THE “witch-hunt” against former Anglo Irish Bank chairman Seán FitzPatrick is not a helpful response to the current challenges associated with Ireland’s financial sector, Prof Niamh Brennan has said.
Addressing a Galway Chamber of Commerce luncheon yesterday, Prof Brennan said she was not comfortable with “the notion that the country turns on one individual” in this way.
Prof Brennan, who is academic director of the Centre for Corporate Governance at University College Dublin (UCD) and new chairwoman of the Dublin Docklands Authority, was speaking on the subject of corporate governance.
The very fact that Mr FitzPatrick had previously referred to Ireland’s regulatory regime as “corporate McCarthyism” showed that he was “never one to hide his attitudes”, she said.
Nor was it helpful to respond to irregularities with draconian legislation, as this was not necessarily going to protect the public from those who wished to take advantage, Prof Brennan said.
An example of this was the introduction in the US of the “most draconian piece of legislation ever” in the financial sector after the Enron scandal – the 2002 Sarbanes-Oxley Act. The legislation has substantial relevance here, as it applies to every Irish company with a listing in the US or a subsidiary of companies listed in the US.
The legislation had proved to be very costly for companies to impose, Prof Brennan said, yet it had not prevented irregularities from recurring.
One had to be “mindful” that good businesses would observe every regulation, so the consequences of such legislation for those with high standards tended to be much greater than the consequences for the “fly-by-night merchants”. It was the “law of unintended consequences” that those who least deserved it could be hit with the greatest burden.
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