Ceisteanna — Questions. Oral Answers. - Air Companies Investments.

30.

asked the Minister for Transport and Power whether investments have been or are to be made by any of the air companies in private concerns; if so, will he give details including the authority for the making of such investments.

31.

asked the Minister for Transport and Power if he will give a full report on the terms of the agreement recently entered into by Aer Lingus to take over one-fifth of the shares of Ryans Tourist Holdings for a figure in excess of £300,000.

32.

asked the Minister for Transport and Power if he will make a statement on the reasons for the recent link-up between Aer Lingus and Ryans Tourist Holdings.

: With your permission, a Cheann Comhairle, I propose to take Questions Nos. 30, 31 and 32 together.

Aer Lingus Teoranta acquired the entire shareholding of Shannon Repair Services Ltd. in 1966. Aerlínte took a 28 per cent interest in Intercontinental Hotels Ltd. in 1964. Aerlínte have recently acquired a 20 per cent interest in Ryans Tourist Holdings Ltd.

The companies are empowered under their Memorandum of Association to acquire shares or other securities of any company with objects capable of furthering the interests of the air companies.

In acquiring an interest in Ryans Tourist Holdings Ltd. Aerlínte were concerned to ensure that the development of their growing translantic business was not inhibited by a lack of suitable hotel accommodation to cater for the all-in tours which will form a growing proportion of their traffic and to lessen the danger of such accommodation being acquired by their foreign competitors. The acquisition of hotel interests for similar reasons has in recent times been a feature of the international airlines business and most of Aerlínte's competitors have already acquired interests in hotel chains. Aerlínte have with my approval and encouragement been exploring the possibility of doing likewise for some time. More than 12 months ago they invited all Irish hoteliers of substance to make proposals to them for participation. These proposals were examined by the company with the assistance of a hotel consultant from London and the company eventually decided that the proposals made by Ryans Tourist Holdings Ltd. who planned the construction of a chain of suitable medium priced hotels would best meet their requirements. Following negotiations an agreement providing for the acquisition of shares in Ryans Tourist Holdings Ltd. by Aerlínte was concluded on 13th September, 1968, subject to my approval and that of Ryans (Shareholdings) Ltd. My approval, while not a legal prerequisite, was stipulated by Aerlínte because of the control exercised by the Government over capital expenditure by all State bodies. The cost of the investment was met from the company's internal resources, i.e., depreciation and other reserves.

The agreement was published and I am placing copies in the library for the information of Deputies.

I am satisfied that the agreement will help to ensure the provision of adequate suitable hotel accommodation for Aerlínte's growing transatlantic tourist business and that it is a sound commercial investment and for these reasons I have communicated my approval of it to the company.

: Does the Minister suggest it was in order for a State-sponsored body, set up for one purpose by this House, to use its funds for another purpose without coming back to this House for authority to do so?

: The Articles of Association clearly provide for it.

: The Minister does not mean the Articles of Association. He means the Memorandum of Association. Does the Minister not know that the Memorandum of Association has been always drawn in the widest possible form? If he is not aware that it has been stated frequently, when special Acts were brought to the House for the purpose of setting up State companies, that the funds thereby allocated would be used for the purposes of that company——

: I consider that this investment was most essential for the air company and that the whole purpose of the air company was related to the need in this country for medium priced accommodation in a chain of hotels being built or planned to be built around the whole west and north-west of the country. I do not consider, therefore, that this goes beyond the air company's general powers because of the fact that there are rivals at the same time doing it. The air company has interests in Intercontinental Hotels.

: Would the Minister further tell the House what commercial advice was made available to the company or to him before he gave his approval?

: The advice was given by an independent hotel consultant, not in this country.

: Who was it?

: I have not got the name of the consultant.

: Would it have been Chief Enahoro?

: Is the Minister seriously telling the House that he approved the proposal without having before him the name of the hotel consultant?

: In actual fact, as the Deputy well knows, if the company had to take part in a stock exchange transaction for the purchase of shares, I had to leave it to the initiative of the air company because it involved the purchase of shares in the Dublin Stock Exchange through the holding company of Ryans. If there had been any spread of information there would have been speculation in the shares. That did not take place. If there had been some other type of agreement, different arrangements might have been made between me and the air company as to the withholding or the giving of consent. In these circumstances, the Deputy is well aware of the need for making the agreement, subject to my consent afterwards.

: We are all perfectly aware of the type of speculation that took place.

: There was not any speculation.

: There was the speculation of Ryans getting Deputy Lemass as a member of the board. The Minister also said that the air company got a hotel consultant to advise on the type of hotel accommodation involved. That is not the same thing as getting commercial advice in respect of a shares transaction. I ask the Minister now which merchant bankers or similar financial establishment advised him or the company before these terms were accepted. That is always done.

: The Deputy will realise that this had to be undertaken with great privacy once the company decided to make a stock exchange purchase. The Deputy may take it for granted that the members of the board are people of responsibility and of absolute integrity, many of whom are known to the Deputy, and suggestions that there was some scandalous connection by me or any of my colleagues or any Member of the House in attempting to influence the members of the board, whose names are well known, is lowdown and utterly scandalous.

: The Minister knows his consent was sought. I am not concerned with the board members but with the Minister. He has a responsibility to the House and to the country. Did he fulfil that duty by getting full advice or were there reasons why he did not want to get commercial advice or financial advice?

: A gift to Ryans, and nothing else.

: As the Deputy well knows, I have been thinking of this type of investment for a long time, of there being a connection between the air company and a hotel chain. If the Deputy looks at the hotel chains in the country he will see it did not require any expert advice on my part to see that this proposition was a good one, bearing in mind the advice of the consultant and the advice of Aerlínte, and bearing in mind in particular the location of the other chains of hotels in this country and also the ownership of the other companies, he will see there was also a priori consideration required for this, simply based on the proposed distribution of the hotels of this company.

: Does it follow from this agreement that tourists travelling by Aerlínte will be directed to Ryans Hotels and conveyed there in Ryans cars? Is the Minister aware of the serious concern of other hoteliers and hotel groups who feel that State money is now being used in competition with them?

: I do not think there is any likelihood of any other hotel chains or hotel groups being affected by this adversely because the stimulus by Bord Fáilte to increase hotel accommodation is being met only just adequately. The extent of the past tourist season will fully illustrate this. The Deputy may rest assured that this is not likely to affect adversely other chains or groups of hotels.

: The remaining questions will appear on tomorrow's Order Paper.

: Ryans have not yet proved themselves in the hotel business. They have not succeeded.

(Interruptions.)

: The remaining questions will appear on tomorrow's Order Paper.

: Where did Aer Lingus get their offices in Collins Avenue?

: I am calling on the Taoiseach. Will Deputies please cease interrupting?

: On a point of order, may we ask supplementary questions on this matter tomorrow?

: There have been ten Supplementary Questions allowed by the Chair. We cannot continue to debate this all afternoon. Will the Deputy please resume his seat?

(Interruptions.)

: Give it to Taca.

: The faceless men of Taca are running the country.