Fóir Teoranta Bill, 1970: Committee and Final Stages.
Sections 1 to 3, inclusive, agreed to.
I move amendment No. 1:
In subsection (2) (a) (ii), page 2, line 28 before "secured" to insert "subject to such conditions as the Company may require".
This follows on some comments I made on the Second Stage of the Bill in which I made the case to the Minister that, in addition to being a lender of last resort, this Bill should provide that the new company, Fóir Teoranta, would also insist on certain very clear conditions that would have to be agreed to before any capital was made available to an ailing industry. In other words, notwithstanding the Minister's assurance in his Second Stage speech, it should be written into the Bill that the board of Fóir Teoranta might require certain conditions to be fulfilled before advancing capital to an industry in danger of closing down.
What I had in mind is what was referred to by the Minister and other speakers on Second Stage, that is, the possible resignation of directors, the possible resignation or discharge of the management and certain other provisions that would need to be complied with before any capital was advanced to the industry or industries concerned.
I appreciate the Minister's assurance on this but I feel that in a Bill as important as this one, setting up a company which can be a very useful agency for preserving ailing industries, we should have regard to the fact that scarce capital will be made available to an ailing industry. It may not necessarily be the lack of capital which would be the cause of the industry's difficulties. It may very well be mismanagement or lack of management or wrong policy on the part of the board which would have put the industry into jeopardy. I should like to see more emphasis in the Bill laid on that factor.
For that reason I have introduced an amendment which puts into the Bill only what the Minister himself said in the course of his Second Stage speech. I quote:
These arrangements, which include the applicants for financial assistance, require applicants to employ consultants and implement their recommendations, including changes in the board of directors and management.
The Minister went on to say:
These arrangements can be made administratively and it is not necessary to cater for them in the Bill.
I submit to the Minister that it is necessary and I think the House would feel happier if it were specifically written into the Bill that the board would require certain conditions to be complied with before advancing capital to enable the affected industry to survive. I feel very strongly on this point and I hope the Minister will agree to accept the amendment. I feel that it will improve the Bill and will certainly lay it on the line that, as the Minister himself said, this is not just a "fire brigade" operation to industries that have no hope of surviving in any event, but that it will be an instrument to preserve industry that can reasonably be preserved provided certain conditions are complied with.
One of these conditions could very well be the resignation of the directors concerned who got the industry into trouble, or a change of management, or possibly an association with another similar type industry, or a merger or some other form of rationalisation or reorganisation. I would stress to the Minister that there is a strong case for including this amendment in section 4 and I hope the Minister will accept it.
I should like to support this amendment. I feel that Senator Russell is quite right in what he says and that it would be quite appropriate to include a phrase such as he has put down in this amendment because, as was pointed out in the Second Stage debate by Senator Russell and, I think, Senator Nash in particular, the companies that are to come before Fóir Teoranta to apply for aid or the companies that will be under consideration for aid of this nature will be companies in trouble and of course there will have been reasons for them having got into trouble. Many of the reasons may be reasons which could have been righted had problems among the directors been sorted out or, in particular, if problems of accountancy had been sorted out.
I think it was Senator Nash who said on Second Stage that in his experience of firms getting into trouble —and I believe he has had very wide experience of this nature—in virtually every case you could bet all the money you had that a company in severe difficulty would not have properly kept accounts. I should like to see Fóir Teoranta recognising this and I should like to see it recognised in the regulations. I should like to see it made one of the conditions by Fóir Teoranta that a properly accredited accountant be put forward immediately to look into the accounts of such a company before any decision is made on whether to give them State aid.
I think this is very important, because I feel that this point was made so strongly, that in the case of virtually every firm that get into difficulties of this nature it will be found when investigations are made that the accounts are just completely missing or they have been made up by an accountant who has not been scrupulous in his duty. One of the most important things is that Fóir Teoranta be empowered to impose conditions of this nature, the conditions needed to rectify the situation, certainly the conditions needed to produce accurate accounts.
For those reasons I should like to support this amendment because I think it gives the board of Fóir Teoranta the power to do this and I think this should be included in the present legislation.
It is quite clearly common ground that that there could be cases coming before the board of Fóir Teoranta which would require the imposition of certain conditions such as have been mentioned in relation to accounts, in relation to management, change of management, directors and such things. Indeed, it was dealt with, as has been pointed out, in some detail on the Second Stage. That, as I say, is common ground.
I submit that the proposed amendment does nothing to improve this situation. It does not specify any such conditions: all it provides is that "subject to such conditions as the Company may require", that is that Fóir Teoranta may require. The board of Fóir Teoranta will, of course, have the discretion to decide in each case what conditions should be applied to the advancing of money. In the case of Taiscí Stáit, which to some extent Fóir Teoranta are replacing, there is no such condition as is proposed in this amendment, but this has not prevented Taiscí Stáit from applying these very kinds of conditions in various cases, in insisting on changes in management, in insisting on nominees on the board and so on.
In other words, the Bill already provides the power which is proposed to be given in this amendment. I would urge the House to consider that there is more to it than a merely negative approach. There may well be a danger, if one were to introduce such a condition—and the danger I think is reinforced by the arguments made by Senator Russell—that it could be interpreted as meaning that the board of Fóir Teoranta would have to have a standard set of conditions which would be complied with in any case which came before them. I would think this would be dangerous and would lead to a degree of inflexibility which could mean that certain cases which would properly be dealt with by Fóir Teoranta would not be dealt with because they did not come within the specific conditions laid down. Therefore, because on the one hand the power proposed for the board by this amendment is already there, and on the other hand because the spelling out in this way could lead to a rigidity that would be undesirable, I do not think this amendment should be accepted.
I do not quite follow the Minister's argument on this. On the one hand he says that Senator Russell's amendment would seem to tie down Fóir Teoranta by almost specifying conditions. Indeed, I considered putting down an amendment to try to do something similar. The reason I did not do it is that I wished to make the specific point which Senator Nash made on the Second Stage debate about the necessity for producing accurate accounts and books or for having them produced after Fóir Teoranta started to look into the affairs of the company and I felt that one could hardly be as specific as this and give the board of Fóir Teoranta the required flexibility. I do not see that Senator Russell's amendment ties the board of Fóir Teoranta in any way; I think it just makes the point more strongly in the legislation before us. I cannot see the Minister's argument for not accepting this amendment because it does not tie the board's hands in any way, but it makes the statement in this part of the Bill stronger. Therefore, I still feel that this amendment should be accepted.
The Minister mentioned Taiscí Stáit. From my knowledge of Taiscí Stáit I do not think they always operated too efficiently, conditions or no conditions. I do not want to go into specific cases but in some of the cases in which Taiscí Stáit gave money I believe that money should not have been given and that there were cases more deserving of it. In some instances in which money was given a pretty flimsy case was put forward for a grant of the size that was given. Apart from that, I still cannot see the Minister's argument that this amendment ties the board's hands in any way. The amendment would make the present legislation stronger and better.
We are dealing with section 4 of the Bill which outlines in the broadest possible sense what the memorandum of the proposed company should contain. The amendment I have suggested is not restrictive. The Minister said it is restrictive but he has not elaborated on it in any way which would convince any Member of the House that the amendment is restrictive. It is as broad as any of the subheads under section 4. The House, presumably, will not see the memorandum and articles until they have been printed. The memorandum and articles must be approved by the Minister, not by the Dáil or the Seanad, therefore, this Bill should contain in reasonable outline an explanation as to what the memorandum and articles will contain when approved by the Minister.
This Bill as it stands contains nothing that suggests that any condition need be, or can be, imposed by the board of the new company. In my opinion this section would be sensibly and properly tightened up if some suggestion were included that conditions could, if necessary, be made by the board of the company. As the Bill reads now, it is purely a lending agency. The clauses in section 4 merely suggest the various ways in which the company can lend money by taking up debentures, by advancing money, by guaranteeing loans and, further on, state the type of companies that can be assisted. Nowhere is it suggested that on receiving this money certain conditions may have to be complied with.
I am merely suggesting to the Minister, without restriction—I still cannot understand the Minister's reference to the word "restriction"—that this Bill should contain a reference to conditions as a reasonable amendment to the ability to lend money. I cannot see how this could restrict the board or how it could detract from the clause covering the memorandum. It would be proper and prudent procedure to put in something that suggests that conditions may be required to be met where scarce capital is to be lent to a company. I should like the Minister to reconsider this matter. I do not think it would detract from the Bill in any way and it would be a sensible precaution.
This is an enabling Bill which will enable Fóir Teoranta to advance money in certain conditions to certain companies. It is quite clear, since it is an enabling Bill, that the board are not obliged to advance money in any particular case and, therefore, they may impose such conditions as they wish. I have mentioned Taiscí Stáit which have imposed conditions operating under the same kind of legislation without a provision such as that contained in this amendment.
Senator West referred to certain cases of Taiscí Stáit where he did not agree money should have been advanced but, with all due respect to him, I would suggest that is irrelevant. There have been cases dealt with by Taiscí Stáit in which conditions such as those mentioned here were imposed. I do not think that Senators would seriously contest that statement. Under the Bill as it stands the board of Fóir Teoranta would be entitled to impose conditions before making an advance to a company. I do not think that can be seriously contested both on a reasonable interpretation of the Bill and on the basis of the precedent, that I have mentioned, of Taiscí Stáit.
We then come to the other side of the question as to whether or not it is necessary. We put it in anyway and it will do no harm. I did not say, as Senator Russell seemed to think I said, that this would introduce a restriction. What I said was that there was a danger that such an amendment might be interpreted as meaning that there should be a standard set of conditions applied to all cases. Indeed, the case originally made by Senator Russell would support that interpretation. I am not saying it will be so interpreted but it could be. I am suggesting that it is not necessary to do this. Such conditions as Fóir Teoranta consider necessary can be imposed in any case under the Bill as it stands.
Senator West made it clear that he accepts the argument I made that it is necessary to have flexibility. There will be different circumstances in different cases and, in effect, one has to depend on the board of Fóir Teoranta in each case to use their discretion and to apply such conditions as are appropriate to that particular case. The Bill enables the board of Fóir Teoranta to do so. They are not restricted in any way as to their ability to apply conditions or they are not forced to apply conditions which they would not think appropriate. The Bill as it stands does exactly what we would wish the board of Fóir Teoranta to do. It gives them the powers they should have. I suggest the amendment does not add to their powers and it involves a slight danger of introducing a degree of inflexibility which would be undesirable.
I cannot agree with the Minister on that. It does not give even the appearance of restricting Fóir Teoranta. Let us look at section 4 (2) (b) (vi) which reads:
its failure to receive financial assistance would have serious repercussions either nationally or locally.
As the Minister knows when a firm or an industry of this type get into difficulties he has local representatives available. If it were in my area I would be on to it as soon as I could because it is a local problem. There would be discussion of it in the Press and the trade unions would quite rightly take up the struggle because the people who would suffer most would be employees rather than the directors or the higher grades of staff. The lower grade members of the firm are the people who might have difficulty in finding alternative employment and who would receive smaller benefits than the people in managerial positions. Therefore, the trade unions will be involved very crucially in closures or possible closures of firms.
One can easily envisage a firm which ran into difficulties but which fell under subsection (2) (b) (vi) of section 4. I would argue that if Senator Russell's amendment were accepted it would strengthen the Minister's hand, and the board's hand, in dealing with such a situation. In such cases there will often be considerable public pressure. The case will be discussed nationally—and quite rightly so—in the Press and in the other media. If at this stage the amendment—"subject to such conditions as the Company may require"—is put into the Bill, it will strengthen the hands of the members of the board of Fóir Teoranta in saying that in a case in which money was not to be granted the firm involved had not fulfilled the conditions that it imposed. It makes the position of both the Minister and Fóir Teoranta stronger, rather than weaker, in a situation such as this.
Could I ask the Senator whether he suggests that the Bill does not allow the board to impose conditions?
It is a good thing to make this stronger and clearer. As the Minister knows, we are facing a time in which there will have to be considerable reorganisation in industry. There will be a number of firms facing crisis situations, and I am of the opinion that a considerable number of organisations will come under the scrutiny of Fóir Teoranta in this way. There will be a great deal of public discussion about the way the money is spent, which is proper. After all, these are public funds. The Minister said that my reference to Taiscí Stáit was irrelevant. It is only irrelevant if one is not interested in the general situation of how public money is spent.
No. The Senator cannot get away with that. It is relevant to imposing conditions.
Let me remark on one condition which was mentioned, I think, by Senator Kennedy in the Second Stage debate. The Senator said that he felt that money should not be given to foreign companies in this country which got into difficulty. He was referring to companies which happen to be subsidiaries of overseas companies that have plenty of capital to back them up.
There was a case in which money was given to such a company by Taiscí Stáit. What I am trying to say is that there will be a lot of public debate about this. It would strengthen the hands of the Minister and of Fóir Teoranta if Senator Russell's amendment was accepted. I do not see that it puts any restrictions, or semblance of restrictions, on the board of Fóir Teoranta. In fact, it makes their position stronger.
It seems to me to be a pity that this discussion should be decided by a count of heads. Obviously, there is not very much between the points of view that have been expressed by the Minister on the one hand and Senator Russell on the other. The Minister himself has referred to the fact that there is a great deal of common ground. The strength of the Minister's argument— or whatever strength may be in it—is in the case he made that the inclusion of the words suggested in the amendment might possibly—and I think he only puts it as far as that—be interpreted as requiring a set form of requirements to be drawn up and, presumably, to be applicable in all cases. If that danger exists, it is very, very slight indeed. When the Minister was making the argument I was trying to picture the scene which one might expect in this House if the phrase which Senator Russell wants to have included were, in fact, included in the Bill at the start. If a Senator on this side of the House said that that was a dangerous phrase to have included, because it could be interpreted as requiring a set form of requirements to be drawn up and to be applied, I could well imagine the Minister, in all good faith and in perfect honesty, scorning that argument and saying that there was not the slightest danger of that being the position. I could imagine the Minister challenging Senators on this side of the House by asking: "Will you tell me one case where the fact that permission was given to impose requirements was interpreted as being mandatory that a particular stereotyped set of requirements would have to be drawn up and be applied?" I could see the Minister, in all good faith and in perfect honesty, making that argument. If roles were reversed I would find it very hard to resist the Minister if he made that argument.
It is a pity that a little bit more common ground could not be found. There is not a great deal of difference, but perfectly sincere conviction has been expressed from this side of the House that the Bill would be strengthened. It certainly would not be damaged. On the contrary it would be strengthened if this amendment were accepted. The only fear the Minister has is that, if he accepts it, it might be interpreted as bringing about a set of circumstances which would require routine set conditions to be drawn up. I should like to suggest to the Minister and to Senator Russell that the problem the Minister foresees might easily be overcome. At the same time, Senator Russell's point of view might be met if there was a slight alteration in the amendment. If the amendment were to read as follows:
subject to such conditions, if any, as the Company may require.
I think that the Minister would agree with me that it would completely remove the difficulty which he sees. I hope that Senator Russell will agree that an amendment on those lines would not weaken his amendment, because it expresses the intention that he has been expressing. If the Minister would indicate that he would accept an amendment on those lines, it might be dealt with now. Otherwise, we might possibly consider it further on Report Stage.
I would be prepared to accept an amendment like that. It will not add one iota to the powers of the board, but I accept that it will obviate the difficulty that I have mentioned.
I am perfectly agreeable. One of the reasons why I do not want to flog this thing to death, but that I would be concerned about inserting it, is that this Bill will ultimately become an Act, a public document. This is what the public will see: they will not see the Minister's speech or any of the contributions made in this House or in the other House; neither will they see the memorandum. The public are entitled to feel that in certain circumstances the directors of this company will have powers to distribute substantial sums and that they will do so possibly after requiring certain conditions to be met. That is all I ask for and I agree with Senator O'Higgins. I thank the Minister.
Could we deal with it in its amended form now?
It is open to the House to agree to amend any amendment. In the interests of order, the Chair would prefer it to be brought in at Report Stage, if that was agreed.
I was only anticipating the possibility that the Minister might look for the other Stages today.
The Senator is using intelligent anticipation.
It would still be possible to introduce an amendment on that basis.
It would be advisable to agree on it now.
Does the House agree to amend the amendment by the introduction of the words "if any" after the words "such conditions"? The amendment before the House will therefore read.
In subsection (2) (a), page 2, line 28, before "secured" to insert "subject to such conditions, if any, as the Company may require".
Is that agreed?
Amendment, as amended, agreed to.
I move amendment No. 2:
In subsection (2) (b) (ii), page 3, line 1, before "and" to insert "involved" and before "capital" to insert "total".
Apart from a small piece of redrafting, which I think improves this subsection, I am anxious that the word "capital" should be qualified by the word "total". "Capital" can have a very wide meaning. There are all types of capital: equity capital, known capital and so on, and it would be possible to have a company with a very small equity capital and a very large loan capital. The directors of Fóir Teoranta would wish that a company's total capital would be substantial. The word "capital" in this subsection as it stands does not give a clear meaning and for that reason I am inserting the qualification.
On the question of employment, the word "involved" improves the subsection. As it reads at present, employment and capital are tied together. It reads: "the employment and capital employed..." The subsection would give a more precise definition of what I hope is in the Minister's mind. It would read: "The employment involved and total capital employed in it are significant." I suggest that the Minister might accept the amendment with that intention.
There are two aspects of this amendment. First, it is a matter of opinion as to whether the insertion of the word "involved" improves the section. It does not make a great difference but I would not argue against it. The more important aspect of this amendment is the insertion of the word "total" before "capital". It is true that the phrase "capital employed" is sometimes defined as covering longterm capital only and it is desirable in the context of this Bill and this section that the phrase "capital employed" should be taken to cover short-term borrowing as well as permanent capital. The insertion of the word "total" as suggested by Senator Russell does help to clarify the position as to what is intended here.
The word "total" is used in the following paragraph and, if only in the interests of consistency, it should be accepted. For the other reasons I have mentioned I consider it a useful amendment and I am prepared to accept it.
Amendment agreed to.
Government amendment No. 3:
In page 3, line 2, after "significant" to insert "either nationally or locally".
The purpose of this amendment is to make it clear beyond any doubt that, irrespective of the size of the business, it will be eligible for assistance where its closure would significantly affect the employment situation in a local area. In the discussion on the Committee Stage in Dáil Éireann a Deputy suggested that the criterion of significance in relation to employment and capital employed might be interpreted as excluding the small business. The Deputy added that an amendment which would ensure that locally significant concerns would be eligible might be appropriate. There is substance in this and for that reason I am suggesting to the House that they accept this amendment which makes it clear beyond doubt that small concerns as well as large concerns may be eligible.
Amendment agreed to.
Government amendment No. 4:
In page 3, line 3, to delete "the promoters' " and to substitute "its owners' ".
This amendment arises out of a point raised on the Second Stage by Senator Alexis FitzGerald. In referring to the word "promoter", he suggested that this was the incorrect term as this is normally applied to persons who establish a concern and who may not necessarily be associated with it after its establishment or may hold only a minority interest. I undertook at that time to look into this matter. I have done so and I am satisfied that the term "owner" would be more appropriate than the term "promoter". I am suggesting that the House accept this amendment.
Senator Alexis FitzGerald made that point and I also made the same point on the Second Stage. The word "promoter" has several connotations. I should like the Minister to explain what he means by "owners". If you have a company with, say, 1,000 shareholders, legally they are the owners, but in fact two or three people with sufficient capital, say, 20 per cent or 25 per cent, could control the company and they could decide its fate. It is possibly too late to do anything about this now but perhaps the Minister would think it over. I should like to see the words "controlling owners" or "controlling proprietors" inserted there. The word "owners" is very wide.
If one put in a phrase such as the "controlling proprietor" one might well exclude a public company which would otherwise be eligible. I am advised that the word "owner" covers as adequately as we can what is intended here without unduly restricting the operation of the board of Fóir Teoranta.
Amendment agreed to.
I move amendment No. 5:
In subsection (2) (b) (iii), line 4 to delete "total" and substitute "equity".
After the Minister's amendment the subsection will read—"the proportion of the owner's contribution to its total capital is reasonable". This is one of the conditions. I do not consider "total capital" a correct term in this sense. If the equity capital states only £100 and there is a lot of loan stock or debentures in this company's capital structure, it would mean that the owners had made a very small contribution out of their own pockets, so to speak, to the capital of the company. The words "equity capital" are necessary to ensure that the owners are the owners of the company. It is their contribution to this that counts in the long run. They might have made a very small contribution to the equity capital and at the same time burden the company with a lot of loan capital or debenture stock. For that reason some qualification is required and I suggest the word "equity" is necessary as the owners of the equity capital are in fact the owners.
I am unable to accept this amendment for the reason that it could prove unduly restrictive. It can happen frequently that a limited company may have a very small equity in proportion to the total capital employed. It is important that the assessment of the owner's contribution should be in relation to the total capital and not merely the equity capital. If I might take an example, it is conceivable that there could be a case where there was a small amount of equity capital and a fairly substantial loan, say, by the owners in the sense in which I have used that phrase previously. In the normal way if such an application came before the board of Fóir Teoranta I would expect they would say one of the conditions would be that any money due to be repaid to Fóir Teoranta would have to be repaid before any of the loan due to the owners was repaid. This would be a fairly normal condition. It would be unduly restrictive, and perhaps unfair, to relate the assessment of the owners' contribution solely to the equity and not to the total capital employed. The point the Senator has in mind can be covered under the Bill, as it stands, but to accept this amendment could be unduly restrictive and perhaps in some cases unfair.
I wonder is the Minister arguing against himself. Perhaps he and I are not quite on the same plane. Perhaps I have misunderstood the subsection. My interpretation is that if an application comes from a company with a very small equity capital and very large loan capital, not necessarily from the owners but from an outside source—to take an extreme example, if the equity capital is £100 and the company has valuable assets in regard to buildings and machinery, and has managed to raise a very substantial loan, say, £50,000—the owner's share of the total capital would be infinitesimal if related to the total capital. Therefore, he will not be entitled to get a loan, whereas if his contribution was related to the equity capital—say it was 50 per cent or 75 per cent—he would be entitled to be considered for a loan. What I am trying to do is to cover the very point the Minister has made in regard to companies with quite small capital but who, for some reason or another, have raised a lot of loan capital and as a result the owner's contribution to the total capital is perhaps only 5 per cent whereas his contribution to the equity capital could be all the equity capital or a very large proportion of it.
I appreciate that the Senator and I are slightly at cross-purposes there. Nevertheless, I would suggest that in the subsection as it reads the proportion of the owners' contribution to the total capital is reasonable. We come back to the situation we have mentioned in discussing many sections of this Bill where we have to depend on the common sense of the board of Fóir Teoranta in dealing with each particular case. It seems to me conceivable that even in the case mentioned by Senator Russell, where taking the proportion of the owners' contribution in relation to the total capital you get 5 per cent, the board might well decide that in a particular case that was reasonable. You could have the reverse situation, too, where the amount of contribution to the equity could be very substantial but could be unreasonable in relation to the total capital. You can have both kinds of situation. The board of Fóir Teoranta must be left to decide in each particular case. The Bill, as it stands, allows that to happen. The introduction of the amendment proposed by Senator Russell could operate in an unduly restrictive way in some cases. The situation the Senator wishes to bring about is not precluded by the wording of the Bill. Ultimately the decision in this matter has to rest with the board of Fóir Teoranta.
Am I correct in thinking that if there was a dispute about this, if this was challenged in some way and a legal argument was being conducted and it hinged on a phrase like this phrase in section 4, subsection (2), (b), (iii)
the proportion of the promoters' contribution to its total capital is reasonable,
this phrase would not have any legal meaning? I am not expert enough to know anything about this, but it strikes me that there is so much latitude for a subjective view of what is reasonable and what is not, that considerable proportions of this section of the Bill really have little legal meaning because one could argue that in one situation something was reasonable and in another was not. As the Minister has said, in the end we will be depending on the good sense, honesty and ability of the board of Fóir Teoranta to resist the various pressures and to take a very objective view of the firm involved. I am asking for guidance here. I feel that some of these sections would not have much force in a law court if one could conceive of an action being taken or some sort of a legal discussion going on. They are in a sense guidelines to Fóir Teoranta. While from this point of view it is extremely important to get the guidelines set down as well and as fully as possible and to get the feelings of the House expressed as accurately as we can, a section such as this one would not stand up to any argument in a law court.
I would just make a further point. It goes back to the Minister's argument on an earlier amendment put forward by me. Is there any danger, however remote, that this subsection would be restrictive? If the word "total" were not inserted it would leave the board completely free to decide whether the owners' contribution to its capital is reasonable. Once the word "total" is mentioned you take in all kinds of capital, unless I am misreading the subsection.
Equity capital, loan capital, possible debentures are taken in and lumped together and the owners' contribution to that total must be reasonable as this Bill and as the Act will read. Any owners in trouble, or likely to get into trouble, reading the Act could say there is no use in our applying to Fóir Teoranta. They could say that their contribution to the equity is undoubtedly reasonable because they put everything they had into it. They might feel that their contribution to the total capital employed in the concern is so small that they obviously would not be considered.
The Minister mentioned in the course of his speech on Second Reading that he was anxious to encourage firms to go to Fóir Teoranta before they got into such a powerless condition that the industry might close up and a large number of workers might be out of employment. Anybody reading the Bill as it stands, and the Act as it will be in due course, might be put off seeking assistance by the words "total qualifying capital". I am sure the Minister would agree that we should do everything possible to encourage firms, particularly conservative family firms, and I speak as one of them myself, who are often very slow to seek outside assistance for various possibly personal reasons. But every encouragement should be given to this type of people to get assistance in time before their industry gets into a hopeless condition.
I cannot purport to give the legal interpretation of this subsection; that is a matter for the courts. For what it is worth, my view would be somewhat similar to that expressed by Senator West, that is that, strictly speaking, this is a guideline from the Oireachtas to the board of Fóir Teoranta and the correct interpretation of this would be what is reasonable in the opinion of the board of Fóir Teoranta. On that basis we get back to what I said before, that one is depending on the common sense of the board.
To return to the amendment, there could be a case in which the owners would have a high proportion of the equity and a very low proportion of the total capital because of borrowings and so on from sources other than the owners and that under this provision it would be open to the board of Fóir Teoranta in such circumstances to say the contribution of the owners to the total capital is not reasonable. On the other hand, one could, as I have indicated earlier, have a situation in which the contribution to the equity capital was small but the contribution to the total capital, allowing for loans and so on, would be quite reasonable. There are both kinds of situations. The introduction of the word "equity", as suggested by the amendment, would remove the flexibility which is in the Bill as it stands. Not alone would it not add to the Bill but it could create difficulties by introducing inflexibility. Therefore, I could not accept that amendment.
Would the Minister agree to delete the word "total"?
No. We would be very inconsistent if we did that.
We have already introduced an amendment to bring in the word "total" in a previous section or subsection.
Amendment, by leave, withdrawn.
I move amendment No. 6:
In subsection (2) (b) (vi), line 12 before "either" to insert "on employment".
This follows on a comment I made during the Second Stage. Paragraph (vi) reads:
its failure to receive financial assistance would have serious repercussions either nationally or locally.
I asked at the time what that meant. I suggested that there should be some reference to employment, either nationally or locally. In fact, this amendment follows up my comments there. So the paragraph would read:
its failure to receive financial assistance would have serious repercussions on employment either nationally or locally.
I think it is a logical corollary to that paragraph. I hope the Minister will agree to accept it. It also follows up on his own amendment to subparagraph (ii).
I appreciate the point the Senator is making, but I think there is an aspect of it that he may not have considered. Let me give him an example. One might have the case of a firm employing, say, 20 to 30 people. If that firm closed down those 20 or 30 people might be absorbed relatively easily into another local industry. If we accept the Senator's amendment, in such a case that firm would not be eligible for assistance from Fóir Teoranta. It is conceivable that in such a case the industry concerned might be such that it could affect, say, a considerable number of local farmers who were providing the raw material for that company's operations. Such a situation would have serious repercussions locally but not serious repercussions on employment. Nevertheless, I would think it is the kind of case—I am sure the Senator would agree— which should be eligible.
I would certainly, but I would not agree that farmers do not work.
They are employed. Would that not be covered by "employment"?
I think the normal interpretation of this would be employment on the farm. If you inserted it, that would be its interpretation.
That was not the way it was intended; it was the repercussions on employment, either nationally or locally. In other words, that would, in my opinion, cover the very point the Minister has made. If farmers who were sending materials to a factory were disemployed or——
The Senator will appreciate——
——if some factory 100 miles away which was supplying materials for further processing was affected as a result of a closure, that would be a national level. However, all these situations would be relative to employment either locally or nationally. If the words are just left open without any qualification they could be interpreted in many ways.
The Senator will appreciate that in the kind of case I have mentioned, where it would have an effect on farmers, it would not normally mean that the farmers would then become unemployed; it would mean that their income would go down. They might have a difficult time but in most cases would continue to farm. They would not become unemployed.
I should like to support what the Minister has said because it seems to me the insertion of these two words restricts this section entirely to considerations of employment and does not leave latitude which would be required to consider other possibilities. The Minister has mentioned one such possibility. I think there are quite a few others which could arise. Supposing a small firm producing a certain specialised piece of equipment was to go under in an area in which there was fairly high employment and the employees could find other work relatively easily; even so, it could have a holding up effect on other parts of the industrial scene; it might not necessarily cause unemployment directly but it could however cause considerable problems. The amendment here rather restricts things because my interpretation of the amended phrase would be that this paragraph (vi) would be dealing with employment and no other problems. I should like to see other problems being considered. However, I think this phrase is a guideline and not a very tight legal phrase. It is such a subjective phrase that it may not have any legal meaning, and therefore would be open to interpretation in many different ways. I should like to see this section made capable of a wide interpretation.
Amendment, by leave, withdrawn.
Question proposed: "That section 4, as amended, stand part of the Bill."
What industries does the Minister envisage as being included in the term "industrial activity including any activity ancillary to industry"? Would it include State or semi-State industries, road or rail transport?
It could include State or semi-State companies although the prospects of their coming before Fóir Teoranta are remote. It does not exclude semi-State companies.
I know most of them get their funds from other sources. The Minister concerned usually comes before the two Houses of the Oireachtas for increased funds. What about public authority concerns? There are not very many examples, but there are a few. Would they qualify?
Offhand I cannot think of a public authority that would seem to me to come within the definition, but maybe the Senator can.
Yes, that might. Mines and collieries, for instance, would.
I do not know anything about collieries, but local authority concerns would not be excluded?
They would not be excluded by reason of the fact that they were local authorities.
That is the point I wanted to make. With regard to "ancillary," that is a very wide term. Senator Fintan Kennedy on the last occasion talked about the catering industry and all its ramifications. I do not think the Minister adverted to that. I adverted to the transport industry—road transport, rail transport, water transport—which are all ancillary to industry. At the moment transport is a vital factor in industry, as the Minister himself will appreciate, particularly industries in the western part of the country. In that regard I think I am correct in saying that a commission has been sitting for the past four years or more to look into the question of transport costs of industries in the West of Ireland.
It has not yet reported and I do not know when it will report. The only reason I mentioned it in this context is that transport is of vital importance to an industry, particularly one that is a good distance from either its raw material or its customers. That applies to a number of industries in the West of Ireland, as the Minister will agree. For this reason transport would appear to be an ancillary industry and a vital factor in the cost of an industry or a concern of almost any kind on the west coast of Ireland.
It is not intended to include in this definition service industries or the tourist industry. A concern must be engaged in an industrial activity or an activity ancillary to industry. I admit that there is room for argument in certain cases as to what comes within that definition. I am trying to give a general indication to the House by saying that it is intended to exclude from that both service industries and tourism.
Could I follow up that point? As the Minister has just said, there is considerable room for argument and, as I have said, for subjective opinion on which firms come under some of the subsections of this section and which do not. What is envisaged? Is the Minister going to lay down further guidelines to the board of Fóir Teoranta about the type of company which is to come under consideration, or is the board of Fóir Teoranta going to be entirely independent and make up its own mind? I do think that is one of the things which come strongly from this section: there could be considerable disagreement, or the board of Fóir Teoranta could consider that industries came under scrutiny with which the Minister would not agree. Is there any provision anywhere in the Bill in which the Minister can either enforce his will on the board in this matter or will the board be given a free rein and will they be completely free to decide which industries come under their ken and which do not?
This problem arises occasionally in relation to the Industrial Development Authority. The precedent there is that the board of the IDA themselves consider whether a particular industry comes within the legal terms of reference which they have. I have known of cases in which they have excluded certain categories and some years later on reconsideration and on examining changes of circumstances in a particular industry have included them or vice versa. On that basis I would expect that the board of Fóir Teoranta would operate in the beginning on the clear-cut basis where there is no question of argument, and then, as doubtful cases came up, would consider the matter and would decide whether that particular category was in or out. I would expect that this will be the way the board will operate. This is the way in which the board of the IDA has operated. The circumstances would be very similar, but I do not think I am in a position to give any clear-cut definition at this stage. Indeed the phrase in the Bill is deliberately wide and broad in order to try to ensure that we do not have narrow definitions excluding cases which most Members of both Houses would feel should be covered. Like many of the other matters to which we have referred, when it comes to the difficult, marginal cases the final decision will have to be made by the board of Fóir Teoranta.
I would agree with that. I am not trying to be critical, because we are approaching this piece of legislation with the idea of being helpful and constructive, but, as the Minister has just said, there is a danger. Supposing the board of Fóir Teoranta changes its personnel over a period of time. It could take one view of an industry at one time and a little later it could, if circumstances changed, if the personnel changed or if other changes occurred, decide that an industry was eligible which previously had not been.
Of course, this happens even in the Supreme Court.
This is unavoidable and the Minister is right to leave this section wide and to leave a fair amount of latitude. It has been improved by amendments but the real point which we should be trying to establish is that there will be as little unfairness as possible. It hinges on the personnel, and this is the crucial thing about the whole of Fóir Teoranta operations. It is the personnel who are going to be involved and who are going to be making these decisions. They are, as we see from this section, going to have a fair amount of latitude.
I am glad that the Minister says that at first they are going to take the cases which clearly come, without argument or discussion, within the provisions of this section. No doubt there are going to be cases in which there will be a fair amount of argument, some of it in public. I presume that in this sort of case the board will consult with the Minister and maybe with some other Government Department on the problems involved.
I suppose, in the final analysis, because a concern is "eligible" does not necessarily mean that it is going to get assistance.
This is true. I said earlier this is an enabling piece of legislation.
Question put and agreed to.
I move amendment No. 7:
In subsection (2) (b), lines 18 and 19 to delete ", and may be removed from office," and in line 20 after "Commerce" to add "for a period of five years and shall be eligible for reappointment".
This is the most important amendment I have put down and one to which I attach great significance. The Minister has. I think, confirmed in several statements made in the House this afternoon that a tremendous responsibility will rest with the board of Fóir Teoranta, and their success as an instrument of reorganisation and in the saving of industries throughout the country will depend on the ability and integrity of the men who guide the company at board level. It would be a great mistake to allow this section, as set out at present, to stand whereby, as stated in subsection (b) of the section:
...the chairman and other directors shall be appointed, and may be removed from office, by the Minister with the consent of the Minister for Industry and Commerce.
You will not get the type of personnel that I imagine the Minister wants to get for this new board if they are going to be appointed at the whim of a Minister—I say "a Minister" specifically— to be hired or fired at his or his successor's will. Any man of any stature, particularly the chairman, will require, first of all, an adequate salary to go with the position of responsibility; he will want a degree of permanence— that is why I suggest a period of five years—and he will want a free hand, which in fact he gets under this Bill. However we might argue about minor sections of the Bill by and large I would agree with the Minister that there is a great deal of flexibility in the Bill. For this reason you must have men of integrity and ability on the board, men who are assured of appointment for a reasonable period of years and are suitably rewarded for their work.
I think there are great possibilities in regard to Fóir Teoranta. I did not think this at the outset; to be quite frank I thought that they would be just another useful political agency for lending money to firms in what I might call sensitive political areas. Having studied it in greater depth now I believe this could be a great instrument for saving industries in danger of collapse and bringing about very necessary changes in the set-up of industries, particularly in areas where there would be very serious repercussions if a major industry were to collapse, such as in the south and in the west. To do that effectively you must have a proper board, a board who will know what they are doing and be sufficiently independent to take unpopular steps if these have to be taken. If you have that type of board with the degree of independence to which they are entitled if they are going to work effectively, this could be a very useful instrument indeed.
If it is to be the case that a man does not know how long his period of office will be, that possibly he is under some pressure of one kind or another, it will not be a success. The whole success or failure of this Bill depends on the personnel, and their degree of success, in turn, depends on the conditions they enjoy. Two essential conditions, I think, are independence and security of tenure. A third one is proper remuneration for the responsibilities they have to undertake. I feel very strongly about this and I know that Senator Alexis FitzGerald, who unfortunately cannot be here today, spoke at some length and with purpose on this particular point. He is a man who has had considerable experience of industry and industrial development, as have had other Senators, such as Senator Nash.
I hope the House will agree with me that if you want an effective board you must have certain conditions. If we do not want that, if we want a hire-and-fire type of board, if we want to appoint a few civil servants—and I do not say that in any derogatory sense— just to put them on for a few years and then change them again, this board is not going to be an effective instrument for saving industry or for developing industry or for bringing about much needed changes in industry. Let us be frank about it, there are industries just struggling on, through no fault of the people employed in them, but due to rank bad management and possibly rank bad decisions of policy by the board of directors.
If this board are going to do their job properly they will possibly have to make unpopular decisions from time to time. The least we can do for the board is to give them the independence and the strength and backing to make these decisions in the interest of employment and in the interest of the country generally. I feel very strongly about this; I am sure other Senators have strong views on it too, though they may not be exactly in line with my own. I speak with experience in the field of industry over quite a long number of years and I would strongly urge the Minister to accept my amendment, or one similar to it, if he can find a better way of phrasing it. Provided he is agreeable to give the board the conditions and the independence to which they are entitled, I am quite prepared to agree to any changes in my amendment, or to an equivalent amendment.
First of all, I should tell the House what the intention is, because it is not in the Bill. It is intended to provide in the articles of association that the directors would retire by rotation, the first one to retire by lot and then thereafter on seniority. I am just giving a rough outline of the procedure, which it one followed in a number of State companies.
There are certain advantages in this procedure. It makes the removal of people who have proved to be unsuitable as directors relatively easy and gives an opportunity of introducing new blood on to the board without there being any break in continuity. It is important in a board like this to establish a certain expertise and ensure that there should be no major break in continuity. I think that Senator Russell is mistaken to some extent in his approach to this in so far as he seems to be thinking in particular of the chairman being somewhat on the lines of a chief executive. In fact the members of the board, including the chairman, will be part-time. The question of permanence—that is permanence qua permanence—will not be a matter of any considerable concern to them. Any member of a State board, I believe, would be concerned to ensure that his services would not be dispensed with at least before his term of office was up. One will find few, if any, precedents for a situation in which a member of a State board had his services dispensed with before his normal term of office was up. There may have been some but it certainly is not a frequent occurrence and there is no reason to believe that it would be a frequent occurrence in relation to the board of Fóir Teoranta.
I agree entirely with Senator Russell that this will be an important board and will require people of a particularly high calibre. Not everybody of high calibre will be suitable for appointment to this board. There are certain qualities of mind that will be required and a certain balance of different kinds of minds will be required. In my opinion, the board will not easily be filled with suitable people because of the nature and importance of the work they will have to do but I think difficulties will arise in the selection and persuading of suitable people to accept appointment. I do not think the difficulty will arise in relation to any lack of permanence or any feeling that they will be appointed, or maintain office, at the whim—as Senator Russell said—of a Minister. This is true of all appointments to State boards. It has not operated as a problem and, as I have indicated, there are few if any precedents for a situation in which such people have had their services dispensed with at the whim of a Minister.
On the basis of the experience we have of State boards, while there will be problems about this board they are not the kind of problems Senator Russell anticipates. I do not think the question of laying down a fixed term of office is by any means essential and, as I have indicated, the intention is to do so on a different basis, on the basis of rotation to preserve continuity. I think Senator Russell's fears in this regard are misdirected. In so far as fears should be expressed here they should be in relation to the calibre of the people who will be appointed rather than to their terms of appointment.
I share some of the fears of Senator Russell and also some of those expressed by Senator Alexis FitzGerald. I am not convinced that what the Minister has said allays them. It is clear from the discussion now, and the discussion on the Second Stage of the Bill, that this is the real crunch section. The whole performance of Fóir Teoranta and the way in which they fulfil what will be a very important national function will depend on the composition of the board.
When this Bill becomes an Act and when Fóir Teoranta are established they may find themselves carrying out their operations under considerable public scrutiny. This is generally a good thing. People should know how public money is being spent. Because many of the cases with which Fóir Teoranta will have to deal will have already received a fair amount of publicity, any decision they will arrive at will consequently receive considerable publicity. Therefore, it is most important that the board—and I am sure Senator Russell will agree with me here—which the Minister will appoint will not only be of high calibre but will be seen by the public to be a board of high calibre, that they will be seen by the public to be a board consisting of men of integrity, that they will be seen by the public to be a board consisting of people who will be able to resist political pressures from whatever quarter.
There is no doubt that political pressure will be put on members of the board by various people, by the Government in office, by the Opposition, or by a political party to which people may belong. It must be absolutely clear to the public, if they are to have confidence in the operations which Fóir Teoranta will carry out, that the men on the board are capable of resisting such political pressures, are capable of taking unpleasant or unpopular steps if they feel they are necessary and that they will be seen to do what is right in the national interest.
I agree with the Minister that it will be difficult to find people of the right calibre, experience and expertise to fill the posts. I believe that there are Members of this House who would make excellent directors of Fóir Teoranta and I am sorry that the amendment in section 18 did not go further than it has. It is essential that the board of Fóir Teoranta obtain the confidence of the public and that we do everything in our power to ensure this. I support Senator Russell on this amendment because we cannot have a situation in which members of the board can be appointed and removed from office and even though the Minister has said this very rarely happened in the boards of State bodies in the past I would still like to see Senator Russell's amendment, or some version of it, accepted. I would not be too worried about the actual wording of the amendment but I am worried about the spirit of it. It is important that this should be incorporated in the Bill. I hope we have not moved away from the idea of the concept of service being connected with a post like this. People who accept directorships should be accepting them with the idea that they are carrying out a public service. They should not be people who would accept such directorships because of the salary involved, or because of the political power it might give them. Since this is so important I feel strongly that some amendment of this type should be inserted.
I was very interested to hear Senator Russell say that when he looked at this Bill for the first time, he was not very optimistic: in fact, he was rather pessimistic and felt that the Fóir Teoranta operation might fall into the category of some of our previous Government operations, which have not been tremendously successful because people were unable to resist political pressures. I believe like Senator Russell that everything hinges on this section and I should like the Minister to reconsider the amendment.
I should also like to ask him, when he says that in the articles of association the directors are to retire by rotatiton, when does he intend that the first director should retire? How long a period after the board have been set up? In addition. I should like to say that it is understood that the directors will not be full-time but will be part-time directors. Of necessity, we shall have to look for experts from the industrial area to take this sort of post. This is not the same as permanence. Of course, some people would be very happy to take a part-time post of this nature because of the political power it would give them, to put it quite crudely and straightforwardly.
It is essential that nobody is given any of these posts on political grounds. From the discussion we had in this House, it would be Members of this House, from either side, who would fill this sort of post. They would be excellent members of the board precisely because they have not forgotten the concept of service to the public, which will be the crucial thing here. At times the board of An Fóir Teoranta may be operating under the public eye and the media will probably pay considerable attention to the decisions they take. Therefore, it is essential that the board of An Fóir Teoranta be seen to be independent of the pressures that will be put on them.
I should like to support the spirit of this amendment. I do not like this phrase that people can be removed from office at the whim of a Minister for Industry and Commerce. It could mean that in a political crisis situation they could be removed by a political party. I think that they should be independent of this and I support the amendment.
Before the Minister replies I wish to say that I agree completely with one statement he made, that it may be difficult to get persons of the right calibre to serve on this board. People of such calibre are generally very busy people and, as Senator West said, they are not prepared to give some of their time in the interests of the community.
I suggest to the Minister that the inclusion of what I call "the hire and fire" section in this sub-clause will make greater the difficulty of getting suitable people to serve on this board. There will be a better chance, particularly in the case of the chairman, of getting a man of ability and integrity to serve if he knows he is going to serve for a stated number of years, say for three or five years, or longer. If he is the right type of man and is prepared to give a proportion of his time in the interests of the community and, in this case, of saving a section of industry from collapse, he will risk a reasonable period. He may have no doubts whatever about the intention of the present Minister but he may have some qualms about possible future Ministers, or change in Ministries. For that reason it will be harder to do what the Minister admits is a hard task, that is to get people of the right calibre to serve on boards of this type.
As Senator West pointed out, the people who serve on this board should be free, not only from day-to-day pressures, political and otherwise, but also from ministerial pressures. That is vitally important if they are to be independent and take decisions that may be unpopular. I should like to see this board—even if they are to be a part-time board only—given the opportunity over a stated number of years of seeing what they can do. If they are found to be unsuitable at the end of that time obviously they need not be reappointed. However, if they are suitable and with three or five years experience behind them I should like to see them being automatically considered for reappointment.
There is a lot to be said for continuity in boards of this kind. Experience is a very valuable asset in any business. As the Minister knows, it is also very valuable in most aspects of industrial, commercial and political life. It is something that should be preserved wherever possible and wherever desirable. I do not know the position with regard to all State companies. I was under the impression that in most State companies directors were appointed for a stated period. I should certainly like to see written into this section a stated number of years and the exclusion of the right of the Minister to remove a director from office.
In the case of the chairman it is primarily important that the right man be appointed. Even if he is only part-time he must be completely independent in every sense of the word, including independence from ministerial or political pressures. I do not think that such will be the case in this set-up. The Minister may disagree with me on that point. Perhaps we can only agree to disagree. I know that I should like to see a change and I think that it would certainly improve the Bill and would improve the working of the Act and the company.
I should like to refer to Senator West's query. The first retirement from the board by lot would be envisaged to take place at the first annual general meeting of the company which would be within 15 months of their formation. Secondly, we should distinguish between State companies on the one hand and statutory boards on the other. In the case of statutory boards it is normal that the directors are appointed for fixed periods, but the procedure I have outlined is the one that was followed in relation to several State companies. These include the Agricultural Credit Corporation, the Industrial Credit Company, the air companies, Nítrigin Éireann Teoranta, Irish Steel Holdings Limited, Comhlucht Siúicre Éireann Teoranta and Irish Shipping Limited. All of those have the procedure I outlined of retirement of directors by rotation and that procedure is envisaged for Fóir Teoranta.
There is no point in repeating what I have already stated. The arguments advanced by Senator Russell and Senator West are academic in the light of the practical experience we have. Being academic they will not get to the root of the real problem; they are based on fears which could be expressed for political reasons but cannot be expressed on the basis of experience of the operation of State companies. Nobody can show that there has been a practice by Ministers of any Government whereby they use their powers of removal of directors of State companies from office to ensure that they get their own way.
I, in my experience, have not come across this, nor have I heard of this happening in previous Governments of any political view. This is an academic point. All our experience shows that this is not a practical difficulty and that the practical difficulties involved in getting the right people for this board do not relate to the terms of appointment to the board. They relate to the calibre of the people and with people of the right calibre being persuaded to take on this work. If people with the right calibre take on membership of this board they will only do so out of a sense of public service. It will be a thankless task and I do not wish to put off people who might be asked to become members of this board but I do not think that the problems relate to the terms of appointment as suggested in the arguments for this amendment. They relate to different matters which cannot be covered in the Bill.
Regarding the rotational system does it mean that the chairman is subject to resignation?
It sounds to me more like a voluntary committee. It is an appalling set-up. Notwithstanding the Minister's comments about academic points made by Senator West and myself, there is nothing very academic about saying that a system like this, whereby each director in turn has to rotate in a year or 15 months, will not make for continuity of effort or for independence of the members of the board and will certainly not develop the dedication the Minister spoke about. You will not get men of calibre, integrity and ability to give their service to the community knowing that if their name comes out of a hat in 15 months they are off the board.
Perhaps the Senator misunderstood me. What I meant was that the first and maybe the first two or three, until you have an order of seniority of appointment, would be determined by lot. That would simply mean that if they had to retire from the board there would be vacancies, but they would be eligible for reappointment. This practice is followed in the various companies I have mentioned.
That does not dispel my doubts. Although the Minister has clarified the position it does not get away from the basic objection I have. You are trying to do two completely incompatible things—get the right people who are prepared to give their time and services to the community for what the Minister has described—I agree with him—as a largely thankless task and at the same time put them on a sort of draw-by-lot basis of resignation.
I am convinced that the proper way is to set up the board and give them a fixed term of office and an opportunity to try themselves. The Minister has more information in this regard than I have and this may have worked in other companies. This is the first time, so far as I am aware, that we have set up a company of this particular type to do the things envisaged under this Bill and for that reason we should not look backwards to what succeeded or appeared to succeed in the case of other companies. This is unique in the history of the State and this company are being asked to perform an important and very unpopular and distasteful task. I wish to emphasise that the board must have independence and some degree of continuity in office. Notwithstanding the Minister's remarks in that regard, I am convinced he is going the wrong way about it.
I should like to back Senator Russell in what he has said. During the discussion on section 4 it became quite clear that there was considerable latitude of interpretation open to board members of the type of firm that could be helped by Fóir Teoranta; we should also remember the extent of the help, up to a certain fairly high limit, which will be decided by the board members.
Senator Russell said this State company would be doing a job which is essentially quite different from any of the companies mentioned by the Minister. This is a very important point and we should not neglect it. As Senator Russell stated, the board of Fóir Teoranta will undoubtedly operate in some extremely politically sensitive areas and it is essential that we have a board which will not respond to any political sensations whatever but will only look at things from the industrial, financial, social and employment points of view. The parallel the Minister has drawn with the other organisations, such as Irish Steel Holdings, has no comparison in the latitude allowed to members of the board to spend public money. Some of the decisions they will have to take will be very unpopular and may be unpopular with the Government of the day. We want to make them as independent of the Government of the day, or of any other party, as is humanly possible.
The parallel is not a good one and therefore we should not be swayed by that particular argument. I presume that if the members of the board whom the Minister judges to be successful and competent come up for retirement by rotation and offer their retirement they will be reappointed. I do not see anything wrong with that but I think it would be much more in the public interest if we took the retirement of board members out of the hands of the Minister and made it automatic.
Finally, the Minister said, and I am quite sure he is right, he does not want to put off prospective board members or directors. There are enough people who will take on a task of this nature and magnitude. It is going to be a pretty tough business. I am quite sure they are not going to get a remuneration which would be equated financially with a job of this nature. I am quite sure that is correct; I do not think they should be paid as if they were directors of a big international company, despite the fact they will be doing just as important a job. The one thing that would encourage an unscrupulous person to try to get on a board of this nature is the prospect of the political power it could give him and, in fact, would give him. In the past we have had the appointment of unscrupulous people, quite unwittingly, and it has caused considerable problems. I am sure the Minister would not dream of doing this but these things sometimes happen. As we say, when a piece of legislation like this comes up Ministers change and a different Minister could take a completely different point of view.
I think Senator Russell is right. His arguments bear more weight than the Minister's because of the very special nature of the task, its tremendous importance and the amount of public money that will be spent by Fóir Teoranta. If we look at the record of Taiscí Stáit a great deal of it, I am afraid, will go down the drain. That is unavoidable. The less the better, but some certainly will. The public will know about this. Bearing those points in mind the independence of the board from political and Government pressures is absolutely essential and I would like to see the Minister reconsidering his attitude to this amendment.
No. I do not want to go back over all the arguments again but I am afraid I cannot accept this amendment.
Is the amendment withdrawn?
I have no alternative but to withdraw it with very great reluctance. I should like to suggest to the Minister that he would look at the articles—I do not know if they are printed yet—and provide for a stated term for the members of the board and not this rotational system which is completely unsuited to a board of this type. That does not affect his Bill, but he can at least do something in the articles to provide for these minimum changes in the conditions of the appointment of directors.
Amendment, by leave, withdrawn.
Section 5 agreed to.
Section 6 agreed to.
Question proposed: "That section 7 stand part of the Bill."
I am not quite clear about this section. Subsection (1) provides:
One share in the share capital of the Company shall be allotted and issued to each of the subscribers to the memorandum of association of the Company...
That is presumably the first directors.
Will they be the first directors?
Not necessarily. These are the people who simply sign the memorandum. Under the Companies Act there must be seven. They will hold these shares in trust for the Minister and will either assign them back to him or, say, on death they would revert to the Minister and could be allocated to somebody else. It is not necessary that directors should hold the shares unless the articles of association so provide. This provision is to comply with the Companies Act. The seven who will sign the memorandum of association will hold the shares in trust for the Minister so that essentially all of the shares will be held by the Minister.
The directors will not hold any shares?
Question put and agreed to.
Sections 8 to 13, inclusive, agreed to.
Question proposed: "That section 14 stand part of the Bill."
May I ask a question on this section? Would the guarantee be in addition to the borrowings of the company? It can borrow up to £7½ million from the Minister for Finance. That is correct, is it not?
In addition to lending that in turn again—it cannot lend it all because it has certain commitments from Taiscí Stáit; I think there is something over £6 million maximum— can it make guarantees of an unspecified amount?
No, it cannot. It must keep within the overall limit set out in the Bill, whether it is borrowing or by guarantee. That limit is an overall one.
So it could in fact borrow up to, say, £7½ million?
In fact, not lend anything—just guarantee loans or invest the money?
The Senator may take it it would not get that kind of money from the Minister for Finance unless it needed it. There may be a slight misunderstanding. What is involved here is a guarantee by the Minister for Finance of money borrowed by Fóir Teoranta. I do not know if that was quite clear to the Senator? That is what is covered in this section. Instead of getting the money direct from the Minister Fóir Teoranta might borrow with a guarantee from the Minister but its total borrowings, whichever way it gets the money, must come within the overall limit prescribed in the Bill.
There is only a certain guarantee granted according to this memorandum.
Yes. That is one of its powers.
To guarantee payments in respect of such concerns— would those guarantees be in addition to moneys it could lend?
Yes. I think there is an actuarial method of calculating the liability on foot of a guarantee of that nature. Presumably that would be applied but the overall limit would still apply, that is, the £7½ million.
In other words, their total commitments by way of either loans to companies, or debentures, or some other form of loan, and their guarantees would not exceed £7½ million.
We have been talking here, under section 14, about the amounts which Fóir Teoranta may borrow. There is no limit on the amount which Fóir Teoranta may turnover by way of advance to companies, getting repayments, and then money paid to other companies, so that, if they guarantee money borrowed by company X, that will be part of what I might call their turnover. There is no limit on that.
We are talking about two different things. Section 14 relates to money being borrowed by Fóir Teoranta. I think Senator Russell's question was related to moneys which would be advanced by Fóir Teoranta, whether by way of direct advance or by guarantee.
I think one more or less hinges on the other. If the company under guarantee from the Minister can borrow only up to £7½ million, in addition to relending that, or taking up shares from companies, can they guarantee the repayment of loans to companies?
Yes, there is no limit in the Bill on the amount they can deal with in that way. There is of course, as the Senator will appreciate, a practical limit, in the sense that if, say, they had borrowed to the limit of their statutory ability, and they were offering a guarantee to a bank the bank might well refuse to accept the guarantee as being one with which they could not comply. This is a practical difficulty; it is not a legal one. As far as the Bill is concerned, there is no limit laid down on the amount of what I call turnover, the amount that the company may advance by way of direct loan or guarantee. There is a practical limit, but not a legal limit.
Question put and agreed to.
Sections 15 to 17, inclusive, agreed to.
Government amendment No. 8:
In page 5, between lines 44 and 45, to insert the following new subsection:
"(2) Where a person who is either an officer or a servant in the employment of the Company becomes a member of either House of the Oireachtas—
(a) he shall, during the period commencing upon his becoming entitled under the Standing Orders of that House to sit therein and ending either when he ceases to be a member of that House or, if it should sooner happen, upon his resignation or retirement from such employment or upon the termination of such employment by the Company, stand seconded from such employment,
(b) he shall not be paid by, or entitled to receive from, the Company any salary or wages, as the case may be, in respect of that period."
The purpose of this amendment is to extend to officers and servants the usual provision relating to Oireachtas membership included in legislation governing State-sponsored bodies. I indicated on the Second Stage that it will be a matter for the board of Fóir Teoranta to decide whether the company should have their own staff or whether they will operate through the staff of the Industrial Credit Company, in other words, to have the ICC act as managers in the way they do to Taiscí Stáit. This will be a decision for the board of Fóir Teoranta. However, it did seem to me that by the omission of this provision it appeared to some extent that a decision was being made or that an option was being exercised and I would, therefore, recommend to the House the acceptance of this amendment which does not commit the board of Fóir Teoranta to either course but leaves both courses open without any complications. By either course, I mean either employing their own staff or using the ICC as managers for their operations.
Amendment agreed to.
Question proposed: "That section 18, as amended, stand part of the Bill."
I want to raise an objection to this section. It is a section which occurs in a great deal of legislation of this type. It is a hangover from pretty archaic British legislation. It is a section we have inherited and it should not become a blanket clause in all legislation of this type. There is a very good case for the Government considering whether this is necessary in legislation of this type, whether or not Members of either House of the Oireachtas should be eligible for posts of this nature. The point at issue in this legislation is really going to be the establishment of a board of people of the highest calibre and integrity. I do not think Members of the Oireachtas should be debarred. If we are going to choose people of the highest calibre it may happen that there are qualified people in the Oireachtas, people who are known to be of the highest integrity and there is a good argument for cutting out this section altogether.
Does Senator West admit that people in the Oireachtas are not subject to political pressure in that case, because that seems to contradict his thesis on the previous section?
I would reply to Senator Ó Maoláin that surely he is not going to rule out members of political parties altogether from this because this is what his argument implies. That is the logic of it. It is not just Members of the Oireachtas; any member of a political party is subject to some pressure in that he will have to agree, at least to a certain extent, with the aims, objectives and methods used by his party. If Senator Ó Maoláin's argument were pursued to its logical conclusion one would have to have Independents only as directors. This might be a very desirable situation. However, I do not think it would, so I would just like to hear what the Minister has to say about this provision as a blanket provision always occurring in this sort of legislation.
I made no argument at all. I was not arguing in any way as suggested by Senator West. I asked him how he reconciled his last statement with the theory he was advancing previously. May I add to that now that I should be interested also if he would indicate the geographical location of this Shangri-la from which we are going to get this unique species of men that he thinks are not subject to any pressures by anybody?
Let me geographically clarify my Shangri-la for Senator Ó Maoláin. It may be a Shangri-la——
I ought to point out to him that I am neither a member of any political party or the possessor of a telephone. It is not a case of people not being subject to political pressures. The point that I made earlier, and I think Senator Ó Maoláin was here at the time, was that the members of this board are going to be subject to political pressures. It does not matter what their political views are. The point is, are they people who will be able to withstand these pressures? That is the crucial point, and I think there would be Members of the Oireachtas who would be able to withstand political pressures while doing a job of this nature. That is the point I am trying to make, not that they should not have political affiliations but that they are people who would be able to withstand them and some people can and some people obviously cannot.
This argument is one that comes up every time a Bill of this nature comes before either House of the Oireachtas. It will be known to Senators that this kind of provision is inserted in all these Bill; in other words, it has been accepted as a general proposition that Members of the Oireachtas should not be either directors or employees of State companies. In so far as employees are concerned they should not continue as employees while Members of the Oireachtas though provision is made for them to resume their employment if they cease to be Members of the Oireachtas.
I would agree entirely with Senator West when he says that there are Members of the Oireachtas who are of first-class calibre and first-class integrity and who would, perhaps, make excellent members of the board of Fóir Teoranta or of any other State board. I certainly would agree with that proposition. But that is not the end of the story. The fact is that it is important in a democracy that not only must it be seen that there is no undue political interference or appointment for political reasons, not only must that not happen, but it must be seen that it is not happening. To illustrate the point I am trying to make, let me follow up what Senator West said in response to the question from the leader of the House. He said that, if one were to follow the point to its logical conclusion, one would come to the opinion that the only Members of the Oireachtas who would be eligible would be Independent Members.
Members of a political party.
In response to a question from Senator Ó Maoláin Senator West said: "If you follow that to its logical conclusion you come to the opinion that only the Independent Members of the Oireachtas would be eligible." Let us take it that the Senator meant Independent Members of the Oireachtas. I want to say to Senator West, that, although he may describe himself as an Independent and other Members of the Oireachtas may so describe themselves, if he thinks he is going to convince any member of any political party to regard him or any other Independent Member as being either non-political or not subject to political pressure he had better think again. I am saying this not in any spirit of criticism of Senator West or any of his Independent colleagues but merely to illustrate the reasoning behind this section. It is impossible to take any Member of the Oireachtas, whether he is a member of a political party or not, and to appoint him to a State board and not to have problems arising which far outweigh from the point of view of the public interest the maintenance of the right of a Member of the Oireachtas otherwise qualified to be appointed to the board. It is a sacrifice that has, I think, to be made by Members of the Oireachtas in the public interest, taking all the factors concerned into account.
Would the Minister not agree that subsection (1) of the clause is unfair? If he is nominated and is not elected to either House he still has to suffer the fate of being discharged from the board. I do not completely disagree with the Minister but I cannot see very much difference in appointing a politician, be it a Senator or TD, on the board or the Minister's own appointee; whether the Minister believes it or not, the public certainly will take it that he digs with the right foot politically.
I think on balance it is probably better to have this position obtain. I do not know the historical background, but I think it is a native product rather than something which was imported. I recall about 20 years ago in the other House when a provision of this sort was introduced by an inter-Party Government—I think the particular occasion was the Irish Newsagency Bill—it was regarded as something of a novelty that we should express in our legislation that Members of the Oireachtas should not be members of bodies of this sort. On balance it is probably better that that should be so, principally for the reasons that the Minister has given; but the Minister will see himself that, if he follows his own reasoning logically, there should be a great number of other people who should be ruled out on similar grounds from being members or employees of State bodies. For example, if you take the test as being that impartiality should not alone be there but should be seen to be there, which, I understand, was the argument the Minister used, then exactly the same argument would apply for example to ex-Members of either House of the Oireachtas. If you want to pursue that policy of what might be described as demonstrable impartiality then legislation of this type would require, I think, not only that you exclude people who are Members of the Oireachtas but that you exclude people who were at any time Members of the Oireachtas. That would be going altogether too far and it shows the difficulty of trying to get a provision which will meet with public approval and, at the same time, not rule out from consideration people of the type the Minister may wish to attract into a service of this sort. The compromise that has been arrived at in this country of excluding or disqualifying Members of the Oireachtas is one which by now, at any rate, is fairly well understood and approved of by the public generally.
Senator Russell has put his finger on a weakness in this particular section. I cannot remember offhand whether the same provisions apply in other Acts, but it does seem to be rather anomolous that a person merely by being nominated should be excluded from membership. It is theoretically possible under our electoral laws both in regard to the Dáil and the Seanad for a person to be nominated without his knowedge. Admittedly he has an opportunity of withdrawing his nomination but the mere nomination under this section would disqualify him. The Minister might look at that again.
I was going to say that in the unlikely event of a person being nominated, unknown to himself, I am quite sure he could——
It is possible theoretically he could be nominated.
To the best of my knowledge the provision here is the same as in other legislation. I know positively it is similar to some other legislation with which I was personally dealing. I think it is in common form. The reasoning behind it is that a director as a policy maker and final judge on loan applications could well be considered an inappropriate person to continue in that role if he had been nominated. The same argument could be made about a member of the staff, although with less force, but there is also the factor that the director is part-time whereas the member of the staff is normally permanent and pensionable. It would, I think, be unfair to require a person in a permanent and pensionable position to interrupt his employment in advance of being assured of a seat in the Oireachtas and possibly with consequences of interruption of entitlement to superannuation. Broadly speaking, that is the kind of reasoning behind the difference in treatment of the directors and members of the staff.
Question put and agreed to.
Sections 19 to 23, inclusive, agreed to.
Title agreed to.
Bill reported with amendments.
Agreed to take remaining Stages today.
Bill received for final consideration.
Question proposed: "That the Bill do now pass."
I just want to make a very brief comment. I have been critical of the Bill in some parts and I hope this was in a constructive vein. I should like to wish the new board every success when it is set up. I believe, and I expressed this opinion during discussion today, that it can be a very effective instrument in preventing serious deterioration in certain sensitive industries in the country, provided the personnel appointed to the board are the proper people. That is the one fear I have about the Bill and I have already expressed at considerable length my views as to why I think we may not get the people the Minister wants.
I asked the Minister, when withdrawing my amendment in regard to the directors, to look at the articles of association so as to provide that the directors would get a stated period of office and that this rotation system would not apply in this case. I do not want to reiterate what I said before, but this board which we are seeking to set up now are not comparable to other boards. They are not comparable to other State boards such as the ESB, Bord na Móna, CIE or any of the rest of them, or any other statutory body. They are being called on to do a different type of duty and a lot of its success will depend completely and absolutely on its chairman and board of directors in the first place, and on executive and other staff generally in the second place. For that reason, I want to make a final appeal to the Minister to reconsider the question of retirement of the directors by a system which I think is more appropriate to a voluntary committee than anything else, and to give them a stated period of office. I think that would help to get people of the right type and with the necessary qualifications to make a success of this board.
First, I should like to thank the House for the fairly constructive approach to the Bill. In many instances it was quite constructive and I think the Bill certainly has improved as a result of its passage through this House. Like Senator Russell, I want to avoid going back over what I said before, but I want to say that I think he is mistaken in thinking that the terms of appointment are important. It is my experience in relation to the appointments to State boards where we had difficulty, perhaps, in getting people suitable for particular appointments, that the problem has never related to the terms of whether the Minister could remove them or how long they were appointed for. It has never related to that; it has always related to the suitability, or more important, the availability of the people who were most suitable.
I want to assure the House that every effort will be made, and is being made, to ensure that we get the right calibre of people for this board. I would have regarded this Bill in the normal way as being very important, but in the context of our present economic situation and of the unemployment problem with which we are faced, I regard it as being of vital importance. I am very pleased that it has been passed today by the House. It will have to go back to Dáil Éireann but as far as I am concerned I want to have as little delay as possible in the enactment of this Bill because I regard it as being potentially of major importance in dealing with problems of redundancy which may arise, and dealing with them more effectively than they can be dealt with under existing machinery.
Because of that importance and the urgency in my view of passing the Bill, I have already had some preliminary consideration and consultation with my colleague, the Minister for Industry and Commerce, in regard to possible membership of this board. The most important thing that has emerged as far as I am concerned is the enormous difficulty with which we are faced in getting suitable people. There will, of course, be very many unsuitable people who if they hear of what I am just saying will have a letter or a phone call in to me tomorrow, or to the Minister for Industry and Commerce. We are not interested in that kind of person. I am talking about the kind who would be suitable; and the problems which emerge are enormous. I am mentioning this in order to make it clear to the House not only that I consider this Bill to be extremely important, but also to indicate some of the reasons why I say that I did not think the problems being raised in regard to the terms of the appointment of the board were the really important ones at all. That is not my impression and despite the difficulties I am satisfied that we will succeed in getting a board which will be fully competent to do the job that is envisaged in this Bill and envisaged by the Houses of the Oireachtas. It will be difficult, but I am confident that we can get a board to do what I regard as very important work.
I thank the Minister for his fairly reasonable reception of my remarks.
Question put and agreed to.