Free Ship of Fools by Fintan O'Toole Page B

system was itself eloquent testimony to the prevailing standards in public life. O’Reilly-Hyland cannot but have placed those in the bank who were trying to uphold higher standards in an excruciatingly difficult position. In evidence to the Moriarty tribunal, O’Reilly-Hyland stated that it had not at any stage been brought to his attention by the governor
or by any other official within the Central Bank that his dealings with Traynor’s scheme had been discovered by its inspectors. This reluctance to raise the issue suggests that it was regarded as a painful embarrassment.
    The then deputy general manager of the Central Bank, Timothy O’Grady-Walshe, told the Moriarty tribunal that he could not remember seeing documentation referring to O’Reilly-Hyland’s dealings with Traynor, but he ‘thought it probable’ that he had done so. He ‘imagined that it should have raised questions within the Central Bank. As to whether it was taken further than himself, he stated that he did not know, but was confident that it was highly probable that he had spoken to the Governor and the General Manager about the matter.’ However, the Central Bank governor of the time, Charles Murray, told the tribunal that it was possible that he had been told about O’Reilly-Hyland but had then forgotten the information. If he were informed, he said, it would have been up to him to decide whether or not to inform the other members of the Board, but he doubted very much whether he would have informed them.
    There is no evidence that knowledge of O’Reilly-Hyland’s involvement in the Ansbacher tax evasion scam had a direct bearing on the Central Bank’s supine approach to this web of financial crime. Some of those at high levels in the bank, however, knew two things. One was that one of their own directors was deeply involved in both the scam itself and in Fianna Fáil. The other was that Des Traynor, who was running the Ansbacher fraud, was close to the new party leader, Charles Haughey. In a supervisory culture that was already remarkably deferential, such knowledge was hardly likely to encourage bold scrutiny.
    The then governor Charles Murray suggested at the
Moriarty tribunal that if Adrian Byrne’s view was that tax evasion had been involved, or if the record in that regard had been changed, he should have pressed the matter by bringing it to a more senior member of staff. Adrian Byrne himself explained to the Moriarty tribunal that the Central Bank’s approach to G&M was shaped by two factors. One was a narrow concern with keeping G&M in business. The Central Bank, he said, had two options: it could have revoked the bank’s licence, or it could have demanded the resignation of certain directors. He said that either course of action would most likely have led to the bank’s collapse and depositors would have lost money. The Central Bank’s priority was to stop this happening. At the same, time, the regulators held Traynor in high esteem. When Traynor promised them after a second inspection in 1978 that he would begin to wind down the Cayman scheme, they believed him. ‘We thought’, said Byrne, ‘that he would work his way out of this.’
    During 1979, before Haughey took over as party leader and Taoiseach in December, the Central Bank began to express more forceful concerns to Des Traynor, pointing out rather plaintively that the Ansbacher scheme was ‘not in the national interest’. In theory, these apparent warning shots should have become louder after Haughey’s election. The arrival of the Boss into power was the signal for a massive growth in the scale of the Ansbacher scam. In April 1979, the deposits stood at just under IR£5 million. Three years later, they had reached almost IR£27 million. By then, the Cayman operation, initially a sideshow, had become larger than its parent company.
    This happened in spite of the Central