Written Answers. - PMPS Depositors.

54.

asked the Minister for Industry and Commerce, in view of the fact that the problem of unsupervised deposit-taking first came to his attention in 1974, the reason action was not taken to introduce legislation until 1978; that after the Industrial and Provident Societies (Amendment) Act, 1978, became law on 15 November, 1978 the Registrar of Friendly Societies, using the powers given him by the Act, the reason he failed to take action against the PMPS until 20 October, 1983 to curb its unregulated banking activities, when it was obvious that the society was continuing its activities during the wind-down period proposed and the reason for this; the relationship between the PMPA and the PMPS; if the Registrar was aware that if PMPS depositors had realised that the PMPA had serious financial problems they would not have put their money into the PMPS; and if he will make a statement on the matter.

56.

asked the Minister for Industry and Commerce the reason a report prepared for the Registrar of Friendly Societies by an accountant (details supplied) in 1981 has never been made public; the reason the registrar opposed the liquidator of the PMPS in gaining access to the report; and if he will publish the report in light of recent developments.

I propose to take Questions Nos. 54 and 56 together.

I am advised by the registrar that the report referred to by the Deputy was not made public because it was a confidential document commissioned by the then registrar to assist him in performing his supervisory and regulatory functions pursuant to the Industrial and Provident Societies (Amendment) Act, 1978.

I would refer the Deputy to a very recent decision in the High Court on 21 November 1988 in the matter of a discovery application by the official liquidator of the PMPS. It was ordered,inter alia, that the liquidator give an undertaking that he would use the report for the purposes of the liquidation, and the litigation, only and that he would not disclose it to anyone unless it were necessary to do so for the purposes of the liquidation and the litigation. It was also ordered that on the conclusion of the liquidation the material provided should be destroyed.

In 1974 when the problem of unsupervised deposit taking societies first came to notice the question of dealing with the problems by making appropriate amendments to the Central Bank Act, 1971, was considered, i.e. bringing deposit taking societies within the scope of that Act. However as the societies in question had developed outside the Central Bank's control they could not have lived up to its technical licensing requirements if brought in immediately under its control.

The Government's concern about the activities of these societies was demonstrated by the enactment of the Industrial and Provident Societies Act, 1978, the main aim of which was to wind down the activities of deposit taking societies. The constitutionality of the 1978 Act was immediately challenged by PMPS and another person. In 1981, the High Court found in favour of the Minister and the Act. The Supreme Court confirmed the decision on appeal in May 1983. The dangers associated with this type of society were spelt out in the course of the court cases as they had been when the legislation was being promoted.

The Supreme Court in its judgement drew attention to the High Court finding in 1981 that the reason for the prohibition in the 1978 Act was that the societies were operating a substantial banking business outside the control of the Central Bank without regard to the principle of sound banking practice and because the general public who placed money on deposit with them was at risk. These statements were made in the Oireachtas and the courts; depositors in PMPS and other societies, and would-be depositors, should have noted them.

The legislation to deal with unsupervised deposit-taking sought to have such activity terminated within five years and to deal with a variety of problem societies engaged in such activity. For that reason, the 1978 Act gave the Registrar of Friendly Societies various discretionary powers, to be exercised according to the circumstances of each society as the registrar considered appropriate.

In the case of the PMPS, apart from ceasing to advertise as a result of pressure by the registrar, the management of the society sought to continue its activities undiminished throughout the period of its constitutional challenge to the legislation. The existence of this challenge, which was finally decided in May 1983, and the desirability of achieving an orderly winding down of the society's activities over a period were among the factors which the registrar had to take into account in his dealings with the society.

Regarding the allegation of the registrar failing to take action against the PMPS I would refer the Deputy to the case of Monica McMahon, otherwise Paschal McMahon — Plaintiff, and Ireland, The Attorney General and the Registrar of Friendly Societies — Defendants, which was tried in full in the District Court and again in the High Court. In the High Court the decision of the District Court in dismissing the Plaintiff's case was upheld. The judgment said,inter alia,“....that at all material times the Registrar was acting intra vires and within the limit of his powers and was doing everything practicable to keep the matter under control”.

On the question of the relationship between the PMPA and the PMPS as this matter issub judice because of a pending court action I am not in a position to comment.