In the days of Ansbacher Ireland, there was a class of people, respectablepeople to whom others looked up and of whom it was impossible to think ill.But they didn't know how to spell the word ethical, writes FintanO'Toole
Traynor was not just a functionary who helped you stash your cash away from prying eyes. He was a connection to the inside track, to the secret sources of power in a country whose official ideology no longer matched its reality.
Treason doth never prosper.
What's the reason?
For if it prosper,
None dare call it treason.
- Sir John Harrington
1561-1612
They literally couldn't spell the word "ethical". They were the decent ones, the only people who showed any awareness that issues of right and wrong might have any relevance. As far back as 1976, good public servants like Adrian Byrne and his colleagues at the Central Bank, looked at the early stages of what would become the Ansbacher scheme, and felt a bit queasy. "It just didn't smell right", recalled Mr Byrne, now the Central Bank's head of banking supervision.
"It didn't taste right. There was something wrong." Looking at the books of Guinness & Mahon merchant bank in Dublin, they could sense that something fishy was going on. Since 1972, when the Cayman Islands left the sterling area, it had been unlawful to send money to offshore trusts there without declaring it for exchange controls. Yet in 1976, Guinness & Mahon had the then huge sum of IR£14.3 million on deposit from Guinness Mahon Cayman Trust Limited.
And when Adrian Byrne and his colleagues asked questions of the bank's main man, Des Traynor, he made it quite clear that he didn't want to tell them too much in case the Revenue found out. He showed them the documents that detailed complex back-to-back loan arrangements, but wouldn't let them note the names of the people who had these accounts.
When they asked about the Cayman companies that held the money, Des Traynor was brazenly up-front. There were no files or records on these companies held by G&M in Dublin. Why? Because G&M "fears that the retention of such files would give grounds to the Revenue to claim that the companies are managed by Dublin and also individual files might come into the hands of the Revenue authorities." It was as simple and as open as that.
As an intelligent man, Adrian Byrne drew the obvious conclusion: that the scheme was a massive tax scam. What happened then is the key to understanding the whole Ansbacher scandal. What Adrian Byrne knew could not be said. There was not a language in which to state the bloody obvious. The fish tasted putrid, it stank to high heaven, there were maggots crawling all over it. But in the native language of the Hidden Ireland, there were no words for "This is a rotten fish." In 1978, when three inspectors from the Central Bank looked at G&M again, they tried to say that the Cayman scam was not "appropriate or ethical". But in a Freudian slip, they stumbled over the latter word. In their report, it is spelt "ethitical." In its own way, the slip is deeply eloquent. It boils the vast Ansbacher report down to nine letters. This is the story of a society whose ruling values are utterly ethitical.
The stumbling over words is not mere accident. Central to the whole saga is the habit of calling a spade an earth-breaking implement. Ansbacher exposes a governing culture in which what everybody thinks is unthinkable, what everybody knows is unknowable and what everybody is whispering in everybody else's ear must never be spoken out loud.
There is, for example, a crucial distinction between tax avoidance and tax evasion. Tax avoidance is what rich people pay clever accountants to do: think up ways within the law of minimising their taxes. Tax evasion - the defrauding of the Revenue - is a crime. And it is simply not possible that a suave, well-connected gentleman like Des Traynor, banker to the business elite, chairman of Ireland's largest company CRH, confidant of the sometime Taoiseach, could be a criminal.
THUS when Richard Fenhalls, chief executive of the Henry Ansbacher group in London, received a damning report on the activities of the Dublin operation in 1991, he was outraged, not by the activities, but by the implied criticism of Des Traynor: "I find it inconceivable to make the assumption that the Chairman of Ireland's largest company, director of a number of prestigious Irish companies, adviser to the good and great in Dublin and approved by the Central Bank of Ireland to be a fit and proper person to run a bank would be conducting improper, illegal or clandestine activities contrary to the law."
Since it was inconceivable that Des Traynor could be a crook, what he was up to had to be tax avoidance rather than tax evasion. The right words could literally not be used. In 1978, Adrian Byrne in the Central Bank wrote in a document for his superiors that G&M "might well be a party to a tax evasion scheme." The word "evasion" was crossed out and the world "avoidance" written in instead.
The change, which became a matter of policy every time the issue was raised at the Central Bank, was enormous. In terms of legality, the difference between evasion and avoidance is that between black and white.
Right at the heart of the State, therefore, there was an active policy of stating that black was white. Concerned officials learned, as Adrian Byrne told the Ansbacher inspectors, the art of "coding". Over time, the code itself was forgotten. The Central Bank's lawyers told the inspectors that the official who first decided that the word "evasion" should always be crossed out "has no recollection of these events." This process of amnesia was helped, no doubt, by events in the political world. In the early years of the Cayman scam, Charles Haughey was in the political wilderness after the Arms Trial. There is, however, a strong correlation between the rise of Haughey's career and the rise of the G&M Cayman scheme.
Especially after the end of 1979, when Haughey became Taoiseach, the rise in the amounts of money held by the scheme in Dublin is spectacular. In April 1979, the deposits stood at just under £5 million sterling. Three years later, they had reached almost £27 million sterling. By then, the Cayman operation, initially a sideshow, had become larger than its parent company.
This may be mere coincidence, but it is striking that the Central Bank's scrutiny of G&M became far less inquisitive after Haughey's assumption of the leadership of Fianna Fáil. At a review meeting in April 1981, there was, as the report puts it, "some passing reference to particular loans with a Cayman connection" but "no further discussion of the overall nature of this banking activity or of its taxation implications." Des Traynor assured the officials that the Cayman operation would not get any bigger. The assurance was a lie, but it was enough to "persuade the \ Bank to leave matters rest." All of this gives us an important insight into the ripple effect of political power. There is absolutely no evidence that Charles Haughey or anyone close to him ever interfered with the Central Bank or any of the other authorities. The effect is far more subtle than that.
People knew that Des Traynor was intimately connected to Haughey.
That knowledge, in the light of Haughey's increasing power, added to the feeling that participating in his dodgy scheme was unlikely to get them into trouble. And the authorities in turn were intimidated by Traynor's confident assurances. After all, as Haughey's son-in-law John Mulhern told the inspectors, if Des Traynor "said it was all right, as far as I was concerned it was all right."
It is fascinating that Traynor, who was, say the inspectors, "reserved to the point of taciturnity" nevertheless had for his clients a magical aura. His neighbour Dr Colm Killeen thought him a "financial wizard" whom he would "never dream of questioning".
To John Byrne, an unsentimental Kerryman who made his initial money the hard way on the building sites of England,he was "a remarkable fellow."
John Mulhern, no starry-eyed novice, regarded him as his "godfather".
To Arthur Gibney, himself a powerful and successful architect, he was "a very dominant figure" whom he "treated with a great deal of diffidence." Here is a man who had recently, in Fitzwilliam Street in Dublin, torn down the longest unbroken Georgian terrace in the world, and replaced it with an ugly facade. Diffidence is not a quality that automatically springs to mind.
So how do we explain the aura that attracted hard-headed business people and encouraged them to give Traynor huge amounts of money on the basis of mere trust? Much of it seems to have derived from Traynor's very silence.
WHAT would usually be taken to indicate a lack of charisma and perhaps an alarming lack of accountability, was taken, in Traynor's case, as evidence that he carried powerful secrets in his head. Those secrets, in the minds of his clients, must have been connected to the most charismatic public figure of the day, Charles Haughey.
Traynor, in other words, was not just a functionary who helped you stash your cash away from prying eyes. He was a connection to the inside track, to the secret sources of power in a country whose official ideology no longer matched its reality.
Thus Traynor's nods and winks, the lack of detailed documentation, the reliance on blind faith, not only didn't ring alarm bells, but were the ultimate guarantee that all of this was just fine. The culture was one in which there was a surface of piety and patriotism, and an underlying reality of amoral greed. Reality was not what you said in public or what you saw on TV. It was what lay behind public appearances. For those in the know, it was only really real if it was a secret.
These were people, after all, who lived in two worlds, a public one of official politics and religion, and a private one of pure materialism. A fascinating little detail in the appendices to the report, for example, is the way Denis Foley, Fianna Fáil TD for North Kerry until the recent election, made his money in the 1960s and 1970s. By day, he collected rates and rents for Tralee Urban District Council. By night, he booked bands for the Mount Brandon and Central hotels. By 1979, when he became an Ansbacher customer, he had accumulated £30,000 from this extra job. This was a lot of money in those days, and it seems puzzling that the job could have been so lucrative. Denis Foley's statement, however, clears up the mystery. He was being paid twice.
The hotels paid a fee, of course. But he also charged the bands what he calls "commission" for the privilege of being booked.
Taking care of business didn't mean that you could not also be part of the official value system. Denis Foley was elected to the Dáil shortly after he opened his account with Des Traynor. Colm Killeen, the doctor who was Traynor's neighbour and who opened an account with him in the early 1980s, was anxious that the inspectors should know that his wife did charity work with "the famous" Father Michael Cleary. They helped unmarried mothers, one of whom Dr Killeen and his wife took into their home because "we were short a domestic at the time."
These were the little people, insignificant in the bigger scheme of things. The bigger players had far more going for them than a nice little earner charging commission to showbands. And they knew more clearly that Irish reality was malleable.
Many of them were shaping the world that we now live in, not just metaphorically but literally.
John Byrne's Cayman Island trusts held some of the properties that dominate central Dublin: O'Connell Bridge House, Ballast House, D'Olier House, Hawkins House. Arthur Gibney and Sam Stephenson, who is also named in the report, designed and developed huge monuments to the new Ireland, including, perhaps appropriately, the Central Bank. One of their big projects, the redevelopment of Fitzwilliam tennis club, was enabled by Ken O'Reilly-Hyland and Liam McGonagle, both of whom are named in the report.
Large parts of modern Dublin, especially in and around Ballsbridge, were built by G&T Crampton, who engaged in joint ventures with G&M. The proceeds of one large development were placed in six Cayman trusts. And of course, the very materials used in all of these developments were often supplied by CRH, eight of whose directors at one time or another were clients of Ansbacher.
These people, in other words, were in the business of literally creating the reality of modern Ireland. They were used to the notion that what people saw around them could be transformed by an act of will. You could tear it down, put something else in its place and, if necessary, front it with a mock-traditional facade. If you could shift the physical world around you, how hard could it be to shift money around?
This power to define reality, and to get everyone who mattered to agree with you, is what made the Ansbacher operation possible. The alternative reality - that respectable business people might be engaged in criminal behaviour - became unthinkable, unsayable and inconceivable. Since a criminal was a thin-faced, ratty-looking kid in white socks waiting outside the District Court, soft-spoken bankers could not possibly be criminals.
Have we really broken with this underlying attitude? The publication of the report is a significant step towards the reclamation of Irish reality. It does mark a significant shift in what is officially conceivable.
But the haste with which politicians have dampened down expectation that there might be prosecutions should make us cautious.
The answer to the question that the present Minister for Justice, Michael McDowell, posed in relation to another scandal - "Will any of these people hang their Armani jackets on the back of a cell door in Mountjoy?" - is still "No." So long as it still seems far-fetched to imagine otherwise, much of the talk of fundamental change will be wishful thinking.
Ethitical Ireland will not be dead and gone.