In this in-depth interview, Michael Somers discusses:


There are many obvious starting points to launch a conversation with Michael Somers, the candid, convivial, and at times mischievous, former public servant who established the National Treasury Management Agency (NAMA).

There is the NTMA itself, an organisation that has quietly morphed and expanded its reach and influence across so many elements of the public finances. Or, we could delve into the slew of board appointments and directorship that Somers has accumulated since his retirement as the agency’s chief executive, the tenth anniversary of which falls this week.

One could canvass his views on Brexit, the national debt or economic threats, or ask him to reminisce about the bank guarantee, Nama and Ireland’s financial calamity. Or seek memories about the personalities he encountered along the way, from Haughey to Lenihan and from Jean-Claude Trichet to Johnny Ronan.

Only this conversation does not start in any of those locations. Instead, it begins 34 years ago in war-torn Lebanon when a young Michael Somers was secretary general of the Department of Defence.

The year is 1985 and Michael Somers had arrived in the department in 1985 from the rarefied environs of the Department of Finance. There was institutional tension between the civil servants and the military wings of the department, and the promotion of an outsider had not played well. But for Somers, it was something of a boy scout’s dream.

“Lebanon was blown to pieces at the time. I remember landing in Beirut Airport which was in smithereens and staying in a hotel there, the Hotel Vistu. The firing would start in the evening,” Somers tells me.

To get to the Irish area of operations, Somers required a helicopter trip courtesy of the Italian army – the pilot was forced to fly low to make the chopper a harder target for militias. As the helicopter went beyond range, Somers, dressed in a helmet and flack jacket, could see the islands of rubbish in the sea and the flashes of guns and rockets back on shore.  

“We had a lot of hassle with the Israelis at the time,” he tells me. “They were supporting militias in the Irish area of operations and there was a lot of rowing with the Israelis over this. Of course, they were always telling us something different.”

“I’ve told people that time and time again – never let the excellent drive out the good.”

His time in the department lasted just three years, but even now, it is obvious that it left an impact on him. Later in the interview, he laments the government of Enda Kenny’s decision to downgrade the Department of Defence from a senior cabinet portfolio and the failure of his successor to restore it. He also has strong feelings about the low levels of pay with the military.

His time in the Department of Defence, however, also helped shape his thinking: about government, about decision-making and about bureaucracy.

The main project during his time was to build a new department headquarters, unifying the scattered office of the department. The project had government approval, bank finance and a building design drawn up.

Then, Somers made a fatal mistake, one which he says he never made again. “One of the civil servants raised the issue of whether the building would be proof against a nuclear explosion in the vicinity. And stupidly I agreed to defer the start for a few months and of course, it never happened then,” he says.

“The Government changed; the project got cancelled. I was out of the place and I learned to never let the excellent drive out the good. You know, I’ve told people that time and time again – never let the excellent drive out the good.”

Meeting Trichet, rowing with the Central Bank, haggling with Lenihan over Nama

The year is 2009 and Michael Somers is sitting in the lobby of the European Central Bank in Frankfurt waiting to see its president, Jean-Claude Junker.

The Irish economy is teetering on the edge. The shattering frailties of the banks are quickly being exposed, and the government is lurching from economic crisis to financial calamity. Contingencies for Nama, designed to save the banks from themselves, are being hastily drafted up. The Bank Guarantee remains in force.

The government needs money, and Somers has been dispatched to Frankfurt to help get some.

“Would you go out and talk to Trichet,” Brian Lenihan, the finance minister had asked him.

“It’s is not my remit,” he responded. Surely it is up to the Central Bank?”

“Well, you know him,” the minister replied. “You go and talk to him.”

Somers knew Trichet for more than 20 years, having sat on an EEC monetary commission in the late 1980s when both worked in their respective finance departments. They had stayed in touch over the years and were on first-name terms.

Later, when Trichet was under pressure back in Paris over a Crédit Lyonnais controversy, Somers had even sent him a note of support. Lenihan wanted to tap into the friendship, by attempting to bypass the role of the Central Bank.

Somers smiles when I ask how the Central Bank responded to the ministerial snub. “Not well, they insisted on coming with me,” he replies.

Even now, Somers still believes that Dame Street tried to block the meeting going ahead. When he arrived, the Irish Central Bank told him that Trichet was tied up and could not meet.

“I rang back my PA in Dublin and said: ‘What’s the scene, they tell me that Trichet is not available.’  So, she rang Trichet’s office and they said he would meet at 12. At 12 o’clock I went up and said, ‘Where’s the President’s office?’ He walked out and welcomed me. What struck me was the relationship was desperately formal between the Irish side and the ECB.”

The meeting was scheduled between Somers and Trichet. The Central Bank, however, insisted on attending.


Ian Kehoe (IK): How did the meeting go?

Michael Somers (MS): I told Jean-Claude that we needed another 60 billion to deal with the mess.

IK: What was the response?

MS: He didn’t say anything.

“Trichet was portrayed as the Devil himself. He was not. Now, I’m biased because I’ve known the man for years and I still tick-tack with him on a regular basis. But he was an easy fall guy.”

IK: But his sense during the meeting?

MS: There was a lot said afterwards that he warned about a bomb going off in Dublin. I was always sceptical about that because English was not his main language and fellas can say things that they don’t necessarily mean.

IK: As in a literal interpretation?

MS: Yes. I think the guys in Dublin always took Trichet far too literally.

IK: But he has something of a bogeyman reputation.

MS: Yes. He said to me at one stage that he had 25 per cent of his book tied up in loans to Ireland and he said, ‘I can’t just keep pushing money, somebody else is going to have to come in and do something.’  And he said, ‘You’ll just have to do something else. Somebody else is going to have to come in.’ 

But he is portrayed as the Devil himself. He was not. Now, I’m biased because I’ve known the man for years and I still tick-tack with him on a regular basis. But he was an easy fall guy.

“I argued with them that maybe we should just take a few loans from the banks and see if they start lending again. But anyway, I lost that one.”

IK: Primarily, you went to meet him to get money for Nama. But I remember at the time you were not convinced by Nama, even though it was under the auspices of the NTMA.

MS: I thought it would be turned down by the Department of Finance and I didn’t object to it initially. And then when it actually went through, I began to get quite nervous at the sheer amount of money that was going to be handed over to the banks. And I argued with the late Brian Lenihan’s position. Lenihan’s attitude was, look, if we don’t take these bad debts off the banks, they won’t lend again. 

IK: Did you make that point directly to Brian Lenihan?

MS: I said to him, ‘I’m desperately jumpy about handing over all that money to them and increasing the state’s debt.’ And we also had a lot of money ourselves. We had the state pension fund.  And we’d another 22 or 23 billion in cash to run the country. But they wanted to hold onto that for the purposes that it was intended for. And I argued with them that maybe we should just take a few loans from the banks and see if they start lending again. But anyway, I lost that one.

IK: And they didn’t lend again.

MS: They didn’t, no. And I would have stuck it to them and let them… they caused the problem.  They knew where the bodies were buried and I was going to say, ‘You sort it out; don’t be looking to us.’ And I wanted to throw the onus back on them and the Central Bank and on the ECB who are supposed to be controlling all this stuff. But anyway, as I say, I lost that one.”

IK: And in the end, you lost the pension fund money later on to bail out the banks?

MS: Well, what happened with the pension money was we had 22 billion. Lenihan wanted us to put the money into preference shares with the bank. Now there was a pension commission. I was one of the members of it, but there were five or six of us on it.  We were obliged by law to invest this money to get the best possible rate of return consistent with an acceptable level of risk. And we felt putting this money into the banks is not an acceptable level of risk, so Lenihan changed the law so that he could give us the direction. So, we were directed to put three and a half billion in preference shares into AIB and the same into Bank of Ireland. We had to do it.


In an interview with The Currency published earlier this year, the property developer Johnny Ronan recalls taking Michael Somers to the top floor of what is now the Treasury Building in 1990 when he was trying to convince him to locate the NTMA building there.

“I said: ‘Michael, this is the future best location in Dublin. See that water body – it’s the Grand Canal docks and we have bought some of the warehouses,’” Ronan told my colleague Tom Lyons

According to Ronan, Somers replied: “It’s a long way in the future Johnny. This is not exactly St Stephen’s Green!” 

Treasury Building atrium.
The 120-feet atrium inside Treasury Building. Photo: Ronan Group

Somers had a slightly different take on the conversation, but admits he smiled when he read the quotes. I ask him how he managed to get the building named after the NTMA.

“The building was going to be called after some minor merchant banker or something like that; I can’t remember what it was.  And I said because the Department of Finance had given me such grief over the thing, I said we’ll call this the Treasury Building so it sounded like the British Treasury Buildings. Johnny agreed with this.”

I ask Somers if he named Treasury just to annoy officials in Finance. “Yeah,” he smiles.   

Dealing with the debt, reporting to Charlie Haughey and working with Albert Reynolds

“There was a lot of opposition to the NTMA, which kind of came out over the years. The Department of Finance were not in favour, for a number of reasons.”

The year is 1987 and Charlie Haughey has just returned to the office of the Taoiseach for the third and final term. The national debt had ballooned to a debt-to-GDP ratio of 115 per cent and there was a growing fear that Ireland may require a financial bailout.

Somers had been an official in the Department of Finance when Haughey was minister there, working with him in introducing a contributory pensions scheme for the widows and children of civil servants. The department hierarchy had been against it, but Haughey and TK Whittaker pushed it through. Somers had been the point man on the detail.

Back in power, Haughey restored Somers to the Department of Finance and charged him with sorting out the national debt. What began as an assignment led to the creation of the National Treasury Management Agency, an agency of the state operating outside of the civil service charged with managing the state’s borrowing needs.

The NTMA was controversial as it could pay private sector wages; Somers’s own salary was reputed to be the highest in the public service. His pension lump sum totalled more than €1 million.

IK: What was the situation like when you returned to the department in 1987?

MS: It was an appalling mess. We had the Irish pound and you could only borrow so much in Irish pounds, because otherwise you squeeze the private sector and they could not borrow anything.

So, we were borrowing currencies all over the world, and there weren’t very many people who either understood this or were prepared to do it. It wasn’t everybody’s cup of tea, particularly civil servants, to be going out negotiating with Japanese and fellas in the Middle East and Saudi Arabia and all this, trying to get a few bob out of them. So anyway, I was hauled back.

IK: What were the pressing issues?

MS: The problem I ran up against then was that the staff who knew anything about this were leaving – whether to go to banks or brokers or whatever, and how do we get the staff. So, we got Citibank to tell us what their views were, and they said, well you’ve four choices – you can do nothing, and you’re going to get into more and more trouble. Because we were being ripped off by the banks, the state was being ripped off. You can try and hire people in from the private sector and pay them – on some sort of a contract. We tried that and it didn’t really work. The third one was, hand the whole lot over to a bank, which would have been probably unconstitutional. And the fourth was, set up some entity outside the civil service, who report into the Minister for Finance, and to pay them.

“Losing power, losing a chunk of their work. There was also the view, I think, we were going to get paid more than they were – which is a valid enough point.”

IK: So that was the genesis for the NTMA?

MS: With a lot of grief, that’s what happened in the end. And we set up in 1990. Now, there was a lot of opposition to it, which kind of came out over the years. The Department of Finance were not in favour, for a number of reasons.

IK: Was it about power? No department like to lose influence.

MS: Losing power, losing a chunk of their work. There was also the view, I think, we were going to get paid more than they were – which is a valid enough point.

IK: But you also reported directly to the minister.

MS: I had discovered when I was in the Department of Defence that the military chiefs, chief of staff, what was then the adjutant general, the quartermaster general, the three of them reported directly to the minister, they didn’t have to come through the Department. So, when we set it up on legislation, we copied that, and put in the chief executive would report directly to the minister. So, for 19 years – I was there 19 years – I insisted on seeing the minister on his own with no civil servant present. From my point of view, it was a way of getting things done and agreed – from their point of view, they were not best pleased with this.

IK: And how did those initial negotiations go with regard to refinancing the debt and borrowing money?

MS: Well it was enormous, as we saw it, at the time.  It has gone bigger since but it’s not an issue anymore because we were exposed to all these foreign currencies.

We had huge exposure to all those currencies, and we were trying to see what the best in terms of swaps and other financial instruments was – that had all come in at the time or was starting to come in. 

IK: But it must have been easier to get expertise?

MS: I wanted to hire some fellows from the Department of Finance to come with me. Now, there were a number of issues, one, the people who came to the NTMA were not civil servants. So, you had to resign from the civil service. And there were exit interviews given to a number of these people telling them that this is not going to work, and in a year’s time this is going to all fall apart, they would be out on the street. Anyway, 25 of them took the risk and came with me and then I had to try and hire people from the private sector.  But I had the freedom to pay, whatever it took.

“The relationship with the Ministers for Finance was always very good. The relationship with other ministers sometimes was slightly fraught because they thought we were taking over their work.”

IK: It was controversial, and so was your pay, but at least you had a cheque book and you weren’t constrained by that the civil service.

MS: No, I wasn’t.  Now I had to get my budget approved by Minister for Finance, everything I spent was subject to a Comptroller and Auditor General auditing.

IK: Who your initial finance minister?

MS: Albert Reynolds.

IK: What was he like?

MS: Albert was a businessman. And Charlie Haughey was a bit iffy about the whole thing and he said to me: ‘I don’t know why you need all this expertise to manage liabilities.’  Reynolds was prepared to take the risk on it. He said look, if you can save €20 million and it will cost €10 million that’s a good deal. And it was a long time before the NTMA cost €10 million. We saved an awful lot of money because we got in the expertise and we were able to deal with these fellows.

IK: And what was that strategy, was it going out and meeting them, raise money or renegotiating?

MS: You see the name of the game; you couldn’t really reduce the size of the debt unless you had a surplus in the budget. And there was no way you could run a surplus. The only thing you could do is hopefully stop adding to the size of the debt. So, our game was to try and reduce the servicing cost. We tapped banks both large and small, not just Warburg’s but mainly German and Japanese banks, they were the most forthcoming in terms of lending money. So that wasn’t a huge exposure for any of them.  And then of course sometimes they’d go to and try and sell down their exposure and they find actually they trust the other bank.

And the same with the Japanese, at one stage we were the most frequent issuer on the Japanese Samurai market. And not everybody wanted to do this kind of thing, some fellows were afraid of it, you know.  You were committing the State to huge potential sums. But the name of the game was to squeeze down the interest rates and that’s what we did. And then we were trading in the Irish market space, we set up a trading operation to buy and sell Irish government bonds and that provided liquidity into the market then to squeeze down the ratio we were paying on Irish debt.

IK: And what was your relationship like with different ministers at that point, it must have been pretty fascinating?

MS: The relationship with the Ministers for Finance was always very good.  The relationship with other ministers sometimes was slightly fraught because they thought we were taking over their work.

Michael Somers on Charles Haughey

“I found Haughey great. I knew him well. I first came across him when dealing with the pension issue. Then I came across him when he set up the NTMA. I mean, it wasn’t as if I wouldn’t have rows with him and he was furious with me over talking to a newspaper man. We were getting a dreadful press. And the journalists would ring me about it and I would tell them what the story was and I would say ‘Don’t quote me because I’ll be blown out of the water.  Don’t quote me.’ And of course, they’d say ‘A source said something or other.’ But at least it wasn’t my name. But every so often my name might appear and Haughey would go ballistic. He blew me out of it.  That I was trying to upstage him and all this. And the secretary of the department told me afterwards that Haughey used to complain to him about me, that he got fed up complaining to me because I kept doing it. We were being lambasted over what we were at. But we had to get the money.

“Another thing about Haughey. He used to invite us over to Kinsealy every Sunday morning for a while, a mixture of civil servant occupations, and we sat around a big table discussing great affairs of State, whatever they were. And he’d have two ladies who gave us a nice lunch and then we adjourned to the bar he had set up and drank his fine wine for the afternoon.”

Panic, financial mania and the bailout

The Irish economy has been defined by repeated cycles of boom, bust and recovery. As my colleague Stephen Kinsella has written on this site, arguing that the fundamental economics of a country like Ireland is a lot like gravity – you can ignore it for a while, but eventually, it will get you. He wrote:

“The 1970s saw a period of some growth, stymied by the oil crisis, and yet throughout this period, emigration continued apace. The overspending of the state in the late 1970s, typified by the giveaway Budget of 1977, was only corrected during the enforced austerity of the 1980s. We had the boom period of the 1990s and 2000s, and, of course, the property crash we are all now familiar with.”

Given his role at the heart of public finances for decades, this is something I want to question Somers about, particularly the build-up to the most recent financial and economic crisis. Given the scale and import of the NTMA – by the time of the crash, its role has extended to managing public-private partnerships, operating the State Claims Agency and even operating the National Development Finance Agency – I am curious about his views on the period.

Also, given it was the borrowing wing of the state, just what role had the agency on the decision to guarantee the banks in September 2008? This is where I begin this portion of the interview.

IK: Were you there the night of the Bank Guarantee?

MS: I was actually in the States. We had investments in 3,500 companies around the world and we were expected to do a certain amount of due diligence with them. One of the due diligences was to at least show that you’re keeping an eye on things. Now, we didn’t invest all that money directly, a lot of it was invested through funds. So, John Corrigan and myself had arranged to go out to the States to meet with some of the companies that we’d invested in New York. Within a day, the banks had been guaranteed.

IK: So, did you know about it when it was happening?

MS: When I woke up, I had a message on my phone from Brendan McDonagh who ran the back office in the NTMA to say that this blanket guarantee had been given. Jeepers. But done.

IK: You were not consulted?

MS: No, no.

IK: You didn’t know?

MS: No. Now if I was consulted, I would have felt that if there was any risk to deposits you had to guarantee the deposits, I would have hesitated…

IK: On the liabilities?

MS: Yeah. But about the bonds, I wouldn’t hesitate. Now, there was an argument on some of the bonds that the terms on which they were issued made them rank pari passu with deposits, but that was the bank’s liability. The fact that the state took over the responsibility for some of the bank’s deposits – I would have looked for legal advice, but I certainly wouldn’t have guaranteed the lower-tier bonds, tough luck on you guys.

But I’ve often thought back on the benefit of hindsight and in relation to that, I suppose there was just this element of almost panic.

IK: Panic?

MS: Decisions were being taken so quickly. In the middle of the night, decisions taken in the middle of the night, that’s always a bad idea, you know, because you’re waking up in the morning with a completely different perspective on things. Fellas tired and all that.

“I didn’t want to put it into the banks here, but I got legal advice, and the legal advice was that you’re only the Minister’s agent.”

IK: The build-up to the crash, obviously you went through the boom, did you see much of the crash coming? 

MS: I didn’t see it coming the way it came. What we did see was the huge growth in credit. Credit was growing by 20 or 30 per cent every year.  And nominal GNP was growing at, I don’t know, 6 or 8 per cent. The figures may be wrong, but it was that order. It was a multiple of what nominal GNP was growing at, and the economics that I have learned was that all those monetary aggregates moved more or less in line with nominal GNP. If you expanded credit too fast, you got inflation and if you didn’t expand it fast enough, you got deflation.  We were doing it at multiples of the rate of growth and we used to discuss this.

I used to manage a meeting every Monday morning and we’d go through what had happened in the past week, pretty frank discussions on the issues. And we used to wonder about all this. Is the economics we learned, is that completely out of date, is this a new theory that somebody has found? And I remember raising it with a prominent official at the time whose name I won’t give you because he’d probably sue me or something. 

IK: Look, I don’t want to be sued by anyone else either.

MS: But I said to him, I don’t understand this, that it looks to me like trouble. I said I didn’t want the trouble, but you can’t keep expanding credit at this rate. And he said to me, ‘You’re not listening to the Central Bank.  The banks have been stress tested; they’re robust,’ et cetera.  They were robust and all this. ‘What are you on about?’ So, I went off anyway because if we’d been wrong, we were ready to accept we’d been wrong.

But of course, what was happening was the Irish banks were constrained in their lending when you had the Irish Pound, because if they wanted to expand the credit base, they were going to have to borrow in foreign currency and convert to Irish Pounds and take a big FX risk which they didn’t want to take. Now in the Euro, there was no constraint on them.

And I remember saying at one stage, it was like kids let loose in a sweet shop. They borrowed all this money abroad at low rates of interest because of course, the interest rates had fallen. Added on a bit for themselves and then lent it out all over the place – it was easy. Except of course when the chickens came home to roost which they did.

And then the liquidity all dried up and then Lenihan wanted me to put money into the Irish banks from the cash that we had to run the country. Which I objected to because I said – we need that, I had it all in the Central Bank or in other banks around the world. I didn’t want to put it into the banks here but I got legal advice and the legal advice was that you’re only the Minister’s agent, you have to do what you’re told, but get it from him in writing. And also, by the way, he might be breaking the law because he was giving preference to one group of banks.

IK: Over other banks?

MS: Over another. So, I went back anyway and said, ‘Okay, here is the legal advice, I have to do what you tell me but you have to put it in writing’. So it was put in writing for three months, at the end of three months I went back and said, ‘Well if you don’t put it in writing again, I’ll have to take it out and put it back into the Central Bank’. Again it didn’t do anything for relationships but it saved me from any allegations that I put on the green jersey and acted incorrectly.

“I said that there is no way anybody is going to come in and run our show for us, we will run it ourselves. Whatever it takes, we will run it ourselves. So, I was kind of shocked when we ended up with the Troika running the show.”

IK: And did you see it coming to the point though that Ireland would need a bailout?

MS: No, I didn’t. In fact, I left.

IK: You were gone before then, weren’t you?

MS: Yeah, I left the end of 2009.  And at that stage we still had the 22 billion in the pension fund, some of it was gone to the banks and we had 20 plus billion in cash. So, I thought we were okay.

IK: A war chest. That’s a pretty heavy war chest there.

MS: Yes, a war chest, yeah and that was there.

IK: Why do you think it happened?

MS: I don’t know. I don’t know how the people lost their nerve or what happened, I just don’t know. And I was shocked at it. I mean we were often threatened that the IMF would come in and over the years we were always in trouble. I said that there is no way anybody is going to come in and run our show for us, we will run it ourselves. Whatever it takes, we will run it ourselves. So, I was kind of shocked when we ended up with the Troika running the show.


“I felt quite on my own after that, a bit of isolation.”

If Michael Somers had a busy full-time job, his career over the past two years has been no less frantic. He has served as chairman of Goodbody Stockbrokers, which has just been acquired by Bank of China, and has served on the board of Goodbody’s previous majority shareholder Fexco. He was President of the Institute of Directors in Ireland from May 2017 to May 2019 and formerly served the board of Hewlett Packard International Bank plc.

His most high-profile role, however, was his position as a director and subsequently deputy chair of AIB. He was appointed to the board in 2010 by the finance minister following another state injection of capital, joining public interest directors Dick Spring and Declan Collier.

“Declan then left, he moved from Dublin Airport to London City Airport. So, he got off the main board and he wasn’t replaced, which I was surprised at. And then Dick got off after six years and wasn’t replaced. And I thought I was off after six years as well, which was a year after Dick. But in fact, at the last minute, I was told I’d be appointed for another two years. But I felt quite on my own after that, a bit of isolation,” Somers says.

“I said to them when I went in there: ‘I’m not here to improve my popularity rating, I’m in here because 22 billion of our money is in here and they want it back’. Now whether that’s legally proper, correct or what, you can argue but that is what I said.”

“Whatever about selling buy-to-lets, but the personal dwelling houses, selling those off, that grates with me.”

How did manage the public-facing role of being a bank director? “I had a constant load of people approaching me either directly or through TDs or whatever about their position. Now I said, ‘I’m only a non-executive director here, I can’t do anything for you. But I’ll draw the bank’s attention to, you know, your issues and ask them would they ever have a look at it’.

“And sometimes a more senior fella might take a different view on something – sometimes they review the thing and fellas got the loan or whatever it was sorted, sometimes they didn’t and some of the times I was codded.”

I ask about the decision by the bank to begin selling mortgage loans linked to primary dwellings, something foreign lenders had done previously but which had been resisted by AIB.

The economy, multinationals and circular wealth

IK: What’s your current take on the economy at the moment?

MS: There’s a lot of money around, you have only to walk around the restaurants. Now, whether the shops are doing all that well I don’t know, but certainly look at any of the posh restaurants.

IK: They’re all busy.

MS: Poke your nose into the Shelbourne or any of these places and they’re all doing very well.  There’s an awful lot of cranes around. I was discussing this with someone the other day and we decided anyway, okay if it crashes again it’s going to be the American funds that are taking the hit, not the Irish banks.

IK: There is very little bank lending out there?

MS: No, no, no.  The Brexit thing is obviously serious and given the amount of trade happening with the UK, I think we, rightly or wrongly, we sort of feel it’s not going to happen at its worst, that something will give here. And we’re going to, we’ll muddle through it somehow or other and maybe we will.  There’s a lot of, there seems to be a lot of wealth around, now of course the multinationals and FDI would have brought a lot of it in but they could move out again. There’s no sign of them doing it. 

And the American attitude insofar as I could read it over the years was that the language is the same, the legal system is by and large the same, and we’re a known quantity, other Americans will come here and have done well. So, if you as an American entity come in here and set up, well you’re not going to be criticised for taking a huge risk.

“The wealth was still in the country.  And there are a lot of wealthy people around. People were hurt.  There was that sense that they were hurt, but the money went to another group.”

IK: Well the big issue in relation to FDI as well is about the tax thing.  Everyone is looking for a bit of the taxing rights. The OECD are hard at work.

MS: We’ve become a very wealthy country very quickly, but I raised this after the crisis. At that stage, we were not running a huge balance of payments deficit and I could be wrong now on this, but I have never seen the cashflow analysis of where the money went. Now, I think a lot of the money went, as I put it to a senior official that I won’t name, from one group of Paddies to another group of Paddies. How much of that money actually left the country? 

I suspect not that much of it. That most of it has remained within the country.  And that’s how we rebounded so fast. That while one group became impoverished and the banks lost a lot of money, that the money that the banks lent ended up back in those banks but with a different owner. The crowd that borrowed it couldn’t afford to pay it back so the banks get into all the trouble but in fact, their deposit base didn’t really take an enormous hit. So, the money may have just gone in a circle. 

And I put this to a very senior official at one stage and he said ‘Oh, you know, they built all those places up in Leitrim, etcetera, that they couldn’t sell.’  And I said ‘Yeah, but the money for the sites was paid to the local farmers or whatever, and the wages.’ I said ‘Okay, money went out of the country to buy the bathroom fittings and whatever, but a lot of the money went on wages to locals or went back in tax to the State. It didn’t actually leave the country.’ 

And he wrote an article in one of the newspapers afterwards kind of half justifying his stance, but I wasn’t convinced, and I’ve never seen a cash flow analysis of where the money went. And in the absence of that I’m inclined to think that. it was circular, yeah. And as such, we bounced back. The wealth was still in the country. And there are a lot of wealthy people around. People were hurt. There was that sense that they were hurt, but the money went to another group.


The interview is drawing to a close and the conversation has moved back to the Department of Defence. When he first arrived in the department, he was shocked at the under-investment in the Defence Forces. In his view, nothing seems to have changed. “The idea that soldiers have to depend on a family supplement or whatever is ridiculous. It is now a very serious issue,” he says.

I ask about the decision not to have Defence as a full cabinet portfolio. Think of the message that sends to the Defence Forces,” he says.  

Finally, given his argumentative style and forthright views, I am curious how he even ended up a civil servant. The response is arguably his shortest answer of our entire interview. “By mistake,” he smiles. “By mistake.”