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Dáil Éireann debate -
Tuesday, 18 Jan 2011

Vol. 726 No. 3

Adjournment Debate

Quinn Insurance Group

I wish to share time with Deputies Seymour Crawford, Caoimhghín Ó Caoláin, Rory O'Hanlon and Margaret Conlon.

We have met Quinn workers, the Quinn group and concerned Irish businesses about this serious situation. There is currently a bid to take over Quinn Insurance. As politicians we have listened to local concerns that this process should be open and transparent, and that whatever decision is made will take into account the 6,000 jobs in the Quinn group and others that rely on it. In addition, taxpayers must be taken into consideration at all times. We will meet various groups and agencies to ensure that the concerns of Quinn workers, businesses and taxpayers will be taken into account in whatever decision is to be made. That is why we have raised this matter in the House today. I will now hand over to Deputy Seymour Crawford.

I welcome the opportunity to speak on this extremely urgent and serious situation. In March 2010, the people of the Border region, North and South, were thrown into disbelief and horror at the action taken by the Financial Regulator, Mr. Matthew Elderfield, who appointed provisional joint administrators by the High Court to Quinn Insurance Ltd. We now know that for years there had been no real regulation here. However, it is clear from the information now available that this action was less than necessary and the problem could have been dealt with in a different way.

I make no excuse for the fact that Seán Quinn and his family made a major blunder through their involvement in Anglo Irish Bank shares. In fairness, Mr. Quinn put up his hands and immediately admitted the exact situation and how it had caused difficulties. However, in spite of the fact that the Quinn group provided a minimum of 6,000 jobs on this island, some of the national media tried to make out that things were much worse than they proved to be. There were suggestions of a smoking bomb which was about to go off, but of course this never happened. Despite all the bad publicity, Quinn Insurance staff have managed to maintain and increase the insurance business that the regulator allowed them to deal with. This proves the value of the Quinn Insurance structure.

My question to the Minister of State is a simple one. My interest is not in any individual but in the retention of 6,000 jobs mainly in the Border region, where the IDA or similar organisations showed no interest. Why were negotiations broken off between the Quinn group and Anglo Irish Bank without any explanation and, thus, the administrator did not receive that proposal? Is it not correct to say that Anglo Irish Bank is fully under Government control and, as such, answerable to the Minister for Finance?

I recall our visit to the Minister for Finance, Deputy Brian Lenihan, as an Oireachtas cross-party group, when he advised us of the importance of Anglo Irish Bank to the solution. Does the Minister agree that it would be better to lodge sufficient money as a guarantee, which would almost certainly never be drawn down? The majority of the 6,000 jobs would thus be retained, rather than putting them at risk and ensuring that the taxpayer would have to bear the brunt of the €2.8 billion the Quinn family might not be able to repay under a different solution.

I make it clear that the Quinn Insurance group is going well. However, the Government and this House need to ensure that whatever has to be done is done to save those jobs.

I welcome the opportunity to make a brief contribution to this Adjournment debate. Everybody knows that since April 2010 Quinn Insurance has been placed in administration. That decision changed the lives of many people who became worried and fearful about their employment prospects, and with good reason. Following that decision, 1,000 redundancies were announced of which 700 have taken effect. A process was put in place to elicit expressions of interest in Quinn Insurance as a going concern. The closing date for that process was 8 December 2010.

What irritates me most is that for eight or nine months the management of Quinn Insurance worked tirelessly with Anglo Irish Bank in preparing a proposal to be submitted for consideration. It was the considered view of the management that there was positivity towards this proposal. Why then was it not submitted for consideration? Did Anglo Irish Bank lead the management on a merry dance and, if so, why? By all accounts, this proposal was comprehensive and well thought out. It would protect the policy holders — of whom I am one — and it would maintain jobs in Ireland, while offering an opportunity for the business to grow in future. It would also facilitate a very important point — the repayment of the €2.8 billion owed by the Quinn family. That surely has to be a big consideration because it is taxpayers' money.

I want to know plainly and simply who made the decision that this proposal could not be considered and why was that decision made? If there were deficiencies with it, why could they not be highlighted in an open and transparent manner, teased out and worked on? My colleagues on all sides of the House and I agree that this proposal is worthy of consideration in its own right and should be judged on its own merits.

At this late stage, before the decision is made, I appeal to the Minister to assist us in getting answers for the workers and management of the Quinn group who deserve no less. They have not been treated fairly and Anglo Irish Bank has not been honest with them. Different messages were given to various people. We are all of the view that the jobs are of paramount importance. There is no queue of foreign direct investors coming our way. West Cavan and Derrylin were barren, desolate places before Seán Quinn took a risk and invested in the community and its people. I do not want to see a situation whereby we would return to the previous scenario. The workers and management of Quinn Insurance deserve to know the truth.

I welcome the cross-party nature of this evening's attempt to address this hugely important issue. However, while I welcome the fact that the Minister of State, Deputy Mary Alexandra White, is taking this Adjournment matter, I regret that the Minister for Finance, Deputy Brian Lenihan, is not here in person. I understand that he may be preoccupied with a matter concerning a single job — that is, the leadership of his own political party. At the core of what we are seeking to address, however, is the issue in regard to many multiples of jobs across Quinn Insurance in Cavan, Enniskillen, Blanchardstown, Navan and elsewhere. Our concerns are real and valid, and we have very important questions to put to the Minister.

We would like to know the full extent of his information on the so described Quinn-Anglo proposals in regard to the future of Quinn Insurance Limited. We would like to know the information he has on how that worked out set of proposals over a period of several months was derailed in terms of its final journey. We would like to know what influences were brought to bear to derail that very sound set of proposals that guarantees the future of the existing jobs in all of the current sites and offered the best prospect of the return of the €2.8 billion owed to the taxpayer — to Anglo Irish Bank now in State ownership — from the Quinn family.

It defies our understanding at this point in time, in the absence of all the information, to appreciate how we could have arrived at this position when after a period of some nine months Quinn Insurance representatives of Anglo Irish Bank, leading up to the Christmas period at the end of last month, were working continuously and fastidiously on developing their proposals and fine-tuning the detail in regard to projections of Quinn Insurance into the future.

We have key and salient questions but, sadly, the Minister is not present and the Minister of State, Deputy White, will deliver what is a prepared response. That is not adequate and, with colleagues here, we are seeking a direct meeting with the Minister for Finance, which I hope will be accommodated at the earliest opportunity. The Minister's reflection of this appeal, on an all-party basis, would be much appreciated.

I hope that in a short period of days this collective of Deputies and Senators across the region, and colleagues from north of the Border who are cosigned to our appeal, will have that opportunity to meet with the Minister for Finance as we are already now embarked on engaging with several of the other decision makers and stakeholders in this very sorry saga.

I am taking this Adjournment matter on behalf of the Minister, Deputy Brian Lenihan, who would like to thank the Deputies for raising this issue.

At the outset, Deputies will understand that the Minister for Finance is constrained about what he can disclose to the House in respect of a competitive sales process in regard to the sale currently under way in respect of Quinn Insurance Limited, including the participation of any party to that process. It is important to keep in mind that responsibility for the sales process is a matter for the joint administrators who were appointed by the High Court. The administrators are currently deciding on a preferred bidder with a view to entering into detailed discussions with them to seek to conclude an agreement on the sale of Quinn Insurance Limited. It is important in that context that the confidentiality of the process is respected and that we remain careful in our debate to ensure the fair process and the commercial nature of the transaction are respected.

Deputies will be aware that the Minister for Finance has responsibility for the development of the legal framework governing financial regulation. The day to day responsibility for the supervision of financial institutions, however, is a matter for the Central Bank, which is statutorily independent in the exercise of its regulatory functions. It was in this independent capacity that the Central Bank, then the Financial Regulator, applied to the High Court to have Quinn Insurance Limited placed in administration.

For the benefit of the House, it made its decision because it had a number of concerns in respect of the financial position of the company, the manner in which it was being managed, and its inability to comply with supervisory regulation. These concerns included an ongoing breach of the Central Bank-imposed solvency ratios; the discovery of guarantees, through unregulated property subsidiaries, to senior lenders — a syndicate of banks led by Barclays and a number of bondholders — over insurance company assets which the Central Bank was unaware of until March 2010 and which had the potential to significantly increase its solvency shortfall; and the manner in which the business was being managed raised governance and accountability questions about the internal control mechanisms as well as the accounting and administration procedures and practices within the company.

The appointment of the joint administrators, pursuant to the Insurance (No 2) Act 1983, to take over the management of Quinn Insurance Limited was taken in the best interests of the firm's policyholders to allow the firm to remain open for business and to continue to be run as a going concern with a view to placing it on an ongoing sound commercial and financial footing.

From the outset the joint administrators have concentrated on fulfilling this agenda and one of their main aims is to ensure that the value of the business was maintained in order to make it as attractive as possible to potential buyers. A key factor here was the reopening of the profitable parts of the UK business.

In response to a detailed case from the joint administrators, the Central Bank, in the first instance, allowed Quinn Insurance Limited, QIL, to reopen private motor insurance business by the end of April. As part of its consideration, the bank considered the information provided by the administrators in regard to key improvements in the company's underwriting model and significant strengthening of its pricing structure. It also consulted closely with the UK Financial Services Authority. Later on, the administrators also sought to have the commercial lines of business in the UK re-opened. However, the Central Bank decided in September that such a move would not be appropriate as QIL would require additional capital which it currently does not have.

The next significant step was the appointment by the High Court on 3 June 2010 of advisers on any prospective sale of Quinn Insurance Limited at the request of the joint administrators. The advisers, on behalf of the joint administrators, issued an information memorandum on 27 August 2010 on the sale of the company to interested parties which set out a two stage process for selecting a purchaser. The first stage required the submission of a non-binding indicative proposal by Friday, 17 September 2010.

The Minister for Finance understands that following evaluation by the advisers and the joint administrators of the above mentioned proposals, a limited number of prospective purchasers were shortlisted by the administrators to participate in phase two of the sale process. They have conducted further due diligence, including the consideration of the necessary commercial information, enabling them to make a final bid.

The joint administrators are currently considering the final bids. In doing this the Deputies should note that the administrators are working to find a solution that addresses the issue of putting the company back on a sound commercial and financial footing. As part of that process their role is to assess bids which will protect the interests of policyholders and which will enable the company to continue to operate as a going concern. The retention and protection of employment is another important element of the administrators' responsibilities subject, as always, to their statutory responsibilities.

Once a preferred bidder is chosen the administrators will enter into detailed discussions with them to seek to conclude an agreement. The Minister for Finance understands that the administrators wish to conclude a sale transaction as soon as possible.

As the Deputies will know, the final decision of the joint administrators is subject to the approval of the High Court. It is important to be clear that neither the Minister for Finance nor the Government has any input or influence over the administration process, including any decision on the sale of the company. It should be noted, however, that he is very conscious of the employment implications of any decision made by the joint administrators in regard to the sale of Quinn Insurance Limited and is keen that as many jobs as possible are safeguarded as part of this process. However, the Minister is of the view that it is inappropriate to speculate as to what may happen in regard to jobs before any decision is made on the sale of the company.

Nevertheless, the Deputies will be aware that last year, in response to the developments in Quinn Insurance and its impact on the employees' jobs, the Minister, Deputy Batt O'Keeffe, established an inter-agency team comprising Enterprise Ireland, FÁS, IDA Ireland, the relevant county enterprise boards and the Department of Social Protection. The group meets regularly under the chairmanship of Dan Flinter.

The Minister, Deputy O'Keeffe, considers that the inter-agency team has been an effective solution to co-ordinate the activities of the relevant Departments, State development agencies and county enterprise boards in order to support employment opportunities for the people concerned.

The Government continues to monitor the position on employment and the Quinn Group generally. That is why the outcome of the sales process is important in putting the company back on a sound commercial and financial footing. This is the best way of protecting jobs and the wider interests of the taxpayer.

Illegal Downloading of Copyright Material

I thank the Ceann Comhairle for giving me the opportunity to raise this important issue and I thank the Minister for Enterprise, Trade and Innovation for coming to the Chamber to reply to the debate.

This issue was discussed in the Seanad before Christmas and it has been the subject of High Court proceedings and a ruling by Mr. Justice Charleton. However, the issue has not gone away and needs to be addressed by the Government at the earliest opportunity.

Illegal downloading of music, films and computer games is widespread. The music and other creative industries are being badly hit by this illegal activity and many jobs are being lost. That is regrettable, while the Government is making every effort to put people back to work. In recent weeks the Minister, Deputy Batt O'Keeffe, has announced several new jobs. We can stop people losing their jobs if we tackle this issue quickly. Yesterday in Galway, further jobs were lost with the closure of retail units. Their owners laid the blame at the door of illegal downloading.

There is a solution to this problem. Mr. Justice Charleton referred to the further enactment of EU regulations and legislation and I ask the Minister to consider this. Something must be done.

There is cross-party agreement on this issue in both Houses. We are all proud of our artists, entertainers, singers, dancers, musicians and film makers and we have supported those industries for many years. We have produced world class artists and we are proud of that. An artist's work is to record an album or make a film and he or she is paid for that by the sale of the end product. That has been the tradition and a number of retail outlets have prospered over the years from artistic activity. Unfortunately, the trend is changing with the advent of technology and illegal downloading. I regret that this development is causing difficulty for our artists and related retail outlets. The time is now right to support these people.

In recent weeks, there has been much mention of the legislative programme to be implemented in the lifetime of the Government. I ask the Minister to give priority to this problem. This is a serious issue that needs to be addressed.

I thank Deputy John Cregan for raising this extremely important issue and assure him that it will get my priority attention.

As regards the issue of illegal downloading of copyright material on the Internet, the first point I would make is that rights' holders of such copyright material already have a legal remedy to pursue anyone downloading such material. Under existing legislation, any person who illegally uploads or downloads unlicensed music is liable for copyright infringement under the terms of the Copyright and Related Rights Act 2000. Such a person, whose Internet protocol, IP, address may be identified through various detection methods, may be pursued by the copyright holder following a judicial process — the obtaining of a Norwich Pharmacal Order from the courts. Under this procedure, a court may order an Internet service provider, ISP, to disclose the names of the alleged infringers through their IP addresses, subject to certain safeguards. This procedure has been used on a number of occasions in this jurisdiction already and is not affected by the recent judgment to which the Deputy refers.

The judgment concerned, which was handed down by Mr. Justice Charleton in the High Court case between EMI Records (Ireland) Limited, Sony Music Entertainment Ireland Limited, Universal Music Ireland Limited, Warner Music Ireland Limited and WEA International Incorporated on the one hand, and UPC Communications Ireland Limited on the other, relates to actions taken against Internet service providers. The judgment is a very complex one and has been examined very carefully both by the Department of Enterprise, Trade and Innovation and the Department of Communications, Energy and Natural Resources.

Essentially, the recording companies concerned sought injunctions against UPC, an Internet service provider, on the downloading of copyright material over the Internet, and the court declined to grant such injunctions in the circumstances set out. The area concerned is a very complicated one and it encompasses issues such as the illegal downloading of copyright material, the treatment of Internet service providers in such circumstances, the obligations imposed on member states by European Union law and the upcoming requirement for Ireland to transpose the 2009 Framework Directive on a common regulatory framework for electronic communications networks and services.

Mr. Justice Charleton's judgment is a lengthy one, running to 78 pages, and, in its ruling, it ranges across the various provisions in copyright, e-commerce and national telecommunications legislation and the relevant European law in each of those areas. Having obtained a copy of the judgment, the Department of Enterprise, Trade and Innovation referred it to the Attorney General's office for advice and this advice has now been received. The Attorney General advice is being considered by the Department of Enterprise, Trade and Innovation and the Department of Communications, Energy and Natural Resources and any necessary actions will be taken as a matter of priority.

As the matter obviously has implications for Internet service providers, the Department of Enterprise, Trade and Innovation will continue to liaise with both the Attorney General and the Department of Communications, Energy and Natural Resources to ensure that any measures adopted do not impose any unnecessarily onerous obligations on the Internet service provider.

As Minister with responsibility for intellectual property, I am concerned to ensure that the interests of rights' holders in respect of copyright and performances are upheld and are not infringed by illegal activity on the Internet or elsewhere. I must also, however, have regard to the position of Ireland's information and telecommunications industry and, in particular, that of our Internet service providers.

Articles 12 to 14 of the European e-commerce directive, for example, provide defences to Internet service providers who transmit digital content, including copyright material, by electronic means on the Internet. These have been transposed, in Ireland, through regulations 16 to 18 of SI 68 of 2003. Regulation 16 provides that Internet service providers are not liable for information transmitted by them in a communication network, where an Internet service provider establishes that it is a mere conduit or carrier of information. Regulation 17 similarly covers caching or temporary storage. Regulation 18 deals similarly with hosting or permanent storage. However, these regulations do not affect the power of any court to make an order against an Internet service provider requiring the provider not to infringe, or to cease to infringe, any legal rights.

At present, the Department of Enterprise, Trade and Innovation is in further consultation with the Office of the Attorney General. We want further clarification as to the content of any measures that might be introduced. I am sure the Deputy will appreciate that while I am not in a position to comment any further on the detail of the document, I am determined to bring it to a conclusion and to take the necessary actions at the earliest possible date.

The Dáil adjourned at 9 p.m. until 10.30 a.m. on Wednesday, 19 January 2011.