Vot Fraud ?

It's 31 July. You are a managing director. Your company has no cash on hand, but in your confident opinion that is a temporary situation. In October, €5m will definitely come in.

The company owes a lot of money, including

€300k to Revenue for VAT collected. Due today.
€100k to employees for wages. Due today.
€400k to suppliers. €200k overdue (60 days+)
€1.7m to Bank A (current account overdraft)
€40m to Bank B. (€2 m overdue)

So, what do you do ? Why, you pay €300k to the Revenue with a cheque using the last €300k of your overdraft facility from Bank A, of course. What else ? After all, it was never your money.

When your employees come to you for their pay, and hear about your choice of how to use your last €300k, they call you a thief. You took their services for the month, but used the money which could have been paid to them to pay some-one else.

The suppliers of goods to you say the same and try to seize your stocks.

Bank B says: that was our money, never yours. You had the use of it on strict condition that you would repay in accordance with a schedule. You didn't. You are a thief.

How do you answer them ?

On "Getting Away With It"

Any resemblance of any hypothetical characters mentioned hereinafter to real persons, living or dead, is purely coincidental.

Consider this scenario:

It is a "stark and dormy" night. (Who said Bulwer-Lytton is forgotten ?) On an unlit road, a tanker's valve somehow spontaneously opens - nobody ever provides a satisfactory explanation as to how or why - and the road surface is soon covered in a black-ish, smelly, viscous liquid. Some minutes later, a motor-car encounters the liquid, the driver - whom I shall call Mr Cooper - loses control and a very nasty accident happens, resulting in several deaths.

Cooper survives, however.

Is he jailed ? Prosecuted ? Arrested, even ?

No. Instead, he lives on, a free man "without a (legal) stain on his character". As Pat Rabbitte once asked, though, is he happy ?

Many people consider this to be outrageous. Four years later, some - and not just the predictably ignorant or intemperate - still mutter about how "the crook got away with it" (and believe it).

Now, unless you are new here, you will not be surprised to learn that my natural inclination is to resist such talk. I will ask to know which crime the unfortunate Cooper is supposed to have committed, why his broken tail-light or out-of-date driving licence had anything to do with the tragedy, even though they were criminal offences - albeit very minor - and so on.

My guess is that, even if you did not "buy" similar arguments already made by me in this series, you might see some value in them in the context of the hypothetical Mr Cooper.

It's an interesting exercise to discuss - as I have done with some people - why "the Coopers" are likely to get more sympathy (and, in my view, more justice) than "the bankers". Let us not detain ourselves with that discussion now. (We can return to it if there is a desire to do so).

However, in this article, I am going to explore the other side of that argument.

Let's go back to Cooper, and make the picture painted of him a little less straightforward, and thus, arguably, more realistic.

Breathalysed at the scene, he tested positive and while the subsequent blood test showed the alcohol in his blood was well below illegal levels, it also showed traces of psychotropic substances. At the time, however, the law did not specifically make it a criminal offence to drive in this condition.

Police investigation also revealed that Cooper's vehicle had at least two tyres marginally "bald", and that he had almost certainly been both driving too fast for the conditions and, worse, had been doing so with a telephone clamped to an ear with one hand.

All that said, the police had no doubt that none of these circumstances contributed to the tragedy, in which Cooper lost not only his only two children but several close friends who happened to be on the road at the unfortunate time. Even if Cooper's vehicle had been in perfect condition, even if he had had no alcohol or other intoxicants in his blood, had had his licence up to date, and had been driving with perfect care and attention, the people would have all died anyway.

Despite these circumstances, should the police charge Cooper with DDCD ("dangerous driving causing death") or less serious offences under the Road Traffic Acts because, otherwise, he will "get away with it" ?

Am I alone in wondering how a man involved in such a horrific scenario will ever get over it ? To me, the question of him getting away with it is out of place.

I would like to hear from those with a contrary view.

(We are not going to detain ourselves at this point with exploration of the culpability of Lehman Brothers, the haulage firm which owned the oil-tanker - imagine that ! - or of any other dei ex this particular machina. But don't forget the disclaimer above.)

Boston vs. Berlin: "Blame-Game" Episode

Mary Harney, for good or ill one of the most influential figures in Ireland's political life over the last 30 years, said in a 2001 speech which is still debated

As Irish people our relationships with the United States and the European Union are complex. Geographically we are closer to Berlin than Boston. Spiritually we are probably a lot closer to Boston than Berlin.

Now, I offer you more grist to that particular mill.

"It's The Economy, Dummkopf"

In the latest entertaining (but, um, scatological) article by Michael Lewis for Vanity Fair entitled as above, our old friend gives us much interesting detail on cultural differences. Read the whole thing; there is more in it than I can possibly précis for you. However, partly but not entirely because of my current series of posts on a related theme, I found this observation especially interesting:

The American bond traders may have sunk their firms by turning a blind eye to the risks in the subprime-bond market, but they made a fortune for themselves in the bargain and have for the most part never been called to account. They were paid to put their firms in jeopardy, and so it is hard to know whether they did it intentionally or not. The German bond traders, on the other hand, had been paid roughly $100,000 a year, with, at most, another $50,000 bonus. In general, German bankers were paid peanuts to run the risk that sank their banks—which suggests they really didn’t know what they were doing.

Reference to $150k p.a. as "peanuts" may be offensive to some, but in this context, is not hyperbolic: some American traders were paid millions, to sell what turned out to be "toxic" products, and for which in Lewis' telling, the less well-paid German fund-managers were actually the "ultimate patsies". He goes on:

But—and here is the strange thing—unlike their American counterparts, they are being treated by the German public as crooks. The former C.E.O. of IKB, Stefan Ortseifen*, received a 10-month suspended sentence and has been asked by the bank to return his salary: eight hundred and five thousand euros.

The emphasis is the author's, who thereby reminds us of American financial entrepreneurs who have made more than $805 million from similar activities.

Ironic or .. ?

In summary, in "Boston" people made millions by selling toxic stuff to relatively underpaid, naive, people in "Berlin". The latter, arguably victims of a kind, are the ones threatened with jail. In Ireland, my impression is that those doing most of the similar threatening tend to be those on the "Boston" side of the debate.

*Mr Ortseifen was charged and convicted, not of "losing billions" (though his firm, Lewis says, did lose more than $15bn under his leadership), but for allegedly making a false statement to the market. The conviction looks rather unsafe to me (for whatever that is worth), and I understand that it is under appeal.

An End to Imprisonment for Debt ?

In a note written in 2006 (you'll find it here) I confidently asserted

No-one in Ireland goes to prison because they cannot pay a debt

Though correct as to the position in law, arguably I was wrong because of the failure to observe due process by some judges.

Earlier this year, it was reported that the relevant legislation was to be challenged on constitutional grounds, with the Irish Human Rights Commission supporting the challenge.

A decision reported in "The Irish Times" this morning (See follow-up note dated 26 October 2013 below) suggests that this may not be necessary.

The report is, as is normal, written for the general audience and is not necessarily complete as to what lawyers would regard as the relevant details, or the detailed ratio decidendi. (I note that Eoin O'Dell has recently repeated his criticism of the delay in publishing the full judgments of the Irish superior courts.) That said, O'Neill J.'s decision as reported seems to me to admirably set out the standards which ought to apply when a creditor applies to a court to have someone imprisoned for failure to pay.

(As an aside: why are so many of the cases which get publicity initiated by credit unions ? Does it reflect sub-normal attention to public relations ?)

Note that a failure to pay by itself is not a ground for such an application: the failure must be to comply with a previous order by the court that the debtor pay a specific amount. Now, it may not be generally realised, but in Ireland, when such a failure occurs, the creditor may realistically have very little legal option but to apply for such an order, even if putting the debtor in prison is of no use, and indeed may be counter-productive. The creditor may not be unreasonable in believing that to apply is the only way to get the debtor's attention.

However, this is by no means always the explanation for the application, or if it is, something is going wrong on a regular basis, because yesterday's case, as well as the case referenced here (and here), all appear to be cases of "can't pay" rather than "won't pay". In all of the latter cases, and, I suspect, in virtually all cases of this kind, the debtor has failed to turn up in court, or, as it is often censoriously expressed, has ignored the summons to attend.

Judges are invariably wont to take umbrage at this, and my sympathy for debtors notwithstanding, I tend to agree with this, at least up to a point. I cannot agree, though, that, as has happened, it is appropriate to sentence someone - in absentia - to prison for up to three months because the judge is annoyed with failure to turn up.

It appears likely, as well, that creditors are either encouraging judges to do this, or failing to suggest more suitable alternatives such as adjournments.

Presumably encouraged by Conor Devally S.C., the debtor's counsel, O'Neill J. has now made such inappropriate happenings much more unlikely, if not completely impossible, by interpreting section 6 of The Enforcement of Court Orders Act,1940 in a new way.

The said Section 6 reads as follows

• ( a ) where a debtor is liable, by virtue of an instalment order, to pay a debt and costs either in one payment or by instalments and such debtor fails to make such payment or fails to pay any one or more of such instalments accruing due while such order is in force at the time or times appointed in that behalf by such order, the creditor may, at any time while such order is in force or within twelve months after it has ceased to be in force, apply to a Justice of the District Court for the arrest and imprisonment of such debtor;
• (b) on the hearing of an application under the next preceding paragraph of this section, the Justice may, if he so thinks proper but subject to the next following paragraph of this section, order the arrest and imprisonment of the debtor for any period not exceeding three months, and thereupon the debtor shall be arrested and imprisoned accordingly;
• ( c ) the Justice shall not order the arrest and imprisonment of the debtor under the next preceding paragraph of this section if the debtor (if he appears) shows, to the satisfaction of such Justice, that his failure to pay was due neither to his wilful refusal nor to his culpable neglect;
• ( d ) on the hearing of an application under paragraph (a) of this section, the Justice, if he so thinks proper, may, in lieu of ordering the arrest and imprisonment of the debtor, treat such application as an application under the next preceding section of this Act for the variation of the said instalment order and thereupon the said next preceding section shall apply as if such application were an application thereunder;

O'Neill J. appears to have decided that section 6(c) may not be interpreted so as to place the onus on the debtor to satisfy the court as to his or her inability, as has been the practice - in accordance, to be fair, with the most obvious meaning of the words - but that it must be shown beyond reasonable doubt that s/he is either wilfully refusing, or is culpably neglecting, to pay. This, the standard of proof in criminal cases, is appropriate because the criminal sanction of imprisonment is involved.

Update on Saturday, October 26, 2013 at 09:51AM by Fergus O'Rourke

Unfortunately, I can no longer find the original 2009 links, but for those seeking more detail this one and this will, I think, prove useful further reading