Anglo trial: White-collar cases are costly, time-consuming and essential

The prosecution of suspected white-collar crimes arising from the latter days of the much-despised Anglo Irish Bank is proving a very costly affair.

The latest trial, involving Anglo and Irish Life & Permanent (ILP), was the longest in Irish criminal history and was years in gestation. It was, in essence, a mini-tribunal before a jury. The question arises as to whether it is worth it.

The trial of Anglo's former chairman Seán FitzPatrick, director of finance Willie McAteer, and head of Irish lending Pat Whelan, in 2014, cost the State more than €1 million in legal fees alone.

FitzPatrick was found not guilty of illegally lending money to the family of businessman Seán Quinn, or of being part of an illegal loans-for-shares scheme with the so-called Maple 10 investors.

McAteer and Whelan were found guilty in relation to the loans-for-shares scheme and were sentenced to 240 hours of community service. Judge Martin Nolan was not inclined to jail the two because a state agency (the Financial Regulator) had, he said, led the men into error and illegality.

This was a reference to evidence heard that at the time of the illegal transactions, the regulator was anxious that steps be taken to ensure that Anglo, and the financial system generally, did not collapse.

The trial ran for nearly three months, involved millions of documents, and absorbed considerable resources from the Garda, prosecution and courts’ services, all for two sentences of community service. As well as the State’s legal costs, it could also be comfortably assumed that this cost the defendants hundreds of thousands of euro each, if not more, and consumed a large part of their middle-aged lives.

Last year a case was taken against three former Anglo officials, Bernard Daly, Tiarnan O'Mahoney and Aoife Maguire. The case concerned the alleged hiding of Anglo accounts linked to FitzPatrick from the Revenue, came before Judge Pat McCartan, and lasted for two months. All three were found guilty, and given sentences ranging between three years and 18 months. They were the first bankers to be sent to jail since the 2008 crisis.

However, the convictions of Daly and O’Mahoney were quashed in the Court of Appeal. O’Mahoney has been sent back for retrial, and that trial will commence later this year. Maguire appealed her sentence, though not her conviction, and was set free.

A new trial involving FitzPatrick and allegations that he misled Anglo’s auditors over a period of years is scheduled to take place this year. An earlier effort to hold the trial ran into difficulties.

McAteer and former Anglo director of lending Pat Whelan are to stand trial next year over an allegedly fraudulent loan of more than €8 million given to McAteer so he could to pay off a personal loan with Bank of Ireland in September 2008. Whelan is accused of being a party to the loan.

The former chief executive of Anglo, David Drumm, is to face two separate sets of charges in trials scheduled to take place in 2017 and 2018. The trials are, again, likely to be long, and very expensive, affairs. Drumm has yet to plead.

Volte face

The collapse of Anglo, and the enormous financial burden that collapse put on the Republic and its citizens, has created a volte face in terms of Ireland’s seeming disinclination towards prosecuting suspected white collar crimes. Is it a case of being careful for what you wish for?

In the marathon case just finished involving Denis Casey and Peter Fitzpatrick, both formerly of ILP, and McAteer and John Bowe, formerly of Anglo, each of the defendants had senior and junior counsel. The State-funded prosecution involved two senior counsel and two juniors. The trial no doubt cost millions of euro in legal fees, with much of it being picked up by the State.

The legal fees for the trial started to clock up, in a serious way, as far back as 2011. Charges were brought against the defendants in 2013, arising from a Garda investigation that began in early 2009. These are tribunal-era type timescales.

All the Anglo cases involve a massive investment in resources by the State prior to the trials. The Garda Bureau of Fraud Investigation (GBFI) had a team of 16 core detectives working on the Anglo/ILP investigation. They were assisted at various times by others, including a forensic accountant and technical analysts. The team had to examine documentation from multiple institutions, including the regulator and the banks’ auditors.

It was an unprecedented investigation from the Garda’s point of view and produced a lengthy trial which reached a conclusion without serious difficulties emerging. This in itself is a considerable achievement. The Office of the Director of Corporate Enforcement has also devoted considerable resources to investigating Anglo cases, though some difficulties have emerged with how it progressed its investigation.

The GBFI’s work included the laborious process of listening to hours upon hours of recorded telephone conversations, in search of snippets relevant to their enquiries.

Important resource

All telephone calls in bank treasury departments are recorded, and the calls proved an important resource for the GBFI. One of the reasons Bowe ended up before the courts was that he worked in a role where all of his calls in Anglo were recorded. He started out as a co-operating witness to the Garda inquiry, but ended up as a suspect (as did Casey and Peter Fitzpatrick). The laborious trawl through the phone records was an important contributor to Bowe being charged, it is understood.

But as well as locating the minutes among the hours of recorded phone calls that constituted evidence against accused persons, the GBFI also had to identify those documents and recordings that might be of advantage to the accused when it came to their defending themselves. This was a massive operation that had to be done successfully, as a slip could endanger a trial. It is because so much material has to be read and considered, and people interviewed, that the preparations for such trials necessarily take years.

For the State criminal prosecution service also, the Anglo trials constitute a massive challenge in terms of bringing allegations of complicated white-collar crimes to trial.

The fact that charges have been brought to court, juries empanelled, and the cases against accused persons successfully outlined to those juries, is an achievement for the system. It has shown that it is capable of rising to the challenge. The jury system too has proven itself capable of dealing with complex white collar cases.

But the question arises as to whether it is worth all the effort and the expense. Is the imposition on the lives of those being brought before the courts itself an issue? Where is the justice in being forced to answer charges that consume your life for months, if not years, and cost you six or seven-figure sums in legal fees to defend yourself against when, upon conviction, the sentence is community service? Is there something hugely out of balance in such a scenario?

Bear in mind that none of the charges coming before the courts involving senior executives from Anglo Irish relate to the role of the banks in the near collapse of the Irish economy – they are about specific transactions and issues. The lending practices that were an inherent part of banking during the bubble years, and even before that, were not a crime. They are still not a crime.

Nor was, or is, it a crime to fail in your duty as a financial regulator or Central banker to prevent reckless lending and reckless loan book growth.

Senior legal sources say that the Anglo/ILP trial could have been reduced in duration by as much as 40 per cent, if it had been possible to “prove” documents prior to the trial going ahead. Such a change in the law should now be made. (Lawyers would still have to do the work pre-trial, so the financial savings are not so dramatic.)

But despite the huge costs and challenges involved, it is surely the case that society has no choice but to prosecute complicated white collar cases. Not to do so would strengthen the view that there is one law for the poor, and another, or none at all, for the rich and powerful. Such cynicism is damaging not just to respect for the law but to social cohesion, a key political challenge in contemporary Ireland and across Europe.

Resource-sapping

White collar prosecutions, such as the Anglo cases, are an expensive, resource-sapping, unwanted, but necessary exercise for the State. The system has shown it can hold suspected white collar criminals to account. People in positions of authority in the financial services sector and elsewhere have hopefully taken note of what can happen if things go awry and you end up in the maws of the justice system. Certainly if the charges had not been brought, a different type of lesson might have been drawn.

What we have now is, in essence, a new sub-sector in the criminal justice system that is equivalent to a succession of mini Dublin Castle-type tribunals. (The barristers who are involved in the process are the envy of their uninvolved peers.)

What will be interesting to watch in the years ahead is whether, once the Anglo cases have worked their way through the system, the practice of prosecuting such cases persists, or is allowed to quietly wither.