Oireachtas inquiry into banks would not answer questions that need to be answered

Let us not have another charade that only demonstrates our institutional weakness


The problem is that the banking system was allowed to treat the State and its citizens as a joke. And the solution to that problem is another joke: a parliamentary inquiry into the collapse of the banks that will be unable to make any disputed findings of fact in relation to the conduct of bankers.

Except for public officials, it will not be able to say anything that damages anyone’s “good name” – David Drumm’s, for example. Furthermore, no TD or senator who has had anything critical to say on the issue of the banking collapse can be a member of the inquiry because “a perception of bias might arise”. Only those politicians who have been essentially indifferent to the biggest scandal in the history of the State can inquire into it.

What is it that we need to know? We know already that the banks were turned into casinos, that the property bubble was deliberately inflated by Fianna Fáil and the Progressive Democrats, that regulation was farcical and that government and senior officials were hopelessly out of their depth when the crisis hit. What we don’t have an adequate fix on are three crucial factors. Why was there complete impunity for corruption in the banking and political systems? How exactly did the nexus of connections between bankers, property developers, politicians and officials work? And what, exactly, were the roles in the whole debacle of the International Monetary Fund and the European Central Bank?

Here, for example, are some questions any useful inquiry would have to address:

The key questions
“Why were there no prosecutions or disbarment of directors after the Dirt inquiry found in 2001 that the banks had engaged in a massive fraud on the State?

“How were the banks able to see off proposals for directors’ compliance statements and codes of corporate governance after that scandal?

“What was the effect on the regulatory culture of the discovery by Central Bank officials that both a serving taoiseach and a member of their own board were involved in the Ansbacher scam, operated by one of the banks they were regulating? Why did the Central Bank doctor its own internal files on the Ansbacher scam to remove references to criminal tax evasion?

“How much money did political parties, especially Fianna Fáil, Fine Gael and the PDs, get from property developers and banks during the boom years?

“How many regulators went to work for the banks they had been supervising and why?

“Why were proposals by the Revenue to tax contracts for difference (proposals that would have prevented Sean Quinn’s disastrous building of a secret stake in Anglo Irish Bank) stymied by Brian Cowen as minister for finance?

“How, where and when did the property industry and the banks lobby against regulation and in favour of tax breaks, worth €8.4 billion by 2004 alone, that fuelled the construction craze?

“Why was no one prosecuted in Ireland in relation to three huge scams carried out at the IFSC: Europe’s biggest ever fraud (Parmalat), the largest bankruptcy in Australian history (HIH Insurance) and a $500 million dollar scam in the US (Cologne Re/AIG)?

“Did auditors knowingly sign off on misleading accounts for banks?

“Has there been a criminal investigation into auditing practices?

“Why, in spite of repeated findings by official inquiries and committees, and an explicit commitment by Bertie Ahern, did no government implement the recommendation of the Kenny report that the price of building land be controlled – an act that would in itself have prevented the worst excesses of the property craze?

“What did the European Central Bank, guardian of the stability of the euro, do when it was told that bank lending in Ireland for construction and property development had increased by 1,730 per cent between 1999 and 2007, an average increase of 18 per cent a month? Did it notice that, between the end of 2003 and the beginning of 2008, net indebtedness of Irish banks to the rest of the world had increased from 10 per cent of GDP to 60 per cent of GDP?

“Why, in 2006, did the IMF give a glowing report on both the regulatory regime in Ireland and the health of the Irish banks, a report that was used to dismiss warnings of impending doom?

“What, in detail, was the role of the ECB in insisting that Anglo and Irish Nationwide be given unconditional guarantees for all liabilities?

“Was the bank guarantee decided, as the Constitution requires, by a proper meeting of the Cabinet?

Let’s get serious
Real answers to these questions would matter because they would force Ireland to confront the failure of its political, legal and business systems and force the IMF and ECB to look at their own responsibilities. But a limited and politicised inquiry has no chance of getting these answers. If we’re serious, we need a constitutional referendum to establish an international inquiry with sweeping powers to delve into everything, including the political parties, the lobbying apparatus and the legal system. If we’re not serious, let’s spare ourselves the embarrassment of another demonstration of the weakness of our public institutions.

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