Elaine Byrne: Banking Inquiry fiasco further erodes public belief in accountability

The architecture of Irish governance compares favourably with other jurisdictions. Successive Irish governments have introduced far-reaching reforms on whistleblowing, political funding, lobbying and ethics that do not exist in many EU member states.

Indeed, the Minister for Justice will shortly bring the Criminal Justice (Corruption) Bill to Cabinet for approval. This innovative legislation is praised by Transparency International Ireland for enabling a public office holder to be removed from office if convicted of corruption. The Government receives few plaudits for these pioneering reforms, which are lost on an angry public exasperated by a perceived lack of accountability for wrongdoing. The fiasco that is the attempts by the Oireachtas Banking Inquiry to formulate its report only adds to the public cynicism. Three reforms could help arrest and reverse this lack of trust.

1 The public interest is not always best served by establishing

commissions of investigation or tribunals

At the heart of this accountability deficit is Ireland's approach to investigating alleged wrongdoing. The Commission of Investigation into the Irish Bank Resolution Corporation (IBRC) has ground to a halt following Judge Brian Cregan's determination that it does not have the statutory power to access confidential, commercially sensitive and/or privileged documents.

However, a broader difficulty with commissions and tribunals is not just around powers but structures. Public inquiries into matters of public interest are by their nature politicised because they are established by the government of the day. Governments are always in a no-win situation.

The terms of reference are typically disputed. Prosecutions are rare. Nor are they efficient or practical, as the technical expertise gathered in the course of an inquiry is dissolved at its conclusion.

Complex financial inquiries are better served by a standing investigatory unit staffed with forensic accountants, digital technology experts and lawyers with commercial expertise in market transactions. Temporary, judicial-led investigations are no substitute for a properly-resourced oversight agency.

A demand for a public inquiry is often the instinctive response when claims of wrongdoing are made. This approach contrasts sharply with the British and American reaction. Specialised law-enforcement bodies rather than public inquiries were the instinctive response. Public inquiries should be only a tool of last resort.

2 A review of Ireland’s oversight agencies

The UK response to the economic crisis was an independent audit of the capacity and operational ability of its oversight agencies to prosecute financial crime. The Serious Fraud Office was given more money, specialist staff and powers, and is now investigating alleged wrongdoing by big corporate beasts Tesco, Barclays, Rolls Royce, ENRC and GlaxoSmithKline.

The Irish response to economic collapse was rooted in our straitened financial realities. A 2014 review of resources at the Office of the Director of Corporate Enforcement (ODCE), then conducting the Anglo investigation, observed that the agency had “an insufficiency of in-house accountancy expertise”.

Ireland's perceived accountability deficit should be tackled with a review of agencies such as the ODCE, Criminal Assets Bureau, Revenue Commissioners and the Competition and Consumer Protection Division.

3 Financial compensation for whistleblowers

The Dodd-Frank Act 2010 established the US office of the whistleblower. The Securities and Exchange Commission is authorised by congress to provide awards ranging between 10 and 30 per cent of the money collected in cases where high-quality, original whistleblower information leads to a commission enforcement action of more than $1 million in sanctions. The scheme has proved particularly successful in the pharmaceutical and financial sectors.

In Australia, meanwhile, Greg Medcraft, chairman of the Australian Securities and Investments Commission, this week proposed compensation to whistleblowers who risk their careers to expose company misconduct.

Paying whistleblowers is a difficult concept. Yet, how much would the State have saved if an Anglo Irish Bank employee had blown the whistle on lending practices and auditing standards in the mid-2000s?

What if the Anglo Tapes had come to light before the bank guarantee?

Ireland could be a leader on governance if it addressed why it has an accountability deficit.

Dr Elaine Byrne is an Irish expert on governance to the European Commission. The European Commission will publish its second report on Irish governance in 2016