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Anglo Corpse Infects Quinnvalid

Posted on: April 11th, 2010 1 Comment

SEAN Quinn has been a media recluse for more than a decade. He made rare, stage-managed media appearances in his glory days.

Otherwise we were starved of Sean, led to believe that he was just an ordinary guy who played cards with his old mates for €10 a night. That drip-feed of titbits built up his carefully spun rags-to-riches image.

Sean’s battery of public relations smoothies protected him from tough questioning. He spent a fortune on spinners. They batted away probing queries, building up a mystique about the man.

Now we know that he had plenty of questions to answer.

Last week Sean Quinn suddenly broke the habit of a lifetime and started to give media interviews. He even rang up RTE’s Prime Time programme on Thursday.

What is going on?

He was panicking.

Less than four years ago Sean was king of the castle. At the end of January 2007 he bought health insurer BUPA. It was a sweet deal. BUPA, from the UK, was selling out to one of our native heroes. Sean was painted as a champion of the consumer, a giant killer ready to take on the VHI monopoly.

To be fair, Sean had a healthy history of challenging the establishment. His cement business had fearlessly tackled CRH; he had founded Quinn Direct insurance; he had even bought into Conor O’Kelly’s NCB stockbrokers, taking on the insiders at Davy and Goodbody.

But in January 2007 he bought a 5 per cent holding in Anglo Irish Bank.

That was the start of the rot.

Sean Quinn is yet another example of the folly of allowing a key Irish company to fall into the hands of a single man, especially if he has reckless tendencies. Or if there is no one else in the company powerful enough to check his excesses.

Quinn developed a taste for corporate bravado as he began to borrow money and buy into a bank. He loved the Anglo ethos. He is now losing nearly €3bn, much of it in Anglo shares. Most of the money to fund such lunacy is borrowed from Anglo.

All powerful as he was, he is not in the Sean FitzPatrick or Michael Fingleton mould of corporate czars. His was a private company, but he quickly became afflicted with the same insanity that captured the banking buccaneers.

Initially he landed himself in the manure business, then his family, then his staff — and finally the nation.

Happily we now have an external Financial Regulator, Matthew Elderfield, who spotted the dangers of some of Sean’s more exotic inter-company activities.

The worst of these were the guarantees given by his insurance arm, reducing its assets by €448m. Matthew rightly decided that these guarantees threatened the solvency of Quinn Insurance. Its reserves did not meet the minimum required by law.

The gutsy new boy moved to appoint two provisional administrators to sort out Sean’s outfits. He forbade them from trading in the UK, where they were losing money.

Elderfield was doing just fine — until outside parties interfered.

Sean took to the airwaves.

Sean’s workforce took to the streets.

A drowning Anglo Irish Bank took to life-saving.

Politicians took to posturing and pressurising.

All were trying to eyeball, subvert or discredit the regulator.

Sean dubbed the regulator’s decision “one of the biggest errors ever in the history of corporate Ireland”. Then he grudgingly conceded that Matthew was “technically right”, protesting that his insurance arm was making €1m a day profit. Finally, he blamed the regulator for not meeting the directors before putting the company into administration.

Deliberately or not, Sean failed to appreciate the solvency rules. “We’re not short of cash,” he insisted. “We’re just short of meeting the requirements of the regulator at the present time.” In layman’s language, he is cash-rich, but insolvent. A very serious situation. The solvency rules are in place for a good reason — to ensure that Sean can meet future claims.

The “sandman” from Fermanagh rang the Taoiseach to ask for help. Now he was using political leverage to confront Elderfield. Brian Cowen sent in that great oxymoron, Enterprise Ireland, to pacify him. Enterprise Ireland is unlikely to make a blind bit of difference. When the semi-state’s boss, Frank Ryan, was interviewed on RTE on Tuesday’s Morning Ireland, he sounded as if he was simply in place to give cover to Cowen. Next, Sean cleverly positioned himself to beat the drum about the 5,500 jobs. In turn the worried staff put the heat on local and national politicians by marching on the streets of Dublin, Cavan and Enniskillen.

The politicians responded by storming Matthew’s fortress in Dublin’s Dame Street. Poor Matthew must have regretted his recent emigration from Bermuda to Ireland after sitting through a half-hour of hectoring from Sinn Fein TD for Cavan-Monaghan Caoimhghin O Caolain.

Hitherto unheard of political pressures were building up on the new regulator. Luckily, beside him at the meeting with the angry politicians sat a stalwart of independence, Patrick Honohan, governor of the Central Bank.

Can anyone remember former governors like John Hurley or Maurice O’Connell indulging local delegations’ special pleading that the regulator’s actions had jeopardised jobs? They would have shown them the door.

Simultaneously, lobbying from another quarter hammered at Elderfield’s door. A demented Anglo Irish Bank demanded that it be allowed to take over Sean’s ailing outfit. Anglo’s bosses feared that if they did not take control, Quinn Group might be sold in a fire sale. Anglo might consequently never be repaid the €3bn owed by Quinn.

The nation stopped and stared in wonder — Anglo is bust; how can a broke bank find €700m to take over a sinking insurance company? Where is the money to prop up Quinn? This is a game of Irish dominoes.

The only source of Anglo’s €700m cash needs would be more borrowings, or further state guarantees.

Is Brian Cowen about to use a toxic bank to guarantee a poisoned insurance company?

Your money and mine is back on the line.

This is the first test of Elderfield’s mettle.

Anglo Irish is not for saving. Quinn Group may be. The fantasy that the Anglo corpse can somehow recoup some of its losses by embracing an insurance invalid is financial insanity. Quinn’s empire should be sold to an outsider. Anglo must simply join the queue of creditors.

More importantly, Quinn Group is now far more valuable without Quinn. Elderfield will be aware that this is not the first time the man from Fermanagh has seriously breached regulations. In October 2008, Quinn Insurance was fined €3.25m — while Sean himself was made to pay over €200,000 and give up the chair. He is now a noose around the neck of his creation.

Elderfield must ignore the politicians and immediately put the Quinn Group on the block — without Sean Quinn.

Have the TDs and senators who marched on the streets last week forgotten that Ireland rightly demanded stricter, not looser, regulation? We cannot allow powerful individuals to manipulate the media and push the jobs button in a bid to bypass the new regulatory regime.

Ireland must support Elderfield, wave goodbye to Sean Quinn — and send Anglo, with its crazy delusions, packing.