OPINION:Widespread popular loss of faith in the country's institutions and centres of power has dominated public discourse of late. In the first of three articles examining what has happened, Edmond Grace looks at one such elite, the bankers, and wonders why current bank directors do not litigate against their predecessors, thereby forcing them to account for their disastrous actions
W E NEED elites – people with the skills, networks and resources required to do the varied and complex tasks on which we all depend.
If these tasks are to be done we have no option but to trust those who do them. They, in their turn, have a responsibility to live up to that trust and, when it is undermined, to restore it.
The country’s bankers are one example of an elite group which has lost public confidence and the primary responsibility for restoring that lost confidence will lie with the incoming boards of our two major banks.
The public standing of every professional elite depends on three factors. The first is technical know-how. The second is a less formal, but often more influential, quality of good judgment. Technical skill is of little worth without a practical ability to assess its impact on human behaviour. New recruits to any profession or major organisation will be assessed in the light of these two factors.
They will be eager to cultivate them openly and competitively.
The third factor on which an elite’s public standing depends is integrity. This, compared with the other two, is strangely unmentionable. While rivalry in promoting one’s own skill and judgment is an acceptable part of professional life, any promotion of one’s own “superior integrity” is guaranteed to cause offence. And any challenge to the integrity of a colleague will amount to a declaration of war – not just against the individual concerned but against everyone who knows and trusts them.
This unmentionable nature of professional integrity has some problematic side-effects. The initial reflex of any elite, when one of their members is accused, is to close ranks and while, to the outside world, this may look like naked tribal self-interest, there is more to it than meets the eye. Every profession and every organisation depends on the trust and mutual respect of its members. People who trust each other do not doubt each other and once doubt is expressed any sense of normal interaction is undermined. All sensible people have reason to dread this downward spiral of suspicion, which is why people of good judgment recoil from it.
And yet this understandable reluctance has to sit side by side with the reality that, in every powerful elite, unseen corruption is at work. Talented people will always gravitate towards centres of power and privilege. They will be ambitious – some with sincere idealism, others more or less self-centred but all, at the start of their careers, untried and untested. Inevitably, as they become established and powerful, some will be corrupted – perhaps by greed or arrogance or some personal vulnerability.
How do we identify the people of true integrity in any particular situation? The only sure way is to allow the most corrupt elements to do their worst and see who is left standing – and rebuilding – after the collapse.
When high standards are maintained, you won’t be able to tell who is trustworthy and who is not, because those standards will be respected not just by the honourable, but also by those who dare not do otherwise.
When, on the other hand, standards are eroded, the unscrupulous will thrive on the resulting absence of constraint – until things finally fall apart. Most people don’t set out to be unethical and none of us can predict with confidence how we might, or might not, measure up when high standards come under strain. The purpose of a well-designed institution is to keep people from learning the hard way about their lack of integrity – by ensuring that certain scenarios of “ethical strain” are unthinkable.
The tragedy of our banks – and other institutions in the country today – is that such scenarios have become all too thinkable. This calamity is public. It’s not just that we all know, but each of us knows that everyone else knows. Any rebuilding of trust will only be effective if it happens in a similarly public manner – each of us knows about it and knows that everyone else knows.
No amount of statements or new policies (in themselves no more than elaborate statements) will bring about this new public reality. An element of drama is required with differing roles played out publicly.
The only way of providing such drama is through the legal process.
Big criminal trials are nothing if not dramatic and certainly have a part to play, but they are the responsibility of the State. There is also the civil legal process and the responsibilities which go with it. The directors of a company have a common law duty of care. They must exercise their office with due diligence and to a standard corresponding to their experience.
When directors fail in this duty, the “technical victim” is the company acting through its board of directors. In truth the real people who suffer are the shareholders, creditors and, in this case, Irish taxpayers.
It is open to the incoming directors of a company to take advice on the possibility of suing their predecessors. Such a step, in the context of Irish banking, would certainly be dramatic but that is the precise reason this course of action is worthy of consideration.
Of course, the resources of the outgoing directors, even including directors’ liability insurance, are slight in comparison with the losses for which they could be legally responsible. But the remedy to be sought is not solely a matter of compensation.
The primary and legitimate purpose for the incoming directors to take such a step would be to secure a formal public declaration of personal responsibility and legal duty of care, for future reference, with a view to restoring the credibility – and asset value – of Irish banking.
There is a great deal of frustration with the absence, to date, of any effective legal process arising from the banking crisis. Such dismay may be legitimate and a successful legal outcome can do much to rebuild damaged trust, but there are aspects of this crisis which cannot be dealt with by the legal system.
This crisis of trust has reinforced a growing popular alienation from the governing elite of this State and it will only be fully resolved if the roots of that alienation are understood and dealt with.
Fr Edmond Grace SJ has lectured in law and social ethics at the National College of Ireland and worked in the Dublin inner city parish of Gardiner Street.
He is a founder member of the Dublin Citywide Drugs Crisis Campaign and his work there brought him into contact with politicians and public servants. He is author of Democracy and Public Happiness.
Tomorrow:what do we mean by public service?