Cantillon: Behind Chinese walls consultants prosper

There’s an unerring predictability about Irish public life. No matter how grim the circumstances, no matter how injurious to reputations, consultants and auditors emerge unscathed.

Take the Central Bank and the recent story about a whistle-blowing employee, who claimed he was directed to remove critical findings from an internal audit.

The individual in question claims his contract was terminated after he raised the matter with superiors.

The audit related to the bank’s compliance with the code of governance set out for State bodies, or more precisely whether or not it had breached financial emergency legislation on public-sector pay by paying certain staff bonuses.

In its defence, the Central Bank said it hired Deloitte to adjudicate. The accounting and consultancy giant later found in favour of the bank’s management. What could possibly be unseemly about this process, you might ask.

Nothing, except for the fact the Central Bank has been investigating the collapse of Bloxham Stockbrokers, which had been audited by Deloitte up until it careered off the rails in May 2012. The brokerage, then the oldest in the land, was found to have an unexplained hole to the tune of €5.3 million. The episode remains, like most Irish financial scandals, unexplained. Perhaps it will follow the others into the sinkhole of “systems failure”.

However, we know the hole in Bloxham's accounts stretched back several years and went unseen by Deloitte. The Central Bank has already fined and banned Bloxham's in-house auditor Tadhg Gunnell on foot of its investigation.

The Chartered Accountants Regulatory Board (Carb) is also planning to investigate Deloitte over its role in the Bloxham shemozzle. It’s a rare thing to have one of the big four accountancy practices investigated by its own professional body. All of this might have steered the Central Bank away from hiring Deloitte to adjudicate on the matter of its whistleblower.

Not so in Ireland where consultants and auditors seem to ride several horses on the financial carousel, safe in the knowledge that a robust system of Chinese walls protects them from any conflict of interest.