Irish crisis inquiry will name the guilty institutions

Anthony Garvey

International Monetary Fund: former officials of the global finance body will take the lead in one
International Monetary Fund: former officials of the global finance body will take the lead in one investigation into the Irish banking crisis. Another is to be led by Central Bank governor Patrick Holohan

A preliminary inquiry into the property-fuelled Irish banking crisis which has cost taxpayers billions of euros in bailouts will name institutions that may have been at fault but stop short of blaming individuals.

The investigation, to be concluded by the end of May, is being conducted by German economics expert Klaus Regling, a former senior official with the International Monetary Fund, and Max Watson, a former deputy director of the global finance body.

According to Regling, their brief is to establish what went wrong and to identify any problems in the system that may have caused the crisis.

He says: “We will look at government policy, the macroeconomic situation, the financial markets, banking supervision and questions involving corporate governance.

“I’m sure we’ll identify some failures but we will not get into naming individuals.”

And Watson says: “It is possible we will name institutions in our report.”

Watson also acknowledges that while individuals will not be named it may be possible to draw what he calls inferences from the report’s conclusions.

A second investigation into the crisis is being conducted simultaneously by Ireland’s Central Bank governor Patrick Holohan.

He is examining how the bank he now heads and his predecessor as governor John Hurley performed their supervisory roles, as well as assessing the work of the country’s former financial regulator Patrick Neary.

Holohan’s report, like that of the international experts, will be completed by the end of May, and both will form the basis of a full-scale commission of inquiry into Irish banking that will start work in the second half of the year.

Holohan has dismissed criticism that his inquiry amounts to the Central Bank investigating itself.

He insists his independence will not be compromised and that he is starting his inquiry from the basis that the regulatory system has failed.
Holohan says he will talk to insiders who have agreed to cooperate with the investigation and to tell their stories.

The governor is equally forthright about what should happen to bankers who flouted the law during the collapse – in his opinion they should go to jail.

He says “You don’t go to jail for making mistakes but you do – and I think you should – go to jail for being involved in criminal acts if they can be proven.”

But Holohan admits that proving who was guilty during the banking crisis could be difficult.

He adds: “There are certain matters which are currently under investigation by the Gardai but I’m not going to comment on them.”