The green jersey agenda was a mitigating factor, but the three banking executives still deserved to be jailed. This was the thrust of the comments by Judge Martin Nolan on Friday, as he imposed custodial sentences on Willie McAteer, John Bowe and Denis Casey. It was a landmark day in the treatment of white-collar crime. Yet there is something different in this case, too.
Unlike most crimes, the three were not acting for personal gain – beyond safeguarding their jobs – but rather to try to protect the sinking ship that was Anglo. And others knew – in the two banks, in the Financial Regulator and perhaps elsewhere in the official system, too.
Yet a crime is a crime and, in financial terms, this was a €7 billion-plus whopper. It was, in the words of the judge, "dishonest, deceitful and corrupt". It was designed to mislead the market about the health of Anglo Irish Bank. No matter who else knew, or what the motives, once the three were found guilty, custodial sentences were always on the cards.
It is still difficult to know, eight years on, precisely where the “all for one and one for all” green jersey agenda ended and criminality began. Somewhere in those dog days towards the end of 2008, in the run-up to the granting of the bank guarantee, when money was flooding out of the banking system, desperation turned to what the court has now found to be crime.
It was understandable that people would do what they could to save Anglo, the judge said. But saving the bank should not have been "everything".Yet back then this was probably how it felt, not only within Anglo but also in government, the Department of Finance and the Central Bank and Financial Regulator.
Saving the bank, back then, may have felt very like saving the country. There was a fear that an Anglo collapse would bring Ireland with it. It was the same mindset that later led to the bank guarantee and to the decision that Anglo would be included in this, rather than starting a process to close it down. Later, the same thought process led to the decision – under severe pressure from the ECB and the EU Commission – not to impose any losses on the senior investors, even in what were by then the two bust Irish banks, Anglo and Irish Nationwide.
Rules bent
The two Anglo executives and Denis Casey from what was then Irish Life & Permanent were caught in a moment when rules were being bent and Ireland – and Europe – was afraid an Anglo collapse could be Europe’s Lehman. Even taking that into account, what they did was a breathtaking fraud on the market and on investors. It was a clear effort to mislead.
As it turned out, they were, of course, putting a new lick of paint on the front of the ship, while water was flowing in all over the place beneath the water line. Did they really believe no one would ever find out? And that if they did, a blind eye would be turned to it, because it was in the national interest to protect Anglo?
Possibly not. But they did believe they were engaged in an enterprise that had either the tacit or explicit support of the Financial Regulator and probably too of the wider “establishment”. As they go to jail they may feel that they have taken one for the team in green jerseys, some of whose other members may spend the weekend thinking that, but for the way justice moved in this case, they too could have been on the way to Mountjoy.
In other jurisdictions, justice would have moved much more swiftly. In the US, the bankers would likely have served their time and been out already. In Ireland, the prosecution of white-collar crime, or even the investigation of what happened in banks that cost us billions, takes years. Legal changes may help to expedite this in future, a bit, but the extraordinary detail and building of the case necessary to convict the three bankers suggests that it will remain a lengthy process.
Ironically, on the same day the Anglo judgment was revealed, we got another judgment in the High Court relating to the second of the terrible twins of Irish banking – Irish Nationwide. The court rejected attempts by a former Irish Nationwide director, Stan Purcell, to stop a Central Bank administrative inquiry into certain management actions at the former building society. Without commenting on the detail of the case, or the specifics of what the Central Bank may look at, suffice to say that the length of time it will take before this investigation is over is simply extraordinary.
Something wrong
Somewhere in the balance between individual rights and the people’s right to know, there is something wrong in the way we do things. It has all taken way too long – and we still don’t know what went on under the bonnet at Anglo and Irish Nationwide.
The public may feel that some senior bankers are now “ paying the price”. And indeed they are. But the price they are paying is not for the banking collapse, it is for the breach of a very specific piece of legislation.
Looking at the wider picture, those responsible for the events that actually led to the crash are generally now retired on fat pensions or, in a minority of cases, still in employment.
Incompetence, however, or even recklessness are not crimes, or when they are their legal definition makes prosecution near impossible. When it comes down to white-collar crime, it is all about the details and about building a case that a specific law was broken on a certain date. Three bankers are in jail. We can only hope the many others responsible for the collapse at least feel some remorse, as they look on.