Padraig Colman

Rambling ruminations of an Irishman in Sri Lanka

Tag: Mahon Tribunal

Lessons from Ireland

This article appeared in the November 2008 edition of LMD (Lanka Monthly Digest) with the strapline: “Michael O’Leary recounts Ireland’s battles with corruption, which tarnished the offices of two of its Prime Ministers”.

 

Corruption thrives everywhere in the world. It is endemic in the US through what are known as ‘earmarks’ or ‘pork’. The saga of the ‘Alaskan Bridge to Nowhere’ has forced one US Senator to face criminal charges while the Republican Vice- Presidential candidate, Alaska Governor Sarah Palin, is now also implicated.

 

Ireland finds itself at a respectable No. 17 in the Corruption Perception Index (CPF) while the Economist Intelligence Unit (EIU) places it at the top of its Quality Of Life Index. Ireland has the world’s fifth-highest

GDP, although world conditions are currently de-fanging the Celtic Tiger. There has been a general recognition that to retain its attractiveness to foreign investors, the Irish state needed to tackle a culture of corruption. The ‘brown envelope’ (or bribing of planning officials) has long been a feature of Irish life – politicians at all levels have had a tendency to confuse party funds with their own personal income. ‘Gombeenism’ describes the kind of parish-pump, pork-barrel politics in which those elected to be legislators devote themselves to cronyism and self-aggrandisement rather than honestly representing their constituents’  interests.

 

It is a matter of public record what a Taoiseach (or Irish Prime Minister, pronounced ‘tea-shock’) earns. On this fairly modest amount, Charles Haughey enjoyed an opulent lifestyle. The McCracken Tribunal in 1997 unearthed illegal payments by businessmen into offshore accounts and Haughey faced criminal charges for obstructing the tribunal. It reported that the bribes, “when governments led by Mr Haughey were championing austerity, can only be said to have devalued the quality of a modern democracy”.

 

The tribunal concluded that Haughey had received around GBP 10 million from businessmen. A significant portion of funds donated for a liver-transplant operation for his former colleague Brian Lenihan was misappropriated by Haughey for personal use. Charlie’s protégé Bertie Ahern presided as the youngest-ever Taoiseach over a booming Irish economy and helped bring peace to Northern Ireland. Ahern signed the cheques from the Lenihan account, and this and other matters from the past came back to haunt him, forcing Ahern to set up the Mahon Tribunal which brought about his downfall.

 

In 1999, the International Federation of Accountants (IFAC) published a discussion paper, ‘The Accountancy Profession and The Fight against Corruption’, which urged accountants to help root out corruption. In Ireland, bankers and accountants colluded with and were protected by the perpetrators.

Des Traynor, Haughey’s own accountant, helped 120 of the country’s richest men to divert their money through London and the Cayman Islands, and back to Dublin, to evade tax. Allied Irish Banks (AIB) operated 50,000 bogus overseas accounts to avoid Deposit Interest Retention Tax (DIRT). AIB also wrote off Haughey’s huge overdraft. The phrase ‘banana republic’ was often bandied about at the time.

 

So, what is corruption? One definition is “the misuse of entrusted power for private gain”. For ordinary citizens, it is more up-close and personal than an abstract definition. It means citizens struggling to get what should be their right. ‘Speed money’ to fast-track public services might be seen as being akin to tipping a waiter at a restaurant, but this is part and parcel of a toxic culture.

 

Codes of conduct and training will remind officials that they are public servants. Corruption thrives when the wealth and potential of the public sector are used without the consent of those who happen to work in government. Economic theory and empirical evidence both demonstrate that corruption impedes economic growth by discouraging investment, deterring entrepreneurship, diverting public talent, reducing the quality of public infrastructure and distorting public finances. Regression analyses have shown a correlation between corruption and income inequality. Corruption leads to an unfair distribution of state resources and services.

Corruption also inhibits citizen participation, which in turn lowers the quality of public services and infrastructure. The poor suffer disproportionately from low-quality public services. When people perceive that the social system is inequitable, their incentive to engage in productive economic activities declines.

 

In 1997, Professor Robert Klitgaard, the world’s leading expert on corruption, recommended the following:

 

  • “Fry a few big fish…”. Major corrupt figures need to be convicted to undermine the culture of impunity.
  • Anonymous groups should conduct diagnostic studies of corrupt systems of procurement and contracting.
  • Collect information to raise the probability of corruption being detected.
  • Link officials’ salaries to success, so they earn enough to control temptation.

 

The corrupt would be comfortable if the citizenry took a pessimistic view that because corruption exists everywhere, nothing can be done about it. No one would argue that because pollution and disease exist in every country, nothing should be done to reduce them.

 

The Irish tribunals made a difference, in that they undermined the public’s tolerance for unethical behavior, and they destroyed the culture of silence in the process. Senior politicians such as Prime Ministers Haughey (death saved him from criminal conviction) and Ahern, Foreign Minister Ray Burke (who was jailed), and EU Commissioner Padraig Flynn and his daughter Minister Beverley Flynn (who was working for a bank when, in the Hiberno-English phrase, “the firm’s cash got mixed up with their own”) were named and shamed – and they paid the price.

 

 

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Corruption in Irish Politics

This article was published in the Island on April 9 2008

 

 

The Irish Prime Minister, Bertie Ahern has announced that he will resign in May. Mr Ahern, 56, has been Taoiseach (Irish for premier) since June 1997 and has been a member of the Irish Parliament for 31 years.

Patrick Bartholomew Ahern was born on September 12th, 1951 in Drumcondra – the area in the Dublin Central constituency which would later become the centre of his political heartland. He was a member of the Dublin City Council from 1979 to 1991 and served as Lord Mayor of Dublin in 1986.

Mr Ahern was appointed Minister for Labour in Charles Haughey’s Cabinet in 1987, a post he held until he became Minister for Finance in 1991. On June 26th, 1997, at the age of 45, he became the youngest ever Taoiseach.

His greatest achievements were the peace settlement in Northern Ireland and the building of prosperity in a country that had long known poverty and even famine. It is unfortunate that he should leave office under a cloud.

The resignation announcement came a day after Mr Ahern began a court challenge to limit the work of a public inquiry probing planning corruption in the 1990s.

Gerry Adams, leader of SinnFein, said: “What we saw today was a Taoiseach bowing out in a very gracious and graceful way and we should look at the good things that he has done as well as the not so good things that he has done.”

Eamon Gilmore, leader of the Labour Party said, “I came to the conclusion many months ago that Mr. Ahern would find it impossible to continue in office because of the mounting conflicts and contradictions between the statements he originally made about his financial affairs and the evidence uncovered by the Mahon tribunal.”

On September 26 2007, he won a vote of confidence by 81 votes to 76 in the Oireachtas, the Irish parliament, at the same time as he was changing his story- “rambling and incoherent” was how the opposition leader described the testimony- to the Mahon Tribunal on corruption in public life. Ahern’s majority party Fianna Fail, governs in a coalition with the Green Party led by John Gormley. Gormley’s support is not unconditional. He did not like the original wording of the confidence motion because it did not show support for the Mahon tribunal but did extol the “enormous contribution” made by Ahern on Northern Ireland, the economy, social partnership and the State’s infrastructure. Gormley had it changed so that confidence was affirmed in the tribunal’s work and expressed support for the government but not specifically for Ahern.

The opposition Fine Gael leader, Enda Kenny, said, “He has the opportunity to go and clear this up. The truth is always simple.” He added: “I find it quite extraordinary that a person who has been eulogised by the media for his mastery of detail, for some strange reason, cannot remember extraordinary amounts of money – paid in cash – moving through his accounts.” Kenny said there was now a situation whereby a witness before a tribunal, testifying on oath, “is continually changing his story”.

The Green Party, which sets great store by ethical behaviour, has been accused by Labour leader Eamon Gilmore of responsibility for a significant shift in the political culture of the State because of what he termed “an extraordinary abdication of responsibility” on the issue of standards in public office.

Gilmore said Ahern had raised the spectre of Charles Haughey’s premiership of the early 1980s. Ahern was a protégé of Charlie Haughey but generally thought to be more honest. It would be hard to be less honest than Charlie. Charlie did great things for the arts, encouraging, with tax incentives, many prestigious writers and performers from all over the world to make Ireland their home, but he also did great things for his bank balance.

He managed to stretch his relatively modest salary to purchase a historic mansion, an island, racehorses, a yacht, a valuable art collection and to run a helicopter and an opulent and loquacious mistress. It was proved that he had received millions from various benefactors. The supermarket tycoon Ben Dunne of Dunne’s Stores, on a cocaine-fuelled night in Florida, confessed about the bribes to a hooker as he tried to throw himself out of a hotel window. (A t-shirt popular in Ireland at the time bore the slogan: Ben there, Dunne that, bought the Taoiseach). Saudi businessman Mahmoud Fustok paid Haughey £50,000 to support applications for Irish citizenship. Allied Irish Banks wrote off his million pound overdraft. Charlie said he couldn’t remember any of this.

All this was known to the voters who affectionately regarded Charlie as “a cute hoor”, which could be translated as an astute but loveable rogue. Eventually, though, the 50% income tax rate eroded their affection for him and his calls to voters to tighten their belts in troubled times did not go down well. He had a convenient heart attack when he was called before the corruption tribunal and died of prostate cancer before he could be punished.

Bertie is a less cosmopolitan figure than Charlie but he is unusual in Irish politicians in defying the once all-powerful Catholic Church by living openly with a woman not his wife. His daughter, Cecilia is a best-selling novelist, married to a member of the boy-band Westlife, who has just given birth to celebrity twins.

There is no dispute about the fact that when he was minister of finance Ahern took large sums of cash from businessmen on four different occasions. Mr Justice Brian McCracken set out the standard in relation to payments to Haughey: It is, he wrote, “quite unacceptable that . . . any member of the Oireachtas should receive gifts of this nature . . . If such gifts were to be permissible, the potential for bribery and corruption would be enormous. If politicians are to give an effective service to all their constituents, or to all the citizens of the State, they must not be under a financial obligation to some constituents or some citizens only.”

Gilmore said: “The scale may well be different from that of Mr Charles Haughey. But scale does not alter standards. It may well have happened at a time of change for the Taoiseach. But circumstances do not alter standards,” said Mr Kenny. Broadening his attack, he said the public should be concerned about the affair because efforts to have a better, more honest society should always be led by the Taoiseach. “But that is now an impossibility,” he noted.

The “time of change” referred to was the collapse of Mr Ahern’s marriage. He said none of the issues being investigated by the Mahon tribunal would have occurred if he had not separated from his wife, Miriam. “I think you would see that people who are separated have to do different things at different times to survive and to move on and I did the same,” he told journalists. He told the Oireachtas, “I have given my evidence as honestly as I can and to the best of my ability. The human mind makes mistakes of recollections, forgets details and mingles events. That is life.” A similar kind of amnesia seems to have affected him that affected Haughey but Bertie is much younger. The response of the assembled Oireachtas was described as polite but not enthusiastic.

Ahern wrote an article for the Irish Independent justifying his actions: “The fundamental root of each of these lodgments was the conclusion of my marital separation and my efforts to put my life back in order after that separation. I have explained these matters to the Irish people and I think people understand the situation I was in which led to the actions I took.

To many, the way I dealt with these issues seems unorthodox. That is because my lifestyle in that difficult period was unorthodox. Many who have gone through the trauma of marital separation and legal proceedings will understand the position I was in. Mine was not a perfect life, nor a perfect family and matrimonial environment, but as I emerged from that period I was assisted by friends who I later repaid in full with interest. My situation was normalised over a short period after the conclusion of my separation”.

Bertie knows that he is (or has been) the most popular taoiseach ever and has (or had) the self-confidence that goes with his recent general election victory and his contribution to bringing peace and prosperity to the island which is not one nation. “When you’re at my level, there’s always somebody out to trip you up.”

At the national ploughing competition, on his first public outing since the confidence vote, the he adopted a demeanour of martyred vindication. He believed the nation believed him.

Fintan O’Toole described the situation well when he wrote that the substance of Bertie’s explanation was not important to the public:” Its plausibility mattered more than its ultimate veracity. If we were to have the wool pulled over our eyes, we wanted it to be fine merino rather than coarse yarn. If we were going to be regaled with fictions, we’d have liked them to be Jane Austen rather than Jeffrey Archer.”

Polls showed that fewer than 33% believed Bertie’s story, but, nonetheless, also showed a sharp rise in support for the government and a fall in support for the opposition. The Irish Times opined that the polls were “a poor reflection of ourselves”.

As with Charlie, things changed for Bertie. The Irish economic boom is slowing down. Soaring house prices have for years been the main sign of the success of the Celtic Tiger. Now house prices are falling and the construction industry is in trouble, which will increase unemployment. The US sub-prime fiasco has had a knock-on effect on Irish mortgages. Ireland has the highest cost of living in the EU. This was not a good time for the government to decide to increase ministerial salaries. Bertie himself got a rise of €38,000 which has led to widespread indignation. More recent poll results show that support for Fianna Fáil has suffered a massive decline among working-class voters, particularly in Dublin, and there has been a corresponding rise in support for Fine Gael and Labour among these disaffected voters.

Announcing his resignation he said: “While I will be the first to admit that I’ve made mistakes in my life and in my career, one mistake I’ve never made was to enrich myself by misusing the trust of the people. I have never received a corrupt payment and I’ve never done anything to dishonour any office that I’ve ever held.”

Time, and the Mahon Tribunal, will tell.

 

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