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Dáil Éireann debate -
Tuesday, 20 Oct 1987

Vol. 374 No. 3

Adjournment Debate. - Future of H. Williams Group.

I should like to say first of all that I appreciate very much the opportunity given to me to raise this issue. Secondly, I hope that anything I say will be interpreted as being constructive. I am aware of attempts being made to resolve this issue and I do not in any way wish to complicate them or make them more difficult for those engaged in the talks. I felt it was essential that certain questions should be answered in the context of this extraordinary collapse. I would appreciate it if the Minister would be good enough to endeavour to answer those queries when he gets an opportunity to reply.

I believe that an urgent investigation by the Minister for Industry and Commerce is fully warranted in the case of this extraordinary collapse. A large number of serious questions fall to be answered and I think we are entitled to know those answers. As taxpayers and as public representatives we are entitled to full comprehensive and clear answers to the questions that arise. In essence, I believe it is hardly credible that a large company which invoked the support of the Bank of Ireland as recently as last August, a bank which must have been aware of the financial facts at that time, could together issue strong assertions about the financial stability of H. Williams Group at that time, including stating that the assets of the group exceeded their liabilities, and that the chain could then collapse within weeks. I find that incomprehensible, a collapse which left a trail of human and financial disasters unprecedented in the distribution trade.

It is inconceivable also that the Department of Industry and Commerce could have been absolutely ignorant of the concerns which were prevalent in the trade or that the Bank of Ireland were in a similar position. It may very well be that the Department were aware and found themselves, for one reason or another, perhaps because of lack of capacity in the current law, unable to do something about it. If that is the case I would like the Minister to say so. Both of these institutions — the Bank of Ireland as a major economic institution and the Department as the ultimate guarantor of peoples rights in this matter — have clear public responsibilities and social responsibilities to us all. In the case of the Bank of Ireland, their mandate and obligations in this respect are very far from proven. I believe the Minister should intervene to have investigated the role which the Bank of Ireland and H. Williams Group played together in the past few months.

Among the serious questions which should now be answered are the following: how is it possible for a major company such as this to have traded as they did for so long without having their questionable financial structuring detected? How is it possible that the serious implications of that trading pattern and that trading arrangement for over 400 supplier companies, the serious implications for 1,500 employees directly within the employ of the chain and many other thousands of jobs in those companies who were supplying H. Williams were not addressed at an early stage? How is it possible for a company to build up a debt which included approximately £18 million owed to suppliers, approximately £15 million owed to the banks, approximately £3 million to non-trading creditors and, last but not least, and perhaps very important, a sum of almost £2 million owed to the Revenue Commissioners without somebody somewhere shouting "stop"? I find that extraordinary. The specific question should be answered: who knew how much and why was action not taken earlier? I want to know specifically what action will be taken to protect the jobs of 1,500 people in the trade and, indeed, the jobs of many people in the 400 small companies whose financial viability could be threatened by this collapse who were supplying H. Williams.

I have read with some degree of optimism reports of a proposed restructuring of the company. I am, I have to admit, somewhat aghast at the prospect that it embodies proposed redundancies in the region of two-thirds of the current workforce and a shutting down of some 13 of the present chain of stores. I am appalled also by what I understand to be — and I would appreciate if the Minister would comment specifically on this — the baulking by the Bank of Ireland at buying this agreement.

I should like to know whether it is the case that all the parties involved, the unions, the group themselves, the suppliers and the creditors, reluctantly but inevitably perhaps, accept that a restructuring is essential and that the only individual, organisation or corporate body holding out is the Bank of Ireland. As far as I am concerned, the Bank of Ireland should address the question: to what extent were they culpable by being aware of the circumstances of this chain, not do something concrete about it and perhaps passively facilitating statements by senior personnel in the H. Williams chain as recently as last August in Jury's Hotel to the effect that everything was in order when it was not in order. I would like to know precisely what the Bank of Ireland feel about the situation at this time and whether they are standing in the way of progress.

I should like to know what action will be taken with respect to these amazing statements made by the senior executives of H. Williams at a public meeting in Jury's Hotel in August when they asserted that they had the full backing of the banks, that their assets at that time exceeded their liabilities and that their financial base was stable and invulnerable when it is now perfectly clear that none of those three statements was the truth. They were gulled by the banks and, in turn, consciously or otherwise, either deceived those at the meeting or, despite the banks, took a course of action which was not in accordance with the highest standards of integrity. It has to be one or the other.

Someone should answer for those people who are today left possibly without jobs and certainly without moneys which are due to them, and I include in this the taxpayer. I want to know what action can be taken to deal specifically with the central responsibility pertaining to the Bank of Ireland who must have known a great deal more than they pretended to know a few months ago. Yet they chose to remain silent, and apparently passive, in the light of their clear social responsibility as a major element in this financial mess. There is a big question mark over their role in this operation. The only forum in which I can raise it is here and the only person who can answer the questions for me is the Minister. I want the bank's role in this matter to be addressed.

It is perfectly clear that our small economy depends on the highest standards of integrity and operational procedures on the part of the banking and financial institutions, or else this economy has no chance. I have a large doubt in my mind about the role of the Bank of Ireland in this particular debacle. I would be grateful if the Minister would tell us whether he is willing to take a personal interest in ensuring the urgent publication of a financial statement on the group's affairs. A full month after the receiver has been appointed creditors — people to whom a debt of all kinds is due — have still not been told the facts. That is not good enough. They are entitled to know the facts. A statement was made that the creditors would get nothing because there was nothing there. I believe that the creditors, in law and in the context of their moral and other rights, are entitled to a great deal more than that.

I demand — if that is not too blunt a word — that the Minister should insist, in so far as he can within the existing law, and I accept that it is not as effective in that respect as it should be, that a full statement of the group's financial affairs be presented immediately in order that people can make their own judgments and take appropriate action.

I would appreciate an indication as to whether the Government intend to take urgent action on below-cost selling, which is a fundamental element in this mess. This artificial internecine feuding is codding many people into changing their allegiance, temporarily or otherwise, in their trading patterns on a day-to-day basis, but ultimately it may act to the detriment of the consumer and the economy in general. This difficult issue needs to be addressed and some approach could be taken by the Government.

I should be grateful if the Minister would take a personal interest in the proposed "restructuring" of the company, which is a very euphemistic term for what I understand to be happening — the shedding of 1,000 jobs and the closing down of a large number of stores. If this is left to those who engineered this mess I would not be optimistic about the outcome. There are major issues involving the debt to the Exchequer and to others which need to be safeguarded by somebody with public responsibility. None of the people at present involved fits that category. The Minister could consider intervening to assist in the restructuring of the company. If some of the interests involved — say, for example, the Bank of Ireland — are being obstructive or negative in their approach, their attitude should be dealt with appropriately and rapidly in the interests of the workers and their families, the creditors and everybody else.

If the receiver proceeds down the present road, he himself will be looked after according to his legal entitlement, but it is possible that nobody else will be looked after. It is quite conceivable that others, some of whom might have a vested interest in ensuring the liquidation of this chain, could pick up the pieces at a knock down price and set the liabilities to one side. Some form of restructuring is inevitable but nobody wants to go along that route. I am not in a position to judge whether the package which has been accepted by some elements is the best solution. I appeal to the Minister to take a personal interest because the mess which has resulted from the ignoring of this problem by a large number of people involved does not lead one to believe that there will be a better result unless there is interest by a Government Minister.

If H. Williams, which had only 8 per cent of the total market, owed £18 million to creditors, is it reasonable to suppose that this pattern of debt is the norm within the marketplace and that other major chain stores might collectively owe many times that amount to other suppliers and creditors, as well as to the Revenue Commissioners? If that is the case, we have a problem not just in terms of the inevitable fall-out which results from the ritualistic feuding which goes on but also in relation to the longer term interests of the consumer and the trade.

There have been assertions that some of the interests involved have made use of the cash flow to add to their profits and have delayed paying creditors for long periods. If that kind of speculation was going on, as well as the feuding, we have a serious structural problem in that trade which must be addressed. The Minister should tell us whether there are large sums outstanding to the Revenue Commissioners and to suppliers over and above what would normally be acceptable in this area of business. If that pattern of debt is a fundamental element in the retail grocery area we have a serious problem.

Does the Minister intend to insist on winding down the scale and dominance of both Dunnes Stores and Quinnsworth in the light of the fact that customers who will be dispossessed of their normal shopping outlets will be gravitating towards these stores, assuming the inevitable closure of large sections of the H. Williams chain? Most people do not want the quasi-monopolistic tendencies in this trade to develop any further. If consumers assist in augmenting the scale and size of Dunnes Stores and Quinnsworth we could end up with different problems. I know the Minister's philosophy is not to intervene unless it is essential but there are times when the public interest must be safeguarded. This may be one such case. The data available to the Minister will enable him to make that judgment. It is not in the public interest to have an effective oligarchy or monopoly in this area of trade and the virtual removal of a large trader like Williams from the field assists in that creation. I should like to know what the Minister intends to do to curb that tendency.

Will the Minister investigate where and how the revenue of H. Williams has been used and how their cash flow was allocated during the past six months? It is extraordinary that a chain which is reported to be in good health weeks before its collapse can suddenly find itself with debts worth about £40 million. There is no point in turning away from the problem and carrying out a restructuring. That is not good enough. We are entitled to answers. Where did the money go which H. Williams took in over the past six months? I have a right to ask that question because some of it should have gone to the Exchequer but it did not.

Will the Minister state clearly whether this company were complying with the Companies Acts in terms of the presentation and clarity of their statement of accounts and in terms of every other rubric? The Minister has powers to order an investigation and that is the essence of what I want to say tonight. I am not satisfied that we should all stay silent in the hope that the bits and pieces can be put together again and a few jobs may be saved. I am glad for the people who are employed and that there will be some form of limping along after this incredible mess. Above all I want to prevent a repetition. The lesson we should learn is that a similar mess must never again be allowed to occur or tolerated by the Government of the day. There can be no guarantee that it will not occur again unless the questions I have asked are answered fully and comprehensively and appropriate actions taken. The Minister must take a firm hand in the matter and we should ask him for a departmental investigation under his aegis in order to get at the facts. He should use whatever powers are necessary, including his powers under the Companies Acts, to order that investigation and to obtain answers to the questions I have raised.

The Government have to be concerned at the loss of jobs or disruption of trade following on from the financial problems in the H. Williams Group. This is obviously the primary concern of the workers in the group and of employees of suppliers who may have lost out because of the difficulties in H. Williams.

For this reason, we would welcome any arrangement that can offer a viable future for the business and an outlet for suppliers. It is clear that the staff interests in the group have already indicated their willingness to make a substantial sacrifice in order to maintain as many jobs as possible.

I am not a party to any of the discussions or negotiations which are going on at present in relation to the future of the group. I cannot say what proposals might emerge over the next few days or the next week in relation to the company. However, I can assure the House that the Government's concern will be that any proposals which do emerge should meet the wider public interest in this matter — and I include in that the interests of workers, suppliers and of the public as consumers.

We read a lot about how far the possible rescue attempts have gone. I re-echo the Deputy's call that if the bank concerned are the only party willing to accept the possible rescue plan — I do not have the details — the bank should positively and constructively look at any realistic rescue plan and thereby ensure that they play their role in what has been one of the major collapses in recent times.

A number of issues have been raised arising out of the collapse of H. Williams. The first of these relates to concentration in the retail grocery sector and the use of buying power that flows from that concentration. This is an issue which was considered in some detail by the Restrictive Practices Commission within the past year. The report of their review of the Restrictive Practices (Groceries) Order, 1981, sets out their views on this question with which I am in broad agreement. The commission concluded from their examination of the retail grocery sector that the power of the multiple supermarkets had increased in recent years and that, if continued unchecked, the concentration of power could have adverse effects on the public interest in the long term. Where concentrated buying power is used to damage unfairly the interests of other retailers, suppliers or consumers, that power has to be curbed.

The Restrictive Practices Commission recommended that below cost selling and "hello" money should be banned and proposed a number of other steps for more transparent arrangements in relation to the terms and conditions of supply to multiple supermarkets. These recommendations represent a considered attempt to redress the balance of power and to bring to an end practices which are unfair and militate against the common good.

I expect that the legislation to confirm the order which I have signed will be discussed by the House shortly, I hope next week. It is worth noting at this stage that it would have been discussed this week but for the four day debate on the Estimates. I had hoped that this legislation would have gone through the House before the summer recess which would have been the case if disruptive practices had not been engaged in and approximately two and a half days were wasted on petty squabbling.

It has been suggested in some quarters that collapses such as that of H. Williams arise in part at least from shortcomings in company law. However, company law can only provide a framework under which the business sector can operate and conduct its affairs in an enterprising and productive manner while offering reasonable protection for stakeholders in companies and interests dealing with them. For an investigation under the Companies Act as the law now stands, other than one requested by the company or its shareholders, I must have in my possession some evidence that circumstances suggested wrongdoing. I do not have such evidence at the moment although I have read allegations of wrongdoing in various newspapers. If the Deputy has any evidence in relation to wrongdoing, I ask him to put it in my possession and if I can take any action I will.

That is not to say there is not scope for updating and extending the present laws governing companies. The Deputy will be aware that a substantial Companies Bill is at present before the Seanad. This Bill contains new provisions on company rescue which have the potential to be of benefit in cases such as H. Williams. These provisions would offer court protection for dealing with potentially viable companies while a court appointed examiner seeks to establish whether a rescue plan can be arranged. That measure, taken with other reforms set out in the Bill, will represent a very substantial and valuable contribution to the framework in which business operates in this country.

It would be wrong of me to offer any comment on suggestions that creditors of H. Williams may have been misled or that the position of the company may have been misrepresented to them in the period prior to the appointment of a receiver. I am simply not in possession of the facts to make any informed comment on this point at this stage. There is, in any event, the danger that anything I might say might prejudice the position of any of the parties involved. In the circumstances I must remain silent on this point other than to say that if any suppliers have facts which would substantiate the allegations made about the company, remedies are available to them through the normal legal process. I would also welcome being apprised of such facts. The suppliers concerned, as a group, have their own civil remedy if they wish to take it or they can place the facts in front of me.

Other questions were raised by the Deputy to which I should like to refer. He asked what would happen if the receiver sold all, or any part of the H. Williams Group. Any assets worth £5 million or an asset with a turnover of £10 million are notifiable to me under the Act dealing with mergers and monopolies. My views and what my approach will be in the event of suggested sales are already on record.

In regard to the exact amount of money owed by the company, that is a matter for the receiver and I do not have any information in that regard. As far as the Revenue Commissioners are concerned, approximately £1.1 million, not including possible moneys due under corporate tax not assessed, represents the basis of turnover, approximately two months. That does not indicate anything more than the normal amount due to the Revenue Commissioners.

I look forward to introducing the Bill dealing with below cost selling and the banning of "hello" money as that will be in the interests of the retail trade and the public generally. The Deputy asked about the amount of credit given. It is said that the amount of money owed to creditors represents something in excess of 50 days' credit which is approximately twice the amount of credit extended in the UK grocery market. A lesson to be learned from this collapse is that suppliers should be a lot more careful in extending credit as the grocery trade operates on very small margins. Indeed, that sort of credit does not exist anywhere else in the EC. The Government cannot run businesses for the people involved but we can provide the framework in which they operate.

Is the Minister being informed of what is happening?

In relation to what?

In relation to the present discussions and the restructuring which I understand is taking place.

The present rescue bid and the discussions taking place are being put together by the directors of H. Williams and I understand that discussions have taken place with trade unions, CII and other interested parties. I do not have a straightforward role but I am — like everyone in the House — concerned at the loss of jobs that might take place and the ultimate effects of such a major collapse. Let us hope that all the parties concerned will approach the rescue bid in a positive and constructive manner and bring it to a successful conclusion.

The Dáil adjourned at 9 p.m. until 10.30 a.m. on Wednesday, 21 October 1987.

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