Would Drumm Have Got Away with It If He'd Gone to the Right School?

Andy Storey

Andy Storey is a lecturer in political economy at University College Dublin and a board member of human rights group Action from Ireland (Afri).


The conviction for conspiracy to defraud and false accounting of David Drumm, former chief executive of Anglo Irish Bank, represents a remarkable fall from grace for a man once feted as a financial wizard.

Drumm rose from modest beginnings to the zenith of the Irish banking sector. A relatively modest start in life also characterized his even more notorious predecessor as Anglo chief executive, Sean Fitzpatrick.

For example, neither Drumm nor Fitzpatrick went to one of Ireland’s elite fee-paying schools, and indeed they and their colleagues at Anglo cultivated an image of themselves as swashbuckling outsiders challenging the old-fashioned “establishment” of Irish banking.

A certain (somewhat misleading) narrative of the Irish financial crisis is that it was the recklessness of the upstart parvenu Anglo that caused the longer established banks to themselves throw caution to the wind, that it was Fitzpatrick especially – the “chancer who ran amok” in the words of now Minister Shane Ross – who principally crashed the banks.

A variant on this theme emerges from a passage in University College London research associate Aline Courtois’ fascinating new book Elite Schooling and Social Inequality: Privilege and Power in Ireland’s Top Private Schools.

In 2011, Courtois attended a past pupils’ event at elite Gonzaga College in Ranelagh, featuring a debate on the motion “A [Gonzaga] education would have saved Ireland from financial disaster”. The debate was chaired by the school’s most famous past pupil, Peter Sutherland, who, Courtois reports, eschewed impartiality in his backing of the motion.

(Courtois uses a pseudonym for the school in her book, but the naming of Sutherland as a past pupil means it is clearly identifiable as Gonzaga, a fact confirmed by media mention of the debate.)

The debate was conducted humorously for the most part, but that such a motion could even be tabled is striking – because Sutherland’s own career is a living refutation of it.

To take just one example, documented by Fintan O’Toole, consider Sutherland’s stint as chairman of the board of Allied Irish Bank (AIB) between 1989 and 1993. During that time the bank’s auditor discovered that AIB had deliberately defrauded the state of revenue due from taxes on bank deposits – it ultimately had to make a settlement with the Revenue Commissioners for the equivalent of €110 million.

Sutherland was not responsible for the fraud, but he did nothing to notify the authorities of it, correct the damage or take any action against those who were responsible. When a subsequent Public Accounts Committee report condemned bank directors’ lack of ethical standards, Sutherland had nothing to say in response.

Similar standards (or the lack of them) were evident when Sutherland later sat on the board of the Royal Bank of Scotland, and specifically on the remuneration sub-committee thereof that lavished outlandish pay and bonuses on chief executive Fred Goodwin, a man whose dodgy dealings would help end up costing the British taxpayer some €52.55 billion when that bank crashed and burned.

Never apparently fazed by such misfortunes (for others), Sutherland also served for 20 years as chairman of Goldman Sachs International, part of an investment banking consortium that has faced myriad criticisms (and fines) for the ways in which it sponsors ruinous financial speculation and creative accounting.

One example among many is Goldman’s massaging of the Greek public finances, including its role in the concealment, in the early 2000s, of the scale of Greek debt, a factor that ultimately helped precipitate the European financial meltdown.

There are a variety of other charges that can plausibly be levelled against Sutherland’s record, but his death earlier this year was marked not by any sustained reflection on his role in destabilizing the Irish, European and global economies, but rather by an almost embarrassing plethora of eulogies.

David Drumm deserves jail time. And Sean Fitzpatrick deserves the public opprobrium that has been directed his way (even if he has himself so far escaped a prison sentence).

Little such opprobrium, however, has been accorded Sutherland. Perhaps a reason for that is the way in which he supplemented his long record of problematic business behaviour with seeming “good works”, such as acting in later life as an advocate for migrant rights.

One of the themes of Aline Courtois’s book is the way in which some elite schools inculcate a version of noblesse oblige in their students, emphasizing the need for the privileged to do good works, to “give something back”.

As the mission statement of Gonzaga College puts it, “We strive to form men of competence, conscience, courage, and compassion”, a seeming contrast, perhaps, to the undiluted rapacity of less classily educated men like Drumm and Fitzpatrick.

The more cynical among us might see this rhetoric as one of the ways in which the elites concerned seek to maintain their power and wealth while simultaneously deflecting criticism of their unearned privileges.

But it is an outlook that seems to have worked well for Peter Sutherland, and it is one that David Drumm might ruefully reflect upon in the confines of his prison cell.

Author:

Andy Storey: Andy Storey is a lecturer in political economy at University College Dublin and a board member of human rights group Action from Ireland (Afri).

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Andy Storey
at 20 June 2018 at 16:02

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