NIB scandal - Bank cheats must be prosecuted

NOBODY will go to jail! The whole country knows this despite the revelation that for years National Irish Bank systematically stole its own customers’ money, cheated the taxman and defrauded the State.

A hard core of 20 former NIB executives, managers and employees are named and shamed in the report of two High Court inspectors.

But Ireland’s nod-and-wink attitude to white collar fraud could well ensure that anybody found guilty of wrongdoing will never see the inside of a prison cell.

Yet this damning report spells out how senior executives at the Australian-owned bank, the fourth largest in Ireland, deliberately set out to rip off the system.

In a series of orchestrated scams, they worked out ways to steal money from their own customers and, at the same time, opened bogus non-resident accounts to help clients salt away hot money.

They operated fictitious accounts at every branch and robbed the Revenue Commissioners of millions of pounds. And they systematically defrauded the State of financial revenues.

Thanks to the moral courage of whistle-blowers in NIB, plus investigative reporting by RTÉ’s Charlie Bird and George Lee, the inspectors have now exposed executives at the bank where for two decades, lies, cheating, and fraud were the order of the day under the unseeing eyes of the Central Bank and the taxman.

While PAYE workers were groaning under the weight of taxation, all the main banks aided and abetted scams ranging from the elite Ansbacher affair, to bogus non-resident accounts and DIRT evasion.

To describe yesterday as another black day for banking would be an understatement. It was a disaster.

It was also a dark day for the financial regulatory authorities who, amazingly, failed to see, or to act upon it if they saw what was going on under their noses.

In lifting the lid on the NIB can of worms, the inspectors have done superb spade work. It now falls to the Attorney General, the Revenue Commissioners, and the Corporate Enforcement body to pursue any NIB executives accused of wrong doing.

Among those implicated in the scandal are ex-chief executive Jim Lacey and former Fianna Fáil TD Beverly Flynn who was working as a financial services manager with the bank.

Turning a blind eye to fraud will send out the wrong message. If the culprits came from working-class housing estates, we can be sure the State would come down on them like a ton of bricks. Sauce for the goose - sauce for the gander.

To date the scandal has cost the bank e64 million in reimbursement, legal costs and tax penalties. But so far nobody has been prosecuted.

To quote Paul Appleby, Director of Corporate Enforcement, the report showed “clear findings of misconduct” and is “deeply disturbing in revealing the extent to which illegality and bad practice was tolerated and to some extent encouraged within the organisation between 1988 and 1998” .

It has to be asked if such fraudulent behaviour was isolated to NIB or was replicated throughout the banking system.

In a business suspected of cartel arrangements, despite persistent denials of this, it would be amazing if the other banks did not engage in similar practices.

Their record of covering up bogus non-resident accounts, suggests that if there was something to hide, the banks would hide it.

Having called in the inspectors, Tánaiste Mary Harney should now launch parallel probes into the other main banks.

In a pointed comment, the two inspectors who spent six years probing NIB’s complex web of deceit, say they do not yet accept that the bank has identified all incidences of improper interest charges. They also criticise its initial failure to co-operate with the investigation.

Clearly, there can no place for fraud in the country’s financial institutions. There should be no scope for customers to be ripped off by banks entrusted with their money.

It is patently clear the financial industry knew what was going on - but nobody shouted stop. Presumably, the silence stemmed from the climate of fear and corruption within the sector.

A change of culture right across the banking community is now urgently needed. It is not enough to say those named cannot be company directors or merely to bar them working in the financial sector. There is an overwhelming case for taking criminal prosecutions against those accused of wrongdoing.

While the public can be satisfied that allegations against NIB have been substantiated, the authorities must be prepared to go further and initiate legal proceedings where warranted.

Confidence in the system has been deeply undermined. The findings are of the utmost gravity.

There can be no hiding place in a bank or in any other area of business for corporate cheats.

On the bottom line, there must be a root and branch overhaul of the entire Irish banking system to ensure scandals of this kind can never happen again.

Otherwise, the excellent work of the inspectors will be a waste of time.