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Anglo Boss too Close to Seanie

Posted on: June 7th, 2009

MICK Bailey was fresh as a daisy. There was a bounce in the builder’s step.

I spent the first hour of Friday morning accosting people in Dublin’s Molesworth Street. Mostly they were people I do not know and, more often, people who certainly do not want to know me.

I spotted Mick Bailey of Bovale builders fame while I was loitering with intent outside Leinster House, coincidentally contemplating a column on Bovale’s bankers, Anglo Irish.

It was my lucky day. For several months, I had wanted to ask Mick for a few stories about the Fianna Fail tent at the Galway races. They would make a wonderful chapter for my imminent book on Ireland’s bankers. Mick was always the star of the show in Galway.

I accosted poor Mick and introduced myself.

I wondered if perhaps Mick the builder was heading for Anglo’s St Stephen’s Green headquarters, just 100 yards away, to lend them a few bob. Or just to offer the under-siege bankers a bit of friendly advice about how to keep out of trouble.

Mick Bailey could probably teach Donal O’Connor, the accountant temporarily in charge of Anglo, a few tricks. He should offer Donal his services as a tax consultant. After all, Bailey was the man whose company settled with the Revenue Commissioners for a bargain €22m a few years ago.

He would certainly be more streetwise than current auditors Ernst & Young, who missed Sean FitzPatrick’s multi-million euro loans for eight years in a row. Bailey would know more than any blind, blue-blooded accountant about where the builders’ bodies are buried.

If Mick was given the gig, you can be sure that the first place he would suggest looking for trouble would be in Seanie’s personal accounts. Then he would be demanding details of what his cronies David Drumm and Willie McAteer were doing about them. Mick would have sacked Ernst & Young on the spot. He never had much use for auditors.

In Anglo’s case, he would probably have been right. And he would have saved the outrageous €2.2m fees charged last year.

Finally, if Mick had been on the case in 2008, when he heard that billionaire Sean Quinn was trying to sell 10 per cent of Anglo, he would have sent for the file and bought the shares himself. There would have been no ‘Golden Circle’.

Mick begins to sound the right guy to sort out Anglo.

So I rang Donal O’Connor, the solemn big chief at Anglo, to make a suggestion.

“I have just met Mick Bailey in the street. I told him you have a vacancy for a chief executive. Would he not be ideal?”

O’Connor is one of those accountants who try hard to behave like normal people.

He made an effort at a laugh and then reverted to corporate speak. “We certainly need a chief executive,” he replied stiffly.

End of topic.

O’Connor was far more comfortable with awkward questions about Anglo itself, the disaster which he is temporarily running. A lifetime as an auditor with PwC has taught him how to dilute specifics into generalities. He actually thinks boring.

In answer to the question “When?” he says he is “heavily engaged” in the recruitment of a new boss.

In answer to the question “Who?” about the identity of the new directors, he heads for the refuge of “skill sets”.

In answer to a question on anything else, he normally prattles happily about the “process”.

That’s accountants for you.

I could sense that the voice at the other end of the telephone was dying to be asked about balance sheets, profit and loss accounts and cash-flow statements.

I resisted going anywhere near that territory for fear of being bored to death.

Donal did drag me into “going concern” and “orderly wind-downs”. That is his comfort zone.

When asked about his possible conflicts of interests, he talked about the “redacting” procedures. Mick Bailey would think “redacting” was a contraceptive for a racehorse.

As my conversation with Donal progressed, I nostalgically longed for the charms of Mick, so recently experienced in Molesworth Street.

Donal is part of the problem at Anglo, not part of the solution. He is a remarkably decent man who has landed in a terrible mess. He should never have been made chairman, let alone executive chairman. He obviously feels deeply uncomfortable in the job. This discomfort must be partly relieved by the €500,000 salary he is drawing.

Donal should ask himself how he can justify taking 10 grand a week out of a bankrupt bank? The taxpayer is footing the bill for his wages. In answer to banking questions, he is fond of protesting — by way of excuse — that he “is not a banker”. So why is he taking a banker’s €500,000 salary from a state-owned basket case?

Donal must be aware of the row out at Aer Lingus last week. On the salary spat, he should take a leaf out of the airline’s executive chairman, Colm Barrington’s, book. The parallels are useful. Both Donal and Colm have temporarily assumed the executive chair’s job while awaiting the selection of their successors. On Friday afternoon there was a row at the Aer Lingus AGM about Colm’s €140,000 salary. Ryanair’s Michael O’Leary thinks it is too high. So, apparently, does Minister for Transport Noel Dempsey. Colm will inevitably be forced to take another cut. How can Donal, a non-banker, justify a wage of €500,000 a year from the destitute Anglo while the less endangered Aer Lingus only pays €140,000 to Colm, a man with vast aviation experience?

The question would never occur to Donal O’Connor.

Donal is part of the old order. He thinks just like another veteran, Maurice Keane, formerly of the Bank of Ireland but plucked out of retirement as a government nominee to the new Anglo board. Unfortunately, Donal was a key player in Maurice’s appointment. They needed a banker. He knew Maurice of old from the days when the Bank of Ireland was PwC’s prize customer.

On Friday, Donal did not want to talk about Maurice’s DCC experience, nor of Keane’s unswerving support for Jim Flavin during the insider dealing case. Maurice Keane is a member of the old guard. So is Donal.

O’Connor is also too much part of the Sean FitzPatrick gang to represent a new broom at Anglo.

Donal was asked to join the Anglo board last year by Seanie himself. It was Seanie who told him about the Sean Quinn antics last summer, but reassured him that the matter was settled. Donal had plenty of faith in Seanie Fitz.

He was refreshingly honest when I asked him if he was a friend of Sean’s, admitting that he had known him for several years.

They both soldiered together on the board of the Dublin Docklands Development Authority before Donal accepted Sean’s invitation to become a director of Anglo.

That friendship and his cross-directorships with Sean compromise his ability to take decisions on several delicate matters at Anglo.

Mick Bailey may not be an ideal substitute, but Anglo should look for someone else.