Inside the world of business
Olympic security farce shows flaw in privatisation doctrine
THE SPECTACULAR failure of the global security business G4S in relation to the provision of services to the Olympics in London has renewed concerns there about the wisdom of privatisation.
As droves of supposed staff of G4S have failed to turn up to work, the British police and army have had to be called in to prevent the collapse of security around the games. It is a picture that sits awkwardly with the over-trumpeted notion that the private sector is more efficient than the public.
At the core of the issue is the simple fact that the primary impulse, indeed obligation, of London-listed G4S is the production of profit. With valuable public contracts in hand, a key way to increase profits is to reduce costs.
Pursued aggressively, this eventually undermines the interest of employees in turning up for work and even the capacity of the company to know who its employees are. It goes without saying that there is no room for a public service culture in such a scenario.
It is worth remembering that this company is already involved in the running of prisons and important aspects of the policing service in the UK. Which is pretty scary.
The experience of the UK in relation to privatised services such as water provision, railways, and the funding of school and hospital buildings, has been so poor that even former acolytes of Mrs Thatcher are growing cool on the assumption that privatisation improves efficiency.
On this island, we have had the disastrous experience of Eircom, where a succession of owners have squeezed the company by burdening it with ever-greater amounts of debt, to the benefit of their bank accounts but to the detriment of the company and the economy generally.
Meanwhile, the troika and the Government continue with their view that the State should sell off some assets. They, and we, would be well-advised to proceed with extreme caution.
Ireland looming ever larger on international wind farm map
IF TWO announcements in the past three weeks are to be believed, Ireland has become the new mecca for those seeking to source energy through wind power.
US group Element Power this week announced plans for a 3,000 megawatt project which would see a connected grid of 40 wind farms dotted across counties Meath, Westmeath, Kildare, Laois and Offaly, producing energy to be fed by undersea cables to the British market.
This comes just weeks after Mainstream Renewable Power – the group led by former Bord na Móna chief Eddie O’Connor – unveiled plans for a 5,000MW “wind park” also in the midlands.
Both are targeting the UK market, which is struggling to meet its EU-mandated target to deliver 15 per cent of power from renewable sources by 2020.
Element believes the plan is a win-win for Ireland. Rental payments to landowners and local authority rates will amount to €50 million a year, says Element, and the energy exported will be worth €1.2 billion annually to the economy from 2018, producing up to 2,000 long-term jobs..
O’Connor’s Mainstream, for its part, envisages partnership with 900 landowners and 500 long-term jobs in its “energy bridge” project.
Both expect to come on stream in 2017 though much will depend on planners – especially whether they grant strategic infrastructural development status to the projects, allowing them to fast-track the process.
IDA Ireland, which is promoting the sector, says Ireland has a surplus of potential wind power. Support also comes from the recently agreed memorandum of understanding between Minister for Energy Pat Rabbitte and his UK counterpart, Charles Hendry, on bilateral trading in renewable energy trading.
Whatever the success of these two projects, with UK requirements amounting to a multiple of their combined output, we can expect to see plenty more turbines dotted across the landscape over the coming years.
Banks crying for stricter regulation
BANKING JUST cannot keep out of the news these days, and for all the wrong reasons. Those few western financial institutions that managed to sidestep the collapse of the sector post-Lehmans appear now to be succumbing to scandal.
First it was Barclays, which has received the sort of public humiliation from regulators that many here were hoping some of our own banking miscreants might experience. Having taken a calculated gamble in settling first with regulators over illegal manipulation of the London Interbank Offered Rate (Libor), the bank has suffered the loss of three of its most senior figures and the very public shredding of its reputation.
Those other Libor offenders still working their way through the process must feel distinctly uneasy about what awaits them.
An injudicious email exchange and what appears to be an inappropriate phone call – to judge from the written record on former Barclays chief executive Bob Diamond – also appear to have torpedoed any chance Bank of England deputy governor Paul Tucker had of succeeding Mervyn King to the top job in the central bank next year. A bit like the John Terry racism trial, the whole exercise has cast a distinctly unflattering light on banking.
Since then, HSBC, one of the world’s largest and most successful banks has seen its US head of compliance resign in front of congressmen as it was accused of money-laundering and breaking Iranian sanctions.
And still, the City of London and banking generally urges caution on regulation. If the events of the past four years prove anything, it is that banks can never be relied on to act responsibly without the strictest of regulation.
QUOTE OF THE DAY
We have said quite clearly that success in Ireland will hinge on euro area stability and recovery,”
– Ajai Chopra, of the IMF, in Dublin
TODAY
National Treasury Management Agency chief executive John Corrigan presents its mid-year business review as the agency publishes its 2011 annual report
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