“The clearest account of [Ireland's] fall from grace comes from Shane Ross, a stockbroker-turned-business journalist, and Senator with a record of exposing corruption.”
The Economist

“Read this super book. Cry, get mad and get even.”
Irish Times

“There aren’t many better at puncturing the pompous world of Irish banking than Ross.”
Sunday Tribune

“Prose that sizzles on the page.”
Irish Examiner

My new book, ‘The Bankers’ is now in shops (retailing for aprox. €15). It tells the inside story of how we went from boom to bust and attempts to make sense of the banking crisis that will haunt Ireland for years to come.

An exclusive extract appeared in the Sunday Independent in November.

26 November, 2008

It was the bankers’ last supper. The banking crisis was at fever pitch; the nation’s finances were in peril; but Ireland’s banking elite was celebrating in a private room in a discreet hostelry near Dublin’s St Stephen’s Green.

The occasion was ostensibly to mark the retirement of the chairman of the Financial Regulator, Brian Patterson. At the time the watchdog was in the wars, but Ireland’s bankers wanted to give Patterson a good send-off. Patterson had, in fact, retired seven months earlier, but his departure was a good hook for a meeting of allies under siege.

Dinner with the watchdogs was part of the job; but it was important that no news of the party leaked to the media. Nor did it. The bankers were all careful not to be spotted as they entered and left. Any media story that the regulators were living it up with the bankers would have been dynamite. A view that the two groups were far too cosy was gaining credibility with the public by the day.

Patterson’s chief executive at the Financial Regulator, the beleaguered Patrick Neary, was another guest of honour at the dinner. During the previous six weeks Neary had been the target of a wave of media criticism for his handling of the unfolding crisis that had caused the Government to guarantee the liabilities of the Irish banks.

Not used to the spotlight, Neary had made matters worse.

A disastrous interview on RTE’s Prime Time programme on 2 October had exposed the normally camera-shy regulator to tough scrutiny. Two weeks later Neary had been grilled by an Oireachtas committee. Calls for his resignation were surfacing as he tried to explain his failure to cool the bankers’ lending to the property market.

Michael Casey, a retired economist at the Central Bank, had broken ranks with his former employer and exposed the watchdog’s flaws. In the Irish Times of 14 October he had highlighted the crux of the problem: “Close relationships between regulators and banks — difficult to avoid in a small country — will have to be ended.”

The hush-hush dinner was a sure sign that the relationship was still close, despite public unease about the mutual admiration between bankers and regulators. Pat Neary was in his comfort zone that night as he tucked into the striploin of tender beef. Mary O’Dea, Neary’s high- profile number two, and Con Horan, the watchdog’s prudential director, were happily mixing it with those whom they so often supervised.

Jim Farrell, Patterson’s successor in the chair, was there too, dining at the only table in the room, laid for 22.

Farrell was a popular choice of successor for the bankers as he himself had been one of their own over a 30-year career with Citibank.

Brian Patterson was not the only diner in the departure lounge on that November night. Within months, many of the invitees would find that this was their last bankers’ supper.

Eugene Sheehy, the smooth-talking head of AIB, was enjoying the evening, exuding his trademark calm amid the turmoil in the industry. According to one of those sitting close to him, “Nothing seemed to be ruffling Eugene”. Sheehy would be on the way out from AIB within six months, having been forced into a humiliating climbdown from his proud boast that AIB would not accept government funding.

Close to Sheehy sat Richie Boucher, the Zambian-born chief executive of Bank of Ireland’s Irish retail division.

Barely three months later, Boucher would succeed Brian Goggin as chief executive after Bank of Ireland too accepted a State bail-out.

Irish Life sent along its top man, Denis Casey, a workaholic with an inscrutable manner. Casey was no great partygoer, but dinner with the regulators was a diplomatic and political imperative.

Within three months, Casey was out of a job.

Fergus Murphy, the new chief executive of the EBS, attended this gathering of the oligarchy, nursing the fear that his own building society was another that might soon need a leg-up from the State. Murphy, untainted by EBS’s disastrous move into commercial property just as the market was peaking, would later emerge as one of the few survivors of the last supper.

His rival at Irish Nationwide Building Society, Michael Fingleton, sent his apologies. Around the table the diners speculated that the controversial ‘Fingers’ was a no-show because he was smarting from a recent humiliation. He was the only Irish banker ever to have been fined by Neary or any other watchdog. A month earlier, provoked by constant taunting about his softness on the banks, Neary had fined Irish Nationwide €50,000 after Fingers’s son — a London employee of the building society — had referred to the Irish Government’s guarantee of bank liabilities in an email seeking deposits from UK-based customers.

His action was politically sensitive because Minister for Finance Brian Lenihan had already faced down opposition from the British government over its claim that the guarantee would give Irish banks an unfair competitive advantage.

Lenihan made his displeasure known, and the fine followed swiftly; but it was a one-off, a token gesture.

Anglo Irish Bank chief executive David Drumm, a regular at bankers’ bashes, accepted the invitation but pulled out at the last minute. A few months earlier Drumm had attended a similar event to honour the retiring chairman of the Revenue Commissioners, Frank Daly. In a weird twist of fate, before the end of the year Daly was to be appointed a director of none other than Anglo.

On this November night, two months on from the State guarantee that was generally viewed as having been enacted to save Anglo, Drumm sent along a senior director, Peter Butler, in his place. Within four weeks Drumm would resign from Anglo when it was discovered that his chairman, Sean FitzPatrick, had been playing ducks and drakes with his personal loans from the battered bank. The Financial Regulator had never noticed.

FitzPatrick was not invited to the dinner as it was not for chairmen like himself, AIB’s Dermot Gleeson, Irish Life’s Gillian Bowler, the EBS’s Mark Moran, Irish Nationwide’s Michael Walsh, or the clubbable Richard Burrows of Bank of Ireland.

All bar Bowler would be shafted within months.

Pat Neary was one of the most popular people at the party. He had been assuring all those around him that Ireland’s banks were well capitalised and that the Financial Regulator was working effectively.

Neary was in denial.

In fact, denial was the common dish at the dinner, happily shared by both bankers and watchdog. Two months earlier, on 18 September, Neary had done the bankers a big favour when he banned short selling of bank stocks. But he could not save himself. Six weeks on from the congenial bankers’ dinner, he would be smelling the roses as he surveyed the carnage he left behind him.

The dinner was hosted by Pat Farrell, the president of the Irish Banking Federation. Farrell, a former Fianna Fail general secretary, was believed to have the ear of the Minister for Finance.

Farrell welcomed everyone, uttered a few kind words about “Brian” and handed over to Patterson.

The departing chairman defended his tenure at the helm, insisting that the “principles-based” system of monitoring the banks had encouraged overseas banks to come to Ireland. In fact, it was a euphemism for a policy of letting the bankers run their own shows.

Here was the Irish banking aristocracy in action, wining and dining their regulators in undisturbed luxury just as a local volcano was erupting before their eyes.

29 Sept, 2008

On the evening of Monday, 29 September, 2008, Bank of Ireland chief executive Brian Goggin found himself entering Government Buildings in the company of governor (ie, chairman) of the Bank of Ireland Richard Burrows, chairman of AIB Dermot Gleeson, and AIB chief executive Eugene Sheehy.

The two chairmen sought a meeting with Minister for Finance Brian Lenihan, after the worst ever day for Irish banking shares.

The four bankers entered Government Buildings at 9.30pm (the following Saturday, Sean FitzPatrick would tell the nation on Marian Finucane’s radio programme that at that very hour he arrived home, having had dinner out with a friend, and watched some TV before turning in at 11).

The meeting had been initiated by a phone call from Sheehy to Lenihan’s office. Although Sheehy’s call was unexpected, Lenihan had been on alert since the previous Saturday, when the beleaguered minister was enjoying a rare moment of leisure at a Fianna Fail fundraiser at Gowran Park in Kilkenny for local TDs John McGuinness and Bobby Aylward.

Lenihan was working the 30 tables of Fianna Fail supporters, each of whom had paid €200 for the privilege, when he received an urgent telephone call. It was not a tip for the 4.30 race. It was the personal assistant to Jean-Claude Trichet, president of the European Central Bank. The minister was advised to expect an urgent message from the governor of the Irish Central Bank, John Hurley, later that afternoon.

The minister headed for the Gowran Park manager’s office and rang Hurley. Trichet had been in touch, warning of banks in trouble all over Europe.

The next morning, Sunday, 28 September, Lenihan slipped quietly into the Central Bank’s Dublin Dame Street headquarters to meet Hurley in his top-floor office. Hurley relayed a grim message from Trichet. European banks were in crisis.

Fortis of Holland, which has a joint venture with An Post, and Depfa bank, which had headquarters in the International Financial Services Centre, were in peril.

A day later, with Ireland’s top four bankers in his presence, it was clear to Lenihan that he had an even bigger problem.

The atmosphere in Merrion Street was far from relaxed. Top bankers are not used to seeking favours, let alone salvation.

On 29 September, for once, the bankers were not in command. Their tails were deeply buried between their legs. They were desperate.

The big bank bosses were kept waiting for two hours in the celebrated Sycamore Room, so called because of its table of bleached sycamore with Fota Island yew. Playing second fiddle to the politicians was a new experience for the bankers.

Spar sandwiches — the menu for the late-night crisis meeting — were not their usual fare.

The financial War Cabinet was already in situ. Side meetings were taking place everywhere. The principal mandarins in the Department of Finance — secretary general David Doyle and second secretary Kevin Cardiff — had been holed up all day. Central Bank governor John Hurley was in constant touch with the Financial Regulator’s Patrick Neary.

Lenihan and Cowen had a separate meeting.

Despite the frenzied atmosphere — the most stressful day in the history of the Department of Finance — the minister managed to abandon the ship of State for an important matter. September 29 was a big day in the Lenihan family calendar. In mid-afternoon Lenihan announced to his bemused staff that he was heading off for his Castleknock home to help blow out the candles on his daughter Clare’s 13th birthday cake. The break fortified him for the long night ahead.

When all the key parties finally met in one room that evening, with the Attorney- General Paul Gallagher present, Dermot Gleeson let rip. According to the AIB boss, liquidity was flowing out of the system. He embarked on a tirade against Anglo and Irish Nationwide. He made it clear that the traditional game plan — that the Big Two would take over an institution in trouble — was not a runner this time. Anglo Irish — whose shares had lost 46 per cent of their value that day — might not survive the week: deposits were pouring out of Seanie’s bank. If the Government did not act immediately, the whole financial system could be brought down. AIB and Bank of Ireland could tumble.

Gleeson had good reason to fear a domino effect. No bank could remain above the fray during a wholesale loss of confidence in Irish banks, as the carnage on the stock markets over recent months had illustrated. He was aware that many of the builders in debt to Anglo had huge liabilities to AIB and, to a lesser extent, Bank of Ireland. The Irish banks had common bondholders. If foreign depositors lost faith in one Irish bank, the others might see consequent withdrawals of money.

Gleeson must also have feared that if queues formed outside Anglo the next day, it would be a matter of hours before savers were assembling outside AIB branches all over Ireland.

No bank would be immune from an outbreak of depositor panic. Gleeson wanted the government to nationalise Anglo or let it collapse to detach it from the others. Dramatic action was needed before seven the next morning, when the stock markets opened.

While Monday’s cataclysm in Dublin markets was itself potentially lethal for all Irish banks, a second blow had been struck across the Atlantic later in the day. The shock defeat in the US House of Representatives of a $700bn bank rescue package had caused carnage on Wall Street — the Dow was down by 777 points at the close, its worst day for 20 years — and Asian markets bombed in early trading. The four bankers feared that European bank shares would be hammered at the opening on Tuesday.

The bankers were thanked by Cowen and then ushered from the room. Little camaraderie was evident between the two sides. A surprisingly short discussion followed. Lenihan was reported to have pondered the nationalisation of Anglo alone but Cowen, characteristically cautious and fearing a legal challenge, was unwilling to discriminate between Irish banks.

The combined wisdom of Ireland’s top politicians and civil servants quickly settled on the cleanest choice. The Government would guarantee all the liabilities — the customer and interbank deposits, and also the vast majority of bonds — of the six Irish banks. This solution had already been canvassed by David McWilliams and Dermot Desmond.

The four bankers were recalled to be told of the decision and asked to “reflect” on it. There would, naturally, be strings attached to the guarantee, but the finer detail would be agreed later. Legislation was already being drafted by bleary-eyed civil servants. AIB’s Gleeson and Sheehy were dispatched back to the Sycamore Room, while Bank of Ireland’s Burrows and Goggin were given their own privacy in the dining room.

All four made telephone calls to senior staff so that they’d know about the new regime when the banks opened in a matter of hours.

Department of Finance officials and the Financial Regulator meanwhile made frantic telephone calls to the chairmen of the other four Irish banks — Anglo, Irish Life & Permanent, EBS and Irish Nationwide — to convey the news.

Reaching the chairmen was not the easiest task. Sean Fitz- Patrick could not be roused from his slumber, so the department settled for his chief executive, David Drumm.

Michael Fingleton, the legendary boss of Irish Nationwide, had been aware something was going on as early as seven in the evening, but did not know it had turned into an all-night drama until he was phoned at home by his chairman, Professor Michael Walsh, at 7.30 in the morning.

Walsh had been woken by a call from the Financial Regulator at 3am but saw no reason to disturb the longest-serving warhorse in the Irish banking business before the sun was up.

Patrick Neary reached EBS boss Mark Moran at around 2.30am. Moran immediately rang his own chief executive, Fergus Murphy, who was only just back in bed at his Enniskerry, Co Wicklow, home, having driven through the night from Donegal after holding an EBS members’ meeting in the north-west. Murphy had heard rumours of dramatic action all day Monday, but was relatively unperturbed as the outflow of deposits from EBS had been modest.

The decision was made; but the formalities still needed observing. Most members of the Cabinet were asleep, many unaware that they might be woken to ratify a historic deal between the Irish taxpayer and the tottering banks.

An “incorporeal” Cabinet meeting was convened via conference call. Foreign Minister Micheal Martin was thousands of miles away in Newark, New Jersey; but he was far easier to contact than Green Party leader John Gormley, enjoying a deep sleep at his Irishtown home only two miles down the road. Gormley, a man notoriously keen on an early bed, had allowed his mobile to run out of juice. So the Minister for the Environment had to be woken by gardai and told to ring in to the Cabinet meeting. Both he and his Green colleague in Cabinet, Eamon Ryan, readily agreed to the guarantee plan: Gormley had urged the guarantee route to Lenihan only a few days earlier.

Social and Family Affairs Minister Mary Hanafin had been on RTE’s Questions and Answers that night, having been forewarned that the banking topic was a mine- field because “something was going to happen”. Any answer she gave could have been overtaken by events. She acquitted herself skilfully.

As she left RTE, Hanafin received a midnight telephone call telling her to be on standby. She went to bed and was woken at 2.45am for the Cabinet meeting. She did the business from her bed.

Agriculture Minister Brendan Smith had spent the day in Brussels and returned late at night to be told that he might be required for a call later on. The Cavan-based minister also performed his affairs of state in his pyjamas from his brother’s residence in Dublin.

Cabinet secretary Dermot McCarthy briefed the politicians on the pending measures and took a few questions. The most important Cabinet meeting for decades lasted less than 30 minutes. Lenihan was given the go-ahead to clear the next obstacles.

At 3.30am the four bankers left. They had put the gun to the Government’s head and the ministers had delivered.

The markets would welcome the decisiveness and determination of the Irish Government; better still, their own jobs were not threatened. It was round one to the bankers.

18 December, 2008

On 18 December Sean FitzPatrick swallowed the poison pill: his transferring of personal loans from Anglo to Irish Nationwide every year for eight years in order to keep the loans out of Anglo’s accounts had come to light, and his position was finally untenable. Non-executive director Lar Bradshaw resigned along with FitzPatrick on the 18th; David Drumm, the chief executive, followed a day later.

David Drumm departed having set the all-Ireland banker’s pay record: in the four years that he served as boss of Anglo, he managed to garner €12.15m in rewards. In 2008 he surpassed Brian Goggin’s €4m figure from the previous year, with a €4.656m package that included a €2m bonus.

The other directors had also filled their boots before the end came. FitzPatrick managed a rise of 22.5 per cent in the year to September 2008, leapfrogging back into first position among bank chairmen at €539,000, just above the Bank of Ireland’s governor Richard Burrows (€512,000). Ten thousand a week for a part-time job presiding over a failing bank. The bank’s employees had an average pay of €99,000 per person in 2007, nearly double the amount taken away by AIB staff that year. Expense claims too were incomprehensible.

Declan Quilligan, who was promoted to the top job in the UK in 2006, was given €335,000 for “relocation costs”.

David Drumm departed a rich man, but he must regret that he never sold his 510,000 shares in Anglo. At one stage they were worth €9m. When he resigned they were just about worthless.

Drumm managed to spend some of his rich pickings on two US homes. According to Ronald Quinlan in the Sunday Independent, he paid $7.2m for two flashy houses in the top US resort of Cape Cod. The second house was bought on 30 September, the day after the bank guarantee was signed.

He had been a consistent buyer of US property during the annus horribilis for Anglo.

Anglo led the way in bankers’ pay, but all of the banks paid their top people at levels that are hard to understand. The common defence for the high salaries is — or was — that they needed to be paid “competitive” rates to retain them at home in their current positions.

Richard Burrows, governor of the Bank of Ireland, was one of the stoutest defenders of the level of pay for bankers. Speaking to the Sunday Independent on 12 October, 2008, just after the Government guarantee to the banks, he was adamant that pay was at the right level.

(Burrows, of course, was himself being paid €512,000 a year for his part-time job.) With an endearing lack of humility, Burrows insisted that “we have to put in remuneration levels which allow us to retain and attract the best people to run Bank of Ireland in the interests of the shareholder. And so that means we have to compare ourselves with the pay rates not just in Ireland, but further afield”.

It is to be hoped that Burrows read the Government’s review of Irish bankers’ pay in February 2009. It found no evidence that keeping senior staff was difficult, and pointed out that many of them came from within the organisation. While bonuses had increased abroad, many of these bonuses were deferred. Irish bank executives pocketed their beefed-up bonuses straight away. The review recommended cuts of up to 64 per cent in Irish bankers’ salaries.

There is not a shred of evidence that Goggin, Sheehy, Fingleton, Drumm or Casey were ever offered jobs that might have enticed them away from the happy home patch. Indeed, they were all rooted to the same bank for nearly all their working lives. No one can blame them.

A comparison with international bankers might have proved embarrassing for Burrows. Brian Goggin’s €4m package in 2007 and David Drumm’s €4.7m in 2008 appear over the top, even by the generous standards of global banking. Eric Daniels, the boss at Lloyds TSB, for example, was paid less than Goggin in 2007 despite delivering three-and-a-half times Bank of Ireland’s profits that year.

Goggin’s total package was 50 per cent more than that of Andy Hornby of HBOS, who collected €2.6m in 2007.

The Scottish giant made €6.988bn that year compared to Bank of Ireland’s €1.584bn.

European comparisons are even less flattering to the top brass at Irish banks. Lord Terence Burns, who chaired Abbey National (a bank of comparable size to AIB and Bank of Ireland) and sat on the board of its owner, Spanish banking giant Grupo Santander, received just €135,000 for his troubles in 2007. Sean FitzPatrick, Dermot Gleeson and Richard Burrows were all paid more than three times this amount.

Comparisons with other industries also show how Irish bankers’ pay had bolted out of hand. Michael O’Leary, the most successful Irish businessman of his generation, earned a basic wage of €595,000 in 2008, compared with Brian Goggin’s €1.2m. The airline chief ’s total take-home package amounted to €1.2m against Goggin’s €3m in the same year.

While being a banker was a licence to print money, being an ex-banker was sometimes even better. Possibly the most outrageous aspect of Irish bankers’ pay is the reward for failure gifted to departing executives by their boards. Anglo Irish again tops the “hard luck” league by a distance. The rationale for the pay-offs in Anglo is probably indefensible.

In the years 2004–2007, the bank paid €8.7m to three executives when they left. All three appear to have been given these vast sums as comfort money, in sympathy for not being awarded the top job won by David Drumm. Tom Browne (€3.75m), Tiarnan O’Mahoney (€3.9m) and John Rowan (€1.1m) were the lucky losers. Gary Kennedy left AIB with a €738,000 payment, plus €2.01m for his pension fund, after being pipped at the post for the chief executive’s job by Eugene Sheehy.

When Mike Soden, apparently voluntarily, resigned from the Bank of Ireland after breaking his own rules on viewing videos, much was made about the honourable course he was taking. He asserted that, as he had set the rules, he should be the first to obey them and to pay the penalty for breaching them. His honour was rewarded with a payment of €2.3m and a special lump sum of €0.4m into his pension fund.

But possibly the most sensational pay-off of all was the €1.87m bonanza given to EBS chief executive Ted McGovern when he resigned in September 2007 after a series of boardroom rows.

McGovern’s reign at EBS was marked by infighting and boardroom turmoil. His price for leaving a “mutual” building society, dedicated to the benefit of its humble members, would have done Ireland’s fattest bankers proud.
2 Responses to “The Bankers”
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1. 1 Patrick Nov 6th, 2009 at 9:16 pm Edit

Congratulations on your book Shane, what shocked me most on reading your book was finding out that Pat Farrell the president of the Irish Bankers Association was previously the general secretary of Fianna Fail. Fianna Fail = “TOO BIG TO FAIL”
2. 2 Hannah Dec 8th, 2009 at 12:41 pm Edit

Shane, a riveting if horrifying read! The greed, collusion and incompetence is beyond belief, and yet we continue to accept this behaviour from our institutions.

Ogden Nash had a thing or two to say about banks himself.

“And you lend them the million so then they have two million
and this gives them the idea that they would be better off
with four,
So they already have two million as security so you have no
hesitation in lending them two more,
And all the vice-presidents nod their heads in rhythm,
And the only question asked is do the borrowers want the
money sent or do they want to take it withm.”

The plan of action is to merge EBS, Irish Nationwide and Irish Life’s banking arm into a third force. Anyone else who wants to join in is welcome.

Halifax Bank of Scotland took one look at the idea and promptly left the country. But the Government still loves the project: lump all the troubled minnows into one pot.

Unfortunately three troubled minnows cannibalising each other equals just one more drowning shark.

Wait for all that bogus old bull about competition. The mandarins will sell this project as a panacea for the consumer. Do not believe a word of it. Customers are about to be sold a pup, a third choice of predator. After last week’s gruesome fodder — figures served up by Irish Life and AIB — we could be brainwashed into believing that the future rests with the third force.

If you are a masochist you can always stick with your old persecutors, AIB and Bank of Ireland. Otherwise you may opt for the fresh, sparkling third force.

Even now in its pre-conception state, the embryo is beginning to look uncomfortably like its first and second siblings. Last week Irish Life and Permanent, a company peddling the third force idea, announced its results. They were woeful. Losses of €200m were revealed.

IL&P likes to distance itself from the two senior predators. It is not in Nama because it was not exposed to such huge property losses. It likes to portray itself as a kind of goody-two-shoes of the banking sector. IL&P wants us to forget that it was the outfit that helped Anglo to doctor its year-end books. Heads rolled, including the chief executive’s. A garda inquiry is now under way. Quite a humiliation.

Sadly they were never such brilliant bankers themselves. IL&P made boo-boos in Iceland to beat the band.

To be fair to the directors of Irish Life, they are not part of AIB or Bank of Ireland’s golden circle. Instead, they run their own little cabal.

And when heads roll at Irish Life, they roll just like they do at any other bank. Then the fallen fat cats are replaced in the same way as they are in the two bigger joints.

Last year when Denis Casey was forced to resign after the doctoring of Anglo’s books with the co-operation of Irish Life, the board sought a replacement.

No doubt the interview process for Casey’s successor was painstaking. Perhaps, like Bank of Ireland and AIB, they searched the world before making a selection. Within weeks they had found the ideal candidate. Enter the boy next door, Irish Life board member and head of life and pensions, Kevin Murphy.

Murphy, like his predecessor Denis Casey, is an Irish Life ‘lifer’. Just like the anointed successors Richie Boucher at Bank of Ireland and Colm Doherty at AIB, he was selected “from an exhaustive process of interviews of external and internal candidates” . Insiders win at AIB. Insiders win at Bank of Ireland. And insiders win at Irish Life. Insiders will win when the third force is up and running.

Murphy had been in Irish Life for 37 years. He was even there when the State owned it. So he must have picked up some bad habits along the way.

Good thinking by Irish Life to pick Kevin. Far less chance of the old guard cleaning out the Augean stables.

Alongside their deplorable figures on Wednesday, Irish Life slipped through the appointment of a new director. No, not a government- appointed director, but one of their own strokes of genius.

What an opportunity to introduce a fresh face, not a member of the banking cabal.

Recent appointments at Irish Life have not covered the board with glory. Ireland’s former financial regulator Liam O’Reilly was a bad choice in September 2008, but they chose Liam long before the world knew much about the antics of Ireland’s financial regulators.

Late last year they opted for Pat Ryan, a former treasurer and risk officer at AIB. Here I must declare an interest. I have a soft spot for Pat. When he was a gilt dealer at Allied Irish Banks and I was an apprentice stockbroker, he gave me my first ever decent order. I cannot forget his kindness; but suffice it to say that objectively an AIB risk officer does not look like an ideal selection in the week when AIB admitted €2.65bn of losses due to excessive risk in property and elsewhere.

On Tuesday, Irish Life appointed an unknown — Bernard Collins — to the board. At least he is not a banker. He even has 10 years experience at multinational Boston Scientific Corporation.

A new broom has landed on the board. Bully for Irish Life.

The press release mentions that Bernard has another gig.

Bernard is chairman of the troubled state-owned flop, the Voluntary Health Insurance.

Now why would the board of Irish Life want the chair of the bloated VHI to join them?

Obviously he has useful knowledge of the insurance market. That must be the reason. Besides, Irish Life may soon divest itself of its banking arm and concentrate on insurance. Bernard could be useful.

Did they advertise? How did they select him? Was there another “exhaustive process”?

Funnily enough, Bernard’s VHI board has another familiar sounding director. A woman by the name of Gillian Bowler is a long-time board member of the State’s health insurer. Gillian just happens to be chairman of Irish Life. So there we have it, a lovely cross- directorship coincidence. Bernard sits on Gillian’s Irish Life while Gillian sits on Bernard’s VHI.

Perhaps Gillian absented herself from the discussion when Bernard’s name came up for this obviously fiercely contested bauble?

Unlikely, as she herself chairs the key nomination committee.

Gentle Gillian seems to develop attachments to fellow directors. Less than three years ago when Irish Life chief executive David Went left office, he rapidly found himself on the VHI board, sitting beside his old pal — none other than Irish Life chairman Gillian. Now both of them sit happily at the Court of Bernard Collins at the VHI. Then last week, Bernard swans in to Irish Life . . .

Collins is no opponent of political appointments. A Corkman, he was parachuted on to the VHI board by his fellow Corkman, Fianna Fail’s Micheal Martin.

His membership of the IDA board adds to his semi-state portfolio. He was re-appointed to the IDA by the same Micheal in 2007 after initially being appointed by Mary Harney in 2002.

So Bernard straddles the semi-state and banking board circuits. Just like Gillian and David.

While small business is screaming for banking facilities, while mortgages are about to soar, while small shareholders are suffering irreparable losses, Irish Life is playing board games. The appointment of regulator O’Reilly did little to prevent Irish Life from a regulatory rout when the transfer of funds to Anglo was rumbled.

When vacancies in the board were created as a result of the Anglo debacle, they filled them with more insiders. Just like the other two senior sharks. The third force should cement the third cabal.

A man who was shedding no less than 1,100 jobs at the airport descended to the dungeon to confront a man who was promising 300 in the same place. The Oireachtas Transport Committee was hosting the row between O’Leary and Mary Coughlan’s allies in Dublin Airport and Aer Lingus.

Wednesday morning’s news had revealed that Christoph Mueller — of Aer Lingus and Germany — was threatening to make 1,100 employees compulsorily redundant.

On the same day Michael O’Leary — of Mullingar and Ryanair — entered the arena promising 300 jobs.

Michael should have been given a hero’s welcome by grateful local politicians.

Christoph should have been booed off the stage.

Far from it.

The Ryanair chief was subjected to tough treatment. Some sceptical TDs dismissed his offer of 300 jobs.

The air was full of innuendo that Michael’s promised jobs were phoney, that he had already secretly agreed to locate his operations elsewhere.

Fianna Fail’s Michael Kennedy even implied that O’Leary was leading the 800 laid-off SR Technics workers up the garden path, having already decided to take the Ryanair jobs to Germany.

The Ryanair boss convincingly scotched that suggestion, insisting once again that the jobs would be lost to Christoph’s home country of Germany if Christoph, Minister Mary Coughlan and the czars of the Dublin Airport Authority (DAA) did not agree to give him the now infamous Hangar 6.

The trio ganged up against him. Christoph insisted that he was not for budging.

Declan Collier, head of the DAA monopoly, supported Christoph’s stance.

Mary herself was a no- show. According to her press office, she was willing to come after the facts had been established!

While Mary did not show up at the meeting arranged to save the jobs, she was well able to make a muddled comment later.

Mary could sort it out in minutes, but will not: Aer Lingus and the DAA are making much of the lease on Hangar 6, which they maintain ties them into an irrevocable deal. Neither will break their agreement.

Honourable parties, these two old allies. Sometimes I even forget that Aer Lingus chairman Colm Barrington came hotfoot from the board of the DAA.

But there is a simple way around the Aer Lingus/DAA alliance. Mary owns the wretched DAA — which she shields like an overfed baby. On the Aer Lingus side Mary owns 25 per cent while Michael owns 29 per cent.

Could Mary and Michael not join forces to scrap the lease? Mary could use her ownership of the DAA to cancel the lease on one side. The two combatants could combine their 54 per cent to cancel it on the other. Then Aer Lingus and the DAA would by mutual agreement scrap the deal. The hangar would be empty. Michael could march in with his 300 jobs.

This could be done in 24 hours.

Understandably, Christoph does not want to allow his competitor into the hangar. But Christoph does not have the 300 jobs on his radar. Indeed he is more intent on reducing jobs.

His sole interest is the bottom line at Aer Lingus. Awkwardly for him, he has Mary (25 per cent) and Michael (29 per cent) as the monkeys on his back. Not an ideal shareholder base.

Luckily for him, Mary is a well-tamed monkey. Michael is a guerilla.

Mary is supposedly holding her 25 per cent in the national interest.

Of course, the State should never have held on to the shares in the original privatisation. Aer Lingus is a semi-state hybrid. The State’s holding was bound to create conflicts, like the present quandary.

We all know that the State’s stake was retained to stop dynamos like Michael O’Leary from taking over Aer Lingus. It was a job protection stake. It was meant to prevent runaway capitalism from reducing employment in North Dublin. It was Bertie — the North Dublin Taoiseach’s — little insurance policy.

Last Wednesday was Mary’s chance to exercise her muscle. She could have come down to the dungeon, shook hands with Michael and joined forces to save the 300 jobs.

She bottled it. Instead, a spokesman for the Tanaiste told the Irish Independent’s Aine Kerr that combining the two holdings “would not be in the commercial interests of Aer Lingus shareholders”.

What a muddled reply from a muzzled minister.

Since when was Mary acting in the commercial interests of the other Aer Lingus shareholders? Her stake represents the interests of the nation. Presumably that includes landing jobs for Ireland?

The other shareholders are Ryanair, the ESOT, Denis O’Brien, the pilots and a smattering of small investors. If the jobs issue went to a vote at an EGM, would Mary really side with Christoph and his job-cutters?

According to Christoph, she has already asked him to exit Hangar 6. Yet she cannot bring herself to unite with Michael O’Leary in this mission.

Which seems to prove a point. The spat is personal. Three dead hands of the State are uniting in a devil’s pact to thwart the ambitions of the entrepreneur, O’Leary.

Not a great reason for stopping the jobs.

The proof of the absurdity of Mary’s stance emerged as ever on RTE’s Morning Ireland on Thursday. Enter the workers, the victims of the Coughlan/DAA/Aer Lingus strategy, to put manners on Michael.

John Devlin spoke from the heart for the SR Technics workers. John knows the hangars. He protested that “people in Dail Eireann and people outside Dail Eireann are talking about these hangars and they don’t know what they are talking about, and I think if they get a better idea, if they see what’s exactly there, they may understand why Ryanair wants those hangars.”

Devlin was rooting for Ryanair. The jobs are all that matter.

Suddenly reality has dawned. The workforce do not care who delivers the jobs. Michael O’Leary, the man who said “Hell would freeze over” before he would allow a trade union into Hangar 6, is offering a lifeline to 300 human beings.

The workers want Mary to back Michael.

But Mary is wedded to the DAA and Aer Lingus.

Anti-O’Leary forces are desperate. Dark propaganda is being peddled.

Sources among the troika are suggesting that Michael wants to build his own terminal at Dublin Airport, that he has a hidden agenda to challenge the DAA.

What a splendid idea. Allow the Ryanair chief to build a modern terminal in competition with the DAA slum.

Competition? God forbid. Declan Collier, the DAA boss paid €638,000 a year, cannot even manage a monopoly let alone take on a competitor.

Leinster House has caught a bout of insanity. All parties are on a spit. The Labour Party, still in love with the DAA, cannot make up its mind whether it hates Mary Coughlan or Michael O’Leary more. Fine Gael is moving against its own conservative instincts to champion the risk-taker, O’Leary.

Fianna Fail, embarrassed by the mess created by Minister Mary, is pretending that O’Leary cannot deliver the jobs. Which he can. The workers are backing O’Leary.

While O’Leary has happily turned the rest of the world upside down, Aer Lingus still rules OK?

More chillingly put: no hangar no jobs.

That is the way he does business. Three arms of the State have joined forces to block him.

While Michael is parading himself on the airwaves, they have despatched their armies of spin doctors to undermine him. None has the neck to confront him head on, so they are whispering behind his back. They are muttering that O’Leary is a showman. Which he is. That he is exploiting the airwaves to promote his cause. Which he is. That he is making mischief. Nobody does it better. And more wickedly, that he is not genuine about his jobs offer. Which he is.

All week O’Leary has been running rings around Minister Mary Coughlan, the Dublin Airport Authority and Aer Lingus. Once again they are trotting flat-footed behind the nimble magician.

O’Leary’s obvious enjoyment at pricking the bloated egos of his three adversaries provides compelling entertainment. Watching Michael on the box beats EastEnders any day. Yet the spectacle can become a distraction: sometimes we lose sight of Ireland’s toxic business warts while we laugh at his gags.

His cheeky arrival at the beautifully coiffed Tanaiste Coughlan’s office, dressed in shabby sneakers and jeans that looked like he had slept in them for a week, was hilarious if a bit contrived. Our minds ran riot imagining the reaction of her army of sniffy civil servants holding their noses when the triumphant tramp, paper cup in hand, entered the building

Theatricals aside, O’Leary has again helpfully highlighted the blockades embedded in Ireland’s aviation sector.

The Ryanair chief comes bearing gifts. Michael will deliver his 300 jobs to the most profitable location. He runs a global business, not a semi-state protectorate.

Such commercial principles make common sense in all circles except the DAA state monopoly, the Department for Enterprise and Employment, and the heavily unionised Aer Lingus. His emphasis on jobs means that O’Leary has prompted an awkward question: how is it that Ryanair, a non-unionised, publicly-quoted company, is offering more jobs than the union-dominated, fully state-owned DAA and the 25 per cent state-owned trade union haven of Aer Lingus? Both his opponents are shedding them.

Do trade unions and state ownership ultimately lead to unemployment? Recent evidence suggests that they do. Last year the DAA sought 400 redundancies from its 3,600 workforce. Four months ago Aer Lingus announced a cut of nearly 700 jobs. Both outfits are expected to report losses for 2009. O’Leary will report profits. Mary Coughlan has lined up behind the losers. As always, the comrades with the beards can depend on the minister to thwart the Ryanair entrepreneur.

The instinctive hostility of all recent governments to O’Leary has done the State no service. Bertie Ahern’s obsession with short-term protection for the two semi-states has left a legacy of losses and falling employment.

His hostility to aviation entrepreneurs was well-flagged by his obstruction of Willie Walsh in Aer Lingus and of O’Leary in Ryanair. Obsessed by the needs of his North Dublin constituency, Bertie defended union power and overmanning at the semi-states. As a result, Walsh was tragically lost to BA. Thankfully, O’Leary stayed to pay his taxes in Ireland.

Fianna Fail’s knee-jerk reaction in defence of state monopolies has landed them in bags of bother. Last year Coughlan moved swiftly to protect FAS when news broke of the latest bout of overspending. Instead of sacking the FAS board, she sought to shield them.

She had been handed a gold-plated chance to detach herself from the profligate wasters at FAS. Instead she leapt to the moribund state agency’s defence.

Similarly, today she is rallying to the DAA flag.

O’Leary had handed her a chance to kick the semi-state airport authority in the teeth. She owns it. She bottled it, instead suggesting that Michael should talk to the bureaucrats in the DAA. Mary knows full well that this is red rag to a bull.

Coughlan’s mandate is to deliver jobs, not to observe business protocols.

She entertained all sorts of red herrings to frustrate O’Leary’s plans.

Her initial plea that Aer Lingus has a legal right to occupy Hangar 6 is feeble.

Information provided by Ryanair shows that the DAA’s standard contract gives it the right to boot out any of its tenants in the hangars with 12 months notice. Last week, instead of instructing the DAA to end its contract with Aer Lingus and find them another premises, Coughlan rang Aer Lingus boss Christoph Mueller and asked him to vacate the hangar. The German, barely a wet day in the job, seemed unaware of the cosy relationships in Ireland. He seemingly told her to go jump in a lake.

Mary Coughlan holds a key 25 per cent stake in Aer Lingus. When it was privatised in 2006, we were constantly assured that the State needed to hold a meaningful share to protect the national interest. The Government needed clout.

‘Imagine the reaction of Coughlan’s army of sniffy civil servants holding their noses when the triumphant tramp, paper cup in hand, entered the building…’

If ever there was a need for clout it was last week. Mary simply needed Mueller to switch hangars and 300 jobs would follow. Mueller gave her a flea in the ear.

So much for the 25 per cent stake. It carries no influence in the national interest. And it will soon be worthless in money terms. Even at this late stage Coughlan could combine her 25 per cent share with O’Leary’s 29 per cent to force the airline to pull out of Hangar 6. Not a chance.

The minister and her allies are more interested in humbling their nemesis.

Coughlan herself has been humbled by Aer Lingus. She is seen as a pawn in the DAA/Aer Lingus cabal that holds sway at Dublin Airport. As owner of one and part owner of the other, she would be better off selling both.

Ryanair sources are adamant that the DAA will never evict Aer Lingus because the airport authority is terrified that its old airline ally might not fulfil a promise to become the anchor tenant for the DAA’s latest white elephant — Terminal 2.

Passenger numbers are tumbling at the airport. The two basket cases are natural bedfellows on the “my enemy’s enemy is my friend” category. The triangle is completed by the State.

All share an anti-business ethos and an antagonism to Michael. The hostility to Michael was highlighted on Monday’s Morning Ireland when poor Mary Coughlan told Aine Lawlor that she would “certainly not” be picking up the telephone to ring Michael. The very thought of ringing the devil incarnate horrified her.

The current row has become deeply personal. The trio desperately want to put manners on Michael. They deeply resent the heroic status he has achieved in modern business folklore. Such personal spleen clouds political judgment. The super-capitalist has become a popular figure because his business model has delivered jobs and cheap travel by challenging State monopolies.

This week’s spat was part of the same strategy.

His success has maddened the DAA, sulking in its slum at Dublin Airport. The monopolists are reduced to briefing journalists that O’Leary has a hidden agenda: he only wants Hangar 6 as a cover to build a terminal for Ryanair.

The Ryanair chief has parried such nonsense by offering to sign a deal legally preventing him from using it for such purposes. The DAA is paranoid about O’Leary.

Just because they are paranoid about him they should never assume that he is not out to get them. He is.

Let us wish him well in his pursuit of the monopoly and the delivery of 300 jobs for Ireland.

Far from increasing competition in the Irish market the Scottish invaders have spread contagion around Ireland over the last decade. They are exiting a scorched earth, partly of their own creation.

Remember the arrival of the Bank of Scotland in 1999? They cut mortgages by one per cent. They were here to challenge Ireland’s big banks. Behold Ireland’s giant killers, the cartel breakers.

And so it seemed. Other banks reacted by cutting their own rates to match the Scots. A mortgage war broke out.

At the time most of us naively welcomed the invaders as saviours of the consumer. Here in the Sunday Independent we even awarded them the ‘Business of the Year’ award in 1999. Ouch.

What fools we were. We were hoodwinked.

We should have known. It did not take the Scots long to go native. They bought the State-owned ICC Bank and proved their commitment to the green flag by putting a hardline Irish republican, Phil Flynn, in charge as chairman. They joined employers’ group Ibec, the useless insiders’ club dominated by the big bankers. They even became part of the elite Irish Bankers Federation. The Bank of Scotland had arrived in Ireland.

Suddenly, after chairman Flynn had been linked to an embarrassing money laundering scandal, they gave him a payoff of €240,000 and nominated a successor. Enter Maurice Pratt, former head of the moribund Ibec, director of the dreaded Eircom and boss of the ailing C&C. An insider par excellence took the helm.

Maurice was still chairman of the jinxed Bank of Scotland last week when it announced the closure of 44 branches and the loss of 750 jobs. Maurice is one of the few chairmen to survive the Irish banking crisis. It is difficult to understand the reasons why he has held on to the job.

Maurice has presided over a disaster similar to the other Irish banks, but he is lucky. He is not part of the decrepit Irish bankers’ club dependent on Brian Lenihan for survival. Maurice is dependent on his UK parent, HBOS, and its current owner, Lloyds Banking Group.

During Maurice’s tenure in the chair, mortgage rates at Bank of Scotland’s Halifax have risen to become the most expensive in Ireland. When Bank of Scotland hit the market in 1999 it was the cheapest. Gradually, as it established its presence here, rates crept up while the bank still lived on the low-cost reputation established as it sailed in from the highlands.

Indulged by Maurice and the board, CEO Mark Duffy loudly blew the bank’s trumpet about new products, tracker mortgages and credit cards. In 2005, the bank bought 54 ESB shops for €120m. Maurice, Mark and HBOS had planted roots in Ireland.

The foreigners even sponsored the massively popular Late Late Show on RTE. They were becoming embedded.

As it insinuated itself into the Irish establishment — while simultaneously making loud anti-establishment noises — the Bank of Scotland was quietly catching the Irish property bug. Duffy and Pratt were not only over-extended on the retail side, they had gone gangbusters into Ireland’s commercial property market.

We should have read the runes. Back in the UK, Maurice and Mark’s owners at HBOS had gone bananas, over-lending on the property market. The contagion was in the family.

In March 2008, HBOS was even coupled with Anglo Irish Banks, branded by the Financial Times’ Lex column as the two banks most vulnerable to a property collapse. The influential columnist’s comments prompted a run on both banks’ shares. An inquiry into dealings in HBOS shares in London was followed by a copycat into Anglo’s in Dublin. The short selling in March 2008 ultimately ended with the nationalisation of Anglo and the UK state rescue of HBOS.

While HBOS had gone overboard on property in the UK, its subsidiary here was joining the party late in the day, bitten by a bug to a depth that would have made Sean FitzPatrick blush.

Seized with the zeal of a late convert, Duffy started to make up for lost time in the development game. Aping his UK parent, he left no opportunity unexplored.

Right at the top of the property boom, he closed enormous deals with the now deeply indebted Bernard McNamara when he funded much of the €288m Burlington Hotel purchase.

He even tied up €1bn with the troubled developer Liam Carroll on the south Dublin Cherrywood site.

The bank that had invaded Ireland as the consumer’s champion was now wooing greedy developers. By the end of 2007, Bank of Scotland (Ireland) had bet more than half its Irish loan book on the flagging property frenzy.

Its lending for property stood at €16bn, nearly 11 times its 2001 exposure.

In February 2009, Duffy, like the other battered bankers, retired with an undisclosed lump sum. Last week he was no longer in position to explain to the desolate 750 workers his decision to buy the ESB shops, to promote the Halifax products or the ill-fated plunge into property. Nor did he need to account for his stewardship to his bosses. The bird had flown with a few bob.

Pratt, like most bank board members, still sits on his perch drawing a six-figure sum. Both men have been well-rewarded for failure. A familiar tale.

Bank of Scotland’s venture into Ireland has been bad for the bank but worse for Ireland. How did it go so wrong?

An uneasy thought keeps recurring: did ruthless overseas banks spot Ireland as a soft target back in 1999? Did they realise that just across the sea lay this island of milk and honey without banking regulation? Even better, the island nursed a cartel, constantly milking its citizens.

Far from bringing competition to the market, the invaders were merely intent on joining in the pillage of Ireland’s innocents.

At the time, Irish bankers’ major sin was overcharging, unchecked and undiscovered by a sleepy regulator. The lack of regulation offered rich pickings for a few extra players. Bank of Scotland seized the opportunity, initially posing as a cartel cracker.

Last week the Bank of Scotland was keen to insist that its commercial property disasters were a completely separate catastrophe from its flop in the mortgage market.

Ahem.

On Tuesday, Maurice Pratt protested that the review ending in the loss of so many jobs was a local one. Insiders pooh-poohed the suggestion that this was a diktat from its new parent, Lloyds.

Ahem. At the same press conference announcing the retreat, Maurice Pratt was flanked by Lloyds’ top dog Mike Wooderson.

The assault on the mortgage market is over. The Bank of Scotland (Ireland) was a willing player in the property madness. It played its part in bringing Ireland to its knees.

Good riddance.

Goodbody is owned lock, stock and barrel by the mighty, but deeply troubled AIB.

Not a comfortable corner for any poor sinner; but imagine the dilemma of a stockbroker offering independent investment advice on whether its parent bank’s shares are a great buy or a stock market dog.

Goodbody invariably sees the rosy side of its parent’s prospects. The brokers have a pretty consistent record of rating AIB a ‘buy’.

Goodbody is hopelessly conflicted; but most punters know — by now — that they should take such conflicted advice with a pinch of salt. It would be a brave, possibly suicidal Goodbody analyst who put the boot into AIB’s shares.

So Goodbody’s words of wisdom about AIB should always come with a health warning.

Equally Goodbody should be circumspect about its view on the relative merits of AIB against rivals, Bank of Ireland and Irish Life & Permanent. Ideally it should not be telling punters that AIB is better than the others. Or vice versa.

Goodbody has never suffered such inhibitions.

Fair enough. Brass neck goes a long way in the cut-throat world of the stock market.

And Goodbody has brass neck — in spades.

Last week, Nick Webb and I discovered that Goodbody decided — back in November 2008 — that AIB shares were a cut above those of rival Bank of Ireland.

So convinced was Goodbody of its parent’s virtues that it made a “house call” to exit Bank of Ireland stock across all its discretionary portfolios and to buy AIB shares with the proceeds.

Goodbody has the largest private client base in Ireland. A decision to sell discretionary shares means the brokers do not have to consult with the client. They just do it.

Goodbody just did it. They sold Bank of Ireland and bought AIB.

Their big bosses in AIB’s Ballsbridge Bank Centre must have been pleased, because Goodbody has massive fire power in the market.

Last week a Goodbody spokesman categorically denied that this was a share support scheme. No doubt, but Goodbody just happened to be great supporters of the shares.

A decision by a giant like Goodbody, the child of AIB, to exit BoI across all their discretionary portfolios and to reinvest the proceeds in AIB shares could alter the market capitalisation of both banks. The fateful decision happened in the frenzied days of November 2008.

Think back to November 2008. The emergency bank guarantee had occurred just a month earlier; panic stalked the markets; prices were see-sawing; overseas sellers were fleeing the Irish banks; AIB shares were tumbling.

In the middle of the storm Goodbody made a big decision on behalf of their discretionary clients — evacuate the B of I ship, and climb on board AIB.

Today they indignantly insist that the switch was made on investment grounds. At the same time they are pleading that, in some cases at least, they switched free of commission. Now why in God’s name would they do that?

More importantly, the manoeuvre was hardly an unqualified success. While Bank of Ireland shares have lost serious ground since November 2008, Goodbody’s beloved AIB have plunged by three times as much. In the meantime, scores of pension fund contributors, who had given Goodbody discretion, are nursing nasty losses as a result of the switch.

Yet strangely enough, a smattering of Goodbody’s other clients may not be suffering so badly.

Those lucky punters who read Goodbody’s circular to clients at the same moment in time may have stuck to the Bank of Ireland stable.

In a bizarre contradiction — which is hard to explain — while Goodbody was quietly selling Bank of Ireland for its discretionary clients in November, it was issuing an odd research circular on Irish Financials.

True to form AIB was a ‘BUY’.

But its verdict on Bank of Ireland on November 14, 2008 was far more interesting.

“We acknowledge,” wrote the brokers, “the significant operational and strategic headwinds in the quarters ahead and the equity issue risk, the stock has collapsed 50 per cent in the past forthnight (sic) and is down 75 per cent from its October 1 level, so our recommendation nudges back up from ‘Add’ to ‘Buy’.”

At the top of the circular four words blare out at the reader. The words BANK OF IRELAND and the word BUY — all in bold.

The contradiction would gobsmack a hardened cynic.

Even more amazingly, Goodbody’s research boys were targeting a 57 per cent improvement in the B of I price from €1.21 to €1.90.

What a puzzle. Goodbody was discreetly selling its discretionary clients’ Bank of Ireland stock while urging the wider world to buy them.

Which group of clients was receiving Goodbody’s best advice?

According to the brokers themselves, the “house call” was to switch the proceeds of the sale of Bank of Ireland into AIB. According to the circular both banks were a ‘BUY’.

It is not clear whether Goodbody considered Irish Life & Permanent or even a foreign bank as an alternative. Or even cash. Instead, they seem to have instinctively headed back to the bosom of AIB.

Goodbody insists that the “the decision [to exit B of I] was not made lightly by the Private Client Investment Committee”.

What a howler. Discretionary clients should challenge the blue-blooded brokers.

Be fair. Perhaps this was a once-off Goodbody cock-up, a failure of its various experts to communicate with each other. But surely a “house call” is a “house call”? And a brutal one at that.

Maybe Goodbody has shown clients a road to riches elsewhere.

The only Goodbody discretionary fund (as opposed to client) I could track last week was the Goodbody Equity Fund. Perhaps this in-house fund could redeem Goodbody’s nightmare outcome on the AIB/Bank of Ireland discretionary fiasco.

So how were the whizzkids performing with the Goodbody Equity Fund?

Surprisingly, the website’s figures are four months out of date. They only tell us of the Fund’s performance until September 30 last year.

The performance is dismal.

Over one year Goodbody’s Equity Fund had lost 11 per cent. Pretty poor compared with the FT World index that had lost only 6 per cent. Even poorer against the average General Equity Fund which had only lost 4 per cent.

Over three months and year -to-date (2009) it showed gains, but its performance in last year’s rising market was again far inferior to the same chosen benchmarks. Part of its poor performance could be due to its ingrained weakness for shares in AIB.

Goodbody appears blinkered. Its benign view of AIB was hardly shared by other brokers when it made the “house call” to switch out of Bank of Ireland into AIB. In October 2008 the more gutsy and independent Merrion Stockbrokers gave AIB a “reduce” rating. How right they were.

The giant Swiss investment house Credit Suisse told clients that they expected AIB to “underperform”. Ditto.

Credit ratings agency Moodys, the cold arbiters of global banks, gave AIB and Bank of Ireland the same dismal credit rating in mid-November 2008, not a point highlighted by Goodbody.

But the worst aspect of the lot is that any discretionary clients who are still marooned in AIB stock — after Goodbody had sold their B of I shares — are losing a mint on the switch.

Perhaps stockbrokers should be saved the embarrassment of being allowed to do discretionary deals in their parents’ shares?

It simply fuels the flames of suspicious minds.

Credit is dead. Healthy outfits are being driven to the wall by the bucketful. Public servants have trade unions to bellyache for them. Small businesses have the seats of their pants, brass neck and hot sweat. Their oxygen is credit. But the oxygen ran out on September 30, 2008.

The big banks have absconded with the supplies of oxygen. They want to keep all the loot for themselves. Never mind, while the unions have Jack O’Connor, David Begg and the Irish Congress of Trade Unions, small business has Patricia Callan and the Small Firms Association (SFA) to carry the cudgel.

Jack and David are past masters at giving the Government hell. Similarly, oppressed businesspeople might reasonably expect the SFA to do likewise to the banks.

After all, the SFA has 8,000 members. Hundreds of them are screaming for bankers’ blood. Sadly, the 8,000 members seem more like 8,000 prisoners.

On balance, I would rather be a public servant, represented by Jack and David, than a small businessman led by Patricia. Admittedly, Patricia is easier on the eye than the bearded duo, but that is where my enthusiasm ends. Does any member of the SFA believe for one moment that it will take on the bullies in the banks?

The SFA is hopelessly compromised in its battles with the banks. Its close links with AIB hardly suggest an oncoming challenge, let alone a confrontation.

Patricia should be storming the gates of AIB’s fortress out in Dublin’s Ballsbridge. She should don her Joan of Arc armour and call her army of 8,000 on to the streets in protest at the bankers’ credit strike.

You will never see the day. Why not? Well, the SFA is a division of the big employers group, Ibec. And who are Ibec’s biggest funders? You guessed it. None other than the mighty AIB and the Bank of Ireland.

No doubt the lovely Patricia disregards her parent Ibec’s links with AIB when denouncing the banks for starving her members of funds. Denunciation of AIB is not in her armoury.

So what has the SFA been doing to stop the banks persecuting its members? In search of an answer, I googled the SFA and AIB to trace the inevitably frosty relationship between small business victims and the big bankers. Funnily enough, there is little evidence of tension. Far from it. The SFA and AIB are bosom buddies. Enter Kieran Crowley, longtime director of AIB. Kieran is not only a top dog in Ibec and a €170,000-a-year director of AIB, but he did a six-year stint as chairman of the SFA and still sits on its council. No doubt Kieran absents himself from AIB board meetings when funding of small business is discussed. And no doubt he leaves SFA council meetings when all that awkward stuff about banks screwing small business hits the agenda.

Kieran apart, the AIB/SFA links are legion. AIB is a recruiting agent for Patricia’s bunch. It makes a kind offer to pay virtually all of the €600 subscription of any first-time member of the SFA. After that, it will pay 50 per cent of the second year’s sub. Canny guys, these AIB banker types.

Equally cannily, AIB is sponsoring the SFA’s ‘Outstanding Small Business Finalists Award’ for 2010. Equally cannily — in 2006 — AIB sponsored the SFA’s Better Business Show. In recent years Eugene Sheehy, the deposed AIB boss, was a star speaker at the SFA’s annual luncheon — a gesture akin to asking a fox to attend a chicken’s birthday bash. The SFA is firmly captured within the warm embrace of the biggest bank in Ireland. Meanwhile, its members cannot access credit. AIB documents are keen on claiming that “the SFA exclusively represents small enterprises in Ireland”. Not quite true. There is another little organisation called ISME, a truly independent body, not a social partnership junkie, nor a prisoner of Ibec.

ISME has a discount deal with the Bank of Ireland, but otherwise has no close relationship with the very banks which are crucifying its members. A far better bet for a small business.

Pat’s companion bears a bushy beard. I recognise it. It has appeared in this column more than any other beard on God’s earth.

I blink and grasp the hand of Siptu boss Jack O’Connor, muttering gratefully that “we have never met”.

Jack is not impressed. For a split second he seemed about to withhold the hand that strokes the beard. Instead, he makes it crystal clear that he has not been aching for the encounter.

“You have done me great damage,” he retorts with feeling.

Used to the rules of combat that allow political opponents to converse reasonably amicably outside the public battlefield, I gulp, but settle down a safe distance away from Comrade Jack. The freeze hardly thaws until Green TD Dan Boyle, another guest on the programme, appears.

Sadly Jack is on a different part of the show.

Tuesday

On an early morning trip to the City of London I meet one of the former heroes of the Irish economy. My favourite developer, Sean Mulryan, is slumming it in Dublin Airport where once he housed his private jet.

Sean is heading to his London Docklands project, followed by a trip to promote his interests in Berlin. I engage Sean in conversation but get the impression he would rather be elsewhere. It seems to happen to me rather a lot.

Former Anglo Irish Bank whizzkid Tiarnan O’Mahony, who departed when David Drumm pipped him for Sean FitzPatrick’s job, is on the same flight. Tiarnan is the man whose ISTC went belly-up for €850m. Unfazed, today he heads up the nation’s Pensions Board. It could only happen in Ireland.

After we reach London, I spot Tiarnan heading for the Docklands Light Railway which charges only £4 to the common rabble for a ticket to central London.

How are the mighty fallen. In the days before he vapourised the €850m, Tiarnan would surely have treated himself to a taxi.

In London at an AGM I overhear several small shareholders comparing notes. They all seem to know each other. Curious at what they are plotting for the meeting, I eavesdrop.

Far from preparing questions for the board, they are swapping the dates and times of upcoming annual meetings, busily entering them in their diaries. One elderly investor asserts that if they all organise their diaries properly they can be guaranteed a good lunch every weekday in the City.

In these times of rare dividends, small investors are suddenly becoming resourceful.

It is harder to work the shareholder lunch circuit in Ireland as there are not enough public companies here with accessible AGMs. Lunches will hardly make up the losses.

So as a possible recession-buster, buy just one share in each company. One share could earn one lunch. Alternatively, put your gatecrashing gear on.

Wednesday

Minister John Gormley comes on to RTE’s Pat Kenny Show to mix it about the bank inquiry. John is the gentlest of ministers but he swallowed the Fianna Fail magic potion on the inquiry — hook, line and sinker.

Hearings will not be in public, it will not cover the events after the bank guarantee and, as Kenny points out, no Oireachtas members will be able to tackle the findings until 2011!

Efforts by supporters of the inquiry to drag in the Murphy report on child sexual abuse as a good example of an effective private inquiry do not wash. The Murphy report was held in private for a very good reason: to protect the victims of sexual abuse from reliving their torture under the gaze of the cameras.

In the banking inquiry the victims are Irish taxpayers entitled to see with their own eyes how the powerful — bankers, politicians, regulators and civil servants — respond to forensic questioning.

Today the DCC report from barrister Bill Shipsey causes consternation. His conclusion raises eyebrows. Jim Flavin, the former DCC boss, is given the benefit of the doubt and a fool’s pardon. Shipsey says Flavin made an “error of judgment” on the insider dealing allegation.

Thursday

I head for Cork with authors Matt Cooper, Pat Leahy and Fintan O’Toole to promote our books in the Opera House. The 900-seat venue fills up, not I suspect so much to hear the ‘Four Angry Men’ sounding off but as an outlet for the widespread public anger at the nation’s economic mess.

The question and answer session sparkles, as ordinary people from all over Cork voice disillusion with all political parties. One man asks why all four whingers are not leading a revolution. Bankers come in for special stick. Next in line are politicians and developers. Two rows from the front sits property developer Owen O’Callaghan, star of the Mahon tribunal. He keeps the head down and does not ask a question.

Nor does the delightful Cork Fine Gael TD Deirdre Clune, sitting a few rows away, despite an opportunity to knock the Government.

The books — Cooper’s Who Really Runs Ireland?, Leahy’s Showtime, O’Toole’s Ship of Fools and my own The Bankers — are all still selling well. They are back in the bookshops after some sold out just before Christmas.

Friday

Back to Dublin on Irish Rail’s InterCity flagship. Breakfast is brilliant — but when the tannoy blares out, thanking us for travelling on Irish Rail, it renews my interest in this monopolistic quango.

There is little alternative to travelling with the dinosaur that has so many questions to answer about the destiny of taxpayers’ €300m a year subsidy and about the dark tales related in the latest consultant’s report which cost the Irish people €500,000.

While CIE’s breakfasts are good, its accounts would constipate an actuary. They were late being submitted. Its directors are politically appointed anonymous figures. Its budget is excessive. It is losing passengers and turnover.

Its minister and only shareholder Noel Dempsey has shown a reluctance to become involved in a full examination of the less transparent activities of this mysterious semi-state monster.

Dempsey is in the news this morning (”waffling” in the words of Michael O’Leary) as our lunatic air traffic controllers try to blow Ireland off the economic map singlehanded. Dempsey is merely rattling his sabre at the Luddites among the air traffic controllers who are refusing to operate new technology.

Dempsey should do more than make noises. If overpaid minorities in key posts hold Ireland to ransom they should, as O’Leary said, be sacked. At a time of economic emergency, we cannot afford to indulge hands-off ministers who tolerate industrial blackmail in the air and out of control spending on railways.

Is Bertie Ahernism alive and well in the Department of Transport?

Brian Cowen must be spitting blood at the governor’s call for an inquiry into what went wrong in the banks. Brian Lenihan’s protegee had poked the Taoiseach in the eye. Initially, Cowen politely rubbished the governor’s idea but it has gained legs galore as every day passes.

Patrick has begun a bit of a bandwagon.

It is probably slightly embarrassing for Patrick that all the opposition parties have joined his crusade. His demand for an inquiry has been politicised.

Last week, Labour’s Pat Rabbitte published a bill enabling an inquiry. Fine Gael leader Enda Kenny lined up right behind him — and even Cowen’s coalition partner, Green Party leader John Gormley, is in the vanguard of those demanding that we find out how the banks managed to bust Ireland.

Cowen is trying to head them off at the pass with some fast footwork. Wait for the formula or “framework” to be announced this week. More ominously, the Government is signalling that nothing will happen immediately. Delay is the currency of politicians.

The Cowen “framework” sounds like a fudge to pacify Gormley and keep Patrick onside.

The last thing that the Government wants is a Central Bank governor who goes walkabout. It is all very well appointing independent guys like Patrick, plucked from academia, to do the nation’s business; but when they start taking all that independent guff seriously, that is a far more serious matter.

Patrick has caused havoc in the Cabinet. Ministers have been paraded out to give all the normal bogus reasons why there should be no immediate inquiry, meaning, of course, that there was never any intention to hold one at all.

“The timing of an inquiry now would be all wrong,” they sing in chorus.

It would prejudice Nama; bankers are too busy; government ministers must keep their eye on the ball; it would damage Ireland’s image abroad. Blah, blah, blah.

Yet, one of their objections carries credibility: the claim that an Oireachtas inquiry would be politicised; that opposition TDs and senators would use it as a platform to bash the Government; that it would become political theatre rather than a forensic probe; that the Taoiseach — as the Minister for Finance at the time of the madness — would be the real target and that the guilty bankers would escape, lost in the politicians’ anxiety to draw blood from their opponents.

On that score — and on that score alone — the critics could be right. In their craving to take lumps out of their rivals, TDs could let the bankers off the hook.

Fortunately, there is an alternative.

Patrick should hold the inquiry.

And he should chair it himself.

If the new governor of the Central Bank was to announce that he was setting up a full- blooded inquiry into the behaviour of the banks, who would dare to boycott it?

He is their regulator. That is his job.

Certainly no bankers would refuse to turn up.

Patrick is, after all, their boss.

Last week at the Bank of Ireland EGM the BoI governor, Pat Molloy, promised to co-operate with any inquiry set up by the Government. Several bankers are making similar sounds, possibly content with the comfort that the Government is hell-bent on delay or dilution.

So let us give them a bit of a nasty surprise.

Let us test their sincerity by allowing their boss, the governor of the Central Bank, to ask the questions.

Patrick Honohan carries no banking baggage. He owes no favours to minister or mandarin.

Cabinet members would hardly boycott their own appointee’s inquiry. All the staff in the Central Bank, employees of the Financial Regulator and all the Department of Finance insiders would be obliged to attend.

Would Bernard McNamara, Paddy Kelly, Sean Dunne and other developers shun the Governor’s initiative? Judging by Bernard’s willingness to give a long interview to RTE’s Mary Wilson on Drivetime last week, he is now happy to present his case to the public. Besides, the inquiry will discover how bankers lent money to builders, not about how the builders went bust.

The builders’ story is simple: they were licensed lunatics, greedily grabbing whatever they could borrow in pursuit of billions.

Besides, the builders are now, like Bernard, all bust. So is the country. So are the banks. So are the small shareholders. The bankers are not. They are, in the words of Labour Finance spokesperson Joan Burton, still living “high on the hog”.

A few weeks ago, Patrick himself suggested that the inquiry should ask social as well as banking questions. Dead on. The first question society should ask is how so many of those who resigned from faltering banks in the last year remain among the richest people in Ireland?

How are so many mandarins still in the same jobs? How many of the staff at the Regulator’s office remain in their safe perches? Is Patrick Neary, the deposed regulator, the fall guy for a totally rotten institution? Were the Revenue Commissioners in the loop?

Would Patrick Honohan’s probe work?

Why not?

He will need help.

Like a panel of untainted experts without an agenda.

Mercifully, there is no longer any need for the mandatory robot from the “social partners”. The customary gig for the militant brother and the fool from Ibec is now a perk of the past. There are plenty of good ex-bankers floating around who retired long before the proverbial property excrement hit the fan.

Professor Niamh Brennan should be asked to step down from her bed of nails as chairman of the Dublin Docklands Development Authority to embark upon this colossal task. Niamh is a former director of Ulster Bank. Her commitment to corporate governance is unmatched.

Tim McCormick, a chartered accountant who left banking after 17 years back in 1990, would be ideal. He understands banking following a distinguished career in the Northern Bank. He carries no personal taint because he made his exit a decade before the property frenzy. He has an MBA, and is today an author with a mind like a razor.

Eddie Hobbs, no favourite of the establishment, would carry credibility among many of the public — especially the bankers’ customers.

Ex-politicians should not be barred. Who better than former Taoiseach Garret FitzGerald? Garret may have a few barmy ideas but his commitment to the truth is hardly in question. He would dig and dig and dig.

Even the bankers could not bellyache about Garret. Was he not the Taoiseach who bailed out AIB’s Insurance Corporation of Ireland in 1985? Let us forgive him for that if he is prepared to rally to the nation’s call once again.

The governor should appoint two members from outside Ireland. There are scores of capable people willing to take on the task.

And even Brian Cowen could not claim that this was a political circus, determined to score points against Fianna Fail.

Neither Patrick Neary nor Sean FitzPatrick could protest that they were not receiving a fair hearing from such rigorous but level-headed people. Nor could such a probe be dubbed a witch-hunt.

Over to you, Patrick.

Of course, the finance minister is blessed with tribal bonds unequalled in Fianna Fail. Of course, his father Brian senior and grandfather Paddy were party icons. Of course, his aunt Mary O’Rourke is a priceless ally in Leinster House. And of course, his brother, Conor, is a minister of state.

Young Brian inherited a political birthright. His path to the Dail’s backbenches was a doddle.

After that, he was dependent on his wits; wits which soon revealed him as the brightest Lenihan ever to pass through the Kildare Street gates.

Before the age of 50, he was thrust into the hottest seat in Ireland.

Brian Lenihan has been acting-Taoiseach for over a year. He has not been leader of Fianna Fail, but he has been Taoiseach de facto, if not de iure. He has carried the lesser title of finance minister, but the reality has been obvious: Lenihan has called the shots in Cabinet.

Brian Cowen, damaged goods because of his catastrophic record in Finance, has wisely deferred to Lenihan in the economic battlefield. Cowen has led Fianna Fail while Lenihan has been digging the country out of his boss’s creation — the economic quagmire.

Tribal credentials alone would never earn a minister, even a Fianna Fail minister, such deference as has been paid to Lenihan. Genuine sympathy for his current illness has certainly prompted a spontaneous outpouring of affection for a man devoid of malice.

But emotion apart, Lenihan has provided welcome evidence that naked ability can still rise to the top of the greasy political pole. Last week one senior minister told me: “Brian is almost unchallenged in Cabinet. He might be asked serious questions on detail, but few will cross swords with him. He simply knows too much about his brief.”

No minister has ever been seen as so indispensable. If Bertie Ahern had resigned when finance minister, the markets might have rejoiced — but few others would have noticed. If Brian Cowen had been moved from the same post, there would not have been a murmur in global dealing rooms — although there could have been uproar in Fianna Fail.

But if Lenihan had stepped down last week, there would have been warnings of woe in the Financial Times and jitters among bond dealers. It is far from fanciful to suggest that a Lenihan resignation would have prompted a wobble in Ireland’s credit rating.

Thank God he didn’t do it.

Until he was cursed with cancer, Lenihan had been lucky. He had escaped the taint of association with the Celtic Tiger madness. Bertie Ahern, threatened by Lenihan’s intellect and ability, had consistently refused to promote him in the glory years. Until 2007, Lenihan was confined to ministries of state or the chair of silly committees by Ahern.

His humiliation was a blessing. He only held a full cabinet position — the Justice brief — for a year before Cowen became Taoiseach. His new leader promptly dumped the toxic portfolio of Finance in his lap.

Thus Lenihan inherited Cowen’s dark legacy.

It has been difficult for Lenihan to flip-flop on nearly all Cowen’s follies without tacitly putting the knife into his predecessor; but he has managed to do exactly that.

He is, by now, a master of Fianna Fail somersaults. While he has pillaged McCreevy’s provident national pension fund and tackled Ahern’s beloved trade unions, he has done a 180-degree U-turn on nearly all of Cowen’s policies.

Yet the rapid U-turn is his greatest achievement to date. He has pioneered measures that destroyed the power of the social partners. The message of his December Budget was clear: either the trade unions ruled or the Government did. It was pay cuts or chaos.

Cowen wanted to play the social partnership game. Lenihan knew that neither the markets nor ordinary Irish people would tolerate yet another fudge dictated by public service unions. Lenihan, not Cowen, conquered.

Cowen will be tolerated as leader of Fianna Fail for the foreseeable future. Lenihan will decide who runs Ireland. And hopefully it will be him. If Cowen, the failure in Finance, challenged Lenihan on key economic issues, he would be laughed to scorn.

It is Lenihan’s intellect, not his political acumen, that has earned him such plaudits.

Lenihan is almost unique in Fianna Fail: he places the merit of argument ahead of political pragmatism.

He is one of the few politicians in Leinster House willing to take the debate outside the chamber. He is notorious for stopping puzzled opposition politicians in the corridors to ask their opinions. He passionately wants to convince those who cross him in debate of the error of their ways. Other ministers simply count the numbers in the Dail and leave it at that.

Such confident conviction has served Lenihan and Ireland particularly well overseas. His presentations to foreign investors have bolstered the NTMA’s efforts to raise billions to keep the nation afloat. His December Budget gave heart to global bond markets; in the eyes of the vultures circling in search of national carcases, he has managed to decouple us from Europe’s most rotten corpse — Greece. Dealers are drawing a clear distinction between the two errant nations. The gap between Greek and Irish borrowing costs is widening, specifically because Ireland’s finance minister is seen as serious.

If Lenihan were to step aside, the prospect of Cowen taking over the portfolio — even temporarily — is too terrifying to contemplate. And none of the other pretenders to the throne would light a candle to him.

Today Lenihan needs luck. Luck with his health and luck with his policies. He has bet the nation on Nama. Those of us who disagree with him on this massive gamble never doubted his commitment to the project. As an opponent of Nama, it is only fair for me to concede that he won the argument in both houses of the Oireachtas. His performance on the Nama Bill in the Seanad was one of the most dazzling displays of parliamentary competence ever exhibited by a minister in that chamber. We, his opponents, were left flat-footed.

He has made many mistakes on the banks, principally allowing them to retrench right under his nose, permitting the insiders to regain power. After proving a genius at removing the old guard, he heeded the advice of the mandarins when approving clones as replacements for the departing oligarchs.

On a personal note, he was recently a more than willing help to me when I was writing The Bankers. Not that he was indiscreet, but he was generous in giving me — as an Oireachtas colleague — plenty of his time to talk to ensure that the book was accurate.

Indeed, time to talk is a rare gift in politics. Brian Lenihan has it in abundance. I have rarely met him without being interrupted by flustered mandarins, reminding the minister that he should be somewhere more important.

He will always smile, raise those dark eyes to heaven, give the mandarins a cheerful wave of the hand and continue the conversation. Self- importance is not part of his make-up.

The Lenihan balance sheet is heavily in credit. God speed for a rapid recovery.