It can be expected that many of those appointed to the boards of State companies will be sitting a little less comfortably after the Minister for Public Enterprise, Ms O'Rourke, sought to replace five of the six Government-appointed directors at Telecom Eireann. One board member has refused to stand down.
The reshuffle is clearly designed to prepare the company for the forthcoming flotation; a successful sale of the company's shares should raise at least £1 billion. Ms O'Rourke decided to act after AIB Capital Markets and Merrill Lynch told her that the appointment of a heavyweight board - with experience of a public limited company and/or a strong pedigree in the telecommunications industry - was the best means of maximising the price at which Telecom shares will be sold. Ms O'Rourke could hardly be faulted for her response. The new chairman, Mr Brian Thompson, described as "capable and focused", is a former vice-chairman of a leading US telecommunications company; it is expected that the other appointments will be similarly designed to reassure the markets in advance of flotation. To her credit, Ms O'Rourke appears motivated solely by what is good for Telecom at this critical juncture in the company's development, although full judgement must await the announcement of the other new board members. Thus far, at least, there is no hint of the party political cronyism which has been such a common feature of other semi-state board appointments by this and previous administrations.
For all that, Ms O'Rourke's action raises serious questions about the manner in which appointments are made to State boards. If those board members who have now been replaced were deemed inadequate to steer the company through a flotation, should they ever have been appointed in the first instance? More generally, is there any reason why the same standards which now govern appointments to Telecom - the need for relevant experience in the sector - should not apply in relation to other State boards? Is the Government satisfied that all board members at Aer Rianta, Coillte or even Aer Lingus (all possible targets for flotation) meet the standards set by AIB and Merill Lynch?
Until now, many board appointments by this Government scarcely meet these new standards. Many well-qualified people have been nominated to state board but there has also been the usual succession of party hacks, appointed primarily as a reward for loyal service. It is, of course, a disgraceful way for any administration to treat the semi-states but it has become part of our political culture. This policy was indefensible at a time when most semi-states enjoyed cosy monopoly status; today, as they face an intensely competitive environment and/or prepare for possible flotation, it makes no commercial sense. Any government with a serious commitment to the semi-states would draw the obvious lessons from the Telecom affair. Appointments to all State boards should be made by a group which is independent of party politics. It is important to reassert first principles; the semi-state sector is not the preserve of any political party, it is (at least until after flotation) the property of the people.