After the economic crash, American vulture funds flooded the Irish property market seeking to make quick money from people’s misery and foreclosing on thousands of distressed homeowners after Irish banks sold them their portfolios for cents on the dollar.
Irish banks were bailed out by the billions but when it came to the ordinary householder no such consideration was given.
During this flood of vulture funds -induced misery for homeowners, one man, a senior court official known as Master of the High Court Edward Honahan, stood in their way. Now he too, has been removed from power.
It is a tale that alas, gets told too often, but Honohan is striking back and made a highly significant appearance before the European Parliament last month.
His message was clear: He hasn’t gone away nor will the vulture issue.
Nothing quite prepared me for the interview with the Master of the Irish High Court. The Master’s job within the legal system is unique to Irish and UK law, as he is effectively the gatekeeper, or in American legal terms, a case manager without being a Judge. The Master’s role is quasi-judicial in that he is a qualified senior Barrister or Attorney, as his legal title would be called in the States.
Ed Honohan is more than just a gatekeeper for the 2nd highest court in the land, Master Honohan is also an economist and was an advisor to the Irish Minister for Finance, Charlie McCreevey back in the mid-nineties. I knew of Mr Honohan’s reputation as “legal toughie” and someone that neither a plaintiff or defendant could pull a fast one on, unnoticed. At the pinnacle of his distinguished law career, Mr Honohan was offered a judicial position as a Judge or if not appealing to him, he could accept the position as Master of the High Court instead. Master Honohan chose the latter as he felt that his altruistic nature was better suited to the job. In time, this decision was proven to be the correct one for him, but it did and does not come without its problems.
Only last month, the Master was “relieved” of his hearing of debt related cases by the President of the Irish High Court, Mr Justice Peter Kelly, a move that was designed to stop the Master from calling the banks to heel, with the effect of allowing the unhindered flow of debt related cases go directly before a judge.
The fine balance that the Master of the High Court had managed to keep in check was and is in jeopardy as he has publicly stated that increased repossessions or foreclosures are going to be the order of the day from here on in. It is suspected that political interference and big finance had a hand in his removal. The gatekeeper function it seems was removed to facilitate Vulture Funds and banks. The public reaction to his removal has led to the creation of a petition signed by eight thousand concerned citizens and also a Facebook petition called “The Irish People for Edmund Honohan” given the high esteem that the Master is held in.
As the Master of the High Court, Ed Honohan has always tried to balance the needs of a plaintiff against the needs of a defendant, however, around the time of the now infamous Irish bank bail-out in 2008 and thereafter, he noticed an increasing number of cases coming before him with banks and other financial institutions taking legal action against property and business owners for repossession or foreclosure of property and other assets. The thing that caught the Master’s eye was that plaintiff banks were intimidatingly employing legal teams of four or five attorneys, whereas the defendants were generally solitary individuals, who more often than not had little or no legal defence team or knowledge of the law.
Honohan in his courtroom has been critical in the past of the behaviour of banks towards financially distressed customers and has on a number of occasions called out the government for failing to offer real solutions to repossession or foreclosure and ultimately an eviction, all of which has been ignored.
A person about to lose their family home or business to the banks for the most part do not have the financial means to employ a capable defence or even begin to understand the intricacies of the often- frightening court system. Most people lose their homes and businesses because they are left to their own devices by a government that many believe is hell bent on saving the banks rather than the homes or business of citizens.
This has been proven to be the case with the Irish government facilitating foreclosures by introducing legislation that ensured that banks and other finance houses were always going to be the winners, no matter what.
Banks consistently proffered shoddy paperwork that just got rubberstamped and sent on to the judge’s lists for their rubber stamp and the subsequent loss of a family home or business. Homelessness in Ireland started to rapidly gather pace shortly thereafter.
Ed Honohan has written a new bill with input from academics and legal experts and is designed to give greater powers to the State’s financial and legal support services and stronger protections to people who are in mortgage arrears called “The Affordable Housing and Fair Mortgage Bill”. Other supporters of the Bill are outspoken Fianna Fail TD and Chair of the Irish Dail Finance Committee, John McGuinness and a housing rights organisation called “Right2Homes” led by Brian Reilly. The proposed Bill has national support; however the government are refusing to allow it to move to the next stage so as to delay its implementation.
Ed Honohan appeared before the European Parliament on Monday 18th of March 2019. Mr Honohan was accompanied by a renowned Irish Economist, Trinity College lecturer and broadcaster, Constantin Gurdgiev, along with Irish members of the European Parliament, Luke Flanagan and Matt Carthy. The Master made a speech that the majority of the Irish media ignored and that will have implications for not just the world of finance and banking in Ireland, but will also have serious repercussions for American banks, funds and finance houses otherwise known to the Irish public as Vulture Funds.
The premise of the Master’s speech was based upon his intricate knowledge of not just Irish finance law but also that of banking law and how Vulture Funds have played the law to its fullest extent so as to effectively become the biggest legal tax avoidance scheme in our history and all with the blessing of the Irish Government.
Honohan recognized that the Irish Government had allowed Ireland become a tax haven, and that in turn allowed Vulture Funds to avail of what he says is impermissible state aid, much in the same vein as the legal action that the European Commission has recently taken a case against Apple for the recovery of €13 billion ($15 billion) in back tax that the Commission say that Apple failed to disclose to the Irish tax authorities.
Ed Honohan in his speech accuses the Irish government of effectively giving state aid to most of the financial institutions who took Ireland to the brink of financial ruin back in 2008 and who continue to influence government policy where banking interests are concerned. Mr Honohan has also called on the Irish government and Irish tax authorities to issue tax assessments to every resident Vulture Fund for unpaid taxes.
This would have the effect of raising billions of much needed tax to fund the deficit in social and capital spending, money that was poured into paying billions of Irish taxpayers money into the same people who are now avoiding paying tax, tax that should have been paid on profits on income earned here in Ireland. Mr Honohan states that the Irish Tax Authorities have a statutory duty and obligation to collect the unpaid tax on behalf of the Irish state and if they don’t then it becomes a matter for the European Commission to investigate the matter as a case of impermissible state aid.
American-owned Vulture Funds are using section 110 of the Finance Act 2017 and this in turn allows these vulture funds to pay no Irish taxes on their Irish domestic investments. In essence, Vulture Funds are using Irish legislation to undertake the wholesale avoidance of taxes to the Irish Exchequer. Their use of the scheme cannot be complete without the help of the State and other government departments such as the Department of Finance, the Charities Regulator, National Asset Management Agency (NAMA) and the Irish Tax Authorities, all who have worked to keep the multi-billion Irish tax avoidance scheme going in the domestic Irish economy.
Honohan went on to explain why these structures would also classify Ireland as a Tax Haven, and how they violate EU law and ultimately qualify as state aid. An EU commission investigation into state aid will look at how the avoidance of tax is not just being facilitated by the government, but also how it affects all other areas of society such as social and economic development amongst other areas of the national interest. The Commission takes a hard-line view of what they effectively see as an issue that is far greater than the value of the unpaid tax.
The EU Commission has now indicated an interest in how the Irish government have allowed American Vulture Funds avail of what is effectively illegal or impermissible state aid. The Master of the Irish High Court says that this will have the effect of sending a strong message to the Irish government, the American Vulture Funds and the New York Stock Exchange that the EU Commission will no longer tolerate the government in facilitating large scale tax avoidance, with the net result that these funds will ultimately have to have to back pay billions of Euro in unpaid taxes.
The Commission can order recovery of illegal state aid for a ten-year period preceding the Commission's first request for information and if illegal or impermissible state aid is proven, then Ireland must recover the unpaid taxes plus interest and normal penalties from all resident Vulture Funds. Master Honohan goes on to say that the government’s response to the calling for the closure of tax loopholes is in reality a ploy to placate the public and politicians and will be papering over a crack so large that Vulture Funds will continue to extract tax, no matter how big the paper covering the crack is.
Both the European Parliament and UN have now effectively backed up the Master’s argument in statements released this week. The UN have accused the Irish Government of applying 'preferential tax laws' to vulture funds and goes on to state that ' this cannot continue'. Combined with that heavy hitting statement, the European Parliament also accuses the government of allowing Ireland to become a tax haven.
In a final parting shot against the Irish government, Ed Honohan cites the “moral dilemma” facing the likes of an Irish taxpayer-owned bank such as AIB, now back in profits, when choosing between selling performing and non-performing home loans to Vulture Funds as opposed to facilitating proposals from ethically-minded alternatives.
After my interview with the Master, I sat there writing my notes from memory rather than taking them during the interview, as I wanted to get the measure of a man who is prepared to not just put his career on the line but also that of his reputation as a legal genius. I walked out of the Starbucks café that we had met in, with the strong impression that he really means business and that the American Vulture Funds really do have a reason to be fearful for their continued futures here in Ireland.
After all who wants to pay billions of Euro in back taxes to the Irish people? Apple didn’t and the American Vulture Funds won’t either.