“Cover-Up” Inquiry

January 22, 2010

The Irish government has been accused of a “cover-up” over its plans to hold an official inquiry into the banking crisis behind closed doors.

On Tuesday, the Irish Finance Minister Brian Lenihan announced plans for a “multi-stage investigation” to be completed at the end of the year.

It will include two preliminary reports followed by a six-month panel inquiry.

Brian Lenihan has said that an investigation was necessary “to restore international and domestic confidence” in Irish banks.

The calls for the inquiry to be held in public had come not only from the opposition parties, but also from within the coalition government’s junior partner, the Green Party.

As was the case with NAMA, when party members demanded greater protection for taxpayers and were awarded the ridiculous ‘levy’ on the banks, this time the Greens have rolled over for their political masters and agreed the inquiry should be held in private.

Senator Dan Boyle said the Irish parliament should be involved but in his statement, Mr Lenihan argued that a parliament committee “cannot not be a court of judgement on private individuals and cannot find on matters of fact”.

International investors will not be impressed by the weak response of Ireland to its difficulties through NAMA or through this inquiry.

Large debt finance obligations contributing to our balance of payments deficit will weaken our ability to provide the infrastructural developments in IT, communications and elsewhere that are needed to seed a competitive economy. For NAMA to succeed another property bubble will require to be generated.

300,000 vacant houses, not counting holiday homes and the delinquent borrowings of developers like McNamara for useless overpriced development land will help NAMA move from delusion phase as it surveys the wreckage created by the first 50 developers loans considered by NAMA for transfer over the coming months.

Useless platitudes like ‘being tough with developers’ will be seen for what they are, developers will simply plead inability to pay.

It appears the inquiry proposed by Brian Lenihan will not have the powers of investigation of similar inquiries in other jurisdictions such as the US, UK and Iceland.

Tues, 19th January, Brian Lenihan, Minister for Finance, finally announced plans for an ‘Inquiry’ into the banks. It has been roundly condemned in many quarters as a “cover-up”.

Mr Lenihan has argued that a proposed public inquiry through a parliament committee “cannot be a court of judgement on private individuals and cannot find on matters of fact.” This adds to the view the minister wants to avoid scrutiny of individuals and their roles.

In contrast, for example in Iceland, will look at individuals and transactions that may possibly end in criminal convictions.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5145969/Iceland-banking-inquiry-finds-murky-geysers-runs-deep.html “How much of it will end in criminal convictions I cannot say,” he said. He claims the investigation will seek to establish whether any transactions included “market manipulation, insider trading, all kinds of breach of trust with shareholders about whether senior executives took loans or invested money for the people they were serving, buying their own shares without having any contract that allowed them to do so and how they invested the money of our pension funds”.

In Iceland , UK and US inquiries into the banking collapse are in public and they probe individuals from which a picture can be built up of how the banking system contributed to the economic meltdown. http://www.businessandleadership.com/news/article/19016/leadership/blankfein-dimon-due-before-bank-inquiry-today

In the US inquiry is already underway…..

“13.01.2010

The first public hearing of a US inquiry set up to examine the causes behind the financial crisis is set to begin in Washington today. The 10-member Financial Crisis Inquiry Commission (FCIC) was established by the US Congress. It has been granted sweeping powers that allow it to compel, using subpoenas, any person to appear before it.

The FCIC is set to present its findings to US President Barack Obama by 15 December this year.

Appearing before the FCIC will be senior bankers including Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JP Morgan Chase, John Mack of Morgan Stanley and Brian Moynihan of Bank of America.

In contrast, Minister Lenihan has said a public inquiry would be both expensive and would take years. This is also in contrast to the unconditional ease at which billions of taxpayers money have been spent on the banks. Of course a public inquiry could make preliminary findings in a short time followed by a deep probe later.

Minister Lenihan has said that the first time there will be any public element will be in about a year’s time, when the report of the Commission of Investigation is brought before the Oireachtas and an Oireachtas Committee can hold public hearings. Critics have said this is an attempt to buy time for the Government to avoid consequences and to defer findings for as long as possible.

Minister Lenihan accepted that much of the banking inquiry would be held in private but pointed out that its Commission of Investigation stage would operate on similar lines to the Dublin Archdiocese Commission that produced the Murphy Report into clerical sex abuse in Dublin, saying that he didn’t think anyone would say that anything but “a very good job” had been done there.

Critics have pointed out that the privacy and protection of victims of abuse afforded by the Murphy report is in stark contrast to the privacy and protection  that this inquiry will use to cover up, a “cover-up” now being offered to bankers, politicians and developers who’ve made taxpayers victims.

He also insisted that the remit for the initial report stage of the inquiry will involve government decisions and those made by government departments, as well as general economic management.

When pressed if individual government ministers would come under focus, Minister Lenihan pointed out that “government ministers are responsible for government departments”.

The Minster also said there were a number of names already in the hat for the independent “wise” man or woman to head up the Commission of of Investigation, and that he wanted to announce the appointment in “a matter of days rather than weeks”.

The inquiry will be a “multi-stage investigation” to be completed at the end of the year and held behind “closed doors”.

The first time the banking inquiry will involve any public element will be in about a year’s time, when the report of the Commission of Investigation is brought before the Oireachtas and an Oireachtas Committee can hold public hearings.

It is expected that a panel of experts will be brought in, possibly from overseas, to study the documentary evidence relating to the activities of the major Irish banks leading up to the nationalising of Anglo Irish and recapitalisation of the other major Irish banks. This will also involve the setting up of a terms of reference to agree on the methods and lines of investigation. All of this work will be behind “closed doors” and beyond the scrutiny of the taxpayer.

http://www.independent.ie/national-news/bank-probe-will-keep-taxpayers-in-the-dark-2022584.html

“BANK PROBE WILL KEEP TAXPAYERS IN THE DARK

Cowen accused of ‘cover-up’ over private nature of inquiry

Bank probe will keep taxpayers in the dark

By Fionnan Sheahan and Fiach Kelly

Wednesday January 20 2010

TAXPAYERS who forked out billions to rescue the banks will be kept in the dark for at least a year over the reasons for the financial crisis.

Opposition parties last night accused the Government of a “whitewash” and a “cover-up” as it announced its plans for a commission of inquiry, which will be largely conducted in private.

Under the plan, it is far from clear if Taoiseach Brian Cowenand other senior Fianna Fail politicians will ever face a public grilling.

The investigation, which will get under way immediately, will be multi-faceted:

  • A panel of experts will carry out an initial investigation into the banking crisis, while the Central Bank governor will produce a report on the role of the bank and the Financial Regulator. They should report by the end of May.
  • An Oireachtas committee, which will receive the reports, will meet the governor and the independent experts to detail what areas the Dail and Seanad want covered.
  • An independent commission of investigation, to be modelled on the Murphy inquiry into child abuse in the Dublin archdiocese, will be set up by end of June, using the two reports to shape its terms of reference.
  • The report of the commission of investigation will be finished within six months and go before the Oireachtas committee where it finally will get a public hearing.

The plans were widely interpreted as stopping well short of the Green Party‘s demands for an open investigation with a significant element done by the Oireachtas. Instead, it was generally in keeping with what Fianna Fail ministers were believed to want. The Government expects the bulk of the work to be completed within a year.

The inquiry’s remit will stop at September 2008, the time of the bank guarantee scheme, so it will look at the causes of the crisis, but not the Government’s subsequent actions. Major decisions such as the nationalisation of Anglo Irish Bank and the recapitalisation of AIBBank of Ireland and Anglo will not be included.

It’s not clear if the terms of reference will be published or if the Oireachtas committee will have powers to compel witnesses to attend. Its not clear if the reports on the role of the financial regulator and the central bank will be publicly made available though this is likely to be so. Its very unlikely in my view that any deep probe by way of documentary evidence on how individual loan transactions took place, on whose authority, under what circumstances can take place in the short time frame. Rather it appears to be the case that such individualisation by way of accountability, responsibility and action will be buried under the more benign cover-up of generalisation and oblique obfuscation designed to protect leading players from personal involvement.

Because of political considerations and embarrassment at the transparent fudging the final report will contain, its likely that this report will be deferred safely beyond the next General Election.

Of most interest to this writer will be the investigation into the relationships/communications between the Financial Regulator/Central Bank and Government ministers on the subject of Anglo Irish Bank; including the relationships between Anglo Irish Bank, developers eg McNamara and Fianna Fail.

Terms of reference could also look at the same in regard to Fingleton of Nationwide. Terms of reference should also examine relations between bondholders and the banks and their lack of responsible regulation from the bondholders, who gave free rein to wild Irish banking practice supported by weak government regulation.

Terms of reference should also include the complete range of extremely generous and unwise tax incentives given to developers as a means to fuel the property bubble under Fianna Fail. Unlike in the USA where a bipartisan inquiry in underway into the role played by banks in the financial crisis, it appears opposition parties, the public, or other interested parties will not have input into the scoping of the inquiry. It remains to be seen who will scope the inquiry or  what its terms of reference will be, or whether the terms of reference will be made available to the taxpayer. From the comments so far of Minister for Finance Brian Lenihan, it would appear part of its scope will be to protect and cover-up those responsible for the financial meltdown within the banking system in Ireland.

The results of this inquiry will be of special interest to young people, who are now in negative equity, forced into paying high mortgages boosting bank profits. Extra taxation to fund repayments on the billions borrowed and given to banks will have its greatest impact on this group.  Collateral damage, young people forced into unemployment and emigration, diminished future prospects for Ireland Inc, wasted opportunity due to incompetence and greed and failure of leadership should also inform the terms of reference of this inquiry.

It will be interesting to see to what extent the proposed “cover-up” inquiry attempts to distribute accountability away from the relatively tiny number of big players, politicians included, who led us into the mess.


End.

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