THE FRIDAY INTERVIEW:Gary McGann, Smurfit Kappa chief executive
MONDAY MORNING in Clonskeagh. There’s a chill in the air but the sun is out and there’s a feeling that spring might finally have sprung.
Smurfit Kappa boss Gary McGann’s office is boiling. The heating in the large, wood-panelled and nicely carpeted office – where Michael Smurfit once directed the global cardboard box empire – is on full whack.
Twelve months ago McGann was feeling heat of a different kind.
In January 2009, he resigned from Anglo Irish Bank following its nationalisation.
He and his fellow Anglo directors were public enemy number one, as the Government wrote an open cheque for the failed bank.
A month later, McGann bowed to the inevitable and handed in his cards as chairman of the State-owned Dublin Airport Authority (DAA).
In parallel with all this, Smurfit Kappa’s share price went through the floor, although it has regained some ground in recent months.
So a year on, how does he reflect on the whole Anglo debacle?
After an upbeat opening to the interview, McGann’s mood changes utterly. His body language becomes distinctly defensive and the colour almost drains from his face.
He gives a little shake of his head before saying: “No, I can’t go there.”
After a pause he adds: “There’s just nothing I can say about it.”
McGann has every right to be defensive about his role in Anglo. He served on the board for seven years from 2002 and was chair of the audit committee when all the shenanigans with directors’ loans were taking place.
The Smurfit boss and Seán Fitzpatrick, the disgraced former chief executive and chairman of Anglo, were very good friends. Fitzpatrick was chairman of Smurfit Kappa when Anglo collapsed and he had helped oversee its return to the stock market in 2007.
Are the pair in touch? Again, McGann won’t commit himself.
Has he been contacted by the Garda Fraud Squad? “I can’t go there,” he says, with another shake of the head.
Did he ever consider quitting as chief executive of Smurfit Kappa, a Dublin-based multinational with operations in 31 countries and sales of more than €7 billion?
“No,” he says, adding that he never considered it necessary. He stood down from the DAA so as not to distract from his role with Smurfit.
How would he characterise 2009 in the life of Gary McGann? “It was one of the tougher years,” he says, before later adding that it was also a “tremendously educational year”.
McGann later says he reckons the country lost it around 2005 when property prices began to rocket.
As a seasoned businessman who has lived through the black days of the 1980s, what did he think about the inflated price paid by Seán Dunne for his Ballsbridge hotels? “I just could never understand it,” he says.
How does he square that with Anglo’s involvement in the commercial property market, notably its support of the €412 million purchase of the Irish Glass Bottle site in Ringsend, land that is now worth only a fraction of this price?
That was a no-go, too.
In an interview in January with the online arm of the Financial Times, McGann said Irish people thought they had “reached the promised land”.
“We overpaid ourselves individually, collectively and almost unanimously,” he added.
Does he include himself in that?
McGann earned €2.35 million in 2008. This was 9.2 per cent down on the previous year as his bonus was roughly halved, but his salary and pension payments increased.
So how much did McGann earn in 2009? “It’ll be in our annual report; I’d be shot if I told you that in advance of the publication. But we froze salaries in 2009 and 2010 and bonuses were down.”
McGann was president of employers’ group Ibec from 2004 to 2006, placing him at the heart of the social partnership process, which, it could be argued, helped to inflate Irish wages and make the economy uncompetitive.
McGann says partnership served us well broadly speaking, but he concedes that it was not perfect. “The latter awards were too high and caused some of the cost structure that have made us uncompetitive,” he says. “But it’s not as disastrous or as deep as people think.”
McGann was willing to discuss his tenure at the DAA, which involved drawing up a near €2 billion programme of investment – since trimmed back because of the recession – for the Dublin airport campus.
The airport’s Terminal 2 facility is due to open in November, coinciding with a collapse in visitor numbers and air traffic.
Has he any regrets about signing off on that project? “No,” McGann says, although he accepts the timing has not worked out perfectly.
McGann argues that the new terminal building will provide a “view and a vision” of Ireland to the world that will stand us in good stead.
It’s a “symbolic confidence”, he adds.
He also believes the mooted €4 billion Dublin Airport City project on 350 acres adjacent to the airport was viable. “I still think the proposals made huge sense,” he says.
Michael O’Leary wouldn’t agree, and the Ryanair boss might have had a role in hastening McGann’s departure from the DAA.
In January last year, Ryanair issued a statement called for McGann to go in light of his connection with Anglo.
Ryanair said he was not “a suitable or appropriate director or chairman for a Government-owned airport authority”.
How does McGann regard O’Leary? He gently shakes his head again and seethes ever-so-slightly in his chair. “He’s a very good negotiator,” he says, biting his tongue.
But how do you really feel about him? “Maybe sometime over a pint I’ll tell you.”
McGann’s premature departure from the DAA was the second time in his long career that he left a role with a State company in some haste.
In 1998, he resigned as chief executive of the then State-owned Aer Lingus to join Smurfit as chief financial officer. McGann had intended to stay on and allow for an orderly handover to a successor.
Public enterprise minister Mary O’Rourke had other ideas and McGann had to clear his desk immediately.
Would he serve on the board of a State body again? “Probably,” he says. “Public service is a requirement for people who have something to contribute.”
McGann is held in high regard within the Irish business community. He is viewed as someone who plays it straight and works hard: a polite man with a tough streak.
These are traits that have served him well in a career that also included stints with Ericsson and drinks group Gilbey’s.
McGann is a self-confessed workaholic. He spends roughly half the year travelling and works six days a week.
His down time is spent with the family and he is proud as punch of his two young granddaughters. Photographs of his family are dotted around his office.
He has been eight years in the top job at Smurfit and will be 60 in August.
Has he any thoughts of retirement? “No, I don’t. I really enjoy what I do.”
The company is heavily indebted but last year secured a refinancing and chipped away at its debt pile. “We need to continue to do that,” he says.
And when does he expect an upturn in demand and sales? “Our sense is that it will be a slow recovery,” says McGann, adding that Smurfit will manage its capacity carefully.
Tony Smurfit, son of Michael and the company’s chief operating officer, has been touted as a successor.
McGann says Smurfit has an “incredibly capable business mind” but adds that finance chief Ian Curley is “equally world class”.
“The company will be in good hands,” he says.
McGann says he is focused firmly on the future. The events of last year and beyond are behind him. “I never look back because there’s nothing I can ever do about it.”
ON THE RECORD
Name: Gary McGann
Age: 59
Job: Smurfit Kappa chief executive
Family: Married to Moira, with three adult daughters and two young granddaughters
Hobbies: Plays golf, setting up the Highlanders golf society in Athlone 25 years ago. "I'm not the best-attending member."
Something you might expect:McGann is a self-confessed workaholic, but he likes to spend down-time with his family. "Any spare time I have is spent with the grandchildren."
Something that might surprise:He spent 12 years living in Athlone when working with Ericsson, and enjoyed every minute of it.
“It was a great time. It [Athlone] gets a hard time but I loved it there. It’s a great town.”
