Key Post An open letter to Shane Ross

Brendan Burgess

Brendan Burgess

Founder
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Shane Ross
Dáil Eireann

Dear Deputy Ross

On Tuesday, Enda Kenny had the Dáil in stitches reminding you of what you had said about the Irish Nationwide on 28 March 2004:

You said Michael Fingleton’s Irish Nationwide published a cracking set of figures. And you went on to say

All Fingleton’s figures are spectacular. Pre- tax profits are up 20% and gross lending rose by 72%.

And you followed that by saying I should have bought into Irish Nationwide.
Anyone who has a spare twenty grand might still have time to carpetbag.
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You handled it well. You laughed it off. You laughed it off again the next morning when Cathal Mac Coille asked you about it on Morning Ireland.

But this was not a once-off error of judgment. You portrayed yourself as the scourge of the banks and the bankers. But until March 2009, when Mark Little asked you straight out “Should Fingleton resign?” you had never criticised Michael Fingleton or the Irish Nationwide. Instead, you lauded his performance and attacked anyone who dared criticise him.

Why did you never run a story about Irish Nationwide’s overcharging?
You ran stories about every other lender in this country, but you ignored the predatory lending practices of the Irish Nationwide.

  • Their practice of charging 20% penalty interest on arrears
  • Their sub-prime lending rates
  • Their practice of not passing on rate cuts
  • The Ombudsman’s finding that their early repayment penalties were “unlawful”.
And when I brought borrowers along to the AGMs to raise their treatment in public, you wrote



Their determination to hasten the sale of the society forced them to parade trophy victims at the AGM. Every hard luck story was told. Members who had not repaid their loans were wheeled out as victims, not defaulters. They lambasted Fingleton for behaving like a businessman, not a benefactor.
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Why did you spring to the defence of Michael Fingleton and the Irish Nationwide whenever they were criticised?
When a group of members put down a motion of no confidence in Michael Fingleton at the Irish Nationwide AGM in 2003, You celebrated Fingleton’s defeat of the motion in the Sunday Independent, and described those who expressed a lack of confidence as “malcontents” and you attributed ulterior motives to them.
The meeting ended in triumph for the man branded an autocrat. The extent of the boss’s victory – five to one on a motion of confidence – was stunning, considering all the bad publicity and tales of woe peddled about him.
Yet the outcome was puzzling. How could a group of malcontents emerge so badly scarred from a members’ meeting?
The trouble with the rebels was that they were profiteers posing as philanthropists. The rebels want the loot.
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In October 2008, when The Financial Regulator sanctioned Michael Fingleton’s son for using the state guarantee to attract deposits, jumped to the defence of the Irish Nationwide and attacked the Financial Regulator. You described the Irish Nationwide as a “soft target” for the Financial Regulator:
And last Tuesday, the unfazed Regulator reverted to type. He took another high profile swipe at a soft target. He fined Irish Nationwide €50,000.
The boss’s son had told his clients to deposit money with him as the Nationwide was guaranteed by the Government. Paddy had found another scapegoat: the son of the boss had done something foolish. Clobber him.
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Why did you never criticise the corporate governance of the Irish Nationwide?
You were relentless in your attack on corporate governance at the EBS. Here is the from your own website where you are grilling Alan Dukes about the corporate governance of Anglo.

But you never once criticised Fingleton’s dominance of the Irish Nationwide, a dominance which has cost the taxpayers €5.5billion to date. You never once criticised the fact that such a large institution had only 5 directors, and only three of them were non-executive. When the Financial Director of their largest lending client was appointed to the board, why did you not criticise that?

In , you called on the shareholders in Anglo, Irish Life & Permanent, Bank of Ireland and AIB to go to the AGMs and demand the removal of the boards. But again, no criticism of the Irish Nationwide board.

Why do you claim that you identified banks to be in danger long before most senators?
[FONT=&quot]This is what you say on your : [/FONT]

I identified bankers as rogues, and banks as in danger long before most Senators…
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[FONT=&quot]I suppose that is technically true in that you did this before most Senators, but a[/FONT][FONT=&quot]s l[/FONT][FONT=&quot]ate as [/FONT] late as , you suggested:

EBS members must be green with envy as they see their rival, Michael Fingleton’s Irish Nationwide, poised to pay out five-figure sums to each member.
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As late as September 2008, when Reuters claimed that Irish Nationwide was in talks about its future solvency, you went on national radio to say that the Irish Nationwide was the most profitable and best capitalized of all the banks.

On 15 September 2008, you described the Reuters story as “”?
There has been idle chatter for months about one or two Irish banks going belly-up. Last week Reuters news agency jumped the gun. As Irish journalists competed to break the story of a bank biting the dust, Reuters went walkabout. It published a fable about the Irish Nationwide Building Society, suggesting that it was in talks with its bankers about closing down the shutters.

Reuters, once the blue blood of journalism, must have known the consequences of its story. If it was true there would be a run on the Nationwide. Happily for small savers, it was nonsense.
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As Enda Kenny has pointed out, you praised the fact that the Irish Nationwide had increased their gross lending by 72%, but you apparently saw no danger in that.

When you did eventually criticise Fingleton, it had to be dragged out of you.
On 24 March 2009, on Prime Time, Mark Little managed to drag the first ever criticism of Fingleton from you, but he had to work hard to do it: You sat quietly and said nothing about the Irish Nationwide. You launched into a tirade of abuse about the EBS and the Bank of Ireland and their upcoming AGMs. You tried hard to muddy the waters and avoid the Irish Nationwide. You allowed Joan Burton speak about the Irish Nationwide.

Mark Little turned to you and said:

"Shane. Dan Boyle said today Michael Fingleton has come to personify all that is wrong with Irish Banking"

You said: "What we are seeing here...what we are confusing all the time...misdemeanours and behaving unethically ...and on the other side ...a raft of bankers who are being paid too much who should all go"

Little had to ask you straight out "Should Fingleton resign?" You said " Yes, of course. They should all resign"

But your colleagues on the Sunday Independent continued to give Fingleton’s side of the story
The following Sunday, 29 March 2009, Your colleague in the Brendan O’Connor defended Fingleton:
Except the funny thing, that you mightn't have got from reading the papers, is that Fingleton isn't a crook. In fact, he isn't even a bad businessman. What you mightn't have known from the mob is that Fingleton was widely regarded in these islands as one of the best businessmen around. The unique business model of the building society that he built was legendary. Costs were pared back to nothing long before it was fashionable, and profits were enormous. And other people weren't able to duplicate it.….
As for running the Irish Nationwide like his own personal fiefdom, that seems to be another way of saying that Fingleton took a lot of personal responsibility for the decisions made there.
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And in April 2010, another Sunday Independent colleague “exclusively” reported that Fingleton was going to give the €1m to charity

In a dramatic development last night, a close associate of Mr Fingleton, speaking with authority, declared: "Mr Fingleton has never said he would keep the money for his own personal use. This was an option he never once considered. His intention always was to quietly distribute these funds to a number of Irish charities. It is still his preference that this should happen.
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As of May 2011, The Irish Nationwide has cost the Irish taxpayers €5.5billion and Michael Fingleton has not returned the €1m !

Yours sincerely


Brendan Burgess
 
Let's not forget some other aspects of Shane's support for Fingleton. Here's a direct quote from the April 2003 article.

Fingleton’s stewardship can be criticised.
Sure, he needs more heavyweights on the board. Sure, he has been overzealous in his pursuit of defaulters.
Sure, he earns an awful lot of money (€835,000). Sure he has been less than transparent.
But Fingleton, for all his faults, has delivered the only thing that matters in business: profit.
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So the absence of 'heavyweights on the board' is trivialised as a minor inconvenience. Those who had the foresight to raise this issue at the tiime could see the risks involved in not having proper oversight of Fingleton's increasingly risky lending practices. Shane, who markets himself as a financial expert and scourge of the bankers, either couldn't see this risk, or chose to downplay it deliberately. The taxpayer is now picking up the bill.

And Shane believed that "Fingleton, for all his faults, has delivered the only thing that matters in business: profit. ". So risk doesn't matter, and ethics don't matter, and governance doesn't matter, and sustainability for the future doesn't matter. Only profit.

tells us "Shane identified bankers as rogues, and banks as in danger long before most Senators…" but on 15th Sept 2008, just two weeks before the State had to mortgage its future to keep Anglo afloat, Shane that the 'false alarm' at Irish Nationwide was nonsense. I guess the €5.5 billion paid over by the State to Nationwide was just nonsense too.


It's not a big deal when the average man in the street gets this stuff wrong. But when Shane Ross, scourge of the bankers and financial expert, gets this so badly wrong, he should at least have the decency to explain why he continued to support Fingelton so steadfastly, right up to the bitter end.
 
I have just found the Sunday Independent article (March 28,2004) written by Shane Ross to which Enda Kenny referred. I had not realised that Ross had considered Sean Fitzpatrick to be a "superstar".

http://www.independent.ie/business/irish/fingers-sidelines-a-sorry-soden-478772.html

Michael Fingleton's Irish Nationwide published a cracking set of figures.
Michael Soden's [broken link removed] bored us all to tears with another trading statement.




The numbers were pedestrian. The commentary was soporific. Well then, what was on the way? Nothing much. Except a forecast of a very dull less than 10 per cent growth in profits before tax.



There was plenty on the way down at the Irish Nationwide. The building society is on the verge of sale. The figures were sparkling. Members with adequate savings or mortgages are in for a €7,000-plus bonanza.
Michael F's cost-to-income ratio at 21.4 per cent must be the envy of Michael S. Fingleton's return on total average assets at 2.03 per cent was far superior to Soden's at 1.22 per cent. He even leaves superstar [broken link removed] Anglo Irish standing, with only 1.54 per cent.



All Fingleton's figures are spectacular. Pre-tax profits are up 20 per cent. Gross lending rose by 72 per cent.



Both Michaels' bodies are benefiting from the mortgage and property boom. But when it is over, where will they be?






Funnily enough, Fingleton still has a few dissident shareholders barking at his heels despite his performance. It is difficult to discern their gripes or their aims, except that one of their number, Brendan Burgess, seems to want a seat on the board. But it would be sinful to upset the Nationwide applecart just as it is about to deliver the fruit.



Fingers has a problem of style. A spin doctor's nightmare, he has few of the social graces associated with the gentility of the BoI ascendancy tradition. He mixes with rough diamonds like Ben Dunne, Noel Smyth, Dermot Desmond, Michael Smurfit, Sean Mulryan and PJ Mara. The sort of people who make a few bob, entrepreneurs who can cut a deal. They talk business, not bull.



So what would a poor punter with twenty grand do? Give it to Michael F or Michael S?



I have already made a muggins of myself. I bought Bank of Ireland stock a few months ago at just above these levels. It seemed then that some predator would see value, pounce, cull the semi-State ethos, and sweat the BoI assets once the present incompetents had walked away with their golden handshakes.



It may well still happen. But I could have done better. I should have bought into the Nationwide. Anyone who has a spare twenty grand might still have time to "carpet bag". It needs legislation to allow Fingers to sell. It is anyone's guess whether the law will be changed, the society sold and the cash paid out within the required two-year period.

But on the basis of Thursday's spectacular statement from Michael F, the Nationwide payout could be even higher than the generally predicted €7,000.
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I see your open letter got a mention in the Sunday Times yesterday Brendan!
I think Ross does have serious questions to answer. When people wonder why the banks ended up in the mess they did, they need to question why banks like AIB and BOI deserted their usual banking models to compete with Anglo and Irish Nationwide. The reason is because they were under huge pressure from shareholders to make a return on equity matching that of the other banks. It wasn't helped by Ross having a weekly pop at the two main banks while cheerleading for Fingleton and Fitzpatrick. He then goes and makes a fortune selling a book on bankers and gets elected on the back of his so called tough stance on banks. He is a complete spoofer.
 
Didn't Michael Fingletons son get a rap on the knuckles after he started canvasing for deposits for INBS in the wake of the Government guarantee in 2008?

Was Fingletons son appointed due to nepotism? Did Shane Ross query it in any column?
 
It's a shame this thread can't be left to the facts as outlined by Brendan, and hopefully some day a response from Shane Ross. All other posts to me are distractions from the points raised in the open letter.
 
RTE are doing a documentary on Michael Fingleton on Monday night. Unfortunately, I don't think that they are interviewing Shane Ross to ask him these questions.
 
Came across this interesting article which sums it up very well.

Holier than thou Shane Ross

Ot quotes an interesting article by Stephen Collins in the Irish Times.

Nyberg was critical of the media for lauding Anglo Irish Bank. “Anglo in particular was widely admired domestically and abroad and lauded (by many investors, consultants, analysts, rating agencies and the media) as a role model for other Irish banks to emulate,” said the report.One of those in the media who lauded Anglo and Irish Nationwide was Shane Ross,who was also a senator during the boom and is now an Independent TD for Dublin South.

During the recent election campaign, his constituency rival Alan Shatter pointed out that from 2000 to 2007, Ross “criticised Bank of Ireland and AIB for their failure to adopt the catastrophic banking practices of Anglo Irish Bank and Irish Nationwide, and used his position as a journalist to put public pressure on those banks to follow the disastrous banking road map constructed by Seán Fitzpatrick and Michael Fingleton.”
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I see that Shane Ross could not resist the opportunity to have a pop at Richie Boucher and his salary (with some justification). And he questioned why shareholders approved such a salary when the share price had fallen from €17 to 17 cents. Never did I hear or read the Senator/ TD/ business editor criticise INM and their management for the salaries paid to family members of the main shareholder when their share price has fallen from €10 to 4 cents over the last 5 years.
And have we heard any criticism of Fingers since he left taxpayers with a bill of €5b. When it comes to hypocracy Shane Ross is in a league of his own.
 
I find all this about Ross very interesting. How can he have neck to open his mouth about financial issues, and writing on finance for the Sindo. The man has no cred at all, and if he has any cop on should keep his head down and say nothing.
 
Tomás Mór said:
I find all this about Ross very interesting. How can he have neck to open his mouth about financial issues, and writing on finance for the Sindo. The man has no cred at all, and if he has any cop on should keep his head down and say nothing.
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He's a politician....they won't have a job if they keep their head down and say nothing
 
He’s a good financial journalist and a brilliant self publicist. That makes him a high profile TD. I find him hypocritical but that notwithstanding he asks questions that the public want asked.
 
Mr Ross ,

He is entitled to change his views.

He was entitled ,given the information at hand in 2003 to laud Mr Fingleton and his ilk.
We all forget that we too perceived these people to be masters of our Universe.
We all thought that our Central Bank Mandarins had a good regulatory handle on these people.

Today Mr Ross ,given the information at hand is shooting bullets and downing all our Mandarins.

With any luck, he will today be as wrong as he was in 2003.

That would mean we are coming out of Bank crisis!.
 
Gerry Canning said:
He was entitled ,given the information at hand in 2003 to laud Mr Fingleton and his ilk.
We all forget that we too perceived these people to be masters of our Universe.
.
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Hi Gerry

He highlighted overcharging in every other lender except Irish Nationwide, and Irish Nationwide was the worst offender. He has never explained why he didn't highlight their overcharging.

I publicly expressed the view in 2004 that Fingers was unfit to be the Chief Executive of a financial institution. Many people agreed with me privately. Ross went out of his way to promote Fingers and to attack those of us who challenged him.

Again, he has never explained why.

Brendan
 
Brendan Burgess said:
He highlighted overcharging in every other lender except Irish Nationwide, and Irish Nationwide was the worst offender. He has never explained why he didn't highlight their overcharging.
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Do you know or do you suspect why he favoured Fingleton?
 
Brendan Burgess said:
Hi Gerry

He highlighted overcharging in every other lender except Irish Nationwide, and Irish Nationwide was the worst offender. He has never explained why he didn't highlight their overcharging.

I publicly expressed the view in 2004 that Fingers was unfit to be the Chief Executive of a financial institution. Many people agreed with me privately. Ross went out of his way to promote Fingers and to attack those of us who challenged him.

Again, he has never explained why.

Brendan
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...........
I hear you (my memory runs out over time); could it be as simple as he feels the vibes in the Country and runs with it?
There were people like you raising Red Flags but the consensus was to tell you (killjoys) to shut up.
If so, he is intelligently dangerous!
 
Gerry Canning said:
Mr Ross ,

He is entitled to change his views.

He was entitled ,given the information at hand in 2003 to laud Mr Fingleton and his ilk.
We all forget that we too perceived these people to be masters of our Universe.
We all thought that our Central Bank Mandarins had a good regulatory handle on these people.

Today Mr Ross ,given the information at hand is shooting bullets and downing all our Mandarins.

With any luck, he will today be as wrong as he was in 2003.

That would mean we are coming out of Bank crisis!.
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Hi Gerry

I hadn't seen the original post until today and whilst reading it thought 'hindsight is 20/20' but as I read through it, Brendan put up examples from 2007 and 2008. That is ample time for Ross to change his opinion on the running of Nationwide as it had become clear to all that corporate governance wasn't high on the agenda in that building society.

Very informative letter Brendan. You pieced everything together very well.


Steven
www.bluewaterfp.ie
 
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