Elaine Byrne, University of New South Wales: 23 July 2013
It is with no small irony that the Minister with responsibility for Small Business consented yesterday to a judgment for €2.47m against him and his wife at the Commercial Court over unpaid loans. John Perry’s long-running difficulties with Danske Bank raise underlying questions about Ireland’s ethics framework and the need to introduce a register of debt for politicians, as is the case in Canada.
The Irish public do not know the extent to which Ministers are in debt and the conflicts of interest, if any, that such debt may incur. John Perry is not the only Irish Minister who has experienced serious financial difficulties.
In 2012, the Minister for Health, James Reilly, defaulted on a €1.9m debt. He was one of four individuals who failed to comply with a High Court order on an investment in a Co Tipperary nursing home. He was the first minister since the foundation of the State to be listed in Stubbs Gazette. That the deputy leader of the main party in government has had a High Court judgment registered against him is not necessarily significant. Rather, the Irish public would never have known the extent of Reilly’s debts if the investor deal had not gone sour.
In July 2012, the Sunday Independent reported that the Minister for the Environment and Local Government secured loans of close to €900,000, which were personally approved by Irish Nationwide building society boss Michael Fingleton. Phil Hogan refused to respond to questions put to him about these loans. “I am not going to get involved in discussing my personal business,” the minister told reporters Tom Lyons and Daniel McConnell when asked about his loans. But the public do have a right to know about Hogan’s private business if, for example, the Cabinet is framing the terms of reference for a banking inquiry. Such an inquiry will more than likely scrutinise the activities of Fingleton in INBS, which cost the State a whopping €5.4bn.
A minister holds an office which demands the public’s trust. The same rules of confidentiality in private financial affairs do not therefore apply. In order to protect against conflicts of interest, politicians are compelled to disclose their ‘registerable interests’. Under the Ethics Acts, ministers, TDs and senators must disclose what income they have outside of politics and any shares, directorships, land, gifts and property interests they may have.
They do not have to disclose any liabilities, such as outstanding loans, debts or mortgages.
Yet members of the National Treasury Management Agency (NTMA), who are assigned to work for NAMA, are legislatively required to so. What’s more, if a civil servant is in financial difficulty “through bankruptcy, or insolvency, or by incurring a significant liability to any person, financial institution”, they are required under their code of conduct to report the matter to their superior.
There is no such provision in the outdated 2001 Code of Conduct for Office Holders. If there were, the Taoiseach would have known about the extent of Reilly’s financial difficulties before Stubbs Gazette was published. The Standards in Public Office Commission has recommended since 2009 that the law be changed. It argues that a public representative “who has significant liabilities to, for example, a financial institution, could be materially influenced in the course of performing their duties where such duties involve dealing with that financial institution”.
A register of debt is just as important as a register of assets.
In Australia, Finland, New Zealand, Poland, Spain and Canada , politicians are required to publicly disclose any debts they have. This is one way of ensuring that the integrity of government decision-making is not compromised by the private interests of politicians. In Canada, Reilly’s counterpart in Health, Leona Aglukkaq, has disclosed that she has four mortgages with two different banks. Her colleague James Flaherty at the Department of Finance has disclosed to the Office of the Conflict of Interest and Ethics Commissioner that he has two mortgages, a line of credit and is a guarantor on a mortgage with the Royal Bank of Canada.
There are anecdotal accounts of others who have made bad investment decisions, over-extended on property loans or have huge personal indebtness due to bank loans for election campaigns. According to the Register of Interests, at least a quarter of our TDs and ministers have holiday homes, rental properties or second properties. The Minister for Justice, Alan Shatter , has investment interests in 15 properties, including four in Florida.
The chair of the Public Accounts Committee, John McGuinness, is a landlord of nine properties, such as a nursing home, a pub, fast-food outlet and student accommodation. The Fine Gael TD Frank Feighan also rents out nine properties and has mortgaged properties in France, Budapest and Bulgaria. The Dublin North-East TD Terence Flanagan (minus the Fine Gael party whip) was forthright in his declaration. His half share in a house at Blanchardstown, he wrote, has “huge negative equity”.
Personal indebtedness has in the past made politicians financially exposed and susceptible to influence by vested interests. Emmet Stagg gave a very insightful interview with RTE back in 2009 about his experiences as a TD in the 1980s. “I was in constant debt arising from the costs of being a TD,” he said. “It left politicians and public representatives very vulnerable to awards of unauthorised money and that did occur. And it was very tempting because you were broke.” The ultimate legacy of three highly charged elections during an 18-month period between 1981 and 1982 was crippling personal debt for many politicians. The Mahon Tribunal exposed just how little it took to bribe public officials.
So let’s learn from the lessons of the past. We need to have a register of interests that reflects just how broke some of our politicians are and to protect them from any potential conflicts of interest that may arise.