Seanad Éireann debate -
Wednesday, 9 Jul 1930

Vol. 13 No. 32

Industrial Trust Company of Ireland—Request for Investment Particulars.

Colonel Moore

I move:—

That, in view of the depreciation of the securities held by the Industrial Trust Company of Ireland, Ltd., and of the fact that the sum of £50,000 has been issued thereto out of the Central Fund pursuant to an Act of the Oireachtas, the Seanad requests the Minister for Finance to lay on the Table of the House a statement of account showing the present investments of the Company, together with the value thereof (a) at the date of purchase and (b) on the 31st March, 1930.

I think the terms explain sufficiently well the purpose of this motion. The sums with which the motion deals are more or less a State advance of £50,000, a contribution from an American group of £50,000. a contribution from banks of £50,000 and debentures amounting to £200,000. This is not a party motion. I have not been asked by anyone in my Party to move it and I have not asked any member of my Party if I should move it.

People who have spoken most on this subject are supporters of the Ministry. Senator Hooper raised this question first by asking for an explanation of the amount of money for which the State would be liable and, also, as to whether debentures issued by this Company would interfere in any way with the position of stability of the £50,000 granted by the State. The Minister, in reply to that, made a very extraordinary statement, and one very hard for anybody to understand. He said that the debentures did not, in any way, affect the stability of the position of the £50,000 advanced by the State. The position of the Government in respect to that Company is that the Government had £50,000 invested in shares in the Company, and he said that the debentures of the Industrial Trust Company did not impose any liability upon the State or the Exchequer and did not prejudicially affect the interests of the State or the Exchequer in regard to the £50,000 held in shares. Debentures always come in front of the ordinary shares, and anyone who says that the value of the ordinary shares are not depressed by the issue of a very large number of debenture shares says something that is beyond my understanding, and probably beyond the understanding of anyone else. Long ago there was a serio-comic person on the stage called Lord Dundreary, and when asked a question of that sort he would reply: "That is a thing no fellow could understand." I do not think anybody can understand how it is that debentures, coming in front of ordinary stocks, do not depress them to any extent. Another statement the Minister made which seems quite inaccurate was this: that he had appointed two directors, and that the appointment of those directors did not, in any way, affect the Company. He says that his object in having directors was simply that they should be the means of directing the Company's attention continually to Irish business when proper Irish business arose, and that it was not with the idea that the Minister for Finance, or the Government, should intervene in the business of the Company.

Cathaoirleach

The Senator's motion is confined to asking the Minister for Finance to do a specific thing; I think it would be better if the Senator discontinued arguing as regards the accuracy or inaccuracy of a statement made by the Minister for Finance on a former occasion. The Senator can make any case he likes as regards the £50,000 issued out of the Central Fund but he should avoid personalities as much as possible. I think it would be better.

Colonel Moore

I cannot understand that statement. Here is a debate on a certain subject in which the Minister for Finance has made certain statements already. Surely I must be permitted to criticise his statement relative to a certain question ?

Cathaoirleach

This is a straightforward question, and I want to point out that I see considerable difficulties in the way in which the Senator is introducing the matter. Ordinarily, to ask the Minister for a statement of this kind is a thing I would not allow, but I do take the view that this matter is not on all-fours with the affairs of an ordinary company and I would ask the Senator, in making his case here, not to criticise what the Minister said elsewhere about certain debentures. The Senator wants the Minister for Finance to lay on the Table of the House a long financial statement. As to whether that would weaken the position of the Industrial Trust Company or whether it would strengthen it are not questions which should be argued here. In the motion on the Paper the Senator is merely asking for certain specific information. In making his case I must ask him not to introduce extraneous matters. With that suggestion I will leave it to the Senator to do in this matter what he wishes.

Colonel Moore

The Minister is not here and the fact that he is not here seems to make it all the more necessary to say something about his statement on this matter. The Minister is absent on his own account. It is quite impossible to argue this matter unless one brings in what the Minister has stated on various occasions. I have in my hand the report and balance sheet of this Company. This balance sheet gives the authorised capital of the Company at 250,000 shares of £1 each. The issued capital is £162,878 in ordinary shares of £1 each fully paid. Debenture stock, 5½ per cent. £200,000; bank overdraft £150,000. Sundry creditors and credit balances, £155 2s. Then on the asset side there are advances, Irish Free State Guaranteed Debentures with interest less income tax to 31st March, 1930, £240,438; investments in Industrial and other undertakings £171,547; sundry debtors and debit balances and also petty cash on hands £1,668. There is a note in italics in this balance sheet which states:—"The market value of these investments on 31st March, 1930, was approximately £199,000." The Company has credited itself with £271,000, which I presume was money paid for investments and they are now valued at £199,000. There is there a loss for the year of a sum of £72,000, that is the difference between these two items. To put the matter in another form will perhaps make it clearer. Advances on the security of the Irish Free State Government, debentures and trade loans (£240,000) had a value in the way of securities and interest up to 31st March last as stated by the Company itself of £199,000. The debenture stock of £200,000 and the bank overdraft of £150,000 make together £350,000. If that sum is deducted from the figure of £439,000 shown here, it leaves a balance at present of about £88,000. Now the value of the ordinary stock which was issued in the first case was £162,000, but its value now is only about £88,000. In other words the value of the £1 shares, which were issued partly to the Government and partly to a syndicate of American people and to the Banks, is now worth only 10/- in the £. I am informed that the figure of £199,000 at which they were valued on 31st March last does not now represent their value. Their value now is very much less. There has been at least a depreciation of from 16 to 20 per cent. since 31st March last. That is not a statement on which I have any certain knowledge, but, at all events, I read out the figures stated by the directors themselves at the Board meeting and it was published in their yearly account which I have here and which shows——

Mr. MacLoughlin

I rise to a point of order. I want your ruling as to whether this motion proposed by Senator Colonel Moore is in order in view of the fact that it contains a preamble, and——

Cathaoirleach

I have allowed the Senator to move the motion.

Mr. MacLoughlin

According to my reading of the Standing Orders the Senator is not in order. In this motion he is asking the Minister for Finance to do what the Minister has no power whatever to do; that is, to force a private company to lay on the Table of the House a statement of the investments made by that Company.

Colonel Moore

With regard to that statement of Senator MacLoughlin. I want to point out that £50,000 of State money has been lent to this Company. It is admitted by the directors that that has depreciated by 50 per cent. The Minister has himself admitted that, and everybody else must admit it. I am going to point out that the assets of that Company are now only worth 10/- in the £, and——

Cathaoirleach

I must ask the Senator to allow me to reply to the point of order. The Senator says that this is a sort of preamble. I do not think that it is a preamble of the nature indicated by the Standing Orders. Secondly, I think that while ordinarily it would be wrong to allow the affairs of a private company to be brought before the House, in this particular instance I think that this is not in the exact nature of a private company. The Minister stands between the taxpayers and the Company. There is £50,000 of public money, State money, invested in this Company. The moneys are to some extent under the control of the directors appointed by the Minister; and that being the case, I think it would be rather sharp practice for me to prevent the Senator putting down a motion on this matter. It is obviously within the discretion of the Minister to reply or not to reply if he thinks fit. To ask me to rule that it is out of order to allow a Senator to put down the question on the Order Paper and to bring it forward here is a thing to which I cannot assent. I will hear Senator Colonel Moore on the matter of his motion on the Order Paper.

Colonel Moore

I wound up by stating that the estimated loss in this investment is 10/- in the £. That is to say, the Government have lost 10/- in the £ on that investment of £50,000. I must state that the Minister has power, as an ordinary shareholder representing the country in the matter of that investment, to do what I am asking. When the Bill authorising this investment was being passed through the Oireachtas, the President made a statement on the subject. That statement is in Vol. 13, column 2069. In the course of that statement, the President said that "the Minister is to exercise all the rights and powers of the shareholders therein; also any other powers or privileges, with the exception that he may nominate two directors to represent him on the Board." That is the state of affairs —that the Minister is represented on the Board by two directors and that he has the ordinary rights of the ordinary shareholder.

It is a very usual thing for a person who is a busy person and who has not time or opportunity to sit regularly on the board of a company to appoint directors who will represent him on the company. These two directors have all the ordinary rights of directors. The object is that the Minister, as the principal shareholder, will be informed from time to time how the business of the Company is getting on, and also whether there is anything wrong going on or whether any loss has been suffered. That is why he puts on these directors in order, as the President said, to represent him on the Board. He has two directors to inform him on all these matters, as the President stated when this matter was first brought forward. I know that Mr. Blythe says the opposite, but I have been asked not to criticise him and so I leave out that part of it. As a matter of fact, according to the President, when the Bill was first introduced into the Dáil that was the position—that these two directors should report to the Minister as to how things were going from time to time. This Company had absolute power under their Articles to embark on practically anything they liked to do. I do not know whether it is necessary to repeat what the President said. The President read out the whole list of what the Company could do. He said that was only a summary of the powers given to the Company, but he added that the Company had practically power to do anything they liked, to invest in anything, whether gilt-edged or not, in England. Ireland, Scotland, or, indeed, in any part of the world.

That was public money, and not the Minister's money. The Oireachtas provided that the Minister would have two directors on this Company to keep him informed. I have a right to believe that these two directors were honest men and that they did their duty perfectly well. I know some of them, and you all know some of them. I have not stated for a moment that they have not done their best and that they have not acted well. I say that, not only of those two directors, but of the other directors as well. I must, therefore, presume that these directors informed the Minister what was taking place in the Company—what the position of affairs was in the Company. It was their business to do it. They were there for that purpose. That was one of their principal purposes there. That was considered by the Oireachtas as a sort of guard over the £50,000 invested by the Government in this Company. The other people, the group of Americans, would never have put in their money if the Government had not some control, direct or indirect, over the affairs of the Company. This Company invested, apparently, as the Minister said, in all sorts of companies in all parts of the world. There is here a list of what they have invested. In Ireland they invested 55 per cent. of their capital. In Great Britain and the Dominions 36 per cent. of their capital was invested; in Europe, not including Great Britain, they invested 5 per cent. of it; in the U.S.A. 1.95 per cent., and in South America 65 per cent.

Mr. Johnson

Will the Senator say, where that information came from?

Colonel Moore

It is on the balance sheet. This is the balance sheet of the Company that I have in my hand, the balance sheet of the Industrial Trust Company of Ireland and I see that the directors are Messrs. David Telford, James Douglas, Dr. Lombard Murphy and Hugh Kennedy. Anybody can sec this report I have here in my hand, and the figures I have read out I have taken straight from the balance sheet. There can be no dispute about that. The Minister provided two directors in order that the public might have a safeguard. The Minister has stated that the reason the directors made these investments was that they were given power to make investments in this way so that they might amass a reserve for the Company. We must ask how the directors could possibly amass a reserve for the Company? You cannot do that with gilt-edged securities or in the case of sound industrial investments. These investments keep very close to the mark. You may win five or ten per cent. in the way of a rise here and there but you cannot make large sums in that way. Therefore, in his own words, it would be gambling, gambling on things that might go up and make a lot of money, or things which might go down and on which we might lose a lot of money. Clearly there was an incitement to gambling. The directors threw the dice and lost. They lost the money of the people, not the Minister's money. I wonder when the directors saw things in that state, did they report to the Minister?

As I stated the other day, I would never have raised this question if it had been a question of a loss of money in this country. Money advanced to industrial concerns in this country might be lost; it would be regrettable if it were lost in that way, but at all events it would be lost in a good purpose and I do not think any reasonable person would raise any question about it. When, however, it is lost in gambling in the stocks of other companies—that is the assertion made by a number of people who have come to me, Senators and others—it is a different matter. I regret especially the loss of the American money, because I think when Americans see their money lost in that way one cannot expect them to come back to invest here again. Why should responsibility be thrown on the directors in this matter? The directors had their own business to do. They were not supposed to come here and make speeches as to whether they were right or wrong. They were to inform the Minister of what was happening and I presume they did. I presume he understood them, but he apparently did not do anything. It is not proper for the Minister to say that we are pillorying the directors. I am not pillorying the directors because I think they were quite honest people and they probably did what they were asked to do. The Minister was asked for a frank statement and he did not give it. He said that he left the papers in his office.

This is a matter of some importance. The managing director of the Company, Mr. Smith Gordon, and another director, Mr. Mackie, both resigned when the Company was on the rocks last year. One wonders why they did so. Did they do it because they disagreed with the other directors in the management of the affairs of the Company, or was it that the other directors disagreed with them and asked them to go? That, I think, is a matter upon which we should be informed. They both resigned and went to London, and are living out of the Free State now and the money is lost. They may have done so for very good reasons. They may have objected to these investments for all I know, but both have left and we ought to know why.

I am asking a question here as to what are the companies in which the Company has investments. That is a thing that all reputable companies put on their balance sheets. I have some knowledge of the matter myself, because I was a director of a company, and I know that that is the usual custom in matters of that sort in late years. They publish a statement of their dealings in the different companies and of the amount of the investments in them. Nothing, however, is stated in this balance sheet in that way. No names are given, and we have merely the general statement that £72,000 has gone. I asked a question as to why public money was placed in such a position and invested in gambling companies; whether they won or lost it is, in my opinion, a wrong thing to do. Nothing could safeguard it except the appointment of directors by the Minister, and their advice was not followed.

The Minister says that we made statements pillorying the directors— that is the last thing which I would think of doing—and he said that it will prevent other reputable persons from helping this country. It is he himself who is pillorying the directors. He says that he had no control over them, that he gave them their heads to do what they liked. Even so, this should be a warning against allowing this sort of thing in future. This is a matter which has not been merely raised by me. It is a matter of general public conversation, and a number of Senators and others have spoken about it. It was raised in the Dáil some little time ago and discussed at considerable length there, and with much more acerbity than I am using now. I see the Minister made some effort to answer the questions put to him there, but he has not come up to scratch here. I am moving this motion in order that the public may know the facts, that the directors themselves may be clear about the matter, not that they may be pilloried, as the Minister says, but that the list of companies in which this Company holds investments shall be laid by the Minister on the Table of the House.

Mr. MacEllin

I second.

Mr. Jameson

I should like to ask Senator Colonel Moore whether this motion is brought forward with the object of saving money for the country as a result of the Seanad inquiring into the investments of the Company? I should also like to ask him whether he thinks that, after the disclosure of these investments to the Seanad, the Seanad should then proceed to examine them, and whether we will be able to take such measures as will save money?

Colonel Moore

It is the business of the Seanad and of the Dáil to criticise the acts of Ministers and others in these matters. When public money is invested in what may or may not be considered a good investment, it is our business to criticise these matters, and the object of these criticisms in the Dáil and the Seanad is to prevent wrong things being done in future. We may not get that money back, I quite admit, unless there is a great recovery in the value of the stocks of the companies, which I do not anticipate. It will, however, prevent, I hope, reckless expenditure of this sort in future. That is the object with which I have moved this motion to-day, in order to have cleared up any underhand talk—I mean the whisperings and talkings which I have heard from a number of Senators and others who bring these matters to me, and who tell me a great many more things than I have spoken of here to-day.

Cathaoirleach

That hardly answers the question that Senator Jameson put. The Senator asked whether you think that you are going to save money for the State if you get this information which you have asked for.

Colonel Moore

I have stated that I do not expect to get the money back, but I do expect to prevent this thing happening again. If it is wrong we shall know, and if it is right we shall know where we are. I may add that the Bank of Ireland has taken £200,000 worth of the debentures in order to safeguard themselves.

Cathaoirleach

We are going outside the matter mentioned in the motion.

Mr. Jameson

I suppose, then, we may take it that the Senator is merely speaking as a shareholder, through the State, of the Company, and that this is a shareholders' meeting?

Colonel Moore

I do not think you can take it to be anything of the sort.

Mr. Jameson

The Senator's belief is that the State has put £50,000 into the Company, and as we provide the funds for the State, we are also shareholders.

Colonel Moore

It is the duty of the Oireachtas—the Dáil and the Seanad—to inspect all sums invested by the Minister.

Cathaoirleach

I think Senator Jameson has put his question very clearly, whether you are asking this information as a shareholder of the Company?

Colonel Moore

I am asking it as a representative of the people of Ireland.

Cathaoirleach

Who are shareholders.

Mr. Jameson

This is a company in which the State has £50,000 invested. That, in fact, is the full extent of the commitments of the State in regard to the Company. How can you ask the Minister to provide a statement of accounts unless he gets the consent of the other shareholders in the Company and of the directors to comply with the wishes of the Seanad?

Colonel Moore

He has got two directors there to represent him.

Mr. Jameson

He cannot do it. The other shareholders must give him permission.

Colonel Moore

They will.

Cathaoirleach

I would ask the Senator not to interrupt Senator Jameson. He will have an opportunity of replying later.

Mr. Jameson

Senator Colonel Moore is asking the Seanad to request the Minister to do that which the Minister could not do. The Minister would say: "The Seanad has asked me to lay on the Table a full statement of the present investments of the Company." Supposing the directors called a meeting and the other shareholders who are in a majority were to say: "We will not allow you to furnish this information. It will damage our interests greatly. A lot of our investments might be depreciated, and it would spoil our business prospects." You would then get a refusal. I do not think, whatever Senator Colonel Moore may wish, that it is possible for the Minister to furnish this information, even with the best will in the world. He could not do it without getting the consent of the directors and of the other shareholders of the Company. I do not propose to follow the Senator further, but I would ask that the Minister should not be put in the impossible position of trying to comply with the wishes of the Seanad in this matter if we pass this motion. This is an ordinary business matter. I do not think it is the least use going into a discussion of the things to which Senator Colonel Moore has been referring. As far as the Company is concerned, the Minister told us the other day that he knew very well that there had been a loss. Personally, I know precious little about this matter, but I am perfectly certain that the Minister and the Banks are taking all the steps any people could to try to recover from the blunders that have been made. How the Seanad could hope to do anything further than that I do not know. I do not think that we have any right to request the Minister to do a thing which is quite impossible for him to do.

Mr. Johnson

I think it is right and proper that a matter of this kind should be discussed, but I think it is wrong for the Seanad to ask the Minister to lay on the Table of the House "a statement of account showing the present investments of the Company, together with the value thereof (a) at the date of purchase and (b) on the 31st March, 1930." As the Senator said, the Minister for Finance, acting on behalf of the State, has all the rights of a shareholder. What are the rights of a shareholder in such a matter? I think, except at the discretion of the directors, who are subject to a majority vote of the shareholders, a shareholder has no right to demand the names of the investments. I would ask the House to consider what are the implications of such a request. The Seanad passes a resolution of this kind asking the Minister to do a thing which, I think, the House is conscious will not be done, on the grounds that I have already stated—that he has no powers. It is outside the jurisdiction of the Minister; he has no right to demand of the Company that they shall give him this list, and he cannot, therefore, comply except at the will of the Company. But take other interests in which the State is concerned. The State has certain contingent liabilities in respect of a number of concerns which have had loans under the Trade Loans Facilities Act. On the head of these interests it is presumed that the State has a right to ask those companies to divulge to the House the details of their own internal affairs. I think that would be very undesirable and that it would be very wrong for us to take any steps which would seem to imply such a thing as that. To be a little more precise, we might say that because the State had considerable investments in the Land Bank we could ask the Minister to exercise such influence as he had to have divulged to the House what that Bank was doing with its funds. I think that would be an entirely wrong principle to adopt. I think the House would be stultifying itself and would be doing rather a foolish thing by asking the Minister for this statement of account, and I hope it will not agree to do so.

While I think it is right and proper, as I said, that the Trust Company's affairs, in view of the State investment, should be discussed, and that any responsibility that the Minister has in the matter should be open to criticism, that is a very different thing indeed from asking for this information. Supposing it were granted, what would its value to this House be, except to pillory individuals? It could not be of any other advantage. As the Senator has himself said, it would not make any difference at all to the past losses. Senator Jameson said that it might make a difference in the possible recoupment of these losses; but it could not do any good, and this House would not be in a position to verify the accuracy of the statement, to estimate the value of the present investments, or anything of that kind. I think a request to the Minister for this statement would be of no value and might be greatly to the disservice of the Seanad.

Mr. Milroy

I desire to express agreement with the views of Senator Jameson and Senator Johnson. Senator Colonel Moore must be a very innocent man if he was under the impression that this information could be secured. If he was under the impression that the Minister was in the position to produce the particulars he seeks, he must be a curiously innocent man. It is only by accepting that that one can understand his tabling this motion. If Senator Colonel Moore were possessed of the average intelligence of a member of this House, he must have been aware that he was asking for something which the Minister was not in a position to supply. I think his object in tabling this motion was not to safeguard the public interests of the Saorstát, but to create an atmosphere of suspicion and to prejudice any enterprise with which the Government of the Saorstát is in any way identified. It is perfectly obvious that even if we were to pass this motion the Minister could not produce the information asked for, and we would be making the Seanad a laughing-stock. Possibly, that would satisfy the object which Senator Colonel Moore has in view. Senator Johnson and Senator Jameson have stated the position very clearly. Not only would no public purpose be served by passing this motion, but we might possibly do a great disservice to the State.

Colonel Moore

Senator Johnson has stated that the shareholders themselves have no power to obtain the statement of accounts. That is a most extraordinary statement. It is just as extraordinary as some of the statements of the Minister. The shareholders meet every year——

Mr. Johnson

On a point of correction, I did not refer to a statement of accounts. I referred to a statement of investments.

Cathaoirleach

The Senator stated that they could not ask for a statement of investments. Shareholders can ask for practically anything at an ordinary general meeting.

Colonel Moore

Senator Johnson stated that the shareholders would have no right to ask for a list of investments. By law, a meeting of shareholders must be held every year. The shareholders, if they take any interest in the matter, can attend the meeting and can ask for a list of investments. If the directors do not furnish them with the list, they can evict the directors and appoint others who will supply the required information. That is not an extreme point of view at all. I happened to be a director of a company in England, and what I have stated happened. I attended a meeting. The shareholders agreed with my view. We had a considerable row which lasted a very long time, but we voted down the directors. The managing director of that company was sued and had to pay up £3,000 for his action—entirely owing to the steps I took. The statement of Senator Johnson is not correct. The shareholders can get these particulars if they choose to ask for them.

Mr. Johnson

Until they have chosen, the Minister has no power.

Colonel Moore

I am quite ready to meet that case. There are 150,000 shares in this undertaking. Fifty thousand pounds was advanced by the Minister. That is State money. Fifty thousand pounds was invested by an American group. The Government and the American group have between them two-thirds of the shares. The American group have representatives at this moment trying by all possible means to get information on this matter. They cannot get it. They have not even seen that list, although they hold one-third of the shares; it is concealed from them. They have been here for weeks trying to get it. Two-thirds of the shares of the Company are held by this American group and by the Government. If these two parties agreed, we know they could get the information. The American party want the information, and if the Minister chose, since between them they have two-thirds of the shares——

Mr. Johnson

Who knows that?

Colonel Moore

I tell you.

Cathaoirleach

The Senator could not be aware of that without seeing the Articles of Association.

Colonel Moore

I have them here.

Cathaoirleach

I think we ought not to go into that question. It would be very deep finance.

Colonel Moore

I was endeavouring to answer every question that was asked.

Cathaoirleach

We could not possibly explore all the possibilities.

Colonel Moore

I have disposed of both Senators. The Minister and the American group have the power to obtain this information if they want it. The American group do want it. This is an important matter and it is being concealed from the public. Not only has this £50,000 gone, but a much larger sum has gone. £240,000 has gone, but it has gone mostly in Irish securities. I do not want to criticise that, because it was a misfortune. I hope that Senators will see the necessity of passing this motion, because I think it is very important to stop this reckless business that is going on. Hundreds of thousands of pounds are being lost on all sorts of things.

Question put.

The Seanad divided: Tá, 8; Níl, 28.

Tá

• Sir Edward Bellingham.
• Michael Comyn, K.C.
• Joseph Connolly.
• Thomas Linehan.
• Seán E. MacEllin.
• Colonel Moore.
• Joseph O'Doherty.
• Séumas Robinson.

Níl

• Dr. Henry L. Barniville.
• Miss Kathleen Browne.
• Alfred Byrne.
• Mrs. Costello.
• John C. Counihan.
• The Countess of Desart.
• Michael Fanning.
• Thomas Foran.
• Dr. O. St. J. Gogarty.
• P.J. Hooper.
• Right Hon. Andrew Jameson.
• Thomas Johnson.
• Sir John Keane.
• Cornelius Kennedy.
• The McGillycuddy of the Reeks.
• James MacKean.
• John MacLoughlin.
• General Sir Bryan Mahon.
• Seán Milroy.
• James Moran.
• Sir Walter Nugent.
• Joseph O'Connor.
• John T. O'Farrell.
• M.F. O'Hanlon.
• James J. Parkinson.
• Siobhán Bean an Phaoraigh.
• Thomas Toal.
• Richard Wilson.

Motion declared lost.