The Fitzpatrick Tapes

This book is a ‘must read’ as it provides a good (and well-written) overview of the dramatic and at times traumatic events of the past years. It is a major contribution to our understanding of the key events, not least because it is based on the views of one of the many players involved in the demise of the Irish banking sector, but on the additional primary and secondary research material provided.

Reading it made me a bit angry about the whole crisis for the first time. While implied throughout, it jumps off the page that Ministers for Finance and their most senior officials knew what was going on but failed to act decisively for reasons that will soon emerge. Maybe it is unfair, but subsequent decisions not to provide vital information about the Government’s prior knowledge can but lead one to suspect that we were deceived and opponents to the bank guarantee have just reason to raise fundamental questions about competence.

The sooner the DPP takes his decisions on the files before him the better. No doubt much emphasis will be attached to the Government’s ‘green jersey’ policy; but policy direction cannot override the law. Crucially, did certain officials effectively consent to alleged criminal offences and if they did what are the consequences?  Where do professional advisors fit into the equation?

More importantly, the results (however preliminary) of the ‘public’ enquiry into the banking crisis should not be delayed any further. It is imperative that the next Oireachtas call witnesses and get to the bottom of what is clearly a shameful series of events and poor decision-making. This truth commission must root out what happened – warts and all – so that we can begin the process of restoring Ireland’s tattered reputation. The last thing we need after the next election is a series of new debilitating findings which should have been put into the public arena many months ago.

The account of the call from Bank of Ireland’s chairman and correspondence from AIB’s chairman to Sean Fitzpatrick after he did his Marion RTE interview is revealing to the extent that if – following a clear Government instruction – they agreed to provide €10bn in emergency funding to address Anglo’s immediate liquidity problem, why did the Government push the nuclear button and hock the Irish taxpayer for the costs of the banks’ collective bail outs. This cash injection should have given the Minister for Finance time to do what his officials wanted; to nationalise Anglo. A side bar issue is Sean Fitzpatrick’s amazing claim that he knew nothing about this credit line.

Acknowledging that the book reflects one side of the story, I came away with several impressions.

It beggars belief that the Department and Minister(s) for Finance allowed the situation to develop to the point where a blanket State guarantee was provided. There were clear signals and information sitting on the files of the Central Bank and Financial Regulator that were ignored, either by choice or perhaps as a result of incompetence. The book cites numerous instances of informal contacts with all the banks in the months prior to what, on reflection, was a catastrophic decision for the Irish economy.

The role that Sean Quinn played, if the book’s allegations are confirmed, is truly is shocking. Having amassed by stealth an amazing 28% of Anglo’s equity, the bank’s executives faced an impossible task to find buyers for shares that were inflated because of his CFD purchases. It is a moot point if Quinn had not been so greedy Anglo would not have had to deal with the Maple 10 and indeed could have focused more management time and effort on addressing the loss of confidence which undermined its performance. It is arguable that once the hedge funds that were aiding and abetting Sean Quinn discovered the extent of his punt they did what they are best at; making money at someone else’s cost. The Sean Quinn factor has not to date been highlighted; the book will bring his role more into the forefront.

Dithering at political level, incompetence, dubious transactions, apparent lapses of accounting and auditing standards and a systemic failure of regulation all contributed to the crisis. In this respect, Sean Fitzpatrick points his finger at many individuals and professional firms who, unlike himself, have thus far not been subject to the levels of public abuse and humiliation he has encountered.

If the evidence as presented in the book is correct, it is also astonishing that Anglo’s public sector directors – in particular its chairman – carried on with the sham that a ‘good bank’ could ever emerge. On the other hand, the absence of a clear policy about Anglo’s future from the Minister for Finance in the weeks following the decision taken on the blanket State guarantee served to perpetuate a lack of confidence in the entire banking system with the unfortunate result that the Government now owns a majority of the country’s banks.

Greed fuelled the property splurge; and the book provide ample incidents where investments were made on a whim where the normal prudent approach of due diligence was ignored. Sean Fitzpatrick seeks to make the case that he was one of the players that suffered the most; but the litany of his own bad investments is testimony to the then prevailing culture that many investors were untouchables.

The available evidence of a pending shock to the banking system was almost universally glossed over by those who were paid to know better. 

Tom Lyons and Brian Carey have done the State some service. The fact that their book was published before the DPP acted and the ‘public’ banking enquiry was published means that this reference work will be much quoted in the coming months.