Friday, December 31, 2010

Northern Ireland Executive posturing with respect to water disruption is pathetic

It is a bit rich for the Northern Ireland Executive to posture like Pontius Pilate adorned in Teflon with respect to the shambolic performance of Northern Ireland Water.

This public utility monopoly is controlled by them. The sacking of four non-executive directors last July following the disclosure of 73 irregular contracts with a value of £28.4 million over a 3-year period must have been the consequence of a legacy of shoddy oversight by the Department of Regional Development.

The interim board was directly selected and appointed by Conor Murphy, Minister for Regional Development last August - outside the Code of Practice of the Commissioner for Public Appointments. Personal choice cannot therefore be divorced from direct responsibility.

The Chairman is paid £45,000 per year on the basis of no more than typically three or four days attendance per month, a considerable outlay for dry taps, parched livestock and toilets that don’t flush in tens of thousands of Ulster homes in mid winter.

Surely the buck now stops with Conor Murphy and, if heads are to roll, should his not be first in line to underline his accountability in this primitive, disruptive debacle before the entire board of directors suffer the inevitable consequences of systemic, failure that is not merely attributable to circumstances of force majeure ? That gesture would be the essence of accountability and good governance at the highest level and it would emphasise the importance of effective risk evaluation and customer service in a monopoly utility.

Incestuous Social Partners are as stale as the current Irish Government

2010 04 11_4223

Danny McCoy, boss of IBEC (Irish Business and Employers Confederation),  and Paul Sweeney, the economic adviser to the ICTU (Irish Congress of Trade Unions), set out their respective panacea for the future of Ireland in The Irish Times today.  Both speak as high-priests and advocates of the social partnership process.  Each is seeking wriggle-room to establish a bedrock of influence in 2011. 

This time in the context is that of ‘a collective’ that is ‘robust and rational’, whose deliberations are based on ‘evidence-based policy’ making.   They opine that ‘social partnership’ is ‘dysfunctional and politically expedient’‘We’ in Ireland need to reflect on the type of economy and society ‘we’ would like to emerge and ‘we’ need to craft laws and policies that reflect that vision!  The ‘perverse economic experiment must be dismantled’ and the next government will have to be ‘courageous and radical’; the private sector will have to be ‘reformed’ so as to move from ‘shareholder value’ to ‘stakeholder value’ and ‘cronyism is to be stamped out’. 

Who, under God, will deliver this utopia?  Lobbyists?? The backing of at least a dozen Nobel Laureates will be necessary to attribute credibility to all of this and to ensure the Jewish and Arab bankers who buy Irish bonds adapt to the collective’s notion of ‘stakeholder value’ and fall into line like obedient foot-soldiers.

Social partnership started modestly in the late 1980’s as an attempt to successfully tame a flaming industrial relations jungle. But, by the turn of this century, it had become a disingenuous platform that provided lobbyists with an unwarranted span of influence, instant access to government and direct funding amounting to millions of wasted euro that has been shown to have been inadequately accounted for. This led to a ‘dig-out’ culture of entitlement, free of any risk to the negotiating parties, which ignored the obligation that bread must be earned in the universe - not doled out at the parish pump.

This is the culture that gave legitimacy to gigantic ‘pre-contracted’ bonuses, outrageous professional fees, described as ‘fair and reasonable’ and annual cumulative directors’ emoluments in domestic financial institutions routinely exceeding €30 million because the government and its agencies failed to govern and the absence of moral responsibility is shrouded in legal legitimacy.

Mr McCoy is concerned about the trauma of the past few months; what about the trauma of the past decade? Does the memory of the lines of people queuing to buy a lousy-designed, poor quality residence on highway-robbery terms not make him squirm in outrage? Does the experience of the thousands of FÁS trainees who never obtained certification from an agency controlled and directed by these very same, ever-solicitous, ‘social partners’ not tell its own story about their capacity to be accountable and practice a decent standard of corporate governance?

He is concerned about the Climate Change Bill and the impact of ‘rushed legislation’. But is he not also concerned that the Government has failed to open the marketplace for professional services by, for example, not implementing the Competition Authority’s 2006 recommendations to open the legal services marketplace, a development which would surely benefit IBEC members.

Mr Sweeney, I also abhor the use of the NPRF resources to bail out the vandalism and delinquency of mercenary galoots, but how could this have been avoided? Japan’s debt/GDP ratio is twice that of Ireland but 95% of its debt is due to Japanese people, a higher proportion of whom are in the older age bracket. If bond holders renegotiate and play their ace card – not to put a further cent into Ireland – what happens next when all new Irish debt is owing to foreigners? It is not unnatural to expect borrowers to spend their own money as well?

It is a pity that Mr Sweeney did not define our ‘real economy’ and elaborate on how it is in ‘good shape’ and what the basis of its sustainable strength is.

This country does not have mineral or energy resources. Recovery from the more restricted Swedish bank bailout of the 1990’s was facilitated by a viable engineering and timber sector as well as hydro capacity. Ireland’s younger demographic profile is an important asset but where is the wealth creation potential for this resource to exploit?


Wednesday, December 29, 2010

Are Irish political opinion polls really accurate?

Have Irish political parties become intoxicated by opinion polls as they reflect on their ambition to abseil the pantheon of political stardom?

While the polls are giving Fianna Fail a severe hangover, they also indicate that support is not committed firmly and that opinion polls really do not capture voting intentions in a representative way. How could they when those seeking to enter government appear to be paralysed by inertia and in sleep-walking mode within an anticipated 100 days of a widely expected general election?  Perhaps they ought to examine the message from the electorate in opinion polls more closely and not merely rely on the froth of the headline trend.

Fine Gael have yet to choose candidates in 7 Dáil constituencies and given the considerable number of Fine Gael candidates chosen who are strangers to the electorate there is little flair or imagination evident on their web site to educate the electorate about their candidate offering and policies.  

The Labour Party web site does not identify one single general election candidate. Their web site offers the usual blancmange of a ‘better’, ‘fairer’ nation but they still blather about ‘Stop NAMA’ and the ‘threatened’ move to transfer €90 million of property loans from banks. Despite the opinion polls there is no evidence that Labour has a well-drilled, sophisticated, army in place to fight the battle ahead. Will positive opinion poll trends be soured by poor candidate selection?  

The web site of Sinn Féin does have a tab called ‘candidate’ – but that relates to their candidates for the May 2010 British general election in their traditional heartlands in Northern Ireland. Apart from media reports that Mr Adams is to migrate to somewhere in Co Louth there is no evidence that Sinn Féin is serious about general election in the Republic of Ireland other than a generic warble about ‘better’, ‘fairer’ ‘change’ and continue pursuing the goal of Liam Mellows and Bobby Sands ‘to bring us closer to our goals of Irish unity and independence’. Independence of what – the IMF and the ECB? They advocate ‘building an Ireland of equals’ – would that be equality of debt, bound in the chains of eternal welfare, poverty, aimlessness and hopelessness? Given the experience of the 2007 general election a voter would have expected to observe the shoots of economic genius and economic leadership but perhaps what is not there simply cannot be observed and what is offered by Sinn Féin is merely rousing neighbourhood activism. 

The Green Party, at whose instigation, the timing of this general election is to be determined, have shrouded the identity of potential candidates, the constituencies they intend to contest and policies for the future in opacity as dark as mushroom compost covered in black polythene. Is their stamina exhausted or a symptom of jaded leadership? 

The electorate deserve to be informed of the identity of general election candidates; to understand their values and competency. The electorate should not be expected to make choices wearing a blindfold. The electorate also need to form an opinion on the capacity of parties to govern with integrity, wisdom and decisiveness. Ireland will not waffle its way, using clichés, to achieve a semblance of recovery. 

Tuesday, December 28, 2010

Coping with bad weather

Ireland has experienced unprecedented disruption as a consequence of snow and freezing weather during  two consecutive winters and repeated episodes of large scale flooding at other times. Government agencies, local authorities and transport providers attempt to provide a coordinated response to weather-related emergencies but are doing so in the absence of any predetermined published priorities, benchmark levels of resources and equipment, lines of accountability, legal or regulatory framework.

A nationwide Adverse Weather Operations Plan needs to be devised and published to overcome these shortcomings.   An operations plan should identify who in a particular region is responsible for declaring a weather-related emergency and leading the response to it. This ought to facilitate  the response of the authorities and integrate those with communities and farmers with suitable equipment against a framework of known priorities and expectations.  Regulations should cover snow and slush clearance and the identification of which roads and routes across the country have priority in terms of attention and resources.  Categories of priority attaching to particular roads would be determined by the importance of the access they provide.  An effective response to the threat of widespread flooding also needs to be taken into consideration in devising such a plan.

Regulations ought to, for example, ban the dumping of snow from a private property onto a footpath or road and establish guidance on the adequate clearance of snow to allow safe passage on footpaths and from fire hydrants and storm drains.

Regulations could also establish emergency parking bans along critically important routes to keep traffic moving safely in snow or in freezing conditions.  Discounted off-street parking might be made available for as long as a weather emergency exists - as a condition of planning approval. 

Bright coloured highly visible sand and grit boxes might be located at strategically important junctions and close to train stations to allow communities clear footpaths, drains and fire hydrants and to encourage use of public transport.

A central low-cost telephone service and and flooding web site might be established to provide a 1-stop source of information dealing with emergency consequences such as driving conditions, school closures, the cancellation of examinations, or changes to the routines of hospitals.   It ought to to be possible to identify vital arteries on such a web site as a component of the long-term planning process and this would enable motorists to become aware of them and respond appropriately when an emergency arises.

The impact of these suggestions ought to enhance the safe passage of vehicles and pedestrians - residents, workers and visitors, but especially the elderly and the handicapped.  It would also provide a context for the avoidance of the threat of flooding on the devastating scale witnessed too frequently in recent times, as well as dealing with its immediate consequences.

Monday, December 27, 2010

What promise does 2011 hold for Ireland?

We ought to remind ourselves that the average age of our abundantly educated, talented, well-travelled, multi-lingual, sophisticated population is under 35 years and that in itself is a magnificent asset. But the chamber of celestial irrelevancies is entirely populated by jaded, faded mainly late middle-aged members, not one of whom is under 30 years of age. How could they possibly have a relevant engaging relationship, vibrant empathy and a convincing understanding of the needs and aspirations of that younger cohort of the population whose prospects they have seriously blighted?

A new lexicon, based on dubious sense of entitlement, has emerged in Ireland that has allowed its advocates to become more and more detached from the necessity of earning prosperity and wellbeing. Politicians using the expression ‘fair and just’ as code for unsustainable levels of welfare, of a scale that ought not to be necessary in a viable, stable, pay-your-way economy but the scale of which creates a long-term poverty trap for those in receipt of it and those who are obliged to pay for it.

‘Fair and reasonable’ is becoming synonymous with exorbitant professional fees and charges, bonus payments, retirement entitlements of ministers’ etc. – which are also on a scale that is detached from our economic reality. How can a bust nation, whose sovereignty has been surrendered and whose GDP accounts for such a tiny portion of that of the EU, for example, support so many professional firms whose annual revenues place them firmly in the top quartile of their European counterparts? If ‘fair and reasonable’ payments are significantly higher than international norms and greatly exceed what can be afforded – what particular criteria define ‘fair and reasonable’ and what outcomes are delivered by those in receipt of such largesse other than a well-nurtured sense of infinite entitlement?

Ireland’s GDP in 2009 is apparently being 27% higher than the EU average as a consequence of asset price inflation but this so-called wealth is not capable of fully employing the nation’s population or funding its spiralling debt. Where is it, who controls it and how productive is it and what benefit is the nation achieving from it?

Ireland needs an establishment that recognises the importance of and is capable of delivery the nation from one generation to the next in a more enhanced condition than prevailed when they obtained the power to influence it. That requires more than a Dáil comprised of neighbourhood populists, passing opportunists, the unimaginative self-righteous and sundry ‘blow-in’s’ from distant parts.

But neither Fine Gael, the Greens, nor The Labour Party has presented a complete panel of prospective candidates to the electorate to contest the general election that is to take place only weeks away. How can the electorate form an opinion of what these parties are capable of achieving, or is the electorate to merely rely on the trends in opinion polls to identify virtue and potential?

Thursday, December 23, 2010

Bank directors remuneration immune moderation

The boards of the banks and building societies which are transferring heavily discounted loans to NAMA are populated by approximately 60 individuals, a significant number of whom have been in situ for many years prior to September 2008.  Their fees and remuneration from 2005 amounted to €148.4 million.

While 11,000 loans to 850 borrowers with a nominal value of €71.2 billion have been transferred to NAMA at a discount of 59%, the bona fides of each loan have to be painstakingly tested and evaluated because the representations of the banks and building societies cannot be trusted at face value.

But the 60 directors who lent this money and endorsed these transactions were paid remuneration and fees of €16.5 million in 2009. That may represent a haircut of 47% on the €31.2 million they were paid in 2008. But the losses incurred on the NAMA loans are equivalent to 180% of the remuneration they were paid last year.

It is from this rudderless, self-serving, opportunistic, morally bankrupt culture that bonus payments of tens of millions of euro are concocted and justified.  Will the Government intercept and definitively halt this wanton plundering of taxpayers money and the willy-nilly invention of yet more customer fees and charges in 2011 spearheaded by Bank of Ireland?

Sunday, December 19, 2010

NTMA defy Public Accounts Committee

I have been observing the relationship between the National Treasury Management Agency and the National Assets Management Agency with the Public Accounts Committee with increasing concern.

NTMA and NAMA Remuneration

The activities of the NTMA and NAMA have been examined on several occasions by the Public Accounts Committee in 2010, most recently on 18 November when the Committee sought a breakdown of the remuneration paid to NAMA employees – all seconded to NAMA from NTMA. The Chief Executive of NAMA, Mr Brendan McDonagh in a letter to the PAC dated 7 December 2010 defied the Committee and advised:

That he discussed the Committee request with Mr John Corrigan, Chief Executive of NTMA – but not, curiously, with the Secretary General of the Department of Finance,  an ex officio member of the statutory  NTMA Advisory Committee and principal advisor to the Minister for Finance to whom both agencies are accountable.

  • That the pay structures in NTMA are outside of public service pay structures (as authorised by the National Treasury Management Act 1990).
  • That the NTMA recruit mid-career specialists in banking, property, corporate finance and law for NAMA on what he termed a ‘fixed purpose’ contracts.
  • The contract and remuneration arrangements of each employee are unique  to a particular individual and are treated as confidential.
  • The NTMA/NAMA staffing ‘operating model’ is shrouded in so much secrecy and opacity that colleagues do not know how much each other is paid and that NAMA would apparently be seriously compromised in the conduct of its mandate were it to be exposed – (presumably, to the rigours of public and media scrutiny and that of the marketplace  from which NAMA seeks to determine  ’ market competitive’ salaries). 
  • ‘Operational freedom to negotiate’, authorised by legislation, in NTMA has apparently become seamlessly synonymous with clandestine secrecy by the Chief Executive of a State agency which does not have a conventional board of directors and where the same chief executive, rather than an independent chairman, corresponds with the Minister for Finance on the performance of the entity that he manages on a day-to-day basis.

McDonagh’s letter and Corrigan’s patrician perspective on the Committee’s request is such an appalling indictment of these State agencies that a citizen would wonder about its capacity to fulfil its core objectives in a culture clearly devoid candour, accountability and transparency.  NTMA and NAMA need to be advised in blunt and uncompromising terms  by the PAC  that the principles of transparency and accountability expected of the Irish public sector are not those of the nod, wink and handshake that prevail, for example,  in the dictatorships of North Korea and Burma. The standards espoused by NTMA also directly contravene the policy of the Department of Finance with respect to the governance of commercial State entities.

Furthermore, this is precisely the self-righteous, conniving, corporate attitude which champions generic, non-itemised accounting that prevailed in FÁS, the HSE SKILL Programme, the Health Services National Partnership Forum and other grossly dysfunctional State entities which have shattered public confidence after the wanton squandering of hundreds of millions of euro with abandon.

Transparency has not compromised the ‘operating model ‘or the efficiency and effectiveness of any the debt management agencies in any other OECD country.  The transparency of these agencies would also suggest that the NTMA is an excessively costly agency compared to its counterparts.

NTMA Costs and Operating Efficiency

The activities of NTMA remained substantially the same in scope between 2000 and 2008 with the exception of the establishment of the National Development Finance Agency in 2003.  Between 2000 and 2007 Ireland’s national debt ranged from €36.5 billion to €37.5 billion.  It increased to €50.3 billion in 2008, an overall increase of 38% since 2000.

But the operating costs of NTMA in that period increased by 314% and remuneration, including superannuation, by 365%.

NTMA held nine bond auctions in 2009 and raised €35.4 billion which brought the National Debt to €75.1 billion.  Salary and pension costs were €22.86 million, or an average of €135,384 per person.  Total expenses in 2009 at €39.4 million were significantly ahead of other OECD government debt management offices.  Debt servicing costs as a percentage of year-end national debt, excluding sinking fund payments, in this period were:




















Australian Office of Financial Management

The Australian counterpart of NTMA is the Australian Office of Financial Management (AOFM). It raised €38.9 billion by approximately 100 competitive tender in the year to 30 June 2010. Apart from managing the Australian national debt AOFM invested €12 billion in residential mortgage-backed securities to provide funding for small mortgage lenders.  Total expenses for the year amounted to €11.5 million – less than ⅓ of what it costs to run NTMA.  The salary, pension and fringe benefits of Neil Hyden, the recently retired chief executive of AOFM, cost €250,000.  The remuneration, superannuation and fringe benefits of the 36 staff of AOFM amounted to €3.94 million in the year to 30 June 2010, or an average of €109,502 per person.   Approximately 60% of Australia’s government bonds are held by non-Australian residents - compared to 84% foreign ownership in the case of Ireland’s Government bonds.

HM Debt Management Office

The British counterpart of NTMA is the Debt Management Office.  Employing a staff of 112 persons, it raised €267 billion on the bond market in the year ended 31 December 2009 in 58 major and 13 minor auctions – a scale of borrowing 7.6 times greater than that of NTMA.  The activities of the DMO also include the administration of the UK Credit Guarantee Scheme in respect of debt issued by banks and building societies and the Emissions Trading System in the UK.  The salary, pension and fringe benefits of Robert Stheeman, Chief Executive of the DMO was €188,000 – some €12,000 less than the 2009 bonus of Dr Somers.  The net operating cost of DMO operating in the City of London in 2009 was €18.5 million – less than 50% of the overhead to run the NTMA in Grand Canal Street Dublin.

Chief Executive’s Bonus

It was officially disclosed last week that Dr Michael Somers, the founding chief executive of NTMA received a bonus of €200,000 in respect of 2009.  It was reported in the media last September that Dr Somers received a bonus of €400,000 apparently bringing his total remuneration to €1 million.

Ireland enjoyed the considerable advantage of lower level government debt relative to GDP for much of the decade to 2008.  Investor perception of Ireland was positive and reflected in excellent credit ratings; an economy that was perceived to be robust; a positive fiscal outlook and attractive yields on Irish debt.  Irish debt was adopted enthusiastically by investors.  There is no withholding tax on Irish bonds thus removing a barrier to investment for foreign investors unwilling, or unable to invest in assets subject to withholding tax.  Was this bonus merely based on surfing these positive circumstances or what precisely was Dr Somer’s contribution to making a distinctive difference which benefited taxpayers?  The citizen is left scavenging the internet for clues because the agency conveys no information whatsoever  on this issue.  The public are treated with the same bland contempt that occurred days before the recent arrival of the IMF and ECB to take economic control by the scruff of Ireland’s emaciated neck.

It would be helpful  if this key agency of the Department of Finance were to publish the fullest details of all executive remuneration for each of the last 10 years.  This, in the case of bonus payments should identify achievements against particular objectives and confirmation of who approved objectives, achievement and bonus payments. 

Department of Finance Code, 2 October 2001

State bodies, including the subsidiaries of such bodies, are required in the conduct of their operations to adopt this Code of Practice promulgated by the Department of Finance and advocated by the Director of Corporate Enforcement.

The Code of Conduct for the Governance of State Bodies states that the remuneration of a chief executive of a State agency and the remuneration of the chief executive of any subsidiary should be subject to audit and set out in the entities annual report which should state:

  • The basic salary
  • Payments made under a performance-related pay scheme
  • The total value of the chief executives superannuation benefits, with a breakdown between standard entity superannuation benefits and any additional benefits  being provided for the chief executive

NTMA has consistently disregarded this guidance.  S6.(3) of the National treasury Management Act 1990 provides that the terms and conditions relating to the remuneration of the Chief Executive of NTMA are determined by the Minister for Finance after consultation with the Advisory Committee – on which the Secretary General of the Department of Finance is an ex officio member.  State agencies are required to implement Government pay policy, as expressed from time to time, in relation to other staff, including the chief executive and other staff of any subsidiary.

The Department of Finance, in the case of NTMA, is expected to be consulted, according to this guidance,  in good time on any pay proposal, or likely development, that could have significant implications for (i) general Government pay policy (ii) NTMA finances (iii) charges for goods and services provided and / or (iv) other areas of the public sector.  Compliance with Government pay policy, or with any particular Government decision, should not be effected in ways which cut across public service standards of integrity or conduct or involve unacceptable practices which result in a loss of tax revenue to the Exchequer.

The annual report of a State entity should include a schedule of the fees and aggregate expenses paid to each of the directors – or, presumably, in the case of NTMA, to each member of the Advisory Committee

There is, therefore, an obligation on the Secretary General of the Department of Finance to explain the remuneration trends at NTMA and very particularly, the remuneration arrangements between the chief executive and the Minister for Finance to the Public Accounts Committee.  How can he sit on the Advisory Committee and observe long-standing policies of his own department ignored?  That slipshod attitude to supervision allowed FÁS function as a ceded territory dominated and unilaterally controlled and dominated by the chief executive who, in practice was accountable to nobody.

Consultancy & Legal Expenses

NTMA has become a large-scale purchaser of legal and consultancy services.  Details should be provided of the number and value of contracts in each financial year, differentiating between new and existing contracts. 

The annual report should, in the case of consultancy contracts with a value of €10,000, or more, identify the consultant concerned; describe the service provides; confirm the price of that service; details of the selections process and the justification for using the services – to demonstrate transparency and compliance with relevant regulations and directives.  Taxpayers should not have to scavenge internet search sites or surveys of the highest revenue earning professional firms in Europe to distil how much revenue Irish professional firms are obtaining from public sources.

Saturday, December 11, 2010

Zuma’s spending spree on State cars

The Irish Government is not the only government under the spotlight for spending on State cars.

A widespread public backlash broke out in South Africa late last year when the government of President Jacob Zuma, elected in April 2009 with an overwhelming majority, spent over €3 million on luxury cars for the use of ministers and senior officials.

Zuma (68), incidentally, was a member of the South African Communist Party from 1963 until 1990, is the father of 20 children and has been married five times.  He was charged an acquitted of rape in 2005 and fought a long battle over allegations of racketeering and corruption.  An 18-seat Boeing 737-7ED VIP business jet is one of four jets at his disposal.

No rules were broken by this outrageous spending spree. The South African ministerial handbook provides for the purchase of up to 220 luxury State cars at a total cost of over €24 million, each car equivalent in value to 70% of the user’s annual salary. A locally commissioned study indicated that this level of expenditure would be sufficient to provide 5,500 houses, 25 schools or pay the annual salaries of 1,500 nurses.

While the global economic recession prompted a reappraisal of State spending before the spending spree, the South African government has failed to curtail extravagant public spending on personal luxuries. The elite of Africa are imbued with a culture of unremitting self-entitlement while the masses are deprived of basic services such as access to water, sewage, electricity and refuse removal. South African ministers argue that top-end luxury vehicles are necessary to meet public expectations and to conduct their mandate.

The Irish Government has spent over €42 million on bilateral aid to South Africa since 2005. Why does the Irish Government not use its diplomatic might, agility and vitality to exert its influence on the governments of aid-recipient countries to curtail self-enrichment and corruption and to foster more sympathy and support to alleviate the financial hardship of the masses they govern?

Irish diplomatic success could, in the case of South Africa, be reflected in the context of the political will of the authorities delivering the values and aspiration of Nelson Mandela with respect to greed, corruption and selfishness.

Real change would be recognised in amendments to their ministerial handbook that outlaws public spending on personal luxuries, improved efficiency in the provision of basic services and the consequential avoidance of a climate of instability and unrest. That would be an authentic demonstration that the poor, hungry and marginalised of Africa are not forgotten and it would imbue the quality and effectiveness of the Irish Aid programme with outcomes that are unambiguous, defensible and sustainable.

Failure to make progress would mean that the Irish Aid programme is really propping up government self-indulgent extravagance in Africa at enormous cost to a dwindling cohort of very hard-pressed Irish taxpayers - with no long-term benefits ever achieved.

Monday, December 6, 2010

Irish Central Bank Review - a toothless wonder

The widespread explicit criticism of incentive structures contained in the recently published Review of Remuneration Policies and Practices by the Central Bank would bear more moral authority if the Government had not made the recently inaugurated Central Bank Commission another haven for political appointees and former overpaid bankers.

It is all very well for this Central Bank review to advocate the necessity for non-executive directors of banks to step up their scrutiny of remuneration arrangements but virtue is never spawned in a vacuum and it never flourishes in circumstances where leadership is not underpinned by compelling and principled good example.  If Irish domestic banks had not demonstrated contempt for the concept of the common good for a very long time there would be no crisis - but they continue to do so. Their practices of paying obscene levels of remuneration are fully insulated by a culture of indifference to the common good that is secured by a phalanx of cronies and yes-men that serve on their boards of directors. These boards are preoccupied and obsessed by their own self-interest.  They have demonstrated that they are incapable of embracing any fundamental change and, according to NAMA, they tend to be economical with the truth when it suits them. They bear no responsibility for the consequences of their decisions because the government insists that moral hazard passes seamlessly, totally and relentlessly to the taxpayers of Ireland for whom there is no apparent ceiling to the burden that is thrust upon them.

The next phase of Ireland’s lost sovereignty will become manifest when the ownership of the domestic banks inevitably falls into foreign hands because they are incapable of resourcing themselves adequately and winning the trust of stakeholders whose support, investment and benevolence is vital. Irish banks will then be accountable to foreign regulators whose exhortations will likely carry more weight and the domestic financial sector will be reduced to credit unions.  The Central Bank will have no control over the banks but remuneration paid by them may only moderate at that stage.