Former Anglo Irish Bank chairman Sean FitzPatrick walked free from court in Dublin last week after being found not guilty of all the charges against him following a trial that went on for 11 weeks.
Anglo Irish, you will remember, was the bank that led the property boom madness here. More than any other bank, it was responsible for the reckless lending that led to the crash which subsequently bankrupted the country.
Yet the man who led the bank for years and created its lending culture has walked away. Ireland has to be the greatest little country in the world in which to be a banker!
Despite the impression given by all the coverage since the crash, Anglo was actually a small player in the market here in the early days of the boom. Banking in Ireland was then – and still is – dominated by the two big boys, Bank of Ireland and Allied Irish Bank.
Getting money from the two big banks for a property project used to be difficult, requiring all kinds of security, paperwork, a track record and significant personal capital. But the way Anglo behaved in the years leading up to the boom was different.
Minimal paperwork, little or no security and not much experience was required. And you didn't need much capital either.
Basically you just went in to see Seanie – he was always Seanie – and if he liked your pitch you got your few million, or even tens of millions, for your property play. Guys who had been plasterers a few years before were now developers, wearing suits and getting millions to buy land and build apartment blocks.
The easy lending by Anglo to property developers at the time allowed it to quickly grab a significant share of the bank lending market, a share which was getting bigger every year. That speedy growth put the wind up the two big boys, the so-called pillar banks.
Scared of losing more market share they began to copy Anglo, throwing out the old rule books and lending vast amounts of money to fund property plays of all kinds. All this lending was fueled by money the Irish banks were borrowing abroad.
By the time the boom turned to bust, the two pillar banks, like Anglo, were up to their necks in dodgy lending. So Anglo was not the only one. But it was the one that started the madness, and its malign influence in the market created the culture that eventually brought down the country and led to us being bailed out by the IMF.
Anglo no longer exists. But the people who were at the top of Anglo, like FitzPatrick, are still around, and they certainly have a lot to answer for.
For that reason there was a sense of shock and surprise here last week when FitzPatrick was found not guilty. How could this be, people wondered, given the role Anglo had played in the collapse of the Irish economy, something we are all paying for now.
The answer to that question lies in what FitzPatrick was charged with. He was not charged with helping to destroy the economy through reckless lending. It would have been difficult, if not impossible, to formulate a charge of that nature given the "light touch" regulation of the financial sector we had at the time (and still have).
If FitzPatrick could have been brought to court on such a charge, then so too could the heads of the other banks. And as you know, none of them has been held to account.
What FitzPatrick was charged with was being involved in giving massive loans to people to buy Anglo shares. (A bank lending money to people to buy its own shares is a crime, since it's a form of share price manipulation.)
Those involved – the so-called Maple 10 – were people of substantial wealth, mostly property clients of the bank. They were loaned hundreds of millions so they could help to unwind the near 30 percent stake in the bank that had been built up in secret by Ireland’s then richest man, billionaire Sean Quinn. He had built up this huge stake in Anglo through contracts for difference (CFDs), and since the bank's share price was falling rapidly as the property boom ended he was in serious financial trouble.
The fear was that all Quinn's shares could suddenly end up on the market and the share price and the bank could collapse. Unwinding Quinn's position was essential if Anglo was to survive.
But FitzPatrick denied that he had played any significant role in this since in 2008 he was chairman of the bank, not CEO. David Drumm, now living in the U.S., had succeeded FitzPatrick as CEO in 2005, and it was he who was the main driver of the Maple 10 plan.
The jury in the trial accepted this and found FitzPatrick not guilty, even though he had been informed by Drumm that such a scheme was being put in place. FitzPatrick's claims of non-involvement are certainly open to question, particularly since we know that later in 2008 he was involved in discussions with the pillar banks when Anglo reached the crisis point and desperately needed to be rescued, talks that eventually led to the infamous blanket state guarantee given to the banks.
More than anything else, what the lengthy court case revealed was that the wrong people were on trial. The Financial Regulator was told by Anglo about the Quinn problem and the Maple 10 plan in several meetings, and for that reason we can assume that senior people in the Department of Finance and therefore the government also knew about it.
Plus other pillars of Irish business knew what was going on. Anglo was getting advice on the plan from a leading Dublin law firm, and the Maple 10 financial transaction was performed by the investment bank Morgan Stanley. Yet none of these stalwarts saw any illegality at the time.
The Anglo trial was about specific offenses under company law, not about who caused the banking crisis and the financial collapse here. In that sense it was a side show that did not deal with the main event.
The people who should have been on trial are those who were on duty when the boom was underway and then when the financial collapse was unfolding, the people at senior level in the Department of Finance, the Central Bank and the Financial Regulator's office, as well as senior people in the main banks, the law and accountancy firms involved, and even the politicians who failed to grasp what was happening.
Instead of that what we got was Seanie FitzPatrick and two of the Anglo executives on trial on points of company law. Seanie got off but the two executives, the sacrificial lambs, may get some jail time.
It is true that FitzPatrick was a significant player in the events that caused the financial collapse. But so were many other senior people, especially the top executives in the other banks and building societies which had to be rescued at a cost which bankrupted the state, as well as all the professionals, civil servants and others from the top layer of Irish officialdom who were involved or who failed to do their jobs.
Instead of being held to account, many of these people walked away from the disaster with huge payoffs and big pensions. Even their reputations have survived, and you see them popping up in public now as though nothing happened.
For example, one of the top bankers involved was a guest at the recent banquet for the president hosted by the Queen at Windsor Castle. Many more of these people are still occupying the top positions in law firms and accountancy firms here, and are still getting obscene salaries for giving advice!
Meanwhile, ordinary taxpayers here are being screwed to pay for it all, for the cost of the bailout, even for the cost of the trial that failed to find Sean FitzPatrick guilty of anything. It's a rotten country to be an ordinary worker and taxpayer.
But it's a great little country for bankers!
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