It is is Diwali, the most important festival of the Hindu calendar, in Delhi. A hundred-thousand
fireworks turn the city’s rooftops hues of blue and orange, their concussive explosions sounding like a military barrage. As Bunker Roy greets me he points to the sky and says “that, my friend, is the sound of money being
wasted”. As the founder of the Barefoot College, this will rank high on his list of sins. The College,
which brings people from all over the developing world to a small village in Rajastan to teach
them how to be solar engineers, has brought Roy worldwide attention, with Time magazine naming
him one of its ‘100 most influential people’ in 2010, and his recent TED talk attracting over
4 million views. A steel-haired man in his sixties, he still carries the Brahmanic authority and grace of manners of his origins. A few minutes in his company though, it is easy to discern the energetic and playfully
non-conformist young man who struck on the idea that shaped his life. Born into a well-to-do
family near Kolkata he followed the familiar arc of the scions of the Indian elite, first attending
the famous ‘Doon School’ in the foothills of the Himalayas, “more elitist than Eton and Harrow”,
he remarks, and then on to university. A career in the professions or the civil service beckoned, but
on completing his degree in 1965 he travelled to work as a volunteer digging wells in the state of
Bihar which had been struck by famine. The engineer he worked with invited him to visit his home
village of Tilonia in the Rajastani desert. While there Roy hit on the idea of founding a University
for, and run by, the poor. “I went to visit Tilonia and stayed for forty years” he smiles.
As we sit down to chapatis and thali, it doesn’t take any prompting for him to begin on a bullish
polemic. “There are huge gaps in the existing aid model. Before, people identified their own
problems and simple cost-effective solutions, but the aid industry as it is is a juggernaut out of control
and poverty is big business…lots of people’s jobs are at stake. Why do we need someone from
Oxford or Stanford to tell us how to tackle poverty? They spend one week in a village and think
they understand the problems…ridiculous”.
Almost unnoticed in the midsts of the Western World’s Great Recesssion, much of the developing
world has been going through an economic quickening. Growth in Sub-Saharan Africa has
held steady at around 6% in the last four years.
The vast potential energy of its young population is slowly being unleashed. The high price
of commodities, and a period of relative political stability in the region has helped, but it as
much a bottom-up as a top-down phenomenon. Innovative banking systems coming from Nairobi
are allowing even the most isolated rural farmers to gain credit, send money and do business.
But with less then eight per cent of people connected to an electrical grid, the capacity for
growth is limited. On a recent trip to Malawi, I visited the previously powerless rural village
of Kaphuka to which two students from Roy’s college had returned. Around the straw roofed
hut they used to assemble their solar panels, little cottage industries had sprung up: a barber’s
with a battered electric shaver, a mobile-phone charging point, even a small cinema. The skills
they had brought back were grounding an economic dynamo.
The economic growth that the region is undergoing is what the World Bank has spent decades,
and billions of dollars, trying, and largely failing, to create. Through the centre of Kaphuka
ran huge electricity pylons, the result of a World Bank and Malawian government initiative. That
the villagers had no access to the electricity that thrummed through them seemed an apt symbol
of the disconnect between the western Aid industry’s wishes, and the needs of the people they are
trying to help. Leaving Delhi to visit the College the next day,
we travel the old trunk road to Jaipur. It seems the whole of India is on the move, turning the
road into an eight-hour traffic jam of wobbling three-to-a seat-motorbikes and wildly-coloured
trucks covered in images of blue multi-limbed gods. Beyond Jaipur the road becomes quieter
and the green brown plains of the Rajastani desert stretch out towards a bulbous purple sun. This
is an area of subsistence farming and seasonal rhythm, ever teetering on the cusp of grinding
poverty. As we turn into a rough track that leads us to Tilonia, we see people working the fields,
women carrying bags of grain back to the village and cattle wandering louchely by. It is a scene that
could come from nearly any developing country and Tilonia, a dust-dry, low-walled collection of
houses, could be any village. But in Tilonia, the problems of poor rural communities
have been largely solved: every house has a solar panel on its roof, a solar-powered
pump gives a constant supply of water, a beehive hut houses a small telephone exchange and in one
small room I find a College administrator busy working on a solar-powered laptop. Though what
is most remarkable about the village is that it is otherwise so unremarkable. There are no signs telling you that this is the Barefoot College, no branding, no fresh faced western volunteers walking
around in ‘Barefoot College’ t-shirts, none of the bureaucracy and aggressive marketing that
one sees when visiting western NGO-funded projects. Tilonia remains an ordinary village, it
just happens to be where something extraordinary is happening.

We are led to a warehouse with peeling walls. Inside are forty women, their faces a patchwork
map of the developing world – El Salvador, Vanuatu, Ethiopia. They sit in front of a tangle
of wires and circuit boards, the blue flames of small soldering irons lighting up their features
as they assemble solar panels from scratch. Most of these women are grandmothers who had rarely,
if ever, left their home villages. I ask Maria from El Salvador if she was worried about coming to
India. “Yes”, she laughs, “I thought I was going to be eaten by lions”. Roy favours grandmothers
as students as they are the most likely to return to their villages with their new skills rather than moving to a city to profit from them.

As the women are mostly illiterate, the Barefoot College uses a unique colour-coded
wordless system to teach solar engineering. At the head of the long table where they sit stands
another Indian grandmother, a graduate of the college, leading them through their lesson.
After six months these women return to their villages. As the knowledge they have gained has
been simplified and given orally it is easily passed on. As Roy says “every student becomes a walking,
talking Barefoot College”. He gives the example of two grandmothers from Afghanistan who spent
time at the college, They returned home, taught another twenty-seven grandmothers who in turn
electrified 100 villages.“Look how we are trying to solve the energy problem…with power lines…they cost $50,000 per kilometre. The key to solving these problems is to decentralise and demystify. If you demystify the technology for those using it and you give every home its own power source, they look after it. Why do they (aid organisations) make it complicated? I can’t believe there are no simple solutions that they haven’t considered but they don’t implement them because if they did the whole system would collapse”.
I finish by asking Roy what he would do if tomorrow he became head of the World Bank
“I would put all the staff on minimum wage. I would have them live for six months of the year
in a village with no electricity or running water so they understand poverty. I would do that with the
UN too, but, as it stands, there is a vested interest in keeping people poor.

Samuel trip to India was paid for by the Simon Cumbers fund

We’ve become used to the idea that a society based on loans is normal and sustainable

‘In most countries, about three per cent of money originates from government mints. The rest is ‘digital’ and created by banks when they issue loans.’

An 1830s’ recession preceded the great famine. Worried about their savings and the future, people reined in their spending which only exacerbated the downturn. Since food was actually then abundant, it seemed odd to most people that routine trading was hampered by what was explained as the mass hysteria of people saving rather than spending. While most people, then and now, naturally expect a continuously rising standard of living, the student of economics expects a rise and fall despite the fact that technology rarely if ever goes backwards.

In the 1830s, banks simply printed money with their own name on it, to facilitate loans.  So after a particularly long ‘fall’ the leaders of that era began to suspect this might be the root of the problem. After all, each pound lent created a matching debt. If people settled their debts with banks, business was no better off because the money used to do so was out of circulation. Indeed people struggled to repay their debts because banks only created the principal of the loan and expected that back, plus interest. And yet there was no interest in the money-creation process.

Cue the Bank Charter Act of 1845 which took a year to make its way across the Irish sea. By then the Bank of England had taken the exclusive power to print the legal tender of the land in a bid to provide a stable money supply and foundation for the economy. Of course people were free to trade with whatever notes they could but Bank of England notes enjoyed preference over all others since they alone were acceptable in payment of tax. Eventually banks were restricted to lending existing money only under the watchful eyes of the queen, on every note.

Ireland had its own issues in 1845 but thankfully the act put an end to the problem of banks simply creating the money they lend such that every unit of currency was issued with a corresponding debt.

Well, not quite.

Hard as it may be to believe, banks simply create the money they lend today, albeit somewhat under the radar by working electronically. In most countries, about three per cent of money originates from government mints that make notes and coins. The rest is ‘digital’ and created by banks when they issue loans. When we go to a bank to take out a loan, the bank does not lend its own money or that of its depositors. They simply type new money into your account. So we’re actually still in the position whereby the vast bulk of money can only co-exist with an even higher amount of debt. Since the money used to settle debt becomes a victim of double-entry bookkeeping, reducing our debts doesn’t leave us in a better position either. This explains why the banking sector as a whole cannot behave prudently (even if it wanted to). What’s in circulation is the principal, or partial principal, of every recent loan. What’s owed back is the principal plus compound interest. We owe more than exists. The banks’ role in this is reprehensible but systemic!

Furthermore the main reason why there’s less money during a recession is because once you repay a loan to a bank the money no longer exists. Reducing our debts reduces the money supply by the same amount which is why reducing our levels of personal and business debt isn’t a solution to the debt crisis. Economists had convinced themselves the problem in a recession was that people save instead of spending.

Encouragingly, just like in the 1830s, the leaders of our era are beginning to suspect that the creation and destruction of money in tandem with debt may be the root of our economic problems. Reforming the foundations of the monetary system was discussed by the Icelandic parliament recently and there is a flowering of academic and media interest.

One proposal being discussed to bring about a transition from the money-as-debt problem involves declaring all digital money to be legal tender. With your bank balance already acceptable as payment of taxes there’s no reason why it shouldn’t join the legal-tender club with cash. If electronic money boasted the status of legal tender, immediately the banks would have to halt their routine of deleting it upon repayment. Effectively outlawing the creation of euros through loans would get right to the root of the debt crisis problem also and the banks would automatically become the intermediaries of existing money only, as many of us always assumed they were.

Now armed with blight vaccines, Sensible Money is hoping history will repeat itself along similar lines.

Paul Ferguson is founder of Sensible Money. For more information on how money is created and destroyed: www.sensiblemoney.ie

Irish Election Literature: Hardiman blooded for FF in Dun Laoghaire

Supreme Court Judge, Adrian Hardiman

Libertarian, scourge of the state and political correctness.

by Kyran Fitzgerald

‘Politically promiscuous, he was a strong backer of the Progressive Democrats, having previously been both a member of Fine Gael and later, a Fianna Fáil candidate’.

‘What cannot be denied, however, is that his judgments are eminently readable, and accessible to most laymen. Hardiman is certainly  clever and erudite’

‘Hardiman  let loose, describing how appalled he was by the length and cost of the Tribunals’

Many of the pillars of Irish life have crumbled. A torrent of revelations of corruption, financial, moral and sexual, has seen to that.

Few forelocks these days are tugged when top politicians, professionals or churchmen pass by.

The recurring theme of the age is one of loss of respect for the lofty. Yet, for a number of reasons, the judgments issued by our higher courts apparently continue to command popular respect.
True, many consider our judges to be overpaid and part of a remote elite, presiding over a flawed justice system, yet there is a pretty general acceptance that the individuals occupying high judicial positions are people of substance.
Scant popular sympathy is on hand for those who display contempt towards the courts.

In part, this may stem from a recognition that our judges have played a major role in papering over the cracks left by a dithering legislature unwilling to implement reforms that could cost them in the ballot box. Irish judges are viewed as incorruptible, notwithstanding an unfortunate recent case, that of former Judge Perrin.
Their work rate is viewed as being high.

Above the District court level, judges have, by and large, avoided the temptation of wading into controversy.

More recently, the senior courts have been forced to cope with the fallout from the wave of insolvencies.
Judges have however, sought to iron out the flaws in the current system, often using creative means.

Overseas, the US Supreme court has, in the past, served as a beacon.
In the 1950s, Earl Warren presided over a Supreme Court that helped to transform American life.
In 1954, in ‘Brown v US Board of Education’, the Court outlawed segregation in the school system and it later sanctioned an overhaul of the country’s State legislatures in a move designed to stamp out political gerrymandering.

The Irish Supreme Court, at times, has been highly creative.
For strong believers in the right to individual freedom, the dissenting judgment of the late Mr Justice Niall McCarthy in ‘Norris v Attorney General’ stands out.
McCarthy in favouring the application to have laws banning homosexual acts declared unconstitutional, questioned how bans contained in Acts dating back to 1861 and 1885 could be deemed to be consistent with constitutional guarantees of freedom of expression.
He cited the US Supreme Court judge, Louis Brandeis, to the effect that “the right to privacy is the right to be left alone”.

McCarthy had a long distinguished career as a barrister and was unusual in that he stepped straight from private practice onto the Supreme Court.
Barristers recall the man with affection, not merely for his sharp wit, but for his ability to mark high fees, thereby indirectly assisting colleagues, both senior and junior.

Adrian Hardiman also moved straight from practice at the Bar onto the highest court in the land.

As a counsel, he stood out by dint of his eloquence and the sheer size and breadth of his legal practice. A brilliant advocate, colleagues recall that as a junior counsel, he was involved in so many cases that it was the Senior Counsel who was ‘holding the fort’, awaiting the arrival of the star advocate.
As a senior counsel he acted for the former MEP, Social Welfare Minister and Democratic Left leader, Proinsias de Rossa in a libel action taken against the Sunday Independent and its columnist, Eamon Dunphy.
In July 1997, a jury awarded de Rossa £300,000 in damages after it decided that the journalist had wrongly alleged that de Rossa was involved in, or tolerated, serious paramilitary activity, among other things.
The size of the award was upheld by the Supreme Court on appeal by a majority of four to one – the latter, Ms Justice Susan Denham, now Chief Justice, favoured cutting the size of the award in half. She also called for a direction on the quantum of an award to be given to a jury – a view rejected by the then Chief Justice, Liam Hamilton.
The Court decison was later appealed to the European Court of Human Rights.

Hardiman was, in those days, a bundle of energy.
Politically promiscuous, he was a strong backer of the Progressive Democrats, having previously been both a member of Fine Gael and later, a Fianna Fáil candidate.
He served as legal advisor to the PDs’ first leader, Des O Malley, and found himself embroiled in controversy over remarks made – in the informal atmosphere of the Shelbourne Bar- relating to the Beef Tribunal by a colleague, Gerry Danaher, then acting as legal advisor to Taoiseach Albert Reynolds.
Educated by the Jesuits at Belvedere College, his father was a school teacher. His family background was respectable, but not particularly privileged.
He arrived in UCD determined to make his mark.
A lot of sweat went into manufacturing his seemingly effortless brilliance as an orator. He later recalled that he arrived to make his maiden speech at the College Literary and Historical Society “clutching three thousand words of frenzied handwriting in a sweaty fist”.
Possessed of a baritone voice that belied his modest frame, Hardiman became a star debater, befriending future legal colleagues such as Michael McDowell, fellow Jesuit boy and Mary Finlay, now a High Court judge.

Many students viewed the L & H crowd as pretentious twits, but the debating society proved to be a good training ground for life in the lucrative legal ‘killing fields’.
Hardiman, while honing his advocacy skills, and testing his larynx to near destruction, met up with his future wife, Yvonne Murphy.
They married early, settling in a flat in Merrion before moving to a property in Palmerston Park, Rathmines.

Yvonne later moved from a career in social services, journalism and political advice to became a barrister on the north west circuit and latterly a Circuit Court judge.
In 2006-7, Judge Murphy chaired the Commission of Investigation into child abuse by the Catholic clergy in the diocese of Dublin, producing a well-regarded, searing, report.

The youthful Adrian favoured a formal style of dress as part of a young fogey reaction against the anorak-and-denim dress-code of the era.
His opposition to the College Left was in part born of a contrarianism, but it had deep libertarian roots, gut feelings which persist today and are apparent in many of his judgments.
At times, his contempt for state bodies and for public officers erring from the path of justice is visceral.
On occasions, his opposition to ‘political correctness’ can appear almost curmudgeonly, no more so than in his decision in the case brought by the Equality Authority against Portmarnock Golf club.
What cannot be denied, however, is that his judgments are eminently readable, and accessible to most laymen. He avoids the nitpicking, equivocation, and tortured reasoning, that characterise so much of today’s judicial output.  Hardiman is certainly  clever and erudite: he can recite reems of poetry and constitutional articles and has given entertaining talks on James Joyce and Flann O’Brien, well outside the curtelage of the Four Courts.
Early in 2005, after five years on the bench, he ruled in proceedings initiated on behalf of a Donegal businessman, Frank Shortt, who had been framed by members of the Gardaí and imprisoned for three years. Hardiman  did not mince his words. Mr Shortt had been “perjured into prison” by policemen keen to advance their careers at his expense, with consequences that were “nothing less than life blighting”.
“That the perpetrators were wearing the uniform of the State aggravated the wrong giving the affair a public as well as a private dimension”.
The judge sanctioned an award of over €4.6m in damages to Mr Shortt.
The decision stands out as a rare case where the Supreme Court actually raised a High Court award, from €1.9m – an increase of almost 250 per cent.

Last December, Hardiman  took another swipe at a state authority, affirming the decision of the High Court to quash a decision of the Minister of Justice to refuse a certificate of nationality to a baby boy, Faisal Sulaiman. He put it bluntly: “I simply do not understand why so great an effort has been made over so long a period to deprive a small boy of citizenship. If there is a point to the pain and anxiety caused to the child’s family, the expense to which they have been put and the taxpayers money that has been spent, it entirely eludes me”.
In the earlier decision of ‘Lobe v Minister of Justice’   he adopted a different stance. He concluded that the state could force the family concerned to leave the state provided that the Minister of Justice was satisfied that the interests of the common good justified an interference with what is clearly a constitutional right.
Being born in Ireland, the child plaintiff had automatic citizenship. What was at issue was the capacity of that child to ‘anchor’ the remainder of his family to the state.
He quoted with approval from the 1982 judgment of Seamus Henchy  in ‘The People v O Shea’.
“It may be said of the Constitution, more than of any other legal instrument that ‘the letter killeth, but the spirit giveth life’ No single constitutional provision ( especially one designed to safeguard personal, liberty or social order ) may be isolated or construed with undeviating literalness”.

In the Portmarnock case (Equality Authority v Portmarnock Golf Club ), the key point at issue was whether Portmarnock was a “discriminating club” within the meaning of Section 8 of the Equal Status Act, thereby attracting sanctions such as the loss of a licence to sell alcohol.
Ruling in the Club’s favour, Hardiman indulged in some provocative baiting of feminists, including quotes from an Irish Times article entitled ‘Wanted : Single Sex zones for our sanity’ . He cited the example of the ICA, founded in 1910 “to bring women together in fellowship”.
“There are said to be only two all men golf clubs in Ireland, but almost any directory provides pages of women’s associations”..
NUI Galway academic, Donncha O Connell, was moved in Village Magazine to describe the judgment as being “laced with the rhetorical flourishes of a once great advocate”. By contrast, Judge Fennelly  in his dissenting judgment, applied the ‘ordinary and plain meaning’ of Sections 8 and 9 of the Act, concluding that Portmarnock did not cater only to the needs of men playing golf ,and therefore could be held to have discriminated against women players in the application of its rules.

Some will have drawn parallels with

Hardiman’s comments at the annual Law Society Justice Media Awards some years ago when he equated journalists to “cowgirls”. The Supreme Court judge was later challenged on some of his remarks by a woman reporter. Quoting the musical Oklahoma, the judge said “the farmer and the cowman should be friends” – the farmer being lawyers and the cowman, reporters. His beef was largely the well-directed one that media coverage of court cases was “inadequate and uninformative”.
Hardiman has ruled in many landmark commercial cases heard by the Court since his appointment in 2000.

In March 2011, the Supreme Court allowed an appeal brought by the ‘reclusive’ property developer, Paddy McKillen, against an attempt on the part of the National Asset Management Agency (NAMA) to take over €2.1bn of his loans from Bank of Ireland.
The High Court had found for NAMA in what was seen as a pretty definitive ruling. McKillen had deployed the services of the leading US economist, Joseph Stiglitz.
In Hardiman’s view, the effect of such a loan transfer would be to extinguish the borrower’s equity of redemption, leaving NAMA in the position where it did not have to account for the excess of value in the assets over the debt.
Hardiman concluded that NAMA would, in effect, be exercising a right of foreclosure, something not seen since the early 19th century.
He contrasted the NAMA business plan, and its seven-to- ten-year life, with the strategy deployed by McKillen – to hold prime assets over a long term.
In his view, McKillen was entitled to a hearing before such a handover of loans was put into effect.
Hardiman  noted that all the McKillen loans were performing, providing a “significant stream of income over and above his ( McKillen’s ) obligations to the banks”.
There was a real concern that NAMA would in taking a short-term view, maximising its return, could have a ‘devastating effect’ on McKillen: “in Ireland and other common law jurisdictions, the scope of the requirement of fair procedures has expanded considerably”.
“At the very minimum”, McKillen “had a right to a fair hearing by an unbiased body”.

In the case brought by Comcast (joined by Persona Digital Telephony and by Sigma Wireless Networks, the other unsuccessful 1996 bidders), an unsuccessful bidder for the mobile phone licence won in 1996 against the galaxy that is the  Minister for Public Enterprise, Michael Lowry, Esat, Denis O Brien, and Ireland and the Attorney General, the Supreme Court was asked to rule on a motion by the state to have the proceedings struck out on the grounds of delay.

Hardiman  was having none of it. He noted that Comcast had indeed issued its original plenary summons as far back as October 2001, alleging breach of statutory duty, misfeasance in public office, breach of the Prevention of Corruption Act, 1907, fraud, deceit, etc.
“These submissions (by the State ) are wholly lacking in reality. The corruption alleged was covert, devious & concealed”.
He mocked the notion that the same limitation period applied in a ‘simple running down action’ to a “case of such complexity with the subject matter allegedly characterised by concealment and deceit”.
The way has been opened to litigation that is likely to put the taxpayer and, potentially, private business interests associated with the licence-holders on the hazard for huge sums.
But the Court felt it must keep open the route to justice, as Hardiman the libertarian was only happy to make clear.

This distrust of the state and its agents is never deeper when it comes to Tribunals of Inquiry. One of his last acts as a senior counsel was to secure a victory for the late Liam Lawlor over the Flood-Mahon Tribunal in 1999.
In July 2011, Hardiman  let loose, describing how “appalled” he was by the length and cost of the Tribunals, when commenting on an attempt by the Director of Corporate Enforcement, Paul Appleby, to secure the disqualification of Tom and Mick Bailey as directors of Bovale Developments.
In Hardiman’s view, the expense to individuals of participation in tribunals has been “nothing less than grotesque”.
He has arguably been less willing to dwell on some of the breakthroughs engineered by the Tribunal system – in large part because, at heart, he is a traditionalist, a believer in the Common Law and in the basic tenets of the 1937 Constitution.
His concerns about the treatment of people, including ordinary witnesses, by Tribunals is well grounded, however.
At times, these star chambers acquired a life of their own, bestowing untold riches on some of its long-serving staff, and counsel.

In July 2010, speaking at the McGill summer school in Donegal, close to his holiday home, he stoutly defended de Valera’s creation, Bunreacht na hÉireann, against reformers interested in substituting for it a document along the lines of the 1916 Proclamation.
In his view, the demand for simplicity could result in the loss of basic constitutional rights.

At heart, Adrian Hardiman lies in the tradition of Edmund Burke, the great 18^th-century polemicist – the only difference being that Burke turned to conservatism and towards a pessimistc outlook in recoil from the French Revolution and its nasty after-effects. The young Hardiman never dabbled in revolution in the first place.

He is a staunch believer in the separation of powers and an independent judiciary untainted by experimentation.
He is appalled by the Government’s moves to cut the judicial pay and pensions bill, in part because it would appear in his view to threaten the status of the judges.
Of relations with the reforming Justice Minister, Alan Shatter, the less said the better.

All of which suggests that while Mr Justice Adrian Hardiman  will no doubt produce many more searching and stimulating judgments, he will not be interested in challenging the deep flaws of a legal system which permits fraudsters to dampen down public comment on their activities by adroit use of draconian libel laws and which permits them to evade justice with the assistance of highly-remunerateed legal consiglieri once their dubious activities have been unearthed.

Because hallowed traditions have their cost.

Village is promoting an initiative to assess the viability of pursuing prosecutions of tribunal villains and dishonest bankers

Like you, Village is sick of the Director of Public Prosecutions (DPP) not prosecuting tribunal villains and dishonest bankers.

What if you could prosecute them yourself?

In fact there is indeed a provision for  a common informer, i.e. a member of the public, to go directly to the court, to take a prosecution.

The common informer acting as a prosecutor must present evidence which is admissible, legally obtained and not hearsay. Tribunal proceedings or reports are not admissible in any prosecutions.

A summary offence is a minor offence, triable in the District Court with the judge acting as judge and jury and a maximum penalty of two years in jail or a 15000 fine.

A summary offence may be prosecuted by a common informer provided there is no statutory provision to the contrary. They may of course also be prosecuted by the Garda, aided by the DPP.

The DPP has no power to intervene in summary proceedings to force the withdrawal of a prosecution brought by a common informer.

An indictable offence is a more serious offence, triable in the Circuit or Central Criminal Court with a jury and no limit on penalty.

An indictable offence may only be prosecuted by the DPP.

A common informer can pursue indictable proceedings in the early stages up to the order for return for trial but the DPP alone can pursue it from then to a verdict.

The DPP will normally proceed with a prosecution on indictment, to trial – once it has been initiated by a common informer. But she may decide not to proceed with it and is not required to give reasons for not prosecuting.  Nevertheless such a decision cannot be taken lightly, according to former Chief Justice O Dálaigh in State (Ennis) v Farrell (1966). Challenging such a decision of the DPP not to prosecute would require judicial review in the High Court by someone with standing i.e. some relevant interest. Such an action might presumably be taken by a frustrated common informer acting in the event that the DPP’s decision was reached mala fide, influenced by an improper motive or improper policy or that the Director had abdicated her functions – grounds referred to by Denham J in H V DPP (1994). It should be noted too that some offences relevant to our purposes require the consent of the DPP from the earliest stages.

To avoid the possibility that the common informer pursues the villain for too limited a penalty, the best approach may be to initiate a prosecution on indictment but, if the DPP does not pursue the crime after the return to trial to either a) judicially review her or b) pursue the matter as a new summary offence.

Village has commissioned a report to assess the viability of criminal prosecution for offences of three categories of persons against whom findings of corruption or other impropriety have been made in Tribunals of Inquiry including the  McCracken Tribunal and Moriarty Tribunal: both dealing with the subject of Payments to Politicians; and the Flood Tribunal and Mahon Tribunal: dealing with Certain Planning Matters and Payments. The report will also address the prosecutability of individuals at the centre of impropriety in the banking collapse.

Village will have a look at the opportunities for prosecuting at least Bertie Ahern, the Bailey Brothers, David Drumm, Ben Dunne, Michael Fingleton, Michael Lowry, Denis O’Brien, Seán Quinn, Albert Reynolds and the corrupt key protagonists at Monarch Properties. We are also looking at the possibility of asset confiscation by the Criminal Assets Bureau of former Monarch Properties’ lands and perhaps of lands and assets formerly associated with the late Charles Haughey, and others.

The idea is that if the DPP will not pursue these prosecutions, Village may promote common informers, with no interest bar the public interest, to pursue them.

A sum of money has been made available to promote this initiative but we would also welcome help from informed members of the public and lawyers with relevant expertise.

Ray Burke, Frank Dunlop, Liam Cosgrave Jr and Liam Lawlor served prison sentences arising, directly or indirectly, from the Planning and Payments Tribunals. No-one else did. Liam Cosgrave Jr, Don Lydon, and Colm McGrath are currently facing trial on charges of planning corruption related to the rezoning of lands at Carrickmines, in South County Dublin, in 1992 and 1997.

No-one has been prosecuted as a result of the McCracken and Moriarty Tribunals. Regarding the banking collapse that bankrupted the country, Seán Quinn and his son served sentences not  for crimes but for contempt of court.

Former Anglo Irish Bank (Anglo) chairman, Seán Fitzpatrick has been charged with several counts of failing to disclose the true amount of loans made by the bank to him or to parties connected with him, among other things. Former Anglo finance director Willie McAteer and former managing director for Ireland Patrick Whelan have both been charged with 16 offences under the Companies Act.

Apart from that all has been morbid silence.

Democracy depends on the prosecutability of white-collar crime.

Rule one: Taking money out of people’s pockets makes you unpopular.

Rule two: You won’t prevent your unpopularity by introducing enlightened measures, like constitutional reform. It just doesn’t cut it. In fact, the electorate will resent you for messing around on such niceties while they’re suffering from cutbacks.
Rule three: Society needs scapegoats.

Rule four: The junior party in a coalition makes a good scapegoat. They’re
always guaranteed a kicking.

Rule five: The voters of ideologically-driven parties have higher expectations ie they are more easily disappointed.
been regressive.

Rule six: The longer you stay in government the more unpopular you’re going to get, especially if this recession continues. And it will. Rule seven: The leader makes a very good scapegoat.

Rule seven: The leader makes a very good scapegoat.
Rule eight: Changing your leader rwill not make a blind bit of difference.

Rule nine: But the junior party will do it anyway.
Now some of you may be thinking that the Greens did not change their leader. That’s correct. It’s also a long – and interesting – story, which space does not permit me to go into. It’s a matter of record, however, that successive harsh budgets resulted in electoral annihilation for the party. The voters opted for a government that promised an end to the regime of austerity. Labour had, apparently, devised a way of making omelettes without breaking a single egg. There were some in the party who assumed that the spin, which had worked so effectively is opposition, could continue in government. Éamon Gilmore, who had articulated the frustration of voters, has now discovered that anger is not policy and that soundbites can’t fix a broken economy. The blustering election promises, accompanied as always by the wagging finger, are now replayed as parodies to an angry electorate. The soundbites have come back to bite him over and over again.

More fundamentally, however, there is a real problem for those on the left in the Labour party, those who genuinely care about social justice. The problem is this: despite all the talk of preserving fairness and social-welfare rates etc, all of the FG/Labour budgets so far have been regressive. In other words, they have hit the poor harder than the wealthy. Contrast that with the record of the previous hated administration where every single budget was actually progressive, despite the severe cutbacks. This was due in no small part to the Green back-room team who went through every budget line to ensure as much fairness as possible. Is that really beyond the capability of the Labour advisors?
Gilmore has yet a few cards to play before he throws in his hand. The one ace up the sleeve, according to some in the Labour parliamentary party, is the renegotiation of the Programme for Government. Take it from someone with experience: this won’t work. Again, look at the precedent of the Greens. The junior party insisted on renegotiation and actually got practically everything they wanted. Did the electorate care? No. As for the media, they were just disappointed and angry when the Green Party members voted to continue in government.
Labour will bear the brunt of that disappointment, and Gilmore as leader will be sacrificed. Colm Keaveney and many old Labour stalwarts have always seen the DL contingent as mere interlopers. The choices are fairly stark: get out now and they’ll save some seats, maybe up to half of them, or brazen it out and face meltdown. If you were a Labour backbencher which would you prefer? They’ll be told that things will get better, that the electorate is ‘sophisticated’ (Did you know that we have the most sophisticated electorate in the world? I’ve read it in newspapers a few times). But, if they couldn’t sell the bank deal (Peace in our time) and the ‘extension’ (don’t you dare call it a renegotiation) of Croke Park, how on earth will they sell more austerity?
The dish will be served cold to Colm Keaveney and Co. Gilmore will go. Joan will take over …to lead the party to the biggest seat loss in their history.
One thing only may save Gilmore. Who in their right mind would want to take over the sinking ship?
John Gormley is a Contributing Editor of Village

By Sheila Armstrong

The Irish Times, in May 2012, announced that its online policy was to change. Before this, comments had to be approved by moderators. Now it is up to fellow commenters to flag offending statements, a policy that allows for anonymous commentary on its online articles.

After a number of tragic and well-publicised suicides in this country, the question of anonymity on the internet has become a cause celebre for politicians and the media alike, with the majority rushing to condemn those who hide behind faceless icons online.

The finger has pointed firmly at ‘trolls’; online users who intentionally provoke, harass or annoy other users. The word itself evokes images of disfigured and abusive introverts hiding under bridges – or in their mother’s basement, to ambush innocent visitors to the web. Often, online commentary descends into just that – undisguised abuse, ad hominem attacks, invocations of Nazis, and even physical threats.

It is no secret that anonymity allows for, even encourages, anti-social behaviour. Studies have proved this again and again, but even the tamest balaclava-clad protester can tell you the same thing without the benefit of a Ph.D. Joe Humphreys, writing in the Irish Times (Jan 9, 2013), even declares that “Anonymity online is the cloak of the coward”.

But  an anonymous opinion does not always indicate a villain behind the keyboard. Nor does presenting a public face necessarily give an argument weight.

Humphreys believes that the concept of “ideas without origin” is “philosophically in the Dark Ages”. But surely it is the idea of identity as a moral scorecard that is obsolete? Identities are constructed, just as morals are. A byline does not indicate a trustworthy source, just as anonymity or a nom de plume does not make a malicious interloper.

Once an opinion has been released into the public sphere, it should, if necessary, be able to stand up unaided, free from the ideological and biological baggage associated with its author.

Malachy Browne of www.politico.ie agrees that it is the content, not the packaging that is important. “The content of an article or comment is the primary concern. Anonymity can be important in protecting whistleblowers. In Serbia, for instance, a website has been created to allow whistleblowers anonymously to submit information to investigative journalists. For more general interaction on websites and social networks, I believe anonymity can stifle real debate because agendas can be hidden and accountability compromised”.

However, Humphreys seems to believe that anonymous input undermines a discussion, as “a conclusion you can draw is that only opinions that people are willing to defend publicly should be taken seriously”. This is not dissimilar from supporting coercion of the citizenry into announce their voting preferences through a loudspeaker on polling day.

Cass Flower, of www.politicalworld.org, believes that there may be a more insidious motive behind the calls for online unmasking. “Our clientelist system in Ireland has a political class with tallymen who like to track everyone’s politics at all times – it is easy to see why it finds the internet and pseudonymous discussion a pain. It is regrettable that vested interests have attempted to use a number of tragic deaths (which took place for complex reasons) to justify trying to bring online media to heel and to restrict rights to political discussion”.

Indeed, anonymity has become synonymous with trolling, and trolling has unfortunately come to import any opinion that challenges the status quo. ‘Anonymous’, an international organisation of ‘hacktivists’, is often described as a troll. Wikileaks does it on a grand stage. However, both of these organisations are frequently described as digital Robin Hoods – exposing corruption and speaking up for the unheard.

Of course, no one is saying that all trolls are virtuous freedom-fighters railing against a corrupt system. Most may in fact be malicious, or just damningly stupid. But reducing a person’s free speech for reasons of malice, ignorance or stupidity would leave democratic expression open to the very few.

But what those who rush to condemn the advent of trolling online seem to ignore is that online media are, for the large part, self-policing. For every exaggeration, abusive comment or outright lie, there are a dozen dissenters rushing to save the day. Online activists take pleasure in dissecting outlandish statements and slamming abusive users, whether or not they choose to disclose their name and address.

And this online policing extends not just to those who comment on media, but to the producers of the content themselves. The suggestion that the media and commentators should be inherently moralistic is rightly laughable. Morals are not universal, but there is something that is – the difference between fact and opinion, between truth and lies. Anyone who presents one as the other should rightfully be subject to any rotten fruit that might be thrown, be it from a respected professional or a nameless face. Calling this cowardice only serves to highlight the tenuous nature of the statement.

Anonymity is not the real issue. Instead, it has become a smokescreen for accountability. But who or what, exactly, are opinions accountable to? Joe Humphreys? Probably not. The writer’s own conscience? Not quite. But the readership? Surely.

In this age where fact-checking has become a joy, instead of a chore, those behind the dusty typewriters need to realise that their audience is not just a passive recipient of their bloated opinions.

Online abuse is one thing. And it’s doubtful that anyone would argue that sexist, racist, threatening or libellous behaviour contributes greatly to any discussion. But to declare that any statement delivered anonymously is worthless or harmful reveals a desire to regain control over media and ideologies that are slipping away. Some might call this mob rule, and it is. But this is also free speech at its most fundamental.

Democratic expression needs to be re-conceptualised in this new realm of cyberculture. It may be naive, it may be idealistic, but the fact remains that opinions, whether presented anonymously or publicly, are eventually accountable to the truth – and it is often the anonymous trolls hiding under the bridge that uncover this truth.

Of course, anonymity extends not just to those who comment on media, but to the producers of the content themselves. The Irish Times says “We are keen to encourage our users to put their names to their work, as our journalists do”.

Let the journalists be anonymous or use a nom de plume as they wish – but grant the same privilege to the audience. The idea that media products are taken for granted because of a name tag, while the audience is discounted for the lack of identity, is a stale one. As Flower says, “Research shows that readers trust writers with a consistently sound track record – the media, or the pen name, is not the issue”.

Allow writers to say whatever the hell they want, wearing whatever mask they want – but make them face their audience, whether  it is made up of anonymous, trollishly-disfigured, or smiling faces.

By Eibhir Mulqueen

Brave new world

Reserves of natural gas that could produce a multiple of what has come from the Kinsale gas field lie underground in parts of Connacht and Co Clare but environmentalists at www.what-the-frack.org are gearing up to prevent three exploration companies in their push to develop Ireland’s first onshore gas field.

The companies are proponents of the controversial extraction process known as fracking and at least two are seeking exploration drilling licences as a follow-up to their current licensing options which run out on February 28.

Fracking, or hydraulic fracturing, enlists a pressurised mix of water, sand and chemicals to release gas from shale rock, raising popular fears of localised earthquakes and contamination of water sources – with gas or with the water mixes used in the process.

In the US, this new windfall of natural gas is called the ‘shale gale’.  It is the most significant development in energy technology so far this century, accounting in little over a decade for over  a quarter of US natural gas supply. “Recent innovations have given us the opportunity to tap larger reserves – perhaps a century’s worth – in the shale under our feet”, President Obama has said.

Commentators focus on the fact that efficient use of gas emits less than half the CO2 per unit of electricity, of coal, falsely claiming it heralds an environmental dawn. They fail to note that without fast elimination of both gas and coal we seem set to breach the two degrees Centigrade limit to increased global temperatures necessary to avoid runaway climate change.

In West Clare, Enegi Oil’s 495 sq km exploration area is “a highly prospective asset”, the company has said, with “a strong best-case investment profile”. The recoverable gas estimate is between 1.49 trillion cubic feet (TCF) and 3.86 TCF. In comparison, the almost-depleted Kinsale gas field, the largest single hydrocarbon discovery in Ireland to date, has produced 1.75 TCF since 1978.

Meanwhile, Tamboran Resources has stated there is potentially 2.2 TCF of shale gas in Leitrim. It too has moved to get a licence for exploratory drilling. Third in the race to develop Ireland’s first onshore gas field is Langco (Lough Allen Natural Gas Company), concentrating on west Cavan.

The industry is scrambling to undo the groundwater-contamination reputational legacy of fracking in the US, extolling the virtues of new extraction fluids. One such, according to Halliburton, uses the same acids and enzymes found in fruit and vegetables “to create one of the most innovative and environmentally safe fracture solutions ever conceived”. A Halliburton executive has drunk a glass of the mix and Langco chief executive Dr Martin Keeley has said he is up for sampling his company’s fracking fluid.

The Government has remained equivocal about the issue, waiting on a second report from the Environmental Protection Agency on the implications of fracking. But Minister for Energy Pat Rabbitte has said the delays at the Corrib gas project at Rossport due to the Shell to Sea campaign were damaging. None of the major oil companies applied for the last round of offshore exploratory licences. Energy security as well as revenue and jobs will be part of the mix when the Government decides.

An Exxon Mobil executive has warned that Europe-wide opposition to fracking would expose it to energy insecurity. “By 2030, Europeans are expected to be significantly more reliant on imports of natural gas than they are today”, Andrew P Swiger told the New York Times. “Europe’s unconventional natural resources can provide the opportunity to offset this changing mix with domestic supplies”, he said.

Ranged against the deep pockets of the exploration companies and their promises of wealth and jobs is an alliance of community-based environmentalists. What-the-frack.org is garnering support with information meetings, newsletters  and screenings of the US award-winning documentary ‘Gaslands’.

Susan Griffin, a founder member of the aligned Clare Fracking Concerned and a UCC lecturer, was living in France when she initially heard about fracking, as groups became active at a local and national level.

“All ages from the very young to OAPs were manning information- and awareness-raising stands in their local Saturday markets. In towns and villages, banners with ‘Non au Gaz de Schiste’ [No to shale gas] were commonplace.”

Despite having huge shale gas reserves, France banned fracking in 2011 and President Francois Hollande has since upheld the decree.

“Upon learning that Ireland, and more specifically my own county, Clare, was also a fracking candidate I returned home to help raise awareness of the possible effects of fracking such was my fear of its potential disastrous consequences on our water, health, agriculture and environment in general”, adds Griffin.

“Everyone’s help is needed. Oil companies have substantial financial power and so we in Clare and Ireland have to assemble and exploit our huge
people power”.

The Clare Group can be contacted at clarefrack@gmail.com. The western-based anti-fracking alliance is contactable at www.what-the-frack.org

Minister Jimmy Deenihan, speaking recently in the Seanad, identified the opportunities in the coming decade of multiple commemorations. These included the possibly contradictory potentials “to dedicate ourselves to an enhanced understanding of modern history” and to “play a major role in bringing all on this island closer together”. Inevitably though somewhat jadingly, he suggested that “the commemorative programme will also have a special appeal to the Irish diaspora”. Why miss a good business opportunity?

2013 is the year of the The Gathering, whose website states that it offers an opportunity for “communities throughout Ireland [to] showcase and share the very best of Irish culture, tradition, business, sport, fighting spirit and the uniquely Irish sense of fun”.

We like to celebrate the stereotype fighting Irish, ideally in failure. Any prospect of success would make this stereotype much more threatening. We have statues to Jim Larkin and James Connolly but none to William Martin Murphy, the businessman who embraced the task of dismantling the ITGWU and so unleashed the Dublin lockout in 1913. Our politics of national identity prizes the heroic underdog – more particularly, the unsuccessful heroic underdog.

Dublin in 1913 was a place of extreme poverty, chronic unemployment, overcrowded housing and rampant malnutrition. Local authorities did not even provide minimal social services to relieve the hardship. Trade unionism had emerged as a new form of struggle for social change. Jim Larkin and the ITGWU had been successful in securing significant wage increases for the dockers in Belfast and Dublin. William Martin Murphy and the Dublin Employers Federation decided to stop the growth of this new movement. Murphy was chairman of the Dublin United Tramway Company and owner of both Clery’s department store and the Imperial Hotel. He also controlled the Irish Independent, Evening Herald and Irish Catholic newspapers. Murphy was also a prominent nationalist and a former Home Rule MP in Westminster. He was known as a kind and charitable man in his private life. He was regarded as a good employer and his workers received fair wages but he was against trade unionism in general and Jim Larkin in particular.

Larkin promoted an aggressive trade unionism that sought to combine unskilled and general workers in one large union and to make use of sympathetic strikes. This approach offered hope to working class people that a fairer and more equal distribution of wealth was possible. So 1913 was more than a dispute over wages and union recognition; it was also a dispute about living conditions, inequality and the ownership of wealth.

Over 20,000 people were off work from mid October 1913 until January 1914. The industrial dispute was the most significant and most severe in Irish history. Families across Dublin endured the most severe hardship. Gradually the workers were forced back to work over December and January.  Many found themselves blacklisted and without hope of work.

Union leaders called the battle a draw. It left, however, a legacy of bitterness and a sense of betrayal among union leaders. Employers were clear that they had secured the avoidance of a social revolution. The battle about the ownership of wealth then ceded place to the battle for Irish independence.

1913 commemorations must rise above celebrating stereotypes of the fighting Irish. We need to commemorate 1913 in these current times of crisis but in ways that enable the past to be a challenge to do better in our pursuit of social change in today’s Ireland.

The 1913 committee established by SIPTU – the descendant of the ITGWU – is a valuable initiative. The Committee aims to recall and reaffirm the values that inspired Larkin and Connolly. It identifies a broad spectrum of civil society organisations that must work together to affirm these values.

1913 challenges civil society to find the strategies and tactics to make its legacy relevant in today’s Ireland. 1913 was the high point in what was an evolving new form of struggle for social change and equality.

Today civil society is fragmented into a diversity of specific interests. It has been transformed by a partnership with the state that has become debilitating. It has lost its capacity to mobilise. Commemorations must stimulate the emergence of a focused and effective civil society that demands an equal, environmentally sustainable and participative Ireland.

UniCredit breached liquidity requirements in 2007.  Matthew Elderfield nods.  The interconnectedness of banking dysfunctionality.

There is a general official view that Ireland’s ethical delinquencies are in the past.  Corrupt planning stopped when the tribunals started; and bad bank-regulation stopped with the demise of Pat Neary and the production of two limited and innocuous reports by Patrick Honohan and Klaus Regling. Inconveniently for a country that has started to see regulation in black (then) and white (now) terms, the general view does not reflect the reality. Hold tight for a mind-boggling trip through the complexity of banking dysfunctionality.

Liquidity is the short-term financing vital to ensure the banks still do their core job of funding the economy.  Somehow Ireland went from having liquid banks to having banks so illiquid that a bank guarantee was offered by the government in September 2008.  But there are staff in every bank legally charged with ensuring banks do not become illiquid.  There is an intricate and comprehensive system in place to ensure they cannot become illiquid, bearing in mind their customer base.  It involves arrangements they must have in place if for some reason they become illiquid e.g. they can ask another named financial institution to lend them money short-term.  Every morning the banks have to produce a report showing how they kept their liquidity up to the target the previous day.  The measure used for the target is the ‘liquidity ratio’.

In mid 2007 the financial regulator, Pat Neary  – following a six-month ‘dry-run’ –  introduced a new rule for the liquidity ratio implementing the latest Basel banking accord.  It required that cash inflows equalled at least 90 per cent of cash outflows forecast over the relevant period. This prudential system was, and is, central to how banking is possible.  The system was intended to be stringently monitored by the financial regulator.

In fact Village has evidence that a failure of liquidity, that if it  – as may well have been the case – was typical to both Irish banks and foreign-owned subsidiaries,  shows dysfunctionality on a scale that should have prompted the financial regulator to advise the government to go out into the markets and get funds for the banks immediately, was ignored by the regulator. Nor did auditors pick up on it.  Indeed it is highly likely that liquidity problems were dysfunctionally glossed over by auditors all over Dublin’s financial world around this time. If such dysfunctionality had not occurred and been ignored for so long after the collapse of Northern Rock, Ireland could have dealt with general bank liquidity in a structured and gradual way – and not purportedly needed the bank guarantee that has finished up bankrupting the country and immiserating much of the population.

The people behind this dysfunctionality should be made to account for it.  The new regulator, Matthew Elderfield,  should explain what went on on his predecessor’s watch so we can see what happened.  Instead it appears the new regulator is being disingenuous.

In late July or early August 2007, an experienced financial risk-manager,  says he discovered his employer bank – the Irish subsidiary of the giant UniCredit Bank of Italy -  had been dramatically breaching the liquidity ratio. The risk-manager maintains he was specifically warned by senior personnel at the Irish subsidiary not to report the matter to the financial regulator in Ireland. On one occasion he reported a ratio of only 70% to the regulator (and obtained a receipt). In fact he says “I was getting 75%, even 65%, not occasionally but day in, day out. Banks are obliged by law to maintain all daily records for at least five years so there must be written evidence of this.  At the time, I thought: ‘Is it my fault?’  Then I asked questions and I was told ‘it’s a system error’ or ‘a trader forgot to book a deal’ or ‘it’s complicated.  Give it a bit more time and you’ll understand.  It will be fine’”. In any event, even if taken at face value, such failures would attract penalties under Sections 3.4 and 10 of the regulator’s Requirements for Management of Liquidity Risk, 2006, which seem to impose fairly strict liability. Ascertaining the liquidity ratio is a complex task and eventually the risk-manager turned to a consulting company in London for help, affording it access to UniCredit’s systems.  That company – a company which continues to provide such services for some of Ireland’s most well-known banks – calculated the liquidity ratio at an extraordinary 50% when a ratio of 89% would in normal circumstances be deemed problematic. The risk-manager resigned, in part fearful  of the draconian penalties that applied for breach of the law.

A simple call to UniCredit’s Milan-based parent could have been expected to generate a transfer of many billions of Euro within a few hours, so resolving the problem.  But that would have undermined the parent bank’s confidence in its Celtic subsidiary, and perhaps jeopardised bonuses against a background where the previous year’s final accounts had anyway required substantial and embarrassing revision to the tune of tens of millions of Euro.

Around  two weeks later the financial regulator came in  on a scheduled inspection. It appears all hell then broke loose with the regulator effectively taking over the firm for two weeks.  During this period the arrangement with the expert London consulting company was terminated, so it may have proved difficult for the regulator to ascertain the prevailing liquidity ratio.  The risk-manager was warned by his former employers that repeating his story “to a third party would constitute grounds for a claim of defamation which we would not hesitate to pursue”. Solicitors McCann Fitzgerald wrote to him on their behalf advising that his allegations were “outrageous”. They have claimed the same to Village.

What is surprising is the reluctance of Irish authorities, and indeed Irish politicians, government and opposition alike, to make the running with this still unresolved issue. The honourable exception is Senator David Norris who outlined the events described above and pushed the issue in the Seanad, though without naming the bank – except privately to the Minister.

The regulator
The new until-now ‘poster-boy’ regulator, Matthew Elderfield, has stated in response to questions from the Sunday Business Post, and the Süddeutsche Zeitung,   a respected German newspaper, that “our records do not match the description of events given by Senator Norris; nor did we receive what might be described as a ‘whistleblower’ letter.  We can, however, confirm that an overnight liquidity breach was reported by an institution around the time in question. The matter was followed up with the institution and rectified to the satisfaction of the Financial Regulator at the time”. For a poster boy this is in fact remarkably disingenuous, though certainly true.  The regulator’s records presumably do not match Senator Norris’s because its agents didn’t look hard enough or take a proper record; and they did not receive a whistleblower letter as the letter came from UniCredit itself which limited its declaration to one overnight breach.  Notably, nothing the regulator said undermines the credibility of the risk-manager.

It is impossible that there could be a flagrant breach without a systemic problem since the whole prudential system is constructed with actuarial precision so it can deal with every contingency.  That is what makes it prudential. In prudential circles a 1% breach is taken very seriously.  20% or 40% is calamitous. Impossible even. It is impossible that there would be an overnight move from compliance (90%) to flagrant breach (70% or even 50%), when the maximum deviation allowed from 90% is 1%. Unless perhaps there was a single extraordinary event, an unpredictable ‘act of god’. Anyone with any knowledge of the dynamics of liquidity ratios, including particularly the regulator,  would know this.  If there had indeed been such an extraordinary event, there would seem to be no reason why some intimation of the nature of the problem would not have been provided by the regulator, when questioned about the breach. In the absence of such an extraordinary explanation, seeing a breach of 20% or even 40% would necessarily alert the regulator to a systemic problem likely to be sustained over a long period. It would appear almost certain that the scale of the breach had evolved incrementally – and continued for some time.  Not just overnight. This would tend to corroborate the risk-manager’s story.

Extraordinarily, the financial regulator did not then, and Matthew Elderfield – who has been in office since January 2010 -  still has failed to, interview the risk-manager about the matter.  This is despite the risk manager’s patently abrupt departure (and that of the London consultants) during this controversial episode – and an accelerating number of enquiries to the regulator about the matter. Nor is it clear whether the regulator informed the Milan-based parent of UniCredit or, crucially, the Italian and EU regulatory authorities.

In June 2009 the regulator issued a revision of regulations for liquidity ratios without making any reference at all to the fact that the regulations had been revised to achieve precisely this ‘new’ effect in 2006.  This served deceptively to imply that the regulations had not been in force at the time of the breaches by UniCredit (and by all the other banks whose liquidity imploded illegally, though without media recognition of the illegality, around the time of the bank guarantee). The text of the 2006 document [section 9.4] which specified that the new requirements had taken effect on 1 July 2007 disappeared from the 2009 document.

The bank itself
The 2007 annual report of UniCredit’s Irish subsidiary is signed as chairman by Professor Brian Hillery, one-time FF TD for Dun Laoghaire, current chairman of Independent Newspapers and  Director of the Central Bank. The auditors were KPMG who appear to have had some difficulties with the accounts but to have swallowed their pride. They – as usual – state  concerning the accounts that “to the fullest extent permitted by law  we do not accept or assume responsibility to anyone other than the company and the company’s members as a body” for the audit. The report states that, ‘‘in the light of pressures in the marketplace, we have maintained strong liquidity ratios since the middle of 2007’’. This must be highly controversial since the new legislation came into effect in the middle of 2007, and the risk-manager claims UniCredit was still not compliant in September, occasioning his resignation. Interestingly,  UniCredit in Milan has emphatically denied, to the Süddeutsche Zeitung and more recently the Sunday Business Post, that it is the bank to which Norris was referring in the Seanad. Perhaps it simply didn’t know.

Department of Finance/Central Bank
Finance Minister, Brian Lenihan, has stated that “the supervision of liquidity requirements for credit institutions  licensed and operating in ireland is primarily a matter for the Central Bank and the Financial Regulator… Breaches of liquidity  requirements may be subject to proceedings  under the Financial Regulator’s administrative sanctions procedure or to prosecution”.  Elsewhere he has emphasised that the Central Bank was subject to strict confidentiality requirements “unless the issue gives rise to some broader financial stability issue which did not arise in this instance”. Nevertheless he acknowledged that the Central Bank had been advised of an “overnight” breach around this time but “the institution rectified the position to the satisfaction of the Central Bank”. “The Central Bank required an external review of the liquidity reports submitted to it but did not identify material issues outside the single date highlighted”. He claimed that “appropriate steps necessary to prevent any recurrence off this issue have now been taken by the institution concerned”.

Opposition politicians
A prominent member of one of the opposition parties recently told the risk-manager, “‘we can’t afford the consequence of revealing this story.  We already have enough to deal with when we come to power”.

Joan Burton of the Labour Party was perhaps a little slow to move but, under a little pressure, diligently raised the matter with Brian Lenihan and met Patrick Honohan. Burton had met Honohan previously about the German bank,  DEPFA, and been told that the regulator’s staff was not trained to monitor IFSC activities and that by-and-large, the IFSC had been treated as some ‘off-shore’ entity that did not warrant strict supervision as most of its entities were subsidiaries of much larger overseas corporations, and therefore ‘someone else’s head-ache’.  The Green Party Senator Mark Dearey and its Chairman, Senator Dan Boyle, wrote to the regulator but did not receive a substantive reply.  Sinn Féin’s Arthur Morgan did not reply to correspondence from a senior academic friend of the risk-manager. Fine Gael’s then-Finance spokesperson, Richard Bruton, who met the risk-manager in his solicitor’s office, has sat on the file and his successor Michael Noonan doesn’t appear to know it exists. Former Fine Gael Taoiseach John Bruton is the head of Dublin’s International Financial Services Centre, which aims to attract financial companies to set up there, and is touting Irish the saleability of Irish banks to Gulf sovereign funds.

An inadequate regulatory culture is alive. Lack of interest in the truth abounds.  Figures just don’t matter.  The blind wearing of the green jersey goes on.

The media
The Irish Times has been reluctant to pursue the story, though Fintan O’Toole did an extensive spread on it.  Others in the newspaper were keen that the risk-manager should go public before the paper would pursue it further.  No other media have covered the matter except the Sunday Business Post, whose Kathleen Barrington has given it considerable space.

The New York Times famously alleged as long ago as 2006 that the IFSC was “the Wild West” of banking. Around that time it was reported that General Re’s Irish subsidiary, Cologne Re, was seen as an ideal location for a major fraud because Dublin “did not report to anyone” and so avoided the “North American problem” of financial regulation”.  The simple truth is that one of Ireland’s few genuine policy successes has been attracting major US-based multinationals like Google and Microsoft on the back of a 12.5% Corporation Tax rate.  Irish banks then assume a disproportionate importance to the world economy because these corporations have an interest in channelling profits through Ireland, so avoiding heavier tax rates elsewhere where the profits may in fact have been earned.  This is one of the reasons Irish banking was a flashpoint, certainly the European flashpoint following the collapse of Lehman’s.  The clout of the multinationals conduced to a lax regulatory régime for banking.  It also partly explains the government’s deference to the banks (over the people) in policy terms including perhaps some of the pressure the government was under to guarantee the banks, lest a run threaten the billions of  Euro in multinational profits resting in Irish accounts. Light regulation helped attract multinationals but it was a gamble that, after a time – and on a grand scale – has stopped paying off for Ireland. It stopped paying off because it led uniquely to liquidity problems across the ranges in a nation’s banks and so to guarantees that have precipitated national insolvency.  But the policy of light regulation also risks major legal actions from those who have been victims of the dodgy, sometimes illegal, laxity. It is surprising in this context that the bailout was not linked to higher standards.  In late November the Financial Times commented, “An element of the bail-out should have been specifically targeted at plugging the liquidity gap, if only to signal an acknowledgement of how crucial a role it has played in undermining the global system – in Ireland, just as it did during the big bank failures in the UK (Northern Rock) and the US (Lehman Brothers and Bear Stearns)”.

The reason the green jersey is in play – apart from the obvious embarrassment of mishandled liquidity issues which were so central to our mishandling of the bank guarantee – is that if it can be shown that the regulator systematically allowed breaches of liquidity ratios, indeed still does not recognise those breaches, it could trigger litigation against Ireland by the likes of HRE (Hypo Real Estate).

HRE, was bailed out for €140bn in loans and guarantees in September 2008 by the German government, after HRE had hastily bought – heedless to its underlying liquidity problems – IFSC-based DEPFA.  DEPFA’s directors then included pillars of Ireland’s economic sector including Francis Ruane, director of the ESRI, and Maurice O’Connell, former governor of the Central Bank.

If HRE had not bought DEPFA, so transferring the relevant headquarters from Ireland to Germany, Ireland would have been responsible for this colossal bailout.  It is perhaps reflective of the lack of seriousness of the debate here for so long that this lucky escape from the consequences of our lackadaisical regulation,  was not more widely recognised as far back as 2008. HRE  is suing its former chief executive Georg Funke for allegedly not briefing them properly on the liquidity problems. HRE was, at the beginning of 2010 reported to be considering suing the entire former board of DEPFA too. Crucially its litigation refers to faulty risk-management procedures and “numerous breaches of Irish banking regulatory law” before, as with UniCredit, the bank went to the regulator who in the case of DEPFA settled with its relevant subsidiary for a €250,000 fine without any public indication of the number of breaches.  It is implicit that the Irish regulatory authorities  may have been delinquent in monitoring breaches in a firm that the German regulator memorably described as a “pigsty”. An extensive German parliamentary investigation  into what was after all a bigger bailout than that accorded to Ireland, found that the German regulator had behaved  competently “within the confines of the legislation” which included that HRE, as a ‘holding company’, entirely avoided the gaze attracted by ‘banks’. An enraged German body politic believes Ireland’s regulatory régime did not help. And Ireland, perhaps myopically, refused requests from Germany for a contribution to the DEPFA bailout.

In a separate but analogous case Sachsen Landesbank had to receive over 17bn in emergency funding from Germany following liquidity difficulties with its Irish subsidiary, Ormond Quay, and ultimately was taken over by Landesbank Baden-Württemberg (LBBW Bank).

Unfortunately for Ireland the same smarting Germany, more than any other country, is responsible for the penal bailout interest-rate that may scuttle Ireland – and will take the determining stance on any renegotiation of the deal.

UniCredit
UniCredit is Italy’s largest bank,  a major international financial institution with strong roots in 22 European countries and an international network represented in approximately 50 markets, with 9578 branches and more than 162,000 employees. In the Centre and East of Europe, UniCredit operates the largest international banking network with around 4,000 branches and outlets. UniCredit’s Irish branch managed €27bn at the relevant time.  UniCredit is said to be Italian-conservative in much of its ethic.  It was in the news when its renowned head Alessandro Profumo resigned in September 2010 arising out of a feud with UniCredit’s main shareholders who have been uncomfortable with the bank’s growing need to raise capital, especially from Libya. The Libyan Investment Authority, a sovereign-wealth fund, recently increased its holding in UniCredit by 0.5% to 2.6%, while the Central Bank of Libya holds an almost 5% stake in the bank.

UniCredit operates on its own and through a labyrinth of subsidiaries.
UniCredit’s 96.35%-owned subsidiary, Bank Austria – Austria’s largest bank –  has a twenty-five percent stake in another Austrian bank, Medici, which is in big trouble. In mid-December a  complaint against Ms Sonja Kohn was part of a fusillade of litigation filed in federal bankruptcy court in Manhattan by Irving H Picard, the trustee trying to recover $40bn in assets for victims who sustained cash losses in the enormous ‘Ponzi’ pyramid fraud perpetrated by the world’s most famous fraudster, Bernie Madoff. The trustee contends Bank Medici was nothing more than a conduit set up for the sole purpose of funnelling money to Mr Madoff.  It is alleged Sonja Kohn knowingly raised billions of dollars in cash to sustain Mr  Madoff’s fraud in exchange for at least $62 million in secret kickbacks. Bank Medici was 25-percent-owned by Bank Austria  and the trustee claims in his complaint that it was effectively a “de facto” branch of that bank. The association with Bank Austria gave Ms Kohn and Bank Medici an imprimatur of legitimacy when recruiting investors, the trustee asserted.

Bank Austria,   UniCredit, and its subsidiary Pioneer, are all named as defendants in the trustee’s Madoff lawsuit — which cites their ties to Ms Kohn. UniCredit said in a statement in mid-December that its policy was not to comment on litigation but that it intended to vigorously defend itself against the accusations made against it and its Bank Austria unit.

As if all this were not intricate enough, according to Roman prosecutors cited in the Austrian weekly newspaper, Profil, in March 2010, banks in Austria – including the Austrian branch of Anglo-Irish banks, Anglo Austria,  but also Bank Austria – the UniCredit subsidiary cited in the Madoff proceedings – were used to launder about two-billion Euro for the Italian mafia between 2005 and 2007.

In 2008 Seán Fitzpatrick sold Anglo Austria to a private Swiss Bank, Valartis, a bank which tells no secrets but has 4000 clients with funds of around €1.25bn.

Extraordinarily, FitzPatrick even funded a loan for Valartis of €24 out of the €141m purchase price with the sale completing the day after FitzPatrick’s resignation from Anglo. It was a surprising move at a time when Anglo had liquidity (i.e. cash) problems.  Anglo Austria was a rich source of scarce deposit cash, up to €600m according to the Sunday Business Post’s Kathleen Barrington – a cheaper alternative to the contrived and fast-evaporating interbank borrowings that Anglo had come to depend on, particularly welcome just around the time Anglo was performing its balance-sheet contortions with Irish Life and Permanent. It is an issue of real concen that some of Ireland’s developers or even bankers may have ploughed dodgy assets into this inscrutable repository away from the gaze of NAMA, trustees in bankruptcy, the office of corporate enforcement and the rest. In another twist the UniCredit subsidiary, Pioneer Investments, which has an office in Dublin, owns a large number of Anglo-Irish bank bonds. Pioneer’s Dublin office seems to be a colourful operation. Village was told of a meeting arranged for employees of Pioneer in Dublin with the papal nuncio to Ireland, at which it appeared that a hierarchy, entirely unrelated to the separate hierarchy in the bank, determined the sequence in which baciamani (kisses) were performed around the ecclesiastical ring.
On a more prosaic level, Italian media reports last year suggested  Roman prosecutors  suspected certain Italian taxpayers of using the Vatican  bank, the Instituto per le Opere die Religione (“Institute for Religious Works”) as a cover for tax fraud and embezzlement. According to the well-respected Italian newspaper, La Repubblica,  investigators discerned years ago that  the Vatican bank administered several accounts at other banks including UniCredit. According to press releases, bank investigations revealed that from 2006 to 2008 illegal transactions were carried out totalling about €180 million. In September 2009, the former President of the Vatican Bank, Angelo  Caloia, resigned after 20 years in office.

The last big scandal concerning the Vatican Bank was in 1982 when   Banco Ambrosiano, in which it was the major shareholder, went bankrupt.  Banco Ambrosiano was implicated in multiple fraud and its head, Roberto Calvi, was found hanging from Blackfriars Bridge in London, fuelling one of the subplots in the movie Godfather III.

One thing is for certain in an age where the banking system is so interdependent and so fragile: the silence of national regulators about dodgy banking practices is unsustainable and dangerous. European regulators and their US counterparts need to know what is going on with UniCredit in Dublin and elsewhere. Germany needed to know how DEPFA was being regulated in Ireland. Irish taxpayers need to know who has funds in the former Anglo Austria, and  we could all do with enlightenment about the recurring dodginess of the papal bank. In a world where money can be transferred instantaneously, banking systems are all interconnected. It is hopeless for national regulators to narrow their horizons to protect ‘their own’ banks. Matthew Elderfield is doing no favours to EU banking regulators, or to the world’s banking and economic system, in being disingenuous about liquidity breaches at the elusive UniCredit.

We need a ‘Social Europe’, not just Stability, Jobs and Growth

By Niall Crowley

Mario Draghi, President of the European Central Bank, did for it last year, in the Wall Street Journal of all places. He declared that the European social model was “already gone”. He stated that austerity, coupled with structural change, was the only option for economic renewal.

Ireland has a proud record of contributing to the development of  ‘Social Europe’. Now that Ireland has assumed the presidency of the European Union there should have been some hope for its revival. Not so. Enda Kenny’s address last month to the European Parliament on the Irish presidency’s priorities made no mention of ‘Social Europe’. In his ubiquitous reassuring Christian Democrat mode, he told the Parliament that “Ireland’s Presidency will be about our European family”. But that family is getting ever more dysfunctional with the loss of Social Europe.

‘Social Europe’ has been an important balancing mechanism. Jacques Delors, European Commission President from 1985 to 1994, most notably championed the concept. He believed that Europeans, faced with intensified Europe-wide competition, had to be protected from the excesses of the market. This was as much about securing acceptance of this intensified competition as it was about social justice. Nonetheless it has been a unique and important dimension to the European project. His thinking found its most significant expression in the Social Chapter of the 1992 Maastricht Treaty. This set out a broad range of workers’ rights.

The Lisbon Strategy, adopted in 2000, reflected this commitment to ‘Social Europe’ in according equal priority to the employment, economic and social goals of the EU. Environmental goals were added a year later. The Europe 2020 ‘Strategy for Smart, Sustainable and Inclusive Growth’, adopted in 2010, continued this commitment with its focus on inclusive growth and by establishing significant poverty-reduction targets.

The economic crisis has provided the opportunity to undermine ‘Social Europe’. Economic matters have come to dominate the policy agenda. Social objectives are absent from the often-improvised economic policies being pursued in response to the crisis. Austerity and competitiveness policies dominate.

Equality and social inclusion policies have become marginal. Democracy has been diminished with the European Commission and the European Parliament sidelined by the European Council. In effect this means that those dismantling ‘Social Europe’ are the national governments rather than the European institutions.

The Government, in assuming the Presidency of the EU, continues the traditional Irish political preoccupation with what the EU can do for us. The Irish Presidency is being dominated by our search for a formula that can be touted as a deal on the bank debt. It is unlikely to be concerned with the niceties of what sort of EU we want, applying the lessons of the current crisis.

The most we got from Enda Kenny’s speech to the European Parliament was that the Irish Presidency would be about “stability, jobs, and growth”. He identified “removing the barriers to business” and “improving competitiveness” as being among the critical developments required in creating an environment for jobs. Is this really a comprehensive agenda for a mature European Union?

Jobs are a necessary focus. However the European Anti-Poverty Network (EAPN Europe) usefully reminds us that jobs alone will not recreate ‘Social Europe’. They point out that the majority of poor families are already working and the number of working poor is rising.

The EAPN analysed the National Reform Programmes (NRPs) published by all Member States under the Europe 2020 strategy. They found that there was little focus on the quality of jobs in these NRPs and no analysis of how employment will contribute to poverty reduction. Although poverty is increasing, it was invisible as a policy issue in the NRP and, therefore, unlikely to be reduced in a jobs only approach.

The EAPN recommended the need to back ‘Social Europe’ and restore balance to the economic and social objectives in Europe 2020 and to economic governance more generally. In line with Treaty commitments they further recommended that all policies should integrate social objectives and contribute to reduction in poverty. EAPN would be foolish to pin their hopes on progress under this most conservative and unimaginative Irish Presidency.