He will have to be questioned by members of the European Parliament to ascertain if he is up to the job.
This contrasts markedly with his appointment, only last year, as secretary general of the Department of Finance. There was a competition but it was a private one and the appointment was announced subject to no external confirmation.
Imagine that there had been a process by which Cardiff had been called to account publicly by elected politicians for his previous work performance in advance of his appointment to that position. What fun they might have had. Cardiff was the public servant in the department with responsibility for banking up to and including the time of the introduction on September 30, 2008 of the infamous bank guarantee covering all deposits and liabilities. “Why, Mr Cardiff, should we approve your appointment?” they would have asked.
He was “in the room” as Brian Cowen, Brian Lenihan and various officials debated the merits of a guarantee that night. Cardiff was the man who sought external advice from the US investment bank Merrill Lynch — which was not overly enthusiastic about what was involved in a bank guarantee — and brought that advice directly to his political masters. Cardiff did not make the final decision: that was for the elected politicians. But we must presume that, as the resident in-house expert, he had his say.
Cardiff was to complain later, at an Oireachtas Public Accounts committee meeting in the summer of 2010, that the banks had been guilty of “self-delusion” and “over-optimism” in the weeks running up to the introduction of the 2008 bank guarantee. The same could be said of the government and its officials, couldn’t it?
And what of the relationship, for example, with Anglo Irish Bank during this period prior to September 2008? What did Cardiff know of the efforts to rescue Anglo, particularly the “improvement” of its balance sheet by way of measures involving Irish Life and Permanent? Former Anglo officials have made all sorts of claims that the department was aware of some of its actions to boost its stated level of deposits, to give the appearance that the bank was stronger than it was actually.
It is hard to believe much of what they have claimed, especially as it is largely self-serving — and the department has denied any conscious approval for the actions undertaken at Anglo. We may learn more when the official investigations into these matters conclude (if they ever do, and assuming that some sort of prosecutions are brought, which may not happen).
And while the greater responsibility for the banking crisis should have resided with the Central Bank there is no doubt but that the department was highly conscious of what was going on at Anglo since March 2008, when its share price suffered major falls. Indeed, Cowen, as minister for finance, took a phone call in Asia from Sean Fitzpatrick at that time. It is most likely that Cardiff knew a lot about what was going on (and if he didn’t then he should have done so).
None of this stopped Cardiff from being promoted in February 2010 when his predecessor David Doyle retired (on pension terms that would be likely to make you sick). Cardiff’s elevation surprised some outsiders but few on the inside. Brian Lenihan had come to rely on Cardiff enormously, regarding him as an excellent analyst of the situation. He decided that blaming him for the past was pointless and that it would not make sense to deny Cardiff the top job because of the impression it would create.
However, Cardiff’s being in situ provided the new government with a serious problem. He had been appointed for a seven-year term. He was associated too closely with the previous administration. He had been a key figure in the surrender to the IMF/EU/ECB troika and had appeared on stage with Cowen on the shameful night the near impossible terms of that surrender were confirmed. Whereas Dermot McCarthy, the secretary of the Department of An Taoiseach, was due to retire shortly after the change of government, sparing the new administration the hassle of getting rid of him, dealing with Cardiff was a different kettle of fish entirely.
Firing anyone in the public sector is difficult and it is entirely possible that Cardiff not only did not deserve to removed, but had performed well during his time in the department and was the best person for the job at the time Lenihan appointed him. Cardiff would have had legal rights, as well as financial entitlements. Sacking him might have been taking as amounting to blaming him for the economic debacle.
So the Government came up with an Irish solution to an Irish problem. It decided to shuffle him off to a very financially lucrative position in Europe. One can only imagine how the Europeans might be reacting to that, although, to be fair, you’d have to believe that many other countries in the past have parked people in European administration, at the EU’s expense.
Now you could also imagine that the European parliamentarians who will meet Cardiff for his job interview at the end of the month might be tended to make inquiries into his performance in the Department of Finance. But they most certainly are likely to ask about his qualifications to be an auditor to accounts given last week’s revelation of slack accounting within our national finances.
It has emerged that the national debt had been mistakenly overstated by €3.6 billion. The possibility of so-called double accounting of money borrowed by the Housing Finance Agency (HFA) had been highlighted in emails from the National Treasury Management Agency (NTMA) to the department of finance, going back as far as August 2010, but Cardiff’s excuse was that the notification of the likely error had not been passed up to the most senior levels. (This is likely to be true but it also suggests a dysfunctional department with seriously flawed communication, which is a serious issue in itself: indeed, there is plenty of evidence, as reported in my new book, of a failure to let people further up the line hear bad news). The error was only conceded formally less than a fortnight ago.
The Government is contorting itself to justify its exile of Cardiff. “Mr Cardiff is not personally responsible for the error that was made,” said Pat Rabbitte.
Taoiseach Enda Kenny said Cardiff is “technically very-well qualified” for the job. Cardiff has defended himself too: “I have served this country as diligently as I can... my record is very solid and very strong.”
The position on the Court of Auditors, which oversees the spending of EU funds, carries a gross salary of around €180,000 a year but, more importantly, a net salary of €140,000 due to the low tax rate on EU salaries.
It is a six-year job which carries generous pension arrangements which amount to half salary for the three years immediately after serving in office and a pension of 26% of salary after that. He will also get his public service pension in the future.
It must be very hard for other public servants and politicians to argue with the troika for the reduction of the size of our debts or the interest rates charged on our loans when our lenders and our European partners see how we deal with political and administrative failure in this country.
Big pensions or a move to well-paid positions does not convey the impression of a country serious about solving its problems for others than the elite.