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Opinion Who was to blame – Anglo or the Financial Regulator? It's a false dichotomy.

No jail time for convicted Anglo pair because Judge Nolan believes they were led into ‘error and illegality’ by the Financial Regulator? Well, the Anglo Tapes tell a very different story.

ON TUESDAY, Judge Martin Nolan released the convicted Anglo criminals Pat Whelan and William McAteer without them spending a day behind bars, saying that jailing them would have been ‘incredibly unjust’.

In the hullabaloo about Judge Nolan’s moral or legal justification, two questions about his judgement remain.

The first is simple. He said that Whelan and McAteer did not commit their crimes for personal gain. But Whelan and McAteer’smotivation was keeping the Anglo ponzi scheme that made them millionaires running a little longer – even their defence team wasn’t brazen enough to suggest otherwise. The illegal loan scheme had no function other than to prop up the Anglo share price, in which Whelan and McAteer had much of their fortunes invested.

Nolan also said that ‘a State agency, the Financial Regulator, led them [McAteer and Whelan] into error and illegality’. Nolan said this after watching Patrick Neary, the bumbling, incompetent Financial Regulator who resigned in disgrace after the affair, give evidence in his court. With Haugheyesque consistency, Neary told the court over and again how he simply couldn’t remember key meetings and events. His bad memory did Whelan and McAteer no harm at all.

But even if you didn’t see demeanour of the diffident, amnesiac Pat Neary compared to the wide-boy wheeler-and-dealers Whelan and McAteer, a quick glance of his history would tell you that Pat Neary never led anyone anywhere.

Regulatory tension between Neary and Anglo didn’t exist

This claim by Judge Nolan has opened a discussion as to who was more to blame, Anglo or the Regulator. It is a false dichotomy; it implies that there was a regulatory tension between Neary and Anglo that just didn’t exist.

The euro was established in 1999, stripping the Central Bank of half its functions – maintaining the currency. The mandarins wanted its other function, financial regulation, to be their responsibility – otherwise they risked having nothing to do. But they had allowed Ansbacher/Guinness and Mahon – a clandestine, sham bank – to operate a few metres from their office for decades, fully aware that its purpose was tax fraud. As early as 1976, the Central Bank was aware that “considerable measures were being taken by G&M to ensure certain schemes would not become known to the Revenue.”

It was clear that the Central Bank lacked both the will and the capacity to regulate financial institutions. The public outrage would not allow such incompetence to be so publicly rewarded. But the Fianna Fáil/PD government were sure not to miss a chance to reward their supporters. They created a new, independent Financial Regulator, separate from the Central Bank, and then createda third quango, the ‘Central Bank and Financial Services Authority of Ireland’, of which both were members. Each of the three with boards, directors, lavish prestige offices, and enormous salaries.

When he resigned in disgrace, Neary got a lump sum of €630,000 on top of his €143,000 annual pension, with €13,178 thrown in to make up for holidays he didn’t take while snoozing at his desk.

The Financial Regulator listed its committees and departments as …

The Authority, the Consumer Directorate, Prudential Directorate, Registry of Credit Unions Consumer Information Department, Consumer Protection Codes Department, Domestic Credit Institutions Department, Financial Institutions and Funds Authorisation Department, International Credit Institutions Department, Insurance Supervision Department, Investment Service Provider Supervision Department, Legal and Enforcement Department, Markets Supervision Department, Planning and Finance Department, Registry of Credit Unions, Executive Board, Consumer Committee, Prudential Supervision Committee, Audit and Risk Management Committee, Budget and Remuneration Committee, Consultative Consumer Panel, Consultative Industry Panel, and the Credit Union Advisory Committee.

Perhaps wisely, the Central Bank did not give out such information.

For Neary, this was not a job, it was a reward. He was chosen because he was a staid, obedient career-long civil servant, who not going to upset the government backers.

The sharp suits in Anglo accordingly treated Neary with contempt. Whelan and McAteer’s colleagues, Peter Fitzgerald and John Bowe were recorded discussing their meeting with Neary, asking for billions to try to save Anglo:

John Bowe: (Laughing) That’s right. So under the terms that say repayment, we say: no.Peter Fitzgerald: None…just none. Not applicable. Okay and what did he say? “I need a change of underwear?”Bowe: (Laughing) There was a bit of that, there was a bit of that [discussing meeting with regulator]….Bowe: So anyway, that sort of got everybody’s attention and then we had Pat Neary. Pat Neary coming in and saying (mimicking), “C’mere lads, I just want to have a word with ya…yeah Jesus…so look c’mere, have you actually got assets, decent assets, that you can put in play? Is there stuff in there, like, that has value, you know?’Fitzgerald: Yeah, yeah.Bowe: “And look lads you know, if you’re going for this now make sure whatever you get sorts it out. Okay? You know?”

This is senior Anglo staff sniggering like schoolboys at how about how compliant Pat Neary was, how easily he was hoodwinked. And yet Judge Nolan has released their colleagues, Pat Whelan and William McAteer without spending a day in jail for their crimes because Neary led them, the poor innocents, into ‘error and illegality’.

William Campbell is the author of Here’s How: Creative Solutions for Ireland’s Economic and Social Problems.

Read: No jail time for convicted Anglo pair, judge says prison sentences would be ‘incredibly unjust’

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