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Dáil Éireann debate -
Wednesday, 16 Mar 1977

Vol. 297 No. 11

Bula Limited (Acquisition of Shares) Bill, 1977: Report Stage (Resumed).

An Leas-Cheann Comhairle

Amendment No. 7 is out of order.

Mr. Colley

With regard to amendment No. 7 I have been informed by the Chair that the amendment is out of order because it is irrelevant to the provisions of the Bill. Could you assist me in explaining this? I do not want to argue the ruling of the Chair. I just want to draw the attention of the Chair to the fact that in the course of the Committee Stage debate there was a discussion on this point. There were some conflicting statements but the statement was certainly made by the Minister, and I think by the Attorney General, that there was a restriction as regards the money being provided which effectively restricted the purchase of shares to 49 per cent. This side of the House sought to ensure that there was no such restriction, although one political commentator wrote a full article to the effect that Deputy O'Malley and I were trying to prevent the State acquiring a majority shareholding. The opposite, of course, was the case. We wanted the State to do so. In the circumstances it seems somewhat peculiar to me to say that an amendment which seeks to ensure that the State is not limited to 49 per cent of the shares is deemed to be irrelevant to the provisions of the Bill.

An Leas-Cheann Comhairle

As the Deputy will appreciate, a letter was sent to Deputy O'Malley in regard to the matter. The amendment proposes that nothing in the Act should prevent the Minister acquiring more than 49 per cent of the shares in the company. The amendment introduces what is in effect a proviso relating to the purchase of further shares in the company. The Bill authorises the acquisition of not less than 49 per cent of the shares and the expenditure of £9,540,000 for this purpose does not deal with the acquisition of further shares. Therefore the Chair has held that the amendment is not relevant to the provisions of the Bill.

Mr. Colley

I must accept your ruling but I think it one of the more peculiar ones which come from the Chair from time to time. I wish, however, to make it perfectly clear that from this side of the House we have sought consistently to try to ensure that the Minister has a controlling interest, not a minority interest.

I move amendment No. 8:

In page 2, line 34, after "attorney" to add "provided always that the Minister may not take up any rights issue in the Company or give any guarantee on its behalf or incur any liability in connection therewith until a motion of approval to his so doing shall have been passed by Dáil Éireann".

This matter was referred to during the Committee Stage by Deputy O'Malley when he pointed out that on the evidence available this company had no cash available to them. They had assets in the form of land and minerals thereunder and they had a number of very substantial encumbrances but had no cash because the shares had been issued for a consideration other than cash. Even the £9½ million being paid by the Minister will not, of course, be paid into the company. The company will not end up with one penny more cash. It will be the shareholders concerned who will get that cash. Money will be required to develop the mine.

The normal way in which portion of that money would be raised is by a rights issue, in effect each of the shareholders being called on to subscribe an amount of money which would be divided in proportion to their shareholding. If that were to happen the Minister would be called on to contribute 49 per cent of the figure that would be sought in order to produce the amount that would be required as the company's share in relation to what would be sought from lenders.

Deputy O'Malley made a number of calculations on Committee Stage. I will not go back over them as the details are set out in the Official Report of the proceedings of the House for 9th February last at columns 1184, 1185 and 1186. The conclusion he came to on the basis of these calculations was that the liability of the State in respect of the various items could well amount to something in the region of £15 million, approximately half the total liability, plus the £9.5 million provided in this Bill and the £2 million rights issue, to which I have referred. This would mean a total requirement of cash from the State in the region of £26½ million. One cannot say with certainty how much, if any, of this money will be required because we have no information as to precisely what will happen. However, we know that as of now the company have not got the cash. We know that a considerable sum of money—and I do not wish to get involved in an argument as to how much—will be needed in order to develop the mine before any return is obtained from it. This money must come from somewhere. We know, also, that in order to borrow money the company will be required to subscribe some cash of their own.

The authorisation in this Bill is for the payment of £9.54 million. You have just pointed out, Sir, in regard to the previous amendment, which was ruled out of order, that the Bill provides for the acquisition of 49 per cent of the shares and not for the acquisition of further shares. Therefore, it seems reasonable to provide that if there is to be any question of a rights issue or of the giving of a guarantee by the Minister on behalf of the company with further liability, actual or contingent on the taxpayer, the Minister should be required before entering into such a commitment or before paying such money, to have the approval of the Dáil by way of the passing of a motion authorising him to act in this way. That is what this amendment seeks to ensure.

We do not know precisely what the position is in regard to the guarantee situation but it is clear to anybody who has listened to the debates on that point during Committee Stage that the situation is very unsatisfactory. Again, I am not anxious to go back over that ground. Suffice it to say that the position, to put is as neutrally as possible, is uncertain in regard to the guarantees while it is a distinct possibility in regard to a rights issue and that under one heading or another there will be a further liability for cash devolving on all the shareholders in the company but particularly on the Minister as the holder of almost half the shares. There is little doubt that lenders to the company in which the Minister and, consequently, the State, is the holder of such a proportion of shares, will insist on guarantees from the State. In those circumstances it is not unreasonable that further commitments of that kind and which could amount to substantial sums of money—considerably greater than what is envisaged in the Bill—should be incurred only after a motion of approval to that effect had been passed by Dáil Éireann. I trust the Minister will consider this to be a reasonable provision and that he will find it possible to accept the amendment.

Mr. Keating

To some extent I understand and appreciate Deputy Colley's argument but for reasons which I trust will seem good to him and to the House, I cannot accept the amendment. There is an important question of principle involved here. In the Bill I am seeking authorisation for the acquisition of shares in a private company in the natural resources sector. That acquisition is in accordance with a policy on the development of natural resources which envisages participation by the State in the mixed-economy concept in association with private interests. This is intended to be a commercial association in so far as that is both possible and appropriate from the point of view of the State. As the Bill stands the position is that there are already established procedures, procedures that are fundamental and well understood and which are central to the whole way in which both moneys and authority are voted and with which any Minister must comply if he is to incur the expenditure of public funds or to give guarantees. That is almost the core of the way in which Parliament works as one will realise on reading the whole history of Parliament.

I see no reason for the imposition of additional constraints on me in this case. As I have suggested, the imposition of such additional constraints would be counter to the concept that the State's association should be within a framework of reasonable commercial freedom. There is an inconsistency between offering the State greater freedom and greater power in some amendments and in diminishing the element of freedom and power by way of other amendments. Here is the dilemma which seems to me to enshroud so much of the Opposition's position and to weaken very much the whole logic of their position right through.

There are very many commercial transactions on the part of the State and there are elaborately-evolved controls in this regard. Sometimes these controls work well but sometimes they are found not to work very well. However, they are developing and expanding continuously. Either there are additional constraints of the kind suggested in this amendment for all that category of activity which, in my view, would put a considerable damper on the activity of the State—that is a proposition that is arguable but which I would consider harmful and one which should be opposed on the grounds of reasonable commercial freedom—or, alternatively say "No, you must have reasonable commercial freedom for the State and although the controls, the checks and the methods in regard to floating money are well understood, thoroughly tested and long developed, we want something extra, something special in this case." That is a preposterous proposition. In the light of the debate that we have had on this Bill during the past six weeks and in the light of some of the things that are on the record and which are disgraceful, it is a proposition that is all the more preposterous.

I will not have special arrangements made for one firm, arrangements that are different from those in the rest of the category. In regard to the whole area of State activity I will not have a diminution of the framework of reasonable commercial freedom. That seems to me an overwhelming powerful argument for the rejection of the amendment.

Mr. Colley

At the outset of his remarks the Minister expressed the hope that I would find reasonable and acceptable the case he makes for not accepting the amendment. I regret that, although I sought to do so, I find myself unable to regard his argument as being either acceptable or reasonable.

First, let me point out that the Minister seemed to think there was a contradiction in some way between, on the one hand, this amendment which seeks to impose further constraints on the company and, on the other hand, some amendments which seek to give greater power than was being sought by the Minister. I presume what he had in mind was the fact that we had sought to amend the Bill in order to ensure that the Minister would not be restrained to a 49 per cent shareholding.

Therein lies the kernel of the whole problem. The Minister is speaking of this company and the State's participation in it almost as though it were what we generally understand as a State company controlled entirely by the State. The Minister is speaking of it in those terms when he is talking about its commercial freedom. There is an enormous difference. In any company in which the State has a minority interest, as in this case, there is a very arguable case for saying that where additional money is required in such cases it should come specifically before the House. There is a very strong argument where the State does not control the company, where the State cannot ensure the pace of development or whether there is development. There is a major distinction between that situation and a situation where the State actually control a company and its operations. If the Minister cannot see that distinction he is missing the whole point in regard to most of the debate we have had on this Bill at all Stages. If the Minister has not accepted that distinction, there is no hope that I will convince him at this stage that it exists.

There is a major distinction, and most people can see that clearly. In this case not only is it a situation in which the State have, and will apparently permanently have a minority position, but we have the additional problem that the agreement relating to the State's participation is being kept secret. Given those two factors, it is very reasonable that the making available to this company of further money, or the guaranteeing of further money, should be specifically authorised by this House. It is a minimal requirement for anybody who has any pretensions to seeking to impose parliamentary control on expenditure. Would that be an interference with the commercial freedom of this company? That seemed to be the case the Minister was making. One can glibly say that it would be so, but in practice I wonder if it would. Even if it were, it is a price that must be paid for a minority State participation, a situation in which the State is paying out substantial money but is not having any control over how the company develops, if at all. A price must be paid for that kind of situation. The well-established procedures to which the Minister referred were presumably the ordinary procedures of Estimates and Supplementary Estimates being brought before the House.

Mr. Keating

The State guaranteeing mechanism also.

Mr. Colley

The Minister knows that these mechanisms in recent years are tending to be more and more theoretical than practical. If we consider the question of Estimates and Supplementary Estimates, complaints are being made from all sides of the House, and serious complaints are being made from this side of the House, about the decreasing amount of time being given by this House to the discussion of Estimates and about the fact that inevitably year after year there comes a day before the Christmas recess when some hours are devoted to a mass of Estimates and Supplementary Estimates with enormous amounts of money involved and only token discussions on them. This kind of thing has happened before, but to my knowledge it has never happened before on anything like the scale or with the frequency with which it is happening in recent years. In effect the Minister is saying that these normal mechanisms would apply in this case. We know that the likelihood is that, if the normal mechanisms apply, the kind of commitments to which I referred earlier, which could well amount to something in the region of £26 million, could be undertaken without ever being discussed in this House. One might say that, if we can live with that for other things, why can we not live with it in this case.

This brings me back to the point that this is special in that it is only a minority interest. It is very arguable that, where it is only a minority State interest, the matter should come before the House if further expenditure is involved. Where the State has a majority holding and control it is reasonable to assume that there will not be much argument about extra money being made available for the development of the project, because in due course it will redound clearly to the benefit of the State. Where it is a minority holding only, there can be much greater room for argument as to whether the return envisaged by the State justifies the kind of expenditure involved. When added to that the fact that the whole investment of the State in this company is based on an agreement which has been consistently concealed from the House, it seems to me that there is every case for insisting that further commitments of large amounts of money by the State for or on behalf of this company should be specifically authorised by Dáil Éireann and that the normal mechanisms to which the Minister refers are not adequate for the reasons I have outlined.

If the Minister wants to argue that normal commercial freedom should apply to all companies in which the State had any interest, whether minority or majority, whether just under 50 per cent or presumably 10 per cent, I cannot accept that proposition. It is not a reasonable or realistic proposition. It is an argument in general terms which the Minister has advanced for the purpose of this case. But when he gets an opportunity to think about it as a general proposition he will realise that it is an untenable argument. For all of those reasons I must insist that this amendment represents a sounder and better position on this issue than the position outlined by the Minister and consequently, despite the Minister's refusal to accept it, I must ask that this amendment be put to the House.

Amendment put.

The Dáil divided: Tá, 53; Níl, 61.

Tá

Níl

Tellers: Tá, Deputies Lalor and Browne; Níl, Deputies Kelly and B. Desmond.

Amendment declared lost.

An Ceann Comhairle

Amendment No. 9 is out of order.

Mr. Colley

I move amendment No. 10:

In page 3, line 17, to delete "and pursuant to the Agreement".

This matter also was referred to on the Committee Stage discussion. It is, perhaps, not a major point but I think it is worth referring to it again. The Minister accepted an amendment on Committee Stage in which the words "subject to the Agreement" were deleted. In this section the words "and pursuant to the Agreement" will still stand. There may be a difference between the two sections; the first is on section 4 and this is on section 5. Section 5 deals with the provision of money from the Central Fund "for the acquisition under this Act and pursuant to the Agreement of shares of the company . . . ".

It seems to me that the words "and pursuant to the Agreement" are not necessary, unless the agreement provides for the acquisition in certain circumstances of more than 49 per cent of the shares. I presume from all that has happened and from what we have been told as to the limitations imposed by the terms of the Bill as it stands that it is not possible to acquire more than 49 per cent of the shares either on foot of the agreement or on foot of the Bill. If that is so, then the words "and pursuant to the Agreement" do not appear to be necessary. We propose in this amendment to delete the words on the grounds that they are unnecessary.

Attorney General (Mr. Costello)

I am afraid I cannot agree with Deputy Colley. From the point of view of the drafting of this legislation it is considered necessary to keep these words in and it is consistent with good drafting. Section 4 (3) from which the words "and subject to the Agreement" were deleted was dealing with a power of the Minister for Finance to sell the shares and it was not considered necessary to keep those words in although they had been there originally.

What we are dealing with now is section 5, which is to be linked up with section 2. Deputies will recall that section 2 provides that the Minister will acquire shares in the company and the words "in accordance with the Agreement" are in this section. Section 5, with which we are dealing, refers to the provision of money out of the Central Fund, and to link up with the scheme of the Bill as set out in section 2, this section provides that moneys required from time to time for the acquisition under the Act and pursuant to the Agreement of shares are to be advanced out of the Central Fund. It is a drafting point which I would ask the House to accept as proper, and for that reason I do not think it would be desirable to accept the amendment.

Mr. Colley

I think the Attorney General is right in describing this as a drafting point. Drafting points may be of considerable importance sometimes, but in this case I do not think it is of major importance. I find it difficult to accept fully the arguments put forward by the Attorney General, but in view of the fact that it is not a major issue, I do not think it is necessary for me to pursue it. Therefore, I am prepared, in the circumstances of the amendment not being accepted, to withdraw it.

Amendment, by leave, withdrawn.

An Ceann Comhairle

Amendments Nos. 11, 12 and 13 are out of order.

Mr. Colley

I move amendment No. 14:

In page 3, line 27, after "Oireachtas." to add "No expenses incurred by the Minister prior to the passing of this Act, and no expenses so incurred after its passing which should properly be payable by the Company, shall be so paid.".

Let me just say in passing—it is not a matter I intend to pursue here—that I am concerned at the ruling out of order of some of these amendments. Perhaps discussion with the officials, a Cheann Comhairle, would assist in clarifying the reasons behind it.

An Ceann Comhairle

They would be very pleased to do so.

Mr. Colley

This amendment arises out of what can only be described as a very peculiar discussion which took place on Committee Stage. For anybody who is interested it is reported in the Official Report of this House for the 1st March, 1977, volume 297, approximately from columns 492 to 507, inclusive. I say "peculiar" because one will see on reading it that the Minister made certain statements and the Attorney General subsequently made statements which appeared to conflict with what the Minister said and then the Minister withdrew or appeared to withdraw what he said the first time. Without going into all that, this amendment arises directly out of what was said by the Minister on that occasion. It would not have occurred to us to put down an amendment but for what he said. It may be that it arose out of a misunderstanding but I do not think the misunderstanding was on this side of the House.

The section involved states:

The expenses incurred by the Minister in the administration of this Act shall, to such extent as may be sanctioned by the Minister for Finance, be paid out of moneys provided by the Oireachtas.

It is a normal provision in almost all Bills, certainly Bills of this kind. The difficulty has arisen because in the course of discussion on Committee Stage the Minister, having given as examples of expenses which might be incurred such things as consultants' fees, travel and staff, at a later stage referred to the possibility that certain continuing fees might be incurred, the liability for portion of which would have arisen before the enactment of the Bill and the liability for the remainder would arise after the enactment of the Bill. The Minister seemed to indicate that in such circumstances it was possible that the total fee would fall to be paid on foot of section 7.

I do not want to go into all of the very complex and somewhat peculiar discussion which took place on this on Committee Stage. It is true that at the end the Minister was saying something else and appeared to be suggesting that in such a case there would be an apportionment and that such a continuous fee would be paid in two parts. That seemed to emerge at the end, although there were qualifications on it. In the course of the discussion the Minister did say and suggest that a continuous fee of the kind I have outlined could fall to be paid under section 7.

The real difficulty involved here is that since the Minister gave as possible examples consultants, travel and staff, it appeared that he was envisaging the possibility that expenses incurred in the administration of this Act could include these items. I questioned the Minister at the time as to how that could arise in the administration of the Act because while one can think of expenses arising in relation to consultants or travel or staff, on the face of it they would seem to be expenses which properly would be payable by the company. Of course, the liability would devolve as to 49 per cent on the Minister but that is a theoretical situation. Assuming the company is operating normally, the company would pay it out of its own resources. I cannot visualise, and I do not think the Minister was able to do so either when he was asked, a situation in which liability would arise for such things after the enactment of this legislation which would not be the liability of the company but rather the liability of the Minister as expenses incurred in the administration of the Act. For that reason we have sought in this amendment to provide that no expenses incurred by the Minister prior to the passing of the Act and no expenses so incurred after its passing which should properly be payable by the company shall be so paid, in other words, to make it crystal clear that the kind of situation to which the Minister adverted during the Committee Stage debate will not arise and to make it perfectly clear that the only liability incurred would be in respect of expenses incurred before the passing of the Act and thereafter any expenses incurred which are properly the liability of the company will be paid by the company and will not fall to be paid under section 7.

Mr. Keating

When I re-read the record on this——

Mr. Colley

The Minister will agree with me on this much anyway, that it reads most peculiarly.

Mr. Keating

I was going to say more than that. It is perfectly possible that I was confused on that—I think I was confused. It is certainly a confusing section of the Dáil record. There is no question about it. I do not think that any real clarity emerged from that section of the debate to which Deputy Colley made reference.

This is a standard clause which is in every Bill. The amendment implies that I or any Minister would be prepared to accept as a charge on public funds an expense which is not a proper charge on such funds. That is the implication which is inescapable. It is an implication I cannot accept and, therefore, I cannot accept the amendment. If an item is properly chargeable to the company or to anyone else, then it is not a proper charge on public funds and irrespective of what may be in any Act it would be improper in a specific sense for any Minister to accept the charge. Again, we are dealing with things which have a history in the State and before the existence of the State. Those distinctions are clearly understood, are upheld rigorously by the public service and my position is that the understanding and the administration is perfectly clear. Any confusion was introduced by me on the Committee Stage debate when I was confused but there is no such confusion in reality or in practice.

Deputy Colley has said that but for that Committee Stage debate it would not have been necessary to put down the amendment. I have spoken frankly about my contribution to that debate. In view of what I have said I believe that the amendment is not necessary. It does make implications regarding me and my conduct of my job or on my successor which are not acceptable. In view of what I have said about the Committee Stage debate, I hope that Deputy Colley will find it possible not to press this.

Mr. Colley

I freely admit that the amendment is open to the interpretation the Minister has put on it, that is, that he or his successor would in some circumstances pay out money which should not properly be paid out. It is open to that interpretation. To that extent I suppose I could not reasonably expect the Minister to accept it. It arose directly out of the discussion on Committee Stage. In view of what the Minister has said, and I congratulate him on being so frank about it— I wish he had been equally frank about other aspects of the Bill—I think the position is clear. In effect what the Minister is now saying is that the position is as it always was, always will be and that anything that might have been said in the Committee Stage debate, in the course of a certain confused discussion, does not affect the issue. On that basis I withdraw the amendment.

Amendment, by leave, withdrawn.

An Ceann Comhairle

Amendment No. 15 has been ruled out of order. That disposes of amendments on Report Stage. When is it proposed to take the Fifth Stage of this Bill?

Mr. Keating

Now. I move: "That Fifth Stage be taken now".

An Ceann Comhairle

Is that satisfactory?

Mr. Colley

I am afraid not. The Minister is aware that I am not willing—at least he was not told but I think he could deduce from what happened before—to take the next Stage now. I would ask him to agree to take it on Tuesday week, 29th March.

I move the following amendment:

"To delete the word `now' and insert the words `on March 29th'."

Mr. Keating

I was perfectly clear —and I was present for the Order of Business—that we would proceed to the next business when this Bill was completed. My position is that I want to have the Fifth Stage now.

Mr. Colley

The Minister may be mistaken. I think the business ordered was the Report Stage, not all Stages. The Minister will recall also that, on the Order of Business, the Leader of the Opposition specifically referred to Report Stage because that is all we were agreeing to.

Mr. Keating

That is not my understanding.

Mr. Colley

I think the record will show that the Leader of the Opposition specifically repeated the position. It may not have been clear to the Minister what it meant but I think he will find that this is what it did mean and that in fact what was ordered today was the Report Stage, not all Stages.

An Ceann Comhairle

I am putting the question then in respect of the date for the Fifth Stage of the Bill. It has been moved by the Minister for Industry and Commerce, Deputy Keating, that the Fifth Stage be taken now.

Mr. Colley

On a point of order, I want to submit to you, Sir, that it is not open to you to put that proposition on the basis that the only business ordered for today in relation to this matter was the Fourth Stage and, that being so, we can only take the next Stage by agreement.

An Ceann Comhairle

The position is that we must have a date now for the Fifth Stage of this Bill. There is only one way of dealing with the matter in the absence of agreement in the House, that is, to put the question in respect of the date.

Mr. Colley

But is it not true that, even on the basis of a proposition and a vote, it cannot be proposed at this stage that the Fifth Stage be taken today?

An Ceann Comhairle

It can, Deputy. I am in no doubt about that.

Mr. Colley

I understood that, if not the Standing Orders, then the practice and precedent of the House was that further Stages of a Bill other than those ordered could be taken on the same day only by agreement.

An Ceann Comhairle

No, that is not so.

Mr. Colley

That is not so? Is that what the Chair is saying?

An Ceann Comhairle

That is what the Chair is saying. I am putting the question. We have a motion in the name of the Minister that the Fifth Stage of the Bill be taken now.

Mr. Colley

On a point of order, again, may we have a House?

Notice taken that 20 Members were not present; House counted and 20 Members being present,

An Ceann Comhairle

Bula Limited (Acquisition of Shares) Bill, 1977. Fixing of date for the Fifth Stage of the Bill.

Mr. Colley

I am sorry to interrupt the Chair again but, merely to clarify the position, is the Chair ruling that in relation to any Stage of a Bill it may be proposed and voted on that that Stage be taken immediately following the preceding one, in relation to any Stage?

An Ceann Comhairle

Yes, Stages follow one after the other. If there is no agreement the Chair has no option but to put the question. It has been moved by the Minister for Industry and Commerce that the Fifth Stage be taken now. To that an amendment has been put down by Deputy Colley, to delete the word "now" and insert the words "on March 29th".

Question put: "That the word proposed to be deleted stand."

The Dáil divided: Tá, 60; Níl, 53.

Tá

Níl

Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Lalor and Browne.

Question declared carried.

Amendment declared lost.

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