Dan White: Don't stop now, Brian ... get rid of them all
Just when it looked as if the Government was going to meekly acquiesce to the payment of €40m AIB staff bonuses, Brian Lenihan dramatically turned the tables.
Instead of handing over the money, he wrote to AIB chairman David Hodgkinson warning that, unless the bonuses were scrapped, the State wouldn't hand over the money the bank desperately needs to survive. With a gun to their heads, the AIB board of directors was forced to back down. As the AIB statement announcing that the bonuses would not be paid acknowledged, "AIB could not have survived until now" without State support.
With AIB now facing imminent nationalisation following its failure to raise more than €5bn of fresh capital from private sector investors, Lenihan's threat to turn off the money tap meant that the bank's board had no option but to reverse its previous decision to pay the bonuses.
John Foy, the currency trader who took legal action seeking to force AIB to pay him a €160,000 bonus, will still get his money. However, handing over €160,000 is still a lot less painful than having to pay €40m if AIB had paid the bonuses in full.
While Lenihan deserves credit for belatedly salvaging something from the bonus debacle, the entire affair raises disturbing questions about how AIB, a bank which will soon be more than 99pc state-owned, is run.
The Minister for Finance already has three nominees on the AIB board; former NTMA boss Michael Somers, former Foreign Minister Dick Spring, and Declan Collier, whose day job is as chief of the Dublin Airport Authority.
Did none of these three amigos, who between them have decades of experience in politics, business and administration, realise the banana skin the bonuses represented?
Or, even more disturbingly, were the state directors treated like mushrooms by the AIB executives -- kept in the dark and fed lots of brown stuff?
We need to know.
If the state directors knew about the bonuses and failed to realise the potential problems that paying them would cause, then we as taxpayers are entitled to ask what purpose, apart from receiving fat fees from AIB, are they serving? However, if as seems more likely, AIB management failed to keep the directors fully informed, then it merely confirms the suspicion that, despite all that has happened over the past two years, Ireland's most arrogant bank remains unreformed.
That the corporate culture that brought us ICI, the DIRT scandal, Faldor, customer overcharging and a hundred-and-one other scams, is still alive and kicking.
If this is in fact the case then the AIB directors, none of whom have been on the board for more than three years, must take decisive action against their over-mighty executives.
With a corporate culture that is rotten to the core, it is now clear that AIB requires root and branch reform rather than a quick facelift.
Every AIB executive above the level of branch manager should be forced to reapply for his or her job.
As part of this process it should be made clear that at least one-third of the senior AIB executives will not be re-appointed. It is only through a wholesale clearout of its discredited top brass that AIB can be reformed.
Now that Lenihan has finally shown AIB who is boss, he must insist that, instead of the previous handful of scapegoats, all of the senior executives who brought AIB to its knees are sent packing.
We have paid enough for their mistakes already. Get rid of them now without any further delay.