The narrative of Ireland’s financial collapse between 2008 and 2010 has not one villain, but two. One is Bertie Ahern, the former Taoiseach (prime minister) who steered the country into unprecedented economic expansion and then ruin. The other is Seán FitzPatrick, who ran the institution that became synonymous with that boom-bust arc: Anglo Irish Bank.
It is a tale that many find comforting. As Stephen Kinsella, who teaches economics at the University of Limerick, puts it: “We tell ourselves that Ireland’s plight is all about two bad men who wrecked the place. What’s good about that story is that it exonerates the rest of us.”
Mr FitzPatrick, the bank’s former chairman and the Irish financier most identified with the country’s catastrophic banking collapse, was cleared of all charges against him of illegal lending. The “Seánie and Bertie” story, it seems, may not be true. Ireland’s implosion was not the act of one man, or even of one institution. “What the Anglo trial tells us is that, the evidence: it just isn’t there,” says Mr Kinsella.
Two of Mr Fitzpatrick’s fellow former executives at Anglo were convicted in the case; they will be sentenced on April 28 and could face up to five years in prison for what the prosecution argued was a breach of Irish company law. The two – Pat Whelan, former head of lending, and William McAteer, former finance director – are the first bankers to be convicted in the aftermath of the banking crisis, which cost the Irish taxpayer €64bn, doubled the national debt, and forced the country to ask the International Monetary Fund for assistance.
The case related to lending a combined €450m to a group of Anglo clients, known as the Maple 10, to enable them to buy some of the bank’s shares and thus support the share price while a troublesome shareholding belonging to businessman Sean Quinn was unwound. The guilty verdicts against the two executives, who were closely involved (unlike Mr FitzPatrick) in the attempts to unwind the stake, appear to be a setback for the Quinn family, which has taken separate legal action against Anglo.
Beyond that, the lessons for Ireland are ambiguous and uncomfortable. The case was technical and the evidence was complex and anyone looking for catharsis was always going to be disappointed. It became clear during the case that everyone in a position of authority in Dublin – from Anglo’s board to the Department of Finance to the financial regulator to the central bank to the lawyers and investment bankers – wanted Mr Quinn’s stake unwound. But since that was not the issue before the court, that little detail must await an airing elsewhere – perhaps in an official inquiry, which is now likely to be approved.
It is unlikely that such an inquiry will tell the Irish people anything they do not already know about the banking crisis. Previous inquiries have spread the blame far and wide, pointing to regulatory weaknesses, “groupthink” among senior bankers, and the greed of property developers.
Observers say the real lesson of this case is the light it cast on the difficulty the country has in drawing a line under its banking crisis. Six years on from the collapse of Anglo – and of nearly every other Irish financial institution – the legacy of the catastrophe is everywhere. It can be seen in negative equity, in “ghost” housing estates in small towns around the country, and in the form of Nama, the “bad bank” administering soured property loans. Most of all, the legacy is manifest in the €64bn of bank-related debt sitting on the sovereign balance sheet.
The result, argues Constantin Gurdgiev, an economist at Trinity College Dublin and a critic of Ireland’s handling of its financial crisis, is that the country finds itself in a “twilight zone”, caught between the search for scapegoats for the crisis and the resulting inability to move beyond it. “It’s too late to go back and ask what caused the [crisis],” he says. “We have to learn the lessons of the crisis, to begin to tackle the issues that remain,” he says.
It has emerged in recent weeks that the lessons apply to far more than the banking sector. While banks remain the target of public ire, the past few years have exposed a striking absence of accountability at the top of many Irish institutions, from the Catholic Church to charities to public hospitals to the Garda Síochana, the national police.
As the columnist Michael Clifford ruefully observed in yesterday’s Irish Examiner, “in a state where accountability is absent” an individual can become a focus of public anger. This Anglo trial – others are pending – has shown how self-defeating such a state of affairs can be.
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