Perrin conviction reveals serious flaws in how we appoint judges

The conviction of former District Court judge Heather Perrin for deception, after she persuaded an elderly client to leave half of his estate to her children while acting as his solicitor, brings the methods by which Ireland appoints its judiciary under scrutiny once again. This system has repeatedly been accused of a lack of transparency, a failure to perform basic Garda checks and evidence of political influence. Even the most revered judge in the country, Chief Justice Susan Denham, has cast doubt on its fairness.

The current model used to appoint judges begins with the Judicial Appointments Advisory Board (JAAB), which is responsible for selecting at least seven qualified candidates for each available position. It was created after the collapse of the Fianna Fáil - Labour coalition in 1994, following Taoiseach Albert Reynolds' appointment of Attorney General Harry Whelehan as President of the High Court. This had caused public outrage, as Whelehan had just presided over a nine month delay in the processing of a warrant for the extradition of clerical paedophile Brendan Smyth to the UK. The idea behind JAAB is that a body made up of eminent members of the legal community (including the Chief Justice, the three presidents of the High Court, Circuit Court and District Court, and the Attorney General) will be best placed to determine the most qualified and appropriate candidates for any vacant judge positions. However the ultimate decision is still left to the Government. The chosen candidate is then formally appointed by the President, who acts 'only on the advice of the Government' per Article 13.9 of the Constitution, and has no real discretion as to who is selected.

JAAB, as it states in its annual reports (which it has only been required to produce since 2002), 'does not have any function in deciding who should be appointed to judicial office. . . [and] does not give any indication of the relative merits of persons' whose names it forwards to the Government. No Garda check or even consultation with local Gardai is required even though this would reveal any pending or previous complaints against candidates. If an informal complaint had been made to Gardai about Heather Perrin's professional conduct prior to her appointment as a District Court judge in February 2009, this might have been revealed by basic communication with her local Garda station. Instead, JAAB's sole function is to establish whether applicants meet a general set of criteria or suitability. These include an appropriate degree of competence, probity and knowledge, suitable character and temperament, willingness to undertake recommended training and the provision, oddly, of a tax clearance certificate. No further information as to how these criteria can be satisfied are given. We don't know why Perrin was considered an appropriate choice because JAAB is not required to release any written explanation of its reasoning to the public.

This lack of transparency has been criticised by both domestic and international senior legal professionals. In June the European Network of Councils for the Judiciary (ENCJ), which represents the collective bodies for judges throughout the EU, declared the appropriate method by which judges should be appointed. It clearly varies from the Irish process. Its recommendations (made at the end of a meeting in Dublin, funnily enough) include a requirement for a clearly defined and published set of selection criteria against which candidates for judicial appointment should be assessed. Any reports or comments from legal professionals used in the process, it said, should be recorded in writing and available for scrutiny. The appointing body should make its decisions in an open and transparent way.

The appointment of judiciary in Ireland is criticised not only for its lack transparency and proper vetting procedures, but also for being unjustly influenced by politics. Successive governments have been accused of appointing judges who have ties with the parties in power. It is not unreasonable to expect that most of the seven candidates nominated by JAAB will have political leanings, as most people do, and that the government will select the candidate who falls most in line with its party policies. Last year five of the six judges appointed were shown to have links with the Labour - Fine Gael coalition. It is also significant that, given that they sit on the JAAB Board, the appointment of the Chief Justice, the presidents of the High Court, Circuit Court and District Court and the Attorney General are all single-handedly selected by Government.

The ENCJ recommends that the recruitment or promotion of all judges should be the responsibility of a body independent of government. This view has been endorsed by Chief Justice Susan Denham, one of the most respected legal figures in the country. In September of this year another of the country's most senior judges, Justice Peter Kelly, stated publicly that appointments to the Supreme Court are 'purely political' and called for an independent body to select judges. He said that JAAB 'doesn't really work' and that some people who would make excellent judges were 'passed over' in favour of others who were not so well qualified. Several TDs have also called for candidates to be screened by the entire Dail before a nominated judge is approved.

Some reforms have been considered. The Constitutional Review Group has considered the adoption of the US model, whereby appointments to the Supreme Court are made by the President but must also be confirmed by the Senate, following a public questioning of the candidate before the Senate Judicial Committee. The Review Group rejected this system, primarily citing the media and public scrutiny it creates - 'A situation where opposition groups or the media could attempt to discredit a candidate selected by the Government as a means of discrediting the Government,' and 'the intense public scrutiny of candidates is likely to deter the sort of people who would be suitable appointees.'

Yet surely media and public scrutiny is desirable in the appointment of judges. It just might have revealed the indiscretions of Perrin, who is now the first judge to be convicted of a serious offense in the history of the state.

Have a heart for Germany

The tide is turning. For several years now, national and international media have presented the Euro crisis as a soap opera, pitting lazy, profligate, scheming Greeks against honest, thrifty, industrious Germans. Yet as austerity continues to bite and in light of the demands of the fiscal compact treaty, created for the most part to appease Germany, these roles are changing. Germany is now cast as the wealthy villain. Over three days at a recent Brussels seminar for Euro-area financial journalists, I watched a German journalist be torn to pieces over the policies of his government.

It is understandable why Angela Merkel and her country are being targeted. The controversial 0.5 per cent structural deficit limit included in the fiscal compact treaty essentially represents an effort to assuage German discomfort with giving further economic stimulus packages to those struggling states that Germans perceive as reckless. Yet Germany, along with France, was one of the first Eurozone countries to breach the deficit rules of predecessor the Stability and Growth Pact, by running up a budget deficit of more than three percent of GDP in 2002 and for the following three years.

The inflation issue has also become a real source of anger. Germany has been hyper-competitive for the last ten years and normally this would result in significant inflation, but German inflation has stayed around or below 2 per cent over this period and continues to remain artificially low, kept there as a result of low productivity in other EU countries. At present the German inflation rate is 2 per cent, actually lower than the Eurozone average of 2.6 per cent. This low inflation keeps Germany competitive and makes it harder for peripheral EU countries to compete. The Bundesbank refuses to relax its hawk-like view of inflation and the German people are terrified of any indications otherwise; last week, after the International Monetary Fund called on Germany to accept higher inflation, Das Bild ran a full-page cover story screaming 'Inflation Alarm!'

Germany's emphasis on austerity also comes up for criticism as it becomes clearer just how exposed it is unless naughty countries like Spain and Greece toe the line. A controversial advertisement launched recently by the conservative British magazine Spectator declared, 'Most Germans own a second property. It’s called Greece.' Despite the vitriol this campaign received, the Spectator is not alone in holding that a large portion of Greek-based assets and debts are owned by Germans. German banks are the second largest holder of loans to Greece, to the tune of €34 billion. Before the crash Germany lent huge amounts to the countries who bought its exports, disregarding the quality of the loans and prospective inflation. As it demands harsh cutbacks in from those member states that want money in part to pay their loans back, the international community is less and less amused.

The poor German journalist at my seminar made three very valid points in an effort to defend the actions of his people. He pointed to the historical reasons for Germany's fear of inflation, a legacy left behind by the hyper-inflation of the 1920s Weimar Republic, itself a result of the government's mass printing of money to pay off reparations imposed after the first world war. Because of this memory, he said, inflation for Germans is like corporation tax for the Irish; they are simply unwilling to move on it. He also pointed out that Germans resent criticism as they provide such a large part of Europe's bailout fund, second only to Luxembourg; Germany has a 27.1 per cent share in the ECB and 6 per cent voting rights in the IMF, and pays out accordingly. Finally he made the point that, a mere ten years ago, Germany was called 'the sick man of Europe.' It struggled in the late 90s, after growth slowed following high spending during the first decade of reunification. In response Chancellor Gerhard Schröder introduced painful labour and market reforms and despite enduring the worst recession since 1945, Germany managed to return to growth and keep unemployment remarkably low. German people, said the embattled journalist, feel that Europe ignores where Germany's success has come from, those painful years of harsh reform.

Ultimately journalists would do well to remember that there are no singularly villainous or righteous countries in this crisis. Unfortunately it is playing out as more of a thriller than a soap opera, as everyone has so much to lose.

A new day for European nationalism

It is ironic that the creation of a single European currency, sold as a step towards unity, integration and the tearing down of boundaries, has resulted in a wave of support for nationalist political parties to a degree not seen since before the second world war.

This was aptly demonstrated in the recently inconclusive Greek elections, which saw the far-right Golden Dawn party gain seven per cent of the vote after winning a mere 0.2 per cent in 2009. The Greek political system is in turmoil for the same reasons that all the rest of the Eurozone is in trouble - bad banks and big debts as a result of loose policies following the introduction of the Euro. And now the spotlight shines on a party that had previously existed on the fringes, consistently accused of anti-semitism.

EU Council President Herman Van Rompuy gave an articulate warning to the Union at the end of 2010 when in Berlin he spoke out against growing nationalism and populism in Europe. 'Fear leads to egoism, egoism leads to nationalism, and nationalism leads to war,' he said. 'Today's nationalism is often not a positive feeling of pride of one's own identity, but a negative feeling of apprehension of the others. Fear of 'enemies' within our borders and beyond our borders.'

Here is a snapshot of Europe's nationalist political parties, many of whom combine nationalism with anti-immigration policies. Much has changed in the past four years. In France, Marine Le Pen's National Front won a record 18 percent of the vote in the recent presidential election. It is predicted that the National Front will gain further traction in June's parliamentary elections. In Austria, the Freedom Party currently controls 34 of 183 seats in parliament and is the second most popular party according to opinion polls. In Sweden, a county renowned for fair policies and good governance, a far-right nationalist party won parliamentary seats for the first time in the 2010 elections. The Sweden Democrats, known for its anti-immigrantion and anti-Islamic stance, received 6 per cent of the vote. In the June 2010 Dutch elections, Geert Wilders’ nationalist party more than doubled its share. It is now the third largest party in The Netherlands. In Finland the True Finns received 19.1 per cent of the vote in last year’s election compared to 4.1 per cent in 2007.

I won't harangue you with more statistics but the list goes on. In some countries there is mass public suspicion of the most extreme nationalist parties, as with the BNP in Britain or the NDP in Germany, but overall it cannot be denied that this brand of politics is gaining support across the Europe.

The same has happened at home. In the last four years Sinn Féin has built a strong campaign against further European integration and as a result has gained ground at an unprecedented pace. Every day as I drive to work I pass more Sinn Féin 'NIL to the Fiscal Compact Treaty' posters than the 'Yes' posters erected by all of the other major parties. I don't mean to create links between Sinn Féin and parties like the BNP, but Sinn Féin is undeniably Ireland's most prominent nationalist party. It is also the fastest growing party in Ireland. February 2011 saw its best ever result in a Dáil election in modern times and more than trebled its number of representatives over the 2007 election. An Irish Times poll taken at the end of April showed that Sinn Féin is now the second most popular party in the state with 21 per cent of the public now behind the party.

After World War Two, European integration was seen as an escape from the extreme nationalism which had devastated the continent. One of the stated aims of the European Coal and Steel Community, the predecessor to the European Union and the first step in the federation of Europe, was to eliminate the possibility of further wars between its member states by pooling national heavy industries and thus preventing domestic protectionism. For fifty years this aim was successfully and peacefully achieved, and the strength of many nationalist parties ebbed and died across Europe. Few would have predicted that the backlash created by the instability of the Euro, that shiny, happy currency marketed as a crucial tool in breaking down national borders, would allow for their resurgence.

Boardrooms still close their doors to women

I read today that the Fortune 500, the annual ranking of America's largest 500 companies, currently features only 12 companies led by female CEOs. That same publication's recent '40 under 40' list featured only five women. Depressingly almost all of the most prominent companies that I interact with every day, including Facebook and Twitter, have no women board members.

The underrepresentation of females in the highest echelons of the corporate world permeates almost every industry and is particularly evident in white collar professions. In the United States, where women represent nearly a third of the legal industry, only about 19 percent of partners at the nation’s law firms are female, according to an August study by the Institute for Inclusion in the Legal Profession.

European boardrooms are only marginally more diverse. Recently released statistics from Europa show that on average only 33 percent of managerial positions in Europe are filled by women. Despite the fact that female students outnumber males in business, administration and law, the proportion of women directors in top quoted companies is only three per cent across the EU and only one in ten company board members is a women. There are no female governors of any national central banks in the EU.

In case you haven't have enough of statistics, I'll add that American women still earn eighty cents to the dollar compared to men, according Bureau of Labor Statistics' Women at Work report. In Europe there is still a 15 percent pay gap between women and men and just 30 percent of European entrepreneurs are female.

These figures are difficult to understand given that women earn almost 60 percent of university degrees in America and Europe and make up approximately half of the workforce in most developed nations, at 49 percent in the US in 2009. In addition, several studies have found that board diversity is linked to better financial performance. There is evidence that more diverse boards have better governance. Analysis by McKinsey and Deutsche Bank has opined that companies with more women on their boards make fewer errors because women do not favour unconsidered risk taking, resulting in better retention of money. Despite all of these truths, women are simply not ascending the career ladder in the same way that men do.

Given the strong female presence in the workforce and the highest leagues of education, and the gaining of almost universal equal rights protections, why does this underrepresentation of women at the highest corporate levels persist? Commentators provide a never ending list of suggestions. Most of these inevitably locate the root of the problem in motherhood.

Despite the clear trend for women to postpone having children until their thirties and later, having a family is often quoted as the single most detrimental factor for corporate women. Have you ever heard a man being asked how he juggles work and family? No? This is because having children is not recognised as particularly harmful to a man's career. Despite the two partners involved in childbirth and the fact that the only definite consequence of childbearing for a woman is to remove her very temporarily from the workforce, having children is considered to radically change only a woman's time constraints and values. The role of men as carers versus breadwinners is another argument, and though relevant it's too involved for me to focus on today, but it can't be denied that women take on a solely childrearing role far more readily than men do and in general do not give birth and then wish to hand over their children to focus solely on their careers.

Yet even if we recognise that women do for a period prioritise raising their children, in practice this means merely a five to ten year period where a woman is marginally less available for professional undertakings. Not wholly unavailable; just more constrained. Such constraints do not explain or justify the halting of a woman's career progression. Surely it is the rigid corporate culture that demand excessive hours and an all or nothing approach that rejects inflexible employees that is responsible.

Having children is not the only contributor to the underrepresentation of females in top corporate jobs. Senior corporate executives are often referred to as operating in an 'old boys club' environment. The consultation process for the Davies report (discussed in the next paragraph), which received 2,654 responses from mostly women, revealed two main barriers for women seeking corporate ascension. The first revolved around work-life balance, the second around 'the male cultural environment'. The influence of 'informal networks' on board appointments in addition to opaque selection criteria were a significant barrier to women, the report found. Discriminatory mentoring, an undervaluation of female skills both by women themselves as well as their peers and a lack of role models were also highlighted as contributing factors.

Women also face more indefinable hindrances relating to their value in terms of youth and beauty. Unlike men, women are judged not only on what they say and do but on how they look – perfectly evidenced by Silvio Berlusconi’s crass dismissal of Angela Merkel, Prime Minister of the biggest economy in Europe, as 'an unf**kable fat ass.' Women are also criticised for showing traditionally male traits, like aggression, when such behaviour is often necessary for success in a corporate environment.

What can be done to address this inequity? Positive regulatory action is the first step. Public policy in the Nordic countries, in particular, makes it easier for parents to reconcile employment with family care. In 2003 Norway introduced a quota for all listed companies requiring that 40 percent of their board seats be filled by women. Supporters of this measure claim that the quota has directly effected financial gains for these firms, although a study by the University of Michigan is not quite so glowing. It holds that the financial performance of Norwegian companies suffered at least in the short term because of the presence of younger, less experienced board members. Other concerns were raised within Norway and outside relating to the supply/demand inequality created by the quota system. The result, critics said, was that some of the more capable female directors were being asked to sit on a range of boards, far too many to have the time to be able to add real value to every company. Regardless of the results, the fact remains that this quota achieved what it set out to do; ensure equal representation of men and women in company leadership.

With discontent growing in the UK over what many see as excessive remuneration paid to largely male executives, the British government has been pushing itself as a supporter of women in business. Prime Minister David Cameron recently spoke of his desire to get rid of the 'usual sort of rotating list of men patting each other's backs and increasing the level of remuneration. I want to see more women in Britain's boardrooms, which I think would have a thoroughly good influence.' In practice his willingness to make the kind of decisions that would directly improve women's chances, as in Norway, is doubtful. The most progressive UK move taken so far has been Lord Davies' recommendation that UK companies listed in the FTSE 100 should aim for at least a third of their board to be female. However a progress report just published by Cranfield School of Management shows that during the review period only 21 women were appointed to board positions out of a possible 93. This represents 22.5 percent of all new appointments, some way short of the 33 percent recommended in the Davies report.

Government action is a must, not a maybe. 'If we persist with current rates of change, it would take about 70 years for women to achieve parity' on U.S. corporate boards, according to Stanford law professor Deborah Rhode. As long as the boardroom is still a male preserve, women will continue to earn less and male characteristics will dominate the way big corporations do business. Virginia Rometto took the helm at IBM on the 1^st of January, the same day that e-Bay founder Meg Whitman took over at Hewlett Packard. That these women are the first female CEOs of the largest technology companies in the world is at least a step in the right direction.

Do the Brits know why Cameron said no?

The angry student in me, the anti-United States of Europe part, is impressed with last week’s rejection by David Cameron of amendments to the EU Treaty that would move us towards tighter fiscal union. It had to be Britain, didn’t it, with a history steeped in sovereignty, colonialism and that first-to-the-pole attitude. It is hard not to admire Cameron’s decision; on the face of it he is putting the interests of his people first, refusing to be swayed by the collective criticisms of the world’s most powerful people. UK citizens appear to agree with him. The first poll conducted since the Brussels summit shows that 62 per cent of British people agreed with the Prime Minister’s stance, with just 19 per cent against. (http://www.dailymail.co.uk/news/article-2072616/David-Cameron-got-right-Most-voters-agree-PM-vetoing-EU-treaty-changes.html#ixzz1gKJijL76)

This public support is questionable given that Mr. Cameron rejected the treaty change in the interests of Britain’s financial services industry. He held that the pact lacked the safeguards to protect the City of London against future regulations that might not be in its best interests. This includes the financial transaction tax that I discussed in a previous post, a tax that George Osborne has been publicly and repeatedly critical of. Yet the latest Eurobarometer poll evidenced that two thirds of all British people surveyed were in support of the introduction of such a tax. UK citizens have consistently expressed a strong level of support for tighter regulation of the banking industry. Perhaps their support for the Prime Minister’s EU treaty veto is down to a lack of awareness about the reasons behind it. Or perhaps the British people have simply had enough of EU policy and continued integration, regardless of the actual reasons given for Cameron’s decision.

Financial transaction tax has merit but little support

At a meeting of European finance ministers in Brussels yesterday, attention was finally paid to the Commission’s proposal for an EU-wide financial transactions tax. Despite the backing of Merkel and Sarkozy it was met with a negative response from the majority of EU states, mostly on the grounds of a lack of planning for its practical implementation. Gordon Brown was heavily dismissive of the tax, quoting research on job losses and GDP reductions. Ireland followed suit with Michael Noonan claiming that any such tax, if not also implemented in the UK, would be disastrous for Ireland.

I continue to be surprised by the lack of consistent support for this type of levy, the proceeds of which could go some way towards reducing national deficits as well as providing finance for humanitarian concerns like foreign aid. There was a surge of interest in the tax in 2008 and 2009 at the height of the financial crisis but this has since receded despite the continued validity of the idea. Given that the recent global economic distress was partly attributable to the activities of banks it seems right and proper to tax financial transactions.

The capital that this tax could raise is impressive. The Bank for International Settlements reported in 2008 that the total value of the world’s annual derivatives trading was $1.14 quadrillion (a quadrillion is a thousand trillions). It is likely that in reality the figure is even higher, since over-the-counter trades are mostly unreported so their size is unknown. A mere 1% global tax on $1 quadrillion in trades would generate $10 trillion annually. We are looking here only at derivatives and not at the finance that could be raised by similarly taxing other types of trades.

The most common argument raised against this tax is that any such levy, by increasing the costs associated with trading, would have a dampening effect on transaction activity and thus would ultimately reduce profits and liquidity. Personally I remain unconvinced. There is huge money to be made in the derivatives market and a minor tax is unlikely to deter traders. The only real risk here would perhaps arise if the tax were applied only to a minority of banks or states; those groups would then be at a clear disadvantage in comparison to tax-free traders. The solution is obvious; it is imperative that the tax be applied to a sufficiently large catchment area to keep the playing field relatively level. An EU-wide tax or US tax would cover enough institutions to silence the argument that a select few have been put in an anti-competitive position. Obviously this will be difficult to implement but surely not impossible.

It should also be noted that the jobs losses and profit reductions that Gordon Brown referred to yesterday as a probable result of this tax will occur mostly within investment banks themselves. Implying limitations on a major industry that has an enormous turnover will naturally result in job losses and lowered profits within that sector. It has also been almost universally accepted that the banking industry is somewhat bloated and needs to be tempered in some way.

Critics also refer to the Swedish example. Sweden implemented a similar tax scheme in the 80s which saw its banks pass on the costs garnered by the tax to private individuals and investors. The answer here is strict regulation. The lax regulatory culture that permeated the financial world pre-2008 (particulalry on the issue credit but in many areas of bank activity)was in many ways the single largest contributor to the global recession and is thankfully coming to an end. We know now why vigilant supervision of the banking industry is in the public's interest. Strict regulation and monitoring of how a financial transaction tax is implemented will be necessary to ensure that banks absorb the associated costs themselves rather than passing them directly on to investors.

Taxing long-term investments that raise vital capital and provide sustainable returns is also a point of issue. It is important that a financial transactions tax primarily targets short-term speculative trading, the kind that was a major cog in the banking collapse. The tax structure must penalise short-term, high frequency activity, the type of trading  that provides no identifiable social benefit. Long-term investments should be subject to a very small levy but short-term movements – holdings for minutes or days – should be more heavily levied on an incremental scale.

Many of the finance ministers present yesterday felt that the biggest stumbling block standing in the way of a financial transaction tax is the practical difficulties involved in its implementation. Since it must be applied globally or at least at EU or US level, a requirement exists for cross-jurisdictional legislation and a practical plan that must cover thousands of institutions. However this is in no way an unattainable task; financial institutions communicate thousands of pieces of information every day through international networks, dealing electronically with complex and dynamic products. The creation of an instantaneous electronic method of taxation with an EU reach is not impossible. Similarly the tax will require a clear framework for the distribution of funds. Personally I favour a system that pays into the state coffers of the country where a trade takes place, with emphasis on sovereignty. However there is obvious merit in passing funds on to international schemes like UN healthcare and climate change programs.

Proposals for this tax were essentially sent back to the drawing board yesterday and a more detailed and practical plan must be formulated before EU finance ministers will debate this issue again. Hopefully the powers that be in Europe will not leave this concept to linger until public unrest at the activities of investment banks has receded.

'Pensions crisis for beginners' on Huffington Post

My article on the pensions crisis is now available on the Huffington Post, have a look:
http://www.huffingtonpost.co.uk/sarah-mccabe/the-pensions-crisis-for-b_b_1018261.html