Anglo case failures were dreadful – but this was hardly a big surprise
When it comes to white-collar crime, we’ve always had an utterly terrible track record
This week’s bungled prosecution of Seán FitzPatrick came as no surprise. But it did serve as an infuriating reminder of two things: 1. How much Anglo Irish Bank cost us – and is still costing us every day.
2. Our shockingly inept policing of white-collar crime that costs us billions more.
Anglo caused a furore in 2009 when we bailed it out with €30bn, but then we kind of forgot about it.
But it didn’t go away. That debt is still hanging over us.
Anglo under Seán FitzPatrick cost us more than AIB, Permanent TSB and Bank of Ireland put together.
And while we may get all the money back from them, we’ll not get a cent from Anglo.
We are still suffering hugely from the biggest financial blow this country had ever received. The Anglo debt makes the difference between being a highly indebted nation struggling to pay its way – and one that fiscally would be on the pig’s back.
Despite our relative economic success, it makes us a country crippled by a massive overhanging debt and an annual interest bill of around €1bn. Without that hanging over us for the past six or seven years, our national debt could be less than €150bn instead of more than €185bn.
(Our debt is rising every second. You can check out the up-to-date figure on a ‘debt clock’ website, financedublin.com.)
Anglo makes the difference between a country with a healthy balance sheet that could borrow freely at lower interest rates – and one that’s highly indebted and shackled by EU rules as to how much it can borrow and spend.
It means the difference between having had no money to spend on healthcare and housing for the critical post-crash period – and having had at least €1bn a year extra. The €31bn Anglo bill would have been enough to build 177,000 new homes, or transform the health service.
A UK study found every €16,230 spent on additional doctors, nurses, ambulances and equipment creates an extra quality adjusted life year (QALY) for a patient. To put Anglo in perspective, €30bn would equate to 1.8 million years of quality life for patients in our health service.
It could have seen the Universal Social Charge pretty much abolished – or paid for 30 years of good childcare.
Instead, we’re desperately playing catch-up with all our problems. We’re spending €5bn on social housing, too late to avert the crisis – and bringing in short-term fixes that cause more long-term problems.
The Help to Buy scheme is being
dismantled less than a year in as the realisation sinks in that, without more housing supply, all it achieves is even more price increases.
The rent control scheme will probably go the same way. While it is effective in sparing tenants hikes in some areas, it is also being abused wholesale. In yet another example of laughable enforcement, rent controls rely on tenants to police landlords by demanding to see records of previous rentals when they move into a new place.
But what desperate tenant is going to risk antagonising potential landlords by doing that? Rent controls in the long term have also been almost universally condemned globally for discouraging investment in the rental market over the long term.
We can’t get back the Anglo money. But we could at least have stopped the same thing happening again by conducting an effective investigation.
What we got was another catastrophic cock-up.
Alas, this is sadly typical of any white-collar crime policing – a failure that costs us billions more and allows unscrupulous sharks to prey on consumers and small firms, using loopholes in the law.
Sometimes all that’s required for them to do this is the costly and time-consuming nature of the legal system itself, enabling those with deep pockets to crush the ‘little guy.’
Time and time again in my career as a consumer journalist, I’ve seen miscreant companies use our legal system to get off the hook.
There was an elderly lady who took a builder to court and won a settlement – only for him to refuse to pay up and shut down his company, then start up again with another entity using the same van.
She could have gone back to court to pursue the second outfit – but what was the point as the same thing could happen again?
Then there was another desperate small company that had to repeatedly take a larger corporation to court.
The small trader won several court cases, running up legal fees all the time, only for the debtor to renege on payments time and time again until he gave up in despair.
The list goes on and on. Suffice it to say that the Anglo case is the tip of the iceberg when it comes to unsatisfactory corporate enforcement.
Yet we could save billions more if we had proper policing of financial crime. It emerged that the fraud squad and the Office of the Director of Corporate Enforcement together had one forensic accountant between them at one point during the Anglo investigation, which ate up most of their time for years on end. What a false economy! We lose billions by letting white-collar crime run amok.
Insurance fraud is rife – and hardly ever investigated, let alone punished. So we pay tens of millions more than we need to for car insurance alone – not to mention all the other types of cover. Proper policing of illegal smuggling of cigarettes and diesel would save us €2.3bn a year.
Political corruption has cost many billions more. And yet only now has a law come in banning it!
We spent €500m on tribunals that made lawyers even richer but let the culprits walk away because they had no real powers to legally punish them.
A fraction of that sum could have been used to transform the fraud and corporate enforcement agencies into effective units that make sure white-collar crime doesn’t pay.
The ODCE apparently now employs a half a dozen forensic accountants and has been successful in taking errant directors to court over minor infractions and getting companies to file their tax returns on time.
But it will take a lot more than that to really clean up our corporate world and regain public trust after this week’s fiasco.