Wednesday, 20 January 2010

The Division of Power Requires Stronger Accountability Institutions

Nat O'Connor: Many current news stories are about accountability, either seeking it or the lack of it. In some cases, there is a clear public understanding of the process we use for seeking accountability. But when it comes to the causes of the banking crisis, there isn't.

Ireland has a number of what you might call 'accountability institutions'. The reports of Eamonn Lillis's trial for murder are familiar territory for most of us. We know about the role of the judge and jury, the prosecution and the defence. We know that Lillis is innocent until proven guilty and that the prosecution are looking for evidence that indicates Lillis's guilt 'beyond all reasonable doubt'. If it were a civil proceeding, only the lower threshold of 'the balance of probability' would have to be met. And in either case, the trial is held in public and reported daily. Most importantly, the proceeding guarantees some kind of result. Either he's innocent or guilty; and if guilty, the judge will impose some kind of sentence.

However, when it comes to the banking inquiry, we seem to lack a sense of how we get accountability. What is the correct place for the inquiry to occur? Who should be involved? What is the correct threshold for evidence? And what guarantee do we have about the outcome?

Maybe the most pressing question is why is this a choice for the Government? Whatever happened to the idea of the division of powers? In parliamentary democracies, one role of the legislative is to hold the executive to account. In the case of our parliament, we were reminded that Oireachtas committees do not have the right to make judgements about disputed claims of fact. This would appear to be a real weakness.

Why don't we have accountability institutions that get automatically activated for public interest inquiries, in the same way that the courts are activated when the DPP decides to prosecute. It is not unreasonable to suppose that a strong, independent inquiry might uncover some embarrassing findings for the Government. All the most reason why governments should not have the power (and temptation) to set up weak or slow inquiries.

What we have had, over the last couple of decades, are a series of ad hoc decisions by successive governments to use different institutions at different times, including tribunals, Oireachtas inquiries (e.g. DIRT) and various commissions of inquiry, such as the Government is proposing in relation to the causes of the banking crisis. Even institutions of the same type work differently in the detail. For example, bizarrely, the Moriarty Tribunal transcripts are copyrighted to a private company, unlike the other Tribunals, which publish their transcripts online.

The Tribunals have been a hugely costly way of patching the gaps in our system of accountability institutions. Setting up some sort of permanent mechanism that can be activated to deal with public interest inquiries would seem to be a priority, whether it is through giving Oireachtas committees more powers or through some other body.

In relation to the Government's proposed commission, according to the Irish Times, the Minister for Finance has said that "an Oireachtas committee would then have an opportunity to examine the report and call witnesses if it wished". But this exposes another weakness in the balance of power. Except for the Public Accounts Committee, Oireachtas committees are chaired by a Government appointee and they all have a pro-Government majority. Hence, their ability to provide independent and robust analysis is limited, especially if there is anything embarrassing to the Government.

The lack of consistency and potential weakness of public interest inquiries is not the only gap in the system. Yesterday, Transparency Ireland launched a report into the weak whistleblower protection in Ireland. Transparency Ireland argue that: “We know what we know about corruption in our banking system and regulatory failure because of whistleblowers. Yet those who would report wrongdoing in our banks and public service still have little or no legal protection or guidance. The situation doesn’t just leave thousands of people exposed to disciplinary or legal action - it leaves the country exposed to another financial crisis”. They are calling for a universal system, like the one that works well in the UK, which will protect whistleblowers everywhere in the State equally. The full report (PDF) can be read here.

Various whistleblowers spoke at Transparency Ireland's launch yesterday, including Eugene McErlene, who was the internal auditor who exposed overcharging in AIB in 2000/2001. McErlene spoke of the very difficult experience of being "isolated" when he spoke out about the wrong-doing that he uncovered. There simply were no adequate accountability institutions in place to which he could turn to. It was very revealing to read an article from last year in the Irish Independent reporting that McErlene does not hold a grudge against AIB. Instead, his frustration was directed at the Financial Regulator.

The issue of how best to find out the root causes of the banking crisis is not just about the detail of the proposed commission such as who's on it, or how many sittings will be private or public (although these are important details). We need to take a long, hard look at our whole system of accountability institutions, from the Oireachtas to the regulators, which are meant to investigate errors and wrong-doing. And the division of powers in a democratic state requires that strong independent accountability institutions will be activated when the public interest requires them, even if their findings may be embarrassing to the executive of the day.


Paul Hunt said...

Excellent post. But prevention is better than the cure. All the market participants in the current banking system debacle behaved perfectly rationally in response to explicit (and implicit) government policy. The problem is in the design, scrutiny, amendment, implementation, review of, and accountability for, public policy. The Oireachtas needs to be reformed to hold the executive to account. It might not prevent a repeat of something similar to the current mess, but it would greatly limit the economic damage.

Only the people themselves can take the steps to effect this reform. The current political classes have neither the incentive not the stomach to advance the reforms required.

Nat O`Connor said...

I had the chance to talk briefly about the post on RTE radio's The Late Debate last night (20 Jan 2010, 10pm-10.30pm). John Devitt from Transparency was also there.

One thing I would like to have added is a response to Vincent Browne's assertion (Opinion in the Irish Times) that a tribunal is the only option.

In brief, it is not (always) what you do, but the way that you do it. A commission of inquiry (using the 2004 legislation) might be the best compromise, but there is a lot of scope to ensure broad public support for the findings of that inquiry.

Currently, the Government will set it up. It will investigate the Government. So, it is always easy to believe that such an inquiry can never go as hard on the Government as a fully independent one might.

Ditto, for one set up by the Opposition. It will be perceived as seeking ways to attack Ministers' actions over recent years.

Hence, neither the Government nor the Opposition should control the setting up of the inquiry. Rather than spend the €150 million (and 10 years) that Minister Lenihan sardonically claimed it would cost to have a tribunal, just put three Government TDs and three Opposition TDs in a room for a week or two, with staff support from the civil service, and give them the job of agreeing a neutral, genuinely independent commission of inquiry. If they can't agree, they are incompetent or bad-willed. If they can agree, the Government can't claim the findings are a witch-hunt and the Opposition can't claim the findings are a whitewash. Facts and the public interest might even float to the surface of the debate!