by Shane Ross
By the time the taxman got wind of this confidential tax evasion service, about 400 Irish residents had availed themselves of it. The Revenue approached the Bank of Ireland, which agreed to write to customers saying they’d made an agreement with the Revenue urging them to come out with their hands up. Once the heat was on, the bankers forgot about ‘confidentiality’. There was no honour among thieves.
The petty thieves paid the penalty. The chief thief paid nothing. The taxman collected €105 million from the Bank of Ireland’s Jersey racket alone. Several of the individual settlements came in at over €1 million. Once again, no banker was punished for this obvious attempt to encourage tax evasion.
The Revenue’s success with the Bank of Ireland prompted an investigation into the operations of other Irish banks in Jersey, Guernsey and the Isle of Man, and by March 2005 the authorities had raked in an incredible €812.8 million from Irish residents hiding money in Irish banks overseas. They gathered far more than the earlier collections from DIRT cheats.
Throughout the eighties and nineties the Bank of Ireland continued to stuff its board with the great and the good of Irish business. It replaced an old inner circle with a newer and tighter club of plutocrats. Cross-directorships were legion. At one point in 1998, under Howard Kilroy’s governorship, Smurfits and the Bank of Ireland shared three overlapping directors: Kilroy, the glamorous lawyer Mary Redmond, and former EU commissioner Ray MacSharry shuffled between board meetings of these two leading quoted companies almost as if they had birthrights to seats at all the top tables. In 1995 the relationship with CRH, the international building materials group, was equally incestuous: Bank of Ireland director Tony Barry chaired the CRH board, where he would welcome Bank of Ireland governor Howard and serial director David Kennedy fresh from the last Bank of Ireland board meeting. Later on, former Bank of Ireland chief executive Pat Molloy, already a director of CRH, was to move almost seamlessly from the Court to double up as chairman of the building materials company. This close connection still survives. Today consultant Terry Neill enjoys dual membership of both CRH and Bank of Ireland boards while Tony Barry still sits on the board of DCC along with former Bank of Ireland director Maurice Keane. Both Bank of Ireland men dug in as staunch supporters of DCC executive chairman Jim Flavin, despite an insider dealing verdict against him in the Supreme Court. The club is holding firm.
The Bank of Ireland inner circle is almost impregnable. At times, when certain directors sat around a table, they must have wondered whether they were at meetings of CRH, Smurfits or the Bank of Ireland itself.
Meanwhile, the fortunes of the bank were far from prospering. All the DIRT disgraces, the offshore scams and the rush into excessive directors’ pay were beginning to emerge. The directors were ultimately responsible. If there was any difference between AIB and themselves, it was only a matter of degree.
The other banks were not far behind. National Irish Bank was another to be caught in hot water when it was unmasked in a massive scam and accused of ripping off its customers. Once again the malpractices were not discovered by the regulator, but by journalists, in this case RTÉ’s George Lee and Charlie Bird.
For decades Ireland’s banks have operated in a world where rules were there to be circumvented; where officialdom turned a blind eye to breaches of codes and laws alike; where customers were cattle; where governments underwrote the activities of cowboys in pinstripe suits. Long before the property bubble and the crisis of 2008–9, Ireland was a land where the bankers were almost untouchable and where the banks were run for the bankers.
2. Seanie
Sean FitzPatrick was a little man with a little bank that became a rather big bank. A one-time colleague at Anglo sums him up coldly: ‘He suffered from the “small man” syndrome. And like a lot of small men, he drives a big Merc.’ Another portrays him as South Dublin’s answer to North Dublin’s Charlie Haughey.
Strictly speaking, ‘Seanie’ was not from South Dublin. Born in 1948, he was brought up in Bray just over the Dublin border in County Wicklow. But his background, determination and drive bear close comparisons with the former Taoiseach. Both men were small in stature. Both were self-made. Both cut corners. Both had strong, pushy mothers. And both became super-rich from humble beginnings. FitzPatrick’s father was a small farmer. His mother had been a civil servant but devoted her life to the rearing of young Sean and his elder sister, Joyce.
At school Joyce was far brighter than Sean. In 2001 he told Ivor Kenny – author of Leaders: Conversations with Irish Chief Executives – that she was ‘the apple of my father’s eye. It was difficult growing up in her shadow. I used to envy her.’ Joyce FitzPatrick was later to become a successful academic at UCD and president of the National College of Ireland in Dublin’s International Financial Services Centre; today she chairs the Digital Hub Development Agency. In 2004 she was made a director of CRH, Ireland’s blue-chip global leader in building materials.
After a year at the Loreto Convent in Bray, Sean was sent to Presentation College in his home town. ‘Pres’ was a rare cocktail, a no-fees rugby-playing school. Sean took more readily to the rugby than to the classroom. Tino Cassoni, a lifelong friend whose family have been in the chip business in Bray since 1949, remembers Sean on the rugby pitch: ‘He was small, but an aggressive player. At school I was out-half and he was centre. As a pupil Sean was streetwise rather than academically endowed.’
Sean FitzPatrick’s schooldays offer little hint of the success that he was to enjoy later in life. He gives great credit to his mother Johanna, describing her as ‘dominant, but she would give up anything for her children’. She encouraged financial prudence. His father Michael was more laid back. He would say, ‘If you’ve got money, spend it now.’ His mother was a devout Catholic who took Joyce and Sean to mass. Their father never went with them.
Like others of his age, Sean took jobs during the school holidays. At the age of thirteen he worked in the amusement arcades in Bray and was put in charge of the dodgems. At home he remembers herding the cows with his father, putting the milk into churns and bottles and selling it during the weekend.
FitzPatrick captained the junior and senior Pres rugby teams; he never carried off a Leinster Trophy but reached the semi-final. Maurice Mortell, a former Irish rugby international, coached FitzPatrick in Pres for a while. He remembers him as ‘the type of guy you would always like, invariably with a smile on his face. He was a smashing little player. He always had bottle to burn. He was deeply competitive.’
As evidence of this highly competitive instinct a rugby-playing colleague tells a story about FitzPatrick’s excessive enthusiasm during his days playing for Bective. Sean, normally a centre or a half-back, was on the substitutes bench one Saturday. Bective scored a spectacular try. A reporter turned to Sean – the substitute – and asked him the name of the scorer. ‘Sean FitzPatrick’ was the response.
FitzPatrick was no star at exams. Somewhat surprisingly, in the light of his later dazzling career in Anglo, he merely managed a pass in his Leaving Certificate maths. He picked up only a single honour – in French. Nevertheless he squeezed into University College Dublin and set out to do a Bachelor of Commerce degree. Even before he entered UCD Sean had seen ‘big money’ being earned by chartered accountants and determined to become an accountant.
UCD seems to have been a happy experience. He played plenty of rugby but, despite his limited academic talents, easily passed his annual exams. He told Ivor Kenny that he had been helped by ‘looking hard at the system’ and realizing that ‘college was quite simple if I got all the lecture notes’. He cutely spotted unlikely allies when he befriended the nuns in his classes. ‘The nuns were great at taking notes,’ he recalled. ‘I was the only one who’d have a cup of coffee with them and I ended up with the best set of notes in college.’
Armed with a BComm, Sean set off in search of the big money. In keeping with his modest roots and barely average exam record, Sean did not hit the dizzy heights of the blue bloods
in the accountancy profession. In 1969 he joined Rey nolds McCarron & O’Connor, a middle-ranking company. At the time, the Irish tax and audit world was dominated by the Big Two – Stokes Kennedy Crowley and Craig Gardner – plus a few others. The Big Two often provided suitable material for the boards of the banking elite. Sean did not fit the bill. But he was a master at acting the accountant. He was always dapper in his dress, even when in articles. One fellow worker from those days tells of Sean’s care with his appearance: ‘He was the only one who brought a briefcase to work every day. We often wondered what work or papers he carried in it. One day someone opened it. Inside were ham sandwiches wrapped in yesterday’s Irish Times.’
FitzPatrick’s dream of big money from accountancy suffered an early blow. Of all the trainees in the firm finishing their articles he was the only one to be made redundant. But his self-confidence was unaffected, and he easily found a job in another firm, joining Atkins Chirnside & Co, soon to be part of PricewaterhouseCoopers. One of his colleagues there was Charlie McCreevy, later to become Minister for Finance and a lifelong acquaintance. McCreevy told me about working with the young FitzPatrick: ‘We spent a long time debating whether to stay as accountants and apply for one of the new jobs being advertised inside the firm. We both fancied our chances. We dithered for weeks arguing the pros and cons. Suddenly we both met turning points in our careers at the same time. While we were dithering I was offered an accountancy post in Naas which enabled me to pursue my political career. Sean was tempted by the Irish Bank of Commerce because they were offering both a job and a loan at a 3 per cent discount to the market. It was the cheap mortgage, not the job, that convinced Sean. That decisive moment in our lives sent me on the road to become Minister of Finance and Sean on the first step to the top of the Anglo Irish Bank ladder… In all the years I have known him, he never lost the run of himself. He wasn’t into great big houses, no jets. We used to laugh at him because he always sat at the back of the plane.’
In 1976 Sean landed a job as an accountant at Irish Bank of Commerce, a publicly quoted investment bank with a tiny deposit base and just four employees. Not long afterwards Irish Bank of Commerce was taken over by City of Dublin Bank. Two years later City of Dublin bought Anglo Irish Bank Corporation, known as ‘Little Anglo’. Three small banks with complementary strengths merged. City of Dublin was a finance house, Irish Bank of Commerce an investment bank and Little Anglo a middle-market business bank.
Sean soon became financial controller at Irish Bank of Commerce. And finally, in 1980, with his trademark brazenness, he managed to switch horses from accountant to banker. He had been dispatched to Hay Recruitment consultants to arrange the search for a chief executive for Little Anglo. Instead, he had a brainwave. He demanded the job himself. The board decided to take the chance. Little Anglo had gross assets of less than £500,000 (€625,000).
He gradually established Little Anglo as the most profitable element in the group. He demanded a seat on the group’s board and persuaded City of Dublin chief executive Gerry Murphy – the most outspoken banker in Ireland – that their two banks should be merged, trading as Anglo Irish. In 1986 the new Anglo Irish Bank, known in the business as ‘Big Anglo’, was born. Sean was the chief executive, Gerry Murphy the chairman.
At last, here was Sean’s chance for the ‘big money’. He grabbed it with both hands.
In his early days as chief executive Sean bought a small finance house, a veritable basket case. A partner from the time recalls, ‘I think he bought it for fifty grand. It had five hundred thousand in outstanding loans, all doubtful debts. Sean was in his element. He got into his car and called on every borrower. He knew that once he gathered more than the fifty grand purchase price, he was in the black.’
For a while FitzPatrick was more of a glorified debt collector than a banker. He did deals with all the debtors. ‘He sized up the country rogues to a tee. He could have gone to the Ballinrobe horse show all day,’ recalls the former colleague with admiration. The venture showed a profit.
FitzPatrick’s ruthless streak was tempered by sporadic outbreaks of humanity. Another associate tells of a day when Sean called at the house of a recently widowed woman. She was in tears, and she was broke. Sean headed back to headquarters, drew up a deed of release and wrote off the widow’s debt.
But such tales of compassion are rare. In 2005, speaking to Ivor Kenny for his book Achievers, Sean told a tale against himself. He and a long-time colleague, Peter Killen, were on the debt-collection trail. They knocked on the door of a house in Lucan. The owner had borrowed money from Anglo for a car; FitzPatrick was intent on forcing repayments.
The debtor answered the door with no shoes on, and asked them inside, where he was cutting potatoes. According to FitzPatrick, the man told the two bankers that he could not delay because the kids were coming home from school. He had crashed the car and his wife had rung the assessor. When the assessor arrived the wife fell in love with him and scarpered, leaving him with the kids. She and her lover had taken the car and sold it.
FitzPatrick was not impressed. He blew a fuse and demanded the money. Peter Killen took FitzPatrick to one side and told him to calm down. Killen headed back to Dublin, drew £250 out of the bank and sent it to the local St Vincent de Paul to buy presents for the kids at Christmas. FitzPatrick told Kenny, ‘I would not have supported that then, but I truly learned from it. That was the decency of Peter Killen.’
Initially FitzPatrick did small things to develop the business. He opened at lunchtime, promoting the move by running a celebrated advertisement promoting the bank as a ‘legend in its own lunchtime’. It was a deliberate dig at the other major retail banks, virtually none of which opened at lunchtime. Deeply conservative and under no pressure to change their ways, the established banks continued to dictate terms to their customers rather than vice versa. FitzPatrick was making the point that Anglo was different, new and aggressive.
Working conditions in the traditional banks were the envy of other sectors. Costs were high. Red tape was part of the culture. A job in the bank was a job for life. The new boy on the block was determined to upset the apple cart. The older banks were profoundly unionized and thus presented an easy target for FitzPatrick with his tiny workforce. Offering a foretaste of the later doctrine of Ryanair’s Michael O’Leary, he never allowed trade unions inside the door.
He set about building a team. It was not easy: the best brains in the established banks were hardly eager to leave the cosy womb of the cartel to jump into bed with a buccaneer. Competition between the main banks was largely illusory. Their mortgage and savings rates had a comfortable similarity. Profits increased steadily. Security of tenure, pensions and short hours were the order of the day.
FitzPatrick managed to entice Tiarnan O’Mahoney from IIB, Bill Barrett and Peter Killen from AIB, and John Rowan from accountancy. By 1990 Tom Browne, who would later be among those jockeying for FitzPatrick’s position, had signed up. Browne was to rise rapidly through the ranks to become Head of Dublin Banking in 1997 and a full board member in 2004.
By his own admission FitzPatrick was ruthless at hiring and firing people. It was part of the new culture. His readiness to sack those who had failed contrasted with the ways of other banks, where it was almost impossible for staff members to lose their jobs unless they were caught with their hands in the till.
The new chief at Anglo had an unorthodox style of interviewing. He had utter contempt for academic achievement: it was almost a minus for a candidate to have excelled in exams. He told Ivor Kenny, ‘As an employer, I’m never really interested in what students get academically, nor am I interested in whether they did an arts or a business degree. It’s all about their interpersonal skills, how they shape up in an interview.’ He would sometimes take candidates for a walk around St Stephen’s Green, see how they related to him and award the job on that basis. ‘It may not have been the Harvard way. I have a very healthy disrespect for very bright people. What you need are people who a
re absolutely focused and want to be part of a real team.’
Another former manager at Anglo says that FitzPatrick picked a great team, adding darkly that he ‘always had to be in love with someone, but he was dangerous when he fell out of love’.
Once part of his team was in place, FitzPatrick identified a gap in the market – the same gap spotted a few years earlier by the ill-fated Ken Bates. There was an unsatisfied demand for business loans: enterprises with appetites for as much as £150,000 were not being catered for. He knew that mediumsized companies were finding it difficult to secure loans from the other banks, which were traditionally ultra-cautious. He headed for the gap and filled it.
Elsewhere he took his attack on their pedestrian ways deep into their territory. He poached specially selected slices of their business; he didn’t want current accounts, credit cards or retail business. An opportunist par excellence, he identified clients with great personal wealth and targeted them. He became the ultimate cherry picker. His team was taught to give quick decisions. Where AIB might take five weeks to give a loan verdict, Anglo delivered a result in five hours. FitzPatrick never promised lower interest rates or even cheaper loans, just speedy replies and less red tape.
Poaching business from the cartel was far from plain sailing. Nor was it a life of big desks, corporate hospitality or golf in the K Club. That came later. In the meantime, in the late eighties, FitzPatrick’s team was working hard on building a bigger loan book. Profits from niche banking were climbing. His decision to concentrate on medium-sized businesses was paying off – so much so that Anglo was beginning to attract dark envious mutterings from some of its peers. FitzPatrick was landing a few punches.
