AIB probes - Heads must roll to restore public trust

THE mantra ‘greed is good’ could well be the motto of AIB, Ireland’s biggest banking group.

Across a spectrum of financial activities, the bank and some of its most senior executives have demonstrated a disturbing willingness to drive up profits at any cost, ripping off customers in the process while at the same time encouraging them to break the law by becoming tax cheats.

Not since the days of Ansbacher have consumers so keenly anticipated today’s publication of probes into overcharging and tax evasion at Ireland’s leading bank. Though attributed to mistakes in some instances, a flood of allegations has left the bank’s reputation in tatters.

So deeply rooted was the culture of tax evasion throughout the country’s financial institutions that a whopping €500 million was recovered in the past three months from holders of bogus non-resident accounts while 86,000 accounts are still outstanding.

Today’s publication of two out of the four probes held into AIB’s activities will determine what actions are ultimately taken against the bank by the Irish Financial Services Regulatory Authority (IFSRA).

Just how the fledgling financial watchdog handles the AIB affair will set a benchmark for such investigations in the future. A softly-softly approach will send the wrong message to consumers grown cynical at the Shylock image of the banks, doling out money hand over fist and then flaying customers for their pound of flesh.

At one point, it seemed the drip-feed of scandals and breaches of regulations at AIB would never end. Confidence in the bank was eroded amid a veritable blizzard of revelations.

Initially, the bank’s response was to fire-proof the upper echelons and to blame employees further down the line. Thanks, however, to the swift intervention of AIB chairman and former Attorney General Dermot Gleeson, one of the country’s foremost lawyers, that convenient and utterly misleading slant was quickly nailed.

The urgency of restoring the bank’s reputation takes on even greater significance because of the heavy emphasis being placed at board level on the importance of corporate governance.

While the chairman is known to be an enthusiastic supporter of this policy, its chief architect is Derek Higgs, a non-executive director of AIB and an acknowledged European expert on the doctrine of corporate governance, which aims to give investors greater insights into the true qualities of a company. Obviously, much remains to be done on the ethical front if the public is to be convinced about AIB’s transformation.

The bank’s perceived rip-off culture ranged across a variety of products from schemes aimed at students, to individual business deals, as well as foreign currency transactions affecting hundreds of clients.

But the whiff of scandal surrounding the company really took hold when it emerged that some of its most senior executives held offshore investments in breach of tax laws. No attempts to play things down by saying they happened over a decade ago can diminish the gravity of the situation.

If confidence in the bank is to be restored, heads must roll. In the interest of probity, justice must not only be done, it must be seen to be done, up front and without fear or favour.

Crucially, at the end of this debacle, AIB must be seen as a bank that can be trusted by the people. As an institution of international standing, it must be above suspicion and without a stain on its reputation.

The importance of rebuilding trust in AIB is paramount if confidence in Irish banking is to be restored. A first-class country deserves a first-class banking system.