Wednesday 13 December 2017

The Interview: Niamh Brennan, chair of the DDDA

The chair of the DDDA, an expert in corporate governance, is not afraid to court unpopularity by absolving most bankers from blame for the economic crisis, writes Brendan Keenan

Big fish: Niamh Brennan outside the
UCD Quinn Business School
Big fish: Niamh Brennan outside the UCD Quinn Business School yesterday

IT'S the way she tells them. One has the impression there must be northern blood in Niamh Brennan, who is Michael Mac Cormac professor of management and director of the Academic Centre For Corporate Governance at University College, Dublin -- but is better known, probably, for plain speaking.

Consider her comments at last weekend's gathering of economists in Kenmare, Co Kerry. She was outraged by how often "successful business people seek appointment to state boards as a way to enrich themselves through the use of state assets".

This was followed by the statement that many former bank directors "are not the ogres they have been made out to be".

As for the board of UCD itself, it is "far too big, with something like 40 members, and it is a bad idea to have directors chosen to represent particular interests".

In fact, Brennan's origins are in Kerry -- a county more noted for circumlocution. But there seems little chance of Niamh Brennan answering a question with another question.

She ruefully admits that her inability to call a spade an agricultural implement is a mixed blessing. Plain speaking tends to create an image of integrity and the image must then be reality.

Brennan was appointed chair of the Dublin Docklands Development Authority in the wake of the financial disaster of the Irish Glass Bottle site and the clear evidence of rampant conflicts of interest in the DDDA during the bubble years.

She ticked all the boxes on that one -- accountancy, corporate governance and integrity. But as any honest northerner will admit, blunt talk and integrity are not necessarily the same thing. Brennan is well aware that the position in which she has found herself means walking the walk as well.

"Now that I am dealing with corporate governance, I have to be aware that I can't just say it, I have to do it. I'm not a person without any sins. But I am conscious that I must not do anything which could undermine my position."

She saw that happen when Gerry McCaughey felt obliged to stand down as chair of the DDDA after reports that he had used a legal loophole to reduce his tax liability when he sold his building company.

"Someone leaked that tax material and Gerry McCaughey never got to attend a single board meeting of the authority," Brennan says.

"But then, when I took the position, someone very experienced warned me, 'Watch out for the piranhas.'"

It was a warning that she probably didn't need. As the wife of former PD minister Michael McDowell, she already felt the glare of the spotlight.

"When Michael was in politics, I knew I couldn't put a toe out of step."

And yet other people can, it seems. "I don't think anybody ever got anything on Michael. Yet he lost his seat and Michael Lowry, who evaded his taxes, topped the poll."

The injustice of it clearly rankles. She tells the story of a recent expensive taxi trip where the driver offered both her and her companion separate receipts for the full amount. Both declined but the driver was obviously familiar with such arrangements.

"Is that the sort of thing ordinary people are doing every day? If you have that 'cute hoor' culture so widespread in the country, then you must expect to find cute hoors at the top in business," she says.

This is the great difficulty in analysing what has happened to the country. There were cute hoors aplenty, no doubt, but there were also people who made genuine mistakes -- albeit often with quite disastrous consequences.

"With some exceptions, I don't believe bank executives in general were hoodwinking their boards about the state of affairs or that directors knew things were going wrong.

"We didn't see executives selling their share options. We saw directors buying shares in their own banks. They would have behaved differently if they had known."

She told the Kenmare conference that she had "tortured herself", as a former non-executive director of Ulster Bank, as to whether she should have, or could have foreseen more of the trouble that was coming.

Admittedly, Ulster is a wholly owned subsidiary of Royal Bank of Scotland, so the responsibilities of its directors are less wide-ranging than those of main board members. But the real difficulty, she says, right across the spectrum, is access to information.

"I would put a lot of the financial crisis down to honest mistakes," Brennan says. "I would regard the people I know on these boards as completely honest. They were using information which was plainly flawed -- but did they or management know that at the time?"

Directors were certainly entitled to take comfort from the fact that the Financial Regulator appeared to have no concerns.

"He was able to get into the engine rooms of the banks in a way that non-executive directors cannot. He raised no red flags."

AT Kenmare, Brennan asked why no auditors had walked the plank in the wake of the crash. She seemed to doubt the value of published accounts, given that so much background information is not published.

She is more circumspect in the interview but notes that directors have few independent sources of information.

"They don't know if the management information is wrong. Clearly, it was wrong in cases like Irish Life & Permanent and Anglo Irish or the DDDA.

"Corporate-governance rules have tried to get round this by strengthening internal audit committees. But my own instinct is that directors need to get 'stuck in' more. They aren't supposed to interfere in day-to-day management but being more intrusive and questioning would be my instinct."

She is unfazed by the arguments over who did what in the DDDA.

"I'm there to make sure the authority survives. The reviews showed some loose financial controls but major problems on planning issues.

"The findings are pretty black and white. They say what happened, but they don't say why."

To summarise her own philosophy, Brennan turns to the health service.

"I'll tell you my kind of yardstick. Four years ago, a foreign academic told me the mortality rate for under-fives in Ireland was atrocious. I met him recently and he asked, 'What have you done?'"

"The mortality rate has gone from 19th in the world to 11th in four years and is still improving.

"That's my yardstick for things -- independent, objective data. At the end, I want to be able to say what I have achieved, not what positions I held."

Irish Independent

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