Dáil Éireann Debate, Tuesday - 11 February 2014
109. Deputy Clare Daly asked the Minister for Agriculture, Food and the Marine if he will explain the connection between Coillte and the Irish Forestry Unit Trust; and the steps he has taken to examine the trust deed of the IForUT committing Coillte to providing liquidity to the fund if needed and selling forests to the IForUT without these forests being put out to tender. [6324/14]
View answerCoillte Teoranta was established as a private commercial company under the Forestry Act 1988 and day-to-day operational matters, such as the relationship between Coillte and the Irish Forestry Unit Trust (IForUT), are the responsibility of the company. It should also be noted that IForUT is a private entity.
I am advised by Coillte that IForUT is a unit trust that was established in 1994 by AIB, Irish Life and Coillte to provide an investment vehicle to enable Irish pension funds and other Irish qualifying investors such as charities to invest in forestry. When the unit trust was first established in 1994, it consolidated the forestry investments of Irish Life Investment Managers and AIB Investment Managers with Coillte introducing semi-mature forests to ensure a balanced portfolio and to provide liquidity to the fund to cover operating costs. The transfer by Coillte involved only the right to harvest timber from one rotation of the forest crop; the underlying land was not sold and Coillte continues to manage and maintain the forests transferred on behalf of IForUT.
In addition to introducing semi-mature forests at market value, Coillte also gave certain guarantees in relation to providing liquidity to the fund. This was to ensure that sufficient funds were available in the event that a pension fund wanted to encash its units and was essential in providing confidence to potential investors. It also ensured that, if the IForUT initiative failed, ownership of the forests would revert to Coillte at market value rather than to a third party. These guarantees have never been exercised by the fund and consequently Coillte has never been called on to provide liquidity. The contingent liabilities are disclosed in the company's annual accounts.
The purpose of selling forests to IForUT was to facilitate investment by Irish pension funds and other qualifying investors in forestry. As a consequence, Coillte did not offer these forests for sale by tender nationally or internationally but is satisfied that its valuation methodology, which has been independently validated, ensured that full market value was achieved for any forests sold to IForUT through this mechanism. Since 1994 Coillte has gradually reduced its unit holdings in the fund as the original purpose for establishing the fund has been fulfilled. Coillte is no longer a unit holder in IForUT.
