Last Thursday, I put to the Minister for Industry and Commerce certain questions in relation to Nítrigin Éireann Teoranta. In regard to his reply to two of these I want to take the matter further today, the Minister himself having joined the two in the one reply.
The basis upon which accounts of companies are presented to the public and to the shareholders of those companies is governed now by the Companies Act, 1963. It is, indeed, something of an anachronism that State-sponsored companies cannot be classified quite so fully within the scope of the particular sections of that Act but, if a State-sponsored company is able, purely by chance, to avoid the sections of the Companies Act, that does not mean that it should do so. On the contrary—I think there will be little doubt the Minister will agree with me in this respect—we are entitled to expect from State-sponsored bodies a standard of honour, a standard of propriety and a standard of disclosure in relation to their accounts which should be a pattern for companies generally in the country rather than that a State-sponsored company should endeavour to hide what an ordinary company is bound to disclose.
It is not necessary for me to explain at any great length to the Minister the provisions of the Companies Act, 1963. Even though he is not sitting there as a solicitor and even though I am not here as a solicitor, we each know them and we cannot forget them. Section 165 of that Act gives members of a company who hold ten per cent of the share capital the right to petition for an investigation. If this were a case of an ordinary public company, I have no doubt whatever that on the facts which have been partly disclosed, and which I am going to reveal again, one-tenth of the members would so petition, and properly petition, but all the shares are held by the Minister for Finance, not for himself but in trust for the public. It is, therefore, clearly one of the occasions on which a committee such as the Committee of Public Accounts should have the right, in relation to a State-sponsored body, to apply to petition under section 165 as shareholders of a company would normally have.
Apart from that, section 166 gives the Minister for Industry and Commerce power to appoint an inspector even when there has not been a petition by the members of the company. Unfortunately, again, that section does not appear to give the opportunity to the Members of this House to demand in the public interest an investigation in relation to the failure to provide a proper system of accounting. One of the things which the Minister has to take account of, has to have regard to in that section, is that the members, that is to say, the shareholders, have not been given all the information that they might reasonably expect. The members, again, are the Minister for Finance, and of course there cannot be a suggestion that the Minister for Finance was not aware of the facts. However, the Companies Act lays down certain standards in relation to accounts of public companies.
First of all, section 149 sets out that every balance sheet of a company shall give a true and fair view of the state of affairs of the company at the end of its financial year. It goes on to provide that the Sixth Schedule are the rules which shall provide for the manner in which and the basis upon which a company must set out its accounts.
The Sixth Schedule sets out very clearly certain things that must be included in the balance sheet of a company, arrears of fixed cumulative dividends, the position in relation to debentures and the position in relation to contingent liabilities. Contingent liabilities—may I stress their nature? I mention particularly contingent liabilities, because when I originally put down the question relating to Nítrigin Éireann, I thought this was a contingent liability but in fact, as it will appear, it is quite clear from the answer given to me earlier that it is not a contingent liability. It is a firm and fixed liability. There is little doubt that if the directors of a publicly-held shareholders company, if I may so use the phrase, had submitted a balance sheet in this form the Minister would have been bound under the two sections I have mentioned, on application, to have caused an inquiry to be made into the company's accounts. Possibly any directors who did submit, in an ordinary public shareholders company, such a balance sheet would or should be prosecuted for a breach of the Act.
So much about the general position. The first account that was submitted by this company was in respect of the year to the 30th June, 1962. At that time, according to the Minister's reply at column 1900 of the Dáil Debates for 23rd February, 1967, £571 interest had accrued. It is not referred to even by way of a general note. According to another reply, £189 had been paid on account of that interest, leaving £382 outstanding. In the accounts to the 30th June, 1962, there is no note, no reference whatever, to that actual liability, even though the Act says that contingent liabilities must be set forth. How much stronger then is it that actual liabilities should be set forth? The next account, that dated the 12th November, 1962, shows that at that date £30,381 interest had accrued by virtue of the determination by the Minister for Finance that was made between 5th January, 1962, and the 8th June, 1962. There is a note in the balance sheet of that date about commitments for capital expenditure but there is no word of any sort, kind or description in the balance sheet to show that there was then a liability for £30,381 interest. In fact if ever there was a case of non-disclosure in breach of the terms of the Companies Act, that is one.
I admit freely and frankly that at that time, in 1963, we were working under the old Act of 1908 and not under the 1963 Act. The next account is that dated for the period ending 30th June, 1964. The Companies Act, 1963, was in force at that time. The directors' report is, curiously enough, as far as I can see, not dated. The income and expenditure account is signed by two directors and dated the 30th September, 1964. I presume that is the general date both for the income and expenditure account and for the balance sheet, but the balance sheet, although signed by two directors, is not dated and the certificate of the auditor was dated 4th November, 1964. At that time the new Companies Act was in force. In that balance sheet to the 30th June, 1964, there is no provision of any sort for interest that had then accrued to the total amount of £190,856. There is not even a note to suggest on the face of that balance sheet, in the directors' report, or anywhere in the accounts that are filed in relation to Nítrigin Éireann, that that sum was then due.
I will be most interested to hear how the Minister for Industry and Commerce will defend today not his own action—I accept that it was not his own action—but the action of his predecessor. In fact, all these patterns were set not by the Minister, not by his immediate predecessor, Deputy Dr. Hillery, but by the Taoiseach, all these patterns of totally dishonest accounts, using the word "dishonest" in the sense not of fraud but for the purpose of presenting an entirely wrong picture to the general public. In the accounts of 30th June, 1964, there is not one shred of writing of any sort, kind or description to suggest that the £190,000 was then due for interest, that it had not been paid, that it had been agreed but was not included in the accounts.
In the following year, somebody apparently got a qualm of conscience. When it came to producing the accounts in the following year, they did not produce any figure although the sum of £396,023 had accrued by the following year. The profit and loss account, the directors' report and the balance sheet have all been signed on behalf of the board by two directors of the company but in respect of these documents, tabled for the year ended 30th June, 1965, I have failed to find any date on which they were signed or purported to be signed. There is a note by the auditor which is dated 8th November, 1965:
As the conditions of repayment of advances from the Central Fund have not yet been determined, interest has not been provided for in these accounts.
Nobody who read that would think it means that the rates of interest had not been determined. Nobody who read it could possibly imagine that there was £396,000 due by the company to the taxpayers and that the amount so due was being deliberately withheld from the public.
I would not have objected to the form of that note if the note itself had referred to the total of £396,000 that had been accrued. Then, albeit in a somewhat complicated way, it would have been possible for a person to ascertain the position and see where the company stood. It was not included then and is not included either for the next year. In the next year, the same form is used and it is stated that:
As the conditions of repayment of advances from the Central Fund have not yet been determined, interest has not been provided for in these accounts.
At the time that note was placed there, the directors of the company knew, the secretary knew, doubtless the Minister for Industry and Commerce and the Minister for Finance knew, and the auditor knew that there was £757,000 due by this company to the general public. Yet, in a most dishonest way, that fact was concealed from the general public by being omitted from the accounts. When one considers the effects the writing of other notes with regard to bank advances and bills, capital commitments and other such, have on the figure for the accrued interest, one can see the appallingly low standard in public accounting to which this company has sunk.
There is more involved in it. I have little doubt, as I said before, that the company would be made to keep its obligations and promises as regards the price at which its wares would be sold but I also said that I thought it highly unlikely that the taxpayers would get anything back in respect of the money they had invested in this concern. They have in fact got back £189 out of £757,000. I suggest that the Minister who settled the form of these accounts must bear the responsibility for filling out and approving a form of accounts which has dishonestly concealed from the public the fact that £757,000 has not been repaid and has not been shown to be due in any shape or form.
These sums were known by the directors before 20th August, 1965. The date of the last advance was 3rd August, 1965. There might be some sense in it if there were a suggestion that these directors wanted to tot up the total and see what it was before they announced the interest due, but from August to 30th June, 1966, there can be no such suggestion. In these accounts this has been done for the purpose of trying to present to the public a false figure in relation to this concern, for the purpose of preventing the public from realising that they were not receiving interest due to them on the money advanced by them.
Apart from the ordinary simple interest calculation I have mentioned, there would also be, in any proper system of accounting in a company such as this, a figure for compound interest due to the long delay in dealing with the matter. It might be wiser for the Minister not to insist on that but there should be such a figure. I have considerable diffidence in raising this matter with the present Minister. It was not of his doing and I am certain he knows the impropriety, the disgusting impropriety, of what has taken place in relation to these accounts. However, the Minister must accept responsibility not only for his own errors but for the errors of those who go before him. The form of these accounts was deliberately sent up by the company for the purpose of hiding this and they were approved by the former Minister, perhaps not deliberately to hide, but certainly negligently, in not showing to the general public financial transactions of such a nature which in any other company would warrant and deserve prosecution and conviction under the Companies Acts.
