Dáil Éireann debate -
Thursday, 11 Jul 1974

Vol. 274 No. 6

Adjournment Debate: Kerry Airport Company.

Mr. J. O'Leary

Today I raised the question of the financing of the Kerry County Airport Company and asked the Minister for Finance to state the present position concerning the application by the company for further financial aid and for the payment of the balance of a grant to enable the company to clear outstanding debts and whether he had regard to the importance of the airport in the future development of the county. The Minister in reply stated that grants totalling £71,000 from the special regional development fund had been made towards the cost of establishing the airport at Farranfore and that the conditions attached to the grant were that the company would meet all operating costs from its own resources. I know that the grants were channelled through the Department of Transport and Power and that the conditions were accepted by the company. I know also that some of the grants are still payable to the company.

The company sought a further grant of £33,000 to clear debts which have built up as a result of the capital investment in the project and not as a result of operating losses, as stated by the Minister in his reply. He said that circumstances do not justify waiving the condition accepted by the company that a grant would not be sought to cover such losses. I now propose to submit to the Minister the circumstances in which it appears clear to me the Minister should waive the conditions originally accepted by the company and in which a further grant should be paid to the company to enable it to clear off outstanding debts because the operations of the company, apart from paying off the interest on the capital and on the loans, are certainly run on a profit basis.

The Minister stated in reply to supplementary questions that the affairs of the company caused concern to the auditors as far back as 1971 and also said that the operating losses arose from mismanagement of the company's affairs. The 1972 figures showed an operating loss of over £6,000, but it appeared from his replies today that he had not got the accounts for 1973, which I understand are available.

Mr. R. Ryan

Why were they not sent to the Department?

Mr. J. O'Leary

I understand that they were sent.

Mr. R. Ryan

They were not.

Mr. J. O'Leary

That is my information from the company. If the Minister says he has not got them, I accept it.

The Minister stated that the annual general meeting of the company in 1972 was reported at length in the local newspapers and the secretary of the company was reported as saying that when he took up duty he discovered that the affairs of the company were being conducted in a very poor and improper way. I do not agree that the background of the losses which the company is now seeking to recoup is the cause of the problem. The debt is in respect of interest on loans raised for capital purposes in the initial stages and in the initial development of the airport at Farranfore. The development costs exceeded by far the original estimate. The original project was offered on the basis of its being a viable proposition which would not require continuing State aid, but this was mainly on the assumption that the ultimate cost would be in or around the estimated cost and I would ask the Minister to have another look at the situation from this point of view.

I want to point out to the Minister the steps that have been taken by the company to correct the situation which appears to have existed in 1971. In 1972, as the Minister pointed out today, there was a loss of over £6,000. This was mainly due to the servicing of the loan of approximately £33,000. In 1973, the audited figures, I am told, show a loss of £2,702, after paying interest rate charges on loans amounting to £3,401. In other words, if you deduct the interest charges on the loans, the operating profit would be in effect approximately £700. The total expenditure in 1973 was £4,978; interest charges amounted to £3,401; maintenance cost was approximately £165; depreciation accounted for about £432; and the balance was made up mainly of miscellaneous expenses, such as rates, ESB charges, heating and telephone expenses. I believe that if the company did not owe this money to the bank and to a finance company, they would not have a loss but would have shown a profit of £700 for 1973. I understand as well that the projection for 1974 shows an increase in gross revenue from £2,200 in 1973 to £3,500 in 1974.

Mr. R. Ryan

Can the Deputy say why none of these figures was given to the Department of Finance before now?

Mr. J. O'Leary

I was given to understand by the company that they were.

Mr. R. Ryan

Not one of these figures was furnished to us before now.

Mr. J. O'Leary

Did the Minister when making his decision ask for the figures for 1973 and the projection for 1974? He should have done so.

Mr. R. Ryan

Of course, and they should have been furnished, but they have not been.

Mr. J. O'Leary

There would be a profit of at least £2,000, were it not for the interest on the loans which now runs at approximately £4,300 per annum or £12 per day or 1p per minute, if we go into it as close as that. We have reached a stage when landing traffic is increasing and is likely to increase further, particularly when we get the two landing strips in Kerry, one in Ballyferriter and one in Ballinskelligs which were recently announced.

Is the Minister aware that the initial expenditure came to £126,000 whereas the investment by way of grant and loan came to only £100,000? This is really the kernel of the problem. I understand that the loans outstanding at the moment are mainly in respect of something more than £10,000 due to a local bank and between £17,000 and £18,000 due to a finance company. One was obtained in 1970 as a bridging loan pending the floating of a rights issue which was not successful. In 1972 another loan was raised pending the payment of a State grant, all of which has still not been paid.

If the company were not in debt they would not have had an operational loss. The company have taken steps to correct the position which occurred in 1970-71. They let some of the property, changed the method of running the bar by letting it and accepting the highest tender, and they now intend to let some of the property for the purpose of advertising. I am surprised the Minister has not yet requested or received the 1973 figures.

Mr. R. Ryan

I have sought all information and I have not received any. If people are looking for money the least they can do is supply all the information requested.

Mr. J. O'Leary

The position is that the Minister and the Government must decide whether this airport is vital for the development of Kerry by reason of its location. Recently one firm expressed interest in using the airport extensively. I believe the Minister has an obligation to ensure that the airport is kept open while at the same time—I agree entirely with him on this—not enabling anybody who should not benefit from it to do so. I honestly submit that the abuses mentioned in the auditor's report for 1970 and 1971 have been completely eliminated. It would cost more than £250,000 to acquire and develop the lands at Farranfore.

The annual general meeting of the company will be held shortly to decide whether the company should be wound up. The property may well be left lying idle and derelict for years because it would be very difficult to get even speculators to put up the above mentioned sum to acquire this property for which a substantial State grant was allocated and most of it paid. I do not want to make a political football out of this airport or to accuse the Government of not being anxious to help out in this problem in respect of which there has been substantial State investment. I submit, however, that the Minister should reconsider the application for a final grant of £33,000 which would be justified by reason of this capital asset in Kerry, bearing in mind what it would cost to acquire the land nowadays and to construct the buildings, and so forth.

I ask the Minister earnestly to discuss the matter with the Kerry County Development Team and with the managing director and the secretary of the company with a view to arriving at a favourable decision as a matter of urgency before the annual general meeting of the company. I can assure the Minister that this project was thoroughly investigated by the Kerry County Development Team and by the people of Kerry before it was undertaken. The last Government readily gave support to the project by way of grant. As I have said, I do not want to make any political capital out of it and I again earnestly appeal to the Minister to seek up-to-date information from the company.

Minister for Finance (Mr. R. Ryan)

There has been a great deal of genuine public unrest recently about public representatives using their public positions in order to make overtures and representations and exert influence on behalf of themselves or their friends or partners or contacts in business or commerce, and I think it is regrettable indeed that Deputy O'Leary, before he raised this matter in this House or while he was talking tonight, did not declare his own interest in this matter. That would have been highly desirable.

Mr. J. O'Leary

On a point of order, I think I should here and now state my position there.

An Ceann Comhairle

The Deputy had more than 20 minutes.

Mr. J. O'Leary

I refused shares in it. I never expected to get a bob out of it. I invested money in it to show my interest in and enthusiasm for the development.

An Ceann Comhairle

The Deputy is not entitled to use the time of the Minister. He had 20 minutes to make his case.

Mr. Wilson

He took only 15 minutes.

An Ceann Comhairle

The Chair allotted him 20 minutes.

Mr. R. Ryan

The Deputy has now declared his interest. That is not the only interest of Deputy O'Leary and his friends in this enterprise. I think it is intolerable that a Minister for Finance should be chastised for not giving a grant to a company whose record of management has been publicly denounced as insufferable. The Minister for Finance is being chastised for not making a decision on the basis of the figures supplied to him which refer only to December, 1972. If the company were genuine in getting assistance as distinct from trying to use their own incompetence and mismanagement for political purposes, they would have furnished the figures Deputy O'Leary trotted out so easily here tonight for examination in the cool, calm and analytical atmosphere——

Mr. J. O'Leary

These figures were given.

An Ceann Comhairle

The Deputy must resume his seat. If the Deputy persists I shall have to ask him to leave the House.

Mr. R. Ryan

The reality of the situation is that when this matter was first recommended against because the proposition then advanced was not viable, in 1968 it was claimed by the promoters of this company that the annual landing fees, in 1968 figures, would be £600 per annum. Since 1968, the figures have never reached £600 per annum. The figures were as follows: for the 15-month period ended December, 1970, £164; the year ended December, 1971, £67; the year ended December, 1972, £212; and on the basis of the last figures we had from the company's auditor, for December, 1973, £145.

When the company were offered an additional grant of £21,000 for extension purposes it was issued on conditions which the promoters accepted, that they would raise additional share capital of £14,000, and in exchange for that undertaking the State agreed to pay a grant of £3 for every £2 raised in share capital by the local promoters on whose behalf Deputy O'Leary professes to speak. That would have meant a total grant of £71,000. Only £58,285 has been paid to date because the local contributors, the local promoters on whose behalf Deputy O'Leary asserts that this is a viable, profitable and commercially successful promotion, have not been able to produce the revenue. I see no reason why I should vary the conditions laid down by Deputy O'Leary's political friends when Ministers from his own party laid down these conditions which he and his friends said would be fulfilled—and they have not lived up to their promises. And they have not lived up to their promises because, as the Central Development Committee forecast in 1968, it is not a commercially viable operation. That would be difficult enough and one might face that situation in the interests of the people of Kerry if all were proper and above board but, as I pointed out at Question Time, the auditors of the company who examined the books of the company said that the company's books and records were not properly kept. They said they had been unable to obtain adequate information and explanations in relation to the unsatisfactory results disclosed by the accounts. The company secretary at the annual general meeting said—and these remarks were quoted in the Kerry newspapers for everybody in Kerry to read—that when he undertook his duties he discovered that the affairs of the company were being conducted on a very poor and improper basis. "The property and goods of the company are being highly abused," he said "and so far as the bar was concerned there appeared to be no control whatsoever."

Mr. J. O'Leary

That was years ago.

Mr. R. Ryan

I am told that was years ago. We have been furnished with no accounts whatever from this outfit to suggest that the situation is any different. The last accounts are in respect of the year 1972 and these disclose a loss of £6,250.

Any Minister for Finance must discharge his primary public responsibility and that is not to issue public funds until he is satisfied about the integrity of the people to whom he is giving them and also satisfied that these funds are being properly managed. We have not seen sufficient evidence in this regard to justify offering any further public funds to this enterprise. We know that the local people who are prepared to stick their hands into the pockets of the taxpayers to get more money are not themselves prepared to put up the money which two years ago they said they would put up. What they are seeking now is not what they originally sought, a State contribution towards part of the cost. They now want 100 per cent State subvention for an enterprise which, on the evidence of their own auditor and secretary, has been improperly managed. I would be failing seriously in my public duty if I were to advance any public money in those circumstances. Those who seek public money must come with clean hands and if their hands are not clean I would regard it as my primary public duty to refuse money to such people. If the situation improves, if the local interest which Deputy O'Leary professes is there is there in reality and evidence of this is furnished, the situation can be re-examined.

I was asked today at Question Time in the original question whether I considered that Farranfore airport had an important part to play in the future development of the county. I would hope it would have but the evidence is very much against it. When the landing fees at Farranfore are less than one-third of what the operators projected six years ago, how can it be said that this is a development which is essential to the future prosperity of the region? All the facts, all the evidence and the record to date are against the protestations which have been made here. Perhaps if the airport had been under the control of other hands the situation would have been different; I do not know; I am not in any way passing judgement on the possibilities that an airport in Kerry could be of advantage but, on the evidence to date, that case has not been proved.

Finally, we are told that the £33,000 which is now sought is interest to date. On the figures furnished, no matter what exorbitant, usurious rate of interest might have been charged, interest to date could not amount to as much as £33,000.

Mr. J. O'Leary

It is not interest; it is the actual loan.

Mr. R. Ryan

Then the argument here is contrary to the basis on which the first application was made. You are now seeking repayment of principal in addition to that which was approved in 1968 and again approved in 1971. If the people of Kerry have no faith in this local enterprise it is very difficult for people far beyond Kerry who have not been given the facts and figures to have faith in it. I know there are people in Kerry who have faith in their county and who are investing considerable sums of money in it and making sacrifices to do so and who have a record without blemish or suspicion but these are not the people who, with all due respect I might say, appear to be involved here. I have no doubt several people are involved in this enterprise who are innocent of what appear to be malpractices in relation to it. I do not want to injure anybody who does not deserve the opprobrium which, on the facts, certainly somebody must carry in relation to this operation but I suggest that people should first put their own house in order and if and when the State see that the local house is in order we shall only be too ready to have another look at the situation.

Mr. Haughey

May I ask the Minister if on strict commercial accountancy terms Cork and Dublin Airports ever showed a profit?

Mr. R. Ryan

I am sorry. I have not got that information before me.

The Dáil adjourned at 11 p.m. until 3 p.m. on Tuesday, 16th July, 1974.