|Anglo Irish Bank was nationalised in January 2009; Peter Fitzgerald remained on the public payroll until February 2013 when the rump former builders' bank was liquidated. John Bowe left in 2012. They remained among Ireland's top earners despite the bust.|
Anglo Irish Bank: Ireland is second to Greece in the rankings of the burden of sovereign debt but when household debt is included, we are the biggest debtor of the western world as a ratio of economic output. So when tapes of conversations between two former senior managers of the bank that accounted for more than €30bn of the additional crisis-related sovereign debt or about 23% of GNP (gross national product), were published this week and showed them to be openly disparaging the State that was saving them, public outrage was understandable.
However, what is extraordinary is that Peter Fitzgerald, who had responsibility for retail banking until the bank was nationalised in January 2009, remained on the public payroll for four years at an exorbitant salary, handling public relations at the defunct firm while John Bowe left in 2012.
What is also striking is that despite the public outrage and the huge damage of the crash, little has changed in reforming a failed governance system.
Most of the older men who now run Irish institutions, had fallen for the bubble fantasy that the free lunch had been invented. The conservative mindset extends to the traditional media.
Support for change in Ireland is a minority interest and the status quo endures.
This month, a leaked document, revealed the frustration of the European Commission with the default glacial speed of reform, if at all:
Ireland's slow-motion government slammed by European Commission
Google "Irish+reform" and the Irish Reform Act 1832 heads the results listing. It's indeed appropriate that a nineteenth century British Act of Parliament should head the ranking and in 1986, the late UCD constitutional law professor and Fine Gael TD, John M. Kelly, said in 'The Sunday Tribune' in October 1986: "Ireland's political and official rulers have largely behaved like a crew of maintenance engineers, just keeping a lot of old British structures and plant ticking over... The challenge is to evolve structures - - within which the people can be drawn to individual and community responsibility for their own development."
One of the biggest Irish indigenous companies was the defunct former Anglo Irish Bank until it was liquidated last February as part of a deal with the European Union on restructuring promissory note debt.
This shuttered rump of a bank was not open for business but had 1,000 staff, 7 executives earning annual salary packages of €500,000+ and 36 other employees being paid more than €200,000. The prime minister of the Netherlands earns €144,000!
Earlier in 2012, Michael Noonan, finance minister, asked Alan Dukes, then chairman of the renamed Irish Bank Resolution Corporation, to cut pay by 15%. He was told where to get off.
Dukes, a former finance minister, had a State pension worth €100,645, in addition to the €150,000 in fees for his part-time directorship - handy earners in a bankrupt country.
To compound the unreality, Eamon Gilmore, tánaiste/ deputy prime minister, described the pay levels at the former bank as "unacceptable" and said the Government had appointed consultants to advise on how wage levels at IBRC could be reduced!
Who the hell owned the former bank?
Gilmore said on Wednesday this week, that if the tape disclosures had been made at a critical stage of the Government’s negotiations with the ECB on the promissory notes, the outcome may have been very seriously compromised.
“I think coverage of this kind does do damage to our international reputation, I am very glad that we didn’t have this coverage, for example, in the week or two leading into the conclusion of our negotiations with European authorities on the promissory note.”
However, long-term what will matter is the commitment to change at home and the former communist is very unlikely to push for significant reforms.
Background on the September 2008 bank guarantee is here:
Last rites read for Anglo Irish Bank - - the damned builders' bank
Links to 'Irish Independent' articles on the Anglo tapes: Monday; Tuesday; Wednesday; Thursday.
Greece's restructured sovereign debt level of 169% of GDP at the end of March 2013 is reported here; Irish sovereign debt data is here (Page 54).
Why GNP (ex-recent distortions) is a better denominator than GDP to get a realistic measure of Ireland's debt burden at 159% of GNP - - see here.
In 2012, Irish general government interest expenditure as a percentage of general government revenues amounted to 10.8%. In 2007, the equivalent figure was just 2.8%. By 2016, based on current assumptions regarding the evolution of revenues, debt levels and interest rates on government borrow ing, the equivalent of some 13.9% of general government revenues will be required for debt servicing.
Household debt chart for European countries, at lower end of page here.
Irish household debt as a ratio of GNP is 155% compared with Greece's ratio of 55% of GDP.
Irish Economy 2013: Bad loans ratio at 25% in Ireland and Greece; 11% in Spain
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