Order No. 6.—The motion for the adjournment of the House.
Architects (Registration) Bill, 1941. - Adjournment Debate—Ennis Company's Affairs.
In raising this matter, I assume that all the members of this House know as much about the case as I do. My knowledge is very largely confined to the reports in the newspapers, and these reports reveal a very alarming situation and throw doubt, at least, on many of our institutions in this State. I, therefore, take this opportunity to secure some assurance to the public at large that this matter is not going to remain where it is at present. There are grave misgivings in every walk of life in the community regarding this case. It has caused great interest generally, particularly amongst the class to which I belong. As I said, there are many of our institutions under a cloud, for instance the Ministry of Justice, the Attorney-General and the Ministry of Industry and Commerce. I think all those Departments are more or less under a cloud. In the case of the Ministry of Justice, somewhere about the 10th of the present month, with all the majesty of the law, two people were prosecuted in the Criminal Court for fraud, for very extensive frauds. There were 24 charges formulated against those people, and, according to the judge, in the public interest 23 of them were dropped—mark you, "in the public interest"—and the minor charge was proceeded with, on which those people were convicted. In Dun Laoghaire, somewhere about the 19th of the present month, two unemployed men were prosecuted for stealing logs, and both of them were sent to jail for two months. I do not know how any community is to believe that the law is impartial, in view of this and numerous other instances in which the unemployed, the poverty-stricken people, are penalised to the very limit. I am not going into the case where a man who stole a few shillings' worth of gas was sent to jail for six months, an unemployed man who was in bad health, or to compare that with the treatment meted out in the Ennis case, but I think something has got to be done about it. It reminds me of a quotation —I do not know the author—which fits this situation very well. It runs something like this: "The law doth punish the man or woman who steals the goose from off the common, but lets the greater felon loose who steals the common from off the goose."
You should discover the author of that.
I do not know the author, but the quotation certainly fits the situation here very well. The Minister for Industry and Commerce is here in relation to this motion on the adjournment, and I want to say in this connection that long before Order 83 came into operation there was a Prices Commission set up, and the greatest possible difficulty was put in the way of fair employers who believed that their workmen ought to have an increase in wages. They had first to satisfy this Prices Commission that no increase would be put on the commodity which they produced in order to give the increase in wages. Those were fair employers, people who were anxious to provide good conditions for their employees, and they were hampered by this body. Now, let us see what occurred in connection with this company. This company, Messrs. Jordan and Company, of Ennis, at one period made 80 per cent. profit in one year. What were the Prices Commission doing there? Surely they must have had some knowledge of what was going on, but, so far as the public know, no action was taken in connection with this matter. As I said before, there is a great deal of alarm in the country in regard to this case, and it has been suggested—and will be believed until it is proved otherwise—that this is typical of a number of industries of new origin in this country. It matters not to the people whether they are exploited by an alien or a native if they are to be exploited, but I submit that in this case the thing was overdone; it became an outrage. In one case, the Revenue Commissioners were defrauded of over £11,000. That £11,000 would pay the wages of the staff in Ennis for several years. Note also that those people were making 80 per cent. on their capital in one year. As I said, the Minister for Industry and Commerce is here, and I am sure he will deal with the matter. I submit that this Prices Commission, or whatever effort is being made to control prices, is a farce so long as what happened in Ennis is allowed to go on. They are more concerned with preventing the working classes from getting real wages than they are about controlling the profits of exploiting capitalists. The idea of a Prices Commission is a farce so long as any company can make 80 per cent. on its capital in one year.
As I said, there are many features of this case which are causing great alarm and concern throughout the length and breadth of the country, not the least of which is that the man who had the public spirit and sincerity to expose all this, the secretary of the company, has been dismissed. The judge, in giving his decision, recommended that this man should be retained in the company. Mark you, this man is not an alien; he has roots here; he has a family here; he is a man of good reputation, but, because he responded to the appeal of the Government, and would not be a party to this fraud and robbery, those people had the audacity, within a fortnight after their conviction on the minor charge which I have mentioned, to dismiss him from his employment. The man who was public spirited enough to expose this fraud was thrown out of employment. So far as those people are concerned, himself and his family can starve, while the man who was convicted can celebrate his victory in one of the big hotels in the city. He can celebrate his triumph over the Government and the law and the Ministry of Industry and Commerce and everybody else. Are we or is the Government going to stand by and allow a man like the secretary of that company to be thrown out on the streets by a non-native? It is for this and other reasons that I take this opportunity of asking the Government to explain to the people what their attitude is on this whole matter. Unfortunately, the Minister for Justice is not here. I should like to get an explanation from his Department as to why the Attorney-General agreed to drop the 23 more serious charges in this indictment and proceed on a minor one, but, as the Minister for Justice is not here——
He is here.
Well, I do not see him.
He is not here for the purposes of this motion.
However, it is a case which, at the moment, concerns the Minister for Industry and Commerce, and time does not allow me to go any further into the matter.
I think Senator Foran requires the presence of not only one Minister but of two and perhaps of three. He has the advantage of having a Minister present within the House to reply to him and the further advantage, which few Senators have enjoyed, of having another Minister listening to him in the gallery. I should like to make a few remarks entirely from the point of view of the Minister for Industry and Commerce, and entirely from the point of view of the public interest, as distinct from any question of different types of treatment meted out to different classes of persons. I have no special knowledge of this matter; I do not know anybody concerned in it. I do not know the man who has been dismissed. I have never spoken to anybody about it and all my knowledge of the case is entirely drawn from what I read in the newspapers. I am aware that newspaper reports of cases in the courts are not full reports—they could not very well be—and I am also aware that one should not base one's view of an individual merely on the report of evidence in court. In this particular instance, however, a number of charges were made against individuals. To some of these charges a plea of guilty was entered, a conviction was recorded on these charges and a penalty was imposed by the judge. About that there can be no doubt whatever. One is entitled on that basis of fact to make certain general observations.
I do not propose to follow Senator Foran by weighing up the verdict or the adequacy or inadequacy of the punishment accorded but merely to take the position of the man who was dismissed, as it appears to the ordinary citizen who has no special knowledge of the matter. The secretary of a public company has, I think, three duties. He has a duty to his immediate superior, the managing director of the company—in this case one of the accused who pleaded guilty to a particular offence. He has a duty in the second place to the shareholders of the company through the directors and he has also a duty as a citizen to the State. Now, Sir, naturally the auditors of a public company must get assistance from the secretary of the company in the interests of the shareholders. Supposing, as in this case, the secretary does make a disclosure, bona fide, which is in whole or in part upheld in court, is it not in the public interest that a man who does take that action should not be penalised, that the ordinary citizen, and the Minister who represents the ordinary citizen, should do whatever is in his power—I am not clear what is in his power—to see that such a man is not penalised?
In order, Sir, to grasp the situation one must consider the relative positions of the State on the one hand, the guilty parties on the other, and then the person who was the State witness. The State got a verdict; it got a fine and the Revenue Commissioners will get their taxes. Not only will they get their taxes but they may also get a penal multiplication of the taxes. I forget exactly what the penalty is, but the Revenue Commissioners will certainly get it. The State, therefore, gets all its taxes, plus a fine, plus a sum of money by way of penalty. Those who admitted that they had broken the law are let off on paying a fine. They are left in possession of their liberty and in possession of a sound business or a substantial share of a sound business, which runs with certain favours conferred upon it, as a matter of public policy, by the Oireachtas, by this State. That is the position of the guilty parties. In the third place the secretary, through whom the State has gained—when I say the State, of course, I mean the whole lot of us— the secretary who was instrumental in putting the State into the position in which it now is left, has lost his livelihood in circumstances which, it appears to me, will not improve his chance of getting another position.
What is more important is that every other secretary of a company in that position is now asking himself a certain question. I think there can be no doubt that every other secretary of a company is saying to himself: "If I take any action of this kind, or become involved in any way in any transaction of this nature, will my fate also be that I shall be thrown out on the street?" I think from every point of view that that is a very lamentable situation, one which the Minister should do everything possible to remedy. I realise the difficulty of individuals who have had a very serious falling out working together, but I do think that if there is anything that can be done by the State, anything in the power that the Minister has at the moment, or any power that can be conferred on him to do justice to an individual in that position. I am sure everybody would agree that justice should be done.
I do not want to discuss the policy of tariffs, monopolies or special favours to industrialists. That is not the question at issue here at all, but since the policy has been adopted of giving favours to particular individuals or groups of individuals, we must surely agree that these individuals also have certain obligations imposed on them. The Minister, almost necessarily following from the policy which has been pursued, has been given very considerable power over firms and individuals. I think that any person who is put in a position of reaping profit from privileges granted to him in the public interest must realise that while he has got certain privileges, there is also power to remove these privileges and that that power will, if necessary, be exercised. I am far from being clear as to what precise action the Minister should take, but I am clear that if any person, enjoying special privileges from the State which give him a profit, breaks the law of the State, another person who keeps the law should certainly not be put in a worse position than the person who has broken the law. I am at one with Senator Foran in this—perhaps it is a class question; perhaps I have some of Senator Foran's bias with regard to class—I do not think any fine or any penalty for income-tax imposed on a prosperous company is comparable to making a salary earner or a wage earner lose his livelihood. In this case the one man who did no harm, who in fact did the State a service, as far as we can see from the newspapers, does appear to have suffered and the person or persons who reaped a profit and who confessed their guilt are merely punished by a fine. That seems to me to be an inexcusable state of affairs. Whether by way of pension, gratuity or otherwise, that particular individual, it would appear to me on the evidence so far as I have read it, is entitled to better treatment, not only from the point of view of equity, from the point of doing justice but also—and I submit to the Minister this is much more important—from the point of view of industrial development, from the point of view of seeing that secretaries of companies do their duty honestly, not only by their own directors but also by the State, whose custodian and guardian the Minister is and about whose interest we here are specially concerned.
I should, therefore, like to hear from the Minister whether, under the powers he has, there is anything he could do, or whether he has any suggestion to make of any action he could take with extra powers. I think I should add that between Senator Foran and myself, we have taken up, I am afraid, most of the half-hour allotted, and I take it that there would be no objection from any side of the House to the Minister's being given ample time to reply.
On a point of information. This is a very serious matter for the Irish people. The order in force in this country in connection with new industries is that 51 per cent. of the capital must be Irish. Now, in the formation of these companies there are two forms of shares—preference and ordinary shares. Only the ordinary shareholders have a right to attend a meeting of the company and to vote. The preference shareholders have no vote, either in person or by proxy, so that the control of the company rests entirely in the hands of the ordinary shareholders. I am speaking subject to correction, but I understand that is the general principle. What is the position of the capital of this company? Who are the holders of the ordinary shares and who are the holders of the preference shares? That would give us an idea whether foreign or Irish capital controls the company.
I am afraid the other directors of the company—I do not know who they are—are hardly free from blame in the matter. No matter who accepts the position of a director of a company, if he does not keep a careful eye on the company's interests, and if any individual or any number of individuals could get away with a thing like this it is a very serious matter. The secretary acted a manly part and it would be too bad that this country should let such a man down in favour of any foreigner, no matter who he is.
Might I rise to a point of order? I think this is such an important matter, and Senator Foran has done such great service in bringing it forward, that we should not, unless the rules are mandatory, limit the discussion to half an hour.
Would it be in order to move the suspension of the Standing Orders?
By agreement of the House and provided that the half-hour mentioned in the Standing Orders is not unduly extended and the Minister is given adequate time to reply. It is understood, of course, that the Minister will conclude.
Agreed.
I do not want to say much about this, except that the seriousness of the matter, from the point of view of the public, is very great, and that I know it is causing considerable concern amongst Irish industrialists, the vast majority of whom, I am satisfied, run their businesses in a manner which is beyond reproach, so far as integrity is concerned. My difficulty is that the public mind has been undoubtedly affected and affected in a way which may be serious, unless in some way or other it can be presented to them in a different manner, while, at the same time, in no way withholding the truth. I think Senator Foran stated that there were 24 charges, and the difficulty is that I cannot honestly make a comment, good, bad or indifferent, in regard to 23 charges which the State withdrew, because I do not know the facts and, therefore, can only refer to the possible effect of one.
I do not think I would have said anything but for the fact that I want to agree and disagree with Senator Goulding. I agree with him as to the responsibility of the directors, particularly for the decision to dismiss the secretary of the company, which normally could not be done without the assent of the directors. But I also want to say that, while I believe directors ought not to remain directors of companies of which they have no knowledge—if there are any such—or to which they cannot give reasonable attention, at the same time the public ought not to imagine that a director who attends directors' meetings regularly, intelligently asks questions relating to the business and to the books can possibly watch every transaction of the company. It is in the interests of the directors and of those who are trying to carry out their duties as directors conscientiously, that the integrity and responsible position of the secretary and of the officers of the company should be maintained, because without that the position of the directors would be such that I think such service as they can give—and they can give very considerable service—will be almost futile. But do not go away with the idea that the best directors you can find in the country, even half a dozen of them, can possibly, while giving full attention even at directors' meetings, watch the passing of invoices, the checking of goods, and the various items where there could be abuses.
I have felt I should say that, and also that, to my knowledge, the matter has caused considerable concern amongst industrialists. But most of those who have spoken to me or to whom I have spoken are in the difficulty that there was a case in the court, and we must assume that the State would not have withdrawn the charges, or that the judge would have agreed to the withdrawal, if they had believed that a prima facie case existed for those charges. For my part, I think it would be wise for the House to deal with the matter on which there was a plea of guilty and the position with regard to the secretary. I do not think that anyone appreciates more than I do the difficulty that might arise. But the company were clearly in a difficult position after the case, and I have sympathy with the directors who, probably, were in no way responsible for any irregularities which took place; I am speaking of the ordinary directors. But most of us do feel that their action within a fortnight in dismissing the man, contrary to the opinion of the judge, raises an issue which may have very unfortunate effects on the good name of Irish industry and of the State as a whole.
I have very few words to offer, but I must say that I am exceedingly glad Senator Foran gave us an opportunity to hear something about this very important matter from the Minister for Industry and Commerce. The discussion has tended to concentrate upon the injustice done to the dismissed secretary, and upon the bad effects that is likely to have upon people in a similar position. But, for my part, I was almost as much shocked when I read of the re-appointment as managing director of a man who had been convicted of fraud. It is quite true that a number of charges were not pressed, but he was convicted of fraud; and what an example that is for the people of the country as a whole, for our industry as a whole, and even for Government servants as a whole. I dare say it follows as a matter of course that, if the managing director convicted of fraud is re-appointed, the secretary, who has been instrumental in revealing that fraud, has to go. The original and almost the worst fault seems to me to be the re-appointment of a man convicted of fraud.
I wish at the beginning to make it clear that my presence here, as distinct from the presence of another Minister, was not intended to confine Senator Foran to any particular points of this matter. To the extent that Senator Foran was confined, it was by his own action in so far as he gave notice of intention to raise here disclosures made in evidence during the trial to which he referred, and nothing else. In so far as he raised the matter of the withdrawal of other charges against the two men who were on trial, I want to say that there is nothing which the Government would welcome more than an opportunity of making the facts fully known to the public.
I understand that an opportunity will be taken in the Dáil next week to make such a statement. I am not in a position to go into detail but I think I should say that the withdrawal of the other charges against the two men on trial was not done at the wish of the Attorney-General or counsel representing the State in the case. I agree with a great deal of what Senator Foran has said and with a great deal of the indignation he has expressed. I feel also with Senator Hayes that we should make it clear that the public of this country commend the action of the secretary in drawing the attention of the Department of Supplies to certain irregularities in the affairs of the company. I would not agree with Senator Hayes that, by doing so, Mr. McCleery has prejudiced his chances of obtaining other employment of a similar character. On the contrary, I feel certain that most public companies in this country would like to have in their service a man who had thus established his integrity and public spirit.
I do not think I said he prejudiced his chances. I think I said I was afraid he had not improved them—and I still am.
I do not think we are in disagreement at all in this matter.
No, perhaps not.
In reply to the point raised by Senator Goulding, the position is that L. Jordan and Company, Limited, Ennis, is an Irish company, established under the law of this country, with the great majority of its ordinary shares held by citizens of this country and the majority of its board of directors citizens of this country. I agree entirely with Senator Douglas that the other directors of the company cannot be commended on their action after the result of the trial in declining to accept the offered resignation of the managing director or dismissing the secretary. I do not think these other directors have shown that they appreciated fully the significance which the public attached to the whole incident.
I feel strongly about this matter because I know that this one incident, isolated though it may be, may do damage to the policy of industrial development in this country which it may take years to repair. It is natural that people assume from one incident that irregularities of the same kind are general. I am sure that most people connected with business in this country know that incidents of the kind revealed in this trial are most unusual and that, so far as the public companies of this country are concerned, there is rarely in the conduct of any of them anything which could possibly lead to similar circumstances arising.
It is a very rare occasion that anything of this character emerges in the courts and it would be a false conclusion for anyone to arrive at that because of this one incident there were similar irregularities in the conduct of other public companies. My feeling in this matter is strengthened by the fact that for some time past it has been the experience of the Department of Supplies, in dealing with this company, that they were unwilling to afford to my Department the same degree of co-operation which other manufacturers gave, and in some respects their attitude could be described as one of obstruction. In the year 1940, as soon as the accounts for the first half of the company's financial year became available, it appeared that they were making profits substantially in excess of those previously earned. These profits were not 80 per cent. The profits revealed by the accounts of the company, certified by the auditors, in 1937 were £5,400; in 1938, £6,300; in 1939, £7,900. These are the net profits. It was not until the year 1940 that a substantial inflation of the company's profits appeared. It is true that to a considerable extent that substantial inflation in the company's profits was due to the development in that year of an export trade of considerable dimensions. That export trade was made possible by heavy stocks of materials purchased during the early months of the war. It was brought to an end by my order prohibiting these exports early this year when I considered it desirable to conserve that stock of materials for our own purposes.
The matter of the prices charged by the company at home was, however, taken up with it because it was obvious that, despite the addition of this export trade, the profits which were being earned were substantially greater than appeared justifiable even if allowance was made for the expansion in the company's business at home. At an early stage in the Department's examination of the company's affairs information became available to the Department which it was considered should be communicated forthwith to the Attorney-General and that information led eventually to the court proceedings referred to here. During the period that the court proceedings were pending and while the managing director was suspended from his office I considered that the attitude of the company called for drastic action by my Department; but it was a matter of some difficulty, Senators will understand, to devise a course of action which it could not be argued might prejudice the trial. Now that the trial has ended, that position will be taken up.
I should explain that the powers of the Minister for Industry and Commerce to investigate the affairs of a company are strictly defined in the Company's Consolidation Acts. The Minister for Industry and Commerce has no power or no right to investigate the affairs of a company, unless he is requested to do so by shareholders of the company holding not less than 10 per cent. of the issued shares. I have received no request from the shareholders of this company for an inquiry into its affairs.
Has the Industrial Credit Company no nominee on the board?
No. So I understand. The company is, of course, subject now to the terms of the standstill order. Senator Foran made reference to it as it affects workers, but it also limits the distribution of dividends by public companies, and the profits of this company are subject to the excess corporation profits tax recently imposed.
I do not wish to say anything concerning the allegation that the company has defrauded the Revenue. That is a matter upon which we might all have an opinion, but it must be clear that there has been no judicial decision yet upon that subject. I know that the matter is engaging the attention of the Revenue Commissioners, but I cannot say more about it at this stage. The only privilege which the company can be said to have enjoyed from the Government was that of a protective tariff. As it happened, a decision was taken to suspend the protective tariff enjoyed by that company, together with a number of other protective tariffs, and that decision is now being implemented. It will be necessary, assuming that the attitude of the company will remain unchanged, to take further measures to regulate the sale of its products. What these measures may be I am not now in a position to say, because it is clearly a matter of some difficulty to regulate the price and distribution of products of the character produced by this company. I gather that they manufacture and sell some 120 different lines of products, all of which are related to one another.
I think the number is probably much higher.
The number is probably much higher. If there has been any delay on the part of the Department of Supplies in taking that action, it was due solely to the fact that these court proceedings were pending, and it was not desirable to create a situation in which it could be said that the trial of the persons charged had been prejudiced by the action of the Government.
I do not know that it is possible for me to say anything more at this stage in relation to any of the matters mentioned. I understand that a number of specific questions relating to the matter have been tabled for the Dáil next week. They are addressed to various Ministers and all of them will be replied to. In the course of these Dáil replies, the matters affecting Departments other than those for which I am responsible will be dealt with, and perhaps it is better that I should leave them to be dealt with by these replies rather than to attempt to deal with them myself, as my knowledge of the attitude and actions of other Departments is not as complete as it is of the Department of which I am in charge.
So far as the future of the company is concerned, it is a matter of some speculation. I think we must create a situation in which it will be possible for us to ensure that the affairs of the company will be carried on with due regard for the position it occupies here. It is true that the company has not got in any sense a legal monopoly, but by reason of the fact that it is the only company producing some of the lines of goods it sells, and that the importation of these goods is not now possible, arising out of the emergency, it has a virtual monopoly.
Could the Minister say whether the company has an industrial credit loan?
The history of the company, as I understand it, is that it was established as a private company. It subsequently applied for and received a trade loan guarantee. Later, it was floated as a public company and the trade loan was repaid in full. The flotation of the public company was underwritten by the Industrial Credit Company. I do not want Senator Baxter to misunderstand the position of the Industrial Credit Company. It is in no way subject to the Government. Its activities are completely independent of the Government and in its ordinary activities in underwriting issues of shares and other matters of that kind, it is not subject to Government direction in any form whatever.
Does the Industrial Credit Company still hold these shares?
I could not answer that question without some notice. I looked up the position of the company to remind myself of its position under the Control of Manufactures Act. I got the information which clearly established that the great majority of its ordinary shares are held by persons who are qualified as Irish citizens under the Control of Manufactures Act, but I did not go to the trouble of finding out who were the individual shareholders. It is possible that the Industrial Credit Company may hold some of the shares, although it is the general policy of that company to dispose of these shares to the public when the time is favourable. It may be that the whole of the issue was subscribed by the public, but I do not know.
The Minister says that the Industrial Credit Company have no nominee on the board of directors?
Not that I know.
That clears up a good deal. The public impression is different.
I do not know that there is anything further I want to say. I was going to conclude by expressing the opinion that, having regard to what has happened in the history of this company, it will be essential for the Government, when any question arises in the future of reimposing duties to protect it, to ensure that the company's affairs will be conducted in a manner which will reflect the responsibilities of its position.
I do not know if the Minister realises that these ordinary shares can be bought and sold on the Stock Exchange. What is there to prevent a body of aliens, who have an idea that the company is worth getting hold of, from purchasing these shares and getting practically absolute control of the company?
That is prevented by law.
The Minister seems to doubt my statement that at one time this company made 80 per cent. profits.
That is not my information.
I understand that it was proved in court.
That does not appear even in the reports of the court proceedings published in the newspapers.
I am reliably informed that it is true. I do not think the Minister told the House what his intentions regarding the secretary are.
Or the managing director.
I want the Senators to understand what my powers are. I explained that I have no power to interfere in the affairs of this company, unless I am requested to do so by 10 per cent. of the shareholders.
May I take it that in that case any person convicted of fraud, bad character or anything else, can be managing director of an Irish industry?
That is too general a question for me to attempt to answer.
It is a fact at the moment, anyhow.
The Seanad adjourned sine die at 5.20 p.m.