OPINION:MANY PEOPLE - if they are honest - are probably quite happy with the idea of the Government owning stakes in Irish banks. The concept is not out of tune with the public mood that the banks need to carry at least part of the can for the mess we have got ourselves into.
State ownership also holds out the prospect of some sort of payback for the various injustices that we all feel have been visited upon us by the banks over the years. But if ever there was a case of being careful what you wish for, the Government taking stakes in the banks is surely it. The recapitalisation of the banks through the injection of taxpayers' money is looking like a necessary part of the process of stabilising the financial markets, both in Ireland and globally. But, in truth, there probably is no upside for the taxpayer in the Government getting involved in banking.The State company culture that has evolved here over the eight-odd decades since the likes of the ESB were established through economic necessity is pretty dysfunctional.
The interests of taxpayers or customers seems to be the last thing that enters anyone's mind when it comes to the stewardship of the ESB, Dublin Airport Authority and the other big State companies. They come a long way down a list which is dominated by entrenched vested interests, the most powerful of which is usually the employees.
In addition, the unions at the large State companies have quite brilliantly manoeuvred themselves into positions of real power over the past decade, indirectly controlling very big stakes in the major State companies via employee share ownership trusts.
While employees owning shares is a positive development, doing it via the Employees Share Ownership Plan (Esop) route has resulted in their combined shareholding being wielded to suit agendas that are not necessarily the same as that of the staff, the other shareholders (meaning the taxpayer) or, on occasion, even of the unions themselves.
The shining example of this is the Eircom Esop, which has been a willing participant in the systematic destruction of the company - with all that means for the wider economy. Every time another assault is carried out on the company's finances, the Esop takes its share of the booty.
But it would be unfair to single out Esops as the problem when it comes to State companies.
Appointments to their boards are still very much acts of political patronage and interference in the running of the companies to suit short-term political agendas is rife.
The boards of the Irish banks may not have covered themselves with glory, and are showing a marked reluctance to accept responsibility, but replacing them with something akin to the nexus that exists between the board of a State company and its line Government department is not going to help much.
There is a hope - albeit fading - that it might be possible for Governments to inject money into the banks without having to get involved in running them.
There are various measures proposed, which would stop short of taking direct shareholdings.
These include the issuing of preference shares, tied to strict conditions over things such as dividends, executive remuneration and corporate governance.
Given the above, such an approach is preferable on the basis that no sooner would the ink be dry on Government shareholding than the pressure would come on for an Esop at the likes of AIB or Bank of Ireland.
But, it is also the case that there comes a point where the amount of money being put in by the taxpayer requires a direct shareholding and board representation.
That's when things start to get tricky. You could well end up with a situation similar to Aer Lingus, where the State owns a significant shareholding in a listed company and has the right to nominate directors.
The problem is that it is just too early to say whether this arrangement works at Aer Lingus. The Aer Lingus management do seem to have been able to run the company, taking a number of politically unpopular decisions such as axing the Shannon to Heathrow route. But the biggest test of the Government's willingness not to interfere is just about to come, as the airline looks to shed over a quarter of its workers and radically alter the conditions of others. The winners here will be the shareholders and the customers; the losers will be the staff.
Whichever way the Government jumps, or if it jumps at all at Aer Lingus, will give you some idea of what it will be like having them as shareholders in the banks.
