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UPDATE:David Begg must explain Role of Central Bank

Dáil Scroll Down for Record of David Begg on Board of Central Bank Before and During the Financial Crash also Wikipedia on Central Bank of Ireland 

Deputy Governor and Chief Economist at Central Bank, Tom O’Connell Tells All at Banking Inquiry

THEY ALL KNEW BUT—

“Too many people were benefitting from the boom time for prudent avoidance measures to have been taken.”

“It’s sometimes said that nobody seemed to know that a property boom or bubble was developing. That’s … that is completely incorrect in my view ——Ireland’s banking and economic crash should never have happened, should never have been allowed to happen, with all the consequences of huge increases in unemployment, rising emigration, enormous debt, suicides, etc., that we have seen.-the liquidity pumped out into the banks was €140 billion, you know, with the … both from the Central Bank and the ECB. I mean, once you spell that out, that’s €140,000 million – there are 12 digits in that.——- One can only surmise that, as Professor Alan Ahearne has said here to your committee, too many people were benefitting from the boom time for prudence avoidance … prudent avoidance measures to have been taken. ”  Dep. Gov.TOM O’Connell at BANKING INQUIRY

Cliff Taylor Irish Times 27/05/2017

“The problem was that by the time anyone realised that the banks were in a mess it was way too late.”

“There is no big gap in Irish law which allowed the banking crisis to happen. The Central Bank’s powers have since been beefed up, for sure, but even back when the bubble inflated it had the legal firepower to at least limit the damage. Also, as a 2016 report of the Law Reform Commission into regulation and corporate law pointed out, since 1992 it has been an offence for a bank or building societ to fail to manage its business in accordance with sound administrative and accounting principles. The laws and regulatory powers were all there. The problem was that by the time anyone realised that the banks were in a mess it was way too late.”  Cliff  Taylor-Irish Times

WRONG!!!  THEY KNEW BUT TOO MANY PEOPLE WERE BENEFITTING!

Deputy Governor of Central Bank, Tom O’Connell and Professor Alan Ahearne  at Banking Inquiry

“One can only surmise that, as Professor Alan Ahearne has said here to your committee(Banking Inquiry), too many people were benefitting from the boom time for prudent avoidance measures to have been taken.”
Deputy Governor of Central Bank, Tom O’Connell Tells All at Banking Inquiry

“It’s sometimes said that nobody seemed to know that a property boom or bubble was developing. That’s … that is completely incorrect in my view ——Ireland’s banking and economic crash should never have happened, should never have been allowed to happen, with all the consequences of huge increases in unemployment, rising emigration, enormous debt, suicides, etc., that we have seen.-the liquidity pumped out into the banks was €140 billion, you know, with the … both from the Central Bank and the ECB. I mean, once you spell that out, that’s €140,000 million – there are 12 digits in that.

One can only surmise that, as Professor Alan Ahearne has said here to your committee(Banking Inquiry), too many people were benefitting from the boom time for prudent avoidance measures to have been taken.

——- Dep. Gov.TOM O’Connell at BANKING 

The Inquiry found that the almost universal adoption of the “soft-landing theory” without any substantial testing or challenge “must be regarded as a key failing for the government, the Central Bank and the Department of Finance”-Ciaran Lynch TD Chair of Banking Inquiry

Mr O’Connell (Deputy Governor and Chief Economist at Central Bank)  also said contrarian views(to the Soft Landing Theory) in the Central Bank “weren’t well received”, and concerns had been “blocked” from reaching a higher level in the bank due to “political and property interests on the bank’s board”.

Central Bank had to ‘pull punches’ despite indicators

Colin Gleeson

 

Irish TimesWednesday, June 10, 2015, 20:11

The Central Bank had to “pull its punches” in relation to concerns about the economy despite indications of great difficulty ahead, its former assistant director general told the banking inquiry on Wednesday.

Thomas O’Connell was appointed assistant director general and chief economist of the bank’s economics division in April 2005. His responsibilities included economic analysis, research and publications, monetary policy and financial stability.

Mr O’Connell said it was his opinion as early as 2001 that “things were going crazy” and a “massive” property bubble had developed. Financial Stability Reports( Annual Reports on Health of Financial System by Central Bank) however tended to include “reassuring” summaries that did not correlate with their data.

“You have the body of the (2007) report (with) all the indicators pointing in the wrong direction and then you have an overall assessment of what’s happening…If I was asked to do an objective assessment on the basis of the indicators I would be inclined to say ‘yeah we’re heading for big trouble’, but a Central Bank being a Central Bank, can’t really say that. It has to sort of pull its punches really.”

Mr O’Connell also said contrarian views in the Central Bank “weren’t well received”, and concerns had been “blocked” from reaching a higher level in the bank due to “political and property interests on the bank’s board”.

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Was  “Seanie” to be the fall-guy for the Entire Irish Financial Elite???

OR WAS THE PROSECUTION DELIBERATELY FOULED UP SO THAT HE COULD BE ACQUITTED WITHOUT HAVING TO INCRIMINATE THE CENTRAL BANK, OTHER BANKS, DEPARTMENT OF FINANCE, GOVERNMENT MINISTERS  etc  ???

Case against Fitzpatrick of Anglo Dismissed

he Judge said he was concerned as to why some documents were destroyed by the lead investigator of the Office of the Director of Corporate Enforcement(ODCE) and not other documents. It was possible that the destroyed documents could have damaged the prosecution as well as the defence.

There is a particular way in which the destroyed (“Shredded”) documents could have damaged the prosecution. They could have incriminated Central Bank (non) regulators, heads of Pillar Banks, Ministers and senior Department of Finance Officials.

The full treacherous story could have emerged.

“Shredded documents
In January it came to light that a lead ODCE investigator into allegations against FitzPatrick shredded documents related to the case in what he (the investigator) called a ‘calamitous error‘.”-Journal.ie      Would You Believe That??

Will the “lead investigator” be sacked or will a person who may have ordered him to shred the documents be sacked???

Maybe they both know where too many bodies,  victims of the elites, are buried!!!

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UniCredit Bank whistleblower Jonathan Sugarman appears before Dáil Finance Committee–The Senior Banker at IRISH FINANCIAL SERVICES CENTRE was Blocked from Appearing before Banking Inquiry

Rose Conway Walsh (SF) Interviews Jonathan Sugarman;

 

“25 Bankers in jail in ICELAND–How many are in jail in Ireland” he asked the Committee

RTE   Updated / Thursday, 13 Apr 2017 20:22

Listen to Some of the Proceedings  of Dáil Committee Here http://www.rte.ie/news/business/2017/0413/867551-whistleblower-sugarman-appears-before-finance-committee/

Listen to 3 interviews with Jonathan Sugarman;

 https://www.youtube.com/watch?v=CuEhUicQz4s

Jonathan Sugarman, who was risk manager in UniCredit, has claimed that prompt action in 2007 might have avoided the need for a blanket guarantee and bailout of the Irish banks

The Oireachtas finance committee is to ask the Central Bank to supply it with documents relating to the case of Jonathan Sugarman, a banker who warned of liquidity breaches at his bank, UniCredit Bank Ireland, in 2007.

Mr Sugarman, who was risk manager in UniCredit, has claimed that prompt action in 2007 might have avoided the need for a blanket guarantee and bailout of the Irish banks.

Appearing before the committee today, Mr Sugarman, repeated his previous claims that his warnings to superiors and the Central Bank about the UniCredit’s breaches of liquidity requirements in 2007 went unheeded.

He subsequently resigned his position in September 2007 and said he has been unable to find employment ever since.

He told the committee within two months of working with the lender he noticed irregularities that needed investigating.

He said it became a daily occurrence to meet with the CEO to discuss risk issues.

Mr Sugarman said he was told the irregularities he noticed were glitches in the IT system and that there was no need to worry.

The former risk manager added that a liquidity breach of 1% should have set alarm bells ringing, but UniCredit only obliged the law and notified the regulator when the breach was 20%.

Mr Sugarman said he notified gardaí of the breaches and was later told the garda fraud squad was dealing with the case.

He said that was the last he heard about it from gardaí, and this was in 2009.

He said his life has been “utterly destroyed because I did the right thing, but the people who did nothing got off absolutely scot-free.

“I have been unable to work for ten years and have been unemployable for upholding the law of Irish Republic.”

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Sentencing of Anglo and Irish Life and Permanent Top Dog Fraudsters Adjourned until Friday

Thousands lost their life savings due to the fraud!

Wed July 27

Is there a dirty deal between the Government and the Defendants To Protect the state from compensation claims?

At the sentence hearing on Monday Last, defence pointed out that there was no loss to the bank or to the state due to the fraud

There ar no reports of the Prosecution on behalf of the Government pointing out that thousands of small investors were defrauded of their life savings

There were several high ranking character witnesses called in support of mitigation of sentence by the defence

But there were no victim impact statements given though these are criminal convictions

Prosecutor O’Higgins SC,for the prosecution (State),  told the judge that the maximum effective sentence was ten years asccording to newspaper reports

But  no  demand for the maximum sentence to be applied was reported.

The defense on behalf of the convicted bankers did not call the then regulator, the then governor of the central bank, the then secretary general of the Department of Finance

Have the defense instructed by the bankers and the government (who instructs the prosecuting lawyers) done a deal to prevent small investors getting their money back???

Lawyers for the defendants and the Government must take instructions from their clients unless such instructions are illegal, unethical or in breach of court rules.

Hence the players in any deal are not the lawyers but the government and the convicted bankers.

Noonan’s Non Reply To Seamus Healy TD in Dáil: Will Small Shareholders be Compensated??

QUESTION NO:  115

DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)
by Deputy Seamus Healy for WRITTEN ANSWER on 23/06/2016

To ask the Minister for Finance if he will recommend that small shareholders be compensated by the State at least to the extent of the entitlement of depositors under the Bank Deposit Guarantee Scheme, given the conviction of two former executives of Anglo-Irish Bank on a charge of conspiring to defraud investors, that Government and his Department, the Office of The Regulator and the Central Bank were all aware of the relevant transaction in advance of the publication of the misleading accounts of the affairs of the bank and the other evidence and remarks of the Judge in Court (details supplied see further down); and if he will make a statement on the matter.

REPLY.

As previously outlined to the Deputy in my answer to parliamentary question number 108 on 16th June 2016, Anglo Irish Bank was nationalised on 15 January 2009 and on that date the Minister for Finance acquired all of the ordinary and preference share capital by virtue of the provisions of the Anglo Irish Bank Act 2009, therefore, as of that date, the ownership of the shares in Anglo Irish Bank would have transferred to the Minister for Finance. If the Government had not nationalised Anglo Irish Bank, the Bank had the potential to collapse and impact on the entire Irish banking system. At that time, shares were valued on the market  in the region of €0.22, however in the event of the Bank failing, Anglo Irish Bank s shares would have been worthless.

Sections 22-32 of the Anglo Irish Bank Corporation Act 2009 provide that the Minister for Finance shall appoint an Assessor at an appropriate time having regard to the public interest. The job of the Assessor is to independently determine the fair and reasonable aggregate value, if any, of the transferred shares and extinguished rights and the consequent amount of compensation, if any, that may be payable to persons in respect of Anglo Irish Bank shares transferred and rights extinguished under the Act. Since the liquidation of IBRC in February 2013, there has been no timeframe set for the appointment of an Assessor.

An update on the liquidation of IBRC can be found at http://www.finance.gov.ie/sites/default/files/Progress%20update%20report_31%20Dec%202015_0.pdf

The Deposit Guarantee Scheme (“DGS”) was established to protect depositors in the event of a bank, building society or credit union authorised by the Central Bank of Ireland being unable to repay deposits. The DGS is part of the Central Bank of Ireland s strategy to ensure that the best interests of consumers of financial services are protected. The DGS is administered by the Central Bank of Ireland and is funded by the credit institutions covered by the scheme. The DGS was not established to protect equity investors.

 

 

Detail Supplied: “In a document prepared for its board, the regulator admitted: “There is also information available that might be argued to support a defence against accusations of market abuse, specifically in relation to knowledge within the Financial Regulator/Central Bank, but also more generally in relation to the role of the Department of Finance, Central Bank and Financial Regulator encouraging institutions to co-operate with each other in extremely difficult circumstances where the very existence of the Irish financial system was in some doubt.”

There is also evidence in notes kept of meetings of the Domestic Standing Group – made up of the Department of Finance, the Central Bank and the Financial Regulator – that the state was monitoring how Anglo and IL&P were working together in the months before the €7 billion fraud.-Sunday Business Post, 19/06/2016

Full Report

http://www.businesspost.ie/damning-files-reveal-central-banks-role-in-e7bn-banking-fraud/

Business Post   19/06/2016

  Remarks of Judge in Court

“These were classic back-to-back transactions, done for public optics only,” the judge said in his February ruling. He said he believed the regulator “condoned optics-based balance sheet management” as it did not want Irish banks to “go down”. The Irish authorities were frightened by what they had seen with Northern Rock and they had seen central banks in other jurisdictions help their banking systems.

Neary and Hurley were “hands on” and entirely involved in the effort to save the Irish banking system, the judge said. They had put the green jersey into Casey’s mind, and Casey had acted on it.  Colm Keena, Irish Times, June 9,2016

Mr Peter  Fitzpatrick (Irish Life and Permanent) who was acquitted of the conspiracy to defraud investors said in a statement to gardai quoted in court:

“He said that prior to January 2009, ILP never received any request for clarification from Anglo or its auditors, the then financial regulator Patrick Neary or the then Central Bank governor John Hurley

‘Political expediency’

“I feel that the matter was dealt with as a matter of political expediency with no reference to the substance of the transaction.

“I believe that the actions of the [financial] regulator post 30 September 2008 effectively shows [sic] that he tacitly if not explicitly approved such actions. Without this understanding the transaction would have in all certainty not have taken place,” he told gardaí­.—Declan Brennan,Irish Times, , May 5, 2016, 18:07

 On one end of the line was John Bowe, Anglo’s head of capital markets. At the other was Mary Elizabeth Donoghue from the Office of the Financial Regulator.

The call occurred on October 28, 2008, weeks before publication of Anglo’s preliminary results on December 3, 2008. Critically, it also came weeks after the execution of a spectacular €7.2bn scheme of circular transactions between Anglo and Irish Life & Permanent…..

“Let’s call a spade a spade,” said Donoghue as Bowe explained the motivation behind the balance sheet window dressing exercise, insisting it had nothing to do with the liquidity crisis then engulfing banks around the globe, including our own.

The conversation included this exchange:

Bowe: “This was purely about avoiding an issue of confidence in the bank.”

Donoghue: “Yeah, so it looked like an asset manager had placed money with yourselves?”

Bowe “Exactly.”

Donoghue “It forms part of the… the customer deposit, yeah.”

Bowe: “Exactly.”

Donoghue: “Yeah. That’s fine, that’s grand, that’s what I – even my limited reading of it now that’s what I read it to be and I just wanted – let’s not get too excited about what’s happening here and let’s call it what it is. That’s fine.”      Dearbhail McDonald Legal editor, Sunday Independent, 12/06/2016

 

 

 

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Sunday July 24

Has a Dirty Deal Been Hatched Between Defense and Prosecution (the Government) to Protect the Elites?

Will the then regulator, the then head of the central bank, the then secretary of the Department of Finance be called (by sub-poena) to give evidence as to whether they encouraged the fraudsters or simply allowed the fraud to continue? Had they full advance knowledge?

The stench is rising!

Damning files reveal Central Bank’s role in €7bn banking fraud – The Sunday Business Post

MINISTER NOONAN FAILS TO ANSWER DEMAND FOR COMPENSATION FOR SMALL SHAREHOLDERS IN ANGLO BY SEAMUS HEALY TD IN DAIL REPLY TO PARLIAMENTARY QUESTION-PENSIONERS, REDUNDANT WORKERS DEFRAUDED

Government, Department of Finance had Full Knowledge!!

<!– [if lt IE 9]> http://www.businesspost.ie/wp-content/themes/smart-mag/js/html5.js <![endif]–>

“Official files and secret notes reveal that a €7 billion fraud that led to the criminal conviction of three bankers earlier this month was “potentially based on encouragement” from the Central Bank, The Sunday Business Post can reveal.

The secret documents reveal how the state had intimate knowledge that the two banks were helping each other out during the financial crisis in order to make their balance sheets appear stronger to investors and the stock market.

The day before Anglo Irish Bank was nationalised in January 2009, Con Horan, the regulator’s then prudential director, told a high-powered meeting that his banking watchdog had an “awareness” that the bank was “working together” with Irish Life & Permanent, using what was called “back-to-back loans”.

He then told senior Department of Finance, NTMA and Central Bank officials that this working relationship was “potentially based on encouragement from Dame Street”.

Horan said he was meeting the bank’s auditors to discuss the arrangement. He also explained how the circular transaction worked in January 2009 in order to use money from IL&P to boost Anglo’s customer deposits.

Horan was asked by Mary O’Dea, another senior official in the Central Bank, whether or not the €7 billion deal would have to be disclosed in Anglo’s accounts.

Horan said: “Auditors are comfortable… Current accounts will have lot more disclosures.”

On February 25, 2009 documents marked “secret” by the Financial Regulator also saw the state’s banking watchdog admit internally that Anglo and IL&P bankers might be able to argue that the €7 billion fraud was only carried out because of “encouragement”–

“In a document prepared for its board, the regulator admitted: “There is also information available that might be argued to support a defence against accusations of market abuse, specifically in relation to knowledge within the Financial Regulator/Central Bank, but also more generally in relation to the role of the Department of Finance, Central Bank and Financial Regulator encouraging institutions to co-operate with each other in extremely difficult circumstances where the very existence of the Irish financial system was in some doubt.”

There is also evidence in notes kept of meetings of the Domestic Standing Group – made up of the Department of Finance, the Central Bank and the Financial Regulator – that the state was monitoring how Anglo and IL&P were working together in the months before the €7 billion fraud…. SB POST

Full Article:

http://www.businesspost.ie/damning-files-reveal-central-banks-role-in-e7bn-banking-fraud/

Business Post   19/06/2016

QUESTION NO:  108

DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)
by Deputy Seamus Healy
for WRITTEN ANSWER on 16/06/2016

To ask the Minister for Finance if he will recommend that small shareholders be compensated at least to the extent of the entitlement of depositors under the Bank Deposit Guarantee Scheme, given the conviction of two former executives of Anglo-Irish Bank on a charge of conspiring to defraud investors, that the Office of The Regulator was aware of the relevant transaction in advance of the publication of the misleading accounts of the affairs of the bank and the other evidence and remarks of the Judge in Court (details supplied)
And if he will make a statement on the matter?
; and if he will make a statement on the matter.

REPLY.
Anglo Irish Bank was nationalised on 15 January 2009 and on that date the Minister for Finance acquired all of the ordinary and preference share capital by virtue of the provisions of the Anglo Irish Bank Act 2009, therefore, as of that date, the ownership of the shares in Anglo Irish Bank would have transferred to the Minister for Finance. If the Government had not nationalised Anglo Irish Bank, the Bank had the potential to collapse and impact on the entire Irish banking system. At that time, shares were valued on the market  in the region of €0.22, however in the event of the Bank failing, Anglo Irish Bank s shares would have been worthless.

Sections 22-32 of the Anglo Irish Bank Corporation Act 2009 provide that the Minister for Finance shall appoint an Assessor at an appropriate time having regard to the public interest. The job of the Assessor is to independently determine the fair and reasonable aggregate value, if any, of the transferred shares and extinguished rights and the consequent amount of compensation, if any, that may be payable to persons in respect of Anglo Irish Bank shares transferred and rights extinguished under the Act. Since the liquidation of IBRC in February 2013, there has been no timeframe set for the appointment of an Assessor.

An update on the liquidation of IBRC can be found at http://www.finance.gov.ie/sites/default/files/Progress%20update%20report_31%20Dec%202015_0.pdf

The Deposit Guarantee Scheme (“DGS”) was established to protect depositors in the event of a bank, building society or credit union authorised by the Central Bank of Ireland being unable to repay deposits.
The DGS is part of the Central Bank of Ireland s strategy to ensure that the best interests of consumers of financial services are protected. The DGS is administered by the Central Bank of Ireland and is funded by the credit institutions covered by the scheme. The DGS was not established to protect equity investors.

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Conviction of 3 Leading Bankers For a Conspiracy to Mislead Investors

Thousands of Retired People Lost Their Life Savings!!!

The Role of The Governor of the Central Bank and The Financial Regulator in The Fraud Committed by the Convicted—-  Will These Also be Called to Account?

The fraud was not a victimless crime. Most of the coverage of Ireland’s banking crash has centred on the fall of the very rich such as Sean Quinn.

But huge numbers of small investors (shareholders not depositors) lost their life savings. These included pensioners who had invested their retirement lump sums, redundant employees who had invested their redundancy award, small traders and the self-employed who saved for their retirement by buying bank shares on the advice of financial advisors.

Because of the fraud, many did not sell their bank  shares  in time or actually bought further shares though the banks were in deep trouble.

The banks and the Authorities were concerned to maintain good “public optics” at the expense of small shareholders

Financial Advisors were entitled to advise clients to continue investing in bank shares because of the misleading accounts published by some banks. In addition the regulator asserted that the regulated  banks were all in good shape and the Central Bank said that there would be a soft landing for the financial system and the economy as a whole in its annual Financial Stability Reports before the crash

The billionaire bond holders were bailed out by the state but the small investors were wiped out.

THIS IS A HUGE SCANDAL

Remarks of Judge in Court

“These were classic back-to-back transactions, done for public optics only,” the judge said in his February ruling. He said he believed the regulator “condoned optics-based balance sheet management” as it did not want Irish banks to “go down”. The Irish authorities were frightened by what they had seen with Northern Rock and they had seen central banks in other jurisdictions help their banking systems.

Neary and Hurley were “hands on” and entirely involved in the effort to save the Irish banking system, the judge said. They had put the green jersey into Casey’s mind, and Casey had acted on it.  Colm Keena, Irish Times, June 9,2016

 

Mr Peter  Fitzpatrick (Irish Life and Permanent) who was acquitted of the conspiracy to defraud investors said in a statement to gardai quoted in court:

“He said that prior to January 2009, ILP never received any request for clarification from Anglo or its auditors, the then financial regulator Patrick Neary or the then Central Bank governor John Hurley

‘Political expediency’

“I feel that the matter was dealt with as a matter of political expediency with no reference to the substance of the transaction.

“I believe that the actions of the [financial] regulator post 30 September 2008 effectively shows [sic] that he tacitly if not explicitly approved such actions. Without this understanding the transaction would have in all certainty not have taken place,” he told gardaí­.—Declan Brennan,Irish Times, , May 5, 2016, 18:07

 

On one end of the line was John Bowe, Anglo’s head of capital markets. At the other was Mary Elizabeth Donoghue from the Office of the Financial Regulator.

The call occurred on October 28, 2008, weeks before publication of Anglo’s preliminary results on December 3, 2008. Critically, it also came weeks after the execution of a spectacular €7.2bn scheme of circular transactions between Anglo and Irish Life & Permanent…..

“Let’s call a spade a spade,” said Donoghue as Bowe explained the motivation behind the balance sheet window dressing exercise, insisting it had nothing to do with the liquidity crisis then engulfing banks around the globe, including our own.

The conversation included this exchange:

Bowe: “This was purely about avoiding an issue of confidence in the bank.”

Donoghue: “Yeah, so it looked like an asset manager had placed money with yourselves?”

Bowe “Exactly.”

Donoghue “It forms part of the… the customer deposit, yeah.”

Bowe: “Exactly.”

Donoghue: “Yeah. That’s fine, that’s grand, that’s what I – even my limited reading of it now that’s what I read it to be and I just wanted – let’s not get too excited about what’s happening here and let’s call it what it is. That’s fine.”      Dearbhail McDonald Legal editor, Sunday Independent, 12/06/2016

 Regulator was told about Anglo’s balance-boosting transactions

DearBhail McDonald, Legal Editor, Sunday Independent  PUBLISHED12/06/2016 30

The Office of the Financial Regulator was informed six weeks before Anglo published its preliminary results in December 2008 of a series of circular transactions designed to boost Anglo’s balance sheet at its September 2008 year end.

John Bowe, Anglo’s former head of capital markets, informed an official at the office of the regulator of the motivation behind the scheme in October 2008, weeks before the bank’s preliminary results were published, a jury at Dublin’s Circuit Criminal Court heard. ….

Role of regulatory authorities may take centre stage at bankers’ sentence hearing

Dearbhail McDonald, Legal Editor, Sunday Independent, PUBLISHED12/06/2016  

The phone conversation was remarkably open and frank, normal even.

On one end of the line was John Bowe, Anglo’s head of capital markets. At the other was Mary Elizabeth Donoghue from the Office of the Financial Regulator.

The call occurred on October 28, 2008, weeks before publication of Anglo’s preliminary results on December 3, 2008. Critically, it also came weeks after the execution of a spectacular €7.2bn scheme of circular transactions between Anglo and Irish Life & Permanent.

The scheme was designed to bolster Anglo’s year end balance sheet by making it appear that the circular loans (from ILP’s life assurance company) were customer deposits, boosting Anglo’s health at a time when it was dying on its feet.

“Let’s call a spade a spade,” said Donoghue as Bowe explained the motivation behind the balance sheet window dressing exercise, insisting it had nothing to do with the liquidity crisis then engulfing banks around the globe, including our own.

The conversation included this exchange:

Bowe: “This was purely about avoiding an issue of confidence in the bank.”

Donoghue: “Yeah, so it looked like an asset manager had placed money with yourselves?”

Bowe “Exactly.”

Donoghue “It forms part of the… the customer deposit, yeah.”

Bowe: “Exactly.”

Donoghue: “Yeah. That’s fine, that’s grand, that’s what I – even my limited reading of it now that’s what I read it to be and I just wanted – let’s not get too excited about what’s happening here and let’s call it what it is. That’s fine.”

Of course, it wasn’t fine, it was catastrophic.

In common with all licenced banks, Anglo submitted its preliminary accounts to the authorities – presumably armed with Bowe’s explanation – before publication to the market on December 3, 2008.

Within weeks, the “best performing bank in the world” was nationalised in disgrace.

Extracts from Article by Colm Keena, Irish Times, June 9

Advice from the Financial Regulator that the Irish banks should enter into a secret “green jersey” agenda to help each other get through the 2008 financial crisis encouraged both ANGLO-IRISH BANK and Irish Life and Permanent (ILP) to enter into financial transactions the State later argued were a conspiracy to mislead investors, the Anglo/ILP trial heard.——-

The attitude of the regulator and the Central Bank might serve as mitigation in the event of the conviction of the accused, the judge ruled at the end of six days of legal argument in February in the absence of the jury. The ruling could not be reported until the jury had come to its decision.

Accused Denis Casey,Irish Life and Permanent,gave evidence in the absence of the jury in relation to his dealings in 2008 with the regulator and the Central Bank. Judge Nolan in his February ruling, said he found Casey’s testimony to be believable and that in his view Central Bank governor John Hurley and the Financial Regulator, Pat Neary, were very “hands on” in relation to the “green jersey” agenda. The two men “knew exactly what they were up to” and exactly what the problem was.

Casey said the green jersey agenda was mentioned to him early in 2008 at a time when Hurley had complained about ILP’s use of funding from the European Central Bank and how that looked. He told the court he was surprised by the attitude of the authorities.

Judge Nolan said he believed the regulator knew about a smaller, circular transaction involving Anglo and ILP in March 2008. It seemed “inconceivable” to him that the regulator did not know the banks were involved in balance sheet management. “Bad” balance sheet management, the judge said, was when a bank improved its balance sheet by way of lodgements where the depositor was not taking any risk. Casey, the judge said, had been “very clear” that he believed the September transactions did not involve risk for ILP. (It was Casey’s case that he believed Anglo would make this clear in their accounts.)

‘Public optics’

“These were classic back-to-back transactions, done for public optics only,” the judge said in his February ruling. He said he believed the regulator “condoned optics-based balance sheet management” as it did not want Irish banks to “go down”. The Irish authorities were frightened by what they had seen with Northern Rock and they had seen central banks in other jurisdictions help their banking systems.

Neary and Hurley were “hands on” and entirely involved in the effort to save the Irish banking system, the judge said. They had put the green jersey into Casey’s mind, and Casey had acted on it.

There was “ample evidence”, the judge said, to support the argument that the September transactions were “totally illegal and fraudulent”.

Anglo and ILP were involved in six circular transfers of €1 billion each on September 29th and 30th, as Anglo came to its September 30th year end. An earlier transaction had occurred on September 26th. On September 29th Anglo told the Central Bank it didn’t have enough money to finance its requirements for the following day. The following morning the Central Bank gave Anglo €1 billion in emergency funding. That same morning the Government announced the bank guarantee. The announcement brought to an end the 2008 crisis of access to liquidity for the Irish banks.

The attitude of the regulator and the Central Bank might serve as mitigation in the event of the conviction of the accused, the judge ruled at the end of six days of legal argument in February in the absence of the jury. The ruling could not be reported until the jury had come to its decision.

The trial heard how Casey told the Garda Bureau of Fraud Investigation (GBFI) he authorised the multi-billion euro transactions between ILP and Anglo Irish Bank, because he felt obliged to help Anglo as a fellow Irish financial institution in the midst of the then global financial crisis.

Casey told the GBFI he was motivated in authorising the deals because of his understanding of a request from Neary and Hurley for Irish banks to support each other as part of the “green jersey” agenda.

The trial heard how Anglo’s then head of capital markets, John Bowe, had openly discussed the Anglo/ILP deal with Mary Elizabeth O’Donoghue of the Financial Regulator’s office in October 2008.

“There have been some questions…in relation to the arrangement that you got involved with there with ILP…that it would bolster your position,” Donoghue told the banker, the trial heard. When Donoghue suggested that the transaction was designed to look like an asset manager had placed money with Anglo, Bowe replied, “exactly”, to which Donoghue in turn said: “That’s fine; that’s grand.”

 

Analysis of Election Results on NUI Panel

Michael McDowell, Former Progressive Democrat leader, received the highest transfer or almost one third of the Begg Transfers!!!!

David Begg Eliminated in NUI Seanad Election Having Received One Fifth of a Quota on First Count

Extreme conservative candidates Mullen, McDowell and business owner O’Ceidigh received  between them in total   59.75% or almost 60% of Begg’s Transfers

Despite this, powerful equality campaigner, Alice Mary Higgins was elected to the third and final seat.

Former minister for justice Michael McDowell was the first to be elected to the Seanad on the National University of Ireland panel..
Mr Mullen was 700 votes ahead of Mr McDowell on the first count but the former leader of the Progressive Democrats pulled ahead on the 26th count following a transfer of 834 votes from David Begg, the former general secretary of the Irish Congress of Trade Unions who was eliminated on the 25th count-Irish Times

Alice-Mary Higgins, powerful professional campaigner on equality issues was elected to the final seat on the 28th count.

David Begg received one fifth or 20% of a quota on the first count.

He had reached only one third of a quota when he was eliminated on the 24th count and had been overtaken by Laura Harmon, former USI President

Extreme Right-Wing Neoliberal Ideologue Michael McDowell, Former Progressive Democrat leader, received the highest transfer or almost one third of the Begg Transfers!!!!

Extreme conservative candidates Mullen, McDowell and business owner O’Ceidigh received  between them in total   59.75% or almost 60% of Begg’s

 

Despite this, Alice Mary Higgins was elected to the third and final seat.

NUI Seanad Panel  Results  2016 (SYNOPSIS)

3 seats

Electorate c. 98,000  world wide

Total Valid Poll   36,293       c.  37% of electorate

Quota                9074

 

 

FIRST COUNT                24th Count     Transfer of Begg Votes

%of Quota

Ronan Mullen         7362      81%                    9016                                +352

Ml McDowell          5661      62%                    8570                                +834

P O’Céidigh              2475      27%                   4513                                +402

A M Higgins              2055      23%                  4636                                + 625

David Begg                1,836     20%                 3232(ELIMINATED)

L Harmon                  1479      16%                  4124                                  +443

Non-Transferable                  576

 

2656 of votes for  David Begg on 24th Count were distributed

The percentage of these distributed votes  going  to each continuing candidate was:

Mullen      +13.25%

McDowell  +31.4%

O’Ceidigh  +15.1%

A M Higgins  +23.5%

L Harmon      + 16.7%

 

 

 

Extreme Right-Wing Neoliberal Ideologue Michael McDowell(PD) received the highest transfer or almost one third of the Begg Transfers!!!!

Extreme conservative candidates Mullen, McDowell,  and business owner O’Ceidigh received in between them in total   59.75% or almost 60% of Begg’s transfers.  A M higgins a powerful equality professional and activist was a continuing candidate as was L Harmon, former USI President. These two got 40% of the Begg Transfers.

David Begg Eliminated in NUI Seanad Election Having Received One Fifth of a Quota on First Count

Former minister for justice Michael McDowell was the first to be elected to the Seanad on the National University of Ireland panel.

He was elected on the 26th count having exceeded the quota of 9,074 narrowly ahead of outgoing senator Ronan Mullen who was elected on the same count.

Mr Mullen was 700 votes ahead of Mr McDowell on the first count but the former leader of the Progressive Democrats pulled ahead on the 26th count following a transfer of 834 votes from David Begg, the former general secretary of the Irish Congress of Trade Unions who was eliminated on the 25th count.

Alice-Mary Higgins, daughter of the President, was elected to the final seat on the 28th count.–Irish Times

Irish Times should have pointed out that Alice-Mary Higgins is in fact a highly qualified professional campaigner on many equality issues. She is Policy Coordinator with National Women’s Council of Ireland including High-level advocacy on economic and social equality including quality affordable childcare and the gender pay and pension gap.

David Begg received one fifth or 20% of a quota on the first count

 Laura Harmon, Former President,USI, went ahead of Begg on transfers before he was eliminated.

First count Tally

Ronan Mullen 7,362.

Michael McDowell 5,661.

Pádraig Ó Céidigh 2,475.

Alice-Mary Higgins 2,055.

David Begg 1,836.

Dr Martin Daly 1,523.

Laura Harmon 1,479.

Ellen O’Malley Dunlop 1,454

——————————————————————-

TUI Not Endorsing Begg for Seanad

Senator Gerard Craughwell proposed to a meeting of TUI Executive a few weeks ago that TUI nominate David Begg for election to Seanad Eireann on NUI panel

The proposal failed to get a seconder

Senator Craughwell then withdrew the nomination

Senator Craughwell has not been nominated by ICTU on the Industrial Relations panel for Seanad Eireann

ASTI not endorsing Begg for Seanad

 

RTE  News Tuesday 19 April 2016 17.35

David Begg is seeking election to the Seanad via the NUI panel

The union representing a majority of the country’s second level teachers, the Association of Secondary Teachers Ireland, has told members that it is not endorsing David Begg in the upcoming Seanad Elections.

Mr Begg, a former general secretary of the Irish Congress of Trade Unions, is standing for the Seanad on the NUI panel.

One of his nominators is former ASTI general secretary Pat King.

In a statement posted today on its website, the union said Mr Begg had engaged in public criticism of the ASTI’s position at critical junctures in ASTI campaigns against national public service agreements.

It is understood the statement relates to comments made by Mr Begg in 2013 when ASTI members were balloting on the Haddington Road Agreement.

The ASTI statement went on to say that the union was not endorsing any candidate for the 2016 Seanad Election.

——————————————————————-

FROM WIKIPEDIA:10 months before the banking crash Central Bank Of Ireland made a statement saying- “The Irish banking system continues to be well-placed to withstand adverse economic and sectoral developments in the short to medium term. The underlying fundamentals of the residential market continue to appear strong and the current trend in monthly price developments does not imply a sharp correction. The central scenario therefore is for a soft landing”[24]

————————————————————————-

Another FINANCIAL Farce : Banking inquiry members did not see key documents relating to the financial crisis during their probe of the collapse, The Sunday Business Post can reveal.

The Department of Finance memos, which relate to the bailout, the structure of Nama, cash injections for Anglo Irish Bank and Ireland’s relationship with key eurozone leadership figures, were not published last week as part of the banking inquiry’s report.

 

DAVID BEGG BEGGARS BELIEF-THE PHOENIX, Jan 29,2016

THE multiple leaks from the banking inquiry last week came at rather a bad time for David Begg and his patron, Tanaiste Joan Burton, following the row over her crony appointment of Begg to the chair of the Pension Authority. In her defence against the Dail motion of no confidence in her, Burton’s defence of Begg’s credentials justifying his appointment mentioned various roles he had played down the years. These included his trade union work (ex-general secretary of the ICTU) and his job as CEO of Concern Worldwide. What she omitted to mention was his 15-year membership of the Central Bank to 2010. Surely such a responsible and onerous position would have impressed those who impugned the manner of Begg’s appointment, cronyist or not?

It took Independent TD, Seamus Healy, to make mention in the Dail of Begg’s membership of the Central Bank board, the most culpable institution of state in the financial crash that befell the state.

Healy quoted former deputy governor general of the Central Bank, Tom O’Connell’s statement to the banking inquiry, “the liquidity pumped out into the banks was €140 billion … both from the Central Bank and the ECB” during the lead-up to the crash, all of which happened, on Begg’s watch.

In his evidence to the inquiry last July Begg made the most exculpatory statement describing how in 2003 “The powers formerly held by the Central Bank for the regulation and supervision of the financial institutions were transferred to the regulatory authority (the Irish Financial Services Regulatory Authority, or IFSRA)” under the new Act  (the Central Bank and Financial Services Authority of Ireland Act 2003). “Thus, I had no further involvement in supervision or regulation of the banks.”

Socialist Party TD, Joe Higgins, picked up on this statement and put it to Begg, “But that’s not what the legislation states, is it?” The TD then directed Begg and the inquiry members’ attention to the memorandum of understanding between the Central Bank board and the IFSRA. This says:

“The Governor and-or Board will advise all relevant parties on the implications for financial stability of developments in domestic and international markets and payment systems and assess the impact on monetary conditions of events;  
In this context, the Governor and/or Board’s objective is to identify developments which could endanger the stability of the system as a whole, and will advise accordingly.”

Higgins then asked Begg, “Isn’t it very clear that the board of the Central Bank had a responsibility in relation to issues such as developed in the exponential lending and the property concentration in the bubble?

Begg waffled on a little more after this embarrassing piece of evidence that blew a hole in his disassociation from any supervisory role in the state’s finances, but he conceded that the Central bank did have a joint role with the regulator.

Shane Ross has been accused, with some validity, of having an appetite for attacking trade unionists such as Begg, but Healy is a socialist to the left of Labour. Begg’s membership of the Central bank became a hot item on RTE’s Liveline programme two years ago when trade union activist, Anne Conway, rang Joe Duffy with a similar line of attack to Healy’s in the Dail, namely, that as head of ICTU, Begg had a responsibility to his members who had suffered more than most due to the crash.

Following an angry complaint from the ICTU (Begg was then still head of the union body) RTE issued an apology to Begg the next day saying that as Begg was not a member of the Central bank’s regulatory authority Conway’s charges were incorrect (see The Phoenix, 14/2/14). In a riposte to RTE Conway pointed out that reports from all Central Bank sub-committees reports on “regulatory developments are circulated to board members.

 

Exchanges between Clare Daly TD and David Begg, Chasirperson Deignate of the Pensions Authority

 

Oireachtas Joint Committee on Social Protection and Education and Skills   Jan 27 

 

Full Proceedings of Joint Committee at this link

http://oireachtasdebates.oireachtas.ie/Debates%20Authoring/DebatesWebPack.nsf/committeetakes/EDJ2016012700002?opendocument#A00100

 

EXTRACT

 

DEPUTY JOANNA TUFFY(Labour Party) IN THE CHAIR.

The Pensions Authority: Chairperson Designate

Chair: I welcome Mr. Begg and ask him to make his presentation.

Mr. David Begg: Makes his presentation

Deputy Clare Daly:   Our time is relatively limited. The challenges facing the pensions industry and the authority are immense. The role of the Pensions Authority has probably not assisted in the crisis over the past period and we will struggle to get to the bottom of it here in one session; even over a Dáil term, we would struggle to do so. It is appropriate that we take the opportunity to question Mr. Begg’s expertise for the appointment. We were certainly led to believe that was part of the role of this committee, even if that role is a little bit weak when it is not going to make any difference to the appointment. Mr. Begg is obviously aware of the discussion around whether that appointment was appropriate, although it was not his decision. It is something that is in the public domain.

The Chairman pointed out that the key function of the authority is to regulate and influence policy regarding pensions in order to ensure that the expectations of pensioners are met and that schemes are run with good governance. Given that function, it is appropriate to question Mr. Begg’s role in terms of some of the pension schemes he has been involved in, including the one to which he drew attention in his presentation, namely, the Irish Airlines Superannuation Scheme, IASS. As he said, that was a very complex scheme involving multiple employers and groups of people, existing and deferred pensioners and current contributors. It had a huge deficit and moneys were put into it to defray some of that deficit. The real travesty is not anything said in the Dáil but rather the impact of those decisions on the livelihoods of those affected by what went on.

One of our considerations here is meeting legitimate expectations. Since that scheme was restructured, retired members, numbering approximately 5,000 people, have seen incomes reduced by €500,000 a month. These people were specifically excluded from any of the talks in the negotiation process. Mr. Begg, both in his roles on the board of Aer Lingus and, more particularly, in ICTU, stood over the process whereby those people did not have a voice in negotiations, going against the idea of “nothing about us without us”. He did so even though decisions that came out of that process meant that they suffered a loss of income. Furthermore, no compensation measures were put in place to defray that loss, even though this took place for other groups. The bitter irony is that their colleagues who worked in America and England got full pension entitlements while their own legitimate expectations were cruelly dashed. How could that process have been stood over? How is that track record going to be beneficial to pensioners going forward? Retired staff associations and, indeed, the deferred members and so on repeatedly wrote to Mr. Begg and to the Irish Congress of Trade Unions seeking assistance and seeking a seat at the table and yet the door was closed on them.

I would also be a little bit concerned that the trade union movement has not advanced the very necessary provision that pensioners who, in many instances, are former trade union members should have access to workplace relations bodies and so on in matters that refer to their pensions once they retire.

Chairman:   We will try to keep initial questions to around the three minute mark. I will let members back in a second time.

Deputy Clare Daly:   Fine. I will come back in. I am wondering why Mr. Begg thinks that would help pensioners in his new authority. In light of the Chairman’s remarks, what would Mr. Begg say to those who argue that, given that he was a director of the Central Bank for 14 years, and that the banking inquiry has been quite scathing and has made the point that the Central Bank had sufficient powers to intervene—–

Chairman:   That is not really relevant to the remit—–

Deputy Clare Daly:   It is, because the role Mr. Begg had in the Central Bank could be viewed to be quite similar to that which he holds in the Pensions Authority – one of oversight. It was the lack of oversight of the Central Bank that caused some of the problems. How do we know we will have a different approach to oversight in respect of the Pensions Authority role? My comments relate to Mr. Begg’s previous experience and expertise.

The last question, in deference to the Chairman, concerns the fact that the Pensions Authority only requires trustees of schemes to send on an annual report to existing members – say, trade unions and current active members. Does Mr. Begg have any views on changing that situation so that information is given, on a mandatory basis, to existing current pensioners? Many of my questions concern how the rights of existing pensioners will be improved under the new Pensions Authority.

Senator Marie-Louise O’Donnell:   Would be possible to get answers to some of those questions, which are quite important, rather than having somebody coming in with four more?

Chairman:   Fair enough.

Mr. David Begg: Addressing Deputy Ó Snodaigh’s questions on the policy role of the authority, ——————-

The question of deferred pensioners also arose in Deputy Daly’s remarks. Let me say first, in response to Deputy Daly, that I took enormous exception to her contribution in the House last week. I thought it was vitriolic, unfair and cowardly in the sense that she used the privilege of the House to say things about me that were unreasonable and unfair, in my opinion. She is quite right about the time being limited in how to deal with some of these problems; that is the only issue on which I can agree with the Deputy.

We can discuss my expertise in all this, starting with the Irish Airlines Superannuation Scheme, IASS, and what I did in those circumstances. That particular scheme was enormously complex, involving a number of employers and trade unions. We had a €720 million deficit in the fund, which was critical. That arose because the strain costs on the fund had not been responded to properly in previous years. There was a large number of restructuring processes in that industry, and the strain costs resulting in the pension scheme had not been responded to. The other problem was there was no agreement on whether the scheme was a defined contribution or defined benefit scheme. That decision would ultimately only be settled in a court of law, if tested, so nobody knew what it was. From the point of view of the board of the company, the formal position was it had no obligation whatever to staff.

The Deputy pointed out that I was a member of the board and general secretary of congress as well. I will park that for a moment before coming back to it. With regard to contacts held with deferred pension personnel, I accept and have made the point that there is a real difficulty as organisations outside the formal structure of the Labour Court are in quite a difficult position because they cannot have effective representation. It is not true that we did not engage with them. I appointed the industrial relations officer of congress, Mr. Liam Berney, to have regular contact with those groups of people. I made strong representations on their issues to the board in the course of the discussions that took place.

I will address the question of legitimate expectations. It is certainly true that employees took an enormous hit but there was one difficulty with that scheme. In certain circumstances it was a co-ordinated scheme but in other circumstances, it was unco-ordinated. If a person served in the scheme until 65 and left on a normal retirement date, the person would have a co-ordinated pension. That meant the person would have an occupational pension less the amount of the social welfare pension. That is the norm in nearly all of the defined benefit schemes around the country. If a person left prior to a normal retirement date – even within one week of turning 65 – there was an anomaly in the scheme that allowed an unco-ordinated pension. If a person had 40 years of service, the person would get 40 eightieths as the pension entitlement plus the old-age pension. That was an extremely beneficial provision but it was unsustainable because it was an anomaly in the circumstances of the pension fund being in deficit to the tune of €720 million.

I worked very hard on the board and as the congress general secretary to try to improve that. I was working at an enormous disadvantage as I could not say what I was doing at the board because I was constrained by confidentiality issues. As most people recall, the major shareholder on the board was totally and utterly opposed to any input of money to fix the scheme’s difficulties. In the end, we tried to bring about a targeted benefit scheme that allowed people to have the same expectation as they would have had if they were part of a co-ordinated pension scheme. In the end, the workers of the company voted by a substantial majority to accept that. Of course, the deferred benefit people were at a disadvantage because of not having collective representation so they did not have a direct influence. They did not have access to the Labour Court to argue around any of the decisions emerging from the court relating to all this. I made a strong case to the board of the company for an injection of €40 million and it was eventually secured.

I will speak a little about my role in the Central Bank. I agree with the Chairman in that it has nothing to do with the Pensions Authority and has been brought in extraneously as part of the vilification process that has been ongoing. Nevertheless, I will deal with it directly. I have received no communication from the banking inquiry team regarding my comments on the draft of the report. Clearly, there is nothing in this that bears upon me from the team’s perspective. I gave three and a half hours of evidence and made two written submissions, which are available to anybody who will take the trouble to look for them. That is very detailed evidence. In the course of giving evidence, I made a point that was fully vindicated by saying that in 2005, I pointed out to the board of the bank that there was a serious difficulty in circumstances where people felt they needed to get on a ladder of having a second house. Such second houses were being built by people who came here as migrants to work in the construction industry and would, effectively, have become the tenants for those houses. It would not have taken a genius to figure out that this was an unsustainable circular process.

My comments on this to the board were vindicated by no less a person than the chief economist of the bank in his evidence to the inquiry, such that the inquiry team wrote to me before I gave my evidence to ask if I wished to comment on what the chief economist stated. Not alone did I do it in the Central Bank forum but I also did it publicly at a social policy conference in UCD on 10 October 2005. I gave a copy of my speech to the inquiry and if anybody on this committee wants to find out what is in that, I am sure it can be provided by the inquiry team. It will probably be published as part of the evidence, as I assume all the evidence will be published. I reject completely that there is any connection between my suitability for this proposed role and my appointment to that position in the Central Bank.

I was asked about trustee information. One of the big problems with trusteeship at the moment, as I stated earlier, is that we have 150,000 schemes, which is an enormous amount. That means there is an enormous number of trustees. We should be honest. In many cases, people do not have the necessary investment experience or training to handle responsibilities of this type. It is a serious difficulty. There is a role for professional trustees, of course, who are people from the pensions industry usually commissioned to act on trustee boards. There is a strong case for reform to try to reduce the number of schemes. We will not really have the chance to ensure good investment decisions for people unless we can do that and professionalise the role of trustees. None of that is to gainsay the contribution that trustees make, almost always in a voluntary capacity, to pension schemes. There is a tremendous risk in this area and there should be full transparency. I would support such an initiative with respect to trustee reports. I would have no difficulty with that.

 

Deputy Brendan Ryan(LAbour:North County Dublin)   I welcome Mr. Begg’s appointment to the role. He is a great candidate and eminently suitable, as he has demonstrated in his presentation. I particularly welcome somebody from a trade union background because many members of pension schemes come from such a background. Mr. Begg has a lot of experience to bring and a deep insight. Most trade unionists to whom I have spoken in the past week certainly welcome his appointment. I look forward to his input in this very important role in the years ahead.

I wish to raise several issues about the IASS, deferred members and Deputy Clare Daly’s point about people having a legitimate expectation of what they might stand to gain on retirement. Mr. Begg referred to an anomaly in the scheme. I have argued that while some called it an anomaly, what it amounted to was the company exploiting the rules of the scheme to use it as a slush fund and encouraging people to leave on the basis of unco-ordination to achieve the productivity it was seeking to achieve. It benefited from this anomaly, or what I argue were the rules of the scheme. The trustees ought to have been aware of this, but they seem to have been asleep on the job. What are Mr. Begg’s general thoughts on this, with reference to what ought to happen in the future in such cases?

I also have a general point to make about the various categories of membership of the scheme. There were active members, deferred members and retired members. We meet them more often than we did in recent years. I have met many of them and members in all categories are disappointed. Active members are dissatisfied with the value transferred from the old scheme. Retired members have lost 10%, while deferred members have lost 50% to 60%. They are seeking to be treated in the same way as retired members, as they had been previously. In Mr. Begg’s view, was there any possible outcome which could have led to greater satisfaction throughout all of the groups?

Deputy Clare Daly:   I have several points to make about what Mr. Begg said. Perhaps he did not understand the point about being a member of the board of the Central Bank. In essence, the point is that he signed off on financial stability reports, particularly in the period 2003 to 2007 when the Central Bank allowed the banks to borrow 50% of GDP, loan it out and fuel the property bubble. We know that as a result of these financial stability reports, many pensioners were encouraged to buy shares in the banks and that many of them lost their livelihoods.

I find it strange that Mr. Begg categorised some of the comments made about his appointment as hostile abuse. To be honest, that is a gross exaggeration.  I am wondering how Mr. Begg could not possibly understand how people who have seen their retirement livelihoods decimated, most paretically in a scheme in which Mr. Begg’s organisation had a very direct role, would be upset that he has been appointed to his current role.

Mr. Begg said I was vitriolic. I do not accept that. He said I made some cowardly remarks under Dáil privilege. I would like to know what those remarks were. He said my remarks were unfair. I am sure he did not like them even though they were not personal and certainly not intended to be such. They were not untrue. If Mr. Begg believes they are, I would like him to specify why point by point, after which I will answer him on those points.

Much time has been spent on the IASS because it is directly relevant to Mr. Begg’s most recent appointment in terms of his experience. He justified his role by referring to the scale of the deficit involved in the scheme and the strain costs imposed through management decisions to let people go. It is a fact that, during the time in question, Mr. Begg was on the board of the company that stood over these decisions. Deputy Ryan is actually correct in that it was not a case of an anomaly in the pension scheme; it was an absolute fact that the clause in the pension scheme was used to entice people to sell their jobs and take retirement to lower the costs of the company. Mr. Begg was on the board of the company at the time.

There was a problem in that there were multiple schemes of this kind over the years. It was not a case of just one redundancy scheme; there were multiple schemes throughout Aer Lingus’s history. The problem is that it is the pensioners and members of the scheme who have paid the price for this debacle. I appreciate that Mr. Begg can say an effort was made to try to share the pain, but the companies involved did not share it. They did not put in enough money to undo the poor decision-making in which they engaged. Unlike Waterford Glass, these are highly profitable companies that had the money to put in.

I am wondering about this because Mr. Begg made a couple of points that were not really accurate or did not describe the full picture. I was not just talking about deferred members but also about the existing retired members. They comprise two separate groups who were prevented from sitting at the negotiating table. While it is true that ICTU engaged with the deferred group, there was no engagement with the retired group, which was organised and represented by RASA, in particular. While it is true that extra money was made available for defrayal and to compensate the deferred members a little — I do not know whether this is the result of Mr. Begg’s input behind the scenes or the work of the pensions committee — Mr. Begg skipped over the fact that no moneys were allocated to compensate the existing retired members, who are the ones seeing €500,000 going out of their collective wage packet every month. They got nothing. While it is true that these groups were outside the Labour Court mechanism, and therefore in a difficult position, the question I am asking Mr. Begg, the former head of ICTU, is what the union did do to alter these circumstances and give the workers a voice and a mechanism, for now and the future?

Chairman:   Has the Deputy a question?

Deputy Clare Daly:   I am seeking Mr. Begg’s comments on this.

With regard to Mr. Begg’s role in the Pensions Authority, is he prepared to order an investigation into what occurred with the IASS, particularly because there were not only poor management decisions but also negligent investment decisions made by the trustees, who decided to divest the pension fund of probably the most unrivalled property portfolio in the city at a time of rising property prices and to put all the money into Irish Life at a time when people connected to Irish Life were also connected to the pension fund? Will it be investigated under Mr. Begg’s remit? He said his greatest expertise was being a pensioner. Of how many pension schemes is he a member? How many pensions is he likely to receive from the various posts in which he served over the years?

Mr. David Begg: I shall respond to Deputy Ryan’s comments first. He is quite correct that most, if not all, occupational pension schemes are, as far as I know, the product of trade union and management negotiations. Companies that do not have the collective bargaining remit would be very unlikely to have a defined benefit scheme.

On the anomaly with the IASS, one could perhaps find a better word for it. However, the difficulty I saw, and in respect of which the Deputy and I have had many discussions, was that nearly all pension schemes in the country had a co-ordinated provision by which one’s pensionable pay was offset by reference to the social welfare provision. Sometimes it is one times the value of the social welfare provision, but more likely twice that value. The difficulty I found in getting a better result out of all this publicly, leaving aside the willingness, or otherwise, of the company, its investors and shareholders to put money in, was that if one were to legislate on this as a public policy issue, one would have to legislate for a quite unique set of circumstances. Personally, I believed that was unlikely but perhaps others have a different view. Certainly, however, it was very unlikely that one could have allowed for what I describe, particularly in the way it operated because it was a co-ordinated pension under the rules of the scheme if one retired at 65. It was unco-ordinated in practice if one retired short of that age. It was a most extraordinary provision. However, this does not gainsay the fact that it was a very heavy hit for many people, particularly people at the lower end, whose real income would have been reduced significantly as a result of the €12,000 odd associated with the State pension. Nevertheless, this was a quite difficult set of circumstances.

None of us can ignore the fact that the €720 million deficit was enormous. There was no great willingness on the part of the company to put money into the scheme. One of the shareholders, the major shareholder, was said in public to have been against doing anything in this regard. Therefore, it was practically very difficult to try to secure a resolution that would have mitigated the worst effects of the deficit of €720 million. Consider the outcome of a targeted pension to give the same level of co-ordinated benefits.  While everybody is probably dissatisfied with the outcome, it was possibly the least worst option. Regarding the trustees and the strain cost over the year, it is very difficult to avoid the conclusion that something was missed. These were important additional strains that were put on it, and it should have been copped much earlier.———————————————–

Deputy Clare Daly asked many questions. I really believe the Deputy abused privilege in the Dáil in the attacks she made about my role in the IASS.

Deputy Clare Daly:   By all means, specify them.

Mr. David Begg: It was completely wrong and I do not believe it was not personal, to be honest. I do not accept it. While I am well used to hostility publicly, the Deputy should consider, from time to time, the damage she inflicts on a person’s family. It never seems to go through her head.

While the Central Bank stability reports tended to indicate what the risks were, it can be argued that it did not stress them strongly enough over the years. I can give an account only of my role. I gave detailed evidence to the banking inquiry. If the committee feels it is relevant, it is more than welcome to examine my three and a half hours of evidence to the banking inquiry and the two written statements I made. I also ask the committee to consider the evidence given by the then chief economist of the Central Bank.

On the multiple schemes that affected the straining cost, it is true that from the 1990s, when the Deputy was a shop steward in a company, I was involved in only one, the leave and return scheme, which set up a provision whereby people could enter into a defined contribution, DC, scheme separately. This restructuring was successful, in its way, although it was not very successful for the company which was loaded with many unanticipated taxation costs. For the people involved, it was good enough.

The problem of representation of people at the Labour Court is a difficulty. I am in favour of some opportunity for people to be heard. The Deputy is mistaken in saying we had no engagement with any of the other groups. ICTU staff were available to anybody who wanted to talk to them. I was constrained from doing so for the reasons I mentioned earlier. The difficulty was that there was not enough money. Regarding how to extract more than €200 million from people, maybe other people were better at it than I. It was the best I could do, and it brought a result which, while probably not satisfactory to anybody, as a damage limitation exercise, it was not the worst outcome.

While I am not sure how relevant my situation is, I will tell the Deputy. I have one pension from ICTU of €32,000 per year. Contrary to what was asserted, I do not have a multiple of public appointments. I have reservations as to whether people should be asked to declare such personal information. It has been said by all and sundry that I am a millionaire.

Deputy Clare Daly:   I have to correct that point.

Chairman:   I will allow the Deputy to talk in a minute.

Mr. David Begg: I did not respond to the Chairman’s point about the legal route. There was a fundamental issue of a legal nature as to whether the scheme was a defined contribution or a defined benefit scheme. The company took the view that it was a defined contribution scheme, meaning it had no obligation to put in money to deliver on the pension promised under the old IASS scheme. The staff view was, on that contrary, that it was a defined benefit scheme. The question could only be determined by way of litigation, such as through the High Court. The risk for either side was that if they lost in court, their case would be over. Therefore, although many people talked about litigating, nobody litigated.

I agree with auto-enrolment. Pensions should be mandatory, not “soft mandatory”. There is a reasonable argument that we would get better results if we took all the money we put into subsidising pensions and put it into State pensions. Handling the transition would be tricky. If the Government announced in the morning that it was going to do it, it would be saying good-bye to all the defined benefit and defined contribution schemes that exist. If the Government made this policy choice, migrating from our current position would be very challenging.

Deputy Clare Daly:   I asked a question about Mr. Begg’s personal pension incomes. What other people have said about it is no concern of mine. It is strange that Mr. Begg took offence at such a question, given that he had no problem describing in detail his wife’s pension entitlements. There is a problem there.

Mr. David Begg: I described the public social welfare implications of being out of the workforce.

Deputy Clare Daly:   I did not interrupt Mr. Begg.

Mr. David Begg: I did not say what her pension was.

Chairman:   Deputy Catherine Byrne also raised the issue. We have all raised the issue of women who have not made the State pension contributions due to having taken time out of the workforce.

Deputy Clare Daly:   The point I am making is that it is a perfectly appropriate question to ask in the context of Mr. Begg’s appointment.

Chairman:   It is unusual. It has never been asked at a committee before.

Deputy Clare Daly:   Have we had a head of The Pensions Authority come before the committee before? Probably not.

Chairman:   We have had people in similar roles, for example the Pensions Board, and have not asked the question.

Deputy Clare Daly:   This is The Pensions Authority. It is different, and that is the basis for the question. Regarding Mr. Begg’s point on hostility, it is surprising that somebody with the record of briefs Mr. Begg has had would take any offence. Again, if I made any specific remarks today or last Wednesday that are inaccurate in any way, I ask Mr. Begg to please put them to me. I will have no hesitation in engaging in a public debate with him, here or anywhere else, if they are deemed inaccurate.  I have two more questions. I have been repeatedly—–

Chairman:   Okay, but we will need to wrap up then.

Deputy Clare Daly:   In Mr. Begg’s new brief, will he commission an investigation into the activities and the investment decisions relating to the IASS which caused serious financial strain on that scheme? Mr. Begg answered the Chairman’s question as to whether it was a DC or DB scheme. That was a tactic the companies used to delay the process. There was a firm ruling that it was a DB scheme, with no question or doubt. That issue was not relevant regarding the latter crisis around the IASS.

Chairman:   Obviously, last week’s debate had nothing to do with Mr. David Begg. There is a practice in the Dáil of not speaking about somebody outside the Houses who is not there to defend himself or herself. I do not like to see the Dáil used in that way. It relates to the issue of privilege.

Mr. David Begg: The comments in the Dáil to which I object relate to my handling of the IASS. There seemed to be a coalition of attack on me involving the far right and the far left. I have always been a nemesis of the Trotskyist left in my long career. The latter has a total objection to anybody in social democratic politics. I thought there was a vitriolic dimension to Deputy Clare Daly’s attack in that particular political sense. She was willing to make a coalition with the extreme right in order to do that. That struck me as extraordinary. As far as I can recall, in the whole experience of the Aer Lingus matter I do not believe I received a telephone call from the Deputy about it, whereas Deputy Ryan was on my case morning, noon and night. I do not understand what Deputy Clare Daly was at in this regard, other than engaging in a very personal attack in that sense.

I do not know if I have any power to investigate the role of the trustees in the past. I do not think it would even be useful to do that. The past is the past. I do not think anything good can come of it. On the issue of whether it was defined benefit or defined contribution, the judgment on the defined benefit was by the then Pensions Board but that was challenged by the company. Ultimately, it always appeared in the company’s balance sheet as a defined contribution scheme. Regardless of who was right or wrong, ultimately, it could only have been tested in the courts.

Deputy Clare Daly:   I find it surprising that anybody would say the past is the past. I hope Mr. Begg will examine the matter because fraudulent or poor, possibly criminal, decision making was engaged in. The time lag does not—–

Deputy Jim Daly:   Chairman, I take exception to this committee being used to rehash and rerun—–

Deputy Clare Daly:   I am sorry—–

Deputy Jim Daly:   Sorry, I did not interrupt Deputy Clare Daly at any stage and I ask her not to interrupt me.

Deputy Clare Daly:   I was actually speaking. Deputy Jim Daly was actually interrupting me.

Deputy Jim Daly:   No, I am addressing the Chair.

Deputy Clare Daly:   When I am finished, Deputy Jim Daly can speak.

Chairman:   Although—–

Deputy Jim Daly:   On a point of order, I want to make a statement. As a member of this committee who attends every meeting, as far as possible, and who has contributed a lot to the committee, I take exception to it being used to settle political scores as is the case here. I ask the Chairman to make a ruling to end it please.

Chairman:   The issue has been aired and Deputy Clare Daly is just expressing her point of view now. If she wants to make allegations, there is a place to do that and it is not here.

We have engaged very fully. I have given everybody ample time. The meeting has been chaired fairly. Unlike other committees, we give the first questions to the Opposition. I will now conclude. We have had a very good engagement.————–

All those present have engaged in a very thorough debate on the issue of pensions and the role. I and, I am sure, other members here wish Mr. Begg the best of luck in his role. We very much appreciate his engagement with us today. I thank all those who participated

———————————————————————-

David Begg Assented to All Financial Stability Reports Issued by Central Bank in the years immediately prior to the Banking Bust

WIKIPEDIA  ON Central Bank of Ireland

Banking system collapse resulting from property bubble[edit]

Main article: Irish property bubble

The Central Bank admitted in November 2005 that estimates of overvaluation of 40% to 60% in the Irish residential property market existed. Minutes of a meeting with the OECD indicated that while the Central Bank agreed that Irish property was overvalued it was fearful of precipitating a crash by “putting a number on it”. Senior Allied Irish Bank officials expressed concerns in 2006 that Central Bank stress tests were “not stressful enough” — two years before the collapse of the Irish banking system.[18] The Central Bank of Ireland (CBOI) management continually ignored warnings from its own financial stability unit [19] and from the Economic and Social Research Institute about the dangerous scale of bank loans to property speculators and developers[20] because it wanted everyone on the right message, leading to key information being suppressed. It also sought to gag one of the country’s most prominent economists from talking about the fragile state of the nation’s banks.[21] The Central Bank deliberately “watered down” economic warnings about the property bubble in the run-up to the crash, blocked internal communication reaching board level due to the political and property interests of the Directors and “rigorously” concealed data from the relevant supervisors on the large exposures of the banks to individual developers.[22][23]

Internal warnings were covered up and when corroborating evidence also pointing to substantial overvaluation in the Irish housing market emerged in 2007, the results were suppressed in favour of an overall conclusion that presented a favourable perspective on the housing market and on financial stability more generally in Ireland. 10 months before the crash they made a statement saying- “The Irish banking system continues to be well-placed to withstand adverse economic and sectoral developments in the short to medium term. The underlying fundamentals of the residential market continue to appear strong and the current trend in monthly price developments does not imply a sharp correction. The central scenario therefore is for a soft landing”[24]

Commercial Bankers could get the regulator to do as they wanted due to their “cosy” relationship.[25][26] and were allowed to recklessly breach lending limits on property without fear of any consequence because of the regulator’s inaction. The CBOI had sufficient powers to regulate, including the authority to revoke banking licences, but the powers were simply not used.[27][28][29][30]

Corrective regulatory action was delayed and timid to the unsustainable property price and construction bubble during the mid-2000s. After the bubble burst, Irish banks faced mounting losses which exposed them to a collapse of confidence following the Lehman Brothers bankruptcy in September 2008; they then suffered acute liquidity pressures which had to be met by Central Bank support, including emergency lending. Management abuses, which the CBOI did not restrain, were also revealed at Anglo Irish Bank, which had to be nationalised in January 2009.

Their Annual Report, which was published just three months before the Government was forced to unconditionally guarantee the deposits of the Irish-owned banks,said: “The banks have negligible exposure to the sub-prime sector and they remain relatively healthy by the standard measures of capital, profitability and asset quality. This has been confirmed by the stress testing exercises we have carried out with the banks”.[31][32]

The next Annual Report had virtually nothing to say about how and why the Irish banking system collapsed.[33] Although there were four Central Bank directors on the board of the Financial Regulator, the Central Bank maintained it had no powers to intervene in the market. Yet, the Central Bank had the power to issue directives to the Financial Regulator if it thought it was conducting its business in a way that was contrary to overall Central Bank policy aims. None were issued.[34][35]

In July 2009, a senior Central Bank official told the Oireachtas Enterprise Committee that shareholders (later corrected/clarified to refer to institutional investors) who lost their money in the banking collapse were to blame for their fate and got what was coming to them for not keeping bank chiefs in check. The official did admit that the Central Bank had failed to give sufficient warning about reckless lending to property developers.[36] The Governor later described the share wipeout in which tens of thousands of investors lost their lives’ savings as a “stock exchange adjustment”.[37]

A report by the Oireachtas Public Accounts Committee said it was “exercising inadequate supervision” and a proper analysis of loan books of the banks was not done[38] while a separate parliamentary banking inquiry blamed the financial watchdog for the economic crash.[39][40]

The regulator’s processes and reports, and the findings of external scrutineers, any of which should have raised red flags, failed to do so. As a result, they did not see the enormity of the risks being taken by the banks and the calamity that was to overwhelm them.[41]

The European Commission in a November 2010 review of the financial crisis said “Some national supervisory authorities failed dramatically. We know that in Ireland there was almost no supervision of the large banks.”[42] Two months later, the President of the EU Commission in an angry exchange in the European Parliament, with a vehemence that shocked his audience, said that “the problems of Ireland were created by the irresponsible financial behaviour of some Irish institutions, and by the lack of supervision in the Irish market.”[43]

The Taoiseach said that the CBOI had the Government put in place contingency plans to provide armed Defence Force security for major Irish banks over public order fears if a cash shortage was triggered at the height of the financial crisis.[44]

The Central Bank have the power to investigate surviving banks with the evidence of their slack lending controls during the boom years but refused and wouldn’t comment on the reasons for not doing so.[45]

The reckless lending practices of banks cost taxpayers “well over”[46] €100 billion or €25,000 for every man, woman and child living in the Republic of Ireland.[47][48]

The Financial Regulator[edit]

Main article: Financial Regulator

In 2003 a new separate division of the Central Bank, with its own Chairman, Chief Executive, and board, was established as the Irish Financial Services Regulatory Authority. This was as a compromise between those who favoured a fully independent regulator and those who believed the Central Bank should maintain full control of regulation of the financial services industry. This division of the Bank authorised and regulated all financial institutions (including insurance undertakings, collective investment funds and credit unions) in Ireland.[49][50]

Under the 2003 arrangements the Central Bank provided the Financial Regulator with services. The Regulator’s industry panel, which provided the Regulator with feedback on its charges and policies said in April 2007 that they had ‘‘major concerns with the quality and cost of the services’’ provided to the Regulator by the Central Bank.[51]

The operations of the Financial Regulator were severely criticised in a report marked “strictly confidential and not for publication”, as being poor value for money. The report stated that there were too few specialist staff, compared with its peers.[52] There were also serious shortcomings in the crucial supervisory area.[53][54]and the report was particularly critical of the regulator’s senior management structure, concluding that a clear management and oversight framework, which ensures that issues are escalated through the organisation, was “not fully in place”.[55]

Former Taoiseach Bertie Ahern, said that his decision in 2001 to create a new financial regulator was one of the main reasons for the collapse of the Irish banking sector and “if I had a chance again I wouldn’t do it”.[56] “The banks were irresponsible,” he admitted “But the Central Bank and the Financial Regulator seemed happy. They were never into us saying – ever – ‘Listen, we must put legislation and control on the banks’. That never happened.”[57]

The April 2009, the new Financial Regulator, outlined his shock at the poor level of financial regulation he discovered when he started his job the previous January and “it is clear to me we need to undertake a fundamental overhaul of the regulatory model for financial services in Ireland.”[58] He also said that there was a “critical absence of intellectual firepower within his staff”[59]

Following the banking collapse of 2008–9, the Government[60] re-unified the organisation under a Central Bank of Ireland Commission to replace the board structures of the Central Bank and the Financial Services Regulatory Authority which became effective on 1 October 2010. A July 2009 editorial, in the respected,Sunday Business Post, said “returning the key powers of regulation to the Central Bank will be useless unless there is a fundamental change in the culture of the organisation. This does not require a complete change of personnel, but a change of key personnel.”[61] There can be no denying that the spinning off of the Financial Regulator from the functions of the Central Bank in 2003, was an outright failure.[62][63]

Criticism[edit]

The headquarters in Dame Street was built at a height far exceeding what was allowed in the planning permission granted by Dublin City Council. The Minister for Local Government told the Dail that he “did not believe that because an organization is very important and is very rich they should be allowed to break the planning laws.”[64]

Irish Trust Bank went into liquidation in 1976 after the Central Bank failed to spot accounting scams and the taxpayer was left to pick up the tab for its debts. The Managing Director and owner fled Ireland and he went on to buy London’s Chelsea Football Club and then Leeds United .[65]

From the mid-1970s up to the early 1990s, it was aware of, but took no action to stop, an organised large-scale tax evasion scheme organised by Ansbacher Bankfor the benefit of wealthy and powerful Irish people. Included in those who were breaking the law were a director of the Central Bank and the architect given the commission to design their headquarters (in contravention of planning permission).[66][67][68][69][70]

In 1982, PMPA, then the largest motor insurer in Ireland with about 300,000 policy holders and 32 per cent of the entire market, had to be saved from total collapse by the State. A 2pc levy was imposed on all non-life insurance premiums at the time to cover the collapse of PMPA which ended in the early 1990s. The subsequent administration of the company lasted 30 years.[71][72]

The Insurance Corporation of Ireland was a wholly owned subsidiary of the CBOI-supervised Allied Irish Banks, when it collapsed in 1985. This was that had arisen due to severe underpricing of policies being written, adequate reserves were not being maintained and it was not monitoring the true profitability of the business. This collapse occurred at a time of deep economic recession in Ireland (government debt in 1985 was 116% of GDP). But the Irish taxpayer bailed AIB out of its difficulties at the urging of the Central Bank. The Irish Government did so as the Central Bank claimed that it could put AIB’s core banking business in jeopardy. The cost to the Irish taxpayer was £400 million at the time (€1245 million in 2013 figures). In a move that angered many, AIB paid a dividend to shareholders the following year.[73][74][75][76][77]

High Court inspectors found that National Irish Bank facilitated and encouraged large scale serious tax evasion by their customers by selling life assurance policies issued by Clerical Medical in the Isle of Man and also deliberating overcharged both interest and charges by up to €100 million.[78][79] The CBOI ignored the report and didn’t sanction the institution in any way.[80]

In 2000, the Dáil Public Accounts Committee, Deposit interest retention tax “DIRT” inquiry, into the facilitation of widespread tax evasion by the banking industry, was of the view that the Central Bank had an inappropriate and outmoded approach to supervision in the context of the growing sophistication of banking and the changing role of banks. It found that the CBOI had an insufficient concern with ethics and supervision and it was “conscious for an extended period before and after the introduction of Dirt of the existence of evasion.”[81][82] The inquiry report further said that the CBOI was “too mindful of the concerns of the banks, and too attentive to their pleas and lobbying” due to its “particularly close and inappropriate” relationship.[83] The Chairman of the inquiry was “shocked and horrified” at the “careless and reckless” manner in which the Central Bank had quoted false statistics to the Public Accounts subcommittee and said that heads must roll and clearly indicated that the Governor should be the first to consider his position.[84]

Senior executives at Allied Irish Banks using a British Virgin Islands company, made for years secret personal profits, at the expense of the public who invested their pensions/savings with them. The CBOI also ignored a tip off about the same financial institution systematic overcharging tens of thousands of their customers, but even after media exposure of the scandals no regulatory action was taken.[85][86][87][88][89][90]

The Central Bank was warned by the German regulator, BaFin, as early as 2004 that Sachsen LB’s troubled Irish subsidiaries were involved in highly risky and under-scrutinised transactions worth as much as €30bn or 20 times the parent bank’s capitalisation. Despite the warning, in 2007 the CBOI approved another Sachsen investment vehicle and two months later the stable of off-balance sheet companies needed a €17.3bn bail-out from the German association of savings banks to keep Sachsen afloat.[91][92]

The Irish Brokers Association said there was “intense frustration and annoyance” about excessive red tape and the CBOI refusing to listen to them in 2005.[93]

The same year the Central Bank was criticised for publishing a report, which it was said, read a bit like a promotional brochure for the money lending industry. It included a section devoted to arguing why moneylenders should be allowed to charge as much as they do. (188%-plus collection fees of up to 11%.)[94]

The New York Times referred to Ireland as the “Wild West of European finance” in April 2005 which was seen to underline the fragility of the Country’s Financial Regulation system.[95][96][97][98]

The Australian Authorities warned the Central Bank of the activities of person connected with the largest bankruptcy in that country’s history. The CBOI did nothing, he went on to commit a US$500 million fraud and pleaded guilty in the US despite the crime being committed in Ireland.[99][100][101][102]

Their consumer panel stated that the Central Bank was slow to respond to consumer issues and ‘”appears to seek complexity and obstacles rather than to seek consumer-oriented solutions to current and emerging problems”‘. And it warned that this approach can undermine consumer confidence in the “efficacy of the regulatory process.”[103]

The same month in 2006, a government-appointed panel that consists of banking and insurance representatives revealed widespread dissatisfaction with the Central Bank’s skills base.[104][105]

Their industry panel, which provides feedback on its charges and policies said the levy on financial institutions for industry funding is perceived by industry as cumbersome and bureaucratic[106]

They did not give their consumer panel a copy of the report of the working group set up following the collapse of a stockbrokers,[107][108] where some investors were waiting over 7 years to have their claims processed.[109] When the panel managed to get sight of it, they said it was “extremely deficient”[110][111]

In July 2007, the Comptroller and Auditor General called for an independent review of the inspection process for financial institutions carried out by the Central Bank. The Comptroller urged the introduction of clearly defined risk categories for individual areas of financial services, so that the appropriate level of supervision required for each institution can be implemented in line with the risk involved.[112]

Transcripts of phone calls by their senior staff suggest they gave tacit approval to the illicit movement of deposits between Irish Life and Permanent plc and Anglo Irish Bank plc. “Okay, that’s grand, right I think that’s everything”. The CBOI refused to say whether staff might face disciplinary procedures or sanctions if the transcripts were validated and investigated internally.[113]

A businessman succeeded in getting himself appointed a Director by giving a large personal gift, in sterling cash, to Bertie Ahern.[114] When the commercial banks began to lend recklessly, which lead to Ireland losing her economic sovereignty, none of the Directors had experience of bank regulation[115] but the CBOI had the expertise available of a “romantic novelist” sitting on its board.[116]

The CBOI knew that Allied Irish Banks were overcharging consumers in FX fees but failed to act for a number of years.[117][118] They gave a parliamentary inquiry the “false impression” that they were unaware of it.[119][120] The whistleblower who gave them the information was requested to come to a meeting with the CBOI but was only invited to withdraw the allegations of wrongdoing and at the same time found himself removed from his position at Allied Irish Banks without any reason given. After his case was highlighted in the media, the CBOI officially apologised on how the authorities treated him, eight years after alerting them of overcharging.[121]

The same whistleblower also sent a report entitled ‘Special Investigation Goodbody Stockbrokers – Trading in AIB Shares’ to the CBOI, in which questions were raised about the legality of a device used to trade in AIB shares through offshore locations in blacklisted tax havens Nevis and Vanuatu. No action was taken.[122]

In 2008 as the Irish economy collapsed, it spent €115,000 on one staff party.[123]

The Central Bank could have spotted Bernie Madoff‘s gigantic fraud, when he started using Irish funds to cheat ordinary investors out of billions in what is considered to be the largest financial fraud in U.S. history. Madoff had to supply large amounts of information to the CBOI which would have been enough to enable the Irish regulator to uncover the fraud much earlier than late 2008 when he was finally arrested in New York.[124][125][126]

In early 2009, the Financial Services Consultative Consumer Panel, tasked with monitoring the performance of the Central Bank, said that most consumers have lost “significant amounts of money” due to the inadequacies of the financial regulatory structure. It also criticised the “deficient” response of the CBOI to threats to consumers, including the Irish property bubble.[127] In response they said “It is clear that the actions we took were insufficient and were not taken early enough,”[128][129][130]

Then leader of the opposition and future Taoiseach Enda Kenny. called for the board and senior management of the Central Bank to be sacked.[131][132]Independent Senator, Shane Ross said that the CBOI was an institution that had lost the faith of the international markets “They think it is actually genetically flawed. That is the problem we’re going to have to attack next.”[133]

The one time head of Financial Regulation, had companies he is a director of, fined a total of €3.35 million by his previous employers the Central Bank, for risk control and reporting failures.[134][135][136] In early 2009, his successor (whom a leading economist said “was arguably the worst regulator the world has ever seen”)[137] retired early over the handling of an investigation into the €87 million secret directors’ loans at Anglo Irish Bank.[138][139] but got a €630,000 golden handshake[140] At a subsequent criminal trial the judge said the man’s attitude and behaviour had complicated sentencing as during two days of evidence he said “I don’t recall” 30 times and “I don’t know” 23 times. There were also two dozen “I can’t recalls” a handful of responses of “I have absolutely no recollection” and a plethora of “I can’t, “I cannot,” or “I don’t” remember.[141] The next holder of the position, was asked at a parliamentary committee “In regard to baseline qualifications, if your staff is regulating the financial sector, should it not be the case where they should have the bare minimum required in the market as well, a qualified financial adviser status, or they’ve gone through certain industry exams. It’s obviously important to have.” But the CBOI executive disagreed: “I don’t agree with that. But I think I’m conflicted because I’ve never taken a professional exam in my life.”[142] The Governor in March 2015 had to return to Leinster House to clarify his earlier comments there that Anglo Irish Bank should have been allowed to fail — a view he said was a “senior moment” and not what he believes[143][144]

Ernst & Young was hired, to advise the Central Bank of Ireland on the €440 billion bank guarantee scheme in January 2009,[145] despite the fact that Ernst & Young[146][147] was being investigated[148] arising from its audits of Anglo Irish Bank[149] and had also refused to appear before a parliamentary committee following the collapse of the same bank after receiving “legal advice”.[150][151] Their then head of financial regulation told the same committee that “a lay person would expect that issues of this nature and this magnitude would have been picked up” by the external auditors.[149]

At the same time the lowest tender was not chosen for the fit out of new offices in Spencer Dock in Dublin’s docklands.[152]

Following the failure of existing regulatory structures to prevent excessive lending to the property sector,[153] consultants Mazars, which were brought in to review operations said that “regulatory expertise was lacking in some areas.”[154] Responding to the highlighted weakness, the Minister for Finance, said “substantial additional staff with the skills, experience and market-based expertise will be appointed. Those recruited will also have the expertise to regulate the international financial services sector.”[155] He also announced that all consumer functions will be ‘”re-assigned”‘ to other agencies.[156]

In July 2009, the CBOI blocked insurers and banks from making any critical statements containing “any references” to them by means either of “public press statements” or un-approved public references, whether “written or oral.”[157]

Two reports of an investigation into the “wholly inappropriate sale of perpectual bonds” by Davy Stockbrokers to credit unions failed to involve any of the credit unions affected, leaving them “in the dark and powerless to add any value to the findings of this investigation”. The CBOI then declined to give them access to the reports. The Chairman of one the Credit Union’s who suffered large losses told his members “The failure to publish the reports is to place the complaints process in a shroud of secrecy. Such a failure of openness, transparency and fairness can only serve to undermine confidence in the complaints process, forcing those with grievances into the courts. Such a course of action is not in the interest of any of the stakeholders.”[158]

The next month, the head of the German Financial Regulator told the Bundestag Finance Committee that the failure of the “terrible” Depfa Bank, which was completely supervised by its Irish equivalent, lead to the collapse of its German parent which forced Berlin to bail it out at a cost of €102 billion. The committee was told that the alternative was a run on German banks and the eventual collapse of the European finance system and “You would have woken up on Monday morning in the film Apocalypse Now[159] The bank had just 319 employees[160][161] but was allowed to guarantee loans valued at 14 times Ireland’s Gross Domestic Product.[162] A former Governor of the Central Bank of Ireland was a director of Depfa.[163] Regulatory failure was acknowledged and this is a source of continuing friction with the German authorities.[164][165]

The CBOI admitted that it had issued private warnings to over 30% of credit unions about their arrears levels, but refused to provide full updates on what percentage of credit union loans are in arrears or how quickly they are increasing.[166][167] This raised questions about their commitment to openness[168][169][170] as detailed questions about the solvency of individual credit unions are subject to the standard response of “no comment”[171]

Transparency International[172] have questioned whether the Central Bank should continue to have an exemption from Freedom of Information legislation.[173]Compliance experts[174][175] have said “The most offensive confidentiality provision in Ireland is the one which protects the Central Bank”[176] Both the Financial Services Ombudsman and Information Commissioner,[177] are among others,[178][179][180] who called for a lifting of the confidentiality applied by the Central Bank to much of its work.[181][182] Other EU regulators have a policy of transparency.[183][184]

The director general of the Free Legal Advice Centres in October 2009 said, the code of conduct on mortgage arrears produced by the Central Bank was “deeply disappointing”, and did not offer enough protection for consumers.[185]

The Irish Times, the country’s “newspaper of record” said the organisation “has a death wish and its regulatory edict verges on the Pythonesque, eating into what is left of its credibility.”[186]

In a speech, the Governor of the Central Bank implied that “ignorance and inattention” were to blame for regulatory failure.[187]

The Consumer Consultative Panel, in December 2009 said that they were unable to function for almost a year because officials ignored requests for meetings and “we believe it is unacceptable that the board of the financial regulation section has failed to take responsibility for their stewardship of the organisation during the last six years. They did not understand many of the sectors and financial products it regulates.”[188] These failings undermines their ability to enhance or enforce corporate governance in the wider financial services sector. It also warned “that the reforms announced to date were not sufficient to avert more crisis’ in the future.”[189][190]

Following a February 2010 review by the Comptroller and Auditor General, the organisation admitted that it paid for 52 spouses of staff to go on foreign trips over a two-year period.[191]

The next month opposition politicians described an advertisement seeking to appoint a consultant to oversee its art collection as insensitive and inappropriate at the dept of the credit crunch depression.[192]

The Central Bank should give an annual statement to the Dáil on bank supervision to make regulation ‘‘more accountable’’, the Comptroller and Auditor General said in March 2010 after highlighting shortcomings in financial regulation leading up to the financial crisis .[193][194][195]

At the same time the influential German newspaper Siddeutsche Zeitung described as “remarkable” the CBOI’s handling of a whistleblower‘s revelations that the Irish subsidiary of Unicredit Bank had 40 times the permitted level of deviation of minimum liquidity requirements. They also did not inform the parent bank and the relevant regulatory authority on the continent.[196][197][198]

High risk and sloppy lending practices at the Irish Nationwide Building Society were reported to the Central Bank by external accountants over a long period but did not change its behaviour. The former head of compliance, became a whistle blower by reporting “dodgy practices”. Separately the Vice Chairman told the CBOI of his concerns in great detail,[199] but again they did nothing.[200][201] It required a €5.4 billion[202] Government bailout, leaving it in State ownership.[203][204] A letter which they received concerning the legality of the illicit loans by the Building Society to Sean FitzPatrick had “gone missing”.,[205] but the CBOI knew for 8 years about the clandestine loans of up to €129 million but did nothing.[206] Management at Irish Nationwide used to arrange meetings with the CBOI for late on a Friday afternoon, knowing that the regulator’s staff would not want for the encounter to last for more than an hour because it would nibble into their weekend.[207] In a damning report following Nationwide’s collapse, the Regulator was found, for decades, to “have understood and delineated the critical INBS issues well before they caused trouble, but equally failed fully to use its powers under the [Building Societies] Act by pursuing these issues, being apparently mollified by bland assurances” and the CBOI “did not meet standards which might be reasonably expected”.[208]

Reports[209][209][210] on the financial crisis did not ask the opinion of their consumer consultative panel, who in a statement said it was “very disappointed that, in particular, the report by the Governor did not refer to the work of the panel in highlighting many of the failings of the regulation in the past number of years.”[211][212]Fresh areas of concern included the lack of minute-taking at senior levels in the Financial Regulation section and among its sub-board. Central Bank minutes and those of then financial services regulatory authority typically recorded “only the broad consensus” on issues discussed and decisions taken.”They do not describe in any detail the frequent debates and often significant differences of opinion that, according to board and authority members, existed on some issues, especially the possible risks to financial stability,”[213]“If this is the situation that prevails, then this has to be a source of concern regarding the standard of governance.” AuthorFintan O’Toole wrote of the same report, [it] “is notably evasive on one of the key questions – political and governmental collusion with the bankers. ‘Evasive’ is not the right word; ‘tortured’,’twisted’ or ‘tormented’ might be more accurate.”[214]

One of the reports noted that the Central Bank had found substantial departures from credit policy during inspections of banks, but failed adequately to follow up on its concerns. Secondly intrusive demands from regulatory staff could be and were set aside after direct representations were made to senior regulators.[215][216]

Two months later, it emerged that their regulatory section authorised the Quinn Group (which subsequently went into administration) to borrow €169 million fromAnglo Irish Bank in order to buy Anglo Irish shares (which subsequently had to be nationalised at a cost of €5,500 for every man, woman and child in the State[217]).[218] Its actions were described as “like the Vatican running an abortion clinic.”[219][220][221][222] At a meeting with the Chairman of Quinn Insurance, the Regulator didn’t think it was “fair or appropriate” to “tackle” the tycoon on his investments.[223] The subsequent collapse of the Quinn Group cost the public €1.65 billion.[224]

On her September 2010 state tour to Russia, the President of Ireland Mary McAleese, highlighting the importance of competence, criticised the Central Bank for its role in the run-up to the financial crisis which resulted in tens of thousands of people in mortgage arrears.[225][226]

The same month the Central Bank described as “heroic” the response in the run-up to the blanket guarantee of Ireland’s toxic banks. The chairman of Nama and former Revenue Commissioner, said he believed there was only a “quite late engagement,” by the Department of Finance with the financial crisis. “The Department relied on the Financial Regulator and the Central Bank and was let down by them,” he added. Two months later, Ireland lost its economic sovereignty when it was bailed out by the EU/IMF/ECB troika.[227] The British Government were tipped off, by the Regulator, of the position concerning Anglo Irish Bank before the Irish Cabinet was informed.[228] Whitehall then refused to release documents showing the extent that the CBOI passed market sensitive information to London, citing [Britain’s] “public interest”.[229]Bank of England minutes show that Ireland’s bank guarantee was blamed in London for bringing global interbank lending to a standstill after the Lehman Brothers bankruptcy. “Actions announced first by the Irish were both unclear and unco-ordinated and led effectively to a ‘beggar thy neighbour’ policy which froze the international banking system,” said a Bank of England minute a fortnight after the guarantee. The Irish guarantee was cited as an example of the lack of international co-ordination, which proved to be as much a trigger for the Financial crisis of 2007–08 as Lehman.[213] The managing director of theEuropean Stability Mechanism said his agency was forced to bail out Ireland because of the wider threat to the rest of the European Union.[230] The Governor conceded that “failure to consult” with other countries “triggered immense pressure for guarantees all over Europe”, causing resentment and making it difficult for Ireland “to make its case for burden-sharing with Europe”.[231]

Almost simultaneously external reviewers highlighted the “unacceptable” pace of investigation into how the financial system in Ireland came close to collapse “leaves a lot to be desired”. This was in contrast to the United States and Iceland, which have moved faster to examine what went wrong. “Furthermore, there has been very little outcome from ongoing investigations into dealings at some of our major institutions by the Central Bank.”[232][233]

Criminal prosecutions by the Garda Síochána against managers in banks who committed offences are being undermined as CBOI staff were aware of the alleged offences, took no action to stop them and thus provided an arguable defence to those who committed wrongdoing, as they could reasonably claim they were acting with the approval of regulatory authorities at all times. One line of inquiry investigated by detectives was that they did not inform the Department of Finance of all facts they knew about the banking industry. Two arrests were made following a complaint made by two officials of the Central Bank.[234][235][236][237] Two directors of a defunct Bank walked free from court after a judge ruled they should serve community service for their role in an illegal loans-for-shares scam despite being found guilty. “It seems to me it would be most unjust to imprison these two gentlemen when it seems to me a state agency [the Central Bank] has led them in error and illegality,” the judge said.[238] and it was “incredible….red lights didn’t go off some place in the regulator’s office and the appropriate legal advice was not sought” and they are “more anxious to solve the problem than comply with the technicalities of the law, but nonetheless the law”.[239] The Irish Examiner described the CBOI’s subsequent refusal to comment or explain its role on crimes committed with its nod as a critical institution of the Irish State as “omerta“.[240]

Five years elapsed before they forced Davy Stockbrokers to inform investors, who lost tens of millions of euros, that “the instrument sold was not compliant with the Trustees (Authorised Investments) Order at the time of its sale as it was not listed on a recognised Stock Exchange” and it “dealt as principal in both the purchase and sale and was in breach of the rules of the Irish Stock Exchange by not disclosing this fact on its contract note”. The effected parties had settled their claim against the stockbroker, before receiving the notification, and it was suggested they could have received much more compensation if they had ensured that their adverse findings about the case was communicated. The full report was not published and no regulatory action was taken.[241]

Within days, after the arrival in Ireland of the International Monetary Fund, they admitted that the stress tests on banks, that the CBOI conducted 4 months earlier[242] “failed to convince financial markets”[243] and the level of capital that the banks needed which they recently described as at “shock and awe” safety levels would be increased by 50 per cent.[244] Two months later, a European Commission document revealed, that a second stress test on Irish Banks, would be “peer reviewed” by the Banca d’Italia and the French Commission Bancaire “to strengthen the external credibility of the process”. This would be in addition to the consultants hired to help the Central Bank, at a cost of nearly €40 million,[245] Boston Consulting Group, Blackrock Solutions, and Barclays Capital.[246] However Boston Consulting, expressed reservations about the process-saying it would have preferred to carry out more file reviews of bank assets, blaming “time and resource constraints imposed by the Central Bank.”[247] A secret internal investigation was held following repeated claims by a whistleblower that the stress test data was “doctored” and “dressed up” to ensure that Bank of Ireland, Allied Irish Banks and Irish Life & Permanent passed, but the investigation found there was no reason for concern. Independent TD Stephen Donnelly said “Perhaps the Oireachtas Financial Committee could look into these allegations on behalf of the Dail. It is not appropriate for the Central Bank to be the only body investigating serious allegations against it by one of its own employees.”[248] Moody’s and Standard & Poor’s[249] credit agencies subsequently said Irish banks would need further large cash injections from the taxpayer.[250][251] Subsequently the European Commission found that the CBOI engaged in “financial nationalism” to ensure that Irish Banks passed the Stress Tests.[252] University College Dublin research found after the stress tests failed to properly assess the true condition of the country’s banks the Governor made “the costliest mistake ever made by an Irish person.”[253]

The €50 billion of emergency funding given to Irish banks by the Central Bank of Ireland could pose a threat to the very solvency of the Central Bank itself, a report by Citi concluded in January 2011.[254][255][256]

In March 2011, the Free Legal Advice Centres criticised the CBOI for failing to regulate hire-purchase agreements saying “that some of the worst credit practices take place on garage forecourts when people are sold hire purchase for a car.”[257]

Comparisons with the Bank of Finland—the equivalent of the Central Bank of Ireland—which has a much more complex banking system to safeguard, show it halved its staff since the introduction of the Euro to 650. The CBOI more than doubled its headcount to 1400 by 2012 since the introduction of the single currency, many of whom are on an average salary of €80,000 a year,[258] work 32.5 hours per week or 6.5 hours a day and can have in excess of 40 paid holidays a year.[259][260][261] The level of its business travel expenses,(€1571 per employee in 2014)[262] featured in the best-selling book “Wasters”,[263] increased by 46% in one year.[264][265] It has also special arrangements for officials to cash cheques internally bypassing the commercial banks,[266] spends over €1 million annually on subsidizing food, tea and coffee for staff with €55,000 being spent on biscuits alone and used taxpayers money to buy golf balls branded with their logo.[267][268] At one time, the Governor was said to be one of the highest paid Central Bankers in the world.[269] An “endemic culture of rewarding failure” has meant that not one person in the Central Bank has been sacked for their role in the worst financial and economic crisis in Ireland’s history, a leading economist said in August 2011.[270]A media commentator accused the CBOI of operating in an “Alice in Wonderland” fairy tale by continually self judging its own performance as being of the highest grade thus giving all staff at least one extra day’s holidays.[271]

Investors blasted the CBOI in October 2011 after losing tens of million of euros in what a High Court Judge described as “a sort of an Irish ponzi scheme” saying regulators should have spotted the problems earlier. An inquiry was carried out, on how the Central Bank handled the affair. This found that a whistle blower told them the true position but the CBOI instead “relied upon a letter [from the Directors] confirming that all equity monies received had been accounted for in the firm’s books and records” which provided “unjustified comfort to the Central Bank regarding the safety of client funds”[272][273][274][275][276][277]

In March 2012, it fined a stockbrokers for failing to report trades to allow them prevent market abuse and failed to establish “adequate policies and procedures”.[278]A Director and shareholder of that firm who was present when most of the regulatory breaches took place was then appointed Head of Stockbroking Supervision at the Central Bank.[279]

The decision to continue printing euro notes in Dublin when those notes could be printed much more cheaply on existing presses elsewhere was described a colossal waste of money in April 2012. Its senior officials also earn more than their counterparts in the United States.[280] Over €60,000 is spent per week on third party legal services[281] and will spend €500,000 alone to move its iconic golden ball from outside its current headquarters on Dame Street in Dublin to its new €140m base on North Wall Quay.[282]

Early in 2013, Fianna Fáil called on the CBOI to publish a top secret report that found major and numerous problems with Irish stockbrokers. They said “it was essential investors had confidence that their money was being handled properly.” The report warned there will have to be mergers of firms to ensure the industry survives, but this process will have to be done in a controlled way—because any instability in the sector could pose a danger to many people’s savings, and prevent new businesses from raising money at a time when banks are not lending.[283][284]

The Government wanted the CBOI to “do more” to tackle the issue of mortgage arrears. “In our view, the Regulator is not moving as strongly as it could be. The money is there. The legislation is there. Now is the time to get on with it,” a government source said in February 2013. In response the CBOI cautioned against interference and confirmed that officials haven’t been directly confronted on the issue, but clear signals have been sent that the Government wanted more action.[285]

Two months later the National Treasury Management Agency chastised the Central Bank for saying that Irish insurance and pension funds held just €11m of Irish government bonds, down from €945m at the start of 2012 suggesting that Irish investors were ditching the bonds just as the Government was trying to return to the markets. “These figures do not reflect the true level of Irish government bonds held by domestic pension funds and insurance companies” The CBOI took down their statistics from its official website the day after their publication but refused to say whether their data was correct.[286]

The next day they issued a silver €10 commemorative coin in honour of James Joyce that misquoted a famous line from his masterwork Ulysses[287] despite being warned on at least two occasions by the Department of Finance over difficulties with copyright and design.[288]

The International Financial Services Centre in Dublin is losing out on major international banks because of how the Central Bank regulates them. The former chief executive of the National Treasury Management Agency said he was “dismayed” to see banks, including big names such as Goldman Sachs, handing back their banking licences. He went on to say said the country was “shooting itself in the foot in many ways”, and the IFSC was of huge benefit to the country,employs 30,000 people and could have grown further.[289] Dublin‘s ranking as a financial services centre plummeted from 10th in 2009 to 70th in 2014[290] IFSC institutions cited the timeliness of decisions by the Central Bank of Ireland as having a significant impact on their operations which was out of line with their expectations and experience in other jurisdictions.[291] The Government have a strategy to try and make the IFSC the centre of FinTech, by being faster and slicker than the UK and Germany in putting regulation in place, however in 2015 Central Bank regulations for the rapidly growing sector look to be years away.[292] A briefing note prepared by senior civil servants for the Minister for Finance said concerns about the Irish regulatory environment may be pushing US financial firms to establish European operations in locations other than Ireland saying “Decision-makers at board level in the US are influenced by seeing their companies encountering far more regulatory problems in Ireland than, say, in Luxembourg.” When visiting investors in California the Minister was also told of the difficulties experienced in receiving a regulatory licence from the Central Bank to establish a European base in Dublin. Irish diplomats, when attempting to secure jobs for the country, relayed back to theDepartment of Foreign Affairs and Trade they are receiving “negative feedback” on the approach to regulation taken by the Central Bank.[293] The Financial Timessaid in July 2015 that doubts about the CBOI’s “regulatory capacity” are among the factors that have seen Dublin slip down the league table of global financial centres.[294]

Following the disclosure of taped conversations of executives of Anglo Irish Bank discussing the bank guarantee, which cost Ireland its economic independence, theIrish Independent called the Central Bank “incompetent” in June 2013.[295] The transcripts showed the executives referring to the Central Bank as “our buddies in Dame Street”[296] as being a “shower of clowns”[297] who were “effectively egging us [Anglo] on” to break the law.[298] German Chancellor Angela Merkel said the calls were “contemptible”.[299][300] Senior politicians expressed astonishment when the Central Bank announced it would not be making criminal complaints either to the Gardaí or the Office of the Director of Corporate Enforcement over the tapes.[301] The CBOI later admitted of a joint golf day between Central and Anglo Irish bank Directors at Druids Glen shortly before the bank guarantee was announced.[302]

An internal whistle-blower revealed problems with the CBOI’s outsourcing of its IT infrastructure. “Ask yourself this, what would be the consequences of any type of [data leak]? Even if the breach did not touch the money transfers and was only information, much of it is commercially sensitive and the possible liability [to the taxpayer] large,” After their outsourced computers crashed, Sinn Féin’s finance spokesperson, said “I wonder if Irish people would be happy to know that all the data for the most important bank in the State is being held in a private company’s control centre which has experienced one power blackout already this year?”[303]Months later following another IT crash, a staff member wrote to a TD claiming that the “IT system has been unstable since being moved, (separate to the process failures), yet they continue to move more and more systems out while the instability continues”.[304] It subsequently encountered technical problems which forced it to push back the deadline for firms to submit a key document in the regulator’s fitness and probity regime.[305]

Ireland is hoping to be the home of Sharia Islamic finance in Europe. Enda Kenny told the Irish Funds Industry Association that he was doing everything he could to “ensure” Dublin became “a centre of excellence for Islamic finances”.[306] These efforts received a setback when a product, approved by the CBOI as Sharia-compliant, was foundto have violated Islamic law in Malaysia and could warrant a penalty of up to 8 years in jail.[307]

The Irish League of Credit Unions in response to the consolidation of the sector, accused the CBOI of acting beyond its statutory powers and “cloak the proceedings and the challenge to its decisions from public scrutiny” and added that it was “important that State regulators operate openly, clearly and accountably”, and it warned the Central Bank against trying “to scare the public or exaggerate risk for the sake of achieving unarticulated policy objectives.” The cost to the State of the rationalisation is expected to be in the region of €1 billion.[308] CBOI regulations will ensure that credit unions are restricted from competing effectively with other financial service providers into the future.[309] A peer review of the work of the Registry of Credit Unions, which is part of the Central Bank, told it that more on-site inspections of smaller credit unions were needed and to communicate better.[310]

Following the collapse of Ireland’s oldest and third-largest stockbroker, Bloxham Stockbrokers, after the firm had been discovered to be cooking its books for five years, the CBOI refused to answer questions about regulatory failure or confirm that it will publish a report outlining what went wrong and how to make sure something like this does not happen again. They did not refer anyone to the Gardaí or the Director of Public Prosecutions.[311][312] Over 3 years later, the Regulatory Board of Chartered Accountants Ireland‘s inquiry into the performance of the auditors of the stockbroker was still being held up by the lack of action from the Central Bank’s own research into the collapse.[313]

The CBOI were aware of “corporate governance issues” at Ireland’s largest credit union in Newbridge County Kildare for eight years before it had to bailed out by the state at a cost of €54 million.[314][315][316]

Debt experts authorised to strike deals through the Insolvency Service of Ireland were threatened with criminal prosecution by the Central Bank unless they became regulated by themselves notwithstanding that both accountants and lawyers are already regulated by their own respective professional associations. The extra red tape made some of the experts’ jobs “unworkable”, resulting in delays for borrowers trying to resolve their debt problems.[317] The Insolvency Service then admitted that over-borrowed families find it difficult to get a financial expert to take on their cases.[318]

In November 2013, the organisation’s regulation failed to detect “accounting issues” at the country’s largest car insurer, RSA/123.i.e. The problems had been occurring for at least two years and its foreign parent had to inject €400 million to keep its Irish subsidiary in business.[319][320][321][322] 14 months later the Central Bank hinted that it lacks sufficient supervisory expertise to police the sector, and indicated it is worried about the financial health of at least three insurers.[323] TheConsumers’ Association of Ireland criticized the CBOI for issuing a directive to the car insurance industry to increase the prices they charge the public and theNational Competitiveness Council slammed rises in the cost of many types of insurance policies as barriers to Ireland’s competitiveness and laid the blame at the regulators’ door.[324][325] A testy exchange followed with the Department of Finance, who requested the CBOI to report on any issues of concern, got the response they were primarily accountable to the Oireachtas and not directly to the department.[326] The CBOI only relented and gave the information after the Minister wrote to the Governor to state that he was “aware of poor financial reports from certain domestic insurance companies: job losses, and reports of an overall negative outlook for the sector domestically” that could have implications for “the Exchequer, policyholders and the wider financial system”.[327] A damning January 2016 assessment by international credit ratings agency, Standards & Poors, said the handling of various insurance company failures by the regulator raised questions about its ability to regulate the sector.[328]

The CBOI was found out to be producing “useless” mortgage statistics after it emerged it excluded large numbers of non-performing home loans from its figures[329]and its Code of Conduct on Mortgage Arrears[330] was on the side of protecting the lender, not the public.[331][332] A Central Bank-initiated scheme to assist indebted families have their debts restructured was a spectacular failure as just one in ten chosen for the scheme actually ended up with a deal.[333] They also published misleading figures by claiming mortgages holders are paying much lower interest rates on home loans than they actually are. When the massive discrepancy was detected by an external expert the CBOI conceded that they are going to have to change how they calculate average mortgage rates.[334] The regulator considered bypassing the state funded Money Advice and Budgeting Service, who works with those in mortgage distress, and wanted consumers to deal with a foreign organisation with no experience in the area.[335] It has no idea how many mortgages were sold to unregulated “vulture funds” which leaves the homeowners vulnerable to being mistreated if they are in arrears.[336] Large-scale breaches of the statutory code of conduct on mortgage arrears by banks and other lenders are unpoliced by the regulator.[337] Fianna Fail said that CBOI mortgage lending rules were designed to discourage people from home ownership and hit families trying to move home and “the failure of the Central Bank to impose a single sanction against a lender is a worrying indication of a continuing deferential approach to the banks by the regulatory authorities”,[338] and later ignored a call by the Taoiseach to “name and shame” lenders who breached the mortgage codes of conduct.[339]An economist blamed the same rules for contributing to a sharp fall in the growth of construction in 2014/2015 [340] The Economic and Social Research Institute in March 2015 found that the same measures would result in fewer houses being built, fewer mortgage loans being issued,higher rents and unsustainable transport patterns.[341] The think tank also said first-time buyers should have been treated the same as other borrowers, dismissing the Central Bank’s argument that first-time buyers are a different risk proposition for banks and “a wide number of studies… conclude that when credit conditions are liberalised, it is relatively younger and poorer households who tend to ‘benefit’ from greater credit provision,”[342][343] A Fine Gael told the Dail “I am at a complete loss to understand how the Central Bank does not know how many distressed mortgages have been moved from a tracker to a variable rate. I remain confused, exasperated and unsure of how to get the information and I had been sent around the houses and down every avenue by the Central Bank.”[344] The CBOI were later accused of not wanting people to be able buy their own home by promoting renting from landlords.[345]

The Central Bank in April 2014 arbitrarily excluded the majority of consumers from getting compensation who were missold Payment Protection Insurance. UK banks provided over £22bn for PPI misselling costs – which, if scaled on a pro-rata basis, is many multiples of the compensation the Irish banks were asked to repay. The offending banks were also not fined which was in sharp contrast to the regime imposed on UK banks.[346] Lawyers were appalled at the “reckless” advice, the CBOI gave consumers who were missold PPI policies, that “will play into the hands of the financial institution.”[347]

Months later a whistle-blower, inside a large multinational financial institution, provided the CBOI with a detailed dossier of flagrant breaches of the regulatory requirements aimed at protecting Irish consumers. The Regulator agreed that the affected members of the public need not be compensated, for the payment of what was described as a “paltry” and “measly”, fine.[348]

Weeks later,a former Governor and their former head of Financial Regulation both snubbed invitations from the Leinster House Public Accounts Committee to appear before it to answer questions on the €440bn bank guarantee .[349]

A report[350] by the Washington DC based International Monetary Fund raised concerns that the Central Bank of Ireland had high staff turnover in some areas which had an knock-on impact on its effectiveness and said officials should make more use of on-site inspections and pursue all of its available enforcement authority, including criminal prosecutions.[351]

A 2014 detailed report by the Free Legal Advice Centres concluded that consumers were robbed of many of their rights and protections across the financial sector and singling out the Central Bank for criticism, said regulations governing consumer protection remain deeply flawed.[352] It contacted the proprietors of a media organization in late 2014, in an attempt to silence a journalist who criticized its efforts to protect consumers.[353][354] In Spring 2015, a peer review of the “light touch” consumer protection function of the Central Bank carried out by the Netherlands Authority for the Financial Markets told it to do more to ensure consumers are treated fairly by banks, insurers and other financial firms.[355][356][357]

The Irish Ambassador to London alerted the Minister for Finance of “very negative comments” from British financial institutions about their experience in dealing with the CBOI. The April 2015 note added: “In their view this has the potential to undermine the Irish financial sector.”[358][359]

Nigerian fraudsters stung the CBOI (which is tasked with maintaining the safety and integrity of the Irish banking system) by fooling them into transferring up to €1.4m into a bogus online account.[360][361]

When the Central Bank became subject to external scrutiny under Freedom of Information legislation the Deputy Governor said “it’s very detrimental and problematic to the way we function and we’ll be speaking more on the phone and writing less in the future”.[362] Accounting firm, Ernst & Young received fees from the Central Bank totalling between €21m and €22m over two years but refused to say what type of work they engaged in, in order to receive the large pay-out. A Government Fine Gael backbencher said “The size of the payments would strongly suggest a requirement to disclose what the fees were for. This is a significant amount of money at a time when the public finances were under pressure and families were making significant sacrifices to help get the country back on its feet. The Central Bank requires a level of transparency from financial institutions in this State. Therefore, I think it is reasonable that the Central Bank would disclose what these payment were for and apply the same level of transparency to itself.” [363]

In June 2015, they were criticized by the left wing in Dáil Éireann[364] for doing nothing to protect those on low incomes, the vulnerable or have low levels of financial literacy from loan sharks when it emerged that up to 100,000 of the 360,000 loans given by moneylenders broke the law.[365]

The CBOI’s supervision of anti-money laundering activities to stop the proceeds of criminal activities and terrorist financing in the Irish financial system is “woefully insufficient” a Deputy Governor conceded in comments not intended for public disclosure.[357]

It was revealed in August 2015, that they were aware for years but inexplicably failed to act, of the mistreatment (deliberate overcharging, subsequent arrears followed by legal proceedings;) of 1372 mortgage holders by Permanent TSB, the “serious failure” included 61 families been wrongly evicted from their homes. A subsequent editorial in Ireland’s largest selling newspaper said:- “How often have Edmund Burke‘s words echoed despairingly ‘The only thing necessary for the triumph of evil is for good men to do nothing.’ For the Central Bank to preside over such inequity while having being warned, is nothing short of disgraceful.” [366][367]

The next month the Regulation Levy charged to financial services entities was increased by 40%, not to fund Regulation but to prop up a €300 million deficit in the “gold-plated” defined benefit pension scheme enjoyed by all its 1,364 staff. The rise in the levy was passed on to consumers by banks, insurers and investment funds and put some small operators out of business.[368][369] Weeks later it was revealed that the CBOI for years breached emergency laws cutting pay and banning bonuses in the public sector by secretly giving managers extra cash and reducing the surplus going to the Exchequer. Those getting the bonuses had to sign a contract promising to keep “the fact and the amount of the payment confidential”. A trade unionist said “Given the role that a bonus culture played in our banking crisis, it is extraordinary that the Central Bank – charged with oversight of the country’s banking system – now appears to itself be part of that culture.”[370] The Public Accounts Committee Chairman said the CBOI was “giving the two fingers to the Government again, which they did previously”.[371] Staff belonging to a trade union then passed a motion of no confidence in management by 92%.[372] Further controversy followed when the CBOI claimed the payments were a retention scheme to ensure that key staff do not leave, when it was learnt that they allowed the same managers to go on secondment to the European Central Bank in Frankfurt.[373]

Shortly afterwards it was learnt that a large amount of information was withheld by the CBOI from the investigation by the 11-person Parliamentary inquiry into the collapse of the Irish banking system.[374] The Central Bank and some of its legal representatives were omitting huge swathes of vital documents, redacting many of the most crucial pieces of evidence, and delaying release of vital material until it was too late to use them in briefings for public hearings – in at least one case handing them over 24 hours before a scheduled interview about them.[375]

It emerged in October 2015 that they were warned six years earlier about the scandal of banks wrongly taking valuable tracker mortgages off at least 10,000 homeowners costing them thousands of euro every year in overpayments but turned a blind eye.[376]

A senior internal auditor was forced to delete critical findings on a lack of appropriate monitoring of arrangements for engagement of external auditors, ineffective monitoring of the banks internal auditing arrangements and lack of review of its internal audit manual. After making a whistleblowers declaration, his employment was terminated. The Bank accepted the finding that it was breaching the Code of Practice for the Governance of State Bodies.[377] The deputy leader of Sinn Feinsaid- “The reason I feel that this report is troubling is because we know that a lack of regulation, a lack of oversight, sloppiness, group-think, all of these things were ingredients over the years that led us to a very catastrophic situation.”[378]

 

 

 

 

 

 

 

 

Banking Inquiry Confirms that Irish Super-Rich and Entire Irish Elite Are Responsible for Greatest Crisis in the Financial History of the State-Statement by Seamus Healy TD   

IRELAND HAS NO ECONOMIC SOVEREIGNTY TO STAND UP TO EU BULLYING

The report of the Banking Inquiry and the published evidence shows that the greed of the Irish rich combined with the compliance of their elites are responsible for untold misery due to the financial crash including mass unemployment, emigration, negative equity, loss of homes and life savings. It also showed that the policies of successive governments have left Ireland with no economic sovereignty to protect our citizens.

A new left government completely excluding Fianna Fail and Fine Gael is necessary to tackle this situation. New regulations and procedures are not enough. The rich and their elite hangers on will not implement any regulations if it does not suit the rich.

The government, central bank and the regulator had plenty powers and advance information to enable them to intervene to prevent the crash but failed to use them.

In his evidence to the Inquiry, the then Deputy Governor of the Central Bank Tom O’Connell, put it in a nutshell: ““It’s sometimes said that nobody seemed to know that a property boom or bubble was developing. That’s … that is completely incorrect in my view ——Ireland’s banking and economic crash should never have happened, should never have been allowed to happen, with all the consequences of huge increases in unemployment, rising emigration, enormous debt, suicides, etc., that we have seen.-the liquidity pumped out into the banks was €140 billion, you know, with the … both from the Central Bank and the ECB. I mean, once you spell that out, that’s €140,000 million – there are 12 digits in that.——- One can only surmise that, as Professor Alan Ahearne has said here to your committee, too many people were benefitting from the boom time for prudence avoidance … prudent avoidance measures to have been taken. ”

TOM O’Connell is right!

The Inquiry found that the almost universal adoption of the “soft-landing theory” without any substantial testing or challenge“must be regarded as a key failing for the government, the Central Bank and the Department of Finance”-Ciaran Lynch TD Chair. The Economic and Social Research Institute, charged with advising citizens and government on economic matters, and employing numerous professors of economics, also predicted a soft landing.

There was significant overlap in membership between the board of the Central Bank and the governing council of the ESRI. Irish elite insiders from business, trade union leadership, academia and the business professions dominated both boards.

Citizens should use the election to clear out the representatives of the super- rich from government before they cause another similar crash

Seamus Healy TD

……………………………………………………………………………………

Independent Alliance Divided on Begg Appointment But Seamus Healy TD calls for Resignation of Begg and Burton in the Light of the Findings of The Banking Inquiry

Seamus Healy TD calls for Resignation of Begg and Burton

Alliance Divided on Begg Appointment-Sunday Times Jan 24.

“The Independent Alliance is divided over the governments appointment of David Begg, the former leader of the ICTU,as chairman of the Pensions Authorty. Fergal Quinn, president of the Alliance, and Senator Gerard Craughwell have told colleagues that they do not want Begg to step back from the appointment, which was made by Joan Burton, the Tánaiste. ………………………………….   .    .     .

Seamus Healy (who is not a member of the Alliance-PH), a Tipperary TD, yesterday called on Begg and Burton to resign in the light of the findings of the Banking Inquiry. Begg served on the board of the Bank from 2003 to 2007″.—–Sunday Times Jan 24

Fergal Quinn, former owner of Superquinn Supermarket chain was also Chair of An Post and dealt on behalf of an Post as an employer with David Begg as then general secretary of the Communication Workers Union.

Gerard Craughwell, past president of TUI, is a former chair of Fine Gael in Dunlaoire but now sits as an independent. He will be running for re-election on one of the panels for which county councillors are the majority electors. ICTU is a nominating body for one of the panels.

Shane Ross and all the Independent Alliance TDs voted against the FINANCIAL EMERGENCY MEASURES IN THE PUBLIC INTEREST BILL (FEMPI) in the Dáil. This act imposes penalties by law on workers whose unions refuse to comply with a government-ICTU public service agreement which extends additional work for 2 years. This is an anti-union measure, proposed by a Labour minister,which is incompatible with the concept of free trade unions.  In the Seanad, Craughwell proposed amendments but failed to call a recorded vote against the Bill. Fergal Quinn also failed to oppose the Bill.

Seamus Healy TD and Workers and Unemployed Action (WUA) have no connection with the Independent Alliance. This is because the Alliance is not opposed in principle to going into coalition with Fianna Fáil and/or Fine Gael. Shane Ross and Fergal Quinn are self-confessed capitalist politicians. During the boom Shane Ross complained that Sean Fitzptrick of Anglo-Irish Bank was not considered for appointment as head of the Bank of Ireland. Seamus Healy supported the motion of no confidence in Joan Burton on the grounds that David Begg was unsuitable for such an appointment because of his membership of the board of the Central Bank when it allowed the Irish Financial institutions including the banks as a whole to borrow 50% of GDP.

…………………………………………………………………………………………………………….

David Begg Should Withdraw From the Pensions Authority  And Joan Burton should Resig following the conclusions of the report of The Banking Inquiry

Statement by Seamus Healy TD   087-2802199

The banking inquiry has come down hard against the regulator and the Central Bank—RTE NEWS.

Tánaiste Burton should Now Resign

http://www.rte.ie/news/2016/0122/762192-banking-inquiry-report/

 

The Banking Inquiry has found that both the Financial Regulator and Central Bank had sufficient powers to intervene in the banking sector to protect the financial stability of the State, but neither intervened decisively according to a Report on RTE News. In my contribution to the recent “no confidence” debate in the Dáil, I said on the record of the Dáil: “I believe that Mr. Begg, who signed off on the financial stability reports of the Central Bank during those years(2003-2007) is particularly unsuited to and not qualified for this particular appointment.”

 

Mr. Begg was a member of the board of the Central Bank from 2003 to 2007. This board, including Mr Begg, allowed the financial system as a whole to borrow 50% of GDP, a level of borrowing that was hitherto unprecedented according to Former Governor of the Central Bank, Patrick Honohan.

The board of the Central Bank failed in its primary duty to protect the value of shares owned by tens of thousands of citizens.

On the basis of the Financial Stability Reports to which David Begg assented, financial consultants advised pensioners, redundant workers and those providing for retirement generally to buy shares in financial institutions including banks in Ireland. These citizens have lost their life savings.

The Pensions Authority is also tasked with protecting the pension contributions of citizens.

David Begg was a member of the Board of the Central Bank for fourteen years.

I believe that anybody who was a member of that board in any of the years from 2003 to 2007 should be disqualified from any state authority exercising oversight over financial entities including pension funds.

Seamus Healy  TD  087-2802199

 

DAVID BEGG GETS THE POST-RETIREMENT JOB (PRJ) FROM JOAN BURTON

See also elsewhere on this blog: How ICTU Failed Us-For Election and Re-election of General Secretaries

Motion of NO Confidence in Tánaiste Joan Burton-Speech by Seamus Healy TD from Dail Record-Jan 19, 2016

Deputy Seamus Healy:   I rise in support of this Private Members’ motion of no confidence in the Tánaiste. We were promised a democratic revolution after the last general election. Of course, this is certainly not the case as we have seen time and again since then. In the past week, we have seen that cronyism is alive and well and at the heart of Government and that a “get out” clause is being used not just by the Tánaiste but by other Ministers to appoint party members and cronies to State boards. We were told that we would have transparency and accountability, a democratic revolution, Dáil reform and appointments to State boards that would be fully transparent. In the case of Mr. Begg, Ms Mangan and others, we find that there was no advertising,stateboards.ie and the Public Appointments Service were not used and there was no short-listing of candidates. These were personal appointments by the particular Ministers.

Even if the advertising took place and stateboards.ie and the Public Appointments Service were used, it would be a smokescreen for cronyism because we know about the formula this Government is using in respect of appointments to State boards – two for Fine Gael and one for the Labour Party. We have seen this not just in this Government but in previous ones. We noticed that Fianna Fáil is criticising the Tánaiste in respect of this. This is like the pot calling the kettle black. Other speakers have said that coming up to the last election, Fianna Fáil made something like 60 appointments to State boards.

The appointment of Mr. Begg in particular has raised significant problems. He had the audacity and gall to suggest that €20,000 was not a crock of gold. I would have thought that as a former trade union chief, he would be well aware of the fact that 125,000 workers earn less than €20,000 per year. Surely he would be aware that a family of two adults and two children on social welfare exist on less than €20,000 per year. How dare he suggest that €20,000 is not a crock of gold. It may not be to him but to thousands upon thousands of part-time workers, low-paid workers and families on social welfare, it is effectively only an existence.

I believe that Mr. Begg is particularly unsuited to this job as chair of the Pensions Authority. Mr. Begg was a member of the board of the Central Bank from 2003 to 2007. This board allowed the financial system as a whole to borrow 50% of GDP. We are not talking about individual banks. We are talking about the financial system as a whole. This board, including Mr. Begg, allowed that system to borrow 50% of GDP. Nobody called a halt, not even Mr. Begg. That level of borrowing was ruinous. The recently retired former Governor of the Central Bank, Professor Patrick Honohan, said that this level of borrowing was hitherto unprecedented. This level of borrowing led to austerity, the bust and the devastation of families across this country. I believe that Mr. Begg, who signed off on the financial stability reports of the Central Bank during those years, is particularly unsuited to and not qualified for this particular appointment.

Broken promises and the breaking and reneging on of commitments made in the course of a general election have also been part and parcel of this Government as of previous Governments. The Labour Party in particular has broken every promise and commitment it made during the course of the last general election. It was opposed to water charges but the Minister for the Environment, Community and Local Government, Deputy Kelly, is implementing water charges. Does the Tánaiste remember the “Tesco” advertisement? It said there would be no cuts to child benefit but there were cuts. The Department of Social Protection has been devastated by this Minister. I support the motion.

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DAVID BEGG GETS THE POST-RETIREMENT JOB (PRJ) FROM JOAN BURTON

David Begg has been appointed to the part-time post of head of the Pensions Authority on 20,000 Euro per year without interview.

The retired ICTU Gen Sec has already taken up a post as full-time Director of the think tank TASC. The Chairman of TASC is former Labour MEP, Proinsias de Rossa. One f the Funders of TASC is FEPS, A european research organisation which describes itself as “close to PES”-the consortium of labour and social democratic MEPs at the European Parliament to which the Irish Labour Party adheres.

“Happily, the Tanaiste is on record as having huge respect for him. Last year when David retired she claimed that the trade union boss had “played a key role in supporting the work of the Labour Party in ensuring collective bargaining as legislated for by this Government”. She went on to praise him as “a relentlessly hard working servant for the Labour movement”.”–Irish Independent Jan 17

“collective bargaining as legislated for by this government” includes the financial Emergency Provisions in the Public Interest ACT(FEMPI) 2013 which cut pay and pensions of public servants and imposed penalties on unions if they did not agree to comply with the related ICTU-GOVERNMENT agreement. Delegates to the ICTU Biennial Delegate Congress held in Summer 2015 called for the repeal of the legislation.This motion was ignored by the ICTU leaders

As I say lower down: “Any senior official who rocks the boat on social partnership or on colluding with austerity governments “hasn’t  a prayer” of this nomination or indeed of any post-retirement job (PRJ) such as a rights commissionership, an industrial relations tribunal membership or nomination to a state board or quango.”

This is the cancer at the heart of capitulatory Irish Trade Union Officialdom

————————————————————————–

Despite whistle blowing to Mary Lou by a member of Cetral Bank Audit Staff-We know we are in good hands!!

John “the soft Landing” Fitzgerald is on the Audit Subcommittee

Des -Ten years on Fás Board-Geraghty is on the Risk Committee-replacing ICTU Former Gen Sec David Begg (now director of TASC) on Board now retitled “Commission”

The new(?) “Commision” is packed with Irish ELITE Insiders

-just as it was during the boom so  we can all rest easy in our beds-never mind the whistle blower!

The “commisioners” (formerly directors) have other things in common.

They have huge powers, particularly  to damage the interests of citizens through lack of vigilance as Irish people know to their cost.

Above all, they have no democratic accountability to anybody except the Minister. Not alone are citizens unable to remove them, even the body which originally  “nominated” them cannot remove them.

In fact there is technically no nomination process. Their names of some are suggested by interest groups.

Importantly, there has been a leading trade unionist on the board in recent decades (David Begg for 14 years). The name is suggested by ICTU which means effectively by the “troika”- SIPTU, IMPACT, PSEU.

See also on this Blog   How ICTU Failed US

https://wordpress.com/post/paddyhealy.wordpress.com/1024

Any senior official who rocks the boat on social partnership or on colluding with austerity governments “hasn’t  a prayer” of this nomination or indeed of any post-retirement job (PRJ) such as a rights commissionership, an industrial relations tribunal membership or nomination to a state board or quango.

Through this mechanism, virtually all general secretaries are controlled or pressurised automatically by the trade union troika-SIPTU,IMPACT, PSEU. This system tends to undermine democracy in individual trade unions

The general membership of the largest civil society organisation in Ireland-ICTU- has no power to remove the trade union “commissioner”.

The commission is safe for the Irish Elite

THE REAL CONCLUSION FROM THE BANKING INQUIRY 

Damning Indictment of Irish Elite by Former Deputy Governor of Central Bank

 “One can only surmise that, as Professor Alan Ahearne has said here to your committee, too many people were benefitting from the boom time for prudence avoidance measures to have been taken. ”  Dep. Gov.TOM O’Connell at BANKING INQUIRY

Economic and Social Research Institute (ESRI), charged with advising the government and the citizens on economic matters, predicted a “Soft Landing” to the boom. ESRI has high-powered academic staff including several eminent professors.

Despite requests by me to all Inquiry Team members,the relevant heads of ESRI were not called before the Inquiry.

This is an important omission because Deputy Governor O’Connell alleges that he was asked to contact then Director of ESRI,Prof  Frances Ruane to express concern about the content of an article by ESRI researcher(Now Director of ESRI) Prof Alan Barrett which questioned the situation in banking

Retired Professor John Fitzgerald, appeared in a personal capacity and agreed that he had made errors

Deputy Governor O’Connell

“It’s sometimes said that nobody seemed to know that a property boom or bubble was developing. That’s … that is completely incorrect in my view ——Ireland’s banking and economic crash should never have happened, should never have been allowed to happen, with all the consequences of huge increases in unemployment, rising emigration, enormous debt, suicides, etc., that we have seen.-the liquidity pumped out into the banks was €140 billion, you know, with the … both from the Central Bank and the ECB. I mean, once you spell that out, that’s €140,000 million – there are 12 digits in that.——- One can only surmise that, as Professor Alan Ahearne has said here to your committee, too many people were benefitting from the boom time for prudence avoidance … prudent avoidance measures to have been taken. ”  Dep. Gov.TOM O’Connell at BANKING INQUIRY

EXTRACT  From Evidence of Former Dep. Governor O Connell

“It’s sometimes said that nobody seemed to know that a property boom or bubble was developing. That’s … that is completely incorrect in my view. You will recall, for example, that, in his evidence to your committee here, Peter Nyberg – himself the author of a report on the collapse – asserted that it was obvious that a property-lending mania was afoot. At the decisionmaking levels in the bank, either people were unaware of what was happening, despite the clear evidence, or they were aware and chose to do nothing. Either way, it all seems quite incomprehensible to me. While the bank, in its public utterances, presented a low-key assessment of what was happening, that is not to say that it was not fully aware of the major excesses. While the bank in its public utterances presented a low-key assessment of what was happening, that is not to say it was not fully aware of the major excesses. The annual financial stability reports reviewed comprehensively what was happening and Patrick Honohan’s report acknowledged that the three major excesses were well recognised in the FSRs, the Financial Stability Reports: there was the huge increase in bank lending, the concentration of this lending in the property sector, and the very large reliance on the … by the banks on potentially volatile wholesale funding. The main body of the stability reports set out extensively how almost all indicators were pointing massively in the wrong direction. By contrast, the overall assessment and tone which reflected the views of the two boards tended to be reassuring – talking of a soft landing, and so on. In fact, I should say that one member of the board did have grave doubts, to the effect that I can recollect his words still ringing in my ear, “It was all a house of cards and would all end in tears”. However, his views appear not to have had any impact on policymaking in the bank. Notwithstanding that director’s views, it was probably necessary, in any event, to present such a rather hopeful overall assessment in public since the Central Bank could hardly conclude that the banks were about to collapse. However, whatever the published assessment, the authorities should have been working assiduously behind the scenes to curb the huge excesses and reckless lending of the banks – egregious risk-taking, as Patrick Honohan has termed it recently in his speech.—————————- In fact, what Peter Nyberg, who interviewed me … the author of the Banking report … he kept asking me “Why did nobody do anything?” … several times “Why did nobody do anything?” And I am afraid that the answer has to be that the authorities simply did not wish to do anything. And actually, Peter Nyberg also asked me why I did not publish a newspaper article on the bubble. I said to him that that would have been highly unorthodox – it would be like a civil servant, you know, writing an article in the newspaper, criticising the minister of financial policy … it just wouldn’t be on … in any event, I don’t think it would’ve had an effect at a time when the Taoiseach was saying that anyone who was questioning the sustainability of what was happening should go and commit suicide. And in fact, you should recollect in the event when Morgan Kelly … Professor Morgan Kelly wrote about the probability of a crash, he was derided – he was literally shouted down at an economics conference where he was presenting his paper on the property market. So, you know, people didn’t want to know.——————- And from the Central Bank side, you know, one has to ask, “How did the Central Bank see the erosion of the banks’ deposit base being halted as the Central Bank pumped increasingly vast amounts of liquidity into the banks to prop them up?” In fact, you may be aware of the fact that the total … the maximum amount … or at its peak rather, the amount of liquidity pumped out into the banks was €140 billion, you know, with the … both from the Central Bank and the ECB. I mean, once you spell that out, that’s €140,000 million – there are 12 digits in that. So, you can well understand why the ECB was jumping up and down when the accommodation provided to Irish banks was at … was at that massive level. ————As Professor Honohan’s report put it, the source of our problems was homegrown. Those who suggest that Lehman’s brought us down are almost wholly wrong, and are merely seeking an external scapegoat, not the first time this would have happened in Ireland, in my view. —————-In summary, it was crystal clear from about the turn of the millennium, and even before, Ireland was experiencing a major property bubble; “a world beating one”, in Professor Honohan’s words. It is not credible that those who ought to have been aware of what was happening were in the dark. One can only surmise that, as Professor Alan Ahearne has said here to your committee, too many people were benefitting from the boom time for prudence avoidance … prudent avoidance measures to have been taken. ————–“

————————————————————

TASC WEBSITE

David Begg

Director

David Begg was previously General Secretary of the Irish Congress of Trade Unions and spent five years as Chief Executive of Concern Worldwide in the late 1990s. He is currently also on the board of Barnardos. David Begg has held a number of Public and Private Sector Non Executive positions including the Boards of Aer Lingus, The Central Bank and the National Economic and Social Council (NESC). He was a Governor of the Irish Times Trust from 2001 to 2011, he also served on the Advisory Board of Ireland Aid. He has a Master’s Degree in International Relations from DCU and a PhD in Sociology from NUI Maynooth

WHY DID DIRECTOR DAVID BEGG(ICTU), (14 years on Board), STAY SILENT? Read his full evidence to Banking Inquiry at Link Below

IRISH WORKERS DESERVE A FULL EXPLANATION FROM DAVID BEGG AND THE ICTU LEADERS

Nov 3,2015  Two Further Damning Indictments Of The Central Bank by senior staff have now been published on the Banking Inquiry website

Frank Browne Head of Financial Stability Division, Central Bank

https://inquiries.oireachtas.ie/banking/wp-content/uploads/2015/10/Frank-Browne-WSW.pdf

Tom O’ConnellDeputy Governor Central Bank

https://inquiries.oireachtas.ie/banking/wp-content/uploads/2015/10/Material-Clarification-Tom-OConnell.pdf

(ICTU had professional economic advice available to it in all the crucial years: Paul Sweeney is the Chief Economist at the Irish Congress of Trade Unions. He is President of the Statistical and Social Inquiry Society of Ireland, a member of the National Competitiveness Council of Ireland, and chair of the Economists’ Network at TASC. Paul wrote several books on the Irish economy and on Irish public enterprise and privatisation, and has also written many articles on economics and business. He is a graduate of Trinity College, Dublin.)

When David Begg appeared before the Banking Inquiry, a Labour Party politician on the inquiry team asked him whether he had got any “training” for his role as a member of the board of directors of the Central Bank. David’s lack of “training” was then highlighted in the media       !!!!!!!!!!!

David is now retired as ICTU General secretary and taken up a role as Head of the Research Body TASC

I find that the explanations given by David Begg in his evidence to the inquiry are inadequate

Read David Begg’s Full Evidence to Inquiry:  https://inquiries.oireachtas.ie/banking/hearings/david-begg-former-general-secretary-ictu-non-executive-director-central-bank-cbfsai/

John Dunne – Former Director General IBEC & former Non-Executive Director Central Bank & IFSRA was also on the board of the Central Bank in the crucial years and gave evidence to the Banking Inquiry

Economic and Social Research Institute (ESRI), charged with advising the government and the citizens on economic matters, predicted a “Soft Landing” to the boom. ESRI has high-powered academic staff including several eminent professors.

Despite requests by me to all Inquiry Team members,the relevant heads of ESRI were not called before the Inquiry.

This is an important omission because Deputy Governor O’Connell alleges that he was asked to contact then Director of ESRI,Prof  Frances Ruane to express concern about the content of an article by ESRI researcher(Now Director of ESRI) Prof Alan Barrett which questioned the situation in banking

Retired Professor John Fitzgerald, appeared in a personal capacity and agreed that he had made errors

Deputy Governor O’Connell

“It’s sometimes said that nobody seemed to know that a property boom or bubble was developing. That’s … that is completely incorrect in my view ——Ireland’s banking and economic crash should never have happened, should never have been allowed to happen, with all the consequences of huge increases in unemployment, rising emigration, enormous debt, suicides, etc., that we have seen.-the liquidity pumped out into the banks was €140 billion, you know, with the … both from the Central Bank and the ECB. I mean, once you spell that out, that’s €140,000 million – there are 12 digits in that.——- One can only surmise that, as Professor Alan Ahearne has said here to your committee, too many people were benefitting from the boom time for prudence avoidance … prudent avoidance measures to have been taken. ”  Dep. Gov.TOM O’Connell at BANKING INQUIRY

FULL TRANSCRIPT

https://inquiries.oireachtas.ie/banking/wp-content/uploads/2015/06/10062015_OConnell_vol1.pdf

EXTRACT  From Evidence of Former Dep. Governor O Connell

It’s sometimes said that nobody seemed to know that a property boom or bubble was developing. That’s … that is completely incorrect in my view. You will recall, for example, that, in his evidence to your committee here, Peter Nyberg – himself the author of a report on the collapse – asserted that it was obvious that a property-lending mania was afoot. At the decisionmaking levels in the bank, either people were unaware of what was happening, despite the clear evidence, or they were aware and chose to do nothing. Either way, it all seems quite incomprehensible to me. While the bank, in its public utterances, presented a low-key assessment of what was happening, that is not to say that it was not fully aware of the major excesses. While the bank in its public utterances presented a low-key assessment of what was happening, that is not to say it was not fully aware of the major excesses. The annual financial stability reports reviewed comprehensively what was happening and Patrick Honohan’s report acknowledged that the three major excesses were well recognised in the FSRs, the Financial Stability Reports: there was the huge increase in bank lending, the concentration of this lending in the property sector, and the very large reliance on the … by the banks on potentially volatile wholesale funding. The main body of the stability reports set out extensively how almost all indicators were pointing massively in the wrong direction. By contrast, the overall assessment and tone which reflected the views of the two boards tended to be reassuring – talking of a soft landing, and so on. In fact, I should say that one member of the board did have grave doubts, to the effect that I can recollect his words still ringing in my ear, “It was all a house of cards and would all end in tears”. However, his views appear not to have had any impact on policymaking in the bank. Notwithstanding that director’s views, it was probably necessary, in any event, to present such a rather hopeful overall assessment in public since the Central Bank could hardly conclude that the banks were about to collapse. However, whatever the published assessment, the authorities should have been working assiduously behind the scenes to curb the huge excesses and reckless lending of the banks – egregious risk-taking, as Patrick Honohan has termed it recently in his speech.—————————- In fact, what Peter Nyberg, who interviewed me … the author of the Banking report … he kept asking me “Why did nobody do anything?” … several times “Why did nobody do anything?” And I am afraid that the answer has to be that the authorities simply did not wish to do anything. And actually, Peter Nyberg also asked me why I did not publish a newspaper article on the bubble. I said to him that that would have been highly unorthodox – it would be like a civil servant, you know, writing an article in the newspaper, criticising the minister of financial policy … it just wouldn’t be on … in any event, I don’t think it would’ve had an effect at a time when the Taoiseach was saying that anyone who was questioning the sustainability of what was happening should go and commit suicide. And in fact, you should recollect in the event when Morgan Kelly … Professor Morgan Kelly wrote about the probability of a crash, he was derided – he was literally shouted down at an economics conference where he was presenting his paper on the property market. So, you know, people didn’t want to know.——————- And from the Central Bank side, you know, one has to ask, “How did the Central Bank see the erosion of the banks’ deposit base being halted as the Central Bank pumped increasingly vast amounts of liquidity into the banks to prop them up?” In fact, you may be aware of the fact that the total … the maximum amount … or at its peak rather, the amount of liquidity pumped out into the banks was €140 billion, you know, with the … both from the Central Bank and the ECB. I mean, once you spell that out, that’s €140,000 million – there are 12 digits in that. So, you can well understand why the ECB was jumping up and down when the accommodation provided to Irish banks was at … was at that massive level. ————As Professor Honohan’s report put it, the source of our problems was homegrown. Those who suggest that Lehman’s brought us down are almost wholly wrong, and are merely seeking an external scapegoat, not the first time this would have happened in Ireland, in my view. —————-In summary, it was crystal clear from about the turn of the millennium, and even before, Ireland was experiencing a major property bubble; “a world beating one”, in Professor Honohan’s words. It is not credible that those who ought to have been aware of what was happening were in the dark. One can only surmise that, as Professor Alan Ahearne has said here to your committee, too many people were benefitting from the boom time for prudence avoidance … prudent avoidance measures to have been taken. ————–

Chairman: I’ll … I’ll give you two examples there. It’ll come up on the screen at the moment, you say, “when around 2005, … Alan Barrett had expressed a view in an ESRI Quarterly Economic Commentary that the banks were in a rather fragile state, I was instructed to request the Director of the ESRI to ensure that such comments were not published in future”. You then go on say, “In the 2007 Financial Stability Report [that we just discussed], a deliberate decision was taken to delete the conclusions of a research study updating the extent of the overvaluation of Irish property services”. So, going back to you again, can you provide further information on this as to how the request was made to you and how, how these … and how did you follow through on the request with regard to these matters? Mr. Tom O’Connell: Yes. Well, in relation to the Alan Barrett comment, which was at … I think it happened at the launch of the ESRI quarterly commentary, and I think the reference to the fragility of the banks was actually in the quarterly commentary, I was, I was asked by somebody senior to me in the bank to ring Frances Ruane in the ESRI, which I duly did, and asked that, you know, those references should not arise in the future. Now to some degree that’s understandable, you know. If the leading research institute is commenting on the possibility of the banks collapsing, I mean, it’s one thing to try to sort of cool down those comments but I would argue that behind the scenes, something should be done to prevent that happening and that really wasn’t happening at that time.————————————

Chairman

I’ll … I’ll give you two examples there. It’ll come up on the screen at the moment, you say, “when around 2005, … Alan Barrett had expressed a view in an ESRI Quarterly Economic Commentary that the banks were in a rather fragile state, I was instructed to request the Director of the ESRI to ensure that such comments were not published in future”. You then go on say, “In the 2007 Financial Stability Report [that we just discussed], a deliberate decision was taken to delete the conclusions of a research study updating the extent of the overvaluation of Irish property services”. So, going back to you again, can you provide further information on this as to how the request was made to you and how, how these … and how did you follow through on the request with regard to these matters?

Mr. Tom O’Connell

Yes. Well, in relation to the Alan Barrett comment, which was at … I think it happened at the launch of the ESRI quarterly commentary, and I think the reference to the fragility of the banks was actually in the quarterly commentary, I was, I was asked by somebody senior to me in the bank to ring Frances Ruane in the ESRI, which I duly did, and asked that, you know, those references should not arise in the future. Now to some degree that’s understandable, you know. If the leading research institute is commenting on the possibility of the banks collapsing, I mean, it’s one thing to try to sort of cool down those comments but I would argue that behind the scenes, something should be done to prevent that happening and that really wasn’t happening at that time.—————————————

Senator Sean D. Barrett

The phone call to the ESRI about the Alan Barrett article. Soon afterwards, as you know, all the independent articles were dropped from the quarterly economic commentary, it just became an in-house ESRI thing. Were those events connected? Was the ESRI worried that it was annoying the Central Bank?—————–

Mr. Tom O’Connell

I, I don’t know whether it was a coincidence or not but, I mean, as far as my recollection goes, I think the, the comment by Alan Barrett was probably … was in the commentary itself. You know, it wasn’t a special article on the banking sector. And Morgan Kelly had an article subsequent … well, was it subsequent? Yes, I think it was subsequent, actually, to it. So, I, I wasn’t fully aware that the independent articles had been taken out. I mean, it might depend on people who were offering articles to the ESRI to put in … in their quarterly commentary.

—————————————————————————————————————————

David Begg(ICTU) assented to all the Financial Stability Reports mentioned below

ICTU had professional economic advisers on it’s staff

Nov 7, 2015

Central Bank cut property bubble warning from report

Fiach Kelly

Irish Times, Saturday, November 7, 2015, 01:02

Former Central Bank director general Liam Barron decided to exclude warnings about the overvaluation of property from a 2007 financial stability report, the Oireachtas banking inquiry has been told.

Thomas O’Connell, who was assistant general director of the bank’s economic division and chief economist from 2005 to 2010, made the claim about Mr Barron in a clarification statement to the inquiry.

He previously provided oral evidence to the committee, which examined the State’s financial collapse, in June.

In his oral evidence, Mr O’Connell said the Central Bank had to “pull its punches” in relation to concerns about the economy despite indications of great difficulty ahead.

He further claimed it was his opinion as early as 2001 that “things were going crazy” and a “massive” property bubble had developed.

Financial stability reports, however, tended to include “reassuring” summaries that did not correlate with their data, he added.

In his clarification statement, Mr O’Connell, who joined the Central Bank in 1970 as an economist, says the three most senior people in the bank had the “final say” in amending the stability report before it was sent to the board.

“The most active of the three in this regard would have been Liam Barron, the director general and chair of the financial stability committee.”

It adds that there were “major concerns” in the economics area of the bank “with the continuing rise in property prices, and therefore there was a need to try to assess to what extent property prices were overvalued”.

Overvaluation

Mr O’Connell says that as far as he is aware, no consideration was given to remove the overvaluation estimates.

They were “arbitrarily” excluded, he says, “presumably on the grounds that, as property prices continued to escalate to unsustainable levels, the publication of large overvaluation estimates could lead to the bubble bursting”.

He then adds: “Liam Barron decided to exclude the overvaluation estimates from the 2007 FSR.”

While Mr Barron gave his own written statement to the inquiry which dealt with the evidence given by Mr O’Connell, it is understood he submitted it without sight of Mr O’Connell’s subsequent clarification statement.

It also says that,Frank Browne, the Central Bank’s head of financial stability from 2003-2010, was responsible for co-ordinating or putting together the draft financial stability report.

“In keeping with the hierarchical nature of the bank, the amendments proposed by the top three executives in the bank would be incorporated into that draft before submitting it to the board.”

Mr Browne also submitted a statement to the banking inquiry in which he said the Central Bank misled the public about the frail state of Ireland’s financial system in the run-up to the crash.

He also told the inquiry that warnings issued by his team as far back as 2004 were ignored by the bank’s senior management.

The thrust of his 90-page statement was rejected outright by former bank governor John Hurley and other senior Central Bank figures from that time.

Warnings on the property bubble were not taken lightly, Mr Hurley insisted.

UPDATE MAY 29

Neary Blames Central Bank (Gov Hurley, David Begg ICTU, John Dunne IBEC et al.) at Inquiry

Patrick Neary Was CEO of the Financial Services Regulatory Authority.He sat on the Board of the Central Bank with David Begg, John Dunne and others. He also had regular meetings with the central Bank. David Begg has sought to evade responsibility for the grossly irresponsible activity of banks by pointing out that he was not a member of the Irish Financial Services Regulatory Authority which was set up as a distinct entity in 2003. This body was tasked with ensuring that individual banks operated in line with regulations. However the Central Bank retained  responsibility for  the covered banks and financial system as a whole. Their task was to ensure that the banks as a whole did not borrow and lend money to such an extent as to endanger financial stability of the country. The Annual Report on which John Dunne and David Begg signed off each year is entitled “Financial Stability Report” (FSR)  

Proceedings of Inquiry-Extract

https://inquiries.oireachtas.ie/banking/hearings/patrick-neary-former-ceo-irish-financial-services-regulatory-authority/

Senator Michael D’Arcy

Can I ask, Mr. Neary, in relation to the FSR reports, you participated in the FSR reports?

Mr. Patrick Neary

Yes, the FSR reports were driven by the economists in the Central Bank. I mean, we didn’t—–

Senator Michael D’Arcy

You participated?

Mr. Patrick Neary

I did. I participated in the discussions, some of the discussions at the preparatory phase on the financial stability committee(of Central Bank). And also as a member of the authority we used to have a joint meeting with the board of the Central Bank to discuss the content of the FSRs.

Senator Michael D’Arcy

Yes, I want to raise the issue of personal indebtedness within banking. In 1995, the percentage of personal indebtedness to the GDP of the nation was 71%; in 2006, it was 192%, according to the FSR reports; in 2007, the predicted figure, according to the FSR report, was 248% of GNP. The original figures I quoted were GDP. What was going to be the outcome, Mr. Neary, when a downturn came, for people when they were indebted to that extent? When a downturn was going to occur, how were people going to be able to pay their bills? (The Central Bank Had allowed unprecedented borrowing of 50% of GDP by Irish Banks and Financial Institutions between 2003 and 2008 which funded this lending-Evidence of current Governor Honahan to Inquiry)

Mr. Patrick Neary

I’m not an economist, and that’s not a defence, and, you know, it certainly would suggest to me that … it raises a question about people able to meet their indebtedness, in general, but bank loans are, you know, done on an individual basis, and if we are talking about … people’s ability to service their, their commitments for residential mortgages and that, you’re looking at them on an individual basis. I mean, this would be a sign. I would expect that people who are, you know, trained and proficient in, in assessing, you know, economic threats would have raised an alarm about, but in some strange way, this transmitted into a message from the Central Bank that, notwithstanding all of these issues, that we were going to have a SOFT  LANDING.

UPDATE MAY 22

Governor Hurley Admits Failure of Central Bank From 2003 to 2008 at Banking Inquiry

Begg Denial of Responsibility Undermined at Hearing

David Begg ICTU was a senior member of the Board of the Central Bank throughout this period

“But where Hurley was less confident and assured was on the failure of the Central Bank to properly see the crisis develop from 2005 onwards. “We did not see the crisis coming … we should have escalated our warnings at the time,” he was forced to concede” –Irish Independent  May 22.

He agreed that the major responsibility of central bank was to maintain financial stability of the financial system as a whole.

Governor Hurley was also forced to admit that the Central Bank had legal powers to give legally binding policy guidance to the Regulator but did not do so. He said repeatedly”That would not be done” – – – “we would not do that”

It is accepted by all at the Inquiry that the banks were allowed to borrow 50% of GDP between 2003 and 2008 (hitherto unprecedented-Gov Honohan) ad the indebtedness of Irish individuals and businesses was allowed to reach gargantuan proportions by irresponsible bank lending.

The Central Bank  failed to protect financial stability

It was the unprecedented borrowing and lending which made the banks and the state particularly vulnerable to the financial crisis abroad including the fall out from the collapse of Lehmans in the USA

The proceedings at the inquiry yesterday totally undermined the contention of David Begg (ICTU) that he had no responsibility for the banking crisis because he was not a member of the board of the Financial Regulator.

At one stage an official document was read to Gov Hurley which showed that a draft Central Bank Financial Stability Report

had been altered. It was put to him that in formulating the reports he had to be concerned with Ireland’s standing abroad, international investment in Ireland etc. He replied  to the effect that of course one must exercise due care but added: “OF COURSE YOU CAN’T FRIGHTEN THE HORSES”

Was this the real story? Due to the virtually total dependence of the country on international financial and industrial investment due to the policies of successive governments, IRELAND HAS NOT SUFFICIENT SOVEREIGNTY TO REGULATE IT’S OWN BANKS AND FINANCIAL INSTITUTIONS.

Was this the real story? Due to the virtually total dependence of the country on international financial and industrial investment due to the policies of successive governments, IRELAND HAS NOT SUFFICIENT SOVEREIGNTY TO SATISFACTORILY  REGULATE IT’S OWN BANKS AND FINANCIAL INSTITUTIONS.

Lack of knowledge, information, division of responsibility, is just “All  a Cod” when everyone new that a modest terraced corporation house in Dublin was on sale for half a million Euro

In fact Professor John Fitzgerald said exactly this at an earlier hearing when explaining that he had no excuse for his “Soft Landing” ESRI Reports during the boom!!!

——————————————————————————————————————————————

UPDATE JUNE 2  Afternoon

Paddy Healy on Liveline to-day

http://www.rte.ie/radio/utils/radioplayer/rteradioweb.html#!rii=9%3A20790350%3A0%3A%3A

UPDATE  June 2

ALAN DUKES On RTE

It has been alleged that a company owned by Denis O’Brien has got loans from IBRC at unusually low interest rates. Crucially, Alan Dukes Head of IBRC in 2011 did not deny this on RTE yesterday. He denied that the interest rate on loans depended the size of the loan or who the person was. This ,of course, is not the same thing. He said that “level of risk” is a factor.  It would be a major scandal if it emerged that super-rich individuals and companies with “low risk” of non repayment, unlike credit unions, were getting low interest arrangements from the Government through IBRC, while government through its ownership of AIB and Permanent TSB was fleecing home owners and small businesses on variable rate interest mortgages and loans.

The state is paying 8 billion in interest  on c. 200 billion of debt or c. 4% interest each year. Is it lending to the Super-rich at 1% to 2%

Could Alan DUKES and Michael Noonan please clarify?

UPDATE June 1

Catherine Murphy Note:Alan Dukes,IBRC, on Morning Ireland, RTE seemed to imply that the risk of an individual or of company being unable to fully repay a loan was a major factor in setting the interest rate!!!

Did he mean that a super wealthy individual would get a lower interest rate than a person in negative equity, all other things being equal?

Surely the reverse should be the case, particularly from a Bank owned by the state !!!!!

Is the regulator involved in these decisions? Is the owner of the bank, Minister Michael Noonan involved?

IBRC, Minister Noonan, please clarify Mr Dukes remarks.

Update  May 21

Begg (ICTU)  and John Dunne( IBEC) Called Before Banking Inquiry Yesterday Afternoon

My Year Long Campaign Has succeeded        Thanks to all supporters

Notification Date                 Appearance Date

Begg, David Central Bank/ICTU               20/05/2015                                   TBC

Dunne, John IBEC                                    20/05/2015                                   TBC

Update May 20

John Hurley, Former Governor Of The Central Bank, will appear before Banking Inquiry tomorrow.

During his term of Office the banks as a whole were allowed to borrow an additional 50% of GDP between 3003 and 2008. David Begg (ICTU Gen SEC) and John Dunne (IBEC) were members of the Board. In the opinions of Governor Honohan and Prof John Fitzgerald (ESRI Retd.) this is the period when the real damage was done to the financial system. Does Hurley Agree? Will David Begg (ICTU and now Director of Tasc???) be called to explain his role? Will government and particularly Labour Party Reps on Inquiry protect him from accountbility?

Update May 14

Begg (ICTU) and Dunne (IBEC) have not yet been Called before Banking Inquiry. WHY?

Is it because ICTU and IBEC support Austerity Policies of FG/Lab Government?

The selection of those to be called before the Banking Inquiry is of vital importance. Government may attempt to prevent David Begg ICTU and John Dunne IBEC being called because of their support for government policies though they were both members of the board of the Central Bank in the crucial years.

David Begg has sought to evade responsibility for the grossly irresponsible activity of banks by pointing out that he was not a member of the Irish Financial Services Regulatory Authority which was set up as a distinct entity in 2003. This body was tasked with ensuring that individual banks operated in line with regulations. However the Central Bank retained  responsibility for  the covered banks and financial system as a whole. Their task was to ensure that the banks as a whole did not borrow and lend money to such an extent as to endanger financial stability of the country. The Annual Report on which John Dunne and David Begg signed off each year is entitled “Financial Stability Report”

As  can be seen from below the  Central Bank grossly failed in its duty. David Begg was one of the most senior members of the board of the central bank when the covered banks borrowed 10% of GDP per year or 50% of GDP overall between 2003 and 2008

Did David Begg oppose this? Did he report it to executive Council of ICTU? Did ICTU oppose it?

If he did and was over-ruled, why did he not resign and bring the matter to public attention?

Stability reports would have been put before each meeting of the Central Bank attended by Begg. Financial Stability  was the principal purpose of the Central Bank. A Financial Stability Report is issued each year to the public. As can be seen below, the official Report, issued in 2007, was grossly incorrect. All members of the Board of the Central Bank, including Begg, signed off on it!

Note:  The Central Bank administered stress tests to the covered banks in 2007-months before the crash. The banks passed the tests

Both Patrick Honohan and even John Fitzgeral are now stressing that the excessive borrowing of the financial system as a whole was the major at the rootof the bank bust and financial melt-down

David Begg, General Secretary of ICTU, was on the board of the Central Bank for 14 years up to mid-2010.

YESTERDAY SEPT 18,2014 he announced that he will retire next March as General Secretary of  ICTU. Will he be called before the Banking Inquiry? He has much to explain to the Irish people

Before he became governor of the Central Bank, Professor Honohan in Economic and Social Review (Summer 2009) said:“Irish banking system had been, in effect, on a life-support system since September 2008.—-.Complacency resulted in the banks fuelling the late stage of an obvious construction bubble with massive foreign borrowing, leaving them exposed to solvency and liquidity risks which in past times would have been inconceivable–At the end of 2003, net indebtedness of Irish banks to the rest of the world was just 10 per cent of GDP. By early 2008 that had jumped to over 60 per cent”

The borrowing of 50% of Gross Domestic Product over 5 years by the covered banks is precisely what the Central Bank is tasked to prevent-grossly irresponsible borrowing which threatens financial stability.

As a result countless thousands have lost their jobs and savage austerity has been visited on the population including pay and pension cuts.

 David Begg owes an explanation to Irish trade unionists who pay dues to their trade unions who contribute to ICTU which pays the general secretaries wages as general secretary of ICTU.  

 In 2007 the Central Bank stress tested the covered banks just months before the crash. The Banks passed the tests.

The Directors of the bank were representative of the elite of Irish Society:

David Begg, Secretary General, ICTU. He was chair of its Audit and Risk Management Committee, which was tasked to advise on “risk management policies”

John Dunne was formerly Director General of IBEC

Dr Brian Hillery, former chairman of Independent News & Media

Dermot O’Brien was the Chief Economist with NCB Stockbrokers, having worked with them from 1987 – 2007

Tony Grimes is Director General of the Central Bank and Financial Services Authority having spent most of his career with the Bank. Prior to that he worked in the ESRI and Davy Stockbrokers.

Jim Farrell has extensive experience of international banking. He has held senior positions with the National Treasury Management Agency

Gerard Danaher is a barrister, closely linked to Fianna Fail.

David Doyle (Then secretary general of the Department of Finance),

Mr Alan Gray, the Managing Partner of the Indecon Economic Consulting Group,

Patrick Neary was appointed to the position of Prudential Director of the Financial Regulator in 2003. His responsibilities included the protection of consumers’ deposits, funds and policies. He was previously Head of Securities and Exchanges Supervision and Deputy Head of Banking Supervision in the Central Bank, where he began his career in 1971. He is a fellow of the Chartered Association of Certified Accountants (FCCA).

Deirdre Purcell former journalist and Actor. In 2003, Charlie McCreevy appointed Purcell to the Central Bank’s board. She was on its Audit and Risk Management Committee, which was tasked to advise on “risk management policies”

The Governor was John Hurley, former Sec general of Department of Finance, and career civil servant

 

The  Central Bank Report (2007) contained the following statements :

 

“The Irish financial sector was, of course, impacted like all others by these global  developments. Medium- to long-term funding  was not as readily available on wholesale  markets as had been the case. However, Irish banks have negligible exposure to the sub-prime sector and they remain relatively  healthy by the standard measures of capital , profitability and asset quality. This has been

confirmed by the stress testing exercises we  have carried out with the banks.”

–         – –   –            – –

   

“Turning to the Bank’s own activities, a strong focus on financial market issues was the dominant feature in the second half of the year. The institutional arrangements we have in place, where the Central Bank and  Financial Regulator operate within the one single organisational structure, enabled us to meet the challenges we faced.

(Central Bank Report 2007 –Governor John Hurley)

Financial Stability Report   2007    Bank of Ireland http://www.centralbank.ie/publications/documents/1.%20financial%20stability%20report%202007%20-%20part%201.pdf

 All those who were members of the governing board of the Central Bank should explain how this occurred.

Trade unionists have a particular interest in hearing an explanation from the General Secretary of ICTU, David Begg who was a member of the Board and Chair of the Audit and Risk Management Committee of the Central Bank at the time.

As a result of the activities of privately owned banks supervised by the Central Bank, countless thousands have become unemployed, have been forced to emigrate,and have pay and pensions cut.

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