In the closely interconnected world of Irish boards, the public is entitled to ask where mutual friendship ends and professionalism begins, writes LAURA SLATTERY

CORPORATE CRONYISM is not a new complaint in Ireland, but it is getting louder.

“Camaraderie over competence” is what defines a large chunk of Irish corporate culture, according to a corporate governance report by business advisory firm Grant Thornton, while Opposition politicians are begging for the arrival of “new faces” into the top echelons of Irish business.

Many of the old faces are, after all, an uncomfortably few degrees of separation away from the centre of this particular episode of corporate governance failure: the former board of Anglo Irish Bank.

Fifteen directors have now resigned from 22 boardroom positions in the fallout from the Anglo affair, while the Irish Association of Investment Managers (IAIM) declared yesterday that it had placed the ramifications of the evolving investigations of the bank at the “top of the IAIM agenda”.

The IAIM, which represents institutional investors, has form in this regard: last year, it forced the resignation of DCC executive chairman Jim Flavin after the Supreme Court ruled that he had engaged in insider share dealing. Mr Flavin had retained the support of his board to the end.

Good corporate governance depends on the strength of a company’s board of directors – especially the independent non-executive directors who are supposed to hold the management to account.

There are many who now feel that it was no coincidence that the former board of Anglo Irish Bank, the one which saw a major corporate governance scandal occur on its watch, was also one of the most interconnected of boardrooms.

It is has been well-documented that Anglo Irish Bank’s former chairman Seán FitzPatrick, who was forced to resign after it was revealed that he concealed loans of up to €122 million by transferring them temporarily off the books, was one of the most connected men in Irish corporate life.

His fall from grace necessitated not one but five resignations – from non-executive roles on the boards of public companies Smurfit Kappa, Aer Lingus and Greencore, as well as from Experian and Gartmore Irish Growth Fund.

The directorships of FitzPatrick interlocked with those of former Anglo non-executives Gary McGann (Smurfit Kappa chief executive) and Ned Sullivan (Greencore chairman); FitzPatrick sat on their boards and they sat on his.

The new executive chairman of Anglo, Donal O’Connor, has links to Elan and Readymix and was, until recently, the chairman of the Dublin Docklands Development Authority.

The board of the aforementioned DCC, now Flavin-free, features many familiar faces: Maurice Keane, the former Bank of Ireland chief executive recently appointed to the board of the nationalised Anglo; former attorney general David Byrne; experienced non-executive Bernard Somers, former AIB director; and chairman Michael Buckley, former AIB chief executive.

Most of the individuals pictured above are seasoned boardroom attendees; some, like former financial regulator Liam O’Reilly and Dublin Airport Authority chief executive Declan Collier have only just entered the dizzy revolving door of non-executive directorships.

The phenomenon of the “overstretched independent director” is not frowned upon in the Combined Code on Corporate Governance for Irish Stock Exchange (ISE) companies.

But as Grant Thornton politely implied, it does raise questions about how much time an independent director can really devote to properly crossing “t’s” and dotting “i’s”.

The code does recommend that a chief executive of a company should not then become its chairman, as FitzPatrick did, while the two roles should not be combined in the form of executive chairman, as they were by Flavin.

Grant Thornton believes elements of the non-mandatory code should become law. PricewaterhouseCoopers, meanwhile, has produced a short film showing non-executive directors how not to get sued. But these days, the ire and dismay is coming from the bottom up, too.

Last week, some 2,500 Irish Life Permanent members of Unite wrote to the bank’s head of human resources to say it had lost confidence in chairwoman Gillian Bowler and the now departed chief executive Denis Casey.

Protesters on the street, the victims of Ireland’s lurch into recession, have taken note of how the tangled webs of boardroom buddies in Irish corporate culture form their own “golden circle”.

They could be forgiven for wondering where mutual friendship ends and professionalism begins.