Consequent on a resolution passed by Dáil Éireann on 24 May 1991 and by Seanad Éireann on 29 May 1991, an order appointing a Tribunal of Inquiry into the Beef Processing Sector was made on 31 May 1991 by the Minister for Agriculture and Food.
In accordance with the resolution of both Houses, the terms of reference of the tribunal were:
(1) to inquire into and report to the Minister for Agriculture and Food on the following definite matters of urgent public importance:
(i) allegations regarding illegal activities, fraud and malpractice in and in connection with the beef processing industry made or referred to
(a) in Dáil Éireann and
(b) on a television programme transmitted by ITV on 13 May 1991;
(ii) any matters connected with or relevant to the matters aforesaid which the tribunal considers is necessary to investigate in connection with its inquiries into the matters mentioned at (i) above;
and
(2) to make such recommendations (if any) as the Tribunal, having regard to its findings, thinks proper.
The order nominated, with his prior agreement, the President of the High Court, the Honourable Mr. Justice Liam Hamilton, as the sole member of the tribunal.
The task which the Houses of the Oireachtas placed before the tribunal was a formidable one, involving a fundamental inquiry into every aspect of the beef processing industry which was of public importance. Under Mr. Justice Hamilton's chairmanship, the tribunal had its first preliminary meeting on 21 June 1991 and commenced hearing evidence on 7 November 1991. It sat for 231 days, heard evidence from 475 witnesses and had its final sitting on 15 July 1993. The tribunal's report was presented to me my Mr. Justice Hamilton on 29 July 1994.
Among other things, the motion before the House thanks the chairman for his work. I am sure every Member will agree that the chairman deserves the deep gratitude of the House for the enormous task he undertook and completed over three years of very hard work. As the tribunal was established by order of the Minister for Agriculture and Food it is appropriate that I should personally record my own thanks to Mr. Justice Hamilton for his work.
The tribunal of inquiry, the report of which is the subject of this debate, was established in response to a series of allegations made in the Dáil and elsewhere regarding the conduct of the Irish beef industry, and the Ministers and the public servants responsible for regulating it. These allegations were of the most serious kind, suggesting fraud by the industry and acquiescence in, and even facilitation of, that fraud by Ministers and public servants. The alleged reasons for such acquiescence and facilitation ranged from incompetence to corruption. The allegations were therefore of the most serious and damaging kind.
The integrity, independence and objectivity of public servants, and the institutions of State for which they worked, were called into question by these allegations. Likewise, the honesty and moral authority of our elected representatives, the politicians, were also called into question. If upheld, those allegations would have amounted to a most damning condemnation of Irish public life and of how we, as a nation, conduct our business.
The tribunal found no basis or evidence whatsoever to support the allegations made against the integrity of Ministers or public servants. Regarding the main thrust of the allegations — that there was a cosy arrangement between business, politicians and public servants and that it was possible to get away with murder, or that a blind eye would be turned, depending on having the right connections, the report of the tribunal, page 231, states:
There is no evidence to suggest that either the Taoiseach at the time or the Minister for Industry & Commerce at the time was personally close to Mr. Goodman or that Mr. Goodman had any political associations with either of them or the Party that they represented.
Because of the position of Mr. Goodman in the agricultural life of the country and because of the obvious concerns of the Taoiseach and the Minister for Industry & Commerce to develop the agri-food sector of the economy and exports of value added products, leading to job creation, there is no doubt but that Mr. Goodman had reasonably ready access to members of the Government, including the Taoiseach and the Minister for Industry & Commerce for the purpose of discussing his plans for the development of his companies and his exports. It is clear that he had similar access to the previous Taoiseach, Mr. FitzGerald and members of his Government.
Regarding the serious and sleazy allegations made by the ITV programme "World in Action", the report of the tribunal, on page 568, states:
There has not been established any basis for the allegation made in the ITV programme that Mr. Larry Goodman and his companies 'had the right connections at the right places that could basically control any investigation that would be put in place'. There is no evidence to suggest that any investigation carried out by any of the relevant authorities, including the Department of Agriculture, the Revenue Commissioners, the Customs and Excise authorities and the Garda Síochána were at any time or in anyway controlled or sought to be controlled by any "connections", political or otherwise. Indeed, all the evidence is to the contrary.
Again, the report of the tribunal, on page 231, states:
There is no evidence to suggest that either the Taoiseach at the time or the Minister for Industry & Commerce at the time was personally close to Mr. Goodman or that Mr. Goodman had any political associations either with them or the Party that they represented.
On page 422, the report of the tribunal states:
The allegation made in the ITV programme implied that there was collusion between "the Irish authorities" and the Goodman organisation to thwart a major European investigation by the appropriate authority of the European Commission into the Goodman organisation and was part of the general approach of the said programme that the Goodman organisation was protected and favoured by the Irish Government, because of political connection therewith.
Because of the seriousness of this allegation the Tribunal sought at the earliest possible opportunity the assistance of the European Commission in determining its truth or otherwise.
On pages 422 and 423 the report of the tribunal states:
On the 16th day of July 1991, the Tribunal wrote to Monsieur Michel Jacquot, who was the Director of FEOGA which is the French acronym for European Agriculture Guarantee and Guidance Fund (EAGGF).
In this letter Monsieur Jacquot was informed of the terms of reference of the Tribunal, the nature of the specific allegations made and his assistance invoked.
In reply, Monsieur Jacquot informed the Tribunal that:
"The allegations as conveyed in your letter of 16th July and equally in the Statement of Allegations is without foundation (in respect of the services of EAGGF)."
Though this reply satisfactorily established the falsity of the allegation, the tribunal was obliged to hear evidence in regard thereto and as a result of such evidence it was clearly established to be baseless and false. Such was the cogency of the evidence in this regard that the allegation was withdrawn by Ms Susan O'Keeffe, the journalist who had researched and played a large part in the preparation of the programme.
On page 403, the report of the tribunal states:
The Tribunal is satisfied that there is no basis for the allegation that the Department of Agriculture did not diligently assist the Garda Fraud Squad in relation to the Waterford and Ballymun investigations.
The Tribunal is further satisfied that there is nothing sinister in the delay of the Customs & Excise authorities making the file available to the Garda Fraud Squad.
Page 362 of the report states:
Commissioner MacSharry, in the course of his evidence before this Tribunal, denied that he had made any such request to Minister Braks to intervene on behalf of Goodman International with any Dutch bank and has stated that he was not aware of the Dutch bank alleged to have been a creditor of the Goodman Group.
The Tribunal accepted his evidence in this regard and that would have been the end of the matter as far as the Tribunal was concerned were it not for the evidence with regard to the manner in which the producers of the television programme distorted and edited the video which showed Commissioner MacSharry's statement to the European Parliament on the 11th day of October 1990.
The actual video of what Commissioner MacSharry stated to the European Parliament was shown to the Tribunal and, when compared with the purported extract therefrom shown on the ITV programme, it was manifest that the excerpt which was shown on the ITV programme was carefully and, in the opinion of the Tribunal, unethically edited to present a distorted picture of what he had actually said.
I am not impressed with people in sections of the media who, on the one hand, moralise and lecture publicly elected representatives, such as TDs, Senators and Ministers, and public servants on their standards when they conduct their business but who, on the other hand, would unethically edit a programme to damage in the most serious way the integrity of publicly elected representatives and public servants who cannot defend themselves, and to distort the actual picture.
It is extremely important that the tribunal which sat for the length of time it did, heard as many witnesses as it did, spent a year evaluating and assessing that evidence — produced such clear findings. It has thus rendered a major public service to the Irish people by clearing the good name of the persons they have elected to conduct their public business for them and of the people employed in their public institutions. The Irish people can renew the confidence they always had in their public representatives and in their public institutions to conduct business on their behalf at home in an objective and even handed way and to represent them abroad with honour and dignity.
The tribunal certainly found shortcomings in the controls exercised by my Department in relation to the operation of the European Union market support arrangements. These shortcomings were found to be due largely to shortage of staff. These deficiencies have since been addressed and this has been acknowledged by the tribunal. I propose to deal in detail with my Department's controls later.
With regard to the beef industry itself, the allegations which were made gave the impression that fraud was widespread and systematic and that the quality of the meat being sold by our processors was of a low order. Certainly, there have been specific incidents of fraud which were detected by my Department or by the Customs and duly dealt with and, certainly, further evidence of malpractice emerged in the course of the tribunal. However, the general impression which the allegations conveyed of widespread and systematic fraud and of a practice of selling low quality meat to unsuspecting foreign buyers was shown clearly by the tribunal findings to be totally false. The allegations did no service to one of our most important industries and certainly did not make the task of holding and winning markets — at best a most difficult task — any easier.
The report states:
Having regard to the nature of the allegations made against the Goodman group of companies, and the widespread publicity given to such allegations and to the evidence given at this tribunal, it is significant that there were no complaints from consumers or purchasers of commercial, intervention or Third Country beef sold and exported by the Goodman group of companies.
We export and market beef to 60 countries worldwide and not one solitary complaint against Irish beef was made to the tribunal of inquiry into the industry.
The tribunal has made many findings in the course of its lengthy report, most of which have attracted much comment and analysis. To me, as Minister for Agriculture, Food and Forestry, one of the most important findings is the first finding, in Chapter Five. That finding is about the beef industry itself. The tribunal refers to the more than four fold increase in sales by Irish vacuum packed beef over the years 1984 to 1992 and goes on to conclude:
This more than four-fold increase has been achieved against a background of falling EC consumption, increased pressure from competing meals, alternative protein sources and the growth in the convenience food sector. Such a striking commercial performance could not have taken place if the quality of the product were in doubt and concerns which have been expressed about the quality of Irish meat exports are, in the view of the Tribunal unfounded: it is a product of the highest quality, justifiably commanding a premium price on international markets both within the EC and worldwide, and remains the country's most successful foreign export commodity.
I wish that the people who carelessly and maliciously threw around allegations about the Ministers, public servants and the industry itself had borne that in mind when they so easily made those very serious allegations.
This endorsement of the quality of Irish beef is most welcome to me and should please everyone who has the economic interests of the country at heart. I am confident that the Irish beef industry, with assistance from the appropriate State agencies, will maintain the development of recent years and will make an even bigger contribution to the national economy in the future.
Because of the importance of the beef sector to the Irish economy and the marketing difficulties to which I have just referred, it has been the policy of successive Governments — supported by the EU — to encourage and promote beef sales, including sales from intervention. This has been done through diverse measures such as the provision of State funding for CBF and the provision of export credit insurance on a national interest basis as opposed to a commercial basis. The Government on 17 June 1983 decided that the Minister for Industry and Commerce of the day would base his judgment on the national interest rather than commercial interest.
Based on the Government decision of 17 June 1983, there is a clear record of many decisions taken by Ministers in the 1982-87 Coalition Government to provide credit insurance for exports of beef to higher risk destinations. The basis for those decisions was the national interest. The perception of the national interest was based on the considerations relating to the beef industry to which I have referred. I do not contest that perception — I agree with it — but I wonder why others choose to make a distinction between those decisions made from 1982 to 1987 and other decisions, similarly based on the Government decision of 1983, made during the lifetime of the succeeding Government.
It is a matter of record that following the execution of the contracts to supply beef to Iraq for which the then Minister for Industry and Commerce provided export credit insurance, in October 1986 the average factory price for R3 steers in Ireland was 99.3p per lb; and that by the end of 1988 that price had risen to 118.5p per lb. Some 100,000 farmers in Ireland benefited from the marketing, selling and disposal of Irish beef to destinations outside the EU, whether commercial beef or from intervention stores. That is reflected in those prices.
In a recent interview on RTE, the chairman of the IFA beef and livestock commodity group stated that it was good that this beef had been sold. I quote directly from the transcript of this interview on the "Today at Five" radio programme on 3 August 1994:
Interviewer: So even though it was risky — export credit insurance was dropped by the previous Government and reinstated by Albert Reynolds — you think it was justified in terms of the crisis of the time?
Mr. Richard Booth: I think Mr. Justice Hamilton acknowledges that it was necessary in the context of the importance of the industry to the country, in that he states quite clearly in the report that the Irish beef industry is very important to the whole economic well being of the State and that there was an onus on politicians to do everything possible to make sure the industry worked well and returned the maximum benefit to the country.
A member of this House put the allegations which led to the setting up of the tribunal in context. Senator Ross said "an unnecessary political trial has been held and, I would add, a costly one at that."
Ideally all sales of beef should be commercial but where sales to intervention are necessary to support the market it is clearly a matter of some importance to dispose of intervention beef stocks. Storage space is limited, large volumes of stored beef overhang the market and depress prices and there is a cost to the Exchequer since EU recoupment does not meet all the costs involved. It cost the Exchequer approximately £35 million to store beef in intervention for the years 1987 and 1988.
A number of the allegations investigated by the tribunal related to public servants and these were the crudest and cruellest allegations made. They were made against the Garda, Revenue officials and officials of my Department. The allegations included indifference to malpractices; not investigating reports of malpractice; obstructing such investigations; not pursuing actual charges with vigour; and even agreeing a plan with the Goodman group to limit the damage involved in the discovery of malpractice at the AIBP plant at Waterford. Most of these allegations were made in the Dáil; none of them has been found by the tribunal to have any basis whatever.
It is a matter of deep regret to me that conscientious and diligent public servants have had their collective good name and reputation impugned without foundation. Since I reached the age of reason in west Cork I was always told by my teachers and parents that we had one great asset in this country and that was the integrity of our Civil Service and public service. The people who impugned that reputation should be ashamed of themselves. The last thing our public servants deserve is that the privilege of the Houses of the Oireachtas be used to defame them when they do not have the opportunity to defend themselves.
The allegations concerning public servants were a clear case of groundless allegation feeding upon groundless allegation. I trust and hope that the lessons have been learned and that we will never again hear baseless allegations about public servants being thrown carelessly and maliciously around the Houses of the Oireachtas. In the course of the tribunal of inquiry which took so long and examined matters so diligently, not alone was there no evidence found of any shortcomings in our public service but on several occasions the sole member, Mr. Justice Hamilton, referred to the total diligence and integrity he found on the part of our public service. I know that to be the case and I know very well that the public representatives here and the people of this country know it. For that reason it was doubly cruel of the people who made those baseless and false allegations under the privilege of the Houses of the Oireachtas. It was total and absolute cowardice.
I would like, at this point, to deal with a further issue relating to the role of public servants. An impression could easily be obtained that the references to specific malpractices in breach of the relevant EU regulations in the allegations investigated by the tribunal and in the evidence heard by the tribunal were new revelations and had not been previously known to or detected by the regulatory authorities, either Customs or my own Department. The fact is that the vast majority of these specific allegations which were subsequently found by the tribunal to be correct had previously been detected and appropriately acted upon by the regulatory authorities. Likewise, the vast bulk of the evidence presented to the tribunal related to incidents already detected and dealt with by the regulatory authorities.
It is also important to point out, in fairness to the public officials and to the politicians and Ministers concerned, that the tribunal has had no criticism whatsoever to make on the follow-up action taken by the regulatory authorities in relation to the irregularities detected over the years. This again demonstrates not only that the public servants concerned were diligent in their duties but also that their political masters did not interfere with them in the exercise of their duties.
As Minister of State in the Department at the time, I am particularly gratified by the tribunal's findings in this regard. I am also pleased that my senior colleague at the time and a Member of this House, Senator O'Kennedy, who found himself one of the main targets of vilification as a result of these disgraceful allegations of interference with the due process, had his integrity totally upheld.
As Minister for Food I was involved in the processing of the Goodman five year plan. I am, therefore, personally very pleased that the many allegations made about the role of Ministers in relation to the plan have been found by the tribunal to be groundless, with only one exception. The exception relates to the decision of the Government on 8 March 1988 to direct the IDA to remove the employment performance clause from the grant agreement.
The tribunal's findings in relation to the Government decision of 8 March 1988 have to be considered in the broader context of the findings in relation to the processing of the Goodman plan as a whole. Those findings provide as clear an exoneration of improper political conduct as could be stated. It follows logically and directly from that exoneration that the bona fides of the decision of 8 March 1988 on the removal of the annual performance clause is not in question. Indeed, apart from pointing out that the decision was ultra vires the tribunal makes no further adverse comment on that decision which was clearly made by the Government in good faith.
The Government was motivated, first and foremost, by the need to create employment and was therefore concerned to ensure that the Goodman plan should proceed. It believed that the removal of the performance clause would clear away the last remaining obstacle to the implementation of the plan. In the event, as is now well known. the plan did not proceed and no grant whatsoever, not a penny of State or FEOGA money, was paid under this plan.
However, if the plan has proceeded without meeting the projected job target, then clawback of grant commensurate with the shortfall in jobs would have taken place after the fifth and eighth years because it was only the annual performance clause, and not the overall one, which had been removed. Thus, even with the removal of the annual performance clause, any taxpayers' money that would have been paid to the Goodman group in grants would have been adequately protected. There was a "belt and braces" precautionary conditionality in relation to that plan.
The tribunal, of necessity, dealt with malpractices and irregularities. The extent of such activity should be put in perspective. In the first place, the EU regulations which the regulatory authorities had to supervise were numerous, complex and, in many cases, lacked clarity. The Commission official responsible for the control, Mr. M. Jacquot, told the tribunal that "the Commission hardly spends a day without its services being questioned on the interpretations on one or another provision."
In addition, the practical difficulties of implementing these regulations in a typical boning hall where an average of 100 boners operate on the production line are patently obvious. The seasonality of Irish beef production, where about 40 per cent of the annual kill occurs in a three month period, intensifies these practical difficulties. More particularly, in the years 1990 to 1992 special factors to which I have already referred gave rise to a dramatic increase in sales to intervention and this additional work had to be handled within the budgetary constraints of my Department's resources.
I believe my Department has coped extremely well with its regulatory obligations, particularly when account is taken of all the difficulties which I have outlined. The total financial responsibility of the Department in relation to EC beef support schemes amounted to £8.5 billion over the period 1973 to 1992. During the same period beef production at premises under the Department's control amounted to 7.3 million tonnes, equivalent to 20.5 million head of cattle.
In respect of these activities the Department presented annual accounts to the EU Commission which were subject to audit and review by the FEOGA auditors, the European Court of Auditors and Commission Special Investigations. In addition, there was the Department's own internal audit and the audit by the Comptroller and Auditor General. As a result of the various audits and examinations, disallowances by the EU over that 20 year period amounted to £3.1 million, or only 0.04 per cent of the total expenditure involved. To any reasonable person, those figures speak for themselves.
References have been made in the media to penalties being imposed by the EU arising out of the tribunal report. As I said, all the specific incidents which were the subject of allegations had already been detected and dealt with by the regulatory authorities and, where appropriate, by the Garda and the courts. The report is being examined in detail in my Department with a view to identifying what further action may need to be taken. In the meantime the report has been referred to the Director of Public Prosecutions.
The report has also been transmitted to the EU Commission in Brussels for its consideration and for appropriate action. When the Commission's examination and that of my Department are completed, both organisations will then consult on the action to be taken. In advance of the completion of these examinations any estimate of financial penalties would be highly speculative.
No regulatory or policing system is ever perfect. The tribunal has made some general criticisms of my Department's role as regulatory authority in relation to the operation of the EU market support arrangements. It has found that "the number of irregularities disclosed and the failure to prevent or discover same" was "due mainly to inadequacy in the number of staff employed" by the Department. The tribunal also concluded that the inadequacy of the staff numbers "undoubtedly led to a laxity in the supervision and control of the system".
However, the tribunal points out that this situation "must be viewed in the context of the huge volume of meat passing through the boning plants" and "the seasonality of much of the activity in this regard". The tribunal also concludes that "the steps that have been taken and the control systems introduced by the Department of Agriculture as outlined in Mr. Dowling's [the Secretary's] statement to the Tribunal go very far towards dealing with the weaknesses in the system disclosed during the course of the Tribunal and have rendered unnecessary many of the recommendations which might otherwise have been made by the Tribunal".
In October 1990, for example, the control functions which resided with the separate commodity divisions of the Department were changed and centralised in a specialised intervention unit. Apart from two relatively small recommendations, the sole member, Mr. Justice Hamilton, is satisfied that the regulations and controls in the Department of Agriculture, Food and Forestry are adequate.
In putting in place these improved control arrangements the Department was guided by two considerations in particular, first, that the primary responsibility for the proper operation of and conformity with the provisions of the various regulations rests with operators themselves and the new contract should underpin this principle and, second, that the command and control structures within which Irish controls operate needed to be more streamlined, more resources needed to be committed, specialisation in the control of intervention activities needed to be developed and the emphasis shifted from the permanent presence as the principal control instrument. I would like to quote from the tribunal report which states that:
...having considered the steps taken by the Department of Agriculture as outlined in Mr. Dowling's statement to streamline and improve the control systems against the background of the evidence adduced before the Tribunal, the Tribunal is satisfied that the Department has addressed the problems disclosed therein and has set up a system and established controls which, if fully implemented and sufficient trained staff employed, would greatly lessen the possibility of irregularities and malpractices occurring in the future and recommends that these systems and controls be rigorously enforced.
The report goes on to make the two recommendations I mentioned earlier, which are marginal.
It is my intention that all the control requirements will be strictly enforced and that every transgression will be appropriately dealt with up to and including criminal prosecution where the necessary evidence is available. To this end the recommendations of the tribunal relating to the controls will, as I said, be fully and speedily implemented.
I thank the House for the opportunity to put the record straight, to quote directly from the tribunal and to uphold the integrity of Ministers, politicians, public servants and the good name of Irish food. In that regard, the report has done an extremely valuable job. If there are specific questions or if clarification is required during the course of the debate, I would be pleased to return to elucidate and to give Members as full an answer and clarification as I can.