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Dáil Éireann debate -
Friday, 3 May 1985

Vol. 357 No. 13

Meastacháin, 1985. - B & I Shipping Company Changes: Statements.

I have received notice from the Minister for Communications that he proposes to make a statement under Standing Order 38.

Yesterday I announced changes in the chairmanship and management of the B & I Company. I am glad to have this opportunity to explain what exactly is involved.

I should make it clear at the outset that references to privatisation of the B & I or to a handing over of control or management of the company are totally incorrect. There has been no change in the status of the B & I as a State-sponsored body. The company remains a wholly-owned State company. Indeed, the exceptional moves I have made are designed to ensure the future of B & I.

Furthermore, the control and direction of the B & I remains with the board of the company, comprising 12 directors including four worker-directors. Their status, their role and their responsibilities remain unaltered.

Against that background it is completely wrong to suggest that Zeus Management Ltd. will have control of the B & I. The relationship with Zeus Management has two aspects. Firstly, Zeus has been retained by me for a three-year period to review the business and operations of the B & I Company and, taking account of the need to maintain Irish participation in cross-channel passenger and freight services, to identify the measures necessary to restore the company to profitable operation by the end of 1986.

The second aspect is that as part of the overall consultancy arrangement, Mr. Alex Spain, who is the principal in the recently formed management company, is being appointed chairman and managing director of the B & I Company for the same three-year period.

Both these aspects were the subject of very full discussions with the designated sub-committee of the board, including the outgoing chairman. It was acknowledged that the consultancy arrangement was a matter for me as Minister and that the board of the B & I did not have to formally endorse any such consultancy or be a party to the consultancy contract.

May I have a copy of the statement?

They are very thin on the ground. We received two copies.

The statement was requested a little over a hour ago. On the second aspect, I should make it clear that the appointment of the chairman of the board is a matter for the Minister, as it is in the case of all State-sponsored bodies, and that the B & I Acquisition Act, which was enacted at the time of the purchase of the company in 1965, provides for the appointment of a managing director by the Minister. While these appointments are matters for the Minister, I am happy that the board at their meeting, including the worker-directors, gave their unanimous endorsement to the appointments.

As I stated already, the board of the company remains in charge. It follows that whatever proposals may be developed in relation to the company will require the agreement of the board. This is as it should be. Moreover, recognising the position of the company as a public sector body, any measures to be adopted require my approval, acting as the Minister responsible and taking account of the public interest and the fact that the owners and shareholders of the company are the people, that is, the taxpayers.

It is important to consider this decision in the context of the B & I's recent financial history. During the past four years the company has incurred losses of almost £40 million. The Exchequer and, ultimately, the taxpayer has had to provide £29 million in equity capital during that time to enable the company to continue in operation. It has been suggested that the 1985 losses will be considerably lower than those for 1984. For many years the B & I's financial performance has been characterised by an optimistic assessment of market and financial trends and one must take account of that in assessing the company's future prospects. Indeed, work done for the board casts doubt on the prospects of achieving the stated target of £3.9 million loss for this year though this is still being retained as an objective.

An important consideration is that over £29 million additional capital has been invested by the Exchequer in the B & I to meet the company's losses. The accounts for the past four years show aggregate losses of approximately £40 million. It is obviously essential that losses of this dimension should be stemmed. It is out of the question that the taxpayer should continue to subsidise a loss-making shipping company. I am equally concerned that the company should survive and continue the service for which it was purchased. The action I have taken is fully in line with that objective. The company has a board comprising first-class people headed by a very high-calibre executive who has access to wide business experience.

I suggest that Mr. Spain and his board and the management of the company should now be let get on with the job. I have given the board a very challenging mandate — to get into profit by the end of 1986 and it is part of the job of Mr. Spain and the board as a whole to ensure that when his term ends and the consultancy terminates in three years time the company will be trading successfully with a new chief executive at the helm to keep it on that course.

I am responsible for many State companies, probably more than any of my colleagues. I am a firm believer in State enterprise and that State enterprise, like all other enterprise, must be efficient. I have a duty to discharge to the taxpayer, which I intend to do, to ensure that the companies under my aegis will be efficient and will perform on behalf of the taxpayer.

It is with great regret that Mr. Frank Boland has resigned as chairman of this company, because he has been a first-class unpaid public servant. He has done sterling work in B & I. However, the problem was not amenable to resolution in a part time way. I am glad to say that he will be accepting another senior appointment in the State sector.

Another job for the boys.

This Minister has a long track record of deceit in regard to handling matters in the House. Nowhere is it more evident than in his presentation of this matter.

He stated categorically — and I quote from the Minister's statement:

I am happy that the board at their meeting, including the worker-directors, gave their unanimous endorsement to the appointments.

I want to quote from this morning's Irish Independent. I listened to the radio this morning as well. I quote from the front of today's Irish Independent:

The four workers directors, Dermot Menton (ITGWU); Tom Forde (FWUI) and seamen's union officials John Hutton and Brian Stacey claimed last night they had been totally misled about the new set-up.

That is the allegation against the Minister. There has to be and is in any plain man's reading of language a direct conflict between what is said by the four worker-directors as quoted in the Irish Independent this morning, as repeated by them on the radio this morning, and what the Minister has the gall and the deceit to come into this House to propound to us, the sovereign Parliament of the Irish people.

The Minister is telling the truth, the whole truth and nothing but the truth.

He comes in here to propound to us that he is happy that the board at their meeting, including the worker-directors, gave their unanimous endorsement to the appointments.

May I read this letter?

There is a word which the rules of this House forbid me to use. There is an old fashioned word which the rules of this House forbid me to use.

The Deputy used it before. Every time he used it he lost votes.

Anybody can draw a clear inference from that conflict.

May I read this letter?

I believe the worker-directors in this instance. I believe Mr. Frank Boland in this instance, the outgoing chairman. What the Minister has done here runs counter to the whole principle of the semi-State sector in the Irish economy. This House passes legislation and establishes a body of this kind as it did in the case of the B & I of 1965. It sets up the appropriate funding arrangements. The Minister responsible to the House appoints a chairman and a board who, in turn, appoint the executive structures. That is the way the whole semi-State system, which I regard as a very valuable system within our community, has been built up over the years. Is it now to be wrecked by smart consultants imported at enormous cost by the Minister, bypassing the board, making direct decisions and debasing the Act of this House by adopting a subterfuge that enables him to exercise his personal power by appointing at any expense any friend or firm that is friendly to such a board to run it?

I will tell the House the subterfuge, which is quite evident. Technically a board of consultants has been appointed. In fact, what is being appointed is a whole time executive chairman directly responsible to the Minister. The Act provides for the appointment of a chairman by the Minister. The Act has always been interpreted, as other Acts have been interpreted, to mean that such a chairman will be a part time chairman of a board which would recruit its own management personnel. Now there is no chief executive on this board. The chairman has gone, and the vacuum is there for the Minister to appoint, at very substantial cost, a rolled up consultancy team which, in effect, puts Mr. Alex Spain in as chief executive, cum chairman, cum hatchet man for the Minister at a cost in the region, it is alleged, of £80,000 to £100,000, in direct circumvention of the existing salary structures which exist throughout the whole State service.

The Deputy should withdraw the expression hatchet man.

I will use a more sophisticated phrase, that is, a liquidator type who may liquidate people concerned in the organisation to the Minister's benefit, and on the Minister's direction, and possibly go on the way to liquidating the company through that process. If the Chair prefers the expression "liquidator" to the expression "hatchet man" I do not mind. The fact of the matter is that this company were being pulled round. The estimated losses of £3.9 million for the current year showed a cut of more than half ——

The estimate for last year was £5.2 million.

——the losses of last year. The Minister is well aware that this company has been turned round under the current chairman, Mr. Boland, and his current board, an excellent company whose track record over the past 20 years has been one of the best in the State-sponsored services. The downward graph in regard to the losses was clearly emerging in this year's Estimates. They would have been of the order of £3.9 million compared with losses last year of £12 million. The target next year was to achieve a break-even point. Prior to the performance of last year and over a number of years, this company had achieved excellent profitability in their operations.

Apart from that, the company were the flagship of the State-sponsored companies in industrial relations. They had excellent industrial relations. There was tremendous worker participation in the management and direction of the affairs of the company. This is very proper, because I remember well when the company were taken over by the Government in 1965, I participated in the debates establishing this company. It was one of the most constructive steps ever taken by an Irish Government. It meant that this community was guaranteed, in a highly competitive area, the permanent links which were so necessary to continue our tourism and our trade business with Great Britain. The company pioneered the way to roll-on roll-off, containerisation and the other revolutionary developments which took place over the past 20 years in shipping transport. What expertise does Mr. Spain have to deal with this situation?

He is a friend of the Minister.

He is not. I did not meet him until recently.

The Minister was introduced.

Does the Minister deny that the subterfuge in appointing as chairman in effect a chief executive under the guise of appointing a consultancy company means that he is getting around a situation, frustrating the board and the whole purpose of a company established by this Dáil in order to appoint a person with unlimited power at unlimited salary? I challenge the Minister to state what annual salary is being paid in effect to this company which means, in effect, a salary to Mr. Spain, the Minister's personal liquidator.

If the Minister has appointed a personal liquidator by adopting the subterfuges I have just mentioned, that is a disgraceful procedure. It is an insult to this House, to the trade unions concerned, to the memory of Seán Lemass and to the whole social purpose behind the establishment of B & I to continue as a national service geared to definite commitments to the Irish economy by maintaining a vital trade link in regard to the transportation of goods and people between Ireland and our main market. That was a very important step.

I want to know what will happen now? I want to know what is being paid to Mr. Spain and/or his consultancy company. This party also want to know what is the future policy in regard to B & I. Are they going to continue as the necessary instrument of Irish policy or are they going to be privatised, given over to some of Mr. Spain's friends? I note that one of the people with whom he is associated in regard to this matter in the Zeus Company has been engaged on similar type privatisation arrangements by the British Prime Minister in the United Kingdom over the past number of years. I refer to Sir Ian Morrow. Along with the Government's personal liquidator from Donnybrook 4, we now have one of Margaret Thatcher's liquidators from the United Kingdom. We are told that the men from Zeus have come here to hurl thunderbolts in a daring gamble. Really, this is Star Wars business. That was in the Irish Independent, obviously a heavily leaked story by Minister Mitchell, taking up a full inside page and a full front page.

That is not true.

It is quite obvious that these two full pages could not have been written without the connivance, or cooperation or the total involvement of Minister Mitchell.

That is totally untrue.

And the handlers.

Can Deputy Lenihan allege wrongdoing of that sort on the part of the Minister in this House and get away with it?

It is a political charge.

It is a political charge against the Minister.

I make no charges. I have not started yet.

Deputy Owen's Minister has told her to sit down, so she should sit down.

Deputy Lenihan was talking about Star Wars.

Can order be left to the Chair?

I ask the Chair not to allow the Minister's name to be so treated.

Zeus was a Greek god who used to hurl thunderbolts. That is the name of the investment company. It is in the Irish Independent this morning “the men from Zeus”— Mr. Alec Spain, Mr. Jim Flavin, his pal, and Sir Ian Morrow, Margaret Thatcher's pal. We have the three listed agents now in place under the Minister. The serious aspect is that the road is wide open now to any form of deal or arrangement to the detriment of the national interest.

We have seen Irish Shipping go. At least in this case the Government are obviously on the way to seeking a more mercenary arrangement. They let Irish Shipping die. They are now giving away B & I——

That is not true.

——or are in the course of giving them away. They are reneging on the basic community principle and Irish involvement that were so essential and germane to the establishment of B & I under the legislation of this House in 1965. I ask the Minister to spend an hour or two going through the Official Report of the House on the formation of that company. The whole purpose and thrust behind it was to maintain that essential link for our economy with our major market in the United Kingdom, that essential link with regard to the transportation of goods and people was so basic to our economic wellbeing that it should be under public control and direction, under a specific Minister and delegated to a board of directors and to personnel recruited by them. This company this year had already cut their losses from £12 million last year to £3.9 million and were on the way to a break-even point next year, but they are now being chosen as a nice fat apple to give away in the privatisation process. That is the serious aspect about this — that people are being put in charge here at enormous cost.

On the Minister's own admission a few minutes ago, these are purely financial people. Of course, they are. They have no concept of transportation, no concept in regard to the social, economic and national reasons behind the importance of having a company like B & I under public control. They are strictly financial liquidators and that is their only expertise. The Minister is well aware of that. If he wants to preside over the total dismantling of the whole public service of this country, then this is very serious. We have relied heavily on the semi-State service as instruments of public policy over the years, as excellent employers and as firms operating vital services on behalf of our community.

I was in the Minister's position for a while and know exactly what is involved in it. There is nothing that cannot be done effectively by a Minister if he wants to work at it, talking directly to the chairmen of these boards, bringing the boards in for regular meetings, making sure that their chief executives are present as well, following Government policy and reporting to the House on the development and the outcome of policies. Appointing outside financial liquidators of this kind is an insult to the intelligence of the Dáil and of the Irish people. The Government are taking the easy way out. The easiest way out, as anybody associated with business will know, is to take on fancy consultants. That is the classical way of running away from the problem. On top of appointing fancy consultants, they appointed them under a subterfuge at enormous cost which has not been specified yet by the Minister. We can only speculate that it will be in the region of £100,000 a year. The Minister is free to deny that or otherwise. He is certainly free to specify the figure at which these gentlemen come in, the full time liquidator and the two part time liquidators. Are they going to sit as a threesome at still more enormous cost? I doubt if the noble earl, Sir Ian Morrow, will come in for anything under £100,000. The man from Donnybrook 4 will get something in the region of £100,000 to be chairman and chief executive of a company that he proposes to liquidate and eventually privatise at some profitable rate at some future date.

This matter was announced yesterday to the media by the Minister, totally on his own and with no reference to this House. My colleague, Deputy Wilson, had on several occasions asked for a debate in this House on that matter, which request was refused. Apparently, the Minister has completely misled the four worker-directors and the union involved, the Irish Transport and General Workers Union, have said, as reported in the Irish Independent of today, that they were “aghast” at the move “which effectively by-passes the board, ignores the worker directors and gives authority to an outside consultancy to do with B & I whatever it pleases, subject to the approval of the Minister”. That is the attitude of the worker-directors, of B & I and of the Minister's Fine Gael friend from Cork, chairman of the board, Mr. Frank Boland. I know that is his attitude, but he will be compensated in some other manner, certainly in the not too distant future. It is well known that there is another nice plum being organised for Mr. Boland. I do not mind that, because Mr. Boland has done a good job here.

However, he has been thrown out of his job because he disagreed violently with the Minister.

The Minister's colleague in Cork is ensuring that there will be a little piece of compensation for Mr. Boland inside the next few weeks.

Not true, either.

We are well aware of that. I would like to mention one important matter in conclusion, a matter of basic principle.

This is entertaining.

The Labour Party are not here today. They have gone dejectedly to Cork and they are being laughed at by their Fine Gael colleagues.

It is at the Deputy's words that we are amused.

The National Development Corporation are already in shatters.

What has that got to do with the B & I?

That does not arise on this debate. I have allowed the Deputy considerable scope.

It does not arise now. The Deputy should obey the Chair.

On a point of order, since Deputy Owen seems anxious to take the Chair perhaps the Ceann Comhairle would like to vacate it for her?

I was making the obvious point that the State-sponsored companies Fianna Fáil established during the years are national development corporations. The whole tenor and thrust behind the idea of the National Development Corporation is inherent in the terms of reference of our State-sponsored companies. Therefore, the whole notion of setting up another superstructure is entirely superfluous at this stage. Here we have a Government who, on the one hand, are establishing a National Development Corporation but, on the other hand, and side-by-side with it they are destroying what are the existing national development corporations in the form of the various State-sponsored companies who have gained during the years the necessary expertise, technical capacity and ability to do their job. Aer Lingus are our national development corporation in the aviation field——

Increased profits under me.

B & I are our national development corporation in respect of the transport——

With heavy losses.

——of goods and people across the Irish Sea.

CIE have reduced their losses under me and Aer Rianta have increased their profits under me.

Irish Shipping, who were liquidated, were our national development corporation in the shipping area. There is a whole list of companies who have been established during the years——

The Irish Sugar Company, Bord na Móna and NET are back in profit under me.

These companies are expert in their fields and are of great value to our economy. The Minister is the person who is accountable to this House. He is the head of what I might call the national development corporations in the form of the various semi-State companies. That is the whole philosophy and thrust behind these companies. However, this Minister and this Government — a segment of which talks about the National Development Corporation — are steadily dismantling the essential units associated with development of the Irish economy, organised by the State through legislation passed by this House and administered in an overall capacity by a Minister who is responsible to the House.

That is the essential inconsistency in regard to what this Government are doing. It is an inconsistency that runs counter to the whole philosophy of the State-sponsored sector and is certainly completely contrary to the philosophy of the party who are licking their wounds in Cork this weekend. These wounds were not inflicted by us but by their Fine Gael partners. That is the reality as far as the Labour Party are concerned as they face their supporters in Cork this weekend.

Seán Lemass said the semi-State sector could outlive its usefulness. He was flexible.

This is a totally unprecedented move by the Minister and has thrown into further confusion the public sector companies, particularly after the move by the Minister to liquidate Irish Shipping. That was done in a rather shameful manner, without any consultation with the people in Irish Shipping, and it had a disastrous effect on jobs there. The first thought of people in the B & I company is with regard to the number of jobs that will be affected there, especially when they see that Sir Ian Morrow is involved. I know that the Ceann Comhairle has asked that we do not use the word "hatchet man" in connection with Mr. Spain but it was a word widely used in connection with Sir Ian Morrow. He was regarded as the hatchet man of Mrs. Thatcher when he was sent into Rolls Royce and when he got rid of thousands of workers in that company. The expertise this company has is in eliminating jobs and cutting down the work-force.

There is no guarantee that putting in private companies or managers into a State company will improve the situation. That was proved recently in the case of the ICI and also in other companies such as Dunlops, Ranks, Fords and so on. Hundreds of private companies have collapsed because of the lack of management expertise and perhaps greed.

Some were closed by the workforce.

I do not know to whom the Deputy is referring. He should deal with a specific case, rather than come up with his ideological suggestions that it is always the workers and never management.

It is a common perception in Cork——

Will the Deputy allow the speaker in possession to continue without interruption?

In this case many questions must be asked in regard to what has occurred. The Minister's statement does not satisfy me or many other people with regard to the trend of events. We have here the extraordinary situation where Mr. Alex Spain, who is what was called a management partner of Stokes Kennedy Crowley, the accountants or auditors for the B & I, set up his own company very recently. This is called the Zeus Company and its first assignment is a consultancy contract from the Minister for Communications to advise him about the B & I and the first assignment that Mr. Spain gets is as chairman and managing director of the B & I.

According to the Irish Independent of to-day's date we are told that Mr. Spain and the Zeus company will be considered for other similar contracts. It must be asked if Mr. Spain approached the Minister with this proposition first or did the Minister approach Mr. Spain first.

The second question is whether the Minister approached Mr. Spain with this proposition before he formed the company? Was the company formed on the basis that his proposition was coming or was it formed afterwards? We should like to know when this deal was made with Mr. Spain.

All of this is being done at a time when the B & I were turning around to profitability. Therefore, it will be a very nice first job for Zeus and Mr. Spain if they move into the B & I in mid-1985 and produce a profit in mid-1986. It is very likely this would have happened in any event without Mr. Spain or Zeus. That first job will certainly be a great boost to their management expertise. In connection with expertise, in his speech the Minister stated that the company have a board comprising first-class people headed by a very high-calibre executive who has access to wide business experience. Mr. Spain is going in there without any expertise in relation to the shipping company. His expertise is supposed to be in the management field only. He will be dependent on these people who will make the company work in any case, with or without him.

In regard to privatisation, the Minister says that he is committed to public sector companies. The Minister for Foreign Affairs got very het up this morning about the suggestion that there was any question of privatisation coming into this. But one must think of this when the Minister has already totally pulled the plug on Irish Shipping Limited and has plans on hands for the splitting up and possible privatisation of sections of CIE. In the case of the B & I, because suggestions have been made over the last six or eight months by some of the media economists — the gurus who tell us that £100 million of capital equity should be issued each year in private companies — is it likely that, for a start, some of the B & I will be privatised, in the sense of the beginnings of private capital going into it, which is the recommended policy of this Government in regard to all the State sector companies? If it is not to be privatisation this year it seems to me to herald the beginnings of privatisation, which will arise at the end of this man's term of office. It is amazing that the Minister appoints a person as chairman and managing director and, at the same time, appoints his company to advise him. The Minister says:

Firstly, Zeus has been retained by me for a three-year period to review the business and operations of the B & I Company and, taking account of the need to a maintain Irish participation in cross-channel passenger and freight services, to identify the measures necessary to restore the company to profitable operation by the end of 1986.

The Minister appoints a chairman and managing director to restore the company to profitability by 1986 and appoints the same man's company to advise him on the measures necessary to restore the company to profitable operation by the end of 1986. Would the Minister please explain to us what that is all about. One would expect that one would employ a consultancy firm to advise one on what is necessary to bring about profitability and then one would proceed to appoint one's managing director, or do whatever they advise. By the time these consultants will have advised the Minister by 1986, or whenever, the chairman and managing director will already be doing the job for which he was appointed; to bring about profitability by the end of 1986. It has not been explained at all what is the purpose of this company and what use they will be. Probably their services will cost more than those of the managing director himself, the person who is supposed to be doing the job. The consultancy company would appear to have no purpose, the Minister not having identified any role or purpose for this company. We still require further information from the Minister on why he brings in a consultancy firm at the same time as he appoints a new chief executive to the company.

In his statement the Minister endeavours to tackle the question of what the board were told when he says:

It was acknowledged that the consultancy arrangement was a matter for me, as Minister, and that the board of the B & I did not have to formally endorse any such consultancy or be a party to the consultancy contract.

According to Mr. Boland, who has been highly praised by the Minister, it did not go to the board but to the subcommittee. The subcommittee totally rejected this idea and would not even put it to the board.

That is inaccurate. That is a misinterpretation.

That is according to Mr. Boland this morning.

He said that on radio this morning. Those were the exact words he used.

They refused to endorse it. There was no objection to a chairman or chief executive being appointed but they certainly did, and all do, object to the role of this consultancy firm which they do not understand. Therefore, further information is required of the Minister on the role of the consultancy firm.

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