Dáil Éireann debate -
Wednesday, 24 Nov 1954

Vol. 147 No. 7

Committee on Finance. - Vote 67—Repayment of Trade Loans Advances.

Minister for Industry and Commerce (Mr. Norton)

I move:—

That a sum not exceeding £6,720 be granted to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1955, for the repayment to the Central Fund of sums advanced under the Trade Loans (Guarantee) Act (No. 5 of 1939, Section 10).

In the Trade Loans (Guarantee) Act, 1939, it was provided, where an advance is made under the Trade Loans Acts, or an advance made from Central Funds, that if the whole or part of the advance remains outstanding after two years it shall be repaid on the direction of the Minister for Finance out of moneys voted by the Oireachtas.

This Supplementary Estimate is, therefore, necessary to ensure recoupment of an outstanding advance made by the Central Fund in the financial year ending March, 1952. The annual account for the year ended March, 1952, indicated that an advance of £8,969 18s. 9d. was made by the Central Fund to fulfil a guarantee to a firm. Part of the advance, namely, £6,720, is now outstanding for over two years and it is necessary to provide for the repayment of that sum to the Central Fund.

The facts of the case are briefly that a loan of £15,000 was guaranteed in July, 1951, to enable a firm known as Parlanti Castings (Ireland) Limited, Jamestown Road, Finglas, to acquire plant and machinery for scrap metal reclamation and refining, for moulds, laboratories, motor and stock. The company had to withdraw £8,880 out of the £15,000 guaranteed to them when, following considerable difficulties arising from the management of its affairs, it was compelled to go into voluntary liquidation. Under the terms of the trade loan guarantee a receiver was then appointed over the assets of the company but the proceeds of the assets were insufficient to meet the liabilities of the company in respect of the loan, plus interest amounting to £8,920. To date, a sum of £2,250 has been received out of the realisation of the assets. This amount has been repaid to the Central Fund, reducing the amount advanced to £6,720, which is the amount of the Estimate. It is expected that some further amount of money will be realised but this further amount will be reduced by the fees and expenses of the receiver, which have not yet been paid.

Mr. Lemass

It has never been my experience that the Dáil has been unduly critical of these Trade Loans (Guarantee) Acts failures. I think the present Minister will have that experience also. Nevertheless, when a company which has been assisted by a State guaranteed loan under these Acts fails, and the taxpayer is required to make good the extent of their failure, full details should be given to the Dáil. I think that is particularly desirable in this case. The Minister mentioned that this trade loan guarantee was given in July, 1951. I was Minister for Industry and Commerce in July, 1951, but I take no responsibility whatever for the giving of the guarantee in this case. It was given by my predecessor. His decision had been communicated to the company before I resumed office as Minister. The announcement of his intention to give the trade loan guarantee had been tabled in the Dáil before I resumed office as Minister. Apparently, although I was not aware of it at that time, the formal sealing of the debenture bond had not been effected until after the change of Government, when I was Minister for a couple of weeks. In my view, from what I know of this particular case, a guarantee of a loan should not have been given. There was little likelihood of this undertaking making good. In fact, it went into voluntary liquidation within three months of receiving the trade loan guarantee. I do not know, from recollection, whether the advisory committee under the Act recommended the giving of the guarantee in this case. Normally, I would say the Minister should not answer that question. It is only an advisory committee. The responsibility for the decision rests on him. However, there was, in this case, some suggestion of political pressure being used—I do not say successfully—to secure a favourable decision.

I think we should be told how much private money was put into this undertaking. I do not think there was very much. The bulk of the loss involved in this unsuccessful attempt to establish an industry falls upon the general taxpayer. I have said already, and I repeat, that the percentage of failures in industrial projects which are assisted under the Trade Loans (Guarantee) Acts is likely to be higher than in projects that do not require to avail themselves of that Act. Any concern which can finance itself without availing of the Trade Loans (Guarantee) Acts will do so. It is only those projects which have for some reason difficulty in getting finance in the ordinary way—and that is generally due to some element of risk in the undertaking—that resort to these Acts. It would be quite undesirable that we should be hypercritical of those failures particularly when there appears that there was at one time a reasonable prospect of success. I suggest that in this case there never was a reasonable prospect of success. The fact that the company was out of business three months after getting the loan supports that view. I do not think we should let it through the House merely as a routine business. I think a full statement should be made on the set-up of the organisation, the financial participation in it by other people; we should be given some indication of the reasons why the guarantee was given and some fuller explanation of the causes of failure of the concern.

Mr. Norton

I do not know whether the Deputy is serious in suggesting that we ought to have a fulldress debate this afternoon on the finances of the company in question. Frankly, I know nothing about it and I had nothing to do with the giving of the original loan. I am merely discharging a statutory function imposed on me under the Act—that is, that when a sum of money is paid out under the Trade Loans (Guarantee) Acts from the Central Fund, and has been outstanding for more than two years, there is an obligation under the Act of 1939 to have those outstanding moneys refunded to the Central Fund by means of moneys voted by the Oireachtas. I am merely discharging that statutory function.

Mr. Lemass

There is no question of refusing the Minister the money. That could not be done.

Mr. Norton

I do not know what further information the Deputy wants. He was in office for three years after the loan was granted. I am sure that he at least read the file once. In any case, he was not prevented from reading it.

Mr. Lemass

It is not my job now to give the particulars to the House.

Mr. Norton

If the Deputy wants any information that it is within my power to give him, in accordance with parliamentary conduct, I shall be glad to furnish it. I do not want to conceal anything in this matter. Whether or not it is desirable to do so in this or in other cases is a matter on which the Deputy should reflect. I came across a case to-day of a trade loan guarantee which was given 12 months ago. I think they have a receiver in now. That was a bit of bad luck. I do not think that should diminish our faith in giving trade loans under that Act. It may be a risk—in some cases, a calculated risk. It would be a mistake, however, if we were to churn up every one of these cases of failure here. I am not sure it is the wisest line of policy in the long run, if we desire to serve the national interest. If Deputy Lemass has any question that it is within my competence to answer, in accordance with parliamentary procedure, I shall be only too glad to answer him.

Mr. Lemass

My opinion is that the voting of money to make good these losses should not be regarded as a routine matter. It is important that it should be understood by those who avail of the Act and those who have responsibility for the administration of it that all these loans are liable to be questioned in detail by the Dáil.

Mr. Norton

The procedure I am following to-day is exactly the same as that which has been followed on previous occasions. If the Deputy had told me that he intended to raise this matter to-day I could have got the information.

Mr. Lemass

As Minister for Industry and Commerce, I took the responsibility of seeking the concurrence of the Minister for Finance in the giving of a State guarantee in a number of cases under this Act. I do not know whether I took the right decision in every case or not. I am quite certain that some of these concerns that were helped by my decision under that Act will fail to make good. The record shows that the percentage of failure is remarkably low having regard to the type of cases submitted for assistance under that Act. I want to say that from what I know of this particular case, I would not have accepted the application. I do not think the guarantee should have been given. For that reason I think there should be on the record of the Dáil some statement of the facts of the case—a more complete statement than the Minister has given. I do not know what induced my predecessor to give the decision in this case. I am asking now if he got a recommendation from the advisory committee. Was he satisfied that the amount of private money put into this concern gave any prospect of success? So far as I know, this firm got a State loan of £15,000 and, within a few months, went into volunatary liquidation. I think that in this case the Dáil should be quite critical—and it should be equally critical no matter who is the Minister.

Mr. O'Donovan (Parliamentary Secretary to the Government)

I am not exactly clear as to Deputy Lemass's point. He is the man who gave the guarantee.

Mr. Lemass

I did not.

Mr. O'Donovan

You admitted in your first speech that, in July, 1951, you were Minister for Industry and Commerce.

Mr. Lemass

I deny that I gave the guarantee. The statutory announcement of the intention of the Minister to give this trade loan guarantee was made during the time of my predecessor and before I resumed office as Minister. Personally, I was not aware until I studied the documents when this Estimate was presented that the formal sealing of the debenture bond took place when I resumed office. From what I know of the facts, I would not have given the guarantee.

Mr. O'Donovan

The formal sealing of the debenture bond is the act of the Minister.

Mr. Lemass

On the contrary, the Minister cannot withdraw. His word should be as good as his bond.

Mr. O'Donovan

If we are going to have this particular type of discussion on responsibility when Governments change, I should like if the Deputy would indicate to us why it was that when the Government changed in 1951 he, time and again, repudiated the financial arrangements which had been made by the previous Minister for Finance. He spent the whole autumn at it. Is he now at this thing in reverse? Is he turning turtle on it? This is quite a small trade loan guarantee. The Minister said it went phut within a few months of being given.

Mr. Lemass

Does the Deputy not understand the significance of it?

Mr. O'Donovan

I know of a very big company, bigger than this one, and I might also be able to make innuendoes of a political sort about it, if I saw fit. The amount of money was greater than this amount. Is he shedding crocodile tears over the taxpayers for a sum of less than £10,000? Does he segregate the taxpayers' money in a matter like this?

Mr. Lemass

How much was put by the investors into this concern?

Mr. O'Donovan

I do not know and neither does the Deputy.

Mr. Lemass

Let someone speak who does know.

Mr. O'Donovan

What I think is wrong is the particular manner in which he threw in the innuendo.

Mr. Lemass

What is more, half the members of the previous Coalition Government were at the official opening. There was a lot of political ballyhoo.

Estimate agreed.

Estimate reported and agreed.