Guest post by Sheila Killian: An Audit of Irish Debt

Dr Sheila Killian is head of the Department of Accounting and Finance at the University of Limerick and lead researcher on the debt audit project. The results of the audit, commissioned by AfRI, the Debt and Development Coalition and UNITE, were released yesterday.
An Audit of Irish Debt is the result of 5 months of research from my colleagues Frances Shaw and John Garvey and myself, which has been an interesting journey that we hope has led to a useful picture of the current situation. The banking crisis and the decision in September 2008 to support all of the Irish banks has brought our debt far beyond sustainable levels. Through the Celtic Tiger years, our total long-term bonds increased, but remained comfortably below 40billion. Now they stand at over 90billion, or roughly twenty thousand euro for every woman, man and child in the country. We can add to this our contingent liabilities: the debts of the banks that we have guaranteed, the NAMA bonds, promissory notes, emergency overnight lending and guaranteed deposits. These potential liabilities come to 279bn euro, over three times the already inflated total for government bonds.

The Audit report spells out in clear language where these different categories of debt have come from, how they are inter-related, and discussed the nature of the anonymity that surrounds the names of bondholders. We also discuss other market activities which impact on the risk of Irish debt, such as Credit Default Swaps and short selling. We are grateful for the support of Afri, Unite and the Debt and Development Coalition, and we hope that the report is useful to all concerned people who want to learn more, and forms a foundation for future work in the area.

Guest post by Andy Storey: Call for debt audit

Dr Andy Storey is a lecturer in the School of Politics & International Relations at UCD. A number of prominent Irish academics, writers and activists have backed a campaign to audit Greece’s public debt, amid suggestions that such an audit might also be required in Ireland. Greek campaigners are calling for an independent and international Audit Commission to find out why the debt was incurred and the uses to which borrowed funds were put. As Costas Lapavitsas, one of the organisers of the petition, puts it:

“Can we be certain that the bulk of Greek public debt is legal, given especially that it has been contracted in direct contravention of EU treaties which state that public debt must not exceed 60% of GDP? The creditors – mostly core European banks – were fully aware of flouting this legal requirement when they lent to the Greek state. Is Irish public debt legitimate, given than much of it is speculative bank lending with a public tag placed on it? Is debt in both countries ethically and morally sustainable if servicing it implies the destruction of normal social life?”

Debt audits have been used across the world to allow civil society to hold to account those responsible for the damage caused by their countries’ indebtedness. An audit in Ecuador in 2008 encouraged President Correa to default on some of Ecuador’s most unjust debt, leading to a write-down by borrowers. Two former Ecuadorian ministers are amongst those who have signed the call to support an audit in Greece.

One of the most alarming aspects of the Irish debt crisis is the lack of transparency or clarity on the numbers involved. For example, the Irish Central Bank says that total Irish bank bonds outstanding amount to €63.4 billion, but Goodbody stockbrokers put the figure at €59.4 billion, while NCB stockbrokers come up with an estimate of €74.8 billion. When we get down to the detail of who this money is owed to, it gets worse. For example, a repayment of €750 million was made by state-owned Anglo Irish Bank in January this year to a creditor who was not covered by the bank guarantee but we do not know who that creditor was and why an unguaranteed debt had to be honoured. An Irish debt audit would allow us answer such questions.

The full list of Irish signatories to the Greek debt audit campaign is:
Professor Sean O’Riain, Head of Department of Sociology, National University of Ireland, Maynooth;
Cathleen O’Neill, Community Activist, Kilbarrack Community Development Programme, Dublin;
Frank Keoghan, General President, Technical, Engineering and Electrical Union (TEEU);
Des Derwin, executive member, Dublin Council of Trade Unions;
Professor Peadar Kirby, Director, Institute for the Study of Knowledge in Society (ISKS); Professor of International Politics and Public Policy, Department of Politics and Public Administration; Member, Governing Authority, University of Limerick;
Professor Cormac O’Grada, School of Economics, University College Dublin;
Dr Iain Atack, International Peace Studies, Irish School of Ecumenics, Trinity College Dublin;
John Baker, Associate Professor of Equality Studies and Head of School of Social Justice, University College Dublin;
Fintan O’Toole, author and journalist;
Kathleen Lynch, Professor of Equality Studies, University College Dublin;
Denis J. Halliday, former United Nations Assistant Secretary-General;
Kevin O'Rourke, Professor of Economics, Trinity College Dublin;
John Maguire, Professor Emeritus of Sociology, National University of Ireland, Cork;
Jimmy Kelly, Irish Regional Secretary, UNITE Trade Union.