Why bank directors owe us a confession

Without some public reckoning with recent business behaviour, we’re stuck with a corrosive fatalism

THE SINGLE most influential Irish cultural export of all time isn’t machine politics or Riverdance or the word “feck”. It is Confession. Irish missionaries to continental Europe in the seventh century brought with them a practice they had developed for themselves: so-called “penitentials”, tariff books for the punishments to be meted out in return for the forgiveness of specific sins.

This wasn’t just a kind of spiritual bureaucracy. It was also a form of theological and psychological liberation. The dominant theology of the time was the doom-laden system of Saint Augustine, who saw humans as irredeemably wicked, unless saved by the intervention of divine grace. The Irish system fundamentally contradicted this attitude – it was possible, in modern parlance, to “move on” from sins if the right price was paid. Against the fatalism of Augustine, it suggested that people could be helped to save themselves.

As Diarmaid MacCulloch explains in his magisterial

History of Christianity

, “The idea was hugely popular – who would not jump at the chance of being able to do something concrete and specified, however hard, in order to lift the burden of guilt? It became the basis of the mediaeval Western Church’s centuries-long system of penance: a practice whereby everyone repeatedly confessed their sins to a priest, who then consulted his book or his memory and awarded the necessary penance.”

The irony is that the country that invented this system is the one where it now has least influence. In most other western societies, Confession was secularised into civic systems of crime and punishment. In Ireland, at least for white-collar crime, it has simply ceased to exist. Confession remained a powerful ritual within Irish Catholicism, but never quite made the leap into civic morality. When Catholic practice declined, the whole idea simply died.

This matters as we contemplate the beginning of a new year. After the annus horribilisof 2010, the desire to "move on" is palpable. But without confession and punishment, without some public reckoning with the behaviour that has caused so much damage to society and to citizens, we're stuck with corrosive fatalism.

The cheeriest Christmas present I got this year was a photocopy of some pages from the Illustrated London Newsof February 1879, sent by a reader, Brian Clohissey of Tuam. There is a large courtroom illustration typical of 19th-century representation of the rituals of justice. There are the elaborately wigged and gowned judges, their eyes cast impassively downwards. There are the curious and expectant men and women in the public gallery, the gaggle of lawyers scrutinising documents, the jury (men, of course) hovering between scrutiny and boredom.

What is different are the prisoners in the dock. They are not the usual desperate-looking ruffians with scars on their faces and murder in their eyes. They are, rather, indistinguishable from the members of the jury: respectable Victorian gentlemen with frock coats and serious facial hair. Only the caption distinguishes them from those who will decide their fate. It labels them simply, “The Prisoners”.

The accused men are the directors of the City of Glasgow Bank. The case against them is that “the Bank was making advances of enormous amounts to particular firms, in great part without any security, and was losing millions upon millions, while the shareholders, trusting to the falsified balance-sheets, were content, year after year, to receive the agreeable dividends declared . . . Several persons then deposed that they had been induced to purchase shares by the false reports and balance sheets which the directors published”.

The seven men on trial were not petty people. They were the cream of Glasgow merchant society. All were found guilty of having misled shareholders about the true state of the bank. The judge, in passing sentence, noted that “the act for which they were convicted was one which they committed for the benefit of the bank; but that did not remove it from the category of crime – very far from it, indeed”. Two of the directors were sentenced to 18 months in prison; the others to eight months each.

We hear a lot now about how difficult it is to prosecute white-collar crime with outmoded laws and the jury system. Yet, in 1879, under the common law system that we still operate, it was possible to send powerful merchants to jail for publishing “false reports” on the underlying health of their bank that misled their shareholders.

There seems to be a serious effort under way to investigate possible crimes at Anglo Irish Bank. But by this criterion, directors and auditors at other financial institutions, especially Allied Irish Banks and Irish Nationwide, surely have a case to answer. Were people not induced to buy shares in AIB, for example, by the publication of grossly misleading annual accounts? If this was a crime in Victorian times, when did it cease to be one in Ireland? Why have shareholders not collectively sought to bring bank directors to justice? Why has the State not sued them for the immense damage they have done? And without confession and penance, how are we supposed to move on?