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  • irishtimes.com - Posted: December 22, 2008 @ 12:20 am

    Is Ireland ready for capitalism?

    Deaglán de Bréadún

    Just when it seemed things could hardly get any worse, it is revealed that the head of Anglo Irish Bank has been playing hide and seek with major loans he had taken out from his own institution.

    Sean Fitzpatrick resigned last Thursday night after it had become known that, for eight years, he had been shifting loans from Anglo Irish to Irish Nationwide (a rival organisation) in advance of the compilation of end-of-year figures for the auditors. Then he moved the money back in again. By the end of last September, the amount had reached €87m. Chief executive David Drumm resigned Friday morning.

    Questions are being asked about the role of Financial Regulator Patrick Neary. It’s the old refrain from journalists covering American politics, ”What did he know and when did he know it?” And why did he not act on the information sooner?

    It seems that Minister for Finance Brian Lenihan was leafing through the annual report of Anglo-Irish Bank and noticed that there was a far bigger concentration of loans to board members than was the case with other banks. Well-copped Minister, you would have made a good journalist. Now the State is effectively taking control of Anglo-Irish, at a cost of €1.5 billion.

    What will really gall ordinary people reading and listening to all this is that Mr Fitzpatrick urged, ten days prior to the recent Budget, that means testing should be introduced for medical cards to the over-70s, not to mention child benefit and the State pension.

    The respected Lex column in the Financial Times delivered a wounding verdict on the secret loans last Saturday. It was “cosy Irish capitalism at its worst”.

    When our banking sector and our whole economy are at their most vulnerable, we need this kind of publicity like a hole in the head. There is a sense of a stone being lifted and one wonders what else is lurking underneath. The FT comment strikes home: too much in this country is done on a “cosy” basis.

    It’s not just the financial sector, it’s every walk of life, politics, you name it. The culture of the nod and the wink predominates. I remember a time at university there used to be arguments as to whether Ireland was ready for socialism. Forget it, folks, we’re not even ready for capitalism.

    • Lefournier says:

      I thought the whole point about Sean FitzPatrick’s shenanigans was to keep the loans out of the annual report? Perhaps the Minister was wading through the recent PWC report? All the more reason it should be published, or at least shared with members of the Oireachtas Comm. on Finance. Clearly, our central bankers are not inclined to blow the whistle on their friends, whom they are supposed to supervise.

    • Deaglán says:

      The point was to keep it away from the gaze of the auditors by moving them to Irish Nationwide on a temporary basis. Afterwards the loans could be brought back to Anglo Irish. It appears that Minister Lenihan spotted an item in the annual report which showed an unusually high concentration of loans to board members.

    • Betterworld Now says:

      This is not about capitalism or socialism or any other ‘ism’.

      The question I want answered is, do the Irish taxpayers believe that their Minister of Finance is right to put €126,000 of their future personal earnings at risk so that the €87m loan advanced to Sean Fitzpatrick is underwritten by the state?

      How many more Sean Fitzpatricks are there out there?

      I have no doubt that Mr Fitzpatrick’s personal fortune would pay the wages of his 1,400 junior employees for several years. And that would be a better use for it.

    • Deaglán says:

      This press release issued by Senator David Norris is worth reproducing:

      As a member of the tax paying public as well as a member of the
      Oireachtas and as some one who has accounts with both of the major
      banking groups I believe there are some questions that urgently need to
      be answered in the wake of the revelations that the Chairman of Anglo
      Irish Bank Mr. Sean Fitzpatrick secured secret loans for over 80 million
      Euros from his own bank. I now call upon the Government to provide the
      public with answers to these questions.

      1. What was the purpose of the loan? Banks do not normally give even
      moderate loans to anybody without (a) knowing exactly what it is for, (b)
      getting securities/collateral on it and (c) knowing when and how they
      are getting their money back.
      2. Is the repayment of the loans still assured or has the bank written
      the loan off? May it not be the case that the Irish tax payer in the
      middle of a financial crisis partly brought about by these kind of
      antics will find itself giving Mr. Fitzpatrick an unwitting golden
      handshake of 87 million Euros. What measures does the Government propose
      to prevent this?
      3. Can we now immediately have full disclosure of any similar
      circumstances existing in other banks.

      If the Government is unable to provide answers to these questions
      immediately the Public Accounts Committee should sit over the
      Christmas vacation to investigate this matter thoroughly.

      Press Release issued today by Senator David Norris

    • Deaglán says:

      On the question of legality, this point was made by Professor NIamh Brennan in The Irish Times: “Another aspect I don’t understand is why the financial regulator is reported as stating that it does not appear that anything illegal took place. Surely, at the very least, there is evidence of breach of the common law fiduciary duty for directors – that they do not put their own personal interests ahead of the company? Also, is not telling the truth in the financial statements an offence?”

    • Richie says:

      A few more interesting questions…

      So, what about the interest? On €87m over 8 yrs must be €20 to €30m … Has it been trimmed-off already? If so will he/they be allowed to keep it? Will it be possible to check on all their other private accounts?

      If “loans” to the bosses are legal, why hide it? Maybe it’s only a loan when it’s discovered, if it’s not discovered because it’s hidden, would it then become stolen?

      If a cashier did a similar thing would it still be a loan?

    • Joanna Tuffy T.D. says:


      You are right that the ‘cosy’ culture dominates much of Irish life but it is not the predominant culture. So much of the lives that most of us lead are not part of that cosy culture. Certain sections of the media too have played a role in promoting the elite and the establishment that operate in the ‘cosy financial world’.

      A problem is that many of those who fawned over the type of people that are now being shown to have worn emperor’s clothes, will now instead view everything with total cynicism and tarnish everyone with the one brush.

      In relation to politics we need to get back to the practice of politics as being about ideas.


    • Deaglán says:

      Ah yes, but what ideas? The Neo-Cons were nothing if not a movement of ideas, in fact many of them were old lefties. Indeed their obsession with imposing their ideology on the Middle East led, in large measure, to the invasion of Iraq.

    • John O'Grady says:

      “In relation to politics we need to get back to the practice of politics as being about ideas.”

      It is my considered opinion that the vast majority of those in Politics could not, with both hands behind their back, find their backside.
      Do you really expect any of “them” to have any ideas?

    • John says:

      “The price of democracy is eternal vigilance”. Right minded men and women need to stand up and take back our institutions from the gombeen men. Ireland has sold itself out for 30 pieces of silver and the great miracle of 2001 ( Ireland’s population increased for the first time in 150 years) could be a fleeting moment in history. Perhaps the US got it right with Obama, hope is a great word, forget about his Irish roots, is that kind of grassroots campaign or that kind of leadership possible in present day Ireland?

    • Deaglán says:

      I am sure we will hear a good deal of Obama-type rhetoric from the established politicians but there is no sign of a coherent grassroots movement as yet, unless the Teachers and the Over-70s get together with other discontented groups, e.g., bank shareholders, farmers, unemployed.
      There’s a lot of discontent around, right enough.

    • “…It’s not just the financial sector, it’s every walk of life, politics, you name it. The culture of the nod and the wink predominates.”

      I have to agree 100%. Even the tribunals were a joke, more nodding and winking than a spasm convention.

    • Ray D says:

      As for tarnishing everyone with the same brush, Ms. Tuffy is really innocent. I have to say that after 43 years working in the civil service I have experienced widespread corruption throughout our society. Corruption is endemic in our country and, in general, if people get the opportunity to make they will.

      It is undoubtedly a fact that only a few in the elites – politics and public service, the church and the private sector – have been exposed. Most of the corruption has gone undetected. Some of the corruption is small scale but that needs to be weeded out just as much as large scale corruption. Remove the Official Secrets Act and one has a fairly good chance of reforming the public sector.

    • Joanna Tuffy T.D. says:

      There is of course ideas and ideology behind what politicians do. But what is often put out as political debate and political ideas is just spin. Another cosy relationship that needs to be dropped in this country is that between spin doctors and journalists. And I am not saying that reporting of spin is the whole picture but it is a significant factor.

    • Deaglán says:

      By spin-doctors, do you mean press officers who are good at their job?

    • Joanna Tuffy T.D. says:

      Not necessarily. The guys that give “inside information” and such stuff. Often there is a code in the article that gives the game away- such as descriptions of the source of the information as “party sources”, “party insiders”. Information that gets written up in a paper and the source is attributed to a source on behalf of Minister/Party before it has been published officially. Articles that say that something is exactly what the propaganda says it is even though it is not. That is what I usually perceive as being spin.

    • Deaglán says:

      It’s “spin” when it gives a false and/or misleading message but the use of anonymous sources is a necessary weapon in the reporter’s armoury, otherwise we would be largely confined to official press releases which can be another form of propaganda. A good reporter won’t be fooled by spin. Is there something in particular that bothered you?

    • Lefournier says:

      I must admit I remain fascinated by Brian Lenihan’s discovery of the Anglo-Irish loan problem.

      The overall level of loans to Directors set out in their Annual Report 2007 (€41m, compared to the actual total of €150m, according to note 54 of the report) and in previous years was not out of line with other banks. So there must have been something else that triggered the unearthing of Sean FitzPatrick’s cosy arrangement with Irish Nationwide.

      The real issue here, whatever document aroused the Minister’s suspicion, is the simply mind-boggling thought that none of his officials saw anything wrong. Now which is worse: the notion of such gross incompetence stretching right to the top of the Department of Finance or the idea that his own staff were hiding the truth from him?

      It is clear, of course, that the Financial Regulator knowingly withheld this information but what about the Central Bank?

    • Joanna Tuffy T.D. says:

      No it is the trend that bothers me, particular articles might annoy me more than anything else where a journalist just writes up the spin that is given him. It bothers me both as a politician and a newspaper reader. I realise that sometimes anonymous sources are sometimes appropriate. For example when information that is in the public is being covered up and revealed through these anonymous sources. But that is not spin and the sources are not spin doctors. I am talking about anonymous sources being quoted giving in effect self serving spin (for their political employers) and the journalist writing it up as if it is straightforward information or news. When it comes to politics I believe that if people have something to say they should identify themselves. I agree with you press releases should not just be regurgitated and there is the article, but at least press releases are attributed, and sometimes can make a point worth making. And what people have to say is news too. As I said cosy relationships between journalists and spin doctors are not the whole picture but they don’t add much to a newspaper nor political debate. I am and have been an avid reader of newspapers and just like everyone else I look to newspapers to find out what the news mainly. What happened, where, who said what. I also like to read and I hope learn from reading critical analysis from different opinions in newspapers. And there is a lot worth reading but there is a fair amount of spin being presented as news too.

    • Joanna Tuffy T.D. says:

      Actually Deaglán I just noticed you used the word “reporter”. It’s the tradition of the “reporter” that is the opposite of what I complain of. I went for an interview with the Irish Press years ago. I didn’t succeed and look what I ended up doing but I remember someone talking to me beforehand about the importance of the role of the reporter. When something happens the reporter is there, the reader is not. They report what happened etc. so that you the reader learn from the report as a reader. And of course I know what tradition you have come from.

    • Deaglán says:

      What you are really saying is, let’s get rid of anonymous sources. Political journalism would be very dull and uninformative if that were the case. There is always a risk that the journalist might be making up the quotes but I believe that very rarely happens and the benefits outweigh that minuscule risk. I mean, in a country as small as this, where everyone knows everyone else, how would journalists get much of their information without anonymous sources? Obviously we would prefer if we could print the names but who would tell us anything worth knowing in that case? If we could only publish what’s in the press release, the party leadership or Government heads would have total control of the message. I suggest the other thing you are implying is that the media are anti-Labour.

    • Joanna Tuffy says:

      No I am not suggesting get rid of anonymous sources. I didn’t say above that spin is only written up quoting anonymous sources. Sometimes spin involves direct quotes from a politician, the politician having “briefed” the media. I was giving as one example of spin when “inside information” is given by political anonymous “sources”. And I am not suggesting the media is anti-Labour either. Spin is not confined to any political party or parties. The issue I have is when spin is written up by a journalist as news or straightforward information. I take a story far less seriously when I see this type of journalism at work.

      On related but separate note I am very interested in how Minister Eamon Ryan is referred to today as forecasting that the managers of the banks are going to be replaced in the New Year. The heading states something as fact or at least that is what I thought when I read it originally. But reading through the article I was not clear whether it was just an aspiration of the Minister or is he telling us about something the Government is really going to implement.

      Hope you have a Happy Christmas and New Year.


    • Ray D says:

      It is amazing how our sole public policy makers are dumping on officials for mistakes. Nowadays they almost never take their due responsibility for mistakes and act accordingly. Eamon Ryan is having a go at the financial regulator, who implements public policy as established by the politicians.. Michael Finneran is placing the invention of the daft Home Choice scheme at the hands of DOE officials. It is the case that Finance officials advised the Government against its reckless policies over the past five to six years (as did the ESRI). It is also the case that they advised against the medical card debacle. Officials advised against the electronic voting roll-out. And so on.

      It is not my point that officials should get any credit for advice but Government Ministers should take full rersponsibility for the decisions that they alone make in their Departments.

    • Deaglán says:

      Happy Christmas and New Year to you.

      Re: The Greens. They’re in government, where your party could have been under different circumstances (not necessarily with FF).
      After the festivities, here – in a friendly spirit – are two questions: 1) Why was Labour unable to be part of the financial recovery in the late 1980s, yet Charlie Haughey and Ray MacSharry were able to secure union cooperation for the economic measures they took at the time?; 2) Can you remember why Labour left the Reynolds-led coalition, which had a huge majority and was supposed to last ten years? I was around at the time but cannot remember exactly.

    • Joanna Tuffy T.D. says:


      Firstly my point was not about the Greens but rather that the lead article of The Irish Times on Christmas Eve was not a story about something that had happened, nor a Government announcement. That was despite the Heading which gave the appearance (to me) of a story about a Government announcement. Rather it was a story based on a mere aspiration of a Minister that may or may not be achieved. I didn’t think this was newsworthy. Maybe it was – I noticed RTE News ran it as a lead story that day too.

      About your questions – I feel that maybe I am being given a test (that I won’t do well in) or else more likely you want to make a point about the necessity of anonymous sources. But I was never arguing against the use of anonymous sources. We have both been talking about different things above. You are arguing for the need for political journalists to use anonymous sources, in particular sources that give an alternative line to the official spin. That is a different thing entirely to what I am complaining about. I am arguing against the writing up of political spin as if it were news or information. Sometimes the source of the spin in such articles is anonymous and sometimes it is not.

      I can think of a few recent articles I read in various newspapers where I perceived the article as being spin simply written up with no sense from the writing that the journalist thought he was writing up spin. Two of the articles concerned were about my own party. The others were about the Government. Spin is not necessarily as you state, false or misleading. Rather it involves statements that are biased in favour of the party/minister concerned. I don’t think this type of journalism (nor political spinning) does anything for political debate or journalism. I don’t think the public are much interested either. I could be wrong.

      Just to clarify that when I spoke about the cosy relationship between spin doctors and journalists, I mean spin-doctors and the politicians they work for. I also mean spin from all political parties. I said above that the cosy relationship between spin doctors is not the whole picture. I don’t even think it is most of the picture, but it is a significant factor.

      You said above that the nod and wink culture predominates every walk of life. I don’t think it predominates but I know it is strong. Do you think political journalism is free from it?

    • Deaglán says:

      Happy New Year and thanks for coming back with your comment.

      I said, “every walk of life” and I guess that has to include the media! Sauce for the goose etc. That’s the problem with sweeping statements.

      So the Government parties put their best foot forward . . . doesn’t everyone, including your own party, do the same?

      It sounds like you would just like Labour to get a better press, but isn’t your leader doing very well in the media these days? And your deputy leader also? Compare the coverage with the current media profile of Brian Cowen and Enda Kenny.

      As for not doing well in my test – you didn’t answer the questions at all, so how can I say what marks you get?

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