Guarantee Meetings to Stay Secret

The Sunday Times reports that the Information Commissioner, Emily O’Reilly, has denied their Freedom of Information request to release documents related to two meetings on the night of September 29/30, 2008, one involving senior ministers and officials and another also involving senior banking executives. The paper reports:

In making the decision, she rejected advice from Sean Garvey, a senior investigator in the Office of the Information Commissioner (OIC), who recommended that the documents be released to The Sunday Times under the Freedom of Information (FoI) legislation because of strong “public interest”.

and

O’Reilly’s decision is a victory for the Department of Finance, which fought a 14-month battle against the release of any documents related to the bank guarantee. It relented and released uncontentious material two weeks ago, but remains opposed to the release of records relating to the guarantee meetings of September 29/30.

The department had warned that it would take High Court action to prevent the release of these records after Garvey recommended their release, with some redactions. Both AIB and Bank of Ireland also opposed their release.

It appears now that we may have to wait until 2038 to see these documents.

Anyone hoping that the banking inquiry will shed light on these meetings is likely to be disappointed. My reading of comments from various government ministers (including the Taoiseach’s interview on RTE’s This Week) is that despite having a terms of reference that includes September 2008, the banking inquiry will not cover the issues related to how the government took the decision to give an almost blanket liability guarantee to the Irish banks.

I was already disappointed that the terms of reference excluded the months after September 2008, when the government consistently put forward a wildly incorrect diagnosis of the scale of the problems in the banking sector (a diagnosis that was shared by its advisers at PWC.) It is even more disappointing to think that perhaps the key policy decision in responding to the crisis will not be open for discussion.

If a major purpose of the banking inquiry is to see that banking crises don’t cost the state a huge amount of money in the future, then to my mind, it needs to come to conclusions not only about how the crisis came about but also about whether the government’s response to it was based on the best information and whether a more informed approach would have saved the taxpayer money.

13 thoughts on “Guarantee Meetings to Stay Secret”

  1. They will get away with it. We aren’t strident enough in demanding that a proper inquiry be held and all relevant information (this in particular) will be made available to it. We are such a bunch of soft rollovers in Ireland and this government knows that. You might as well throw out the phrase ‘in the public interest’ as it is now ignored and the FOI act gets you very little in reality – they will always find a way to deny it. Where’s an effective opposition when you need one?

  2. @Karl Whelan

    Good to know – but not surprising.

    Looking forward to the publication of ‘Blind Panic Revisited’ in 2038 …. if we live that long!

  3. how did it happen? I assume it was when a certain bank found out that a certain blue-chip was about to withdraw €700m from it the following day, other banks were owed money by bank A and institutional depositors were making preliminary enquiries to move funds with everybody else, they went to DoF and pretty much said ‘protect us or we’ll bring down the whole system’ and DoF reacted accordingly. end of.

    we need a system where banks can’t threaten a nuclear fall out if they go down, they should be able to close and face the music just like any other business.

  4. I was listening to the Bill Moyers show on PBS website this afternoon. There was a segment about the energy challenge, Copenhagen and so forth. The authors of a book, Who turned out the lights? were going through various scenarios Hollywood has given for the future. From Charlton Heston in Soylent Green, Mel Gibson in Mad Max and Ed Harris in Apollo 13.

    There was one interesting scene picked out from the Apollo 13 movie. The astronauts in the pod communicate to base:

    “Heuston, we are venting something out into space. I can see it outside of window one, right now. There appears to be some kind of gas or something.”

    Ed Harris’s constant advice to those working at base in NASA is:

    “Work the problem people! Lets not make the problem worse by guess-in!”

    I have hammered on maybe too much about Dr. Gregory House here already, so I will present Apollo 13 as an alternative viewing experience. In the movie, the base crew at Heuston are presented with the classic ‘square peg in a round hole’ problem at a later stage.

    If I had a penny for each one of these situations I found myself in, working in the construction industry. There was one guy at Zoe developments who reminded me a lot of the Ed Harris character. The normal human response in dealing with a situation, is to define a problem based on one’s experience, background and training.

    In the Irish Times last Friday, John Water’s column outlined a very credible explanation, of how the problem in Ireland as presented to the public, has been ultimately filter-ed through the lense of the journalism profession. At Zoe developments, we often worked with and employed a range of different specialists. It was funny, if you wanted a definition of a problem, you could almost hire a certain specialist and be guaranteed what answer he or she would come up with.

    This pattern of problem definition repeated itself time and time again. It was funny, because we were all situated at ‘base control’ so to speak, we were not making our commission or fee based on any speciality, we learned over time to compensate for this failure in a system consisting of a team of dedicated specialists. We learned how to the ‘work the problem’.

    Reading Vincent Browne’s piece in today’s Sunday Business Post I was presented with a true take on how the house of Oireachtas in Dublin functions. As Browne asserts, the Oireachtas house, except for deciding on a new Taoiseach every 5 no. years, doesn’t really do very much. The government elected makes up its mind, and the rest is only ceremonial at best.

    Given that set up, there is not much opportunity for an Irish politician to learn skills associated with problem solving. At best, the task of diagnosis and brain-working is left to clever journalists. Browne emphasised the fact, that if a Fianna Gael or Labour type of banking inquiry was begun, it would have ended within a couple of hours, because someone had ran down to the High Court to block it.

    There isn’t much scope for ‘working the problem’ within such an arrangement. Then on top of it all, you take Dr. Ed Walsh’s observation. That a full 80% of Dail deputies, are drawn from a pool of about 1000 no. local county councillors. Some Dail members have hardly any experience at all, working with the best problem solvers, in any industry.

    Yet we seem to expect better miracles out of a system which is thus constrained.

    In passing, I would like to mention some thoughts I had on the nature of the problem in Ireland. I was looking for a useful analogy to the recent bout of reckless spending, lending and dealing we witnessed in Ireland. The conclusion I have come to, is that the music production industry is a very good analog to what we saw in Ireland.

    You scan through articles, like the one in today’s Sunday Business Post about the Davy equity group, involved in property development in various European countries. It is almost as if, each business plan or each property-related company in Ireland was like the music industry. Each company wanted to own the next Michael Jackson, the next U2 or the next Madonna.

    It was almost as if, each Irish property company expected to get smash-hit after smash-hit, after smash-hit. It is no coincidence at all, that one of the biggest shining icons of the Celtic Tiger years in Ireland, was a tower project called the U2 tower. Effectively, if the tower had been a music album, it would never have been released. Thus, we will never know what ‘sales’ it might have enjoyed on the open market.

    My point is though, we will have to become creative in how we define our problems going forward. We have experience in Ireland of a property industry defined by a small number of very large producers. For some reason, the big finance in this country decided it was more efficient to make money employing that kind of model.

    Some useful intellectual references are as follows:

    The Control Revolution: How the Internet is Putting Individuals in Charge and Changing the World We Know, by Andrew L. Shapiro.

    And more recently, Yochai Benkler’s The Wealth of Networks. Both books look at a move in media and broadcasting away from large singular facilities, such as we saw in the 20th century eras of big television, radio and music production. I think, this is the conclusion we may come to. That the idea of producing smash-hit property developments, with companies headquarter-ed in Ireland, perhaps wasn’t the best model to follow.

    A different market strategy is lightly to prove more effective in the 21st century context. Is NAMA going to compound that mistaken approach even further? That is about my best attempt at ‘working the problem’, thus far.

    BOH.

  5. “It was almost as if, each Irish property company expected to get smash-hit after smash-hit, after smash-hit. It is no coincidence at all, that one of the biggest shining icons of the Celtic Tiger years in Ireland, was a tower project called the U2 tower. Effectively, if the tower had been a music album, it would never have been released. Thus, we will never know what ’sales’ it might have enjoyed on the open market.”

    Lets not forget either, that the Dublin Docklands Development Authority, as a state-owned authority (but does not receive taxpayer funding as such) had gained a kind of addiction to see-ing their logo printed on each and every major ‘smash hit’ release. In effect, it had become part of the music production industry. If DDDA was to provide any indication of what NAMA will turn out like, I would be very worried. Because bear in mind, that NAMA ‘owns’ out-right all of the music recording ‘contracts’ at this stage.

    It has become the [ B l a n k ] of Irish property.

    BOH.

  6. The Banking Inquiry will sanitize the record and come to the conclusion that the Civil Servants, TDs, Ministers and heads of state, quasi state and nonstate entities behaved with the utmost integrity and did a brilliant job for which we should all be grateful. The parties propping up this sham of a government should be walloped in the next election. But this is Ireland a country so mired in cronyism, nepotism and graft that nothing short of occupation by a brutal foreign power will change anything.

  7. It is beyond belief that cabinet confidentiality is being cited as a reason not to release the details regarding advice and input, and from what sources. If the advice received was to go ahead with the guarantee as implemented then, at the very least, those proponent advisors should be removed from any role in cleaning up the mess. If the advice received was not to go ahead with the guarantee, then it’s pretty obvious what happened at cabinet.

    The granting of the guarantee can not be seen as a natural follow-on from the situation in which the banks found themselves, which is to be the subject of the secret inquiry. It is a separate issue, just like the bail-out of AIB regarding ICI was a separate issue to the imprudent drunken underwriting practices that led to the call to Government Buildings back in 1984.

    The government’s reaction to the problem, as much as the original banking problem itself, is what has the country in such an intractable mess.

    If, as is reported, the DoF have blocked all calls, then it’s reasonable to assume either their advice was not something of which they are now proud, or it was ignored and they are protecting the government.

    Strange now to look back at the jubilation that attended the first couple of weeks after the “cost-free” wheeze was introduced.

  8. I think there should be a call by senior commentators in the media and academia for a judicial review of Emily O’Reilly’s decision. Get your pens out.

  9. Don’t worry, no one will be harmed in the enquiry, except the reputatiopn of all who take part, but as we get more cynical, we can be ruled out as biased.

    Eventually, the edifice will get so rotten it will fall apart. We just have to suffer it in the meantime. Thank God that they aren’t doing anything serious! That could really set the cat among the pigeons!

    Deflation, corruption, welfare decreases, public servants striking, unemployment peaking, banks laying off workers and throwing people out of their homes. Could be worse!

  10. “The Sunday Times has eight weeks to lodge an appeal against O’Reilly’s decision at the High Court.”

    They should raid the piggy bank.

    “In her ruling, she criticises the finance department for revealing the existence of the handwritten records last May, five months after an OIC review began.”

    The DoF kept the existence of the notes secret from the Office of the Information Commissioner.

    That’s a bit naughty.

  11. It’s a pity that the details of this night will remain hidden. What caused the decision to go for such extreme measures? Who came up with the idea of a guarantee to include certain bonds? Were they cogging from David McWilliams articles that had appeared earlier that month? How much research did they do with regards this scheme? Did a decision have to be made on this night – was it Anglo year end or an inability of all Irish banks to access interbank funds? Would a holding statement have bought time to consult with our European partners?

    Then there’s the Green Jersey agenda, and I’d include the bank’s propriety trading, mis-labeled interbank loans, the central bank and the NTMA/NPRF. This agenda creates systemic risk and not necessarily in the interests of the nation. We know of the ILP/Anglo arrangement. Was this the extent of it on guarantee night? (I would like to know what additional Green Jersey activities have taken place since then). And what level of involvement did the government, CB/FinReg have with the Green Jersey?

    Oh well guess I’ll wait for it to hit cinemas in 2039. Perhaps the Anglo 2009 Annual reports will be released a little sooner.

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