When you are known colloquially as the State’s “corporate watchdog”, you must not be seen to preen like a poodle.
Ian Drennan, incoming chief executive of the new Corporate Enforcement Authority (CEA), is wearing his serious face as he poses for The Irish Times’s photographer at its Dublin offices on Parnell Square. He looks every inch the corporate enforcer as he stands in front of a shelf of old law books.
“Could you smile a bit?” asks the photographer. Drennan does not skip a beat as he responds deadpan: “Smiling doesn’t fit in with the job”.
It is fair comment: Drennan shouldn’t exactly be grinning like the best man at a wedding. He became Director of Corporate Enforcement a decade ago and now leads the transformation of his office (the ODCE) into the CEA, with beefed-up resources to run the company law side of the State’s fight against white collar crime.
Yet even as he fixes a flinty gaze at the camera, a faint twinkle is discernible in the Dubliner’s eyes. The beginning of a smile creeps across his face before he quickly banishes it. Clearly he is hamming it up a little with the tough guy routine, and appears to be enjoying doing so. The photographer is barely five seconds out the door before Drennan has whipped off his tie.
The new CEA, which is due to launch imminently, is a centrepiece of the Government’s promise to scale up the fight against white collar crime following a slew of criminal cases that arose from the post-Celtic Tiger banking collapse, with mixed results. Several convictions were secured but the high-profile collapse of the Sean Fitzpatrick trial, which was blamed on the ODCE, also stands out.
The CEA is being spun out of the Department of Enterprise, Trade and Employment into a standalone agency overseen by a commission of up to three members – Drennan so far is the sole appointee. Staff numbers are rising 50 per cent to about 70, including a boost in its complement of in-house gardaí from seven to 16. Its budget has risen almost a fifth in recent years – about €6.3 million for 2022.
Under Drennan, a qualified accountant, it is responsible for enforcing all company law, including supervising liquidations and company directors. Then there are the bits that capture public imagination. It is often bang at the centre of the biggest and most complex investigations of alleged corporate wrongdoing in the State’s history, such as at Independent News & Media (INM, now called Mediahuis Ireland) and the Football Association of Ireland.
Yet when Drennan first walked in the door almost exactly 10 years ago in the summer of 2012, the ODCE as it was then had just two accountants among its staff, and one of those was retiring. How could you enforce all company law with one or two accountants and no forensics lab?
“Even if one wasn’t about to retire, you didn’t need to be a rocket scientist to figure out that it was something that needed to be enhanced. It needed significant professionalisation,” says Drennan.
One of the key powers of the new CEA is the ability to hire its own staff, such as forensic accountants and other specialised investigators. Drennan says it must benchmark itself against the sort of organisations it often ends up dealing with, such as major law firms.
“If you go back 10 years ago, we had little control over who we hired because it all went through the department. When one person retired, the department would send someone else over. That’s all fine, and they were good people. But that’s not how A&L Goodbody hires. You need to be able to go to the open market. That’s how you develop an organisation fit for purpose to do the things we need to do.”
Critics of corporate Ireland argue that this country has a particular problem with corruption in business, compared to other developed states. Drennan says it is a hard question to answer.
“As you go back over 30,40,50 years of business history in this country, there has been a fairly healthy disregard for rules and regulations generally. [But it is] probably no different to other jurisdictions in that regard. The vast majority of company directors try to do the right thing. That is borne out in the number who are restricted.”
About 105 directors were restricted or disqualified on foot of action by Drennan’s office in 2020, but that number was down by more than one-third due to a fall-off in the level of liquidations. His office investigated 149 complaints, executed seven search warrants and secured 13 criminal convictions.
Drennan says the conduct of company directors has become increasingly “professionalised” and has improved over the years.
“People take their responsibilities more seriously. Directors do more training. You can have all the rules and regulations you want. But ultimately these things come down to human behaviour. Where things tend to go off the rails a bit is where people don’t take their responsibilities seriously.”
Drennan likens good corporate behaviour and governance to the responsibility of driving a car.
“You need a licence to drive a car because it’s important you have a basic understanding of what you’re supposed to do. If you do your lessons and all the rest of it, it limits the risk of you crashing. You can do catastrophic damage with a car. You can do catastrophic damage with a company.”
He acknowledges there is a burden of compliance with corporate governance issues that can take company leaders away from running the business. He says they have to find the correct “balance”.
“The trick – and it is not easy – is to get the appropriate balance between the conformance with regulations and the performance of the business. If you don’t spend enough time on the strategy/performance, it may impact profitability. If you don’t get the conformance right, you potentially end up in the High Court, haemorrhaging money to lawyers and huge reputational damage.”
Drennan is an enforcer in the corporate world, but he has spent most of his career in the public service. He trained as an accountant about 30 years ago before joining a small practice in central Dublin, earning “a paltry salary, as you do”. Then he spotted an advertisement for a job in the Comptroller and Auditor General’s office, auditing state entities.
“I doubled my salary overnight,” he says.
He eventually ended up on a team at the CAG’s office as part of the DIRT inquiry, investigating bogus offshore accounts. He moved on to the Department of Finance, auditing European Union structural funds, before joining the ODCE for his first stint there, as head of compliance.
At the height of the Celtic Tiger in 2004, he took over as chief executive of the Irish Auditing and Accounting Supervisory Authority (IAASA), the regulatory body for auditing.
“There was nothing there when I started – a board with no executive. My starting point was to set up the whole organisation.”
He ran IAASA for eight years, including in the initial post-crash period when people began to wonder how the auditors of the bust Irish banks could possibly have stood over the accounts they signed off. Drennan says people get confused about the purpose of an audit.
“An audit is not and cannot ever be a certification that this business is financially viable 10 years into the future.”
In 2012 he left IAASA, and took over the ODCE from Paul Appleby, who had fought battles with previous governments over resources. One of the major investigations Drennan inherited was into the conduct of directors at Anglo Irish Bank. By the time of his arrival, many of the mistakes that led to the collapse in 2017 of the trial of former Anglo chairman, Sean Fitzpatrick, had already happened.
When the Fitzpatrick trial collapsed, the judge in 2017 criticised the ODCE for coaching prosecution witnesses and shredding documents. Although Drennan was already five years into an overhaul of the organisation by that stage, it took a public pummeling from politicians and commentators.
“Those failures occurred. They shouldn’t have, but they did. Absent a time machine, you can’t go back and make sure it didn’t happen. So you have to make sure it doesn’t happen again,” he says.
“The ODCE embarked upon one investigation into [Anglo] and ended up doing five. It was once in a generation in terms of scale. It didn’t appreciate the scale of what would come. It got swamped. The case against Fitzpatrick was the one that went catastrophic.”
Over the summer of 2017, a succession of politicians, including a handful from the government benches, failed to declare their confidence in the ODCE. Does Drennan feel bitter about that?
“Politicians make comments. We live a free society and they have free speech – what they say is a matter for them. But what I would say, bringing it back to facts, is that I was asked by the then minister to prepare a report on what happened – 300 pages, or 3,000 pages with appendices – and I tabled that. Ministers were then able to inform themselves regarding the facts.”
He corrects a “misperception” when I suggest to him that he “works for” politicians.
“I’m appointed by politicians but I don’t work for them. My statutory accountability line is that I report to the Minister and he is required to table my annual report to Government, and it is put before the Oireachtas. So ultimately I work for the public. I think it is important to dispel any misperceptions or myths here. We are fiercely independent, and that independence is always respected.”
Drennan says he learned two main things from the Fitzpatrick fiasco. The first is that you have to be “switched on” to risk.
“It’s no different to business – if you don’t take risks you will achieve nothing and if you’re going to be paralysed by fear, you may as well go home. Our record would suggest we have a healthy appetite for risk. But it has to be managed. Some of the risks around Fitzpatrick were not managed appropriately.”
The second thing Drennan says he learned is that people “should do what they are qualified to do” – one of the judge’s criticisms was that civilian staff had been taking witness statements, and not gardaí.
“I don’t ask my dentist to service my car. I don’t ask a lawyer for accounting advice. And similarly, we shouldn’t have had civilians taking witness statements in circumstances when that is what guards are trained to do. There were a variety of reason why that happened, but it shouldn’t have happened.”
At the same time as the ODCE was getting kicked around following the Fitzpatrick affair, a shot at public and political redemption literally walked into Drennan’s office. Former INM chief executive Robert Pitt arrived with his lawyer in 2017 to make a series of explosive whistleblower allegations about the company and its then-chairman Leslie Buckley, a representative of its then-main shareholder, Denis O’Brien.
Six months later, Drennan went to the High Court to seek the appointment of High Court inspectors to INM, with a grounding affidavit that contained some of the most startling accusations of corporate wrongdoing in Irish history. The inspectors have yet to report. The office’s investigation of concerns around governance at the FAI has also brought it high profile.
Drennan acknowledges that taking high-profile court cases is useful because it can have a “dissuasive influence” in terms of highlighting the fight against white collar crime. Does the organisation need to ration how many major cases it can handle at once?
“We have to be cognisant of that. It would be very unwise to try to take on three large investigations to the detriment of anything else. We have a finite level of people. But you also have to keep a presence in the District Court. If an issue is being ignored, it can mushroom. We can’t have that either. Sometimes we take a prosecution because we have to signal that we’re not prepared to tolerate something.
The new CEA has an enhanced budget and it recently agreed a memorandum of understanding with An Garda Síochána over the hiring of new detectives – there had previously been delays and murmurings of friction with Phoenix Park over resources. But that all seems to be settled now, and the first CEA Garda roles have been advertised. For the first time, Drennan will have a role in choosing them.
The CEA is still waiting on new powers to allow its technical staff to sit in on Garda interviews – currently they must sit outside the door and leave it to gardaí. It also wants new powers to allow it more easily search and seize information on businesses that are held in cloud storage systems. Drennan is hopeful the powers will come soon.
The new CEA, he says, will be heavily focused on “ramping up” criminal enforcement of company law, utilising its extra Garda resources.
“It will also allow us to conduct investigations more speedily. There will be a greater number of files to the DPP and greater emphasis on indications of criminality that might be in liquidator reports. People can expect to see that quickly. We intend this to be different, and to be seen to be different very quickly.”
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CV
Name: Ian Drennan
Position: Chief executive of the Corporate Enforcement Authority
Home: Dublin
First job: Trainee accountant
Something about him that you might expect: He is an accountant.
Something about him that might surprise: He has coached kids rugby.
