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.

Why They Should Not Be Arrested - Pt 8

This post is one of a 10-part series of posts, the rest of which can be seen here.

In this post, I shall address some issues which have been raised by comments made (on this site, Twitter and elsewhere) querying my overall thesis.

Common-Law Crimes

A "common-law crime" is one which was not voted into existence by the legislature. Many things have been recognised to be criminal for thousands of years. For example, murder, rape and theft were all recognised by the police and by the courts as crimes, even before statute law (that is, laws enacted by our elected representatives) defined and refined the details.

It has been suggested by Fintan O'Toole of The Irish Times, for one, that what caused the insolvency of our banks was the commission of common-law crimes by bankers. He refers favourably to what happened in the case of The City of Glasgow Bank, implicitly suggesting that that case showed "just how it should be done" if our justice system would only work as well as did, notoriously, that of 19th century Scotland, oh yeah !

Well, I have seen no evidence that similar behaviour occurred in our own recent disaster, but if it had, the perpetrators could be charged, not with such common-law crimes, but with crimes which have now, like murder, been defined by the legislature.

In any case, the City of Glasgow situation was in hardly any way comparable: only the shareholders lost money.

Finally, I know of no (other) common-law crime which applies to the behaviour of those who are responsible for our banks' failures.

Unjust Enrichment

There is no crime of "unjust enrichment" known to Irish Law. I am not even aware of it being a crime in other jurisdictions.

There is a tort (meaning a civil wrong) of that name. It describes the situation where, for example, you give me a €50 note thinking it to be €20. I do not notice, but may have been "unjustly enriched" by €30. You may be able to sue me for the return of the €30 - good luck with that ! - but there is no question of my being punished for what happened.

It might just be possible that some of those responsible for the banking mess might need to be nervous about this. To be clear, though, they may worry about having to return money received, not about being arrested or imprisoned.

"General Criminality"

This is the most common objection to my thesis, if hardly the most compelling.

What is said is that our "top bankers" were all obviously up to their necks in "blatant criminality", by which it is meant that they disregarded all constraints of law to indulge their greed. I have even been assured, by intelligent people educated to third level, that said bankers knew what they were doing and were determined to ruin their banks and the Irish economy so that their own wealth would be maximised.

Challenged to justify this belief, they will cite the revelations about the behaviour inside Anglo-Irish Bank during 2008, but are unable to explain why, if both Seán FitzPatrick and David Drumm are now bankrupt, wealth maximisation was going on.

I see no evidence of this alleged "widespread criminality". Greed is not a crime.

What happened during 2008 was not a cause of the crash, but a desperate attempt to avoid it.

Recklessness

Almost as common as the last, this concept is mentioned often, and appropriately so, in my opinion.

There is no general crime of recklessness, or even of gross negligence, in Irish Law. (There are road traffic offences which amount to the same thing, but prosecuting for lending "carelessly" "without due care and attention" or "dangerously" under the Road Traffic Acts are not viable options).

Now, Irish law does recognise a crime of "reckless trading" (Companies Acts, section 297A). Prosecutions of this can only take place if the accused was a director of a failed company (meaning one in examinership, or liquidation).

Because of the way in which the failure of the Irish banks has been handled (even Anglo is not a "failed company" in the above sense), technically the crime does not apply. I will discuss this further in the next part of this series of articles. For now, I will say two things about it.

First, I do not believe that the authorities had that legal position in mind when they chose to proceed as they did, but anyone of another mind is welcome to try to change mine.

Secondly, I cannot resist reminding you that I asked for a mandate from the electorate last year to make "reckless lending" a crime in itself, but there was little interest from voters and none from commentators.

Coming Soon

Part 9, in which I (attempt to) answer the question

So, they just get away with it, do they ?