A wealth of experience to count on

THE FRIDAY INTERVIEW - LAURENCE CROWLEYTHERE ARE few examples in Ireland, especially in the smouldering wake of the Celtic Tiger, of true business dignitaries – individuals who have led long, successful and largely unblemished careers, while managing to maintain a high public profile over many years.

Laurence Crowley is about as close as we get to matching the description, having been born into a celebrated accountancy family 74 years ago and living up to his prestigious roots throughout a career that has spanned the gamut of sectors: aviation, utilities, tobacco and, most significantly, banking.

Crowley was appointed a director of Bank of Ireland in 1990, subsequently taking the role of deputy governor and ultimately becoming governor, or chairman, in 2000. He held the post, which he describes as the pinnacle of his career, for half a decade, leaving a gap of a couple of years between his tenure and the most explosive financial disaster in Irish history. He rejects, however, the notion that the seeds of collapse may have been sown while he oversaw the State’s second biggest bank.

“Credit processes were very good when I was there,” he says, in the quiet, respectful tone beyond which he rarely goes. “The people were very switched on and very enthusiastic.”

After Crowley’s tenure expired, he sank into the background of financial services, actively choosing not to interfere with the new regime led by Richard Burrows as governor.

“I thought it was well run and didn’t want to hang around backstage,” he says, pointing to the “wise” decision of President Mary McAleese (a personal friend) to study in Rome when her term ends, rather than staying in the country and potentially upstaging her successor.

Banking was changing dramatically at around this time and Crowley says that he looked in from the outside after 2007 and could see there were some “crazy” things going on.

“It was all still under control in 2006 and 2007,” he says. “It started in maybe 2008.”

Given the scale of the problems that emerged very soon after his departure, does Crowley accept any responsibility for what went wrong?

“One is always sorry to have been there so shortly before it all went pear-shaped,” is as far as he will go.

In the same vein, he is reluctant to apportion blame to individuals, but he acknowledges that “the fundamental thing that changed it was Anglo”, and the smaller bank’s voracious chase of development lending business that persuaded the others to play catch-up. The feeling, as Crowley sees it, was “how dare they come after my lunch?”

As all involved “lost the run of themselves”, Crowley accepts that the usual suspects of Seán Quinn (whose investment in Anglo exposed its precarious and ultimately doomed position), individual bankers and the financial regulator all played important parts in what occurred.

“You cannot believe that the regulator was doing a good job,” he says, suggesting that “it would have happened but only on a minor scale”, if the regulatory approach had been different.

Crowley believes that the way financial institutions were run also contributed to the problem and wonders if there might still be substantial shifts to be made.

He argues that banks need to look at the role of directors generally and at the nature of the decisions and information being brought before the board. Should the board, for example, be required to approve all loans above the €1 million level?

He recalls, in his day, “the philosophy was that management run the bank”. At the same time, there existed a belief that it “wasn’t a good idea” to have ex-bankers on your board, another tenet Crowley now views as senseless, at least in the case of many ex-bankers.

In the present, he reckons Richie Boucher is “doing a good job” as chief executive of Bank of Ireland, and welcomes last month’s stake-building of 34.9 per cent from, among others, Fidelity, Wilbur Ross and Fairfax.

“They’re smart people, I’m told,” he says, welcoming the result that not all of the domestic banking sector is ending up in State hands.

He is a little worried, however, about the role the Government, and its civil service, has in running the banks it controls.

Crowley declares himself a “great admirer” of the civil service. “But they’re not bankers,” he adds, having observed what he considers to be many bankers spending too much time looking over their shoulders of late as they try to do their jobs. He is particularly concerned about the impact of the Government’s banking salary cap, which dictates that chief executives in State-guaranteed banks should be paid no more than €500,000 per year. This compares to the millions drawn down in pay packages during the boom.

Crowley describes this salary cap, along with the €250,000 cap to be applied in semi-States such as Bord Gáis (where he is a director) as “nonsense”. It may be possible to retain existing chief executives with wages at this level but “who is going to succeed them?”, he asks, echoing a point made in July by AIB executive chairman David Hodgkinson, who has been charged with finding a new top man or woman for the bank.

“I’ve always believed that a key influencer in an organisation is not how much people are paid but what they’re rewarded for,” Crowley adds.

A better package in the banks, reflecting the role and the difficulties to be faced by the person holding it, would be €750,000, including incentives, Crowley suggests. As for the semi-states, he reckons he would have been tempted to legally challenge the €250,000 cap if he had been one of the incumbents affected.

Such remuneration, while distant from the sums paid in better times, still lies well beyond the ken of the average worker, the person for whom the economic crash is still a daily, painful reality.

Crowley describes the mood on the street as “panic”, a feeling which he says reflects a much graver situation than that in place during the previous recessions he has experienced.

“It’s worse now,” he says, without hesitation. “We’ve had two pillars of our society taken from under us – the Church and the banks. People are shocked.”

The theory that the descent of the Church should have equal footing with that of the banks is an unusual one but Crowley holds a conviction that society needs both if it is to prosper. The good news is that he expects economic recovery to come within about five years, although this would be contingent on things going well in the wider world.

“We’ve always recovered in the past. I’m sure the 1920s in the US was worse,” he says, describing himself as “sensibly optimistic”.

If any merit is to be awarded to a voice of experience, then Crowley’s views on recovery hold a certain value. Not only has he lived through recessions, but his roles in the corporate world and, more fundamentally, as an insolvency specialist in the 1980s, mean his perspective is arguably better than most.

The youngest of six children, Crowley followed two of his older brothers into Kennedy Crowley, the Dublin accountancy practice his father, Vincent, had established with Peter Kennedy in the uncertain and increasingly nationalistic days of 1919. The practice set a standard for Irish people wanting to do business outside the Anglo-Irish establishment, initially by growing organically and subsequently through merger. A first merger came with a peer, Forsyth Co, with a second, more fundamental move coming in 1972, a few years after Crowley himself joined. This saw the firm became Stokes Kennedy Crowley (SKC) by joining forces with Stokes Bros Pim, a staunchly Anglo-Irish establishment company that had been in existence since 1876.

“We decided we needed to go to the other end of the spectrum,” says Crowley, reflecting on the “two very different cultures” at play in the deal. This delivered its own lessons, with the integration of the two groups teaching the young accountant to “avoid at all costs being slapdash”, a message he clearly still carries with him.

Crowley says he never felt family pressure to achieve, despite growing up in privilege at a time where wealth was even more distant from large swathes of society than it is today. He admits, however, that this may have been different if he hadn’t pushed himself academically, earning a B Comm from UCD and subsequently passing accountancy exams despite having no particular yearning to enter the field. The lack of any “binding affection” for anything else was probably more of a driver in his career choice, he says.

Not long after he joined SKC (now KPMG), Crowley and his brothers noted a growing demand for insolvency services. Initially, the eldest brother and managing partner, Niall (a subsequent chairman at AIB), did a lot of the work but it was soon decided that Laurence would take it on through the establishment of a dedicated team within the company. It was, he says now, a “new concept” at the time.

The work appealed to Crowley, particularly because it was so varied: one day he was mulling over the value of livestock in Leitrim, the next he was dismantling a sophisticated financial and property empire in Dublin.

Describing these days as “fascinating”, Crowley says the trick was always to separate the company from the business and then to work out whether or not there was a business there at all. The problem with today’s building firms, for example, is that they are only as good as their last job and thus contain no inherent long-term value.

The most challenging receivership he ever handled involved a company that had 14,000 pigs, ran a builders’ merchant and made pyjamas, among many other activities.

“I asked them why they made pyjamas,” says Crowley. The slightly baffling answer was that the company employed lots of men, and felt it needed to employ women too, so that the men might have the chance of meeting a wife.

The same receivership brought threats, however: he recalls driving to a rural location and finding the local hotel surrounded because the people had “heard the receiver was coming”. The guard in charge said he couldn’t guarantee Crowley’s security, although the receiver had never presumed he would.

There were happy moments too, although they often arose in surprising circumstances. Crowley remembers one occasion, again in the country, where he suddenly found himself surrounded by a group of men, feeling mildly threatened. The men began to encourage him to visit a local home so that he could meet a child of one of the workers from the company that had been rescued: alarm bells started to ring at this stage but Crowley felt the circumstances left him little option but to make the visit. When he arrived at the home, a woman stood in the doorway with an infant in her arms, raising yet more questions for Crowley. It turned out the child had been born as the receivership was being completed and its parents had been so happy with the outcome that they had named their new baby Laurence.

Crowley wonders how, in today’s world of more numerous and potentially more complicated restructurings, the insolvency practitioners can possibly manage all the work that seems to be falling on their shoulders.

“Your name is on the docket,” he says, outlining the responsibility that comes with being appointed as receiver or examiner. He, for example, always made sure he personally did any necessary firing and spent the first day in his role talking to staff on the shop floor rather than company owners.

“They were much relieved now that they had a voice.”

Inevitably, the nature of the work brought Crowley into situations he might not have relished on a professional basis. Notably, there was the high-profile Gallagher Group, which collapsed in 1982 after its top man Patrick Gallagher had over-extended his hand as one of the State’s first property developers.

Two years later, in his role as receiver, Crowley discovered a £300,000 payment made some years before by Mr Gallagher to then Taoiseach Charles Haughey. The Revenue Commissioners had been unaware of the transfer, until Mr Crowley informed its chairman, Séamus Páircéir, of its existence. A “brilliant letter” came back in return, outlining Páircéir’s belief that it wasn’t in the national interests to pursue Mr Haughey through the courts but that the liability should instead be assessed as a capital gain. A lengthy pursuit ensued, with the receiver and man who had kicked it all off standing by as polite observer.

In the end, Crowley decided he had done enough accountancy and, with offers of non-executive roles in no short supply, he exited the business, with no regrets.

“I made a decision to branch out,” he says, describing the choice as “take a chance or stay on”.

Through the decades, his directorship days have seen him sit on boards as diverse as tobacco company PJ Carroll, Aer Lingus, Elan, Bord Gáis, payments company Realex, the ESRI, the Gate Theatre and the Smurfit Business School, as well as Bank of Ireland.

The level of his non-executive experience makes him something of an expert on Irish compliance, which he argues is far from being as poor as some would suggest.

Last year, a report by think tank Tasc found that between 2005 and 2007, Crowley was one of 11 directors in the country’s top 40 private companies and State-owned bodies who had 10 or more links – via multiple directorships – to other companies in the network.

Crowley says not all directorships can be compared, with his time at Carrolls seeing him on the board of 25 subsidiaries which were essentially defunct. Equally, he is in no way apologetic for the multiple links traditionally seen on Irish boards.

“You’d normally be hesitant to choose somebody you’d never heard of,” he says of the process of appointing new directors. Choosing the wrong person means “risking the cohesiveness of the board”, he adds. He will acknowledge that a line was crossed in some companies in the past but does not view this as “part of the problem” in the downfall of the economy, unlike, say, the bankers.

In these roles, the old rule about not being “slapdash” is again high in his mind.

“I do agree with the point that you can’t spend life going from one board meeting to another. There is so much required that you need to give it a lot of time.”

And for Crowley, as with insolvency, non-executive roles have not always been fun. His chairmanship at Century Radio led to a Mahon Tribunal appearance while at Elan, there was no pleasure in having to dismiss both the chief executive and the chief financial officer, both of whom had been his accountancy partners.

As receiver of exploration firm Bula, meanwhile, he found himself embroiled in a painful legal saga that spanned four decades. More recently, as chair of the organisation that ran the Your Country, Your Call contest, he has had to face off criticism over the role of State funds in the venture and in relation to general governance. For the record, he says Government money was initially promised but budgetary constraints meant it was never delivered, leaving the scheme to be funded privately.

The Your Country, Your Call involvement, as with Crowley’s chairmanship of the President’s Gaisce awards, comes in part as a result of his friendship with the McAleeses, initially forged when Martin McAleese worked as an accountant with Crowley many moons ago. The relationship saw Crowley campaign for Mary McAleese in her effort to become president and, this time around, he expects to offer assistance to Mary Davis, a candidate with whom he has also been impressed.

He is interested in politics, although he tends to keep quiet during national elections. “I would think well of it,” is his understated verdict on the Fine Gael-Labour Coalition, while he describes its predecessor as a “very poor government”, with the exception of Brian Lenihan’s role as minister for finance.

On a more general policy note, Crowley warns that if cuts to personal income are pushed much further, existing levels of disenchantment could reach crisis levels. He admits that if he was many years younger, he might be sitting on a beach on Australia rather than sticking around to experience austerity.

Despite never having experienced shortages or money worries himself, Crowley says his parents always made sure that their children understood that their position of privilege brought with it a responsibility to “give something back”. This explains his involvement with so many not-for-profit groups, his promotion of the peace process in the North and his under-the-radar roles in smaller organisations such as the Middletown Centre for Autism in Co Armagh. It also probably explains why he sees the establishment of the Smurfit Business School at UCD as one of his career highlights, and an area in which he has identified “unfinished business”, such as his vision of rationalising all graduate Irish business schools into one.

To say that Crowley has not suffered hardship of his own would, however, be strongly inaccurate. Some 32 years ago, when the couple’s son was just four years old, his wife Mella suffered paralysis after a life-threatening fall from a horse.

The accident meant she required intensive medical care for many months, at a time when Crowley’s career was not designed to accommodate such a pressing commitment to his family.

“Everybody has problems,” he says now, clearly understating the awfulness of the situation. Instead of faltering, Crowley simply adapted, working until 5pm, spending two hours with his young son before visiting his wife and then going back to work as night fell. “I drove very fast between meetings,” he adds, lightening the tone as is his habit. The family did eventually emerge and now Crowley’s son has had three children of his own, their grandfather full of pride as he fishes a photograph of the two eldest from his wallet.

As for Mella, her husband was recently very touched when Queen Elizabeth bent down at the Irish State dinner held in her honour so that she could properly greet her. The moment was a brief one, but for Crowley and his keen sense of honour, public service and protocol, it meant more than the monarch could have realised.

The Queen’s visit was a highlight for Crowley who, as he enters his mid-70s, is showing few signs of reducing his still-heavy workload.

“As time passes and terms of office are completed, one’s workload usually reduces,” is as much as he will say on the matter.