WILL Brian Lenihan ever find more convincing evidence than this of a need for cleaning out our bankers?
A few weeks ago one of the clowns at the EBS woke up to discover a banking crisis.
Another clown at the EBS had a solution: send for the PR agents.
PR spinners, Q4, prepared a powerpoint paper.
The spinners' secret analysis was dynamite. It was never meant to see the light of day.
The paper told the EBS bosses that their goose was cooked.
Happily, the secret document fell into the hands of the Sunday Independent.
Chaos broke out in the Burlington HQ of the EBS last Sunday.
Emails headed to the staff, rubbishing the story.
Headless EBS chickens were spotted outside the HQ, running all over Burlington Road.
Investigations to discover the mole were launched. Fingers of accusation were pointed in every direction. A board meeting was due last Monday morning.
A policy was decided on. Send the top clown, Fergus Murphy, onto RTE's Morning Ireland to dilute the story. That should tame the members, those 270,000 pests not too beloved of the EBS. Bankers disdain their shareholders.
Fergus made it worse.
He strove to distract attention from the damaging elements of the hair-raising report which expose the EBS as a basket case.
Basket case or not, the EBS is revealed in the report as served by a public relations outfit interested in covering the EBS bosses' asses. They see the members, not the competition, as the enemy. Worse still, the EBS spinners want the same jokers to ensure that the 2008 accounts never surface.
Why? Because it has suddenly emerged that the EBS is heading for a loss in 2008. Awkward members might want to know why.
How the EBS made a loss is a mystery. Turning a €67m profit into a loss is no mean achievement. Even Bank of Ireland and AIB have shown a profit.
Apparently, Haven Mortgages, the society's proudest 2007 baby, has flopped. A few months ago EBS chairman, super clown Mark Moran, told shareholders that: "We expect Haven to grow ahead of the market in coming years and to deliver positive financial returns ... " Blah, blah, blah.
Sensationally, the confidential report proposes that EBS should "announce the closure of Haven before Christmas".
Worse still, the report reveals that "unexpected, significant and damaging provisions have emerged". Some of the shock losses obviously stem from its Haven disaster. But others came from its Iceland adventures.
Second shock: the EBS was fishing in the choppy waters of Iceland.
Unknown to staff and members, the EBS has written off €16m in Iceland.
It is difficult to fathom how a small Irish building society is exposed to a bankrupt country like faraway Iceland. But the adventurers at the EBS won the day -- and lost a packet.
Maybe we should forgive the EBS bosses. Times are tough.
Maybe, but the problem is not just their moronic mistakes. The problem is the top guys' attitude. The report reveals that the Q4 spinners' principal concerns are first, how to protect the EBS bosses asses (not their assets); and second, how to avoid telling the poor members about the catalogue of follies committed by the clowns in charge. Quite a double, if they can pull it off.
Q4s "Overall Assessment" -- if EBS stays as a stand- alone mutual -- is stunning.
First, come the dire predictions -- if the cat ever gets out of the bag about their losses: "The level of provisions and damage to P&L will seriously damage [in this order] the board, management and [in last place] EBS."
The members, staff and customers do not merit a mention.
Second, comes the fear of the media reaction: "They will be very critical."
Third comes the inconvenient members: "They will be outraged."
Not a single mention of their losses.
The next part of the report is worse. It considers the "Delta" Option.
This is EBS-code for the recent attempt to persuade Irish Life to dig them out.
Q4 , true to the banking culture, primarily agonises over the fate of the fatcats. It concedes that a member vote will be necessary, repeating that a loss "would be hugely damaging to board/management if not carried."
The board comes first.
And then, the Exocet.
The report spells out the real priority: "The need to finalise the deal quickly and in a way which will not necessitate publication of the 2008 financial results."
I read this sentence five times, gasping for oxygen after each reading.
Corporate governance is out the window. Keep the calamity under wraps. Tie up the deal before the year end.
Why is it necessary to take such an extreme course?
The report answers the question itself.
The purchase by Irish Life "will avoid the mayhem" associated with publication of the 2008 results. "Mayhem" indeed. The PR boys anticipate "mayhem" if the truth of the losses ever reaches the members.
Now we know why all our bankers need culling.
The PR trick is to spin the sale to Irish Life as a coup, sell it to the members without having to reveal the losses. Pray to God that the poor fools cannot work out that Irish Life would be buying them on the cheap. They will be lucky to receive a grand a man in dodgy preference shares as a farewell pittance.
Ditto, the third option, code-named "Orange". This is EBS code for Rabobank. Once again, the PR lads want to do the deal before the bosses are forced to publish awful EBS accounts for 2008.
So the well-programmed Fergus headed for Morning Ireland on a mission to muddy the waters. He nearly succeeded.
He wanted to "put it in context". He had merely been "kicking the tyres". The EBS had asked "a couple of executives ... to look at our operations for a particular devil's advocate lens". The report was one of many inputs into "our strategic evaluation".
He nearly got away with diversions, red herrings and waffle. His waffle competed with Bank of Ireland's Brian Goggin for the Oscar in jargon the week before. (Brian's "optionality" and "deleveraging" won by a whisker.)
This leaked document is an albatross around the EBS clowns' necks. The worst aspect of all is that such dynamite could have leaked at all. That is the absolute proof that Moran, Murphy and the rest are a collection of amateurs. If they cannot protect a top secret document, how can they guarantee confidentiality of members' accounts?
One happy consequence of the present banking fiasco is that EBS will be put out of its misery. It will probably be salvaged by Rabobank in a threesome with Irish Life. Let us hope that Rabo do not fall for the public relations spoof.