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Tuesday 2 September 2014

Fionnan Sheahan: Rivals cash in on Cowen's time as Finance Minister

Fionnan Sheahan

Published 22/04/2010 | 05:00

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Brian Cowen says he understands the public perception. Brian Cowen says it's important to have public support for the Government's economic and banking strategy. Brian Cowen says he can't legally prevent a €1.5m pension top-up being paid on behalf of the chief executive of a bank, which has received €3.5bn from the taxpayer.

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Perhaps, but the Taoiseach could have made a greater effort to reflect the public anger emanating as a result of the latest example of the glaring gap between the elite at the top and the little people.

Cowen said yesterday that "obviously it would help in public perception terms" if Bank of Ireland chief executive Richie Boucher returned his pension top-up.

But he wasn't going to be the one to directly tell him to do so, because it was an amount requested by the trustees of the pension to ensure future payments can be met.

The Taoiseach repeatedly said he holds no brief for the pension fund, yet he went out of his way to explain the technicalities behind the move.

Cowen said he'd made his position known on the issue -- but his position has come across as justifying the payment and saying he can't do anything about it.

When you're explaining, you're losing. And the Government was being battered.

By yesterday, the Coalition was relying on peer pressure bringing about a change of heart within Bank of Ireland.

Last night, it appeared the bank was on the brink of bowing to the inevitable.

Boucher's pension top-up will just have to be sacrificed.

If it took the management of the bank that long to feel the political heat, then they seriously need to check the thermostats in their headquarters.

The Boucher payment threatens more than just a bad vibe about the public's view on bankers, which can't really get any lower anyway.

Union bosses said the payment "stinks to high heaven" and the controversy threatens to scupper the acceptance of the Croke Park pay deal.

After racing ahead of their membership to strike a deal with the Government, the unions need a scapegoat if the agreement is rejected by their members -- a distinct possibility at this point.

Mr Boucher fitted the bill perfectly.

Why should ordinary public sector workers accept lesser standards of treatment than the bank bosses whose institutions are being propped up by their taxes?

Legally, financially and actuarially the bank can say the pension payment is legitimate.

But Bank of Ireland definitively entered the world of politics in September 2008 when the State guaranteed the bank.

Since then, the Government has recapitalised the bank to the tune of €3.5bn.

The excuse the bank is not in as bad a condition as other institutions just wouldn't wash.

Next week, Bank of Ireland will seek to raise €3.2bn in the biggest capital raising venture in the history of the State and the most complex.

The net effect will be the State owning a 35pc share of the bank on foot of the conversion of preference shares into ordinary shares. Within two months, the bank will be expected to pay back €500m to the State.

But it wouldn't win any brownie points if the Boucher issue wasn't resolved.

Next week -- when the bank will again be in the headlines, reminding the public of the controversy -- the Bank of Ireland will have to get the hint and it now appears to be set to perform a U-turn.

The furore over Boucher's €1.5m pension top-up and Michael Fingleton's €1m bonus severely undermined public support for the Government's banking strategy as it suggested the old habits were dying hard. Cowen's credibility on the banking front is being eroded by the day as the opposition parties continually bring up his role as Finance Minister.

The Taoiseach's claim to understand the public perception means he ought to have a grasp of the picture being painted of his time in the Department of Finance.

Cowen built a political reputation as a bruising debater, in his element when in the thick of a robust exchange.

When it came to his dealings with the banks, he was the ultimate dog who didn't bark.

Neither Enda Kenny nor Eamon Gilmore have had a golden bullet to fire at the Taoiseach but they have succeeded in creating an image of a minister who heard no evil, saw no evil, spoke no evil, about the banking sector.

Cowen had dinner with Seanie FitzPatrick and his pals in Anglo Irish Bank at the invitation of his friend, Fintan Drury, only weeks before becoming Taoiseach. He says the condition of the bank didn't arise over dinner.

Within months, Anglo was at the centre of a threatened implosion of the entire Irish banking market, requiring unprecedented State intervention to stave off.

Cowen met with Fingleton and senior management at Irish Nationwide Building Society in 2005, when he was drafting legislation about the future of the sector.

Nothing unusual about the Finance Minister holding such a meeting, but even at that stage there were suspicions about the building society's lending practices. Again, the Taoiseach insists nothing was brought to his attention.

Besides, he says it was the Financial Regulator's job to monitor financial institutions.

In Cowen's mind, soft-touch regulation and the international banking meltdown are entirely to blame for this country's banking crisis. Not even a whiff of culpability hangs over his head. Cowen's problem is somebody else is always at fault -- but the fingers of blame keep pointing in his direction.

fsheahan@independent.ie

Irish Independent

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