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"Transparency in the Economy": Fifth Joint Meeting of Archives and Records Association Ireland and Information & Records Management Society Ireland

The first thing to say is that I'm not an economist and I do not claim any special insight into matters of the economy, whether North or South. I do not speak the language of economists and like many others I sometimes struggle to understand the jargon in which discussion and commentary on economic affairs are so often conducted. As an Information Commissioner, working on a daily basis with Freedom of Information (FOI) legislation, I am a proponent of transparency in all aspects of how we govern ourselves. We need to have transparency in relation to all of the institutions and systems which bear significantly on the health, welfare and life chances of individuals, families, communities, states and, indeed, of the so-called community of nations generally. But I am conscious that, in reality, in matters to do with the economy the level of transparency is actually quite limited and this appears to be the case both in the UK and in the Republic.

The Irish FOI Act has an explicit exemption (section 31) which protects the financial and economic interests of the State and of public bodies; this exemption may be applied to records of public bodies which relate to rates of exchange or the currency of the State, taxes, revenue, the regulation of banking and insurance, interest rates, foreign investment, property transactions and so on. The UK's FOI Act has a somewhat similar exemption at section 29. But the situation is much worse in relation to the banking and financial services sectors where, at least until very recently, the very notion of public accountability and of transparency would have been dismissed as a bad joke.

The absence of transparency in this sector is epitomised by the development over the past 20 years or so of products and transactions which are deliberately complex and obscure. Derivatives, securitisation, hedging, CDOs, arbitrage - these are some of the jargon terms thrown around in the surreal world of global financial services. Some derivatives, as explained by the English journalist and author, John Lanchester, "are actively designed to conceal the real nature of the assets involved – bearing in mind that the assets are themselves often debts, repackaged and sold on in ‘black box’ structures designed to hide the entities within." Frequently these products, as Lanchester puts it, "are way over the heads of civilians and sometimes, it seems, over the heads of most of the people who buy and sell them." One of the more esoteric features of contemporary global finance is the practice known as arbitrage; this involves betting in both directions in the markets and profiting from price differences as between different markets. This is regarded as a virtually risk free activity. The problem with many of these practices is that they operate in a virtual world and the link to tangible economic activity - in the old-fashioned sense of goods and services being bought and sold in the market-place - has been eroded to the point of non-existence. And when the system unravels, as it has over the past few years, what we are left with is chaos.

It is undoubtedly the case that there has been a huge lack of transparency in relation to the economy and that this lack has, to a greater or lesser extent, contributed to the economic chaos now affecting much of the Western world. It is sometimes argued, particularly in the case of the Republic of Ireland during the "Celtic Tiger" years, that in good times the people have no interest in understanding how the economy works and that it is only when times are bad that people begin to ask questions and take an interest. While there may be some truth in this, it is also the case (and a more compelling truth) that we have not had, nor do we yet have, adequate mechanisms which support and promote transparency in the economy.

I am an advocate of greater transparency. I acknowledge that we need to be clear as to the uses of transparency in matters of the economy and, equally, we need to be clear as to the correct limits on transparency - if limits there must be. If there is to be any lack of transparency, we should be satisfied that this is warranted in the interests of the common good. I cannot promise to provide absolute clarity on these issues but I do hope to stimulate some thought on them.

WHAT IS "TRANSPARENCY"?

Somewhat ironically, there is no firm agreement on what we mean by the term "transparency". It is used widely these days in the social sciences and in law and, not surprisingly, its precise meaning varies with the context in which it is used. The key elements of transparency are: (1) providing information which would otherwise have remained secret and (2) empowerment of some kind arising from the information disclosure. One useful definition I have come across is that transparency is about "the degree to which information is available to outsiders that enables them to have an informed voice in decisions and/or to assess the decisions made by insiders ... [p]ut simply, transparency is the opposite of secrecy. Secrecy means deliberately hiding your actions; transparency means deliberately revealing them… Transparency is a choice, encouraged by changing attitudes about what constitutes appropriate behaviour."

Much of our thinking on transparency is influenced by the approach of the NGO Transparency International. Its agenda is to promote transparency as an antidote to corruption. It defines corruption as "the abuse of entrusted power for private gain". Of course one can also take the view (as I do) that transparency is an end in itself and not just a shield against corruption, though that is very important. In a democratic society it is proper that all who wield power - whether political, administrative or economic - should be open to the scrutiny of an informed public. Transparency becomes a very pressing concern in the kind of situation in which we now find ourselves where, certainly in the Republic though to a lesser extent in the UK, we have had financial and economic devastation heaped upon us as a society. While one thinks of bolted horses and open stable doors, the question inevitably arises: would the scale of the devastation have been less, or even been avoided completely, had we a stronger regime of transparency in place? Certainly in the South, we now know after the event that some of the actions which brought us to where we are - especially in relation to the banking fiasco - were seriously corrupt; but other actions were simply acts of omission arising from complacency and failures in regulation.

For my part, I see transparency as a necessary element in the package of checks and balances which are necessary in a democratic society. It is not the panacea for all ills, and it has some negative consequences, but it is a necessity both to curb corruption and to promote the common good.

WHAT IS THE "ECONOMY"?

Turning now to the other term in the title of my presentation, we must have some broad understanding of what we mean when we talk about the "economy". There isn't time now to go back to Adam Smith, or even earlier, to trace the emergence of those ideas and practices which have brought us to where we are today. At the risk of a gross generalisation, we can say that the economy is a system, a set of arrangements and understandings, within which people, communities and states engage in the production, distribution and exchange of goods and services. The economy involves the coming together of labour, capital and land resources with a view to maximising efficiencies and achieving the best results from scarce resources.

The economy is pre-eminently a social construct which continues to function only for as long as it is supported by the society which it serves. Trust and mutual confidence between economic agents are essential ingredients. When the economy malfunctions - as it has with disastrous consequences in the past few years - it is extremely difficult to forge a new set of arrangements and understandings which will allow it to function as intended once again. This difficulty is added to immeasurably by virtue of the fact that, to a very real extent, the economy is no longer simply national or regional but is very much global. In effect, what we have is a series of interlocking economies with a high degree of interdependency but where, not surprisingly, change at the highest level impacts on the lower tiers more than happens in the reverse scenario. It is an unfortunate fact that achieving consensus at the global level - whether in relation to climate change, the International Criminal Court or world trade - is very difficult. Correcting mistakes in the global economy is a daunting prospect.

In Ireland and the UK - along with the rest of Europe, North America, Australia, Japan and most of Africa - what we have are economies based on capitalism. A key feature of capitalist economies is their reliance on market mechanisms as the engine of economic activity. Within the overall capitalist model there are significant variations which reflect different ideologies and political systems. In fact, the model of the economy is generally a reflection of the political system and vice versa. These models, when put into effect, produce different outcomes in terms of efficiency, justice and equality. The balance between maximising output and achieving equitable distribution varies from model to model. For example, the contemporary Nordic model is generally regarded as giving greater priority to issues of fair distribution and social justice than does, for example, the current US model.

Another key variable is the extent to which agents in the economy - in the banking and financial sectors, particularly - are regulated or not regulated. At one end of the spectrum there is the view that the economy should have only minimal regulation and that the market should be let get on with it and regulate itself. At the other end of the spectrum is the view that the market is not, by itself, an appropriate mechanism to determine those key factors which govern a society and that, accordingly, the state should exercise significant control and regulation of the economy in the interests of the people.

In terms of our own countries, there has been a general perception over the past few decades that the Tories (in the UK) and the PDs (in the Republic) - with some support from elements within Fianna Fáil and Fine Gael - tended to support a market forces approach to the economy which minimises state intervention and maximises private sector market involvement. Self-regulation, or "light touch" regulation, are the hallmark of this model. Traditionally, the UK Labour Party represented an approach to the economy which allowed for substantial state involvement and an emphasis on re-distribution and social justice. The recent years of New Labour have, to say the least, blurred the ideological lines which previously existed. In the Republic, it is probably fair to say that all of the bigger parties found themselves during the Celtic Tiger years straying (to a greater or lesser extent) somewhat in the direction of a more market driven economy.

In reality, the economic systems in the Western world - wherever they lie on the spectrum - are not purely capitalist. To a greater or lesser degree there is a social dimension and a recognition that certain vital elements, necessary for the good of society, cannot be left purely to market forces. Thus, health services, education, policing, public transport, social security and state security are generally the responsibility of the state. Not all Western-style countries provide for these services in the same way or to the same level. For example, as we know from the travails of Barack Obama, the US appears even yet to be unwilling to accept any significant public sector involvement in health care. Similarly, the US social security system would not win much praise from the late William Beveridge.

I am making these general observations because I think they are directly relevant to the question of what level of transparency we require in the economy. As a general observation, and putting the point in crude terms, the more right-wing the model the less transparency we can expect in the economy. Though, as I will mention later, this generalisation does not apply in all cases.

My final general observation at this stage is that, wherever the model sits in terms of right-left, with the advent of globalisation there are now agents in the economy which are possibly beyond the control of individual states, or blocs or even supra-national bodies. Individual states, it would seem, are at the mercy of those powerful forces referred to collectively as "the markets". Any sign of weakness and the "markets" will go in for the kill. Whether these agents can be tamed and made more transparent and accountable is a large question. In a sense, while other agents in the economy have their actions conditioned (to some extent, at least) by the requirements of the wider society, the "markets" appear to be able to behave as if maximising profit is their sole raison d'être.

TODAY'S CONTEXT

Today's discussion on the need for transparency in the economy is set in the context of the recent dramatic events in the economy at global, regional and national level. I'm not qualified to say that the scale of the disaster is unprecedented, but I can say that the consequences are devastating - particularly in the Republic of Ireland. The disaster involves various combinations of a banking crisis, the bursting of a property bubble and a state fiscal crisis. In the Republic of Ireland it involves all three.

The banking crisis struck first in 2008 with banks in the US, the UK and other European countries falling like nine pins. Within the space of a few months the five biggest investment banks in New York – Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs and Morgan Stanley – had ceased to exist as investment banks. In September 2008 came the largest bank failure in American history as Washington Mutual went into receivership following a bank run during which its customers withdrew $16.7 billion in ten days. The mortgage underwriters Fanny Mae and Freddie Mac - of which we on this side of the Atlantic were mostly unaware - became household names for us after their effective nationalisation by the US government.

In the UK in early 2008 Northern Rock was nationalised and later that year HBOS, the UK's largest mortgage lender, suffered a catastrophic share price collapse and was bought by Lloyds at a knock-down price. Also in late 2008 the Luxemburg, Dutch and Belgian governments jointly nationalised Fortis Bank when it collapsed. In Germany, around the same time, Hypo Real Estates had to be given a €50 billion bail-out by the Government. In Iceland three major banks collapsed during the period September/October 2008 and they had to be nationalised.

In the Republic of Ireland all of the Irish banks have suffered collapse to a greater or lesser extent. Anglo Irish and Irish Nationwide have been nationalised and are in the process of being de-commissioned. As for the two largest Irish banks - AIB and Bank of Ireland - both have required massive recapitalisation by the state; the former is now state-owned and the latter largely state-owned.

By late 2010 it was clear that Ireland had lost the capacity to borrow on the international money markets and, like Greece some months earlier, it was forced to turn for help to the IMF and the European Central Bank. It agreed a financial rescue package worth €85 billion with these bodies (including some bilateral loans from the UK, Sweden and Denmark). Since then a third Eurozone country, Portugal, has also had to be bailed out and the turmoil in relation to Greece, in particular, currently threatens the stability and even the continued existence of the euro as a currency.

These details are intended simply as reminders of where we are at, in terms of the economy, at present. Any talk of transparency in the economy must be set against this background. What is particularly important is that there be sufficient transparency right now so that we can all see and understand how, and by whom, the costs of dealing with the disaster are being borne. For many people there is the uncomfortable feeling that they are the victims of a system which is profoundly unfair, a system which hitherto they did not understand and which, in hindsight, it appears they were not intended to understand. This system, they believe, operated on the basis that the "markets" took the gains in the so-called "good times" but when things went to the bad the losses were borne by the ordinary people. The American economist Joseph Stiglitz has written about this and has coined the phrase "ersatz capitalism" to describe this situation. Stiglitz has written very recently:

"Over the past thirty years, we have changed a large number of rules [of the economy] on a piecemeal basis, under the influence of an ideology which said that the best rules were those that interfered least with the markets. That, at least, was what the advocates of the rules said. But in fact, there was another agenda. Deregulation did not, in fact, result in less involvement in the market, but more: there was less involvement in the years before the crisis, but far more in its aftermath. This was predictable and predicted. What these advocates of so-called free markets were doing was creating a system I have called ‘ersatz capitalism’, the essential ingredient of which is the socialisation of losses and the privatisation of gains. This ersatz capitalism is closely related to the corporate capitalism that flourished under Bush and Reagan. In some cases, who pays for these gifts to corporations is not so transparent: in the end, of course, it is ordinary citizens, whether as taxpayers or consumers who pay, but often in ways that are not easy to detect, for example, through tax expenditure or through higher prices on the goods they purchase."

Genuine transparency is required to ensure that we can all be clear as to where, and by whom, the costs of the collapse are being borne.

INSTRUMENTS OF TRANSPARENCY

How then, we must ask, is transparency to be achieved? And if we know how this can be done, have we got the instruments in place to achieve it? Furthermore, if we have the necessary instruments in place, is there sufficient resolve at political level to resist the pressure of those with a vested interest in opposing transparency?

The usual instruments of transparency are well-known:

  • comprehensive access to information laws;
  • comprehensive "whistleblower" or "protected disclosure" laws;
  • voluntary disclosure practices by key institutions - both public and private.

Access to Information Laws

In the UK and in the Republic of Ireland FOI is the primary access to information law. In the case of the Republic (I cannot really comment on the UK situation in any detail) FOI has limited usefulness in the area of information on the economy. There are three specific reasons for this.

The first is that FOI does not apply at all to most of the key public bodies which deal with economic matters. The Central Bank (which now includes the functions of the Financial Regulator) is not subject to the FOI Act. Neither does FOI apply to the National Asset Management Agency (NAMA), nor the National Treasury Management Agency (NTMA), nor the National Pensions Reserve Fund (NPRF), nor the National Development Finance Agency. Collectively, these agencies control enormous levels of public assets.

The NPRF, just to take one example from among these agencies, currently controls more than €22 billion in assets on behalf of the State which includes 93% of the share capital of Allied Irish Banks. In December 2009 the NPRF had investments in 2,900 companies worldwide in which, in most cases, it exercised its rights to vote at shareholder meetings. It also, according to its 2009 Annual Report, engaged with 323 of these companies on topics including environmental, social and governance matters. In fairness to the NPRF, it does disclose a considerable level of information in its quarterly and annual reports. However, this is information which the NPRF chooses to disclose rather than information which the public has a right to have. And this is the crux of the matter in the case of all of these agencies: the flow of information is controlled by the agencies rather than being governed by a statutory code such as is provided by the FOI Act.

The new Coalition Government has included in its agreed programme a commitment "to extend Freedom of Information ... to ensure that all statutory bodies, and all bodies significantly funded from the public purse, are covered". It will be important that these major economic agencies are included in full and that records relating to key areas of activity are not excluded from the scope of the FOI Act.

The second reason why FOI is of limited use in the case of information on the economy is that it does not apply at all to the private sector institutions in the financial services and related areas. In fact, when the legislation to establish NAMA was being drafted in 2009, the Irish Banking Federation lobbied the Minister for Finance to ensure that NAMA would not be covered by FOI and would not become an indirect source of information on the banks.

The third reason is that those public bodies (such as the Departments of Finance and Enterprise, Jobs & Innovation) which hold information on the economy tend to take a very cautious and conservative view when dealing with FOI requests. While taking this cautious and conservative approach may simply be part of the tradition, it is now highly questionable whether, in current circumstances, this approach serves us well. If our task it is to persuade the world that we can deal with the present crisis then we will create confidence in our ability to do so by being as open as possible about how we are managing our economy. If, in particular, we are trying to put some distance between ourselves and other countries (notably Greece), one way to achieve this is to be absolutely open about how we are managing our affairs

There is a most interesting recent example from the US of how the FOI principle can be applied even in relation to records which some would regard as highly sensitive in terms of possible impact on the economy. In 2008, at a time when some of the leading US institutions were under major pressure, the Federal Reserve (Central Bank equivalent) made emergency loans available to those institutions to keep them afloat. Subsequently Bloomberg News applied to the Fed, under FOI, for certain information on these emergency loans including information which would identify the institutions concerned. The request was rejected by the Fed on grounds which included the argument that disclosure would harm the borrowers’ competitive positions. This position was supported by the financial services own lobby group which took the line that to identify any of the institutions involved would lead to a loss of confidence and a run on that bank by clients. Bloomberg appealed this refusal to the District Court - there is no Information Commissioner equivalent in the US - and this appeal was successful in August 2009. Ultimately, the issue went before the US Supreme Court which in March of this year decided the case in favour of Bloomberg. While there are undoubtedly complexities and qualifications to be taken into account, it does appear that the US Supreme Court has found that the need for transparency in the use of public money takes precedence over any perceived risks either to the individual institutions concerned or to the economy more generally.

In Ireland, this case would not have got off the ground as the Central Bank is not troubled by being subject to the FOI Act. In the UK, as I understand it, the Bank of England is subject to FOI but many of its key functions (including operations to support financial institutions in trouble) remain outside of the Act. In fact, as I understand it, the Bank of England also in 2008 introduced an emergency liquidity fund to support banks in trouble. Other than headline figures for the amounts provided and the number of institutions participating, the Bank of England has declined any detailed information and, in particular, it has protected the identities of those banks involved. It appears this kind of detail will remain secret even after 30 years (after which period it is normal to release sensitive information).

However, returning now to statutory access to information regimes, there is another regime which, though not yet very well known or used, may have the potential to become a significant weapon in the transparency armoury. This is the Access to Information on the Environment (AIE) regime which arises under an EU Directive (2003/4/EC) and which, in turn, seeks to implement the UNECE Aarhus Convention. (In the UK, the AIE regime is integrated into its FOI regime.) While AIE is concerned with access to information on the environment, there is a substantial cross-over between environmental information and economic information. Furthermore, the definition of what constitutes "environmental information" is very broad as is the definition of what constitutes a "public authority", that is, a body bound by the AIE regime. In my capacity as Commissioner for Environmental Information - dealing with appeals under AIE - I am currently considering two cases which raise the very interesting questions of whether NAMA and Anglo Irish Bank are public authorities for the purposes of the AIE regime.

"Whistleblower" Laws

The UK has made considerably more progress on "whistleblower" protection than is the case in the Republic of Ireland. Since 1998/1999 Great Britain and Northern Ireland have had the Public Interest Disclosure Act [PIDA] in operation. The PIDA is stated to be: "An Act to protect individuals who make certain disclosures of information in the public interest; to allow such individuals to bring action in respect of victimisation; and for connected purposes." It applies equally in public and private sector employments. While there are some shortcomings in the operation of the PIDA, it is generally regarded as something of a model in the field of legislation on protected disclosures.

In the Republic, we had the Whistleblowers Protection Bill 1999 on the legislative programme of the Oireachtas between June 1999 and April 2006. This Bill began its life as a private member's bill [as did the PIDA in the UK] but one which was accepted by the Government, in principle, and was ultimately included (in 2002) in the then Government's legislative programme. There appeared to be a political consensus that some type of generalised statutory protection was warranted for workers, both private and public sector, reporting corruption, wrong-doing or dangerous practices on the part of an employer. The 1999 Bill was withdrawn from the Oireachtas in April 2006 on a Government motion but with the stated intention that the protection of "whistleblowers" would be dealt with legislatively on a sectoral basis. In fact, with the exception of the health sector and the policing sector, no real progress has been made in the area of "protected disclosures of information". And in the case of the policing sector, where confidential disclosure may be made by a Garda to a statutorily appointed “external confidential recipient”, the post of external recipient has been vacant since the first incumbent retired in late February of this year.

It is arguable that, had we adequate whistleblower protection in the Republic over the past ten years or so, at least some of the calamitous practices in the financial area during that period could have been stopped or prevented. And it's not as if there were not grounds for concern about very bad practice. After all, as far back as 1 April 2005 the New York Times, in a piece on Dublin's Financial Services Centre, commented that "Dublin has become known in the insurance industry as something of the Wild West of European finance". We know now that this was not an April Fool's story!

Of course for whistleblowing to be effective there must be some confidence that a disclosure, when made, will result in appropriate action whether by the employer or by an external regulator or by the police. This requires a climate in which there is a commitment to transparency, to respecting professional ethics and to serving the common good - not the kind of climate, it would seem, which prevailed in Ireland during the Celtic Tiger years. On the question of professional ethics, it now seems clear that during those years some professionals, notably external auditors in the financial services area, had a limited and self-serving understanding of their professional, ethical obligations. In the small number of cases where a professional did blow the whistle, it is not at all clear that appropriate action was taken. There are have been media stories in the past two or three years that even when serious failings in the Irish financial world were reported by a whistleblower (who, incidentally, had no legal protection) minimal action only was taken by the authorities. And this appears to be one of the gaps in the PIDA arrangements in the UK, that there is little information on the extent to which disclosures have been acted upon or on the outcome of whatever action has been taken.

Neither should we underestimate the pressures on people not to blow the whistle. Even where there is legal protection provided by the likes of the PIDA, it often takes great courage and a willingness to accept personal loss (in terms of income and future employment prospects) to make a disclosure. In the US, whistleblowing has been taken a step further in the past few weeks when the Securities and Exchange Commission (which regulates the financial services area) announced a new "bounty" scheme. Under this scheme, a whistleblower who gives information leading to successful enforcement action can expect to be rewarded with between ten and thirty per cent of the money collected in the enforcement action. Some of the bounties paid will be very substantial indeed.

I am very clear that whistleblower protection, while not a panacea, is essential and that protected disclosure is a key instrument in ensuring transparency. It is an instrument whose usefulness, increasingly, is being recognised across the globe. For example, in April 2010 the Council of Europe Parliamentary Assembly approved a resolution on whistleblower protection which encourages all member states to introduce comprehensive legislation in the area.

There are grounds for optimism that protected disclosure arrangements will be put in place in the Republic. The new Government in Dublin, for its part, has given a commitment to introduce whistleblower legislation which I assume will be on a cross-sectoral basis and will include both the public and private sector employments. There is also a very interesting development in this area brought about by Transparency International Ireland. Two weeks ago TI launched its new Speak Up - a free information helpline and Transparency Resource Centre. This is a service which offers support for people - whether in the public or private sector - facing ethical dilemmas or who wish to report concerns about wrongdoing in the workplace and in government. The service, interestingly, is part-funded by the European Commission which must mean that at EU level there is an acceptance of the value of protected disclosures.

Voluntary Disclosure Arrangements

There is a role for voluntary disclosure of information by key bodies, both public and private, active in the economy. In the Republic, in recent years, there have certainly been some worthwhile developments in this regard but only within the public sector. As a logical follow-on from the principles underlying FOI, some Government Departments and other public bodies now publish on their own initiative material which would otherwise be releasable were it to be requested under the FOI Act. The Department of Finance, for example, has adopted the practice of publishing on its website submissions made, in advance of the annual Budget, to the Minister for Finance. These submissions are published after the event, when the Budget has been announced. The Department of Finance has also published the briefing papers prepared for the incoming Minister for Finance following the recent General Election.

These briefing papers have been heavily redacted in places and of course this focuses attention on what has not been disclosed as much as on what has actually been disclosed. Nevertheless, publication of these briefing papers, even in redacted form, represents a significant step forward in terms of transparency. What it suggests to me is that the principle of openness and transparency, as embodied in the FOI Act, is actually influencing behaviour outside of the FOI Act.

Yet there is still a long way to go in the South in terms of transparency of Government held information. There is a case, and indeed a strong one, that Government should be much more forthcoming in sharing important information with Parliament and/or with Parliamentary Committees. It makes no sense that members of parliament should vote on important economic and other matters and yet have no access to the information which should inform their vote. The effective side-lining of parliament is something on which I have spoken on several occasions in recent years. There is no more effective way to ensure the continued ineffectualness of parliament than by denying its members access to the information they need to take informed decisions.

This sharing of information could be done on a confidential basis if the information is genuinely very sensitive. I imagine the response to this proposal - made recently by Nat O'Connor of TASC - will be that there too many risks involved and that sensitive material will be leaked. In the short term, this would be a risk until politicians learn that they are expected to behave as responsible professionals. In the longer term, parliamentary reform (now very much on the agenda in the Oireachtas) cannot succeed until members are treated as adults and understand that they are expected to behave as adults. Our politicians need to believe that they actually do play a role in governing the country.

It may be too much to expect that private sector bodies - for example in the financial services area - would engage in a similar exercise of voluntary disclosure of relevant information. On the other hand, it is not too much to expect that the information these private bodies actually release will be accurate and not misleading. Unfortunately, in the light of what we know now about the behaviour of many of the banks and other financial institutions in Ireland during the Celtic Tiger years, there is a major credibility issue attaching to the information they choose to publish. For example, much media attention has focused on the conduct of a bank, the Irish subsidiary of a large European institution, which appears to have operated during much of 2007 (including into the second half of the year) on liquidity ratios frequently well below the level demanded by the Financial Regulator. As quoted in the media, that bank's annual report for 2007 says that "in the light of pressures in the marketplace, we have maintained strong liquidity ratios since the middle of 2007". It appears that the accuracy of this statement is in serious doubt. While I cannot say that this particular bank's annual report statement is incorrect and misleading, I think I can say that that there is a general scepticism about the reliability of much of the information published by financial services companies.

There is an issue also, on occasion, about the truthfulness of statements on economic and financial matters by Government Ministers and others in high public office. There is even a view that there will be situations in which Ministers and others, acting in the national interest, are actually required to give information which is incorrect, incomplete or misleading. There have been a few situations of this kind in recent times. One of the most colourful involves, not an Irish person, but the Prime Minister of Luxembourg, Jean-Claude Juncker, who is also President of the Eurozone Group. Some weeks ago Mr. Juncker organised a meeting of a select sub-group of EU Finance Ministers to discuss the Greek crisis. Initially, Mr. Juncker denied that any such meeting was taking place. Subsequently, he conceded that the meeting had taken place and he justified his previous denial on the grounds that, to confirm that the meeting was taking place, would have been to put the Euro currency at risk from speculators. While the European markets were closed as the meeting took place, Wall Street was still open! Mr. Juncker rather cheerfully admitted later that, over his long career, there had been other occasions when he felt obliged to lie in order to discourage currency speculation or the like.

Strangely, Mr. Juncker attracted attention more recently for the very opposite reason - because he appears to have told the truth about options to re-structure Greek debt. He let it be known that consideration was being given to some form of re-structuring of Greek debt at a time when no decision had been made on the matter. While most observers would have expected that this option would be considered, the official EU position was that it was not being considered. Mr. Juncker's candour is reported to have ruffled feathers considerably among his colleagues in the Eurozone Group.

In the Republic, we have had some similar experiences in the past year. In late 2010 when it seemed probable that Ireland would have to seek external assistance from the IMF and from the EU, it was a matter of common sense that a responsible government would be considering this option and making some contact, however informal, with the bodies concerned. Yet the Government denied that it was even considering such a move and denied that any soundings were being taken. Such was the deemed sensitivity of the matter that even some senior Ministers were, it appears, not told of these contacts and were put in the position of denying something which very shortly afterwards was confirmed as true.

More recently, Minister Leo Varadkhar has been criticised for appearing to suggest that Ireland was unlikely to be able to return to borrowing in the bond markets in 2012 and, by inference, that it might need a further external bail-out. The Irish Times ran a leader article quoting the war-time slogan that "careless talk costs lives" and that the Minister's comments will "create doubt and uncertainty in financial markets" to Ireland's detriment.

One has to question whether there is any reality to all of this, particularly when what is denied one day turns out to be the truth on the following day. Responsible governments will always consider all of the options when there is a crisis. What seems to be involved here is some kind of childish pretence: a government will protest its confidence that all is well and that radical action is neither necessary nor being considered. For this pretence to work, the markets (and excepting military actions, it is usually the markets) are expected to pretend that they believe what governments say in such circumstances. It does seem naive in the extreme to believe that the markets are impressed by this game of pretence. Might it be the case, in fact, that what the markets want is accurate information rather than "pretend" information and that much of the speculation which bedevils the bond market arises from an inability to believe what is being said by governments as much as from the hard facts - when eventually disclosed?

Limits of Transparency

After all of that, I acknowledge that there are limits to the uses of transparency and there are costs incurred in ensuring transparency. Furthermore, the machinery of transparency can become choked with the passage of time where there is any let-up in the enthusiasm and application of those charged with operating that machinery. These are questions I raised myself in 2008 in a publication to mark ten years of the operation of Ireland's FOI Act. In that publication I quoted from an address given in 2003 by Professor Onora O'Neill in an address she delivered at the Royal Irish Academy in December 2003.

She asked the question: "How good is the case for extensive transparency requirements? Are they always desirable, or do they create problems for democratic, corporate and professional governance and accountability?" In answering these questions, she suggested that "unmitigated transparency", under which office holders are required to disclose all working documents, "can certainly lead to problems". Overall, she concluded: "Excessive transparency requirements can compromise good policy process, sound management, and even democratic process." This, in principle, may be correct.

But at that time, in 2008, I felt there was no real evidence to suggest that the Irish FOI Act created "excessive transparency requirements". I felt that the protections built into the FOI Act 1997 did provide a reasonably fair balance between the requirements of openness and the need to protect the functioning of government.

With the passage of three years, and with the experiences we have had during that period, I am even clearer in my view that (at least in the Republic) our transparency laws come nowhere near reaching that tipping point where transparency is more of a burden than a benefit.

Thank you.