Is there an existing licence for cement manufacturers? If so, whichever company manufactured cement did not pay an annual fee.
Cement (Repeal of Enactments) Bill, 1999: Committee Stage.
Section 1 agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."
There is an existing licence which is held by CRH. It was a once off licence granted in 1936. Any fee would have been paid then as fees were not paid on an ongoing basis. I refer to an issue raised by Senator Ross yesterday. He asked why CRH has sole responsibility for the manufacture of explosives in the State. Irish Industrial Explosives is the sole manufacturer in the State and it is 50 per cent owned by CRH while CRH also owns 50 per cent of the quarries where explosives are used. However, a number of new companies are entering the market. Shannon Explosives has applied for a licence and two UK companies are also planning to start operations which will require local authority licences to store and operate low volume liquid explosives. This is a new development in the explosives area. The Senator raised other issues and, hopefully, I will communicate with him next week.
Given that CRH has abused its monopoly position and, indeed, was fined £3 million by the European Union for such abuse, why has it been indulged for so long by the State? I am aware it was not the Minister's responsibility. What measures will be taken or planned, if any, by the Government to allow and facilitate other companies to enter the cement manufacturing market? I did not list companies yesterday – and I probably should have – as I felt it might have been slightly irresponsible because I was not certain that they were all victims of CRH but some were. There has been systematic abuse by CRH whereby it has put smaller companies out of business. Whereas the monopoly is now theoretically removed, it is in such a strong position that it would be difficult for anyone else to enter this market.
Will the Government take any measures to make it easier for other companies to enter this market and, therefore, compete with CRH? Mr. Quinn's company is a prospect on the Border. However, it would be good if others were encouraged, otherwise there will be a continued monopoly and abuse of that monopoly, by a private sector company which is far too powerful or there will be a cartel. The danger of what is happening currently is that CRH is so large that if other players enter the market there will simply be a cartel because CRH is already charging far too much for its product.
I also refer to the abuse of its monopoly position and the fact that CRH has been fined by the EU. Yesterday I raised the operation of the company and the fact that eight of its directors are shareholders in Ansbacher (Cayman) Limited and that an unlicensed bank operated from its headquarters. When the Minister concluded Second Stage she indicated there was ongoing consultation between political leaders in regard to referring the matter to the Moriarty tribunal and she considered it the most appropriate way of dealing with the problems. Will she clarify her comments? I would welcome that because it would be a considerable extension of the remit of the tribunal and have major implications.
Senator Costello referred to the Moriarty tribunal. As I understand it, counsel for the public interest, Mr. Frank Clarke, SC, on behalf of the Attorney General, made a public submission to the tribunal suggesting that there would be cross-party support for the tribunal to examine any issues surrounding the disposal of lands at Glen Ding Wood. I understand that the tribunal will examine such issues. People raised possible conflicts of interest if the tribunal were to do so but none of the parties in the Houses of the Oireachtas believed that was the case.
Are the unlicensed bank and the Ansbacher accounts covered by it?
Not by the tribunal.
Are they covered under the consultation process?
Three High Court inspectors were appointed to carry forward the section 19 report which was carried out by Gerard Ryan. It was an excellent and comprehensive report. The inspectors are led by Mr. Justice Costello, Noreen Mackey, formerly a barrister in the Competition Authority, and Paul Rowan from Northern Ireland, who is a chartered accountant. They have the power to subpoena witnesses, take evidence from others, other than company directors, and make a report to the High Court. I expect that they will be able to do so soon because of the nature of the work that has been done heretofore.
They have been given the back up staff they require to do the job quickly. It is important that they report quickly because all of us are concerned about what emerged during the inquiry into the substantial operations of Ansbacher (Cayman) Limited in this State. Indeed, many of the issues which have come to light recently happened in the past but until the McCracken report offshore banking and tax evasion were rampant. Notwithstanding the amnesty a few years ago, it continued until the inquiry by Mr. Justice McCracken, and this is often not understood in the public domain.
With regard to Senator Ross's query, there were no other cement manufacturers in the State. The Competition Authority has enforcement powers but if there was no competition in the State in the manufacture of cement there was not much that the authorities could do when they did not receive a complaint.
Now the Seán Quinn Group is coming in. Generally we do not support by way of grant aid companies in the construction industry, for obvious reasons. That company has been supported – it has received substantial moneys towards research and development to facilitate its entry into the market. Investment in cement manufacturing is expensive. In the case of the Quinn Group transfer from Northern Ireland, from Derrylin in County Fermanagh to Ballyconnell in County Cavan, there is a £70 million investment. The Lagan brothers have made an application to develop a manufacturing facility at Clonard, County Meath.
We will not see a change in the CRH proportion of the market until we have more competition and more new companies. No Minister for Enterprise, Trade and Employment would ever allow a company that already has 80 per cent of the market to acquire any more market share. If it were the case that CRH sought to acquire any of the new manufacturing facilities, no Minister would allow it because it would be anti-competitive.
I will look at the issues raised by Senators regarding the possibilities of collusion when there are only two or three players at the most. We have substantial powers through competition legislation and the Competition Authority, particularly the enforcement powers it has which Governments did not have in the past. Competition did not become a legislative issue in this economy until the early 1990s. There was no legislation in this area. It is an area in which we have been slow to make the kind of changes that are required. We often confuse regulation of quality and standards and quality of service with the need to restrict market entry. In my experience competition improves quality, drives down prices and gives increased choice to the consumer. That applies in cement as it does in many other areas of activity. It is important that we focus on the competition element.
Licences for explosives is a matter for the Department of Justice, Equality and Law Reform. There must be fair and open tendering procedures on this issue. There will be two UK companies and Shannon Explosives and this will give us a wider choice in the future than we had in the past.
The Minister's reply is extremely satisfactory. I have every confidence that if anyone will tackle this issue she and her Department will do so because her record on competition is unparelleled. However, this may be a problem because we have a monolith here that is so well established and entrenched that it will be difficult to shake it and introduce fair competition in the sector. In the circumstances we can trust the Minister and the Government to do whatever can be done. I accept her bona fides in this regard. The grip that CRH has had traditionally over politicians, although not over her party, has been unhealthy and has been abused.
Concern has been expressed in the media and elsewhere about hidden ownerships by CRH – these are companies which it owns and has not declared in its annual report as being in full or over 50 per cent ownership. A benign interpretation would consider that a mystery. There is a malign interpretation also but I do not want to be hard on CRH. However, it appears that for some reason it is hiding its ownership of various companies. That is monopolistic behaviour. Several of these companies have been exposed recently. CRH's explanation has been non existent – it has behaved like most bullies in this situation, saying nothing and hoping the issue goes away.
The Government does not wish to have a role interfering with individual companies in the private sector. There is a general policy role of exposure and transparency. Will the Minister look into this matter in the case of CRH, investigate it and ask why a monopoly of this sort is not disclosing significant ownerships until it is pushed? It has admitted to doing so one by one recently. The information has to be wrung out of it. That suggests it is more monopolistic than it wants to make out and it may have put other people out of business in a monopolistic way. CRH has been a bully for a long time.
I wish to raise a general policy matter, to which I referred yesterday, but I do not want the Minister to go into specifics. There is a danger at the top of Irish business of certain companies becoming too powerful, way beyond the industries in which they operate. CRH is one of these. I pointed out yesterday that the chief executive of CRH is a member of the board of AIB, Mr. Don Godson. There are at least two board members of CRH – Mr. Tony Barry, the chairman, is also the Deputy Governor of the Bank of Ireland—
The Senator should not mention the names of people who are not here to defend themselves.
They are not accusations, they are incontestable facts. Mr. Howard Kilroy who is the Governor of the Bank of Ireland is a member of the CRH board.
There is a convention that names are not mentioned in the House.
Sorry, I will not mention any more. There are others I could go into. Another board member, without mentioning his name, is also a strong member of the board of a public company which has a monopoly in another area. What is dangerous is the influence of CRH, not only in the cartel which is the banks and the huge influence it has over one particular bank, the Bank of Ireland, but also in other industries and in IBEC. That is a matter not of specifics but for general Government policy, that one company which has achieved a great deal in easy circumstances has such an inordinate and unhealthy influence in Irish business life. That is something which the Government should consider. It should consider ways of ensuring that it does not happen. Perhaps the Tánaiste might comment on that. I apologise to the Cathaoirleach for mentioning specific people but I had to use them as an example and they are facts which are in the annual reports.
On section 2(2), when does the Minister propose to bring the Act into operation?
Obviously, as soon as possible. The Bill must go through the other House and be signed into law by the President – maybe a day or so later if possible.
Senator Ross raised the matter of membership of boards. In the past there was a small pool of people to pick from for particular reasons. Thankfully, we have a new breed of entrepreneur in the State. We have a wider choice. Pat Molloy, the former chief executive of the Bank of Ireland, is an example. When I was establishing Enterprise Ireland I set out to get him to agree to chair Enterprise Ireland for a host of reasons. I did not know him very well but he has a reputation as a fantastic people person, he is a doer and he can bring people with him. The task of dealing with over 2,000 people was so enormous that I did not want it to take forever, as other amalgamations, changes and mergers did in the past.
Thankfully Mr. Molloy agreed to do that and he is doing an outstanding job. We need to be careful in what we say about individuals because many give great service to the State. That is not a platitude. I agree with Senator Ross that the less of a cross membership there is among the larger bodies the better. It happens too with people who retire from politics. People who retire from the public sector are suddenly on the boards of companies. While they may not have dealt with the company on an individual basis they would have dealt with the sector. I see a huge danger in that but I do not know the answer to it. You cannot legislate to make certain things happen or to make dishonest people honest. However, there are issues about which we should be rightly concerned but I am not certain what is the most effective way to address them. So far as company law is concerned, the problem is that obviously the laws were not enforced.
The most successful economies are also the most aggressive regulators and expect that. The Revenue authorities in the United States have no problem moving in quickly if wrongdoing comes to their attention. Unfortunately in Ireland we tended to turn a blind eye and we are paying a heavy price and it is all coming together.
The Companies Registration Office is enforcing the law. A couple of hundred companies per week are being struck off for failing to file returns and give details of the directors and so on. That will continue until the job is done, notwithstanding the pleadings of some who do not want to give information because they reckon it is giving their competitors inside information and so on. Every excuse in the book is used. However, no excuse will work. When these inquiries are over, the Minister for Enterprise, Trade and Empoyment has powers to initiate prosecutions for certain matters. There is no point having an inquiry unless it is followed through. If we begin to do that and aggressively apply regulation, where necessary, and apply the law without fear or favour, some of the issues raised by Senator Ross will be dealt with.
I would always be concerned about hidden ownerships. I have already discussed that matter with some officials in my Department and I have read articles in the national newspapers. One must always be conscious of hidden ownerships. There are powers in the Companies Acts but one does not wish to use them lightly if the matter can be dealt with another way. If we do not know the owners of companies we cannot say whether there is competition. One would always have to be suspicious if large or small companies deny who are the directors and the beneficial owners of an undertaking.
I hope that some of what is happening will come to an end on foot of the recommendations of the McDowell committee on company law enforcement. I established that group shortly after I assumed office because of my concerns about what was emerging from the inquiries and that company law was not enforced. A Bill will be coming before the Government shortly, the purpose of which is to establish a new company law enforcement office, independent of the Minister. There is a requirement for an office that is well resourced and has members of the Garda Síochána, professional lawyers, accountants on the team and the kind of people needed to enforce company law. What we have is a small unit in my Department which does an excellent job but it has not the capacity to enforce the law in the way I and everybody here would wish to see it enforced. Hopefully the climate will change but it will only change when decisive action is taken and the inquiries are the first step. Perhaps people have felt that because their company was so large they could do as they wished. Unfortunately, that was the history of the past. That is no longer the case. The public requires accountability and that the laws passed by the Oireachtas are enforced without fear or favour.
I support some of the issues raised by Senator Norris regarding the difficulties facing people trying to get into the market. Harrington's has an application before Mayo County Council for a cement manufacturing factory. I hope there will be some assistance to enable people get into the market to ensure that monopolies or cartels will not operate. In the event that there are a number of applications for cement manufacturing units throughout the country, will provision be made in the new planning Bill to govern or control the ground rules for such units? We have nothing to go on except CRH which was set up in the 1930s. While I agree with Senator Ross that the passage to gain entry into the market should be eased financially and that certain rules will have to be adhered to, will any section of the new planning Bill make this difficult?
I understood the application in Mayo had been refused but, if not, I wish it well. We cannot have specifics in the planning legislation or in the environmental protection legislation for certain companies or particular areas of activity. The planning laws have to be dealt with on the basis of what is good planning and development. That is a matter for the local authority and on appeal for An Bord Pleanála.
Under the Environmental Protection Act a licence is required to manufacture cement. The reason for this requirement is the contribution to COf8>2 emissions and so on that comes from the manufacture of cement. We cannot confuse two things. We can have high environmental standards. Technology ensures the manufacture of cement can be done in a way that is not damaging to the environment but we must also ensure our environmental laws are not used as a barrier to market entry, which happens in many countries. Subject to good planning and development and good environmental controls I would like to see and, as far as one can, we would be supportive of other companies that want to enter into this market. That is the only way there will be real and effective competition.
Because of the nature of cement only 5 per cent of the domestic requirement is imported. I do not envisage that changing very much, therefore, we rely on local suppliers. Given the size of the economy there are always conflicts between the internal domestic market and what is required to perform on the outside stage – the rest of the world. The scale of activity that is required to succeed in many sectors is such that one has to get large. We have to ensure our companies can get large enough though foreign acquisitions, foreign partnerships, joint ventures or whatever but not so large that we have an uncompetitive situation. Time and again it is a question of balance. That is particularly the case in the food sector where companies have to get bigger to compete while they probably have to reduce the numbers employed when the various companies are pooled together. That must be done in a way that ensures domestic competition. That is not easy in a market of 3.7 million people but it is something on which we have to keep a focus because it is important that there is competition abroad and that we have companies that can compete and become world class operators which CRH has succeeded in doing in 11 countries other than Ireland. That is something we can be proud of. When that happens we must ensure it does not cause an adverse impact on the domestic market.
Has the Minister any comment to make on the fact that CRH refuses, in its annual report or any other document or representations, to reveal the directors' salaries individually, contrary to the codes of corporate governance?
I launched a new document on this issue on behalf of the Association of Investment Managers. I launched a new document on its behalf on this issue. The Senator is probably aware of my comments. Earlier this week I met the Stock Exchange which I have been seeking to encourage to do voluntarily what I believe is right. I believe in as little government as possible and in self-regulation, if it works. Where it does not, one has to have an alternative.
Unlike Northern Ireland and Britain, under Stock Exchange rules in Ireland CRH is not required to disclose individual remuneration packages. It has to disclose the aggregate sum. The Stock Exchange made proposals to me earl ier this week which are not sufficient. If it is not done voluntarily it will be legislated for in the next company law Bill. Shareholders have a right to know what bonus, remuneration, benefit-in-kind and incentive package is paid to the directors of public companies. All stakeholders in a company have a right to know this information. This is the norm in the United Kingdom and so far as I am aware it has not caused any problems in relation to security or the other matters about which one hears and which could become potential problems.
I accept that in a small society there is often a tendency for begrudgery but in seeking to legislate we have to put that aside. We are seeking to encourage best practice and good corporate governance. I hope the Stock Exchange will review what it suggested the other day. It offered a compromise but it is not sufficient. I hope it will think again. I am aware that it has had consultation with its members but my position has hardened as a result of what I have seen through various recent inquiries. I see no justification for the current regime continuing.
Question put and agreed to.
Title agreed to.
Bill reported without amendment and received for final consideration.
Question proposed: "That the Bill do now pass."
The Bill is not before time. I hope to see a large number of cement manufacturing companies being established.
I thank the Tánaiste for her fast processing of the Bill.
I would hate to be left out of this general applause for the Bill and I echo the remarks of my two colleagues.
I wish to be associated with the remarks which have been made. We welcome the Bill. The Tánaiste has been open and knowledgeable in her responses to the queries raised.
I congratulate the Seanad for taking three and a half hours to discuss this short Bill. I was advised by my officials that we would be in and out in half an hour. Great credit is due to the legislators here for raising so many interesting issues. I thank Senators for their comments and look forward to returning with further legislation in this area shortly.
Question put and agreed to.