Vol. 441 No. 7
6 Mr. Allen asked the Minister for Finance if he will make a statement on the winding up of Fóir Teoranta; if all moneys due to Fóir Teoranta from companies have been repaid; and the up-to-date position of the shares that had been taken up by Fóir Teoranta in companies.
Under the Fóir Teoranta (Dissolution) Act, 1990 Fóir Teoranta was wound up on 2 April 1991. Its assets and certain of its liabilities were transferred to ICC Bank plc, then the Industrial Credit Corporation plc.
The balance sheet thus transferred to ICC Bank plc included loans amounting to £11.103 million and investments amounting to £1,086 million, both figures net of provisions.
In the period from 2 April 1991 to 28 February 1994, the latest date for which figures are available, ICC Bank has collected £7.707 million by way of realisation of loans and investments, interest payments, divident receipts, and recovery of bad debts.
At 28 February 1994, total loans and investments on the Fóir Teoranta balance sheet amounted to £5.317 million and £0.424 million respectively. These figures are net of provisions and are subject to audit.
With the winding up of Fóir Teoranta have any loans been turned into grants on the basis that this money was given as a blood transfusion to keep a firm alive? What is the bad debt provision? We know that any bank, particularly a lender of last resort like Fóir Teoranta, must make a realistic reassessment of its bad debt provision. How much of the outstanding £5 million is provided for in bad debts?
Two points arise there. When Fóir Teoranta was wound up in April 1991 its assets and some of its liabilities were transfered to ICC. At that stage the State, through the Minister for Finance, took over the liabilities by way of loan, when £75 million was written off the balance sheet. Since then ICC has managed the portfolio very well and receive a small fee. I do not believe they have written off anything since. For example, in their unaudited figures at 28 February last the gross provision was £17.395 million; they had provision for £11.654 million, so that the net figure now is £5.741 million. Most of that are comprised of loans and investments. Almost £2 million represents interest, dividends and recovery of bad debts, so it is all included in that figure. I have been looking at the balance sheet in the past few days because it was the end of their accounting period. I noted that the figure is shrinking fast and contains one major loan only, representing an accumulation of smaller ones.
The Minister said that £75 million had been written off which seems to be an extraordinarily large amount of money. I was not aware of that figure. Has there been any investigation by the Committee of Public Accounts or anyone else to ascertain whether people simply waltzed away with money? For example, if some company were to approach the IDA, get £75 million and walk out within ten years, they would have some claim on that money. Does the Minister know how many firms benefited from that write-off, or can he give any additional information on it?
I recall the debate at the time which, needless to say, was controversial. I do not know the number but I am sure there were a great many. That was the reason Fóir Teoranta was wound up. It would be my hope that nobody would ever go down that road again because, as long as the State plays the tune, the perception is that there is no problem in people handing out money. That is what happened. In fairness to the people involved, I should say they tried but they were subject to political pressure and commercial examinations were not always undertaken or were not as detailed as they should have been. That is why we ended up with £75 million being written off at that time. It should act as a very good lesson for not going down that road again.
I take it from the Minister's response that we will not be having a super State bank comprised of ACC, ICC, An Post and the Trustee Savings Bank?
If we had it would be based on commercial logic, not on fantasy.
It is news to me as well that £75 million was written off. I remember the Bill going through the House but cannot quite recall all the detail. Is it not the case that the IDA took over existing investments for Fóir Teoranta and loans they had given out? I thought the assurance the House was given at the time was that the new body would be responsible, that there would not be any moneys lost as a result. There might be bad debts in the normal course of events, but I did not know that loans were written off merely because Fóir Teoranta no longer existed.
This is not new information but rather information the House should remember for the future whenever Members might call for the restoration of such institutions. There was a total of £75 million by way of liabilities in respect of advances made to Fóir Teoranta by the Minister for Finance which were simultaneously written off. ICC wanted to take over a balance sheet they could handle and they have done so very well. It was the reason the Government of the day wound up Fóir Teoranta and, if I recall correctly the House agreed to the provisions of the Bill for that reason.
