Vol. 480 No. 7
20 Mr. Rabbitte asked the Minister for Public Enterprise when it is intended to implement the promised sale of 15 per cent of the shares in Telecom Éireann to its employees; the price at which the shares will be sold; if it is intended to extend similar share purchasing schemes to other companies in the semi-State sector; and if she will make a statement on the matter. [15064/97]
28 Mr. Quinn asked the Minister for Public Enterprise her intentions regarding the level of shares in Telecom Éireann to be made available to the workers in Telecom. [14946/97]
I propose to take Questions Nos. 20 and 28 together.
As outlined in the Action Programme for the Millennium, the Government is committed to the development of public enterprise. We have made it clear that employee shareholding in State companies may be a conduit for raising capital for the further development of the commercial State sector. In the case of Telecom Éireann, the Government is committed to the conclusion of an employee share ownership plan in the spirit of social partnership and consensus.
I recently met representatives of KPN-Telia — the State's strategic partner in Telecom Éireann — the company and the unions with a view to determining a framework within which the negotiations on an employee shareholding scheme can be restarted. This framework is now almost in place and I look forward to the recommencement of negotiations with a view to reaching agreement on an acceptable deal within the coming months.
The details of any scheme are a matter for negotiation between the parties. From the outset of the strategic alliance process, a shareholding of up to 5 per cent was earmarked for the employees of Telecom Éireann in return for verified cost reductions and change within the company.
The Government, in response to the union's proposals to maximise employee shareholding, is open to practical and feasible proposals by the staff to purchase for cash payment to the Exchequer at a fair price shares in excess of 5 per cent when it is satisfied that this will assist the future development of the company and that the conditions relating to the initial 5 per cent are satisfactory. Any transfer of shares beyond 5 per cent can only be considered with the agreement of the strategic partner.
The question of extending the share purchase scheme to other State companies will be dealt with on a case by case basis because each company is at a different stage of development and may require a specifically tailored solution.
Will the Minister put herself in my position? When in Opposition her party made a specific commitment to give the workers concerned 15 per cent of the shares——
The actual figure is 14.9 per cent.
The precise figure is 9.9 per cent, they already have 5 per cent. The Minister is now saying that it is a matter for negotiation and that they will be given shares in excess of 5 per cent. By how much and at what price? When is it proposed to conclude the negotiations? During the general election the Minister's party leader wrote to the union concerned — I have a copy of the letter — and made a specific commitment. We would like to know what all of this means.
Having met the representatives of Telecom Éireann, I am convinced I can do business with them. I have met representatives of the unions twice. I met the outgoing and incoming secretary in July, two weeks after taking office. With the Taoiseach, Tánaiste and officials of my Department, I met the programme managers and we agreed in principle to the sale of 14.9 per cent of the shares at a fair price. We have no ideological difficulty with that concept. I then met the chairman and chief executive and the strategic partner to discuss the matter. Two weeks ago I had a meeting with Con Scanlon and his adviser, David Grafton, and reached agreement on certain principles. We also agreed a framework on how we should proceed to negotiations. I am convinced that the Government and I can do satisfactory business with the representatives of the employees in Telecom Éireann.
I wish the Minister well in the negotiations. We all know what the payment terms proposed by the union were and are. As I understand it, the Minister has agreed to dispose of 14.9 per cent of the shares in Telecom Éireann in this manner. As regards the union offer, what is considered to be a fair price? Is the Minister saying that she has the agreement of the strategic partner to this arrangement whereby the shareholding will rise from 5 per cent to 14.9 per cent? Have the chairman and chief executive of the board of Telecom Éireann communicated assent to what she calls the share ownership plan?
The strategic partner and the chairman and chief executive are aware of the commitment in the Programme for Government——
Do they agree with it?
That remains to be seen. The strategic partner is anxious to ensure that the matter is finalised as quickly as possible. What constitutes a fair price is the subject of an evaluation. Telecom Éireann, the unions and ourselves will engage separately in an evaluation exercise. We have arranged a date with the unions. Their New York advisers will come here to make a presentation to me and my officials, and I presume to Telecom separately, on how they see their bid developing. I await that. We are engaged in a process which I hope will lead to agreement.
Will the Minister agree the position she is putting forward now is at variance with the position of her party in Opposition when it said that 14.9 per cent of the shares should be made available to the workers free gratis and for nothing? That was the position put forward by Deputy Séamus Brennan who is now Government Chief Whip. There was no question of market value being demanded from the work force in Telecom Éireann at that time, although the Minister would seem to be doing that now.
Has the Minister examined the implications of the decision she outlined to us in principle concerning the membership of the board of Telecom Éireann? Will the workers' representatives positions be increased? Will the people who will now have 14.9 per cent of the shares in the company receive additional representation? What are the implications of that for the strategic partner and for the main shareholder?
The first question the Deputy asked concerned the position as adopted on the floor of the House. Those matters are on the public record. The words in the letter, referred to earlier by Deputy Rabbitte, in the name of the then Leader of the Progressive Democrats and current Tánaiste, Deputy Harney, and the then Leader of the Opposition and now Taoiseach, Deputy Ahern, were "at a fair price" of 14.9 per cent.
Deputy Stagg asked what implications it would have for the worker directors on the board of Telecom and whether there would be an expansion. The Deputy will remember that when the legislation was being discussed, he and I had a barney because I did not agree with there being two directors and two alternate directors, which——
The Minister will agree I won that barney.
To answer the Deputy directly, I have met and talked to the unions about the elections for worker directors that are now going on. We teased out a legislative point with regard to the interpretation of the Bill in that debate following the Deputy's comments on the Bill in the House, which I thought were helpful. The further implications for the worker directors would fall to be discussed at the negotiations.
Can I take it that during these negotiations the Minister will stick to the principle she enunciated here, that the question of a workers shareholding, of the kind she is talking about, is to be seen as a conduit for raising capital for the company and that the shares will be made available for "cash payment to the Exchequer at a fair price"?
Does the Minister see a workers shareholding of this kind as a means of promoting individual incentivisation for workers in Telecom? Is the Minister worried that — if on the valuation date of the company, which is just over two years away, there is a workers' shareholding of 14.9 per cent — the strategic partners will exercise their option to take a further 10 per cent? One of the methods of carrying out an evaluation of the company, which is an initial public offering, will effectively be ruled out unless at that stage the Government decides it will become a minority shareholder in Telecom.
The questions the Deputy has put to me — with the exception of that referring to individual incentivisation, to which I will return — will all arise in the detailed negotiations. I have studied these questions and understand that what the future can hold will depend on the actions we take in the next few months. I have pondered and reflected upon all the points that have been put to me. They will clearly form a strong case in our minds when we discuss them. It is for the negotiations to decide how we can address them now and in the future.
What does that mean? Does it mean the Minister has any position or principles in regard to any of these things?
It means I am entering the negotiations with an open mind as to what the employees want, which the Deputy, regretfully, was unable to do. I have the agreement of the Taoiseach and the Tánaiste as per their letter which says "at a fair price". The detail now commences as to how we realise that. I intend to work on it fully, every step of the way. However, it would be extremely foolhardy for me to announce today what will be the result of perhaps three months of intense negotiations.
The Minister has no principles or convictions about it?
Just an open mind.
I have plenty of principles.
They are just not evident today, is that it?
We are going into intensive negotiations. I note that the then partners in Government with the Deputy's party, Deputy de Rossa and Deputy Spring, made great efforts during his trip to Tralee to try to get him to change his mind on his figure of 5 per cent, but he stuck to his guns. The Deputy is full of principle, but look where it got him.
The Minister has a healthy company to deal with now.
The Deputy asked me about individual incentivisation. If he means that incentives are to be seen as motivating goodwill towards the company and that employees work hard within their company because they get something out of it then, yes, I would regard that as individual incentivisation.
I notice that in the Minister's formal reply, as distinct from her reply to supplementaries, she said she was prepared to dispose of shares in excess of 5 per cent when it is considered to be in the interests of the company. That, obviously, is the position of the Secretary of the Department. Can I clarify whether that is what we are talking about? In other words, as regards the question Deputy Dukes put to the Minister about the valuation date in terms of the right of the partner to opt for 35 per cent of the stakeholding, is that when the Minister will decide to dispose of these shares, however many there are, in excess of 5 per cent? Or is it before Christmas or when the discussions end? It is an important question from the viewpoint of the workers, who have been led to believe this will be in their Christmas stockings.
Can I hear the Minister's philosophical approach to the extension of these kind of share ownership schemes to other companies in the semi-State sector?
Going back to the first question and the Christmas stockings, I will proceed with the teams engaged in the negotiations in a studied way. Our next involvement is in two weeks time when the advisers to Telecom workers will make their case to me. At this point it would be inappropriate for me to go into what deliberations I have in mind, but which I have not yet talked through with other people.
Talk it through with us, Minister.
The Government is committed to 14.9 per cent "at a fair price" and that wording is under the names of the Taoiseach, the Tánaiste and myself.
With regard to other State companies, of course, there is interest in this. There is bound to be. I replied to this point earlier, but that may have been obscured by the previous supplementary questions. Each State company will demand a different response because they are at different stages of development. Some have strategic partners, while others do not. Employee ownership in any semi-State company will be tailored to the specific needs and demands of that company.
I congratulate the Minister on the rapid progress she has made and I support the line she is adopting. However, she must ensure that worker directors continue to be workers only and that outside experts are not allowed in under the guise of worker directors. Staff directors who hold 14.9 per cent of shares should be workers and not agents hired on behalf of workers. Perhaps the Minister could reassure us that worker directors will always be workers.
I do not know what the Deputy means about hired agents ——
The Minister will see it in the files.
——but it sounds dramatic. I will listen to the advice of officials and speak directly to the union about such matters.
The Minister should speak directly to the workers and existing worker directors.
Are they not members of the union? Why did the Deputy change that?
