Vol. 505 No. 5
1 Mrs. T. Ahearn asked the Minister for Health and Children the reason for his referring arrangements concerning the raising of a loan with AIB for developments at Beaumont Hospital to the Attorney General; the date the loan was raised; the amount raised; the purpose for which it was raised; and the arrangements made for repayment of the loan. [12842/99]
4 Ms McManus asked the Minister for Health and Children the circumstances in which his Department authorised Beaumont Hospital to take out a £7 million loan from Allied Irish Bank in 1981; the purpose of the loan; if tenders were sought for the loan; if he has referred the file on the loan to the Attorney General; if so, the reason for this action; and if he will make a statement on the matter. [13960/99]
I propose to take Questions Nos. 1 and 4 together.
The loan, for a principal of £7 million, was raised in 1981 and was used solely for the new hospital project. The loan arrangements were sanctioned by the Department of Finance in February, 1981. In accordance with the provisions of the Beaumont Hospital Board (Establishment) Order, 1977, consent to raising the loan was given to the hospital by the Minister for Health in March, 1981. The loan was approved by Allied Irish Banks Ltd. to the Beaumont Hospital Board at triple A rates, repayable over a five year period. Approaches were not made to other lending agencies about the loan; the hospital's capital account was held by the Allied Irish Banks Ltd.
In view of the terms of reference of the Moriarty tribunal, I recently asked the Attorney General to review the relevant files to establish whether, in his view, the matter should be referred to the tribunal. He has now indicated that while the files reveal nothing to warrant their being sent to the tribunal, it would be prudent to send them, particularly in the light of the request from the tribunal to provide any relevant records. Accordingly, the files relating to the loan have now been sent to the tribunal by my Department.
I regret that part of my question, which may have thrown some light on this issue, was disallowed but I accept the Ceann Comhairle's ruling. We do not have any difficulty with the amount of money raised and totally support the purpose for which it was used. Why was this loan, in particular, referred to the Attorney General? The Minister did not explain that in his reply. Was the loan sanctioned at the time by the then Minister for Finance? Does the Minister agree that this loan was raised shortly after a member of his party received a very generous settlement from the AIB? Even leaving that aside, does the Minister agree that the loan was agreed at a very high interest rate? Why was there no tendering process for this loan as would be the normal practice for Departments? Why were other financial institutions not approached? Who informed the Minister about the loan? Will the Minister publish the Attorney General's advice on the matter? I would like the Minister to concentrate in his reply on why the details of this loan, in particular, were forwarded to the Attorney General. I have not received a satisfactory explanation for this unusual procedure.
The Deputy will be aware of the Moriarty tribunal's wide-ranging terms of reference. This issue was brought to my attention by a departmental official. Having spoken to the Secretary General, I referred the matter to the Attorney General as any responsible Minister would do. The Attorney General advised me in the normal way, as outlined in my reply. He indicated that while the files reveal nothing to warrant sending them to the tribunal, it would be prudent to send them, particularly in light of the request from the tribunal to provide any relevant records.
I reject the Deputy's unsubstantiated suggestion that the interest rates were very high. There was less competition in the financial market in 1981 than there is today. The triple A rate – the rate for the most credit-worthy borrowers – was common to the main licensed banks at the time. The suggestion that the rates were excessive at the time is incorrect.
This matter was brought to my attention. I referred it to the Attorney General who advised me on it. On the face of it, there does not appear to be any problem. If the tribunal wishes to see the file, I have no objection to that.
I thank the Minister for outlining this significant information. Was it not abnormal practice for this kind of favourable arrangement to be made by the Department with one bank without checking around to see what was the best value for money? The Minister stated that there was not any particular aspect which merited referring the file to the tribunal but that it was being referred anyway. That seems to be somewhat contradictory. Is this the only file or matter which has been referred in this way?
The Deputy is making assertions about a favourable deal having been made.
It was a favourable deal.
There is no evidence to suggest this was a favourable deal. The fact is that in 1981, the triple A rate was the best available rate within the banking system. There was not the same degree of competition within the banking system in 1981 as there is today. Different banks did not have different triple A rates. The same rate applied throughout all banks. To suggest a favourable deal was done on the basis of interest rates is factually incorrect. The Department of Finance has not indicated to me that a tendering process was required for loans in respect of this matter. That was not the practice.
On the issue of whether the practice was normal or abnormal, it was the practice in the year in question to seek ways of accessing private funds for the purpose of ensuring that public capital programmes proceeded. The whole motivation for the Minister of the day was to ensure that Beaumont Hospital was completed. That it was completed was to the benefit of the general running of the Department as it meant that the £40 million public capital programme of that year went towards other projects apart from the construction of Beaumont Hospital. On the basis of these objective criteria, clear benefits accrued both to the hospital and the Department. This procedure was used in 1981 because of the financial constraints under which the Government was operating which, thankfully, were quite different to those which prevail today.
There is nothing contradictory about the Attorney General's advice. The Attorney General has examined the files and on the evidence in them concluded they contain nothing untoward, based on the practice and the policy at that time. Because of the wide terms of reference of the Moriarty tribunal, and the fact that the tribunal has requested the files, I have no problem forwarding them.
I am calling Deputy Ahearn.
I did not get an answer to my question.
The Deputy must be brief. I have called Deputy Ahearn.
The Minister said there were benefits to the hospital and nobody is arguing about that. He is not recognising that there were also benefits to the bank, which was the only body given the opportunity to lend money at what was a high rate at the time. This specific bank got an enormous amount of business.
The Deputy is making a statement. Will she put a question to the Minister?
The Minister must be clear about this. Will he agree—
The purpose of Question Time is not to make anything clear to the Minister, it is to elicit information.
I wish to clarify this matter. As I said in my reply, the hospital's capital account was held by the AIB. Beaumont Hospital took out the loan and went to the bank which held the capital account. It was capital expenditure. The Deputy is suggesting, by implication, that there were more competitive deals in existence than was the case in relation to this particular bank. The level of competition in 1981 was far different from now. There were not different triple A rates among the various banks at the time; they all had the same rate. Tendering was not required in this situation. In 1981 a positive decision was taken to ensure we could access private funds for the purpose of proceeding with a public capital programme in the Department of Health. The requisite evidence in the file confirms that this was done with the consent of the Minister for Health and taken out by the Beaumont Hospital board on foot of established Government policy at that time.
The Minister will agree that several loans are arranged every day by his Department and other Departments and questions are not raised about them. The Minister said an official informed him of this loan. Will the Minister explain the reason the official brought this particular loan to his attention? In what context did the official raise it with him? Why did he raise this loan with the Minister, and not any other loan? Is the Minister prepared to place all the relevant documentation in relation to this loan in the Dáil Library? Has the Minister discussed this matter with the Minister for the Marine and Natural Resources, Deputy Woods?
I have discussed the matter with the Minister, Deputy Woods, who has been fully co-operative both with my Department and the tribunal in respect of any information the tribunal seeks. He does not have a problem with that. In relation to the files, the files have been sent to the tribunal.
They will not be there forever.
I am trying to clarify the matter. I realise an election is looming but I ask Deputies to desist from attributing mala fides to anybody in relation to this matter when, on the evidence, there is no such suggestion.
May I ask a question?
The time has concluded. I call Question No. 2.
I ask the Minister not to—
I have called Question No. 2.
On a point of order, my question was not answered. Why have Question Time if we do not get answers to questions?
That is not a point of order.
Of course it is. Why was this loan brought to the Minister's attention? That is the most important matter.
The answer is in the reply.
The Chair has called Question No. 2. Will the Minister please reply to Question No. 2?
