The Anglo tapes - Banking inquiry now essential

Details of the leaked transcript conversation between two officials of the Anglo Irish Bank — John Bowe, director of capital markets, and Peter Fitzgerald, director of retail banking — make for distressing reading.

Listening to the cynical, flippant nature of their conversation, interspersed with bursts of laughter, makes for even more disquieting listening.

The whole thing is outrageous. With the benefit of hindsight, it became all the more shocking, in view of the enormity of the ensuing economic disaster.

Before the bank guarantee was signed in Sept 2008, those Anglo Irish Bank officials realised that €7bn was not going to be enough to rescue the bank. “The reality is that actually we need more than that,” Mr Bowe stated. “The strategy here is you pull them in, you get them to write a big cheque.”

Once the Government was committed for €7bn, it was going to be easier to get more in order to protect the €7bn already provided. “They have to support their money,” he added.

“Yeah, yeah, yeah, yeah, yeah,” Mr Fitzgerald replied. “They’ve got skin in the game and that’s the key.”

The two bank officials seemed to think the Government might fear that the cost to the taxpayer would be too great, with the result that the Government might balk at providing the money. Now we know that the Anglo Irish Bank fiasco has cost some €30bn.

People will be tempted to question whether the taped conversation really amounts to evidence of a plan to deceive the Government. Questions must be asked about responsibility for the broader implications, which seem to suggest the whole thing has undermined the country’s economic sovereignty and its independence.

No one has a right to come to any firm conclusions until the issues are examined properly. Frequently those who leak material have ulterior motives, often to cover up their own involvement somewhere else. Of course if that is the case in this instance it should set even more serious alarm bells ringing, because it would be truly terrifying to think that this leak is designed to cover up something even more sinister.

The leaked conversation demonstrates without any doubt that the need for a thorough banking inquiry is more pressing than ever. The conversation gives the impression of a disregard for the banking regulators, with talk of playing “duck and drakes” with the regulations. Indeed, what does all this say about the competence of the officials at the Central Bank and the Financial Regulator’s office? Three separate inquiries within the banking sector have already published reports, two in 2010 under the previous government and another in Apr 2011. Yet it was the media — not any of those inquiries — that disclosed the taped conversation at the centre of the current story.

This was obviously the kind of material that should have been highlighted, but its disclosure has taken five years. When such material was available, it is difficult to understand why a full, proper inquiry is not already under way.

Taoiseach Enda Kenny stressed yesterday that there are “many, many tapes” and over a million pages of documents to be investigated as part of the banking inquiry. He added that he understands “the rage and the anger” that the tapes have provoked.

Richard Bruton, the enterprise minister, described the tapes as a reminder of past failures. There is no doubt the current government inherited the mess from its predecessor, but any government can only blame its predecessors for so long. There comes a time when it must accept responsibility for tackling past mistakes. In earlier years a judicial tribunal might have been set up to investigate the banking fiasco, but such tribunals were brought into disrepute over their failure to tackle other problems effectively, that the public clearly did not have the stomach to tolerate further wasteful extravagance.

In fairness it should be emphasised that the electorate frustrated the current Government’s initial efforts to establish a banking inquiry with effective teeth, when it rejected the referendum proposals in Oct 2011. Some members of the Government blamed the legal profession for inspiring the defeat of the referendum for their own financial reasons.

Public Expenditure and Reform Minister Brendan Howlin published legislation last month designed to provide for efficient, cost-effective parliamentary inquiries. This legislation must be enacted in order to tackle the corrosive impact that such scandals are having on public life in this country.

The electorate has a right to know what has been going on — the people’s need to know is even more important, because it is fundamental to the proper operation of any democracy.