When the debate on Second Stage was adjourned I was saying that I had some difficulty with this Bill because I was not entirely enamoured of the operation of Fóir Teoranta at all stages of their history. Therefore, I had some sympathy with the fact that it is proposed that this body be wound up, but I query whether the economy is now in such a robust condition that there is perceived to be no need for any alternative rescue agency.
The Minister dealt with the economic circumstances at the time Fóir Teoranta were established when we were heading towards EC membership, with all the implications of trade barriers coming down, a freer market and a more competitive environment generally. As a result this posed additional stresses and strains for Irish companies not accustomed to performing in the new free market conditions. It was acknowledged in that climate that there was a role for a body such as Fóir Teoranta to tackle genuine ailing companies that, with restructuring, advice and short-term finance, had the capacity to be revived and to continue to provide employment.
I think it was in April, when the Minister first addressed this subject, that he remarked that there was no necessity for State props in the new competitive environment, about which he was in ebullient mood. He detailed in that address, as Deputy Noonan said, the fact that interest rates were the lowest for years, there was unprecedentedly low inflation and investment was available through the BES, all factors that, in the very brief period since this Coalition Government came to power, have dramatically changed. The position regarding low interest rates no longer applies. There have been four increases in interest rates since the Government came to power and there is a very significant difference, of 4 percentage points, between the interest rates obtaining in this country and in the leading economy in the EMS exchange mechanism. Inflation has not been contained and the investment available through the BES has been very seriously curtailed in the Finance Act, 1989, and in the Finance Bill which we passed in the House last week.
In case there is any doubt about this matter, I want to say that I support entirely the limitations imposed on the operation of the BES. In fact, I do not think they went far enough. Some of the abuses of that scheme were scandalous, and that raises very serious questions about the original raison d'etre of that scheme. It seems, when it comes to raising investment capital for industry, that that is too risky a matter for many Irish businessmen, whereas a guaranteed return on projects like some of the so-called tourism-related projects is considered a much safer bet. If one looks at the BES since its establishment, one finds that until such time as the banks came up with ruses which could make investments risk-free the BES was scarcely availed of. It was only when investors could be guaranteed a safe return that they began to put up the money for the kind of projects I have referred to. That raises doubts about the investment culture and entrepreneurial instinct in this economy.
Notwithstanding that, the situation that the Minister adduced as his reasoning for introducing the Bill has completely changed. I wonder whether the initial reasons for Fóir Teoranta coming into existence are not, to some extent, about to be revisited on us in as much as there is some analogy to be drawn between the circumstances facing Irish enterprise at the time of our entry to the common market and the situation we will be faced with after 1992. Projections have been made and commentators have written about there being an expectation that we will, unfortunately, risk further closures and further company failures in the aftermath of 1992. Other commentators say we are now so slimmed down, fit and lean that we can face the free market competition with impunity. I would like to think that is the case but quite frankly I am dubious whether, at least in the initial years following the completion of the free market, some companies that, perhaps in the medium or longer term, would have potential for survival and continued employment, will come under pressure, and that the absence of an alternative mechanism will be regrettable. I hasten to add that it is not my job to come in here and argue for further bankrolling of industrialists, although that is too expansive a term to use for all the people who have availed of the Fóir Teoranta largesse, but I am concerned about the employment that is provided.
I have some quibble with Deputy Noonan's reference to the fact that Fóir Teoranta have been instrumental in saving 40,000 jobs. That is probably an exaggeration but nonetheless from the point of view of protection of employment, they have played some role. I would like the Minister to say if there are estimates for the number of jobs that remain in existence as a result of Fóir Teoranta assistance.
I part company with Fine Gael when it comes to indiscriminate praise of Fóir Teoranta. Deputy Noonan was too undiscriminating in his comments about the performance of Fóir Teoranta and about them not being an easy touch for Irish businessmen. I do not believe that at all stages of their history and in all cases that can be established. To some extent they were seen as an easy touch and as a mechanism for the banks to avoid their social responsibility. Customers who were too much of a risk were pawned off on Fóir Teoranta and the banks did not feel they would come under any pressure as a result. In some cases Fóir Teoranta were used as a milk cow for inefficient businessmen. That is an important point, because successive persons associated with the management and board of Fóir Teoranta have commented that they were often asked to bail out companies whose difficulties were also due to inherent managerial weakness. In my view often it is not a financial problem alone but a question of managerial competence. Perhaps we should look very carefully at whether a system of task forces of experts should be available to provide the necessary managerial competence in such circumstances.
Talking about Fóir Teoranta having been used on occasion as a milk cow by inefficient Irish businessmen, my attention has been drawn to an article as recently as 3 May 1990 in Business & Finance on a company called Manford Clothing. This article illustrates the general point I am trying to make and probably supports the introduction of the Bill for the dissolution of Fóir Teoranta by the Government. The article states:
Manford Clothing & Fashions, the Longford clothing company that went into receivership two weeks ago, received over £1 million in State aid since it began trading in 1980. Of this, £440,000 came from State rescue agency Fóir Teoranta. The Fóir Teoranta investment was approved in the summer of 1985 and was made in September 1985. At this time Noel Hanlon, the owner of Manford Clothing and Fashions was also the chairman of Fóir Teoranta.
A spokesman for Fóir Teoranta says that Hanlon would not have been involved in the discussions on the Manford investment. A close friend and former election agent of Albert Reynolds, who is the local TD for Longford, Hanlon was once one of the biggest employers in the county.
There has been a number of examples of that kind of involvement by the agency. I do not question the statement there which is the reason I put it on the record that Mr. Hanlon would not have been involved in the decision while he was chairman of Fóir Teoranta. It is tempting in a situation such as that where one's own business is involved and one is in such a position because there could be a potential conflict of interest. Generally speaking, Governments of successive colours have been subjected to inordinate pressure from backers of their own political parties to be rescued in circumstances such as I have described in the case of Manford Clothing.
Mention of Mr. Hanlon's stewardship as chairman reminds me of another point, and it is an important one. There was a time when one could get easy access to information about major loans advanced by Fóir Teoranta — perhaps not the minor ones — because they were published annually. Some of the figures I have show that on the capital side the Exchequer advanced £1 million in 1979, £7.9 million in 1980, £3 million in 1981, £14.5 million in 1982, £22 million in 1983, £19 million in 1984 and so on. The point about which I am uneasy is that when Mr. Hanlon took over as chairman in 1982——