Ship of Fools

by Fintan O'Toole

  And something stirred, some memory perhaps that France had once had an aristocracy of its own and had replaced it with the idea of a republic. As Marlowe reported, ‘the onlookers’ anger exploded. There were cries of “C’est dégueulasse” (It’s disgusting) and rude comments about the bride and groom. Each time the veiling operation occurred - on arrival and post-wedding departure for the silver van carrying the bridesmaids and the black Mercedes which brought the Taoiseach and his daughter - the catcalls grew louder.’ The French, at least, remembered how to jeer the gentry.

  There had been a kind of dress rehearsal for Georgina and Nicky’s nuptials eighteen months previously, when both were guests at the wedding of another Westlife member, Bryan McFadden, to Kerry Katona, an event that was similarly purchased by Hello. This time, the wedding was in the village church of Rathfeigh in County Westmeath. Access to parts of the village and to the church were similarly blocked off, even after the end of the wedding, and Hello’s investment was likewise protected by burly security guards and blacked-out cars. The Irish taxpayer paid for fifteen gardai to be on duty to keep citizens at a distance, and gratefully provided a pair of Garda motorcycle outriders to flank the bride’s wedding car. As the newly-weds drove away from the ceremony in their blue Rolls-Royce, the gardai ran alongside the car to shield its occupants from prying eyes and preserve Hello’s droit de seigneur. But whereas the French villagers had rebelled and jeered, the Irish crowds behaved with impeccable peasant propriety. ‘Loud cheers’, reported the papers, ‘greeted the guests as they were ferried in a convoy of tinted-window minibuses and Mercedes saloons from Slane Castle.’ Ireland had its own new gentry and no memory of the guillotine to cut through the celebrity culture with a sharp edge of republican self-respect.

  In some respects, the most puzzling aspect of what happened in Ireland in the Celtic Tiger years is the tolerance of an increasingly confident and educated populace for the emergence of what was, in all but the external trappings of title and accent, a new aristocracy. This was a much more substantial new elite than that generated by the outrageous fortunes of manufactured pop. But it tapped into a grander version of the same cult of celebrity. And it would prove to be, in its own way, almost as insecure as the instant fame of reality TV shows and assembly-line bands.

  The concentration of the new wealth created by the boom could hardly have been more extreme. Excluding the considerable value of its residential property, the personal wealth of the top 1 per cent of the Irish population grew by €75 billion between 1995 and 2006. Bank of Ireland Private Banking estimated in 2007 that, including private residential property, the top 1 per cent of the population held 20 per cent, the top 2 per cent held 30 per cent and the top 5 per cent held 40 per cent of the wealth. Even this picture was somewhat distorted by the puffed-up book values of middle-class houses. If residential property was left out of the equation, the top 1 per cent held 34 per cent of the wealth.

  Even at the apex of this pyramid, moreover, there was an extreme concentration of wealth. Of the 33,000 millionaires (again not counting house values), the vast bulk had less than €5 million. Three thousand had between €5 million and €30 million. Just 330 had more than €30 million. In the last three years of the boom (2004 to 2007) alone, the richest 450 people in Ireland added €41 billion to their combined personal wealth.

  Yet, somehow, Irish people went on believing that they lived in a relatively classless society.

  There were a number of reasons for this, chief among them the old Irish association of ‘upper class’ with the Protestant Ascendancy, meaning that a Catholic aristocracy was a contradiction in terms. But another crucial factor was the way the rise of the new elite in Ireland coincided with the global culture of celebrity.

  Bertie Ahern himself was the key to all of this. His brilliance lay in his capacity to connect the old power structures of Fianna Fáil and the native business elite to the new global celebrity culture. He did this through the creation of ‘Bertie’, a character who tapped into the tabloid celebrity world while keeping hold of a very old-fashioned Irish political machinery.

  Celebrity culture thrives on two qualities. One is false intimacy - the belief that a famous person is known to us in the way our friends, family and neighbours might be. The other is blankness - the celebrity is a screen onto which we can project whatever feelings, thoughts or desires we choose at any given time. ‘Bertie’ superbly encapsulated both of these qualities.

  In politics, blankness might seem to be a weakness, but the Bertie persona turned it into a strength. Except under extreme pressure, Ahern could hide real feelings like anger, contempt or greed under a warm blanket of mundane amiability. He could be a friend to everyone, even his enemies - knowing, of course, that the politician who was attacking him today might want to do a deal tomorrow, or that the voter who was venting spleen on the doorstep might just change her mind in the polling booth. He could be a socialist with a trade union leader, a neo-liberal with a business leader. He could share with a property developer his contempt for tree-hugging environmentalists and with the Green Party a passion for sustainable development. This adaptability and opportunism, this talent for absorbing all sorts of forces within himself, may have had their source in a kind of emptiness, but they functioned splendidly in the shifting landscape of boomtime Ireland. He had no hard core of moral passion to weigh him down as he modulated from friend of the rampant rich to every worker’s pal. This allowed him to embody the evasiveness of a society that was in many minds about its own reality.

  Even the impression of a certain kind of stupidity - his famous ability to mangle even the flattest of cliches (‘smoke and daggers’, ‘upset the apple tart’) often made George Bush sound like Abraham Lincoln - could enhance the power of blankness. Bertie underplayed his own keen intelligence, sometimes deliberately resorting to gibberish, not caring if it made him look obtuse and inarticulate. He downgraded the grandeur of his office by being infinitely available to ceremonially open pubs, hairdressers, supermarkets or packets of crisps. He deliberately gave the impression that he cared more about Manchester United or the Dublin Gaelic football team than about health policy or poverty. It allowed people to get used to the idea that he was not in fact willing to engage in any serious discussion about the direction of Irish society, and even to the notion that such matters were tediously irrelevant.

  The blankness gave him more than the ability to remain, for all the apparent permanence of his power, a moving target. The famous Teflon surface that allowed him to deflect obvious questions about, for instance, his relationship with Charles Haughey, in which he was both the Boss’s favourite protégé and entirely ignorant of his master’s misdeeds, was also a screen onto which people could project an image they liked. It allowed for the other great celebrity quality - the false intimacy that turned Bertie into the embodiment of familiarity, the ordinary Joe with ordinary desires who just happened to be running the country.

  Like all celebrities, he dished up selected slices of his real, private life. It ought to have been a problem in a country that still had a very high level of Catholic belief that, uniquely among international leaders, Bertie was a still-married man who not only lived with his girlfriend but made her the official first lady who accompanied him on state visits and hosted heads of state and government. There ought to have been some sympathy for the poor, conservative Archbishop of Dublin who not only had the Taoiseach’s partner’s beauty salon opposite the entrance to his palace, advertising Brazilian waxes, but who actually received an invitation to an official state reception in her name. But in fact the drama of Bertie’s complex love life was perfectly consonant with the pop-culture worlds in which his broader family, with its best-selling popular novelist daughter Cecelia and his boyband hero son-in-law, was firmly embedded.

  ‘Bertie’, in other words, was the image, not of a ruthless politician whose mentor was flagrantly corrupt, but of a character in a long-running soap opera. Such characters are meant to be people li
ke us, except that an absurd number of dramatic things happen to them. Their marriages break down, they have complicated, drawn-out love affairs, their children marry pop stars and have twins, or become famous novelists overnight. Their careers follow strange paths, with unlikely and sometimes downright incredible twists. But they themselves remain solid, reliable, familiar. The things that happen to them are functions not of their character, but of the plot.

  This is the way Bertie Ahern was seen, and it was the reason for his legendary invulnerability to scandal. When he signed blank cheques for Charlie Haughey, as he did for long periods in the 1980s when he was treasurer of Fianna Fáil, it wasn’t something he did but something that was done to him, as the innocent victim of an older man’s wiles. When he brought Ray Burke back into cabinet in spite of specific allegations that he was on the take, it wasn’t a conscious decision, just an accidental turn in a complicated story of which he knew nothing. When he got money from businessmen, it was something they did to him, an event beyond his control. He was as surprised as any of us would be if our friends suddenly gave us envelopes containing thousands of pounds while we were having a pint in the local. And when he had to explain that money as news of his ‘dig-outs’ became public, he did so by shifting it back onto the soap opera territory of private life, in which he could no more help what happened than Ken Barlow in Coronation Street could help leaving Deirdre for Denise and then Denise for Deirdre.

  The importance of Ahern’s brilliant manipulation of celebrity and soap-opera norms was not confined to his own outstanding success in winning elections. It was not even limited to the way this greedy, money-grubbing man with wads of cash in his safe managed to make pretty much everyone believe that he was an ordinary fella, who was interested in money only to the extent that he needed a roof over his head, a few pints and a subscription to Sky Sports. It did more than any of that - it provided cover for the emergence under Ahern of a new aristocracy. It harnessed one kind of elitism (celebrity culture) to the interests of another - the operation of a governing class that (often quite literally) floated above the reality of Irish society. ‘Bertie’ mediated perfectly between the existence of an aristocratic elite on the one hand and the public belief, on the other, that there were no class distinctions in Ireland.

  To call the new super-rich elite an aristocracy is not as whimsical as the absence of blue blood or old money may make it sound. Nor is it simply a reflection of its desire for country mansions and racehorses, or even of its preference for the helicopter view of Ireland. (The property developer Seán Mulryan and his wife, for example, flew in and out of their gloriously restored manor and stud at Ardenode in his-and-hers Sikorskys.) What made the elite an aristocracy was precisely its successful insistence on the privilege that defined the French aristocracy before the revolution: exemption from taxes.

  One of the effects of the sense of victimhood in which much of Ireland’s billionaire class wrapped itself (see Chapter 5) was the absence of any sense of social responsibility. The patriotic urge was more than adequately fulfilled by taking over old Ascendancy estates or buying up half of London’s West End. It did not need to be expressed in sentimental gestures like paying one’s taxes. This was a noblesse untroubled by oblige.

  For much of the early period of the Irish boom, sophisticated tax avoidance was entirely unnecessary. Good old-fashioned tax evasion was perfectly adequate and almost entirely risk-free. The Revenue, indeed, began the boom period by writing off, in 1996, €1.8 billion in unpaid taxes - none of it, it is safe to say, owed by ordinary PAYE workers - as ‘uncollectable’.

  In 2002, the Comptroller and Auditor General gave the public a unique glimpse into the tax dealings of a highly successful, but unfortunately unnamed, property developer. He (a safe assumption is that it is a ‘he’) was in business since 1970 but, presumably not being a man to rush things, didn’t make a tax return until 1988. Not one - for eighteen years. He was tempted out of the shadows by a tax amnesty brought in by Fianna Fáil in that year. For eighteen years of property development, he paid a grand total of €79,000 in tax. This was ‘considered inadequate’ by the Revenue but it never got round to asking for more money.

  Having made his grand gesture, the developer promptly disappeared again. A demand from the Revenue for €450,000 in corporation tax was returned to sender. The Revenue let it lie on the basis that ‘neither of the two directors could be contacted’, and in 2000 this tax was written off. Remarkably, this Invisible Man was involved, throughout the 1990s, in thirty-five major property developments, including ‘several major industrial estates, office blocks, apartment blocks, townhouse schemes and a shopping centre, with recent [in 2002] developments valued at over €125m’.

  The idea that one of the country’s larger property developers couldn’t be contacted with a tax demand may seem implausible, but the story actually became even more fantastical. Of the developer’s thirty-five companies that were registered for corporation tax (they paid a measly total of €250,000 between them), twenty-five were registered for VAT and none was registered for PAYE or PRSI. In the paper world of officialdom, their employees could not pay tax because they did not exist. One company that was recorded in the official records as ‘dormant’ somehow managed to construct with this staff of ghosts ‘two townhouse developments and an apartment block in the early 1990s which sold for €10m’.

  When one Revenue demand for €34,000 in VAT arrears was returned to sender, a tax official contacted the developer’s registered address and was informed that the company had transferred to another address, and that the whereabouts of the directors were unknown. At the second address, the official was told that the company no longer existed. Again, the VAT arrears were simply written off.

  In an ordinarily dysfunctional society, the property developer who could build thirty-five major developments without paying tax and avoid prosecution would be content to bask quietly in the knowledge that he could do whatever he liked. Our hero, however, had the panache of the true aristocrat. When he sold his own house for €3.9 million, he was not considered to have any liability for residential property tax because ‘his declared income was below the income threshold’. There was a genuine elegance about the circularity of this brazenness - he didn’t pay tax because he had declared hardly any of his income; he didn’t have to pay tax because the income he declared was so low. The V-sign was flicked with a nerveless insouciance that commands applause.

  With the relatively brief upsurge of public disquiet that followed various tribunal revelations - Haughey’s voracity, Burke’s backhanders, Lowry’s evasions - and the DIRT inquiry in the early 2000s, this kind of open taunting of the tax authorities became rather less advisable. What happened, however, was that the Fianna Fáil/Progressive Democrats government offered an alternative. The alternative was not, as might naively be imagined, that people who were making millions would pay their taxes in the same way as those who were making mere thousands. That would imply that these categories of people were somehow to be regarded as equals. Instead, illegal (though unpunished) tax evasion would be turned into perfectly legal tax avoidance.

  Some of this strategy consisted in either cutting taxes or deliberately leaving loopholes in tax laws. The wealthy, and especially property developers, benefited enormously from one of Charlie McCreevy’s first moves as Minister for Finance - cutting the rate of capital gains tax from 40 per cent to 20 per cent. Developers also gained enormously from a loophole in stamp duty legislation, which allowed them to purchase or transfer, tax-free, shares in companies owning land rather than technically buying the land itself. (The whole transaction was treated as a transfer of company ownership rather than of property, thus avoiding the bulk of the tax.) This created a bonanza for the super-rich: the developer Bernard McNamara saved €36 million on a single deal (the purchase of the Glass Bottle Company site in Dublin’s docklands). Over 40 per cent of big property deals exploited this loophole, but the government refused to close it.

 
For complete aristocratic immunity from taxation, however, it was necessary for the government to construct an even more abject scheme. Most democracies have problems with what the Irish called ‘tax exiles’ (making them sound like melancholy and martyred refugees) and the Americans, who take tax more seriously, rightly call ‘tax fugitives’. Ireland was one of the very few countries to go out of its way to make it as easy as possible to be a tax fugitive. In essence, Fianna Fáil and the PDs deliberately concocted a ruse whereby it was possible, if you had your own jet, to live in Ireland and abroad at the same time. As if Ireland did not have enough bogus non-residents, they summoned into existence a whole new (and entirely lawful) host of spectral beings whose whereabouts were more a matter of hovering than of being.

  Again, the gift was bestowed by Charlie McCreevy. The existing situation was that, in order to claim not to be resident in Ireland for tax purposes, it was necessary to spend more than half the year (183 days) abroad. This did not suit the super-rich, so McCreevy played Fairy Godmother and invented the ‘Cinderella clause’. A day, it turned out, was not a day if you left the country by midnight. It was possible to work in Ireland all day and still technically not be in Ireland. So long as the golden carriage of the Lear jet was in the air at the witching hour, you were in no danger of returning to the plebeian ashes and rags of nasty taxes.

  Not that anyone was likely to be checking anyway. Figures uncovered by the Sunday Tribune in July 2009 showed that just nine individuals (0.15 per cent of the total number of tax fugitives) were audited by the Revenue to ensure that they were operating within the rules. It was hardly surprising that the numbers of rich people accepting McCreevy’s gift rose steadily. While McCreevy was in office, the numbers were never revealed. From 2005 onwards, they became public: in 2005, there were 3,050 people claiming non-residency for tax purposes. In 2006, there were 3,996. In 2007, there were 5,142. And in 2008, there were 5,803.