Monday, January 24, 2011
Every financial drama needs a rascal. In “The FitzPatrick Tapes,” that role is played by Sean FitzPatrick, the former chief executive and chairman of Anglo Irish Bank Corp.
As recently as three years ago, the Dublin-based bank posted a net profit of almost 1 billion euros ($1.35 billion). Now, the lender’s collapse is set to cost the taxpayer as much as 34 billion euros. That’s more than the country’s entire tax take last year or, as FitzPatrick himself puts it, more than BP Plc has set aside to pay for the Gulf of Mexico oil spill.
FitzPatrick resigned as chairman in December 2008, after revealing that he hadn’t fully disclosed to investors and auditors loans he took from Anglo. Since then, he has largely kept his counsel amid probes into the bank. Now he has broken his silence in this book by two of Ireland’s most respected reporters, Tom Lyons and Brian Carey of the Sunday Times.
Drawing on 18 interviews with FitzPatrick, the authors present a detailed look at the rise and fall of Anglo and, by extension, Ireland. They also give us glimpses of the banker’s political connections, hands-off management and multimillion- dollar investments in Nigerian oil and Riviera real estate.
FitzPatrick, 62, ran Anglo for almost two decades before becoming chairman in 2005, and the book is already creating a political stir. He discloses, among other things, that he played golf with Prime Minister Brian Cowen in July 2008 and had previously called him to discuss the bank’s difficulties. Two months after their game, the government guaranteed the deposits and liabilities of all Irish banks.
The prime minister’s opponents cited the contacts as evidence of what they call unhealthy links between his government and the bankers who laid the nation low. Cowen denies any impropriety. This week, he defeated a challenge to his leadership during a secret ballot inside his Fianna Fail party.
In truth, the contacts aren’t much of a smoking gun. We don’t learn in any real detail what FitzPatrick and Cowen discussed -- or what the consequences of the contacts were. The authors are careful not to draw any conclusions.
More interesting are the insights into how FitzPatrick ran the bank. “I was a fairly fastidious guy, but it was easy and it was loose,” he says at one point. “I never read papers. If people weren’t good, I shot or fired them.”
Almost as intriguing is FitzPatrick’s dotty way of investing his own money, which may go some way to explaining the bank’s buccaneering lending. At one point, he sinks $12 million into an oil venture in Nigeria -- allegedly without first meeting his African business partners. Oil was an “interesting hobby,” he says. Then there was the 11.5 million-euro Saint- Jean-Cap-Ferrat rental property on the French Riviera that he invested in and then visited just once, the book says.
The clearest pattern that emerges is FitzPatrick’s absence during the crucial and most controversial moments of the crisis.
What about those deposit transfers to Anglo from Irish Life & Permanent Plc -- a practice that Finance Minister Brian Lenihan says may have created a “false impression” about Anglo’s deposit base? Not me, your honor.
How about Anglo’s heavy reliance on international money markets for its finance? Can’t help you there.
Though he accepts responsibility for the lender’s demise, FitzPatrick says blame needs to be spread more widely. He comes across as a somewhat bemused bystander, watching the carnage unfold around him. While police have questioned him -- an outing he describes in detail in the book -- no one has been charged in relation to Anglo and he denies any wrongdoing.
For now, bravo to Lyons and Carey. There are frustrations with this book, such as the absence of an index and, more significantly, a lack of on-the-record voices from other major players in the Anglo drama.
Still, in persuading FitzPatrick to speak, they’ve got a genuine scoop on their hands. While there’s no big revelation here, the mountains of detail they’ve extracted add up to a telling portrait of a man, a bank and a country in crisis.
“The FitzPatrick Tapes: The Rise and Fall of One Man, One Bank and One Country” is published by Penguin Ireland (264 pages, 18.99 euros, 16.99 pounds).
(Dara Doyle writes for Bloomberg News. The opinions expressed are his own.)
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