Dáil Éireann debate -
Wednesday, 20 May 1992

Vol. 419 No. 10

Adjournment Debate. - Agriculture and Food and Industry and Commerce Matters.

Mr. Deasy

It is not a coincidence that Deputy D'Arcy and myself are raising the same subject. It would not surprise me if 32 or 33 Deputies had raised the matter. The operation of the beef premium scheme is a disgrace. A written reply to a Dáil Question today refers to the special departmental task force who were set up to inquire into and sort out the anomalies which were occurring in this scheme and in other headage and premia schemes. It was not a satisfactory reply. The reply referred to the number of applications that had already been paid in respect of 1991 and how they exceeded the number paid in 1990. That is not the point. The point is about justice. There are probably hundreds of cases in some constituencies which have not been paid because of minor technicalities. The Minister can check that for himself.

Many Deputies will be able to give the Minister graphic illustrations of instances where people have been disqualified on minute grounds. It is not good enough. The departmental task force will have to find a better solution. People are suffering enormous hardship due to bureaucratic bungling or ineptitude. I do not like to use injudicious language or to badger officials, but there is something grossly wrong. The Minister will appreciate that I am saying this in all sincerity. I am sure Deputy D'Arcy will enlarge on what I am saying. I expect some action to be taken to rectify this problem. Perhaps some of the local offices are not doing their job properly. Those cases should be attended to as quickly as possible.

Mr. D'Arcy

I thank the Chair for allowing us to raise this matter. Unfortunately, this is an ongoing saga. A reply from the Minister for Agriculture in November 1991, in relation to the beef premium scheme said that having checked this with the appropriate section in the Department, the Department would, where mistakes were made without fraudulent intent and where there was reasonable explanation for such mistakes, make every effort to treat each case with flexibility and understanding because it appeared that some of the penalties laid down by the EC are too severe and that in fact, the Department had taken up this matter with the Commission.

I will give a couple of instances to the Minister of State on this issue. One has only to look at the Order Paper to realise the amount of time I and other rural TDs are spending on this matter. In one instance a man had 33 bullocks, one died and one disappeared. The man went down to the office in Enniscorthy to have his card stamped in relation to the 33 cattle. He pointed out to the official in the office that one had died and one had disappeared. The departmental inspector informed him that as a result of his failure to inform the Department he was being disqualified this year and next year. That was an unfair thing to do. A second farmer purchased eight cattle in the mart and he understood that they had not had the premium the previous year. The farmer checked the cards and they were all safe but he did not check the ears of the cattle. Unfortunately, two of the beasts were punched. The inspector called to his premises to inspect his herd. The farmer pointed out that two cattle were wrongly written up but he was disqualified for this year and next year. The problem is that the Department are using the criteria of two beasts in 40, or three beasts in 43 and if a farmer does not qualify under the criteria the farmer will not even be considered. This is most unfair. In County Wexford we have 170 cases still disqualified out of 2,600. These people are entitled to their money. The task force has not worked out a satisfactory result to this problem. As a rural Deputy I appeal to the Minister to do something about it.

Minister of State at the Department of Agriculture and Food (Mr. Hyland)

I acknowledge the sincerity of Deputies Deasy and D'Arcy in raising this serious and important matter as far as the agricultural community is concerned. I will not abuse the two minutes available to me to trot out the statistics which were given to Deputy Deasy in reply to a Dáil question.

As of now, the level of grant payments compared with last year and previous years exceed the statistics referred to in today's question. I acknowledge that difficulties are still being experienced by farmers in qualifying for these grants. As a result of the work of the task force we gave a commitment in this House that we would pay all grants which could be paid, particularly in cases of innocent error. The Department have been dealing with applications on that basis. As I said previously, we will again go back over the unsuccessful applications to see if grants can be paid. I acknowledge that today more than ever before farmers are becoming increasingly dependent on the payment of direct income supports from national Government and the EC. It is imperative that we put in place procedures which will enable payment of these grants to farmers in the year in which they are entitled to payment. The Department are determined to pay all grants where innocent error has been made in the application. That is the point which both Deputies raised this evening. I give them an assurance that we will continue to take steps to ensure that these grants will be paid if they meet requirements.

Mr. Deasy

Will the Minister send a senior official from his Department to the offices in Waterford and Enniscorthy to investigate the problem?

An Ceann Comhairle

I must now call on Deputy Hogan to let us have his two minute statement.

Mr. Hogan

With regards to land annuities, the reason why the Land Commission were established was to make farms viable and to give farmers a chance to buy land in order to be viable. In recent years, with the downturn in agricultural activity and in farm incomes, farmers who are paying a very high rent for their land are finding it exceedingly difficult to make land annuity payments. This is causing anxiety and great hardship to many families throughout rural Ireland. The land annuity can take up the total profit of the holding in some instances.

The Land Bond Bill recently introduced gave power to the Minister to reduce this burden. A working party were set up in the Department and I have heard nothing about the findings of that working party although I understand that discussions have been entered into by the Department of Agriculture and Food with the Department of Finance to see if a solution can be found to this problem. I am disappointed that the Government do not appear to be treating this matter with urgency in view of the fact that moneys in respect of premia due to farmers are being diverted to make some of the repayments in respect of land annuities to the Land Commission in Castlebar.

I hope the Minister of State, Deputy Hyland, who has many problems in his constituency in this respect, as has my colleague, Deputy Flanagan, will be able to clarify the position regarding this working party and whether a solution will be found and implemented as soon as possible to allay the fears of my constituents in Carlow-Kilkenny and among the people in Laois-Offaly.

Mr. Hyland

I appreciate Deputy Hogan's concern in raising this matter but I reject his suggestion that there is any delay in the Department of Agriculture in dealing with it. The first file I dealt with in my new position related to the problem of land annuities. As a result of a working party set up within the Department certain specific recommendations were made to my senior colleague, Deputy Walsh, and to me. We dealt with that file, which is now with the Department of Finance. There are certain very sizeable financial implications involved.

I can assure both Deputies that I am extremely sympathetic to the problems of farmers in meeting their annuities. I want to assure that the annual repayments are within the capacity of each individual to meet them. In dealing with the file I took into consideration the recommendations of farming organisations and I had many discussions with individual farmers who have difficulties with repayments. I am taking every step open to me to dispose of this matter in the shortest time. I hope to see a reasonably satisfactory resolution of the problem within the next six to eight weeks. I do not want to be tied to that, but I give an assurance that the matter is being dealt with very seriously within the Department.

Mr. Deasy

I refer to the Nordex factory in Waterford city which went into receivership about five weeks ago with a loss of 30 jobs. The receiver was extremely hopeful at the outset that he could retain the enterprise as a going concern and I understand there were quite a number of inquiries, perhaps as many as 19, for the plant and equipment initially. I have now been informed that the receiver is to sell off the plant and the building separately. This gives rise to the fear that the enterprise will not continue as a going concern and that 30 jobs may well be lost. The fittings in question will all have to be imported in the future. It is widely believed that the person who owned the company has similar enterprises in Britain and will now merely export them into this country. I am asking that the enterprise be kept going, and that the 30 people should be kept in employment. I also ask that the cost of the imports from Britain be saved for an enterprise that can be conducted profitably.

Minister of State at the Department of the Environment (Miss Harney)

I apologise for the absence of my party leader, the Minister for Industry and Commerce, who is indisposed this evening. I compliment Deputy Deasy on his energy and enthusiasm at 9.45 p.m. I thought after his busy weekend in Dublin he would have taken a rest this week. I compliment him for raising so many matters.

Mr. Deasy

Young people like me have endless energy.

Miss Harney

I am not as young as I used to be. Nordex Limited, which acquired the lighting division of National Industries in 1990, has gone into receivership. It acquired a business that was in extreme difficulties and for the past few months Nordex has had major cashflow problems which led to substantial debts in the company and the subsequent loss of their ISO 9000, which caused them further problems. Barclays Bank appointed the receiver on 16 April. On 21 April 25 employees were made redundant and on 24 April the business was advertised.

I understand from the IDA that they are engaged in serious negotiations with three interested parties and they are extremely optimistic that they will be able to find a buyer for Nordex. It is important that at a time of high unemployment public money is wisely spent. While the IDA will be supportive of any person or company interested in acquiring Nordex, viability must be taken into account. If it is possible for an interested party to acquire the company on the basis of business plans and future viability, the IDA will certainly be of assistance. I understand this evening from the IDA that they are extremely optimistic that they will be able to help a successful bidder and that the company will be back in production. This is a major Italian-based company which has plants in many parts of Europe. I do not know their intentions but the Minister for Industry and Commerce and I are anxious to ensure that the jobs will remain in Waterford. If viability can be assured, that will be the case.

Mr. Hogan

The role of the examiner is based upon a number of models, including Chapter 11 of the Bankruptcy Code in the United States, a number of European countries where debts are frozen while the financial position of a company is examined and also the role of the Administrator in the United Kingdom, which was introduced in 1987.

When the Minister introduced the 1990 amendment Bill into the Dáil in August 1990 he said that the effect of the Bill was to freeze payment to the creditors. However, the Bill does not freeze payment to existing creditors and there is nothing to prevent directors from paying existing creditors subject to whatever action the examiner might take to prevent them. The effect of the appointment of an examiner is that no proceedings for the winding up of the company may be commenced, a receiver cannot be appointed, no attachment, distress or execution can be put into force against the property or effects of the company except with the consent of the examiner. No action may be taken to realise any security which had been given by the company except with the consent of the examiner. No steps can be taken to repossess goods in the company's possession by any hire purchase agreement or leasing agreement. No proceedings of any sort can be commenced against any person who has guaranteed the debts of the company, and that of course would include the directors. Therefore, once an examiner has been appointed, there is no other legal action that the creditors can take.

The recent liquidation of United Meat Packers is a perfect example where difficulties arose in respect of the payment for goods and services while the company was under the protection of a court-appointed examiner. It suited financial institutions to place the company in liquidation and therefore the banks refused to provide adequate additional capital to restructure the company. It is difficult to apportion blame to those banks in this instance in view of the fact that the company must be insolvent in the first instance to qualify for the examination procedure. No financial institution would be foolish enough to invest money in that type of scenario.

The only way that finance could be provided was through the State rescue agency, Fóir Teoranta, which this Government abolished. I am calling on the Minister for Industry and Commerce to indicate if amendments can be made to the Companies Act to re-establish Fóir Teoranta or some venture capital State agency if he is serious about making the whole concept of examination work. Otherwise banks will starve companies of finance and bring about enforced liquidations under examination. It should never be tolerated again that a Minister should stand idly by and do nothing to ensure that goods and services are paid for by the Examiner when the company is under the protection of the court. That is what happened in this instance and it is unforgiveable. I would hope that the experience of UMP would give the Minister an opportunity to indicate amendments if necessary to the Companies Act.

Miss Harney

I thank Deputy Hogan for raising this matter. I am surprised that he has done so because he raised it by way of Dáil Question on 8 and 29 April and the Minister dealt adequately with the case made by him. The whole purpose of appointing Examiners is to allow companies in temporary financial difficulties to apply for the protection of the court for a period of three months.

When the Examiner is appointed he acts as an investigator and reporter and looks at the possible viability and recovery of the company. This is a different process from either a receivership or a liquidation. The Examiner is appointed under the protection of the court for a temporary period of time so that he can ensure that in the longer term the company are viable. It would be wrong in those circumstances if the Examiner did not have full power to do what is necessary to make the company viable, which is the primary purpose of his or her appointment.

It is not correct to say that difficulties in UMP arose after the Examiner was appointed. It is correct to say that the effect of appointing an Examiner is that all debts are frozen and only those debts incurred by the Examiner and those creditors who supplied goods at the request of the Examiner in order to keep the company in operation are given the protection of being paid first. They are guaranteed payment from the revenue of the company or from the disposal of assets and investments. The Examiner's expenses have first call on the revenue and the reason for this is that if a company were put into examinership and the expenses are not guaranteed, nobody would supply the essential raw materials to the company and the company would collapse.

It is not fair to say that difficulties arose in UMP since the appointment of the Examiner. What happened was that an administrative error was made in the office of UMP and 200 different cheques, amounting to £234,000, which should have been paid were not included on the Examiner's list as a result of a clerical error and as a result they were not put before the court and included on the list of people to be paid. However, the matter was satisfactorily resolved and all 200 cheques were paid on 4 May 1992.

When Ministers are in difficulties, it is nice sometimes to give guarantees that legislation will be reviewed — of course, no legislation is written on stone and neither is this legislation. However, I see no reason to review the legislation at this stage as it has acted very effectively. Since we initiated the examinership procedure, just two years ago, 126 companies, many of them very low profile companies have availed of this provision of the Act and it has helped to save companies which would otherwise have gone under. Therefore I believe it is right that the Examiner's expenses and the creditors who supply goods to the Examiner should be treated as preferential creditors and should come before anything else that has a preferential debt or those who have secured or unsecured debt. If we did not have this provision there would be no point in appointing an Examiner.

This legislation, the Companies (Amendment) Act, which brought in Part IX of the Companies Act, 1990, and the Companies Act itself will be constantly under review. If there is anything I can say about the present Minister for Industry and Commerce, it is that he is a reforming Minister who will do everything to support viable companies.

I do not support the proposition of re-establishing Fóir Teoranta. We have to get it into our heads that we cannot throw taxpayers' good money after bad. We have to operate on the basis of commercial viability. If we do not do that we will have to have higher taxes, higher foreign debt, lower economic growth and higher unemployment. Although it is often popular to call for the establishment of new banks or new companies — at one stage there were calls to nationalise Bewley's, a bun shop — we have to be sensible and operate on the basis of commercial criteria.

The Dáil adjourned at 9.55 p.m. until 10.30 a.m. on Thursday, 21 May 1992.