Yet another banker caught out

Yet another banker has been caught out and forced to resign. Sean Fitzpatrick, chairman of Anglo Irish Bank, has resigned in a controversy over ‘inappropriate’ loans to directors involving sums of up to €87 million.

We don’t know yet if Fitzpatrick has done anything illegal, we can only be sure that if he has he will not be made accountable.

Writing in the Irish Times (22nd September 2005) Fitzpatrick is scathing in his criticism on over regulation and the attitude of media reporting on business matters. The article is worth reproducing in full.

Media should spare us the polemics and give us balanced business news

To maintain economic progress, we need fewer laws and a more positive attitude towards business and risk-taking, says Seán Fitzpatrick.

In order to consider now what we should be doing with the fruits of our economic success, we first need to understand what it is we have achieved over the last 15 years.

Let’s cast our minds back a number of years. Many of us will remember the mid-1970s to the mid-1980s. It’s easy, though, to forget the days of negative growth, high unemployment, high taxation, high interest rates, rampant emigration and balance of payment problems.

Ireland wasn’t exactly a great place to do business. We were conservative, flair was hardly in evidence and we lacked business confidence. The pace at which things were done was pedestrian, bureaucracy prevailed, but even worse, there was very little hope for our young and educated, who emigrated in their tens of thousands.

The last decade and a half or so has just blown that all away. It was as if, overnight, we discovered just how good we were. We were bright, well-educated, flexible, good-natured, creative and even hardworking. The Paddy stopped drinking G&Ts before the three-course, three-hour lunch and found Ballygowan, the bowl of soup and the hang sandwich.

We had ideas, and we had balls. We would put in whatever hours and whatever miles it required to take those ideas and turn them into business successes.

The brightest and the best of our school-leavers stopped automatically signing up for the professions.
Commerce faculties, business schools, and property qualifications became trendy and numerous. And all the time as we worked the scene and maximised the moment, the world watched in astonishment. That is no exaggeration.

The authorities on these matters – the economists, the Financial Times, the Wall Street Journal and others – that had initially been sceptical, eventually came to marvel at what we were doing and achieving.

The economic boom has brought some trouble in its wake. It has led to excesses that have the potential to damage the very fabric of our society. On occasions, the confidence that fuelled much of the business dynamism turned to arrogance.

We’ve all seen the cases where the smile became a sneer, and the stride a swagger.

However, what must be acknowledged is that, for all the reservations, some of which are well founded, the Celtic Tiger has been a force for good in Ireland. It has allowed us stretch ourselves and express ourselves in a manner that was unthinkable in the business culture of the recent past.

And what was it that underpinned all of this success? Some trends were crucial, in my opinion:

The profound cultural shift in how we did our business and the pro-business environment that our Government championed.

More specifically, taxation was reduced, inward investment was greatly encouraged and many incentives were used to promote business and enterprise and property development.

The general environment was positive. The men and women who took advantage and who drove the economy onwards year on year were operating in a positive environment where risk-taking was applauded and success rewarded.

In his last budget, the current Minister for Finance referred to economic success as being nothing more than a means to an end – that unless it helped to create a better society it will have been wasted.

The national debate must go to the heart of what the Minister for Finance said. Yes, we must sustain our economic performance, but we must ensure that in another 10 years no such blights exist in the Ireland of 2015. Society as a whole must have benefited to a greater extent than it has to date. And that is the responsibility of us all.

I would like to develop another theme which is also about perspective – but in a different sense.

While our economy continues to outperform most of its peers and the immediate outlook remains very positive, there has been a slowdown in the rate of growth. This means we need to be very conscious of the overall environment for business.

Two things concern me:the move towards more and more regulation; the quite hostile approach towards business by elements in the media.

Maybe it is the start of old age kicking in. Maybe it represents the defensive instincts of a banking sector that feels a little bit hunted at the moment. But maybe, just maybe, the concern is genuinely motivated by a belief that the pronounced moves towards greater control and regulation could squeeze the life out of an economy that has thrived on intuition, imagination and a spirit of adventure.

There are those who appear to want to establish Ireland as the perfect model in corporate policing and regulation. For these people, regulation is paramount.

They want us to go further than a territory such as the US, where the scale of impropriety in business has been truly shocking. We’re moving towards regulatory and compliance barriers that are significantly more stringent than two of our most important trading partners.

But why? What has been done here over the past decade that demands such a reaction? Where is the line-up of failed companies with shareholders who’ve been ripped-off and left bemoaning the lack of due care and attention by feckless directors?

It is true that we’ve had some difficulties. My own industry of banking had the issue of Dirt to deal with and, as an industry, our actions were clearly wrong in the past. We failed to deal with the issues appropriately; we were wrong, and we have paid the price for our misjudgment.

However, what’s important in this context is that the issue of Dirt was capable of being dealt with under existing legislation and under existing procedures. We did not need any new powers.

Overall, we have done very well by Ireland and the Irish economy over the past 15 years. We can be proud of it and we can confidently state our case: we do not need more legislation. What we really need is fewer laws, but which are better and more stringently enforced.

The media has a huge influence in Ireland, and overall, I believe it has taken quite a negative view of Irish business. It remains the case that many in the business press seem always to focus on the negative.

Issues of compliance or general corporate conduct get coverage that is disproportionate to their importance, or the frequency with which they would arise.

This is important because business coverage influences the general public mood. It is a source of information for those from outside who are considering Ireland as a place to do business. It is absolutely correct that where serious wrong-doing has been uncovered it should be exposed.

This must be part of the function of an independent press. (The lack of it has been one of the long-running criticisms of the property media in Ireland and I don’t believe it has served the property sector well.)

So, it’s a question of balance. There are things that should be ventilated more, but what I see from where I am sitting, is a general acceptance by most of the media that business is dodgy or suspect and it needs to be highly regulated.

This theme is there in much of what I read and it needs to be challenged, because it undermines the fundamental that underpins economic growth.

And then there is the occasional descent into farce. RTÉ, which in fairness brings us morning and evening business coverage that is focused on just that – business – recently gave a platform to one of the thousands of financial advisers who trade in Ireland and allowed him sound off on the ills of our economy.

RTÉ chose to give a TV soapbox to Eddie Hobbs, someone who – completely unchecked – was allowed to go on a rant about our economy that targeted almost every stakeholder in that economic success that I referred to earlier. Why?

Everyone knows there have been overruns in infrastructural budgets. We all know that the taxation cocktail hits us particularly hard on certain goods and services and so on,but why, oh why, give this man four weeks of prime time television?

This is not good. I’d genuinely worry that much of the nonsense he peddled would gain common currency and that the wholly unbalanced Hobbsian perspective on Ireland of 2005 would fuel the anger of many of those who have failed to benefit from our economic success thus far.

This could also support a political agenda that is far removed from any of our long-established political parties.Were that to happen RTÉ should be held accountable, as the media generally must be, for the significant influence it has on the economic environment. This whole area needs attention.

To conclude, let me return to the need for us to make sure that we sustain the economic success of the past 15 years, but that in doing so we turn even more attention on the creation of a better and more equitable society in its wake.

That is the job of us all, and the media should prompt and prod us all – politicians, business people, the social partners – to ensure that this happens. Just spare us the polemics and the hyperbole and give us some balance.

Seán Fitzpatrick is chairman of Anglo Irish Bank. This is an edited version of his speech at The Irish Times Property Advertising Awards

© The Irish Times