It was a busy week on the business and political news front.
More than 20,000 people visiting Dublin for the Web Summit. A raft of job announcements. Strong exchequer figures.
Yet further evidence of Government disarray over Irish Water. Embarrassing revelations concerning the use of Luxembourg schemes by Irish multinationals to slash corporate tax payments and finally, the long awaited publications of letters to the Irish Government from the ECB in the run-up to the EU/ IMF bailout of Ireland.
It is the letter from the former ECB governor to finance minister, Brian Lenihan, which will most engage the attention of the historians in the years to come. But the real interest will be in how we reached the stage where our Government felt the need to enter into that €375bn guarantee of the banking system. In reality, it was the culmination of a long, tawdry period in Irish governance, financial, commercial and political.
Rogues were allowed to shape our collective future destiny and many of these individuals had resort to libel laws which, in this jurisdiction, have long protected the mighty and the unscrupulous from the attentions of commentators and investigative journalists. And some of these individuals continue to reshape the narrative despite a whole string of revelations of staggering greed and incompetence.
It suits well that the anger of the public is directed at the hapless politicians in power.
Add to this group of targets, the real villains and their acolytes from organisations like Anglo who move in and out of the glare of publicity and really, that’s about it. In fact, the circle of perpetrators was much wider than this.
Talk to once prosperous people running small family firms and modest professional careers and they will mutter darkly about the devastation wrought on their lives as a result of sloppy, self interested advice provided by people from large organisations with strong reputations.
At some point, sales and marketing considerations began to loom ever larger in the minds of many of the people running our large banks, but this attitude spread like a virus through the system.
The Oireachtas Banking Inquiry due in the Spring will barely touch the surface. No doubt the key witnesses will be well coached. Some may be pilloried. The more scrupulous among them are probably stunned by what has happened. It just never occurred to them that the wild party would end like this, with a body on the floor, and the cops on their way...
The inquiry is set to kick off in April. Sparks are set to fly, but the most interesting players will be missing. The affable and courageous former Finance Minister is gone before his time, having left a testament in his wake. Mr Trichet looks set to boycott the event, another ghost at the feast. It would be nice to hear from a few of the senior lenders who acted as principals in deals. Below the very top ranks, there are other executives with plenty of questions to answer.
Media outlets which were to the fore in boosting and building up the developers during the ‘get rich quick so as to get very poor’ years of the bubble now shamelessly fan the flames of public anger. Fringe politicians have moved mainstream, leading large protests, channelling the anger, but to what long-term purpose? their political advancement, or our betterment? To date, the media has largely given the Oppositionists a free pass, but should these people not be called to account for themselves, too?
Our Irish ‘Weimar Republic’ politicians inherited a fetid financial swamp. They have brought the country back from the brink, at huge political cost to themselves. At times, they have blundered, but will the oppositionists fare any better should their turn come?
We have just celebrated the 25th anniversary of the Berlin Wall coming down. The unexpected fall of the various communist dictatorships in Eastern Europe set in train the course of events that led to the launch of the Euro a decade later and the establishment of the European Central Bank.
The architecture of the new currency was flawed from the start. There was a strange void at the heart of the ECB. The central bankers, EU officials and national leaders stood idly by while a lending orgy got underway across much of Western Europe. Some academics at the time fretted about the lack of European-wide financial regulation. Many of the European statesmen active during the period should really question whether they listened with sufficient respect and care to those who had concerns about this great experiment in currency union that lacked a fiscal back up plan. The plan was driven by politicians with a broader interest in European unity.
Ireland was only too willing to accept all the dirt cheap loan lolly that flowed its way.
Between 2000 and 2007, the stock of lending in Ireland jumped from €120bn to almost €400bn. We are saddled with huge household debt now as a result, more than €120bn. The average household still carries around €35,000 in debt on its back. The Progressive Democrats, professed economic liberals and opponents of a large State, sat in Government while public spending ballooned, the country lost competitiveness and the balance of payments —the key economic measure — plunged into the red. We stopped paying our way as a country while our public service became increasingly costly to run.
The Commission of Investigation into the Banking Sector, the Nyberg Commission posed this question: why did the banks receive unqualified audit reports from various auditing firms? Nyberg criticises the limitations of the statutory audit process, with its focus on historical financial information, but he does not let the firms off the hook.
“The Commission would have expected a bank auditor exercising necessary professional scepticism to have concerns about growing property and funding exposure?” Such concerns, he adds, should have been communicated at an early stage when the issues were identified.
The Big Four reps waited until January 2008 before they approached the Financial regulator. In Nyberg’s view, the auditors and regulators would need to have been getting the lead out by early 2005.
Nyberg paints a picture of an anti-intellectual culture where dissent and difference are discouraged. How many Irish organisations remain like this today, being run on essentially non democratic lines?
Have the events of six years ago brought about a cultural transformation in Irish business and official life? Somehow I doubt it.
Sparks are set to fly at the Oireachtas Banking Inquiry this April, but key players will be missing, writes Kyran Fitzgerald
Ireland was only too willing to accept all the dirt cheap loan lolly that flowed its way
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