JOINT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE debate -
Wednesday, 23 Mar 2005

Tralee Beef and Lamb Closure: Presentation.

Chairman

The next matter on our agenda is a discussion with the IFA and representatives of the farmer creditors of Tralee Beef and Lamb on the issues surrounding the closure of that company. The committee is joined by Mr. Ruaidhri Deasy, deputy president of the IFA, Mr. Donal Kelly, vice-president — Munster — of the IFA, Mr. Kevin Kinsella, director of livestock of the IFA, Mr. Phil Healy, president — Kerry — of the IFA and a farmer creditor, Mr. Bobby O'Sullivan, a farmer creditor, and other representatives of the IFA.

On behalf of the committee I welcome the members of the delegation and thank them for attending today's meeting. Before we commence, I remind our guests that while members of the joint committee have absolute privilege, those appearing before the committee do not. I further remind the committee that members should not comment on, criticise or make charges against persons or organisations outside the committee or the Houses of the Oireachtas.

During the past year, the Oireachtas Joint Committee on Finance and Public Service has discussed issues involving banks and other financial institutions. It received correspondence from farmer creditors unhappy at their treatment by certain financial institutions arising out of the Tralee Beef and Lamb issue. We agreed to meet with representatives of creditors in the IFA today to hear their views. We may subsequently consider meeting representatives of the banks separately. This is an opportunity for the delegates to present their viewpoint but their presence in the Oireachtas does not mean they have a stronger legal case. We do not have a panacea for the problem before us and I wish to ensure that no misinterpretation arises as to the outcome of today's meeting.

The meeting must adjourn at 2 p.m. to make way for other activities. I ask the IFA to make a short presentation before the floor is opened to members' questions.

Mr. Ruadhri Deasy

I thank the Chairman for facilitating our appearance as well as members who have pushed him towards providing us with a platform from which to present our case. We have supplied details of the events to members.

The Tralee Beef and Lamb issue has been a long running saga which began in 2001. Some 300 farmer creditors, the majority of whom are small farmers from Kerry, Cork and Limerick, are owed in the region of €3.5 million. Anglo-Irish Bank appointed the receiver and was repaid the €776,000 it was owed following the sale of the property. Our submission contains figures which reveal the Anglo-Irish Bank repayment and the liquidator's receipt of €1.786 million, as well as the different expenses incurred. Over €1 million has been excluded from this equation. The receiver's fee was €153,000, security was €220,000 and employee wages and holiday pay totalled €126,000. The figures reveal that a lot of cash from the operation was used to pay debts. We contend that Bank of Ireland, as the main trading bank, should have been in a position to know the full details of the company. We believe that many farmers were exposed to a loss and that cattle were used as collateral.

Since the collapse, the IFA has worked in conjunction with the creditors committee and has campaigned relentlessly on behalf of farmer creditors to secure payments for farmers. It has done so in accordance with long standing tradition. We believe that justice must be done. We have made proposals to the main banks and to the property's purchasers, Mr. Haulie O'Shea and Mr. Robert Noonan. We have not yet received full satisfaction but we are determined that the IFA will have to make full use of its political support to find an equitable and strong solution for farmers who have been severely impacted.

Mr. Donal Kelly

I also thank the Chairman for providing this opportunity to highlight our grievances with different organisations. The Bank of Ireland was the exclusive banker to Tralee Beef and Lamb and operated a discount invoicing system for the profit of the bank. It was the only organisation that ought to have been aware of the company's chronic cash flow problems and of its disastrous financial situation. It must have been apparent to the bank that the longer it propped up the company by means of the discount invoicing system, the greater the losses to the farmers concerned. It was inevitable that the company should collapse. Despite dire consequences for small and medium cattle farmers in Kerry, Cork and Limerick engaged in business with the company, the bank co-operated in the interests of maximising its profits. Consequently, it facilitated the sham business of Tralee Beef and Lamb for the final 12 months of its existence.

Following the collapse, the farmers involved had serious financial problems. Many had to sell assets and restructure their borrowings to survive. Financial ruin has been inflicted on their farms and families. Farmer creditors who have been devastated by the failure of Tralee Beef and Lamb include long-standing and loyal bank customers. The fact that the bank placed profits before its duty to the community has been a cruel blow to the farmers of the region.

In the aftermath of the company's collapse, the bank has chosen to hide behind its legal entitlements and obligations rather than take cognisance of its wider duties to the ordinary farmers reliant upon it. It is difficult for us to ascribe a motive other than simple profiteering to the bank's decision to assist Tralee Beef and Lamb continue trading long after it should have been apparent that the company was heading for collapse.

I believe that the disappointment of the protestors with the belligerent and uncaring attitude of the bank boiled over into frustration and anger which resulted in a sit-in at the bank's premises in Tralee to highlight the inequity of the bank's treatment of the farmers who were owed money, most of whom were already fighting for survival. A High Court injunction was taken against the creditors, of whom I am one.

We are appealing today for political support to find an equitable solution for the farmer creditors of Tralee Beef and Lamb. The law of the land states that one must pay for one's purchases. I cannot understand why that is not the case in this instance. We appeal to the chairman to ensure that those involved, particularly the Bank of Ireland, should not be allowed to walk away from their obligations.

Mr. Phil Healy

The previous owner of the Tralee Beef and Lamb factory operated in the old abattoir in Tralee and in 1995 built a new state-of-the-art factory for which we understand he secured generous grants. He was allowed to sell it in 1997 to John Delaney who did not seem to have the necessary capital to keep the business going. Why did the Department of Agriculture and Food give a licence to the new owner without checking out his financial credibility? Anglo-Irish Bank was an absentee lender which did not seem to care about the social problems this difficulty created for the workers and farmer creditors as long as it got the money it was owed plus interest. Was that bank a reckless lender?

When the company was put into the hands of a receiver we thought he would give us a fair crack of the whip. The receiver sold assets worth €1.8 million and seemed to delay proceedings long enough to spend nearly all the money and only handed back €36,000 to the liquidator after several requests to do so. More than 15 months passed and he still had not sent the money back. The liquidator believes there is a strong case against the accountant involved and we can provide evidence that the creditors were led astray by false accounts. Even though the courts appointed a liquidator he claims he does not have the necessary funds available to take a case to court. Was there a deliberate set up to make sure that money was not available from the €1.8 million proceeds of assets sold?

Mr. Bobby O’Sullivan

I thank the chairman for this opportunity to express our concerns and I hope he will be able to do something to sort out this case for us. I feel very aggrieved about the whole affair. As I see it, our cattle have been stolen by the insidious means of the promise of a good price that did not come to pass. In the last few months the company was in business it upped the price of cattle to attract more cattle for the final slaughter to have the greatest amount possible to cover its expenses.

I also believe the Bank of Ireland is responsible for much more than it pretends to be. It has already stated that the farmers unfairly targeted the bank but that is definitely not the case from what I consider to be the position. The company and the Bank of Ireland were cogs in the same wheel of the business. Why did the bank keep purchasing and issuing invoices when it knew the cheques issued to farmers were not being cleared? Why did it not keep an eye on the company's accounts in the same manner as it would keep an eye on my account or members' accounts if they or I owed it money?

How does this country, which claims to be Christian and democratic, support a law that makes it legal and easy to confiscate and steal cattle? It does not abide by the provisions of the Constitution nor by the Ten Commandants handed down by God, and that is plain to be seen. It puzzles me greatly that nobody has properly investigated what we consider was a spurious dealing arrangement and a suspiciously close level of co-operation between the bank and the company. The bank was in a position to have first-hand information that cattle sold were not being paid for as cheques were not being cleared. It was its duty to examine the company's accounts, which it did not do.

The company kept purchasing and issuing invoices in respect of what I believe were ill-gotten goods, which allowed the wheels of the business to keep turning and more cattle to be confiscated or stolen. The Bank of Ireland claims that farmers unfairly targeted the bank. If we want to get anywhere in addressing this matter, a proper investigation must be carried out into the level of co-operation between the Bank of Ireland and the company. It is the duty of the members of the committee, some of whom are members of Dáil Éireann, to ensure that people are treated as they should be under the provisions of the Constitution. We are definitely not being treated properly. Why are farmers not given the same concessions as others when they sell their product? We have no claim to the product when we supply it, as we did in this case, and that is wrong. We ask the members to do their job properly and to ensure that citizens are treated in the way in which they should be.

Chairman

A number of members are offering and I propose to call a Government speaker and then an Opposition speaker because we have a good mix of members. However, I will first call Deputies from the constitutency. I call Deputy McEllistrim.

Deputy McEllistrim

I welcome the members of the IFA, the creditors' committee and the farmers affected by the Tralee Beef and Lamb issue. I am a local Deputy from Tralee and I am very familiar with this situation. I sent eight cattle to Tralee Beef and Lamb and received a cheque from it. I then bought replacement cattle at Castleisland Mart for almost the corresponding amount and handed over the cheque. The manager of the mart in Castleisland subsequently telephoned me and informed me that the cheque had bounced. Therefore, I know the situation well and the reason these farmers are here today.

What happened at the plant was awful for the people affected in Tralee, other parts of Kerry and parts of Cork and Limerick. Some 300 farmers and creditors were left with debts of about €3.5 million in respect of cattle they supplied. I am aware that most of the farmers were small farmers. I support these farmers, the creditors and the IFA in its submission here today. I call on the Chairman and members of the committee to examine if there is anything we can do to try to rectify this desperate situation that occurred in Tralee.

Chairman

I call Deputy Deenihan.

Senator O’Toole

I ask the Chairman not to forget the Senators from the constitutency. He tends to forget from what part of the country I come.

Chairman

Will the Senator speak on the Government or the Opposition side?

Senator O’Toole

I represent the third way.

Chairman

A third force.

Deputy Deenihan

I am glad to have this opportunity to contribute even though I am not a member of this committee. I thank the Chairman for allowing me to do so.

Coming from north Kerry I am familiar with what happened in Tralee at that time. I know some of the farmers who were affected and who are still affected because of what happened at Tralee Beef and Lamb. The Official Report of that time will show that I raised this issue on a number of occasions and elicited responses from the then Minister. They are now fairly legendary. Unfortunately, it ended up that the farmers suffered. The reason so many farmers were caught out, if one can describe it as such, with Tralee Beef and Lamb was that they were very loyal to the company. They had alternatives but did not use them. They were so anxious to keep the plant going and to keep it alive. Unfortunately many of them suffered for their loyalty in the end. This has been overlooked at times by people and by the banks in particular. They were not rewarded for that loyalty. At no time has that aspect of what happened, which was a tragedy for so many farmers, been fully appreciated or realised by the main players.

At the time I asked the then Minister, Deputy Harney, in the Dáil, to involve the Director of Corporate Enforcement in this issue. Will the delegation confirm whether the matter was referred to the Director of Corporate Enforcement? Were these misdemeanours and the reckless trading by the banks as referred to by the delegation, referred to the Director of Corporate Enforcement for investigation? If so, what was the result? How did the Director of Corporate Enforcement react to the various allegations made? What was the view regarding possible reckless trading? Was any follow-up action suggested?

It is obvious the banks were aware that a problem existed. At any time in the previous year did any of the people affected voice concern to the bank manager in Tralee or to any bank official about their unhappiness or unease about what was happening with Tralee Beef and Lamb? It is a fact that over a period of time people were not being paid and I believe some were left unpaid for approximately six months. The company was inclined to pay some of the bigger suppliers and ignore some of the smaller individual creditors. Was this and the fact that there were question marks about the future viability of the company reported to the banks? If this was the case, then the banks could be accused of reckless trading and this is a very important aspect. Did the Bank of Ireland lose money? This is not clear from the accounts. I notice from the accounts there seem to be no payments made to the Bank of Ireland by the receiver.

I appeal to this committee to support the creditors in whatever way it can. Did the IFA, on behalf of the farmers, ever consider taking a case against the Bank of Ireland in the matter of this experience and allowing the courts adjudicate the matter?

Deputy Ferris

I welcome the representatives of the creditors and I commend and congratulate them for the fantastic effort in keeping this issue alive because some people would prefer to see it go away. I also commend the IFA for its interest in the case. It is good to see a body such as the IFA standing behind people who have had a wrong inflicted upon them.

I have intimate knowledge of the situation because my brother is also one of the creditors of Tralee Beef and Lamb. The people who have really lost out and who have been hit by this situation are the smaller farmers from the Kerry area and parts of Limerick and Cork. Many of them depend on that cheque because it is their main income for the year. I know of some people who could sustain that loss but many could not.

I regard it as grotesque, to say the least, that a bank such as the Bank of Ireland with a declared profit of €1.2 billion for this year, is prepared to allow this injustice against farmers in need to continue. As the main lending bank and with detailed knowledge of the financial position of the company — which has been detailed very well in the presentation by the IFA — it is hypocritical in the extreme and bordering on corrupt, to allow Tralee Beef and Lamb to continue trading, knowing full well that significant difficulties existed for quite some time. Many creditors have stated that the bank was not honouring cheques. For the bank to now wash its hands of it is an absolute disgrace.

I am aware the delegation has met with Anglo-Irish Bank and also the purchasers of the premises. Will the delegation enlighten the committee whether there has been a favourable response from anyone prepared to contribute in some way towards the position of the farmer creditors? Will the delegation confirm whether the Department of Agriculture and Food or particularly the Revenue Commissioners, would have been aware or otherwise of the trading position of Tralee Beef and Lamb? The accounts should be a means of enlightening such people who are in the position of examiners.

It is my understanding that the liquidator would initiate court proceedings against the accountancy firm if the money was forthcoming. Mr. Phil Healy in his presentation referred to a cost of €75,000. The amount available to the liquidator was €36,500 which is completely inadequate for a liquidation of the firm and to initiate any court proceedings.

I note the payments made which include a questionable payment of €217,100 for security which covers a short period of time. This is for security of a building that had been stripped of its contents. It is inexcusable that such an amount of money should be allocated for that purpose.

On the question of what this committee can do, I am a substitute member on behalf of Deputy Caoimhghín Ó Caoláin who has kindly allowed me the opportunity to speak because of the delegation's presence here today. If possible I suggest the committee should investigate the accountancy procedures of the firm and whether any Department was aware of those procedures. It is mind-boggling to consider that a major bank was aware in absolute terms of the difficulties and accountants camouflaged them. Not only have the creditors lost out, Tralee has too. Up to 80 workers have lost their jobs. A good industry that had loyal support from the farming community in counties Kerry, north Cork and west Limerick is now gone. These people have had a grave injustice inflicted upon them. I fully support any actions the delegation has taken. I commend its members for standing up to the banks. I will stand shoulder to shoulder with these ordinary, decent and hard-working people who have stood up to the new landlords. Whether the plant is occupied, these people are right and they should not let the banks get the better of them.

Mr. Michael Berkery

I apologise to the joint committee but I have a meeting with the Minister for Transport on the beet industry soon. When it rains it pours.

Deputy N. O’Keeffe

The sugar beet is not wet in Mallow.

Deputy Deenihan

Deputy Ned O'Keeffe is getting full credit for saving Mallow.

Mr. Berkery

The IFA is a broad-based organisation like Fianna Fáil. However, not to be frivolous, we have attended the committee to explain the creditors' position. The IFA president is in solidarity with the affected creditors. The IFA will do everything it can to support them. To advance their case the IFA will bring it to any hearing.

The lifeblood of the business was the cattle. For a long time there was no money in this business other than the cattle. Then the shutters were brought down. The law is sometimes a remedy. However, corporate law is a complex and expensive business and the victims in this case do not have deep corporate pockets to play this out for the next ten years.

Some solution must be found such as an ex gratia payment. The IFA has not come to the committee to establish a precedent in this case. We are making a case for a solution with all the veracity we can. The law can consume many resources and judgments can turn on a fine point. While going to the courts is an option we do not want to rule out, on behalf of the creditors, we want to explore every other possibility.

The IFA has taken the specific area of enforcement regarding directors as far as it can. With no disrespect to the committee, I must leave to attend a meeting with the Minister for Transport.

Deputy N. O’Keeffe

I welcome the delegations. I am sad about these events. Mr. Healy wrote to me on several occasions. I have known him from previous organisations in which I have been involved. I could easily be on the other side of the committee room today.

The auditors have a role in these serious events. I am bothered as to why they signed off on previous balance sheets and annual reports. However, Anglo-Irish Bank is the real culprit as it held the security and debenture but pulled the pin. The case is a mini-Enron or mini-Parmalat but people affected in those cases continued trading. In the case of Clover Meats, the farmers were eventually paid.

The committee's role is to bring the banking groups together, put a package in place, if possible, with an ex gratia or a compromise payment. Common sense must prevail. However, in the interests of goodwill, a hardline approach is not the way forward. Up to €776,000 has been paid back to Anglo-Irish Bank while the plant’s site was sold for €1.269 million. As there is now only €36,000 left, where has the difference gone? The two banking groups must meet the committee, even if it is in private. Mr. Berkery and other key IFA figures could be invited to attend.

There are hardships in Kerry, north Cork and Limerick but the committee can do the business. It has been done in the past. I have soldiered with Mr. Berkery in difficult times and we have had successes. His view on the law is right. The law is great but there is an old saying, a hap'worth of law is as much as one will want.

Senator O’Toole

This is an horrific story. Realistically, it will be difficult to win a legal case on this. Deputy Ferris referred to Bank of Ireland's profits of more than €1 billion. The bank's first reaction was to sack 2,000 workers. The bank's sense of personal morality and responsibility leaves much to be desired. The only way to put pressure on it is by embarrassing it into facing up to its responsibilities and dealing with this in a humanitarian way.

Legislation was recently passed which requires auditors to sign off every financial year stating the company was trading properly, correctly and not recklessly. The legislation requires directors to state that to the best of their knowledge, they were not trading recklessly but in a compliant fashion. It was a great struggle to get this legislation passed. The Director of Corporate Enforcement fully supported it while many Government and Opposition Members were slow to give such support. This case highlights why the legislation is important.

In this report, there is no reference to the audited accounts from the previous year. Someone must have signed off on the audited reports of the previous year and sent them to the Companies Registration Office. That person must take responsibility for this action. The auditor is not referred to in the report, while the receiver and liquidator are. The auditor's purpose is to ensure the stakeholders, creditors and shareholders are properly looked after. I want to hear the auditor's views on this.

Under section 150 of the Companies Act, referring to reckless trading, an application restricting all directors of the company from future trading can be made. This action seems quite mild. I understand it means they cannot act as company directors for the next five or ten years. That is ineffective in terms of the issues we are discussing. These people must be made to feel the pinch at some point. The right to limited company protection was granted on the basis that those who availed of it would act honourably. One cannot be a thief and still expect to claim the protection of the law. This is pure fraud and robbery.

Difficult questions must be asked of the auditor, the first of which is whether he signed off on this matter. The Director of Corporate Enforcement, Mr. Paul Appleby, should also be asked for his view on this issue. The directors of the company must bear some responsibility for what has taken place. The banks always seem to emerge from such situations unscathed. However, in the context of the revenues of some €1.25 billion generated last year, they should be put under public moral pressure to concede on this issue as any responsible person would do.

Deputy Cregan

I thank the delegation from the IFA and the farm creditors for providing this briefing. I am quite familiar with the situation as some of the creditors are from west Limerick, including several from my own parish. I agree with other members that a grave wrong has been perpetrated in this matter to people who are attempting to make their living in a fair and honest manner.

In his opening remarks, the Chairman advised the delegation that its members should not build up their hopes too much and observed that he was unsure how the committee should proceed subsequent to the meeting. However, I second Deputy Ned O'Keeffe's proposal and the valid remarks of Senator O'Toole in this regard. This meeting probably represents the last chance saloon for these people and it would be wrong for us not to respond to this issue. Serious allegations have been made about malpractice, whether on the part of bankers, auditors or accountants. In the context of alleged and proven malpractice in the banking sector over recent years, it is proper that the committee should pursue this issue as the final forum for those concerned to seek some reparative action.

I respect that it is a matter for the Chairman and all members to decide in this matter but I urge that we move forward with the objective of giving some glimmer of hope to those concerned. I commend the delegation on making such a strong case and persisting with it for so long. It is not easy when one is repeatedly stonewalled and can find no satisfaction from any quarter. These people have stuck to their guns and have come to us in the hope that we will listen to their grievances. However, it is only proper that the committee should also listen to the arguments from the other side and get answers to the serious allegations that have been made. The committee should investigate to the bitter end what seems to be a case of significant malpractice and should strive to get a result for the delegation. I support Deputy O'Keeffe's suggestion that a goodwill payment is required to bring this matter to finality.

Deputy Bruton

My family's long involvement in this business has led me to understand that the relationship between farmers is always built on trust and loyalty. There is no doubt in this case that such trust has been severely broken and the committee should assist those affected in any way possible. There seems to be general agreement with Deputy Ned O'Keeffe's view that the issue will not be resolved through legal action but rather on the basis of some type of ex gratia approach.

In this context, it would be useful if the delegation could make any supporting documentation available to the committee. For example, references were made to liquidator's reports which cast doubt on the manner in which accounts were prepared in the previous year. It is important that we have access to any such material that is available. As Deputy Deenihan said, comments or reports from the Director of Corporate Enforcement, who I am sure has had to look at the role of the directors, are vital. Likewise, it is important that the committee should examine the auditor's report from the previous year.

The core issue in terms of the culpability of the banks is the question of who knew what and when. I understood from the delegation's presentation that there was what one might call reckless trading whereby prices were raised to attract business at a time when the business was in difficulty. We must ascertain the extent to which the banks were aware or should have been aware of such activity. Any information on these issues is at the core of identifying the extent of negligence on the part of the banks and their responsibility in the resulting debacle.

The summarised case presented by the delegation is welcome but some limited documentation will be helpful to the committee in ascertaining whether it has a role to play in advancing this case.

Deputy N. O’Keeffe

Has the delegation access to the company's registered accounts for the year previous to that in which it went into liquidation?

Chairman

Before I invite the delegation to respond, I have two observations. First, its submission states that the IFA has put forward a proposal to Tralee Beef and Lamb, Bank of Ireland, Anglo-Irish Bank and the new owners. The delegation may not be able to discuss that proposal with the committee but it might be communicated to us through another means. Has the delegation an update on the Director of Corporate Enforcement's handling of this proposal?

Second, we have already corresponded with Anglo-Irish Bank and received an indication of willingness to attend a public session of the committee provided that its delegation is aware in advance of exactly what will be asked. That is understandable. The bank made it clear it had a debenture incorporating a fixed and floating charge over all the assets of the company with the exception of the debtors, which we now know were covered by Bank of Ireland. Therefore, there were no assets not covered by one or other of the banks through either the invoicing arrangement or the debenture.

Mr. Deasy

I welcome the cross-party support and constructive concern of members for the plight of these farmers. I noticed with interest that certain members declared an interest. I found this quite funny in a perverse type of way. It serves to illustrate that a significant number of people were affected.

Deputy Deenihan asked whether the Director of Corporate Enforcement was brought into the situation. I understand he was asked through the office of the Tánaiste and other channels but that he could not do so while the courts were involved through the activities of the liquidator and receiver. However, I am open to correction on this point. It is certain the banks were aware of the problem. However, although the cheques bounced, the company was permitted to continue trading.

I do not dispute Bank of Ireland's claim to have lost some €850,000 on invoice discounting. However, invoice crediting is one of the most expensive means of financing any operation and significant profits were made over a considerable period of time. All banks make a provision for bad debt in regard to the interest they charge. Senator O'Toole mentioned the €1.2 billion in revenue generated last year. It seems Bank of Ireland wants to take a risk and take a charge for that risk but it does not want to pay out when the cards fall badly. There is a case to be answered here. As to Deputy Ferris's question, we have had a positive response from Mr. O'Shea and Mr. Noonan, but they will not contribute money until they resell the property. They have promised €400,000 and the creditors have put a charge on the deeds in order to secure that. However, this will only come to fruition when the property is resold. As far as Deputy Ned O'Keeffe's comments are concerned, an ex gratia payment is exactly what we are seeking. If memory serves me correctly, the Deputy has good experience of working on such cases in the past.

Deputy N. O’Keeffe

That is correct.

Mr. Deasy

The Deputy is to be commended for it. Unfortunately, we are obliged to revisit this situation repeatedly, but to date we have not had a favourable response from the banks in question. I wish to defer to my colleague Mr. Kevin Kinsella. He is better versed in other aspects of the law regarding the Companies Acts and so forth.

Mr. Kevin Kinsella

I thank the joint committee for taking such an interest in this case on which we have worked for a long time. I will deal with several specific issues to try to provide the joint committee with more information as to how it might proceed. We welcome the approach outlined by the joint committee and proposed by Deputy Ned O'Keeffe to make progress on the issue. We have information that can be supplied to the joint committee's secretariat or in whatever manner is best, that would add to today's discussions. I do not have the information concerning the Director of Corporate Enforcement with me today. Although I have extremely thick files on Tralee Beef and Lamb, I do not have that information with me today. This company went into receivership on 10 October 2001. My best recollection, although I am open to correction, is that we raised the issue with the Tánaiste at the time.

Deputy Deenihan

I certainly did.

Mr. Kinsella

I will confirm this later, but my best recollection is that the Tánaiste subsequently referred the matter to the Director of Corporate Enforcement. He responded by stating that he could not act until such time as the receiver and subsequently the liquidator had completed the work requested of them by the courts. One should bear in mind that the courts appointed both the receiver and the liquidator. My recollection is that I spoke to the Director of Corporate Enforcement at the time and the response was that we had to wait for them to undertake their work. One should note that the liquidator is still in place. However, to answer the question put earlier today, I see merit in both the IFA and this joint committee contacting the Director of Corporate Enforcement.

The issue of the accounts was also raised. We have a copy of the accounts to 31 March 2000. This is the last set of audited accounts. I have a copy of the auditor's report, signing off on those accounts.

Chairman

Who were the auditors?

Mr. Kinsella

The auditing firm was D.F. Byrne and Associates, chartered accountants and registered auditors from Ballsbridge in Dublin. When one examines them, the accounts show——

Deputy Cregan

Is this firm still practising?

Mr. Kinsella

Yes.

Chairman

Were the data kept up to 31 March?

Mr. Kinsella

The last set of audited accounts went up to 31 March 2000.

Chairman

This was 18 months prior to——

Mr. Kinsella

If I may, I will explain the situation.

Mr. Deasy

If I may be excused, I need to leave. My apologies.

Mr. Kinsella

I will not be long. After I clarify some issues we will be close to a conclusion. I have converted the monetary values into euros, as we were using pounds at that stage. For the accounts up to 31 March 2000, the company turnover was €25 million. There was an operating surplus of €1.1 million and trade creditors were owed €1.3 million. These are the three important figures. There is also a set of unaudited accounts up to 31 March 2001. The auditor did not sign those accounts. I understand that the receiver and liquidator have a copy of them.

Senator O’Toole

Did the auditor refuse to sign these accounts, or did he or she ever receive them?

Mr. Kinsella

I cannot say whether he refused or otherwise to sign. I can say——

Senator O’Toole

The reason I ask the question is because as the Chairman, in his professional capacity as an accountant knows, if it were the case that the auditor refused to sign the accounts, then the directors would be criminally responsible after that.

Mr. Kinsella

My understanding is that the receiver and liquidator both have a copy of a set of unaudited accounts for the period up to 31 March 2001 which shows turnover of €30.5 million, an increase of approximately €5 million on the previous 12 months and an operating loss of €290,000. It also shows trade creditors were owed €1.5 million. This is a very important figure, because four or five months later, when the company went into receivership on 10 October 2001 and the receiver undertook his investigations into its affairs, it emerged that the creditors were actually owed a figure in the order of €5 million. In contrast, the unaudited accounts showed that €1.5 million was owed the previous March. This is the basis of some of our concerns regarding the auditor and the accounts. We will gladly provide the joint committee with whatever details we have as they are based on the records lodged in the Companies Office and information ascertained from the liquidator and receiver. None of the information is secret. As our colleague Phil Healy and some of the other creditors have stated, we are investigating the situation concerning the auditor. We do not wish to comment further on the issue

I wish to clarify a statement made earlier by the IFA's deputy president, Ruaidhri Deasy. We have sought a contribution from Mr. Noonan and Mr. O'Shea, who bought the site in Tralee. Through the good work of the creditors' committee led by Donal Kelly, we requested a significant contribution from them to a fund that we mentioned and they have promised us €400,000. Mr. Deasy stated that the creditors had sought and obtained a charge on the assets of the company in that regard. I wish to make a slight correction on this point. While we have sought an undertaking from the new owners' solicitors that they would pay the promised sum, we have not received it yet. We have reason to believe we may succeed in securing such an undertaking so that if and when the site is sold, the new owners, Mr. Noonan and Mr. O'Shea, would pay the amount of €400,000. I think it important to clarify this point.

As to Deputy Ned O'Keeffe's proposal, we share the view that it will not be easy to solve this issue by means of legal action. We can go down the legal, corporate avenue and be in the courts forever and a day. One should bear in mind that the creditors are small farmers. Collectively they are owed a large amount of money, but individually are owed small amounts of money and that has had a severe impact upon them. We are not in a position to take on the weight of the Bank of Ireland from that base but it is very important that both banks and the new owners recognise their obligation. The new owners were made aware of their obligation by the IFA before they purchased the site and have recognised it.

We see the solution to this problem as lying in the recognition by the banks and the new owners of their moral obligation along the lines of the proposal put forward by Deputy O'Keeffe. We welcome and support the proposal and hope that the committee assists the farmer creditors by asking the banks how they intend to fulfil their moral obligation to the farmer creditors of Tralee Beef and Lamb. As Senator O'Toole remarked, it is not about the €1.3 billion profits that Bank of Ireland made last week and the laying off of 2,000 staff. It is about the bank's obligation to the communities of Kerry, Limerick and Cork and many of its own customers. Many of its farmer customers are now short €10,000 to €15,000 as a result of the Tralee Beef and Lamb saga. The Bank of Ireland, Anglo-Irish Bank and the new owners of Tralee Beef and Lamb have a clear obligation to these people. We would welcome any assistance the committee can give to the farmer creditors and the IFA to get these three groups to fulfil their obligations.

Mr. Kelly

On behalf of the group, I thank the Chairman and the members of the committee for their time and patience. I am confident that the committee will support the farmer creditors and the IFA in this matter.

Mr. Healy

I thank the committee and Deputy Ned O'Keeffe for bringing our case to the attention of the committee. The forces of the State seem to be on the side of the receiver and the liquidator who appear to be able to do what they please. It appears to have been a deliberate policy to use up all that money in order that the liquidator could not take legal action. The Kerry branch of the IFA was always told when it met John Delaney from Tralee Beef and Lamb that it should look at the accounts. At one stage, the IFA hired an accountant to examine the accounts and the accountant reported back that the accounts were above board. At the same time, the Department was sending in cattle. We were led to believe that Tralee Beef and Lamb was a very safe place to supply cattle to. When it went into receivership, all the forces of the State were ranged against us. The receiver used up €1.8 million and the liquidator was unable to fulfil his duties because there was no money left. It appeared to me that this was a deliberate policy and I hope the committee can ponder that.

Mr. O'Sullivan

When the company sold meat to the wholesalers, it took the invoices to the Bank of Ireland and they were paid even before the wholesalers received the meat. Would it be correct to say that the Bank of Ireland then became the legitimate owner of the product when it received the invoices because I regard the invoices as the deeds of the product? Did the bank become the last legitimate owners of the product?

Chairman

Did some of the speakers say that the Bank of Ireland had lost a considerable amount of money on the invoice discounting?

Mr. Kinsella

At this stage, the Bank of Ireland claims that it is down €840,000 on non-collectibles on the invoice discounting and I have no reason to disbelieve it.

Deputy N. O’Keeffe

I have spoken to the Bank of Ireland on matters arising from this. It is possible to debate the legality of this indefinitely but we should try to reach some compromise as has been outlined by Michael Berkery. The status of the Bank of Ireland is no different in law from that of the people who sold the cattle. The committee will try to do something for the farmer creditors. Anglo-Irish Bank is the real culprit in this case in law. I sympathise with the farmer creditors and both I and Deputy Ferris have been working on their behalf.

Deputy Deenihan

Was Anglo-Irish Bank paid in full?

Mr. Kinsella

The bank was paid in full.

Chairman

There is already a letter on file which is available to members of the Oireachtas. Contributors can obtain a copy of the letter from the secretariat. The other members of the committee have already seen a letter outlining the position to date. We will act on Deputy O'Keeffe's suggestion, which was seconded by Deputy Cregan and supported by everyone else, including the IFA, that the committee meet the banks. Does Deputy O'Keeffe's proposal involve the committee meeting the new owners as well?

Deputy N. O’Keeffe

My suggestion is that the committee needs to talk with both banks. There is a precedent for this because the purchasers of the site are prepared to put money on the table.

Chairman

We will decide on the format of the meeting. It could possibly involve a delegation from the committee meeting the banks in private. As I do not think a compromise will be reached in a public forum like this, perhaps a cross-party delegation could meet the banks in private.

Deputy Ferris

Could the IFA furnish the committee with all available details?

Chairman

We will check in with the IFA before we meet the banks.

Mr. Kinsella

We will provide the committee with any information we can.

The committee adjourned at 1.55 p.m. sine die.