Valentia Marine Limited: Presentation.

The committee meets to hear a presentation by Mr. Pat Curtin on matters relating to Valentia Marine Limited. I welcome Mr. Pat Curtin of Valentia Marine and Mr. Derry Gray of BDO Simpson Xavier. Before I ask Mr. Curtin to begin, I advise everyone that we will receive a short presentation which will be followed by a question and answer session. I draw the attention of witnesses to the fact that while members of the committee enjoy absolute privilege, such privilege does not apply to witnesses appearing before it. The committee cannot guarantee any level of privilege to witnesses appearing before it. Further, under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

We agreed before Mr. Curtin joined us to take a synopsis of his presentation which he has sent to us in advance. I will allow him to speak for ten to 15 minutes or less because members are under time constraints today and have indicated that they have a number of questions to ask arising from the presentation.

Mr. Pat Curtin

I thank the Chairman and members of the committee. In 1981, I developed a family-owned boat building business on a greenfield site in Valentia, County Kerry. At that time it was one of the main employers on the island. We employed up to 20 people full time and a number part time.

In 1989, I wrote to the then Secretary of the Department, Mr. Fionán Ó Muircheartaigh, regarding matters pertaining to the boat yard business and in particular my concerns with the impending Single Market which was coming into play in 1992. I wished to draw the attention of the Secretary to means of funding developments for this neglected industry. In 1991 the Secretary invited me to attend a meeting in Dublin at his offices to discuss these issues. He concluded by assuring me of the Department's full assistance in whatever way that could be afforded.

In 1992 I had successfully built a number of boats under the European surveillance package for the Department of the Marine. It was at the launching of one of those boats by the then Minister for the Marine, Deputy Michael Woods, that I discussed with the then Minister my plans for further developing the business. At that stage the Minister was very interested in my development plan and asked in what way the Department could assist me in completing my application for grant aid to the European Commission under Regulation 4028/86. I advised the Minister that I would need the expertise of a number of key personnel within the Department to guide me through the Brussels bureaucracy. I got that from both the Secretary and the Minister.

In 1992 we developed the plan which was to provide a comprehensive fishing boat service and repair facility to cater for the needs of the aging Irish fleet and the long-haul European fleet as well. The Department assisted me in every way to develop this plan. We developed the plan and brought it to fruition. I then brought it to the Minister in his Dáil office for appraisal. On foot of that the plan was verified, certified and supported under Regulation 4028/86 and submitted to Brussels. Under Regulation 4028/86 it is a prerequisite that before any application goes to Europe for approval, State funding must be in place. In October 1992 the plan went to Brussels. In December 1992 I was requested to attend in Brussels accompanied by an official from the Department of the Marine to brief the various DGs in Europe on the concept, the rationale and the thinking behind the project. The official concerned acknowledged and confirmed the Department's support for the project. In April 1993 representatives of the Department attended the regular fisheries structures committee meeting in Brussels at which the project was approved under Commission Decision Port/Irl/1/93. On 26 April 1993 the Department and my company, Valentia Marine Limited, were formally advised by registered mail of the Commission's approval for the project under Regulation 4028/86. The funding arrangements for the project were as follows: grant aid from the Commission of IR£1,056,850, committed member state funding of IR£565,185, with the beneficiary paying a further IR£565,185. At this stage the Commission decision was legally binding on all those to whom it was addressed. In summary, I had approval in the form of a Commission decision for grant aid totalling IR£1,056,850 for development of the boatyard. However, this was linked to the member state contribution, as is the case with all European Commission funding. I cannot stress enough the importance of this requirement.

On receipt of official notification of project approval, I immediately set about implementation of the plan by recruiting extra staff and firming up the arrangements with potential service providers in the area of electronics and so on. I then prepared the site for commencement of the project. I had at that stage expended approximately IR£250,000, which amount was certified by an engineer from the Department. The information can be made available to the committee on request.

There were a number of conditions attached to the Commission decision, including that the project be commenced within one year of approval and completed within two years of commencement. I had, therefore, to go into first gear and waste no time in commencing the project. I met my bank to arrange bridging finance for it. On examination of the Commission decision, the bank made the following observations: the funding from the European Union could be drawn down in two stages. This did not present a problem. However, there was no indication of a draw-down sequence in regard to departmental funding. It was suggested, therefore, that I obtain a letter clarifying and identifying the Department's draw-down sequence. I then requested a letter from and a meeting with it.

During a later meeting with the Department the personnel present appeared to be of a different mind on the matter. One official said he would consider the matter and defer to me, while the other became somewhat agitated and advised me in no uncertain terms that the Department was under no obligation to pay any grant towards the project and that a letter would issue to me within a short time. I received the letter on 23 September 1993 advising me that it was a matter for me to provide the member state funding and that the Department had no mechanism or scheme in place or obligation to pay a grant towards the project. There then ensued a series of correspondence with the Department, all of which came to nothing. I was faced with a really big problem in that by that stage I had taken on three new personnel and owed the bank in the region of IR£300,000. I requested many meetings with the Department which were not granted.

It was at this stage that I took legal advice on the options open to me. Based on this advice, I applied for and was granted a judicial review in 1995. My case was eventually heard in the High Court in 1997. The outcome, after four days, was a settlement initiated by the Department and entered into in good faith by me. It provided for two options: (a) acceptance of a sum of IR£135,000 in full satisfaction as damages or (b) that the sum of IR£135,000 form the national aid element in the event of the original project, with its modified funding arrangements, being submitted to the Commission for approval. I opted for option (b).

The Department supported the modification option as per the court settlement and confirmed the project's viability. It submitted the project by letter to the Commission for approval on 26 February 1998. In response, the Commission requested details of the national scheme under which the original project had been approved and asked if the scheme had been approved by the Commission. The Department's response was that it had no national scheme of grants in place to assist projects such as mine. I again found myself in a dilemma when the Department acknowledged to the Commission that it did not have a national scheme or programme under which it could grant-aid the project.

During a meeting with the Taoiseach arranged by my local representative, Deputy Healy-Rae, the Taoiseach indicated his concerns to me. Thereafter, following considerable deliberations, he commissioned international consultants, INDECON, to examine the matter and report back to him. The report recommended that the case be returned to the High Court or that it be brought to the attention of the Ombudsman for speedy resolution. It was also critical of the Department's lack of consistency and the manner in which it dealt with the application admininstratively.

On 17 May 2001 I submitted a formal complaint to the Ombudsman. In September 2002 he completed his report on the matter. The report stated that, on the basis of the evidence examined by him, he considered that the manner in which the Department had processed the original application may have been flawed based on undesirable administrative practices and was contrary to fair and sound administration. It further stated that, while the Department had been directly involved in the preparation of the application, it appeared to him that it did not meet the requirements as set out in Regulation 4028/86. The Department did not have the required programme in place and could not accept responsibility for the provision of the member state funding. This eventually led to the court settlement. The Ombudsman expressed his concern that the Department might not be in a position to fulfil its part of the court settlement in that conditions attaching to the Commission decision had not been met by it. The report concluded that, following a preliminary examination, it appeared the Department's actions might fall within the heads of maladministration and that I had been adversely affected by these actions. The Ombudsman requested that the Department review its handling of the case and report back to him on what steps it proposed to take.

I have lost my business as a result. I have a young family and no means of providing for them. I have five young sons. The Department's failure to acknowledge its obligations and commitments to me and the European Commission has left me without a business or a means of providing for my young family. I have incurred enormous debts which I may not be able to pay. If I am to do so, the Department needs to compensate me adequately.

I will take questions before asking Mr. Gray to confirm the figures for us.

I warmly welcome Mr. Curtin who has raised this matter individually with members. Most people were astonished to read and hear about this saga, on which the joint committee has received a covering note from the current Secretary General of the Department. Given that it is approximately 16 years since this saga commenced, would it be Mr. Curtin's intention, if the original commitments given were fulfilled, to proceed with the project? In other words, even at this late stage, would he still proceed with it, or does he believe some other form of compensation is necessary?

The fundamental point identified by the Ombudsman is that a package was put together in April 1993, whereby the Commission would contribute more than IR£1 million, with the member state and beneficiary each contributing IR£565,000. The contention is that no funding mechanism was put in place by the then Secretary General. Were other grants researched? I recall, as a former member of the Committee of Public Accounts, examining several marina projects, the most famous of which was Kilkee. There was a significant expenditure of State moneys where the proposers had to go back to the drawing board because the studies of the harbour were inaccurate. Is it true that the Department did not have a mechanism in 1993 or 2000 that could have assisted this project?

It is an astonishing saga which is why members felt Mr. Curtin should make a presentation to the committee. I propose that the committee should hear back from the Secretary General on this matter. It is astonishing, given that the project broke down after 1993 that the Taoiseach's intervention led to a report that produced the same result. It is a sad saga and represents serious maladministration by the Department. Mr. Curtin and his family have been ruined. He can rest assured that the committee views it in a serious light and would hope that even at this stage there can be a resolution.

Mr. Curtin

The grant aid mechanisms for the marina were under tourism-based projects. I applied for one which was identified to me by officials in the Department. Regulation 4028/86 provided for Community measures to improve and adapt structures in the fisheries and aquaculture sector. It was designed for peripheral and coastal areas in Europe. The failure of the Department to put in place a national scheme for private port developments, while it has killed my project and destroyed my business, has denied Ireland access to this funding for several years. I am not going to take on that battle as I have a large enough one as it is.

So much money has been spent, one wonders if the Department had put the money up front, would the business have been successful? Is it too late at this stage?

Mr. Curtin

There is a "Yes" and "No" answer to that. I was 44 years of age when I commenced this. Regrettably I am now 58 years of age and I am not so young or fit. It has been a battle with the Department to get to this stage. I have not the same energy and my health has deteriorated. The project is still a good one and if it were properly funded and managed it would work. Some 14 years of horrific journeys to Dublin, being dismissed and stonewalled, has taken its toll. The human body can only take so much. I personally could not take on this project at this stage.

This saga is worth a book.

I welcome Mr. Curtin and Mr. Derry Gray. I am disappointed by the State's investment of only IR£565,000. I admire the time and effort the individuals put into this project. They employed financial consultants and worked with the bank on this dream. It astonishes me that they were given an initial commitment by the Department in 1993 and encouraged by the then Minister, but not given final approval. This is a miscarriage of justice. The Department's ambiguity is astonishing. I am sure it is disappointed this case has not gone away. I admire Mr. Curtin's principled stand. It has been 13 years since it was first approved. The impact of losing a business, particularly when one is rearing a family, is traumatic. Mr. Curtin has paid a personal price for this project.

The project was approved by the State agent and the European Commission but when it came to the crunch the State failed to meet its obligations. I am disappointed that the State has not delivered on this. The Secretary General and the Minister have not given clear direction on this matter. After the proceedings in the High Court, Mr. Curtin took option B which was a scaled-down development.

Mr. Curtin

We scaled down the amount of State contribution. We found an investor to fill the void created.

Was the EU money still on the table at that stage?

Mr. Curtin

Yes.

Is it correct that the bank supported the project and it was approved by the Department in principle?

Mr. Curtin

It was more than "in principle". As the regulation clearly points out, application for Community aid must not only be channelled to the Commission through the member state but must also have received the formal and unqualified approval of the member state. Financial contributions by the member state at prescribed rates are not only contemplated but are a precondition to eligibility for Community assistance. It has to be signed, sealed and delivered in Dublin before it can go to Brussels for consideration.

I was impressed by the presentation. This is backed up by the Indecon consultants' report on the matter. They were highly critical of the overall handling of the matter, particularly regarding the lack of consistency. There is no clear direction on this. Correspondence on this matter was received by the Committee of Public Accounts when I was Chairman. The Ombudsman reported on the issue four years ago. I am astonished that this has been ongoing since my election to Dáil Éireann. It represents a catalogue of total failure on the part of the State to meet its obligations. This view was clearly endorsed by independent arbiters including the Ombudsman and the High Court, and the latter application has equally failed to deliver.

Whatever about the State's ability to co-fund this project in the past, we are now operating in a multi-billion euro economy. In any case, the State's contribution, on behalf of the taxpayer, amounted to a maximum of IR£565,000, less than 25% of the cost involved. I am sure the Department could have included clauses, conditions and stipulations in respect of the funding it was to provide to allow for the eventuality of the project's failure to make money. Was Mr. Curtin prepared to agree to such conditions?

Mr. Curtin

Had I been asked, I would have had no difficulty in doing so. We received positive viability reports in respect of this project, which was to create in the region of 50 skilled jobs in Valentia, on the periphery of the Kerry coast. I would have had no problem in agreeing to any stipulations regarding the departmental funding because I knew the project would be a success. It was verified by internationally esteemed economic consultants, Norton Consultants in Edinburgh, who advise the World Bank and the European Commission. They undertook feasibility studies prior to my submission of the proposal to the Commission.

From a business perspective, I admire Mr. Curtin's determination to achieve resolution of this issue. I am disappointed the State has failed to deliver. Even at this last hour, I appeal to the Secretary General of the Department and the Minister of the day, who has ultimate responsibility for this, to do the honourable and decent thing by coming to a final resolution. Mr. Curtin should not have to endure more hardship; he has gone as far as he can go.

The documentation, which I saw previously in my capacity as Chairman of the Committee of Public Accounts, is entirely convincing. I will pass the file to the Comptroller and Auditor General to see whether he can give a recommendation or directions to the Department to act in a compassionate manner and bring this case to a conclusion. I sincerely hope Mr. Curtin is not obliged to go to court again to deal with this. If there is any degree of justice on the part of the State, the matter should be resolved instantly.

I remind members that we are hearing Mr. Curtin's side of the story today and that we are obliged to hear the other side also. It would be wrong for us to reach any conclusion until we do so.

I draw members' and witnesses' attention to the absence of Deputy Healy-Rae, who had to return to his constituency to attend a funeral.

I wish to explore a point made by Deputy Perry. In the period when Mr. Curtin received the first indication from the Department that it would not be supportive, did he approach other agencies such as the IDA? Deputy Perry made oblique reference to this.

Mr. Curtin

A particular difficulty was that the Department was the only national authority competent to deal with boat yards, an area that had previously come under the remit of Bord Iascaigh Mhara, BIM. Neither that agency nor Forbairt was able to commit to the project because they did not have the relevant powers under existing legislation. The Department was the only authority through which we could have submitted our project, as indicated by its joint application with us.

I commend Mr. Curtin on his endurance in struggling for 14 years to achieve what should have been a formality. He is still struggling to ensure his rights are protected. It is a disgrace that the Department has continued to resist his attempts over that period and has actively placed obstacles in his way. I agree with Deputy Perry that this case is a miscarriage of justice.

The Department participated in a judicial review at which two options were presented, A and B, of which the latter was signed up to by both parties. Within a short space of time, however, the Department walked away from that decision. The documentation further shows that the Department supported the proposed modification of the project, confirmed its viability and submitted it to the Commission for approval. Four months later, however, the Department advised the Commission that it would not have a grant scheme in place to assist the project. The Department initially supported the project and entered into an agreement to that effect with Mr. Curtin before doing an about turn four months later. It was a case of unbelievable incompetence, to put it mildly.

The Department has stated that it is unable to agree with the Ombudsman's decision in this case. It says, however, that as an "exceptional measure", without prejudice or any admission of liability, it is prepared to explore with the Office of the Ombudsman the possibility of arriving at an amicable resolution.

For the record, the Deputy is reading from the response the committee received from the Secretary General of the Department, Mr. Brendan Tuohy.

That is correct, it is his correspondence.

Deputy Ferris may continue

The Department is still dragging its heels. As the Chairman said, we want departmental representatives to attend a meeting of the committee to explain why this has been ongoing for 14 years, during which time the Department effectively stifled, if not destroyed, a viable project in an area that needs employment. Fifteen jobs would have had a major impact in Valentia. The activity of servicing boats from all over the coast would have had a knock-on effect for the island community as well as the wider south Kerry community. All of that has been lost.

I hope the departmental representatives will explain to us why they have put Mr. Curtin through so much torment in this period and why they failed to honour an agreement that was thrashed out in the courts. It is an absolute disgrace and I commend Mr. Curtin on his resilience. There is no doubt that the Department will take this to the wire. I wonder whether we would be outside our remit to write to the Ombudsman.

I will ask the clerk to inquire about that.

I suggest that we do so if we are within our remit. The Ombudsman has come down strongly in his recommendations in this case. What is the purpose of the Office of the Ombudsman if a Department simply ignores it?

On the advice of the clerk, we should ask the Ombudsman to compel the Department to negotiate a settlement in this case. What was a fantastic project 14 years ago could still be viable now, although it would have to be taken on by somebody else because, as Mr. Curtin said, he has given it all he can. He is entitled to compensation not only for what he invested in money, effort and endurance but also for what he and his family have lost. What would have been a major industry in the area has been lost. I wish Mr. Curtin the best of luck. I am sure everybody here will fully support him. Having read this and having spoken to my own contacts in south Kerry, this is absolutely accurate. It has been verified by court decisions, by the Office of the Ombudsman and by the Department.

Immediately after the public session we will ask Mr. Curtin and Mr. Gray to leave and the committee will decide in private session what course of action to take.

I apologise to Mr. Curtin. Unfortunately, business sometimes clashes and I had to attend in the Dáil on foot of a priority question to the Minister for Enterprise, Trade and Employment. However, I am familiar with the details of this case. I am deeply disturbed by the nature of the briefing note the Department sent us regarding this meeting. It indicates this is not something that relates to a distant time and that there are real questions as to the attitude and position of the Department in the present day.

In the Department's briefing note it is stated that Valentia Marine Limited intimated to the Department that it was a matter for the Department to provide a member state aid contribution of up to IR£565,000. The Department did not accept that this was the case and informed the company in September 2003 that it was primarily a matter for the company itself to arrange a member state contribution.

Mr. Curtin helpfully provided a document from the Official Journal of the European Communities setting out approval for this project — the authority or body responsible for forwarding the supporting documents was the Department — and it clearly outlines that the member state contribution as capital grant would be IR£565,000. If that were not enough, it is stated in a further submission from the Department that the project had the full support of the Department of the Marine. On the one hand the Department is stating that this has nothing to do with it. On the other hand we have a document signed by a Department official stating that the project has the full support of the Department of the Marine.

What worries me is not so much that a mistake was made because mistakes happen. What worries me is that the mistake is not acknowledged in the briefing note from the Department which knows that this committee is interested and concerned and has been in communication with the Department on the issue. It is time for the Department to come clean, to stop covering up an error, admit that mistakes were made and provide due compensation for an entrepreneur who was, in effect, an innocent abroad in this scheme.

This case has wider implications. The Ombudsman's work has yet to be completed. I have read the summary of the Ombudsman's report. It details a list of errors that applied to the manner in which the Department was handling such European grants at the time. There was no relevant authority and no relevant documentation. There was no assessment and so on. There is a long list. I am concerned that the Department may have been stonewalling and refusing to acknowledge the mistake made in this case because if it did it would open up wider questions as to how European money was spent, what grants went through, and what were the methods of assessment, measurement and performance monitoring.

The question I want to ask Mr. Curtin is what does he believe made the Department balk at providing the capital grant for this project. Did the Department of Finance turn the project down? What changed? I apologise if I am crossing over some of Mr. Curtin's earlier testimony. What changed in respect of the Department's position since the signing of a document by Mr. Michael Daly on behalf of the Department indicating that it fully supported the project? Mr. Curtin would have taken that as gilt-edged security. It was the State stating that it fully supported the project. He would have proceeded to develop his business on that basis. Perhaps Mr. Curtin can only surmise, but what does he believe is the reason for the change?

We agreed prior to the start of this meeting that we would send the extract of the committee debate to both the Department and to the Ombudsman. I expect a response from the Ombudsman and from the Department.

The Office of the Ombudsman also has critical questions to answer as to why it sat on this for four or five years and has not responded to the Department. The last Departmental correspondence was some four years ago when the Ombudsman's office has clearly indicated that what we have here is a case of maladministration. If the Ombudsman's task is not to deal with such obvious maladministration, what is the Office of the Ombudsman for?

Mr. Curtin

It is a mystery to me that the Department reneged. I approached the Department in September 1993 with a view to getting its timetable for the draw down of its portion of the funding so that the bank could provide me with adequate bridging finance. The response from the Department was that it was a matter for my company to find the State's portion of the funding. To this day I am at a loss to understand that, particularly as the Department promoted and certified the project in conjunction with me and my company, Valentia Marine Limited. I regret that I do not have an answer to Deputy Ryan's question.

Mr. Curtin has included a two-page extract from an Ombudsman's report with his submission. In the interests of clarity I must ask him whether he has the entire report?

Mr. Curtin

I do.

Was it sent by the Ombudsman?

Mr. Curtin

I received it in the post.

That is not what I asked. I asked whether it was sent by the Ombudsman.

Mr. Curtin

I do not know.

Who sent it?

Mr. Curtin

I do not know.

Did it arrive anonymously?

Mr. Curtin

It did.

Did Mr. Curtin ask the Ombudsman to give him an official copy of the report?

Mr. Curtin

I did.

What was the response?

Mr. Curtin

I asked for it under the Freedom of Information Act.

What was the response?

Mr. Curtin

I was informed that I would not get a copy as I was not a maligned person in the case.

I welcome Mr. Curtin and Mr. Gray. I have been aware of this matter for some time. I remember when Mr. Curtin first spoke to me about it. I read the documentation and correspondence and I cannot believe what is happening. I believed this was a matter of a simple error that could be quickly rectified but this was not done.

I will not go into what has been said. I am not a member of the committee. I thank the committee for facilitating me. Mr. Curtin needs answers now. This is a committee of the democratic Parliament of this country. If Mr. Curtin cannot get answers here, he may as well give up.

I propose that the committee invite the Secretary General of the Department and his officials here to answer questions because they are the only people who know what happened. I do not know what happened, nor does anybody on this committee. We need to know what happened. Was there a mistake? Was it intentional? All the documentation supports the application. The area where Mr. Curtin lives is an ideal location for such a project and jobs were badly needed there at the time. Mr. Curtin was well equipped to carry out such work. I do not believe what happened had anything to do with Mr. Curtin's business plan.

I appeal to the committee to follow this up and try to get answers for Mr. Curtin. If he does not get answers this will destroy his health and that of his family. This is our democratic Parliament. We are sent here by the people to represent them. The facility for people to come in and ask questions is democratic as well, and if Mr. Curtin cannot get answers in this forum I do not know where he will get them.

I have here an abstract from the Ombudsman's report which I will read because it is reflected in the response. Paragraph 4.6 states:

The Ombudsman has concluded following his preliminary examination that the actions of the Department of Communications, Marine and Natural Resources may fall within the heads of maladministration at section 4(2)(b) of the Ombudsman Act 1980 and that Mr. Curtin has been adversely affected by these actions.

The Ombudsman requested that the Department review its handling of the case and that it report to him on what steps it proposed to take to remedy the adverse effect suffered by Mr. Curtin.

I am reading that into the record on the understanding that this is the Ombudsman's report. We are open to correction if that is not the case.

Deputy Broughan mentioned that the Department responded in detail to the Ombudsman's office. I will read from the Department's response because it is important it is read into the record. It states:

The Ombudsman's Office carried out a preliminary examination of the matter on foot of a complaint by the company and wrote to the Department in September 2002 setting out its preliminary examination report. This indicated that the Ombudsman had concluded that the actions of the Department might fall within the heads of maladministration of section 4(2)(b) of the Ombudsman Act 1980 [this confirms what I read earlier] and that the owner of the company had been adversely affected by those actions. The Ombudsman requested the Department to review its handling of the case and report on the steps it proposed to take to remedy the adverse effect suffered by the company’s owner.

The Department responded in detail to the Ombudsman's Office on 27 September 2002. In summary, the Department emphasised that it rejected as completely unwarranted and without substance or foundation the complaint by the owner of the company that the Department acted improperly, unfairly and with bias. It said that it was satisfied that it had at all times acted properly, fairly, reasonably and objectively towards the owner of the company.

The Department stated also that it was unable to agree with the Ombudsman's conclusion that the actions of the Department might fall within the heads of maladministration, or that the owner of the company had been adversely affected by the actions of the Department. It said also that it would, however, as an exceptional measure, without prejudice and without any admission of liability, be prepared to explore with the Ombudsman's Office the possibilities for arriving at an amicable resolution.

There have been some informal contacts with the Ombudsman's Office in the meantime but the Department has not, as yet, received a substantive response to its letter of 27 September 2002.

That is what the Secretary General of the Department of Communications, Marine and Natural Resources had to say on the matter in his briefing note to the Ombudsman's office.

I have a specific question for Mr. Curtin, his response to which will assist us, when he leaves the room, in deciding what should be the our next step. Does Mr. Curtin agree with what the Department says?

Mr. Curtin

No, I do not.

Has Mr. Curtin had any consultation with or meaningful communications from the Department in an effort to resolve the issues as outlined?

Mr. Curtin

No.

In what period?

Mr. Curtin

Not since the court case.

The Ombudsman's office reported its preliminary findings in 2002. Can Mr. Curtin tell the committee what has happened since then?

Mr. Curtin

In 2002, I submitted my complaint to the Ombudsman's office. Thereafter, the Ombudsman informed me he would examine the complaint and would, on completion of his report, forward it to the Department for its response and deliberations. I have since then tried to encourage everyone involved to progress this matter. Regrettably, I have been stone-walled and have had no response on or resolution to the matter.

Did Mr. Curtin communicate with the Ombudsman in regard to completion of his report taking account of the detailed response received by him from the Department on 27 September?

Mr. Curtin

I was not aware the Department had corresponded with the Ombudsman on 27 September 2002.

How many meetings have you had with the Department since the court case or, since 2002?

Mr. Curtin

None.

None. There has been no communication on the matter?

Mr. Curtin

No. We have not been afforded any meetings.

Perhaps Mr. Gray will tell the committee about the financial implications of this for Mr. Curtin.

Mr. Derry Gray

I am a partner with an accountancy firm BDO Simpson Xavier and I am also an engineer. Much of my work is as a management consultant for ports and marine-type projects. I have been engaged by the Department of Communications, Marine and Natural Resources on a number of projects during the past ten years.

Following the court case in 1997, I was requested by the Department to liaise on its behalf with Mr. Curtin to get the project up and running. The business plan I read in 1997 was superb and was spot-on in terms of its market, opportunity, management structures and funding model coupled with the approved grant from Brussels which I understood the Department was seeking to complete and secure for Mr. Curtin who had taken option (b) following the court case. I was satisfied this was a straightforward matter and was expecting the Department to rubber-stamp it. The business plan was not being altered, there was merely a small amendment to its financial characteristics. The project was costed at IR£2.2 million and was being reconfigured with some extra equity funding to make up the deficit in that the Department was then only contributing IR£135,000 as opposed to IR£570,000.

I was surprised first by the length of time it took to get a response on the matter. The court case took place in January 1997. It was February 1998 before the Department took on board my input and informed Brussels by letter of its support for the viability of the project and its intention to move forward with it. I took that to mean Mr. Curtin could at last commence his project. As noted in the correspondence, three to four months later, we received a letter from Brussels requesting further information regarding viability. I could not understand this. I had seen the report and given my recommendations regarding viability and had signed off on the viability issue with the Department who were satisfied with it at that time. I did not understand why the issue of viability was back on the table.

The rest is history. I will not go over the details again. I had a number of meetings with the Department on Mr. Curtin's behalf in an effort to move matters along. However, it was clear to me from mid-1998 onwards that there was a definite reluctance on the part of the Department to support the project. It was not a priority project for it and I got the distinct impression we were playing for time given there is a six year and nine months time limit attached to EU grant approvals. I knew at that stage we would hit a deadline at some point during 1999 which would result in the EU side of the bargain falling out of bed and that is what happened. There was a kick for touch and the saga continues.

To answer the Chairman's question in terms of the financial impact of this on Mr. Curtin, the business plan was superb and had the potential to create 30 to 40 jobs in Ireland with a revenue stream in excess of IR£1 million per annum. If the business plan were up and running today, I would project a profit of more than €1 million per annum. If such business were to be valued today it would be valued at a multiple of that million.

Fair enough. I want to be clear on the following point. Mr. Curtin does not have the resources required to take this matter back to the High Court and has come to this committee to put his case before Members of the Oireachtas.

Mr. Curtin

That is correct.

Mr. Curtin has indicated to the committee that he lost approximately IR£300,000 as a result of what happened.

Mr. Curtin

I have lost a great deal more than that.

I have one or two questions on the superb business plan. I respect Mr. Gray's credentials and qualifications. He stated that he was commissioned by the Department to reconcile the differences that existed at the time. Is that correct?

Mr. Gray

I was retained by Mr. Curtin but the Department had requested that a person be sought to mediate between the two parties.

The Secretary General stated in a letter to the committee that there was uncertainty in terms of the viability of the project and its potential capacity to earn money. On what, in Mr. Gray's opinion, was this finding based?

Mr. Gray

I was not involved during the time of the court case. The Department had prepared for the court case a witness who would testify as to the viability of the project. I became aware of that testimony, which was prepared by a consultancy firm, when I became involved in 1997-98. I had to bat against that to challenge whether it was valid. In February 1998 I was satisfied that the consultants' report was off the table and the points in our viability study were accepted. Subsequently, in late 1998 a further set of consultants were engaged to examine the project's viability. This was an unsatisfactory situation. I had to contact those consultants myself to meet them. They took a desk-top approach to the viability study. In the last line of their report to the Department, they stated they had not taken into consideration the economic criteria of the region in which this fishing boat repair service would take place. The fundamental point of the business plan was the economic situation in the south west with the fishing fleets from Norway, Spain, the UK, the Netherlands and Ireland using the facility. That economic assessment was the critical point but it only came into the last line of the report. I had to point out to the Department that this glaring omission more or less blew their desk-top opinion out of the water. Unfortunately I did not get any satisfactory reply to that.

It indicates that they were given a mandate to arrive at a determining factor. After the court case in 1998, two options were given. Mr. Curtin opted for the latter option. The business plan put the annual operational profits at €1 million. After the court case the Department was only to give IR£135,000. This was a scale-down from IR£565,000, a saving of IR£430,000. If the Department believed there was no viability, he should not have been offered this option. At that stage the Department was culpable. Considering the court case, the viability of the business plan and the report from the Ombudsman, Mr. Tuohy's letter indicates there is a contradiction in the reconciliation of the case. Is it correct that the Department believed this was a viable operation and it would co-operate fully with the application?

Mr. Gray

That was my understanding at the time.

If the Department felt it was not a viable operation, it should have gone for the other option which was a final settlement. Is it correct Mr. Curtin wanted to pursue his business dream and went for the second option?

Mr. Curtin

That is correct.

On that point, when the Department offered IR£135,000 as a settlement, why did he agree to that offer?

Mr. Curtin

I agreed to the offer so that it would allow me access to EU funding. I was confident on the basis of the strength of the project that I would find a suitable investor. I decided if that is the best offer and it was within the remit of the amount of percentage of grant aid that could be paid by a member state to a project, between 5% and 35%, it fitted the criteria in that respect. What I did not know at that time was that the Department in no way could have honoured its obligation. I learnt of this from the Indecon report dated March 2001 where the then Secretary General was asked if there were any means or mechanism by which a project such as this could be forwarded to Brussels for grant aid. The then Secretary General stated the Department had no knowledge of any schemes or mechanism by which any such project could be submitted to the Commission for grant aid. I did not know that at the time. Neither did I know when we went to the High Court that the Attorney General had advised the Department. That advice was stated in the Indecon report. The advice concluded that if the project failed due to lack of funding by the State, Valentia Marine Limited would have a good claim for loss and damage as a result. The legal advice to the Department was to that extent.

Indecon was requested by the Taoiseach to look back on these events. It had access to papers.

Mr. Curtin

Yes.

That last point is vital. How did the Department not know there was no such scheme, even though it had applied to Brussels for it on behalf of Mr. Curtin?

Mr. Curtin

They applied on three occasions.

Numerous questions have been raised. The Department indicated to the committee that it disagreed with Mr. Gray's analysis and did not think the project was viable. I thank Mr. Curtin and Mr. Gray for their submissions. The committee will consider them and will decide its next step.

Has what Mr. Curtin discovered from the Attorney General been given to the Ombudsman?

Mr. Curtin

Yes, in the Indecon report.

Will Mr. Curtin send that document to the clerk of the committee?

Mr. Curtin

I will.

The last point is important in the interests of justice. This has been going on over 14 years.

During several Administrations.

Yes, it has.

We will discuss this immediately afterwards in private session.

I want to see a resolution to this matter.

We will discuss this immediately afterwards in private session

It is important that the people responsible deal decisively with this.

Deputy Perry knows the procedure. It will be discussed in private session.

Mr. Curtin

In regard to the viability of the project, I cannot understand why there has been so much attention on this aspect when it is clear that the Department was unable at any stage, on its own admission, to send any project such as mine to the Commission for approval.

I thank the Chairman, committee members and Deputy Healy-Rae for their assistance and allowing me to make my case at this meeting.

I must make clear to Mr. Curtin our awareness that there are at least two sides to this case. It would be remiss of me as Chairman not to hear the other side, as I said at the beginning of the meeting. I thank Mr. Curtin and Mr. Gray for appearing before the committee.

The joint committee went into private session at 4 p.m. and adjourned at 4.10 p.m. sine die.