Kathy Sheridan: You might not like her, but Jackie Lavin has a point about banks
She claims Bill Cullen’s business and thousands of others could have been saved
Bill Cullen and Jackie Lavin leaving the Four Courts after a High Court judgment. Photograph: Collins Courts
“I read it expecting to sneer, instead I got angry,” a colleague tweeted on Saturday, after reading my lengthy interview with Jackie Lavin. Many of us who abhorred the celebrity culture of the boom years are pre-disposed to sneer, unable to blank out boomtime images of the arrogant, vulgar, in-your-face glitz of it all and the reckless, mine-is-bigger-than-yours property plays that brought down the banks and ultimately Ireland.
Then came the news about comfortable, overseas bankruptcies, about private, multi-million “gifts” and deals arranged between spouses or between parents and children, all with the jolly outcome of leaving shedloads of cash sloshing around within the tribe, just not technically in the chief’s own bank account. The groundlings could only gaze and wonder.
They should care about the fate of Glencullen’s some 200 employees, who abruptly lost their their jobs
Lavin is acutely aware of this. But the bigger problem is ours, as she sees it. Our “resentment” has blinded us all to the resulting problem: that is, the behaviour of the banks towards long-standing companies that were down but not necessarily out.
But they should care about the fate of Glencullen’s some 200 employees, who abruptly lost their their jobs, had their car keys taken, were told to get the bus home, and paid only to the end of the week, she says. And that many would go on to default on their mortgages and live in terror of never working again, existing on tax-payer funded statutory redundancies and jobseekers’ allowance.
Cullen – to whom she remains wedded in all but name after 37 years – had stuck to what he was good at since the age of 15 and never indulged in property plays, she says. He had been a successful customer of Ulster Bank for nearly 20 years, until the company was hit with cashflow problems in 2009, after which the slide was steep and fatal. Still, the harsh fact is that some garage owners went down, but others survived. What makes Cullen a victim?
If these claims seem scarcely credible, none is new to the public domain
Her case is that Glencullen would have survived its problems with some careful nursing from Ulster Bank. Instead, she claims that along with thousands of companies whose assets comfortably exceeded their loans, it was put into the bank’s “turnaround” unit, known as the Global Restructuring Group (GRG), where business owners anticipated some hand-holding, guidance and indulgences. By this account, they fell victim instead to a scheme instigated by Ulster Bank’s parent, Royal Bank of Scotland (RBS) – a bank bailed out by the British government and in desperate need of cash – to engineer defaults and pick up their assets on the cheap.
If these claims seem scarcely credible, none is new to the public domain. Back in January, Lavin addressed the Oireachtas Finance Committee on behalf of Glencullen and Ulster Bank/GRG Action Group. In response to Irish Times questions at the time, the bank strongly denied that businesses were “artificially distressed” by being put into the GRG and claimed that a number of independent reports supported this conclusion.
But the action group’s claims find an echo in a BBC2 Newsnight/Buzzfeed report on RBS activities, aired last October. Using whistleblowers’ evidence, the programme showed how 12,000 companies were pushed into the GRG; how in a scheme christened “Project Dash for Cash”, staff were incentivised to search for companies that could be squeezed or have their interest rates bumped up; how staff could find a way to “provoke a default” where business customers had not defaulted on loans; that unrealistically low valuations were used to claim customers had reached their borrowing limit and force them into the GRG.
Of nearly 2,140 Irish companies put into the GRG’s so-called “turnaround division” in Ireland, just six emerged. This is why we should care, says Lavin.
Last week, we learned that AIB had been fined almost €2.3m for multiple breaches of regulation, punishment regarded as light by enforcement professionals. The league leader in this area is Ulster Bank, with fines of almost €9m since 2012. These served to highlight the fact that in such cases, no details of actual settlement agreements are published and that senior bankers can still evade responsibility, in law, by claiming ignorance of their subordinates’ activities.
In effect, no heads will roll. No accountability applies.