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Archive for July, 2013

Buffett Swoops on Hopeless Quango

HAS Warren Buffett lost his marbles? What in the name of God is the lofty Sage of Omaha doing, mixing it with the lowly VHI?
Out of the blue, last Thursday morning an Irish Independent exclusive revealed that the wiliest investor in the world had been sucked into one of the deepest swamps in Ireland.

Safety goes off the Rails at CIE

COME back John Lynch, all is forgiven. Remember John? The former executive chairman of CIE? We gave the poor guy plenty of stick in this column during his time in office.

Pull Plug on JAABS for the Boys

Chief Justice Susan Denham is nobody’s prisoner. Last week, she issued a timely warning to Irish business about its governance.
In a rare venture into extra-judicial affairs, Denham demanded “ethics in the boardroom”, “transparency” and “personal codes of honour”.

Bank probe: No TDs need apply

 

WERE you listening to the guff from government ministers last week? All the pompous garbage about TDs having a constitutional duty to hold a bank inquiry?

They dismiss suggestions that TDs cannot be trusted. They hold up their hands in mock horror at the idea that deputies are already compromised by past statements or personal spats with banks.

Perish the thought. Ministers insist that TDs possess all the necessary qualities for an inquiry. As chairman they will seek a reliable, independent TD, naturally enough one with government sympathies. Luckily, they need look no further than Michael Lowry, whose battle with the banks to save his fridge business, gives him proven talent to preside over the probe. His umbilical cord with Fine Gael makes him ideal.

From the main opposition parties , no one has more on- the-ground experience of banks than the old guard of Sinn Fein. The unorthodox interaction of their IRA friends with bankers gives them an unmatched inside knowledge of bank vaults. Fortunately, none other than TD Caoimhghin O Caolain – one of their TDS without baggage–- is available. Caoimhghin was at one time – somewhat incongruously – a bank official himself.

The Government will need a majority. No better man to display his expertise than Minister of State John Perry, currently nursing the wounds of being sued by the banks for €1.3m. Perry would no doubt relish the chance of challenging his persecutors.

And what about Mick Wallace? Wallace has had numerous brushes with the banks. He will offer advice on the problems of deep debt and on any item about developers.

To advise on the dangers of TDs grandstanding, Fine Gael’s loudest voice Bernard Durkan, a veteran of the Dirt banking inquiry, should shore up the government majority.

What a pity Fianna Fail’s Beverley Flynn has retired. She could have brought all her knowledge of selling investment policies at National Irish Bank to the party.

The ministers are right. The Dail is an unappreciated treasure trove of TDs with banking experiences.

Last week, former Director of Public Prosecutions (DPP), James Hamilton, gave an RTE interview pointing out the pitfalls of TDs holding an inquiry into banking. He did not name names. Instead, he offered a reasoned warning against politicians holding such probes.

Hamilton owns one of the best brains in the country, no longer of direct use to Ireland because the quirks of public service rules made it more attractive for him to retire early rather than soldier on.

Hamilton, still under 65, only rarely ventures into the limelight to share his wisdom these days. What a waste.

Last Sunday, he decided to dive deep into the Anglo Irish Bank tapes controversy. In the process, he torpedoed the credibility of current government plans for a banking inquiry.

Hamilton was always opinionated. I knew him well as a precocious young genius at TCD. He has been a friend ever since and has carried the same refreshing , almost reckless, integrity into active retirement.

As a young barrister he had a reputation for refusing to butter up solicitors in the competitive scramble for legal work. Hardly a prudent career move for a man not born with gold-plated legal connections, a disadvantage that may have persuaded him to head in the direction of the highest legal post in the land rather than sliding into silk and a place of privilege on the bench.

The DPP job does not merely require brains. It demands a super-integrity of an order not sought in many other public offices. Hamilton has it. The position is particularly precious because it is unlawful for politicians to try and influence the decisions of the DPP.

Thankfully, it is not illegal for a former DPP to comment on the antics of current politicians. Last Sunday Hamilton made it crystal clear what he thought of politicians holding an inquiry into banking parallel to criminal proceedings being taken against bankers. He did not like it.

He believes that at a minimum the criminal trials should be held first. In support, he cited the dangers of politicians “grandstanding” at hearings, that they could say things that were “prejudicial” to a fair trial. He went on to insist that if TDs wanted to “grandstand and put on a performance”, they could hardly be stopped – even by a strong chairman.

Even more pertinently (highlighting the dangers of abuse of parliamentary privilege) he insisted that TDs “rightly have latitude about what they say” but warned of the pitfalls contained in that privilege – namely that immunity from defamation can be exploited by TDs.

Justice will then be frustrated as bankers arrive in the Four Courts in jig time, pleading that they have been defamed, so cannot now receive a fair trial.

The showmanship of TDs at an Oireachtas inquiry could ensure that guilty parties walk free. And then, in response to a later question, Hamilton pooh-poohed the Government’s crazy idea of holding a repeat referendum to beef up the powers of an Oireachtas inquiry, insisting that “the decision had been made” by the people last year.

Referring to the rejection of that specific proposal by Ireland’s citizens, he was emphatic that the “people had decided that this was not a function to entrust to politicians”.

Pressed on this point by RTE’s Richard Crowley, Hamilton asserted that the people’s decision “was not an unreasonable one. They had grounds for concern. Yes.”

Bingo. The former DPP was putting the boot into the Coalition.

Hamilton is right. Irish people have uncanny instincts. While they want to see guilty bankers behind bars, they fundamentally distrust their politicians’ commitment to facilitate it. Indeed politicians’ play-acting is likely to frustrate this.

Fanciful? Not at all. Remember former Tanaiste Mary Harney’s public assertion that Charlie Haughey should go to jail? High Court Judge Kevin Haugh postponed the former Taoiseach’s trial indefinitely because Harney had prejudiced the proceedings. Harney lifted Haughey beyond the arm of the law.

And what is the Government’s response? It has reacted by rushing full speed ahead towards an Oireachtas banking inquiry. It is so intent on using it as a vehicle to discredit Fianna Fail that it is prepared to see guilty bankers cheat justice.

It is so determined to crucify political opponents that it will not allow any inquiry to consider activities of bankers, top civil servants or politicians, during its own term of office.

The inquiry will be limited to questioning Fianna Fail wrongs, not allowed to challenge the current Coalition’s abject failure to clean up the banking culture or change the guard. Last week, two ministers – Michael Noonan and Brendan Howlin – declined to countenance extending the inquiry to cover the second dark day of total chaos in the Department of Finance, just five months ago, the night when Anglo was liquidated by the Fine Gael/Labour Coalition.

There is an obvious solution: no TDs should apply.

Well, who else could sit in judgement?

Apart from the obvious merits of complete outsiders, who better to head up the inquiry than former DPP James Hamilton himself, or even the Chief Justice Susan Denham, one of the few judges whose political pedigree is a mystery?

Who better to join them than the Comptroller and Auditor-General Seamus McCarthy, a man who shuns the limelight? Why not put them beside other self-effacing experts like former AIB internal auditor and whistleblower Eugene McErlean?

If we need another banker, Professor Louden Ryan of Bank of Ireland has never been tainted with the excesses of his successors. Others beyond reproach include accountant Dr Niamh Brennan, whose professional and corporate governance skills are second to none.

Take your pick: former DPP Hamilton (or Chief Justice Susan Denham) in the chair flanked by the dull but worthy Comptroller, ex-AIB internal auditor Eugene McErlean, former Bank of Ireland Governor Professor Louden Ryan and Dr Niamh Brennan.

Alternatively, we could appoint the commercially savvy Michael Lowry , the controversial Mick Wallace, the battered John Perry, a couple of Sinn Feiners and Bernard Durkan, the great grandstander.

Irish Independent

 

Priority Question Michael Noonan and Anglo Tapes

Bank probe prepares political gallows

 

Forget the banking enquiry. Welcome to Ireland’s kangaroo court for financial felons.

 In the box will be the bankers, once again destined to cheat the gallows. But they are not the real kangaroos. The court will be set up to hang the bankers’ former friends. The real kangaroos will be the politicians who allowed bankers to run riot.

Bankers, developers, regulators, civil servants, Fianna Fail and the Greens are all culpable for the atrocity that devastated our citizens in 2008. We already know that. What we now want to know is what happened.

The release of the Anglo tapes last week makes a banking enquiry imperative. But it must be a banking enquiry, not a political hanging.

The Government has suddenly – five years too late – developed a voracious appetite for a “banking enquiry”. The Irish Independent’s scoop of the decade has thrown them a political lifeline. They are determined to exploit it to batter Fianna Fail.

They do not give a hoot about the bankers’ fate, although the hideous revelations in the Anglo tapes have guaranteed that all bankers will suffer collateral damage.

The present plan – of an Oireachtas committee probe – will give us the worst of all worlds. The bankers could escape, courtesy of the Four Courts, while the enquiry itself disintegrates into a political pantomime.

An Oireachtas committee will be set up to hold “hearings”. It will have a Fine Gael/ Labour chair flanked by a majority of loyal government TDs. The Opposition will be outgunned by over two to one.

The enquiry will start in the autumn or in early 2014. It will take about two years. All disputes will be decided by majority vote. Coincidentally, the two-year period will lead us right up to the general election.

Its terms of reference will be set by Taoiseach Enda Kenny and Tanaiste Eamon Gilmore. Its timeline will not extend beyond the date of the fall of the last Government. It will not enquire into any events that have happened under Fine Gael and Labour. Recent evidence that nothing has changed in banking since their arrival will be excluded. While questions hanging over the night of February 7, 2013 – that saw the liquidation of Anglo – will wrongly be out of bounds, the night of the guarantee in September 2008 will rightly be minutely scrutinised.

The first witnesses called will be faceless civil servants, unknown regulators and dull central bankers. They will be subject to polite questioning from the TDs. Initially the enquiry will prove promising, without being sensational. Government spinners will applaud the “responsible and constructive” nature of the proceedings.

When the enquiry enters its second year, the bankers will be called. Injunctions will begin to fly, as well-heeled bankers – armed with expensive lawyers – prove that TDs on the enquiry team have all made prejudicial statements about them.

Bankers will be in and out of the High Court challenging the committee’s mandate and previous statements about them from individual members. Government spokesmen will insist that they “cannot interfere with or comment on legal proceedings”. The probe will be stalled.

Ireland’s bankers will be delighted with the lack of progress. The appearances of key bankers will be parked until the legal arguments are settled.

As the second half of 2015 approaches, the real targets will be called. They will be saved for the final six months. Paraded before the cameras will be no less a person than former Taoiseach Brian Cowen, followed by former Transport Minister Noel Dempsey and FF’s last Justice Minister, Dermot Ahern.

Such unwelcome reminders of the past will be resurrected to strike fear into the hearts of the Irish people. They will be quizzed about the night of the bank guarantee and any meetings they ever had with any bankers. As Christmas 2015 looms, Bertie Ahern himself will be summoned to put the ultimate frighteners on Ireland’s voters. Coalition committee members will take lumps out of him.

In January 2016, the committee will be granted an extension, just enough time to discredit any current Fianna Fail TDs who were in the Cabinet in September 2008.

The crack Fine Gael and Labour hit squad will seize the opportunity – grandstanding in front of the cameras – to savage minor players like former Fianna Fail ministers Willie O’Dea and Eamon O Cuiv.

Having battered Fianna Fail and sidelined the bankers, the enquiry will finally call in Micheal Martin, leader of Fianna Fail. They will remind the electorate of his time sharing power with villains such as Bertie Ahern, Cowen, Dempsey and Dermot Ahern. Under privilege they will give Martin a political grilling of which Vincent Browne would be proud.

The final witness will be Enda Kenny. His appearance will be a lap of honour. The Oireachtas committee will treat him with deference. He will explain that he was not in power at the time of the guarantee. Yet he will be able to tell them that when he came into office there were no records of how Fianna Fail and the bankers ruined Ireland. In that order.

The general election will follow within a month of Kenny giving his evidence. He will return to power in triumph. The bankers will escape. Fianna Fail will be decimated.

That narrative is far from fanciful. Last week Enda Kenny set the scene for the “independent” enquiry on banking. Responding to Micheal Martin, he cunningly linked the enquiry to the Anglo Irish Bank tapes. He pulled out a stinging phrase blaming “the axis of collusion” between Anglo, Fianna Fail and bankers in general.

He was plugging into public outrage to milk immediate political advantage. He has spotted a vehicle – a parliamentary enquiry – that will carry him over the line at the next election.

The bankers are rejoicing. Such political cynicism could let them off the hook.

And let us not be fooled by suggested variations on the narrative. Perhaps the Government will dress up the enquiry by granting the chair to a High Court judge, provided he or she is flanked by a safe majority of Coalition TDs. Of course, the chair will have to be a “Fine Gael” or “Labour” judge, a safe political appointee. The key terms of reference will remain the same: no investigations into banking since this Government came into office.

The Government’s response to the toxic tapes of the Anglo cowboys has been the most cynical exercise since the financial crisis broke.

Ministers have competed with each other to find the rhetoric of condemnation. Leo Varadkar found the tapes “stomach-churning”, even “gut-wrenching”, Alan Shatter was “nauseated”, Brendan Howlin was “personally sickened”. Ministerial vomit is spilling all over Government Buildings.

Come on, ministers. We all knew what these men were like. They thought they could walk on water.

Spare us the rhetoric. We are not simpletons. We can see the devious depths of the plan. The Government is prepared to risk bankers escaping scrutiny if they can be exploited as an instrument to destroy political opponents.

We need an enquiry made up of independent ordinary citizens, experts, outsiders, advised by lawyers and accountants if necessary. No TDs should apply.

Otherwise the bankers are likely to escape, rescued by the Four Courts or by the enquiry sinking into a political charade, constructed specifically to win a general election.

The Anglo leaks provided a new urgency for a banking enquiry. News that it would be stuffed with Fine Gael and Labour TDs is a godsend to bankers and mannah from heaven for ministers.

So, who was the source of the leaks?

Always ask: Cui bono? (Who benefits?)

Irish Independent

 

CIE, Ibec and the wall of silence

 

LAST week, I rang CIE in search of its chairman, Vivienne Jupp. I was told that the troubled transport company’s chief was not “due until next week”.

 

On Thursday, I tried again. Perhaps someone else from the office could help.

“Hello, CIE,” came the reply after a long wait.

“Could I speak to the chairman?” I asked.

Pause. “Hold on.”

A lengthy background conversation between two CIE staff members ensued: “Hey Mary, who’s the chairman?” asked the operator.

Mary: “Um…” Silence and a long, long pause. Sounds of internal telephone directories’ pages being turned.

Operator: “Sorry for holding you, I wanted to be sure to give you the right number for his office.”

Evidently the chairman of CIE has not made much of an impression on the workforce.

Eventually I was given a number for ‘Linda’. Linda was supposedly the channel to the chairman.

Linda was not available. I was told to email her. Which I did immediately.

The email prompted an automatic response, informing me that Linda was out until Monday. But if it was urgent, I should contact Jennifer at a given number or email.

As it WAS urgent, I emailed Jennifer. Jennifer has yet to reply. Thankfully, I was not ringing the fire brigade.

The chairman turned out to be a woman. She should tell her staff, who seem to think she is a man.

So Vivienne, Linda and Jennifer of CIE were all elsewhere.

Vivienne Jupp has been top dog at CIE for two years.

She seems to have been in hiding for the entire time. Not much has been heard of Vivienne herself during that period. Plenty has been heard of CIE as it stumbles between liquidation and examinership, rescued by emergency injections of State funds on top of annual subsidies.

Vivienne, it seems, does not come out to play – although she takes a fat fee of €31,500 a year.

A CIE spinner tried to make contact instead. I told him that I was looking for the chairman.

I remember when Vivienne’s term of office began, the day she told an Oireachtas committee proudly: “It is quite a demanding job in terms of time commitment. I actually nearly got locked into the Heuston Office at 7.30pm last Wednesday.”

That was the day she informed TDs that she “looked forward to driving CIE to further success”. Oops, had she read the balance sheet before accepting the job? As it happens, her tenure has been a disaster, marked by falling passenger numbers and financial crises.

It was at the same meeting that Vivienne admitted her lack of expertise in transport, but comically tried to impress the Committee on Transport with her credentials by telling them that “I take the number seven bus and the Dart is close to me”.

Echoes of former US Republican vice-presidential candidate Sarah Palin claiming in an interview to know all about Foreign Affairs because she could see Russia from her bedroom window.

Luckily for CIE, Vivienne has plenty of quango experience. She has sat on the board of the Broadcasting Commission of Ireland. She was on the Review Body on higher remuneration in the public service. She even sat on the Covered Institutions Remuneration Oversight Committee, where she trousered €19,000 for two-and-a-half months’ work.

Quite a quango queen.

Funnily enough, all I had initially wanted to ask Vivienne was how much CIE paid to Ibec, the utterly useless employers’ body, which has somehow managed to ensnare contributions from quangos galore into its coffers.

Ibec is the established comfort zone for all quangos.

CIE, the bankrupt semi-state, lashes out taxpayers’ money with its annual subscription to Ibec.

How much?

A grand? Two grand?

It is a secret. Quangos are deeply secretive organisations. Last week, they were almost masonic in guarding their guilty little secret about their subs to Ibec.

But judging by the reckless generosity of other quangos to Ibec, the CIE subscription runs into tens of thousands.

Ibec loathes the idea of semi-state bodies letting the ordinary citizen know the size of membership fees they snatch from the taxpayer.

Prompted by CIE’s reluctance to release the size of its largesse to the quango club, I decided to set out in hot pursuit of the others who bankroll the employers’ club. Was Ibec, poser as the champion of private enterprise, really still living off taxpayers’ money, the subscriptions from bankrupt semi-states and destitute State-owned banks?

What a wall of silence was suddenly erected. No one in the quango world wanted to say anything about Ibec. They are ashamed of any open association with this once-powerful social partner, not to mention the loot they thrust in its direction. One insider told me that it drove the Employers’ Group (often known as I Beg) bonkers to see the source of its income blazed all over the newspapers.

Nevertheless, it is obvious that not only our destitute semi-states, but also our beloved bankers are still pulling the strings at the employers’ lobbyist’s Baggot Street headquarters.

Both AIB and Bank of Ireland refused to reveal the current figure flowing out to Ibec for their annual member subscriptions.

No one can blame them. The last time that I asked the question, they were far more forthcoming.

Four-and-a-half years ago, Bank of Ireland was pumping a staggering €200,000 annually into Ibec’s coffers. AIB, the now State-owned bank, was giving them €194,000 as an annual donation.

Perhaps the figure is lower today? Somehow, I doubt it.

Perhaps it is higher?

Pity Ibec. It has suffered from the disappearance of its key nobility like Irish Nationwide and Anglo, so it must bridge the gap somewhere. Otherwise, its top brass would have to take pay cuts like the rest of us.

Where better to make up the difference than from the semi-states? Provided, of course, that they keep their mouths shut.

And last week, they did.

Omerta on the subject of Ibec subs has gripped the so-called communications centres of the nation’s top quangos. An Post refused to respond to the question. No one can blame them. Four years ago, this State monopoly admitted to chucking a staggering €123,000 of taxpayers’ funds as an annual donation to Ibec. Struck dumb too was the Dublin Airport Authority, still deep in debt. In 2008, it donated €136,000 to the bosses’ club.

A deep throat from Coillte broke the omerta. Today, Coillte is paying far more than it did in 2008. The forestry outfit, which escaped the privatisation gallows last week, has increased its subscription to Ibec from €88,000 to €113,000! Is it possible that the train wreck that is CIE has followed the same rising pattern?

Other spectacular amounts handed over to Ibec that year by taxpayer-owned quangos included €154,000 from the ESB and €103,000 from RTE. The national broadcaster, the phoney champions of openness and transparency – themselves facing financial oblivion – refused point blank to say whether they had increased their annual amount.

Not only did quango spokesmen refuse to reveal the figures, not a single voice offered a reason for their continued membership of this moribund body. In the days of social partnership, there was a cynical case for the lobbying body’s existence: the State- funded outfit, propped up through the back door of semi-states annual subs, would – on cue – always be relied upon to give the employers’ seal of approval to outrageous pay deals. Ibec provided the fig leaf a government needed to approve benchmarking and other damaging agreements cooked up between the social partners.

But today, now that social partnership is dead, there is no longer any need for this social partner.

Back in 2008, the banks, CIE and other quangos contributed over €1m a year to keep Ibec afloat. Nothing has changed. Today, it is the protector of the worst pillars of Irish business – State-owned banks and semi-state invalids. Silence is not a solution.