Where did it all go wrong? Only a Dáil with real power can find out

WHAT actually happened?

How did it all go wrong?

What really caused the collapse of our banking system and the explosion of the property bubble?

How was it all allowed to get out of control in the first place?

They’re the questions all sorts of people are asking. And they’re odd people, not quite the sort of people you might expect to be obsessed with questions like that.

The governor of the Central Bank wants to know, for example. So does Colm McCarthy.

You’d imagine that people like that would already have a pretty good handle on the answers to those questions.

In their professional capacities they were pretty close to the action, after all. But there is a growing consensus now that we really have to have the answers to what are, after all, fundamental questions. If we don’t know what really went wrong in the past, how are we going to prevent it happening in the future?

It is noticeable, of course, that the only party that’s a bit cool on the need for an inquiry into all these things is the Government.

But even the Government is going to find it hard to resist a growing demand for real, in-depth knowledge about the set of issues and relationships that have caused the worst and most dramatic recession in the history of the state.

Most of us already have a dim idea. Anyone who has lived through previous tribunals, for example, knows there is a sort of nether world, a dark and mysterious place where politics, personalities and money get all mixed up.

Again and again, in the Beef Tribunal report, in the Mahon report, in the McCracken report, this deadly brew of money and politics emerged as the core of the story.

And there can be little doubt that our present economic catastrophe is due in no small measure to the same type of cocktail.

The unhealthy relationship between politics and big business was immensely complicated in this instance by the addition of ideology. Politics set out to use the builders and the bankers to build the Celtic Tiger and they did it by providing two key incentives.

For most of the years the Tiger roared, budget after budget provided tax breaks for every conceivable form of investment in property.

The purpose of those tax breaks was to make such investment lucrative, but also to make it safe and to remove the element of risk.

The second key incentive was the reform of the regulatory system. It’s often forgotten now, but regulating the financial services sector was the subject of a long, behind-the-scenes battle between Fianna Fáil and the PDs — between those in favour of the status quo (though that had never worked very well) and those who favoured a modern, American-style, “light-touch” form of regulation. The compromise they came up with — the Central Bank and Financial Services Authority of Ireland Act — was passed into law in 2003 and contributed its part to the mess we find ourselves in.

So actually, what we need to know is quite complex. It’s not so much about whether crimes were committed — the law, grinding slow as it does, ought to be able to deal with that.

It’s much more about whether the system failed — or whether it was set up to fail. Did individuals fail to do their jobs, or were their jobs impossible? Were things legal that ought really to have been crimes? Did politics, in short, let us down?

And you know the real problem? It’s not that there isn’t an abundance of things to investigate — it’s actually that there is no effective mechanism to investigate them.

Yes, we can set up a tribunal and haul the bankers and the builders and the civil servants — and even the politicians — in front of it. It will take years and cost tens of millions.

And why? In re Haughey, that’s why. In re Haughey has nothing to do with Charles Haughey. It’s actually the name of a Supreme Court ruling that was handed down 40 years ago in a case involving Haughey’s brother. Ever since then, that ruling has set out the standard by which every tribunal must be run.

The right of every person against whom an allegation is made, to know who has made it. The right of every person to take whatever steps are necessary to vindicate his or her good name. The right of every person to legal representation for that purpose.

Ever since that ruling, every tribunal of inquiry must be run on an entirely adversarial basis. And so, as a matter of fact, must every Oireachtas inquiry.

We’ve had one successful Oireachtas inquiry — into the DIRT scandal. It was successful only because the banks at the time had little choice but to put their hands up — the scale of tax evasion was clear before the inquiry started. Had they instead chosen to go to the courts and fight that inquiry every inch of the way, it would have had to fold up pretty quickly.

As it was, although the Oireachtas inquiry was really successful in chasing the money, it was effectively precluded from making any assertion about who was responsible for that scandal. It simply could not make any finding of fact about any individual.

This is the brick wall into which any serious effort to really understand how the crisis was brought about will run. And it’s a fundamental problem that has always, and will always, prevent the Dáil from becoming a real investigative body, capable of summoning witnesses and demanding papers. Surely, if we’re serious about enabling the Dáil to carry out real investigations into important matters of public policy and interest, we should address that issue now.

SOME years ago, as part of a proposed reform of the Dáil, Pat Rabbitte suggested that we need a constitutional referendum to address this issue. Among other things, he proposed that the people be asked to agree to a simple form of words, along the following lines:

“Provision shall be made by law enabling Dáil Éireann, in any matter stated by it to be of public importance, to inquire into and report upon an exercise of the executive power of the State or in relation to the administration of any of its public services.”

Such a change would empower the Dáil to carry out the investigative function from which it is effectively debarred at the moment and would enable it to begin to get to the bottom of the real and root causes of the mess we’re in right now. Without a change like that, the first time a witness was asked a difficult question about how he or she applied the law in any particular situation (or failed to), the committee would find itself facing a posse of barristers hot-footing it to the High Court.

We need to know. And we need the Dáil to have the power to find out for us, and to tell us. So we need to begin by giving the Dáil real power to investigate, fairly and scrupulously. Unless we get it right, we are never going to get the answers to which we are entitled.