Vol. 392 No. 4
asked the Minister for Industry and Commerce if he will make a statement on the operation of the export credit guarantee scheme in relation to beef exports to Iraq; if he will outline the history of the scheme over the past five years; the extent of the guarantees issued; the firms to which they were issued; the amount guaranteed in each case; and the exposure of the State on foot of such guarantees.
25.
asked the Minister for Industry and Commerce if he will elaborate on his statement of 18 October, 1989 in connection with certain export credit insurance policies; if, in particular, in light of his earlier statement that the use of the scheme to cover foreign goods exported to Iraq amounts to serious abuses of the scheme and a fraud on the State and the taxpayer, he intends to refer the matter in question to the Director of Public Prosecutions; in light of his earlier statement that decisions in these matters were taken by the Government as a body acting collectively and by individual Ministers, the reason a decision was taken to concentrate so much of the insurance available in favour of one company exporting one product to one country; and if he still considers that these decisions were entirely wrong in principle and an act of political favouritism.
37.
asked the Minister for Industry and Commerce the grounds on which he cancelled cover under the export credit insurance policy in relation to meat exports to Iraq in 1987 and 1988; if the standard policy wording which covers goods exported from Ireland and produced in Ireland was used in this instance; if payments have already been made in respect of these meat exports to the company concerned under the export credit finance scheme; the steps he proposes to take to recover these moneys; and if any member of the Government at that time was aware that the meat exporter was not in a position to fill the meat contract with Iraq solely with Irish meat.
39.
asked the Minister for Industry and Commerce if his attention has been drawn to reports, following his cancellation of export credit insurance cover in respect of beef exported to Iraq, that the Government were aware that beef not sourced in the State was covered under the terms of the scheme; if the investigation conducted by his Department determined the persons in Government who made the decision to allow this cover; if it is intended to ask the Garda to investigate whether there has been any attempt at fraud in connection with this scheme; and if he will make a statement on the matter.
41.
asked the Minister for Industry and Commerce if his Department were aware that a percentage of the beef exported to Iraq as part of the consignments covered by export credit insurance originated in Northern Ireland; that the beef was exported from Greenore Port, County Louth and had veterinary certificates issued from Northern Ireland; that these certificates were inspected and approved by inspectors from the Department of Agriculture and Food; and if the Government through his Department were so aware; and if he will make a statement on the matter.
I propose to take oral Questions Nos. 10 and 25 and priority Questions Nos. 37, 39 and 41 together.
During the past five years, a specific ceiling applied in respect of export credit insurance for all products, including beef, exported to Iraq. While this ceiling was increased on periodic occasions to reflect the expanding level of business opportunities available to Irish companies, cover was suspended in May, 1986 because of increasing repayment difficulties and the resultant delays that were beginning to arise for Irish exporters. Cover remained suspended until May, 1987 when the then Minister for Industry and Commerce decided to reopen cover within a specified limit because of the significant potential of the market for Irish companies.
Cover was again restricted in December 1988 because of the high level of payments which were then overdue from Iraq to Irish beef companies.
Prior to 1987 liabilities amounting to £10.35 million were underwritten under the export credit insurance and finance schemes in respect of exports of beef to Iraq. All payments in respect of these exports were received from Iraq. Since 1987 liabilities amounting to £120 million were underwritten under the export credit insurance scheme in respect of exports of beef to Iraq. The percentage of cover in 1987 and 1988 was either 70 per cent or 80 per cent depending on the credit period. Bank guarantees involving a total exposure to the State of some £55.2 million were issued under the export credit finance scheme in respect of such exports. This amount is included in the total maximum potential insurance liability of £120 million.
For reasons of commercial confidentiality it has not been the practice to reveal information about individual companies.
Deputies will be aware of recent decisions taken by me to void certain export credit insurance policies in respect of beef exports to Iraq. The grounds on which these policies were voided are set out in my statement of 18 October 1989. In view of the importance of this matter I feel it is appropriate for me to read into the official record of the House the text of this statement. The statement reads as follows:—
In response to a large number of enquiries from the media arising from reports in this morning's newspapers centred on the initiation of proceedings against me, I have decided in the interests of clarity, to confirm that, on 12th October last, proceedings in the High Court were instituted against me by a beef exporting company. This action was initiated on foot of my decision to void certain export credit insurance policies in respect of exports of beef to Iraq, the background to which is as follows:
Earlier this year my Department commenced an investigation into the discrepancies which had emerged as between official statistics for Irish beef exports to Iraq in respect of the years 1987 and 1988 and the levels of beef exports which had been declared for insurance purposes under the Government's Export Credit Insurance and Finance Schemes in respect of the same years. The investigation was conducted in consultation with the Central Statistics Office, the Insurance Corporation of Ireland, the Department of Agriculture and Food and the exporters concerned.
The principal finding of the investigation has been that the discrepancies concerned arose mainly from the fact that approximately 38.4 per cent by volume, of the beef, the subject matter of certain insurance policies issued during the same period, was sourced outside the State, having been processed either in Northern Ireland or in Britain.
In accordance with the provisions of the Insurance Act, 1953, the primary purpose of the Government's Export Credit Insurance Scheme is to promote Irish exports. Policies of insurance issued under the scheme specifically provide for cover in respect of the export from Ireland of goods which are produced within the State. Such a provision is present in all policies concerned with the export of Irish beef to Iraq.
In the light of the findings of the Department's investigation, I consulted with the Attorney General. I directed my Department on 11 October to instruct the Insurance Corporation of Ireland, as my agents in the administration of the Export Credit Insurance Scheme, to notify the companies concerned that specified policies are void and that no liability will be accepted by me in respect of them.
If these legal proceedings against me are persisted in I propose to contest them vigorously.
It will be clear from the above that this is an extremely complex matter and one that has demanded careful assessment and a considerable level of consultation. This is especially true in relation to the legal dimensions. My first and foremost task, therefore, was to take whatever action was both necessary and open to me in accordance with established insurance practice and convention. This I have now done in a manner consisent with the requirements of law and in the light of the circumstances and facts of the case.
It will be clear that my primary concern in this case has always been the protection of the Exchequer and I can assure the House that this will continue to be the case. I am continuing my detailed consultation and consideration of the matter. In view of the fact that proceedings have been instituted in this case, I do not think it would be appropriate for me to make any further comment which might be prejudicial to the course of future legal proceedings, whether civil or otherwise.
In relation to the reasons for the decision to allocate cover given for beef exports to Iraq in 1987, the then Minister for Industry and Commerce set out the situation in relation to this in reply to Parliamentary Question No. 9 on 3 May, 1989.
The standard policy wording regarding sourcing of product was employed in the insurance policies in question. This was further augmented by declarations to the effect that the beef to be supplied was or would be the produce of the Republic of Ireland.
No claims have been paid in respect of these beef exports under the export credit finance scheme and accordingly the question of recovering moneys does not arise.
Finally, I am satisfied that at no stage prior to the issue of the insurance policies in question was my Department aware or given any reason to believe that a proportion of the beef to be exported and declared for insurance was or would be sourced outside the State. Furthermore as far as I am concerned neither the then Minister nor the Government were so aware. In this regard I would again emphasise that the companies concerned provided declarations to the effect that the beef was or would be the produce of the State. Facts regarding sourcing of the beef only emerged as a consequence of the departmental investigation already referred to.
Having regard to the limited time available for ordinary questions I propose to call the Members in the order in which their questions have appeared on the Order Paper and to move into priority question time to deal with the priority questions tabled on this subject matter. I am calling Deputy Mervyn Taylor.
I want to ask two questions arising out of the Minister's reply. First, does the question of fraud arise on these issues, and has any matter arising from that been referred to the Garda authorities for examination or investigation? If so, will the Minister give details of exactly what has been referred for consideration to the Garda authorities on the question of fraud?
The second question is, if the Minister now stands over his own statement of May last when he pointed out that one particular firm had received 80 per cent of the total cover available for exports to Iraq and then said that the Government of the day had shown favouritism in giving such a volume of cover to one firm. Now that the Minister has taken office in the same Department does he stand over that statement that he made in May or does he wish to change it now?
In relation to the first part of the Deputy's supplementary, I have consulted the Attorney General on precisely that point. I have taken his advice and I have followed that advice in the answer that I have given today. For the benefit of the Deputy I will repeat the relevant part of my earlier answer and I will respect the Attorney General's advice not to go beyond it. I think if the Deputy carefully considers the sentence I am going to read out again he will agree that it would not be appropriate for me to go beyond that. It is this:
In view of the fact that proceedings have been instituted in this case, I do not think it would be appropriate for me to make any further comment which might be prejudicial to the course of future legal proceedings, whether civil or otherwise.
As far as the second part of the Deputy's supplementary is concerned, the figures I gave here in March or April of this year, that 80 per cent of the cover went to one company and 20 per cent to another, appear to me to be broadly correct but the actual figure may be 79 per cent.
Will the Minister agree that in saying that he stands over his statement he is indicating that the Government at that time had shown favouritism in that regard?
The Deputy put that question earlier.
I am not satisfied with the answer given. I did not ask the Minister to comment but to inform the House if the matter has been referred for investigation by the Garda or not. That was not a comment.
We cannot have the luxury of repetition.
I have consulted with the Attorney General in some detail about this matter and I have got precise advice from him. I have nothing to add to what I said and the Deputy should realise that it would not be appropriate to make statements in the House on a matter like that.
The Minister should tell the House whether the matter has been referred to the Garda for investigation. That was a perfectly reasonable question and the answer to it is either "yes" or "no".
I am calling Deputy Spring. Deputy Taylor has put that question on a number of occasions.
Does the Minister stand over the statement he made in the House in May in which he alleged that the insurance cover of goods exported to Iraq amounted to serious abuse of the scheme and a fraud on the State and taxpayers, that the decisions were entirely wrong in principle and an act of political favourtism? Does the Minister stand over those statements? I should like to repeat Deputy Taylor's question: has the matter been referred to the Director of Public Prosecutions?
Repetition is not in order.
It may elicit an answer.
Quotations at Question Time are not in order.
I expressed the view that in my opinion too much cover was given to too few companies in respect of one product to one country and I remain of that view. The investigation that was carried out would seem to bear out the view I had in regard to that matter in May of this year, in regard to the quantity of cover that was given to one product going to one country and to two companies of which one got the great preponderance of the cover.
I should like to put one question to the Minister and it does not relate to favourtism. I should like to ask the Minister a question in regard to discrimination. Will the Minister have concern for the possible discrimination against firms, or a firm, who do not have access to this cover? I am talking about the other side of the favouritism that was referred to earlier.
If and when we get to the stage when we can reopen cover for beef to Iraq it will certainly be my intention to try to distribute the cover as widely and as equitably as I can to companies interested in it at that stage.
I am now dealing with priority Question No. 37, in the name of Deputy Seán Barrett.
Will the Minister repeat his reply to the question if any claim was made under this policy? The Minister said that at the time no member of the Government, or his Department, was aware that the full contract for the supply of meat to Iraq could not be sourced solely in this country. I should like to ask the Minister what the consequences are for export credit insurance if in the future an undertaking of a similar kind is given and the exporter in question finds that he or she cannot source all the meat here. What will happen to the contract? In relation to the export credit finance scheme will the Minister say if he intends pursuing the repayment of moneys that were obtained under this scheme if a claim has been made which turns out to be, in accordance with what the Minister has said, a fraudulent one?
Please, Deputy, I should like to dissuade you from putting a series of questions in an omnibus form.
It is better to put them in that form than to be hopping up and down.
The Deputy should obey the Chair and put his questions briefly and succinctly.
I am putting my questions.
The Deputy cannot put a long series of questions.
I have lost my train of thought as a result of the Chair's interjection; I do not mean to be disrespectful. Perhaps the Minister will answer the questions I have put to him.
I am not sure I can recall the various questions because I have lost by train of thought also.
The Minister should know because this is a very serious matter for Irish exports in the future.
I am well aware of that.
Deputy Molloy should realise that the Minister is big enough to look after himself; he should not be holding his hand all the time.
The Deputy has put a series of questions and the Minister should be given an opportunity to reply.
There were no claims paid under the export credit finance scheme relating to this matter and so the question of having recourse to the insured parties to recover moneys has not arisen.
Was money not paid out under the export credit finance scheme?
There were, of course, substantial sums of money paid out under the scheme but they were paid by banks to the companies, not by the State.
Guaranteed by the State?
Guaranteed by the State, yes.
On 10 May the Minister said that the scale of the abuse was, in its potential to the State, unprecedented. I should like to know if the Minister stands over the statement he made then, that this state of affairs was due to governmental and ministerial intervention.
On 10 May "the Minister" did not say; "Deputy O'Malley" said, and that is a different matter. I have already dealt with the other matters. I cannot go into historical facts. I have expressed my view on the quantity of cover that was given and the circumstances in which it was given.
The Deputy's view changes depending on whether he is a Minister or not.
Incredibly, my view does not change. I have been able in the House today to stand over the figures I gave the House last March, April and May when I was in Opposition. That is an indication of how responsibly I approached the matter at that time, and if I recall at that time I got fairly limited support from outside my own party in regard to the matter.
I should like to ask the Minister to answer three simple questions. Did any company in the Goodman group make any claims for payment under the scheme in respect of beef exported from Greenore? Were the inspectors of the Department of Agriculture aware of the source of the beef at that stage, and did they certify it?
I am not prepared to discuss the affairs of an individual company but I can say, as I have already done, that no claim has been paid in respect of this matter.
I asked the Minister if there was any claim made or paid.
Notice is given by banks from time to time of amounts that will arise for payment some days later. Notice is given to my Department but in regard to the events that have occurred my Department have not had to make a payment. As far as the Department of Agriculture and Food are concerned a question in regard to them should appropriately be addressed to the Minister for Agriculture and Food.
My question was if any claim was made by any company in the Goodman group for payment under the scheme.
The Deputy asked that question on two occasions.
Is the Minister saying that there has not been any payments?
Mr. Taylor rose
I should like to advise Deputy Taylor that we are in priority time and I cannot call the Deputy. I called him in ordinary time. I am calling Deputies Barrett and Rabbitte for final supplementaries.
Were any moneys paid by Irish banks under the export credit finance scheme in respect of beef that did not originate in this country? If the standard wording of the policy was used, relating to goods exported from Ireland and produced or manufactured in this country, is it not at that point that the Minister should repudiate liability in respect of a claim? Should he not repudiate the claim if the claim does not fit in according with the wording of the policy? Will the Minister agree that in this case cancelling the policy was as a result of fraud, as he saw it, and, therefore, it has serious consequences for the Irish beef industry in the future? Will the Minister agree that it is vitally important that before we leave the House today we should be left in no doubt whether false claims were made or not? Are there any claims pending? Were any moneys paid out?
The Chair is seeking to utilise the time available as fairly and as equitably as I can. Deputy, please.
This is a farce.
I am calling a halt to Priority Questions at 3.45 p.m. in accordance with Standing Orders.
I am asking a question.
I have given the Deputy every facility but he goes on asking question after question.
It is in the public interest that I ask questions.
Apart from the Priority Question with which you are now concerned, there are two other Priority Questions the Chair wants to deal with, if he can.
In reply to the first part of the Deputy's supplementary questions, banks in Ireland advanced the sum of £55.2 million on foot of the export credit finance scheme in respect of meat that was contained in two policies, which I subsequently voided. Because the amount of beef external to the Republic of Ireland, covered by those two policies, amounted to 38.4 per cent of all the beef insured, I think it is inevitable, that some of the advances that were made by the banks in respect of the finance guarantee scheme must have been made in respect of some beef, at least, that was external to the Republic of Ireland. In relation to the second question which the Deputy raised that I should repudiate these policies when a claim is made — I presume he implies by that that I should not void them any earlier — the advice I had both from the insurers who act as my agents, from the Attorney General's Office and the Attorney General himself——
It was a fraud.
——was that once I was satisfied about the position I should then void them and should not wait for a claim to be made, and that it protected the State's position by my voiding them at the earliest opportunity that was open to me, which is what I did.
Could the Minister——
I am calling Deputy Rabbitte.
Deputy S. Barrett rose.
Order, please. I am calling Deputy Rabbitte. Deputy Rabbitte's question must be very brief. I am moving on to deal with another question or two.
In his earlier answer the Minister defended his position now as compared to the position he took as a Deputy in this House on 10 May on the basis that the figures are broadly correct. Frightening as the figures are in their scale, I suggest it is the analysis of who is responsible for this state of affairs that is at issue. At that time the Minister said, as a Deputy in this House, that some people took actions that were deliberate and that they were as a result of Government and ministerial intervention. Is he standing over that decision today?
In reply to Deputy Barrett's last supplementary, he wants to know how much is now outstanding in respect of the sums that were advanced by banks here. The reply is £25.2 million is now outstanding under the credit guarantee system.
Could I ask——
The amount of potential liability still outstanding in respect of the insurance cover is approximately £50 million.
Would the Minister repeat that? I did not catch the last figure.
The amount of potential liability outstanding in respect of export credit insurance as opposed to the credit guarantees at the moment is approximately £50 million.
But the export credit guarantee——
Can we hear a reply to Deputy Rabbitte's question?
The two are bound up together because the credits are not given by the banks and the money is not advanced unless there is export credit insurance in place.
Which is now——
Deputy Rabbitte's supplementary question has still to be answered.
I have a history of all the ministerial decisions that were made in respect of export credit to Iraq over the past five years by a number of Governments. Because this is what is called an account number two country — that is, one where cover is not afforded except by ministerial decision — every change of view or increase or decrease or removal of cover was decided by Ministers for Industry and Commerce during that time and in various cases it was after consultation with the Government as a whole.
I have the Minister's text in front of me——
A question Deputy Rabbitte, please.
The reference is not to the normal functioning of the Minister.
A question Deputy Rabbitte, please.
I am asking the Minister whether he stands over his statement of 10 May.
You have already put that question. I must now call Deputy Bell.
In relation to the 38.4 per cent referred to did the documentation of certification clearly state that the beef concerned originated in either Northern Ireland or the United Kingdom?
All the insurance documentation clearly stated that all the beef originated in the Republic of Ireland. If veterinary or other documentation was used, that would be a matter for the Minister for Agriculture. It is not a matter for my Department or for the Insurance Corporation of Ireland.
May I ask the Minister——
That must be the end of questions for today.
May I raise the subject matter of Question No. 37 on the Adjournment?
I will communicate with the Deputy.
