Niamh Brennan, Professor of Management at UCD is a very confused woman. Here’s what she had to say on RTE recently (1st report, 2nd item) regarding the Anglo Irish fraud.
“I’m terribly disappointed that the company did not have the high standards that I thought it had.”
“The accounting standards are very explicit, transactions should not be entered into for the purpose of disguising the truth. What has happened here is a case of deception on the part of Anglo Irish Bank.”
“It is fraudulent financial reporting, I’ll repeat it again because I feel so strongly about it; that is why I’m so baffled, why the Financial Regulator could possibly say there was nothing illegal about the Fitzpatrick loans, I cannot accept that.”
Professor Brennan is baffled because like so many so called experts she still labours under the illusion that Ireland is a normal democratic country. She still believes that politicians, Government officials and regulatory agencies all work for the good of the country, she still believes that the State is intent on prosecuting the corrupt rather than facilitating them, despite overwhelming evidence to the contrary.
Here’s an article she wrote on 3rd June 2004. (My emphasis with comments in brackets).
Shame of our low standards in high places
I am one of the few people that think Enron is a great thing to have happened. That is because around the time of Enron, I established the Institute of Directors Centre for Corporate Governance at UCD. This is a joint venture with the Institute of Directors. Business has been booming ever since.
Happily (for me, but not for the thousands of investors that have lost millions) corporate scandals continue to fill newspapers. This reminds company directors that being a director nowadays carries very onerous responsibilities and risks. Directors need to get training – to make sure they don’t appear in the national newspapers wearing handcuffs, or worse still join George Redmond in jail.
(As corporate governance is a joke in Ireland any director who actually paid for such a course is a fool).
A fairly predictable consequence of corporate scandals, is a call on politicians to do something to sort out the mess. This usually results in even more regulations and laws. This is what happened as a result of the DIRT scandal.
(And the call in response to the current scandals is for even more regulation, anything bar actual prosecutiions).
We now have a new Accounting and Auditing Act which makes even more demands on directors. However, we now also have a very fine regulatory environment in Ireland. In fact, so good are these new regulations, that (shortly after the Enron scandal) Brian Walsh, chief executive of the Institute of Chartered Accountants, described them as a very fine example of public policy development. He said that Ireland would be a leader in the field in corporate governance.
(Remember, this was written in 2004).
Many commentators are complaining about this legislation – that excessive regulation stunts entrepreneurial activity and takes people away from doing business. But I believe the converse is the case. Strong regulation is good for Irish business. It will attract quality investors from abroad.
Low standards in corporate life turn off quality investors, and attract the kind of investors the country would be better off without. The problem with more regulations is that the good guys kill themselves to continue to observe and apply our laws to the highest possible standards, at a considerable cost to their business, both in time and money.
Meanwhile, the bad guys continued to do as before, and approach any new regulations in their usual tickboxing, ritualistic way. Within their inner sanctums, behind boardroom closed doors, they continue to feed their personal greed by cutting corners, and in some cases by outright corruption.
(And we are still waiting, since the foundation of the State, for the first prosecution).
Ireland continues to suffer from the consequences of very low standards in public and corporate life, as featured in the all-too-many tribunals currently in progress. As a result, we are at the wrong end of worldwide corruption indices. This is not good for business, and won’t help us attract top class investors to Ireland.
(But it did attract a large cabal of chancers to the ‘Wild West’ IFSC centre).
In spite of the whingeing from some quarters, while our new regulations are onerous, they are ones which I believe will stand the test of time and which will even become a source of pride to us.
(No wonder the Professor is baffled).
The problem with corporate governance is us – us human beings – and our tendency (on occasion) towards dysfunctional behaviour. Each one of us has to take personal responsibility for our behaviour, for its affect on public and corporate life, and for the messages we send out about the kind of society in which we want to live. I believe that as a society, we are ambivalent about high standards of behaviour in public and corporate life.
(We are indeed ambivalent but that does not excuse the State facilitating white collar crime).
For example, after revelations of questionable (to put it mildly!) dealings in relation to his taxation and other financial affairs, not only did the voters of Tipperary North in the 1997 general election elect Michael Lowry, they put him at the top of the poll. All those voters made a clear personal statement about their attitude to standards in Ireland.
(Agreed, Irish people are politically ignorant with a complete inability to make the connection between voting for a corrupt politician and the inevitable consequences that will follow).
Thus, while we roar and shout when a new corporate scandal breaks, many of us have questions to answer about our own personal day-to-day behaviour and the way in which it influences standards in Ireland, both corporate and otherwise. No laws or regulations can prevent greedy, self-serving behaviour by company directors.
(Wrong. If a company director sees a colleague going to jail he/she will think twice before engaging in corrupt practices. The witnessing of law enforcement is a strong disencentive to wrong doing. The problem in corrupt Ireland is that, for white collar criminals, there is no law enforcement so, in effect, they can do as they wish – and they do).
Add to this, that greedy, self-serving people seek each other out. The old Irish phrase “Aithnionn ciarog ciarog eile” (one “beetle” or maybe “cockroach” recognises another) captures this aspect of corporate life beautifully.
(Ah yes, Haughey/Ahern come to mind).
So on top of good rules and regulations, there has to be a real meaningful engagement, and a commitment to good practice, from each individual human being around the boardroom table. These additional regulations are scary – especially the requirement on directors to sign a statement saying they have complied with company, taxation and other relevant legal regulations.
But, don’t panic, help is at hand!
For all you down-trodden, over-burdened directors, the Institute of Directors Centre for Corporate Governance at UCD (www.corporategovernance.ie) is there to ease your pain. We offer short half-day courses on governance, in house customised courses for individual company boards, and in September 2004 we are introducing a one-year, part-time Diploma in Corporate Governance.
(I would love to see a student list for these courses. I’ll bet Sean Fitzpatrick isn’t one of them.
Professor Niamh Brennan, is Michael MacCormac Professor of Management, UCD Academic Director Institute of Directors Centre for Corporate Governance at University College Dublin
The baffled Professor
2 thoughts on “Confusions and bafflement at the school for Corporate Governance”
Too late for this foreign investor. I’m not ambivalent at all and having lost £80k of my retirement savings, won’t be placing any more of them in Ireland, even if FitzP. does sign up for the course when the pigs take to the air.
To whom is Prof Brennan married? When you answer that you’ll be even more baffled that she should have the brass neck to continue her waffle about corporate governence. The gov of which her husband was a member and the legal counsel put most of the ‘governance’ in place and was also responsible for the tax breaks that was the basis for a lot of the funny business in the banks.
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