The financial crisis that erupted in 2008 with the provision of the guarantee on €440bn of liabilities at our banks in September 2008 gave rise to a new beast in the Irish board room – the public interest director. In recent weeks, with revelations over salaries and pensions in state-guaranteed and bailed-out banks, public interest directors have come into focus as we wonder what exactly they do. They came in for criticism in 2010 when it emerged that millions were being paid in bonuses at some of the covered banks. This blogpost should tell you everything you need know about them, including who they are, what they’re paid and what they’re supposed to be doing – the information is sourced from parliamentary questions tabled by the Sinn Fein finance spokesperson Pearse Doherty yesterday which were responded to by Minister for Finance Michael Noonan – the full PQs may be available online later. Here’s the summary together with salaries. In total, between 2009-2011 they have cost us €2m. You will not be happy with what you read.
Who are they? In alphabetic surname order.
Declan Collier is a public interest at AIB. He is the current CEO of the Dublin Airport Authority where his €106,000 bonus in 2010 raised eyebrows as it came on top of a €506,000 package comprising salary of €309,000 and pension contribution of €182,000. He resigned from AIB’s board on 28th June 2012.
Tom Considine is a public interest director at Bank of Ireland. He is the former Secretary General at the Department of Finance from 2002 to 2006, having joined the Civil Service in 1974. He is regarded as responsible for
Frank Daly is of course the NAMA chairman and former chairman of the Revenue Commissioners. He had a 12-month stint as a public interest director of Anglo Irish Bank between 18th December 2008 and 22nd December 2009 when he became the NAMA chairman.
Alan Dukes was a public interest director at Anglo between 18th December 2008 and 14th June 2010 when he was appointed chairman but is seemingly still regarded as a public interest representative on the Anglo, now IBRC, board.
Margaret Hayes is a career public servant and former Secretary General at two government Departments.
Adrian Kearns was a public interest director at Irish Nationwide Building Society between March 2009 – his appointment announcement from then Minister for Finance Brian Lenihan is here – and June 2011 when INBS was merged with Anglo to form Irish Bank Resolution Corporation. He is a former chief executive of the National Development Finance Committee and an assistant Secretary General at the Department of Finance.
Ray MacSharry is the 74-year old former Fianna Fail Tanaiste and Minister for Finance. He is a now a public interest director of Permanent TSB.
Rory O’Ferrall was a public interest director at Irish Nationwide Building Society between March 2009 – his appointment announcement from then Minister for Finance Brian Lenihan is here – and June 2011 when INBS was merged with Anglo to form Irish Bank Resolution Corporation. He is a former accountant with Deloitte and Touche.
Ann Riordan was a public interest director at EBS between January 2009 and June 2011 when EBS was acquired by AIB. Ann founded Microsoft in Ireland was in more recent times has served on the boards of Tourism Ireland and National Standards Authority.
Michael Somers is NOT a public interest director. Instead, Minister Noonan says he is “a Government Nominee (not a Public Interest Director) appointed to the AIB board on 14th January 2010 under the terms of NPRFC’s investment of €3.5bn in AIB of May 2009”. Got that, Deputy Shane Ross? NOT a public interest director but a Government-Nominee! Michael is the former CEO of the NTMA and used to earn €1m per annum in the good old days – his successor, John Corrigan will be lucky to gross €408,000 this year. He famously told RTE how he was worth it, and he had “plenty of other job offers and could have gone off” These days, he’s on the boards of insurance company Willis and Hewlett Packard Bank International based in the IFSC. Like Dick Spring (see below), Michael is also a non-executive director of Fexco.
Anthony Spollen was a public interest director at EBS between January 2009 and June 2011 when EBS was acquired by AIB. He is a former director of Dublin Airport Authority and had a career at AIB, including a spell as financial controller of Allied Irish Investment Bank and Head of Group Internal Audit at AIB for five years.
Dick Spring is a public interest director at AIB and is of course, the former leader of the Labour Party leader and former Tanaiste and Minister for Foreign Affairs. He is a non-executive director of Fexco and has been associated with various financial funds in recent years, including Alder Capital.
Joe Walsh is a public interest director at Bank of Ireland and is a former Fianna Fail agriculture minister.
How much do they get paid?
It varies but in 2010, it ranged from €29-127,000. In the following year, 2011, there was some upheaval as EBS merged with AIB and INBS merged with Anglo to form IBRC.
When do they retire?
There is no set expiry date for the AIB or Bank of Ireland public interest directors says Minister for Finance Michael Noonan. The EBS public interest directors retired on 30th June 2011 when EBS was merged with AIB. The INS public interest directors resigned on 30th June 2011 when INBS was merged with Anglo to form IBRC. Anglo itself now only has its chairman Alan Dukes whose term expires in December 2014. With the split of Irish Life and Permanent into Permanent TSB and Irish Life, the two public interest directors are now only on the board of Permanent TSB and Irish Life has – shock, horror! – no public interest director. AIB has only one public interest director since Declan Collier’s resignation over the summer.
What are their duties?
Minister Noonan says that they don’t have any specific duties, but that ALL directors of the covered banks have duties under section 48 of the Credit Institutions (Stabilisation) Act 2010 which in turn sets out the duties under Section 4(f) which says
(f) to address the compelling need—
(i) to facilitate the availability of credit in the economy of the State,
(ii) to protect the State’s interest in respect of the guarantees given by the State under the Act of 2008 and to support the steps taken by the Government in that regard,
(iii) to protect the interests of taxpayers,
(iv) to restore confidence in the banking sector and to underpin Government support measures in relation to that sector, and
(v) to align the activities of the relevant institutions and the duties and responsibilities of their officers and employees with the public interest and the other purposes of this Act,
How well are they doing in performing their duties?
Minister Noonan demurs from providing an assessment when asked. He also says there is no formal reporting line to the Minister. He says “public interest directors do not have a formal reporting relationship to the Minister or to the Department of Finance. As Minister for Finance, I am strongly committed to ensuring that the boards of the covered institutions act at all times in a manner fully consistent with key public interest objectives for the banking sector.”
Given the backgrounds of the chosen directors – four former politicians and a smattering from the business world that have weathered their own pay controversies, you won’t be surprised that it is just now that revelations about banking pay and pensions are causing such outrage and there is no evidence of the public interest directors lifting a finger to pursue the subject privately in the banks.
Minister Noonan confirms there is no specific mandate given to public interest directors as opposed to all other directors, though Michael Somers is NOT a public interest director but a “Government nominee” so public interest directors aren’t even “Government nominees”. They’ve cost us €2m to date, they’re part time and generally have other preoccupations.
Is it time to terminate them?