Michael Clifford.


Shambles throws up valuable lessons

Potential conflicts of interest and incompetencies evident in the prosecution of Sean FitzPatrick speak volumes about our attitudes to white-collar crime, writes Michael Clifford.

Shambles throws up valuable lessons

Two elements which were key to the collapse of the prosecution of Sean FitzPatrick speak volumes about attitudes to white collar crime in this country.

Yesterday, Judge John Aylmer instructed the jury to find Mr FitzPatrick not guilty of 27 charges relating to the concealment of hundreds of millions of loans from his time as chairman of Anglo Irish Bank.

On Tuesday, the judge set out reasons as to why he felt the trial couldn’t go on. One related to the role of the chief investigator in the case, Kevin O’Connell, a legal adviser to the Office of the Director of Corporate Enforcement (ODCE).

Mr O’Connell was entirely out of his depth. At one stage during an earlier, eventually aborted, trial on these charges, O’Connell shredded documents that should have been given to Mr FitzPatrick’s legal team. Apart from that, he was central to a strategy that involved taking witness statements in a manner that was completely wrong, and characterised in the trial as more suited to preparing a civil case, rather than a criminal prosecution.

The difference is vital. A civil case usually involves two parties fighting over money. A criminal case can see the defendant found guilty of a crime and sent to prison.

On Tuesday, the judge said that Mr O’Connell had no previous experience relevant to the prosecution of indictable offences.

“As a result, the investigation fell far short of the standard impartial, unbiased and thorough investigation in which the paramount duty was to seek out and preserve all evidence which was or might potentially be relevant to innocence as well as guilt.”

Prior to joining the ODCE, Mr O’Connell’s main experience had been in summary prosecutions at the district court. Typically, prosecutions in the district court involve public order summonses, road traffic offences, petty crime and minor assaults.

A solicitor for whom that arena represents the vast bulk of his prosecutorial experience was thus thrust into a world of complex accounting involving alleged fraud, connected — albeit peripherally — to the near collapse of a banking system in a developed economy.

Why did the agency hand this case to a professional with virtually no experience in investigating breaches of company law? Is it that the terms and conditions were unattractive to more suitable candidates? Or is it that those in the legal business don’t take seriously such a role as a career option?

Either way, the deployment of this solicitor to lead an investigation requiring knowledge of company law and forensic accounting says plenty about how seriously white collar crime was, and most likely still is, regarded.

It has ever been thus. All the way back to 2007, when the country was awash with money, the then taoiseach said the ODCE would have to wait in line before getting the kind of resources that its chief executive claimed were necessary in order to function properly.

“It’s only a matter of priorities,” Mr Ahern said at the time. “It’s not that his work is not considered important.” Not important enough it would seem to be in light of all that we now know was happening at the time.

The taking of statements was another issue that contributed to the collapse of the FitzPatrick trial. Statements taken from two auditors who had audited Anglo’s books — in which Mr FitzPartrick’s loans were hidden — were seriously contaminated.

Removing the sign from Anglo Irish Bank HQ on St Stephens Green, Dublin. White-collar crime is hard to detect because it often occurs in private, behind closed corporate doors. Picture: Nick Bradshaw
Removing the sign from Anglo Irish Bank HQ on St Stephens Green, Dublin. White-collar crime is hard to detect because it often occurs in private, behind closed corporate doors. Picture: Nick Bradshaw

The statements were put together through repeated consultation between the two auditors, their solicitors and personnel in the ODCE office. There were a number of revisions, deletions and suggestions from the various parties.

This kind of thing is common in civil law. Affidavits are prepared which lay out the positions of various parties.

In criminal law, a statement is a sacred document, which is supposed to be an account of the witness’s experience or observations. Any input from other parties in revising the statement is a complete no-no. The rights of a defendant demand a high standard of integrity in a statement in a criminal trial.

This is the kind of stuff that gardaí learn in year one. The FitzPatrick trial heard that gardaí were “conspicuously absent” in the preparation of these statements. So we’re left with highly paid legal and accountancy personnel putting together statements and nobody among them had a clue that this kind of thing was wrong, while the people who knew how to take statements were outside the door.

Was it incredible incompetence, or was it simply that these people don’t consider breaches of company law to be a “crime” as such? Perhaps they see crime as something that is confined to those of the lower orders who lack a good education.

One other thing to emerge from the shambles was the potential conflict of interest of some of the lawyers who were coaching the auditors on their statement. These lawyers are also acting for Ernest & Young in a potential action being taken by the Irish Bank Resolution Corporation — successor to Anglo Irish — against the company. And in addition, they are acting for Ernest & Young in an inquiry by the accountancy regulatory body to examine whether the auditors did a proper job in auditing Anglo Irish.

Therein lies an enormous potential for a conflict of interest. What, for instance, if the statements prepared for the criminal trial were seen by the lawyers to be incriminating in relation to one of the other actions? Would that have prompted any revisions or deletions?

Of course, we know from experience that among the so-called professional classes there exists Chinese walls to block out any conflicts of interest. In this the boys and girls in the worlds of law, accountancy and auditing have the capacity to eliminate the kind of bad thoughts which might seep into the minds of mere mortals. That again is something that is relatively unique to the Irish business world. In most other countries there is a recognition as to the limits of human capacity to negotiate conflicts of interest.

So it goes in this State, apparently the best little country in the world in which to do business.

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