Breakdown in trust highlighted

Joyce Memo:The former chairman of the EBS, Brian Joyce, told the board a breakdown in trust was "undeniably impacting adversely" on the society's business.

In a memo written in June 2006 and responding to earlier memos written by independent directors Ron Bolger and Cathal Magee concerning corporate governance, Mr Joyce said the issues raised were "materially oversized" and "in truth are more targeted at Ted's [McGovern, the chief executive] and my stewardship than any real concern about governance structures".

Mr Joyce is a former managing director of Bord Bainne and a former chairman of CIÉ, and has been a director of a number of other companies.

He said he fully agreed with Mr Bolger "that a breakdown in trust is at the heart of this and also his acknowledgement that it reflects on all of us and especially himself as senior independent director.

"My primary concern is that this is undeniably impacting adversely on the orderly working of the board and some of its committees and most importantly on our business."

He continued: "The persistence and unreasonableness of this campaign has destroyed trust between the chairman and the two directors concerned, equally destroyed trust between the executive and the two directors concerned, and crucially dominated our agenda and cast a shadow over our board workings and the day-to-day workings of the executive for an unacceptable period of time."

Mr Joyce said the "destruction of trust destroys boards and companies. The breakdown of trust ends joint ventures and is a canker in the corporate environment." He said the memos from Mr Bolger and Mr Magee were set out as if the central issue was corporate governance "when clearly it is nothing of the kind".

Mr Joyce said the departure package negotiated with the former finance director, John Cullen, had been a pension-related arrangement and this had been notified to the remuneration committee at the time.

"Further details were not sought or given," he said.

A number of months later an issue arose concerning the placement of €5 million into the senior managers' pension fund because it was underfunded at the time.

Mr Joyce said the fact that this was done without reference to the board was far from ideal, but it was not a requirement at the time to notify the board and this had since been changed.

The fact that another substantial contribution to bring the fund up to the minimum funding standard had been agreed by the board confirmed that what had been done earlier was "essentially correct". "I personally believe that Cathal Magee's aggressive and intemperate treatment of this issue represented the turning point in trust and mutual confidence," he said.

Mr Joyce said the bonus awarded to Mr McGovern in 2005 was 35 per cent, and had never been 32 per cent (and subsequently increased), as alleged by Mr Bolger. Mr Joyce said the two independent directors had pursued a campaign "designed to hasten my retirement as chairman". He said he had not broken confidence by disclosing the content of conversations he'd had with Mr Bolger.

"Ron Bolger had been speaking in my opinion inappropriately and injudiciously to other directors about individual directors . . . There is nothing sacred about such utterances. In my view they are beneath contempt."

He said when a chairman engages in the "push-back of bad behaviour" or the executive rebuts assertions made, "it does not amount to corporate bullying in any shape or form".

Mr Joyce resigned from the board of the EBS in December 2006.