Alan Dukes: Dukes of Hazard
The former Fine Gael leader has a tall order on his hands in his new high-risk position
Published 20/03/2010 | 05:00
THE arrest of Sean FitzPatrick, less than a week after he was appointed to the position, illustrates just how tough a job Alan Dukes has on his hands as the new chairman of Anglo Irish Bank.
Last Friday week, Anglo Irish Bank announced that Alan Dukes would take over as chairman from Donal O'Connor in June. Immediately after news of the appointment broke, Dukes went on a "charm offensive" aimed at persuading the public that Anglo had a viable future and that the costs of closing the disgraced bank, which he put at €20bn, would be greater than the costs of keeping it going. Dukes even went so far as to predict that, at some indeterminate date in the future, Anglo could be sold back to the private sector at a profit to the taxpayer.
If this seemed an unlikely prospect it became even more so on Thursday when news broke that Sean FitzPatrick, the former chief executive and chairman of Anglo Irish, had been arrested by gardai investigating possible fraud at the bank.
These dramatic events merely highlighted what a basket case Anglo now is.
It was fears that Anglo was about to go bust that forced the Government to unconditionally guarantee the deposits of the Irish-owned banks on September 30, 2008. Then, in January 2009, the Government was forced to nationalise Anglo when the revelation that FitzPatrick had concealed loans from the bank of up €129m over an eight-year period destroyed whatever remaining credibility it possessed.
In May 2009, Anglo announced loan losses of €4bn for the six months to the end of the previous March. This forced the Government to inject €4bn of fresh capital into the bank to keep it afloat.
Things keep going from bad to worse at Anglo. When Finance Minister Brian Lenihan announced his detailed plans for the National Asset Management Agency (NAMA) last September he revealed that of the €77bn of bad loans being purchased by the new organisation, €28bn would be coming from Anglo. On the basis of the average 30pc discount which Lenihan predicted that NAMA would receive on the bad loans it purchased from the Irish-owned banks, that translated into losses of €8.4bn.
Unfortunately things aren't that bad at Anglo, they are much, much worse.
It now transpires that Anglo will actually be transferring €32bn of bad loans.
When Anglo reports its results for the 15 months to the end of December 2009 shortly, it is expected to announce a further €14bn in loan losses.
This will bring its total loan losses over the past two years to €18bn -- a cataclysmic 25pc of its end-September 2008 loan book of €72bn.
So what on Earth possessed Dukes, a former Fine Gael leader and finance minister, to accept this crown of thorns? Surely someone with his stellar reputation doesn't need the bother that comes with being chairman of Anglo?
Still aged only 64, Dukes has seemingly been around forever. A native of the Dublin suburb of Drimnagh he is the son of the late James Dukes, a former senior civil servant who served as chief executive and chairman of the Higher Education Authority. He was educated by the Christian Brothers at Colaiste Mhuire on Parnell Square before going on to graduate from UCD with a degree in economics and a Masters degree in international trade and economic integration.
He was hired by the Irish Farmers' Association as its economist straight out of UCD. In 1973, following Irish accession to the EU, he moved to Europe as the head of the IFA's Brussels office. He then went on to serve for two years as chef de cabinet to European Commissioner Dick Burke.
These positions were merely a precursor to a career in politics. He was headhunted by the then-Fine Gael leader Garret FitzGerald to run as a candidate for that party in the first elections for the European Parliament in 1979. With his IFA stint and strong farming background, the 34-year old Dukes was easily elected as an MEP for the Munster constituency.
Dukes then successfully ran for the Dail in the 1981 general election. He was only the fifth TD to be nominated as a minister on their first day in the Dail when FitzGerald named him as agriculture minister in his first Fine Gael/Labour coalition.
The first FitzGerald government collapsed when its budget was voted down by the Dail in February 1982. This was followed by another general election and a shortlived minority Fianna Fail government leading to a second general election within eight months. The result was the second FitzGerald government, which took office with Dukes as finance minister in December 1982.
Dukes's period in the portfolio was an intensely frustrating one. His efforts to rein in public spending and bring the national debt under control were continually blocked by the new Labour Party leader Dick Spring. Instead, the budget deficit remained stubbornly stuck at more than 12pc of economic output and the national debt doubled during the four-year term of the second FitzGerald government.
In February 2006, FitzGerald moved his young protege to the Department of Justice where he remained until Fianna Fail returned to power the following year. FitzGerald resigned as party leader following the 1987 general election in which the party lost 20 seats. Dukes was elected as his successor.
It was during his three-and-a-half years as Fine Gael leader that Dukes made what was almost certainly his most significant contribution to Irish public life. Fianna Fail, which had campaigned in the 1987 general election on the slogan of "health cuts hurt the old, the sick and the handicapped", did an about-turn after the election and swiftly implemented a programme of much-needed public spending cuts.
Instead of following Fianna Fail's example and strenuously opposing these spending cuts, Dukes, in an act of selfless patriotism unveiled his "Tallaght Strategy" of giving broad support to the Government's programme.
Unfortunately, in politics as in life, good deeds rarely go unpunished.
Fine Gael gained only five seats in the snap 1989 general election and, when the party's candidate Austin Currie limped home in third place in the November 1990 presidential election, Dukes's goose was cooked. He was replaced shortly afterwards as Fine Gael leader by John Bruton.
THE years since 1990 have generally been ones of disappointment for Dukes as he failed to live up to his early promise. Bruton didn't nominate him to his cabinet when the rainbow coalition came to power in December 1994. It was only when Michael Lowry was forced to resign as communications minister in November 1996 that Dukes was appointed to replace him. This last stint in cabinet lasted seven months before the rainbow was swept from office by a resurgent Fianna Fail in the 1997 election.
In 2002, Dukes's political career came to an end when he lost his seat in that year's rout of Fine Gael. Shortly after losing his Dail seat he was appointed director general of the Institute of European Affairs (IEA) think-tank.
He served for five years at the IEA but left somewhat acrimoniously at the end of 2007 when his contract wasn't renewed.
Dukes's return to the limelight began in December 2008 when he was first appointed by the Government as a public-interest director of Anglo. Since then, the situation at Ireland's third largest bank has rapidly deteriorated.
Can Dukes deliver on his pledge to turn Anglo around? It's a tall order but if he delivers it will represent a comeback of Lazarus-like proportions for both Dukes and Anglo.