I will share the information I have collected since I received the Chairman's letter. I will place the role of Shannon Development and its relationship with us in context and then deal specifically with what I know and understand regarding the property at Gillogue.
Our relationship with Shannon Development is one of governance and monitoring. With regard to property, we have close contact with Shannon Development and receive annual reports on its property operations, financial tables and other matters. We receive various other documents from the chairman and board on the company's internal financial controls, code of practice and the governance of State bodies.
There is a series of procedures and guidelines in place in respect of the management of Shannon Development's property portfolio. The underlying objective of all these procedures is to ensure compliance with public procurement guidelines. All property transactions are required to be approved at board level. In cases where they are not significant, responsibility is delegated in accordance with authorised levels by the board. A board property sub-committee is in operation and includes two members of the main board, one of whom is chairman. Reports on transactions are forwarded to the board.
The procedures were reviewed in 2004 and a new property procedures manual was issued with the assistance of third party expertise. A new manual was developed with board approval in line with internal audit recommendations. An outside property consultant was brought on board to review the property function of the agency, including a detailed and systematic examination and assessment of the property department within Shannon Development, the details of the overall property portfolio and a full site examination of all the properties in the portfolio. I hope this will be completed within the next few months.
As a general observation, the agency is required to comply with public procurement procedures and guidelines laid down for all State bodies. As the parent Department with a governance role, we communicate the guidelines to the agency as delivered to us by the Department of Finance. In practice, the day-to-day business of management of the property portfolio is a matter for the agency. In executing that role it is required to be responsible in ensuring the assets of the State are properly managed in accordance with procedures.
With regard to the property at Gillogue, I made inquiries following receipt of the Chairman's letter. I understand from the agency that the site in question has had various occupants during the years, the most recent being FitzPak Limited, which relocated its paper box manufacturing business to the site. In 2001 Shannon Development leased part of the Gillogue facility to FitzPak which traded until it went into liquidation in February 2004. A court appointed liquidator is now offering the FitzPak equipment for sale by public tender with a closing date for receipt of tenders of June 2004. The significant piece of equipment is a corrugator which has a particular value in situ.
Shannon Development states it wrote to all parties which had expressed a direct interest in the Gillogue facility setting out the terms under which the property would be made available, one of which was the receipt of a business plan. It received a proposal to purchase the property, together with a business plan, within the timescale laid down from a consortium called MMDS which included members of former FitzPak senior management.
Discussions took place between Shannon Development and MMDS until the end of 2004 on various aspects of the sale but the sale did not proceed. Following a review of the discussions and the entire project, the board of Shannon Development decided in February this year to sell part of the property, the factory and the land within the curtilage, through a new public process. In taking this decision Shannon Development states it took into account its economic development role to promote industry and employment in the region, the use of its property portfolio as a resource in achieving these objectives and its duty as a public agency to preserve and protect State assets.
I have been informed that having considered all the information available and the limitations of dealing with one party alone, the agency believed a successful solution must start with the exposure of the Gillogue facility to a wider set of potential interested parties. For this reason, Shannon Development decided to place the premises and the land within the curtilage of the building, which I gather is relatively small, on the open market to provide all potential interested parties with the time and opportunity to make proposals. Inevitably, this has had an impact on others, not least the former workers who had hoped to take up employment with the new business to be established.
I am informed that the chairman of Shannon Development met MMDS on 3 February to discuss the issue and a group of former workers at the factory on 15 February. I understand the chairman has followed up the latter meeting with a detailed letter to the workers setting out the background to the development at Gillogue, the process followed since the liquidator was appointed in 2004, the factors that contributed to Shannon Development's decision not to proceed with the sale to MMDS and the process the company will now follow in the disposal of the Gillogue facility. Shannon Development has kept the liquidator informed of its position and, on foot of a request from the liquidator, a meeting took place yesterday morning on the issue. I understand the meeting was constructive and that both Shannon Development and the liquidator updated each other on recent developments and that contact will be maintained in the near future.
The current position is that Shannon Development has appointed consultants to make recommendations on the extent of the land curtilage to be included as part of the sale. Work is ongoing on this issue.
There is a desire and need to make all efforts to ensure the workers who became unemployed through the liquidation of FitzPak Limited are assisted in finding new employment in the region. Clearly, Shannon Development has a role in this regard. However, the agency must also observe rules and requirements as regards public procurement regulations and must act in an open and transparent manner in dealing with State assets.
I am aware that the issue of the Gillogue property is the subject of an internal audit review in Shannon Development. It is expected that the internal audit report will be considered by the board in May. I will examine the findings of the report in consultation with Shannon Development.
On 12 April I received a letter from the Office of the Comptroller and Auditor General in the context of a draft report on another property issue. In the normal course of events the Comptroller and Auditor General had requested certain information by mid-May and while the Gillogue property was not the primary focus of the report, it was mentioned in an appendix to it. I am examining the issues raised by the Comptroller and Auditor General as well as the questions put to me in the report, to which I will respond.
In summary, the decision was made by the board. Essentially, it has decided to put the project back on the market.