Vol. 388 No. 5
asked the Minister for Agriculture and Food if, in relation to the statement he issued on 15 March 1989 on the importance of the cattle and beef industry to the Irish economy, he is fully satisfied as to the accuracy of that statement; and if he will make a statement on the matter.
100.
asked the Minister for Agriculture and Food if, in relation to the statement he issued on 15 March last on the importance of the cattle and beef industry to the Irish economy he will outline the full meaning of the phrase "normal routine" as used in that statement; and in particular, whether there is a prescribed or usual period beyond which the withholding of funds of any kind including guarantees, ceases to be routine or an amount of such funds above which withholding ceases to be routine; and if he will make a statement on the matter.
101.
asked the Minister for Agriculture and Food if, in relation to the penalties imposed on Anglo-Irish Beef Processors in relation to irregularities at Dublin and Waterford plants, as referred to in a letter already published from his Department to the company of 16 January last, his Department has released all guarantees of export refunds arising from the 1986 Aid to Private Storage Campaign; if not, the amount still not released; if he regards the withholding of any such guarantees for more than two years as being consistent with normal routine; and if he will make a statement on the matter.
102.
asked the Minister for Agriculture and Food when the irregularities mentioned in the letter of 16 January 1989 from his Department to Anglo-Irish Beef Processors were first brought to the attention of the EC; and if he will make a statement on the matter.
103.
asked the Minister for Agriculture and Food if he will outline the extent to which the EC was directly involved in the investigation into alleged irregularities in Anglo-Irish Beef Processors Ltd. which led to his Department's letter to that company of 16 January last; whether it was the Department or the EC Commission which decided on the extent of the penalties outlined in that letter; and if he will make a statement on the matter.
104.
asked the Minister for Agriculture and Food if he will explain why the delay occurred between the completion of the investigation into irregularities in the Waterford and Dublin plants of Anglo-Irish Beef Processors and his Department's letter to that company of 16 January 1989; and if he will make a statement on the matter.
105.
asked the Minister for Agriculture and Food if any factors emerged during the investigation at the Waterford Anglo-Irish Beef Processors during late 1986 and early 1987 which would suggest that an attempt was made to cover up discrepancies which were discovered; if so, whether such attempts were brought to his attention at the time; and if he will make a statement on the matter.
106.
asked the Minister for Agriculture and Food if allegations concerning the false stamping of beef (details supplied) during October 1987 were investigated by the Department of Agriculture and Food and by the Garda, if so, if he will outline the progress of such investigations; and if he will make a statement on the matter.
108.
asked the Minister for Agriculture and Food if any investigation has taken place into an APS consignment or consignments of beef from a company (details supplied) during the 1988 APS season; if so, whether any irregularities were discovered and whether they were of a serious nature, for instance, whether irregularities included the finding of trimmings and offal in the carton(s); the value of any such consignment(s) investigated; whether any penalties have been imposed; whether any funds or guarantees are being withheld from the company; and if he will make a statement on the matter.
111.
asked the Minister for Agriculture and Food the number and grade of Department officials supervising and controlling EC-related operations at each meat export plant, and if he will make a statement on the matter.
112.
asked the Minister for Agriculture and Food the number of irregularities, as defined in the statement of 22 March issued by the Secretary of his Department, reported to the EC for each quarter of 1986, 1987, 1988 and for the first quarter of 1989 relating to meat exports; the number of meat export companies involved; the total tonnage and value involved for each quarter; the number of irregularities unresolved to date; and the number referred to the Garda authorities.
113.
asked the Minister for Agriculture and Food the number and grades of staff employed in his Department's internal audit unit relating to meat export CAP activities for each year from 1987 to date; and if he will make a statement on the matter.
I intend to take Questions Nos. 99 to 106, inclusive, 108 and 111 to 113, inclusive, together.
Because of the considerable amount of detail covered by the questions my reply will be in the form of a detailed statement on the cattle and beef industry and CAP expenditure controls.
The following is the statement:
Importance of Cattle and Beef Industry
The unique importance of the cattle and beef industry to the Irish economy is evident from the following basic facts:
—the cattle and beef sector accounts for nearly 40 per cent of the value of agricultural output and exports of cattle and beef are valued at about £900 million p.a. or 8 per cent of total annual exports;
—about 1.3 million head of cattle are slaughtered annually at meat export plants yielding about 420,000 tonnes of beef and some 10,000 people are employed directly in the meat processing industry;
—practically every Irish farmer, whether full-time or part-time, is involved in some way in cattle production;
—the cattle and beef sector is six times more important to us than the same sector is to any other EC member state and is in fact more important to our economy than agriculture as a whole is to the total economy of the European Community.
Importance of Common Agricultural Policy
The vital importance of the Common Agricultural Policy to the Irish beef sector is clear in that:
—it provides access for our cattle and beef exports to a Community market of more than 320 million people; this provides a return of the order of £500 million compared with £300 million which would otherwise be available on world markets;
—the intervention intake in Ireland, that is beef bought up by the Community, was 126,000 tonnes in 1986, 99,000 in 1987 and 58,000 tonnes in 1988;
—under the aids to private storage scheme, that is where private traders are paid to keep product off the market, over 130,000 tonnes or one third of exports were placed in storage last year;
—refunds/subsidies paid on exports to third countries for 1988 were worth over £200 million and overall over £500 million was paid from EC funds in this country under the EC regime for cattle and beef in that year.
Beef Industry's Potential for Further Expansion
The Government lay particular emphasis on the role of the beef industry in expanding and developing the economy.In this context the industry is well poised for further expansion. The December livestock enumeration revealed a substantial increase in beef cows and in-calf heifers, indicative of the general confidence in the industry. With a decline in cow numbers throughout the Community, the industry here is in a strong position to increase its share of Community markets and export earnings and to generate increased sustainable employment.
Need for Responsible and Informed Commentary on Industry
Given the importance of the beef industry and the CAP to this country the Government believe that it is necessary to clarify how the EC price support system for beef operates and how any infringements and irregularities that arise under Community regulations in the cattle and beef sector are dealt with in this country.
State Agencies involved in CAP Control System
The Department of Agriculture and Food is the agency primarily responsible for application of CAP regulations here. The Customs Authorities also have an important role as regards import and export control.
Role of Department of Agriculture and Food
400 Departmental Staff Involved
The total of over £500 million of Community funds paid by the Department of Agriculture and Food involves many thousands of individual transactions. About 400 Department staff are engaged in the control and monitoring of the operations giving rise to these payments, and in administering the systems generally at headquarters, at 43 meat export plants and associated cold stores, at 43 public cold stores and at export points. Veterinary inspectors and staff in a number of Agricultural Officer grades are employed by my Department supervising all operations at meat export plants.
Wide Range of Community Regulations Applied
Community regulations applicable to the cattle and beef sector are many and complex. They include provisions on export refunds (subsidies to third countries), intervention buying (that is beef bought up on behalf of the Community), intervention sales, aids to private storage (that is where private traders are paid to keep the product off the market for specified periods) and the charging and paying of monetary compensatory amounts (that is amounts applied in trade to offset currency fluctuations).
Securities Required for Advance Payments
Advance payment of export refunds subsidies before the export is carried out is the norm in Ireland. Aids to private storage may also be paid before the end of the contracted period. In order to protect Community funds, however, a trader who avails of the advance payment must lodge a security that is a written guarantee from a recognised financial institution or insurance company, which gives an undertaking that, in the event of noncompliance with the conditions of the scheme, the advance payment plus a 15 to 20 per cent penalty will be repaid. Securities lodged by traders with my Department to guarantee performance of contracts and compliance with obligations under EC regulations are released only when the transaction covered is completed, the prescribed documentation justifying release has been submitted to my Department and the Department is satisfied that all requirements have been met. The procedure can entail inquiries by the Department either about the documentation itself or about any other aspect of the operation concerned. Under some EC measures periods considerably in excess of two years are permitted between the lodgment of securities and the receipt of the necessary release documentation. Lodgment and release of securities take place on an ongoing basis and the level of securities on hand in my Department can vary from day to day. The total value of securities held at present is about £850 million of which some £300 million relates to beef export refund operations.
Standards Laid Down by EC
In its application of the system, the Department follows explicit standards laid down in EC regulations as well as rules of practice agreed with the European Commission and with other member states. This applies in particular to infringements and irregularities and suspected cases of both, an area in which the Department maintains close liaison with the European Commission.
Treatment of Irregularities
Whenever an irregularity is suspected an investigation is immediately set in train in accordance with explicit standard procedures. If imports or exports are involved, this investigation is carried out in close co-operation with the Customs authorities. Where it is established that an irregularity has occurred which has resulted in FEOGA funds being incorrectly paid, the Department has the option of recovering the amount from the securities held against the operator or, where necessary, initiating civil proceedings to recover it. Investigations extend to all aspects of cases including any attempts to obstruct official inspections.
Suspected Fraud
In instances where there is reason to believe that there is misrepresentation with fraudulent intent the practice is to refer the matter to the Garda Síochána for investigation. Where such an investigation produces evidence of an offence, the Garda refer the file to the DPP who decides whether a prosecution is warranted.
Reporting of Irregularities to EC Commission
At the end of every quarter the Department makes a return to the EC Commission of all irregularities that have come to notice. The report shows, 1, new cases which have come to light since the last report and, 2, an update of existing cases. All relevant facts are made known to the Commission, for example nature of the irregularity, financial consequences for the EC, the manner in which the irregularity was discovered and any action taken, including criminal prosecution.The Commission is kept fully informed of ongoing developments in each case and when an irregularity investigation is closed it is normal for the Commission to be provided with reasons. These standard procedures are followed by the Department of Agriculture and Food in all cases. Details of the number of cases reported to the EC Commission in the years 1986, 1987 and 1988 are given in the table attached. The cases reported involve a number of different companies.
Independent Checks on the Department's Administration of CAP Regime
The Department's administration of the CAP regime is subject to numerous independent checks. These are carried out by the European Court of Auditors and by the European Commission's audit services in addition to the audits carried out by the Comptroller and Auditor General and the Department's own internal audit unit. The staff of the unit consists of one professional accountant, four higher executive officers and seven executive officers.
Role of the Customs Authorities Certification
Exporters' entitlement to the payment of refunds/subsidies is determined by the type and quantity of goods being exported. It is the function of Customs to certify that the particulars declared by exporters in the relevant Customs documentation are correct. The certified documentation is then forwarded to the Department of Agriculture and Food as the paying agency.
Regular Spot Checks
Where declarations are made, Customs, as part of their normal function, carry out regular spot checks on the goods being brought under Customs control, while under Customs control and at the point of exit from the country. These controls are carried out routinely throughout the country at meat plants and at cold stores. Customs have a full-time presence at ports approved for the export of live cattle.
Investigations
When an irregularity comes to light or is suspected in relation to particulars declared to Customs, an investigation is carried out by local Customs staff augmented, where necessary, by staff from the Customs Investigation Branch and assisted, where appropriate, by staff from the Department of Agriculture and Food. Such an investigation may involve close surveillance of the activities of the firm, the thawing, weighing and physical examination of individual cartons and consignments of beef, checks on weights of cattle and audit of a firm's commercial records. When an investigation discloses evidence of an irregularity or non-compliance with EC regulations, the matter is reported to the Department of Agriculture and Food as the paying agency.
Annual Audits of Traders' Records
In addition to these regular checks and investigations, Customs also carry out an annual audit on the commercial and financial records on a selected number of CAP traders.
Difference between Technical/Procedural Irregularities and Fraud
It is important to make distinctions between the various infringements and/or irregularities which are liable to occur in the course of applying the CAP beef regime. Many of the "irregularities" that occur are of a technical or procedural nature. These would include, for example, those arising from clerical error or from failure for one reason or another on the part of the company concerned to meet contractual commitments — either as regards quantities, qualities or time limits. Money is paid only where the relevant operation has been carried out in accordance with Community regulations and appropriate documentation is available from Customs to confirm that fact. Where infringements are technical in nature no irregularity or indeed fraud may have been intended but the provisions of the regulations will usually require certain action to be taken automatically by the Department including the partial or total non-payment of claims. In the case of advance payments it would involve the recovery or partial recovery of advance payments made under security plus the appropriate monetary penalty. Where fraud is suspected the matter is referred to the Garda in addition to imposition of monetary penalties.Amounts forfeited by traders arising from infringement of Community rules in the beef sector were £1.2 million in 1988, £1.1 million in 1987 and £0.5 million in 1986. A total of in excess of 500 transactions was involved.
Position of the Government
Need for Confidentiality
Financial transactions under the terms of the CAP between the State agencies and particular individuals or companies are conducted on the basis of strict confidentiality.
Confidentiality is crucial in:
—avoiding unfair advantage or disadvantage among traders here and in other member states.
—ensuring uninhibited investigations by my Department, Customs and the Garda, and
—ensuring that any ensuing legal proceedings are not prejudiced.
This long established and necessary principle of confidentiality has been accepted by all past Governments and is applied equally to all firms and individuals.In this regard I am concerned about the adverse consequences of the recent unauthorised publication of a letter from my Department to an individual company. It would be improper of me to compound this breach of confidentiality by replying in detail to the specific questions tabled about the operations of individual companies and their transactions with my Department. Having regard to this obligation of confidentiality I am not in a position to disclose details of individual cases. However, in each year since 1980 cases have been examined by the Department in consultation with the Commission and the appropriate sanctions applied. These numbered 21 over the period and involved 17 companies. In the course of running the beef regime inquiries are instituted and concluded on a continuing basis.
The very scale of CAP transactions makes it imperative that official monitoring of those transactions and the pursuit of any irregularities that occur must be carried out impartially under well-established procedures and subject to strict financial control. That is how the control system for CAP expenditure within this country functions now and has always functioned in the past. The Minister for Agriculture and food has overall responsibility for ensuring that the European Communities CAP payments system is operated in accordance with the rules laid down by the Community.The Minister does not take any part in the day-to-day operation of the system which is left as an administrative matter for the Department as already outlined. This position has obtained since the coming into effect of the European Communities (Common Agricultural Policy) (Market Intervention) Regulation 1973. There has not, and will not be any political interference with the operation of the system. The Government are determined to meet their obligations under EC and national laws by maintaining full, effective and impartial application of the present monitoring and control systems.
TABLE
Cases Related to Cattle and Beef Sector Notified to EC Commission
|
Year |
Quarter |
Approx. date when irregularities occured |
Number of irregularities |
Number of companies |
Amount(£000) |
|
1986 |
1 |
— |
None |
— |
— |
|
2 |
August 83-May 85 |
2 |
2 |
4,000 |
|
|
3 |
— |
None |
— |
— |
|
|
4 |
— |
None |
— |
— |
|
|
1987 |
1 |
— |
None |
— |
— |
|
2 |
— |
None |
— |
— |
|
|
3 |
1982-85 |
1 |
7 |
1,500 |
|
|
4 |
September 86-February 87 |
1 |
1 |
Not determined |
|
|
1988 |
1 |
September-December 87 |
3 |
2 |
None |
|
2 |
— |
None |
— |
— |
|
|
3 |
— |
None |
— |
— |
|
|
4 |
November 85-July 86 |
7 |
7 |
2,000 |
|
|
1989 |
1 |
— |
Return in preparation |
