Dáil Éireann díospóireacht -
Thursday, 25 Feb 1999

Vol. 501 No. 2

Other Questions. - National Lottery.

Michael Noonan

Ceist:

4 Mr. Noonan asked the Minister for Finance if the licence under which An Post ran the national lottery was revoked in 1992 and replaced with a licence which extended its contract for four years; if, as a consequence, the company which supplies on-line equipment for the lottery enjoyed a similar extension of contract; the policy and other considerations which led to this decision; the representations received in his Department on the matter; and if he will make a statement on the matter. [5556/99]

Mr. McCreevy

The national lottery is conducted under licence granted by the Minister for Finance. Section 3 of the National Lottery Act, 1986 makes specific provisions for the granting of licences by the Minister. First, the initial licence granted to a person may not exceed ten years. Second, the Minister at any time may revoke this licence and grant a further licence to the original licence holder. Also, the duration of subsequent licences is entirely at the discretion of the Minister.

The licence to hold the national lottery was awarded to An Post in October 1986. The National Lottery company began operations in March 1987. It was required under the terms of the licence to introduce an on-line lottery game as soon as possible. In November 1987, the board of the National Lottery company contracted out the provision of technical support for this on-line game to GTECH following a public tendering process. The duration of this contract was for five years from 1 April, 1988.

During 1992, the lottery company concluded that it needed to upgrade its IT support for lotto and for the instant games both to improve services for its customers and to position itself to respond to the challenge posed by the UK lottery. Accordingly, in July of that year, the company issued a request for proposals for an enhanced on-line IT support base. GTECH emerged as the most competitive bidder.

In November 1992, the lottery company advised my Department that the board of the company had decided to accept the GTECH proposal. Noting that even more competitive commercial terms would be available if the duration of the lottery licence were to be extended by 3.5 years to end of March 2000, the company inquired if the Minister would be agreeable to issuing an extended licence.

Having evaluated the business case for this proposal, the Department recommended to the Minister in February 1993 that he should exercise his powers under section 3 of the 1986 Act to grant an extended licence subject to the negotiation of a reduced management fee with An Post, which would ultimately benefit the national lottery beneficiary fund. The Minister approved this proposal, negotiations took place with An Post and the office of the Attorney General was consulted. Finally, in December 1993, the Minister revoked the initial lottery licence granted to An Post in October 1986 and issued a new licence to run to end March 2000.

Throughout this process, all negotiations with GTECH were conducted by the National Lottery. At no stage was there any direct contact between GTECH and the Department or the Minister. Neither is there evidence from departmental records of representations made by or on behalf of GTECH on this issue.

I place on record my view that since commencing operations in March 1987, An Post National Lottery company has conducted the national lottery in an exemplary manner, building up massive public support, as evidenced by annual sales of well over £300 million. It generated more than £900 million for the National Lottery beneficiary fund is the period 1987-99.

Mr. Noonan

The Minister is aware that there was considerable interest in the licence when the Government originally decided to have a national lottery. The licence was awarded following a public tender. Why did the Minister of the day, Deputy Bertie Ahern, and his Department decide not to have a public tender process when the licence was being extended? Why was it done so secretly that until earlier this year, one of the main competitors – Rehab – did not know the licence had been extended from 1997 until 2000? It was only when it thought it should prepare for the next public tender for the lottery that it realised this secret extension had taken place.

Mr. McCreevy

There are two contracts at issue. The Deputy's supplementary question relates to the extension of the licence to the National Lottery. When the Act was being drawn up in 1986, when Fine Gael was in Government, section 3 related to the grant by the Minister of a licence to hold a national lottery. That section, specifically under subsection (2), states:

Upon or at any time after the expiration or revocation of a licence, the Minister may grant a further licence under subsection (1) of this section to the person who was the holder of the first-mentioned licence.

Subsection (3) states:

When a licence is granted to a person for the first time, the duration of the licence shall be such period not exceeding 10 years as the Minister may determine; the duration of any subsequent licence granted to the person shall be such period as the Minister may determine.

Subsection (5) states:

The Minister may at any time, for reasons that seem to him to be sufficient and are stated in notice in writing given to the licensee, revoke a licence.

When this Bill was being considered, something to which I was not party, it was provided under subsection (3) to allow these powers to the Minister for Finance. I am sure there were good reasons advocated at the time, which would have been part of the Government memoranda and the supporting documentation, but it was decided to put it clearly in section 3 and the relevant subsections. As has been pointed out outside the House in regard to the licence, the National Lottery decided to upgrade its facilities and had a public tendering process which GTECH won.

The National Lottery then approached the Department of Finance and told it this company would invest in new technology and it would like the licence extended. The Department recommended to the then Minister for Finance to do so and he did that. That was the only involvement of the current Taoiseach in the matter.

Mr. Noonan

Is the Minister aware of the unsavoury reputation of GTECH, under its previous owner in particular, in other jurisdictions in which it has operated? That reputation is associated with bribery of public officials and politicians. Is the Minister satisfied as to the probity of the company under its current ownership and management?

Mr. McCreevy

There must have been similar considerations about it in 1986 when another Government, of which Fianna Fáil was not a part, was in power. If there are doubts about that operation, they were as valid then as they are now.

The award of the licence for the equipment in 1986 or subsequently in the 1990s when Deputy Ahern was Minister for Finance was a matter for the national lottery, not the Minister for Finance. He was involved with the extension of the licence to run the national lottery to An Post on foot of recommendations from An Post to the Department of Finance. The Department of Finance's officials considered it and recommended it to the Minister, who granted the extension.

Mr. Noonan

The Minister is aware that the question marks over GTECH arose in the late 1990s. Mr. Richard Branson of Virgin won a notorious libel case against it in that period.

Mr. McCreevy

The question marks have existed since 1993.

Mr. Noonan

The Minister said there were no representations from GTECH concerning this matter on the file in the Department. Were there representations from third parties other than An Post?

Mr. McCreevy

I will say once more what I said in my reply. Throughout this process all negotiations with GTECH were conducted by the National Lottery. At no stage was there direct contact between GTECH and the Department or the Minister. Neither is there evidence from departmental records of any representation made by or on behalf of GTECH on this issue.

Mr. Noonan

The Minister did not answer the question about representations from third parties on file.

Mr. McCreevy

I am not aware of any. If the Deputy wants to come to my Department to look at the files, I will gladly give them to him. I have no problem with that, although they date from before the Freedom of Information Act. There was nothing untoward in the awarding of this contract, as Deputy Noonan well knows.

Mr. Noonan

Since the Minister invited selected journalists, I might take him up on that offer. Did he invite the journalist who broke the story in the first place?