Regulations

Regulation is a process, not a product. Just like security, of which it is a branch. It requires vigilance, consistency and thoroughness. Without these three, all of the sophisticated laws, systems and computers are pointless. ‘Pointless’ is the word which sums up the condition of all of the regulatory frameworks and structures in this state.

It matters not one jot that Ireland has adopted into law a vast and shiny complex of up-to-date legislation and equipped its regulators with pretty logos, clever websites and fast computers, if the process is not actually applied.

In a Comment&Opinion column last week Mr. David Dillon held forth at length on the quality and quantity of regulation in Irish financial affairs. Clearly, he doesn’t ‘get it’ and, so it seems, neither do the majority functionaries serving the ‘Golden Circle’ – the simple fact is that there is no point in having speedlimit signposts every 100 metres if the police do not enforce the law.

In recent years, we have seen failures to monitor, catch and sanction breaches of regulations with regard to; insider trading at DCC/Fyyfes, directors concealing personal borrowings at AngloIrish, multiple mortgage security frauds at several solicitors practices, fund managers imploding as at DEPFA, bank boards flouting core banking directives on large exposures via the Central Bank, pension fund shortfalls by the bucket load and, lastly, multinational accountants failing to spot any of this whilst receiving fortunes in consultancy contracts from Govt. for assisting in the construction of this regulatory wonderland. Oh, and did I forget to mention the share-support scheme at AngloIr, for which the taxpayer is now picking up the tab.

It is especially galling to the populace that they have witnessed the hounding of small firms over breaches of procedure and paperwork while large organisations and wealthy persons were flouting the law in every sector of the ‘financial industry’.

Mr. Dillon objects to the lack of fine distinctions being drawn in the nonspecialist press and takes particular exception to having Irish regulation characterised as equivalent to a ‘gombeen man’ environment. However, nowhere in his article is there any evidence of effective regulation working to protect the interests of the depositor, shareholder, investor or, ultimately, the taxpayer.

It is 4 years since the New York Times described Dublin as the ‘wild West of finance‘. Since that time we have had a raft of EU directives, a brace of overcharging scandals from domestic institutions and two major fund management debacles that have led to lawsuits and parliamentary hearings in Germany and the United States.

Despite all these warnings and implementations, it seems to the great unwashed that there is precious little regulation going on anywhere in Ireland.

Last week, while Mr. Dillon’s apologia was being penned, we learned that several institutions were changing their locations to Dublin as various Carribean taxhavens were becoming too uncomfortable for them. Is that what Mr. Dillon dreamed of when he was putting his shoulder to the wheel of building an Irish regulatory regime – that we should be the second-best taxhaven of choice for the misbegotten spawn of Tyco International and Arthur Andersen.

Mr. Dillon also protests that it is misleading to state that funds can be legally registered in 24 hours in Dublin, while at the same time his own firm is promoted in cyberspace as providing this same service.

Also last week, while Mr. Dillon’s apologia was being penned, we learned that the workers of the Waterford Crystal company may have take a case all the way to the ECJ because the pension fund was mismanaged in a way that the State is likely to find itself liable for.

Also last week, while Mr. Dillon’s apologia was being penned, we learned that the Bundestag review of the DEPFA collapse found that the German regulator BaFin had warned of problems at the subsidiary for 5 months in advance of the collapse. So even when someone else finds the problem on the Irish regulators behalf they still cannot bring themselves to do any regulating.

It is also true that the “authorities”, and I use the word advisedly, had a full year’s warning of the likelihood of difficulties at AngloIrish, given that Anglo had pursued the exact same business model as the NorthernRock in the UK.

But, again, Mr. Dillon prefers to draw a veil over these matters rather than rocking the boat of the stellar achievements of the IFSC and it’s global reputation.

Mr. Dillon ends with a plea for the readers to beware of the self-serving agendas of those who comment on financial regulation. When he has taken the beam out of his own eye the Irish people may be prepared to listen to him.

His penultimate plea is for “a consensus on effective and sensible regulation which screens out the incompetent and the ill-intentioned.” Forgive my innocence but I was under the distinct impression that that was what he and his ilk were supposed to have provided in the first place.

Irish solicitors have for years foot-dragged over implementing reforms of land registration in favour of the makework scheme of deed reviews. This inefficient system has been a boon to the type of frauds perpetrated by Mr. Lynn and co.

We have seen and beon subject to laxity, fraud, double dealing and insider trading for years and none of it has been found, stopped or investigated by the ‘authorities’. It has, in most cases, been the victims and the press who have done anything about the inner corruption of this State.

I can assure Mr. Dillon that the taxpayers and bank shareholders and mortgagees in negative equity of this State upon whom he his now dependent for the ‘bailing out’ of his wondrous construction do not share his opinion of the quality of the regulatory framework he is so proud of.

The fact that Mr. Dillon does not understand that regulation is a process and not a product puts me in mind of the Lotto winner who bought a fancy car that he was incapable of driving. It is for the reader to decide whether this is foolish, vulgar or both.

While on the subject of ‘foolishness’, perhaps the Irish Times might like to do some more fact checking in future. I know that times are tough and resources scarce but it does nothing for the future of journalism if the Comment page is used to shill for a writer’s industry while the next day’s Business section will carry evidence to the contrary. ALL of the links in this piece (NYT apart) came from the IrTimes the day after Mr. Dillon’s essay was published. (‘essay’, from the French – ‘to try’)