Ship of Fools (4 page)

Stupidity and corruption shaped this process.

The role of sheer idiocy should not be understated. As finance minister, Charlie McCreevy's credo was a textbook statement of macroeconomic illiteracy: ‘When I have the money, I spend it, when I don't have it, I don't spend it'. This childish mantra, motivated by an apparent desire to dance on the grave of John Maynard Keynes and obliterating at a stroke everything that governments worldwide had learned about the need to restrain a runaway economy by spending less and boost a flagging one by spending more, was the economic equivalent of bulimia: binge and purge, binge and purge. Much of the binging was breathtakingly brainless, with money thrown at pet projects or vote-catching exercises without any attempt to analyse the costs and benefits. It was McCreevy who announced that he was giving free GP services and medical prescriptions to all those over seventy, on the basis of a back-of-the-envelope calculation that it would cover 39,000 people at a cost of €19 million. In fact, in the first year, it covered 63,000 at a cost of €126 million. It was he who announced, with no costing and no detail, the folly of the so-called ‘decentralisation' of government departments and agencies to provincial towns which meant, for example, buying five large sites at the height of the property
boom for €16 million and allowing them to lie idle indefinitely, and a running total of €230 million spent on the schemes by 2008. Both of these policies were straightforward pre-election gimmicks.

And all of this was done in a way that was deliberately socially regressive. McCreevy made sure that the boom would preserve the deep inequalities in Irish society by using his budgets to redistribute income upwards. His budget for the year 2000, for example, made the incomes of the poorest 20 per cent of the population rise by less than 1 per cent, those of the middle-income groups rise by 2-3 per cent, and those in the top 30 per cent by about 4 per cent.

McCreevy gave priority to tax cuts over everything else. The cumulative effect was to create a fantasy land in which taxes could be cut while public spending was rising. People were encouraged to think that they didn't have to make choices - lavishly wasteful public expenditure didn't matter because no one had to pay for it. And the long-term effect of pumping all of this money into the economy through tax cuts and an artificial property boom was a massive rise in inflation which seriously damaged economic competitiveness. Inflation under McCreevy rose at twice the rate of Ireland's EU partners. Prices in Ireland in 2004 were 28 per cent above what they were when McCreevy took office in 1997; the corresponding figure for the EU was 14 per cent.

This stupidity was not about a lack of intelligence: McCreevy, Harney and Ahern were all very bright people. It was induced by a lethal cocktail of global ideology and Irish habits. On the one side, so-called free market ideology held government in contempt. When McCreevy boasted of spending money when he had it and not spending it when he didn't, he was expressing a deeply held belief that it was not the business
of governments to interfere, for good or ill, in the workings of the economy. More broadly, if you believe, in accordance with the doctrines that dominated official thinking, that government itself is essentially evil, the very idea of using political power to effect the long-term transformation of a society is anathema.

On the other side, there was the ingrained Irish political habit of thinking only in the short term. Fianna Fáil in particular existed as a machine for the gaining and holding of power. It was in general inimical to political ideas that could be spelled out in detail or tested against reality. If ideas had to be worn at all, they could also be easily discarded. Bertie Ahern brought the party's contempt for coherent political values to new heights. This was a man who declared himself a socialist in 2004, having told his biographers six years earlier that ‘I don't believe in all that socialist stuff. I've never met a socialist in my life'. This free and easy way with ideas meant that there could not be, from the top, any kind of vision for how Irish society should develop. When Ahern remarked, of his dream for a €1 billion white elephant sports stadium on the far outskirts of Dublin (quickly dubbed ‘the Bertie Bowl'), that it would be the legacy of the Celtic Tiger, he betrayed the staggering poverty of social ambition that underlay the second phase of the Irish boom.

McCreevy and Harney were not personally corrupt, but Ahern saw nothing wrong with accepting large sums of cash from businessmen. In general, the government did not just tolerate low standards in public life and business by doing little to challenge them. It preserved the attitudes that kept them in place. In doing so, failed to alter the well-established climate of financial adventurism, in which recklessness was encouraged by impunity. An atmosphere of insider intimacy in which cronyism thrived continued to hang over boomtime
Ireland. On their own, either political stupidity or a tolerance for sleaze would have threatened the sustainability of the Irish economic miracle. Together, they ensured its demise.

Jonathan Swift, in leaving money in his will for the founding of a mental hospital in Dublin, noted that ‘no nation needed it so much'. The government adapted Swift's satire to its own exercise in insanity:

‘Thanks very much and I'll sort you out'

- Bertie Ahern to donor Barry English

 

 

 

For once in his political life, Bertie Ahern was entirely unequivocal. His mastery of the arts of evasion and ambiguity had once caused a frustrated opponent, Joe Higgins, to compare the task of getting a straight answer from him to ‘playing handball against a haystack'. This time there was no masking of his true feelings, none of the babble of barely connected words that often left his listeners unsure about almost everything, not least whether the man was an idiot or a genius. This time, he was direct, eloquent and so sincere that not even the greatest sceptic could doubt that the tears in his eyes and the catch in his throat were involuntary symptoms of powerful emotion.

And so, in June 2006, Bertie Ahern stood at the graveside of his master, Charles Haughey, in Saint Fintan's Cemetery in Sutton and called him ‘a patriot to his fingertips': ‘The definition of a patriot is someone who devotes all their energy to the betterment of their countrymen. Charles Haughey was a patriot to his fingertips.' The catch in his voice came in his peroration when he referred to Haughey as ‘Charlie, Boss', pausing for effect between the two terms, so that the second gathered its full resonance as a tribal act of homage to the lost leader.

But before then he had managed to articulate with some
precision the message that was to go forth from the graveside: ‘When the shadows have faded the light of his achievements will remain.' Those shadows were cast, of course, by the towering skyscrapers of money that the Boss had accumulated while holding high political office: the equivalent in 2006 of about €45 million, or 171 times his total salary payments as a full-time politician. Corruption, Ahern was saying, even on such a heroic scale, was of little long-term consequence. This was a serving Taoiseach, speaking at a formal state funeral (which cost the taxpayer at least €500,000, including €35,000 for food and drink for the invited guests). He was affirming as official policy the idea that theft, deception and fraud on a grand scale were relatively minor matters in Ireland.

For most of the previous decade, since his grandiose crookery was first confirmed by the report of the McCracken tribunal of inquiry in 1997, Haughey had been treated as Fianna Fáil's reprobate uncle, a family embarrassment whose scandalous behaviour should not, however, be held against the present generation. The state funeral was, however, a calculated act of contrition for these attempts to distance the party from the Boss. This act of collective homage was solemnised by the party's young princeling, the future Minister for Finance, Brian Lenihan - son, namesake and political heir of one of Haughey's closest allies. Haughey had stolen €250,000 from a fund set up to pay for a liver transplant for Lenihan's father, whom Haughey described as ‘one of my closest personal friends and certainly my closest political friend'. In a sign that even this was to be forgiven and forgotten, Lenihan did the first reading at Haughey's funeral Mass. It was a potent statement of the official ethic - you could steal from your friend's life-saving medical fund and still be a
patriot right down to the tips of the fingers that were elegantly snaffling the banknotes.

This was an important moral statement - for Bertie Ahern himself, who clearly liked to imagine that his own venality in public office would be forgotten in time, and for some of the other mourners. Among them, for example, was the builder and developer Mick Bailey who, with his brother Tom, owned Bovale Developments, one of the largest private landowners in Ireland. On the day of Haughey's funeral, and conscious perhaps that much of the nation's attention would be focused on that event, the Bailey brothers quietly acknowledged that they had made probably the largest single tax settlement in the history of the state - €22 million to cover systematic tax evasion since 1983.

The Bailey brothers, in fact, embodied the culture of impunity that is the most distinctive aspect of Irish corruption. Political sleaze in various forms is endemic in many democratic societies. Where Ireland differs from almost all other developed societies, however, Italy being the obvious exception, is that no price need be paid for getting caught. Haughey was never prosecuted either for stealing money from the public purse (and from Fianna Fáil itself) or for lying about it to a tribunal of inquiry. Nor was he, in Fianna Fáil's worldview, ultimately dishonoured by the revelation of his criminality. And when this is so for those at the very top, the infection cannot be quarantined.

Mick and Tom Bailey were key figures in the Irish property and construction business, whose land-bank alone was worth €51 million in 2002 and had probably doubled in value by 2006. They were also key figures in the corrupt relationship between that business and politics. In 1989, Mick wrote to James Gogarty of the structural engineering company
JMSE telling him that he could ‘procure' a majority of the members of Dublin County Council to vote for the re-zoning of over 700 acres of agricultural land in North Dublin that JMSE owned so that it could be developed for housing. The ultimate publication of that letter led to the establishment of a tribunal of inquiry chaired by Mr Justice Flood.

That inquiry found Mick Bailey to be directly involved in bribery. In June 1989, he handed over either IR£30,000 or IR£40,000 to the Fianna Fáil minister Ray Burke as part of a bribe of either IR£60,000 or IR£80,000 to help get the lands re-zoned for development. He also made three payments totalling between IR£16,000 and IR£20,000 to a senior planning official, the assistant Dublin city and county manager George Redmond.

Both Mick and Tom Bailey also lied under oath at the Flood tribunal. In its report, the inquiry found that Mick Bailey had given ‘false evidence' about a meeting with Ray Burke. He lied about money he had allegedly given to James Gogarty. He leaked information to the
Sunday Independent
newspaper and then claimed that he couldn't co-operate with the tribunal because of his fear of leaks. He was also found to have given false evidence under oath in relation to meetings and dealings with George Redmond, including the payment of bribes.

Tom Bailey made a false allegation under oath about money he had given to James Gogarty. He also failed to provide the tribunal with financial records even when it obtained an order of discovery against him. Not only did Mick and Tom Bailey each give false evidence under oath, but the tribunal found that they had colluded together to tell the same lies. As the taxing master of the High Court put it in refusing to pay their legal costs, the Baileys engaged in ‘a
deliberate attempt to ensure that the tribunal would never find the truth'. There are laws against this kind of thing, even in Ireland.

In almost any other democracy, it would be extraordinary for those who engaged in long-term tax evasion, bribery of public officials, giving false evidence under oath and obstructing a public inquiry not to be prosecuted for all of these offences. It would be utterly unthinkable for them not to be prosecuted for any of them. Yet the Baileys were never charged with any offence, suffered no civil sanctions (such as being declared unfit to continue as company directors) and continued to be lent large sums of money by Irish banks.

Not only, however, were the Bailey brothers not prosecuted, but they were still able to mingle cheerily and intimately with Bertie Ahern and members of his cabinet. Less than two months after Haughey's funeral and the revelation of the Baileys' vast evasion of taxes, Tom Bailey was one of the guests paying €400 a head for the chance to mingle with the Taoiseach and government ministers in the Fianna Fáil tent at the Galway races.

At worst, the Bailey brothers' walks on the wild side were the subject of political in-jokes. His most famous saying was his reply to a question posed by James Gogarty as they were on their way to hand the bribes to Ray Burke: ‘Will we get a receipt?' ‘Will we fuck!' In 2009, the former Minister of State at the Department of Finance Tom Parlon was overheard regaling his friends at the Galway rces with a hilarious anecdote: ‘Tom Bailey has a horse running and I asked him “Will he win?” and he said “Will he fuck!”.'

Parlon could hardly be accused of bad taste because he was telling a kind of truth: public ethics in Ireland were a joke. The paradox of Irish political culture in the Celtic Tiger
years was that revelations of corruption didn't make things better, they made them worse. In the 1980s and early 1990s, when anyone with a sense of smell could get a ripe hum of rottenness off figures like Haughey and Burke, glimpses of whose dubious financial dealings occasionally emerged through the fog of Ireland's heavily restrictive libel laws, it was possible to believe that if ever there were incontrovertible proof of their venality, the system would be shaken to its core. The assumption was that some kind of rough morality actually operated, and that wrongdoing, once revealed, would be punished. The old culture would not survive, and if Fianna Fáil itself were to do so, it would have to be thoroughly reformed.