For the second year in succession the opening of the Dáil year is dominated by a confidence motion in the Government. Last year the issue was the standards people could expect from those in Government. The issue again this year is about standards — of those in Government, those in semi-State companies and in private business. However, the difference is that this year the debate takes place against a background of a deteriorating economic situation, record unemployment levels and television pictures of tens of thousands of young Irish people battling for visas to give them hope of a new life and a job in the United States.
People have been stunned, shocked and sickened by the revelations of sharp practice, malpractice, downright dishonesty and corruption which have emerged. Day after day we have had more disclosures which have thrown new light on the operation of what has been referred to as the "golden circle". The operation of such a group had been well known. Certainly, The Workers' Party had pointed to it repeatedly. However, what has emerged for the first time in the past two months has revealed in all its ugliness the level of their greed and the ruthless nature of their activities. We have seen a world in which greed is God, where the pursuit of even greater profits seems to justify the use of virtually any means, in which this small elite — and it is a small elite — appeared to believe that they had the political connections necessary to render themselves immune from the normal regulatory and supervisory procedures to protect the public interest.
Greencore, Telecom, Celtic Helicopters, Carysfort, NCB — the list of questions is virtually endless, the answers from Government virtually non-existent. The Government and responsible Ministers have failed utterly to respond to questions about what they knew, about the manner in which they supervised semi-State companies for which they were responsible. They have withdrawn into their Ministerial bunkers and refused to answer the people. As head of Government the Taoiseach has a particular responsibility to the public for all of these scandals but he, too, has gone to ground. His decision to transfer to other Ministers virtually all questions relating to these scandals, where they relate specifically to statements made or actions carried out by him, is the latest indication that he is determined that if the buck is to stop anywhere certainly it will not stop with him.
These scandals are a sad reflection of the value system of some of those at the top of business and politics in this country. Nobody who knew what was going on in Irish society will have been surprised at the improper activities of some of those who were involved in the Greencore and other affairs. Perhaps the most surprising thing is that the improper activities have become public knowledge. To date those involved normally have managed to successfully hide their trail. I predict that what we have seen so far is only the tip of the iceberg of corruption and improper activities now prevalent in some sectors of private business which, unfortunately is also eating into the public sector.
After 70 years of independence it is time to examine our values and priorities as a society. Despite the high-sounding principles of the 1916 Proclamation and the fine aspirations of the democratic programme of the First Dáil we live in a Republic in which an individual's rank and status in society is determined by the amount of personal wealth he or she can accumulate. Indeed in Ireland the greatest prestige seems to attach to wealth accumulated in the least socially valuable way. Land rezonings, property speculation, asset stripping, offshore companies, the use of inside information, access to political pull, the "stroke", tax avoidance schemes, these seem to be the favourite routes to financial success rather than the creation of jobs or added value products which could be of benefit to the wider community. It is a culture that ensures that job creation is at the bottom of the list, a culture which ensures that we have a parasitic economy, denying the rights of thousands of our people to a job, ensuring that investment will be in asset stripping rather than in the protection and creation of jobs. The dominant political parties in this country have bestowed their blessing on wealth accumulated in this way. This is especially so in the case of Fianna Fáil, who have encouraged and benefited from the stroke culture. We are now paying the price for this attitude, with the reputation of Ireland abroad being badly damaged and political confidence at home eroded.
It is not acceptable that those who blew the whistle are blamed for the damage to our reputation. Those to blame are the ones who engage in these activities. What we need, perhaps, as well as a code for politicians and for business is a code for the protection of whistle blowers. They have done this country a favour by dragging into the light of day the activities we have heard about in the past few weeks.
The first of the recent scandals to come to the attention of the public was the Greencore affair. Greencore is particularly significant, not just because it opened the floodgates in regard to the other affairs but because many of the elements at the centre of it also feature in the other affairs — issues of honesty, of what is or is not an acceptable level of profit, the adequacy of company law, the use of devices such as offshore companies to disguise the real ownership of companies, the role of semi-State companies and the adequacy of ministerial supervision of the semi-State sector.
We are of course aware that various inquiries have been set up into the Greencore affair, but there are many questions which could and should have been answered by the Government and especially by the Minister for Agriculture and Food, without having to await the outcome of any inquiry by any Inspector. When did the Minister, Deputy O'Kennedy, first become aware that a number of Irish Sugar executives had acquired a 49 per cent minority shareholding in Sugar Distributors (Holdings) Limited? When did he first become aware that this purchase had been partly funded by a soft loan given to the executives by the company? When did he first become aware of the subsequent resale of the shareholding to the Irish Sugar Company at a six-fold profit to the executives involved? Was Deputy O'Kennedy, as the Minister with overall responsibility for the Sugar Company, consulted regarding the purchase of the Sugar Distributors shareholding, and did he approve of it? When did he first become aware of a claim by Mr. Chris Comerford to beneficial ownership of a substantial shareholding in Talmino Limited?
As my colleague, Deputy Sherlock, pointed out at the time, only days before the Greencore affair broke, the Minister, Deputy O'Kennedy, was only too glad to make himself available to the press to lecture the public about his views on morality, and particularly about the age at which condoms should be made available to young people — an issue which had nothing to do with his Department at all. But when the questions arose about Greencore, the Minister was suddenly unavailable, declining all invitations to appear on radio or television programmes, and refusing to answer all questions, even when cornered by journalists at the public functions he could not avoid.
The Minister, Deputy O'Kennedy, had plenty to say about the morality of making condoms available to 16 year olds, but he had nothing to say about the morality of a group of senior semi-State executives acquiring a shareholding in Sugar Distributors, and then selling it back to their employers at a six-fold profit. The Minister had nothing to say about the propriety of executives of State companies setting up covert companies in tax havens like Jersey. The Minister, like many of his colleagues, seems to relate to sexual matters only.
In a Cabinet where mediocrity is the norm, with a few honorable exceptions, and incompetence taken for granted, the Minister, Deputy O'Kennedy, stands head and shoulders below the rest. His handling of the Agriculture portfolio has been characterised by bungling and evasion. He is probably the most evasive of Government Ministers when it comes to replying to Dáil questions. Even when he has nothing to hide, he sounds as if he has. He persistently refused to acknowledge any allegations of irregularities in the beef industry — even as he announced the setting up of the Tribunal of Inquiry — yet only two weeks ago he was forced to send his inspectors, accompanied by armed gardaí, into a number of Goodman owned plants.
He criticised Deputies who raised legitimate questions about the use of substances like angel dust and tried to downplay the whole problem, before eventually being forced to admit the dangers involved and take some remedial action. He insisted on ramming the Bill to privatise the Irish Sugar Company through the Dáil, using the guillotine to curtail the debate at every Stage, and we are now paying the price for this.
I do not intend to deal in detail with the other scandals, which my colleagues will be speaking of during the course of this debate. However, I would like to make a few points about Telecom and the Ballsbridge site, because it symbolises much of what is rotten in Irish society and especially much of what is rotten in Irish business. It is an episode which proves that business strokes kill jobs. I would remind the House of the 500 Johnston, Mooney and O'Brien workers, who lost their jobs with the closure of the bakery in 1989 and who are, in many respects, the forgotten victims of the scandal surrounding the sale of the Ballsbridge site. This whole episode illustrates once again the ruthless nature of some of those at the top of Irish business who are quite prepared to destroy jobs and livelihoods in the pursuit of huge profits.
The bakery was put into liquidation in February 1989 although its parent company, Odlums, was making substantial profits at the time. When the sale was originally announced it was supposed to be part of a plan by the company to move to a new custom built premises. This was never proceeded with and a liquidator was appointed by the company only months later. There must now be serious doubts as to whether the new premises was ever a serious proposal, as the parent company declined an offer of a management buy-out to keep it in operation. It seems far more likely that the parent company simply decided that its most valuable asset was the site, which was put up for grabs to the highest bidder.
While there are many questions remaining to be answered about the progress of the site from ownership by Johnston, Mooney and O'Brien, through the various deals to its eventual purchase by Telecom Éireann, what is very clear is that substantial profits were made along the way by a number of individuals. A small group of wealthy people have got even wealthier. A profit of more than £4 million, probably tax free, was made in just 18 months. But what has happened to the 500 bakery workers? How many are still unemployed? How many have been forced to emigrate? How many families have been broken and lives destroyed by the resulting stress? These are the real casualties of these scandals.
Unfortunately the experience of the Johnston, Mooney and O'Brien workers is not unusual in Irish society. Too often we have seen the asset strippers move in and dispose of premises, plant and equipment without any consideration for the workers involved. What is more, as I said earlier, the dominant political parties in this country have bestowed their blessing on wealth accumulated in this way.
One common element in most of the recent controversies has been the firm of National City Brokers. NCB is no stranger to controversy — there was considerable disquiet in 1989 over the manner in which it was awarded the contract for handling the privatisation of the Government's shareholding in Tara Mines. The contract was not put out to tender and many people believe that what NCB was paid for their work was about three times the going rate for the job.
But it is really because of their role in the affairs which have come to light in the past few weeks that NCB have come under close scrutiny. It was, of course, NCB which advised the Irish Sugar Company on privatisation, and which either failed to notice the Sugar Distributors deal or else did it not consider it important enough to bring it to anyone's attention. It was NCB which one of the firms commissioned to carry out a study of the prospects of privatisation of Telecom Éireann — Mr. Smurfit said that the Government had requested the study, the Minister, Deputy Brennan, said he knew nothing about it. It was NCB which established the firm of United Property Holdings, which played a central role in the various deals involving the Johnston, Mooney and O'Brien site — a site which eventually cost Telecom Éireann more than twice the price it had been sold for 18 months earlier. It was NCB which, according to Mr. Smurfit, failed to advise him that UPH once owned the Ballsbridge site and it was NCB which was involved in the leaking of confidential commercial and financial information about Irish Helicopters to a rival helicopter firm in which the Taoiseach's son was a partner, in circumstances that still have to be adequately explained. Certainly the claims of a postal misdelivery are unconvincing and the full story has still to be established. It is not good enough for Aer Lingus to claim that a briefcase was not involved "as is alleged". What we want to know is whether a briefcase was involved.
It was against this background that I decided to make public details of a document which came into my possession which provides startling new evidence of the special relationship between National City Brokers and Fianna Fáil in government. In the document, NCB cite "intervention at the highest level", "the use of personal contacts at the highest level, including the Minister for Finance and the Secretaries of the Departments of the Taoiseach and Industry and Commerce", and the use of favours from "political contacts" to justify a huge fee of £2 million charged to one of its commercial clients.
As Deputies will now know the document in question is a letter written to Pernod Ricard in France (for whom NCB acted in the takeover of Irish Distillers) dated 6 January 1989 and signed by Mr. Dermot Desmond. It raises very serious questions about the relationship between NCB and the Government and political figures. I will read this letter on to the record of the House so that there is no ambiguity about its contents.
It is on NCB notepaper and it is addressed to Thierry Jacquillat, Director General, Societe Pernod Ricard. It reads:
It was a pleasure to see you again yesterday.
As you wish to give some further consideration to NCB's fees, I thought it might be helpful if I summarised the factors which we reviewed both during our meeting and over a most enjoyable lunch.
The first point I would reiterate is that our fee estimate of IR£2 million is put forward in the spirit of honesty and openness in which we acted for Pernod-Ricard throughout the takeover battle. It was not conceived as an exaggerated opening position with a view to bargaining, but as a very basic and modest estimate of the value of our contribution to the success of Pernod-Ricard's acquisition of IDG. I honestly expected you to accept it as such, giving you the opportunity to offer more.
From the outset our sole intention was to create value for Pernod-Ricard and our fee structure was based on this principle. If Pernod-Ricard had not succeeded in acquiring IDG, we would not have made any charge. I enclose a copy of a Memo sent to Robert Woodroffe of Societe Generale dated 13th September indicating this.
You are in a better position to judge our value in relation to—
(b) Negotiating with FII and Irish Life.
(c) Obtaining irrevocables in excess of 50%.
(d) Our Interaction with the Irish Media.
We made sure that the Irish media started and finished as supporters of the Pernod-Ricard bid and added greatly to its credibility as far as the media and the public were concerned.
(e) Our involvement in the High Court proceedings and similarly in the Supreme Court.
(f) Our contribution in relation to the Takeover Panel proceedings.
(g) Our Passion for Victory.
Throughout the whole process we bullied and policed every other party involved, from lawyers to tax experts and ensured that we either got a high quality service from them, or else effectively supplied it ourselves.
We feel that our fee is justified on the basis of the contributions listed above, but I think that there is further justification if you look at the following, which is specific to NCB.
1. At the outset, our conception of the share purchase alternative and our success in backing it with a strong tax counsel's opinion had a major strategic importance in getting the bid price set as low as £4.50.
2. But for our intervention at the highest levels in connection with the Monopolies and Mergers decision, it is certain that Pernod-Ricard would have been constrained to dispose of one or more brands and that GC & C would have been allowed to acquire in excess of 30%.
3. We orchestrated entirely the successful campaign to get a positive tax opinion from the Revenue Commissioners which involved using personal contacts at the highest level, including the Minister for Finance and the Secretaries of the Department of the Taoiseach and Department of Industry and Commerce. Our success had a major impact in undermining FII's credibility in Court.
In relation to 2 we consider that the impact of the decision which would not have been obtained without our involvement is at least worth a fee of £2 million.
Finally, there were indirect costs to NCB because of our total commitment to Pernod-Ricard and yourself. I as Chief Executive was responsible for taking this decision.
At a more fundamental level, we put NCB's reputation and position in the Irish markets at risk throughout the campaign, yet we did not draw back at any stage. Nor did we put a cash price on our continued involvement in the battle at any stage even though we were putting our entire business at risk.
Over a three month period the entire commitment of NCB's top management team was solely devoted to ensuring the success of the Pernod-Ricard bid. As a result, in that period other major business opportunities were let go. I will give just one example — although advisers to GPA we lost the opportunity to do a £167 million private placing of GPA shares with Irish institutions. This cost us almost £1 million in commissions.
We used up a large proportion of the favours we can call upon from our political contacts — and no doubt will pay a price on the other side.
We believe that without NCB's involvement Pernod-Ricard would have found it difficult to succeed in capturing IDG; nor would it have succeeded in winning at a price as low as IR£4.50. I believe that it is possible quite coldly and objectively to measure our overall contribution as greater than the combined contribution of Schroders and Societe Generale and, on the defensive side, as greater than that of IBI and County.
As I said to you at our meeting, you must also, however, weigh heavily the spirit of total commitment in which we made our contribution. I know that you appreciate the value of that aspect personally and I am sure that Pernod-Ricard will respond to us in the matter of fees in a manner which will reflect the same values.
With kindest personal regards,
DERMOT F. DESMOND
That letter throws light on an area which up to now has been murky, to say the least. It was in the context of NCB's involvement in virtually every other affair that has been revealed in the last few months which ensured that I would have to make that public.
In my statement on Sunday I said that there was now an obligation on both NCB and the Government to spell out exactly the basis of their relationship, to explain the nature of the political favours referred to, and to identify those who were involved in these contacts, and especially the references to "the highest level". I am still waiting for a satisfactory response to these points.
It is entirely a matter for NCB what fees it charges its clients for commercial work undertaken on their behalf, and it is entirely appropriate for them to make representations on their behalf. However, it is a matter of very serious public concern when the company appears to be suggesting that it has some unique special relationship or some sort of inside track with those in power and that it can call upon political favours to serve the interest of its clients. This letter must greatly add to the public concern arising from the recent allegations of political favouritism involving NCB.
Perhaps the most serious passage in Mr. Desmond's letter is where he tells his client:
We used up a large proportion of the favours we can call upon from our political contacts — and no doubt will pay a price on the other side.
The common sense implication of this would appear to be that, having extracted the favours from the political contacts, NCB was, in some way, going to have to repay the favour to those who obliged their client. Equally alarming is the passage in which Mr. Desmond says:
We orchestrated entirely the successful campaigns to get a positive tax opinion from the Revenue Commissioners, which involved using personal contacts at the highest level, including the Minister for Finance and the Secretaries of the Department of the Taoiseach and Department of Industry and Commerce.
How is it appropriate for NCB to use personal contacts with the Minister for Finance and senior civil servants to extract "a positive tax opinion"? Was pressure exerted on the Revenue Commissioners to deliver this "positive tax opinion" and what was the cost to other taxpayers of Mr. Desmond's ability to extract this "positive tax opinion"?
In another part of the letter, Mr. Desmond writes of NCB's "intervention at the highest levels" in connection with a monopolies and mergers decision. Does this mean the Taoiseach's office or some other Government Department?
This letter raises questions of the most profound importance about the nature of the relationship between business and commercial interests and the Government. It is one of the most revealing documents to have emerged in the past few weeks and casts some light on the operations of the golden circle about which the Minister for Industry and Commerce, Deputy O'Malley recently expressed some concern. Presumably the records available in Deputy O'Malley's Department will be able to shed further light on the claim of "personal contact" with the then Secretary of the Department of Industry and Commerce, and in the interests of open and honest government to which he subscribes he will make the records available to the House. Indeed the Taoiseach and the Minister for Finance must produce their departmental records to this House in order to establish once and for all, the veracity or otherwise of Mr. Desmond's claims.
The claim for £2 million in fees shows just how high the stakes are for companies like NCB. Huge fortunes can be made on single deals. This cannot, however, justify any element of political favouritism or the provision of any special facilities or concessions to those in business who claim some sort of special relationship with those in Government.
There is a particular obligation on the Taoiseach to spell out exactly what is the nature of his relationship with Mr. Dermot Desmond. In various media interviews Mr. Haughey referred to Mr. Desmond as a personal friend. In a briefing given to political correspondents following the meeting of the Fianna Fáil parliamentary party on 2 October, the Government Chief Whip, Deputy Vincent Brady, quoted Mr. Haughey as saying that Mr. Desmond was not a "personal friend" but a "business friend".
As I said earlier, there have been no satisfactory responses by either the Government or NCB to the issue raised by Mr. Desmond's letter to Pernod. The recent "personal friend" of the Taoiseach has been disowned by all in Fianna Fáil in an attempt to save their own political skins. The Government Press Officer is quoted as saying that they cannot be held responsible for the exaggerated boasts of a businessman. This is a polite way of accusing Mr. Desmond of being a liar.
Mr. Desmond, on the other hand, now confirms the authenticity of the letter but says it is being misinterpreted. Mr. Desmond is stretching credibility to the limit by suggesting that the only reason for the seeking by NCB of favours from "political contacts", the "intervention at the highest levels", and the use of "personal contacts including the Minister for Finance and the Secretaries of the Departments of the Taoiseach and Industry and Commerce" was to ensure that the Irish financial and political authorities acted in a "comprehensive manner".
While it is understandable that people are very correctly angry and indignant at the disclosures of shady practices which came to light in the past weeks, the public should not lose sight of the fact that the Government's record on unemployment represents what is perhaps the greatest scandal. The unemployment figures published on the first Friday of this month represented an increase of more than 40,000 over the same month last year. Each month during this summer we have seen unemployment climb to levels never experienced before in the history of the State. For this reason alone, Mr. Haughey and his colleagues have lost all moral right to govern and should be hounded out of office at the earliest opportunity.
Our lack of confidence in this Government long pre-dates the disclosures of the past few weeks. Fianna Fáil and the Progressive Democrats, in the Programme for Government negotiated in July 1989, promised to make job creation their number one priority. Instead, to use Mr. Haughey's favourite phrase, they "stood aside" and allowed the dole queues to lengthen and the human misery that comes with unemployment to increase proportionately. We knew all along that we had a Government who were spectacularly incompetent and who had failed to honour the commitments given in the Programme for Government to make employment creation "the major priority".
There is, in fact, a direct link between the scandals of the past few weeks and the failure of the Government to make any impact on the unemployment problem. The Greencore, Telecom and Carysfort scandals all represented attempts by what were already some of the richest people in Ireland to increase their wealth by "strokes"— property speculation, cute deals and offshore companies.
Charles Haughey's Fianna Fáil have shamelessly encouraged and benefited from this parasitic culture. They have always seemed to consider the stroke or the inside deal to be a far preferable route to wealth creation than the slow, hard, risky slog involved in setting up a manufacturing industry which might add to the wealth of society in general and create badly needed jobs. Until we have a Government who treat these parasitic deals and strokes as the anti-social activities they are and who set about encouraging and promoting wealth creation through manufacturing industry or useful services, we are, unfortunately, going to have to face continued unemployment at this shocking level.
Irrespective of the outcome of this week's vote of confidence here in the Dáil the massive level of applications for Morrison visas is a huge vote of no confidence in the Government on the part of hundreds of thousands of young Irish people. Young people are voting with their feet by trying desperately to get out of the country. The massive level of applications for these visas is a reflection of the sense of despair felt by so many young people. Young men and women, many of whom have spent long years in college and university have not been able to get even menial jobs. They feel betrayed and let down by a Government who came into power in 1989 promising to make job creation their number one priority and who have since stood aside and allowed unemployment to climb to record levels.
It is clear that Mr. Haughey and his colleagues have totally abdicated their responsibilities and see renewed emigration——