the offices of Anglo Irish Bank in February 2009. Three years on, the investigation continues. This is far from the first time that the State has launched a lengthy investigation into white-collar crime. The investigation into Merchant Banking’s failure to comply with financial regulations in the 1980s lasted for six years before it was determined that the case could not be prosecuted. Criminal investigations of planning corruption in the 1980s were abortive.
In 2011 High Court Judge Peter Kelly refused an application from the gardai and the Office of the Director of Corporate Enforcement (ODCE) for a six-month extension to their joint inquiry into Anglo. “Will it [the inquiry] ever end?” he thundered, occasioning privately-expressed outrage from the beleaguered Gardai, the Director of Public Prosecutions (DPP) and the ODCE.
Three separate investigations are ongoing into Anglo after its spectacular collapse likely to cost the country around €25bn. It appears that the refusal of ten witnesses to co-operate with the ODCE is one of the principal reasons why the Anglo investigation rolls on interminably.
Last year the ODCE submitted five extensive investigation files on Anglo to the DPP. In the first quarter of 2012, it sent another three large investigation files to the DPP. The ODCE now regards the investigative phase of its Anglo Irish Bank investigations as almost complete. Yet no charges have been referred against Seán Ftzpatrick, David Drumm or Michael Fingleton. It is entirely a matter for the DPP to determine if, and to what extent, any of the extensive investigation files which she has received from the ODCE and the Garda Bureau of Fraud Investigation warrant prosecution.
The biggest problem seems to be the mentality of civil servants in the prosecuting authorities who do not see the urgency of the imperative to prosecute those who have riven our country with their greedy corruptions. There is evidence that the judiciary, led by some of the Tribunal judges and Judge Kelly, but also by the likes of Judge Griffin in the Circuit Court who recently sentenced Councillor Forsey for corruption, understand the significance of advancing these prosecutions, but the ODCE, DPP, Central Bank and the Fraud Squad are timorous, and deferential in the face of the moneyed and the professional.
Since its inception, the Competition Authority has secured 33 convictions against companies and individuals, but the yield has been low: €600,000 in fines and no one sent to jail. The ODCE has secured around 300 convictions, mostly in the District Court where fines and penalties are derisory. In its 10-year history, the ODCE has never secured a single prosecution for insider trading or market abuse, though last year it did finally secure a three-year prison sentence arising from a company law conviction.
The only convictions related to the drawn-out tribunals have been of Ray Burke for tax evasion, George Redmond (eventually overturned) and Frank Dunlop for corruption, and Liam Cosgrave for offences under the ethics acts; as well as of Liam Lawlor for blatant obstruction of the Planning Tribunal. More are needed.
Comparisons have inevitably been drawn with the US where Ponzi scheme supremo, Bernie Madoff, is serving a 150- year jail term and where even cuddly newspaperman, Conrad Black, did porridge.
But there is little appetite in cosy Ireland to replicate the US prosecutor’s panoply of wire-taps, plea-bargaining, monetary incentives for witnesses to testify against former colleagues and the wholesale removal of discretion in sentencing from judges.
Consideration needs to be given to granting US-style immunity from prosecution to corporate whistleblowers. It is also time to consider the introduction of pre-trial hearings that would force prosecutors to show their hand at an early stage, flushing out frivolous cases and reducing delays. Such hearings would deal with complex issues such as disclosure, admissibility of evidence and disputes over documents and expert evidence before a single juror is empanelled. There should be a debate as to how prosecutors should be more democratically accountable. Rudolph Guiliani and Eliot Spitzer both made names from aggressive prosecutions of white-collar criminals, though it seems clear that US-style elections would introduce an undesirable majoritarian populism to prosecution functions.
A law is required, as in the UK, to compel witnesses (as opposed to suspects) to co-operate with serious fraud investigators. 1j3Many powers to procure co-operation and information from are on the statute books: there is little evidence that those powers have been used or fully tested. The powers must be reviewed immediately to see if they can be improved by reference to the experience of other jurisdictions such as the UK.
Indeed last year Minister for Justice Alan Shatter introduced the Criminal Justice Act 2011, which sees witnesses being compelled to provide information to Gardai across a broad range of white collar/fraud categories if it might be of material assistance in preventing the commission by another person of a relevant offence or securing the prosecution of any person for a relevant offence.
But above all we need a change in the ethos of the criminal justice system. A rigorous programme of training for judges, lawyers, Gardaí and officials in the Office of Corporate Enforcement, Central Bank, Competition Office and Director of Public Prosecutions and Revenue offices must be initiated as soon as possible. The law on corporate crime and corruption is no longer really the problem. The problem is not the rules, it is their enforcement.
Nothing enshrines inequality in our society so well as inertia in prosecuting white-collar crime. As a first part of a continuing series we look [pp24-29] at why bankers and people fingered by our zealous, if over-priced, tribunals have remained with one or two exceptions free, the beneficiaries – apparently and so far – of impunity.