Everyone's a winner at Eircom
The putative new Australian owners of Eircom must have been baffled by the objections to its purchase of the company raised by the head of the Communications Workers Union (CWU) last week.
Steve Fitzpatrick, who has impressed as general secretary of the CWU in the hard job of dealing with the basket case that is An Post, complained that Babock and Brown had not met with his union to discuss the issues involved. He bemoaned its rudeness and implied there would be trouble ahead if they did not contact him for meaningful talks.
The Australians must have wondered why this man was causing a fuss and have looked to the new Irish partners for an explanation. It is not hard to imagine Babcock and Brown receiving an old-fashioned Irish nod and wink.
Babcock and Brown is the latest controller of Eircom to have tied up a deal with the Employee Share Ownership Trust (ESOT), the owner of just over 21 per cent of the equity in the former State-owned telecom operator. It will retain its shares as part of the new ownership.
The ESOT is an extremely lucrative arrangement that has brought great financial benefits to about 14,500 past and present Eircom employees.
The members have shared €424 million in cash, tax-free, so far. The ESOT still owns ordinary shares worth over €500 million and preference shares valued at another €100 million or so. This is a multiple of the original investment made by the ESOT and it has been managed shrewdly by former CWU chairman Con Scanlon and his associates.
Access to vast sums of money has made ardent capitalists out of these erstwhile trade unionists. Scanlon quit the CWU when his own lucrative additional arrangements – worth millions – were disclosed. It would be unworthy to suggest, however, that Scanlon's actions were motivated by his own rewards. His legal duties as manager of the ESOT require him to maximise the financial returns to its members, not protect the work conditions to be enjoyed by remaining employees in Eircom or safeguard the infrastructure investments that may convey benefit to the State.
Scanlon has been shrewd in increasing the employee shareholding in the company at minimum cost and in extracting great profits, tax-free, from it. It may have appalled his former union colleagues but any ballots of ESOT members required to endorse actions suggested by Scanlon have been endorsed overwhelmingly. He may have received rewards the envy of his union colleagues, but they were still a fraction of what other directors at Eircom received.
Just imagine that Fitzpatrick starts threatening the conclusion of the deal, by means of some form of industrial action. The workers who are set to make more money again out of the latest Eircom sale would rip him apart, given their experiences to date. They have shown that they have no interest in political and economic principles or in the suitability of any owner. They just want the money. This is a power-struggle Fitzpatrick cannot win. It's hard to believe he intends to take his objections any further. He should stick to representing the unfortunate workers at An Post. The Eircom workers are doing all right.