Thoughts on an Arrested Series

In the old, originally French (I think), sense of "halted", my 10-part series (the first 8 parts are here) has itself been arrested for some time now.

I will explain why in due course, but some interim observations may be of interest

Yes, Irish bankers are just as liable to commit criminal offences as any other occupational group, and I have no reason to suppose that they are more virtuous than, say, journalists,lawyers, politicians, priests or academics. However, once again, I must emphasise that in this series I am looking only at the issue of crimes which may have been causative of the collapse of the Irish banking system.

Greed - which many see as the fundamental cause - is not in itself a crime, and I cannot see any workable manner in which it, simply as such, could be made one.

Fraud and insider trading are crimes, and their incidence increased in the period up to the Collapse, but they neither caused the Crash nor significantly contributed to the cost of it in Ireland (it may have been otherwise elsewhere e.g. in Iceland).

There is no evidence - that I have seen - of involvement in such nefarious activity by prominent individuals in the Irish financial institutions, civil service, regulatory establishment or politics, with the possible exception of the Anglo/Quinn debacle. (And in that sub-story, most of the credible allegations relate to what was effectively an increasingly desperate and always futile campaign to prevent the Collapse which had already become inevitable, probably from the beginning of 2007 or even earlier).

Journalists such as Matt Cooper (in many ways otherwise admirable) react by saying that if we cannot prosecute them, then "we" must excoriate them using "our" ability to "name and shame". What is meant is not even "trial by media" - trials have rules - but more or less ignorant demagoguery, which tells us more about the moral standards of those engaging in it than about the guilt of its targets.

More serious commentators, in particular Colm McCarthy, refer constantly to "lack of clear answers" and, while acknowledging the possible lack of criminal behaviour, persist in suggesting that there must have been an original "sin", committed by an individual or by a small number of people, which drove the banks "onto the rocks". They say that the Nyberg and its preliminaries dodged this question and point to the Bankruptcy Examiner's Report into Lehman Brothers in the U.S. as a model.

Let me (again) make a few additional pertinent points:

1. As the regular visits to Gárda stations by Mr FitzPatrick and a few others demonstrate, arresting is, among other things, in itself an idle recourse.
2. Charging and then bringing to trial are what matters.
3. I am not opposed to imprisoning bankers if they are convicted of serious crimes.
4. There is little reason to believe that the Irish banking disaster was caused by any Irish banker committing a serious crime known to Irish law.
5. Note that this does not equate to saying that no Irish banker has committed a crime known to Irish law. It also does not, of course, mean that Irish law may not have been lamentably lacking
6. As to whether breaches of the law were serious or otherwise, most were not, as far as I can see. The evidence on serious alleged crimes is not yet in the public domain (leaks do not count: they are usually inaccurate). My guess – not all that educated – is that at least one Irish banker is guilty of at least one of the serious alleged crimes. But the crimes in question did not contribute to the occurrence of the banking catastrophe for which we are all paying.
7. I believe that we need to legislate for more banking crimes, but we cannot in 2013 make something that happened in 2008 (or before it) into a crime now if it was not one at the time. The argument that the "common law" would have always regarded some relevant behaviour as criminal has proven impossible to sustain.
8. Furthermore, I am sympathetic - just a little - to Nassim Nicholas Taleb’s idea that we should perhaps reconsider the virtues of the death penalty, as in China, for disastrous errors of bank management.
9. There is no need for you - I am addressing the vocally impatient among us - to wait for the Director of Public Prosecutions, if you think – understandably – that she is too slow. The option of private prosecution, though of limited utility, is available if anyone thinks that there is enough available to proceed against anyone.(Read the recent English case of Gujra which includes a discussion of the merits of this procedure. The position in Irish law is very similar.)
10. But the truth, which those who shout loudest on this will not admit, is that you don’t have such a basis. Or else, you’re too lazy and prefer to shout than to do something useful, while complaining that others owe you a duty to do what you will not do yourself.
11. You are not alone. For years now, I have been offering to help anyone who wants to do something about it. Want to guess how many have even enquired about the possibility ?
12. The answer is: 1. No, not one hundred or one thousand. Yes, I mean the number between 0 and 2. I have had a single enquiry.
13. More correctly, the answer is still: zero, because that query – which only came in a few months ago – turned out to be from a bank shareholder who wanted to seek personal compensation from a former bank director.

The Perils of a Solicitor's Undertaking

A recent decision by the Irish High Court (Peart J.) exposes some of the sloppy banking and legal practices which characterised the Madness, and have contributed to the scale of the crash. The case is remarkable in a number of ways and I may return to the sloppy practices on another occasion.

I will here confine myself to noting this summary by Peart J. - a former solicitor, be it noted ! - of how the court will approach an application to enforce a solicitor's undertaking:

In summary, the following principles emerge from the judgment of Laffoy J. and Geoghegan J. in Coleman, and the authorities considered therein:

1. The Court has an inherent jurisdiction in matters concerning the conduct of solicitors, being officers of the court, including but not confined to compliance with their undertakings.
2. It is both a punitive and compensatory jurisdiction.
3. It is discretionary and unfettered in nature requiring each case to be considered on its own facts and circumstances.
4. In its exercise, the Court is concerned to uphold the integrity of the system, and the highest standards of honourable behaviour by its officers - a standard higher than that required by law generally.
5. The order made by the Court can take whatever form best serves the interests of justice between the parties.
6. In the matter of undertakings, the Court must consider the entire undertaking in order to reach a conclusion as to its real ultimate purpose.
7. The Court may order compliance with the undertaking, though late, where there remains a reasonable possibility of so doing.
8. Even where the undertaking may still be complied with, the Court may nevertheless order the solicitor to make good any loss actually occasioned by the breach of undertaking, which may or may not be the entire of the sum which was the subject of the undertaking.
9. Where compliance is not possible to achieve by the time the Court is deciding what order to make, if any, it may order the solicitor to make good any loss actually occasioned by the breach of undertaking.
10. Carelessness or other form of negligence on the part of the person affected by the undertaking, and in relation to the matter the subject thereof, may be a factor which the Court will have regard to when determining what order may be fair and just.
11. Any order the Court may make ought not be oppressive on the solicitor. Nevertheless, gross carelessness or other conduct considered sufficiently egregious by the Court, though falling short of criminal behaviour or even professional misconduct, will entitle the Court, should it consider it just to do so, to order payment of the entire sum which was the subject of the undertaking, and not simply a lesser sum in respect of loss actually occasioned by the breach of undertaking.

To these statements of principle which I perceive to emerge from Coleman and the other cases referred to therein, I would add one other which is linked in a way to that at 11 above.

It is this. It seems to me that the special supervisory jurisdiction being exercised by the Court in these matters is not unlike an equitable jurisdiction, given the wide discretionary nature thereof, and its objective of ensuring that justice is done between the parties in a broad sense.

In my view, therefore, it seems to me that it is not inappropriate or otherwise wrong for this Court to have regard to the overall behaviour of the solicitor, somewhat akin to seeing whether a person who is claiming an equitable relief has come to court with clean hands, even where the undertaking may be still reasonably capable of being completed, and even where the loss actually occasioned and sustained by the claimant may be less than the entire sum which was the subject of the undertaking.

The Court went on to order that the firm of solicitors should pay over to the bank the entire amount of the loan (€3m) plus interest and costs. This was approximately €1 million more than it would cost to belatedly comply with the undertaking.

Now, that's what I call "non-oppression".

Update on Saturday, March 6, 2010 at 09:01PM by Fergus O'Rourke

(This is my second attempt to publish this follow-up; I was unaware that the first attempt, made almost exactly 24 hours ago, was unsuccessful, for mysterious reasons, until a few minutes ago).

In relation to the "oppression" point, it should be pointed out that, under the option suggested by the solicitors but rejected by the court, the bank, instead of getting its €3 million back with interest, would have been provided with security worth about €0.6 million.

Update on Friday, June 29, 2012 at 07:09AM by Fergus O'Rourke

This decision by the High Court (McGovern J.) - though the circumstances are very different - is another example of how expensive failures to comply with undertakings can be. (A hat-tip to Mark Tottenham at Stare Decisis Hibernia for this, and much else).

Update on Friday, November 8, 2013 at 10:19AM by Fergus O'Rourke

The case citation links in this post have now been repaired.