Monday 26 September 2016

'Masters of the Universe' come calling to tell us all that they are sorry​

Gerard O'Regan

Published 25/04/2015 | 02:30

Brendan McDonagh with the late Brian Lenihan (left)
Brendan McDonagh with the late Brian Lenihan (left)

There was a time when Dermot Gleeson seemed a bit like a Master of the Universe when viewed by more ordinary mortals - respected by friend and foe alike for his razor sharp intelligence and ability to often emerge as top dog, whether it be in the legal or the business world.

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The genial-speaking Corkman comes from a high-flying family of legal eagles. His father was a Circuit Court judge, and during his own career as a barrister he appeared in various high-profile cases, culminating in a period as Attorney General in the 1990s.

His perceived intellectual ability to see around corners did not go unnoticed in the business world. Eventually he was lured into taking one of the top corporate gigs in the country, when he became Chairman of AIB, between 2003 and 2009.

How it must all seem so different now when he looks back on his earlier years in that particular job. So often described as one of our pillar banks, AIB was among those institutions at the very heart of what we thought back then was Ireland's very own economic miracle.

The bank was churning out millions and millions in loans, all bringing lots and lots of money into its coffers by way of interest repayments. During those days, when it seemed the dreamboat would sail forever, it made for sweet times to be savoured by borrowers, shareholders, and staff. And of course Mr Gleeson did quite nicely out of it as well.

This week, the former Chairman trooped into the Banking Inquiry to give us his take on why that gilded and golden era - when it seemed he and other banking heavyweights could do no wrong - shuddered to such an ignominious end. Inevitably, he looked older than his Master of the Universe days; we can only wonder how much of his quieter thinking time is devoted to looking back and pondering the might-have-beens. His performance was a mix of apologia and explanation, coupled with the odd philosophical aside. One rueful comment of his could yet be a mantra for the entire Banking Inquiry, when he mused: "Nothing surprises me any more.''

There was also a touch of self-justification underpinning some of what he had to say. He did want to assure us that while AIB was not without sin, the baddest boys in the class were Anglo Irish Bank and Irish Nationwide. He thought they would be nationalised - on the presumption this would solve the whole problem.

In a slightly bizarre aside, he also told us that despite billions of euro being at stake, there was an all important "piece of paper'' floating around on the bailout night. Its whereabouts are now unknown but it did contain some important stuff about the state of AIB.

He was less than impressed with Patrick Neary, Central Bank regulator at the time, and supposedly the referee for good governance for all of the banks. But we were left to ponder when he came to this conclusion - and did he ever do anything about it?

Another one-time Master of the Universe - although he operated in a less public role - was former AIB executive Donal Forde, who came into the inquiry with his hands up. He accepted his pay package of ​€​1.4m in 2010 does in retrospect seem a bit "silly'' and his incapacity to see what was coming remains a matter of "deep regret''. He dispensed an astonishing ​€17bn in loans.

But the best and most worthwhile contribution of all was made by NAMA Chairman, Frank Daly, who painted a frightening picture of a small group of property developers, some of whom in his opinion had major shortcomings as businessmen. They were poor at keeping track of their finances, while providing us with houses, apartments, and office blocks, which sometimes failed to provide proper fire and safety standards.

And maybe he got to the crux of this whole sorry saga when he pointed out they rarely put in cash to fund their wheeling and dealing - instead relying on more and more borrowings. This meant the risk factor for the banks went higher, and higher, and higher. "It is much easier to take an optimistic view of a project when you are not being asked to put your own hard-earned capital at risk," he concluded.

In time, 29 developers would ratchet up astronomical debts, for the size of this country, totalling €34bn; yet almost to the end, the banks fought viciously with one another to lend this motley crew more and more money. ​T​hey all wanted to get their slice of those nice juicy interest repayments. Is this the essence of our banking crisis?

Meanwhile, former FF Mary O'Rourke says the inquiry is like Hamlet without the prince. She has taunted by saying she has private information which could be useful to the committee. She wants the right forum to dispense it. We can't wait.

Irish Independent

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