FOR a brief moment last week, fool that I was, I thought we were crossing a rubicon of reform. Insiders need not worry. Bonuses are not on the way out; banks are not being reformed; semi-states are not bowing the knee; seats on boards are safe. Instead of reform, fresh phrases are being invented to give the impression of radical change.
Even that mother of all misnomers, the “public interest” bank director, resurfaced.
Ponder for a moment what, in the name of Declan Collier, these bank directors do in the “public interest”.
Well, after the bank crisis threatened to destroy the economy, the last government decided to help save Ireland by inventing a new class of bank director to guard the “public interest”.
Each State-supported bank agreed to accept two directors who would watch over the sitting board members. The unspoken agenda was clearly that they should act as State spies embedded behind the bankers’ lines. A good idea, as the old regimes could not be trusted. The new guys would stop the rot.
It has all turned out so differently. The ‘spies’ turned out to be collaborators. What the banks needed were guys devoid of baggage, unconnected to politician, auditor, mandarin or regulator.
They needed consumer champions, people with business pedigrees and whistleblowers but, above all, outsiders who were not part of the politically contaminated semi-state apparatus.
The selections by politicians of public interest directors had familiar flaws. The result: insiders took seats alongside insiders.
Last week it looked for a split second as though Taoiseach Enda Kenny was about to smash the “public interest” fantasy. When he was commenting on DAA chief executive Declan Collier doubling up as a director of AIB, he nearly dumped Declan in the manure. Enda’s heart is in the right place, though he is congenitally careful. So when he told the Dail that Declan’s gig as a member of the remuneration committee of AIB was “not good practice”, it looked as though the floodgates to freedom from cronyism might finally be opening.
Declan is embroiled in a loud controversy about his €106,000 bonus from his day job at the DAA while doing a nixer at State-owned AIB, deciding on highly sensitive pay packages for the top brass.
As Declan obviously felt he deserved the bonus from the DAA (bringing his package up to €612,000 for 2010), his judgement on appropriate pay awards at the State-owned AIB is somewhat suspect.
Even before the shock news of Declan’s €106,000 bonus broke, there was evidence that as a member the board he had erred on the side of generosity to AIB insiders. When AIB had approved its departing chief executive Colm Doherty’s massive €3m payoff, Declan was a member of the AIB remuneration committee.
I suppose anybody who can splash out €3m of taxpayers’ money to say goodbye to the boss of a destitute bank can justify a six-figure bonus for himself.
That is the wonderworld in which these fantasists live. Nobody on God’s earth — bar the board of the DAA and Collier himself — felt that Declan was worthy of a bonus in 2010. Kenny was reflecting public opinion when expressing his “personal view” that it was not good practice for such a generously rewarded man to be dishing out the dough at AIB. The Taoiseach was giving leadership.
Suddenly, an unlikely party rode to the rescue of the embattled DAA boss. Ireland’s most powerful socialist, Eamon Gilmore, threw a lifeline to Collier. A left-wing leader offered sanctuary to a capitalist fatcat. Asked about Collier’s position, the Tanaiste was quick to distance himself from Kenny by claiming that the DAA bonus and the AIB board nixer were separate issues. He had confidence in the well-heeled Collier.
Quite a puzzle: the Fine Gael Taoiseach virtually buries the plutocrat, but the Labour Tanaiste gives him a dig-out.
Not such a puzzle when the identity of another member of the AIB board is considered. Enter Dick Spring, former leader of Eamon’s wobbly socialists. Any challenge to Declan’s largesse at the AIB committee would naturally lead to Dick, the other “public interest” director. The next question to Gilmore would have queried Dick’s position on an AIB board which approved other generous awards to top employees.
Eamon was not going down that road. He cut the questioners off at the pass. Indeed he said that it should be acknowledged that Declan had surrendered his bonus, adding: “I think we should move on from it now.”
You bet he does.
Declan was through the hoops. Dick had provided his shield. Eamon gave him his escape route. Not all insiders are of the Fianna Fail variety.
Other “public interest” directors on bank boards, plucked straight out of the political elite, included former FF finance minister Ray MacSharry (Irish Life), former FF minister for agriculture Joe Walsh (Bank of Ireland), and former Fine Gael leader Alan Dukes (Anglo). All were paid-up members of the Leinster House club. Ominously, none has escaped the influence of arch-insiders, the mandarins in the Department of Finance.
And the same powerful mandarins were well-represented in the ranks of ” public interest” bank directors. Top ex-staff of the Department of Finance landed on the boards. Former secretary-general Tom Considine joined Joe Walsh at Bank of Ireland; former assistant secretary-general Adrian Kearns headed for the Irish Nationwide. Old bankers and mandarins who had been put out to grass came back to haunt other bank boards. All in the “public interest”.
The culture of high remuneration is in safe hands.
The practice of overpaying top brass at the banks and semi-States has flourished despite their bombed-out balance sheets. Gilmore & Co bottled it when they had a chance of making an example of the monstrous behaviour of the DAA board which awarded Collier the bonus.
They should have sacked all the directors for defying Government policy on bonuses and told Collier that his contract would not be renewed next year. They should have cleaned out all 12 “public interest” directors of the banks as protegees of the FF regime.
The DAA’s attitude to pay offered a perfect opportunity for a bout of semi-State bloodletting. The DAA pay structure was exposed as blatantly unjust because bonuses were dished out to top management while the lower paid were forced to take pay cuts. Collier and his cohorts were reaping bonuses, but any worker earning above as little as €30,000 was compelled to accept a pay cut. In the previous year (2009), Collier had actually trousered a €50,000 bonus when the old monopoly had recorded a €13m loss!
Then, in 2010, he was awarded a €100,000 bonus despite tumbling passenger numbers at all three airports, two credit rating downgrades of the company’s €1.2bn debt, the stillborn T2 white elephant and a 9 per cent fall in retail sales.
A series of other semi-state chiefs have suddenly emerged from the woodwork, hands up, volunteering to surrender bonuses awarded to them in 2010. Do not be fooled.
Bonuses may be in temporary retreat but directors have survived the turmoil intact. Not a single semi-state director’s head is on a plate. The DAA board, which approved Collier’s outrageous bonus, is still in situ. So are all the others, including the great misnomer, the “public interest” directors.
Contrary to rumour, they have not gone native. They were always native.