FitzPatrick’s reversal of fortunes makes for a very telling tale

Perhaps there is no more telling a tale of Seán FitzPatrick’s reversal of fortunes than the May 2005 Greencore AGM.

There was a febrile atmosphere. The backdrop was the thorny issue of the closure of beet processing plants in Carlow and Cork. The then Greencore CEO David Dilger came in for a torrent of abuse. A number of farmers, calling themselves Greenshare and headed up by the former president of the IFA, Joe Rea, berated Mr Dilger for his stewardship of the company.

Perhaps their most stinging criticism was that he wasn’t Seán FitzPatrick. Mr FitzPatrick was on the board of Greencore and was a couple of seats away from Mr Digler.

The members of Greenshare made withering references to the respective share price performances of Greencore and Anglo. Mr Dilger urged patience from those present. He argued that he was trying to reposition the former State- owned sugar company to make it a viable, long-term growth prospect. The audience were having none of it. They wanted the spectacular returns posted by Anglo.

What’s more, they wanted Mr Dilger replaced by Mr FitzPatrick with immediate effect. Mr FitzPatrick’s prowess as a CEO had reached living legend status, although by 2005 he had become chairman of Anglo, having been replaced the previous year by David Drumm as chief executive.

But the meteoric rise of Anglo from a shell outfit in 1986 to the best-performing company on the Irish stock exchange in 2005 was seen as his achievement. Very few financial institutions had become so synonymous with one man. Three years later in 2008, he was forced to resign amid revelations that he had concealed €155m in private loans over a number of years.

At the beginning of 2009, the bank was nationalised as it strained under the weight of its loan book. In Mar 2010, Mr FitzPatrick was arrested for the first time on suspicion of financial irregularities at the bank. He was declared bankrupt in 2010. David Drumm remains at large in the US.

Where did it all go wrong? There is an interesting analogy between Mr FitzPatrick and Dick Fuld, the former CEO of the now bankrupt investment bank Lehman Brothers. Mr Fuld was driven by a desire to be accepted by Goldman Sachs and the other bigger established banks on Wall Street. His massive inferiority complex drove him to take reckless risks that eventually brought down his bank, and nearly the global economy with it.

When Mr FitzPatrick took over at the helm of the little- known Anglo in 1986, his institution was not on the radar of the established ‘pillar banks’ — Bank of Ireland and Allied Irish Bank. The banking parvenu would make it his life mission to put Anglo on an equal footing with the big two.

That he did with aplomb — so much so that at the AIB AGM in 2001, the then CEO Michael Buckley came under heavy criticism from share-holders who berated him for lagging behind the returns posted by Anglo.

At the same time that his bank’s fortunes were on the up, so to was Mr FitzPatrick’s public profile. He became an unofficial spokesman for corporate Ireland.

In an Oct 2008 speech at a business lunch, he called for cuts to welfare entitlements and railed against the overburdensome regulatory environment.

His defence against the charges brought against him are that he was a hands-off chairman. David Drumm was the CEO and it was he who orchestrated the now infamous ‘Maple Ten’ share transaction and the temporary €7.6bn deposit from Irish Life & Permanent in September 2008.

Ironically, Mr Drumm claims that he was a mere puppet for Mr FitzPatrick the entire time he was CEO.

Mr FitzPatrick will get to air his defence in the forthcoming court case.

It remains to be seen whether his one time protegé will join him in the dock.