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Old Guard Back At Anglo

Posted on: January 26th, 2009 1 Comment

BRAVO. There was blood on the carpet. The old Anglo board retired with a whimper.

Giants of the Irish corporate world were toppled. Gary McGann, chairman of the troubled DAA was gone; Ned Sullivan, chairman of Greencore was gone; Michael Jacob, a 20-year veteran of the Anglo adventure, was gone.

Finance Minister Brian Lenihan’s claim to be putting “clear blue water” between the “old” and “new” Anglo Irish Banks was gaining credibility. Bankers were finally falling on their swords.

Lenihan was steadying the ship. Bank of Ireland and Allied Irish were rightly being put in a different bracket to the wayward Anglo. Whispers that Lenihan was the only minister on top of the economic crisis were circulating in Leinster House. Favourable comparisons with his Cabinet colleagues — and the Taoiseach in particular — were being widely made.

The Anglo board suddenly began to look fresh. Former finance minister Alan Dukes remained a director, as did retired tax chief Frank Daly.

Admittedly, chairman Donal O’Connor, the sole survivor of the purge, was a minus. He had protected the Anglo auditors Ernst & Young at the EGM and he had refused to allow questions to the directors — but hopefully he will in future take advice from Dukes, Daly and other credible directors.

One step forward.

Then the Government blew it. Two steps back.

As the old board departed to the sounds of trumpets, Lenihan stumbled into an old trap. A new director was announced.

The old guard was back in town.

Perhaps Lenihan had been advised by O’Connor? Perhaps the Department of Finance had filleted the files and found a fossil?

Out of the cupboard popped the skeleton of Maurice Keane.

Maurice, 68, is a member of the golden circle. He has directorships galore. As a former Bank of Ireland boss, he ticks the banking box. He was chairman of health insurer Bupa. He is a director of Axis Insurance. He is rich as Croesus. A beneficiary of government gigs, he is on the board of the National Pension Reserve Commission.

The perfect candidate.

Not quite. Maurice is a director of another company. The press release was strangely coy about this item.

It never mentioned the most interesting episode in Maurice’s career.

Maurice is a director of DCC, possibly the most notorious company on the Irish Stock Exchange.

DCC is being investigated by the Director of Corporate Enforcement, Paul Appleby. The first report on DCC is due in court this week. Following the Supreme Court’s findings of insider dealing by DCC’s Jim Flavin in Fyffes shares, Appleby’s inspector — barrister Bill Shipsey — is poring over DCC’s grubby history.

A series of reports about the behaviour of DCC boss Jim Flavin during the insider dealing saga are threatened.

Maurice does not emerge from the recent DCC story covered in glory. And it is only beginning.

Although Maurice was not a director of DCC when the insider dealing offence took place, ever since his appointment in 2002 he has stood four-square behind Flavin.

Maurice even headed to the Four Courts to stand shoulder to shoulder with Flavin in his hour of need. After the Supreme Court’s dramatic finding against DCC and Flavin in 2008, Maurice was one of the board cabal which still refused to remove the boss.

Maurice was on the DCC nomination committee which — amazingly — made Flavin executive chairman of DCC in 2007. The executive chair job offends corporate governance conventions because it puts too much power in the hands of one man.

Jim Flavin was King of the Castle down at DCC. The board was so impressed with him that they allowed him to breach corporate governance orthodoxy.

Just like Sean FitzPatrick down at Anglo. Corporate governance conventions were waived for Sean, too, when he ascended to the Anglo chair after holding the chief executive’s post for donkey’s years. Close parallels with Jim.

All those directors who were under Sean’s spell are now gone. Most of those who were under Jim’s spell are still in place at DCC.

Including Maurice.

Maurice was impressed by Flavin. He must have been. He was a member of the DCC remuneration committee that gave Flavin a special €150,000 bonus for his extra work fighting the DCC vs Fyffes insider dealing case! This bonus was awarded soon after the High Court had found in Flavin’s favour, but before the Supreme Court had unanimously reversed the decision.

A premature reward, which backfired spectacularly.

Even after the final verdict, Maurice and the boys never asked Flavin for the money back.

Hardly surprising. The DCC board is not exactly a model of good governance.

In the light of his history at DCC, Maurice is an astonishing choice for Anglo. His backing for Flavin could return to haunt him in the coming years. Not only that, but he is deeply imbued in the “old” banking culture. While at the B of I, he enjoyed a final package of €863,000. He held 350,000 options and over a million shares. His pension is in the stratosphere.

So how was Keane picked? According to the press statement, it was after Lenihan had “consulted with” Donal O’Connor, the Anglo chairman.

Which speaks volumes about O’Connor.

Accountant Donal O’Connor is another member of the golden circle. Funnily enough PWC, the auditors where he was top dog, are also auditors to DCC. Not that such a connection would ever cloud his judgement, but the circle is small. PwC are also auditors to Bank of Ireland where Maurice reigned supreme for years. Ahem.

Maurice Keane’s period in charge at the BoI overlapped with O’Connor’s reign at PwC. They must have bumped into each other at bunfights by the dozen.

The Bank of Ireland was possibly Donal’s biggest client.

Donal O’Connor’s choice of Maurice Keane casts a dark cloud over his judgement. The old guard is regrouping around the new bank.

Lenihan can still redeem the situation. He showed sensitivity when he appointed Dukes and Daly. He should now ask Dukes to take the chair, retain taxman Frank Daly after telling Keane and O’Connor to step down. He could then recruit competent external people who enjoy public confidence, not the narcissistic admiration of corporate Ireland. Locally, he could ask David McWilliams to step into the breach. McWilliams is not just a journalist, he has valuable experience as a banker.

Then, the crazy decision hastily taken by O’Connor and the old board — to install an internal Anglo candidate, Declan Quilligan, as new chief executive — should be reversed.

Dukes would be an ideal chairman. He is an unsung hero of political Ireland who would fly the corporate flag of independence. If Lenihan is serious about his call for patriotism, he should put Dukes in charge. It was Dukes who sacrificed his chance to be Taoiseach when he ordered the Fine Gael opposition to back a government — to save the economy. It worked for the economy. Dukes was taken out and shot by his own party for his patriotism.

Time for another u-turn. It should not be difficult. The Government has plenty of practice. Lenihan should tell O’Connor and Keane to take an early bath.