How blowing the whistle on the banks ruined Jonathan Sugarman's life

The author of 'The Whistleblower' spoke to Sean Moncrieff

How blowing the whistle on the banks ruined Jonathan Sugarman's life

Whistleblower Jonathan Sugarman arrives at Leinster House, Dublin, 13-04-2017. Image: Brian Lawless/PA Wire/PA Images

Jonathan Sugarman - a former risk manager at the Dublin branch of Italian bank ‘Unicredit’ - spoke to Sean Moncrieff about how his life was "completely destroyed". 

Speaking before the Oireachtas Finance Committee, Sugarman said he had repeatedly warned the Financial Regulator that the Irish banking system was facing a liquidity crisis before the financial crash.

"A bank is supposed to know how much money it's lending to people," he said on Moncrieff. "At the very minimum, your liquidity had to be at 90%.

"I, for example, might be the proud owner of Stephen's Green Shopping Centre, but if there's no one wiling to buy it off me, that is an illiquid asset. So if I run a bank and I owe Sean Moncrieff €5 million, but I can't get rid of the shopping centre, I have no €5 million to give you back."

How it began

Within his first few weeks at Unicredit, he noticed the bank were consistently missing the liquidity target. When he brought the issue to his superiors, his concerns were effectively dismissed.

"At first it was, 'oh it's just a computer error', or, 'actually we're fine, sure it's grand. So I said, 'well how do you know that?' And they said, 'You're just not in the bank long enough, you'll understand our portfolio and our balance sheet better in a couple of weeks time'."

At this point, Sugarman had been a risk manager for seven years, at several different banks at home and abroad. 

"Risk management is what I've done for most of my working life," he said. "This is finance - a plus is a plus and a minus is a minus."

Sugarman faced a prison sentence of up to five years by “signing for billions that do not exist.”

Enough is enough

Before bringing in an independent body to review the books at Unicredit, he essentially handed himself into the Central Bank.

"I walked in, in broad daylight, and said, 'I am in breach of Irish law and this is the extent of the breach'," he said. "So I expected the Central Bank to raid the bank that afternoon or at the very latest the following morning, but all we got was an acknowledgement."

Sugarman did not hear from the Central Bank following his confession. Then, the results of the review came back - telling him the breach was closer to 40%.

"I resigned the next day," he said.

Untouchable

Sugarman has attempted to regain employment within the financial sector since coming out against Uncredit - to no avail.

"I failed miserably," he said. "I am untouchable.

"I had this conversation with one of the leading financial recruitment agencies in Amsterdam at the beginning of the year. They said, 'Frankly, Jonathan, we regret even letting you into the building because if any of our clients realised we were in contact with you, we would be in trouble'."

Sugarman admitted he effectively ended his career, but did not anticipate the situation he would find himself in. He told Moncrieff that on numerous occasions, he has found himself sleeping rough.

Statement from the Central Bank

In a statement to Newstalk, the Central Bank said:

"In August 2007, the Central Bank of Ireland was notified by Unicredit Ireland about an overnight breach of compliance with a then recently introduced Central Bank requirements for the management of liquidity risk.

"An inspection was undertaken by the Central Bank from October 3rd to October 10th 2007. Upon investigation, the bank was satisfied that the breach did not suggest a wider or more systematic erosion of overall liquidity. The bank was back in compliance within the limits within 24 hours. This breach was not connected to any other bank operating in Ireland.

"Following additional claims made in 2010 in the media and in Seanad Éireann that numerous breaches at the regulated firm took place in the months following the introduction of the requirements in 2007, a further investigation was undertaken at the instruction of the Central Bank. This investigation did not highlight any further breaches.

"The Central Bank has undertaken significant investigation of the issues raised and is satisfied that the matter is closed."