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Dublin: 6°C Tuesday 25 January 2022

Column: Nick Leeson asks why no-one has gone to jail for the Irish banking collapse

In his first column for TheJournal.ie, the man who is famous for losing $50 million in one day wonders why no-one has been held accountable for the far greater losses in Irish banks.

Nick Leeson

IN THE MOVIE made about my life, Ewan McGregor looks at himself in the mirror and says: “I, Nicholas Leeson, have lost $50 million in one day.” I can only be grateful to the people who made it that they chose one of my better days.

Unfortunately, the losses in the banking system that are being written down, and continue to be written down, far exceed that sum of money, as staggering as it is.  Only yesterday, AIB announced yet another spectacular set of losses. These are unlikely to be the last.

As taxpayers, we are acutely aware that we have been burdened with the cost of the solution – if there is even a solution.

Restoring confidence to the beleaguered financial system is, we are told, of paramount importance.

Whatever you may think of the bailout package that exists at the moment, it does satisfy the need to restore liquidity and strength to the system. However, there are other important methods of restoring confidence to the system – and I’m sure like me, these are the ones that you are anxious will be pursued.

The concepts of responsibility and accountability exist in all walks of life. They are the cornerstones of the judicial system. When reputation has been damaged as badly as it has in this country over the banking system, we need those involved to accept responsibility and be held accountable.

The most embarrassing period in my life

I’m not proud of what happened to Barings Bank during the early to mid ’90s.

If I’m asked to characterise it in my own terms, the only way that I can describe that period is as the most embarrassing period of my life. Gaining notoriety for that time and being remembered for it doesn’t sit well with me.

But I make no attempt to defend my actions: I was wrong.

At all times, I knew what I was doing, knew that I shouldn’t be doing it, but I continued all the same. For that simple reason I accept full responsibility for everything that happened during that period.

To restore confidence, any form of wrongdoing must be punished – either within the guidelines that are set out by the marketplace, or in a court of law. More often than not, the biggest crime committed by many of the current crop of bankers is pure stupidity.

Unfortunately there is no direct penalty for stupidity and there is certainly no legal penalty. Much of the lending was insane, and the evidence of this is legion. But where there is an obvious case of wrongdoing, it should be punished.

It is essential for public confidence that this happens, both within the system to show that it will not be tolerated and to the rest of us who – quite rightly – expect the system to be governed correctly.

But the wheels of justice are moving very slowly at the moment – if they are moving at all. Frankly, I have my doubts.

Swift and summary punishment

In my own case, within eight months I was arrested in Germany, extradited back to Singapore, tried in the High Court and sentenced to six years and a half years in prison. Swift and summary punishment.

Bernie Madoff,  within a slightly shorter period, was exposed as running an unbelievably large Ponzi scheme and consigned to a life behind bars. In the most recent case of insider trading in the United States, a lawyer and a trader are sitting on their hands on remand in prison whilst the case is investigated. Anything else would not have been acceptable.

To say things happen at a different pace in Ireland would be an understatement. In recent weeks, the Moriarty Report was published – a lengthy tome that took nine years and an inordinate amount of money to reach some debatable opinions.

Criminal prosecutions arising out of it are extremely unlikely.

Last week, after thirteen years, the High Court disqualified Jim Lacey, the former head of National Irish Bank, for various breaches of his duties. The NIB scandal centred around overcharging and bank sponsored tax-evasion, neither of which seem too difficult to prove. Why does it take so long?

Turn your attention to the case of Anglo Irish Bank. Whilst Anglo is swift enough to pursue customers through the courts for non-payment of their loans, no-one is pursuing Anglo Irish quite as actively.  We are told that last month another set of files were sent to the DPP for his perusal.

Added to the files that were sent last year, you could reasonably assume that there is sufficient evidence for charges to be brought. Both the back-to-back transactions, and the secret loans to investors appear to me to be fairly simple and obvious attempts at market manipulation and deception, and there must be individual fingerprints all over them.

Anglo’s public difficulties surfaced in September 2008, and now we are rapidly approaching the third anniversary of that date. That no charges have been brought is not acceptable.

These are wilful episodes of market manipulation – and very deliberate attempts at deception.  Nobody should wait thirteen years for a solution.

If the taxpayer is going to ultimately be held accountable for the banks losses, we should demand the same for those who have clearly be involved in this wrong doing.

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