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The issues at Quinn Insurance
4 May 2010
The announcement of 900 job losses in the Quinn Insurance company will be a devastating blow to the livelihoods of the workers facing the dole. They now look into a recession with poor prospects of getting a new job, especially in the Cavan- Fermanagh border area where many of the jobs will be lost and where there are few other sources of employment. The workers have campaigned to save their jobs through a number of demonstrations locally and in Dublin, blaming the new Financial Regulator for pulling the plug on the business by forcing it into administration, and preventing the continuation of business in most areas of their UK market.
They have rallied behind their employer, Sean Quinn, and pointed to his success in building up his business from relatively humble origins to one of the largest businesses north or south of the border. The attitude of many local people was summed up by one – “Sean Quinn is an entrepreneur and entrepreneurs take gambles. If he had not taken gambles, he would still be sitting on his family farm in Derrylin.” They have trusted Sean Quinn to get them out of the predicament they find themselves in and have repeated his assertions that the insurance business is profitable, that he has been unfairly dealt with by the Regulator and that he and the management of the company can fix what problems there are if they are left to get on with it.
Socialists can only sympathise with the plight of the workers and support the demand that their jobs are saved. This however is to do no more than what local politicians have also demanded, including those in the North standing for election and also in the South, some of whom belong to the governing party. Those in the North have had no real solutions to offer and those in the South have hardly been better. They are caught between crass nationalistic denunciations of the Regulator for being English and all too obvious awareness that overt overturning or subversion of the actions of the Regulator would smack of the ‘light’ or non-existent regulation of the financial system that is widely held to have contributed so much to the financial crisis now facing both states, but particularly the South.
Quinn’s resistance to the administrators taking over his insurance company has obviously been reliant on the continuation of the crony capitalist relations that he enjoyed in the past. His plan B, that Anglo-Irish take over the business in order to protect the huge loans owed to it, might allow him some future role. This is the only hope for both Quinn and Anglo. The latter ranks behind other creditors should the Quinn Group be wound up and it is also owed a huge personal sum from Quinn consequent on his €2.8 billion punt on Anglo-Irish shares which failed spectacularly. It is not however obviously in the interests of ordinary taxpayers that a bank that is spectacularly bust should be given millions more to take over a company in administration.
Quinn’s failed speculation led the bank lending ten individuals money from the bank itself to buy Quinn’s interest off him, secured on the bank’s own shares. This became a notorious example of the sharp practice of playing fast and loose with other peoples’ money which has made Anglo a byword for reckless and costly speculation. Much of the cost of these loans was subsequently written off, in other words the ordinary taxpayer paid for it. The origin of the mess that Quinn’s companies now find themselves in lies with this gamble.
It is therefore one thing to gamble with your own money. What has happened with Quinn is that he has gambled with the livelihoods of thousands of workers. While he has shifted millions out of the insurance company to support his other companies, and moved to support his own family, it is the workers at Quinn Insurance who have paid the real price. Whatever ultimately happens to him and his companies, he will never be short of a few bob. The workers who have rallied so strongly in favour of Quinn should reflect on this and also on how much of a business he could have created without their hard work.
Many workers have blamed the Regulator for undermining the insurance business and it is clear that neither his priorities nor that of his defenders have been the preservation of jobs. In this respect however they are no different from Quinn himself. The fact is that Quinn has had a history of breaching the rules which allowed him to set up in the insurance business. In 2008 his company was fined a record €3.5 million and Quinn himself €200,000, while he was compelled to resign from the firm.
It is relatively easy to take money, promising to pay up if accidents happen, but the proof of ability to meet insurance claims rests on the retention of money in the business ready to pay out against them when they arise. The new Regulator stepped in when it was clear that Quinn did not have the required money to do so. Reports of his balance sheet also raise similar questions over just how solvent the business is. While the insurance company had €1.8 billion in assets 28 per cent was held as property, and we know how the value of this has plummeted. By way of contrast the rival insurance company Aviva had just 1.3 per cent of its assets in property. While FBD, the third largest in the market, had 47.6 per cent of its assets in Government securities, which are considered safe, Quinn had zero. This all points to the Regulator hastening the arrival of the redundancies but not responsibility for their creation.
The redundancies at Quinn reveal the priorities of both the Irish and British Governments. Both have pumped billions of their currencies into failed banks. Especially in the case of the Irish Government it has done so on the basis of claims that it is necessary to strengthen the banks so that they will be in a position to extend credit to businesses which might then create jobs. This round-about route to employment creation is, on the face of it, not the most effective or efficient way to create or save jobs. It is already astronomically expensive and involves cuts in wages and services which will depress the economy and lead to more job losses. The idea of giving a thoroughly rotten institution like Anglo money to save jobs is about as credible as giving it to Quinn. If Quinn workers find it hard to accept this they should recall that their jobs are being lost and others put in jeopardy because Quinn had the money but chose to shift it from his insurance company to elsewhere. Why would anyone give him more? His losses at Anglo may already be in the process of being picked up and paid for by fellow workers through the transfer of bad loans to NAMA.
The workers have expressed real confidence that the insurance business is profitable. They work in it and know how it functions and operates. If it is indeed profitable it will be because of their hard work. Why therefore should they not take over the business and run it themselves? They certainly know more about it than Anglo-Irish. It would be a lot less expensive than funding Anglo to do the same. In many ways it is the obvious solution, at least for those not crippled by illusions in private capitalist ownership of business and production.
One major obstacle stands in the way. Workers have demonstrated to defend their jobs but these mobilisations have been organised by the company itself. Quinn does not allow his workers to join a union; their voices are fine but only so long as they are in support of him. The workforce has therefore not acted independently in its own interest but appears to have assumed a shared interest between boss and workforce, for many based on local geography. They credit him with giving them jobs but are blind to his destruction of their jobs through reckless gambles and greed.
Relations between classes often appear as personal ties in local, particularly rural, areas but the example in Quinn is, in many ways, the Irish State writ small. Workers in Ireland have not rallied to their own cause in the wider financial crisis but have accepted paying for it under a nationalist banner that in the big world of global finance is no more credible than thinking local loyalties of Fermanagh and Cavan transcend big business and its class interests. In the case of the country as a whole workers have found that it is their trade unions that have peddled this pretence to most effect.
The questions raised at Quinn in Cavan
and Fermanagh, in Navan and Blanchardstown, are thus the same questions
that face every working class person in the country.
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