Findings almost irrelevant as perceptions rule

 

Perceptions of corruption discourage private and foreign direct investment and limit economic growth, writes ELAINE BYRNE.

TAOISEACH EAMON de Valera’s patience was worn out by the end of the 1940s. He told the Dáil that persistent corruption allegations reminded him of “the primpealláin, a beetle, which from the moment in the summer time when it began to use its wings and fly about, went about, not attracted by any flower in the field or any flower in the garden, no matter how beautiful they were, whether they were roses or lilies. The primpealláin went about looking for some cow dung or horse dung in which they might roll themselves”.

In a 12-year period, the De Valera government initiated three tribunals of inquiry and a parliamentary investigation into alleged corruption, concerning for the most part, the department of industry and commerce’s role in awarding licences, leases, export quotas and the improper disclosure of confidential information.

Of the 20 allegations investigated, 18 were dismissed and two lesser charges were found. Then minister for industry and commerce, Seán Lemass, took the allegations very seriously. His response was unequivocal and in one case a senior civil servant was compulsorily retired.

Fast forward 60 years.

In interviews with four Sunday newspapers, Denis O’Brien disclosed that the Moriarty tribunal has made adverse preliminary findings against him, former minister for communications Michael Lowry, and that department’s civil servants in relation to the awarding of the State’s mobile phone licence to his Esat consortium in 1996.

If the tribunal’s adverse preliminary findings become actual findings, their implications are potentially devastating, not just for O’Brien, Lowry and the Civil Service, but for Ireland.

O’Brien, who personally made nearly a quarter of a billion arising from the sale of an asset granted by the State and immediately afterwards became a tax exile, has become an unlikely knight in shining armour for the Irish taxpayer. “We’ve had to take the fight to the tribunal otherwise the Government will be faced with a massive claim for damages,” he told the Sunday Times.

Adverse findings against the State would open up the possibility of claims for substantial compensation from rival bidders who failed to win the lucrative mobile phone licence. Yet, if he is successful in his “stand for the civil servants” and the preliminary findings are reversed, public opinion will nevertheless make assumptions about the veracity of such a decision. It is almost irrelevant now what the final findings of the Moriarty tribunal will be.

Foreign investment executives rely on perception-based indicators used by commercial political risk-assessment firms such as Standard and Poor’s, Political Risk Services and the International Country Risk Guide. The US Millennium Challenge Account (MCA), a repository for up to $5 billion per year in new US official development assistance, relies heavily on composite governance indictors as additional information to determine levels of assistance.

I’m a short-term governance consultant for the World Bank and regularly, to the point of tedium, meet the “And what is going on in Ireland!” question. There is the monotony of anecdotes from colleagues who have been to yet another presentation about compliance with international financial and banking benchmarks and how embarrassed they would be if they were Irish. And so forth.

Perception matters. Research has shown that perceptions of corruption discourage private and foreign direct investment and limit economic growth (Mauro, Quarterly Journal of Economics, 1995).

Perhaps the most frustrating aspect of our tribunal process is that we have been here before. In the past, Groundhog Day ethically repeated itself and the abdication of responsibility was intellectually accepted as one without consequences. Well, this time the consequences for perceived shortcomings in our governance framework are potentially profound and we can financially ill-afford it.

The tribunal has done itself no favours with expense claims for Belgian chocolates and extraordinary fees for tribunal lawyers. As a result, there are openings to shift attention from the very serious substantive issues at the heart of the tribunal to the tribunal process itself. Today, as in the 1940s, focus is now directed on the method of inquiry rather than on the underlying allegations themselves.

A discussion on the tribunal findings and their implications now gets lost in the personalisation of what O’Brien refers to as his “street by street” fight to clear his reputation. The challenge is to distinguish between systemic and individual corruption; petty and grand corruption; moral and legal corruption; and rumours and reality of corruption.

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