Inside The World Of Business

Warning for the powers that be

AS IF there wasn’t enough painful comment on Government policies floating around, there came a few days ago some tough-talking from none other than a former chief economist for the International Monetary Fund.

Simon Johnson, writing with an eminent pal on a New York Times blog, sternly warns that Ireland should “definitely not” be held up as a model for other economic trouble spots in Europe or further afield. The problem with our way of doing things (ie the National Asset Management Agency), he argues, is that it reflects “an unwillingness to make creditors pay for their past mistakes”.

Instead, it is the good taxpayers of the State who have been left shouldering problems that were not of their creation. Just in case the powers that be might still be feeling a touch self-satisfied at having succeeded in their economic repair job where others have failed, Johnson says this is “hardly a good lesson for Greece, the euro zone or anywhere else”.

He doesn’t stop there. These days an academic at MIT’s Sloan School of Management, Johnson makes some uncomfortable accusations about the motivations behind the Nama bailout scheme.

“Ireland had more prudent choices,” he says, suggesting the taxpayer could have been spared taking on private bank debts by forcing bank creditors to share the burden. Instead, and here comes the most bruising bit, he says, “a strong lobby of real-estate developers, the investors who bought the bank bonds, and politicians with links to the failed developments (and their bankers) have managed to ensure that taxpayers rather than creditors will pay”.

Ouch. Sparing nobody’s feelings, he claims the banks and associated parties are simply too well-connected in the corridors of power to end up as the losers.

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Independent News & Media (INM) chief executive Gavin O’Reilly made great play yesterday about the company’s “full” compliance with the combined code on corporate governance following the appointment of Bengt Braun to its board as a non-executive director and the reconstitution of certain board committees.

Braun is vice-chair of Bonnier Group, one of Scandinavia’s largest media groups.

O’Reilly also said the terms of the sale of the London Independent titles to Russian moneybags Alexander Lebedev would be “very well received” by investors.

These were two major items of concern for Denis O’Brien last year as he harried the board of INM over the way the company was being run and levelled accusations of cronyism at the group.

So has O’Brien been vindicated? “The issues in relation to Denis O’Brien, I’m sure he’s going to claim ownership for some of these,” O’Reilly told the press at a briefing in Dublin yesterday morning.

“I think the important thing is that we as a management team are doing the right things for our shareholders. Denis O’Brien is one of those shareholders.”

INM’s annual dividend used to be one of the safest in town but shareholders won’t receive a windfall for 2009, given its various financial travails. O’Reilly said INM would pay a dividend again, just not in the short term.

“We didn’t get very wealthy last year as managers and neither did our shareholders; 2010 is about rebuilding the equity story for all our shareholders.”

O’Brien will surely approve.

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