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Gamekeeper John Mulcahy turns poacher in his new role

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John Mulcahy

John Mulcahy

John Mulcahy

'THERE is no conflict of interest arising," declared Finance Minister Michael Noonan in the Dail on Thursday, issuing his final word on John Mulcahy's appointment to the board of private property pension fund IPUT.

Mr Mulcahy, until recently the head of asset management at Nama, raised eyebrows around the country this week as news broke that he is joining the board of IPUT – the largest growing property pension fund in the country. He takes on the new role just six months after leaving Nama, where he dealt with some of the country's choicest property assets.

Reports also suggest that Mr Mulcahy has agreed to give advice to businessman Denis O'Brien on some of his international property assets, again six months after he left Nama.

While Nama's public relations people no doubt fret about these kinds of moves, they are far from unusual. Though light-touch regulation is a dying concept, it's still firmly the norm for the return of state agencies' senior executives to industry. Appointments to state-funded roles are closely monitored and legislated for, but little attention is paid to where they go after leaving public service.

Local authority officials and directly employed civil servants, like government ministers and their departments, are governed by a vaguely worded Code of Conduct, which requires them to "notify the appropriate authority" if within a year they plan to take a position, after leaving a taxpayer-funded job, with an organisation they worked with in an official capacity or that might gain an unfair advantage by employing them. Certain senior civil servants are also subject to the Ethics Act, meaning they can't take a non-civil-service job within 12 months or role that has a conflict of interest without first getting approval.

But Nama, semi-state companies, the HSE and a host of other taxpayer-funded organisations fall completely outside of these codes, relying mostly on employment contracts the Ethics Act and the Official Secrets Act.

Nama parent the NTMA only started including longer notice periods of three to six months for middle and senior management employees recently, after an independent review of its employment policies by law firm Matheson. NAMA has had a three month notice period and gardening leave provision since people were first assigned to it in 2010. A provision "prohibiting certain activities in an employee's subsequent employment for a defined period of time has also been introdcued on a case by case basis for new employees, in cases where employees have moved from fixed to specified purpose contracts, and on promotion."

John Mulcahy's decision to wait six months was done voluntarily, Michael Noonan confirmed.

There's a reason why legislators have been slow to act in this area. Limiting people's ability to earn a living afterwards is a clear disincentive to them taking on the job in the first place. The Matheson report stressed the imposition of such restrictions would need to be balanced against the NTMA's need to recruit good candidates "for whom such restrictions may act as a significant disincentive to taking up employment with the NTMA. Furthermore, to maximise the prospects of enforceability, Matheson advised that any such restrictions would need to be drafted as narrowly as possible."

Despite its best efforts, NAMA has been hit with several conlict of interest accusations. A storm erupted in 2012 when top Nama executive Kevin Nowlan left to rejoin his former employer, commercial property asset management group WK Nolan. That firm had worked as one of its key consultants. More recently, he raised €365m on the stock market through real estate investment trust Hibernian Reit.

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Paul Hennigan, who spent three years working for Nama as a portfolio manager and later senior asset recovery manager, departed the agency in 2012 to take up the position of partner with Prime London Partners in the UK. As revealed by the Sunday Independent at the time, his new employers had in 2011 acted for a Malaysian wealth fund that paid Nama €172.3m for 11-12 St James's Square in London – offices formerly owned by investors David Arnold and Deirdre Foley of D2.

Fuelling the controversy further was the fact that Mr Hennigan had been responsible for managing the portfolio of D2 Private as part of his duties with Nama. Mr Hennigan rejected any suggestions of impropriety and according to his professional profile, his responsibilities at PLP were confined to working on behalf of international investors with respect to their property portfolios in London.

But Nama is not the only organisation concerned about accusations that its former employees might be in a position to use their acquired knowledge and contacts to benefit private industry. Virtually every government department and sector has its own high-profile example, particularly those governed by a lot of regulation.

In finance there is Liam O'Reilly, the former chief executive of the Irish Financial Services Regulatory Authority, who in 2012 joined the board of Irish Life and Permanent – the same organisation he once regulated. Fees paid to the bank's non-executive directors at that time varied from €68,000 to €127,000 per director in 2007.

Other high-flyers who left the public service to make a killing in the private sector include ex-Department of An Taoiseach boss Paddy Teahon, Dan Flinter of Enterprise Ireland, and Paul Haran from Enterprise and Employment.

O'Reilly, Teahon, Flinter, Haran and the former Nama personnel mentioned above are all highly respected and there has never been any suggestion of impropriety of any sort on their part in relation to their moves to the private sector.

Former TD and EU commissioner Charlie McCreevy is another well respected mover.

Just months after stepping down from his role as EU internal markets commissioner – where he had been heavily involved in the reform of financial regulations, and known to favour a "light-touch" approach – he joined the board of London-based NBNK Investments, set up to buy distressed assets in Europe.

At the same time Mr McCreevy was in receipt of an EU severance package worth €11,000 a month for three years after leaving the commission.

It was the powers-that-be in Europe who intervened. For a year after they leave office, EU commissioners are in "quarantine" and must seek the commission's approval before taking up paid employment.

Mr McCreevy stepped down following the launch of an EU probe. But he then joined the board of the Dublin-based Bank of New York Mellon Clearing International, which was set up to deal with derivatives deals – contracts used to limit financial risks for banks and big financial institutions – almost immediately after the one-year limitation expired.

Today Mr McCreevy also sits on the board of Sentenial, a payments technology firm. As internal markets commissioner he was one of the architects of the EU system for e-payments.

The Government is now scrambling to address the issue, after years of light-touch regulation and inaction. The Regulation of Lobbyists Bill, which will soon appear before the Dail, includes a provision preventing former government officials lobbying their old colleagues.

Another bill being prepared by the Department of Public Expenditure and Reform will broaden the scope of this rule, extending it to a much wider group of civil servants.


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