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Alan’s Little Bank of Horrors

Posted on: June 20th, 2010

WHICH finance minister said: “I was completely against it. The last thing you need is a State-owned bank, because it will end up with every lame-duck, politically attractive proposition being brought to it for finance.

“The more the State owns of it, the less it will be possible to refuse. That’s a complete horror story in my book.”

Charlie McCreevy? Albert Reynolds? Brian Lenihan?

It must be Charlie. He took the State out of the banking business. No, not Charlie. The words are those of the chairman of Ireland’s only State-owned bank, the ever-humble Alan Dukes.

Anglo chairman Dukes was speaking in 2005 to Simon Carswell, author of Something Rotten: Irish Banking Scandals. Well, that was then and this is now.

Today Dukes chairs the State-owned bank at a handsome (but reduced) fee of €150,000. He also receives a ministerial pension of €100,000. Latest accounts show that in 2009, Dukes earned approximately €100,000 as a mere director, before he was promoted to chairman.

Happily Dukes is today, somehow, a convert to State ownership of banks in trouble.

His earlier contrary opinion was an answer to a question from Carswell about the State’s behaviour when confronted with the collapse of Allied Irish Banks in 1984 when Alan was Minister for Finance.

No doubt the context was different. . .

But Alan’s principled objections remain rock-solid today. Carswell had asked him why the State had not taken a stake in the ailing AIB. Alan was horrified by the idea. He spoke in general terms. State-owned banks are vulnerable to “politically attractive propositions”. And even more importantly: “The more the State owns of it, the less it will be possible to refuse.”

Today Alan’s Anglo is 100 per cent owned by the State. Alan’s “lame duck” has lost both its legs.

Humble Alan was on the button. Only five years ago, he was particularly sensitive to the political pitfalls embedded in State banks, believing that they find political pressures impossible to resist when applications for loans float across their desks. As he says of them himself: “That’s a complete horror story.”

Knowing Alan’s views on the dangers of political interference in the operations of State-owned banks, it was wonderful to welcome him to the Oireachtas Committee on Finance and the Public Service last Wednesday.

It seemed reasonable to test the sworn opponent of State-owned banks on his current thinking about the dangers lurking in the recent political appointments to the board of Anglo. No doubt, with his well-ventilated fears, he had scrutinised the new directors with that forensic mind of his?

So I asked Alan about the procedures used for the shock appointments of ex-AIB fat cat Gary Kennedy and ex-Fianna Fail senator Aidan Eames to his Anglo board.

Alan’s response was uncharacteristically reticent. And characteristically personal.

First, he broke into French, invoking the Bourbons to take a swipe at my own inability to “forget nothing and learn nothing”. Then he condescendingly translated his words into English.

A testy exchange followed:

Deputy Joan Burton: “Is that about Fianna Fail or about the board?”

Dukes: “It’s about Senator Ross . . . I have absolutely no doubt that all the current members of the board will make a substantial and constructive contribution to what we have set out to do.”

Ross: “That does not answer any of my questions. . . What input did you have in interviewing these guys?”

Dukes: “That’s as much an answer that you’re going to get, Senator.”

Ross: “Why?”

Dukes: “Because I am not here to write a column on the back page of the Sunday Independent Business.”

Well, he just has.

Ross: “. . . we’re entitled to know this. It is important that people know this.”

Dukes: “It is perfectly adequate on my part to say that these three appointments have gone through due process and I’m perfectly happy with each member of the board that we have.”

Ross: “And did you interview them beforehand?”

Dukes: “I’m not going to answer that question.”

Ross: “Why not?”

Dukes: “Because I don’t choose to. I don’t have to tell you.”

Ross: “Because we’re entitled to know that.”

Dukes: “No you’re not.”

Ross: “How much are these guys paid?”

Dukes: “You may look at the annual report in which the fees of directors are disclosed.”

********

I was staggered that Alan was refusing to reveal relevant information about how the new board was chosen. Did he have any input into the choice of an ex-Fianna Fail senator, party donor and campaign manager, to the board?

Alan missed the point that not only is he paid €150,000 of public money for the Anglo gig (plus €100,000 as a ministerial pension), but his new colleagues will be pocketing close to €100,000 each in fees. Taxpayers are entitled to know the selection processes. Alan, supposedly appointed in the public interest, closed the door on such matters.

Gary Kennedy is part of the old bankers’ golden circle. Aidan Eames is part of the FF golden circle. Aidan doubles up as a politically appointed director of An Bord Gais.

Indeed Alan could have offered insights into political appointments at An Bord Gais. When he was Fine Gael’s Minister for Energy, it was under the aegis of his department that a certain James Corr was a politically appointed director of Bord Gais.

James, a one-time Fine Gael TD, is today the FG leader on Cork City Council.

Those were the days when Alan did FG’s bidding.

Today all is changed, changed utterly. Alan is receiving plaudits from strange quarters. I suppose it is not surprising when a man performs somersaults.

Some of us had great faith in Dukes. It is fading fast.

He still has his fans. At last Wednesday’s committee meeting, Fianna Fail’s Frank Fahey poured praise on former political opponent Dukes. On Thursday in the Seanad, Fianna Fail diehard Donie Cassidy, laid it on with a trowel: “. . . the advice given by the new chairman of Anglo Irish Bank, whom we all know and trust, and who has made an immense contribution to public life in Ireland, is that we start a small business bank, as Senator Feargal Quinn rightly suggested , the equivalent of ICC Bank. That would be a profitable bank.”

Today Alan is fighting like a tiger to keep Anglo alive, attempting to put it on life support as a lender to businesses. Far from winding it down, Alan is adamant that Anglo has a future. His enthusiasm for its expansion is difficult to reconcile with his assertion to Carswell that a State-owned bank “will end up with every lame duck”.

After the meeting I hovered around to talk to my old friend the Anglo chairman as I felt that the spat had revealed an indifference to the rights of the public to information.

Alan was busy addressing Fianna Fail’s Lemass group , a think-tank for Fianna Fail backbenchers (if that is not an oxymoron).

I wonder did Alan Dukes, the State’s banker in 2010, give the Fianna Fail troops his beliefs from less than five years ago? Perhaps he started with the familiar words: “I was completely against it. The last thing you need is a State-owned bank because it will end up with every lame-duck, politically attractive proposition being brought to it for finance.

“The more the State owns of it, the less it will be possible to refuse. That’s a complete horror story in my book.”