I note the Minister for the Environment is present, but neither he nor his Department has responsibility for this matter. The Department principally responsible no longer exists and that is a convenient way out for everybody concerned. The personnel in the Department of Tourism, Transport and Communications certainly had nothing to do with any aspect of this matter and it would be very unfair to blame them. Substantial blame is attributed to different people.
This report of the Committee of Public Accounts is deserving of more attention than it received. Since its publication some weeks ago I have seen only one press article on it, other than reports of what is in it. Only one effort was made to analyse it and that was from an unlikely source, Ms Nuala Ó Faoláin of The Irish Times who normally does not concern herself with matters of this kind. In fairness to her, while she got some of the facts and nuances wrong, she understands and fully articulates proper concern for what this report has brought to light. She underlines the importance of what is at issue here — I wish more people did so because it is a very serious matter.
The Committee of Public Accounts has been in existence since shortly after the establishment of this House, since the early 1920s, and I do not think it ever produced a report that expresses such a degree of criticism of public bodies and officials as this one — perhaps there is such a report of which I am unaware. It makes very disturbing reading. I became a member of the Committee of Public Accounts only in recent months. I was not a member of the committee that investigated this matter, nor had I any part in drawing up the original draft report. I had some input to considering the draft but no material changes were made. There were additions and omissions but I heard none of the evidence in this matter.
I have good knowledge, from my previous position as Minister for Industry and Commerce, of what happened and while this report is accurate, it does not tell the whole story. There is more to it than has been outlined in the report. In particular it does not deal with the genesis of this project. It gives the impression that it was simply a brainchild of Shannon Development, but that is not the case. It has a different genesis.
While I agree with the report, I disagree with paragraph 21 which should not be in it — I did not advert to it fully when the committee was looking at the final draft — in which it incredibly, seeks to attribute a degree of culpability to the European Commission for allowing this to happen. The last organisation who should be blamed is the European Commission. It had nothing to do with the project apart from providing the money. If the European Commission has to oversee each and every project it would be tied down for all time. That is why the insertion of paragraph 21 is a serious error, and I take my share of responsibility for allowing it to be included. I did not appreciate its significance when the final draft was considered. The Commission has no responsibility in this matter and it would be crazy for the committee, this House or anyone else to seek to give it responsibility for overseeing the detail of projects. In any given year the Commission probably provides funding for 1,000 or more projects in this country and if it was to become involved in the monitoring of each one and take responsibility in the event of something going wrong, we would get nowhere, the Commission would simply withdraw from funding these projects. In future the report should be read disregarding paragraph 21.
Unfortunately, almost every paragraph of the report is critical of somebody, mostly of Shannon Development and its subsidiaries. There are many criticisms of the Department of Tourism, Transport and Communications as it was then, and to a more limited extent, the Department of Industry and Commerce and the Department of Finance. Virtually every paragraph is critical and the language used is much stronger than usual in documents of this kind, which shows the strong feeling of the committee about these matters.
I cannot go through the entire report in 20 minutes but I will make some general points. From my experience of trying to cope with this mess when I discovered it in 1991 I am a great believer in the importance of developing regional activity and have tried to do that for years. The principal institutional body we have had over the years is SFADCo and if regional development, as opposed to central development or purely local authority type development, was to succeed here, it would have had to succeed in the first instance through Shannon Development.
Having been in Government for many years I know that this concept has never been accepted in the Department of Finance. The concept was pressed on the Department from time to time by members of the Government, but it has always been resisted. When this mess came to light, mainly in 1991, the people who celebrated, although quietly, were those in the Department of Finance because they would have looked at it as an example of people in regional development being given a certain autonomy which was abused. This will be thrown back at the present and future Governments and it is regrettable that should be the case, and that an opportunity to do down the regional concept was given to those who wished to do it down, because the over-centralisation of our Administration is a great mistake.
In the latter part of this report the committee issues a range of suggestions as to how the Department of Finance should lay down guidelines on this, that and the other, that the duties of a departmental representative on a State board should be clearly defined, that everything should be set out in writing and that the Department of Finance is in some way deficient because all of these matters were not set out in great detail for the guidance of board members and, in particular, of departmental representatives. Such advice is misplaced. Board members, whether from the private sector or the Department must exercise common sense. If common sense had been exercised, the type of mess that occurred here and the huge loss of public funds would have been avoided.
Approximately a year after I last became Minister for Industry and Commerce, I first heard about this problem through rumours in the mid-west region that something extraordinary was going on in Kilrush. I could not pin down those rumours to any great extent. A representative from the Department of Industry and Commerce was appointed to the board of Shannon Development and within a short time of his appointment he suddenly became aware of what was happening there. He came to my office and told me about the problem. He expressed great shock as did I and I asked him to investigate the matter further, which he did. The more he investigated it the worse it seemed to be and we found that the problems extended beyond Kilrush. That representative was only exercising common sense which was to inform the Minister and the Secretary of the Department that something was seriously wrong. I cannot understand why common sense was not exercised before and why it was not exercised in the Department principally involved, because the Department of Industry and Commerce was not principally involved.
There are substantial gaps in this report in terms of where certain blame could lie for the difficulties experienced by the committee in investigating the matter. I can only conclude that the establishment was ensuring that not too much embarrassment was caused. If a publicly elected person was responsible for a quarter of what has happened here, all hell would break loose but because elected people are not responsible, no media commentator, apart from Ms Ó Faoláín ín her article, has seen it worth his or her while to comment on this serious matter.
As soon as I and the Department became aware of the seriousness of what was happening, various steps were taken to correct it. While this report is critical of Shannon Development, and with very good reason because of the way it conducted its affairs, the position today in Shannon Development is quite different as a result of personnel and other changes at different levels.
It is only right that tributes should be paid to the present chairman of Shannon Development for the extraordinary efforts he has made to turn around a company which was in such dire straits when he took over that office. I emphasised that because I noticed in the article to which I referred, the chairman and the chief executive were referred to as if they were the people who were chairman and chief executive when these events happened. They were not, and credit is due to the present incumbents for the steps they have taken because the company appears to be a great deal healthier. The position has been made healthier not by the Department of Finance making up new rules and so on but by people exercising common sense and prudence. Neither common sense nor prudence was exercised in this case.
Lest people think that the Kilrush fiasco was the only one at that time, I would refer the House to the Minister's speech, because for some reason he refers, out of the blue, to something quite extraneous to Kilrush, but that is typical of what was happening at that time. He said: "With the assistance of SFADCo [which I do not understand] SMDL managed to wipe out the debt completely by the end of 1992 including £393,000 for the sale of SFADCo's shares in Rent an Irish Cottage". That is laughable; whoever wrote the Minister's speech, in taking the PR brief given out by SFADCo, confused matters a little and stated it incorrectly. It is interesting, for whatever reason, that the Minister should bring up the question of the sale of SFADCo's shares in Rent an Irish Cottage. It had nothing to do with Kilrush.
That is an example of what was going on at the time. Those shares made something in the region of £400,000 about six months after Shannon Development informed my Department they had sold the shares for less than half that figure. The shares were not put up for public tender nor were any steps taken to get a good return on them. They made a private deal with one individual and told nobody about it. When I heard about what had happened I said I thoroughly disapproved and would not stand for it. I said I thought the shares were worth a great deal more but, irrespective of that, they should have been offered for public tender. When they were offered for public sale they made more than twice what Shannon Development were prepared to take for them in a private deal which no one would have known about.
Unfortunately, Shannon Development resorted to a practice that was not publicly visible of utilising funds voted by this House for industrial development for tourism related and other projects. Substantial money was used in a way which had not been voted by the House. In 1991 I laid down strictures and questioned whether the money which had been improperly applied would be repaid. It was obvious that it would be impossible to repay it from the tourism side to the industrial development side. That issue had to be left but it is indicative of what was happening at the time.
Another incident I heard about on the streets of Limerick, which was denied when I queried it but later discovered to be true, was that half a million pounds was paid by the company for a public house in the extremities of disrepair in Limerick city. They still own it. It has four walls but little else.
