Greencore Shareholding: Statements.

Minister for Finance (Mr. B. Ahern)

There has been much comment, both in the media and elsewhere, on the question of the State's residual shareholding of 30.4 per cent in Greencore. I would now like to report on the factual situation to the House.

I would first like to deal with the issues of the shareholding limitation of 15 per cent and the national sugar quota, both of which are safeguarded by the special shareholder.

The Irish sugar quota — and I want to emphasise that this is a national quota — is allocated by the Department of Agriculture, Food and Forestry and is not the property of Greencore. It cannot and will not be transferred elsewhere.

The Sugar Act, 1991, provided for the holding of a special "golden" share in Greencore by the Minister for Agriculture, Food and Forestry. The purpose of this share was to protect the sugar quota when the State's holding fell below 50 per cent.

The share confers certain exclusive rights on the Minister and the Act prohibits him from disposing of this share. It would require an Act of the Oireachtas for this share to be disposed of. There is absolutely no question of the Government bringing forward any such amending legislation. Let me emphasise this — the protection afforded by the golden share will remain fully in place irrespective of whatever decision is taken in relation to the State's residual shareholding in Geencore.

The rights of the special shareholder are set out in the articles of association of the company. The Greencore offer for sale document made specific reference to these rights and drew particular attention to the following:

Without the consent in writing of the holder of the special share (i.e. the Minister for Agriculture) there can be neither a change in the rights attached to the special share nor a change in the limitations on shareholdings.

In particular, the prior consent in writing of the special shareholder (the Minister for Agriculture) is required for (inter alia) any resolution to authorise the sale, transfer, or disposal of the majority of the issued share capital of Irish Sugar, any sugar quota held by Irish Sugar, or more than 20 per cent of Irish Sugar's fixed assets used in the production of processing of sugar

Let me deal now with the 15 per cent limitation on shareholdings in Greencore. This limitation is not provided for in the Sugar Act, 1991, but is, rather, enshrined in the company's articles of association. Article 11 (b) provides that "no person shall be entitled to acquire or to be Holder of Shares representing more than 15 per cent of all shares then in issue".

As indicated in the prospectus, any change in this limitation on shareholding first requires the prior written consent of the special shareholder. An extraordinary general meeting of the company, requiring 21 days' advance notice, would then have to be convened. Any resolution proposing amendment or abolition of this limitation would have to be adopted if required

Last week, at my post-budget press conference, I elaborated on the reference in my Budget Statement that receipts of £150 million in respect of asset disposals were included in the budgetary arithmetic. I said that it was the Government's intention to proceed with disposal of certain State assets, including its residual shareholding in Greencore. In preparing for an eventual disposal, my Department had sought advice from Davy Stock-brokers, the Department's advisers on the State shareholding in Greencore, on how best to approach the issue. On the basis of the market information then available, it seemed that share placement was the appropriate way to proceed. There were absolutely no contacts between the Department and its advisers and multinational companies on a possible share purchase and no such contacts were mooted. I was, however, aware of Greencore's stated strategy of growth through acquisitions and was naturally anxious to ensure that the State, when eventually disposing of its shareholding, would do so in a manner which would be supportive of the company's declared strategy.

Greencore had, I understand, contacts over recent months with a series of potential trade purchasers of the State's shareholding. Neither I nor my Department were privy to these contacts or even aware of them. On 16 February 1993 the company advised my Department that it had identified a US-based major food company which was interested in acquiring virtually all of the remaining shares. It described this company as the ideal partner for the growth strategy planned by Greencore. I met with a representative of the company on 18 February but made it clear that I was not in a position to address sale of the State's shareholding until after the budget.

The proposal was that I should sell 25 million shares to the company identified by Greencore and to sell the remaining shares at a later stage. Before the Government had an opportunity to consider the proposal, several Irish food companies expressed interest in acquiring the Government stake. As a result the takeover panel will need to monitor transactions in the shares of Greencore.

An Irish company with an international market in its shares has to be seen to adhere to the highest standards. The takeover code is a voluntary set of rules which all companies of good standing in Ireland and the UK adhere to.

An important principle of the panel is that any party acquiring a 30 per cent stake or more is bound to extend an offer to all shareholders on the same terms. In the event that someone makes such a purchase, or enters into discussions regarding such a purchase, an offer period is created. The implications of an offer period mean that the panel will monitor all transactions carried out by certain parties during the period. This would comprise all holders of more than 1 per cent of the share capital of Greencore and all connected parties, including all advisers to any party considering a purchase in excess of 30 per cent.

The other implication of an offer period relates to any information made available by the company to any party intending to acquire more than 30 per cent. The panel rules would insist that any such information would be made available to all other parties who have shown a similar interest. These provisions should not create problems for the process in hand.

As I indicated in a press release issued yesterday, the Government has decided to afford time to all interested parties to put foward proposals, which should reach my Department by Wednesday, 24 March.

The criteria on which decisions will be based will include price and compatibility and the long term strategic development of Greencore as a major Irish food company which could consolidate and expand employment in the Irish economy.

My concern now is to achieve the receipts from asset disposals which have been provided for in the Estimates for public spending in the current year and to obtain a fair price for the State. My equal concern is to enhance the capacity of the company to grow and develop, which can only be in the interest of its employees, farmer suppliers, shareholders and the economy.

While the Sugar Act, 1991, empowers the Minister for Finance, following consultation with the Minister for Agriculture, Food and Forestry, to dispose of shares held by him in Greencore, I will keep the House informed of developments.

Mr. Noonan

(Limerick East): I hope what we have just heard from the Minister is the definitive Government view and that it will not be contradicted by other members of the partnership on the 6 p.m. or 9 p.m. News this evening or on “Morning Ireland” tomorrow morning.

The Government again seems to be involved in internal division and recrimination. It is truly astounding that a Government, which took so long to draw up a programme and which came into office with fanfares of unity on all sides, should already be subject to criticism from members of its respective parties.

The Mullaghmore affair, the Digital closure, the budget, and practically every other significant announcement, have been greeted by internal opposition. While, previously controversies involved backbenchers such as Deputies Kemmy, McDaid and Davern, the proposed Greencore sale has lifted dissention to a new plane and involved the Tánaiste and the Minister for Finance.

I hope that over the next three weeks the parties in Government will take into account the overall good of Greencore, of its employees and its shareholders and of the farmers who supply it with beet and cereals, and that they do not get involved in an arid ideological argument which will benefit nobody.

All of us in this House heard the Minister for Finance announce on budget day that the Government would sell State assets to the value of £150 million. Every Member of this House knew he had Greencore and Irish Life in mind and perhaps some other assets. I cannot understand how anybody could be suprised this week, one week later, when the Minister proceeds to give effect to his announcement.

Fine Gael agrees in principle to the sale of the Government shareholding in Greencore. A passive shareholder such as the Government, who would not back a future capitalisation of the company, is of no use to Greencore in the fulfilment of its growth and expansion plans, regardless of whether those plans are drawn up by acquisition or some other means, and which would lead to the securing of the present jobs in Greencore and to the expansion of jobs as it extends its activities in the food processing industry.

The Government has been a passive shareholder, but the proposed American purchaser, on the other hand, would not only bring extra expertise to the company but would also be active and supportive in organising capital to enable the company to expand. If a suitable Irish bidder could be found to do the same it would be an even more satisfactory solution.

Serious issues do arise, however. When Comhlacht Siúicre Éireann was floated a commitment was given in this House and in the prospectus of sale of the shares that no individual or institution could hold more than 15 per cent of the total shareholdings. This commitment was subsequently enshrined in the articles of the company, and the assurance of the Dáil was repeated when the Department of Finance sold 15 per cent of its shares to the Investment Bank of Ireland last year. The solemn commitment given to this House has now been broken. The commitment to other shareholders has also been broken and a dominant shareholder holding in excess of 29 per cent of the total share capital is now being introduced.

The fact that the principal bidder is foreign is also a consideration. I believe that there are no ulterior motives in this bid and I have been assured that the American company involved has no predatory intent. Circumstances however can change and the principals to this deal may not be the decision-makers some years hence. New men and women would not be committed to informal commitments entered into now. This House requires a categoric assurance from the Minister for Agriculture, Food and Forestry and from the Minister for Finance that the golden share which he controls not only protects the sugar quota and maintains it in Ireland for the foreseeable future, but that also in the final analysis the Minister for Finance or the Minister for Agriculture, Food and Forestry can countermand any decision taken by the company in the future which is not in the national interest. The Minister has given some assurances today, but he has not given the one I am looking for.

It is not in the national interest if a major Irish food processing company passes into foreign ownership. Irish Distillers is now owned by the French drinks company Pernod Ricard, Carrolls is owned by Rothmans, and Jacobs is owned by the French food company BSN. I do not want Greencore to go down the same road.

I hope this matter can be brought to a successful conclusion. If the assurances I request are given we need have no fear for the future of the company. I do not know the position of the Irish companies reputed to be interested in Greencore but the issue of whether an investor is committed to be an active participant in the future expansion plans of the company, and is in for the long haul, is far more important than the nationality of the bidder. Greencore needs an active shareholder to replace the Government. I hope matters can be brought to a satisfactory conclusion as quickly as possible in the interests of the company, the shareholders, the workers and the farmers and that this issue does not get bogged down in a sterile, arid, unproductive ideological debate between the Government parties.

Mr. O'Malley

The proposed sale of the State's remaining 30 per cent stake in Greencore is a logical outcome, and in my view should be proceeded with provided some key national strategic criteria are fully met.

These obviously include the issue of the price to be secured for the Irish taxpayer; the protection of the strategic interests of Irish farmers and the workers in Greencore, and the vital role of this company in the Irish food industry sector. I welcome the belated decision of the Government to allow Irish companies, and indeed any other possible interested parties, to bid for this stake, and the criteria governing the proposed sale.

I also welcome their statement that a key determinant in deciding who to sell to would be the long term strategic development of Greencore as a major Irish food company, which could consolidate and expand employment in the Irish economy. But this is not to say that the proposed sale should exclude possible non-Irish buyers. To adopt such a xenophobic attitude, notwithstanding the raw memory of some multi-nationals here would make no sense in a European free market; it takes no account of the role that some overseas investors could play in the international expansion of Greencore; and it fails to take account of the reality that Greencore is a quoted public company.

It is vital from the point of view of the general taxpayer that the best price possible is secured. On this score I do not believe that the apparent price offer from the American bidder, ADM, is satisfactory. This will require careful consideration.

Let us look at the position of Greencore compared with other major Irish food companies or to quoted food companies elsewhere in the Community. Taking its trading price today, which I understand is 267.5p per share, this represents a P/E ratio of 8.6 when related to the earnings per share of 31p at year ended September 1992.

Now when we look at the P/E ratio of a number of other companies for last year we find that in many cases they are significantly in excess of the Greencore ratio, some examples which I think are comparable and Fyffes at 14.4; the Kerry Group at 12.9; and Avonmore at 9.2; a directly comparable company abroad is Tate & Lyle in Britain whose P/E ratio stands at 14. When I referred to Greencore's P/E ratio today being 8.6, that is after a very substantial increase in the price because the prices before the shares had to be suspended was 237p and the then P/E ratio was 7.

I believe concerns which have been expressed about the Irish sugar quota, which is of such enormous importance to the Irish farming and food industry sectors are reasonable and must certainly be addressed in the context of the proposed sale. I believe, as the Minister has said, that these fears are fully met by the so-called "golden share" provision in the Sugar Act, 1991, which ensures that the sugar quota cannot pass out of Irish State control notwithstanding the composition of the ownership of Greencore.

Moreover, under present EC regulations, the national sugar quota cannot be transferred outside the State. It is also important to bear in mind that any proposed sale of the Government's 30 per cent stake will, I presume, be subjected to the provisions of the mergers, takeovers and monopolies legislation and also the Competition Act, 1991, which I brought forward when Minister for Industry and Commerce.

These provisions are of considerable significance in the event of any possible monopolistic developments that could arise in the forthcoming sale. There is already a monopoly in sugar held by Greencore, but there could in certain circumstances, for example, on its purchase, be the possibility of a monopoly in flour milling, which clearly would be very undesirable.

What is important in relation to the present proposal is that there be the greatest level of transparency and accountability by both the Government and Greencore on the matter. There is a whole variety of legitimate interests and concerns, especially those of the 2,000 workers in Greencore, and the 5,000 Irish farmers who grow beet for the Irish sugar industry.

At a political level, it is difficult to understand some of the political comment emanating from the Labour Party ranks. Quite simply, they cannot have it both ways. However extraordinary it now appears, they signed on in last week's budget for a Government privatisation programme of £150 million this year. That is amazing, given that party's strident policy of opposition to privatisation in any shape or form down the years.

Indeed, I recall a chorus of statements from Labour parliamentary ranks in the wake of the recent general election that one of the main reasons why their party could not possibly do business with the Progressive Democrats, for instance, was because we support privatisation in certain circumstances.

How times and things and people change. That is not the only aspect of this policy u-turn by the Labour Party we might ponder. In recent years, when the Government of which my party was a part, did sell assets, the proceeds went entirely, as far as I know, to retire debt, and not on current spending. Indeed, considerable opposition was expressed at the time to even the possibility that the sale of any State assets prior to this year might be applied otherwise than in reduction of the national debt. However, the proceeds of the Greencore sale, if it is completed, and a further privatisation programme of about £90 million will have to be undertaken simply to bridge this year's borrowing gap for the Government on a current year basis. Apparently there is no application of these moneys to a reduction of the national debt, which is a great pity.

The Minister for Finance, when delivering his budget speech, in referring to a privatisation programme of £150 million was wrong not to specify then what companies or bodies would be involved. In replying he should take the opportunity to clarify the position in regard to the State's residual shareholding in Irish Life which is quite substantial and, as far as I recall, is a larger percentage than is held in Greencore. If there is doubt now or in the future about how the State is going to deal with its shareholding in companies that have been partly privatised it will create serious problems for the future for other companies that might be floated on the Stock Exchange. The credibility of the State's dealing with its minority shareholding has not been high. Unfortunately, there has been much confusion and doubt and this is creating difficulties for the future.

I am surprised at the account given by the Minister in his speech about how this shareholding came to be offered to this American company. The shareholding is the State's; it is registered in the names of the Ministers for Agriculture, Food and Forestry and Finance or in the name of one or other of them — it does not matter which. It is the State's property and nobody else's, but it appears from what the Minister said that without his knowledge, or the knowledge of his Department, the Greencore company made contact over recent months with a series of potential trade purchasers of the State's shareholding. It was not Greencore's business to do that. If the State wants to sell its shareholding — I quite agree with the principle of doing that — it is a matter for the State to do so and not for the management of the company concerned without the knowledge of the Minister or the Department involved. That is unsatisfactory and if it happened in this case it should not be allowed happen in any other case. That point should be made particularly to Irish Life.

Mr. Rabbitte

In one of his early movies called "Love and Death," Woody Allen faced execution at 7 p.m. with great fortitude and humour. "I was supposed to be executed at 6 p.m.", he confided, "but I had a good lawyer". It seems the Labour Party will be able to say at the end of the term of office of this Government, "Fianna Fáil would have sold off Greencore in April 1993 but thanks to us they did not sell it off until May 1993". The public are somehow supposed to be grateful that we will now have a public auction before we sell off the State's remaining stake. A Government floundering in the wake of the Digital debacle where a powerful multinational thumbed its nose at Ireland and Irish workers in favour of its own corporate strategic interests now proposes to sell off to a multinational the remaining State's shareholding in a major indigenous company. All the workers in Digital got was high flown Government rhetoric about implementing the Culliton report and growing our own indigenous sector. What the workers in Digital were told is in direct contradiction of what the Government now proposes to do.

Greencore is a home grown indigenous company in the key food sector and, instead of using its stake to influence its future growth and expansion, it is being handed over to a multinational with no loyalty to Ireland, Irish workers or Irish growers. Indeed, the multinational selected may have a conflict of interest in that some of its business is in non-sugar sweeteners. The profit performance of Greencore leaves no room for complacency. We can be assured that if it were to serve the corporate interest of a multinational, one of the remaining plants could well be shut down.

Deputy Noonan said he hoped the Minister's contribution was the definitive word on this development. I wonder if the House has been told all the facts and the truth about the extraordinary background to today's development. Why are the main movers in Greencore so aggrieved about yesterday's Government decision? Why did the Labour Party not know about the proposal to dispose of the remaining shares? Is it not the case that top Greencore personnel had the deal with Archer Daniels all stitched up even before this Government was formed? Is it not the case that the same Greencore personnel had the approval of the Minister for Finance, Deputy Ahern? Can we assume that Deputy Ahern had at least the implicit sanction of the then Cabinet? Why was The Labour Party not informed? Why was this House, after all the cant about open Government, not informed? Why does the Minister continue with the pretence that the recent budget was not constructed on the assumption of the disposal of the shares in both Greencore and Irish Life? Were the Labour Ministers awake when the Cabinet approved that budget or has the Labour Party dropped its opposition to selling off the family silver in favour of giving some of the silver to the family?

Surely the Minister does not expect this House to ignore the commitments given by the former Minister for Agriculture and Food, former Deputy Michael O'Kennedy, during the privatisation debate on 6 March 1991 when he assured the House:

Collusion will not be tolerated under the Articles of Association and no one element or group will be able to combine together to acquire more than 15 per cent. I think all the guarantees are there.

Former Deputy O'Kennedy was the man responsible at the time.

The Minister went into some detail explaining that we will have to convene a special general meeting of the company, that a special resolution will have to be put and so on. All of that can be done, and we know enough about the chairman of Greencore to expect he will do so if it suits his convictions at the time. I find it difficult to accept the assurance about the sugar quota in the context of the commitment we were given in this House by the Minister responsible at the time of the privatisation debate. For example the then Minister, Deputy O'Kennedy, said in the House on 6 March, 1991, column 40 of the Official Report:

I should also point out that the company will raise additional capital through rights issues and the Minister will have the option of increasing his holding to maintain that 45 per cent. That is a very important element of the legislation.

In other words, the former Minister told the House that it was a very important element of the legislation that the Minister could increase his shareholding of 45 per cent. I am not trying to tell the House that I ever took a great deal of notice of what Deputy O'Kennedy said in this House, so I do not particularly want to make remarks about him when he is not in it; but he was the Minister for Agriculture. That is what we were told at the time, and this is what we are doing now. At column 61 on the same day the then Minister said:

Deputy Rabbitte has again said we are selling off the Irish Sugar Company, but I want to totally and utterly reject that. It is false. It is not going to serve any purpose for Deputy Rabbitte to keep repeating that phrase.

Here we are now and Deputy O'Kennedy is gone and so, it would appear, is the State's interest in a major indigenous company. Yesterday evening and again this morning we had to endure the spectre of the Minister for Equality and Law Reform, Deputy Mervyn Taylor, pirouetting about the Labour Party's position on privatisation. "This is not privatisation" he said, "We are and we remain, utterly opposed to privatisation. This is just getting rid of a remaining minority interest." When the Minister, Deputy O'Kennedy, was here he told us that this was not privatisation, that we were selling off a minority stake and that the legislation provided for us to increase our holding at any time that suited us. The question arises — when is privatisation not privatisation?

I am not satisfied at all with the opening statement of the Minister for Finance. It is not the definitive statement that Deputy Noonan sought. I had marked the paragraph to which Deputy O'Malley referred. It is not good enough to describe it as extraordinary that a Minister would come in here and tell us that he now understands something that he apparently did not understand or know about on budget day. The Minister certainly did not tell us about it. The Minister now understands that over recent months a series of potential trade purchasers of the State's shareholding had been contacted by Greencore. The Minister says that neither he nor his Department were privy to these contacts or even aware of them. Is the Minister seriously telling us that after what we saw in the relatively recent history of the Irish Sugar Company and Greencore and their performance in the recent past that nobody in the Department was even aware of the fact that they were hawking the remaining State's shareholding around the world looking for potential purchasers, after all the brouhaha in this House about not having a civil servant nominee director on the board to report back to the Minister about the debacle that occurred in Greencore only a number of months ago? A few months later the Minister is telling us in this House that neither he nor anyone in his Department were aware that they were hawking these shares around the world looking for a potential buyer for our shareholding——

Mr. Noonan

(Limerick East): They reported to the Department of Agriculture. He did not rule that out.

Mr. Rabbitte

If that is the case the Minister should take the opportunity to put the record straight. Whatever one says about the Labour Party doing a somersault on privatisation, some of us at least expect that this Government would not engage in the same shenanigans vis-à-vis some semi-State companies as the previous Government did. There is a need for the Minister to give a far more credible response to this House then he has done so far on why we are now divesting ourselves of an important strategic holding in a major indigenous company.

Mr. M. Ahern

I would like to share my time with Deputy Michael Nolan. Coming from East Cork, which is the main beet growing region of Cork, and having Mallow Beet Factory in my constituency I know that any likely change in that industry raises great concern among the farmers, among the employees of the company and among many hauliers in the region. Over the years amalgamations, reorganisations and rearrangements have become synonymous with job losses and naturally fear of the same is to the forefront in the minds in those employed in Mallow and no doubt in Carlow. There are also fears with regard to the beet quota. I am glad that the Minister has made it clear that the beet quota is not a Greencore but a national one, that it is in the hands of the Government and that the Government has no intention of introducing amending legislation to enable it to dispose of this special golden share. The farmers will be glad to hear that the quota is held in the hands of the Ministers for Agriculture and Finance.

While I would prefer to see an Irish company or an Irish consortium as the purchaser, as the level of commitment to Ireland by an indigenous group would be greater in times of difficulty than that of a foreign industry, in the final analysis what we want from the purchaser of Greencore is a commitment to the growth and development of Greencore for the beneficial interest of farmers, employees, shareholders and the economy generally. The decision that will be taken by the Minister in three to four weeks' time should take these points as the basis of making that decision.

Mr. Nolan

The proposed sale of the remaining 30 per cent shareholding of the Government in Greencore disappoints me to an extent. Greencore are for the first time facing the prospect of being taken completely out of the control of some Government Department. While there are solid and sustainable reasons why it would be good for the Government to sell its 30 per cent shareholding at this time, I am concerned by the timescale set for the making of offers for such a sale. It goes without saying that in the present world economic climate it is a buyers market. I regret the urgency in disposing of this State asset. It makes commercial sense for Greencore to claim that it needs an entry into the world food market by joining forces with an established player in that sector. I caution the Government in deciding on that partnership. Like my colleague, Deputy Ahern, I would prefer to see an Irish company — for instance, one of the co-ops — being involved in the proposed purchase of the 30 per cent shareholding. In the light of recent events one would be far happier with an Irish company purchasing the remaining Government shareholding.

The timescale startles me. If by 28 March, which the Minister has set down as the time for the Department and the Minister to receive offers for the 30 per cent shareholding, the offers are not to the Government's liking, the time could be extended.

I am glad that the Minister has confirmed that the sugar quota will remain under the control of the Government and the Department of Agriculture, Food and Foresty. This is a national asset and should not be disposed of too lightly. I would warn the Minister to move cautiously in this regard. To move too quickly could be to the detriment of the workforce in Greencore and the beet producers.

Mr. Yates

I am concerned about the future of Ireland's 5,000 beet growers. Our sugar industry is worth some £123 million annually and produces 1.4 million tonnes of beet. My main feeling of outrage about this matter is in relation to the Minister's speech. Deputy Rabbitte referred to undertakings given by the former Minister for Agriculture, Deputy O'Kennedy. One matter which was watertight then was the 15 per cent single maximum shareholding by any individual or corporation. It is now clear from the Minister's speech that he intends to waive this limit and an EGM will be called. This undermines everything written into the prospectus, it undermines the basis on which people invested in the company, namely, that there would be no single, monopolistic interest within it. Once you get to 30 per cent it is not too far from 51 per cent. We are now seeing a ripping up of the Greencore rule book. The manner in which the rules are being broken is outrageous and unprincipled. We are told that there was a 15 per cent single shareholding maximum rule but it is going to be discarded.

This House should be wary about ministerial assertions and re-assurances concerning the Sugar Act because every day a litany of people are prepared to take their chances in the High Court in relation to legislation, as in the case of Mullaghmore, the X case and so on. I am aware of a legal opinion which states that once the Government has sold all its tradable shares, this golden share will not be worth the paper it is written on because it will have no effective operation. I would like to know what was the Attorney General's advice on this matter. It is one thing to have a golden share when one is a 45 per cent shareholder or largest single shareholder but when there is not one share left what is the meaning of this golden share. Surely somebody who holds a 30 per cent shareholding in a company would have a greater entitlement to make decisions in relation to the company's future development than someone who holds no shares.

The Sugar Act, as it is now shaping up, is open to legal challenge and reversal. Therefore, the assertions given in relation to the sugar quota must come under the microscope. Those of us who take a deep interest in agricultural matters know that there is a lobby within the Council's 12 agricultural Ministers which favours the trading of quotas between member states. Such trading does not relate only to the sugar quota, it relates to milk quotas, suckler cow premium quotas and ewe premium quotas. It is conceivable that in the years ahead there will be agreement that quotas will be transferable across member state boundaries. In such circumstances the area of national quotas takes on a new dimension. If its principal owner produces non-beet sugar products he or she may be greatly tempted to import sugar, which would be disastrous for this country. Such a move would jeopardise not only the jobs in Mallow and Cork but also the livelihoods of the 5,000 sugar beet growers. I have heard repeatedly that the Minister owns the sugar quota, that is true, but only in a technical sense. The Minister has assigned the quota to Greencore who operate and farm the quota and decide the allocation of the beet acreage. Greencore have control over and make all decisions in relation to the quota. The only thing is that it is not on the company's balance sheet.

The only credible, watertight legal assurance that can be given by the Minister is to jointly vest the quota, not in the Minister, as at present, but between the growers and Greencore. In other words, people who traditionally had acreages of beet quotas should have them in perpetuity in conjunction with Greencore. That, in my view, would be the only acceptable protection. There is no guarantee that once the ADM or any other group acquire a shareholding in the company they will not say a 30 per cent shareholding is of no use to us as did the Government who decided to dispose of it, those companies are in for the long haul and will make an offer to other shareholders who are cash-starved. As we have seen in other cases such as Jacobs, Carrolls and Irish Distillers we will see that they want total control. There are companies such as Fyffes, Dairygold and others interested parties in this matter.

This House should be very cautious about ministerial assurances because if this saga has taught us anything it is that previous assurances by the Ministers for Finance and Agriculture and Food are worthless today. There is no guarantee that in a few months, never mind a few years, the same assurances being given today will not be equally meaningless.

Minister for Agriculture, Food and Forestry (Mr. J. Walsh)

The House will be aware of the press statement issued by the Minister for Finance yesterday and his earlier speech in relation to the Government's residual shareholding in Greencore plc. The Minister indicated that it is the Government's intention to proceed with the disposal of its residual shareholding of 30.4 per cent in Greencore plc. A major international food group that is, ADM, a US based company, and a number of Irish food companies have expressed interest in acquiring those residual shares and the Government has decided to give all interested parties until Wednesday, 24 March to put forward proposals to the Department of Finance for the purchase of those shares.

When the Irish Sugar Company was restructured and floated on the Stock Exchange in April 1991 certain safeguards were put in place to ensure that the Irish sugar industry was protected — that is, the Irish sugar industry, the Irish quota and the jobs in the industry.

Under the Sugar Act, 1991, the Minister for Agriculture and Food acquired a special share in Greencore, the holding company of Siúicre Éireann cpt. The rights attached to this special share, which the Minister may not dispose of, are set down in the articles of association of Greencore plc. That Act cannot be changed unless it is amended in this House. This special share ensures that none of the following events can arise without the Minister's prior consent in writing: (a) any change in certain specified articles in the articles of association of Greencore; (b) the winding up of Greencore; (c) the sale of more than 49 per cent of Siúicre Éireann cpt. which is a subsidiary of Greencore; (d) the disposal of specified sugar assets including the Irish sugar quota which is held by Siúicre Éireann; (e) the creation of a new class of shares in Greencore and (f) the building up by one shareholder or a consortium of shareholders, other than the Minister for Finance, of more than a 15 per cent shareholding in Greencore after flotation.

In summary, the special share prevents the disposal of the controlling interest in Siúicre Éireann or the sugar assets including the Irish sugar quota, and prevents a single shareholder or a group of shareholders acting together from gaining control of Greencore plc.

Now let me deal with any concerns which arise in connection with the Irish sugar quota. Ireland is allocated a sugar quota of 200,200 tonnes under EC legislation. Member states are required to allocate a sugar quota to each sugar producing undertaking in their territory. As Ireland has only one such undertaking, that is, Siúicre Éireann cpt, the entire quota of 200,000 tonnes is allocated to that company.

Current EC legislation does not provide for the transfer of any quota, or part thereof, from one member state to another. The question of relocating Ireland's sugar quota in another member state does not therefore arise. There are two safeguards (1) the 1991 Sugar Act and (2) European Community legislation which prevents the Irish sugar quota from leaving the country or being taken over in any way by outside interests. I should mention also that at the time of the restructuring of Siúicre Éireann cpt in 1991, special arrangements were made to protect the workers engaged in the sugar industry. A provision was made in the Sugar Act, 1991, to ensure that every person who was an employee of Siúicre Éireann prior to flotation, enjoyed the same rights and was subject to the same obligations after flotation of the company. In that regard also Siúicre Éireann and the unions drew up an agreement and lodged it with the Labour Relations Commission and registered it with the Labour Court. This agreement related to employees' conditions, pay, continuity of employment, recognition of trade unions and continuation of existing procedures. This agreement gave reassurance to workers whose interests were already protected under the European Communities (Safeguarding of Employee's Rights on Transfer of Undertaking) Regulations 1980. I want to stress that I fully endorse the contents of this agreement which I have no doubt constitutes a major protection for the rights of the employees of Siúicre Éireann.

The sugar industry is of immense importance to the Irish economy. Some 1,300,000 tonnes of beet are grown each year by about 5,000 beet farmers. The value of the beet is worth nearly £60 million per annum. I want to assure this House that the disposal of any remaining Government shares in Greencore will not affect the operation of the Irish sugar industry, which, as I have already outlined, is adequately safeguarded.

Mr. Connaughton

How does the Minister know that?

Mr. J. Walsh

Our 200,000 tonnes of sugar is worth at least £1 billion and by any standards that is a considerable national asset. May I recall that one of the major justifications for restructuring Siúicre Éireann was to enable the development of a major food enterprise based on indigenous resources with a view to maximising added value, exports, and of course the creation of jobs, especially in the food area? Any proposals for the sale of the Government's residual shareholding in Greencore will be viewed in this context.

Mr. Browne

(Carlow-Kilkenny): I wish to share my time with Deputy Connaughton.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Mr. Browne

(Carlow-Kilkenny): The sugar industry is extremely important to this country and is extremely important to my own town of Carlow. Since it was set up in 1926 it has expanded from a production of 89,000 tonnes in 1945 to over 200,000 tonnes in 1990. It follows that we should ensure that whatever changes come about will not affect either the production of sugar beet, the position of the workers or the rights of farmers to continue supplying beet to the company.

When we discussed the Sugar Bill of 1990 we expressed our fears for the future viability of the company. We were assured that section 2 (2) of the Bill referred to the special share held by the Minister—the golden share is an important aspect of the Sugar Company Bill. It is vital to this country that the Government in its efforts to bring in some of the £150 million needed from the sale of State assets does not attempt to change that protection for the control of the company. The Minister has assured us on this and at the same time the 15 per cent limit on shareholding which was part of the commitment will now be changed at an extraordinary general meeting. The question is how much reliance can we put on assurances given here if there is a financial crisis for the Government?

Since the closing of Digital and the loss of jobs in Lapple in Carlow we have heard much about indigenous industry. Nothing could be more indigenous than the sugar company and the production of sugar from beet grown by the farmers of Ireland. After all, we are an agricultural country, not fully utilising our potential in many aspects, but the beet industry is a real example of successful production. For that reason I am not in favour of any foreign company getting a 30 per cent share in Greencore. Foreign companies are perfectly entitled to make profit; otherwise they would have no interest in being involved in another country. We have no control over boardrooms of foreign companies or of future changes that may take place but we must learn from the past. We have tried to close too many stable doors after horses have bolted. We have very successful businesses and co-ops in the country which have genuine concern for our welfare. I suggest to the Government, who will have to get £150 million, to tread warily in the way they sell our State silver.

If this American company can find it more profitable to produce sugar from means other than beet then they would be mad not to do so. For that reason we would be mad to give them the opportunity to change the position of a very successful company in Ireland that gives good employment and provides good income for the farmers of this country.

Mr. Connaughton

In the few minutes at my disposal I should like to say briefly that as far as I am concerned I believe the Government had decided before the budget to sell off this shareholding and that what we are now fighting out here in the Dáil is a charade. On the basis that it has become public I have no doubt whatever so far as the Government are concerned they decided in the budget that they would sell.

There are a few very important aspects of this matter which I should like to bring to the notice of the House. There must be an inbuilt protection for beet growers and the Greencore staff and for the general sugar industry in Ireland. I am glad the Minister for Agriculture, Food and Forestry is present. I would ask that consideration be given to the exact position of the sugar quota. We all know it is owned by the Government and by the Department and it is not the property of Greencore. If Greencore was taken over by a multinational on the world stage in the food sector area who manufactured, traded or were involved in products other than sugar, would it not be true to say that the users of the national beet quota would be like a man holding a horse's tail rather than the horse's head? They would have no control over it one way or the other and it would be useless.

Mr. Yates

They would probably get a pick.

Mr. Connaughton

All I am saying is that we have to be extremely careful. I believe that the assurances given by the Minister for Agriculture, Food and Forestry and the Minister for Finance will prove useless if the trade across the world takes a turn at a particular time. There is nothing the Irish Government can do after the shares are gone.

We have to be particularly sceptical about any takeover so far as the Tuam area is concerned. We lost the sugar company some time ago. We now have the engineering section of Greencore, which is very important to Tuam, and we also have the animal feedstuff division. I sincerely hope, irrespective of what the Government does, we will not have more people on the dole because of closures in that vital sector.

Mr. E. O'Keeffe

First of all I shall say I have no reservations about the sale of a 30 per cent share of Greencore to Arthur Daniels. We have to look at the progress of the Irish food industry and many joint ventures. Irish Distillers and Pernod, Kerry Co-op, which is very big in the United States, Murphy's Brewery in Cork, Beamish's Brewery, Avonmore Co-op and Waterford have all diversified with foreign investment. We have approximately 5,000 farmers who are growing approximately 1.38 million tonnes of sugar beet. I wish to express one reservation in this area: I do not want to see the maximum tonnage or acreage of beet to any one farmer increased in excess of the present tonnage. I understand that some of our beet farmers have quotas of the order of 5,000 tonnes or 6,000 tonnes. That is unrealistic in an age when we have to live with quotas and protect the family farm. I hope we will not see any further change because it is easier for a company to handle one individual grower than to handle 5,000 growers.

It is important that we have security on the home market for our sugar beet industry. For some time we have seen "Silver Spoon" sugar on the shelves of our supermarkets. That is a foreign sugar which is competing with our sugar beet industry. We will have security for Irish sugar beet growers if we have an involvement with ADM, a very large company. I believe they have the finance and the wherewithal to expand the sugar beet industry. We have been informed of their involvement in the malt industry which would give another outlet for our grain growers who experience great difficulty because of oversupply in the feed barley area. We have a very fine grain in Ireland which is ideal for malting, for distilling and brewing. So in that context there would be an additional advantage if a company such as ADM coming to this country.

I wish to express my concern for the jobs at Mallow and Carlow and indeed other areas but investment by a company with the type of expertise as the one in question would minimise any difficulties for Greencore in the years ahead and instead of having a contracting industry we would have an expanding one and greater diversification.

This investment will lead to competition, which will be in the interests of Irish farmers and Irish businesses generally. There is no competition in the importation of beet. This has led to many problems for farmers and compounders generally. The amalgamation a few years ago of IAWS and Halls did not help in ensuring competitive prices for feed stuffs. The involvement of Arkady Feed Limited, which is better known in the feed industry, with Greencore, which is developing a feeding compounding business, will lead to greater competition in this area. This will enable us to expand our livestock production, an indigenous resource. The spin-offs from this expansion will lead to the creation of more jobs.

ADM already has an investment in Cork, in Southern Mills and Paul & Vincent Limited in Kilmallock. The company employs approximately 700 people in the Cork region, and I understand it is an excellent employer. I cannot say whether ADM will be the owners of the 30 per cent share in Greencore, but if it will be I will wish it well. An article on ADM stated that in view of the fact that the Culliton report had recommended that American food companies should be allowed to buy stakes in Irish food companies, thereby providing access to US and European markets, ADM was thoroughly researched and the researchers liked what they saw. ADM has invested more than £1 million in the Irish economy and employs more than 700 people. It is one of the biggest food companies in the world, employing 13,000 people, has annual sales of £9 billion and a net value of £4 billion. Clearly this is the type of company that Government wants to maintain an active interest in the Irish economy. This company has a substantial amount to offer this country and its further involvement with Greencore is the way forward. I know many people would disagree with me. Earlier I referred to a number of companies which have been involved in highly successful partnerships and joint ventures.

It is necessary, and important, that there should be a substantial injection of capital in Greencore so that it can diversify. I hope the moneys which will accrue to the Exchequer from this will be invested in some of our ailing semi-State industries to ensure continuity of jobs and further investment in companies such as Aer Lingus.

Mr. Bradford

I listened with interest to the remarks of my constituency colleague, Deputy Ned O'Keeffe, and I am still slightly confused as to whether he is in favour of or against this proposal. One has to commend the Fianna Fáil Members for being present for the debate; their colleagues in the Labour Party seem to have disappeared. That is surprising because, if my memory serves me correctly, when we debated the Sugar Bill, 1991 the Labour Party put forward quite a strong ideological line and gave us a very severe lecture on the evils of privatisation. It would appear that a few spins in the Government mercs have eliminated any of the difficulties that party had with privatisation.

What we are speaking about here this evening is the completion of the privatisation of the Sugar Company. When the Sugar Bill, 1991 was debated in the House I had no difficulty with it on any ideological grounds. I do not think that the State had either the political will or, more importantly, the resources at that time to invest in the Sugar Company, and such investment was urgently needed. It is fair to say that since the partial privatisation of Greencore that company has prospered. I am reminded of an old saying, "if it ain't broke, don't mend it". I am slightly worried that changes are occurring at this time as I believe Greencore has performed well.

This sale would appear to be based on a lack of Government finances rather than on any strategic planning in the food industry. This is not a great basis on which to sell the Government's share in Greencore. The decision is based on financial reasons rather than on the introduction of a food strategy.

One of the remaining two Greencore factories is located in Mallow in my constituency. There is some concern in that town about what the new proposals will mean for the plant there. The two-factory strategy has worked well for Greencore and I hope this strategy will remain in place under any new arrangements. Hundreds of my constituents, workers and farmers, and thousands of people throughout the country depend on the Mallow plant for their livelihood. I am sure those people are wondering what will happen to this plant and what the Government's strategy is.

My colleague, Deputy Yates, asked some pertinent questions which, unfortunately, were not answered by either the Minister for Finance or the Minister for Agriculture, Food and Forestry. Those questions related to the status of the golden share and the ownership of our sugar quota. Deputy Yates asked — he did not receive an answer — about the legal status of our special share: what will be the legal worth of the special share when the time comes that the Government has not even £1 invested in Greencore? It is difficult to argue, without any holding in the company, that the special share will still hold good. This matter needs to be clarified urgently.

In relation to the ownership of the sugar quota, the Minister for Agriculture, Food and Forestry pointed out that under current EC legislation there is no provision for trading, either internationally or within the EC, quotas, be they sugar quotas, milk quotas and so on. The important term he used was, "under current legislation". I am sure the Minister is aware that the Commission has discussed, and, presumably, continues to discuss, the putting in place of provisions for the trading of quotas. We have cause to be concerned about our sugar quota if changes occur. Will it be possible to trade that quota? That question should be answered before this debate is concluded. Farmers, the workers in Greencore and many other people, depend on the retention of this quota for their livelihood.

Mr. Cullen

I find it extraordinary that I am the thirteenth Member, including two Ministers, to contribute to this debate and there has not been one speaker from the Labour Party. Indeed, there is not one Labour Party Deputy present in the Chamber for this debate. Yet we have to endure the spectacle of them on the plinth outside this House in front of television cameras enunciating to the world all the difficulties they have with the potential sale of the Government's share in Greencore. However, they have not even shown the courtesy to their partners in Government, with whom they are supposed to be sharing collective responsibility, of being present in the Chamber for this important debate. I suppose we can take it that from here on out it is the Fianna Fáil Party which will enunciate and deliver on any policy the Government introduces, not that there will be much of that. I very much regret the absence of the Labour Party Deputies on this occasion.

The Labour Party would want to cop itself on for the simple reason that it is no longer a party in Opposition which can fire out balls as it suits it for other people to grab. It has to remember that it is in Government and that it has a responsibility. If the Labour Party continues to undermine important decisions which can be reflected in the marketplace, how are we supposed to deal with the serious privatisation programme referred to by the Minister? Obviously, this will have a destabilising effect on Government policy and on the ability of the Government to achieve the best possible price for its assets. If a party in Government is going to continue to snipe from the wings at both ministerial and backbench level then the future of all State companies which require further development through private involvement will be seriously and continually undermined.

In his speech the Minister for Finance made some extraordinary admissions, to which other Deputies have referred. He said he was unaware that the management of Greencore was in effect touting the shares of the State around the world seeking a potential purchaser. These shares do not belong to Greencore but to the Government and they are vested in the Minister for Finance. He claims it was not until 16 February that he was advised of this in his Department. The budget was announced on 24 February. Am I to take it that within a week of discovering that there was an interested party in regard to the Government stake in Greencore, the budget strategy was then developed and that this was a major part of the £150 million which was to be raised by the disposal of State assets? Alternatively, am I to understand that it was planned, before the Minister's knowledge of the Greencore matter, to dispose of another £150 million of State assets? Strategy seems to be made up as the Minister goes along and if there is a shortfall something must be done quickly to cover it up. That is not responsible behaviour on the part of a person who manages the State's involvement in State companies. It is extraordinary and unjustifiable.

I refer to the position of the 5,000 beet growers. If a major multinational becomes involved in Greencore, potentially some if not all of the raw material for processing by Greencore could be imported and the position of the beet growers could be seriously undermined. The growers have had difficulties with Greencore in the past regarding the price offered for beet and they will be deeply concerned about the future. There are no guarantees of security for the beet growers. We must remember that 5,000 families are involved.

I have no objection in principle to what the State is doing but the timing is bad. The prices being obtained by companies in the market are bad. Obviously this move has been handled very badly. The greatest benefit for the taxpayer, who owns these shares, could be obtained when there is a turnaround in the market. There are serious questions as to the best partner for Greencore. I do not believe we have the full information. One multinational company based in America has been contacted, but that is not a broad enough approach. Indigenous companies are also interested and we must look at what they could offer. I regret that my time is so short because I have much more to say.

Mr. Lawlor

I hope that a combination of indigenous food processing companies, probably some of the very strong organisations in the dairy sector, could see their way to putting forward an attractive proposal for a stake in this strategic processing company. Vested in the company is the quota from the European Community. This is not vested in the 5,000 growers, as in the dairy sector. Whatever transaction is thought by the Minister to be most beneficial, I hope the discretion as to who grows beet will be vested in the company and that there will be contractual arrangements with 5,000 farmers. I am concerned that if a multinational organisation buys these shares there may be a proposal to merge some divisions of Greencore. Rationalisation on a global basis could mean strategic closures in Ireland. That would not be desirable. We have been hoping to see our indigenous food processing organisations become big enough to be international. That might be the eventual outcome. The Minister has had one approach from a US multinational but he is taking time to ensure that any other interested company will have an opportunity. As far as the political establishment is concerned, the growers and staff must be our priority.

I am aware of the difficulties beet growers had in the past with the then Irish Sugar Company. There was a series of contentious issues in regard to tare, weights and renewing of contracts. We have to be aware of the conditions which have prevailed in the supply of sugar to the Irish market. International companies have not managed to gain a foothold here and this has been to the advantage of beet growers and the staff working in the company. There could be rationalisation within the Single Market.

Should the company decide they want only 4,000 growers in a given financial year and that they will import supplies from France or elsewhere, there would be a serious effect on the beet growers and on the staff in the Irish divisions. If companies in the food sector do not grow in the home market they will not become big enough to compete internationally under brand names. I hope that some of the former co-operatives, now public companies, will emerge as food conglomerates capable of trading internationally and commanding supermarket shelf space throughout continental Europe thus maximising the benefits to growers and staff.

Mr. Lowry

The Government decision to offer for auction its shareholding in Greencore is a matter of great public concern. There have been obvious signs over the past two days that this decision was not taken with the approval of a full Cabinet but by a small group within the Cabinet. This is probably understandable in view of the fact that the sale of assets announced in the budget had the full support of all Labour and Fianna Fáil Deputies in the course of the budget debate. It was included in the Minister's speech at the point where he referred to raising £150 million from the sale of State assets in Irish Life and Greencore.

The legal implications of this move, as detailed by Deputy Yates, were obviously not thought through and could have very serious ramifications for the future of Greencore vis-á-vis the food industry generally and beet growers in particular. The second reason for concern is the deliberate clouding of the issue and the moves made to initiate the deals by the Minister for Finance. The Minister says on the one hand that his Department was approached by Archer Daniels with a view to possible purchase of the Government's shareholding by that company. A spokesman for Archer Daniels on the other hand says that the first moves were made by and on behalf of the Government. We are entitled to know the correct version of events. In either case it does appear that an attempt was made to railroad the deal through in favour of Archer Daniels without the full knowledge or consent of all the interested parties.

However, my main concern in this issue is to put forward the case for the people who are most immediately affected by the decision which will be taken. These are the workers and the farmers. Let there be no mistake about the bottom line in this situation. It is the protection of the jobs of Irish workers and Irish beet growers. My constituency of Tipperary has had a long tradition of association with the Irish sugar industry since its foundation. Generations of Thurles and Tipperary people gave their working lives to the development of the beet factory to the point where it was the mainspring of industrial and agricultural life in the county. This was strengthened by the development of its sister company, Erin Foods, in Thurles. Now, as everyone knows, the sugar factory is no longer there — a fact attributable to inept Government handling as much as to any market forces. A whole series of poor decisions at Cabinet and board level eventually led to the closing of the factory, the loss of hundreds of jobs and a threat to the livelihood and the incomes of hundreds of Tipperary farmers.

We cannot allow this to happen again. We must control the destiny of this company and we must protect the jobs of the workers at Erin Foods. Guarantees must be given in unequivocal black and white that the future of this valuable food company will be protected in any share transfer that may take place. The workers there have shown tremendous loyalty to the company through the lean years. They cannot now be left wondering about their future because of the whim of a Government anxious for short term shoring up of the Exchequer. The long term view has to be taken and all the implications of the decision must be considered before any share transfer takes place.

The Minister for Finance has said that all of the bids will be "assessed on the basis of their compatibility with the long term strategic development of Greencore as a major Irish food company which could consolidate and expand employment in the Irish economy". Those are noble sentiments indeed from the Minister. He probably will not need any reminding from me, but I will remind him in any case, that his party in Government was involved in the loss of over 2,000 jobs in the sugar company in the late seventies and eighties and in the winding down of a vibrant food processing industry, of which Erin Foods in Thurles is the sole survivor. His noble sentiments will have a very hollow ring indeed in the ears of anyone with any connection or interest in the sugar company in Tipperary.

It is vital that we are given an assurance that the long term viability of Erin Foods and the future of the sugar beet industry are not sacrificed on the altar of short term gain by a Government bereft of any real strategic plan for the development of our food industry.

Dr. Upton

It is hard to see how Fine Gael can have it every way in regard to Greencore. They voted for privatisation. it is as simple, as raw and as clear as that; and when one votes for privatisation one simply takes away the State's control. There is little point in crying crocodile tears now. They have made their position clear. They have walked through the lobbies and voted for privatisation and there is no getting away from that. I gather that Deputy Cullen was concerned that the Labour Party had not made their views known on this matter. I do not think he should be too concerned. If he hangs around he will have little doubt as to where we stand.

Mr. Cullen

I am glad we got the Deputy into the House.

Mr. Yates

The Labour Party are not only selling the family silver but they are keeping the silver in the family.

An Ceann Comhairle

The time limit of five minutes on this debate is too short for interruptions. Let there be no interruptions.

Dr. Upton

The events of the past few days in relation to Greencore can only be viewed with alarm. It is unacceptable that the Minister for Finance appears not to have been adequately informed of the attempts to sell this company behind closed doors, despite the fact that the Minister for Finance owns in excess of 30 per cent of the company and is the major shareholder in the company. It is unacceptable that the information on what is happening is made known by way of a strategic leak the source of which we do not know. It seems that the strategy behind that is not designed to advance the interests of the workers, the producers of sugar beet or the Irish food industry generally. This way of doing business is unacceptable.

The plans to sell the company outside the country are especially alarming. It must be particularly worrying for those people who work in Greencore. It is also worrying for the beet producers. What is happening needs to be seen in the context of the strategic objectives for the Irish food industry and indeed for Irish industry generally. We are weary of telling one another the importance of building up an indigenous industrial base in this country. What could be more indigenous than the Irish food industry? Greencore is a central part of the Irish food industry and it is imperative that the Irish food industry should now try to consolidate. It is imperative that the Irish food industry should now build up two or three major Irish food companies which will have the capacity to do adequate levels of research and development, adequately market and develop branded Irish food products. The unfortunate reality is that we do not have an Irish food product as far as the European markets are concerned. Let anyone who has any doubts about that walk into the supermarkets of Europe, into the hotels and restaurants of Europe and look for any of the food products that we take for granted here. We need to be able to develop that type of product and put it on European markets.

If that is to happen it is essential that the food industry consolidate and I would imagine that Greencore has a key role to play in that consolidation. One way or the other, given the acceptance which has been granted to the Culliton report, it is very foolish, indeed it is almost perverse, that this proposal should now be put in front of us while we are waiting for the report of the committee of experts on the food industry which is to be produced as an adjunct to the Culliton report and which was to be produced within six months of the publication of the Culliton report.

How could anybody who wants to be reasonable and try to progress and advance the Irish food industry go ahead and make the types of decisions which are now being considered without seeing what that report has to say? I have noticed that some people have seen fit to quote the Culliton report in support of what is happening. That is quite incorrect. Certainly the relevant part of the Culliton report in relation to the involvement of multinational companies in joint ventures with the Irish food industry talks in terms of those companies being prepared to establish significant headquarter functions in Ireland and there has been no mention of that in the context of this present proposal.

I am pleased to hear that no final decisions have been taken in relation to proposals to sell the shares at this stage. We in the Labour Party opposed the privatisation of the sugar company. The votes are a matter of record in this House. We opposed it in the Seanad as well and got very little support in so doing.

The Labour Party is very concerned at the implications of what is proposed for the development of the food industry. No hasty decisions should be made on this matter. We should think long and hard about the strategic implications of what is now being proposed and how those factors may influence the long term development of a viable food industry.

Finally, the views, the principles and the policies of the Labour Party cannot be taken for granted on this issue, which is a major one. Discussions and consultations with the workers and the various other interests must be taken into account before this is resolved.

Mr. Yates

We thought the Progressive Democrats were bad.

Mr. Cullen

They are threatening their Ministers.

Mr. Hogan

I am disappointed with the contribution made by my friend, Deputy Upton. He is seeking to have things almost every way. The Labour Party are enjoying the "mercs and perks" of office but are trying to disown collective responsibility. The votes that matter now will be the votes that decide what will happen the percentage of Greencore that is being sold off whether the Labour Party likes it or not.

I want to know what the programme managers and advisers are telling the club of 22 about these matters, if the club did not know about what was happening. I am surprised that some of the armchair generals in the Labour Party who tell everybody outside the House what they should and should not be doing could not influence their own Ministers in the arithmetic that formed part of the recent budget.

Mr. Kavanagh

Does the Deputy have anything to say about Greencore? Perhaps that is embarrassing.

Mr. Hogan

The decision to be taken by the Labour-Fianna Fáil Coalition Government is inevitable because, whether or not the club of 22 recognise the fact, their Cabinet colleagues have sold them out — they have privatised them. It is regrettable to sell off some of our State assets to fund current expenditure programmes. The very last decision that any private householder would make would be to sell the family silver to buy food for the table. One would expect it to be Doomsday when one had to sell the family silver to pay a bank debt. That is not the position in this country but, regrettably, in the budgetary arithmetic presented in the 1993 budget the Fianna Fáil-Labour coalition——

Mr. Ferris

The Deputy will have to do better than this.

Mr. Hogan

Deputy Ferris will get his own opportunity to speak, if he is allowed into the debate. He might not be allowed to speak in the debate because the Labour Party takes a very disciplined, strait-jacket approach to who is allowed to speak.

An Ceann Comhairle

Deputy Hogan has five minutes to speak, without interruption.

Mr. Hogan

There is no doubt that there are people in high positions in Greencore who are seeking to frighten off local industry and possible local equity partners in the shareholding. I have no doubt that the chairman of Greencore has something to do with this matter. He occupies a very privileged position as chairman of another State company, Aer Lingus, and he has to make a contribution to the enhancement of his own position. He wants to ensure that he retains his chairmanship in the future. As chairman of Greencore what better could he do than offer to the Government the opportunity for extra resources at a time when resources are very scarce? Is this a matter of a £65 million State sell-off in order to protect his own position? Not only that, the proposal was to make the sell-off secretly to a multinational company without telling any of the local food interests — not to mention the backbench committee of one of the Government partners — that anything was happening. It is rubbish to suggest that any multinational company that would seek to purchase equity in one of our State companies would not go further than 30 per cent or to suggest that a multinational company with only a 30 per cent control of a company would seek to put capital into that company.

At the end of the day it seems that Greencore is facing a position very similar to that in which other companies mentioned by my colleague, Deputy Noonan, earlier in the debate found themselves, and in this regard I think of Carrolls, Jacobs and Irish Distillers. Greencore could fast become a subsidiary of a multinational company with its headquarters in Chicago. We all know what happened recently to the Digital operation in the west which had its headquarters located outside this jurisdiction. Irish food companies should have an opportunity to further develop Greencore into one of this country's thriving food industries so that it might be able to take on some of the major food players in the European food market. I would like Greencore and whatever equity partners it might have within this jurisdiction to make a contribution to the economy. That would be preferable to having the decisions made for us elsewhere. I am surprised that the Labour Party is not in a position to make sure that that will happen. The decisions of any foreign investor in Greencore, whether or not that investor has a 30 per cent holding, will amount to nothing more than a con job. I certainly could not support foreign investment in Greencore on this occasion.

Mr. Byrne

I am sure that there are not too many Members in the Chamber, at the moment at any rate, who have been beet growers or who have represented beet growers. I have the happy distinction of having done both and I therefore have a particular interest in this matter. I am concerned with the proposed sale of Greencore. In the first instance the Irish Sugar Company and Greencore have played an enormous role in rural Ireland particularly in my own constituency. At present there are 5,000 growers in the country who produce about 220,000 tonnes of sugar which yields about £1 billion per year into the pockets of many people. In fact, Mr. Liam Cosgrave, a former Taoiseach, said that 25,000 people were involved in the sugar industry. I should like to confine my remarks basically to growers because I think all else has been spoken about in the debate.

About 1,200 growers produce approximately one-third of the beet crop in Wexford. If Greencore were sold to the American company Archer Daniels I should be very much afraid that some of the quota painstakingly built up by this country over the years might also be sold off and that some of Ireland's sugar quota might be produced elsewhere. If that were to happen Wexford would be most vulnerable, and that is what I am concerned about. I am partly reassured by the Minister in his earlier statement that the golden share would be protected, but I am very anxious this evening to be assured that any sugar included in the quota would be produced only in this country even if Greencore was partially sold off. I seek that assurance to protect the many people who are employed in the industry, whether they be growers, hauliers, workers in fertiliser and chemical factories, or agricultural contractors. No matter in what capacity people are associated with the industry, the sale of Greencore would put them under threat unless there is an assurance this evening that the sugar will be produced in this country from now on irrespective of who buys part of the company.

Mr. Kavanagh

I first wish to dispel any fears there might be on the Opposition benches in relation to the stance of the Labour Party on privatisation. In the Labour Party manifesto for the recent general election it was stated very clearly that as a general principle the Labour Party is opposed to privatisation of public utilities and State companies in the trading sector. It was also stated that the policy of the Labour Party was to enable State companies to grow and not sell them off to native or foreign individuals, institutional investors or speculators. That remains the policy of the Labour Party and it will continue to be the party's policy whether in Government or out of Government.

Two years ago almost to the day the House decided to privatise Greencore, or the Irish Sugar Company as it was then known. That was done by a combination of the Fianna Fáil, Progressive Democrat and Fine Gael parties and was opposed only by the former Workers' Party, the Labour Party and one or two Independent Members. On that occasion I was spokesman on Agriculture and Food for the Labour Party and I warned very clearly what could happen if the Irish Government did not keep overall control of the Sugar Company. When speaking to an amendment I had tabled at the time I said:

Leaving all questions of ideology aside, the Sugar Company, one of the Irish food companies which at present cannot be bought out by a multinational will be put in jeopardy if this section is passed.

I pointed out that even though the co-operatives might feel safe nothing could stop their members from voting for a takeover by an international food combine in the future. I am sorry that that day has come rather more quickly than I thought it would. My warning fell on deaf ears among our fellow Opposition Deputies of the time, who were in a great rush to sell off the Sugar Company. On that occasion the former Minister for Agriculture and Food, now Senator O'Kennedy, gave the House certain assurances. When speaking on the Second Stage debate of the legislation he said that the special share was designed principally to ensure that none of a number of events could arise without the prior consent in writing of the holder of the special shareholding. One of those concerns was that the disposal of the specified sugar assets, including the Irish sugar quota held by the Sugar Company, could not be sold. He also claimed on that occasion that the building up by one shareholder — or a consortium of shareholders other than the Minister for Finance — of more than a 15 per cent shareholding in the company meant that the flotation could not take place. We know from what the Minister told us that this was not in the Bill but in the articles of association of the then Greenvale company which was later changed to Greencore.

Voices of concern have been raised on all sides of the House in relation to what is happening to this company. I am sorry that, two years ago, such concern was expressed only on these benches. It is true that the European Court of Justice in the case of companies — British Telecom in particular, Jaguar and the Freight Trading Company of Great Britain — which had golden shares, sanctioned their sale. That is the history of the golden share. It is open to any company — and indeed encouraged under the Single Market — to be involved in takeovers in the Community and if there is a conflict the issue is taken to the European Court of Justice. I am afraid that if this American company got control of even some of the shares in this company it would be entitled to use that facility in Europe to claim the whole shares of the company if it got the support of other investors. Undoubtedly, a very attractive share prices would be offered to other shareholders who might be induced to sell their shares through this multinational.

Our concerns are real, I know that the Minister has listened to them and taken them into account. I know that the Labour Party in Government are voicing those concerns and when the Minister replies we will see that he has taken them on board. It is just as well that the Labour Party were in Government when this proposal was made because it is obvious that any other party in Opposition would not have the same concerns. They voted for the privatisation of this company——

Mr. Yates

It is not going ahead?

Mr. Kavanagh

The Opposition blindly trooped through the lobby and voted for the privatisation of this company two years ago and we must now ensure that the concerns of the Labour Party will be taken on board in Government.

Mr. Kemmy

I am flattered, indeed almost overwhelmed, by the concern shown to the Labour Party, and its backbenchers, by members of the Progressive Democrats and Fine Gael parties. I have also been entertained by the play-acting and the matinée idol performances in this House. However, it is not a time for play-acting or tomfoolery, it is a most serious business. I will be replying in a straightforward manner and I will not go over the top by using extravagant language because this matter is too serious for that.

We can learn from the recent past in relation to Greencore because powerful, influential people have enriched themselves at the expense of the public purse by using privileged information during the privatisation of the company.

Mr. Yates

The golden circle.

Mr. Kemmy

People made plenty of money at the expense of the public and I did not hear too much from the other side of the House when it was going on. The food industry is too important to be left to the whim of any individual, group or company and that is why the Labour Party have taken this issue very seriously. We favour the orderly, planned development of the food industry but that did not happen in the past. The industry is too important to be dealt with in a haphazard piecemeal way, which is what happened. The industry badly needs to be restructured and put on a new footing. It is highly competitive and it needs a practical, intelligent response to the problems affecting it. The food industry, and the protection of jobs, are paramount on our agenda. Companies need to be competitive and efficient, not only in the home market, but in Europe and the American market; that is the challenge facing us. At present only the dairy co-operatives, which are small, represent any potential or capability for development.

The objectives I have outlined for the food industry, development and planning, are the only feasible measures as far as we are concerned. They are not easy to achieve in practice but they can be outlined in theory. We should learn from the mistakes of the beef industry. I do not have time to go into that matter today and, in any case, it is far too painful and convoluted to go into too deeply. The Government must not make hasty decisions in regard to Greencore, it must carry out a very careful and determined policy and examine the question of costs.

The Minister referred to his pre-budget press conference and said that the sale of Greencore had been mentioned. That was the first the Labour Party knew about it. There was also a leak — perhaps an inspired one — to the press last weekend. I do not blame the media, I live in the real world and am well able to take care of myself without help from anyone. I speak on behalf of the Labour Party in regard to this issue; our position is simple and clearcut as far as Greencore is concerned. We want to do what is right for the people. Ideology must serve people, not the other way round, that is the principal, basic plank of our policy and we do not have any hang-ups about the matter, good, bad or indifferent. Our approach is practical but we must size up all the options, we must be consulted and convinced and our party will not rush into hasty decisions or be pushed into a quick decision on this matter. The common good of the people is our own criterion in this matter and, in the final analysis, that will be the deciding principle of our party in this regard. The public interest is paramount and that will influence our decision in this matter.

Mr. Yates

Hang in there.

Minister for Finance (Mr. B. Ahern)

I hope I will be allowed a few minutes over my allocated time to try to answer the many questions. I thank Deputies from all parties who spoke on this matter.

The Sugar Act, 1991, provides for the holding of the special golden share in Greencore by the Minister for Agriculture, Food and Forestry. I want to emphasise that because Deputy Noonan asked a question in regard to it. The main purpose of the share was to protect the sugar quota when the State's holding fell below 50 per cent. On Second Stage of the debate on the Sugar Bill, 1991, the Minister for Agriculture and Food stated that the special share was designed to ensure that a number of events could not take place without the prior consent writing of the special shareholder, including the winding up of the company, the disposal of specified sugar assets, including the Irish Sugar quota and the building up by one shareholder — or a consortium of shareholders — other than the Minister for Finance and that a sale of the remaining State holding in the ordinary shares of Greencore could not make the slightest difference to the special share or the rights attached to it. That is an important point which I think most Members now understand. In difficult trading circumstances on the Stock Market a trade partner is always useful and such partners must be acceptable to the board and the management of the company whose shares are to be sold. In the present instance it was at least useful to know that the likely proposal was acceptable to Greencore.

At the time of the flotation it was made clear to all investors that the Minister for Finance was most unlikely to exercise his rights in taking up options in any future rights issue which the company might bring forward so that in the expansion and development of the company the State would not take up the options.

Deputy Rabbitte asked me to clarify my statement. I said that neither the Department of Agriculture, Food and Forestry nor the Department of Finance are privy to the workings of the board of Greencore. I should also point out that, under the rules of the Stock Exchange, I would, as a shareholder, be excluded from any information which would not be given to all the shareholders, which is normal.

What happened in this case is that last Thursday week Greencore approached a party that it knew would be interested in buying the shares; there was no question of values or money. The only people ADM would talk to in that regard were the advisers to the Department of Finance, Davy Stockbrokers. Greencore was not running around the world trying to sell its shares. It may have been talking to various companies which had an interest in the company.

Mr. Rabbitte

A rose by any other name. Members of the board were running around selling our shares. They had no mandate and should be sacked. We had enough of a mess in regard to Greencore on that last occasion.

Mr. B. Ahern

I reiterate that while the board was going around the world doing what I said it was doing — talking to interested companies — I do not have any knowledge of the matter to which the Deputy referred. The same applies to the Minister for Agriculture, Food and Forestry.

Mr. Rabbitte

That is all the more reason some action should be taken.

Mr. B. Ahern

I concur with Deputy O'Malley in that any trade purchase would be subject to approval under the mergers and monopolies legislation and the competition Act and that this provides a protection against the development of a monopoly. Not alone does the national legislation protect the quota, but the EC quota regime ensures that national quotas cannot be transferred across national boundaries.

Deputy Yates asked what would happen to quotas. Under EC legislation, the allocation of individual sugar quotas is left to member states. Our national quota of 200,000 tonnes of white sugar is administered by the Irish intervention agency, which is the Department of Agriculture, Food and Forestry. As Ireland has only one sugar producing undertaking, Siúicre Éireann, the entire quota is allocated to that company. Current EC legislation does not provide for the transfer of any quota or part thereof from one member state to another.

Mr. Yates

It may do so in the future.

Mr. B. Ahern

The question of re-allocating Ireland's sugar quota to another member state does not therefore arise. Under section 2 of the Sugar Act, 1991, the Minister for Agriculture, Food and Forestry holds the special share in Greencore. Greencore is the holding company of Siúicre Éireann and the special share, which may not be disposed of ensures that Siúicre Éireann may not dispose of sugar assets, including the Irish sugar quota, without the prior written consent of the Minister and I have pointed out already the Dáil's role in that regard. Greencore has gone through a long period of rationalisation and as far as I am aware no further reduction in numbers is envisaged. I am sure that if it received finance for further development it would help increase profitability.

The Government made it clear yesterday that it will examine carefully the position between now and 24 March. Greencore could have sold the entire shares on the market before the Government had even considered the matter. As some of my Labour colleagues stated, an outside investor put forward a proposition and subsequently a number of people from within the country had a serious interest in buying the shares; others were willing to consider it and said they would need about two weeks to decide on the matter. I will prepare the proposals for 24 March and the Government will then consider them.

I would not like people to imply from this debate that ADM is a foreign company with no interest in this country. To my knowledge ADM is a fine company. It is a major processor of agricultural commodities throughout the world, employing 13,000 people, with sales of more than £9 billion and is the largest producer of oil seed by products in the United States. It is also the largest manufacturer of corn produce in the United States.

Mr. Yates

Some of the Minister's colleagues are not so keen on it.

Mr. B. Ahern

It is the largest producer of wheat and flour in the United States and is also involved to a large extent in bakery products, mixes and formula feeds for livestock and poultry. We spent some time last week talking about the importance of employment. ADM has a significant commitment to the Irish economy. It has $100 million invested in the Irish economy and through its subsidiaries, Arcady Feeds, Southern Milling, Paul and Vincent and ADM, Ringaskiddy, employs more than 700 people in this country. I had only one brief meeting with the company but I know it did nothing wrong in regard to this matter. It is one of the biggest employers in the country. It was approached by Greencore and asked to meet the Minister for Finance. It was told who the stockbrokers were and it forwarded its statement of interest. In my view it is a fine company, fine employers in the Irish economy, and whether we do business with it in regard to Greencore ultimately will be a matter for the Government. There should be no implication, even in a hidden way, by Members of this House or elsewhere that ADM is anything but a fine company.

Dáil Éireann díospóireacht - Wednesday, 3 Mar 1993

Greencore Shareholding: Statements.

Mr. Byrne

Dáil Éireann díospóireacht -
Wednesday, 3 Mar 1993