Amendments Nos. 1 and 5 are related and may be discussed together. Is that agreed? Agreed.
Postal and Telecommunications Services (Amendment) Bill, 1998: Committee Stage.
SECTION 1.
I move amendment No. 1:
In page 3, subsection (1), line 19, to delete "p.l.c.".
I welcome the Minister to the House. This amendment is straightforward. Are we in a position to legally change the title of Bord Telecom Éireann, the name of the company as stated in section 10(1)(b) of the Postal and Telecommunications Services Act, 1983? If a change is made an anomaly will be created as it will be a board and a limited company. This seems to be a contradiction in terms – either we drop the term "bord" or "p.l.c.". Is the change to "p.l.c." legally dubious? The company can issue shares, but nowhere in the 1996 Act is the company allowed to change its status to a p.l.c. Where will we stop? Is Bord Telecom Éireann p.l.c. the new name of the company or can it be changed again to Telecom Éireann or Éircom? What is intended by the Minister and is it proper to apply the term "p.l.c." in present circumstances?
I know how much the Minister for Education and Science, Deputy Martin, will appreciate the sympathy conveyed by Senators. I extend my sympathy to the Minister, Deputy Martin, and his wife, Mary, on their loss.
Senator Costello's colleague, Deputy O'Shea, raised this matter on Committee and Report Stages in the other House, and we have made an effort to accommodate him. He has his own legal advice, which he is entitled to, and I can see where he is coming from. However, we must follow the Attorney General's advice that the company should be called Bord Telecom Éireann p.l.c. It was registered as a public limited company on 20 December 1996, following the legislation introduced by the rainbow coalition Government. Once a company is registered as a p.l.c., it is obliged to use the term under the Companies (Amendment) Act, 1983. The deletion of p.l.c. would be in contravention of section 4 of that Act.
Deputy O'Shea said the name of the company should be Bord Telecom Éireann, as stated in the Postal and Telecommunications Services Act, 1983. He also said the company is exempted from using the term "ltd." in its name under section 10(2) of the same Act. As regards his first point, immediately on the commencement of the IPO, section 10(1)(b) of the 1983 Act will be repealed. On his second point, the term "ltd." refers to a private limited company, which Telecom Éireann was in 1983. However, in December 1996, the company was registered as a public limited company following the enactment of the legislation setting up the strategic partnership. The exemption in section 10(2) of the 1983 Act only refers to "ltd." and does not cover the use of the term "p.l.c.".
Deputy O'Shea also said that the name used in the recently published Telecommunications (Infrastructure) Bill is Bord Telecom Éireann. This follows a legal drafting convention, as it would be incorrect to pre-empt the outcome of the deliberations of the Oireachtas on this Bill. When and if this Bill is enacted, the reference in the Telecommunications (Infrastructure) Bill will be amended on Committee Stage to Bord Telecom Éireann p.l.c.
The Senator asked about Eircom, which is not included in this amendment. We had a discussion on that yesterday, as we also had in the other House when the matter was raised, and I told the Members of both Houses that Telecom Éireann remains as Telecom Éireann for the flotation. After that, apparently by board decision, the name will be changed to Eircom. It wanted to change the name to Eircom prior to the flotation but common sense prevailed. I explained this in detail yesterday.
Telecom Éireann took a decision that it would change its name to Eircom but forgot to tell the main shareholder. Eventually, the company told the main shareholder and she did not like it very much – the same can be said for everyone in the country. Everyone thought it was a daft idea. I had a vision of the company saying it would sell Eircom shares although they would be Telecom shares, explaining how Eircom was Telecom etc. – extraordinary and unnecessary. The company is being floated as Telecom Éireann. I cannot have an input into the later designation.
On the point about the registration of Telecom Éireann as a private limited company was Bord Telecom entitled to register as a limited company after 1996? There is nothing in the Act which appears to give it authority to do so. On what legal basis did it apply for limited status, why was it granted and under what circumstances?
I am delighted that the Minister intervened with regard to Eircom. It would have been a messy situation to try to float Telecom Éireann had it become Eircom beforehand. What is wrong with the name Telecom Éireann? Telecommunications is the company's business. Eircell, which is in the business of mobile telephony does not have the same broad or strong international trading name. I do not know if any influence can be brought to bear on the title. It would be appropriate if the Houses of the Oireachtas and the Minister could give a direction with regard to its name to this major semi-State company, which is to be largely privatised and part-owned by the workers and which is being floated on the stock market.
I will have no entitlement to give any directions once the company is floated. I have an entitlement now and have made my views known, as did others in various parties. The decision was taken in mid-December but I was not informed of it. The board has taken a decision that the name will change later.
One of the main objectives of the Telecommunications (Miscellaneous Provisions) Act, 1996, was to allow for the sale of shares in the company and to allow for there to be multiple shareholders. It was to allow for the strategic partners, KPN Telia. Implicit in this was that the company would be re-registered as a public limited company, which was done on 20 December 1996. That is noted in the records. They were entitled to do that.
We did our utmost to establish if there was substance to Deputy O'Shea's point because he felt strongly about it. Having looked at the 1996 Act, the company's and the registration of the company, it was correct to re-register as a public limited company on 20 December 1996.
The Minister got legal advice to that effect.
I got legal advice from the Attorney General. I have seen the records and they are registered as a public limited company.
I am aware of that but it was entitled under the Act to so register. Did it have a legal entitlement to seek registration?
I presume that the new title, logo and so on will cost an enormous sum of money. To do this seems to be part and parcel of modern day trading, with a cost to the shareholders and prior to that, to the taxpayers. We can recall what happened in relation to Aer Lingus when it tried to get rid of the shamrock. What it sought to do was not impressive either. It seems strange and I am disappointed that Telecom Éireann should seek to change its name to Eircom, especially with the attendant charges to which it will give rise.
It will cost the company a great deal of money but the board has taken that decision. I do not think they received with good grace my idea that it should not change for the flotation. I was worried on several fronts. First, how one could explain that Telecom Éireann had become Eircom and that it would be a good idea to buy Eircom shares because they used to be Telecom Éireann shares and so on. Second, it will be a public company at that stage and when one thinks of what is associated with Telecom Éireann – the logos, lorries, vans, headings, notepapers, kiosks and so on – the change of name will cost a substantial sum. However, it will be up to the company to decide what to do. Apparently, when the New York Stock Exchange was mentioned somebody said that Telecom Éireann could mean "Telecom Iran" and that Iran was a bad vibe. However, that was a dim conclusion.
The advice of the Attorney General is that the main purpose of the 1996 Bill was to allow for a sale of shares. There would be multiple shareholders and, therefore, it would have to register as a public limited company. I can only give Members what seems to be common sense legal advice in the matter.
I adverted yesterday to the Eircom proposal and the Minister quickly explained that the decision was deferred until after the flotation. I agree with the sentiments expressed by Senator Costello. It is daft for a company which is so well known internationally to decide to change its name after flotation and, notwithstanding what the Minister said, that she will have no authority in that regard. The customers and consumers of Telecom Éireann will be looking more towards efficiency and greater productivity than snazzier titles.
Is the amendment being pressed?
Yes.
Amendment put and declared lost.
Section 1 agreed to.
NEW SECTIONS.
There is a correction to amendment No. 2. The words "Dáil Éireann" should read "both Houses of the Oireachtas".
I move amendment No. 2:
In page 3, before section 2, to insert the following new section:
2.–Section 8(2) of the Act of 1996 is hereby amended by the insertion after paragraph (a) of the following paragraph:
("(aa)The Minister may not dispose of any shares in the company other than as pro vided for in subsection (3)(a) without the terms of such sale being laid before and approved by both Houses of the Oireachtas.'."
The correction that Dáil Eireann should read "both Houses of the Oireachtas" is timely. I am reiterating a proposal from the Minister's colleague, the Minister of State, Deputy S. Brennan, which he presented on Committee Stage of the 1996 Bill. I see no reason the Minister should not take on board what was proposed by her colleague at that time, that before any shares are disposed of, other than provided for in section 3(a), the terms of such sale should be laid before and approved by both Houses. That is a reasonable proposal. We are talking about the shares of a company that have risen from an initial £1 billion value to between £5 billion and £6 billion. The jewel in the crown of our semi-State companies is being privatised. However, not all the shares are to disappear in one fell swoop; there is a mix of shareholders including the private sector, employees and the State.
We are all concerned about the level of State shareholding that will remain with the company. The Labour Party feels strongly that at least 25 per cent of the shareholding should remain with the State. I do not know if this was referred to by my colleague in the Lower House but that is my party's view. It is appropriate that we maintain a strong worker-director representation in the company and that the State has a significant say in the company's affairs. We will not accept anything below that figure.
Before we dispose of more of the State's silverware, both Houses should be informed of the intention to sell, the quantity of shares to be sold and to whom they are to be sold. It is still substantially a State company and as such it would be appropriate that the approval of both Houses be sought in relation to the disposal of shares.
I express my horror at Senator Costello's memory lapse. For a Member of this House to omit reference to the very House of which he is a Member and to have that error compounded by Senators Gallagher and Ryan is horrifying. This would not have happened when Senator Ryan was on the Independent benches.
It is merely because of the day that is in it.
I do not think so. May I speak on the section?
No, we are dealing with the amendment. The Senator may speak on the section in due course.
The fact that Senator Costello omitted reference to Seanad Éireann does not matter. I am free to come before this House also. I accept Senator Norris's point that this debate is taking place in the Seanad. I do not think he was present for the Second Stage debate yesterday but his colleague, Senator Gallagher, who spoke very strongly on the matter was.
The road to privatisation began with the Senator's colleague, Deputy Stagg, who pioneered the Bill through Dáil Éireann in 1996. I mention that not from any sense of retribution but to put the record straight. In so doing Deputy Stagg set in motion – I have proof of this – the process in which we now find ourselves.
Does he claim responsibility for that initiative?
It is on the Dáil record. Deputy Stagg steered this Bill through the Dáil to allow KPN Telia to become a strategic partner. Everybody knows that the next step is privatisation. Therefore, the idea that the Labour Party is to demand that the State maintain a 25 per cent shareholding is a little bit rich. I do not know what percentage the Cabinet will choose to float. That remains a matter for decision in April.
I am not sure if Senator Costello is aware of this, but Deputy O'Shea won the day in that I gave my word that I would come to the Dáil and lay before it not the terms which would be completely incorrect and confidentially sensitive but the general principles of the sale. His amendment was altered on Fifth Stage to read ". . . . the general principles of the sale" which he accepted. In turn, he agreed to speak to his colleague in the Seanad. I could not provide that I would disclose the terms of the sale because that would include confidential information. I would also come to the Seanad, if Senators wished, on the same day to discuss the matter.
I am opposed to this amendment. It is one of the most impractical pieces of Labour Party mumbo jumbo which I have come across for many years in this House. Do Senators Costello, Ryan and O'Meara understand what this means? It means that every time the Minister wishes to sell any of the remaining shares she must have every detail of that sale debated in the Dáil and Seanad. She would have to signal to the market that she wished to sell the shares at a certain price and the price, terms, vendor and buyer would then have to be discussed by both Houses. That is not how the market works.
I am reluctant to approve the subsection in the Bill which states that the Minister has to spell out the general principles because that ties her hands to a certain extent. The idea that the State should be tied to holding a 25 per cent shareholding in the company is absurd. The Labour Party is harking back to former days, with one foot in and one foot out. It cannot make up its mind about privatisation. It told us a few years ago that there would be no sale of State assets. That was holy writ. It has now accepted the inevitable. I did not know it was Labour Party policy that we should hold onto 25 per cent of Telecom. It creates a false market for the shares because neither the Minister nor anybody else will sell these shares. The only value of these shares is in selling them. One will make a complete fool of oneself in market terms if you announce that such shares are of no value. The idea that we should debate each individual sale in the House is patently ridiculous. By the time we had done that the price of the shares could have halved or doubled. This is fairyland. I ask the Labour Party not to waste the House's time by coming forward with totally impractical suggestions. I reject the amendment.
This is by no means a ridiculous amendment, it is very practical. Telecom Éireann is a State company which has attained its worth and status on the international and domestic market through hard work by its employees, the taxpayer and retired people. I cannot accept that we can simply dispose of a valuable asset without laying down some conditions. Why should we go from 100 per cent ownership to zero ownership in one fell swoop?
It is important for us to retain some interest in what is probably the fastest expanding and most lucrative business area in the world, namely telecommunications. It has expanded dramatically in leaps and bounds. Senator Ross knows quite well, free marketeer that he is, that the value of Telecom Éireann has shot up by more than £1 billion each year since the original assessment of its value. That is a colossal increase in value. It is important for us to do what I am proposing, namely not to go below the 25 per cent shareholding.
I do not see that in the amendment.
I am speaking to the amendment. I am replying to what has been said about it. We should not go below that, which would enable us to keep two directors on the board.
The Minister has stated that the proceeds of the sale will be used for investment in infrastructure. We could get as much money for infrastructure, which is badly needed, by using State companies, which are being partly privatised and are entering into strategic alliances, as collateral. This is a very valuable asset and we should retain a significant involvement in it. That is part of the reason we should be able to monitor the sale of the shares.
I am quite happy to accept the Minister's compromise whereby the Minister would provide for the general principles of the sale to be presented to both Houses.
I would be quite happy, having listened to Senator Costello, if it were confined to the Dáil. I am now totally confused. One would think we were moving into a zoo as we have had asses, fairies, stags with feathers and the Minister being invited on board. Is it Noah's Ark? Can we not just get on with it? If we have to have this, please let it stay in the Dáil and spare us this affliction. I could not bear endless debates on the value of shares.
The Senator will be spared it because he will not have it. That is exactly what is going to happen.
I wish to return to the point raised by Senator Costello because I do not want to let it stand on the record. He said I was doing this in one fell swoop. In 1996 the Labour Party allowed the sale of 20 per cent plus an option of 15 per cent – which is to be decided upon any day now – a total of 35 per cent, to KPN Telia. That was the purpose of the legislation and it was done in one fell swoop. It is daft to talk, three years later, with rosy hued nostalgia because it has already been done.
It must be agreed 35 per cent is very different from 100 per cent.
It was 20 per cent plus 15 per cent, a total of 35 per cent. They knew the road ahead of them at that stage.
That is very different from 100 per cent.
An Leas-Chathaoirleach
The Minister, without interruption.
Thank you. Clearly, I am not tied, nor is any Government, to any notion that the Labour Party now has about a 25 per cent stake. The Cabinet will decide the matter on the basis of commercial realities, what is prevalent in the telecommunications market of the day and the likely outcome of the flotation but it will not make its decision on the basis that I want to keep my paws on Telecom, which I do not.
I will not be talking to the House about the terms of any sale but will be laying out the timetable agenda and the general principles. It will be in the form of a statement followed by questions and answers.
This Bill was passed with two agreed amendments. However, even if it were not, we are in a different world and we are not taking these actions for ideological reasons but based on plain common sense. They make sense for the consumer, which is the first consideration, and in terms of competitiveness, the proper running of companies and giving people a choice in their daily dealings with telephones and flights and, later, airport facilities and the ESB. It is better for the consumer and the employee. Telecom has surged ahead since we brought forward deregulation and is getting more business, as are the other companies. I am not infused with latter day ideological zeal for privatisation but, at this stage of my life, I am quite infused with common sense.
As we embark on this road – to make a backward reference to what happened last week – there are bound to be frissons, bumps, upsets and hiccups on the adventure road, as Senator O'Dowd called it yesterday. However, it is not possible to tackle Telecom Éireann and later Aer Lingus, Aer Rianta and, perhaps, the ESB, and for everyone to be happy every after. That will not be the way. There will be people who will not feel happy ever after but it will all turn out for the best eventually. However, I wish to state emphatically that there is no tie in regard to the percentage we are going to sell.
The thrust of my remarks was not that there should be a tie on the percentages. I was merely stating that we would look for a certain amount of the company not to be sold off. The Minister indicated that the disposal of shares would be presented to the Dáil for approval, as is stated in the legislation, and she indicated in her earlier remarks—
I must interrupt the Senator. It is not for approval—
An Leas-Chathaoirleach
The Minister will have an opportunity to speak.
That actual terms of the amendment which the Minister inserted are that the general principles of the sale will be laid before and approved by Dáil Éireann. I am only quoting the amendment which the Minister inserted. It is in the Bill.
General principles—
I did not say a word about the general principles.
I am doing so.
I said the Minister would be presenting it to the Dáil – although, of course, she will be presenting the general principles. The point I was making, before the Minister interrupted me, was that she made an earlier statement that she would also present the general principles to the Seanad. Her latter remarks to Senator Norris seemed to suggest he would not have the benefit of hearing her presentation because it would not be presented to this House. Perhaps she would clarify that.
I am delighted to. Senator Norris said he did not want to have to discuss the price of shares.
Exactly.
Those were his exact words because I wrote them down. I said that he will not get the chance to because I will not be here discussing the price of the shares. That is exactly what I said.
The Minister's earlier remarks were that she would—
Of course, I will come with my general principles but I will not come—
But the Minister will not come to this House.
The Senator should stop engaging in that nonsense.
Will she be coming here?
One would think the Senator was a latter day stockbroker.
An Leas-Chathaoirleach
We are on Committee Stage. Senator Costello, please.
You asked me to speak and I am not finished yet.
An Leas-Chathaoirleach
The Minister is in full control. I am asking Senator Costello to desist. He will get an opportunity to speak later. The Minister, without interruption.
The Minister is in full spate and you are in full control.
Yes, you are the boss. I will not be coming to the House for approval because the approval is the IPO Bill. I will come with the general principles and a timetable out of courtesy to elected representatives in the Dáil and Seanad. The IPO Bill is the approval of Dáil Éireann and Seanad Éireann by legislation. I said to Senator Norris that I do not intend to come with details of the price of shares.
I take it the Minister will come into the Seanad in the same manner as she will go into the Dáil and seek its approval on the general principles of any sale.
I cannot do so because the IPO Bill is the approval or disapproval of Dáil Éireann and Seanad Éireann. There cannot be any further process of voting on its approval or disapproval because the legislation will, I hope, be approved today. I must be clear on this issue so there is no ambiguity.
Amendment put and declared lost.
An Leas-Chathaoirleach
Amendments Nos. 3 and 4 are related and may be discussed together.
I move amendment No. 3:
In page 3, before section 2, to insert the following new section:
"2.–Section 10 of the Act of 1996 is hereby amended by the insertion after subsection (1) of the following subsection:
‘(1A)In the event of the sale or transfer of shares in the company, the proportion of employee directors in relation to the total number of directors on the Board shall remain fixed at not less than the proportion of employee directors at the date of passing of this Act.'.".
Amendment No. 4 is an extension of amendment No. 3 in that it seeks to ensure that the "number of employee directors shall not be reduced below 4". We want the Minister to come before the House in the event of the sale of shares to explain the general principles. We also want to ensure that a certain proportion of employee directors are accepted and recognised as being entitled to representation on the board, irrespective of the extent of the sale or transfer of shares in the company.
It is part of the same principle that we should not divest ourselves of a say in the running of the company. I welcome the 14.9 per cent employee shareholding in the company. However, we should not allow representation on the board to drop to a level which is not effective. The purpose of this amendment is to ensure that does not happen.
The Bill as published provides for the removal of Telecom Éireann from the scope of the Worker Participation (State Enterprises) Acts. We can no longer have that obligation on the company because it will no longer be a State enterprise but a publicly quoted company. The implications of that are clear. The Worker Participation (State Enterprises) Act cannot apply to a publicly quoted private company. The issue of worker participation on the boards of State companies is one of the hiccups we must face.
An ESOP director will be appointed once this Bill is passed. The Communications Workers Union and other unions have nominated Deputy Spring for the position. He cannot be appointed until this Bill is passed because an earlier section relating to Members of the Oireachtas being members of boards must be repealed. I welcomed his nomination because he is competent and professional and will be good on the board. I did not call it cronyism. I have the technical job of approving his nomination as an ESOP director.
One cannot place the obligation of worker participation directors on what is no longer a State company. Mr. Peter Cassells and Mr. Dermot McCarthy, Assistant Secretary of the Department of the Taoiseach with responsibility for partnership arrangements, are looking at this issue. Mr. Peter Cassells has written to me and he is speaking to Mr. Dermot McCarthy to see if there is a mechanism whereby someone whose thoughts are attuned to the general principles of workers and what they stand for can be nominated to the board. That issue is still being discussed by Mr. Peter Cassells on behalf of ICTU.
The issue of worker participation on boards will apply to every semi-State company, including Aer Lingus. Whatever is decided in this case will apply generally.
I am surprised at the insistence of Senator Costello on four worker directors given that the Minister has reconfirmed that Deputy Spring has been nominated by the Communications Workers Union and other unions. I would have assumed that Senator Costello's confidence in Deputy Spring's wide international experience, political expertise and great in-depth knowledge of unions and worker participation would have made Deputy Spring worth more than four or 44 worker directors.
The cockles of my heart were warmed listening to Senator Liam Fitzgerald applaud Deputy Spring. I do not recollect him saying such fine things about him when he was active in the Dáil.
I am delighted the Minister is in negotiations with Mr. Peter Cassells with a view to getting someone else on the board who would be attuned to the thinking of the employee director.
It is not me but the Department of the Taoiseach which is in negotiations with Mr. Peter Cassells.
It is difficult for one employee director to effectively represent the workers. A minimum of two people would be needed to make an impact on a board. Despite the wonderful talents of Deputy Spring, I am not sure he on his own will be more than a token employee representative.
He did enough damage to the country on his own.
He was one of the best leaders we had.
An Leas-Chathaoirleach
I ask Senator Costello to speak to the amendment.
The purpose of this amendment is to ensure an effective representation of employees which is not in the current plans.
The Senator is saying it will be a them and us situation which is going back to the old days. We are talking about partnership, positive moves and all the "P" words which are supposed to be warm and evocative. Senator Costello is painting a picture of good workers and bad management. It is not, nor should it be, like that. Many of the companies are working very strongly at positive participation to try to avoid a situation where workers are in one corner and managers in the other. Such 'them and us' barriers should not exist. I do not understand the Senator's point about people being unable to get their views across.
I welcome the fact that Deputy Spring is joining the board. We are trying to get someone to work in concert with him. I do not envisage that they will operate in any adversarial way in one corner.
Amendment put and declared lost.
I move amendment No. 4:
In page 3, before section 2, to insert the following new section:
"2.–Section 10 of the Act of 1996 is hereby amended by the insertion after subsection (1) of the following subsection:
‘(1B) Notwithstanding the provisions of subsection (1), the number of employee directors shall not be reduced below 4.'.".
Amendment put and declared lost.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."
In the context of the general principles of the sale being laid before the Houses, will the Minister outline the form the promotional campaign will take? In the past 12 years the UK has initiated privatisation sales of state utilities and slogans and mascots are used in almost every case. I recall a ubiquitous individual called Sid popping up on television on a regular basis in relation to the sale of British Gas. The primary purpose of the exercise was to make the share flotation attractive to the general public.
Ireland is generally conservative in terms of share ownership as we do not have a culture of that. Any surplus money is invested in banks and building societies. We are now in a low interest regime and putting money into fixed interest accounts in financial institutions is not the way to go if one wishes to maximise capital. In the US the public has tended to use shares, equities, stocks and bonds as savings vehicles and that trend seems to be catching on in Europe too. I would like to think it would be something which would be encouraged as a result of this flotation, which is the largest the country has experienced to date. The flotation represents an ideal opportunity to create a platform to inform people that while there is a certain risk element attached to investing in blue chip shares, it is a good thing to do.
I am curious to know what kind of campaign the Minister envisages. Obviously, consultants and PR people will advise her in this regard. I do not wish to put her on the spot but I am sure that, as with all other details of this legislation, she has an intimate knowledge of what the consultants propose to do in the next two months. Will advertisements be placed in the newspapers or broadcast on television or will the campaign be an inventive one which will capture the public imagination?
Senator Mooney's point is a very interesting one. The campaign will be a difficult one because we are not a shareholding nation and have, in the past, tended to put money into banks, building societies and so on. From what I have read, a massive and effective effort will be made to encourage everyone to consider investing some of their savings in Telecom shares. I gather that all subscribers will receive a letter to that effect and that certain incentives will be offered to induce people to purchase shares.
I have very few criticisms of the flotation. The nonsense which we witnessed last week is totally irrelevant in terms of the flotation and has already been forgotten. Politicians on this side of the House attempted to damage the flotation last week. They behaved extremely irresponsibly and did not succeed. The flotation will be successful. The appointment of Mr. Ray MacSharry was a very fine one. He will be able to sell this flotation well. He has an international reputation, having been involved in the GATT talks and is well known in Europe and America. Mr. MacSharry is a man of superb ability and we are very lucky he was able to take Mr. Thompson's place. What happened last week was a political spat but it has nothing to do with the marketing of the flotation which will occur on the basis of the balance sheets, profits and figures.
I have one criticism in regard to the costs and fees being paid in relation to the flotation. Provision has been made for expenditure of up to £40 million for fees. That is an excessive figure by any standards. Public relations people will receive almost £1 million for promoting the flotation. If the Minister visited New York, Japan and Europe a couple of times, she would do far better than any public relations people. The PR people persuade civil servants and politicians that they are necessary when they are not.
I have experience of the flotation process and there is no magic or science attached to it. One does not need to be qualified in brain surgery, the process is based on common sense. One communicates the value of the shares to people and they make up their own minds. Marketing is a very simple business. I cannot for the life of me understand how the £40 million will be spent. If we ask the right questions and receive a breakdown of the figures, we would be amazed.
Merchant bankers and other professional advisers in this country are ripping off the State in regard to this flotation. It may be that those who are operating behind the scenes in the Department feel they are inadequate to market the flotation. Professional expertise is too damned expensive. These people are ordinary people with a certain level of skill who charge far too much for their services and are happy to rip off the State because they get away with it. That has been a pattern in all flotations.
I understand the importance of the Telecom privatisation being successful because of those which will follow it. A competitive tender was carried out and the correct procedures were followed completely. However, in future we must give serious consideration to the issue of costs. We should completely dispose of the nonsensical public relations people who make no valuable contribution. The Department could easily handle this matter on its own.
I have tabled an amendment on Report Stage in regard to share options. This flotation is likely to be extremely successful. It is likely to leave many small investors happy if well handled and small and large investors who will be very happy to hold on to their shares. The Minister stated it will be the third largest stock market capitalisation on the ISEQ, and I am sure she is right. It will be solid, blue chip, worth holding and safe. There will be a good story to tell, not only for the flotation but for the future.
However there is one danger. This danger completely marred the flotation of Irish Permanent and overshadowed everything else to do with the Irish Permanent. The danger is the directors and management being allowed to write themselves lucrative share options to which they are not, by any moral code, justified. As I stated yesterday – and I am mentioning this as I have tabled an amendment for Report Stage – this was the one aspect which ruined the whole concept of privatisation in the UK and elsewhere. The media, rightly and fairly, seized on the privatisations and pointed to the number of people who became multi-millionaires because they happened to be sitting at the top of the pile when it happened and wrote themselves millions of pounds worth of options and then cashed them in a few months later. That is the one thing which the general public in the UK will remember about the privatisations. That is a great pity because they were very successful. They created a new shareholding public in the UK, which I hope we can create here whereby people own these utilities. They are happy to own them and have an alternative outlet for their savings.
However, the executives of Telecom should not be allowed on day one to decide they will get 300,000 or 500,000 shares at the market issue price, which will probably then go to a premium, and I hope it will. These share options are free, they do not pay for them. If they are issued for the price of £1 the executives never pay the pound. They have an option to buy the shares for £1. If the share price increases by 10 per cent they can make £100,000 on £1 million on day one. That happened in the case of Irish Permanent. The amount of money made by executives there was a disgrace.
The one thing which will be remembered about the short life in the public arena of the Irish Permanent shares is the amount made by the executives and directors. The one thing which will be remembered about privatisations in Britain when all else is forgotten is the scandal of what those people made. It is the one thing which will be remembered about the recent First Active flotation. The three directors there have already made hundreds of thousands of pounds on paper for doing nothing – and it is not related to performance.
The key thing about share options is that they are not related to performance. They are related to share price which is not necessarily related to profit. A situation could occur whereby Telecom Éireann is taken over – whether Senator Costello likes it or not – shortly after it comes on the market. If Telecom Éireann grants options to its executives, does not perform well and is then taken over as it is vulnerable to take-over when its performance is not good, the people who benefit most will be the executives who have not performed very well as the share price increases in the event of a take-over. That is the danger here and it is one of the great immoralities and injustices of the capitalist system and private enterprise. It does those of us who strongly and unapologetically support the enterprise, business and profit culture – after all, profit makes the business world go around – no good if we allow one or two people who are not even very good at making profit to reap millions of pounds. We will not only damage this flotation, we will damage Aer Rianta, Aer Lingus, the ESB and all the others to come.
I plead with the Minister to consider inserting in the legislation – and I will not repeat this on Report Stage – a clause which forbids this happening for at least two years. The two years are necessary because the probability is that these shares will go to a premium. They almost have to go to a premium for it to be a success for political and other good reasons. If the executives are allowed to write themselves options at the issue price when we all know it will go to a premium, they receive an enormous preference over the ordinary punter who will be scaled down to a quarter of his size. The Minister should consider inserting this.
Senator Ross's speech illustrates the value of this House. It was a remarkable exercise in the incisive application of intellect to a complex problem which made it seem accessible to someone such as myself who has no economic training. I am proud to be a Member of this House when we get these kinds of contributions and the type of contribution we heard last night from Senator Glynn on the situation in mental hospitals. It is very refreshing and stimulating.
I support Senator Ross's point on lucrative share options. It is insufferable that these people should capitalise on their immediate advantage in respect of the position in which they coincidentally find themselves. This will stick in the craw of the public when they realise what is going on. It is unconscionable that they should abuse their position in this manner. After all, the company is currently in public ownership and they are digging their hands into the public till. I disapprove of it. Senator Ross gave an excellent analysis of why we should not approve of this.
I am horrified about the PR exercise. I had no idea that £40 million was being spent on it. It is an utter waste.
It is not for PR.
The £40 million is not being spent on PR; it is for the advisers.
Even £1 million for PR is a lot. I will do it for £500,000 or £250,000 and I guarantee I will draw attention to those bonds. I would give great value. Senator Mooney raised this issue and spoke about the mascot of British Gas. I can think of a few more appropriate mascots but I will not sully the airwaves of this House with my suggestions. It is some comment on the intelligence of the British public that they needed to have zoo animals – I think it was a seal – in advertisements. Why do these childish tricks have to be employed to draw people's attention to the existence of a market?
Reference was made to the flotation of the ESB. I am not too worried about the privatisation of Telecom and perhaps public transport, although I would have some reservations there. However we ought not to get completely carried away.
I should not get carried away?
No, I mean we as a House should not get carried away on this wave of privatisations. As a matter of principle I believe there are some utilities, such as electricity generation and water supply, which should be kept in public ownership because they are so vital to the welfare of the people. I would not support complete privatisation.
I am very glad the Minister's "jizz" levels have been restored. I was seriously concerned that they were dropping to dangerous levels. However she illustrated her comeback to life very clearly. I wonder what the transcriber will make of her wonderful gesture of flexing her muscles and exclaiming. It was terrific. I hope that with the benefit of computer graphics, we can insert an illustration to do justice to the Minister's colourful and invigorating performance.
I also tabled an amendment on the distribution of share options. When I raised a few queries about the distribution of what appeared to be massive sums of money to the existing workforce in Telecom Éireann I was accused of begrudgery and people quoted the Bible to me, something I anticipated. The obvious parable was of the vineyard owner who hired labourers throughout the day, paying each of them, including the man who was hired at 11 o'clock, the same amount. At the end of the day when he was rebuked by a jealous and begrudging employee who worked the entire day and resented somebody who started at 11 o'clock getting the same wage, the owner said the labourer is worthy of his hire and that in any event he was the proprietor of the vineyard and could do what he liked with his money.
I agree, but in the case of Telecom Éireann we are talking about our money and we have every right to monitor it. Indeed, we have a responsibility to monitor it and I am unrepentant in saying there seems to be an inequity in some whipper snapper who is only in the company for three months being given this enormous benefit while people on pension or on leave of absence get nothing. I have no personal interest in this regard. I listened to the executives of Telecom Éireann talking about the distribution of shares and how the workers were entitled to them as they had built up the company, given it its strength and made it so valuable. However, in terms of efficiency in this sector we are in the bottom 25 per cent in Europe. Therefore, I do not see why people should be rewarded for being about the worst in Europe. However, if we accept the argument of the company executives, then the distribution of shares should apply to those who contributed 30 or 40 years work to the company and I believe such people should be rewarded. I see no reason for excluding pensioners from this bonanza.
I know the Minister is a humane and charitable person and I ask her to examine the issue of requiring the company to make some provision for pensioners who built the company and whom I understand will receive nothing from the flotation. I also ask her to examine the case of people in other anomalous situations, including those on leave of absence, as an inequity seems to exist. As my Fianna Fáil colleagues would say, in fairness, those who worked all their lives in the company and who are now pensioners should be allowed reap some reward from this very generous settlement. I have tabled an amendment on this matter for Report Stage.
The debate is taking a very interesting turn in some respects. The issues which have been raised are very important. We want people to be motivated not just by profit but by the philosophy of those who founded the State and who worked for many years to make these companies great. Those who founded the State gave everything they had. Last night I spoke to a man whose father fought in the Old IRA and then joined the Garda Síochána. The man made the point that his father refused the pension as he genuinely felt the State needed the money more than he did. Many people made great sacrifices in the setting up of the State and in bringing it to this stage of development.
In one sense we are transferring ownership to those people who worked with goodwill and energy in the Department of Posts and Telegraphs and Telecom Éireann, and to their successors, through the provision of shares. We are also transferring ownership to the ordinary people of the State whom we hope will buy shares. It is about much more than profit. We are trying to cultivate a philosophy by giving owner ship back to the people and rewarding them in the broadest possible way for the sacrifices they made. Our parents, many of whom had no cars, put us through school if they were able, and the philosophy underpinning this, based on community, sharing, partaking and belonging, is missing in our modern, dynamic State. If the flotation is directed at the ordinary consumer then it is good.
Through this flotation, the first of many, we are trying in many respects to change our country. It is very important that the flotation is transparent and that the fees referred to by Senator Ross are openly available to the public. For some months I have been trying, under the Freedom of Information Act, to acquire information in relation to these fees and the amounts people are being paid for carrying out this work. As Senator Ross said, I totally accept the commitment that the work has been done properly, but I would like the system to be more transparent and open.
Senators do not have the facility to ask parliamentary questions, etc. Therefore, I have used the Freedom of Information Act to discover the fees of these people, who have without question been properly selected according to proper procedures. In response I received a six page letter from the Department of Public Enterprise outlining why it cannot provide such information. The provision of information would not put the flotation at risk in any respect and such reasoning does not in any way justify the reply I received. The fees paid to the companies which have been successfully selected ought to be published. We do not want to know about those who were not successful or about business plans or strategies. We just want to know how much the companies are being paid and it is proper that we should have that information. I have now appealed to the information commissioner, following an internal review of the Department's decision. I would like to see much greater transparency and openness in terms of these facts.
I wish to refer to shares which the executive directors and the chief executive may receive from the flotation. I raised this issue during yesterday's debate and no doubt the Minister will provide the information when she receives it. It is important that the House sets down a marker that this information be made available so that we are in a position to discuss it. We are seeking the information in the context of the public's right to know. Yesterday's debate was very positive and I wish to continue that approach. It is important that the public has this information as it will contribute to the perception of the launch of this IPO. It is also important in the context of future flotations.
What rights will temporary staff working for Telecom Éireann in such places as Castlebar, where the exchange is being closed, have to shares? I have also been asked to raise the issue of their pension and redeployment entitlements.
An Leas-Chathaoirleach
That issue is more appropriate to section 5.
It is an important aspect of the floatation of Telecom Éireann and we should discuss these matters here.
The discussion on this section is valuable and it is at the heart of the privatisation debate. We have found that privatisation is not an altruism or a cosy caring sector we are embarking upon. It is a ruthless sector and its only principle is profit. In that context managers and directors will be looking for a killing.
I do not see any reason for Senator Ross to wring his hands because it has always been like that. Privatisation in the UK gave it a bad name but that was part and parcel of the way that its business was carried out. The vultures who hover around – advisers, public relations people, etc. – are part of the process and they will take advantage.
We must remember that our semi-State sector is 100 per cent owned by the public. We, as public representatives, have a responsibility to ensure that we get the best deal possible, establish criteria under which any flotation will take place and prevent vultures from making a killing.
The sum of £40 million has been provided for investment advice fees and £1 million on public relations and an incredible amount of share options will be allocated free of charge. Why should we go down that road? Why not develop a separate flotation model? If the Minister and we as public representatives are going along with legislation that will divest the public of the ownership of so many semi-State companies – this is just one but it is the biggest – then why can we not put together a model whereby we could avoid all these undesirable practices? There has been no response to date that would protect the public purse and the taxpayer who built up those companies.
I agree with Senator Norris. It seems very narrow to be giving a substantial tranche of shares to the present employees. The company did not suddenly reach this stage of value just by using the present cohort of employees. Over the decades many pensioners gave a lot of attention and hard work, as will the future workforce. I agree with Senator O'Dowd when he asked for recognition for part-time staff.
With regard to this section, the Minister of State, Deputy Brennan, will be very disappointed that his recommendations and amendments Nos. 2 to 4, inclusive, in the 1996 Bill which we took on board are not acceptable. My party wholeheartedly supported him then and we are supporting him now.
But the Senator's party did not take his recommendations on board.
We are presenting them now to the Minister.
He sold 35 per cent.
The Senator is performing verbal acrobatics.
It is now a Fianna Fáil Bill. I am sure the amendments presented by the then Minister, Deputy Brennan, still hold good.
But the Senator's party did not agree with them.
I fully agree with them and that is why the Labour group has tabled them.
The Senator agrees with them now.
I know the Minister is trying to be helpful but I wanted to remind her that her colleague was very vociferous about the desirability of those amendments two years ago. Perhaps the Minister could have a quiet chat with her colleague to ensure that the two of them are singing from the same hymn book.
Exhumation will not be possible if the Senator goes on much further.
Deputy Brennan brought forward those amendments in 1996 when Telecom Éireann was 100 per cent owned by the State but the Senator's party did not accept them then. Three years later his party seems to be accepting them. That is very novel legislation making. In the interim, the Labour Party sold off 35 per cent of this State owned company.
There is a big difference between 35 per cent and 100 per cent.
It seems like déjà vu to me. Three years after Deputy Brennan tabled his amendments the Labour Party is accepting them.
We have had a chance to reflect on them.
Revisionism is good and philosophical in historical terms but not on this issue.
Can the Leas-Chathaoirleach tell me whether I can discuss amendments No. 1 to 3, inclusive, even though their subject matter has already been referred to here?
Their subject matter has already been discussed.
An Leas-Chathaoirleach
We will return to them on Report Stage but the Minister can make a passing reference to them with regard to section 2.
The debate over the past two days has been very good. The 12 speakers who contributed yesterday were knowledgeable, interesting and discursive on some points and had different viewpoints on this topic. This all makes for good debate.
With regard to Senator Ross who raised the issue of fat cats, we talked about it yesterday when we discussed the privatisation of utilities in the UK and how they were mired by the resultant very large amounts of money which well positioned people were able to take out of such a flotation. Then the Senator went on to refer to the Irish Permanent and what happened here. That is morally incorrect behaviour for any person to engage in, particularly people who might have an inside track because of their positions. No management incentives, including share options, will be provided in advance of the IPO. I have already expressed this view and I will continue to do so. I will not have control over what happens after the flotation but a board will. No management incentives, including share options, will be provided before the flotation.
Does that mean that no members of the board, management or anyone employed by the company, will receive shares at flotation price?
There will be no scheme in place before the flotation of the company.
I congratulate the Minister on this decision which augurs extremely well for future privatisations. It is a magnificent and courageous commitment.
My abiding memory of the eighties in the UK was of this taking place. This led to legislation which capped the salaries of directors of utilities. It is morally incorrect that anyone who is perceived to be in a position of privilege should have the chance to leap in, so to speak, before a flotation. This will not happen here.
Senator Mooney spoke about the advertising campaign of Bid and Sid in the UK in relation to the sale of British Gas. This leads to the question of fees for the main advisers. Up to £40 million was mentioned in the Estimates last December. I got a frenzied note that evening asking me to say nothing about the £40 million, even though it was written in the Estimates. This was daft given that the £40 million was mentioned in the Estimates. I have been advised that the fees charged by Merrill Lynch, AIB Capital Markets, and all the ancillary advisory groups to them, are modest. I do not have any other experience of selling shares.
The banks do not have much experience of modesty.
I believe that international precedents for costs associated with flotation have been between 3 per cent and 3.5 per cent of the total process. Our costs will be less than that figure.
This process will involve registration forms in every post office and registering of interests in the banks, etc. I will not be taking part in any of this, except for the initial launch. There will be massive billboards stating, "It is a good idea to buy Telecom". Therefore, many people will probably decide to buy shares in Telecom because they have a little more money now, enough to believe they can afford to buy shares in Telecom. I would like to see ordinary citizens purchasing the shares.
Senators O'Dowd and Ross said yesterday that we are not a shareholding nation. How could we be a shareholding nation. We have come from the Gregory clause and the quarter acre to being in a position to purchase shares in Telecom. Therefore, the inculcation of share ownership is new and it should be a good experience but in order for it to be a good experience, it must be extensively advertised. I am precluded, by the nature of my position, from discussing issues regarding Telecom. Despite the fact that the Taoiseach said we must not write books about our time in Government, I intend to write a book about Telecom. I am writing about Telecom at the moment while the subject in fresh in my mind. In order for my job to be successful, it would not be wise for me to speak on certain matters. What I feel about advisers is well known in the Department.
There will be many costs involved in setting up the sales office, including media costs and so on. The investors I have met seem to be decent people. I do not have a quarrel individually with them; I have a problem with the concept. However, I accept this is new to me. I accept also that people who are much more learned than I on these matters have spoken and written about them; this is part of the debate.
Public water was mentioned. I will not discuss this matter.
This was privatised in England.
Yes, but we will not follow England. Electricity is open to competition from next February. This was a fine measure introduced by the previous Government when it signed the European directive. It will open at 28 per cent and will no longer be a monopoly.
On pensioners and ex-employees of Telecom, I met with representatives of the pensioners last February and had a long conservation with them. I have sympathy with their point of view. The arrangement entered into with the union coalition is agreed and signed and will become law in the near future. These people were civil servants and forfeited entitlement to their pension of 5.3 per cent. They also forfeited their annual bonus and borrowed £95 million from a financial house which will take ten years to repay. This has not been reflected in media reports. First, 5 per cent was agreed by the previous Government for changes in work practices. Second, 9.9 per cent was purchased and £95 million of a loan was raised by each current employee. This will take ten years to pay back. This has been lost sight of in the general debate. One would have a general feeling of sympathico with those who built up the company. These people have surrendered their 5.3 per cent public service pension. I presume that those who retired receive their pension, to which they are entitled. It would not be possible to change this unilaterally because the arrangement is signed with the union coalition. These people have borrowed the money and will be paying it back when the flotation commences. We are considering special arrangements whereby pensioners will be assured they can purchase shares. I do not know if the flotation will be over-subscribed or by how much, but if it is, it will be ensured they will have a right purchase if they so wish. I am sure there is a general feeling that it reflects well that they would be able to do so.
The agreement entered into between the company and the union coalition comprises a 5 per cent shareholding for changes and a 9.9 per cent shareholding purchased by surrendering pension rights and bonus entitlements and obtaining a loan of £95 million which will take ten years to repay before workers will see any return. The arrangement has been agreed between the company and the unions and both have signed up to it. I do not have a right to alter that arrangement, no matter how much I sympathise with any points of view expressed.
The Minister indicated the possibility of a book and a number of publishers are probably already salivating at the prospect. Perhaps they will be queuing up in the ante-chamber. If she needs any assistance in negotiating a publishing deal and advances, like Senator Norris, I will be happy to do so—
The Taoiseach will not allow me.
—when the time comes for a mere pittance.
I appreciate the Minister had many matters to deal with in this section. However, I did not get a flavour of what this campaign will be about.
I will send information on it to the Senator.
I thank the Minister. With regard to the share flotation, the largest one in recent times was Norwich Union, notwithstanding the First Active flotation in which the company changed its name from First National to First Active. The Norwich Union share flotation seemed to capture people's imaginations. It was the first time I became aware of a broad interest on the part of the public. The system operates in a graded manner whereby one can apply for a certain number of shares up to a maximum hold ing. However, there is no guarantee one will receive the maximum holding if one applies for it, mainly because, in practice, such flotations are severely oversubscribed – the ratio of oversubscription in the case of Norwich Union was about 3:1 or 4:1.
A significant number of people who had never been involved in shareholding before became caught up in the frenetic activity surrounding the advance notice of the flotation and borrowed significant sums of money from their banks or building societies. The cost of a maximum holding for Norwich Union shares last June was £112,000. This was the amount of money a person was obliged to submit along with their application in advance of the share flotation based on the share price agreed at the time. There were several stories in the financial sections of newspapers at the time about this. Banks acknowledged that there had been significant borrowing activity in advance of the flotation.
I declare an interest – I own Norwich Union shares. I know about this process because I went through it. I first received free shares because I have a pension plan with Norwich Union. Many people have received free shares, such as those who had mortgages in the First National Building Society and deposit holders in the Irish Permanent. This is not unprecedented. However, the fact I received free shares stimulated me to obtain more. The greed factor came into play.
I discussed this question with a number of banks and the amount of money required to gain the maximum number of shares was £112,000. There was no question of a person who submitted that amount of money receiving that number of shares because the flotation was oversubscribed. Consequently, they received less shares than that for which they had applied and they were then in debt to the banks for £112,000.
Norwich Union, not deliberately but because of the sheer volume of administration, held on to the balance of the money for some considerable time afterwards. It was at least a month or two before people received a refund of the balance and the shares they had bought. People had obtained bridging loans from banks for two to three months at the prevailing rate of interest, submitted their £112,000 but only received about £5,000 to £6,000 worth of shares, and found that Norwich Union held on to the remainder of the money which belonged to the bank. This meant they not only had to await the return of the cheque for a month or two months but also had to pay the interest due on the original loan figure of £112,000.
I strongly advise in advance of the flotation that the Minister tries to minimise the grading system to spread the ownership of shares across the widest possible section of the population. If it means the highest number of shares people will receive is 250 or 300, at least people will know in advance and will not get themselves into debt with banks and building societies. I am sure the Minister and the Government do not wish to encourage that level of borrowing. There is a risk element involved for a start and it commits people, who in many cases can ill-afford it but who are driven by nothing else other than greed and are carried along by the excitement of the flotation, to borrow more money than is necessary. Experience has shown that no matter how much money a person borrows or how much they apply for at the top end, they will not receive the shares they applied for because of oversubscription.
Perhaps a mechanism can be found by which it will become apparent to people in advance of the flotation that there is no need for them to borrow significant sums of money and that, if they apply for a certain number of shares, they have a reasonable chance of obtaining a high proportion of those. I will not state it otherwise because I appreciate the Minister cannot know until the shares are available how many people will apply. However, evidence indicates this flotation will be greatly oversubscribed.
I thank the Minister for making clear the situation with regard to pensioners and previous employees. When the new technology was introduced, I remember a large number of women in their 40s and early 50s retired from Telecom Éireann. I am glad to hear from what the Minister said that, given the investment they made in the company during their lifetime and since via various ways, such as pension funds, they will be in a position to apply for these shares. As Senator Mooney said, it is important the highest possible number of people should be in a position to apply for shares and I hope—
Everyone can apply. The pensioners are not getting a big deal.
I know that.
I think Senator Henry is referring to the certainty of obtaining shares should they apply for them.
I understand everyone can apply, but it is important for these groups who not only put a personal but also a financial investment into improvements in Telecom Éireann over the past ten to 15 years. I am grateful to the Minister for having made it clear.
There is more in this pensions business than has been exhibited so far, but we will deal with that when we come to the amendments.
I support Senator Mooney. He made a valuable point. However, we need a much wider debate on the way flotations occur, how people apply for shareholdings and so on. I do not see how the potential ordinary shareholder can do other than apply for a greater number of shares than he or she anticipates getting.
Not if a cap is put on it.
There must be some proportionality. That is the way it works. I have only done this once and I was tipped off by somebody not too far away who suggested that it might be amusing to punt on Greencore.
Could the Senator identify this person?
I approached the two banking institutions who I normally permit to service my debt problem, AIB and Bank of Ireland, because I wanted to borrow £25,000 from each to punt on these shares. Bank of Ireland was very snotty, interviewed me and asked me why I wanted the money. I said I wanted to take up some of these shares to which it replied it was not in the business of lending money for people to gamble. Why not?
That did not represent the general view of the banks who have been keen to give money away.
AIB did not have similar concerns and I got approximately 25 per cent of what I applied for. I was in the situation to which Senator Mooney referred. However, it was not the company but the stockbrokers who held on to my cheque for approximately two months.
A very important point has been raised by Senator Mooney although it may not be within the remit of the Minister. We should look at the practice of stockbrokers in unjustly holding on to the money paid in over-subscription. It is very wrong. It is obvious what they do with it. The ordinary citizen borrows from the bank, the stockbrokers then deposit or invest it where they get interest. We are paying for that. It is grossly unfair because we receive no service for that fee. It is wrong.
Question put and agreed to.
Sections 3 and 4 agreed to.
SECTION 5.
Question proposed: "That section 5 stand part of the Bill."
My colleague, Senator Burke, has asked me to raise a question regarding temporary employees of Telecom Éireann. In Castlebar telephone exchange up to 80 temporary staff are being let go and the property is being sold immediately. What rights, if any, do these people have to shares following the launch of the company? What are their pensions and redeployment rights?
If they participated in ESOP they would be entitled to whatever was agreed. I do not know the people referred to by the Senator.
Nor do I. What are the rights of those employed by the company in a temporary capacity for long periods?
If they entered the ESOP arrangement they will get their shares. If they did not, they cannot.
Question put and agreed to.
SECTION 6.
I move amendment No. 5:
In page 5, subsection (1), line 10, to delete "p.l.c".
Amendment put and declared lost.
Section 6 agreed to.
Section 7 agreed to.
SECTION 8.
Question proposed: "That section 8 stand part of the Bill."
Given that the shares for Norwich Union were so heavily over-subscribed, and I agree with Senator Mooney's views on the way this was handled, is there is a need for such a flambuoyant and extensive PR campaign of the kind envisaged by the Minister? At this stage there is hardly anybody in the country who does not know that Telecom Éireann is to be floated and the shares will be good value. They will be over-subscribed without any PR campaign.
I welcome the Minster's indication that she will ring-fence a certain number of shares for purchase by those who have contributed to the development of the company over the years. Given that there are existing shareholders, including employees and prospective investors, why is the Minister left with the cost of the sale of the remaining shares of the company? What is the expenditure involved? Is PR advice on the sale necessary?
We are working on the division of the expenses with Telecom Éireann. The amount to be spent on the media campaign is a small proportion of the budget. The biggest proportion will be spent on Merrill Lynch, who are the main advisers involved. There is a need for extensive advertising, etc., because we want a good price.
Question put and agreed to.
Section 9 agreed to.
SECTION 10.
I move amendment No. 6:
In page 6, line 24, to delete "The" and substitute the following:
"As and from the date on which the legislation is enacted and comes into operation providing for equivalent alternative provision (in relation to the three next following enactments), the".
At present Telecom Éireann comes under the remit of the Ombudsman and the question arises whether consumers will have the same rights when it becomes a floated company. I considered the various EU directives involved. These guarantee to all consumers their rights.
When the company is privately owned it will not be eligible to come under the Ombudsman's remit. However, the regulator's office is taking note of this and it will contain a section to deal with complaints not only in respect of the company but also for other companies operating in the industry. People will be able to seek a redress to their queries there.
Amendment put and declared lost.
Section 10 agreed to.
Section 11 agreed to.
First and Second Schedules agreed to.
Title agreed to.
Bill reported without amendment.