Gary McGann: ‘It’s not what you achieve but how you achieve it’

Gold Medal recipient, retired Smurfit chief and former Anglo director is as busy as ever

Gary McGann, chairman of Paddy Power: ‘It’s people, the talent you left embedded, that’s what matters most.’ Photograph: Eric Luke/The Irish Times

Gary McGann, chairman of Paddy Power: ‘It’s people, the talent you left embedded, that’s what matters most.’ Photograph: Eric Luke/The Irish Times

 

Gary McGann strolls around the president’s room at the RDS, pointing to familiar faces from decades-old photographs on the walls. “Ah, I know him too,” he says, spotting another. “He actually lived near us when I was growing up. Except he lived in one of the big houses, and we . . . well we didn’t.”

He pauses for a moment and smiles to himself, probably at how life turned out.

In his 47-year career, McGann has run three of Ireland’s best-known companies: Gilbey’s, Aer Lingus and Smurfit Kappa. He currently chairs one of the most dynamic companies of the current generation – Paddy Power – and he has been director of scores of others, including the most notorious, Anglo Irish Bank.

He has been president of the employers’ lobby Ibec, chairman of Dublin Airport Authority, and he has also served on the influential European Round Table of Industrialists. This year’s recipient of the RDS Gold Medal for Industry, McGann is one of the most accomplished Irish corporate executives of his generation. He has the track record, the rewards and also the scars to prove it. Like his old neighbour, it is McGann who now lives in one of the big houses.

Sipping tea in the RDS reviewing his career, he is considered and judicious. But, at times, he is also noticeably sombre. He can sometimes be cautious in media interviews. But it isn’t that.

The previous day, one of his closest friends, former Enterprise Ireland chairman Hugh Cooney, died of cancer. As the interview wears on and he eases into a reflective mood, McGann speaks warmly of his old friend, a “special guy”. He is much too decorous to become visibly upset. But the occasional hushed tone says plenty.

Two months into his supposed retirement from Smurfit Kappa, McGann is busier than ever. Among his slew of directorships, he is steering the Paddy Power board as it prepares for a €7.5 billion mega-merger with Betfair. He also recently pricked the wider public’s consciousness when he delivered his evidence to the Banking Inquiry about the collapse of Anglo.

Business life, as much as any other sort, is a compendium of highs and lows.

 

Valued judgments

McGann once told me people never remember you for what you have done, only for what you leave behind. What will he leave behind?

“People – the most important thing. Deals, IPOs, transactions, they’re all just moments in time. It’s people, the talent you left embedded, that’s what matters most.”

Does he ever consider what people’s opinion might be of him?

“The people whose judgments I value, the people I cherish dearly, I know what they think. Those people are generous, perhaps too generous.”

What about the other people, the Aer Lingus critics, the Anglo critics?

“I’ve heard a number of things. Some people said I was disloyal because of the number of companies I’ve moved around. I suppose it’s not that unfair, depending upon how you define loyalty. But I think it’s loyal to do what you can for people and then stop when you’re not able to do it for them any more.”

The most important thing, McGann says, is to be able to live with your own conscience. It’s not just what you achieve, “but how you achieve it” that counts.

“The second biggest thing is how your family perceive you. If I couldn’t look them in the eye over whatever I did or achieved, none of it would matter.”

Turn the clock back almost a half century. Far from a budding business stalwart, McGann hadn’t a clue what he wanted to do. The son of hard-working west of Ireland parents who moved to Dublin – his father worked in Independent News & Media while his mother was a nurse – he applied for zoology at UCD. It was a mistake.

“Three months in, they gave me a scalpel to cut a rabbit. I couldn’t do it. The professor said you have to cut or go. So I had to go. It was total squeamishness. To this day, even a barber in a white coat upsets me.”

McGann joined the Civil Service and ended up at the Comptroller and Auditor General’s office, where he worked on audits of State-owned organisations.

He studied Irish and history at night while working days, still unsure of what he really wanted to do. He showed financial ability at the C&AG, so he started training to be an accountant.

After seven years as a civil servant, he moved to Athlone to work for technology company Ericsson, where he finished his accountancy training. The 13 years he spent in the Midlands, where he eventually became Ericsson’s finance chief, were formative for McGann. He learned international management techniques and “how to look under the bonnet of a company”.

“I’m a failed accountant, really. I was never that great at it technically. But I understood what it all meant.”

In 1988, with a young family in tow, he moved back to Dublin to become chief financial officer of the drinks company Gilbey’s of Ireland, which owned top brands such as Bailey’s. There, McGann learned about branding and how to woo consumers. In 1991 he became chief executive, his first top job.

Three years later, he was headhunted to be chief executive of Aer Lingus, whose directors included Jefferson Smurfit executive Paddy Wright. Like Cooney, who he also met during this period, Wright became a huge influence on McGann.

 

Back from the brink

Ireland stood on the verge of prosperity in 1994, but Aer Lingus, as was often its wont, was on the verge of bankruptcy. McGann steered it back from the brink with a number of decisive moves, such as initiating the amputation of Team Aer Lingus.

 

Determined and ambitious, he eventually became frustrated at the State-owned airline.

“I was brought in to turn it around. I was to join the board, but that was never delivered. And there was an unwritten understanding I would take it private. But it later became clear to me that these things were not going to happen.”

After more than four years, McGann announced he was leaving to become chief financial officer of Jefferson Smurfit, the packaging giant run by Michael Smurfit. He gave several months notice, but transport minister Mary O’Rourke asked him to leave straight away. It still irritates him 17 years on.

“She was put on the spot by the unions. They told her I was a lame duck CEO. I can understand why she did it, but I thought it was wrong. But I bear her no ill will. I made a choice and you take the lumps.”

An acquaintance of his, he says, once accused him of “taking 30 pieces of silver” over the manner in which he left the semi-State.

“There seemed to be this perception I had jumped ship. But that comment came from someone whose judgment I don’t value anyway, a guy who is wont to engage his mouth before he engages his brain.”

Smurfit, one of Ireland’s truly great international businesses, was always seen as a company where talented executives did well.

It was Wright who had put McGann in touch with Michael Smurfit, the jet-setting family patriarch who ran the group.

“Working with him was unpredictable, challenging all the way, feisty at times. He had courage, he was a great dealmaker. I was more structured. I wouldn’t dare suggest I’m in his league, but we had complementary skills. Process was a pain in the ass for him, but you need process to run a company.”

McGann took over as chief executive in 2002 when it was taken private by US fund Madison Dearborn for €3.5 billion and its patriarch left. McGann totally overhauled its global business over the next few years, retuning it as a modern multinational and engaging in debt-fuelled acquisitions. He built a giant.

In 2005, it merged with Dutch company Kappa, creating a global powerhouse which today has more than 40,000 staff. “A marriage made in heaven,” says McGann. After an extended honeymoon for the merger, the financial crash made things a bit more hellish.

McGann rates 2007 and 2008 as among the worst years of his life. “First of all, I lost one of my closest friends when Paddy Wright died. That was a monumental issue for me. Then Anglo got into difficulties and we had the issue with the Smurfit share price. Combine those together and it wasn’t the best of times.”

The darkness was only punctured by the blazing light that came with the birth of his first grand-daughter.

McGann had floated Smurfit once again in March 2007 at €16.50 and three months later it was more than €20. Then the credit crunch arrived, debt went out of fashion and, with it, Smurfit’s balance sheet. By mid-2008 the share price was a little over €1.

Did he consider quitting?

“No. It was a substantially good business and it was never in danger, although maybe there were things we could have done earlier. A more pertinent question would be, did anyone ever think of saying to me: you’re out. I felt it was possible [that he’d get sacked]. But I had a great board, they understood the issues.”

McGann held on, the company addressed its €6 billion debt pile and it won investors over once again. McGann was at the wheel when the problems arose, but he fixed them all. He has left Smurfit Kappa in fine shape.

His experience with Anglo Irish Bank tracks a different arc. There is no such tale of redemption with the toxic bank, which has tainted almost all who came in contact with it.

Wright was also a director at the bank and McGann joined him on the board in 2004, serving on its audit committee. Does he regret joining Anglo? Which way to the woods, says the bear.

“If I knew what was going to happen, I certainly wouldn’t have done it. There is no aspect of that experience that has any redeeming features.”

McGann, wrestling with himself, cuts off his own answer.

“Sorry, that’s unfair. There were some good people. Whether we got ahead or behind of ourselves, that’s a different matter. I don’t regret everything about it, but I regret the experience as a whole. I regret that some of the lessons maybe should have been learned earlier. I regret that my family got dragged into it.”

Given the gravity of what happened, the intense public focus and anger is something he accepts, he says: “It’s the reality of life, but it’s tough for people who care about you.”

At the banking inquiry, some members of the committee expressed incredulity at McGann’s evidence that banking matters were not discussed during two 2008 meetings with Brian Cowen, including the one that incorporated a game of golf at Druid’s Glen in Wicklow.

Anglo was in mortal danger. It seems illogical to many that banking wasn’t discussed at meetings with the finance minister and future taoiseach.

“There’s nothing strange about it. One or two inquiry members asked if I really expected people to believe it. My point is, someone had put me on oath (at the inquiry). And then you ask if people can believe it? I was on oath.”

For two years until 2006, McGann was also president of Ibec. It’s a bit like being lord mayor of the business community, a reflection of his status. His president’s dinner speech in 2006 is a classic of its time. It is a call to arms to rebuff begrudgery. There is no sense in the speech of the devestating problems stored up in the Irish economy. Not that many had recognised them.

McGann, to his credit, now acknowledges the blinkered worldview of the time and that he was a part of it.

“If I learned anything, I learned to listen more carefully. There was more talking than listening done in those days. It took courage to speak against the motion back then. There is no doubt that we were all miscalling certain things at that point, almost to the point of delusion.”

McGann recalls leading an Ibec delegation in to see a “certain minister for finance” prior to a budget. He doesn’t say, but it must have been Cowen.

The delegation had a list of demands for the minister, but they didn’t consider how the country might pay for them. Unprompted, McGann says he recalls the purpose of the meeting to his “shame”.

“We made a one-sided submission. Here we were, a bunch of business people, talking about expenditure and liabilities, and we didn’t define where the income and the assets we going to come from. That was disgraceful on our part.”

He worries about the slippage of standards in education and also whether Irish society will remain supportive of wealth creation.

McGann, by dint of his success, has consistently been one of the highest-paid executives in the country, with a total pay package last year of €7.2 million from Smurfit Kappa alone.

He also picks up fees from myriad other directorships, including Aon and Green Reit, Sisk builders and the recently floated Multi-Packaging Solutions.

“We need to get it right. Risk and courage needs to be rewarded properly. But then tax and distribute appropriately. I’m not a capitalist.”

That sounds like a stretch, but McGann is adamant.

“Not the sort of capitalism where you make and keep a fortune and to hell with the rest. I’m not of that ilk. But the day we think profit or success are bad words, that won’t be a good thing either.”

With the award of the RDS gold medal, McGann has emulated his old boss Michael Smurfit, a past recipient.

Smurfit had his ups and downs. So, too, has McGann. Often, it is such undulations that make a journey interesting. And McGann’s long and interesting journey is certainly one worth commemorating.

 

CV

Name: Gary McGann

Age: 65

Lives: Dublin

Family: Married, three daughters, two granddaughters.

Something we might expect: When he has spare time, he likes rugby and golf. His golf handicap is 14 but he rarely plays to it.

Something that might surprise: Rather than playing golf or watching rugby, he really prefers spending time with his two granddaughters, Zoe and Ava, to anything else. Together with his “other four girls” – his wife and daughters – they are “the joys of my life”