Courage and skill needed for any bank inquiry
OPINION:COLM McCARTHY has called for a Dirt-style inquiry into how our banking system got into crisis. McCarthy is clearly correct when he says that the public deserves an explanation. However, is a Dirt-type inquiry really a suitable vehicle for inquiring into this issue?, asks PJ O’MEARA
In October 1998, media reports claimed that the Revenue Commissioners had made a deal with Allied Irish Banks over a massive deposit interest retention tax (ie Dirt) liability owed by them.
Within days, the Dáil’s Public Accounts Committee (PAC) raised these revelations with the Revenue Commissioners. The PAC chairman, the late Jim Mitchell, took the initiative of seeking the support of Dáil Éireann to investigate this matter further.
I was Jim Mitchell’s personal adviser for the duration of the Dirt inquiry. During the public hearings Jim underwent major back surgery and had to work from an orthopaedic chair for the remainder of the public hearings.
His commitment and determination was inspirational, and despite his convalescence, myself and other members of the inquiry team were regularly summoned to Jim’s Terenure home for planning and preparatory work.
It took just 14 months for a PAC sub-committee to secure the necessary powers and resources to conduct this parliamentary inquiry, hold public hearings and publish its first report on this issue in December 1999.
The effectiveness and low cost of the Dirt inquiry holds obvious attractions as a model for such an investigation in the current economic climate.
Over the following 12 months, the Revenue Commissioners’ “lookback audit” took £173 million (€220 million) from the financial institutions in tax, interest and penalties. Individual bogus non-resident account holders were subsequently targeted in a massive sweep that brought hundreds of millions of pounds to the exchequer.
Furthermore, the inquiry cost just £1.8 million (€2.3 million) and the televising of its public hearings enthralled a large section of the public. People could see their representatives demanding answers from representatives of the State bodies and financial institutions involved in this scandal.
The inquiry’s work helped to restore trust in our political system, something that had been badly shaken by damaging revelations concerning payments to politicians and low standards in public office.
However, there are a number of factors relating to parliamentary inquiries other than cost which must also be considered.
This form of investigation ran into difficulties during an investigation by the Joint Oireachtas Sub-Committee on Justice, Equality, Defence and Women’s Rights into the death of John Carty at Abbeylara, Co Longford.
In April 2002, the Supreme Court ruled that this sub-committee lacked the powers to make findings that would hold non-office holders or ordinary individuals responsible for the acts or behaviour under investigation.
This reverse was followed by the collapse of a parallel inquiry by the Joint Committee on Public Enterprise and Transport into the mini-CTC signalling project due to delays arising from an interim injunction, the uncertainty caused by the Supreme Court Abbeylara decision, and the beginning of the 2002 general election campaign.
While no attempt was made to hold another Dirt-style inquiry during the lifetime of the 29th Dáil, a Law Reform Commission report on public inquiries in March 2003 held that it was probable that the Abbeylara judgment would not have affected the capacity of the Oireachtas to conduct the Dirt inquiry or the CIÉ signalling costs overrun inquiry.
Consequently, it is clear that the terms of reference of any serious banking inquiry will have to be very carefully framed. Its procedures will also have to be rigorously examined and structured.
If the PAC does seek powers from the Oireachtas to compel witnesses to co-operate with its investigation in this instance it is unlikely to meet with the same level of co-operation as it did during the Dirt inquiry.
Back then the institutions whose conduct was under investigation appeared to have taken the view that they were culpable and it was in their interest to co-operate.
Last September’s State guarantee should ensure the compliance of our financial institutions. However, compelling individuals who are no longer employed in this sector or who may be co-operating with other investigations to attend its hearings may be problematic.
If they feel it would not be in their personal interests to co-operate with such a process the Abbeylara decision might encourage them to seek judicial review of the Oireachtas’s compellability powers.
If the inquiry passes these legal tests this cross-party body will still have to handle explosive political material. The collapse of the banking sector will be a key political battleground in the next general election.
How would the PAC manage the questioning of witnesses such as the Taoiseach and his predecessor in office by their political adversaries without damaging its internal cohesion? How would it adequately address the performance of those at senior Cabinet level in the inquiry report?
These will be largely uncharted waters for the inquiry team given that the standing orders of the PAC prevent it from inquiring into the merits of policy decisions. In addition, ministers never appear before the PAC at ordinary hearings – departments are represented by their secretaries general.
The Dirt inquiry got around this problem by delegating the questioning of previous ministers to its legal advisors. The collapse of the banking sector is a far more toxic subject matter. The country does not need a repeat of the squabbling that marked a 1994 Oireachtas inquiry into the collapse of the Fianna Fáil/Labour coalition government. The sub-committee could avoid this problem by excluding the role of the ministers for finance from their remit but would this then be a case of Hamlet without the prince?
Parliamentary inquiries are subject to particular time pressures as they expire automatically on the dissolution of the Oireachtas. It is generally accepted that it would not be possible for a PAC sub-committee to reconvene in the aftermath of a general election because the inquiry would have to maintain the same membership throughout and this might not be possible after a general election.
We live in times of great political instability. Many would not be surprised if the current Government collapsed before Christmas. Parliamentary inquiries are very demanding of the sub-committee members. Will they be able to prepare properly for public hearings or contribute to the drafting of a report in the current political environment?
None of these challenges should be underestimated. Nevertheless, the Dirt inquiry showed what a parliamentary inquiry can achieve if a committed sub-committee with sufficient talent and experience is given the support of personal, legal and financial advisers, in addition to the assistance of the Oireachtas Committee Secretariat.
McCarthy’s proposal for a parliamentary inquiry into the banking crisis is feasible and has merit. Parliamentary inquiries can work quickly and for a fraction of the cost of other forms of public inquiry. This banking inquiry will take no small amount of political skill, courage and energy.
It may cause sleepless nights for some but a Dirt-type inquiry will help us understand how we have reached this point in our history, and how we can safeguard against similar catastrophe in the future. This inquiry could even restore some of our lost faith in politics.
PJ O’Meara now works as a primary teacher in Cahir, Co Tipperary