Madam, – Your columnist “Cantillon” (Business Today, April 2nd) produced an article which bears all the hallmarks of a pot-boiler produced at the last minute to meet a publication deadline and passed off as analysis.
The salaries of the CEO and senior management personnel at Anglo Irish Bank were determined in accordance with the recommendations of the Covered Institutions Remuneration Oversight Committee (CIROC) and approved by the Minister for Finance. After nationalisation, the board of the bank determined that a new senior management team should be recruited from outside the Irish banking sector and among people who have a solid record of achievement. The CEO and all of those who directly report to him conform to those criteria and all have been approved under the “fit and proper” criteria laid down by the Financial Regulator. In every case, the salary level had to be adequate to attract people of the required calibre in an internationally competitive market, while conforming to the CIROC limits.
“Cantillon” commented adversely on the expenditure last year of €62 million on outside consultants for work on restructuring, asset transfers to Nama and legacy matters.
It is indeed the case that three of the restructuring plans prepared with outside consultancy advice were rejected by the European Commission. The first was prepared at a time when the Commission’s expectations were not particularly clear. The second, submitted in May 2010, was prepared in the light of detailed reaction by the Commission to the first. It was not presented, as “Cantillon” claims, as having no viable alternative: it was, rather, presented as the least costly of a series of options. It was presented also with the explicit endorsement of the Department of Finance, the Central Bank and NTMA.
I cannot say whether the Commission “changed the goalposts”, as Cantillon muses: Anglo Irish Bank was not involved in any direct discussion with the decision-making levels of the Commission services. I find that rather a pity, since I would like to discuss in some depth the Commission’s apparent belief that its normal view of competition policy is still relevant in what are still deeply dislocated financial markets. The third restructuring plan was decided by the government and announced to Anglo Irish Bank early in September 2010. In my view, it never had much to recommend it and has since been abandoned. Nevertheless, the bank was obliged to work out how to implement it while it was current.
The due diligence work required by the Nama legislation is an expense that the bank simply cannot avoid. If “Cantillon” has a complaint to make about this, she/he should take it to the framers of the legislation.
The bank has at all times cooperated fully with the relevant authorities in relation to ongoing investigations. It has been necessary to ensure that due process is observed at all times in these investigations, not only to ensure fairness to all concerned but also to ensure that there are no legal flaws which might affect the future course of events in this connection.
I should add that there have been a number of occasions when the authorities have required information on aspects of the bank’s activities and where they have required the production of the information to be validated by external scrutiny. In those cases, the bank has had to bear the costs incurred in securing that external validation.
Today’s “Cantillon” falls far short of the analytic clarity of the original. – Yours, etc,