I move: "That the Bill be now read a Second Time."
Claims by the Taoiseach that he had no involvement in his family business during a period when £1.1 million was invested in the company in exchange for two Irish passports by a mother and son from the Middle East are at the heart of the cause of this Bill being brought before the House by Fine Gael.
There is widespread and growing public concern that passports were gained for investment behind closed doors involving benefit to close relatives and, one way or another, a Minister. The issue is not just the scheme itself — that is indeed a matter for debate. The issue is integrity in Government, self-enrichment as a result of a decision by another Minister and may even have far reaching consequences that cannot be contained within the Cabinet. I stress that I am not making any allegation of breach of the laws I am about to draw to the attention of the House but I want to illustrate that the situation is by no means trivial.
The Prevention of Corruption Acts, 1889-1916 provide:
Any person holding an office remunerated out of the Central Fund or moneys provided by the Oireachtas shall be guilty of a misdemeanour punishable by imprisonment, or fine, or both, if he:
(a) corruptly accepts or obtains, or agrees to accept or attempts to obtain, from any person, any gift or consideration as an inducement or reward for doing or forbearing to do, or for having done or forborne to do, any act in relation to the affairs or business of his Department, or for showing or forbearing to show favour or disfavour in relation to such affairs or business; or
(b) corruptly gives or agrees to give or offers any gift or consideration as an inducement or reward for doing or forbearing to do, or for having done or forborne to do, any act in relation to the affairs or business of the State, or for showing or forbearing to show favour or disfavour to any person in relation to the affairs or business of the State;
(c) knowingly uses with intent to deceive the Head of his Department any receipt, account or other document in respect of which his Department is interested, and which contains any statement which is false or erroneous or defective in any material particular, and which to his knowledge is intended to mislead.
Where it is proved that any money, gift, or other consideration has been received by a person holding an office remunerated out of the Central Fund or moneys provided by the Oireachtas, from a person or agent of a person, holding or seeking to obtain a contract from a Government Department, the same shall be deemed to have been received corruptly as such inducement or reward as is mentioned in the Acts, unless the contrary is proved.
The penalties under the Public Bodies Corrupt Practices Act, 1889, are as follows:
Any person on conviction for offending as aforesaid shall, at the discretion of the court before which he is convicted, (a) be liable to be imprisoned for any period not exceeding two years, with or without hard labour, or to pay a fine not exceeding five hundred pounds, or to both such imprisonment and such fine, and (b) in addition be liable to be ordered to pay to such body, and in such manner as the court directs, the amount or value of any gift, loan fee or reward received by him or any part thereof; and (c) be liable to be adjudged incapable of being elected or appointed to any public office for seven years from the date of his conviction, and to forfeit any such office held by him at the time of his conviction; and (d) in the event of a second conviction for a like offence shall, in addition to the foregoing penalties, be liable to be adjudged to be forever incapable of holding any public office and to be incapable for seven years of being registered as an elector, or voting at an election either of members to serve in Parliament or of members of any public body, and the enactments for preventing the voting and registration of persons declared by reason of corrupt practices to be incapable of voting shall apply to a person adjudged in pursuance of this section to be incapable of voting, and (e) if such person is an officer or servant in the employ of any public body upon such conviction he shall, at the discretion of the court, be liable to forfeit his right and claim to any compensation or pension to which he would otherwise have been entitled.
It might be noted, in passing, that section 4 (1) states that a prosecution for an offence under this Act shall not be instituted except by or with the consent of the Attorney General.
I repeat that I make no allegation of criminal activity by anybody but I bring this law to the attention of the House to illustrate the seriousness of the situation. It is not a matter to be considered lightly.
I wish to give a hypothetical set of circumstances as an example. A future Secretary of the Department of the Taoiseach could be a major shareholder in a private company and his friend and colleague, a future Secretary of the Department of the Environment, could write to the Secretary of the Department of Justice stating that he intimately knows a Middle Eastern woman and her son who, it turns out, are investing £1.1 million in the aforementioned private company. As a result the applicants are granted passports.
What would happen when those facts became known? The three departmental secretaries would immediately be dismissed and brought before the courts under the legislation to which I referred earlier. Why should Ministers receive a pat on the back, immediate exoneration and allowed to continue on their merry way? Are some citizens above the law by virtue of their Dáil majority while everybody else must comply with it? This is the nub of the question.
The Bill being given a Second Reading contains proposals which provide that: (a) the absolute discretion of the Minister for Justice to grant citizenship in return for financial investment would be ended; (b) any person aggrieved by a decision of the Minister for Justice would have the right of appeal to an appeals tribunal who could (i) affirm the decision of the Minister, (ii) set aside the decision and refer the matter back for the Minister's consideration, (iii) set aside the decision of the Minister and grant the application or revoke the certificate of naturalisation as the case may be; (c) the Minister would lay before both Houses of the Oireachtas rules, criteria and forms for the granting of a certificate of naturalisation and (d) the Public Offices Commission (as proposed by the Ethics in Public Office Bill, 1994) would (i) annually in arrears review the granting of certificates of naturalisation for investment and report its finding to Dáil Éireann and (ii) report to Dáil Éireann on every decision made by the Minister under the business migration scheme to grant a certificate of naturalisation at any time over the past 15 years.
I will highlight public concerns in relation to granting passports to "investors" in a company owned by the Taoiseach and close relatives of the Taoiseach and in which he had an ongoing interest while he was a Minister.
I have been informed that the up-to-date accounts for C & D Foods Ltd., have not been lodged with the Companies Office. The last accounts lodged there are for the year ended 31 December 1991. This is a significant point since any "investment" in the company during 1992 would be shown in the accounts for the year ended 31 December 1992 and future years.
Also, the up-to-date accounts would show whether a £300,000 shareholders' loan shown in the previous accounts had been refunded in full or in part. What is being concealed by the non-lodgement of these accounts? On two different dates the company made lodgements at the Companies Office and had the opportunity to lodge its accounts on the same dates. On 30 May 1994 an amendment to the Memorandum and Articles of Association was lodged and on 13 July 1994 a change of address of a director was lodged yet no accounts were lodged on either occasion even though stiff penalties now apply to the non-lodgement of accounts. What is in the accounts for year ended 31 December 1992 and following years that cannot be lodged at this time?
Furthermore, it is doubtful whether the directors' report with the accounts for the year ended 31 December 1991 which was lodged is in compliance with the law. The report was signed on 28 April 1992 and any significant events since the end of the financial year should have been referred to in the directors' report. There was no mention of the £1.1 million received from the Masris in that directors' report even though, the "investment" was advanced in March 1992, according to the Minister for Justice, and the Masris were introduced in September 1991, according to an article inThe Irish Times of 4 June 1994. Why has a company in which the Taoiseach, Deputy Reynolds, has 164,000 ordinary shares, as per the Companies Office file, not lodged accounts for year ended 31 December 1992 and year ended 31 December 1993? I am advised that these should have been lodged, by law, by 31 July 1993 and 28 June 1994 respectively. What does the Minister for Enterprise and Employment have to say about this situation?
Why did the Masris, good citizens one presumes, invest in a company which does not file its accounts? In 1992 some 5,607 companies were struck off for failure to return their accounts. In 1993 the figure was 7,465. Why was no action taken against C & D Foods Ltd? In November 1993 there were over 40 prosecutions of directors for overdue returns.
Until 19 December 1991 when there were changes in the ownership of the ordinary shares in C & D Foods Ltd., 80 per cent were held by the Taoiseach, Deputy Reynolds, and 20 per cent by Mrs. Kathleen Reynolds, that is 100 per cent between them. Thereafter the shareholding was Albert Reynolds Senior, 41 per cent, Kathleen Reynolds, 10 per cent — between them 51 per cent — Albert Reynolds Junior, 10 per cent and Philip Reynolds, 39 per cent. It is clear from this that the Taoiseach, Deputy Reynolds, continued to have a controlling interest in C & D Foods Ltd. There is no record in the Companies Office that stamp duty was ever paid on these share transfers, if due. It could be reasonably claimed that Deputy Reynolds, Minister and Taoiseach, remained a shadow director of the company.
Shadow director is defined in section 27 of the Companies Act, 1990 which states: "a person in accordance with whose direction or instructions the directors of a company are accustomed to act (in this Act referred to as "a shadow director") shall be treated for the purposes of this Part as a director of the company unless the directors are accustomed so to act by reason only that they do so on advice given by him in a professional capacity".
According to Mr. Maalouf, a spokesman for the Masris, quoted inThe Irish Times on Saturday, 4 June 1994, the company would not agree to give the Masris equity so the family had to lend the money on the basis of an interest, i.e. dividend, of about 5 per cent each year and an option to take shares in 1997 if the money cannot be repaid. The members or shareholders are the company. I have already illustrated who they are — the Taoiseach and his family. That statement by Mr. Maalouf has not been refuted — and I know the Taoiseach's propensity for writs.
A sterling investment of £1.1 million at the end of February 1992 would have attracted quoted interest rates of 11.75 per cent to 12 per cent. An insurance company might have given a high rate return bond of 13 per cent. C & D Foods Ltd., not only received a loan of £1.1 million at a rate of 5 per cent which it could invest in its business to make profits but it also received a subsidy on interest rates at that time in excess of 7 per cent. This subsidy was worth about £77,000 per year each year for five years, on top of the use of the capital at 5 per cent. It is clear who benefited from these transactions — the owners of the company. Yet what we have received so far, to paraphrase Disraeli, are lies, damn lies and no current statistics.
The Tánaiste, Deputy Spring, absolved those involved before he saw the files. He was then put under pressure and sent for the files in early June 1994, again absolving all those involved. Did the Tánaiste look at the Companies Office files? These are available to the public in an office under the aegis of his colleague, the Minister for Enterprise and Employment. What do that Minister and the Tánaiste have to say about the state of the company's file and the absence of information which the public are entitled to and which directly relates to the passports purchased by the Masris?
There are a number of questions which need to be answered. Did the then Minister, Deputy Albert Reynolds, know of the "investment" in his business of £1.1 million in exchange for two passports? When did he find out? Did he, while Minister, involve himself in the affairs of C & D Foods Ltd? If he did, would a fair and reasonable assessment be that he behaved at all times as the proprietor and as a "shadow director"? Did Ministers take the decision without knowing the name of the company in which the investment was to be made? If they knew the name of the company, what steps did they take to ensure that the whole procedure was done at arms length and with transparency? Why was the IDA not asked to assess this investment?
The Minister for the Environment, Deputy Smith, stated that he knew the applicants "intimately". How long did he know them and how was he in a position to make such a statement? Did they tell him the good news of their investment in his colleague's company, C & D Foods Ltd? Did the Minister for the Environment, or any Minister involved, foresee the possible conflict of interest and controversy that this decision would cause if found out and what steps did they take to ensure that the transaction was transparent, at arms length and seen to be at arms length? Were any laws broken? Were any guidelines or procedures broken which were laid down by the Department of Finance or other Departments?
Will the Taoiseach, as the major shareholder in C & D Foods Ltd. direct that the accounts for the years ended 31 December 1992 and 31 December 1993, and up to date accounts, and any version of these accounts prepared but not made public so far, be made public so that the company law requirements are met and this matter can be independently examined?
The Attorney General is awaiting his long promised appointment to the High Court. All gardaí from the rank of superintendent upwards depend on the Government for promotion in their careers. What we have before us is a politically sensitive issue which involves the Head of Government.
In the next jurisdiction, a senior police officer from an outside region can be called in, as happened when Mr. John Stalker was appointed to investigate certain matters in Northern Ireland. It is not acceptable for the Government or any member of it to say from a cursory examination of one file that all is well. What did the Tánaiste expect to find on the file? I make no allegation of criminal offence nor do I convict anybody of wrongdoing, but the Opposition must seek answers to questions which are properly in the public realm. We must continue to do our duty in seeking a full and frank explanation of these transactions.
A Stalker-type examiner must be found, one who is above any question as to his or her ability, probity and independence. Perhaps Mr. Stalker, the recently retired Chief Justice or the outgoing Comptroller and Auditor General would be a good choice. Someone of that stature must make an independent and fair assessment of these transactions to assist the Public Offices Commission referred to earlier and make their findings public. If the Opposition cannot find the Government guilty, the Government equally cannot find itself innocent. We must have an independent examination of these facts. Fine Gael does not accept that a member or members of Government should be allowed, behind closed doors, to absolve a colleague whose family business gained substantially from a decision, also taken behind closed doors, to grant citizenship to persons who clearly have no other connection with this country.
It would appear that the rules for granting citizenship to investors were softened at some stage over recent years. It was up to the Department of Justice to check with other State agencies, such as the IDA, as to the appropriateness of any investment made. This was not done in the case of C & D Foods Ltd. The Minister was merely made aware of the fact that "the overall project in C & D Foods Ltd. was IDA granted" according to "inquiries made through the consultant who submitted the application", as stated in reply to a parliamentary question in my name on 15 June, 1994. What competent authority decided independently that this investment was in the public interest? This is a central question which has not been replied to.
In the cases in question, the passports were issued for payment of £600,000 and £500,000 respectively despite the Minister for Justice in several interviews and in replies to parliamentary questions on 9 March 1994 stating that the investment required for a passport was of the order of £1 million. The address of the applicants given inIris Oifigiúil was simply “Haddington Road”— not even a number was given. The Minister had already informed the Dáil, in reply to a parliamentary question on 9 March 1994, that “purchasing a home and living here” were criteria which had to be observed if a passport were to be granted under this scheme. On 15 June 1994 she told the Dáil in response to a parliamentary question that “an investment of about £500,000 would be required and that the applicants would demonstrate an intention of residing in the State by purchasing a residence”. Why were procedures “softened” and when? Why were passports awarded to Mrs. Masri and her son as stated by the Minister for Justice when, as reported at columns 854 and 855 of the Official Report of 31 May 1994, “the husband of the woman and father of the man who had made the aforementioned investments had purchased a residence in Dublin”? Not only did those who were granted the passports not live here, they did not even own a residence here, if this reply is correct.
On 31 May 1994 the Minister told the House — column 857 of the Official Report — that the owner of the residence had subsequently invested £1.5 million in forestry and on that basis she was prepared to grant him naturalisation. At the time of granting naturalisation on 15 December 1992 it would appear that Mrs. Masri and her son did not meet the criterion of owning a home here let alone residing here. On 31 May 1994 the Minister told the Dáil — column 856 — that the owner of the house, Mr. Masri senior, had applied for naturalisation, again through Minister Smith, in October 1993 but was routinely turned down on the basis that he would not meet the criterion as he would have to make a separate investment, which he later did. He could have sold the apartment at any time without consulting his wife or son.
In addition, the public is entitled to know how the Minister for the Environment intimately knew a family who do not live here and why he recommended them for citizenship. I have tried to raise this matter in the Dáil but the Ceann Comhairle, by way of letter to me, ruled the question out of order since it contains argument. I have the opportunity tonight to put my questions. Why was Minister Smith, a Deputy from North Tipperary, involved in an investment in Longford? How well and for how long did he know these investors? Did he make any further representations, verbal or otherwise, to the Minister who made the decision? Was he asked to do so by a colleague, the then Minister and later Taoiseach, Deputy Reynolds, or any member of his family? Minister Smith has been a close ally and friend of the Taoiseach for many years. Are we to understand that he recommended these investors in the Taoiseach's family business without mentioning to him that he had done so? Minister Smith owes this House a detailed explanation. It is scandalous that he has not come into the House to explain himself. Has the Tánaiste interviewed him as part of his examination "of the procedures followed"?
The investors in C & D Foods Limited do not appear to have received shares in the company. How then can this money be described as an investment? Do they have representation on the board of the company? If not, how do they protect their interests? Did the Tánaiste ask the Taoiseach if he knew the application was being made given that he owned the company? Did the Tánaiste ask him if he stood to benefit from this investment now or in future? These questions must be answered and the matter impartially investigated given that the decision appears to have been made by Ministers only. The role played in this process by the Minister for Justice, the Taoiseach, the former Minister for Justice, Commissioner Flynn, and the Minister for the Environment, Deputy Michael Smith, must be examined and reported on by an acceptable independent source.
In May 1994 the Minister for Justice stated on television that the investment was made in 1990. The Dáil has been told that the financial controller of the Taoiseach's family firm stated that the investment was made in 1992, after the Taoiseach's appointment. The Minister for Justice stated that this matter was not dealt with in Cabinet. At the end of May 1994 the former Minister for Justice, Commissioner Flynn, was reported in theSunday Independent as suggesting that the matter was dealt with by Cabinet and, on radio on 30 May 1994 the Minister of State at the Department of Finance, Deputy Eithne Fitzgerald, relied on Commissioner Flynn's assertion, and said the Dáil had already been informed.
In a document read in the record of the House on 31 May 1994 — columns 881 and 882 — which exposed the contents of a document circulated to international "investors" by an international lawyer seeking "investors" it was made clear that: "The project is so structured that it is for the Government's economic advisers, and not the investors, to source and select a suitable investment that conforms to the Government's job creation criteria". If the criteria stated in this document are correct, which Government economic adviser examined this "investment" in C & D Foods Ltd? These questions must be answered and investigated by an independent and impartial source.
Fine Gael is proposing that the Public Offices Commission be empowered by law to review this decision to grant passports, and every other decision over the past 15 years. However, the political sensitivity of this particular case is such that the Commission should be assisted by an independent examiner in determining the facts. Given Labour Party claims to stand for high standards in public office, I feel certain that it will support these proposals and the reasons for them.
When the Tánaiste examined the Masri file he will not have found details of the following extract from a book written by Mr. Tim Ryan, a biographer of the Taoiseach. This extract is not only relevant but alarming and, if its contents are sustained, it has the most serious consequences for the continuation in office of the Taoiseach. The following extract is from pages 64, 65 and 66 of that book:
In the summer of 1982 Spence finally initiated legal action against C & D for his shares.
A lot of correspondence was exchanged between both sides, although Albert Reynolds as Taoiseach claimed on 30 May 1994 that he "had not been involved in any way in the running of the company for up to fourteen years". (In his evidence to the Beef Tribunal, Albert Reynolds said he came back to government in 1987 "having spent four years in opposition, having spent four years developing my own business, which is very allied to this business that we are talking about..." (Tribunal Report, Chapter 6 page 206-207.)
In a speech in Portlaoise in June 1994 the now Taoiseach said he had "as required an arm's length relationship with that company (C & D), since I took up ministerial office, so I cannot be accountable for and have no knowledge of its day-to-day business".
On 28 June 1982, while Minister for Industry and Commerce, Albert Reynolds, however, wrote to Spence telling him he had "not produced the sales needed".
In a detailed letter he pointed out that capacity would increase two or three fold when a new factory — to be grant-aided by the IDA — was completed.
He added that it was necessary to introduce a new management structure reporting to Michael Difley, and to set budgets and targets for all management.
"...I must point out," he said, "that there was never any mention or question of your being paid 10 per cent of the profits, or receiving 10 per cent of the proceeds of the sale if I sell the company".
(During the 1983-87 Coalition, Taoiseach Dr. Garret FitzGerald replaced a Junior Minister, Eddie Collins, when it was revealed that he had attended the board meeting of a family company from which he had resigned on his appointment to office. Collins was present at such a meeting when an application for assistance to a State financial institution was discussed.)
On 12 July 1982 Albert Reynolds, as Industry Minister, publicly rejected reports in a British retail magazineThe Grocer that two giant British supermarket chains, Sainbury's and Tesco, were pulling out of deals with C & D because of Ireland's stand during the Falklands crisis. Later Reynolds personally telephoned a Mr. Hatch at Sainbury's on 16 July to reassure him. On 28 August Minister Reynolds attended a meeting at C & D along with the company's auditor Bernard Carroll, P. Gillen, head of Kinnear Consultants, and Padraig Groarke, C & D's solicitor.
Article 26 of Government Procedure Instructions states that "in so far as business interests to membership of other organisations are concerned, the underlying principle is that no Minister or Minister of State should engage in any activities that could reasonably be regarded as interfering, or being incompatible, with the full and proper discharge by him of the duties of his office".
On 27 April 1983 Albert Reynolds was again asked by Sainbury's to come to London to discuss ongoing difficulties with the product. He refused to allow Norman Spence accompany him to the meeting, but agreed to meet him later in the Tara Hotel.
"There he told me that due to further economies at the plant I was not needed any more. He handed me a letter which he told me to bring home and read, and to put my feet up for a while. The letter was a note of dismissal on the grounds that I had not generated enough business. They offered me something like four weeks' redundancy pay".
I wish to quote from the letter sent from Mount Carmel House, Dublin Road, Longford on 28 June 1982 to Norman Spence, Esq., Mountain House, Llanteg, Norberth, Pembrokeshire, Wales, regarding C & D Foods Limited:
I regret the delay in formally replying to your letter of 27th March, but no doubt you will appreciate how busy I have been since then, and in any event, I dealt with all the matters you raised in my last telephone conversation with you.
You say that some misunderstandings may have arisen between members of the company management in the past, but as I have said before, it is results that count and you just have not produced the sales needed.
1. For several years now, the company has not increased its sales volume or gained any significant new customers, and the price increases obtained for its products have been far lower than the increased costs of production, per case, and this despite the huge devaluation of the Irish pound against the British pound.
"Production management" has increased the capacity of the factory from about 15,000 cases per week to nearly 25,000 cases per week in the last few years at a cost extending into six figures. Production management has also made several innovations to improve efficiency and keep costs down. The capacity will increase 2 or 3 fold more when the new factory is completed later this year.
3. The necessary borrowings and grants have been organised by our accountants internal and external and management consultants employed from January 1981 to advise and support the general management function.
4. Yet sales are now running at only 13,000 cases per week and the company is now making a serious loss.
5. Clearly, irrespective of the minor day to day hiccups of the type discussed in your letter,
(a) Production management has done its job.
(b) Financial and general management has done its job.
(c) Sales management — i.e. you — havenot done your job.
Accordingly, it has been necessary to
(i) Introduce a new management structure reporting to Michael Diffley.
(ii) Employ sales and marketing consultants to ensure the proper and planned marketing of our products.
(iii) Set budgets and targets for all management.
As I have said before, the company cannot afford to keep you on the team in circumstances where you do not obtain the sales we need for survival and profitability.
In relation to your final paragraph, I must point out that there never was any mention or question of your being paid 10 per cent of the profits, or receiving 10 per cent of the proceeds of sale if I sell the company. Back in 1974, you had agreed to subscribe for 2,500 shares but the High Court declared this invalid. However, it was subsequently agreed with you that the company would make pension and life assurance contributions for you and this was done.
I trust this clears the matter and that all management matters can in future be handled in the normal way through the Chief Executive, Michael Diffley.
The signature on that letter is that of Albert Reynolds, now Taoiseach.