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Terry Prone: Rage smoulders as bank fatcats just keep getting richer

A lot of beady eyes are on Ireland at the moment. Those who gave us bailout money are watching us. Those considering inward investment are watching us. They must be mystified by what they're seeing.

On the one side, most of the population are markedly poorer than they were four years ago, for doing nothing other than buying a house at the top of the boom.

Dummies

On the other side, a minority of the blokes from the profession who got us into this mess are doing nicely, thank you. In fact, they're doing better than nicely. They're laughing all the way from the bank.

In the last few days, pictures of the lovely Howth home of the former top man in AIB have appeared over stories that -- despite the fact that AIB lay down and died during his time at the top -- he's still walking away with several million euro.

One has to wonder what international analysts make of the whole thing.

One has to wonder even more energetically how the guys the Government put on the board of the bank to watch over our interests allowed it to happen.

What were they thinking? How could they believe it was fair to hand several million euro to a man who'd failed to save the bank when architects, lawyers, plasterers and plumbers who always did a great job are standing in the dole queue, mortified and bitter?

Let's have a stab at understanding the mindset of the public interest board members, the ones Shane Ross yesterday called "dummies." They're not dummies. They're bright, successful, ethical men who care about the public good.

So how could they get it so wrong?

When AIB were told by their main owner, the State, that it was time to shift Eugene Sheehy from the top job, they were also told that an insider would not be a good replacement. But the bank came back offering Colm Doherty. An insider. Steeped in the old ways, the old thinking. Precisely what the Government didn't want. Now, why would they do that? Out of evil intent? No. They looked around and decided Doherty was the best man for the job. Honestly.

Massive

The Government agreed. A contract was signed. Now, hold it right there, because right there is where the problem is. BECAUSE Doherty was an insider, he was already on what most people would regard as a pretty massive salary before he took the top job.

The board couldn't offer him a bigger, more difficult job for half what he was currently paid to do a smaller, less difficult job, right? And if they did, would he have been daft enough to take it?

Once the contract was issued, the bank had to pay out -- or dare their man to take them to court and enmesh themselves in years of costly litigation.

The bank board wasn't stupid. It was just operating as if the financial world had not turned upside down and inside out. If any of the public interest board members had gone down to one of the dole queues and explained it, he wouldn't have met with "Oh, I get it" nods. If he'd said "Look, you can't get a worthwhile bank CEO for less than half a mill," he'd have been told "Why don't we try it? Because we've paid a bunch of guys multiples of that sum and you know what? They didn't turn out to be that good."

Huge payoffs for unsuccessful executives may -- indeed do -- make contractual sense. They make sense within the old banking mindset. But the old banking mindset has nothing to say to today's miserable realities.

The Government has to take action. It has to prevent a drip-drip of fatcat pension stories.

Because they dangerously inflame the smouldering rage of those whose contracts have not kept them off the dole queues or prevented them getting poorer and poorer.


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