Jan 17th, 2012 by Donagh
This quote is taken from the above interview at around 2:40
Interviewer: “Would you get in and invest in a bank and maybe start one?
DOB: I was on the board of a bank maybe five years ago - it’s too slow moving a business for me - I like fast moving businesses.
Interviewer: But you still think there’s an opportunity there?
Interviewer: Yes, I do.”
I decided to look at to this interview again because of the story about how much Denis O’Brien owes to Anglo Irish Bank or whatever its called these days. This time however, I was paying more attention, as I had missed O’Brien comment about his position on the board of an Irish bank.
This long quote from an April 2011 Sunday Business Post article by Kathleen Barrington provides some interesting background info on O’Brien’s tenure on the board of the Bank of Ireland between 2000 and 2006.
It is disappointing, to say the least, that the board of Bank of Ireland did not follow that protocol when considering the appointment of Denis O’Brien to the court - as Bank of Ireland’s board is known - back in 2000.
If it had, it would have been spared the embarrassment of the Moriarty Tribunal’s findings, that its former director had given IR£900,000 in clandestine payments and loan support to onetime Fine Gael minister Michael Lowry, and that Lowry had delivered the state’s second mobile phone licence for O’Brien.
Bank of Ireland appointed O’Brien to the court following the successful sale of his Esat Telecom business to British Telecom for €2.4 billion, even though there were already serious questions being asked about the manner in which the mobile phone licence had been awarded to the Esat consortium.
There had been complaints from rival bidder Persona as far back as 1996 about the selection process for the competition to obtain the mobile phone licence, which Lowry had awarded to O’Brien’s Esat consortium in 1995.
The Moriarty Tribunal had been set up in September 1997 to inquire into payments to politicians, one of whom was Lowry.
Admittedly, it wasn’t until 2001 that the tribunal began following a specific line of inquiry in relation to a £420,000 Investec/ Woodchester loan involving both O’Brien and Lowry.
But, by 2002, it was abundantly clear from newspaper headlines that O’Brien was a key witness at the Moriarty Tribunal - so much so that some shareholders raised their concerns at the Bank of Ireland agm in 2002.
The then Bank of Ireland governor, Laurence Crowley, asserted that the bank was far ahead of modern standards on corporate governance and that, if any directors were found to have been involved in wrongdoing, they would be removed from the court.
We know, of course, from subsequent media leaks that, behind the scenes, there was some disquiet in relation to O’Brien’s continuing membership of the court.
Specifically, it emerged that TK Whitaker, the eminent public servant and former governor of the Central Bank, had raised concerns with Crowley, but no action was taken.
Instead, on September 15, 2005, O’Brien was promoted to the position of deputy to the new governor Richard Burrows - one of the most responsible and prestigious positions in Irish business.
Two weeks later, Justice Michael Moriarty issued a preliminary ruling which left no doubt that O’Brien was under intense scrutiny in relation to certain payments to Lowry.
But it would be another year before O’Brien finally resigned from the Bank of Ireland in September 2006, citing time constraints due to his other business commitments.
The precise circumstances in which he came to get the post of deputy governor have been the subject of much speculation in business circles.
But in the absence of any on the record comments from the parties involved, the process by which he came to be elevated has remained a closely guarded secret.
Another thing that remains unclear is what role O’Brien played on the court of Bank of Ireland - specifically, whether he took any part in driving lending policy at the bank during the boom years.”
The story of O’Brien owing money to Anglo appeared in the UK edition of the Sunday Times this week. It mentions how he borrowed 510 million to invest in Independent News & Media and then lost 500 million when IN&M got into financial difficulty in 2008 and was forced to do a debt for equity swap when it couldn’t pay up for bonds when they became due. Of course he still owes the millions he borrowed. Here’s the quote from the article which was provided by Broadsheet.ie:
“His most painful investment has been Independent News & Media, whose stable includes the Irish Independent. Between 2006 and 2009 he built a 26% stake at a cost of more than €510m. During that period the group’s newspapers ran articles critical of him.
He engaged in a bitter wrangle over the company’s direction with Sir Tony O’Reilly, the long-time chief executive. O’Brien eventually won his campaign to force out O’Reilly, who retired in 2009.
Financially, however, the business was a disaster for him. The publisher was hit hard by the economic slowdown and in 2009 it was forced into a debt-for-equity swap that virtually wiped out investors.
O’Brien, still the biggest single investor, was left nursing a €500m paper loss. Worse, he would have to look elsewhere to repay Barclays Bank and Anglo Irish Bank, which funded the share spree.”
You have to wonder though why the Irish editor of the Sunday Times is not interested in simply reproducing a story that has already appeared in the UK edition, even if it was half as interesting as this one. According to Broadsheet.ie the Irish Sunday Times editor through twitter declared that its old news - it’s well known that Fitzpatrick and O’Brien are the best of friends - even though no one can find a trace of where these loans have been mentioned anywhere in the Irish media.