The Commanders of Destiny

In France they are called enarques, a cohort of suits who by virtue of their attendance at an elite college, glides effortlessly between careers in politics, the civil service, and the corporate sector. And in an interventionist state like France, there's often not much difference between these sectors; note for instance that even companies with a tech boom cachet, Vivendi and France Telecom, were driven onto the rocks by enarque CEOs.

It's a sign of the Irish Republic's bizarre mental block about class issues that no equivalent word has been found for the very similar cohort in Ireland. As Irish Times columnist Fintan O'Toole has repeatedly documented, our mixed-up attitude about class involves some combination of it being something that left with the Brits in 1922, or being manifested only in the existence of a grand total of 2 rich people in Ireland, Michael Smurfit and "Sir" Tony O'Reilly.

But we always had our own beneficiaries of dirigisme, and with Ireland being a much smaller place than France, and much more of a one-party state, there was a much more incestuous and entrenched quality to it, and a more propagandist element to their obsequious treatment by the local media. Many "corporate" jobs in Ireland are actually political appointments of the government (e.g. Aer Lingus) or in sectors of the economy that owe much to the government's laissez faire attitude to quasi-monopoly behavior (banking) or to handouts of government concessions and contracts (construction).

And unlike our counterparts in France who at least shake things up a little bit with a change of government every so often, there's a reliable 40-plus percent of the Irish electorate who'll vote for the party that operates at the fulcrum of this system of crony capitalism, Fianna Fail (the Soldiers of Destiny). And that's enough to keep them in power most of the time, to preside over what we previously labelled the World's Richest Banana Republic.

We post about this now because there is a crisis of still undetermined proportions amongst the cronies. It was touched of by a revelation that Allied Irish Banks had been overcharging on foreign exchange counter transactions for years. AIB was trying to work its way out of scrutiny following huge "rogue trader" (=passive management) losses at their Maryland subsidiary, Allfirst, a couple of years ago. Indeed, Irish banks have a history of making overseas investments that turn out terribly for the shareholders, which is what you'd expect to happen when lazy managers get exposed to real competition. We suspect that the real motivation for AIB's Allfirst investment was the chance for the managers to lord it over the plebs as they sat in Aer Lingus Premier Class on the flight to Baltimore.

But anyway, things have only gotten worse for AIB. Sensing that their cronies in government might be applying more scrutiny than usual with an election coming up, the suits started to look through their files for other potential problems, and found evidence of their top executives participating in schemes that involved a combination of tax evasion and being beneficiaries of insider transactions that hurt other AIB customers. And since the cronies just appoint each other to all the top jobs, having AIB executives embroiled in scandal was bound to drag in other companies from the crony sectors as well.

So far, the only member on the casualty list is the chairman of Aer Lingus, although the CEO of AIB rival Bank of Ireland also quit in a seemingly unrelated scandal about improper web-surfing; the speed of B of I's action in the latter case points to both banks sensing that the heat is on. It looks today as if the cronies initial strategy is to tough it out, helped by a government that will put on the appearance of outrage but with a few nods and winks to the boys thrown in. Consider for instance Taoiseach (PM) Bertie Ahern's usual hands-off stance:

[Ahern] has said that the future of AIB's Chief Executive Michael Buckley was a matter for the bank's management.
He added that as far as he was concerned Mr Buckley was a hard working civil servant and banker and his company needed good people to put their current problems right.

Note the reference to Buckley's previous civil service career. The supposedly tougher talk is being left to Tanaiste (Deputy PM) Mary Harney, but even Mary is spinning:

[Harney] also said any inquiries into tax evasion in AIB by the regulator should be paid for by the bank itself, and not by the shareholders or taxpayers.

Mary is making a bizarre distinction between "the bank itself" and its shareholders i.e. the owners of the bank (note that she didn't rule out the bank getting the cash by further fleecing its customers). Leaving aside whatever forced housecleaning takes place amongst the suits, the remaining question is whether the voters will finally overcome their cognitive dissonance between how they vote and their occasional outrage and disgust at the country they live in. We'll believe it when we see it.