You don't need me to tell you that this has been a horrific couple of weeks for the banking industry in Ireland, with revelations about offshore investment schemes for senior executives and issues about tax compliance added to the stories of overcharging customers at AIB and the slightly surreal resignation of Michael Soden over accessing Las Vegas escort sites on the internet at Bank of Ireland, writes Sheila O'Flanagan
I tend to be less hysterical about the overcharging since I don't believe that it was a deliberate corporate policy, although management's apparent desire to push the blame onto junior staff members is disgraceful. Even the upping of the mortgage insurance, while not exactly open and transparent was, perhaps, more akin to having the travel insurance cost tacked on to your holiday price without having it pointed out to you that you might have been able to get it cheaper somewhere else than a major scam.
But the murky waters of the Faldor scheme for senior executives is a different story altogether and only serves to reinforce the belief held by many of us that high-level business people don't think the rules apply to them. And they think they are worth every penny of every scheme that can bring them in extra money. Roy Douglas stated that he regarded the investment fund managed by AIBIM on behalf of the senior executives as a "benefit attaching to my position". So as well as the "because I'm worth it" remuneration package, senior executives had the fruits of their labours managed for them by professional fund managers.
Not only that but those funds seemed to have been given preferential treatment.
Preferential treatment of funds has always been a potential problem within the funds management industry. Rules have been tightened up in those companies over the past number of years to prevent that sort of thing happening courtesy of date and time stamping of trades and a variety of other means to ensure that the correct deals are always allocated to the correct funds at the correct time. But rules can be broken. As we know only too well.
The corporate world always seemed to operate in a cocoon of its own. But high-profile revelations from big companies in the US and Europe has changed the manner in which we view corporate governance. The cocoon has been split wide open and nobody can possibly like what's spilling out. It still seems that executives are unable to rise to the top of their profession without feeling that no amount is too big and no benefit too great to award themselves for climbing the greasy pole.
Meanwhile, the Michael Soden issue adds a certain tabloid feel to the whole banking industry. Stressing that he had not done anything illegal and that his viewing of Las Vegas escort sites was mere "curiosity", Mr Soden has nevertheless left us wondering how it was that, in the cut-and-thrust world of high finance, where you are head-hunted and paid a fortune to compensate you for the stress involved in the almost 24-7 nature of the business, you have time to sit around in your office contemplating a potential trip to Las Vegas and searching for the kind of companion that you need late at night when going through new business plans.
His statement about putting the bank's interests ahead of his own was, I presume, meant to sound noble but the bottom line is that he was accessing adult sites on bank time and on the bank computer and that was hardly putting its interests first. But at least he had the decency to quit. Interestingly, the statement by Laurence Crowley says that Michael Soden's resignation was accepted with regret. I'd say it was accepted with a great deal of relief.
Many people are now saying that the banking industry is in crisis and that the whole future of Ireland as a financial services centre is under threat. This is somewhat extreme. In the context of possible criminal proceedings or fraud, we are currently talking about one home-grown financial institution. In the past few years, we have seen many of the biggest global names in banking - Merrill Lynch, Citigroup, Goldman Sachs and others - paying large fines or having their employees investigated for bad practice in the industry. No financial institution should be in the position of having its business placed under scrutiny for a culture of corporate greed. But it's almost inevitable that in every country there'll always be one.
People in finance like to pay themselves well. They see themselves as the kind of guys who keep the whole commercial scene on the road. But in the end, stripped of all the frills and fineries that dealing in vast sums of money can bring, bankers are no more than middlemen between people who have excess funding and people who want to borrow.
They put the two together and charge a fee for the purpose. They don't create anything but they do, perhaps, enable other people to grow and develop their businesses.
It does us no harm to have to scrutinise the industry and the people who work there. As with every industry, success at the top has come by being relentless in demanding greater productivity from people at the bottom. As with every industry, the people at the top seem to have inflated ideas about the value of the work they do. We grumble about the money they earn but we don't feel there's very much we can do about it. But when they decide to reward themselves by engaging in malpractice, then we can do something about it.
In the US, executives who have been found guilty of fraudulent behaviour are now facing criminal charges. The "perp walk" has become synonymous with greed in the corporate culture. It seems sad, but not outside the bounds of possibility, that we may yet have perp walks of our very own.
