Alex Massie

Another Horror Story from Zombie Ireland

Another Horror Story from Zombie Ireland
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Here's a snapshot of life in 21st century Ireland: Vincent Campbell sold a house and 4.75 acres of land outside Limerick City for a nifty three million euros in 2005. He's just bought the same property back for 215,000 euros.

Meanwhile, the Irish Independent has been having a good week. The paper has revealed how Anglo Irish Bank*, amidst stiff competition perhaps the worst bank in europe, knowingly stiffed the Irish taxpayer for billions by playing the Irish Central Bank like a salmon. As the Indo reported, taped conversations between senior Anglo executives reveal a fresh part of the true story behind the collapse of a bank that went a long way towards sinking the whole country:

At a meeting in mid-September 2008, Anglo executives including the CEO David Drumm told Central Bank officials that Anglo required emergency liquidity funding while at the same time playing down the true extent of their exposure.

The recorded phone conversation reveals that the hidden strategy was to panic the Central Bank into loaning them an initial €7bn, which they believed was "big enough to be important" but would not seem too high for the taxpayer.

The purpose of the loan was to artificially prop up Anglo's end-of-year financial statement, which was due on September 30 – the same date that the Government put in place the bank guarantee, which eventually led to a full bailout.

And, according to the Anglo executives, once the state bank had "skin in the game", it would be left with no choice but to continue providing Anglo with loans to "support their money" and then the sum "could creep up" over time.

They also hoped it would lead to the bank being nationalised so "we'd keep our jobs".

The bank was ultimately taken over by the State in January 2009 at a cost to the taxpayer of €30bn. In the meantime, it had benefited from the Government's September 30, 2008, Bank Guarantee Scheme.

Way to go, lads. The deception, frankly, is the least of it. The gloating tone of the conversations between senior Anglo executives is what really strikes you. These people knew what they were planning to do (which is more than can be said about many of their banking decisions). To the tapes:

[John Bowe , Anglo's Director of Capital Markets] says: "Yeah and that number is seven (€7bn) but the reality is that actually we need more than that. But you know the strategy here is that you pull them in, you get them to write a big cheque ... and they have to support their money.

Mr Fitzgerald replies: "Yeah. They've got skin in the game and that is the key."

Mr Bowe then says: "If they (Central Bank) saw the enormity of it up front, they might decide that they have a choice. You know what I mean?

"They might say the cost to the taxpayer is too high. But if it doesn't look too big at the outset ... if it looks big enough to be important, but not too big that it kind of spoils everything, then, then I think you have a chance ... it can creep up."

Mr Fitzgerald asks Mr Bowe how they had arrived at the €7bn figure for the Central Bank. Incredibly, Mr Bowe laughs and replies: "As Drummer (CEO David Drumm) would say, picked it out of my arse."

In the recording, the two men are heard laughing when Mr Bowe reveals that Anglo had no realistic prospect of re-paying the envisaged €7bn loan.

The Director of Treasury revealed: "We gave (Central Bank) a term sheet and we put a pro-note facility together and we said that's what we need. And that kind of sobered up everybody pretty quickly ... and (mimicking), 'Jesus oh, oh ... you have certainly focused our minds'."

Mr Fitzgerald asks if the €7bn is a term loan. The two men laugh when Mr Bowe replies: "This is €7bn bridging. So you know, it is bridged until we can pay you back ... which is never!"

Mr Fitzgerald says: "Yeah, yeah and that's in the pro-note ... that's in the terms and conditions?"

Mr Bowe replies: (laughing) "That's right, so under the terms and conditions that say 'repayment', we say 'no'.

Boom. And how did Anglo executives react to the announcement of the bank guarantee? By singing Deutschland Uber Alles.

As Peter Cunningham says perhaps these revelations will inspire a fresh run on the Dublin and Cork branches of Torch & Pitchfork Inc. But I'm not sure it will. There will be a parliamentary inquiry - though connoisseurs of Irish political history will lament the lack of a judicial tribunal - into these revelations. Who knew what and when and why and how? And can Fine Gael pin this on Fianna Fail again?

It matters that they do so because, five years on from Ireland's collapse, some opinion polls report that Fianna Fail have regained much of their discredited popularity and are now running neck-and-neck with Fine Gael. Truly, they are the Party of the Living Dead, a Zombie alliance of knaves, fools and cute hoors for a Zombie country.

And if Fianna Fail  - Fianna bloody Fail, fergodsakes - can bounce back like this, one wonders how much potential for real rage remains. Instead, there's a depressed fatalism. It is true that Ireland had no good options when it guaranteed its banks' deposits; it is also true that doing so proved a calamitous miscalculation. Or rather, the decision to make the blanket guarantee permanent ruined Ireland's chances of making the best of an appalling situation. It was, as David McWilliams writes, a hostage drama in which the hostages all died.

It has all been a tragedy in the truest, time-honoured, sense of the term. The improbable Irish rise was, in many ways, a glorious tale. True, you wondered, visiting Dublin circa 2005-6 or so, how it could continue. The property bubble had become quite insane by then and some kind of correction loomed. The question was when and how much of a correction.

Even so, the scale of the calamity has been breathtaking. Shocking and pitiful too. And yet, so far, no-one has been prosecuted, far less imprisoned. That may change now. Even so, the dent to Ireland's finances is only part of the story. Just as telling, is the manner in which Irish self-esteem has been crippled by the crisis. The Anglo Tapes can only confirm the gnawing sense that the country as a whole was taken for a ride.

*For chapter and verse on the Anglo story I recommend Simon Carswell's excellent book Anglo Republic.

Written byAlex Massie

Alex Massie is Scotland Editor of The Spectator. He also writes a column for The Times and is a regular contributor to the Scottish Daily Mail, The Scotsman and other publications.