O'Connor move exposes gulf of dissent at Bord na Mona

WITHIN weeks of Pat Dineen's appointment as chairman of Bord na Mona last September, it became apparent to insiders that he was not going to get on with the managing director.

The millionaire insurance broker and former Irish steel chairman had a very different style to his predecessor, the easy-going, former Labour politician and eurocrat, Brendan Halligan. One area in which their different styles was quickly manifested was in how they felt the company's managing director, Dr Eddie O'Connor, should be paid.

As Mr Dineen put it at the very start of the 12 week-old controversy over Dr O'Connor's remuneration: "following my appointment as chairman in September last I had concerns about certain elements of the managing director's remuneration. In November 1995 I instructed the managing director to rectify the position..."

Mr Dineen's concerns ultimately led to two highly publicised investigations into Dr O'Connor's pay and his subsequent suspension this week, pending the outcome of a further internal review. It has also led to allegations from the company's unions that Dr O'Connor's ousting from the driving seat in Bord na Mona was about more than just the fact that his pay package breached Government guidelines.

According to Dr O'Connor: "Mr Dineen was instructed to cut overheads by half and to get the company back to the basics of producing turf and that the company was to be discouraged from further diversification. I challenged that."

This week Mr Lowry gave his version of the Government's position. As part of the deal agreed last May under which the company would receive a Pounds 123 million equity injection, the company was told that it would have to substantially reduce its corporate overheads. "This was communicated to the previous chairman Mr Halligan and there is no question of any change in strategy when Mr Dineen was appointed," he said. Mr Lowry also said that the Government told the company last May that it must concentrate on maximising the productivity of its core activities and justify any other activities.

Such an agenda was almost guaranteed to bring the chairman into conflict with Dr O'Connor who made no secret of his expansionist ambitions for the company. The prospect for conflict over the company's future direction was heightened by the securing of the Pounds 123 million equity injection in the company; the availability of funds meant that Bord na Mona was at last in a position to undertake some of these projects.

Dr O'Connor was the driver behind the Europeat project to build a new Pounds 100 million peat-burning power station in the midlands. The building of the plant, coupled with a rebalancing of the subsidised price paid by the ESB for peat would secure the future of Bord na Mona's core activity; digging peat for the ESB.

With its core business on a sound long-term footing and its balance sheet restored with a Pounds 123 million cash injection, Bord na Mona would finally be in a position to examine some hitherto closed options. These included the raising of its own finance to fund acquisitions and a partial privatisation.

The Department of Transport Energy and Communications was known, for some time, to have been unenthusiastic about some of Dr O'Connor's more ambitious plans.

The acquisition by Bord na Mona of the solid fuels distribution company CDL in August 1995 for Pounds 4.5 million is understood to have been undertaken in the face of reservations from the Department and its secretary, Mr John Loughrey. Earlier, in 1994, Kildare Street gave the thumbs down to Dr O'Connor's plans to expand the Celtic Roots range of bog oak giftwear. A letter from the Department at the time gives an insight into its attitude towards Bord na Mona: "The Department is of the opinion that the involvement of Bord na Mona in this venture is most likely to be a potential drain on scarce resources in a period when the board is required to make every effort to reduce costs. Trying to manage an inherently unprofitable subsidiary is also a diversion of management time from its core activity".

The letter gives a flavour of the tension that existed between Dr O'Connor and the Department prior to Mr Dineen's appointment. The drive and enthusiasm that had enabled Dr O'Connor to revive the fortunes of the loss- making company also had the capacity to irritate his superiors. The Government's May 1995 mandate that corporate overheads be cut, raised temperatures further as did Dr O'Connor's frequent critical public comments about the "dead hand" of Government.

Mr Dineen's attempts to carry out the cost-cutting mandate inherited by him from his predecessor soon brought him into conflict with Dr O'Connor. The new chairman sought to establish a finance sub-committee of the board that would not automatically include Dr O'Connor and members of senior management. Dr O'Connor claims to have challenged this move and obtained legal advice to support his challenge.

The chairman's decision in February to ask Price Waterhouse to tabulate Dr O'Connor's remuneration package could not have helped the already strained relationship.

The boardroom tensions were confirmed in late April when the news of the investigation was leaked to the media.

Subsequent leaking of documents damaging to Dr O'Connor, such as the Price Waterhouse report and a supplementary report commissioned by the board, have given credence to Dr O'Connor's assertions that since April he has been the victim of a "dishonest and concerted attempt to ruin my reputation".

Dr O'Connor's belief that he was being. targeted as part of larger campaign aimed at clipping the wings of Bord na Mona have found support amongst some of the company's directors, the company's unions and, naturally enough, with opposition politicians.

The case was strong enough to provoke a response from Mr Lowry, who has twice reiterated his support for Bord na Mona. He pointed out that he was the minister who has secured the Pounds 123 million equity injection and was enthusiastically behind the Europeat project. He also announced that consultants were to be appointed to design the competition for the construction and running of the new power plant.

By last Monday the suggestion that there was some other agenda at work was a key feature of Dr O'Connor's written response that was circulated to Cabinet ministers. It was also the thrust of a statement broadly supportive of Dr O'Connor that was issued by the ICTU group of unions at the company.

With the whole affair destined to end up in courts - unless there is a settlement package - the question of whether there was a hidden agenda at work or just a ruthless boardroom battle being fought will undoubtedly simmer for the rest of the summer.