AFTER A year of swingeing loss, scarcely a member of the business elite is untouched by the recessionary forces sweeping through Irish commerce.
Amid excruciating turmoil in the financial world, mere survival is the current objective of many business luminaries. Thus the losers' enclosure is packed to capacity - and there are but a few contenders for a place on the winners' podium. As business affairs came to the fore as never before in the national conversation, many stellar reputations took a hit.
In the beleaguered banking sector, no one could escape a seismic breakdown that erased as much as €55 billion from the market value the quoted institutions achieved when they reached an all-time high in February 2007.
If the downward slide was painful for all, the spectacular flameout at Anglo Irish Bank saw a titan of the boom buckle under the combined weight of credit crunch, property collapse and scandal.
The abrupt departures of chairman Seán FitzPatrick, chief executive David Drumm and non-executive director Lar Bradshaw over underdeclared loans of €87 million to FitzPatrick put paid to the bank's increasingly futile attempts to remain independent.
With Anglo all but nationalised following the Government's decision to take preference shares with 75 per cent voting rights as the price of public recapitalisation, FitzPatrick was the biggest loser in the banking debacle.
While his preening in a astonishing radio interview with Marian Finucane outraged many business colleagues, his controversial transfer of loans to Michael Fingleton's Irish Nationwide Building Society (INBS) year after year for eight years was his undoing.
The affair raised sharp questions about the work of Financial Regulator Pat Neary, whose office had known of the loans for almost 12 months before they came to the Government's attention. The revelation of the concealment of these loans - when Anglo was on the brink of recapitalisation, after a 97 per cent share price collapse - sealed the bank's fate.
Also hit by Anglo's woes were Seán Quinn and members of his family. Their 15 per cent stake in the bank was valued at €1.22 billion at the start of 2008 when held through contracts for difference. That interest, now held in shares directly, has been all but obliterated.
On their own, such losses merit a special place in the annals of Irish business disasters. Yet there was more, much more.
Quinn had to resign as chairman of his own insurance firm after it was fined €3.25 million and he personally was fined €200,000 over the failure to notify regulators of a €288 million company loan that was used to finance his family's purchase of Anglo shares and cover their losses. His primary business, Quinn Group, wrote off €829 million advanced in 2007 to subsidiaries that made stock market investments for his family.
Further write-offs seem inevitable.
Quinn was also burned in the €850 million near-collapse of International Securities Trading Corporation (ISTC), the ill-fated specialist bank lender set up by former Anglo star Tiarnan O'Mahoney which sold for €5 million to a unit of investment bank Collins Stewart. Others exposed to ISTC included Seán FitzPatrick and Denis O'Brien. O'Mahoney remains chairman of the Pensions Board, a nominee of Minister for Social and Family Affairs Mary Hanafin.
Troubles in the bank business were not confined to Anglo. With the likelihood of bad debts rising as a result of the recession, the upshot of it all is that taxpayers are now on the hook for all the liabilities of the Irish banking system.
For most of the quoted institutions, all of whom rode high in the boom years, a humiliating turn to the State as guarantor of last resort in September led inevitably, if tortuously, to agreement on recapitalisation by Christmas. Remarkably, AIB chief Eugene Sheehy and his Bank of Ireland counterpart Brian Goggin were still talking smoothly and still in their jobs at the end of the year.
So too was Denis Casey at ILP, which may yet receive State capital and which is in takeover talks with the Educational Building Society (EBS). Despite the best efforts of EBS chief Fergus Murphy, the leaking of a confidential internal report outlining the seismic strategic options being assessed by the building society showed that serious dysfunction has yet to be eliminated from that camp.
With the independence of INBS also on the line, Michael Fingleton's failure to proceed with a sale of the society immediately after the enactment of legislation to facilitate demutualisation in mid-2006 now looks drastically misjudged. In addition, INBS incurred a €50,000 fine from Pat Neary after Fingleton's son Michael jnr solicited new deposits on the back of the guarantee.
While Minister for Finance Brian Lenihan seemed constantly to be fighting fires in the bank sector, he has not yet achieved the consolidation that was mooted around the time of the State guarantee. That he inherited the banking mess flowed directly from Bertie Ahern's departure from the taoiseach's office, which liberated Brian Cowen from the Department of Finance.
Lenihan promptly bemoaned his "misfortune" for taking stewardship of the public finances in such straitened times. In his maiden Budget, brought forward in light of the escalating crisis in the public finances, he spoke of patriotic duty while increasing the tax take from the middle classes. A climbdown on plans to eliminate free medical cards for the over-70s was but one of a few embarrassing U-turns along the way. All the while the public finances continued to worsen.
If a review of the public sector by An Bord Snip Nua chief Colm McCarthy signals a retrenchment for the bloated State bureaucracy, the likelihood of dire spending cuts in 2009 will bring David Doyle and his Department of Finance colleagues further to the fore.
Although the crisis in Irish banking is rooted in the property crash, big developers with supersized bank loans stolidly remained in business in spite of the collapse. Yet pressure is mounting.
Seán Dunne will have to wait until next June to hear the outcome of his appeal against Dublin City Council's refusal to grant permission for a 37-storey tower in Ballsbridge on a site amassed at a cost of €379 million. Dunne told Marian Finucane on RTÉ radio that his lending arrangements constituted "good banking". On another Finucane programme, developer Bernard McNamara said he had "sufficient assets" to cover his debts and dismissed any suggestion that he or his business were exposed to any financial difficulty. McNamara sold his Superquinn stake and pulled out of five social housing regeneration projects in central Dublin.
In an extraordinary testament to dire conditions in the residential market, McNamara and fellow-developer Ray Grehan separately offered interest-free loans to prospective home-buyers who could not raise large deposits to buy property in two of their developments. That two highly-leveraged developers offered leverage free of charge to stimulate business was remarkable indeed.
Developer Paddy Kelly, another ISTC investor, told Eamon Dunphy on radio that he owed "hundreds of millions" to his bankers but maintained this was not a great burden on him.
Amid testing times for really big developers, smaller players and the companies that carry out work for them fell by the wayside. Brothers Michael and John Taggart saw Taggart Holdings go into administration in Northern Ireland and receivership in the Republic.
In the first six months of 2008, accountants Farrell Grant Sparks reported a 76 per cent rise in creditors' voluntary liquidations, High Court liquidations, receiverships or examinership. Of 177 corporate failures, 42 per cent were in the construction sector.
The pain spread. Businessman Malcolm Brighton saw his Habitat franchise close down. In the pub trade, investors Simon Kelly, Seán Doyle, Philip Hickey and Mark Leavy saw the Thomas Read group go into examinership. Directors William Walsh and Angela Cahill saw ladies chain Sasha meet the same fate. With hoteliers across the board under pressure, Shelbourne Hotel owners John Sweeney, Bernard Doyle, Bernard McNamara, Gerry O'Reilly and David Courtney sued the Marriott organisation over its stewardship of the property. Marriott denied any default in its management of the hotel.
Departees from the top echelon included DCC founder Jim Flavin, who resigned after the Irish Association of Investment Managers called for his head and corporate law enforcer Paul Appleby sought a High Court inspection into the Fyffes insider dealing affair. Flavin retained the support of the entire DCC board to the very last.
CC chief Maurice Pratt called it a day after a catastrophic loss of value in the cider company, but was soon recruited by Minister for Tourism Martin Cullen to chair the Tourism Renewal Group. FÁS chief Rody Molloy left the training agency after a poorly-judged radio interview with Pat Kenny about his expenses. Payzone chief John Nagle and chief financial officer John Williamson were dismissed by its board after the market lost confidence in the merger of Alphyra and Cardpoint.
There was more. The near collapse of Australian investment bank Babcock Brown and precipitous decline in the share price of its satellite fund Babcock Brown Capital (BCM) means Eircom is once again in play. Eircom executive chairman Pierre Danon and Babcock financier Rob Topfer left the stage.
Of the new arrivals, incoming Greencore chief Patrick Coveney had a torrid time of it when a €21 million fraud was discovered in its mineral water unit. The contract of auditors PricewaterhouseCoopers was not renewed.
Elsewhere, Josephine Feehily became chairman of the Revenue. Defaulters who made settlements with the tax authority this year included Tullamore-based Condron Concrete, whose payment of €8.1 million was the third-largest since Revenue began publishing defaulters' names. Co Offaly publican Christy Cowen, a brother of the Taoiseach, made a €96,351 settlement.
As the economy worsened, only liquidators, receivers, examiners and litigation lawyers seemed to be booming. While deal-making verve fuelled by the euphoria of a soaring economy epitomised the years or strident growth, the mergers and acquisitions scene practically ground to a halt.
Not before Airtricity founder Eddie O'Connor achieved the greatest triumph of 2008 when majority shareholder NTR sold the firm's European unit to Scottish and Southern Energy for €1.08 billion. The deal, on only the fourth day the year, capped the €1 billion sale of its US wind farms to German giant Eon.
O'Connor's own bid for the European business was rejected by NTR, but he walked away with his bank balance enhanced by more than €50 million. Many doubted O'Connor's vision when he set up Airtricity in the late 1990s. His perseverance paid off nicely, although his sale proceeds were dwarfed by the €118 million received by NTR chairman Tom Roche and his family in a liquidity event at that company.
If the Airtricity sale seems now like the dying kick of an age of plenty in which vast fortunes were accumulated with aplomb, other deals done in 2008 were of more modest scale. They included Hibernian's purchase of the 70 per cent of health insurer Vivas held by Dermot Desmond's IIU and Vivas managers, a transaction that underlined Desmond's profit-making capacity even in turbulent times.
There was no resolution of the stalemate at ferry operator Irish Continental Group. Company chief Eamonn Rothwell and One51 boss Philip Lynch are in talks to mount a joint bid for the business with Doyle Shipping. The intentions of 29 per cent shareholder Liam Carroll remain unclear. Habitually disinclined to speak in public, Carroll saw the value of ICG stake drop by some €28.7 million to around €132 million. The value of his Greencore shares dropped by more than €210 million to around €56.6 million.
At Bord Gáis Éireann, John Mullins' preparations for a €2 billion bid for the generating plants owned by independent power company Viridian in the Republic were blocked by the Government. FBD chairman Michael Berkery successfully spurned an unwelcome €1.2 billion takeover approach for the insurer from Dutch financial giant Eureko.
In the stockbroking sector, Ronan Reid came close to a sale of Dolmen to Irish Life Permanent only to see the deal fall through. At Davy - two years into a €316 million management buy-out led by Tony Garry and Kyran McLaughlin - the company made a €35 million settlement with credit union clients to cover losses incurred on investment bonds.
The meltdown in Iceland's financial system played into the hands of Merrion Capital chief John Conroy and colleagues, who are paying some €30 million for the 84 per cent stake in the business that was acquired by Lansbanki for €90 million.
A renewed bid by Ryanair chief Michael O'Leary for Aer Lingus proved to be headache for Dermot Mannion, although the incoming Aer Lingus chairman Colm Barrington immediately adopted a more pugnacious stance with Ryanair than his low-key predecessor John Sharman.
However, O'Leary's new approach came sprinkled with unexpected promises on union recognition, the restoration of the Shannon link with Heathrow, the protection of Heathrow slots and other treats. Whether EU competition commissioner Neelie Kroes yields remains to be seen.
While O'Leary famously wasn't hedged as oil rocketed to $147 per barrel, Ryanair has forecast that it will break even in the current fiscal period after dipping into losses in the second half.
There was no sign of a bid for Independent News Media (INM) from "dissident" investor Denis O'Brien, whose losses on his 26 per cent stake in the company easily exceed €350 million. O'Brien's ritualistic attacks on INM chief Sir Anthony O'Reilly prompted an unsparing tirade in March from the knight's son Gavin O'Reilly, second-in-command in the company.
Several months later, however, Gavin O'Reilly and O'Brien met face-to-face at INM's head office in Citywest. The medium-term value of O'Brien's stake and Sir Anthony's 29.5 per cent interest may well rest on the company's ongoing attempts, in a very difficult market, to sell its 39 per cent shareholding in Sydney-based APN News Media.
The two rivals are busy on other fronts, with O'Brien steering on the expansion of his Digicel mobile phone empire. However, he recently told a Jamaican newspaper that long-time associate Leslie Buckley or Digicel chief executive Colm Delves will succeed him at the helm of the company whenever he decides to step back. Meanwhile, Mr Justice Moriarty is soon expected to make public his tribunal's report on the award of the State's second mobile phone licence to O'Brien's Esat Digifone in the 1990s.
Sir Anthony faces a massive dilution of the 60 per cent interest in Waterford Wedgwood he shares with his brother-in-law Peter Goulandris if the company recruits new investors. Waterford's survival will be in grave doubt otherwise. Either way, Sir Anthony's combined investment in Waterford with Goulandris - some €400 million - has been nothing short of disastrous.
Now in the latter stages of a long and illustrious career but still in the thick of the fray, Sir Anthony's investments in food group Heinz, oil company Providence Resources and Lundin Mining all lost significant value last year.
As 2009 begins, there is an overwhelming sense that the months ahead may prove to be the most testing period yet seen by a generation of business people accustomed to great success and wealth. In this changing landscape, with tens of thousands of workers likely to lose their jobs as the economic contraction worsens, neither the winners nor the losers will have it easy.
