Madoff, UniCredit and Ireland’s regulatory silence


by David Malone{jcomments on}

Last week I wrote suggesting Unicredit might be in trouble because of debts coming to it from its Austrian subsidiary Bank Austria and its American subsidiaries Pioneer Global Asset Management and Vanderbilt Capital Advisers

Friday, Unicredit, Pioneer, Bank Austria and through them, Medici Bank, are all named as accused in the largest case to come out of the Madoff swindle.

Now this brings up a point which has been bothering me for the last couple of weeks. How is it, that I know that the Irish Financial regulator has on file certain information regarding the activities of UniCredit which would be of material interest to the Austrian financial regulator, and Austrian parliament, as well as to their Italian counterparts, and the New York lawyers led by Mr Picard, who filed the suit, and yet it seems none of them know?

Why has the Irish regulator, or the Irish Minister of Finance, not seen fit to tell his European regulatory partners highly relevant information, despite the fact that European law makes it their duty to do so? Why does the Austrian parliament not know what I do, regarding a matter which has now embroiled the owners of the largest bank in Austria?

You might argue that I can’t possibly know what the Austrian parliament does and does not know. And yet silly as it is, in this case I do know. Just as I also happen to have talked to a retired executive of one of the largest, collapsed and now-nationalised, European banks; this person has detailed and disturbing knowledge pertaining to the how the bank was taken over, how it operated both in Ireland and in New York, and why it collapsed. Now, although it is a matter of public record that the Security and Exchange Commission visited Dublin while investigating the activities of the collapsed bank which were under their juristriction, this executive has never been contacted. Neither the Irish regulator, nor the SEC, bothered to contact him. Why not?

I wonder if it is time for ordinary people to start pressing via both their elected representatives and Freedom of information requests, for what is known to the Regulators to be brought in to the light of day instead of being hidden away behind the greasy shroud of Corporate confidentiality.

I am not so naive as to expect any of the information the regulators have, and have so far kept secret, will be made available, but I do think it begins to prepare the grounds for taking the regulators, in person, to court, for dereliction of duty at some time in the future.  I think it is important to make it clear to the Regulators that if they have failed to serve the interest of the public and have instead chosen to protect the banks, that they should start now to fear for their personal future.

To this end I wonder if one of the last honest politicians in Ireland, Senator Norris, might take it upon himself to ask the regulator what he knows and what he has conveyed to other European regulators. For if the answer  comes back, ‘nothing’ because there is nothing to tell, then I suggest that that regulator might become the first to answer to the public in court, after an election which might just remove those who are protecting the banks in preference to their own people and nation.

What we have now is a conspiracy of silence where every nation’s regulator is keeping silent about facts known to them because they think it will protect ‘their banks’ from harm. Their logic is that the banks are too important to be allowed to come to any harm, even if that means putting them above the laws meant to regulate them.  In this case the Irish regulators know facts about UniCredit which would be helpful to Mr Picard in his case against Unicredit and the others and possibly important to the Austrians as well.

I would be willing to bet that the Austrian and Italian regulators might be aware of facts pertaining to both Bank Medici and Anglo Irish Bank’s Austrian subsidiary, which the Irish people, if not their banks, would very much like to know. Each regulator is protecting its banks.  Each would very much like to know what the other knows. We, the people, would like to know what they all know. And the banks and their political friends have so far made sure that none of us know anything.

But the situation may be changing of its own accord. What happens when, as in Mr Picard’s Madoff case, one country might seek to deflect blame and even culpability from an important bank in its country to the regulator and banks in another country? In this case a political party in Austria might seek to find the evidence to put the blame upon UniCredit and the Italian regulator or even the Irish regulator for failure to do his duty.

I wonder if this is a new phase of the bank fraud crisis, where the rats start to turn on each other. If so we should all do what we can to help them. There is nothing to stop us coordinating Freedom of Information requests in our various countries to find out what is known about the same banks.  At the very, least it might raise the political and legal temperature surrounding the banks in question.

This article is reproduced with thanks to David Malone. He is the author of the book Debt Generation. You can read and listen to excerpts from his book here: