Cooper on Implications of Flavin Judgment

I’ve been reluctant to write anything about the DCC\Fyffes\Flavin case (see here and here) despite my suspicion that it represented a very unfortunate precedent in an age in which corporate malfeasance in our leading businesses is a major issue in Irish public life. This is because I can’t claim to have read the 700 page Shipsey report and have a very limited understanding the complex legal issues involved. However, I think that Matt Cooper has done the public an important service in raising the potential implications of the case in this article and I’d be interested in hearing the opinion of some of our more legally-minded commenters as to whether Cooper’s concerns are well-founded.

Shipsey found that Flavin had done no wrong because he had taken legal advice prior to the relevant share dealings. Paul Abbleby of the Office of Director of Corporate Enforcement then concluded “There’s no way that any court would sanction a director for having followed the company’s legal advice.”

Cooper asks “So the question arises: has Shipsey set a precedent that legal advice trumps the law?” and points out how any future businessman wishing to do something illegal now only has to find a lawyer to tell him that what he wants to do is ok.

In relation to the banking crisis, Cooper points out that the defence that people believed they were behaving legally can now come to the aid of those who clearly behaved in an illegal fashion and that a public banking inquiry is likely to be our only chance to see certain individuals called to account for their actions.

As I say, I’m not a legal expert, so I’d like to hear whether those in the know think Cooper has this wrong.

No Explanation for Senior Civil Servant U-Turn

The year’s first week of Dail sittings came and went without much attention being paid to the government’s U-turn on its decision to cut the pay of Assistant Secretaries by 12 percent and the pay of Deputy Secretaries by 15 percent.

The lack of attention to this U-turn—the only cut in the budget that has been rolled back, as far as I know—could reflect a lack of interest from the public, who perhaps think that senior civil servants were being unfairly treated by the budget proposals. Alternatively, the lack of interest may reflect the original timing of the announcement—just before Christmas Eve and three weeks before the next meeting of the Dail, by which time other issues (such as banking inquiries) had arrived along to distract the public.

Credit then, to RTE’s Rachel English for putting a question about this U-turn to junior minister Dara Calleary on her Saturday View program. Mr Calleary’s response was “There’s a U-turn in relation to 160 people whose salaries are benchmarked against a European level unlike most others in the service.” This follows a similar line used by the Minister for Finance. The Irish Times reported:

Mr Lenihan said the pay of workers at this particular grade had been benchmarked against their counterparts in other European countries and they were not paid more than those at equivalent positions.

The benchmarking exercise that Ministers Calleary and Lenihan were referring to (the report of the Review Body on Higher Remuneration in the Public Sector) is here.

It discusses international comparisons and then recommends exactly the type of pay cuts that the government introduced in its budget. So the government’s defense of this U-turn is to use the same report that it used to justify introducing these pay cuts to now justify rolling back the pay cuts. This is hardly a satisfactory explanation.

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.

Academic talent

Peter Sutherland may have been quoted out of context, or inaccurately, in today’s Irish Times, where it is reported that

Yesterday, Mr Sutherland was also critical of Government moves to reduce the pay of university presidents and other senior academics. Mr O’Keeffe has written to university presidents seeking a voluntary pay cut, while the Higher Education Authority has reviewed procedures which allow universities make special payments to its top academics.

Mr Sutherland called for a new flexible approach, “necessary to retain talented but highly mobile staff”.

But presumably the academics here can all agree that in the entire history of higher education, there has never been a recorded case of a talented student saying “I must get my PhD at Harvard, they have a really exciting President”, or “Oxford is the place for me, their Head of Human Resources rocks”, or “what about that VP for Research at Stanford, there’s no other option as far as I’m concerned.”

Academics — even, or perhaps especially, the opinionated ones — make universities what they are. The best students go to places like Harvard because of faculty rosters like this. VPs, Presidents and all the rest are not ‘senior academics’. They are university bureaucrats, or administrators if you prefer. In the Irish context they sometimes come up through the ranks, while sometimes they are hired in from places like the HEA.  I doubt that they are particularly mobile internationally. Paying them enormous salaries strikes me as a waste of money.

If Ireland wants to become a ‘smart economy’ it would be helpful if basic distinctions like this were kept in mind.

Quality of Irish Economics Departments: it’s neither Size nor Youth that counts

Look at http://www.rae.ac.uk/results/qualityProfile.aspx?id=34&type=uoa

These are the economics results for the most recent Research Assessment Exercise for the UK.

The first numeric column reports the number of staff returned in the subject for each institution: UK departments are comparable in size to many Irish ones.  On the same website, one can browse to a narrative for each department: each institution is specifically required to comment on early career researchers.  Like some Irish deparments, many UK departments are also developing new talent.

Now compare their position in the Tilburg ranking https://econtop.uvt.nl/   to Irish departments. 

Everyone still happy?