Adjournment Debate. - Eircom IPO Price.

I thank you, a Cheann Comhairle, for selecting this most important and disturbing matter. This morning was another of those cold bath mornings when we awoke to hear some new horror. This time is was the chief executive of Eircom, Mr. Alfie Kane, who told us that it was his view last July and is his view that the price of 3.90 at which the Government sold the Eircom shares represented a 30% premium over their real value. He stated at the launch of Eircom's annual report, further to his interview with Ms Harney on "Morning Ireland", that he made known his views at that time.

The Minister for Public Enterprise, Deputy O'Rourke, stated that the board agreed this, but what seems to have been forgotten is that some months before the IPO she axed any member of the board who was not of her political hue and put on the board her own people, including a former ministerial colleague, Mr. MacSharry, as chairman. Therefore, it comes as no surprise to me that the board was prepared to merely rubberstamp a Government decision and would not go along with the views of their chief executive.

The only issue in this debate is simple. Were the half a million people told the full story? I believe they were not told about Mr. Kane's view that the stock was being overpriced by 30%, but they also were not told the full story about Comsource. The reason the price of these shares fell to a record low of 3.24, their lowest level ever, at close of business at 5.30 p.m. this evening with a pessimistic prospect is there is a potential overhang on the market of 776 million shares from KPN and subsequently from Telia. It is rumoured that they are prepared to take 2.90 per share. That outlines just how the public was hoodwinked by the Minister. My understanding is that those companies, in their talks with the Department, stated that they wanted more than 35% of the company and in such circumstances they would be long-term stockholders. The Government said no and they said they would be short-term stockholders. While it is true that it was written in the small print of the prospectus, it was never publicly enunciated that the likelihood was not only that they could get out after six months but that they would get out after six months. The public was not told of Mr. Kane's views or about the rapid exit of KPN/Telia and Comsource.

Permanent damage has been done to the IPO process. People will not have their fingers burnt again. They will not be taken in by balloons, red smoke and people coming down ropes with champagne bottles. That type of thing will not work again.

I am intrigued by a copy of the speech the Minister is about to deliver which I received from a civil servant in her Department. It is rather pathetic, bearing in mind that the share price at IPO was set in July, that in the last paragraph she quotes comments from me from as far back as 22 April 1999, when I stated that this is not a risky investment; it is a sure bet. Eircom is a sound business and the telecommunications sector is a sound sector. I do not withdraw any of that, but I was not to know then that the people would register first and the price would be decided afterwards when they were locked in and captive purchasers of this stock. That will never be allowed again.

The Minister must now explain when she knew first of Mr. Kane's views and when she knew that Comsource would only be around for six months. If she knew in July 1999, she concealed this successfully from the public. It is clear that when the Minister's political career is over she will find it easy to take a job as a second-hand car sales person because she bought and sold the public on this issue. She has succeeded in ensuring that people bought a pig in a poke and are now left with a loss of 15% plus their expenses, and maybe more. This debate is not about scoring political points but about Ministers giving answers about what they knew and when they knew it.

What about the employees?

I am delighted to come into the House to reply to this matter. The following information was sent to every shareholder. There is no difference in the size of the print of any statement within it; it is all the one size. It states clearly:

Comsource, KPN Telecom and Telia have agreed not to sell any of their Shares for a period of 6 months from the completion of the Offer, but will be free to sell their Shares thereafter . . .

Deputy Yates insists on peddling lies. One would think he would get a life.

I did not say they did not —

I never interrupted Deputy Yates.

The Minister should not state he was telling lies.

Minister, I would ask you to withdraw the word "lies".

Untruths. I would expect that Deputy Yates would act under prudence. He has one aim in life, to bring the shares to the floor. I said that to him before and I say it to him again.

The Minister would like to have me as an alibi.

It is the truth. The prospectus and the price range set prior to the flotation were agreed by both the Government and the company. That is a fact.

Was it Mr. MacSharry?

Deputy Spring is a member of the board also. Would Deputy Carey allow me to speak? The final price of £3.07 was halfway within the price range. The balance sheet of the company was very strong and the price for Eircom was set by the Government on the basis of what the market was prepared to pay.

As I stated, the strategic partners in Eircom, that is KPN and Telia, were prevented from selling their shares and each shareholder received this information which states, they "will be free to sell their Shares thereafter", immediately after six months.

The pricing of the shares was a delicate one of balancing the need for a fair price for taxpayers and the need for a fair return for the investors. In fact, Deputy Rabbitte, whose political acumen I really value, stated in the House that I was like a street vendor in Moore Street selling fruit at half-price and that I had let the shares go for nothing – it was reported inThe Irish Times of the day following the share sale. Many economic commentators in Sunday and daily newspapers stated that we had done the taxpayer wrong and sold too cheaply.

The Government could have chosen to float the company at a higher price, but it chose not to do so. As the House will be aware, the launch price was £3.07. In the first three months of this year—

It is no consolation.

Why was I not asked to come into the House to say why they had increased by 25%? Nobody summoned me to Dáil Éireann.

That is no consolation.

Why did people not sell their shares? They did not want to sell. They had increased in value by 25% and we never heard a bleat out of Deputy Yates. The potential returns to Eircom investors have been available against a background of a market which has been, at best, sluggish or in decline.

It is a disaster.

The Minister without interruption.

Deputy Carey is a total disaster. There are the bonus shares to which I could refer also. Deputy Yates has suggested that I should apologise. Deputy Yates should apologise for pretending to the shareholders of Ireland that Telecom shares were a sure bet.

I hope the Minister will give the full quotation.

I will. Deputy Yates stated to Mr. Richard Crowley on "Morning Ireland", "This is not a risky investment; this is a sure bet". He went on to say, "I'm telling people this is money for old rope". The interviewer, Richard Crowley, even suggested to Deputy Yates that he was "doing a great sales pitch. They (Telecom Éireann) wouldn't need to spend £3 million if they had you working for them".

That was on 22 April 1999 before I read the small print.

How much of taxpayers' money did the Minister spend on the sales pitch?