Inside The World Of Business
Unpalatable truths served up at Ibec president’s dinner
AFTER PASSING through a hail of abuse on their way into the Mansion House, the last thing those attending Ibec’s biennial president’s dinner were expecting was a ticking off from one of their own – the incoming president of the lobby group, no less.
BWG group chief executive Leo Crawford told his audience that it was not only the institutions of state but also business that, in future, “had to avoid the more obvious mistakes, poor policies and questionable behaviours that have allowed us to be so badly shaken”.
After the successful growth model of the late 1990s and early 2000s, he said, Ireland slowly lost its advantage. “We paid ourselves too much . . . We became unfit as a country and as an economy and frankly, some of our business practices became unfit too.”
Unhealthy business behaviour deepened the crisis, he said, and resulted in “a loss of public trust and damage to the reputation of business generally”.
Crawford was not letting anyone escape his clarion call – Government, regulators, accountants, auditors and managers. Non-executive directors, in particular, needed “to properly question, analyse and interrogate business practices and strategy”.
Business – and he included himself – had been notable by its absence from the debate as the financial crisis unfolded, he said, whether for fear of criticism, “merited or otherwise”, or negative headlines.
“We at the top of business cannot give credible leadership if we do not act as responsible corporate citizens; we must raise our game in the areas of governance, risk management and accountability. We cannot be found wanting.”
Crawford wondered at the outset how his grandfather – a man who oversaw the creation of the Irish Congress of Trade Unions and was an early general secretary – would view his new role. Given the tone of his speech – all the more notable for coming after an insipid address from Taoiseach Brian Cowen – the chances are he would recognise something of himself.
Docklands war of reports
The “war of the reports” aspect of the dispute over who should shoulder the blame for the Anglo HQ disaster in the Dublin Docklands is interesting in itself.
A report from Declan Moylan of Mason Hayes + Curran, commissioned by the former board of the Dublin Docklands Development Authority, was a forward-looking work that found that senior executives had a mistaken but genuinely held belief that they had the authority to do a confidential deal in relation to the building.
The executive and developer Liam Carroll signed an agreement concerning planning for the North Lotts building and an associated transfer of land by Carroll to the authority. The perception of bias created by the deal – which wasn’t disclosed to the DDDA board – led the High Court to later quash planning permission for the development.
When a new DDDA chairwoman, Prof Niamh Brennan, was appointed last year, relations between her and Moylan deteriorated over a period of months. His report has never been officially accepted by the board.
However, it commissioned and accepted a report by Declan Brassil Co on planning matters which covered the Anglo HQ debacle.
While the Moylan report did not criticise former chief executive Paul Maloney, the Brassil report said there was a “lack of oversight” from Maloney. He rejected the finding. A more serious finding against him, to do with the deliberate withholding of information from the board, was dropped from the report before it was published.
Both reports are likely to feature in the expected Dáil Public Accounts Committee hearings into the affair, although by the time they happen we may well have a third report, from the comptroller and auditor general John Buckley.
Cause for cautious optimism
This week brought the felicitous news that Ireland will enjoy the greatest recovery rate of any of its euro-zone peers in 2011. The more sceptical among us may have baulked at such an optimistic pronouncement, given that it was issued by Ernst Young, the global accounting firm you may know from such inglorious audits as Anglo Irish Bank and Lehman Brothers.
However, a respected UK consultancy has also weighed in with an upbeat, albeit more conservative, analysis of the economy.
CEBR said this week that the improvement in Ireland’s trade surplus indicated that an export-led recovery may well be materialising. Although key challenges remained in terms of domestic demand conditions in Ireland’s trading partners, internal devaluation appeared to be taking hold, the consultancy firm said.
“Sluggish domestic demand in Ireland and a weak currency will help to keep import growth modest, with the resulting improving trade surplus helping Ireland to bounce back to positive growth by 2011,” it said.
Alan McQuaid, chief economist at Bloxhams, echoed this message yesterday, saying that the export sector will clearly be the “key player” in the Irish recovery story over the next few years.
GDP figures for the first quarter of 2010, due out next Wednesday, will shed further light as to whether a recovery really is coming down the tracks. Economists are forecasting that the data will reveal a quarter-on-quarter rise of 1 per cent, which would mean that Ireland is technically out of recession.
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Podcast
This week’s podcast covers the new banking regulations, the proposed State-guaranteed business loans and puts the British budget in a Northern Ireland context. www.irishtimes.com/ business/podcast
Next Week
A number of key economic indicators are due to be issued next week: the CSO will publish the live register figures and quarterly national accounts on Wednesday while the exchequer returns for June are due on Friday.
