Ceisteanna—Questions. Oral Answers. - Goodman Group.

Alan Shatter

Question:

9 Mr. Shatter asked the Taoiseach when he was first informed of the financial difficulties of the Goodman Group; the meetings, if any, which took place between him and Mr. Larry Goodman in the three months period which immediately preceded the special Dáil sitting of 28 August 1990; and whether the difficulties of Goodman International were discussed at any such meeting.

Alan M. Dukes

Question:

10 Mr. Dukes asked the Taoiseach whether any member of the Government requested EC Commissioner MacSharry to make representations to the Dutch Minister for Agriculture with a view to requesting Dutch banks not to take proceedings against companies in the Goodman Group.

Alan M. Dukes

Question:

11 Mr. Dukes asked the Taoiseach whether any member of the Government made representations, directly or indirectly, to banks either to lend money to the Goodman Group or after money had been loaned to refrain from taking legal proceedings to secure recovery.

Pat Rabbitte

Question:

12 Mr. Rabbitte asked the Taoiseach the number of occasions and the dates since June 1987 on which he met Mr. Larry Goodman, any representative of the Goodman Group of companies or any of the individual companies within the group; the purposes of these meetings; if any action was taken by him arising from these meetings; and if he will make a statement on the matter.

Dick Spring

Question:

13 Mr. Spring asked the Taoiseach if he will outline the representations made to him, on behalf of the Goodman Group of companies, in the weeks prior to the recall of Dáil Éireann in August 1990; the person or persons who made these representations and the actions sought; and if he will make a statement on the matter.

Dick Spring

Question:

14 Mr. Spring asked the Taoiseach if he met Mr. Larry Goodman prior to the recall of Dáil Éireann in August 1990; the location of any such meeting and the matters discussed; and if he will make a statement on the matter.

Dick Spring

Question:

15 Mr. Spring asked the Taoiseach if he had any discussions with the EC Commissioner for Agriculture in relation to the Goodman Group of companies prior to the recall of Dáil Éireann; if he will outline the contents of any such discussions; and if he will make a statement on the matter.

Dick Spring

Question:

16 Mr. Spring asked the Taoiseach if he visited the offices of, or intervened in the operations of, any Government Department in August 1990 with a view to expediting payments due to the Goodman Group of companies; and if he will make a statement on the matter.

Dick Spring

Question:

17 Mr. Spring asked the Taoiseach if he has at any time written or signed any letters to any banks which could have been used to promote the interests of the Goodman Group of companies; and if he will make a statement on the matter.

It is proposed to take Questions Nos. 9 to 17, inclusive, together.

I was informed on 18 August 1990 by the Investment Bank of Ireland in their capacity as financial advisers to Goodman International that the financial situation at Goodman International was so serious that, in the absence of support from the State in a tangible form, it was very likely that the company's operations would have to be liquidated. They explained that, as a result of the Middle East crisis, bankers to the company had threatened to withdraw or refused to renew facilities available to the company; that some banks had advised that they would start proceedings for recovery of loans on the following Monday, and that there were no other available facilities to meet these demands.

The liquidation of Goodman International, particularly approaching the peak beef processing season, would have caused very serious losses in jobs, farm incomes and exports and would have gravely damaged the economy as a whole. I, therefore, immediately summoned a meeting of available relevant Ministers and senior officials to consider these grave implications for workers, farmers and the economy generally and whether there was any action the Government could properly and prudently take to alleviate the situation.

This group evaluated the situation as being one with wider implications for the beef industry than the problems of Goodman International. The high cyclical point being reached in Irish beef production, at a time when market outlets were affected by the Middle East crisis and the fall in consumption due to consumer concerns arising from the BSE problem in the UK, combined to create difficulties for all beef processors and seriously threatened employment in the industry and the incomes of farmers already faced with weak cattle prices.

It was decided that as a matter of principle the State should not provide any financial support or guarantee to Goodman International as had been asked for by the company's financial advisers.

The group also decided that the Government should increase their efforts to persuade the European Commission to improve the various market support measures, including intervention, in order to help overcome these temporary difficulties. Chief among these measures was the operation of the safety net intervention system which the Minister for Agriculture and Food had already negotiated with the Commission whereby, where certain market conditions apply in at least three regions, intervention offers for steer beef are automatically accepted in these regions. This automatic intervention system was applied to Ireland and has been extremely helpful in maintaining demand for cattle in the current difficult trading conditions. It was also noted that the efforts already in train by the Minister for Agriculture and Food to re-open the Iranian and Libyan markets could, if successful, also help in the current trading situation. As the House is aware, the Minister has since visited Iran and Libya and is confident that these markets will be re-opened to our trade.

The group also decided that additional resources be provided in the Department of Agriculture and Food to ensure that no bottlenecks existed in the release of securities in respect of intervention and export sales and that close liaison was maintained with all the firms concerned to ensure that documentation is presented in a way that facilitates the earliest possible release of securities. These measures have been of benefit to all major meat processors.

The group further decided that, in the current acute trading circumstances, it would be prudent and proper for the Government to seek to have the provisions of Part IX of the Companies Bill, which was at Report Stage in the Dáil, having been passed by the Seanad, enacted urgently as a separate piece of legislation in order to provide an alternative to liquidation or receivership in accordance with modern company law throughout the world.

I have outlined the only measures and actions taken by the Government which relate to the difficulties of Goodman International and to the trading difficulties generally in the beef industry. I should also mention that full details of the information available to the Government on the situation pertaining to the Goodman Group were given to the House by the Minister for Industry and Commerce in the special session of 28 August 1990, when the legislation was passed with the support of the entire House.

I believe the House can be satisfied that the enactment of the Companies (Amendment) Act, 1990 has enabled the beef processing jobs and the farm incomes dependent on Goodman International to be maintained pending the evaluation being made by the examiner appointed by the High Court as to whether the enterprise can be restored to viability. The House will also wish to note that two other companies have since applied to the High Court for the appointment of an examiner.

The actions taken by the Government were, therefore, of a nature to be of assistance to firms generally. No special aid or assistance was given to Goodman International. This contrasts with the fact that we have seen in this House very radical and specific State measures and actions taken by the Fine Gael/Labour Government to rescue important private sector companies. I refer to the PMPA and the ICI. I would like to remind the House that my party in Opposition facilitated the speedy passage of the necessary legislation in the national interest, and did not seek to turn those matters into party political issues. I may also point out that there is hardly a Deputy who has not, at some time or another, urged in this House, the Taoiseach, the Minister for Labour, the Minister for Industry and Commerce or other relevant Ministers to intervene, including the provision of financial support, to prevent enterprises in difficulties from closing down with serious loss of jobs and grave consequences for the national and local economies.

In my view the decision of this House to enact the Companies (Amendment) Act, 1990 has helped, temporarily at least, to maintain in operation a company which is of such importance for a large segment of our beef industry. In a report prepared for the Central Review Committee of the Programme for National Recovery, it is made clear that our beef industry is a £1.2 billion a year industry, representing 36 per cent of gross agricultural output, and directly employing nearly 4,500 persons in slaughtering and processing. It is an industry that has been developed in the past 20 years from a situation in which live cattle exports represented nearly half our exports to today's representation of only 11 per cent. Goodman International and other meat processors have been responsible for that profound economic and social transformation. We are uniquely dependent on our beef exports in that we export about 85 per cent of our production compared to about 10 to 15 per cent for the Community as a whole. These figures should bring home to everyone in this House, if they are not already familiar with them, how responsible and concerned we have to be to ensure that the developed state to which this industry has been brought is maintained and expanded.

As regards communications with Commissioner MacSharry in regard to the problems of the beef sector, I have explained that representations were made to him and his officials to ensure that the intervention mechanism already in place was made fully operational. I am glad to say that the Commission has been most helpful and efficient in operating that mechanism. Any other action that Commissioner MacSharry felt it beneficial to take because of his deep concern for the welfare, not just of Irish farmers but of all the farmers of the Community, and his responsibilities in relation to the EC beef sector in particular, was taken by him solely on the basis of the information available to him and his assessment of the critical situation that obtained. But I will say that, if any action of his resulted in Goodman International not being liquidated, he deserves the warmest congratulations from every responsible Deputy in this House and from the workers and farmers whose livelihoods and incomes were bound up with the viability of Goodman International. I would say further that any action taken by the Dutch Minister for Agriculture which was beneficial to our national interests is something for which we should be grateful.

In conclusion, I would commend to the House the statements made by the ICTU, the CII, the IFA and ICMSA expressing their grave concern at the difficulties facing Goodman International and their hope that with the co-operation of the financial institutions involved it would be possible to maintain the close to 2,000 jobs in the Goodman processing plants and to retain the market outlets for the thousands of farmers who supply these plants. The Government agree fully with these views of the social partners.

The Taoiseach has taken nine questions together and he has barely touched on the matters raised in any single one of those questions and not on anything else. I find that is total obfuscation, that is not answering questions. I would like to point out also, a Cheann Comhairle, because the Taoiseach brought this in as a new red herring in this affair, that the action that was taken in relation to the PMPA, ICI and other companies that he has mentioned, bears no comparison whatever with what was done in this particular case because there was no hint, trace or smell of political involvement of the Government of the day with the companies in question. It was done purely and simply in the public interest in each one of those cases, and the Taoiseach and his party do not deserve any particular credit for having gone along with it. The Taoiseach mentioned a committee of Ministers that was set up to look at the difficulties in the period, apparently, between 18 August — when the Taoiseach says he was first informed of this — and 23 August, which was the date, as far as I can remember, he first informed the leaders of other parties in the House that it was his intention to recall the Dáil. Could we be told who the members of that committee were? Could we be told specifically whether Commissioner MacSharry was at any one of the meetings of that group and whether that group asked Commissioner MacSharry to take any steps in relation to banks which had money on loan to the Goodman group of companies? Could we also be told——

If you let me deal with those the Deputy can come back with additional questions.

I have every intention of coming back, Sir, and it will be with the permission of the Ceann Comhairle and not of the Taoiseach.

May I appeal for brevity having regard to the number of questions taken together and the number of Deputies involved.

First of all, I want to make it absolutely crystal clear and beyond any doubt that Commissioner MacSharry was not a member of that group. It would be completely improper for him to be a member of the group but he was not.

A Deputy

What meetings did he attend?

He did not attend any meetings.

Are you sure?

The other part of Deputy Dukes' question related to the committee of Ministers, which was myself, the Minister for Finance, the Minister for Agriculture and Food, the Minister for Industry and Commerce — I think that was all — and maybe the Minister for Labour. At the first meeting the Minister for Industry and Commerce, as I recall, was not there; the Secretary of the Department immediately went down to see the Minister for Industry and Commerce who was on holidays, and the Minister for Industry and Commerce returned immediately and took part in all further meetings.

I would like to thank the Taoiseach for answering Question No. 13 in my name, and perhaps now he will answer Questions Nos. 14, 15, 16 and 17. May I ask the Taoiseach in relation to those questions which he did not touch on if he had meetings with Mr. Goodman the week prior to the Dáil being recalled? Second, may I ask the Taoiseach whether he visited the office of the Department of Agriculture and Food and, if so, can he explain to us why he visited the office of that Department? Lastly, is the Taoiseach aware of allegations that Goodman International had an oil for beef arrangement with Iran so that as oil prices fluctuated the published rate for beef exports for intervention was raised in favour of Goodman and one other company in order to compensate for the loss in oil price fluctuations and that the net effect is that £19 million was transferred to these two companies by the EC in respect of this arrangement? Was he aware of that and the scale of the money involved and will he outline the role played by members of his Government in that arrangement?

First of all, I met with Mr. Goodman once, a day or two before the communication from his banker on 18 August. At that meeting Mr. Goodman informed me that his company was in serious critical difficulties and that his banker — Investment Bank of Ireland — would be communicating with me immediately about the matter. I certainly never visited the Department of Agriculture offices. The last time I was there was when I was Minister for Agriculture myself. I know nothing about the sort of deal the Deputy is talking about, about oil, beef or anything of that kind. It did not appear at any of our discussions.

Arising out of the Taoiseach partially answering Question No. 9, may I ask him on how many occasions he met Mr. Goodman in the three months period lead-in to that special Dáil sitting? When the Taoiseach met Mr. Goodman two days before 18 August did Mr. Goodman advise him that in the preceding two weeks members of Goodman International had been assuring bankers across Europe that Goodman International was financially sound and only had minor difficulties arising out of the Iraqi crisis? Finally, may I ask the Taoiseach, during that meeting with Mr. Goodman, did Mr. Goodman indicate to the Taoiseach that large sums of money borrowed for agricultural purposes, subject to section 84 tax reliefs, were being diverted through the Cork group of companies and other companies to purchase shares on the English stockmarket?

No, the meeting which I referred to was the only meeting I had with Mr. Goodman in that three month period and, as far as I recall, in a much longer period than that. The second question was——

The second question was: did Mr. Goodman advise the Taoiseach that in the preceding two weeks members of his company had been telling European bankers that there were only minor difficulties arising out of the Iraqi crisis?

No, Mr. Goodman did not speak of any of those matters. Mr. Goodman's statement to me was simply to convey to me the very serious problems that were confronting his companies, that his bankers — Investment Bank of Ireland — who were his special financial advisers would be in touch and would convey the whole situation to me and to the Government and the request for assistance of some kind.

The diverting of funds——

I am calling Deputy Rabbitte.

May I ask the Taoiseach if he will respond to my Question No. 12? He has given Deputy Shatter an answer concerning his meetings with Mr. Goodman for the specified period of three months in advance of the reconvening of the Dáil. I have asked the Taoiseach if he will say on how many occasions since June 1987 he met with Mr. Goodman. What specific request did the Taoiseach reject from the financial advisers to the Goodman Group of companies? He said he rejected their request for direct financial assistance. What specific package did they put on behalf of the Goodman Group? Was the Taoiseach at any stage since 1987 the subject of representations from Mr. Goodman, or any person acting on behalf of Mr. Goodman or the Goodman Group of companies, to make an intervention in the affairs of the beef sector, the effect of which would be to put a competitor company at a disadvantage or specifically to disentitle a rival company from a benefit or facility or sharing in the availability of lines of credit that were available to Mr. Goodman but disentitling any other company? Did the Taoiseach or any Minister in Government act on such representations and to what effect?

No, there were no such representations. From the period after 1986-87 as far as the Goodman organisation were concerned the boot was on the other foot. I and the Minister for Agriculture and the junior Minister, the Minister for Food, were continually pressing the IDA and other persons to get on with the major beef expansion programme which we had been promised. There were no representations to me of any other kind from the Goodman organisation or anybody connected with the Goodman organisation about the matters Deputy Rabbitte has mentioned. I would recall for Deputy Rabbitte that it was Deputy Ray Burke as Minister for Industry and Commerce who cancelled the export credit guarantee scheme in regard to Iraq. That was subsequently confirmed further by Deputy O'Malley as Minister for Industry and Commerce when he not only retained the cancellation but voided the previous export guarantees that had existed.

Could we return to the committee to which the Taoiseach referred? What steps did that committee take to convey information to Commissioner MacSharry and what advice, if any, did that committee give to Commissioner MacSharry about what he might do in response to the situation? It is totally irrelevant to speak of the safety net system which the Taoiseach said in his original reply had already been put in place before any of these matters were brought to his attention. It is curious that the name "Corke" keeps coming into this affair. Is the Taoiseach aware that Professor Corke, who has nothing to do with the companies but is a world respected figure in the company law area, has made the point, as did my colleague Deputy Barrett in this House when we discussed the legislation, that Part IX of the Companies (Amendment) Act, 1990, has utterly failed to deal with the problem in that company and that it has not been the examiner or the banks who have resolved the problem but simply that the banks have found themselves in a hole that they cannot get out of any other way?

The examiner is not finished yet and I would hope the House would give him an opportunity to see what he can do.

Deputy Spring for a final question.

Could I have answers to my previous questions?

The committee conveyed their views to the Commission on the critical situation facing the Irish cattle and beef industry and requested that every possible means be taken to come to the aid of the Irish beef industry in general. A number of measures were taken in regard to intervention.

The Taoiseach said the main one was already in place before any of this came to his attention.

Deputy Spring has been called.

Given that the Taoiseach has said that a briefing was given to him or his representatives by the Goodman Group banks and that he had a meeting with Mr. Goodman himself, did the Taoiseach ever feel that as a matter of public duty he should have inquired from Mr. Goodman or the company the reasons for the loan of about £20 million which Mr. Goodman has claimed he was defrauded of? Has the Taoiseach ever sought clarification of the reason that large loan was given and has it ever been explained to the Government or their representatives?

No, we have not. It only came to light after the examiner was appointed. It is primarily a matter for the examiner and I am quite certain he will report on the matter in due course.

I want to bring this matter to finality. There are too many Deputies offering and we are fast running out of time for Taoiseach's questions. I shall be moving to Priority Questions shortly.

The Taoiseach has taken nine questions together.

That is so and we have disposed of only 17 questions so far today.

Regarding the meeting between the Taoiseach and Mr. Goodman, did Mr. Goodman make the Taoiseach aware of the difficulties which were being caused by the action of the Government in cancelling export credit insurance and did he put a proposition to him regarding the restoration of export credit insurance? Is the Taoiseach aware that as a result of the action taken by him and by the then Minister for Industry and Commerce the taxpayer is still exposed to a possible liability of £74 million as a result of claims that could be pursued if the court case which is being taken by Mr. Goodman is successful? Did Mr. Goodman, in the course of the meeting, remind the Taoiseach of the undertaking which I understand he gave to him when the Taoiseach and the Minister undertook to restore export credit insurance that he would only be covered in respect of meat sourced in this country?

I am quite satisfied the taxpayer is not exposed to any liability with regard to export credit insurance. My advice is that the action taken by both Ministers stands up perfectly. There has been no loss under the export credit guarantee scheme under any heading. I might be wrong in detail but by and large that is the position. The financial adviser, the Investment Bank of Ireland, certainly majored on that question of restoring the export credit guarantees, but we made it specifically clear through the committee and otherwise to any bankers who were in touch that there was no question of that situation being changed.

Would the Taoiseach answer the third supplementary relating to the meeting with Mr. Goodman and whether he agreed to restore export credit?

I never had any meeting with Mr. Goodman over export credit — never.

Did the Taoiseach make any rough stab at calculating the number of occasions on which he met Mr. Goodman in respect of business matters? Do I understand the Taoiseach to say that he had no knowledge of the difficulties in the Goodman Group of companies prior to the meeting of 16 August? Will he tell us the dimensions of the financial package recommended by the financial advisers to the Goodman Group of companies?

We are having a lot of repetition.

We are getting a bit repetitive but we will go over it again. Regarding the last matter mentioned, the main thrust of the financial adviser's letter to me was to the effect that the banks were meeting and that unless there was some evidence of tangible support from the Government he could not see the bankers agreeing not to liquidate. On that matter we made it perfectly clear to the financial adviser that there was no financial assistance, nothing of any tangible support and no question of the export insurance being reinstated.

Would the Taoiseach not agree, in retrospect, that the elevation by the Government of Goodman International as being the main body responsible for the massive expansion of the beef industry in the 1987 period assisted Goodman International to borrow right across Europe, to over-extend themselves and laid the foundations for the crisis that arose in the beef industry this summer, and furthermore laid the foundations of the débacle we have now?

I would not accept that at all. The basis of this crisis is very clear. As I interpret it, it is entirely a matter between the Goodman organisation and their bankers. The bankers advanced enormous sums of money to the Goodman organisation when the times were good. Then the crisis came — the major problem in Iraq and the two disastrous investments by Goodman International in Britain. These three things came together and caused the whole crisis. Then our bankers, all 33 of them — well, perhaps not all 33 of them — having loaned the money with great goodwill, wanted to pull the whole load down, but that is the way with bankers.

The time has come to deal with questions nominated for priority.

But the bankers saw Goodman International as an arm of Government and it was the Government's imprimatur that produced the situation; without the Government's imprimatur it would not have happened.

That is not fair.

We are now in priority time; let us conserve it carefully. Fifteen minutes only are allowed for these questions.