On September 9th, Fianna Fáil announced Jim Gavin as the party’s nominee for the presidency. The next day, the first inklings of a row brewing between the chief executive of DAA and the board of the State-owned airport operator emerged in the public domain.
These two seemingly unconnected events are now deeply enmeshed. Minister for Transport Darragh O’Brien has declined to sign off on a €1 million severance deal for Kenny Jacobs that was hammered out by the board of DAA.
The reason – or at least part of the reason – for O’Brien’s foot-dragging is the possibility of a Fianna Fáil leadership contest in the not-too-distant future if Micheál Martin gets the shove as a consequence of Gavin’s ill-fated campaign. As a former army officer and GAA hero, Gavin was seen as Martin’s personal choice ahead of party stalwart Billy Kelleher.
[ DAA board pushes back as Minister suggests reconciliation with Kenny JacobsOpens in new window ]
O’Brien is viewed as a serious contender to replace Martin and is said to be concerned about the blowback for his leadership ambitions of being the guy signing off on a €1 million payoff for a State company executive.
A more prosaic explanation is that O’Brien believes Jacobs is doing a good job, even if he is not making too many friends at the airport operator or the Department of Transport as a consequences of his elbows-out approach.
A number of protected disclosures against Jacobs – which were not upheld by an independent inquiry – are at the root of his dispute with the board. There are also other issues, including the provision of information to the board.
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Jacobs has certainly brought some urgency to DAA’s efforts to get the cap on Dublin Airport passenger numbers lifted and grow the airport. Finding someone with the same appetite for the fight with Fingal County Council and other entrenched opponents is far from a given. Recruiting a successor could take months at a time when the Government is under pressure to make progress on delivering big projects. Better the devil you know.
Whatever his reason or reasons, O’Brien has turned a drama into a crisis.
He has put the board in a very difficult position by asking them to reconsider their decision and try to find a way to work with Jacobs. Unsurprisingly, they said no and told the Minister they had received another formal complaint about Jacobs – understood to be from a worker director who relayed concerns set out by certain staff – since approving his exit deal in September.
If O’Brien does not back down, the board faces a stark choice. They can either do the Minister’s bidding or they can resign (in whole or in part). If they don’t resign, they face being sacked.
Leaving aside the rights and wrongs of the predicament DAA board members find themselves in, there is no chance the Government will allow a precedent to be set where a State company board defies the wishes of the shareholder.
The calibre of the independent directors on the board of DAA – led by investment banker Basil Geoghegan – means it would not be a very good look for Government if they resign or are fired. The independent directors include senior executives from aircraft leasing, hospitality, finance and infrastructure investment. As State company boards go, it is pretty high-powered. Replacing the current independent directors with individuals of a similar calibre in the wake of mass resignations or firings would also be disruptive.
To a certain extent, O’Brien has created a situation where he is now damned if he does and damned if he doesn’t. If he forces the issue with the board, possibly resulting in resignations or firings, he will get the blame for the inevitable disruption and reputational damage to DAA that follows.
If he signs off on Jacobs’ payoff, he will have to deal with the impact of the short-term bad publicity and also the longer-term hit due to the loss of a chief executive at an critical time.
The compromise that he is proposing is fundamentally unsustainable. Even if there is some sort of last-minute fudge whereby Jacobs stays on and a few of the more principled directors walk the plank, the company might limp on but further conflict between Jacobs and the board is inevitable.
Jacobs clearly has some skills which are badly needed at DAA, but if he cannot cut his cloth sufficiently to operate within the guardrails that pertain to State-owned companies, he is not suitable for the job.
O’Brien must know all this, so there might well be an explanation for his unwillingness to bite the bullet and write the cheque. Perhaps he is banking on not being in his current job when it all blows up again.
