Friday 23 March 2018

Ex-Googler Herlihy on State board that invested €50m in company that hired him

Fine Gael's Kate O'Connell
Fine Gael's Kate O'Connell

The Insider: Business Confidential

Ex-Googler Herlihy on State board that invested €50m in company that hired him

John Herlihy, the man who led Google in Ireland for 10 years, is in a bit of a pickle.

In late 2014, he teamed up with former Elan boss Kelly Martin and John Given's biotech investment group, Brandon Point, which ultimately begot the listed life science investment firm Malin.

Herlihy had just stepped down at Google, after building up its Irish operations into the largest non-US outpost for the search and advertising behemoth. He is clearly one of the most switched-on guys in the sector.

Presumably, it was for this reason that Conor O'Kelly and his team at the NTMA recruited Herlihy to serve as one of the external members of its investment committee last April. But surely some alarm bells should have sounded in NTMA towers?

The NTMA - via the Irish Strategic Investment fund (ISIF) - had just plonked €50m of taxpayers' hard-earned money into buying a stake in Malin when it floated a couple of weeks earlier. Herlihy obviously and correctly declared an interest and recused himself from any discussions related to Malin and the NTMA investment. However, his relationship with Malin continues, having been appointed to not one but two boards of Malin investee companies.

Herlihy sits on the board of Serenus (which got $18m from Malin for a 41pc stake last year) and also on the board of 3D4Medical (in which Malin splashed out $16m for a 38pc stake last July). This leads to a number of issues, including the management of potential conflicts of interests and the transparency of the NTMA.

Herlihy advises the State on what to do with its money - but he has also benefited from his relationship with Malin, which has received State funding.

While Herlihy has behaved with the utmost probity, it was a ridiculous and awkward position to put him in. Did nobody at the NTMA even consider the optics of this? IAG boss Willie Walsh chairs the NTMA, and former NCB Stockbrokers head Conor O'Kelly is chief executive. Both of these guys are smart. Even the quickest glance at Herlihy's LinkedIn page should have alerted them to this potential problem.

Our new TDs and their business skills

THE election has removed politicians that the electorate couldn't stomach - replacing them with other politicians the electorate won't be able to stomach soon.

The uncertainty over who will actually run the country and who will make the big decisions that will affect giant corporations or smaller businesses could rumble on for months.

It's all going to get very tiresome very soon - but what of the new TDs? Are there any potential champions of business? And do any of them actually know their stuff?

There's nobody from Silicon Valley or Goldman Sachs, but the electorate has given us some entrepreneurs, with interests ranging from fake tan to cutting hedges.

Danny Healy-Rae appears to be a deal-closer of note, having persuaded Kerry County Council to give his plant hire and contracting company over €2m since 2008, including €275,000 last year. The fees are well down on the €516,110 his company was paid back in 2005 but Healy-Rae seems to be a man who knows his market and delivers a service that Kerry County Council is happy to pay for again and again and again.

Fine Gael's Kate O'Connell is another entrepreneur who gets business. She's a successful pharmacist - and, if company filings are anything to go by, one who has the minerals to look at new business ventures and markets. She's a director of Fake Tan Online, with the firm set up a few years ago.

New Wicklow Fianna Fail TD Pat Casey is a hotelier of some note, having owned and run the Glendalough Hotel for 30 years. So our new TDs bring some experience of retail, hospitality and contracting to the Dail. It could have done with much more.

Do FBD boardroom exits open door for KBC?

Fiona Muldoon's changing of the board at FBD is curious. Most curious.

Long serving chairman Michael Berkery is leaving…but not until next year. Berkery chaired the firm through its disastrous expansion under Andrew Langford and should get both barrels from shareholders having presided over a shocking share price performance - falling 60pc in two years

Ten years ago, we broke the story that Dutch insurer Eureka had made a €36 per share approach for FBD. Berkery should have bitten their hands off. Shares are at €6.75 now.

The departure of the IFA's Eddie Downey is to be expected, but the other three exits are less clear - especially as they served such short terms. Ex-Canada Life boss Ruairi O'Flynn only joined the board in May of 2015. Emer Daly was recruited in August 2014. She's also on the board of the Permo, so there may be some overlap and restrictions on cross directorships of financial institutions. They barely even left the seats warm.

Brid Horan, of the ESB, joined in 2011.

While there are major structural issues at play in the domestic insurance industry, FBD seems to be getting its act together.

I've always thought that putting FBD together with a smaller bank like KBC Ireland might make sense - and suggested a couple of weeks ago that a €300m move by the Belgian bank could happen. Cross selling to the agricultural market has got to be attractive. This makes the appointment of Walter Bogaerts to the main board extremely interesting.

He worked with KBC for most of his career, serving on a supervisory board of KBC's central European insurance business. At least KBC would have someone speaking their language.

Attack boat Kowalski gets all serious

Frank Kowalski is one of the most intriguing maritime entrepreneurs working in Ireland.

His Youghal-based Safehaven Marine is the largest privately owned ship-builder in the land. He's the guy who spent €1m to develop and kit-out an exceptionally cool stealth interceptor vessel called the Barracuda, which he wants to sell to defence forces around the world. I went out for a spin in it last summer - ridiculously good fun. And it has mock machine guns which pop out of a concealed compartment.

The prototype has attracted genuine interest and Frank has just set up a subsidiary Safehave Marine Protection to capitalise on this demand. He's also lured John O'Connor from naval shipbuilder VSEl - now part of BAE's submarine-making division - to join his board. O'Connor is already on the board of Anglo African Minerals.

Machine gun-toting stealth attack boats and searching for rare metals in Africa... it's got all the makings of a good Spielberg movie.

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