Ireland is no country for tackling white collar crime

Fines in bid-rigging case ‘a ridiculous amount’

Brendan Smith: pleaded guilty to bid-rigging. Photograph: Collins Courts.

Brendan Smith: pleaded guilty to bid-rigging. Photograph: Collins Courts.

 

If you’re a white collar criminal, come into the parlour. There’s a welcome there for you. Recent events have reminded everybody – as if we needed reminding – that prosecuting white collar crime in Ireland is a rare and difficult thing.

But even when cases are successfully prosecuted, judges can render the whole effort utterly pointless with sentences as punishing as a set of satin sheets.

Take this week’s case for bid-rigging in the multinational flooring industry, which came up for sentencing in the Central Criminal Court on Wednesday.

The case involved two of the largest providers in the market, Aston Carpets and Flooring (ACF) and Carpet Centre Contracts (CCC), who conspired to rip off a list of multinationals including Google, Mastercard and Dell on the prices paid to fit carpets and tiles in their commercial headquarters.

Over several years, Brendan Smith, the managing director of ACF, and David Radburn of CCC would routinely email each other their quotes for upcoming major contracts. They met several times a year in a cafe near the Westbury hotel to carve up contracts between them, lowering and raising their respective proposed quotes according to who wanted which contract.

The practice of bid-rigging is endemic at sub-contracting levels of the construction industry. One person grew so tired of observing it in the multinational flooring sector that, at great personal risk, they approached competition regulators in 2012.

The Competition and Consumer Protection Commission (CCPC) have been working on this case for five years. In 2013, they launched a series of raids, gathering reams of documents and damning email evidence.

Eventually, Radburn caved in and gave evidence to the CCPC in return for immunity from prosecution. Smith and ACF were charged and, with overwhelming evidence against them of at least 16 instances of bid-rigging, pleaded guilty.

In his sentencing on Wednesday, Mr Justice Patrick McCarthy gave Radburn a status akin to a “whistleblower”.

But in fact, Radburn only confessed his bid-rigging to the CCPC, seven months after his home and business was raided. This saved him from the heat that was already coming around the corner.

The real whistleblower in this case was the uninvolved person who approached the CCPC in 2012, sparking the entire investigation. Life soon became uncomfortable for that person, while those involved in the bid-rigging carried on in the industry.

After five years of worry about how the case would pan out, how must that real whistleblower feel now, following the paltry sentences doled out by Mr Justice McCarthy? “Why did I bother?” would be an understandable reaction.

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The judge gave Smith three months in prison, but suspended the sentence. He also fined him €7,500, while he fined ACF €10,000 (having initially appeared to fine it €15,000 before changing his mind when an error in his rationale for calculating the figure was pointed out to him).

This is the first time in the history of the State that bid-rigging – a crime that is estimated to cost taxpayers €100 million annually from the rigging of public procurement contracts alone – has successfully been prosecuted. But the judge marked its seriousness with a sentence you might get for running over a tabby cat.

Mr Justice McCarthy conceded the fines arising from this five-year, high-profile investigation were “modest”, but said he was guided by the 2009 case of Patrick Duffy, a Citroën dealer who was sentenced for his part in a cartel.

The sentences in that case were also suspended, while the fines to Duffy and his company totalled €100,000. The carpets case was “much less serious”, according to the judge. And that was that.

To put the punishments in perspective, Smith owns four properties in Meath, Dublin and Kildare. He sold a business in 2007 for at least €2.5 million. He has investments in property funds valued at close to €650,000.

Smith also has a previously undisclosed (to the court) share of a new business worth up to €400,000, which his lawyers said he hadn’t told them about.

On top of his assets, the judge noted that Smith has a monthly income of more than €9,000. Then he promptly fined him about three week’s wages for bid-rigging that took five years to investigate and bring to court.

It is a ridiculous amount. The GAA fined Kerry €7,500 last year for having a feisty encounter with Donegal.

ACF, meanwhile, has effectively been wound down, although its activities are now carried out by its sister company, Crean Mosaics.

ACF and Crean Mosaics are part of the same group, which is controlled by prominent Mayo businessman Alan Crean. He was not charged with bid-rigging, but he was a director and chairman of ACF while it was bid-rigging, and he accepted the book of evidence on its behalf.

In the period since charges were filed against ACF, Crean’s group went on to do millions of euro worth of work for the State in offices, schools and hospitals. For example, Crean Mosaics recently did carpet and tiles for the new Central Bank, the overseer of financial probity in this State, and the new Kevin Street divisional Garda headquarters.

Crean’s group is estimated to have annual turnover of €22 million. So finding €10,000 to pay the fine levied on the unlimited ACF should be no problem.

FOOTNOTES

A consortium including publican and accountant David L’Estrange has finally opened their new hostelry on the site of the old MacTurcaill’s pub in Dublin’s Tara Street. Ruin Bar opened during the week.

MacTurcaill’s was the purveyor of alcohol located closest to The Irish Times office, although the place was more of a hit with hangover-immune students than thirsty middle-aged hacks.

Until this week, the premises had been closed for more than two years (although there was an “opening soon” sign in the window for at least 18 months).

Ulster Bank loans attached to the pub were bought by US firm Sankaty as part of Project Coney.

The premises was eventually acquired by the consortium behind the south city craft beers and cocktails joint, Camden Exchange (the restaurant in RTÉ’s drama series Raw). L’Estrange is a leading member of that consortium, which also includes Stephen Johnson, owner of the nearby Bleeding Horse.

This craft beer tsunami is getting so prevalent now, the stuff will soon be flowing under the door. Like the Taliban, we will all be forced to grow long beards. There are bicycle wheels hanging from the ceiling of Ruin Bar, for God’s sake, and an ape on the wall who is painted like a zebra.

The Dublin pub world has changed, and changed utterly.

State Street Global Advisers (SSGA), the asset management arm of the giant US financial group, has appointed a new head of its Irish business (which morphed out of Bank of Ireland Asset Management).

The new boss is Ann Prendergast, until now SSGA’s head of relationship management. She is also on the board of the National Gallery of Ireland. Prendergast replaces BIAM veteran, Peter Wood, who has retired.

State Street now has two female bosses of its Irish units – Susan Dargan heads up State Street Global Services, its fund administration arm on Dublin’s quays.

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