LAST week was one bankers would like to forget. Three of their brethren were sent to jail. Despite the announcement of huge profits by both AIB and Bank of Ireland, both banks just scraped through stress tests by the European Banking Authority.
Two Anglo Irish Bank (John Bowe and Willie McAteer) and one Irish Life and Permanent (Denis Casey) bankers were deemed to have been involved in a €7billion criminal scam, sending money out one bank back door and bringing it back in the front door. Yet, the longest criminal trial in the history of the state leaves more unanswered questions rather than satisfied minds that convictions have been secured.
Some might argue that the three bankers were no more than fall guys for an industry that was greedily out of control, consumed and subsumed by its own sense of power. These boys broke the eleventh commandment – ‘Don’t get caught!’
The whole debacle raises questions about bank governance. Where were the eagle eyes of the Central Bank, Department of Finance and the all-seeing, all-watching European Central Bank? What of the role of auditors?
Ernst & Young did not come up smelling of roses when they were criticised by the presiding Judge Martin Nolan. It “beggared belief” he said that EY (as they have since been rebranded) signed off on Anglo’s figures as “true and fair.”
EY was quick out of the traps with a press release: “EY was not a party to these proceedings. EY fully cooperated with requests from the prosecution for witnesses and documentation in this matter. Neither the prosecution nor the defence chose to call any EY witness to give evidence…”
The liquidators of IBRC (Anglo Irish Bank rebranded after a merger) are suing EY for €50million over separate claims that EY failed to uncover certain financial irregularities at Anglo.
Regardless, one wonders if there is any regulatory body willing or able to tackle EY in the wake of Judge Nolan’s comments and trial findings. If not, why not? Is this another financial loophole that needs to be closed?
Couple this with the vulture funds farce. They can escape paying tax in Ireland by registering as charities, even though they have bought huge NAMA assets at knockdown prices, effectively at the expense of the Irish taxpayer.
What did Finance Minister Michael Noonan know about the tax status of these companies? If he was aware why did he not close the loophole? If he did not know then is he fit for the job? There is no in between. Under the existing tax structures such vulture fund companies pay tax of €250 on revenues of tens of millions of euros. They can also move money offshore to parent companies, legally. This also poses serious questions for Revenue.
If legislation is introduced to close off this loophole it will fall into the ‘closing the door when the horse has bolted’ syndrome. Translated into political speak this means that the politicians will act only because the information has found its way into the public domain.
NAMA also has questions to answer. How much did they know before they allowed foreign companies to buy Irish assets at knockdown prices? What is fair, just or moral about foreign companies buying Irish assets cheaply, raking in rent and sending the money offshore, tax-free? Meanwhile, Irish taxpayers suffer cutbacks.
Mr and Ms Irish Taxpayer have been duped again – by stumping up for the bailed-out banks and losing out on tax revenue these companies should pay. The game simply goes on. Those who created the mess are still in control.
Bank of Ireland declared half-yearly profits of over €500million while AIB posted a €1billion profit for the same period. Yet, both barely scraped through the EU stress test. How is this possible? Are we back to accounting and auditing procedures looking good on paper when in reality the cupboard is still bare? Is it more ‘leprechaun economics’? If not, why just scrape through the stress test?
The full context of bank-speak is in ‘The Great Irish Bank Robbery’ by Liam Collins, (2007 Mentor, ISBN 978-1-84210-393-7) - a riveting read. Beg, borrow or steal it!