Vol. 361 No. 6
asked the Minister for Industry, Trade, Commerce and Tourism the further information which has been received concerning the Insurance Corporation of Ireland; and if he will make a statement on the present position indicating the likely exposure of the taxpayer through State funds and/or Central Bank funds.
28.
asked the Minister for Industry, Trade, Commerce and Tourism the total amount of liabilities of the Insurance Corporation of Ireland which is under administration and now under the control of the Government.
39.
asked the Minister for Industry, Trade, Commerce and Tourism if he will make a statement on the ICI-AIB losses; and the steps he proposes to take to guarantee that the Irish taxpayer will not be involved in any way in paying for these losses.
46.
asked the Minister for Industry, Trade, Commerce and Tourism if he will comment on press reports indicating a major increase in ICI debts emerging during the administrator investigations.
47.
asked the Minister for Industry, Trade, Commerce and Tourism when he expects to receive a report on the current position of ICI from the administrator; and if he will publish such a report.
I propose to take oral Questions Nos. 7 and 28, priority Question No. 39 and written Questions Nos. 46 and 47 together.
On a point of order, I am objecting to this mode of dealing with questions, particularly those to be dealt with at priority level later. I cannot understand how the Chair can allow questions to be bulked together like this, following priority questions having been received and placed on the Order Paper. In effect, it means that the period between 3.30 p.m. and 3.45 p.m. will not be required. It also will restrict me from following up the matter in the priority time. If the Minister were prepared to give that 15 minutes to a discussion of this matter and have the questions all lumped together now I would not mind at all, but by adopting this tactic the Minister is, in effect, ruling out any possible supplementary questions and information which I might get by way of priority.
I would refer Deputy Flynn to paragraph (h) of the order of this House made on 28 May last which reads as follows:
A Member of the Government may, where appropriate, group both categories of Question comprehended by subparagraph (b) of this paragraph and Questions put down for written answer for the purposes of reply;
That is the order I have to carry out and the Minister is within the order in doing what he is now doing.
I would like to say that it is not my wish to be in any way obstructive regarding a debate on the question in priority time. I appreciate the importance of the question but I am caught procedurally. If I do not answer Question No. 7 now that question, under the new rule, will not fall to be answered until I come to priority time. The order is not of my making.
I do not wish to enter into an argument on an order made by the House but it makes a nonsense of the whole matter of priority questions. The people who decided on the priority questions and on the lottery questions had this information available to them. Once it was discovered that I had a priority question put down on the ICI and intended to pursue that question for perhaps ten minutes by way of many supplementary questions to the Minister, it should not have happened that that question be bulked together with a question in the lottery. I shall be restricted from asking——
The chair, as he has always done——
——any supplementary questions whatsoever or from making any points.
The Deputy will be restricted from making points certainly, but will not be restricted from asking questions. The Chair will bear in mind the number of questions that are being taken together. The Deputy can put his supplementary questions.
Of course, but it makes a nonsense of priority questions.
The Deputy should take that matter up with the Committee on Procedure and Privileges.
I am going to take it up, but this perhaps is a device being used by the Minister and Ministers——
No, that is not the case.
——so as to negative the matters of priority questions which would allow a spokesperson and a Minister to go into some detail concerning this question about the AIB-ICI crisis. It is a totally unsatisfactory way of dealing with the matter. The Minister could have included all the other questions under the lottery and excluded No. 38, which would have satisfied me.
The Minister is governed by the rules as well. When you have rules and an element of lottery you can have chancey results.
You certainly can, but one would have thought that the rules would at least have included a provision whereby if something comes out of the lottery and it is going to mean that it can be bulked by the Minister with priority questions——
The Deputy knows that what he is doing now is engaging in what I would regard as professional wrangling with the Chair.
I am not accustomed to professional wrangling.
The Chair can do nothing about this.
I would ask that the Minister take note that this is a device that the Opposition have come across and we are not going to tolerate it.
I suggest that it be brought before the Committee on Procedure and Privileges.
It will be.
I would like to make it clear that it is not a device being used by me. I must abide by Standing Orders. I wish the Ceann Comhairle to take note that the Opposition have been very responsible in regard to this major matter. It is not my wish that they be restricted in their questions. This is a matter of importance and I accept it as such.
What questions are being taken together?
Questions Nos. 7 and 28, priority Question No. 39 and written Questions Nos. 46 and 47.
Why has the priority question to be included? I thought that was in a separate category.
It is stated in this order which the House made.
I want it clearly understood that it is not my decision.
When this matter first arose some months ago you ruled that, where there was a question in the lottery similar to a priority question, the latter would get priority and the Minister dealt with the question between 3.30 p.m. and 3.45 p.m. I recall that the question was in the name of Deputy Mac Giolla and he strongly objected to the ruling.
The ruling I made then was that, if a lottery question and a priority question were being answered together and we arrived at the time of 3.30 p.m., then only the Deputy who had put down the priority question could continue to put supplementary questions.
I am happy to answer this question in priority time.
The Chair would be happy if the Minister would continue to answer.
I wish to clarify the position. It happened previously that Ministers said: "With the permission of the Ceann Comhairle, I propose to take questions..." When this new system was introduced we understood that priority questions had priority over all other questions on the Order Paper and we would have felt that the Minister would have given an indication that he would take the priority question.
I do not know whether the Deputy heard me on the intercom. Paragraph (h) of the order reads as follows:
A member of the Government may, where appropriate, group both categories of Question comprehended by subparagraph (b) of this paragraph and Questions put down for written answer for the purposes of reply;
If the Minister does that, there is nothing the Chair can do.
The Chair read from that paragraph and referred to two categories of question. In my opinion there are three categories — oral, written and priority questions. Which two of the three are referred to?
I invite Deputies to listen to what the Chair says. The three categories were read out.
You read two.
Paragraph (h) states:
A member of the Government may, where appropriate, group both categories of Question comprehended by subparagraph (b) of this paragraph and Questions put down for written answer for the purposes of reply;
It bears out my point that there are three categories, although you referred to two categories. What are the two categories?
There are three altogether. The Deputy is wilfully ——
We are wasting time.
Has that only dawned on Deputies now? It dawned on the Chair quite a while ago.
The assessment by the administrator of the Insurance Corporation of Ireland plc of the company's position was set out in a press statement on 16 July 1985. Briefly, the administrator estimated a net balance sheet deficiency in the accounts of the company as at 31 December 1984 which, taking account of the later sale of the Insurance Corporation life subsidiary, came to £164 million.
The administrator's assessment was based on an extremely thorough examination of the books of the company and on professional advice from outside the company. I understand from the administrator that the overall assessment announced in July has not altered.
The financing arrangements for the administration were announced by the Central Bank on 4 October 1985. These arrangements involve an advance of £100 million to the Insurance Compensation Fund for a period of 15 years. The cost of the advance, amounting in aggregate to £9 million per annum, will be met in full by Allied Irish Banks, the other licensed banks and the administrator. These arrangements are in line with the Government's objective that none of the costs of the administration should be borne by the taxpayer.
Will the Minister be asking the administrator for any further updating of the exposure of the taxpayer and the Central Bank on the liability since July last, having regard to the fact that the Minister for Industry, Trade, Commerce and Tourism stated in the Dáil on 27 March that the estimate of exposure was between £50 and £120 million and that there was no reason to believe it would be the higher figure? In July the figure rose to £164 million. Is it not time for a further reassessment? Is the Minister aware of a report in the Reinsurance Report magazine indicating a likely exposure figure of £500 million and will he comment on it? Have any of the reinsurers challenged liability on ICI business? How many arbitrations are pending? How many court cases are pending? What is the likely outcome of these cases as far as the ultimate liability of the State is concerned?
I am satisfied that the overall assessment which was announced in July and which forms the basis of the Central Bank package has not changed.
It changed from £50 million or £120 million to £164 million.
Deputies will understand that there was a certain amount of confusion in March when a very serious event was occurring which put in jeopardy the public interest and shook the foundations of the banking system in Ireland. The Government, with the consent of this House and of the Seanad, took swift steps to ensure the security of the financial foundation of the State. I am satisfied with the assessment the administrator has made. This was the basis of the announcement in July and it is a prudent assessment based on his very thorough examination of the books and supported by outside legal and insurance advice.
I am confident that this position is the correct one and has not altered since then. There is no need for further assessment at this point. It will fall to the administrator to carry out his legal functions under the court and to publish the accounts of the company when they become available. They have not been published this year in respect of 1984 because of the difficult and complex nature of the accounts as the administrator found them. Deputies will understand that.
Regarding the question of reinsurance and the report Deputy Taylor mentions in some publication, I am satisfied that the administrator's assessment on reinsurance is prudent and that the provisions are prudent. The administrator will be taking all steps commercially and legally open to him to ensure that such policies as fall to be paid will be paid to the company. I am informed that the administrator is supported by legal advice in his view on the recoverability of amounts due from reinsurers.
It is not within my competence to deal with the question on arbitration and court cases. That will fall to be determined by the administrator in the ordinary course of his administration. The administrator is answerable to the court and I am satisfied that the action taken by the Government, which culminated in the Central Bank package recently announced, is the correct one. Under the guidance of the administrator I am satisfied that the prudent and commercial viability of the company will be restored.
Can the Minister tell us——
A number of questions are being answered together. The duty of the Chair is to give every Deputy fair play. I have allowed Deputy Taylor to ask three supplementaries in one and I am now calling on Deputy Connolly.
It has transpired from the Minister's replies that the overall liability of the ICI has gone up from £120 million to £164 million. Can the Minister give the House a guarantee that that will be the total amount? If not, who will be responsible for any overrun? The amount estimated by outside commentators would be substantially greater than that given by the Minister.
From his experience in Government, the Deputy will be aware that the insurance industry is very much open to rumour and rumour mongery, and not of a benign nature. I am satisfied that the statement by the Minister on 16 July last and the package presented by the Central Bank on 4 October reflect the true position. I am confident that the administrator, who is held in high esteem in his profession, will have sufficient funds to carry out his legal obligation to return the company to viability. It will take some years for the administration to be resolved but I am confident that the company will be brought back to viability within the existing financial allocation.
The Minister did not answer my questions.
He is not here to answer questions, only to dodge them.
I pointed out that I would try to be helpful to Deputies.
I am happy to withdraw that. If I pose questions in simple language the Minister might be able to give me the answers I require, just a few. I assume that the administrator is an appointee of the courts. The Minister might indicate who are the five directors of the company. Have the ICI, since the administrator went in, experienced any difficulty in collecting from the reinsurers? If so, how many of the reinsurers used by ICI have defaulted, and by how much? If the ICI are still functioning in their London offices and continuing to pay on their liabilities under insurance treaties, that were badly negotiated in the first place, how much money have they paid on foot of these treaties? Because I may not get a chance to come in again——
It looks as if this will take a little time.
In the hope that I will get in for a few further supplementaries, will the Minister tell me if the ICI operation is profitable at present and is their trading position sound? Would the Minister agree that the comments made in March last were misleading to this House? At that time the Minister Deputy J. Bruton, stated that the losses incurred "will fall inside the range of £50 million to £120 million". He went on to say that he had to stress that £120 million would be the known upper limit and that there was no possible way it could go beyond that figure. The Minister misled the House at that time when he said the taxpayer would have to pick up the liability only in the last resort. Would the Minister now agree that, with the new package announced by the Central Bank in October, a lie has been made of the solemn commitment given to this House on 16 July by the Minister's statement and in March when the Bill was being introduced?
I do not know where to start.
Might I point out for the guidance of the House that one other Deputy put down a question? Only one Deputy will be entitled to come in after 3.30 p.m. and he is Deputy Flynn. I am calling Deputy Séamus Brennan.
By keeping the show going until 3.30 p.m. I will get my 15 minutes priority and I will not allow the Government to arrange it otherwise.
I wish to ask a brief question.
The Deputy has no question down.
A Deputy who has two questions down did not get an opportunity to ask one supplementary.
I put down a question but Deputy Enright did not.
I want to ask the Minister if legal proceedings have been issued. Can the Minister say if Allied Irish Banks have issued proceedings?
Has the Minister's attention been drawn to an article in the magazine Irish Business some weeks ago, and would he like to comment on the long list of allegations in that article? One of my questions is about the present status of the ICI. Are they a semi-State company fully under the direction of the Minister? If they are, what directives does the Minister propose to give to them? Particularly, has his attention been drawn to the Irish Business article which had a whole range of allegations, from insuring bush fires to hotels which had burned down already, and so on? Would he like to comment on that article, and what action does he propose to take to follow it up?
I am not aware of the position in relation to AIB. That is a matter for AIB. I am aware of the articles Deputy Brennan referred to and I repeat that, above all industries, the insurance industry is open to malign rumour. Though I do not want to comment specifically on the articles referred to, I will approach the ICI case on the basis of the facts known to me. I cannot stop rumours — I must treat them with the respect or disrespect they deserve.
Coming back to Deputy Flynn, at this point in time I am not quite sure whether he supports the continuation of the ICI administration or whether he would be happy to see the administration brought to an end. Certainly he is giving vibes in that direction. In relation to the myriad diverse comments the Deputy made on this issue — and one which is central as far as I am concerned — I should say that the Minister did not mislead this House on the ICI issue. As Minister for Industry, Trade, Commerce and Tourism he indicated possible dimensions of the problem, as he had been advised by Allied Irish Banks.
Again, at that point in time the seriousness of the problem was recognised and addressed by the Government, with the co-operation of the administration. That position was subject to a full assessment by the administrator of ICI's affairs. That became available and formed the basis of a press statement on 16 July last which formed the basis of a finance package announced by the Central Bank on 4 October. I want to say quite clearly — in order to dispel notions that might be abroad, to dispel the rumour mongering machines, not only here but in England as well — that the assessment by the administrator is a prudent one and I have been so informed.
How does the Minister of State know?
I am making a statement that, as Minister with responsibility for the insurance industry, I am satisfied that the administrator's assessment of the ICI is a prudent one and will withstand examination. I am also satisfied in relation to the question of the payment on reinsurance treaties that the normal commercial practice will be followed by the administrator in connection with the recovery of moneys due to the ICI. As I said earlier in my reply, I am satisfied that the administrator will take every necessary step to ensure that he is paid moneys due properly to the company.
I would have been happier had the Minister replied to Deputy S. Brennan's question. Let me put the Minister at ease: certainly I wish to see an end to the administrator's activity in ICI. I take it that he expects and hopes that that would be the case too at the earliest possible date. It is in an effort to get around this morass of so-called evidence that we are hoping to bring about that position. Might I ask the simple question: is it envisaged having some new method of management of ICI in the immediate future other than the administration?
The Deputy has clarified his position somewhat. It would be up to the administrator himself to decide on the management structure he would wish to put in place. I am sure he will address himself to that question. The House will appreciate that the ICI London office accounts were in a mess. Let us be quite frank about it. The position has been very complex and, in large measure, has been unravelled only in the not too distant past. I am sure that, when the initial and serious questions which the administrator must address have been addressed, he will decide on his structure of management. I should add — Deputy Flynn raised this in one of his earlier questions — that my understanding is that the ICI are and have been trading profitably.
Has the Minister the final report from the administrator at this time?
I have had a full assessment of the report from the administrator. Of course that formed the basis of the press release on 16 July last.
In that report does the administrator recommend the termination of his appointment in the foreseeable future?
I should not like to address any aspect of the report which of course is confidential. The question of the continuation or otherwise of the administration of the ICI is up to the administrator who, if he wishes to terminate the administration, would apply to the court. Of course one would assume that, the Central Bank having made the funds available to him knowing that they are acceptable to the administrator, the exercise foreseen by the Deputy is somewhat frivolous, perhaps even slightly irresponsible, given the serious nature of the case we are at present discussing.
When he is in a tight corner the response of the Minister of State to these matter is to contend that the questioner is irresponsible.
I am not in a tight corner.
Might I ask the Ceann Comhairle: is it in order for Deputy Flynn, having taken up ten minutes of the time given for supplementary questions to ordinary backbenchers, to continue uninterrupted in this way, pursuing this matter ——
That is in order.
——in this way, having placed ordinary back benchers in the position of not being able to raise very important questions they wanted to raise?
I am acting in accordance with the order of the House. Deputy Flynn, please.
Giving way to information that Deputy Taylor failed to elicit from him.
Because of Deputy Flynn's interruptions, because there was not time.
In the report of the administrator, which the Minister says he has, is the full extent of the London mess, as he rightly called it, quantified in money terms?
I will not be drawn into any aspect of the report which is, of its essence, confidential to my Department.
Now we know.
Of course my Department have been made fully aware of the situation, especially that in the London office.
It appears from the Minister's response that he does not have the quantification of the London mess. Consequently it draws a certain amount of scepticism in so far as the Minister's earlier reply is concerned, in that the final amount has now been satisfied in the sum of £164 million. Is the Minister aware that the Minister for Finance, in a recent question, responded to the effect that he did not expect to be asking for any more, and was not prepared to give a guarantee that the taxpayer would not, somehow or at sometime, have to pick up the tab of these ICI losses? Is the Minister of State aware of that?
I am satisfied that there is no foreseen need for any sum greater than £100 million that has been provided to the administrator. I am confident that the £100 million is the maximum figure that will be required. I am also confident that the administrator will be successful in his task of revitalising this company. I fully accept that the mess in the London office falls at the door of Allied Irish Banks who bought and owned ICI. What I am saying is that this Government took the necessary action, in the public interest, to secure the ICI in administration and also to secure the financial foundations of this State. I do not make any apologies for their having done so.
The Minister is talking through this and is not answering the question.
We are aware of the situation in the ICI. I have stated that the company are currently in a profitable trading situation. I do not know what the Deputy wants me to say additionally unless he wishes to partake in the rumour mongering machine or unless he wishes to undermine the administration. I do not think he so wishes but I would like to say to him——
The Deputy does not wish to get involved in the rumour mongering. It has been pointed out to the Minister by reputable sources that these costs could escalate. The Minister has not relieved our anxiety in that regard. Is the Minister aware that the Insurance Solvency International Report in 1981 indicated that ICI were a bad risk and that he indicated in his speech when the Bill was introduced here that he saw a certain lack in the supervisory authority machine? Could he indicate what improvement has taken place in the monitoring and supervision of insurance companies since March of this year?
I will not comment on rumours in the press no matter from what source. I take exception to the suggestion by Deputy Flynn that the supervisory functions in my Department are inadequate, especially in regard to the Insurance Corporation of Ireland. This problem arose in the London office and the Deputy is well aware that there are existing international conventions which put that office under the aegis of the British Department of Trade and Industry. The insurance division of my Department have been extremely vigilant in relation to insurance company supervision in this country and I resent Deputy Flynn's remarks.
Minister Bruton is on the record of the House as stating in the debate on the Bill in March that ——
The Deputy must ask a question.
Is the Minister of State aware that the Minister stated in the House that the supervisory authority of which he is the master was inadequate and that he was taking steps to improve its monitoring capacity? Deputy Collins now says that not a single thing has been done since the debacle of March and the previous debacle in so far as the PMPA were concerned. Not a single movement forward has been taken by way of supervision improvement in the Department. As the Minister does not have the final figures in relation to the London mess —— as he rightly named it — will he now reaffirm that there is no possible way that the taxpayers will be asked ——
The Minister, on a point of order.
Last week I was denied time to reply to supplementary questions. Am I again going to be denied time to reply?
I will operate within Standing Orders.
Is it the Minister's intention, following the London mess, to do anything about streamlining the London office or, as the supervisory authority of the company, will he allow them to run on their merry way and possibly end up with escalating costs of a fresh nature? Will he finally answer the question which Deputy Taylor and I asked him in different ways — how much money have the ICI paid on foot of the treaties with the reinsurers and have any of those treaties broken down?
As Minister in charge of the insurance division in the Department of Industry, Trade, Commerce and Tourism, I welcome the fact that we are getting staff. Since Deputy Flynn is so concerned about this area I wonder why he did not deem it necessary to get extra staff when he was Minister. He must have been satisfied with the situation at that time ——
Deputy Collins is the Minister now.
I do not have a function in relation to the London office and I am surprised that Deputy Flynn is not aware of the legal procedure which is that the British supervisory authority under the Department of Trade and Industry is responsible for insurance matters in Britain and we have to abide by that rule.
Is the Minister suing them on our behalf?
As I said, the administrator informed my Department that ICI are trading profitably at present and the Deputy cannot get away from that fact. In relation to reinsurance treaties, I stated that the administrator will take every step open to him to ensure that such treaties are honoured and that the money due to ICI will be paid.
They will never be paid, they are in Zulu land.
I am sure that you will agree that the correct principles of Question Time have not been adhered to. It is ridiculous that we only got to Question No. 7. Perhaps you may say that the fault lies on this side of the House but that is not correct. I must remind you that you are responsible for ensuring that Question Time runs as smoothly as possible.
My namesake caused the delay.
Does the Deputy want me to suspend a number of Deputies?
It is up to you to decide what action you will take, but the Minister has taken about ten minutes to answer each question.
I wish to raise on the Adjournment the question of the redundancies in Bord na Móna.
I will communicatre with the Deputy.
Could Questions Nos. 20, 30 and 41 be continued for oral reply?
I was not allowed to make the announcement which I wanted to make earlier. All questions which were down today for oral reply which have not been reached will go for written answer unless a request is made to have them reballoted.
I wish to raise on the Adjournment the subject matter of a Private Notice Question which I tabled for today. I wish to ask the Minister for Health if he will make the necessary finance available to the Southern Health Board to enable hip replacement operations to be carried out in Tralee General Hospital as such operations were discontinued due to lack of finance available to purchase orthopaedic implants.
I will communicate with the Deputy.
We have money for planting trees and so on but we cannot provide money for hip replacements.
Could Question No. 10 be included in the lottery for the next occasion?
I want to make it perfectly clear that as early as Question No. 2 today I appealed to Deputies to make progress. I regret to say that I nagged at them all through Question Time to make progress.
You will have to do more than nag them.
I am glad to have your support in this matter.
My priority Question No. 41 is one which calls for a reply by way of statistics. Does it now go for oral answer?
It will come to you in the form of a written reply. I also wish to mention that it is not necessary to make these requests in the House as they can be made in the General Office before 4 o'clock.
Could I have Questions Nos. 12 and 32 retained for the next lottery?
Make your request in the General Office, it is not necessary to make it here.
