Irish Government to pursue religious orders for €250 million in unpaid compensation to abuse victims
The Cabinet of the Irish Government agreed this week to pursue religious orders for payment of the remaining €250 million needed to make up their half of the cost of €1.46 billion compensation promised to victims of horrific ill-treatment in orphanages, schools, borstals and other institutions run by Catholic monks and nuns. The amount was revised upwards from €1.36 billion after more victims came forward.
Education Minister Ruairi Quinn has been given the task of extracting the money from the orders.
The congregations of priests and nuns initially offered just €128 million in cash, property and counselling services as part of a controversial indemnity deal dating back to 2002. Only €106 million of this was ever realised.
Four of the eighteen orders named in the Ryan Commission that investigated the decades of abuse that was perpetrated have said they are willing to consider transferring more school buildings and other educational infrastructure on top of what has been offered.
Mr Quinn said: “The Government is obviously disappointed that the congregations have not agreed to a 50:50 share of the very considerable cost for redress. This decision represents the most pragmatic way to maximise the level of contributions to be made by the congregations and the management bodies so that the taxpayer does not bear an unreasonable burden of the costs.”
On Thursday 11 July, Ireland passed an abortion law legalising abortions for women if a woman’s life is under threat.
The critical part of the legalisation bill that I take issue with is the specification that a woman’s life must be threatened by the continuation of the pregnancy, including by threat of suicide, and that neither rape nor a woman’s values, interests and wants are given any consideration in the matter.
How positive a step towards women’s rights has the Irish government made if it considers death to be the only valid release clause from an unwanted pregnancy? By its own words, the state is content to withhold the power of a woman to control what happens to her own body to the point that she resorts to suicide as a final act of control. This is an act of a government that has no respect for its women.
Anti-abortionists need to recognise that suicide is not the only way a woman’s life can be destroyed by an unwanted pregnancy, and that failure to acknowledge this fact is a failure to acknowledge the value and personhood of women.
Imagine a medical student. She is in her first year of university when she is brutally raped and subsequently falls pregnant. Suddenly, any plans or aspirations she may have had – to finish her degree, begin her career, help hundreds of sick people, and start on the road to achieving any number of anticipated life-goals – are blown out of the water. The life she would have had is terminated, for better or worse, before a physiological threat to her life even enters the picture.
On top of this, this woman then has to face a number of oft unappreciated, sometimes grim, realities of pregnancy.
When carrying a foetus, a woman’s body is no longer her own, it becomes unpredictable, even uncooperative. She may get nauseous for weeks on end, feel exhausted, physically and mentally, her changed body may well prevent her from doing many of the things that she finds important or enjoyable, she might even lose her job.
She then faces uncountable hours of labour, the threat of post-natal depression, or other, non-life-threatening consequences of childbirth. But most importantly of all, she has to take responsibility for a human life, even if this takes the form of putting that child up for adoption.
Even with the smoothest of pregnancies, the changes it wreaks on the mother’s life will stay with her for ever. To assume that the threat posed by pregnancy to a woman can be such a simple, black and white, life or death calculation is insulting and sexist.
Historically men have been permitted, if not encouraged, to take out threats to their valued way of life, whether in the form of a household intruder or a war-time enemy. It is viewed as a necessary and sometimes honourable act, even if it means harming an unwitting assailant.
Yet when the threat is to a woman’s valued way of life in the form of an unwanted pregnancy, the threat is ignored and the woman is refused powers to protect herself. This sends the misogynistic message that a woman’s only real purpose is as a mother, and her life could not possibly have as much value and meaning to herself and society as that of the undeveloped foetus.
It is time opponents of abortion realise that the debate surrounding the legalisation of abortion is not simply a question about the biological health of the mother, or the imagined potential of the foetus. It is about the complexities of a human life, and respecting a woman’s intelligence, autonomy and desire for fulfilment as having equal status and complexity as any man’s.
Following the release of tapes of Anglo staff discussing how they present their case for support, in the lead up to the bank guarantee, there are more revelations in todays Irish Independent (which has been breaking the story). You can listen to the tapes via the Indo’s website (at the links above), but here are… read full article
Irish ‘rage’ after bank manipulated multi-billion bailout
BRUSSELS – Irish leader Enda Kenny has said he understands “the rage and the anger” of Irishpeople on Monday (24 June) following a leak of taped conversations by two Anglo-Irish bank bosses which indicate the Irish government was conned into …
Top Irish Bankers Hoodwinked Government Over Bailout, Secret Recordings Show
A top banker with the financial institution that almost bankrupted Ireland boasted that he had picked the figure of €7bn (£5.9bn) they told the Irish government was needed to rescue the Anglo Irish Bank “out of his arse.” Taped phone calls between two …
David Drumm, former chief executive of Anglo Irish Bank, tells a senior manager at the bank in the latest tape revelations: “We won’t do anything blatant, but . . . we have to get the money in . . . get the f***in’ money in, get it in.” Photograph …
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Pedestrians walk past the Anglo Irish Bank head offices, in Belfast March 25, 2010. Credit: Reuters/Cathal McNaughton. By Sam Cage and Conor Humphries. DUBLIN | Tue Jun 25, 2013 4:19pm BST. DUBLIN (Reuters) – Ireland’s deputy prime minister laid in …
Irish Ministry Calls for Pension Overhaul
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IMF Warns of Irish Austerity Fatigue as Bailout Exit Looms
The Irish government estimates an accord in February to restructure the bailout of former Anglo IrishBank Corp. will yield 1 billion euros ($1.3 billion) in annual savings from next year. These shouldn’t be used to temper budget cuts as the state may …
Inquiry seeks WA Irish child abuse victims
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DUBLIN — The Irish Parliament is expected to legalize limited abortion before its summer break after the publication of final government proposals that would allow terminations in cases when there is a real and substantial risk to the life of the …
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Threat to burn minister’s home over abortion bill
Health Minister James Reilly has received a letter threatening to burn him and his family out of their home from an opponent of the abortion bill. Also in this section. Outlook is gloomy: 10 more wet summers on cards · ‘Honest’ thief gives back bike to …
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Irish Human Rights Commission calls for comprehensive Magdalene redress …
The Irish Human Rights Commission has called on the government to establish a comprehensive redress scheme for survivors of the Magdalene Laundries. The agency says the scheme should be established as the State failed to protect the human rights of …
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Farmer Willie Corduff is just one of the Irish taxpayers that have to pick up Statoils bill on the Coribb-project.
The cost overrun is mainly due to poor handling of local residents’ protests. Locals complain of lack of dialogue with the oil companies, little information, and fear of getting a pipeline almost under their houses.
The intense protests have delayed the project and made it more expensive.
Paradoxically enough, though, it is the Irish themselves who must foot the bill for the extra due the country’s legislation. Losses for companies are tax-deductible.
Ireland’s favourable tax policy means Statoil’s losses could actually be very small. Losses, capital costs, and exploration costs can be written off against future income in their entirety, while the tax rate is only 25 per cent.
Irish tax havens
Ireland has long been known to have very favourable tax rules for companies. Both the IMF (International Monetary Fund) and organisation Tax Justice Network defines the country as a tax haven – a term often associated with palm-treed islands in distant waters.
Standard corporation tax in Ireland is 12.5 per cent, which has successfully tempted Internet giant Google to establish its European headquarters in the country. Apple has also received criticism for using the Irish’ tax regime to evade taxes. Apple top Tim Cook had to answer to the US Congress regarding the practice last week.
Norway pays nothing
Statoil’s multi-billion kroner loss falls to the Irish to pay in its entirety, while Norwegian taxpayers remain unencumbered. It would have been different had the project been in Norway.
Companies can write off about 78 per cent of their losses here. This rate may be reduced if the government succeeds in getting its planned tax changes through.
In return, the Norwegian government receives 78 per cent of the hydrocarbon industry’s profits.
“There’s no doubt the tax system is attractive for oil companies. It must be this way, however, to draw companies here. Very few significant discoveries have been made in this country and the outlook for revenues is uncertain. In many ways, Ireland is where Norway was before the Ekofisk discovery in the ‘60s,” says Fergus Cahill, head of the Irish Offshore Operators’ Association.
The oil companies decided
Many among the Irish population are sceptical to the favourable tax regime for oil companies. Padraigh Cambell is a former rig worker and has been a spokesperson union Siptu. He knows Irish history oil well.
“What taxation authorities drew up in the ‘80s was based on what the oil companies said. They dictated the terms; 25 per cent tax and 100 per cent depreciation. All expenses 25 years back in time can be written off, as well as gifts, sponsorships, everything! Politicians said that this would be good for Ireland, but now the situation is that the supply business happens from Scotland, for example. So the oil-related costs can then be written off in Ireland. We want the Norwegian model. We want jobs for Irish ports, Irish companies, and Irish workers,” says Mr Campbell.
The controversial gas pipeline from the Corrib field comes ashore near the town of Rossport, northwest Ireland. Several residents in the town neither believe Ireland will benefit from the Corrib field because depreciation rules are so favourable, nor that the country will not get tax revenues.
“People in Norway will benefit from the project through Statoil. We’re not going to profit from it because of the Irish tax rules,” says farmer Willie Corduff.
Fergus Cahill in the Irish Offshore Operators’ Association disagrees.
“I know this is a popular argument among some opponents of the hydrocarbon industry in Ireland. Calculations by the authorities show that tax revenues from commercial fields will be substantial – even in relation to the present system,” Mr Cahill says.
Modified in 2007
The Irish government has announced a review of the tax system in the autumn. However, there is nothing to suggest that this will result in the country approaching the tax system as it presently is in Norway.
“I struggle to understand how anyone can expect we’ll have a Norwegian tax system without having Norway’s amounts of commercial discoveries,” newspaper The Irish Times reported Ireland’s Energy Minister Pat Rabbitte saying at a hearing earlier in May.
The system was also changed in 2007. Authorities then introduced a surplus tax of up to 15 per cent that could bring the total tax rate up to 40 per cent, depending on the project’s profitability. The change was not retroactive, and has no significance for the Corrib project Statoil is involved in.
Statoil’s annual report on its 2011 operations in Ireland shows total national losses of EUR 1.3 billion (almost NOK 10 billion), but that this can be written off against future taxable income.
In 1997, Statoil also recorded an approximately EUR 159 million (NOK 1.2 billion) loss in the Connemara area of Ireland, when it was determined that the field was not commercial. Irish rules are designed so that losses and expenses can be written off against taxes for 25 years after they are incurred. This means that Statoil can also write off the Connemara loss against tax on future profits from Coribb field.
The corresponding limit in Norway is ten years.
Head of Information Bård Glad Pedersen at Statoil does not wish to comment directly on how the favourable tax terms have or have not influenced their decision to continue their operations in Ireland, but writes in an e-mail that:
“It is common that costs and losses can be offset against future income. The tax system in Ireland does not differ significantly from taxation in the other countries in this area. We make investment decisions on a commercial basis, and the framework conditions are included as a factor in these reviews.”
Shell, operator of Coribb field, has the following comment:
“All companies in Ireland can write off investment costs against profits, and the partners in Coribb field are no exception. Oil and gas companies must, however, pay 25 per cent tax instead of 12.5 like other companies in the country. Ireland also receives tax revenue from the hundreds of people who are employed in connection with the project,” Shell Ireland press officer Fiona McGuinness writes in an email.
Mari Steed was two years old when she was adopted from Ireland by a Flourtown family. Years later, her search for her birth mother turned up the Magdalene Laundries’ horrifying legacy, and Steed wants justice—along with an apology from the Catholic church.
Mari Steed’s fingers trembled as she tapped commands on her laptop.
The unprecedented apology was about to be streamed online, projected onto a big screen in the conference room of the Philadelphia World Affairs Council. As the group’s director of technology and new media, Steed had set up numerous live feeds before. But her hands had never shaken.
Today was personal. Irish Prime Minister Enda Kenny was going to use a session of Parliament to issue an apology, acknowledging what Mari Steed had known for years: that for nearly a century, the Irish government had participated in the imprisonment and abuse of thousands of women whose only crime was that they’d been orphaned, or abandoned by their families, or gotten pregnant outside of marriage. They were known as the Magdalenes. And Mari’s birth mother had been one of them.
The government had long touted a party line about the Magdalenes: They had voluntarily entered the institutions where they’d been treated like slaves, had willingly relinquished their children. But now, the Irish government could no longer deny the disgrace it had abetted.
And so today, Ireland’s prime minister would officially apologize to the surviving women—all of them elderly. And Mari would begin to make peace with the country that had betrayed the child she had been and the mother who had borne her. The conference-room screen flickered to life. Mari leaned in to watch, her co-workers gripping her hands in support.
“What we discuss today is your story,” Kenny said in the televised session that practically all of Ireland was watching. “What we address today is how you took this country’s terrible ‘secret’ and made it your own. Burying it, carrying it in your hearts here at home, or with you to England and to Canada, America and Australia, on behalf of Ireland and the Irish people. But from this moment on, you need carry it no more. Because today, we take it back.”
A month after the announcement, Mari Steed, 53, is curled on the living room sofa in the cozy Levittown home she shares with her grown son and daughter. A short, pretty woman with a husky laugh, thick black hair and dark eyes, she’s a dead ringer for her biological mother, Josephine Fitzpatrick, now 80, whose face is included among the framed family photos on display. Freezing rain batters the picture window that looks onto the backyard; two huge dogs snooze contentedly on the carpet. The aromas of fresh-brewed coffee and just-baked soda bread fill the air. A few Irish musical instruments hang on the wall, a nod to the country Mari left behind when she was adopted by a suburban Philadelphia couple at the age of 18 months.
“You wait all this time for an apology, and you think, ‘I wonder what they’ll say? How much will the government actually admit to? What if they still lie?’” she says. “But it was better than we had hoped for.”
Adoptees never know what they’ll find if they manage to locate their birth parents. It’s an understatement to say that Mari never expected that her reunion with Josephine—whom she calls Josie—would help correct the narrative of Ireland’s past. Like so many others before her, 20 yearsago, she’d gone looking for her birth mother simply to discover who she was.
Her adoptive parents raised her in Flourtown, and “told me the usual thing that parents tell their adopted children: that I was special, I was chosen. They even kept my first name, because they said I walked off the plane answering to it.” Two years later, they adopted a son as well. Mari had what she calls a “wonderful” childhood, attended Bishop McDevitt in Wyncote, marched with the drill team, starred in school musicals: “I wasn’t conscious, growing up, of some hole I had to fill.”
She might never have gone looking for the woman who relinquished her if fate hadn’t intervened in a cruel and ironic way. In her senior year, Steed became pregnant by her boyfriend, a junior. Her parents shipped her to St. Vincent’s, a home in Upper Darby for unwed mothers; the days were long and dull, peppered with withering comments from the nuns about her stupidity. On her rare visits home to Flourtown, young Mari was kept indoors, lest her swelling belly attract neighborhood gossip.
Mari fantasized about setting up house with her boyfriend, of raising the baby with him. But the decision had been made for her: Her daughter, to be named Erin, would be given up for adoption.
“I was in a daze,” Mari recalls. “There was a hospital photographer who asked if I wanted a picture. I said yes, but then she came back and said, ‘I’ve been told I’m not allowed.” I got ballsy and said to my social worker, ‘If I don’t get a picture before I leave, you don’t get the baby.’ Giving up Erin was the most wrenching experience of my life. I cried for weeks.”
She lasted a year at West Chester University, devolving into a party girl. She got a job in banking and moved to Florida. There she married an abusive, addicted man and had two children with him before he committed suicide right in front of her. “My husband was a deeply disturbed man, but I couldn’t see that when we first met,” she says. “I felt so bad about myself. I didn’t think I deserved better.”
Mari knew it was time to deal with the shame and pain of losing Erin—and began to wonder if being taken from her own birth mother was something she needed to come to grips with, too. She felt it was too soon to search for her own daughter (“I didn’t want to do anything until she turned 18”); instead, she began to look for the woman who’d packed her off to America clad in a sweet hand-smocked dress, clutching a stuffed handmade doll. Mari’s parents only knew that she had been born at Bessborough, a home for unwed mothers in Cork.
With that scant information, Mari leapt into the adoption-rights river, whose current was growing stronger through the 1990s as adoptees in the U.S. began clamoring for the right to know their origins.
“I don’t remember leaving Ireland,” she says. “But at 18 months, I certainly must have known who my mother was. What was it like for me to lose her? What was my birth mother’s story? I only had Erin for two days. It was devastating to give her up. How do you give up a toddler?”
Her 10-year search twisted and turned like the roads through Donegal. The dead ends were devastating; the obfuscation from church and state officials was infuriating. But after each setback, a “search angel” from the world of international adoption-rights would serendipitously appear to steer Mari to a critical document or an obscure public record. “I felt led—it’s the only way to explain it,” Steed says. “Just when I’d want to give up, I’d get an email out of the blue.”
“Mari is charismatic and dogged,” says Barbie Bowman, a longtime friend. “Where other people see impossible obstacles, she says, ‘How do we get around this?’ If anyone was going to find her birth mother, it was going to be Mari.”
Years passed. Eventually, Mari had a name. She found Josephine Fitzpatrick’s phone number in England and called her. But suddenly overcome with anxiety—would Josephine be frightened by an unexpected call? Angry? Dismissive?—she hung up the moment she heard the voice on the other end say “Hello.” Still, that one word convinced Mari she had the right woman. “Her voice was exactly like mine,” she says.
She asked for advice from Judy Campbell, an adoption researcher in London. Campbell offered to approach Josephine’s former landlord, a friend who regularly saw Josephine and her husband, Les, at Sunday Mass. Campbell asked the landlord to relay that an American woman was searching for Josephine. The landlord reported back that Les’s excited response was, “That must be the baby she gave up!”
Mari’s phone rang one day at 5 a.m.
“Josephine’s husband is a doll!” Campbell told her. “He says Josephine is getting her hair done, but she’ll be back in an hour and a half. He says to call her then!”
“Oh my God,” Mari replied. “Is this happening?”
For 90 minutes she paced, wondering what she would say to the mother she hadn’t seen in 50 years and did not remember. She dialed the phone.
“Hello?” said Josephine tentatively.
“Hello, Mom,” said Mari, holding the phone so tight that it would be hard to uncurl her fingers later.
“Oh, Mari, my Mari!” came the voice that sounded so much like her own. “Is it really you? Oh, my dear, dear Mari!”
The two wept and laughed for 45 minutes, introducing themselves to each other, marveling at similarities, hungry for details of lives that had played out 3,000 miles apart. “The feeling, oh my God,” recalls Mari, hand on her chest. “It was so close, like we’d been speaking every day of our lives.”
By then, she had become a bit of an expert on Irish adoption issues. Scheduled to speak at an upcoming conference in Dublin, she told Josephine that she and her children would make a stop in London first, so everyone could meet.
“So we’re walking out of Heathrow Airport, and this van pulls up,” says Mari. “Les is driving. And there was Josie. I can’t even describe what it was like to see her. She gets out of the van and she’s tiny. She’s not even four-foot-10. I’m like a giantess next to her. And we fall into each other’s arms. She’s crying, Les is crying, the kids are crying. People are honking their horns, because they know something great is happening.”
Holding Josie close, Mari felt a shock of familiarity that let her know, in case there was any doubt, that this was indeed her birth mother.
“It was her smell,” she says. “I recognized her smell.”
Before beginning her search, Mari Steed had never heard the term “Magdalene.” She soon learned that her mother had been one. From the mid-19th through the late 20th century, Ireland dealt with its most desperate citizens—abandoned and orphaned children, the mentally ill, unwed mothers—by locking them out of sight in industrial and reform schools, mental asylums, mother-and-baby homes and, perhaps most infamously, what came to be known as the Magdalene Laundries.
These last were industrial laundries, run first by Protestant lay organizations, then by Catholic nuns. An estimated 10,000 women lived and toiled inside them. Some were “wayward girls” sent by family; others were orphans, or abandoned, or crime victims sent to the laundries by the courts, church or police. The girls ate paupers’ meals, suffered unspeakable neglect and abuse, and worked backbreaking hours doing laundry and sewing for no pay for hospitals, government agencies and the like. The laundries were named for Mary Magdalene, the biblical prostitute reformed by Christ. The wretched who suffered behind their walls were referred to, simply, as Magdalenes.
They were treated as slaves, beaten with straps, denied food, forced to lie prone in prayer for hours, sometimes sexually abused by groundskeepers or visiting priests. They lived lives fit for a Dickens novel. “Life was brutal for them,” Boston College associate professor James Smith wrote in his 2007 history of the Magdalenes. “Ireland was a new state and very concerned with forging a national identity of moral purity. So they hid away anyone who might be seen as shameful or lacking in respectability.”
Josephine was the fourth-born child of a single woman from County Wexford whose fed-up family finally told her to move to England, marry a good man, tell him nothing about the children she’d left behind, and settle down already. The first three of the woman’s children were raised by extended family. But Josephine was sent to a children’s home and, when she hit her teens, transferred to a Magdalene laundry in Cork run by the Good Shepherd Sisters. Identified as a talented seamstress, she was put to work sewing and embroidering.
After 10 years, Josephine was sent to work in a Catholic hospital. Unprepared for the larger world and naïve around men, she became pregnant. Sent by her employers to Bessborough, a mother-and-baby home in Cork run by the nuns, she gave birth to Mari, who was cared for in a nursery while Josephine again sewed and embroidered, visiting at night to rock and sing her daughter to sleep.
“It was understood that she wouldn’t keep me,” says Mari. “Josie never felt she had a say in the matter. You have to understand—she’d been treated like property. She was a broken person.”
When little Mari was 18 months old, she was deemed ready for adoption. Josie wept as she sewed clothes for her little girl to wear to meet her new parents in the United States. On the day Mari was taken, Josie stood outside the home as the sedan carrying her daughter drove away. “She told me she wept and wept for days,” says Mari. “I knew exactly how she felt.”
Josephine moved to England. When her first husband died, she married Les. She had no other children. “Josie told me that she was terrified to ever lose another child,” says Mari. “She wouldn’t be able to stand the pain.”
Hearing her birth mother’s story did more than incite empathy in Mari Steed. It served as a call to action. She would get justice—for her mother, for every one of the forgotten Magdalenes.
In 1993, a mass grave in Dublin holding the bodies of 155 Magdalenes was discovered. There was not a single headstone to detail who they were or when they had died. Ireland was horrified to learn how little regard the nuns seemed to have had for the pitiable women in their care.
A group of advocates calling themselves the Magdalene Memorial Committee sought to commemorate the dead women, installing a memorial park bench on St. Stephen’s Green and gravestones at Glasnevin cemetary in Dublin for the 133 bodies they were able to identify through records. Mari, along with several other adoption advocates, didn’t think it was enough. All of the Magdalenes, not just the deceased ones, deserved closure.
So in 2003, they formed Justice for Magdalenes, or JFM, a nonprofit with a two-fold goal: to obtain an official apology from the Irish government for its part in violating the rights of the women who lived in the laundries, and to get compensation for those women for their unpaid labor.
For years, the Irish government met JFM’s demands with a yawn. Mari worried that the public believed the wrongs heaped on the Magdalenes were confined to a single laundry, and had been righted by a single memorial bench. So JFM took its allegations to the United Nations Committee Against Torture.
In a stunning proclamation, the committee found probable cause and ordered the Irish government to get to the bottom of what had happened in the laundries. “That was the turning point,” says Conall O’Fatharta, a senior reporter for the Irish Examiner. “For 10 years, no one in the government would listen to JFM. But when the UN said, ‘You have to look into this,’ the state was finally backed into a corner.”
On February 5, 2013, the Irish government released its report. Its conclusion was unequivocal: The state did, indeed, have direct involvement in the laundries; it owed the Magdalenes an apology, and the women were entitled to redress.
“What JFM accomplished was extraordinary,” says O’Fatharta. “I think I speak for many people when I say that I can only stand back and watch them with awe.”
Boston College professor Smith—who was so moved by JFM’s work that he eventually joined the group’s advisory committee—calls their work “staggering.” He’s admiring of Steed in particular. “What’s interesting to me is that Mari was one of Ireland’s 2,000 ‘banished babies,’ who were relinquished to the United States and whom no one expected ever to see again,” he says. “The state thought it could literally export its problem children and never be held accountable for it. No one ever expected those babies to grow up, find the Internet, do their research, and return to fight for themselves and their birth mothers. But Mari did. She and JFM have corrected the narrative of Irish history because of it.”
As for Mari, she feels as though her life has come full circle. She’s in constant contact with Josie; she’s also reunited with her own birth daughter. “There is so much love,” she says gratefully. “And for Josie, who thought she’d lost the only child she ever had, well, she has me back—plus grandchildren. She is so happy.”
Mari and JFM are monitoring Ireland’s proposed plans to offer compensation to the estimated 1,000 to 2,000 surviving Magdalenes. She worries, though, that the government isn’t doing enough to publicize the redress plan, and that survivors will learn of it only after it’s too late.
“We still have a lot to do,” she says. “This isn’t over yet.”
So the US Permanent Subcommittee on Investigations has declared that Ireland is a tax haven and Apple executives giving testimony to the committee have said that the Irish government gave them a special 2% rate. Rate in this context is irrelevant however, as the mechanism ensures that what Apple declares as taxable income is completely up to them. As many reports have suggested, Apple could pay as little as 0.05% on income earned and passed through Ireland, and the revenue appears to be sales tax on Apple products bought in Ireland. In addition they have also said that their Irish companies are not registered for tax anywhere, so that none of the $30 bn global income earned in the last number of years was taxed.The Irish government denies that it has provided special tax treatment to Apple, and that it is not a tax haven. This is the surest sign that it is one, according to Richard Murphy of Tax Research UK.
In my long article in the first issue of Irish Left Review on Ireland’s corporate tax regime I made the point that Ireland in effect sells its abilities to make tax laws to profit hungry MNCs, in much the same way as it sells to the rights to our natural resources to large oil companies. That is, whatever economic benefit there is, and its small, goes to the ‘agents’ who negotiate the deal, with very little, if any, benefit appearing in the economy.
Recently these arrangements, known as the Double Irish with the Dutch Sandwich have been given a lot of attention and are often explained. For example, see this New York Times info graphic. However, while listening to Jim Stewart’s interview on Morning Ireland last Friday in a conversation about Google’s ‘grilling’ before the UK’s Public Accounts Committee on taxation, I found out that the ‘Dutch Sandwich’ is no longer used, and instead Google’s earnings from its EMEA market goes from Google Ireland to Google Ireland Holdings, which is registered in a solicitor’s office at 70 Sir John Rogerson’s Quay and also in Bermuda. So, by passing these to the Bermuda registered company, the earnings go straight to Bermuda. Google Ireland Holdings has no employees and is ‘owned’ by Google Bermuda which also has no employees. Both are unlimited companies, so under Irish law, they do not have to publish accounts.
via Irish Left Review.
via Irish Left Review.
IF THERE IS one topic that I get asked questions on more than any other it is in the area of bank deposits, the Deposit Protection Guarantee Scheme (DGS) and Deposit Interest Rates. The first answer I always give is that we should worry about the areas we can control, and ignore things that we cannot control.
Reading and discussing economic and investment updates seems to have replaced past discussions on property values and everyone seems to have an opinion on the Bank Guarantee, Euro Stability, Yen Devaluation and German Government Bond Yield. In reality, the investment world is very simple, but investment managers, stockbrokers and economists make their living from selling fear, greed and excitement in equal doses!
€150 million is on deposit in Irish banks
To set the scene, there is over €150 billion on deposit in customer deposit accounts in Irish Banks as of February 2013. This figure has been steadily falling ever since the banking crisis began in the summer of 2008, but is still a significant figure.
At that time, the Irish Government introduced the Eligible Liabilities Guarantee (ELG) which covered all deposits and some bonds in Irish covered institutions, in their entirety. I won’t cover the merits or otherwise of this blanket guarantee, or whether they were forced into it by higher powers. However, the ELG did give Irish depositors some comfort that all of their hard earned savings were fully guaranteed by the Government, and at the end of the day, the European institutions.
This comfort was taken away at the end of March when the ELG expired and we reverted to the historic guarantee. This guarantees €100,000 per institution. Therefore any individual who has a deposit with a covered institution with a balance under €100,000 can take some amount of comfort in a government guarantee.
If you’re lucky to have over €100,000, you should protect it
This does cause some confusion for individuals with multiple accounts, as the guarantee is per ‘institution’ not per account. For example, if an individual is lucky enough to have a savings deposit with AIB for €100,000, and also a portion of their pension on deposit with AIB for another €150,000, these accounts are taken in aggregate and only €100,000 of the combined balance (€250,000) is guaranteed)
Most sensible individuals are now rightly worried about the security of their cash and how to mitigate all the risks associated with savings and investments at the moment.
While I don’t personally believe the European Institutions or the Irish Government will default on their guarantee, recent news in Cyprus has, at least partially, brought this possibility into focus. It is clear that spreading deposits around the guaranteed banks and keeping exposure to any one bank below €100,000 is the obvious way to reduce this risk to a minimum
The threat to people’s deposits
Since banks have had some success with recent bond issues and seem to be stabilising, deposit rates have fallen significantly. There were wide spread offers during the summer of 2012 for 5 Year Fixed Deposits earning over 5 per cent. The best rate on the market as of the time of writing is now 2.75 per cent (excluding specialist accounts with Danske Bank).
This return, after DIRT is deducted, will only just beat inflation and I see this as being a larger threat to people’s deposits over the long term than any short term default risk. However, inflation never gets the headlines and is an invidious threat which is hard to understand in the short term.
The only true way to protect you from risks is to be widely diversified across a whole range of asset classes. €150 billion on deposit in Ireland would indicate to me that we are over-invested in cash at the moment, just as we were over-invested in property and Irish Equities in 2007.
Diversifying is the only way to protect your cash
In the long run, well managed and well protected portfolios never have too much in any one asset class. I would recommend assistance from a professional (ideally from a Fee Based Financial Advisor) before deciding exactly how to invest in a widely diversified portfolio but it’s the only way to truly protect against all the threats to our wealth and wellbeing in the current economic environment.
My biggest fear for Irish Investors and any of those individuals sitting on large deposits is that as the interest rates keep falling, they will become more and more restless. Equity markets have been on a fairly steady bull run since the market bottom in March 2009. The US indices are at or above all-time highs and this strong short term past performance might tempt some of these depositors to finally leap back into the markets.
I don’t know what is going to happen, but I would be nervous about equity markets at their current valuations and can easily see a correction in the second half of 2013. As markets keep going up, the risks of this correction keep getting larger and I just hope Irish depositors don’t’ get caught out by the markets again.
In summary then, the only way to reduce risk is to diversify. At a minimum this diversification should be across all the guaranteed banks, and for funds with a long term focus, diversification into other asset classes is ideal.
David Quinn is the Managing Director of Investwise.ie. Established in 1988, Investwise is the trading name of Fitzpatrick Morris Financial Services Limited. With years of experience in the financial industry, they offer independent services and advice on a range of financial matters.
There seems to be a myth doing the rounds at the moment that the 2008 Blanket Bank Guarantee, which ran for 2 years from September 2008 until 2010, wasn’t put in place to simply stop both Anglo Irish Bank and Irish Nationwide from collapsing in order to protect, as far as possible, the considerable interests that a small group of Irish people had in those cauldrons of greed and corruption.
Rather, popular thinking now goes, the notorious guarantee was put in place because of pressure from the ECB who were eager to ensure that revenue from Irish taxes would be used to pay bondholders in the banks of Core EU countries in full.
Take this recent article published on the 27th of March last which has the headline: “Germany’s rethink on just where the blame lies for the Irish bank bailout”. The implication behind the headline is that the bailout was required because of the guarantee, but also suggests that the statement made by the German Finance Minister that the Irish guarantee was a solely Irish initiative is a ‘rethink’, that is, an attempt to change the narrative that the bailout, and the guarantee that made it inevitable, was dictated by interests of big German banks.
“It was the Irish government that imposed the farthest-reaching guarantee for its banking system at the start of the crisis – on its own initiative,” said German finance minister Wolfgang Schäuble.
The statement itself was prompted by comments made by Irish politicians while negotiating on bank debt. Such comments, of course, are tailored to an Irish audience who are increasingly convinced that the enormous and unsustainable burden of Irish bank debt which the residents of Ireland are being forced to finance is being imposed by the ECB and Germany in order to protect their own struggling banks. This particular framing of the story feeds into the tale told about Timothy Geithner’s phone call and the posthumous yarn about the letters Brian Lenihan received from Jean-Claude Triche.
These Irish politicians are entirely aware, however, that the decision to provide such a broad guarantee was made without the advanced knowledge of the ECB. It is a consequence of this decision which was only put in place to maintain access for Anglo Irish Bank and Irish Nationwide to the interbank market that the vast majority of bonds have been paid off in full.
We know this because on the 3rd of Oct 2008 the ECB published an opinion on the Irish bank guarantee. Here’s the relevant excerpt.
“As a further general comment, the ECB notes that the Irish authorities have opted for an individual response to the current financial situation and not sought to consult their EU partners. In view of the similarities of the causes and consequences of the current financial distress across EU Member States and the potential interdependencies of policy responses, it would have been advisable to properly consult other EU authorities on the envisaged legislative plans.
2.5 A further point relates to the risks to the Government’s budgetary position arising from any financial support to Irish credit institutions. While the ECB appreciates that any guarantees provided by the Minister under the draft law would be contingent in nature, given that the financial exposure of the Irish State under such guarantees is potentially very large, the Irish Government could be obliged to make significant payments in case these guarantees are called over the next two years. At a point in time when the Irish budgetary position is deteriorating and may risk exceeding the 3 % of GDP reference value for public deficits, as specified under Community law12, this is a cause for concern, even when the provision of financial support would, under the draft law, as far as possible ultimately have to be recouped from the credit institution or subsidiary in question.”
via Irish Left Review.
via Irish Left Review.
US fund manager who gambled on Bank of Ireland bonds in 2012 earned USD $2.2bn (personally, that is, himself)
You will be glad to have confirmed the identity of at least one bondholder to whom we have paid tens of billions. David Tepper has been named by Forbes as the highest earning fund manager in 2012. He, himself personally, was paid USD 2.2bn (€1.68bn) in 2012; yes, he actually earned 2,671 times Pat Kenny’s 2012 RTE fees. Forbes reports “his flagship hedge fund successfully bet on stocks and other securities at key moments in 2012, posting a net return of nearly 30%. His $15 billion Appaloosa Management has been knocking out annual net returns of about 30% since 1993”
And how is David earning 30% annual returns? We don’t have a detailed breakdown but we’ll remember David here in Ireland after his January 2013 performance on Bloomberg TV, when he told the US audience.
“We invested in the Bank of Ireland… and we bought their bonds, subordinated bonds…They [BoI] wanted to ‘cram us down’ … So we took them to court.. We were gonna go into the English and Irish courts to fight the Bank of Ireland, and fight the Irish Government for that matter…We finally won at the beginning of this year… The debt was trading at 40/50 cents…..So the Bank of Ireland this year, goes and issues a new issue, of the same debt…. a month and a half ago….the debt is now trading at 115..The only reason it is worth buying, is because we fought it, and we won”
Bank of Ireland, the bank into which we have shoveled €4.7bn gross, about €3bn net.
We have no real idea of the bondholders in Anglo, Irish Nationwide, Permanent TSB, EBS and AIB into which we have shoveled €60bn. Yes, there was a partial listing of INBS junior bondholders from Guido Fawkes which Senator Norris tried to read into the Seanad record, and was stopped, but it’s just the tip of the iceberg.
Challenge the government on this and the key defence is “think of the credit unions”, but we know they are suffering circa €15m losses on deposits at Irish Bank Resolution Corporation. The government also claim that because the banks don’t maintain lists and the banks merely pay clearing companies which then make payments to the actual bondholders, that there is no way of knowing the ultimate identity of the bondholders. Well, at least, we know David.
Here’s the video
via NAMA Wine Lake | Click the green link above for latest news and over 2,400 related articles. NAMA – National Asset Management Agency – part of Ireland’s response to its banking crisis and property bubble.
via NAMA Wine Lake | Click the green link above for latest news and over 2,400 related articles. NAMA – National Asset Management Agency – part of Ireland’s response to its banking crisis and property bubble.