Led into error and illegality

Thu, May 1, 2014, 06:00

Guilty as charged, but in mitigation of their crime Judge Martin Nolan found the two former Anglo Irish Bank directors, Pat Whelan and Willie McAteer, were also more sinned against than sinning. That was a key consideration in Judge Nolan’s decision not to send the two bankers to jail, having found that “a State agency led them into error and illegality”. To imprison them would be unfair as, he concluded, the financial regulator had given the “green light” to the illegal purchase of Anglo Irish shares, for which both men had been convicted.

It has taken a long time – six years – for the case to come to court and to be decided; with the 48-day trial involving some 50 witnesses. Now that justice has been done – at least in this case – the Oireachtas can establish the long-awaited banking inquiry, due to be set up next week. As yet the great banking failure, precipitated by Anglo Irish Bank, remains a partly assembled jigsaw, one that awaits completion.

The Anglo trial has supplied some of the missing pieces. Hopefully, the parliamentary inquiry should help to complete the puzzle, and provide a fuller picture of past events. Only then will the public be satisfied that they have secured adequate accountability for a financial debacle that has cost so much – € 64 billion spent in rescuing the banks that has proved so damaging, and that culminated in an international bailout of the Irish economy in 2010.

One difficulty evident in the Anglo trial, which may also become a feature of the parliamentary inquiry, has been the failure of key witnesses either to keep contemporaneous notes of unfolding events, or to recollect them later in evidence. In that respect the failure of the former financial regulator, Patrick Neary, to do either, was a striking feature of the trial. Will the parliamentary inquiry see a replication of that kind of performance by key figures – politicians and public servants – in their evidence? That must be a serious concern.

How confident can the public be, given what the Anglo trial has revealed, that what brought the banking system close to complete collapse, could not be repeated? The Central Bank has sought to offer reassurance, citing Ireland’s strengthened capacity in financial regulation and supervision in recent years. Yet no one in the Central Bank, it would seem, has paid the price for the supervisory failures that contributed to the banking debacle.

A year ago, the former financial regulator, Matthew Elderfield, called for a public debate about strengthening the laws dealing with white-collar crime. Existing legislation, he said, was inadequate. And he also questioned whether the Garda and the Office of the Director of Corporate Enforcement, were properly resourced to do so. The six-year delay in bringing the Anglo Irish case to trial only serves to confirm the merits of that view.