Boardroom seats: just a reward for party cronies

The controversy surrounding Dermot O'Leary's conduct as a director of Aer Rianta has highlighted the role of political cronies…

The controversy surrounding Dermot O'Leary's conduct as a director of Aer Rianta has highlighted the role of political cronies given perk jobs on State boards. Joe Humphreys reports.

Wanted: Someone to attend a working lunch once every five weeks. Remuneration of €13,000 a year, plus expenses. Free personal use of company services available. No experience required. Party activists, preferably male, need only apply. (In fact, don't ask us; we'll ask you.)

So A cynic might describe the nature of appointments to the boards of public sector companies. Cynical? Yes. But how far is it from the truth?

Glance down the list of directors at any State agency and you'll find them all there: party fund-raisers, party activists, party advisers, former ministers, failed candidates, or just "friends of the Minister", people whose political allegiance appears to be their only qualification for the job.

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Not that there's anything new in such cronyism. Political parties of every hue have been guilty of using boardroom seats in some of the State's most important companies as a reward for loyalty, friendship or benevolence. A fuss is only made when there's controversy, as is the case now with Aer Rianta director Dermot O'Leary's "humanitarian" intervention in Dublin Airport on the occasion of disgraced TD Liam Lawlor's return to Ireland.

Mr O'Leary, a member of the Fianna Fail ruling national executive whose expertise lies in cranes rather than planes, is the perfect example of the political appointee whose fortunes, as regards State directorships, swing with those of his party.

Appointed to the board of Aer Rianta in October 1992 under a Fianna Fail government, he was later made chairman of CIE by the then minister for transport, Brian Cowen, in 1994. A year later he was controversially dropped from the post when the rainbow coalition swept into power. But in November 1997, when Fianna Fail returned, he was back again, this time on the board of Aer Rianta.

A more telling scenario can be found in Aer Lingus, where three of six non-executive directors on the board are prominent Fianna Fail activists.

There's Des Richardson, former constituency fund-raiser for the Taoiseach, and the party's first full-time fund-raiser. There's Chris Wall, Mr Ahern's former election agent and lifelong friend. And there's Dr John Keane, election agent to the Minister for Public Enterprise, Mary O'Rourke, and fellow native of Athlone, Co Westmeath.

A spokesman for the Minister said he could not comment on individual appointees, adding there were no specific criteria which they were obliged to meet. He stressed, however, that the Department of Public Enterprise did consult private-sector guidelines on corporate governance, which stipulated appointees should be trustworthy, have experience or competence in a relevant area and add to the skills mix on the board.

"The big fear is that the board will have a dominant clique or dominant person rail-roading everything through. Successive governments have held the view that not everyone should come from one area of expertise because the board then becomes a talking-shop or pressure group," he said.

But is the current "skills mix" erring on the side of inexperience? Recent initiatives from the Department would suggest it is. In establishing the rail procurement agency, which will oversee proposed Luas and Metro developments, the Department stipulated, in legislation for the first time, the level of competence required for directors. Nominees were obliged to have expertise in "one or more" of a range of areas including law, economics, engineering, and transport planning.

The privatisation of Eircom, which involved the removal of several board members in the months before flotation, has underlined the need for reform. The shake-up was prompted by consultants to the Government who warned that without a strong board, with proven public limited company experience, a privatised Eircom would struggle to gain credibility.

With other State companies up for flotation, similar purges can be expected. In the case of Aer Lingus, Ms O'Rourke has already promised boardroom changes, the irony of which is not lost on one senior trade unionist.

"There's a feeling that these stooges are good enough for State companies but when it comes to private companies a different set of criteria applies," he says, in reference to public companies in general. "You don't have to look too deeply to see these people have no relevant expertise, and the suspicion is that they're there just to keep their political masters well informed, and ensure no decisions are made which would embarrass the Government."

A more sinister theory is that appointees are there to maintain a mutually-beneficial "golden circle". As Green Party TD John Gormley puts it: "There is a belief that even when Fianna Fail are not in government they are in power. We need to depoliticise the whole appointment process."

State agencies naturally maintain that non-executive directors are forbidden from bringing party politics to the boardroom. Agencies also claim that financial rewards to board members are overstated by the media. But if neither money nor political influence is a factor then why do people take the job?

For kudos, is the most common answer given by directors themselves. But, even then, that raises the question: is this what we want our State bodies to be used for, some sort of back-slapping gentleman's club?

And, incidentally, it is mainly gentlemen we are talking about. A Government survey last year found that only two Departments were reaching a gender target of 40 per cent women on boards under their aegis. The Minister for Finance, Mr McCreevy, was found to have appointed 10 women out of 81 vacancies since 1997, and Ms O'Rourke 15 out of 115.

As regards reform, the larger political parties have been reluctant to abandon what is considered one of the spoils of government, although there are indications that may finally change.

In the wake of the Hugh O'Flaherty controversy 18 months ago, the Labour Party suggested it would champion a range of reforms including the opening up of certain jobs to public competition through the Civil Service Appointments Commission, and the scrutinising of chairmen on State boards by Oireachtas committees.

The party has since gone quiet on the matter, although a spokesman said it was "quite probable" a policy initiative would be revealed closer to the election.

Fine Gael went a step further this week by agreeing measures which would see all board nominees subjected to questioning in the Oireachtas.

In what some might regard as an extraordinary volte-face, the party's public enterprise spokesman, Mr Jim Higgins, said: "We feel State bodies are too important to be used by political parties as a means of rewarding party supporters."

He rejected the claim that the procedure would act as a deterrent to people taking up positions on boards, adding that similar vetting schemes operated in other countries, including the United States.

"The intention would be to give people a rigorous scrutiny in committees. But if they are suitable, and if their credentials are what is required for the job, I don't see why it should be an inhibiting factor."

With public disquiet continuing over the O'Leary case, the question of how, and why, party cronies end up on the boards of public companies may force its way on to the election agenda.

History suggests, however, that one shouldn't bet against the Opposition quietly shelving its plans for reform either before or after a possible change of government.