We’ve posted a couple of times (here and here) about the six planning investigations started by John Gormley but then discontinued with the change in government.  The debate concerning them has reignited in the past few days in the wake of the Mahon Report. (more…)

Ireland is bankrupt and the IMF team headed by Ajai Chopra has flown to the country to negotiate the terms of the bailout. Amongst their number is an Irish-American who is a more than a little bemused by his ancestors approach to finance and public service. He is given the task of shadowing the head of the Department of Finance, Dermot Mulhearn, during the negotiations and is then left in place to monitor progress when the rest of the IMF team leave town. Mulhearn’s priority seems to be to maintain a certain kind of lifestyle for the civil service and to protect his various perks and assets such as investments in apartments, hotels and a room full of voting machines, rather than to broker the best deal he can for the country. The politicians on the other hand seem totally clueless, dancing the last waltz as the walls come crumbling down around them. Instead it is left to the Eighty Five Billion Euro Man from the IMF to go through the books and to try and get civil servants and politicians used to the high life to change their ways. Mulhearn and his cronies however have a touch of the Sir Humphries about them and they’re not about to simply lie down and roll over.

Based on the @IMFDublinDiary Twitter feed and stories in The Mire, The Eighty Five Billion Euro Man is a satire/farce, starting with the IMF’s first visit to Dublin and ending just a few weeks after Enda Kenny took office as Taoiseach. It covers a whole range of different events and parodies both the civil service and leading politicians. The story is told mainly through dialogue heavy scenes that work well to capture some of the absurdities, ironies and tragedies of the bailout and subsequent political shenanigans. There is a lot to like about the novel. Some of the scenes are very amusing and the caricatures of some politicians are particularly well done, for example, Brian Cowen, Mary Coughlan, Brian Lenihan, Michael Noonan and Joan Burton. However, the plot is a little uneven, with the tail end of the book, in the lead up to the election and afterwards, notably weaker (partially because it starts to stray too far from the situation it seeks to satirise – especially Mulhearn running for election). The level of satire also varies a little and whilst it is very amusing at times it’s never quite as biting or cutting as it could be, and it doesn’t have the sophisticated wit and cleverness of a political satire like Yes, Minister. Given the in-jokes, I’m also not sure how easy it would be for someone unfamiliar with Ireland to follow some of the scenes. That all said, The Eighty Five Billion Euro Man is a recommended read for anyone who is interested in the crash in Ireland and the government response. It’s an amusing read and provides a counterpoint to the dry journalistic accounts that have dominated the shelves to date.

Rob Kitchin

As reported by RTE this afternoon, the independent review of planning irregularities in six local authorities, commissioned by former Minister of Environment, John Gormley, has been terminated by the Department of Environment and will be replaced by an internal review instead.  The independent review was to be carried out by a panel of independently appointed reviewers (who have been recruited) and was due to focus on planning processes, systems and policies in Dublin and Cork City councils, as well as county councils in Carlow, Meath, Galway and Cork.  The reason given by the Department is that the format for the review was considered ‘inappropriate’ by Minister for Environment, Phil Hogan TD and Minister of State for Housing and planning, Willie Penrose, TD.

By ‘inappropriate’ one presumes they mean ‘independent’ with a license to ask difficult and awkward questions.  By downgrading the review to an internal process, the Department has left itself open to accusations that it is seeking to narrow the parameters, remit, autonomy, openness and transparency of any review.  Whether such accusations are fair or not, presentation and process are important in creating trust, faith and confidence in the system of governance.  Downgrading a review does not built such sentiment.

There have been many accusations that planning has not worked as effectively as it should in Ireland and that clientelism, cronyism and in some cases corruption has been at work in the system.  An independent review seems entirely warranted to identify issues that need redress and reform.  If planning had been working properly, neither the councils involved, nor the Department of Environment, should have anything to fear from such a review.  Indeed, if that were the case, the review would highlight examples of best practice that other councils might learn from.  The fact that such a review was sought by the last government suggests that this is far from the case.  For an interesting account of planning irregulatories in Carlow, one of the councils that is due for review, see this article in The Village. Also, see this article in the Independent.

The present government were elected in part on a promise to address shortcomings in public administration and the political system – planning falls into the domain of both.  Cancelling an independent review does not instil faith that such a mandate is being persued.  Instead, it suggests that there are issues that need to be buried and glossed over.  We got independent reviews into the banking sector.  We need one with respect to the planning system to either identify and address shortcomings or to create confidence and faith in the planning system.

Rob Kitchin

Simon Kelly started in property development as a teenager, crunching the numbers for his father, Paddy Kelly, one of Ireland’s best known developers.  He quickly progressed to become his father’s right hand man and eventual partner, specializing in the financial and legal side of the business.  In Breakfast with Anglo he tells the story of the Irish property boom from the developers’ perspective, providing a reasonably frank account of how the property development game worked, focusing especially on the finance side of things and the relationship between developers and the banks, especially Anglo Irish Bank.

Breakfast in Anglo is a curious read.  Kelly has produced a candid, seemingly open, and engaging narrative.  Whilst many elements of the story will rile many readers, Kelly has clearly been on a journey of self-reflexivity and he’s able to step back a pace and set out the ins and outs of the business, his role in it, and to acknowledge his culpability and express remorse for the ensuing disaster of the collapse of the Celtic Tiger.  That’s not to say that Kelly is full of regrets, though he has a few, or that is he rounds on his former colleagues and partners, or is apologetic for his lifestyle or the fact that he knows how to work the system and does, including walking away or sheltering from massive liabilities.  Indeed, it’s clear that even now he has a soft spot for Anglo Irish Bank and many of the staff who worked there, and he’s generous in his praise of those he worked with.  However, by wearing his heart on his sleeve and being straight, the result is a book which as much as one would like to hate it, and as much as the story annoys and riles, and for all its faults and silences, one has to admit was a pretty good read.  That’s not to say that there aren’t issues with the story being told, but that the writing craft and narrative was solid.

As for the story.  Breakfast with Anglo principally tells the financial and deal making side of the building of the Kelly’s property empire.  In particular it focuses on the relationship between the Kellys and Anglo Irish Bank, how they built a complex web of partnerships with other developers and financiers to make different deals work, and how the nature of development changed throughout the boom years.  Told from Kelly’s personal perspective it also reveals how he changed as the business grew and became increasingly disillusioned by the life he was living, but ultimately was unable to extract himself from it.

Where the book is strongest is in its insight into the way in Anglo, the other banks, and the deal making side of development worked.  Anglo built relationships that extended beyond simply servicing business.  It cultivated its clients, gave them royal treatment, bent over backwards to help them out and make financing as easy as possible, but in return demanded loyalty.  They became the bank of choice for developers because they actively facilitated them by building a relationship, cutting through red-tape, and were reactive to their needs.  They also didn’t impose ‘silly rules and restrictions’ as Kelly puts it, by which he means sensible and prudent rules and restrictions.  Some quotes gives the flavour of Anglo’s business strategy.

‘Anglo was the easiest place to source a draft for your bid, and you knew that they would be able to follow up and finance the deal if you were successful.  That was part of their unique service.  The other banks were never as free with that kind of money.’

‘We never had to worry about the money for a deal.  Once the numbers on the deal stacked up, Anglo was there – and sometimes Anglo was there even if the numbers didn’t stack up.’

‘We heard rumours from other developers of the existence of a head of risk, but we didn’t worry about him because he had no power in the bank.  The ADs [associate directors] all wanted to get their own loans through, so they would not stop each other’s.  … If a deal looked tricky, the bank would put up the price of the money but lend it anyway.’

‘In the bank’s heyday, borrowing money from Anglo was easy – provided you were already an Anglo client.’

‘They thought more like developers than bankers.’

Where the book is almost completely silent is with respect to politics, vested interests and planning.  Not one single politician makes an appearance in the story.  The much talked about cabal in the media is developer, banker, politician.  Either the Kelly’s had nothing to do with the politicians or political donations or political lobbying, or this is conveniently dropped from the narrative.  And whilst Simon Kelly might not have been actively and directly involved in this, one would find it hard to believe that he wouldn’t have known what other elements of the firm were up to given the level of interaction and family and partner plotting.  Neither is the role of vested interest groups such as the CIF much discussed and the role of developers in shaping the policy landscape around planning and tax breaks.  And the book is pretty mute on the business of securing planning permissions and working the planning system and bullying local communities through threats of compulsory purchase orders and the like, other than a couple of short notes.  There are hints at how developers played the tax incentive schemes and avoided capital gains tax and stamp duty, but these are in passing and there is no in-depth discussion as to how these were played and exploited.  The story then is selective, rather than the full warts and all promised.  For the book to have been the full expose of what went on, then all these issues needed to be explored in depth.

At the end of the book, Kelly provides ten lessons for the boom.  Interestingly, they all focus on what a developer should remember in order to be successful and avoid crashing.  None of the ten lessons focuses on what Ireland should do to avoid future boom and bust – no mention of the Kenny Report, nothing about financial regulation, nothing about a more robust planning system, nothing about political reform, and so on.  Ultimately, Kelly cannot see beyond the developer horizon.  If after being at the centre of the property development boom and bust, the ten lessons are simply about protecting developer interests, one ultimately feels that despite his self-reflexive soul searching, Kelly hasn’t learnt a lot beyond self-interest.  And he is one of the developers who isn’t still in denial, as NAMA accuses in this morning’s papers.  Unless the cabal of developers, bankers and politicians can start to see the bigger picture beyond their own interests, then one anticipates reading a similar book by a Kelly-wannabe or the next generation of his family in 30 years time.

Overall, a book as interesting for its silences as for what it has to say about property development in Ireland, but an engaging read nonetheless.

Rob Kitchin

In many ways this book bears many similarities to The Banksters by David Murphy and Martina Devlin covering much of the same time period and events. It discusses the crisis currently facing Ireland paying particular attention to the personalities, relationships, political and economic culture, and power relations at the centre of the current storm.  It begins particularly effectively with a prologue highlighting in a very simple way the unhealthy relationship between regulators and bankers, a theme that dominates the book. While other writers have laid the cause of the crisis firmly at the feet of certain individuals, this book differs in that it highlights the systemic failures of the banking system, regulation, politicians and civil service or the ‘mandarins’ as Ross refers to them. In fact, it is the scathing nature with which this latter group are dealt with that particularly distinguishes this book from the Murphy and Devlin text.

The Bankers is an exceptionally well-written and well-researched book and is an absolute pleasure to read. There is a sense that this text was a long time in the making; it is carefully crafted, questioning, provokes thought and pulls no punches. Rather than merely reporting fact, Ross goes behind the scenes and the level of minute detail that he brings to the story is remarkable. It is clear that the author received exceptional levels of cooperation from a range of insiders and it is little wonder that many of them wished to remain anonymous given the information that was provided. The collusion between a range of state agents and the private sector to maintain a system that worked in the interests of those in power (be it political or economic) is breathtaking. Worryingly, one is left with the feeling at the conclusion of the book that not much has changed. While new institutions, such as NAMA are currently being established, the culture that permitted the crisis to develop does not seem to have fundamentally changed.

This book is well worth a read. If one is looking for a basic synopsis of the facts of what has happened in Ireland since the beginning of the international banking crisis, then IDavid Murphy and Martina Devlin’s The Banksters is a basic starting point. However, if one wishes to read a more in depth and nuanced account of how we got to where we are today, as well as one that focuses on the range of systemic failures beyond just the banking sector, then The Bankers is a must-read.

Niamh Moore

Fintan O’Toole is one Ireland’s best known social and economic commentators and cultural critics, and Deputy Editor of the Irish Times. Never shy about airing his views, he doesn’t pull his punches in telling it as he sees it, and in Ship of Fools: How Stupidity and Corruption Sank the Celtic Tiger he provides a damning critique of both the Celtic Tiger model of development and the Fianna Fail (and coalition partners) government since 1997. Rather than focus on one particular aspect of the present crisis – as with The Builders or Banksters – O’Toole provides a broad sided polemic on how Ireland went from bust to boom and back again in a twenty year period. (more…)