CRC and the Controlling Network Strategies of the Elite

The fallout from the Central Remedial Clinic top-ups continued over the weekend. The clinic is an organization set-up to provide remedial care for people with disabilities and receives funding from both the government and donations from the public. Recently it came to light that despite cut-backs to the organization, executives were topping up their reduced – yet still excessive – salaries with fund-raised money. An article in The Irish Times on Saturday described the overlap of personnel between the board of the Central Remedial Clinic and directors of its charity arm the Friends and Supporters of the Central Remedial Clinic Limited, along with another charity the Care Trust Ltd. On top of this, all organizations were audited by the same auditor EY: formerly Ernst & Young. Such cross-management control appeared to facilitate the issuing of top-ups and an “interest-free and not repayable in the short term” €3 million loan from Friends and Supporters of the CRC to the CRC in 2012. “It was used to beef up the clinic’s pension scheme during 2012”. All the directors of the Friends and Supporters were also on the CRC board. Additionally:

The bulk of the Friends’ income comes in turn from another charity, one that is 50 per cent owned by the Friends and Supporters, and 50 per cent owned by Rehab. This is the Care Trust Ltd, a Blackrock, Co Dublin, operation that many moons ago ran a football pools operation. It still raises a not-inconsiderable amount of money, of which the Friends and Rehab get an equal amount each year, with a smaller sum going to the Mater. The 2012 accounts show €3.88 million was paid out that year, and €4.5 million the previous year.

Three of the Care Trust directors – Kiely, James Nugent, and Hamilton Goulding – were also on the boards of the CRC and the Friends and Supporters.

http://www.irishtimes.com/business/sectors/energy-and-resources/cantillon-crc-kept-its-friends-close-1.1659520

Much of this harks back to the strategies uncovered in the powerful directors’ networks of the Celtic Tiger, which were used to sustain a wide-range of boardroom dominance within the hands of an elite few. A report by TASC called Mapping the Golden Circle identified  how throughout 2005 to 2007 a powerful “network of 39 individuals” “held more than 93 directorships between them in” “33 of 40 top public organisations and private Irish businesses”. These directors also held “an average of ten directorships each in other companies” (1). The network interlaced with the public sector:

One in four members of the Director Network sat on the boards of both State-owned and private companies at the same time  [and] half or more of the Director Network have at some time engaged in public service either through board membership, political office or employment as a public servant (1).

Some of these directors also appeared to be in overlapping positions of influence with regard to deciding their own payment packages (CRC members were in positions of influence as to the use of donations to bolster their own remuneration):

In 2007, five of the eleven [the 11 most well-connected members of the Director Network] sat on at least one of the remuneration committees of the Interlocking Boards (1).

Other forms of payment control were quite possibly conducted through reciprocity. Some of the directors’ network were on committees deciding the remuneration of fellow directors who were vice versa on committees deciding the former’s remuneration:

Sean FitzPatrick, Ann Heraty and Gary McCann were members of the remuneration committee of Anglo Irish Bank that set the payment for the chairperson, who was SeanFitzPatrick;

Sean FitzPatrick as chair of Anglo Irish Bank, was involved in setting the remuneration of non-executive directors, who included Ann Heraty and Gary McCann;

Sean FitzPatrick was chair of Smurfit and was a member of the remuneration committee of Smurfit, hence involved in setting the remuneration of Gary McCann, who was CEO of Smurfit;

Sean FitzPatrick was a member of the remuneration committee of Greencore, which set the remuneration of Ned Sullivan, chair of Greencore. Ned Sullivan was also a member of the remuneration committee of Greencore;

Ned Sullivan was a member of the remuneration committee of McInerney Holdings (1).

The same reciprocal network control strategy may have been operating behind the scenes during an infamous Celtic Tiger property deal. The Dublin Docklands Development Authority (DDDA), along with a developer and a financier, purchased the Irish Glass Bottle Site in Ringsend in 2006. The record price of €412million was supported by a €288 million Anglo Irish Bank loan. The bank’s chairperson at the time was their former chief executive Sean Fitzpatrick who was also an executive of the DDDA board while the DDDA chairperson Lar Bradshaw was also an Anglo executive. The DDDA had the dubious capacity to provide planning permission and invest in the sites. By the end of the boom the site was devalued to €60 million (2).

So one might harp on about how high-payment appeals to ‘self-interest ‘attracts the best for the job. Is the best then the most conniving who would put their own interests ahead of the interests of the hiring organizations?

1. Clancy P, O’connor N and Dillon K (2010) Mapping The Golden Circle TASC [Online]. Available at: http://www.tasc.ie/publications/list/mapping-the-golden-circle/ [Accessed 11/11/2012], pIV, 3, 31.

2. Mccullagh C (2010) ‘We are where we are’: Constructing the Crisis. In: Share P & Corcoran MP (eds.) Ireland of the Illusions: A sociological chronicle 2007-2008. Dublin: Institute of Public Administration, p42-3.

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One thought on “CRC and the Controlling Network Strategies of the Elite

  1. Pingback: The Broader Societal Problems Lurking Behind Angela Kerins | Myths of Our Time

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