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Recent articles by Dermot Freeman
Recent Articles about Ireland / Britain Economy
Sean Quinn - Cowboy turns desperado - A Western in four parts
ireland / britain | economy | opinion / analysis Thursday August 02, 2012 15:43 by Dermot Freeman - WSM
We don’t know a lot about the personal life of this son of a small farmer. He was the richest man in Ireland in 2008 with an estimated wealth of €4.7billion and now he is only out of jail because the Judge wants him to help the Irish Resolution Banking Corporation (IRBC) recover some of the €2.8 billion that he owes them. You may never have heard of IRBC but you will know of it’s previous alias: Anglo Irish Bank,winner of the dodgiest bank award in a state where there is stiff competition for that prize. His son is in prison, (plush Training Unit in Mountjoy) serving a sentence for what the Judge called ‘outrageous’ contempt of court as he sought to put money/assets beyond the reach of the bank. His nephew Peter is supposed to be there for the same reason but has gone missing. All we know about Sean – the daddy of the empire is that he’s big into the GAA and he likes to play poker for a few quid with his friends. Along with his love of poker, I would guess that Sean senior fancies the odd western.
The Good, The Bad, the Ugly and the DesperateSean’s perception of himself is of essentially a good man, who started off the son of a small farmer in Fermanagh and built himself from a quarry he started in the early Seventies, to the conglomerate that incorporated hotels, insurance, healthcare and property at home and abroad, employing 5,500 people at its height. That’s the self-image, and Sean leans back on his chair, puts his boots on the table and says to himself ‘I made this town what it is today’.
The Bad comes in when you actually look at what his success was based on. Take for instance the insurance company that he built: it was based on providing insurance to people who couldn’t normally get insurance and it had massive success declaring profits of €123 million in the first six months of 2006. But if you actually looked underneath that success, you found an insurance company that did not employ an actuary. You might think that a business professional who deals with the financial impact of risk and uncertainty would be essential to an insurance firm, but Sean Quinn did not. In his Western, nobody gets to tell Sean what to do?
He probably thought they cost too much money, and his business plan was to take in loads of money and to minimise the amount he had to pay out.
Where this ultimately led was to the imposition of a 2% levy which is being put onto everyone who has insurance in Ireland [Insurance (Amendment) Bill 2011] in order to cover the estimated cost of the €280m bust of Quinn Insurance. Now every year for the next 5 years Irish people are paying approximately an extra €65m for their insurance thanks to Sean senior. That was the initial story, but after more digging around, it turns out that the debts are closer to €1.6 billion - which is an astounding figure for one insurance company. So what does that mean for the Irish insured? It means that we are going to be paying off this levy, which was a short-term measure, for approximately 25 years. Thank you Sean senior for your brilliant business brain.
Although this cowboy would have you believe that he only likes to gamble when he is having a quiet game of poker with his friends, the truth is that his gambling was far greater than that. He might have this self-image of the biggest man in town creating thousands of jobs, but I think that greed is a primary motive in this case; that is what gets you to be the richest man in the State, and he was in the top 200 on the planet back in 2008.
The commercial court in Dublin in February this year heard that between October 2005 and July 2007 Sean Quinn had built up a 28% stake in the former Anglo using contracts for difference - a financial instrument used to gamble on the bank share price. Then we all know what happened in 2007, the music stopped and there were no chairs to sit down in, casino capitalists' arses hit the floor and the parcel of shit exploded. (I am being metaphorical here but you get the picture, the financial crisis hit and this was coupled with the pricking of the property bubble here.) Sean’s response to this was to get all creative with the accounting and to give his many firms a massive loan from his insurance one. In 2008 the Irish Financial Regulator imposed an unprecedented fine of €3.25 million thanks to the dodgy way Sean was pulling money from his insurance firm (€288m) to cover losses due to his poor stock investments and also to finance a plan to buy more Anglo Irish Bank stock to boost its falling price.
There is much more evidence of bad but we will return to that after a little bit of the ugly. The protests where the workers were given the day off to go marching through the streets looking for their jobs to be saved regardless of the manner in which the company was being run by this cowboy were ugly and reminiscent of a Simpsons mob.
When it all started to unravel Sean started to look pretty desperate and skedaddled across the border and sought bankruptcy, admitting that he owed €194m. Again going across the border extends the Western motif in this story. It was annulled in January of this year and this meant that he found himself back in the commercial court in Dublin. What has been revealed in front of the judge was one desperate attempt after another to put money beyond the reach of the banks or the State. Russia, Sweden, Ukraine and the UK are all mentioned like some kind of Bourne Supremacy of bankruptcy. It was so obvious that the Judge called the contempt they held for the court ‘outrageous’.
So on the one hand we have this ordinary man of the people who wants nothing more than to create jobs, and at the same time we have an incredibly intricate international web of deceit and unscrupulous international financial transactions to put his money beyond the reach of the bank and ultimately the taxpayer who is picking up the pieces. In 2005 Quinn cement was censured by the Labour Court for failing to honour the most basic of working conditions like sick pay, length of the working week and disciplinary procedures. That was a case taken by SIPTU on behalf of workers who couldn’t identify themselves thanks to Sean’s anti-union stance.
His actions are desperate, his behaviour has been ugly. What we have here is a model lesson in visceral greed. Sean may have created great wealth but he wasn’t into sharing it by granting basic terms and conditions to his employees. He left behind a legacy of monumental debt which is being picked up by the workers of this country.
Having sympathy for this cowboy and his gang is like worrying that the hangman is too warm beneath his hood after he’s pulled the lever for the trapdoor and the rope is tightening about your neck.
But also, do not be fooled when the system feeds you one or two victims.
Round up the Horses!When you’re on the rich list – it’s not important how you get there, just as long as you are there. A system that measures success on money does not ask too many questions on how you made that money. The system raises entrepreneurs to god-like status but when it all crumbles away, you find that the business was based on variation of a constant theme; exploitation. In the case of these cowboys they just found a way of accumulating as much wealth as possible by running an insurance firm like a Ponzi scheme, putting their name on profits, and got busy ferreting that out of the country when people started looking for it back. How can these be profits when the loss of one of his companies amounts to €1,600,000,000. Money makes money and they borrowed more from a dodgy bank in order to make even more money and play tricks within the stock market. Jobs are just a by-product of the primary focus on greed and accumulation.
The other lesson of note is that the rules of the game appear to have changed. The school lessons informed us that entrepreneurs took risk with their capital and this gave them a licence to continually exploit the waged worker for generations. Now, apparently the entrepreneurs can take risks with borrowed capital, which they get from banks, and when they don’t pay it back, the people who are fortunate enough to still have jobs in this bankrupt economy, get to pay back these loans which were taken out to make the rich richer. In insurance terms, those of us who do have insurance cover are going to be paying for Quinn’s business venture into this market for decades. So instead of seeing these processions to protect this cowboy we should be rounding up a posse to pursue justice and go after the architects of this system, and the 1% of greed-heads who’ve made it work for them for so long.
Wed 25 May, 11:18
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