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Sean Leaves his Pals in Situ

Posted on: July 18th, 2010

NOW that a stake has been driven through Seanie’s heart, what will be his legacy? How will he rank in the pantheon of great Irish bankers?

Well, he was unique. No Irish banker has ever behaved more recklessly than Seanie Fitz. First he put Anglo Irish Bank, next himself, and finally the nation, at risk of financial oblivion.

Some legacy.

Last week he completed the first two legs of the treble. Anglo was bust long ago. Sean is now bankrupt. Next stop, the nation. Let us pray that Brian Lenihan can prevent the third leg of Sean’s treble.

Sean always carried the scent of a financial buccaneer.

His willingness to put Anglo at risk when he headed into the frenzied property space is evidence that he was financially bonkers.

His brazen decision to hide his personal loans from visibility at Anglo’s year-end in the darkness of Irish Nationwide’s books was a sure sign that he was a chancer. The list of his assets and liabilities published at his bankruptcy hearing last week confirmed his investment insanity. It gave us an insight not only into the ethics, but also into the character of the former darling of the Irish stock market.

The list contained a few fascinating omissions. While Sean was prepared to squirrel away €15m into a Nigerian oil well and tens of millions into crazy property plays in obscure locations, it failed to remind us that he had shown little faith in the companies he had fronted back home. Probably buried under the umbrella of the “various portfolios” were the shares that Seanie had been forced to declare for public inspection.

Remember Seanie was a director of Greencore, of Smurfit Kappa, and of Aer Lingus — three blue-chip companies. He loved the kudos that such trophy directorships brought him. When Sean, the maverick banker from Anglo, landed the trio of company directorships, the outsider had arrived. For years the stuffy south Dublin establishment had excluded the rough diamond from Bray from its inner circle.

His arrival at the top boardrooms was corporate Ireland’s capitulation to the superstar who walked on water.

Although Sean wallowed in the recognition, he hardly repaid the compliment. While Smurfit Kappa paid him €300,000 a year to chair its board, Sean showed little confidence in the paper and packaging company of his good pal and fellow Anglo director Gary McGann. He bought a pitiful 14,491 Smurfit shares — worth barely €108,000 at last Friday’s close of business.

At Greencore, where yet another friend and fellow Anglo director Ned Sullivan was chairman, he only bought 23,000 shares that are worth €30,000 at today’s prices. And at Aer Lingus, to which he was politically appointed, he bought a token 9,544 shares that are currently worth €8,000.

Sean, the wild property punter, was taking no chances in the stock market’s blue chips. Today, the gambler who lost everything must be smiling at the irony that he was chairman of the Aer Lingus risk committee and held the critically sensitive post of senior independent director!

Such prudence in his approach to safe-haven equities was wisdom itself as the market approached an all-time peak.

Indeed, all three have suffered sharp reverses since.

Yet his reluctance to sink more than token amounts into the trio is derisory from a man who sank €15m of his petty cash into a Nigerian oil well. Last week, his investment portfolio turned out to be worth €51m. He had liabilities of €96m. His investments in the three flagship, publicly-quoted, companies amounted to a laughable €146,000.

Sean FitzPatrick’s meagre, and publicly visible, investment profile was merely a front for an insane over-indulgence in his private investment passions.

While Seanie preached prudence from the chair of Aer Lingus risk committee meetings, what was going through his mind? Was he, for an uneasy moment, wondering about the fate of the cool million he had punted on an Hungarian golf project? Or the €2m entrusted to the tender mercies of property mogul Derek Quinlan?

Or his mad borrowings from bankers outside the Anglo stable? Even more pertinently, how did his role as the guardian of corporate governance at the airline –as senior independent director — sit with his cavalier power grab when he ascended, unchallenged by his board, from chief executive to chairman at Anglo Irish Bank (in contravention of all good governance rules)?

No doubt he allowed the thought to perish instantly.

Sean the private investor showed delusions of grandeur that would horrify even the most adventurous of fund managers. He was a zealot in his belief in property. He fell for the charismatic creatures of the day such as Derek Quinlan, for the fashionable investment funds run by go-go Claret Capital, for a villa in the glamorous location of St Roche, for property in sunny Cape Town and for the joys of a holiday home in Marbella .

So much for Sean, a financial corpse serving a 12-year bankruptcy sentence. But what of the deceased’s legacy? He leaves behind friends and admirers still in key positions in Irish public companies.

Gary McGann and Ned Sullivan resigned from the Anglo board days after the nationalisation fiasco. Both men had welcomed Sean to their own boards, just as he had welcomed them to Anglo’s.

They obviously had high opinions of the man who is now seen as a property junkie both in his private dealings and in his stewardship of the bank. Mesmerised by the bogus success of the little maestro, they were part of Seanie’s golden circle. Today they remain oligarchs of Ireland’s public companies.

Gary, chairman of Anglo’s audit committee, stepped down from the chair of the decaying DAA but has held on at Smurfit Kappa. Ned, Sean’s senior independent director at Anglo, remains as chairman of Greencore.

Did neither of these Anglo directors sense that Sean was running massive risks with the third largest bank in Ireland? Did neither of them have a notion that he was acting like a deranged property addict in his personal property dealings, while having invested a pittance in their companies?

Even more worrying for corporate Ireland, these are among the guys who allowed Sean to achieve supreme power at Anglo, to run the bank as a personal fiefdom and to bring Ireland to its knees. They carry a heavy responsibility. Yet their resignations from Anglo seem to have allowed them to slip under the radar.

Surely they should not be holding the reins at other public companies when they have so patently been part of the massive failure at Anglo?

Sean FitzPatrick, the man who bankrupted himself, Anglo, and possibly the nation, did not do it on his own.

He was facilitated by the regulator and by his fellow directors. The bankruptcy of Seanie Fitz is not even the end of the beginning.

It does nothing to root out the dominance of the old oligarchs in Irish public companies. We have already seen how the Anglo board is falling back into the hands of political and banking insiders. The ancien regime is regrouping in the same bank, while those who departed soon after Sean have quietly survived in the other boardrooms of Ireland. They are happy as Larry.

Sean’s legacy is secure.