A long way from penny apples

FINANCE: The FitzPatrick Tapes: The Rise and Fall of One Man, One Bank and One Country  By Tom Lyons and Brian Carey Penguin Ireland, 266pp. €18.99

SOME HOLD THAT the job of a good journalist is to scoop rivals. Others value the more cerebral skills of joining the dots, collecting a well-researched maze of facts and connecting them coherently. The irritating news is that the authors of The FitzPatrick Tapeshave succeeded at both.

By way of a bonus, Tom Lyons and Brian Carey have also illuminated a controversial truth: golf is much more than a game. Back in 2001 Seán FitzPatrick told the Sunday Business Postthat his favourite sources of information were FT.com and the Economist, "but for the real McCoy you can't beat the 19th hole on the golf course". At the time Anglo Irish Bank was earning a name for exceedingly generous corporate hospitality; for FitzPatrick its highlight was the annual gathering of the new aristocracy it hosted at Druids Glen golf club.

“We used to have a huge golf outing . . . with the top people in Ireland probably. They were huge, enormous, you would have Gerry Gannon, Denis , David Drumm, Kyran McLaughlin [from Davy stockbrokers], Quinlan. Sean Mulryan I am sure would have been there. You name them, all the top names would have been there . . .”

This was the essential difference between Anglo and say, AIB, according to FitzPatrick. “It was not the product – in other words, money. It was the people and the way they dealt with the customer base.” They called it relationship banking.

The Anglo style was to follow the people who were managing the projects rather than the projects. Someone christened it name lending. In a rare admission FitzPatrick says: “In hindsight you could say that probably we went too far.” Too late. Banking rivals started to copy the Anglo model, a practice known as chasing Anglo. Golf provided space for relationships to blossom. FitzPatrick and Willie McAteer played at least three games of golf with Patrick Neary when he was chief executive of the Irish Financial Services Regulatory Authority. They didn’t “really” discuss Anglo while playing, says FitzPatrick. “It was just a general chat. It was a game of golf, a meal, no drinks. Drive home.” Rather like the alcohol industry’s claim that glamorous advertising has no influence, it provokes a question: what’s the point of it all, then? Why fritter away precious money-making time on a golf course?

Talking about his schedule as chief executive, FitzPatrick says : “ was my whole life, everything. I just sold all the time. When I was out with people I was talking about the bank. I was a hail-fellow-well-met . . . I was so different from the other bankers. I wasn’t playing at that. That was the way it was.”

In that context the book’s big scoop – the seven-hour golf round and informal dinner at Druids Glen with Brian Cowen only weeks before the bank guarantee – is significant. FitzPatrick says he “never saw politicians as important in that way”, but he clearly liked rubbing shoulders with celebrity. When Dermot Desmond and Noel Smyth were slugging it out for control of Dunloe Ewart, Desmond invited FitzPatrick to a Blackburn Rovers versus Celtic Uefa Cup match. The starry-eyed banker travelled by private jet and met Alex Ferguson, Rod Stewart and Mark Lawrenson. “We were in the directors’ box, the whole lot . . . It was one celebrity after another.” On the return trip Desmond revealed his motives. Noel Smyth was about to take over the captaincy of the K Club and Desmond needed 30 members’ votes to block it. The man from Anglo said yes.

Others might wince at the juvenility of such golf-club politics, but FitzPatrick’s purpose in telling the story is to demonstrate his business acumen and straight dealing. He acted on both sides of the Dunloe deal (which didn’t appear to trouble him) and also told Smyth straight out that he was going to vote against him at the K Club. “It is the easiest thing in the world: telling the truth straight out. Noel Smyth walked away with a smile on his face and thinking I was a great guy. That was my talent.”

A useful talent, no doubt, for a man who admits he “wasn’t technically good” and who has no regard for “hugely intelligent people” when hiring executives. What he prizes most is an ability to read and connect with people, but there is precious little evidence of his ability to do so here. While preparing for the infamous interview with Marian Finucane, recalls FitzPatrick, his PR advised him to show “humility, every chance I could get”. There was much to be humble about, as it was only a few day after the bank guarantee. But what lingers in the memory from that interview is his refusal to say sorry. Later, congratulatory calls flooded in from David Drumm, former Bank of Ireland chief executive Pat Molloy, Mick Bailey and other developer clients, saying “Anglo had taken too much shite”. FitzPatrick then travelled on to a Greystones golf club to give a speech proposing that universal State pensions and child benefit should be scrapped.

FitzPatrick still sees no problem with any of this. Why should he apologise? “If I didn’t steal tuppence from you, then I can’t apologise even though things have gone very badly for me and for you. I did not do so, therefore how can I apologise?” And the budgeting advice to government? “Lookit . . . I still believe kids’ allowances should not be paid to people who can afford to live without them.”

It still hasn’t occurred to him that the offence might lie in the advocate, not the argument. Here was the poster boy for disgraced bankers, airily prescribing cuts guaranteed to cause further pain. And the news of his disastrous personal borrowings of €129 million hadn’t even emerged then. He says now: “Nothing has come back to haunt me in that I believe everything I said.” That’s because he can justify everything he has done. The spending frenzy was never about greed or a yearning to be Dermot Desmond, apparently. It was about “the deal” , as the high-flyers like to say, and he invested when he “liked the guy”.

No one at Anglo advised him to scale back his risk-taking. “No. No one did that at all. That should have been done,” he says. So, without a hint of irony, the iconic lender of the bubble believes someone should have stopped him. In his frenzied banking life, did he ever appoint anyone familiar with the concept of enough? Anyone brave enough to bell the cat? Even Sean Quinn, that other great risk-taking maverick, who still featured in the Forbes 200 list of the world’s wealthiest people in 2008, was expected to bow before FitzPatrick. FitzPatrick was trotted out for 2007 crisis talks with Quinn because Anglo chief executive David Drumm “felt that Quinn regarded me as a superhuman, as a superhero”. The Anglo duo assured Quinn the bank was in grand shape, so Quinn continued to chase his catastrophic losses on Anglo shares, sure that the markets had it wrong. But FitzPatrick was astonished. “What the f**k was he doing?” asks FitzPatrick now. “He just keeps on going. It was like a drug.” Pot, kettle and black come to mind.

That sense of skewed vision, wilful denial, poor recollection and flawed business philosophies permeates this book. The industry view of Prof Morgan Kelly’s repeated warnings of a crash in 2006 and 2007 makes for spine-chilling reading: “In some ways, actually, the Morgan Kellys who were predicting actually prolonged because people were, you know, really determined to prove him wrong – say, ‘Ah no, that is a whole lot of sh*t, that is not going to happen’.”

Anyone looking for insights into how some of Anglo’s great fiascos evolved will look in vain. He was chairman when €375 million of Anglo money was sunk into a Quinn rescue over five days in March 2008 but says now: “I was a hundred million miles away from it . . . I had no idea what money we had lent to the guy at that stage.” He was “absolutely a million miles” from any liability for the extraordinary Anglo/Irish Life & Permanent manoeuvres that put a highly misleading gloss on Anglo’s year-end figures. He “hadn’t a clue” about Anglo’s financing of the €412 million Irish Glass Bottle/Dublin Docklands Development Authority (DDDA) deal, despite the fact that he was chairman of Anglo and a board member of DDDA at the time. And, he claims, it wasn’t his idea to send his €129 million in loans into Irish Nationwide for a couple of weeks every year, coincidentally around Anglo’s accounting time.

His bafflement at the commentary on that revelation reveals much about his mindset. “They talked about concealment . . . I said, God, yeah, but it wasn’t really concealed, sure the Central Bank knew about it . . . It wasn’t as if the loans weren’t in existence . . . They never went out of existence. They just went out of the bank at the end of the year. Are you trying to tell me that people actually have been misled? And that was the next step then, that it was concealment to mislead people, that people would feel better about the bank not knowing that I had the big loans. I was sort of, just, Jesus Christ, I never thought about that at all. That’s not right at all and it couldn’t be seen as that.”

He had nothing to do with assembling the so-called Maple 10, the big-name bank clients who were leaned on to shore up the shares, and claimed not even to know the names. The authors suggest otherwise.

So he knew nothing and didn’t like to interfere. “David was chief executive now at this stage for the guts of four years” is a consistent thread in the book. But FitzPatrick took an office on the executive floor that visitors had to pass en route to Drumm’s office and, say “friends” of Drumm, used his influence with the board to put pressure on the chief executive. This is denied by FitzPatrick. But, according to the authors, the situation became so serious that Drumm considered having FitzPatrick removed as chairman.

FitzPatrick claims he made the decision to step down himself, although he would certainly have been sacked. It ended with a conference call to the board, and the minutes record that his resignation was accepted “with regret” and “disappointment” regarding the loans. A few weeks later he was playing golf in South Africa.

As with so much else, he “absolutely” had no sense that nationalisation was coming or that hostility was building back home. A colleague rang, advising him not to return to “this f**king kip”. “I said, ‘don’t be ridiculous’.” When he got home he was “hugely shocked”. “I had no sense of the . . . bitterness, and the coldness and the anger and the whole sense of betrayal of this . . . I had no sense of that at all.”

At the end the reader is left wondering why he gave a string of interviews to the authors at all. He told Tom Lyons that he saw it “as some sort of opportunity . . . of giving my side of the story”. Sadly for Seán FitzPatrick, it does exactly that.

Kathy Sheridan is an Irish Timesjournalist