IFSC Clearing House: What the Irish Times Doesnt Say And Why It Matters.

I wrote this in response to reading Harry McGee blog post on political seismology here, and the Irish Times recent coverage of the IFSC Clearing House Group.

Interesting blog post. Have a few opened ended questions relating to the role of political journalism in Ireland these days generally but cast specifically through the prism of how the facts about the IFSC Clearing House Group that have been in the public domain are mediated via the mainstream media. These are open to readers to have a go at?

Does not the idea that political journalists see themselves primarily as “political seismologists” aiming “to identify new rifts and faultlines.” reduce their function to gatekeepers of gossip and inter departmental spin in ways that make “The Thick of It” more akin to a documentary than satire. Is this retreat into personality as politics and politics as successive pseudo-entertaining events because current mainstream journalists lack the space to develop thier own critical analysis of the macro political economy and the multi faceted nature of converging crisis?  What about dependance as it is on the government of the day for its copy?  Is there a herd mentality within journalistic practice? And where are working class political and economic journalist in the mainstream media.  In short what Im not doing below is to try hold up the traditional view often held by the public and journalists alike that the political journalism is akin to an imagined Woodward and Bernstein. The idea that political journalism plays a  vital role in speaking truth to power and uncovers the mechanics of decision making in ways that add to a critically informed public essential to notions of a democratic state is seems increasingly distant for many. People living in Ireland  tend to get a much deeper understanding about the nature of the crisis in Ireland and Europe by accessing international analysis or specific blogs. As such this is not about demanding a higher level of political journalism (though that would be nice). Instead I feel we need to rethink of the role of citizen journalism – ordinary people informing and educating each other with the explicit aim of developing critical capacity within our own society as a response to the failure of mainstream political and economic journalism in Ireland to explore the actual causes and larger social implications of the current crisis.

Is the imagined role of existing political journalism something that is out of place in an increasingly media/politically literate population? And in 2012 why is it that most journalists and/or the companies they work for still do not make publicly available ALL information they receive under FOI’s?  ( Hat tip here to Gavin Sheridan for pushing that end of things and actively educating people how to go about it ) This can hardly be because corporate media outlets lack the resources to do this as a matter of course. Free tools such as Scribd, Google Doc’s etc make it incredibly easy to upload and share such information, which then could be used by an active citizenry. Whilst media corporates like the IT are dealing with confluence of a changing media ecosystem and technologies and social practices which pose an existential crisis, emerging new publics within that same ecosystem are recognising the limitations of media corporates in providing critical analysis of the substance of our lives. The tradition creators of official common sense are failing to provide a framing that makes sense of our experiences of growing poverty within what many understand is a capture state where the logic of markets trumps the logic of either genuine democracy or simple care. Thats without even mentioning the vested interests of media ownership

In an attempt to exemplify what I mean by the above I will look at the recent coverage that the Irish Times has given to the IFSC Clearing House Group. Its worth noting that I only began looking in to this after reading the above blog post and chatting to some friends who have a desire to understand what is actually going on in the state and the financial services. Im not a professional journalist, I’ve never received payment for anything I’ve written. Thats not to say I wouldn’t accept payments, but just to say I write primarily because I care . My main resources are curiosity, critical analysis and a broadband connection. The Irish Times made repeated mention of Freedom Of Information requests in its recent coverage. One tangential affect the use of FOI’s gives in the air of investigative journalism. Given that these often take weeks or even months from government departments less than keen on open transparency and public democratic scrutiny that’s somewhat understandable. I still not sure know how to use FOI’s myself but they wouldn’t be much use to me tonight. Instead over the course of this evening Ive sat on my bed with a laptop.

Essentially I feel the Irish Times fails not because it lacks criticism of IFSC Clearing House Group. Its articles by McGee and Carl O Brien and its editorial are explicitly critical in the context of an external body having undue influence on  democratic decision making within government. O Brien piece is a useful introduction to readers of the concept of lobbying and has nuance between lobbying and PR. Though given that Ireland’s neoliberal democracy models its public political performance in the ultra mediated and message controlled style made fashionable by the UK’s perma-tanned Tony Blair, such boundaries are increasingly blurred. McGee has two piece on Monday 8th Oct. The front page “Coalition to reappraise IFSC lobby group ties” reports that the present government is “reviewing the nature of its involvement with the IFSC Clearing House Group” after suggestions the group is too close to government. It would be hard not for it to be close to government considering its headed by the top civil servant Martin Fraser, politically anointed appointed Secretary General to the Irish Government and Secretary General of the Department of the Taoiseach since 1 August 2011.  As the photo below show the Irish Government wasn’t just “too close”. It was part of the IFSC Clearing House Group.

First meeting of the IFSC Clearing House Group, April 1987. Chaired by an Taoiseach Charles Haughey. Cheers to Conor Mc Cabe

A cursory google search of the term IFSC Clearing House Group looking between the dates Jan 1, 1990 – Jan 1, 2007 shows 401 results. I picked the dates fairly randomly. From these results I have managed to established the following.

As I’ve said the Irish Times articles and editorial framed the Clearing House Group as being a lobby group. Such framing put it in a broad category of organisations that are external to government but that seek to shape policies for their own benefit, and indeed O Briens  Such framing is completely wrong. Far from the Clearing House being a lobby group of the Irish government, it is perhaps best understood – given the rotation of personnel between the senior civil service, the Clearing House and its constituent organisations, members of the states political organisations and explicit, public statement made over the past two decades by ministers and Taoisigh – as an unelected extension of the government itself.

The Clearing House Group is in fact part of the para legal-financial infrastructure that has shaped the workings of the state over the previous 25 years, through its direct involvement in the internal workings of successive governments for its own accord. It is intrinsically part of the indigenous political/economic/cultural practices that see our state in the mess that it is in today. It is integral to the development of an indigenous shadow banking system that intentionally increases wealth inequalities,  it has turned Ireland into a key hub of the international tax dodging architecture and ultimately undermines the notion of a democratic society, a society were people have the direct ability to be involved in decisions that affect their lives. It does so not by lobbying but by writing laws within the Department of Finance and Dept of the Taoiseacht to suit the purposes of its constituent organisations, who include a who’s who of multinational financial, legal and banking organisations but also critically almost the entire Irish indigenous class  of financial-legal corporation that assist those same multi-nationals. That point is crucial. Enda Kenny and FG/Lab are aligning themselves over the past few weeks to create a narrative that the bank bailout was pushed upon us by broader European politicians. This is irrefutably a lie – though Ive yet to see much coverage of this point but plenty Ctrl+C Crtl+V of FG/Lab/FF historical revisionism. The bailout was pushed and advised by our own indigenous corporations acting in their own interests as well as the interest of their golden goose clients. Your interest, or the interest of the common good didn’t come into it.

It has been a matter of public record that the Clearing House scripted governments approach to financial services generally and financial tax policy specifically. Heres a quote from Mary Harney, ‘clarifying’ questions raised in the Dail about Ireland Inc being organised as a defacto tax haven

The above proposals will represent the Department’s corporate view on how the the IRNR problem should be addressed (even if IDA dissent) and, as far as the tax based solution is concerned, the intention would be to have this pursued urgently and vigorously at the Secretaries Group and/or the high level IFSC Clearing House Group with a view to having it adopted as the Government’s primary response to the IRNR problem.” http://www.independent.ie/national-news/and-what-the-dail-wasnt-told-455981.html

In 2002 Bertie Ahern stated in a speech to Financial Services Ireland Annual Members Dinner that he viewed the governments relationship as something very different than lobbying. He said “the Clearing House Group and its sub-committees, which work closely with my Department, have been one of the earliest and most successful forms of public-private partnership”

http://www.taoiseach.gov.ie/eng/News/Archive/2002/Taoiseach%27s_Speeches_Archive_2002/Speech_at_the_Financial_Services_Ireland_Annual_Members_Dinner.html

Also in 2002 Ahern stated in the foreword to the ‘Strategy for the Development of the International Financial Services Industry in Ireland’ that the state strategy “is the result of intensive consultation between the different sectors in industry and the relevant Government Departments and Agencies. I would like to thank all those who contributed and, in particular, the members of the IFSC Clearing House Group and IFSC Working Groups which operate under the aegis of my Department” (bold is mine)

http://www.taoiseach.gov.ie/eng/Work_Of_The_Department/Economic_and_Social_Policy/International_Financial_Services/International_Financial_Services_Publications/Strategy_for_the_Development_of_the_International_Financial_Services_Industry_in_Ireland.shortcut.html

In 2007 Ahern once again made the linkages between the functioning of state policy and The Clearing House Group

The Government believes that the time is opportune to re-affirm its commitment to the industry, to build on the work undertaken since 1999 and to implement an agreed work programme to ensure that we proactively pursue appropriate actions for the further development of the industry. My Department and the IFSC Clearing House Group, still maintains the central role it has occupied since the beginning of the IFSC in 1987 and it is intended that it should play an active part in overseeing the implementation of this report.”

It makes no sense to conceptualise the Clearing House Group as a lobby group akin to Barnardos or the trade union movement, or the IFA and in doing so the Irish Times makes a categorical mistake that is damaging to basic public literacy about how power and vested interests shape not just our economy, but the political decision making structures of democracy itself.

Ken O Brien in an article in the Irish Independent almost 6 years ago to the day mapped this nexus of political and financial common consensus in great detail worth quoting extensively.  Leave aside its self conscious congratulatory tone, though that itself is notable for its social detachment. Its written precisely at the time the arse was falling out of the construction industry and thousands were falling into unemployment. Think of it more as a emotionless spider diagram.

In casting a paternal eye westwards he (Ahern) is abetted by two MEPs who sit on the Economic and Monetary Affairs Committee of the EU parliament (responsible for drafting and examining financial services legislation at an EU level), Eoin Ryan and Gay Mitchell.

Other politicians have made key contributions, notably Michael McDowell , who, as A-G put a lot of effort into developing state-of-the-art law, such as the Covered Bond legislation, and Mary Harney in her time in the Department of Enterprise and Employment.

Ruairi Quinn has been Labour’s main player to date – with his New Labour-style comment as Minister for Finance: “I’m for the IFSC – after all I’m on 10 per cent.”

The IFSC has been blessed by the work of skilled public servants, such as Frank Mullen of the Revenue Commissioners, who delivered key agreements at times when the status of IFSC tax schemes have been threatened. He has also overseen the establishment of a tax treaty network that now covers over 40 countries.

Other key players were Maurice O’Connell (when the Central Bank was in charge of financial services regulation) and Dermot Quigley in the Revenue Commissioners.

The mantle of financial regulation has now passed to the Financial Regulator, where Pat Neary is probably the most powerful individual as far as IFSC firms are concerned.

The Financial Regulator recently set up a board to mediate between it and the industry, and James Deeny, formerly chief executive of HSBC Ireland, holds the hot seat.

The early vigilance to keep a clean corporate image was down to Felix Larkin in the Department of Finance, Frank Mullen, and, in the Nineties, Brendan Logue of the IDA, who, was part of a campaign to wipe out a mushrooming of Irish offshore shell companies in the late 1990s.

Nowadays, influence in the IFSC operates at micro levels – where, much of the work of the centre involves the development of complex tax and regulatory arrangements, in structured finance and funds for example.

In this the major lawyers and accountants have been key players – with names like Pat Wall, Mary Fulton, Marie O’Connor, PJ Henehan, Cormac Murphy, Paul Reck, KPMG’s Paul McGowan, Brian Daly, and a little known back-office player – Frank Carr – one of the geniuses of Irish tax over the years of the IFSC.

Among the lawyers, bright young Turks have come to the fore – such as Turlough Galvin, and Michael Jackson in MOPs, while long standing pillars of the IFSC include Paul Dobbyn, David Dillon of Dillon Eustace, Ronan Moloney, Kevin Murphy of Arthur Cox, Ambrose Loughlin, and John Larkin in William Fry.

The lawyers have been central, and they will be pivotal to the success of the IFSC in the years to come. Alongside their growth has also been been the Irish Stock Exchange – which, had it been anywhere else, might have shriveled up and died. Dublin would have gone the way of its Belfast and Cork counterparts, were it not for the vision of people like Maire O’Connor, who was instrumental in the development of Ireland as a funds listing centre in the early Nineties, and Tom Healy of the Exchange, who has overseen the emergence of the Exchange as Europe’s largest listing centre for funds and asset backed securities (ABS), and for new hybrids of ABS that are constantly being developed.

Alongside the lawyers and accountants, many of whom contribute to legislation in response to submissions from the industry, are the formal representative bodies.

Because of its position as part of Ireland’s Social Partnership structure, IBEC’s body, Financial Services Ireland, has a special position at the right hand of Government – its chief executive Aileen O’Donoghue sitting on the Taoiseach’s Clearing House Group (chaired by the Secretary of the Government, Dermot McCarthy), a body that discusses IFSC matterson a regular basis.

Another position at the right hand of the Government is occupied by Pat Farrell of the Irish Bankers Federation, whose position derives not perhaps from the fact that he represents banks – but also because he is former general secretary of Fianna Fail.

The hard working representatives of the two other key sectoral pillars of the IFSC are funds representative by Gary Palmer, and insurance rep Sarah Goddard.

Overseeing all sectors of the IFSC is Deirdre Lyons of the IDA.

According to the Finance Dublin IFSC Yearbook, in December 2005 there were 453 international financial services companies – employing a total of 19,095 people, up by 1,485 or 8.4 per cent on the previous year.

These are the real players who make the IFSC a reality.

William Slattery has managed to combine being head of the biggest IFSC employer, State Street, with the time for passionate advocacy of the causes of IFSC development, and for its contribution to the Irish economy.

Slattery has been a thoughtful forthright critic of the Government IFSC policy from his time as a regulator himself, and as head of FSI. When in the Central Bank, he created the foundation of the modern IFSC funds industry in the early Nineties through his progressive and far-seeing technical excellence.

Other movers and shakers are Aidan Brady, chief executive of Citigroup , Mike Ryan, of Merrill Lynch Capital Markets Bank, Giovanni Lombardo of Pioneer, Gerhard Bruckermann, of Depfa, Henning Ludolphs of Hannover, Rick Hodgdon of Transamerica, Frank Monks of Nexgen, Rachel Panagiodis of Hansard, Michael Brady of XL, and John Gilsenan of Porsche, straddling both treasury and insurance.

The life assurance sector too has been notable for the contribution of Colm Fagan, chairman of the society of actuaries, and whose entrepreneurial venturing has leveraged a whole sector of Italian life insurance companies into the IFSC.

The two big banks have always been pivotal in their involvement in the IFSC – AIB initially represented by Michael Buckley, and in most recent years by Colm Doherty, and in Bank of Ireland Padraig Rushe.

The funds industry is actually the most prolific sector in employment terms – rapid employment growth being experienced by the new firms like Joan Kehoe, Quintillion, and her former employer PFPC, Harley Murphy’s Mellon, Gerry Brady, Capita, formerly Bank of Bermuda, Ronan Daly’s BISYS, and Dermor Butler of CHAM.

The IFSC is a growing empire, at whose head sits the Taoiseach.

He recently said he was keen that it should remain a special responsibility of the department.”

The bold is mine, the sickness in the bottom of your stomach is yours.

The IT editorial on 8th Oct ends with the line “Paying attention to representations from the IFSC is acceptable. But policy formation is a matter for Government”. Whilst this might reflect abstract theoretical political economy in a first year undergrad course, it bears little reflection to the reality and practice of how financial services policy formation has actually worked in this state for the last 25 years. The IT editorials rhetoric rests upon a two core, yet unsustainable assumptions. That first assumption is that there is a significant difference between the specific political/economic demands of the banking and financial sector actors who act through the Clearing House Group and the ideological stance of the main political parties in Ireland in government since Haughey chaired their first meeting in 1987. This doesnt stand up to scrutiny. The state  set up the IFSC Clearing House Group and still asks it to provide legal and financial arguments for the government to use in its negotiations to get a debt writedown. It was and remains the governments baby.  A debt itself that was imposed upon our society by the very same actors who argued for a blanket gaureentee in the first place. It would be farcical where it not for the rising suicide, long term unemployment, mass emigration and multitude  of other social malaise solely attributable to the working of financial capital.

The second assumption is the conceptualization that the Government and the IFSC Clearing House Group can be understood as two separate entities with competing remits. Clearly this is something we would like to think is  true, and abstract theory tells us its should be true. But the reality is that at the highest level in the country from within the civil service, the political organisation and the representative bodies of financial capital share the same interests and social imagination.  One begot the other. This is why the lobbying frame of the IT is a failure of category.  You don’t need to lobby people you are in complete ideological agreement with. Even less so when one runs the other. This is why the current crisis cannot be understood merely as an economic one. When the system and personnel that are tasked with resolving the crisis at a government level share the same limited social and political imagination as the system and people who caused the crisis, is it any wonder they seem there options as limited. When the state advisors to debt negotiations are entirely made up of people from within the industry that caused the debt crisis – rather than the people it is impacting upon most, we would be suffering a collective delusion to believe that our interests are being served. The present and past government benefit from the historical revisionism of claiming the IFSC Clearing House Group is merely a lobby organisation. It has never been that.

The real uncovering here is not about how some lobbying influence financial actors have in shaping some little know financial services policies. (Though given this information is decades old and easily found by me via a Google search ‘uncovering’ seems to over-egg it a bit.) It involves substantial but as yet unasked questions around to what extent has the beneficiaries of the Clearing House Group and the wider financial-legal industry has actually captured the decision making structures of our society and state. Laws are shaped to benefit themselves with the full acquiescence and oversight of the political organisations that stand for election. When the facts, intentions and action of the actors are out in the open for all to see, its hard to not feel that we live in a captured state. One in which a mainstream media seems pretty illiterate when it comes to both financial capital and political economy. The implications for an informed democratic public means this would make a great case study for students of media and journalism. As for the rest of us? We need to decide whether we are happy to live with the normalisation of our own material poverty and growing inequality or whether we are going to get informed and remake our own common sense against the backdrop of ideological collusion of Ireland’s political and financial pillars of power.

12 thoughts on “IFSC Clearing House: What the Irish Times Doesnt Say And Why It Matters.

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  2. Very well commented. The Clearing House Group was not the only such case –

    “The Advisory Forum on Financial Legislation was set up by Taoiseach Brian Cowen when he was minister for finance and held seven meetings between the autumn of 2007 and November 2008. It was quietly disbanded during 2009 at a time when light-touch, or principles-based, regulation was being increasingly blamed for contributing to Ireland’s regulatory failures.
    The forum had a brief to draft Heads of the Bill for a modernised financial regulation scheme that would consolidate 45 Acts and over 150 pieces of secondary legislation. The forum was chaired by Pádraig Ó Ríordáin, the managing partner of Arthur Cox solicitors, membership of the forum, as well as its drafting subgroups, was dominated by the financial industry and the private sector. It is rare for private sector interests to be involved in the drafting of legislation: in this instance the Government asked the financial industry to become involved in helping draft legislation that would have the effect of regulating the industry itself in future.

    In January 2008, Mr Cowen said to the forum it had full Government approval to ensure full “involvement of the wider community of interests”.
    The forum’s task was to prepare for “cross-sectoral principles-led regulation of the financial sector” within 12 months.
    The minutes of its meetings, as well as internal Department of Finance documents, show that the forum adopted the light-touch approach of then financial regulator Pat Neary. (IT, FOI Act)

    Nine of its 23 members were drawn from the banking and finance sectors, compared to only six members from government departments.”

    http://www.politicalworld.org/showthread.php?p=108811&highlight=Cowen+involving+banking+sector+regulations#post108811

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  3. Excellent analysis of how vested interests rule over us, the party system is just dressing to preserve the illusion that citizens have any say at all. The world of finance and it’s politics is a complex web, hidden away and only on occasion to we glimps it’s true nature.

    This article is a worthy contribution to our understanding specifics … We need this.

    For me, this asks the question … What do we do then? We MUST organise for change, in a manner different to what we have done so far. We must act differently in the exercise of our democracy … We must stop handing over our mandate to parties or to anyone.

    That is what The Peoples Convention http://www.cppc.ie is dedicated to … The Empowerment of the People.

    Other ideas on how we change the situation welcome.

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  4. Mark, very nice piece! Am in Dublin these days doing research on the financialization of the Irish state and would love to have a chat with you on this topic. Could you perhaps drop me an email? Best, Reijer

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