Bertie Ahern at Banking Inquiry
Former taoiseach gives evidence on role during crisis
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Hello, good afternoon, and welcome to The Irish Times live blog of former Taoiseach Bertie Ahern’s evidence to the Banking Inquiry.
The former Fianna Fáil leader is said to be “keen” to appear before the committee, while members are eager to question him on his role in the economic crash.
How very cordial.
My name is Colin Gleeson and I will be here throughout the day to bring you rolling updates from today’s proceedings.
If you’d like to get involved by commenting on any of what’s going on, you can tweet me @ColinGleesonIT and I will publish your remarks here.
Ahern is due to begin giving evidence at 3.10pm. The inquiry has, shockingly, run over time this morning. In light of that, I imagine his appearance will run until about 7pm.
But, taking a leaf out of the Sky Sports book of how to tee-up an event, let’s have 40 minutes of build-up.
First, a little bit of history.
Ahern was Minister for Finance from November 1991 until December 1994.
He succeeded Albert Reynolds in the role after the latter’s failed leadership heave against Charles Haughey.
After Reynolds was expelled from Cabinet, Haughey rewarded Ahern for his loyalty with the finance portfolio.
Just a few months later however, Haughey resigned following a series of scandals and the sacked Reynolds became Taoiseach instead of Ahern.
Seems like that could have been awkward for him, but Ahern retained his finance portfolio amid suggestions of having struck a deal with Reynolds that he would leave the field clear for him to become Taoiseach and make his move at a later date.
After the 1992 General Election, Fianna Fáil formed a coalition government with the Labour Party.
When Labour withdrew from government in 1994 over their dissatisfaction with Reynolds' proposed candidate for President of the High Court, it fell sometime later and Reynolds resigned as Taoiseach and leader of Fianna Fáil.
Ahern then ascended to the leadership, the first unopposed candidate since Sean Lemass.
It was something of a baptism of fire however as negotiations with Labour about forming another coalition failed and he found himself leader of the opposition for a time.
He had to wait until June 26th, 1997, to become the youngest ever Taoiseach at the age of 45.
After that, he went on to become the longest serving Taoiseach in the history of the State, with the exception of Éamon de Valera.
He would resign on May 6th, 2008, after revelations about his personal finances at the Mahon Tribunal.
As Taoiseach, obviously quite a lot happened.
The focus of the committee today is likely to be on the “key drivers of budget policy” during the successive governments he led between 1997 and 2008.
Following their evidence to the inquiry in recent weeks, former ministers for finance Charlie McCreevy and Brian Cowen were both accused of pointing fingers in all directions but their own.
I wonder if the pair might find themselves becoming intimately familiar with the underside of a bus themselves this afternoon.
15:20The committee is currently meeting in private session so we should be ready to roll fairly shortly.
And we’re away.
Bertie will first of all take the oath before delivering his opening statement.
15:30A few smiles in the press gallery as he’s giving the oath.
He starts by listing the main economic problems facing Ireland in the mid-1990s as being high unemployment, net emigration, relatively low incomes and the need for increased productivity.
A decade later, he says, these problems were “substantially solved”.
A lot of listing off of achievements so far.
He’s talking, sometimes in quite technical language, about all the great things that happened.
In terms of policy decisions however, he says he is “not going to present a comprehensive review” of them. “Nor the inputs to those decisions,” he adds.
“However, I think it is important that the committee takes due recognition of the information that was available when the decisions were being made to counteract the retrospective narrative that has developed, with the benefit of hindsight, over the years since the crisis first began to manifest in 2008,” he says.
He says it can be “readily seen” that the crash was not foreseen by the IMF who “only revised their outlook when the slowdown was well and truly at hand”.
He gives an example that as late as Autumn 2007, the IMF was forecasting that the Irish economy would grow at 3% in 2008 after inflation is deducted.
“Even when it became clear that there was a severe global downturn, the IMF forecast in late 2008 was that there would be no more than a marginal fall of 0.6% in real GDP in Ireland in 2009.”
He says that “Inevitably, of course” there were stresses and strains associated with rapid expansion in economic activity.
“The most noted and commented upon at the time was the growing importance of the construction sector in the Irish economy,” he says.
“At some stage this growth would inevitably ease.”
He is speaking about ESRI forecasts and advice received and says “the implication is that no home grown crisis was foreseen and even an imported one would have relatively mild effects due to the fundamentally sound nature of the Irish economy”.
He says the research and conclusions of these organisations “constitutes a major input to policy decisions”.
“Of course, having this research available does not mean that the most appropriate course for policy was always clear,” he says.
“Some divergences of opinions are to be expected and indeed contrasting views and opinions were encountered. This range of views was always taken into account in reaching policy decisions during my time in office but the synthesis of opinions leading to policy decisions inevitably reflects the conclusions of the vast majority of the research. I believe that this is the correct basis on which decisions should be made.”
He says “it must be noted” that the “overwhelming and virtual consensus during this time was that Irish policy was moving the economy in the right direction”.
He says the consensus was that the economy “was on a sustainable growth path that could be expected to slow somewhat in response to changes in fundamental drivers, that the main risks could be traced to developments in external economies and that the dangers posed by domestic factors represented challenges to be managed rather than the first indicators of a crises such as subsequently developed”.
15:48The key drivers of budgetary policy rested on “ensuring that budgetary policy supported and encouraged growth in a sustainable way, while ensuring that inequality was reduced and social protection was enhanced”.
He says the downturn “did have a very hard impact on individuals and families, especially those who lost their jobs, and of course that saddened me and I wish the recession did not happen”.
“However, it is disingenuous to suggest that all the gains this country made have been wiped out. Between 1997 and 2008, this country thrived and not only did Ireland enjoy record economic growth, but Irish living standards were raised across the board, and this drove social progress.
“This rising tide was essential in lifting hundreds of thousands of our people out of poverty, to reversing forced emigration, to significantly increasing pensions and child benefit, to modernising schools, health facilities, roads and communications infrastructure around our country, and in creating well paid jobs for our young people at home.”
15:52He says there is “zero credibility” in suggesting that an open economy like Ireland’s could withstand a global recession and the collapse of the global investment banking system.
He says he “did make mistakes”.
“I admit that but so does everyone who governs,” he says. “I know that during my time as Taoiseach, while I did not get everything right, I can honestly put my hand on my heart and say I did try my very best to do the right thing by the Irish people.
“Of course, I apologise for my mistakes, but I am also pleased that I did get a lot of things right.”
He is concluding his opening statement with a nod “of respect” towards the work done by his successor Brian Cowen and the late Brian Lenihan.
“I also admire the efforts of the current Government and I think the Taoiseach, Minister Noonan and Minister Howlin have shown a lot of commitment and courage in tackling the financial crisis,” he says.
Under questioning from committee chairman Ciaran Lynch, Ahern says he “probably would have battened down the hatches in 1997 and said no to everything” in terms of spending.
“Then we would have had such a big surplus we would have been like Germany and able to take the whole hit,” he says.
He adds he “wasn’t blessed” to have had that view back then.
It’s already kicking off.
Sinn Fein finance spokesman Pearse Doherty is up and he immediately demands to know why parts of his opening statement today are “taken word for word” from his autobiography.
Ahern does not look pleased.
“Because that was my position when I did the autobiography and I haven’t changed the position,” Bertie says.
“I’m consistent,” he adds.
Pearse wants to know if he’s not had time to reflect on his position. Has it not changed at all?
“I haven’t changed my position,” says Bertie.
He’s being asked about the extension of property reliefs and whether they “helped sustain and create a property bubble”.
Ahern says yes they did.
Pearse wants to know when that penny dropped.
“Probably about 2009,” says Ahern.
Now Doherty wants to know about “the relationship between Fianna Fail and the construction industry”.
Ahern says that in his capacity of being president of FF, he endeavoured as a political party to “have good contacts with as many sectors of society as we could”.
He says he had “a lot of dealings” through the social partnership process with all the main employments agencies.
He says the CIF were “quite a strong lobby” as part of that process.
“I would have had dealings with them,” he says.
16:28“I don’t believe that I personally had much interaction with property developers,” he says. “I did deal a considerable amount with the CIF.”
Doherty is making sure he touches on all the headline issues during this segment.
He has asked about the infamous “go commit suicide” remark Ahern made in reference to the naysayers about the economy.
“I never should have said that,” says Ahern. “Three minutes after coming off the stage I apologised. That was totally the wrong thing to say.”
He adds that what he was trying to get across related to “confidence”.
Fine Gael TD Eoghan Murphy is questioning Ahern now.
He brings a classic one-liner from Ahern while questioning him on adding fuel to the fire.
“If hindsight was foresight, I’d be a billionaire, and so would you,” he says.
Let’s talk about the minister for finance then, says Murphy.
Ahern looking both ways for pending arrival of the bus.
Murphy references Cowen being asked about what effect the 2002 election had on budget decisions in 2000 and 2001. Cowen had basically replied that the government would be “very conscious” of not doing anything that “going to antagonise the electorate”.
He’s on to McGreevy now.
McGreevy said: “Certainly all governments of which I have been a member and all
governments when I wasn’t a member, have always borne that very much in mind.
“So the answer to your question is, yes, of course, the upcoming election has always influenced measures which the Government do at election time. We are politicians, don’t forget, and we actually like to be re-elected.”
“Is that a true reflection of your government?” Murphy concludes.
“Em, I don’t think we ever did anything irresponsible,” he says.
“And to be honest we hadn’t got that much competition in 2002 so I wasn’t that worried about whether I’d be re-elected Taoiseach or not.”
Ouch. Dig at Michael Noonan there.
16:56“If you asked me do I have to accept or disagree with what Mr McCreevy said, there is a touch of that you did something irresponsible, and I don’t think we did.”
Feel duty-bound to point out, as I was there that day in '06, that Bertie Ahern didn't say boom times were getting boomier. He said "boomer"— Ruadhán Mac Cormaic (@RuadhanIT) July 16, 2015
Murphy has asked him whether the 2008 public expenditure was too high.
Unsurprisingly, Ahern says yes it was.
But he adds that had he listened to the opposition, he “would have spent three times more”.
Fianna Fail finance spokesman Michael McGrath is now taking his turn.
Ahern has acknowledged that the model of the economy, with so much dependence on property, was “unsustainable” and “dangerous”.
He is being asked about the role of the Central Bank and is mirroring the evidence of Brian Cowen somewhat in terms of his assertions that there ought to be no political interference.
“My long experience of dealing with governors of Central Banks – and I’ve dealt with many – is they will not allow you inside their remit,” he says.
“I’m not saying I ever tried, but that is something that is guarded by them.”
McGrath is now asking about Ahern’s resignation.
Ahern said as he was stepping down that revelations in the Mahon Tribunal were becoming a distraction to his Cabinet colleagues, and McGrath wants to know were they not a distraction to him as Taoiseach in the months that preceded his resignation.
“The point is,” he says, “it didn’t affect my job because I didn’t give much time to it, other than maybe Sunday night or answering the endless letters I used get from them.
“But it became a daily issue not just for me but for my cabinet colleagues, and as I say in that statement, it was a serious time, there were serious economic difficulties, and the attention had to be on them, those issues, not me.”
He insists that the “distraction” issue for the Cabinet was the reason he resigned.
Otherwise, he says, “I would have stayed on - not like some former leaders until they were 80 - but I certainly would have stayed on for another 18 months.”
17:27They've now gone for a short break. Ten minutes or so.
To catch up on a few more bits and bobs that were said there, Ahern said he could not have done any better than Brian Cowen as Taoiseach.
“I don’t think Brian Lenihan or Brian Cowen made any mistakes. They did their very best in the circumstances.”
He earlier accused Pearse Doherty of having “a bit of an obsession” about the Galway tent.
“I wish I had known the extent of the exposure of some of those people, that they had to the banks,” he said.
It's kind of scary that Pearse Doherty memorised Bertie's autobiography.— Kieran Cunningham (@KCsixtyseven) July 16, 2015
We’re back and Fine Gael TD John Paul Phelan is now quizmaster.
He’s asking about whether he had a view on increasing capital gains tax, “despite the fact that you were a self-proclaimed socialist” at that particular time.
Phelan is smiling broadly but Joe Higgins is sitting beside him and he doesn’t know where to look.
“I probably shouldn’t have agreed to cut it then,” says Ahern.
“I’d have to say my ‘self-proclaimed socialist’ views haven’t changed either, but I think we should have kept the property tax.”
Phelan wants to know whether Ahern thinks it was appropriate to have had meetings with property developers.
He cites one in particular.
“Can you see now with the benefit of hindsight how such a meeting with such a significant group of developers, would portray a relationship – could portray I should say, I can’t lead you – that might have existed between government and those people at that time?”
Ahern says “of course” he can understand how it could.
“It was with officials,” he says. “I tended as best I could – but I can’t say I always did – to make sure I had an official [with me] and it would be properly done.”
Fine Gael senator Michael d’Arcy is asking about regulation.
“Was there appropriate regulation by the authorities into the banks?” he asks.
“Not at all,” says Ahern, looking disgusted. “There was hardly any regulation as far as I can see.”
Ciaran Lynch wants to know if he ever met the financial regulator as Taoiseach.
“No,” says Ahern.
He adds he may have done so at the annual dinner of the Irish Financial Services Centre Clearing House Group.
He is giving out about all the hype in relation to residential property.
“Look what happened in the commercial property side of things,” he says.
“There was where all the madness happened where it zoomed from nearly nothing to extraordinary increases with no collateral behind the individuals, where the property was all over the world. It was doled out like snuff at a wake.”
That’s the second time we’ve heard “snuff at a wake” at this inquiry.
“Now who should have seen it?” Ahern ponders.
“It was the job... the job of the regulator,” he concludes. “I mean, I have, earlier on today, taken my hit for the areas that were within my responsibility, but I’m damned if I’m going to take responsibility for something that wasn’t.”
Now McNamara wants to know if Cowen got “the biggest hospital pass in history” off him when he took over.
Ahern says getting to be Taoiseach is never a hospital pass.
“When I handed over, we still were in a good position,” he says.
“Do you believe that?” interrupts McNamara.
“Let the witness finish,” interjects chairman Ciaran Lynch.
“We were still in a good position,” says Ahern. “We did not think the investment banks of the world were going to collapse in a short period of time that would precipitate the crisis as it did.”
Fianna Fail marc MacSharry is asking about the Galway tent again.
He asks whether Ahern believes it left a “grubby impression” on the party.
“I accept some people in Fianna Fail ran away from it,” he says. “But I believe they were wrong,” he says.
“Were the party wrong to abandon it?” asks MacSharry.
“Yes,” says Ahern.
Interestingly, that was Cowen’s decision when he came to power and maintained during his evidence that it was the right decision.
Ahern is now cribbing a bit about how annoying fundraising was.
He says he pretty much couldn’t stand it but that the Galway tent was the “only pleasurable” fundraiser. “It was the only place where there was a bit of craic,” he adds.
Now Labour senator Susan O’Keeffe is demanded to know what the people in the tent were paying for if it was all as innocent as has been maintained.
“It usually rained in Galway on race week so at least you had a tent to stay dry,” Ahern replies, perhaps getting a little tired of talking about the tent at this stage.
O’Keeffe isn’t going to let him away with that though.
“I don’t think that’s the answer I was looking for,” she says.
“Well you got a bit of food; you got a bit of fun,” is his reply.
O’Keeffe looks unimpressed.
Ahern even reveals that “some people met their wives to be and things like that in it”.
“Really?” asks O’Keeffe.
Bertie looks her straight in the eye.
“Yeah,” he says.
“Okay, Mr Ahern, on a serious note,” persists O’Keefe.
“Oh, I’m dead serious,” he says. “That was one of the good things about it.”
“I had no idea the Fianna Fail party were involved in dating services,” says O’Keeffe.
“Well it happened in the tent,” he says.
It really is all coming out now.
18:47Ahern says Brian Cowen came straight to his home from the airport on his return from his St Patrick’s Day trade mission in 2008 in order to brief him on the situation regarding the banks.
19:09They're on a short break. We should be back in the next five minutes.
Senator Sean Barrett is asking about the advice that was given and listened to by the government in the run up to the banking collapse.
Morgan Kelly “did get it very right”, Ahern admits.
In light of his qualifications as an accountant, Mr Barrett wants to know how the auditors missed so much.
“Are standards high enough?” he asks.
“The only explanation that I can give is, at the end of the day, a lot of it was about risk,” says Ahern.
“They had to be taking the banking figures. Right up until the end, the banks, when they were being asked by the regulator, were standing over their figures. They were replying these were net worth individuals.
“All I can assume is the auditors must have been accepting that the capital the banks said they put aside to deal with this was adequate.”
Committee chairman Ciaran Lynch is wrapping things up and wants to know how many briefings Ahern got about the situation in Anglo before he left office.
“Very little,” says Ahern.
“How serious was the advice?” asks Lynch.
“Other than the one I mentioned to you about the minister coming to see me,” replies Ahern, referencing Cowen’s visit after his St Patrick’s Day trade mission return.
“Did you talk to the financial regulator or the governor?” asks Lynch.
“No, I never had a discussion with the financial regulator,” says Ahern.
“Why not?” Lynch wants to know.
“He never... I had a practice, which continued on, that the Central Bank governor would meet me – I would go to the Central Bank, he would come to my office – but there was no such arrangement every with the regulator,” replies Ahern.
Fine Gael TD Eoghan Murphy enquires whether it ever crossed Ahern’s mind to approach the financial regulator himself to talk about the regulation of the system.
“No, because it was the old system had prevailed,” he says. “The person who was the face of that end was the governor of the Central Bank and the Central Bank governor did come to me.
Ahern has clarified that the meeting in his house with Cowen related to the share price collapse of Anglo.
He says he has no recollection of talking about the contracts for difference that Sean Quinn had built up in the bank, and suggests he would remember as he would meet the Quinns at GAA occasions regularly enough.
That concludes the committees questioning and Ahern is asked to give any closing remarks.
He has told some sort of a story but I haven’t got the foggiest what it was about.
Looks like he was expecting a laugh at end too, but most of the committee just looked at him rather blankly.
On that slightly odd note, we are at the end of Bertie Ahern’s evidence to the Banking Inquiry.
Thanks for joining me and see irishtimes.com as well as tomorrow’s newspaper for reports and analysis of today’s events.
This event has now ended
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