Eoin O’Malley (6th July, 2010)
Little attention is given in today’s papers to Brian Lenihan’s appearance before the Oireachtas Joint Committee on Finance and the Public Service yesterday. There he answered questions on the proposed Commission of Investigation into the banking crisis and in doing so made some statements on how he sees his ministerial responsibility. Lenihan has received (rightly, I believe) some credit for his willingness to instigate a timely preliminary review of the Department of Finance and government policy. An emergent, more extensive review of the Banking system will cover 1 January 2003 to 28/29 September 2008 – when Bank Guarantee Scheme was agreed. It seems to be carefully constructed to avoid consideration of political actions/ decisions. The agreed draft terms of reference focuses mainly on the Banks’ own management and the failures of the regulator. It also looks somewhat at the relationship with the Department of Finance.
While he expressed a willingness to extend the dates to allow consideration of the nationalisation of Anglo-Irish Bank, Lenihan has ruled out inclusion of policy decisions and the political handling of the Bank Guarantee Scheme or the decision to nationalise Anglo (probably inevitable given the Bank Guarantee Scheme). He has also ruled out including the Department of Finance in the Inquiry (though there may be a separate review of the Department’s structures/ capacity). His line is that he is the minister and has been available and responsible to the Dáil.
“I am responsible to Dáil Éireann for the Department,…I have discharged that responsibility at all stages, and there is nothing established to date that would suggest that any of the decisions taken in relation to the management of crisis require a Commission of Inquiry” (5 July 2010)
There are a number of problems with this. First , it isn’t wholly consistent because the time investigated goes well beyond when he became minister. Charlie McCreevey hasn’t been available to answer question for the decision he made, yet his decisions are also exempt.
Second, it seems to suggest that ministerial responsibility excludes extra-parliamentary investigation of ministerial decisions. This is obviously nonsense – many Tribunals of Inquiry have investigated ministerial decision making. While it might make sense not to include ministerial decisions in this Banking Inquiry because it is about banking and the person who’ll run it will be an expert in banking and bank systems, he should then allow an inquiry into the political decisions.
Third, he says there is nothing established to question his handling of the crisis. Well nothing maybe established (that presumably is the point of such an Inquiry) but there are many who suggest that his decisions made the crisis worse than it could have been. His decision to extend the Bank Guarantee Scheme to bond-holders and to include Anglo-Irish Bank has cost the state tens of billions of Euros. It isn’t controversial to suggest that the line he gave at the time that the Scheme would be the cheapest bail-out in the world is shown to be wrong. He may know he did nothing wrong, but it hardly seems reasonable that we just have to take his word on it.
His defence that the minister is responsible to the Dáil and that the Dáil can ask whatever questions it wishes is disingenuous. The Dáil simply isn’t given the access to information needed for informed debates. It seems like he trying to avoid ministerial responsibility.
19 thoughts on “Is Lenihan right to exclude political decisions from the Banking Inquiry?”
If Joan Burton is to be believed then the “a timely preliminary review of the Department of Finance and government policy” is merely a benchmarking exercise. It is also patently absurd, yet completely unsurprising, that Lenihan has ruled out inclusion of policy decisions and the political handling of the Bank Guarantee Scheme or the decision to nationalise Anglo, never mind the role played by the Department of Finance. These decisions serve only to underscore his opponents belief that he must have something he believes now needs to be hidden. Surely if the Department has, as it suggests, been robust in its warnings then it would like such an inquiry to take place? Eoin is right, given the almost complete executive dominance over the Dáil, it is simply impossible for it to hold Lenihan and his advisers to account. As Paul Hunt noted on an earlier post parliamentarians should be empowered to ensure that the evidence presented is intelligible to them, and also, and ultimately, to their constituents. Indeed this is surely an argument that there should be legislative committee or other institution which has access to all information enabling it to hold all departments and ministers fully accountable to the citizens of this state.
Of course he is not right to exclude them, it is a cowardly and befuddled decision.
Lenihan as Sommers implied has been well and truly captured by his department.
This man is not thinking clearly at all, he already allowed these people off the hook back in January when they exempted themselves from cuts they prescribed for everybody else. They should be investigated in every way possible because when you bring in the blood hounds all the trails lead back to their department staffed by lifers and career civil servants many of whom we now know have poor qualifications.
What else would we expect from Lenny – from whom exactly would he have learnt ethic – not his father or aunt? So why do people think he is a different sort of Fianna Fáiler when he is from the same murky gene pool that Biffo, Hanafin and Coughlan come from.
There is not a shred of evidence that Lenihan is any better than the usual FFer.
Just because he is unwell doesn’t get him off the hook when the decisions he makes affect millions of people – he ought to be fully held to account and if he is not capable of withstanding that stress or pressure then he should step aside.
For all his intelligence, every step of the way he had been outflanked by the banks and those in the golden circle – not one of whom has had their assets frozen or their lifestyle curtailed.
The political decisions that were taken are and the reasons why are fundamental to tackling the reasons Ireland has ended up in this mess and no one should underestimate how hard those who have most to fear to fight to prevent anyone having access to what really went on.
Desmond, it’s not a question of one party being better than another. I’m not sure one can single out any particular party for being particularly willing to subject themselves to criticism or avoid it. Fianna Fáil tend to get tarred with this brush because we have more material to work on, but this may be just because it’s been in power for far longer than any other party.
Many thanks for seeking to divert the partisan slant that has been emerging. All parties, if they get the opportunity, will seek to exercise executive dominance. We can argue the toss elsewhere as to who has abused it most. As we post I suspect senior politicians in FG and Labour are smacking their lips at the prospect of exercising the executive dominance currently enjoyed by FF and the Greens.
The case I am trying to make (and hat tip to Jane Suitor for highlighting a key element) is not intended to prevent governments pursuing through to enactment policies for which they have secured a democratic mandate. It’s simply that policies are often conceived in the political backrooms by special advisers and power brokers, beaten into a vaguely plausible and defensible shape by senior department officials and dressed up in the form of draft bills by the parliamentary draftpersons. Empowering and resourcing parliament to shine some light on this process is in everyone’s interests. And a strong committee system seems the best option. It won’t stop stupid policies being whipped through; governing factions, by definition, should, in most cases, be able to muster the lobby fodder. But it should reduce the incidence of imbecility and economic illiteracy – and even if these prevail, citizens will be able to see clearly who the perpetrators are.
Contrary to much popular opinion I have great admiration for those who seek and secure elected office. The extent to which one becomes public property, I suspect, is frightening to most of the rest of us who seek to develop some sense of a personal space. I just want to see those who fail to secure government office – both in the governing and opposition factions – being empowered and resourced to do something genuinely useful for those who elect them – and to secure some status and prestige for doing this properly.
This requires backbenchers in all of the main factions to seek to “take back parliament” from the executive. FG, in its “New Politics” policy proposal, has some sensible ideas. There has been a hint on this board that some FF TDs have given this some thought – but nothing of substance has emerged. From Labour, a forlorn attempt to strengthen the legal powers of existing committees – and a desire to revamp the Constitution to enshrine rights without responsibilities.
It is for TDs from these factions and others to make the case, but it appears that the tyranny of faction alsways seems to win out.
As alluded to above former NTMA chief Michael Somers has been a long time critic of the Department of Finance. I remember well an extraordinary interview he did with me at the Irish Times in December 1998. In a recent Marian Finucane show he alluded to the interview saying it caused consternation at the Department and that senior mandarins had wanted him to be sacked from his position at the NTMA.
It is behind a paywall so it is perhaps worth pulling out a couple of the quotes from the time as they may reveal something of the mindset on Merrion Street. Somers, a former Finance official and secretary at the Department of Defence, was so scathing about the culture, we were cautious about printing some of it.
He recalled advice given to him when entering the Department: “If you try to change things there are three possible results. The first is they may improve, the second they may disimprove or thirdly there may be no change. So you only have a one in three chance of success of don’t change anything.”
He argued that the “Republic needs to move to a US-type environment, where the top echelon of the civil service change with the administration, to effect modernisation.”
“Getting the Department of Finance to change tack is an extremely difficult job.” And pointed out that you need to be an extremely determined and stubborn politician to get any change through Finance.
He later told an Oireachtas committee that if he were to be secretary of another government department he would consider taking legal action to question Finance’s control over the entire civil service. His view on Lenihan’s latest moves would I’m sure be interesting.
I expect Dr. Somers’s views would be interesting, but I don’t think it’s very helpful to berate the Minister on the apparently narrow – and, presumably, politically convenient – ToR for the proposed Commission of Inquiry.
What many people seem to be looking for is retrospective scrutiny and accountability. At the best of times this is almost impossible to achieve. It may generate gratification for some, but it not a useful allocation of time and resources. How many tribunals were sitting while the economy and banking sector went to hell in a handbasket?
What we need is scrutiny of, and accountability for, current and future policy decisions – and the implementation of these decisions. What’s done is done and the people will pass their judgement – informed or not – on the stewards of the economy.
It is for those they elect at that time to craft the appropriate system of scrutiny, but it would be good if those who are currently ‘on seat’ were to give some indication to the voters of how they might set about achieving this.
I agree that we should be worried about setting in place structures to enable better oversight in for current decision making, but if there’s no facility for retrospective investigation and accountability it weakens the potential for accountability on an ongoing basis. If I’m a minister and know that while I might be able to get away with something now without too much attention, but in five years it could be investigated that potential retrospective accountability will surely make one more careful in their decisions/ how they behave now.
Agreed. But if there is more transparency and scrutiny of the decision-making process – and consideration of evidence that contests the selective and partial evidence frequently advanced by government, people will know whom to blame. It’s never going to be foolproof and avoid stupidity, but it should minimise the requirement for retrospective scrutiny. And a better informed electorate will make its judgement every 4-5 years.
To be fair, in its New Politics document Fine Gael did set out a number of proposals which cover this area.
Its basic premise was a good one and as Eoin pointed out at the time was that the government has too much power and was subject to too little scrutiny. Proposed solutions included a whistleblower’s charter; a new budgetary process including an independent advisory council for the budget committee; a new senior civil service, with increased flexibility and changes to TLAC; a register for lobbyists; an electoral commission; elect the Ceann Comhairle by secret ballot. Crucially it plans to boost the role of TDs and the Dáil generally by including them in the pre-drafting stage for Bills, as well as increasing research back up to support its oversight functions.
If these proposals make it to manifesto it can only be a good thing.
Agreed. These proposals will probably make it to the manifesto, but securing constructive Labour input and sign-off (the most likely governing combination), crafting sensible legislation and enacting it may prove difficult. What are the odds that two parties excluded from power for so long will enact legislation and establish procedures that will curtail their unbridled exercise of executive power?
This is one for backbenchers in all factions who are capable of forming a realistic assessment of the probability of their securing ministerial office – either at the next election, if in the governing faction, or at the one after, if in opposition. Being the chairperson of an appropriately empowered and resourced Oireachtas Committee (elected by secret ballot – as is now the case in Britain) should be an attractive proposition.
What are the odds that two parties excluded from power for so long will enact legislation and establish procedures that will curtail their unbridled exercise of executive power?
If you were to have a FG/Labour government with anything like the majority being suggested by the recent polls, keeping the backbenchers busy would be a major imperative. As such, I’d expect there to be significant political reform in order to bolster the role of parliamentarians.
Point well made. It’s one that has occured to me as well. I’m keen to examine the motivation and incentives that might be required for both backbenchers and governments to embrace parliamentary empowerment willingly. Ministers and backbenchers of all factions will ask: what’s in it for us? Ministerial opposition is well understood, but giving under-employed backbenchers something useful to do has to have some attractions. It is in the DNA of politicians everywhere to seek to evade transparency, scrutiny and accountability, but, if they had some assurance that voters would back them if they were to provide these, their tune might change.
@ Paul Hunt
“What many people seem to be looking for is retrospective scrutiny and accountability. At the best of times this is almost impossible to achieve. It may generate gratification for some.”
Are you saying that if these people made disastrous decisions nothing can be done and we just ignore the damage they did and move on? Or in the case of long term unemployed move on to another country i..e. emigrate. We already know that white collar criminals get off scott free in our great Republic. The papers have been replete with those stories in the last week. Have we to accept that incompetent people are to be left in their jobs after the finances of the country being incinerated by their incompetence, laziness, arrogance and plain stupidity and I include NAMA in this? Yes, I speak out before the so called investigation or review of the DoF because the management style I believe in is MBO management by objectives or management by results. We have seen the results and now we just need the names of the guys responsible so they can be removed and never let near the balance sheet of Ireland inc. again! Just as the bank directors have to go, these guys have to walk the plank too. They cannot be allowed to specify that boards of directors go when they are even more culpable as it was they that set the rules under which the whole system operated. Sommers knows where the bodies are buried and I hope he reveals where they are.
Sometimes I wonder why we are unable to pin point the people who are responsible and call a spade a spade. I did not know their was a rule in Ireland saying there is no such thing as WCC white collar crime. Have we also become too afraid and paralysed to point to inept or chronic decisions taken by the DoF? I know the public sector unions have the government by the throat in these matters and that too needs to be faced down. Even the most incompetent fools hold their jobs, get automatic promotions and retire on gold plated pensions because they are part of a public sector union. It is not working and is bankrupting the country. I consider these people to be traitors. Ireland should not be borrowing 40% of these peoples salaries every month nor 40% for those union “leaders” who have linked their salaries to top public servants jobs. This stinks! Imagine a salary of 3000 Euro being credited to someone’s account 1,200 is borrowed and is paid for with a 5 year or 10 year government bond. So/she goes off and spends his salary and leaves the tax payer to service the 1,200 of that months salary for the next 5 or 10 years. It is the economics of unsustainability and government of the people in the most cowardly fashion. The government and government workers have their hand permanently in the exchequer purse and are borrowing to top it up for themselves every month there is no money there to pay the 108bn contingent liability for their pensions either. How long can that last? Not very long. The way we govern ourselves tells the markets that Ireland is a crony capitalist state of the first magnitude. So far our spin has kept the wolf from the door but as more and more of us refuse to be taken for fools this will change. Fitch have said that Irelands GDP to debt ration is 110% when you count in NAMA. Have a look at what Rogoff and Reinhart have to say about debt of 110%.
That is why the country is going to default and go broke because the only way people in the private sector are going to get any justice is to withdraw from the tax system as much as they possibly and legally can. Let the government workers service the 150bn debt on their own. Just a thought, maybe they can export the services they provide but I don’t see any takers on a quality basis also they have priced themselves into the stratosphere.
I can see that you are angry – and justifiably so. A recent thread in another place:
highlights the international ‘groupthink’ to which Irish policy-makers were a party. This is not offered as exoneration; it merely provides some explanation.
Brendan Keenan, in today’s Indo, is quite specific about the international political and economic reality:
The people will have an opportunity to pass jusgement on the political stewards of the economy. Ireland’s macroeconomic, fiscal and monetary sovereignty has been transferred to Brussels and Frankfurt. The unelected policy-makers who contributed to this mess will fade into the background. This may not be enough for those seeking retribution, but the time and effort involved in going much further will deflect attention from more pressing tasks.
These include, on the economic front, major structural reform of the state, semi-state and sheletered sectors – this remains within Ireland’s control. And, in the context of this board, major reform of democratic governance to ensure an effective separation of powers between the Oireachtas and the executive.
I completely disagree it is partila to contend the mess we are in now wouldn’t have happened only but Fianna Fáil were in power.
Fine Gael and LAbour don’t have the perfect solution but they do have policies and are policy driven parties – you may not like the polcies but they have them. Fianna Fáil has a compeltely different mentality and does not make decisions on the basis of a policy in the way otherp arties do – it never did even long before the rot set in.
There is a reason Ireland is in such a mess and it is because of the way decisions are taken, because those decisions are shaped by the way Fianna Fáil minister shape theirdecisions at the behest of certain priviledged interconnected groups.
During the last Rainbow, Richard Bruton was put under massive pressure by Independent Newspapers to alter the Competition Act and he refused, a Fianna Fáil minister would not have.
I’m not for a moment arguing that there would not have been a recession but there is no way on earth it would have been so bad or that a non FF government would have failed so miserably to face up to it. This again comes back to the mentality within parties about how to govern and take decisions and the difference is not because FF has been in power so long, it is because of how FF thinks and operates.
A person beginning an interest in politics does not choose to get involved with FF if they are policy drive, if they have an interest in a decision making process based on policies they pick FG/L/G/SF/Other.
Ergo, it is essential that political decisons are investigated and the rational behind them are exposed – we can all debate the merits of say the last FitzGerald government but I don’t think anyone for a moment serioulsy doubts that FitzGerald made his decisions based on policy research and objectives – the fact he got it wrong as often as he got right doesn’t belittle the fact to get to making a decision he went through a policy drive thought process.
Where is the evidence that ever takes place in FF? Where is the evidence of any FF government minister ever being known for discussing policy or having an interest in formulating it? It stands to reason then that the decisions they take/took are based on other rationals such as the golden circle having a meeting in government buildings in the dead of night with no civil servants there to record what was said or promised or handed over. It’s an outrage and it’s a cop out to claim somehow Brian Lenihan is different? Why? He also has no tracj record of polciy and was a cheer leader of FF decisions from the backbenches and in cabinet – he never spoke up against anything.
Of course labour have policies and before they implement any of them they must consult the trade unions that are affiliated to the Labour Party such as: AEU, ATGWU, EETPU, IMPACT, RMT, GMB, SIPTU, BFWAU, TSSA, UCATT, MSF. Labour policies come with an incredible amount of baggage when it comes to governing this country. We are crying out for reform of the public sector which has not changed much since Victorian times only to grow enormously in both complexity and cost.
You cannot carry out this reform if you are in thrall and in debt to the unions as Labour is. What is the labour policy on NAMA will they wind it down and put it out to grass as soon as possible or will they add on a few carriages for their own members? What is their policy on the unsustainable public service salaries and pensions. There is a contingent liability of 112bn lying on the books of the state and not a cent set aside to pay for them going forward? Lunacy and ostrich like behaviour. What is their attitude to Anglo will they wind it down and put it to rest? How are Labour going to achieve efficiencies in the HSE without again bring them into conflict with unions? What will labour do about crime and will they build the new jail? Will they face down WCC white collar crime and bring prosecutions against unions who got in on the act of pilfering the public purse? Will Labour abolish the DDDA or continue with life support for it. Will they do anything about the disgraceful monopoly that out at the airport? Will they find a way, even if it requires legislation to wind up the raft of tribunals that have bled the public purse in a Thomas Aquinas head of angels on pins approach to their brief. How are Labour going to service the national debt and how do the propose to create jobs in this economy? I could keep writing for years? Nobody knows anything about Labour because Labour tell nobody what they believe in? They believe that if they say nothing and refuse to state clearly unambiguously what their policies are they will achieve power. They are wrong. People are going to demand answers and it will be multiple choice time. If Labour are in power with regard to this issue will you do a,b,c,d,?
@Desmond F & Robert B,
I think we’re going seriously off-piste here. The initial post focused on the narrow ToR of the proposed Commission of Inquiry. I accept that there is a case for widening the ToR to examine how, in the context of this mess, policy decisions were arrived at and implemented. But only as a first step to reform the process. The policy formulation and presentation processes within the major parties – and the policy stances they adopt – are, of course of interest and require scrutiny, but it is the proper scruitny of the process by which these policy proposals are converted into laws and regulations that requires major reform of the procedures and resources of the Oireachtas.
And a hat tip to Eoin O’Malley for his op-ed piece in today’s IT:
which gets to grips with some of the key issues.
(I fear, though, that any attention it might receive may focus on his demolition of the case advanced by Prof. Ed Walsh, rather than on the use of electoral reform as a displacement activity (similar to stag-hunting and dog-breeding) to avoid consideration of what is important or on the sensible reforms advanced.)
But Lenihan had access to anyone he wanted to have access to – if he wanted to get honest opinion which in hindsight seems unlikely. I don’t buy any of this nonsense that LEnihan is some sort of better type of FFer – I think he is as bad as any other FFer and his poor health shouldn’t be used to deflect away from the fact Lenihan was a very strong supporter of everything that went on over the last 10 years – he never once raised a voice against anything that went on.
It’s quite amazing he is touted as some version of FF’s Enda Kenny who will revive FF after the next election when there is not an ounce of evidence he is any different to those who went before him. Not an ounce.
So as the country went down the tubes instead of getting the best advice from anyone who could offer it to him, he apparently called to David McWilliams in the dead of night and they chew the garlic together. Can you imagine George Osbourne calling to the home of David Blanchflower in the same manner! No way.
The system is not the main problem. The problem is the thought process behind how decisions are taken by people in Fianna Fáil – people like Lenihan.
If Richard Bruton had been minister for finance there is no way he would have had a meeting in the department with no officals present or to have people from Anglo etc in attendance with no record – and to whom Lenihan is financially compromised because they donated to his political campaigns and to those of FF – and then the next day announce a bail out that in reality only protects their assets at the expense of everyone else.
This took place because those making the decisions did not personally think they needed to follow any process of impartiality or the greater good even if the department has such rules they won’t have used for any decision since June 1997 when the Rainbow left office.
Now, why is it Brian Lenihan took his decisions in the way he did while Richard Bruton, for example, refused to take a decision that would have benefitted Independent Nesapapers in 1997 in that same way – Bruton followed correct transparent process and took a decision that O’Reilly didn’t like and the price paid was the Independent Newspapers turning on the Rainbow government.
So there we have 2 ministers who were both subjected to massive pressure from private sector firms to use state resources for the benefit of those firms and the Fine Gael minister stood his ground but the Fianna Fáil minister didn’t.
That’s about more than procedures, that a mentality and it needs to be rooted out.