Pfos case has caused 'reputational damage' to island
IT DOESN'T seem long since our States, or their delegates in the civil service, managed to lose £2.6m. in the Lagan fraud. Somehow this quickly seemed to be brushed under the carpet with little accountability, but in any case the money has long gone. We now have the far more serious incident of approximately £11m. of taxpayers' money being lost – I am including the rejected £3m. offer to settle in with the legal fees of £8m., although I do accept that even had a timely settlement been reached, substantial legal costs would have been incurred.
The main reason for bringing up the painful memory of Lagan is that both incidents have caused reputational damage to the island and display a lack of proper controls over public funds. Please compare this to what happens in the case of privately-owned financial institutions on the island.
If the GFSC considers that there are insufficient documented controls in place to ensure that the reputation of the island is adequately protected, then the directors of those institutions are subject to the real possibility of hefty fines, prohibited from pursuing their careers, and public humiliation. They may also have their professional qualifications removed. If an institution has insufficient documented controls to prevent fraud, similar draconian action can be taken. In both of these examples it matters not whether the island's reputation has actually suffered any damage, or that fraud has actually occurred. The GFSC will and does take action if there are insufficient documented controls.
I am not arguing against the powers of the GFSC in this context – from what I read in your newspaper there appears to be overwhelming support from our finance industry for the powers that it has been given and the way in which it uses those powers.
The members of our States have given those powers to the GFSC, so would it not be reasonable if those members (and the appropriate members of the civil service) were subject to the same rules and penalties. Now I am sure that many States members will say 'nothing to do with me', or the usual 'it must be somebody else's fault', but the GFSC do not accept such excuses. Non-executive members of financial institutions are treated the same as executive directors for any failures – it's called collective responsibility.
But reading the comments of the last two ministers of Public Services, there seems to have been a great reluctance to accept responsibility – in this case it's not the committee's fault, it's the fault of the lawyers.
If that is what he really believes, then they are naive. Lawyers make their money – an awful lot of money in some cases – from charging fees based on the time they spend. Of course they like to win – it improves their reputations and so they get more clients. But, win or lose, they get paid. So with any case which has the potential of a long drawn out trial, are too many lawyers going to recommend that the client, the States in this case, settle early? Clearly not.
Surely the States should have been aware of this – and I'm not just referring to the committee involved. Where were the law officers? When the potential for losing so much taxpayers' money is involved, all members should make it their business to be informed of the risk and, if it goes badly wrong, the reputational damage. Perhaps then one States member, properly informed, may have questioned the strategy being outlined, or at least identified that the claim may eventually be out of time. It is beyond belief that the highly paid lawyers did not recognise this risk.
So I assume that now we will get an internal inquiry which will lay the blame somewhere else and, as with Lagan, it will all be brushed under the carpet.
One final point – will we, the taxpayers, be told which legal firms were involved and how much they were paid for the very poor advice they gave, or will this also be brushed under the carpet?
PS – I see in the news that our chief minister is also not immune from causing the island reputational damage – actual damage. Maybe the GFSC should have a word with him.
Name and address withheld.
