A cruel end to the O'Reilly reign at INM

There was both cruelty and irony in the ending of the O'Reilly reign at INM last week. By Vincent Browne.

There was a cruelty in the shafting of Gavin O'Reilly as chief executive of Independent News and Media (INM) last Thursday afternoon. The statement issued afterwards said his departure followed a "compromise agreement", approved "unanimously" by the board - though this announcement was later amended, as apparently two O'Brien representatives had not agreed with the O'Reilly departure package.

The cruel words "amicable" and "mutual" followed. O'Reilly had been forced out in advance of an AGM at which he would have been voted out.

There was an irony in the ending of the O'Reilly reign at INM. A vast warchest of wealth (Denis O'Brien's) forced out the family that had amassed a vast warchest of wealth for themselves from INM. But it was ugly nonetheless.

The enormous wealth that forced out the O'Reillys included the most valuable endowment ever awarded by the Irish State (i.e. the award of the second mobile phone licence to Esat, a company controlled by O'Brien), and was undiluted by a return to the State of a mere 20% in capital gains. (O'Brien was resident in Portugal and thus did not have to pay Irish capital gains tax.)

O'Brien has put it up to journalists to trawl through the detail of the Moriarty findings against him and invite his response. If we examine the details of the findings, they are damning.

O'Brien had done well in blurring the significance of the Moriarty findings, but the brazen displays of camaraderie with Enda Kenny, at a time when the public was sensitive to improper crossovers between politics and business (in the immediate aftermath of the publication of the Mahon Report) brought those findings back into focus. (For his part, Kenny had loyally avoided a single critique of O'Brien by name and also avoided any acceptance of the tribunal's findings against O'Brien.)

The collapse of INM's share price was not of Gavin O'Reilly's making. It was of his father's making, and it is hard to avoid the impression that this collapse was caused during the long control of the company by Tony O'Reilly.

INM was propelled into expensive media acquisitions around the world. These could have been afforded by the profits INM generated over a long period, had they not been splurged in dividends, mainly to the enrichment of Tony O'Reilly.

Tony O'Reilly certainly took tens of millions in salary and stock options since 2000 and probably the same again, or its equivalent in real terms, from his purchase of the Independent in 1973.

In so many ways, Tony O'Reilly is very gifted: brilliant at sports, notably rugby, endowed with profusions of cultural and social capital, rivalling his economic capital. Clever, funny, charming.

And, for so long, so, so successful. A star of Wall Street after his early stewardship of Heinz, a media tycoon, not just in Ireland, but also in Australia, New Zealand, South Africa, India and Britain. The rescuer, initially, of the iconic Waterford Wedgwood company. A philanthropist, with halls named after him and his parents. And, as final confirmation of his success, a tax exile, not just from Ireland, but from the US also. The philanthropy softened those social transgressions.

His latter career has been less spectacular. His dividend and expansion strategy devastated INM, his stewardship at Eircom was hugely profitable for him personally, but hugely damaging socially, and Waterford Wedgwood went under.

Perhaps O'Brien could have done himself a favour by staying away for a few years after the Moriarty criticism. The report was so massive that few read it, and fewer still would have remembered it in a few years. But O'Brien has insisted on reminding us, and now we won't be able to forget for quite a while. Fine Gael will remain cosy with O'Brien, but that might not be sufficient to permit him to take overt control of INM through bidding for the company. The level of control he now has may be enough - for now. Sooner or later, however, he will surely make a bid for the company.

He might be better advised to settle for a knighthood.

Alternatively, he might just settle for making a few more euro through his recently acquired Siteserv - whose businesses include the installation of water meters, believe it or not. {jathumbnailoff}