Dáil Éireann debate -
Wednesday, 27 Nov 2013

Vol. 822 No. 4

Topical Issue Debate

Home Repossessions

Deputy Niall Collins

I thank the Minister of State, Deputy Kathleen Lynch for taking this issue. It is a matter that has been widely reported, including in the Irish Examiner yesterday and today and in many other publications in recent months, including the Daily Mail and the Sunday Independent. Families throughout this country are struggling with the heavy burden of mortgage debt and, as we know, desperate times provoke desperate measures. Under the weight of severe financial pressure, many people are facing the grim prospect of having their family home repossessed. We have debated these issues on several occasions in the Chamber. The Land and Conveyancing Law Reform Act, for instance, strengthened the banks in terms of their ability to instigate repossessions. We have seen reportage in recent days of the first cases coming through under the provisions of the Personal Insolvency Act. It remains a problem, however, that the banks are at the centre of that process and effectively have a veto on debt resolution proposals.

As a consequence of the desperate circumstances in which people find themselves, a highly dubious property trust has emerged claiming to be able to save people's homes on the basis of a lacuna in the law of which, apparently, only the people operating the trust are aware. They have consistently refused to enlighten anybody as to how it works. In the year to date, it has been reported, up to 2,000 people, many of them high-profile business people, came into contact with the trust and, in a last-ditch attempt to remain in control of their debt-laden properties, have engaged with it. They put their faith in this mysterious property trust, known as the Rodolphus Allen Trust, which claimed it had found a way to split mortgages from properties. In exchange for this promise of protecting people's properties, the trust is charging an administration fee in the order of €200 to €250 and a per folio charge of up to €100. There have been reports of up to 200 people turning up at signing-on sessions.

These were aided and facilitated by a notary public, who has since seen the light of day and desisted from being involved. As the Minister of State is aware, the trust has also made claims of up to hundreds of millions of euro from receivers and banks, which are working through some of these distressed properties. The trust has also written to people claiming the rent rolls on commercial properties.

In August a mob - that is the best way of describing it - was led by the trust to a stud farm in County Kildare and took over the property. The people involved then withdrew from the property and it was eventually taken into possession by the receivers. All of this has been high profile and widely reported. The individuals at the centre of the trust are highly mobile, moving from one end of the country to the other and moving out of the jurisdiction. While it is not our business, it is a fact that similar organisations have been operating outside the jurisdiction, in the North in particular.

It was reported yesterday that the head of the trust was arrested and this brings the matter into sharp focus. There are several questions which I am keen to put to the Minister of State and I will follow them with supplementary questions. What action has the Government taken to inform vulnerable debtors of the activities of this trust and similar trusts? Has the Government reviewed the Consumer Protection Act 2007? Is the Act capable of dealing with this type of activity? Has the Department of Justice and Equality or any other Department been in touch with the Garda Síochána and the Revenue Commissioners, two relevant agencies in this matter, given the high profile nature and the sums of money involved. In the case of at least one of these trusts it is estimated that in excess of €600,000 has been taken from people in cash payments; there are no cheques and there is no traceability, it is all cash and there is no accountability.

Minister of State at the Department of Justice and Equality (Deputy Kathleen Lynch)

The Deputy should note that the Minister for Justice and Equality was keen to take this issue himself but he is in the Middle East in his capacity as Minister for Defence. The Deputy will accept that as legitimate. I will go through the reply as quickly as I can but before I do I wish to point out that people who find themselves in desperate situations are inclined to resort to sometimes desperate solutions. We should not forget that.

I thank Deputy Collins for raising the issue. The Government has brought forward significant modernisation of the law to address the problem of over-indebtedness, primarily through the enactment of the Personal Insolvency Act 2012 and reform of the Bankruptcy Act 1988. The Personal Insolvency Act established three new debt resolution mechanisms: the debt relief notice, the debt settlement arrangement and the personal insolvency arrangement.

In the context of today's debate, the personal insolvency arrangement, PIA, has been the most significant development. The PIA will enable the agreed settlement of all unsecured debt and secured debt up to €3 million, a cap which may be increased with the consent of all secured creditors. The PIA provides for the negotiated resolution of secured debt in a court-sanctioned process that provides for certainty for creditors and hope and relief for debtors. The PIA does not only cover mortgage debt; it is effectively a form of personal examinership that can comprehend debt arising from trading or business activities, including agricultural activities.

To protect the constitutional rights of all concerned and to prevent potential actions for judicial review, the Act provides for enhanced oversight by the court of the new debt resolution procedures. This court involvement has the significant benefit to the debtor of providing protection from enforcement actions by creditors, either through the negotiation period or during the lifetime of the arrangement. Trust law allows for the legal title of land to be held by trustees not for their benefit but rather for the benefit of the beneficiaries of the trust, a point that relates specifically to Deputy Collins's question. The beneficiaries are said to be the beneficial owners and the property must be used for their benefit rather than for the benefit of the trustees. The trust mechanism may be used in family situations where, for example, the intended beneficiary is a minor or is otherwise incapable of managing the property. Trusts are also commonly created in the context of wills where the testator may leave property to his or her spouse for life and afterwards to his or her children. The creation of trusts for charitable purposes is also common.

The Property Registration Authority is the State authority which manages and controls the Land Registry and Registry of Deeds. I am advised by the authority that in recent months over 500 applications for the registration of notices of certificates of acknowledgement of the living man's claim of right were received in the Land Registry. Based on the third party witness common to all these documents, it appears they originated in the trust in question. The notices of certificates of acknowledgement appear to be applications to record on a State register the acknowledgement of the living man. Freemen on the Land is one of several groups, originating in Canada and the USA which advances the notion that the legal person and living person are two distinct entities. Under the belief system, the living person is not bound by law or court rulings unless and until the living person or freeman contracts to accept such law. Obtaining an entry on a State register of the recognition of the living man or freeman on the land is often a first tactical step within these groups. These applications were all rejected by the Property Registration Authority.

Acting Chairman (Deputy Catherine Byrne)

Thank you.

Deputy Kathleen Lynch

I will finish presently but this is a matter of concern to us and, as Deputy Collins said rightly, people who are desperate are being sucked into this.

In so far as the Registry of Deeds is concerned, the documents presented for registration were not deeds within the meaning of section 32(1) of the Registration of Deeds and Title Act 2006. Therefore, no registration could be made in the office. In so far as the Land Registry is concerned, the registers, which are maintained in that office, must consist of information required to be recorded under the Registration of Deeds and Title Acts 1964 to 2006 and be authorised by the land registration rules 2012. The applications received in these particular cases did not constitute applications for an authorised entry on the folios of the register and were not in a form prescribed by the land registration rules 2012. I gather the Property Registration Authority has not received any applications from any other trust of this nature.

Deputy Niall Collins

We are all agreed that at the heart of this issue there are vulnerable people and, basically, they are being exploited. It is a major fraud and a scam being perpetrated throughout the country. By any yardstick, given the amount of reportage on the matter, there seems to be no oversight whatsoever from any State agencies, an issue of major public concern and one we should be concerned about in the House. Since some of these people are vulnerable they want to remain private. None of them is coming forward to make complaints to An Garda Síochána.

It is noteworthy that some of the individuals operating these trusts - I have no wish to call them trusts - tried to align themselves to the political establishment. They contacted people in the Houses of the Oireachtas and sought meetings. One such person was my colleague, Senator Thomas Byrne, who met them. As a result of meeting them he was so alarmed that he wrote to An Garda Síochána and made an official complaint. Regrettably, he got back a reply, a copy of which I have, stating that it was not a formal complaint. However, he put a complaint in writing and it is high time that paper stopped shuffling around the desks of An Garda Síochána at a high level and that the force took the issue seriously.

The Minister of State has outlined in clear terms what trust law provides for. She stated that these people are trading on the notion of a distinction between the living man and the freeman. It does not stack up. We need to hear from our agencies of State but above all we need to hear from the Government. What exactly is the Government going to do in this regard? How many other operations exist? Are there up to half a dozen similar entities operating in the country? At the heart of this is mass fraud and misrepresentation. Vulnerable people are being targeted and are effectively being taken for a financial scam but no one seems to be concerning themselves about it.

As I stated, Senator Thomas Byrne wrote officially to the Garda Síochána-----

Acting Chairman (Deputy Catherine Byrne)

Sorry Deputy, you have gone over your time.

Deputy Niall Collins

-----and got a one-line response to the effect the Garda cannot act on it.

Deputy Kathleen Lynch

I believe all Members are agreed on this matter and it is not as though the Garda is doing nothing on this issue. There was a high-profile arrest recently and Members should be conscious that it was simply an arrest. Members also should be conscious that if charges are to be brought, they must go on to be proved.

Deputy Niall Collins

Yes, but that was not for the activity.

Deputy Kathleen Lynch

No, I understand that perfectly but the Deputy must admit it did bring a degree of attention to the particular issue. I do not believe one can ever enact laws that will protect people who are quite desperate from making decisions for themselves and clearly, this is what is happening. A debate like this one today will alert people to the fact that this is not a viable option. I believe that is as far as one can go. However, I do not believe that other so-called trusts are operating in the country to the same extent as is this particular one. As the Property Registration Authority has noted, no applications have been made other than through this living man and freeman testimonial. This should provide some degree of comfort but that said, the Minister for Justice and Equality has a meeting on a monthly basis with the Commissioner. I am sure this is a subject that will arise in their discussions and I also will ensure it is drawn to his attention. While I do not believe he needs this, I will ensure it happens, as there is a real need to start telling people they are throwing good money after bad in this respect.

Departmental Investigations

Deputy Caoimhghín Ó Caoláin

I welcome the presence of the Minister for Agriculture, Food and the Marine, Deputy Coveney, to take this Topical Issue. Last week, a Circuit Court judge voiced strong criticism of the conduct of the head of the Department of Agriculture, Food and the Marine's special investigation unit, SIU, urging that his conduct and that of the SIU in the case before the court be properly investigated. I will cite from reports of the case in question, in which Judge Leonie Reynolds stated:

it seems to me there was a very heavy-handed approach adopted here and as to how matters were handled thereafter, they were handled in a less than fair manner. I hope those comments will be taken on board in the Department and matters will be looked into.

I speak of the case that was brought against Mr. Douglas Fannin, a farmer in County Cavan. In her closing remarks, Judge Reynolds stated:

I want to be very clear, Mr. Fannin leaves this court here to-day with his reputation fully intact and without any question mark hanging over his integrity.

What has taken place in this regard? What step is the Minister now taking to address this serious and now publicly-exposed misconduct of members of his Department's special investigation unit? There are questions, namely, what has taken place and why and these questions must be answered fully. This is the reason a thorough Garda investigation is needed. I ask the Minister to advise Members today if this is how he expects matters to progress. The Garda should be fully involved. There is a need to establish what is the full truth behind this particular case and the series of visits to the farm and home of Mr. Fannin over the period in question. Whatever is the truth, there is no doubt but that there has been a blatant misleading of the courts by the Department of Agriculture, Food and Marine through its representatives. That is clear from the transcripts of the case, as reported in several publications, including in the Irish Farmers' Journal, The Sunday Times and several other popular daily newspapers.

It is critically important that the Minister now outlines the steps he intends to take and that he will confirm a thorough Garda investigation either is pending or already is under way. He also should advise Members as to the steps he will now take to restore domestic and international confidence in Ireland's beef sector, given that animals which officials of his Department believed were contaminated were allowed into the food chain through a European Union-licensed meat plant. These are serious matters, huge matters, that go far beyond the situation that maintained and presented for the unfortunate Mr. Fannin and his family.

I wish to put on record that this issue has continued for four to five years. During 2009 and 2010, I continually sought to properly advise the former Minister for Agriculture, Fisheries and Food, my constituency colleague, Deputy Brendan Smith, of the seriousness of what was unfolding. After consistent lobbying of the Minister, Deputy Smith, including at least one direct one-to-one meeting, I subsequently secured a meeting with the then Minister and the chief veterinary officer of the day, in the offices of the Minister at Agriculture House. I outlined to them both my serious concerns in respect of the conduct of the named head of the special investigation unit at that time. I implored them both to ensure there was an investigation of his alleged activities at that time. Had that been proceeded with and explored properly, I doubt whether the debacle that presented to the courts last week in the name of the Department of Agriculture, Food and the Marine and on behalf of the people would have taken place.

I do not accept the broader accusation that this issue has somehow undermined confidence in the food safety control systems in Ireland. The special investigation unit, SIU, by its very nature, must be robust in dealing with very difficult cases and, in some cases, with very difficult people. The job involves difficult relationships and investigations. In this case, if the SIU got it wrong, that needs to be reviewed and exposed and we need to ensure systems are in place to prevent a recurrence. It has nothing to do with undermining the credibility or the robustness of the food safety systems.

Deputy Caoimhghín Ó Caoláin

I am deeply disappointed with the Minister's response. It appears he is relying on an internal departmental review to deal with the matters I have sought to address. That is not what is required. Internal reviews will not suffice by a long shot. In the case in question, a man's life was not only put into suspension for several years but he faded before my eyes, month after month, as I met him in consultations about his situation. His family have suffered immeasurably. The Minister should not put his head in the sand to ignore the fact that he is not unique and isolated. There are many such people and families involved in farming who have equally suffered because of the very questionable approach and engagement of the SIU. I assure the Minister I have no doubt of the importance and necessity of the role of the SIU to ensure the highest standards of practice, but there is no question in my mind on the evidence that I have seen that there is behaviour beyond acceptance being employed by a certain individual or certain individuals within the SIU, including currently, and it is not acceptable. I am deeply disappointed that the Minister has suggested in his response that the prosecution's case was not sustainable. The subtext of that is open to the interpretation that it was unable to prove its case and there is the very overt suggestion that in some way Mr. Fannin was other than wholly innocent.

I will repeat for the Minister what the judge said at the conclusion of the case:

I want to be very clear. Mr. Fannin leaves this court here today with his reputation fully intact and without any question mark hanging over his integrity.

That was my understanding of Mr. Fannin all along and that is why I took the very appropriate steps of bringing his case to the attention of the highest office in the Department of Agriculture, Food and the Marine, that of the former Minister, Deputy Brendan Smith and the chief veterinary officer of the day.

Deputy Simon Coveney

The Deputy never brought it to my attention.

Acting Chairman (Deputy Catherine Byrne)

Deputy Ó Caoláin's time is up.

Deputy Caoimhghín Ó Caoláin

I ask the Minister to explore the record of his Department and his office.

Acting Chairman (Deputy Catherine Byrne)

The Minister has two minutes to reply.

Deputy Caoimhghín Ó Caoláin

These are the facts as outlined and I am deeply disturbed.

Acting Chairman (Deputy Catherine Byrne)

Please, Deputy Ó Caoláin------

Deputy Caoimhghín Ó Caoláin

A Garda investigation is what is required.

Acting Chairman (Deputy Catherine Byrne)

I ask the Minister to try to keep his reply to within two minutes.

Deputy Simon Coveney

I will try to do so. The Deputy is asking for a Garda investigation into how the case was handled, but the Garda Síochána was involved in this case. I am not sure if the Deputy would be happy with an investigation. I have been a Minister for more than two and a half years but the Deputy has never mentioned this case to me.

Deputy Caoimhghín Ó Caoláin

That is not the case. I remind the Minister that I spoke to him about it. However, all the substantive work was done before his time.

Acting Chairman (Deputy Catherine Byrne)

Deputy Ó Caoláin, the Minister is replying to the debate.

Deputy Simon Coveney

I can only answer for my own tenure in office. The Deputy will know that when he has brought other issues to my attention, I have always given him a fair hearing and we have tried to get to the bottom of issues about which the Deputy has concerns. I would have taken the same approach had he expressed significant concerns about this case. The first I knew of this case was what I read in the media. Since reading those reports, I have asked for a full and comprehensive review to be carried out quickly by the Department and we will draw conclusions from that review. If further investigation is required as a result of the review, we will consider it.

The SIU is an integral part of my Department and it has a very difficult job. The unit deals with the most difficult cases and it is expected to get to the bottom of those cases. This case was such a case. I accept absolutely what the judge said at the end of the court case. So far as I am concerned this case is concluded and the individual against whom the Director of Public Prosecutions took a case is completely absolved of any wrongdoing. That is the judgment. However, it is my task to examine how the role of the SIU and my Department functioned in this case. If that role was inappropriate or unacceptable, I need to deal with the consequences. It would be very wrong of me to draw conclusions before a review takes place.

Hospital Facilities

Deputy David Stanton

I thank the Ceann Comhairle for allowing me to raise this extremely important issue which is the need to open the stroke unit in Cork University Hospital. I have been following up progress on the CUH stroke unit for more than two years, since November 2011. During this time I have been in contact with Chris Macey of the Irish Heart Foundation. I am pleased that one of its representatives, Emma Jane Morrissey, is in the Public Gallery.

The HSE's 2012 national stroke programme provided for the opening of 28 dedicated stroke units in acute hospitals throughout the country to care for patients admitted through accident and emergency departments The aim is to have 90% of acute hospitals operating a stroke unit to cover 90% of all stroke admissions. I acknowledge the Minister is very dedicated to this project. A total of 27 of the 28 units have been open and operational for the past 12 to 18 months. The only unit not yet open is the unit in Cork University Hospital. It is only one of two locations in the country that has the potential to operate as a centre of excellence in stroke care. I understand that to date, a considerable amount of funding has been allocated approximately for the recruitment of additional staff for the stroke unit but it is still not in operation. Why is it not open and when will it be opened? I understand that the Mercy University Hospital was not allocated additional resources but despite this, its stroke unit has been open for two years. The Bantry hospital stroke unit was opened in 2009.

It is widely accepted that general access to properly staffed stroke units will not only greatly improve stroke outcomes but could cut by 20% to 25% the annual death toll in Ireland of more than 2,000 people. This is a life and death issue. Stroke units save money as well as lives. The development of stroke units will reduce the number of stroke survivors requiring nursing home care. Figures from the Irish Heart Foundation indicate that as much as €414 million out of an annual cost of stroke of €557 million is spent on nursing home care for stroke survivors. An ESRI report for the Irish Heart Foundation, The Cost of Stroke in Ireland, states that the wider availability of stroke units and thrombolysis can save at least an extra 750 people each year from death and lifelong dependency and disability, while also saving the health service an estimated €230 million over the next ten years.

Funding was allocated to the HSE for the CUH stroke unit under the 2012 national stroke programme. A stroke unit is essentially made up of people rather than equipment. It is a concentration of expertise that has a dramatic added impact on patient outcomes. Essential personnel include stroke consultants, specialist nurses, occupational therapists, physiotherapists, speech and language therapists, dietitians, social workers, and psychologists.

In 2011, the chief executive officer of the HSE spoke at the joint committee on health about the development of stroke units at Cork University Hospital, Mercy University Hospital Cork, St Vincent's University Hospital Dublin, Limerick Regional Hospital and Our Lady of Lourdes Hospital, Drogheda. He said they would be completed by the first six months of 2012. We are still waiting for the CUH unit. When I raised the issue by way of parliamentary question in June 2013, I was advised by the HSE that upgrading work has been completed on ward 3A for some time. This ward will contain 11 beds for the stroke service, 13 neurology beds and a four bed epilepsy monitoring unit and video telemetry. The HSE has also advised in June, August and September this year that recruitment is under way for the necessary posts to staff the unit, and it was envisaged that the CUH stroke unit will be fully operational in the third quarter of 2013. It is still unopened.

I have continued to follow up the matter with the HSE since the summer and I understand that delays in opening the unit have been due to difficulties in the recruitment of staff, specifically additional nursing staff, despite an extensive recruitment campaign. I received a further communication from the HSE today advising me that a further series of interviews for nursing posts commenced yesterday and it is hoped that these will yield sufficient nurses to allow the unit to open in January or February 2014.

Minister for Health (Deputy James Reilly)

I am very grateful to the Deputy for providing me with the opportunity to speak on this matter.

Improvements in stroke services were envisioned in the Changing Cardiovascular Health: Cardiovascular Health Policy 2010-2019, which was launched in 2010. The policy establishes a framework for the prevention, detection and treatment of cardiovascular diseases, including stroke, which seeks to ensure an integrated and quality assured approach in their management to reduce the burden of these conditions.

The Health Service Executive has advised my Department that the situation with Cork University Hospital, CUH, is that it provides a full and comprehensive range of services for the victims of stroke. These services include neuro-radiology, including intra-arterial thrombolysis, acute neurology and elderly care medicine, which, when taken together, designate CUH as providing a comprehensive range of stroke related services.

To enhance this service delivery further and to provide a dedicated facility for stroke services, the executive management board at CUH allocated ward 3A as a suitable location for a stroke unit to be shared with the epilepsy and neurology services. When fully operational, ward 3A will comprise 11 stroke beds, 13 neurology beds and a four-bed epilepsy monitoring unit with video telemetry.

Funding of €25,000 was provided by the national stroke programme to enable some infrastructural upgrading of the ward. This work has been completed for some time, and Cork University Hospital has been working on progressing the staffing of the unit. The stroke unit will be staffed by relocating some existing staff from within the hospital and the recruitment of additional staff. The stroke unit includes a four-bed high dependency unit, HDU, which requires higher staffing levels. The HDU is where stroke patients who meet clear clinical criteria will receive thrombolysis. Currently, in many cases, this is provided in the emergency department. The new stroke unit will lead to this treatment being provided in a safer, more appropriate environment.

The delay in opening the unit is primarily attributed to difficulties in the recruitment of the additional staff required for the unit. Cork University Hospital has put in place a staffing plan based on training up a number of more experienced nurses who work in the hospital to allow them to work in the high dependency unit, but their current positions must be backfilled before they can be released.

Over recent months Cork University Hospital has engaged in a number of extensive recruitment campaigns with a view to recruiting additional nurses for the hospital. These nurses are required to replace those nurses who have left the hospital through resignation or retirement, and to staff new developments such as the stroke unit. While these recruitment campaigns have made progress in the recruitment of nurses for Cork University Hospital, the hospital has not yet reached the level of staffing required to allow the stroke unit to open.

A further series of interviews for nursing posts in Cork University Hospital commenced this week on 26 November. It is anticipated that these interviews will yield a sufficient number of nurses to allow the unit to open. The opening date for the unit will depend on how soon the new nurses can commence, but management in Cork University Hospital are confident they will have adequate nurse staffing levels to open the unit in late January or early February of next year.

Cork University Hospital provides an excellent service to stroke patients and the opening of the stroke unit later this year will further enhance the service available.

Deputy David Stanton

I thank the Minister for his response and I am hopeful this unit will open soon. There is new information in the Minister's response, namely, that experienced nurses working in the hospital will be transferred to the high dependency unit and that other nurses will then be recruited to fill their positions. I take it from that information that the hospital will be recruiting nurses who may not be as experienced or who are general registered nurses. The country is full of nurses who are unemployed so why is that process taking so long? We are talking about late January or early February before these positions are filled. As this is November, we are talking about another three months.

I do not know what is going on but we have had this false start on more than one occasion. I agree with the Minister that the hospital provides an excellent service and that this additional service will enhance what is in place. It is a shame the ward is available but is not being used. The Minister might find out, if not now then later, the reason it is taking so long to recruit ordinary nurses, and I use the word "ordinary" in a careful way, who are not as experienced, according to what the Minister has just said, to backfill the positions that will allow people move from their current posts to the high dependency unit. What is going on? I may be missing something but I cannot understand why nurses cannot be recruited when there are so many nurses looking for work. A series of interviews started only yesterday. I was led to believe that process was ongoing for months. Somebody must answer questions in that regard because, as I said at the outset, this is a matter of life and death for people, and these units make a huge difference. Something is wrong and it is not good enough that it has reached this stage. I know the Minister is committed to this issue. He works very hard on the anti-smoking campaign, which is related to stroke in that we know smoking causes stroke. It is important, therefore, that we get this done as quickly as possible, preferably before Christmas.

Deputy James Reilly

I thank the Deputy again for raising this issue because it is unacceptable that it has taken two years to open this unit. Every other unit in the country has opened. The consequence of that is that we have gone from the bottom of the league in Europe to the top regarding the administration of thrombolysis, the blood clot busting drug that has saved so many lives. Moreover, the current statistics show we are saving virtually a life a day and saving three people from going into long-term care.

There has been an extraordinary improvement in outcomes for people with stroke as a consequence of these stroke units, and the Deputy is correct that it is not just about the presence of a CT scan or of thrombolysis. Having a dedicated unit with dedicated staff who become very experienced in the various nuances of dealing with people with stroke improves the outcomes also. I am aware that President Obama's health spokesman mentioned this, at an international conference in Oregon last year, as one of the areas where significant improvement has been achieved despite that country being in the face of a serious economic recession.

The people who work in our stroke units have done a phenomenal job in an extraordinarily short period, improving outcomes for people, and the people of Cork are entitled to the same service. As the Deputy rightly pointed out, I fail to understand why it is that the Mercy University Hospital has its unit in place and Cork University Hospital still does not. I will be meeting Mr. Ian Carter, the new director of hospital services, today and I will raise this subject with him. It is unacceptable it could take this length of time, when we know a large number of nurses have said they are leaving this country because they cannot get work, to recruit nurses for Cork University Hospital. It will be dealt with.

Illicit Trade in Tobacco

Deputy Robert Dowds

I thank the Minister for being in the Chamber to respond to this Topical Issue matter. I wish we did not have to discuss tobacco at all because it is a killer which does not have any beneficial effects for anybody, but it will come as no surprise to the Minister that there is a significant level of illegal tobacco sales in Ireland. The estimates fluctuate from 30% down to 15%, with the truth being somewhere in between. I understand the Revenue Commissioners estimate that in 2011, some €707 million worth of illegal cigarettes were sold, which led to a loss of €258 million in excise duty and VAT to the State. That is particularly appalling given that so much of the work of hospitals and our health service is to do with tackling the ill-effects of tobacco. If ever there was a product that deserved to be taxed because of the cost to the State, tobacco is it.

One of my concerns is that in parts of my constituency there is a strong sense that approximately 30% of the sales are illegal, and that figure is growing. That appears to be the case in other parts of Dublin and in cities such as Waterford, according to anecdotal evidence.

I will give the Minister a couple of examples. A small shopkeeper to whom I spoke in north Clondalkin told me he let two staff go recently because of a decline in the legal sales of tobacco. The reason is not that people have suddenly stopped smoking, although I wish it was, but the growth in the illegal tobacco business. A neighbouring shopkeeper told me approximately 30% of discarded tobacco packaging outside his shop is from illegal tobacco products. While it would be preferable if people gave up smoking all together, it is galling that businesses which pay their commercial rates and keep people in work are being undermined because of illegal tobacco.

The other side of this issue is that the illegal tobacco trade benefits the criminal fraternity. Retail Ireland believes criminals in Ireland make in the region of €3 million per week from illegal tobacco sales. The most insidious aspect of that is it sucks young people into crime and inevitably some of them go on to get involved in even worse things, such as heroin and cocaine.

There are several questions about this issue to which I require answers. What is being done by the Revenue Commissioners and customs officials to stop illegal trafficking of tobacco products? What is being done to stop illegal sales of tobacco on the street? What is being done to get at the crime lords behind the street sellers who are making big profits from these illegal sales? Are the criminal sanctions adequate? Is there evidence that legally produced tobacco products are making their way into Ireland as illegal products from another country, as has been alleged to me? Has the State investigated this?

Tourists can legally bring in 800 cigarettes per person into this country and retailers reckon it accounts for 7% of tobacco consumed in Ireland. By contrast, Finland allows only 200 per tourist. Is there any way we can take a leaf out of the Finnish book to discourage people from smoking?

Minister for Finance (Deputy Michael Noonan)

I am advised by the Revenue Commissioners, who have responsibility for the collection of tobacco products tax and for tackling illicit trade in this area, that they are very aware of the threat that illegal tobacco products poses to the Exchequer and to the Government's health protection objective of discouraging smoking through high prices. Tackling this problem is a high priority for Revenue.

Cigarette smuggling is a world-wide problem and affects most EU member states. It is estimated that some 11% of the global cigarette trade is illicit. Given that tobacco tax rates and prices here are among the highest in the world, it is not surprising that there is a problem with illegal tobacco in Ireland. A survey conducted on behalf of the Revenue Commissioners and the National Tobacco Control Office of the HSE in 2012 indicates that 13% of cigarettes consumed here are illegal and that a further 6% of consumption is made up of legal cigarettes bought duty paid in another EU member state and brought in for personal consumption here.

In accordance with Article 32 of Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty, section 104(2) of the Finance Act 2001 provides that tobacco products tax is not chargeable on tobacco products that are bought tax paid by a private individual in another member state of the EU, provided that the products are for the individual's own personal use and not for commercial purposes. The tobacco products must be personally transported and accompanied into the State by that individual. This means that quantitative limits may not be imposed in these circumstances.

EU law provides for an indicative guide level which can be used solely as a form of evidence as to what constitutes a quantity consistent with personal use. The indicative guide levels are 800 cigarettes, 400 cigarillos, 200 cigars and 1 kg of smoking tobacco. Consequently, the quantity of tobacco products concerned can be taken into account only as one of a number of considerations used to determine whether the tobacco products are for an individual's own private use or for commercial purposes. This determination falls to be considered in accordance with criteria set out in Part 4 of the Control of Excisable Products Regulations 2010.

The only exception to this is where EU law permits the imposition of quantitative restrictions where member states have been allowed a transitional period to apply a rate of tobacco products tax that is lower than that required under EU excise law. Consideration is currently being given as to whether quantitative restrictions may be imposed in 2014 on cigarettes brought in from those member states that are subject to transitional arrangements and which have not achieved the minimum rate of tax required, in accordance with Council Directive 2011/64/EU.

Quantitative restrictions apply to tobacco products brought into the State from outside the EU or from territories where EU rules on VAT and excise duties do not apply, such as the US or the Canary Islands. Where passengers arriving in Ireland have travelled from these areas, they may bring a maximum of 200 cigarettes or 100 cigarillos or 50 cigars or 250 g of tobacco into the State tax free.

Interception of illicit tobacco products is achieved through a combination of risk analysis, profiling, intelligence and the screening of cargo, vehicles, personal baggage and postal packages. Revenue officers also target the illicit trade after importation by carrying out intelligence-based operations and random checks at retail outlets, markets and private and commercial premises. In line with best practice in tax administration worldwide, Revenue regards the development of information and intelligence as critical to the detection of evasion and smuggling.

In the period from January to 25 November 2013, more than 38.6 million cigarettes and more than 4,000 tonnes of tobacco were seized, which represents a reduction on volumes seized in earlier years. In 2012, seizures amounted to 95.6 million cigarettes and 5,276 kg of other tobacco while in 2011, 109 million cigarettes and almost 11,200 kg of other tobacco were seized. The reduction in volumes is believed to indicate a change in the operating patterns of smugglers who are moving away from large consignments towards smaller, more frequent consignments which are less easy to detect and which yield lower a volume on seizure.

There has also been success in detecting and prosecuting those involved in the illicit trade. In 2012, there were 132 convictions, which resulted in 47 custodial sentences, some suspended, and fines of €246,600. This year to 25 November, prosecution of those involved in tobacco smuggling and the illegal sale of tobacco has led to 87 convictions, with 32 custodial sentences, some suspended, and €147,750 in fines. The high level of seizures over recent years reflects ongoing enforcement action by Revenue.

Deputy Robert Dowds

I thank the Minister for his reply. I wish to put on record my absolute condemnation of the threat by Philip Morris, the tobacco producer, to the Minister, the Minister for Health, Deputy Reilly and, by extension, the State in terms of pursuing plain packaging. It is absolutely disgraceful given it is purveying a product which kills people. I fully support the Minister's efforts to bring in plain packaging.

Is there any possibility of following the Finnish example in terms of reducing the number of tobacco products brought in by tourists? It is disappointing to see the decline in the figures. Clearly the Revenue Commissioners and customs officials are aware of that and are, presumably, trying to come up with a better way to deal with this whole issue. Will the Minister comment on the sentencing of people caught selling illegal tobacco, in particular the people behind those on the street because they are the ones at which we need to get? They need to be hit very hard in their pockets and, preferably, with prison sentences as well.

Deputy Michael Noonan

I fully support the Minister for Health in introducing plain packaging. We will not be diverted from that by any correspondence we receive from vested interests.

Deputy Robert Dowds

Good.

Deputy Michael Noonan

There is a real problem with tobacco. Much of it arises from the fact that ordinary decent citizens are buying illicit cigarettes and illicit tobacco, mainly for price reasons. As we continue to use price to discourage people from smoking, I think we will divert more and more of the trade to the illicit trade. It sounds like a cliché to say that if people stopped buying illicit cigarettes, the trade would stop very quickly. The incentive to buy is related to price. Much of the illicit trade is driven by people posing as tourists to go abroad to buy cigarettes to bring into Ireland. People can check the Internet to find very cheap flights. They can use these low-priced flights to go to countries where cigarettes are much cheaper than they are in this country. I have a suspicion that the legitimate trade is involved in the production of illicit cigarettes as well. People are able to buy very cheap cigarettes in other countries and bring them to Ireland. As they pass through the airports, nobody checks whether they are carrying more than 800 cigarettes. I accept that there are some spot checks and spot searches. Large amounts of illicit tobacco are being brought into this country by individual travellers who purport to be carrying cigarettes for personal use. If one examines the prices of some flights, one will appreciate how quickly a profit can be made, especially by those who are prepared to travel a couple of times a week. The crackdown will continue. The Revenue Commissioners are chasing this up. The major price incentive associated with buying illicit tobacco makes it difficult to stop this activity.

Sitting suspended at 1.52 p.m. and resumed at 2.52 p.m.