So, Do They Just Get Away With It ?
Even if I am right, and, as I have argued in earlier articles in this series, criminal offences did not cause the Irish banking disaster, it does not follow that no-one was "to blame".
In case anyone is still unclear, my view is that those responsible for the disaster, were indeed, mainly, those in charge of our banks. And that it was the lending of money badly which was the crucial fault. I am also of the opinion that, although their failings were not "criminal" in terms of the law as it is (or was), they should have been, and that such conduct should be criminalised for the future without delay. I note that the redoubtable Nassim Nicholas Taleb suggests that the old rule of a death penalty might be revived for similar offences. I am not sure if I fully agree, but I like the thinking.
However, in terms of the law as it is, rather than it might be, my view is that the criminal law is not likely to be useful. What of civil remedies ? I will now examine this question under four headings.
One route would be to examine contracts of employment, establish what contractual duties - whether express or implied - applied to the most senior individuals and try to see whether there had been any breaches of duty by them. Unfortunately, the contracts are not in the public domain, and I have no reliable information concerning their terms. Were I an employment lawyer, I might speculate as to possible avenues of liability, but alas ! I do not have that expertise. Any lawyers reading this who might have something useful to say about this are hereby invited to do so. For whatever little that it is worth, my unreliable information about the terms of the relevant contracts is that there is no scope under them to impose a liability on any officer or employee who might be of interest in this connection.
It more or less automatically follows that the pension entitlements do not offer much help, either: if it is not legitimate to reclaim salary, why would it be just to reduce pension payments ? There is one exception - at least at the level of principle - to this, however, which is highlighted by the case of Eugene Sheehy, the former Chief Executive of AIB Bank. Mr Sheehy's pension entitlements, like those of all AIB pensioners, are a liability of the pension scheme, which is a separate legal entity, rather than of the bank. The Bank's multi-billion euro losses do not affect the value of the scheme, except to the extent (limited) that the scheme invested in bank shares, but the scheme does rely on continuing support from the bank as sponsoring employer, both to maintain the contributions for continuing employees of the bank, and to "top-up" the scheme funds if their value falls, or fails to keep up with the pension promises made.
Unsurprisingly, the latter circumstance has occurred, as it has for virtually every scheme. AIB injected approximately €1 billion, I understand, into the pension scheme to keep it solvent. The bank, unless it restructured its pension obligations, really had to do this, but taxpayers can feel justifiably aggrieved that some of their money was used in this way. They can also legitimately ask just why the alternative of a restructuring of the bank's pension obligations was not chosen.
Mr Sheehy, to his credit, shortly afterwards disclosed that he was waiving part of his pension entitlement. It is hardly unfair or far-fetched to suggest that there may be others who should do the same.
Where a company has been put into liquidation, a number of options for action against those in charge who may have behaved with insufficient probity or competence become available. For example, the issue of reckless trading becomes something which the Liquidator can explore. Also, unless the Office of the Director of Corporate Enforcement deems it inappropriate, the Liquidator must apply to the High Court for an order restricting all directors from acting as company directors for five years. Such orders are not made automatically by the court, and are arguably not very onerous for many of those affected, but when contrasted with what most bank directors have faced, those affected may feel "hard done-by".
Now that Anglo-Irish Bank has finally been put into liquidation, I expect to see proceedings against directors by the Liquidators, and indeed some hints of this have already appeared in the media.
The only other useful legal recourse is the one proposed by us (Karl Deeter, multiple signatories and I) here. Just after we published, a UK parliamentary committee report led to similar proposals there. (Ireland's own parliamentary inquiry is still stalled; despite a fine and comprehensive preparatory report, the latest indications are that it will focus exclusively on how the infamous Guarantee was decided).
Policymakers have proposed introducing a “rebuttable presumption” that the directors of a failed bank should be automatically barred from running another unless they could prove they weren’t at fault.