Patricia Quinn and Undue Influence

The Irish Times is reporting that the Commercial Court has just issued judgment rejecting Patricia Quinn's plea that she did not have to repay her loan eur.3 million loan to Anglo Irish Bank (now Irish Bank Resolution Corporation) because of undue influence. Justice Peter Kelly, correctly, ruled that "[t]he law since the middle of the 18th century allowed for no presumption of undue influence between a wife and husband, and there was also no actual evidence of undue influence by Mr Quinn over Mrs Quinn, such as bullying behaviour."

This is a relatively straightforward case and it is surprising that an undue influence argument was even advanced. The law has moved on considerably beyond patronising views about a married woman's contractual powers. It is necessary to show that the woman is under the dominion of her husband in order to succeed. In other words, a lot more than the mere fact of marriage is necessary for an undue influence presumption to arise. Further, even if dominion is shown, it is not the end of the inquiry. If the woman exercised independent judgement the transaction would stand. Quinn's claim seems to have been based on authority along the lines of Midland Bank v. Cornish, where there was clear evidence of the bank taking advantage of the wife. But there is no evidence of unfair advantage here and it beggars belief for a woman who serves as a director on a number of corporate boards, and who must be assumed to be reasonably sophisticated, to make such a claim.  

In sum, Justice Kelly got it absolutely right and it would be hard to see this judgment being overturned on appeal - at least on undue influence grounds.

Greeks Taking Money from Banks to Store in Garages: No End to EU Crisis

As I've argued before, EU leaders have shown very little evidence that they are capable of taking the bold steps necessary to contain the crisis. Italy and Spain's continuing troubles show that markets have no faith in these band-aid measures and that they next crisis is not too far off. A recent article in the Guardian about a silent bank run in Greece is scary:

In May alone, almost €5bn (£4.4bn) was pulled out of Greek deposits, as part of what analysts describe as a "silent bank run". This version is also disorderly and jittery, just not as obvious. Customers do not form long queues outside branches, they simply squirrel out as much as they can.

One senior investment banker [said]: "People are scared that the government doesn't know what the fuck it's doing." He tells a story about an acquaintance who took out €30,000, wrapped it in a bag and stashed it in his garage. "The bag had previously had some food inside," he says. "So it attracted rats, who ate the notes."

These sorts of stories remind one of the Great Depression and it is incredible to read about it happening so close to home in this day and age.

Is the Anglo Investigation Interminable?

The investigation into Anglo limps on as the court granted another extension and no charges are expected to be filed until next year:

Lawyers representing the Director of Public Prosecutions told the court that it expected to receive a file on financial transactions by Anglo directors within the next 14 days.

The file relates both to a suspected failure by the bank to maintain a register of directors’ dealings and a suspected withholding of information from auditors.

Predictably, the lawyers claimed that the transactions were "more complex than expected." I don't know how this claim can be repeated over and over again. It might have been more complex than expected the first time, but surely the complexity loses its unexpected quality thereafter and adequate steps to tackle it are in order? Better and more legal resources would help reduce the complexity and speed up the analysis? Moreover, one would have thought that the snail-like pace of the investigation would have changed after harsh remarks from the judge. But this snippet proves that little has changed: "A file concerning a loan to a particular Anglo director, sent to the DPP in December 2010, has been assessed by the DPP and is now being considered by its lawyers, while two other files on “back-to-back” deposits between Anglo and Irish Life and Permanent have also been sent to the DPP."

Seriously? You cannot make this stuff up. Some of my previous posts about the Anglo investigation are here, here, here, and here. At this rate it would take a miracle for any charges to be filed.

Does the Lehman Lawsuit Offer a Template for Suing Anglo Irish Executives?

Several pension funds are suing Lehman Brothers's former CEO Dick Fuld, CFO Erin Callan and other top executives in federal court in New York for misleading investors. The suit - which was filed over 2 years ago - is now going to trial as Judge Kaplan ruled in favour of the pension funds and denied a motion to dismiss holding that “It is entirely plausible to conclude that the misleading picture that Lehman portrayed played a material part in keeping its stock higher.” Therefore, the losses suffered by the investors might be attributable to the fraud. He also ruled that the suit “sufficiently alleges facts giving rise to an inference that these defendants were involved in setting Lehman’s risk policies and knew that the statements concerning enforcement of risk management policies were false.”

One wonders if there is sufficient evidence for similar legal action in respect of executives at Anglo Irish and other failed banks in Ireland. Executives at these entities also claimed that they were in good financial health until they collapsed. The Lehman ruling is available here.

Bank of Ireland Manages to Escape Grasp of Government

In a surprising bit of news, the markets put some faith in Bank of Ireland and helped it to stay out of state control. An investor group - located outside Ireland - is reported to have put about 1.12 billion euros into the bank. This is probably the best news the Irish banking sector has had in some time. It is also a relief for the taxpayer.

More Details on Anglo Fraud Emerge in AIB Investigation

It appears that the alleged fraud being investigated by AIB in Anglo's deposit book is very much the plain vanilla sort: "around €3m of money previously held in Anglo was unaccounted for.
It is believed the sum was stolen from a number of deposit accounts at Anglo by a former official at the disgraced bank.
The Anglo official, who was based in Dublin, is suspected of moving large sums of money between accounts to cover the thefts.
It is suspected he avoided detection by ensuring that funds were available for accounts that matured.
The man at the centre of the allegations has since died ..."

Anglo will probably claim that this is just a rogue actor. However, this raises questions about its supervisory practices and internal controls. The article is available here.

Anglo Fraud Could be Uncovered by AIB?

The veil of secrecy that has protected the key players in Anglo might be beginning to part as the restructuring process yields more information about transactions at the failed bank. As the Irish Times reports, AIB has commenced an investigation into allegedly fraudulent transactions involving Anglo's deposit book:

"The bank said the investigation was triggered by a customer inquiry and concerned certain discrete funds.

"In the event that fraudulent activity has occurred, AIB confirms any such transactions will be for the account of the bank," it said. The Garda Bureau of Fraud Investigation and the Central Bank have been informed of the matter. Some €7.1 billion in deposits held in Anglo Irish Bank were transferred to AIB..."

The Independent also has a report on the investigation, stating that "a complaint from a customer who believes money was missing from an account sparked the probe."

This investigation might shed light on Anglo's banking practices with implications beyond these transactions.

Ban on Repossessions Delaying Inevitable?

Repossession orders are down according to the latest figures in the Independent, dropping from 985 to 583 during 2010. The Irish Times also has a report on the topic noting "an increase of 65 per cent in applications for judgment mortgages" in the Circuit Court over 2009. Similar actions increased 128% in the High Court.
Unsurprisingly, there were 13,613 debt judgments in the Circuit Court during 2010 (up 25%), and 30,000 in the District Court.
The report also notes that "[t]he High Court dealt with 3,207 debt-recovery cases, up 28 per cent on 2009. The District Court issued 1,564 ejectment orders last year, up 76 per cent on the previous year. There has also been a trebling in bankruptcy cases in the last two years, with 29 bankruptcies granted in 2010 compared to eight in 2008."

Given the state of the economy, how many of those currently in arrears are likely to avoid repossession after the 12 month moratorium? This policy is just kicking the can down the road and preventing the market from achieving the necessary correction. No one wants to see neighborhoods blighted by empty repossessed homes but setting up this artificial situation with a repossession embargo cannot be a good idea.

More Delays in Anglo Investigation

Will this ever end? Justice Kelly's deadline seems set to expire without any discernible action as the investigation has not moved beyond the 90% mark. Via the Independent:
The ODCE and the gardai have indicated that they will not be in a position to complete their files for the Director of Public Prosecutions, James Hamilton, until at least the end of the year.
Although 90pc of the files have been completed, witnesses are still being interviewed in connection with the rest of their inquiries.
Some 200 people have already co-operated with the investigation but more than 40 other witnesses have yet to be seen.

I posted previously about reading speed in this investigation. Other posts on the investigation can be found here, here, here and here.

Amidst all this, the DPP is quitting to protect his pension.

Ridiculous "Golden Goodbyes" at Permanent TSB and Irish Nationwide

As a long-time observer and researcher of CEO compensation issues, I am used to seeing fat sums offered to corporate executives in the form of golden parachutes. But this report about "golden goodbyes" in the Irish Independent made my jaw drop:
[More] than 500 staff at Government-guaranteed Permanent TSB are to get a bonanza pay-off ...[this] is also available to the 245 Irish Nationwide Building Society staff who earlier this year transferred into Permanent TSB as part of a forced merger of Nationwide with the Anglo Irish zombie bank.

The €38m package will see staff walk away with an average pay-off of €120,000 -- but some managers will be in line for pay-offs of more than €300,000.


This is simply unbelievable. There is an argument to be made for CEO golden parachutes based on expertise, risk exposure etc., when they have performed adequately, but paying such sums to what seem like mid-tier staff in a bank that would have gone bust but for the bail-out seems ridiculously excessive. This is clearly pay for non-performance and failure and a complete waste of taxpayer money. The minister must intervene and stop this nonsense.

British Pensioners v. Bank of Ireland

The Independent is reporting that British pensioners are taking legal proceedings against the Bank of Ireland's restructuring proposal:
One part of that restructuring relates to permanent interest bearing shares (PIBS) issued by Bank of Ireland subsidiary Bristol & West worth £75m.

Under the bank's restructuring plan investors in the PIBS will be offered just 20p out of every pound invested in the shares.

I would imagine that those shares were issued under English law. There might be some interesting conflicts of law issues if the English court hears the case. Still, it looks like an uphill battle for the pensioners!

Jim Lacey of National Irish Bank Disqualified for 9 Years

The Irish Times is reporting that the former CEO of National Irish Bank has been disqualified for nine years. Such disqualification orders present a powerful tool for regulators, particularly where the evidence of wrongdoing falls short of the legal standard for criminal prosecution. They are also preferable when moral blameworthiness is less clear and criminal punishment might be unduly harsh for the wrongdoing asserted. Such orders are quite regularly employed in the U.S. and other jurisdictions and one can expect them to be used here with greater regularity if regulators follow through on their promise of tougher enforcement.

Today's order follows the decision of the High Court in April where it had made a finding that Lacey is "“unfit to be concerned in the management of company”, within the meaning of section 160(2)(d) and (e)."

Lacey's defence - like that of many CEOs before him - was that he did not know about the illegal acts or that the illegal acts were committed by rogue actors who were subordinate to him, without his knowledge. He also claimed that the bank was a large organisation and he could not be expected to know the minutiae of the day-to-day details concerning its affairs. He argued that there was a system of delegation in place and that the illegal acts had not been brought to his attention as such. Moreover, he claimed that the external auditors had not raised any concerns and that the board had not been accused of wrongdoing. This echoes arguments made by other CEOs in high profile U.S. cases like Enron where the CEO, Jeffrey Skilling, also claimed that the company's actions were legal and that any illegality had been without his knowledge at the instance of the CFO, Andy Fastow.
The court was not convinced by Lacey's arguments. In relation to the I-did-not-know defence, it said:
... the Inspectors Report, had found that branch audit reports were consistently critical of the standard of compliance with the legislative provisions and Bank procedures pertaining to the operation of non resident deposit accounts. The report referred to the Bank’s obligation to hold a non resident declaration in the form prescribed or authorised by the Revenue Commissioners pursuant to s. 37 of the Finance Act 1986, for each account designated by the bank as a non resident account.
The Inspectors referred to the deficiencies most commonly reported including the failure to produce non resident declarations forms at the time of audit; charities declarations rather than non resident declarations; obsolete, undated, not fully completed and containing incorrect account numbers. "

The court seems to be placing a lot of emphasis on the incomplete documentation. Since the incomplete documentation had been flagged in communications which included the CEO, the court ruled that he could not have been unaware of noncompliance with the bank's legal obligations.

Further, the court held:
"The Inspectors found that bogus non resident accounts were opened and maintained by the bank and were widespread in the branch network. They found that the opening and maintenance of such accounts by the bank constituted an unlawful and improper practice which served to encourage the evasion of revenue obligations by third parties, both on the funds deposited and on the interest earned. They concluded that up to May 1995, a year after the respondent ceased to be Chief Executive, senior bank management failed to inform branch staff in clear terms of the relevant provisions of the Finance Act 1986. They also failed to have a review conducted at that time to ensure that all existing non resident accounts were genuine. Senior management was aware of the existence of bogus non resident accounts. The Bank failed to account to the revenue for DIRT properly payable."

With regard to the CMI deposits, the evidence is a bit thin, and the necessary nexus might be weak:

"The Inspectors found that the respondent was aware of the level of deposits being made by CMI with the Bank and that he knew or ought to have known how the product was presented. He had to bear responsibility for the practice which served to facilitate customers of the Bank and others in evading tax."

On the issue of delegation, the court correctly ruled that delegation of duties did not entail delegation of legal responsibility:

"The court is not satisfied from the evidence of the respondent, that there was a proper system in place or that he properly supervised the delegation of reading the internal audit reports. Indeed, given their importance as a control of the performance of the branches, their limited number and relative brevity, it is surprising that he only read those few categorised as poor or unsatisfactory.
While the respondent was entitled to delegate it did not follow that he was not under any duty in relation to the discharge of that delegated function, notwithstanding that the person to whom the function had been delegated appeared both trustworthy and capable of discharging the function. Where a delegation had taken place he, as delegating Chief Executive and director, remained responsible for the delegated function or functions and had a residual duty of supervision and control."

So, the defendant's lack of knowledge defence did not persuade the court as he had been included in the communications although the lack of documentation/noncompliance issue had not necessarily been red-flagged as potentially illegal or criminal:
"The court is satisfied from the evidence given in cross examination that the respondent had notice of some of the reports such as to be aware of issues of non-compliance with DIRT legislation.
On this basis it seems to the court that the inference drawn by the Inspectors that the respondent should not only have been aware of the failure of the branches to hold properly completed non-resident account declarations but should also have been aware that bogus non-resident accounts existed throughout the branch network, was a proper inference.
From the evidence given in cross examination the court finds that the respondent was aware that non-compliance continued to a significant extent. The court also finds that the ignoring of an obligation to account for retrospective tax when the accounts were redesignated would seem to confirm a degree of complacency on the part of the respondent with regard to the implementation of the provisions of the Finance Act 1986. The court finds that the respondent failed as Chief Executive and as director of the Bank to exercise a proper duty of care in relation to tax compliance."

No Prosecution in Sight for Anglo Irish Bank Executives

The Independent reports that "Significant delays in the Anglo investigation were revealed in the High Court yesterday. The blame for the hold-up was partly attributed to the refusal of certain key figures to be interviewed or provide witness statements."
This protracted saga does not seem to be nearing an end anytime soon. Most observers cannot fathom the delay and it seems the judge is losing patience too:
Mr Justice Peter Kelly expressed concern about the delay in completing an investigation that began more than two years ago when millions of files were seized during a raid on the bank's St Stephen's Green headquarters.
The judge was hearing an application that would allow the investigation to continue for another six months.
He is due to make a decision on the matter next Tuesday.
Lawyers for the ODCE told Mr Justice Kelly that "every effort" would be made to complete it by the end of this year.

Justice Kelly is absolutely right to express concern. We are not dealing with opaque CDOs and other exotic transactions here. What happened in these banks is relatively straightforward, the only question is whether there is enough evidence to back up criminal charges. You would think that there were millions of complex documents and hundreds of people to interview - as would be typical in major litigation but even that does not appear to be the case here:
The court heard files and reports running to 12,000 pages and related to three of the five issues being investigated were sent to the Director of Public Prosecutions in December 2010 and March of this year.

12,000 pages in 5 months?  Assuming one person only works 20 days/month on this material that's just 120 pages a day.
The average person probably reads no slower than 50 pages/hour, and with a lazy 8 hour work day could read 400 pages. So they must be very slow at reading there.

The report also notes that "the judge was told there was no indication yet what view the DPP had taken on the material and that it could take another two years to complete any criminal prosecution.

In response, the judge asked if the investigation was "ever going to come to an end". He noted the investigation had been adjourned and extended six times by the court and said he was not "a rubber stamp".
The whole saga does not inspire much faith in the system.

Vincent Browne on Oireachtas Inquiry into Banking Crisis

Vincent Browne has an interesting op-ed in the Irish Times today arguing against an Oireachtas inquiry into the banking crisis. I've had plenty to say on this topic in the past on this blog and in the media, and I am in substantial agreement with many of Vincent's arguments. I disagree with his prescription for a judicial inquiry. Based on previous experience in the U.S., I think an independent commission would be superior to a judicial inquiry. This commission, as I've previously argued, should have a set timetable - 1 year for instance - and be given a fixed budget. It should be comprised of experts - some with a strong legal/prosecutorial background - and be manifestly free of conflicts of interest. It should be mandated to produce a report in that time-frame.

In the light of prevailing fears about the unconstitutionality of Oireachtas inquiry powers, it might be useful to have a close look at the language in the Abbeylara case. Chief Justice Keane wrote a superb dissent that is well reasoned and scholarly in its analysis of comparative constitutional law. Some extracts:

The Oireachtas, like any other body or person in the country, is entitled to keep itself informed and, for that purpose, to initiate inquiries, provided that, in so doing, it does not infringe the law. That is not in any way in dispute in this case. Nor was it seriously contended on behalf of the applicants that the Oireachtas was precluded from establishing a fact-finding committee to investigate and reach conclusions on particular matters which might be relevant to the exercise by them of their legislative function. Thus, it was conceded that there could be no legal inhibition on their establishing a committee to investigate and report to them on a particular topic of scientific controversy in order that they might consider the possibility of and, if thought appropriate, enact, legislation dealing with the topic. The challenge in these proceedings is to the establishment of a body, such as the sub-committee, charged with what the Divisional Court and the written submissions on behalf of the applicants describe as "adjudicative functions", the conclusions of which may affect the good name and reputation of persons, such as the applicants, who are not members of either House of the Oireachtas. The description of those functions as an "adjudication" is, in my view, inappropriate and calculated to mislead. The latin root of the word and the definition to be found in the Oxford English Dictionary (Vol. 1), make it clear that one of its primary meanings is "a judicial sentence or award". The report of a body such as the sub-committee is, however, entirely devoid of any legal effect (that is not say, of course, that it is devoid of factual effect. If I drive my car carefully down the street but injure a pedestrian who walks in front of it, my driving will have serious factual consequences. It will remain devoid of legal effect.) Its findings do not determine any legal rights or obligations and represent no more than the opinions its members have formed on the material placed before them, whether in documentary or oral form. Unlike the orders of courts established under the Constitution or awards and determinations of the many tribunals which are not courts but exercise quasi-judicial functions, the findings of a body such as the sub-committee can be wholly ignored or disregarded by persons referred to in their report without the slightest possibility of any legal sanction being imposed upon them as a result.

... they clearly considered themselves entitled to reach a conclusion ... which, in a court of law, might support a verdict of unlawful killing. But the fact that the sub-committee could arrive at such a finding does not mean that they would be "adjudicating" on the issue, as that expression is properly understood, still less that they were arriving at a finding which was in any way whatever equivalent to the verdict of a court in criminal proceedings or, for that matter, the judgment of a court in civil proceedings arising out of the same event.
...
What seems to have been entirely lost sight of, however, is that a finding of fact - or more accurately, an opinion arrived at by a body such as the sub-committee on the oral or documentary evidence placed before it - is no more than that: it cannot as a matter of law be equated with the verdict of a court of competent criminal jurisdiction or the judgment of a court of competent civil jurisdiction. Such judgments and orders are, under the Constitution, the exclusive prerogative of the courts established under the Constitution, save for those limited matters of a non-criminal nature in respect of which what are normally described as quasi-judicial determinations may be made by bodies other than courts under Article 37 of the Constitution.

The right of persons in the position of the applicants to their good name must be balanced against the right, and indeed the duty, of the Oireachtas to inquire into and inform themselves as to matters which are relevant to the discharge by them of their constitutional functions. It is accepted by the Attorney General that not merely must the inquiry proposed to be conducted by the Oireachtas relate to the discharge by it of its constitutional function: the employment of this instrument, affecting as it may the constitutional rights of persons outside the Oireachtas, must be proportionate to the objective to be achieved. 

The chief justice quoted Costello J. in Goodman International v. Mr. Justice Hamilton  [1992] 2 I.R. 542:
"The terms of reference in this case require the Tribunal to inquire into the truth or falsity of a number of allegations of wrongdoing including assertions that the criminal law has been breached. But in inquiring into these allegations and in reporting its opinion on them theTribunal is not imposing any liabilities or affecting any rights. It is not deciding any controversy as to the existence of any legal right. It is not making any determination of any rights or liabilities. It is not imposing any penalties. It may come to the conclusion that some or all of the allegations of wrongdoing are true,but this opinion is devoid of legal consequences . Its functions of inquiring, reporting and recommending cannot therefore be regarded as the 'administration of justice'."
...
Goodman International v. Mr. Justice Hamilton  [1992] 2 I.R. 542 is put beyond any doubt by the judgments in this court. Finlay C.J., in addition to upholding the view of Costello J. as did the other members of the court, that such an inquiry was in no sense a "trial" but was rather a "simple fact finding operation reporting to the legislature", also referred to the resolution as one which "directed the tribunal" to inquire into the specified matters. Even more emphatically, if that were possible, the same view was expressed by Hederman J who said at p. 597:-

"While Article 15, s. 10 of the Constitution provides that each House of the Oireachtas shall make its own rules and standing orders, with power to attach penalties for their infringement, and provides that each house shall have power to ensure freedom of debate, to protect its official documents and the private papers of its members and to protect itself and its members against any person or persons interfering with, molesting or attempting to corrupt its members in the exercise of their duties, it does not provide for the establishment of parliamentary tribunals. But in any parliamentary democracy it is essential that the parliament should have powers to initiate inquiries…" [emphasis added]

Hederman J. also cited at p. 598  Watkins v. United States  (1957) 354 U.S. 178 as authority for the proposition that:-

"The [United States] Supreme Court has held that the power to conduct investigations 'is inherent in the legislative process'."

The High Court's treatment of very persuasive U.S. authority holding that congress has the power to conduct inquiries had been thoroughly baffling. Keane CJ was of the same view:

Counsel for the applicants sought to distinguish this powerful current of authority in the Unites States Supreme Court on two grounds. First, they argued that, as in England, the cases proceeded on the basis that the power to inquire which was inherent in the legislative process could not exist without the consequential power to secure the attendance of witnesses and the production of documentary evidence. Since that consequential power was not inherent in, or expressly conferred, on the Oireachtas, they urged, the power of inquiry, to which it was consequential, could not exist either.

The Divisional Court was impressed by this argument: I have to say, with respect, that I find it bafflingly illogical. If the power to inquire is pointless and meaningless without the consequential power (and it is highly debatable whether that is so - if a civil servant of any rank had been requested to appear before an inquiry being conducted by the Committee of Public Accounts before the passage of the Act of 1997, could it be seriously suggested that he or she would have fearlessly refused to do so?), the consequence should be either a finding by the courts that it exists as a necessary consequence of the inherent power (as in England and the United States) or the enactment of legislation conferring it (as in Ireland). To treat it as a ground for supposing that the bare power to inquire does not exist in the first place is, to put it mildly, mystifying.

Justice Murphy's dissent also deserves quotation:
... the right of members of the Oireachtas, whether individually or collectively, to obtain information is implicit in the Constitution and the right, in certain circumstances, to compel members of the public to provide such information under oath is expressly conferred by statute. The real concern, as I see it, relates to the power or duty of a sub-committee of the Oireachtas "to make a finding of fact"....
The Oireachtas cannot usurp the functions of the courts (see Buckley and others (Sinn Féin) v. Attorney General and another  [1950] I.R. 67). Neither can any other person or body exercise the judicial function which the Constitution exclusively vested in the judiciary (see  In re Solicitors Act, 1954  [1960] I.R. 239). Similarly the courts have no jurisdiction to substitute for impugned legislation a form of enactment which it considers desirable or to indicate to the Oireachtas the appropriate form of enactment which should be substituted for the condemned legislation (see  Somjee v. Minister for Justice  [1981] I.L.R.M. 324 and  MacMathúna v. Attorney General  [1995] 1 I.R. 484. The legislature cannot confer on itself, or any other person or body, a power or duty, in whatever terms expressed, which would amount to the exercise of the judicial function.
...
If, for example, the Committee of Public Accounts continued with the inquiry which, on the 1st December, 1970, Dáil Éireann éireann had directed it to undertake, and upheld the contention of Chief Superintendent John P. Fleming to the effect that Mr. Padraig Haughey was guilty of a criminal offence, that conclusion would not have enabled the committee, or indeed any court of law, to impose any penalty by reference to that finding or conclusion.
...
I would readily infer that the Oireachtas had power to confer on a sub-committee a power to make findings of fact in the sense that those findings represented the views of the committee or a majority of them on any matter which might be in controversy. The fact that the findings might of themselves have serious repercussions, or that the publication thereof might cause damage to the reputation of witnesses or other members of the public, is regrettable but unavoidable. This contingency is adequately provided for by the well established requirement that any such witness must be afforded such protection as the circumstances require extending if necessary to what is described as "the full panoply of the  Haughey  rights ( re Haughey  [1971] I.R. 217)". I accept therefore that a sub-committee of the Oireachtas may be empowered to gather information, compel witnesses to attend before it and to make findings of fact on any issue properly raised before it. More particularly I am satisfied that such power can be exercised without the enactment of further legislation. It is not challenged by the applicants that a right to conduct an inquiry challenged in these proceedings could be validly taken or conferred by legislation enacted in that behalf.

Justice Murray's judgment, part of the majority of the court, provides support for the view that an appropriately limited inquiry by an Oireachtas committee might be constitutional:

I think the Attorney General is correct when he submits that there is nothing in the Constitution to inhibit or prohibit the Oireachtas from conducting or initiating inquiries as such . The fact that the Houses of the Oireachtas may conduct or initiate inquiries to obtain information or ascertain facts does not derive from an inherent power peculiar to its role and function as a representative democratic parliament, although its desire to do so in any particular case would indeed be related to such functions. But once an inquiry is conducted within the law and the Constitution, it seems to me it is axiomatic that the national parliament, like many other even private bodies, may conduct an inquiry for their own purposes. It is not restricted from doing so.

 ...
It is difficult to envisage then that the Constitution of 1922 or that of 1937 would, silently, ordain that the Oireachtas should have power to establish and conduct inquiries and make findings as to the personal culpability of individual citizens for serious wrongdoing. As I have pointed out earlier, when the Constitution gave specific and special powers to the Oireachtas to adjudicate on the conduct of its own members and on other persons and office holders who were not members, it did so explicitly. I think it can be fairly said that if the Constitution intended to confer far reaching powers on the Oireachtas to inquire and make findings of fact or express opinions as to the personal culpability of individual citizens for serious wrongdoing, it would have also done so in an explicit manner.
...
In the circumstances of this case, we are only concerned with an inquiry which may make findings of personal culpability impugning the good name of an individual citizen. I do not see any reason why the Oireachtas cannot conduct inquiries of the nature which they have, for practical purposes, traditionally done, including inquiries into matters concerning the competency and efficiency in departmental or public administration as well as such matters as those concerning the proper or effective implementation of policy and to make findings accordingly. Also, in the case of a particular office holder, such as the chief executive of a semi-state body, who is by virtue of his appointment, whether by statute or contract, answerable to the Houses of the Oireachtas, different considerations arise and I do not consider that the order proposed to be made by this court affects such a situation.

Furthermore, as Hardiman J. illustrates in his judgment in considering the New Zealand experience, it is possible for a parliamentary committee to conduct an in-depth investigation of a large police operation and make extensive findings and recommendations of great public and legislative import without the necessity of making findings of personal culpability of individual police officers.

Justice Hardiman's opinion seems to be animated largely by the secondary or collateral consequences of any findings made by the parliamentary committee. He repeatedly cites the inquiry by the US House Un-American Activities Committee in this regard. His chief concern seems to be that even though the committee's conclusions are "legally sterile" - in the sense that they carry no legal consequences in terms of punishment - they nevertheless have the potential to destroy individuals' lives. In other words, the findings are expressively overdetermined and different audiences might impose collateral sanctions upon those held to be "guilty." Surely, this risk exists even in the case of judicial findings of guilt? While a convict's judicially imposed punishment might terminate upon the expiry of the sentence, is it not the case that the convict bears the stigma of conviction and collateral consequences for the remainder of his life? I am not persuaded that Justice Hardiman's argument does the job. In any case, this does not rule out an inqury if it makes no "findings" about culpability? Deposing individuals in public serves an informational purpose and could educate parliament about responses to the financial crisis. Surely that is permissble and very necessary for the conduct of the legislative function? After all good public policy and a sound system of financial regulation can only be formulated upon the basis of evidence?

Some extracts from Hardiman J.'s opinion:
(on the phrase "findings of fact") I have no doubt that the phrase, according to its ordinary and natural meaning, describes a rigorous analytical process leading to factual conclusions, conducted by a body uniquely equipped or authorised to do so. It is the diametric opposite, in my view, of the sort of opinion expressed about a work of art or music: matters of taste and artistic impression are known to vary from person to person and not to be susceptible of rigorous, objectively justifiable, demonstration. When it is recalled that the hypothetical finding of fact in this case might involve a finding as serious as "unlawful killing", made by a parliamentary sub-committee acting under the authority of both Houses, I believe that it is quite fanciful to consider that a reasonable man or woman in the street would not regard a report so phrased as a solemn finding of demonstrated wrongdoing. If, in relation to one of the applicants, it was found as a fact by this parliamentary group that he or she had unlawfully killed the deceased man, I do not believe that the alleged technical status of such finding as being (contrary to its obvious and natural meaning) merely an opinion would at all avail him or her in the eyes of the ordinary reasonable member of the community. 

Is this just a quibble as Justice Hardiman suggests? Surely there is a difference between a "finding" in such a context and a conviction for unlawful killing?

Justice Hardiman goes on to rule:
It is not disputed by the garda applicants that the findings of the sub-committee, no matter how adverse, could not bind another tribunal or in themselves impose civil or criminal legal liability. But in light of the grave consequences which I am satisfied a finding of responsibility in any degree for Mr. Carthy's death would carry, I believe that the proposed inquiry can fairly be described as an adjudicatory one.
...
To be brought by compulsory process before a committee claiming those powers and to be on risk of that parliamentary committee making a "finding of fact" that a particular person shot the deceased man and that such shooting was an unlawful killing, in my view, can only be regarded as a form of accountability.
 ...
The salient lesson from the Houses Un-American Activities Committee cases is that a person can be ruined simply by exposure and condemnation as much as by conviction. This, indeed, according to the minority in  Barenblatt v. Unites States  (1958) 360 U.S. 109 was the principal purpose and effect of the committee's activities. It is important, I believe, to realise that a body making findings of fact and authoritative pronouncements, but without the power to make actual orders or impose penalties, has its being and its effects wholly in the sphere of public opinion and private reputation. Black J.'s dissenting judgment contains a detailed prospectus of how a pronouncement that is "legally sterile" can destroy the life of a citizen. And yet, Black J. lamented, "The court still sits". The same point has been recently made by the distinguished scholar Ronald Dworkin (Dworkin: New York Review of Books 28th February, 2002). Looking back at these events from a safe distance, but also seeking to find some lessons for the post-September 11th world, Dworkin reflected that after the Second World War the United States had created "… A red scare that destroyed the lives of many of its citizens because their political opinions were unpopular. Much of this was unconstitutional but the Supreme Court tolerated almost all of it. We are ashamed now of what we did then: we count the court's past tolerance of … McCarthyism as amongst the worst stains on its record".
Justice Hardiman also left open the possibility that parliament could pass a law allowing it to conduct an inquiry:
It was said many times on behalf of the respondents that, even if the applicants were correct in law in saying that there was no inherent power to hold this inquiry, their proceedings were nonetheless in some sense futile because that position could be rectified by the passing of "a two section Act". I wish emphatically to express my agreement with the judgment of Geoghegan J. in this regard. That point is quite irrelevant to the case made on behalf of the gardaí which must necessarily be based on the state of the law as it now is. If the court were to be influenced by the possibility of future legislation it would, ironically, be trespassing into the legislative area by assuming that the Oireachtas would legislate in some particular fashion. A statutorily conferred power to hold an inquiry such as that proposed might raise quite different issues to those raised by the claimed inherent power: it is quite impossible to anticipate what issues might arise under legislation which does not exist, and it is improper to attempt to do so.
This is already a post that has gone on for too long. I'll save comments on Justice Geoghegan's judgment for another occasion.

In conclusion, I think an inquiry by the Oireachtas would be sub-optimal. An independent commission of inquiry would be a superior alternative.

Nyberg Report Released

It's available here.

Previewing the Banking Inquiry Report

If the Irish Times is correct in its reporting about what's in the Nyberg report into the causes of the financial crisis, the inquiry might well have been a waste of time. According to the newspaper, the "report is expected to criticise the “herd mentality” that prevailed in banking and among the regulatory authorities, where there was a strong culture of consensus and where any challenge to this was strongly discouraged.
The investigation is understood to have severely criticised the lack of governance in banks (especially Irish Nationwide Building Society), serious systemic failures and shortcomings in the Central Bank and in the former financial regulator’s office, as well as in the Department of Finance."

Did we need another inquiry to tell us that? A survey of the newspapers here over the last few years would have said as much.

This is exactly why I repeatedly emphasized the need for someone with a prosecutorial background to lead the inquiry. In any case, I'll reserve more comment until a full reading of the report.

Anglo probe to be completed "by end of the year"

The Independent reports that the probe into Anglo Irish Bank is nearing its end:
The Director of Corporate Enforcement, Paul Appleby, and senior gardai confirmed last night that 90pc of their inquiries are complete.

Files on the main issues -- the €7.2bn 'back-to-back' deposit arrangement between Anglo and Irish Life and Permanent in September 2008 and the involvement of the so-called 'Maple Ten' group of investors -- were sent to the DPP before Christmas.
Last night, Mr Appleby disclosed that last week he sent another extensive investigative file to the DPP.

This relates to Anglo's provision of loans to the various investors so that they could buy Anglo shares in 2008.
He said the file contained about 8,000 pages over 17 volumes and pointed out that the Companies Act prohibited businesses from giving financial assistance for such purchases.
Senior Garda officers told the Irish Independent last night that they were now entering the "wrap-up" phase and pulling together the final strands of their inquiries to present a full picture to the DPP.

They said the lack of co-operation from some figures, who had not made themselves available for interview, would not hold up the completion of the files and that it was up to the DPP to determine whether to make a decision on charges in their absence.

This whole process has already taken too long. It would be surprising if the DPP did not already have a view about prosecution.

New Irish govt. to Introduce Anti-corruption Law

The Independent reports that "Tougher laws to tackle rogue bankers and extra powers for the Criminal Assets Bureau (CAB) are two key planks of the new Government's strategy to combat crime.

A new anti-corruption law is to be introduced to punish white-collar crime and end what Fine Gael and Labour described as the impunity from consequences for corporate behaviour that threatens the economy.
It is also intended to take steps to prevent convicted white collar criminals from transferring their assets to spouses and other family members and to give power to the CAB to pursue them for any financial gains or benefits deriving from the proceeds of their illegal activities."

The new law must also contain provisions for whistle-blower protection and create a hotline for tips. It is not sufficient to merely pass legislation. As the various reports into the performance of the Dept. of Finance and regulatory bodies have conclusively demonstrated, the problem is poor enforcement even of existing law. Poor technical capability has been a significant contributing factor to the under-enforcement problem. So, any new legislation must provide for appropriately skilled staff and resources. White collar criminals are not going to be lacking in good legal representation. Expecting the same old departments to fight them just with new laws that look good on the books is a bridge too far.

Review of Dept. of Finance - Damning

The review report assessing the policy advice and performance of the Dept. of Finance has just been released. While it does not tell us anything new, it is still a damning indictment of successive governments and highlights serious gaps in ability and processes. Here are some conclusions:

In virtually all countries, responsibility for monetary policy is delegated to a Central Bank that is independent of the political process. This occurs because it has proven to be virtually impossible for the political process in any democracy to sanction explicitly action to restrain economic growth early enough in the business cycle to avoid dangerous overheating of the economy.As a relatively small nation now within a large monetary union, the Irish Central Bank has fewer tools available to constrain monetary conditions. This puts much more onus on fiscal policy to constrain spending and tax expenditures to levels that are sustainable from the underlying growth of the economy.


5.2 Ireland failed this test of prudent fiscal management.
 
... in recovery from its current circumstance, the country must constrain its ambitions for Government supports to sustainable levels.


5.4 We believe that Government must substantially improve budgetary processes, enhance ministerial accountability to parliament and publicly release substantially more departmental analysis for public consultation.


5.5 The Department needs to be more effective and needs to remake itself. This requires a series of changes of structure, professional capacity and internal working methods, together with a more outward looking attitude. These issues need to be addressed urgently.

Some interesting points from the report:

NAMA Constitutional

The High Court has just issued judgment in the case of Dellway Investment Ltd & Ors v. National Asset Management Agency, rejecting a constitutional challenge to NAMA. Detailed analysis of the judgment will follow after a more thorough reading of what looks like a well reasoned decision. For now, here is a brief extract:

The Court is of the view that the creation of NAMA, as permitted by the Act in the manner interpreted by the Court, is a reasonable and proportionate policy response to the problems which the Act seeks to address. It was, in the Court’s view, possible for the Oireachtas to conclude that impairing any rights which borrowers might have to any lesser extent, by either restricting NAMA’s acquisition powers to impaired loans or loans connected with impaired loans, or by delaying the NAMA acquisition process by putting in place an entitlement on the part of borrowers to be heard, or both, would not have achieved, to a sufficient extent, the ends of the Act. In those circumstances, the Court is satisfied that the Act meets the proportionality test. 

... the definition of possessions for the purposes of the ECHR is, if anything, narrower than the scope of property rights which may be afforded constitutional protection under the Irish Constitution. Two consequences seem to the Court to flow from that conclusion. First, it follows that the Court is of the view that there has been no interference with the rights of Mr. McKillen as guaranteed by the ECHR for those rights are, at a minimum, no more extensive than the rights guaranteed by the Irish Constitution which the Court has already determined have not been infringed. Second, the approach of the ECtHR lends reinforcement to the view which the Court has already expressed which is to the effect that property rights of a contractual or goodwill nature are required to be legally enforceable (or at least in the Irish context analogous to being legally enforceable) before those rights achieve the status of being constitutionally protected.

Conclusions
10.33 Given the Court’s view, as already expressed, that the Act does not interfere with any constitutionally protected rights of Mr. McKillen, it follows that, in any event, the Act is not inconsistent with the Constitution by reference to Mr. McKillen’s rights. Even if the Court’s analysis of the interference by the Act with Mr. McKillen’s rights is incorrect, it does not seem to the Court that any such interference could be placed at a very high level for all of the reasons which were addressed in the section of this judgment in relation to fair procedures. Even if the Court is wrong in its view that no constitutionally protected rights of Mr. McKillen are interfered with, then that analysis must, at a minimum, lead only to a conclusion that any interference with his rights is on the lower end of the scale.
10.34 For the reasons which the Court has already set out, the problem needing to be addressed is at the very highest end of the scale. In addressing the proportionality between those two matters (that is the scale of the problem and the minimal interference (if any) with Mr. McKillen’s rights), it does not seem to the Court that any such interference as might be said to derive from the absence of an impairment requirement and the absence of a right to be heard, can be said to infringe the principle of proportionality.