JUST who is bluffing whom in the health insurance market? The Department of Health has never believed that Bupa intends to withdraw from Ireland. Bupa has no reason to believe that the health department will restructure the market sufficiently to allow competition. Bupa has threatened to leave the market, the department is threatening to let it.
Axa’s entry into the milieu merely adds to this rotten, festering puss of bad faith. Axa’s offer to take over Bupa customers and staff stretches credibility. The company, which operates as a rival to Bupa in Britain, has previously expressed grave doubts as to whether there exists a commercial basis to operate here.
It now might graciously accept Bupa’s 20% market share, perhaps with a three-year exemption from the crushing rules of risk equalisation and a commitment from government to break the VHI monopoly.
If Axa wants to take over Bupa’s Irish business, then it should probably talk to Bupa, not go running to government. Bupa is perfectly entitled to rebuff. After all, Bupa would stay if offered the same conditions.
If Axa truly wants to enter the Irish health insurance market, then the world’s second-largest insurance company should simply open for business and try to win Bupa’s customers.
The Axa Ireland boss, John O’Neill, last week said that its talks on entering the health insurance market here were “delicate and confidential”. The comments were made in the full glare of television cameras as he walked out of the Department of Health. How confidential was that? Is O’Neill an innocent stooge in the morality play, trotted out by the health department to deliberately shine a bad light on Bupa?
Or is he a willing patsy? This is not poker, it is the dark art of politics.
Shame of Shannon shenanigans
WHAT self-respecting manager would work for the Shannon airport company? Last week workers turned down redundancy terms of 10 weeks’ pay per year of service and a €10,000 loyalty bonus for those staying with the company.
Almost half of the workers, those employed in the flight kitchens, will be pocketing €100,000 redundancy payouts, and will also be offered new jobs with a contract caterer, albeit on lower pay.
Yet the staff still rejected the survival plan.
The message from the Shannon workers seems pretty clear: no outsourcing at any price.
The Shannon managers have been led a merry dance through the state industrial relations machinery for a full 18 months and are now practically powerless to act.
The redundancy offer is hugely generous. If the airport bosses conceded any more, it would be nothing short of a national scandal. Yet management is incapable of making workers compulsorily redundant.
Management has no big stick and has been left holding a big juicy carrot instead.
As a protest, the board of the Shannon Aviation Authority should resign en masse.
Of course, that would merely serve as a victory for the unions, who have never been great supporters of a separate Shannon airport company.
What a mess.
Enforcer Appleby still has directors in his sights
THE corporate enforcer Paul Appleby made front-page news recently with the revelation that company directors repaid “improper” loans of €200m in 2006.
In total 900 directors were cautioned under a provision in the Companies Act that prohibits directors from drawing loans of more than 10% of the value of their firms. The money was “repaid” to the companies that these directors actually own. So, in effect, they gave the money back to themselves.
As breaches of the Companies Acts go, the director loan provision is hardly the most venal. It is designed to prevent managers plundering assets for their own use. As most owners are also managers in Ireland, it could be argued that the managers have every right to plunder their own companies, so long as it is stated clearly in the accounts.
In Britain, a 20-year prohibition on companies making loans to their directors is soon to be reversed in new legislation. At present, no cap on director loans is being proposed.
For the Office of the Director of Corporate Enforcement, the loan repayments represent “an ongoing drive to raise awareness of this law and to encourage greater compliance”.
One man who is rather upset at the tactics used by Appleby in “encouraging compliance” is John Mulhern, the racehorse trainer and son-in-law of the late Charles Haughey.
Mulhern was detained for 10 hours without charge at a garda station under the Criminal Justice Act in relation to directors’ loans he took out at two companies, Clayton Love Distribution and Meleck. His property was searched and privileged documents taken from his home.
In a judicial review, scheduled to be heard this week, Mulhern will claim that he was singled out and subjected to the “most extraordinary and oppressive treatment”.
If Mulhern is successful in establishing that he was unfairly treated, enforcer Appleby might find himself in a rather uncomfortable spot.
Appleby is a genuine, conscientious and earnest public servant. What is worrying is that the office is in danger of seeing everybody in a suit as a criminal.
Little Chef gives Anglo a big lesson
IT was somewhat surprising to hear that Anglo Irish Bank got stranded at the Little Chef service stations. The bank lent £38m (€56m) to the People’s Restaurant Group when it purchased the famous greasy spoon cafes for £52m in August 2005.
Even more than nailing down security, the Anglo lending mantra is that “cash flow is king”. But within a year of backing the People’s Restaurant, the company was unable to pay the rent. Overburdened with debt, the restaurant group had little room to develop and relaunch the business.
Where exactly Anglo stands following the rescue of Little Chef by another of the bank’s clients, Arazim, an Israeli group, is hard to decipher. But with security over a number of the motorway cafes, it is unlikely to be much out of pocket, if at all.
No company is too small to offer a salutary lesson, however. Anglo is no stranger to highly leveraged private-equity takeovers, many of them much larger than Little Chef.
- John Riordan took the controls at troubled Smart Telecom last week with a big reputation as a turnaround merchant. Yet the patrician Kerryman has tasted defeat a number of times in his business career, too.
A few of his British property businesses went bust in the mid-1990s, after which he crossed the Irish Sea to take up the post of chief executive at Princes Holdings, a joint venture between Independent Newspapers and the cable company UPC. He was also a director of Tara Television, an Irish cable channel based in Britain that went bust after RTE pulled the plug on programming because of debts.
Riordan’s crowning glory has been the restructuring of UPC, yet one wonders whether that really qualifies him to secure Smart’s survival. Smart needs to be restructured, but it needs to be reinvented and rehabilitated too. Riordan has a tough task ahead of him.
