Adjournment Debate. - Recovery of Legal Costs.

This is a tale of how the Exchequer has been ripped off to the extent of millions of pounds by the deliberate action of servants of the State either at political instigation or by mere complicity in unlawful collusion with companies in the beef processing sector who were the intended beneficiaries of the scam.

Legal costs of more than £1 million arising from unnecessary and wasteful litigation in which the Department of Agriculture and Food embroiled itself have last week been discharged by the State. General damages awarded to the injured party have yet to be assessed but will exceed the amount already paid out for costs by an unknown factor. The Department of Agriculture and Food ignored all entreaties to desist and no other agency of the State would agree to intervene. Attempts by some politicians from inside and outside Government to terminate this madness were fought off by the Department on the grounds that they were likely to succeed in court. The facts may be complex but are quite straightforward.

Arising from the then GATT the EU was obliged to import a small amount of beef from third countries. Ireland's share was 400 tonnes divided by licence among the main beef companies including several companies in the Goodman group. They did not import the beef but sold their quotas almost entirely to a firm called Emerald Meats. The rules were changed in 1989 arising from an unrelated court judgment in that the EU Commission took over allocation of the quotas from the Department. The Commission introduced a regulation binding on member states that would give the quotas to "the traditional importers". Therefore, in Ireland the law now dictated that these quotas should go to Emerald Meats. In blatant contravention of the law the other beef companies, predominantly the Goodman group, and the Department of Agriculture and Food officials conspired knowingly to misrepresent the historical position to Brussels. The Department furnished a fictional list of traditional importers to Brussels described subsequently by Mr. Justice Declan Costello as a travesty of the true position.

The Department then set about doing down Emerald Meats and asserting the claims of Larry Goodman and others in Brussels and this led to a complaint by the managing director of Emerald Meats to the Garda Síochána in February 1990 that there was "a conspiracy to defraud my company of its entitlements under EU and Irish law". To my knowledge no action was taken by the Garda and similar complaints to the Department were ignored. Emerald Meats was left with no alternative but to carry out its threat to sue the Minister.

In the ensuing years Emerald Meats was comprehensively vindicated in the courts on all counts. Mr. Justice Egan's judgment made it clear that the Department of Agriculture and Food could not hope to win an appeal but the Department carried on regardless. The Supreme Court in March 1997 rejected every one of the Department's legal arguments and ruled that in addition to specific damages Emerald Meats was entitled to general damages which are not yet assessed.

The State is occasionally forced into litigation on constitutional or other grounds that are difficult to explain to the taxpayer. No such grounds existed in this case. This was a case of conspiracy between the Department, Goodman and others to steal from a rival company. It would be a serious matter in any circumstances but it is especially grave when the Department involved has already been indicted of an unacceptably cosy relationship with the dominant group of companies in the sector. This is the same Department whose negligence in supervising the depredations of the same group in another context led to fines of up to £70 million being imposed on the State.

At the height of the 1990 controversy the Minister told the House that he would seek to recover the money from the companies concerned. The Secretary of the Department told the Committee of Public Accounts that the necessary steps were being taken to get moneys from the companies involved. Eight years after that first commitment a spokesman for the Department told The Irish Times last week that no attempt has been made to recover the money from the companies involved. Why did the Department become wantonly entangled in a conspiracy to ruin a small company to the benefit of giant competitors who had not bothered to use their import licences?

The Secretary General of the Department is on record as saying, "Did we ever think they would?". Why did the Garda not act on complaints made to them? Why did the Department persist in wasteful and expensive litigation when it had fabricated documents and lied to Brussels? What was in it for the Department or the officials concerned? Were they acting at the behest of their political masters? Has there ever been an internal investigation of the scandalous handling of the licence applications, given the heavy cost to the taxpayer? Has anyone been made accountable for misrepresenting the true position?

The Committee of Public Accounts should be asked by this House to use the new compellability regime to investigate the detail of a scandal that reflects discredit on a major Department and the climate of favouritism instigated by Ministers at that time and since towards the Goodman group and no credit on the Garda who, if they had acted on complaints made to them, might have spared the taxpayer millions of pounds.

I will briefly outline the background to this matter before I deal with the topic of the debate.

As is evident from the subject of this debate, the legal proceedings taken by Emerald Meats against the Department go back many years to 1990. The essence of these legal proceedings concerned a decision taken by the Department in relation to a dispute between Emerald Meats and various beef processors about entitlement to GATT import licences for frozen beef. The dispute arose because of a change at EU level in relation to the administration of the GATT licensing system which was transformed from a nationally managed system to a Community managed system.

The new system for allocating the licences was based on the quantity of beef imported by traders in previous years under GATT licences issued under the old system and the dispute arose over whether the new licences should be issued to the processors to whom the old licences had been issued or to Emerald Meats which imported the beef under these licences. The Department, acting on legal advice on the matter, awarded the licences to the meat processors. Emerald Meats took legal proceedings against the Department in the High Court, which ruled that the licences should have been allocated to Emerald Meats and which awarded special damages to the company. The Department was joined by the various meat processors as defendants in the case. Both the Department and the meat processors appealed the judgment to the Supreme Court which upheld the judgment of the High Court and also gave Emerald Meats leave to seek general damages against the Department.

I now want to deal with the issue of recovery of the meat processors' share of the legal costs, plus interest, which have been incurred by the State arising from the legal action taken by Emerald Meats. Both the High Court and the Supreme Court ordered the Department to recover from the meat processors 50 per cent of the legal costs paid by the Department to the legal representatives of Emerald Meats in respect of this case.

I will now inform the House of the steps taken by the Department to enforce this order. The Department was informed by the Chief State Solicitor on 28 September that legal costs of Emerald Meats had been taxed by the Taxing Master at £374,060.14, not including interest. The Department immediately drew the attention of the Chief State Solicitor to the order of the High Court and the Supreme Court relating to the recovery of costs and asked that processors should be required to pay their share of the costs. The Chief State Solicitor replied on 21 October that legal advice from counsel was that the Department was obliged to pay the full legal costs and subsequently seek to implement the order against the processors. In light of this legal advice, the Department dealt with the matter without delay and has paid both the legal costs and associated interest charges to the legal representatives of Emerald Meats.

When the sheriff was sent in. What does the Minister mean by "without delay"?

The Deputy should allow the Minister to reply without interruption.

The Department has asked the Chief State Solicitor to recover from the meat processors their share of those costs in accordance with the court rulings. I understand the Chief State Solicitor has instructed a firm of legal cost accountants to initiate the process of recovery in accordance with the orders of the court.

I emphasise that there has been no delay on the part of the Department in paying the costs or in seeking to implement recovery of the costs from the processors. According to the legal advice given to the Department, it was not possible for recovery to be made until such time as the Department had first paid the costs. Immediately these costs were paid, the Department instructed the Chief State Solicitor to enforce the court ruling. I am fully committed to implementing the ruling as rapidly as possible.

That reply did not deal with any of the points I raised.