Amendment No. 1 is in the name of Deputy O'Shea. Amendment No. 5 is cognate so amendments Nos. 1 and 5 will be discussed together. Is that agreed? Agreed.
Postal and Telecommunications Services (Amendment) Bill, 1998: Report and Final Stages.
I move amendment No. 1:
In page 3, line 19, to delete "p.l.c.".
Section 10(1) of the Postal and Telecommunications Services Act, 1983 states:
The names of the companies shall be, respectively .
(b) Bord Telecom Éireann or, in the English language, The Irish Telecommunications Board.
Section 10(2) states:
Each company shall be exempt from the requirement of section 6(1)(a) of the Companies Act, 1963, to include the word "limited" or "teoranta" in its title.
I raised this matter on Committee Stage. There is a question about whether Telecom Éireann is at present legally entitled to call itself a plc. The name of the company is set out in the Postal and Telecommunications Services Act as Bord Telecom Éireann, not Bord Telecom Éireann plc. The company was allowed to issue shares under sections 8 and 9 of the 1996 Act but nowhere did the Act permit the company to change its name to a plc. If it had done so, my advice is it would be legally dubious.
Even if the company is a plc, there is a question as to whether the term "plc" is part of its name because of section 10(2) of the 1983 Act. This is being repealed in the Second Schedule but until that comes into force, Bord Telecom Éireann is the factual name of the company.
Furthermore, the Telecommunications (Infrastructure) Bill, 1999 states—
I do not have that Bill with me.
—in line 24, section 2: "‘network operator' means Bord Telecom Éireann", not Bord Telecom Éireann plc. This is a technical point but I am concerned that it could lead to difficulties. After Committee Stage, I again took legal advice on the issue.
We have made clear efforts on this matter and have been in contact with the Deputy's office and his legal adviser. We also consulted our legal advisers and sought the advice of the parliamentary draftsman. Their advice is that it is correct to use the name Bord Telecom Éireann plc.
One of the main objectives of the Telecommunications (Miscellaneous Provisions) Act, 1996 was to permit the sale of shares in the company and to facilitate a situation of multiple shareholders. Implicit in this is the fact that the company would be re-registered as a public limited company. The company was, therefore, re-registered as a public limited company on 20 December 1996. Once a company has been so registered, it is obliged to use the term under the Companies (Amendment) Act, 1983.
The purpose of the term "plc" is to serve as a signal to anybody dealing with that company that its liability is limited. Where this is the case, it is important that it should be clearly stated. The word "limited" means a private limited company, which Bord Telecom Éireann was in 1983. In December 1996, the company became a public company. When it became a public limited company, the exemption from using the word "limited" no longer applied. That is the advice I received from my advisers.
With regard to the Telecommunications (Infrastructure) Bill, 1999, it could not pre-empt the work of the Oireachtas so it could not presume to state what the company was until this legislation is passed. The Deputy received different advice from mine and that is where the matter rests.
I should have acknowledged earlier that the Minister had been in contact with me about this matter. I went over the implications of the 1996 Act with the legal adviser who says something may or may not be implicit in the Act. However, the 1983 Act was not changed. I will not press this amendment, but we are concerned that the legislation should be drafted as well as possible.
Amendment, by leave, withdrawn.
I move amendment No. 2:
In page 3, between lines 30 and 31, to insert the following paragraph:
"2.–Section 8(2) of the Act of 1996 is hereby amended by the insertion after paragraph (a) of the following paragraph:
‘(aa)The Minister may not dispose of any shares in the company other than as provided for in subsection (3)(a) without the terms of such sale being laid before and approved by Dáil Éireann.'.".
I tabled this amendment on Committee Stage. The Government can also claim ownership of this amendment because it was originally submitted by Deputy Séamus Brennan. In the context of overall accountability, and because of recent events which have not been helpful in terms of this legislation, referral back to this House in respect of the disposal of State assets should be adhered to on all occasions. I therefore ask the Minister to accept this amendment.
I support Deputy O'Shea's amendment because there are very important issues of accountability in question. This amendment proposes that we in this House should have an opportunity to discuss the terms of the sale as it proceeds.
A few examples illustrate why this is of vital importance. I was aghast to read some of the Sunday papers on a matter that relates not to me or to politics but to good corporate governance. Informed sources spoke about the vice-chairperson who had resigned from Telecom Éireann, having sought an executive job and having been turned down, how he had been objected to by the other shareholders on the board, and had a bad relationship with the chief executive. This all came from spin doctors somewhere in the Department, somewhere on the official side. The Minister herself said last week in the Dáil in relation to the man in question that he had served Telecom Éireann well as a director and as chairman and that she wished to thank him for his contribution. If that was the official position, I resent deeply that some anonymous sources went on to do a malicious hatchet job on his reputation by making these suggestions about the KPN-Telia objection. That is an example of spin doctors who are not accountable to anyone. I would go so far as to say that some of the Minister's predecessors of my own political party were not well served by these same spin doctors. I do not like to see someone who has given six years on the board of Telecom Éireann being treated in this way and his reputation damaged. That is one example of why these matters should be brought back before the Dáil. It is reprehensible that a person who is not in a position to defend himself should be subjected to these allegations and have his reputation damaged.
The second example relates to two key concerns workers have about this Bill. I was not aware of these concerns. Perhaps the Minister would clarify why there is a need for ongoing accountability as referred to in amendment No. 2. Not everybody in the employment of Telecom Éireann availed of the opportunity to buy shares. I understand that about 200 workers did not sign up. They are now being told the Partnership 2000 pay rise will not be granted. They are saying they were not given this information at the time. It is one thing not to opt into the shares but to be denied a pay rise is an entirely separate matter. Here they have come to a Dáil representative and, as this amendment sets out, it is an opportunity for the Minister to give an answer and also later on, if there are similar questions as we come near the final sale.
The final question I have relates to the fact that some workers were under the impression that under section 5 of the 1983 Telecommunications Act they could revert to their Civil Service status. This issue only arose in the context of privatisation when a few applications were lodged and they have in recent days been refused, at the point of privatisation. This is an important issue for future privatisation schemes and for the status of employees. In terms of accountability in this Dáil I understand it is the Minister who makes the decision as to whether they can be readmitted to the Civil Service. Why have they been refused, and why was it not made explicit? How were they under a misapprehension, because they were of the opinion that they could revert to Civil Service status if they so desired?
I invite the Minister to condemn the spin doctors for what they did in the Sunday papers to the former vice-chairperson of the Telecom Éireann board. It was poor thanks to have his reputation damaged by those remarks. It serves no-one well that this should be done. He is not a politician. I have not spoken to this man. Nor have I ever spoken about this issue. I just think it is wrong that a former chairperson should be treated in this way by anonymous spin doctors. I invite the Minister also to answer the two specific queries from workers. Is it true that a Partnership 2000 pay rise is being denied to some 200 people who did not sign up for shares, and can people revert to the Civil Service under section 45 as they expected to be able to do?
I thank Deputy O'Shea for putting down the amendment and Deputy Yates for his contribution. I did not read a Sunday paper until Monday morning, and there were reasons for that. I did not know what was in them, so there is no point in my talking about it. I spoke to nobody about it. I am precluded, because of the sensitive nature of all of these matters from saying anything, but I intend, in time to write about it very fully when all the matters have been dealt with. The Taoiseach has forbidden us to write, to keep diaries, but I will keep a diary of Telecom Éireann and, when it is all satisfactorily over, I will write my own tale about it.
I repeat what I said last week. I was disappointed that the vice-chairman resigned. I repeat that the Government and the country thank him for his work with regard to Telecom Éireann. I have no other comment, nor do I make any comment, and I shall not until everything has been dealt with.
On the other matter, I did not inquire how many people did not wish to participate in the ESOP. It would be essentially their own business if they did not want to. One of the terms of the employee share option scheme was that employees would give up their pensions and forego wage increments already announced. That surely evokes a question about the dreadful spin-doctoring about the great bargain the Telecom workers got. The Telecom workers paid for their shares. They took the loan of money and they have to pay it back. It will be five years before they get anything from the trust, from the 5 per cent, and it will be ten years before they will have paid anything back on the £90 million. I say that because there was a deliberate effort to besmirch that arrangement. The Deputy has told me that 200 people did not avail of ESOP.
Will the Minister be able to get that information out?
Yes. I do not know, given the collectivity of arrangements such as those, whether the majority holds sway. It was 200 out of 10,000. The Communication Workers Union and the other union involved decided this, and the terms had to be worked out. I will get the information for the Deputy.
The Deputy also asked a question relating to the Civil Service. Under the 1983 legislation such officials cannot go back to being called civil servants, but they have all the rights of civil servants. Apparently, the Bill made that clear in 1983. I do not remember the Bill, although I was a Member of the House.
To return to Deputy O'Shea's amendment, I said on Committee Stage that I would be prepared to come back to the House on that matter. If the Deputy wishes to insert that amendment into the Bill I will agree.
I thank the Minister for that positive response.
There might need to be some slight change in the wording but I have no control over that. We will get back to the Deputy on that. There may need to be a "whereas", a "whereto" or a "wherefrom", but it means that there is a compulsion on me to come to the House.
That is satisfactory.
Is the amendment, as worded, being withdrawn?
No, we are agreeing to it.
Has the Minister agreed to the amendment in its present form?
We will agree to the amendment and if there is need for a change of wording, I will do so in the Seanad tomorrow. The Deputy could talk to his colleague about that. I do not know who is dealing with it.
Amendment agreed to.
Amendments Nos. 3, 4 and 6 are related and may be discussed together by agreement.
I move amendment No. 3:
In page 3, between lines 30 and 31, to insert the following:
"2.–Section 10 of the Act of 1996 is hereby amended by the insertion after subsection (1) of the following subsection:
‘(1A) In the event of the sale or transfer of shares in the company, the proportion of employee directors in relation to the total number of directors on the Board shall remain fixed at not less than the proportion of employee directors at the date of passing of this Act.'.".
Amendments Nos. 3 and 4 were tabled by Deputy Séamus Brennan to the 1996 Bill when he was Opposition spokesperson. Amendment No. 4 states: Notwithstanding the provisions of subsection (1), the number of employee directors shall not be reduced below 4".
The 1983 legislation includes the provision that the number of employee directors shall not exceed one third of the number that the Minister is otherwise entitled to appoint. The Minister was about to initiate talks with Congress on the position of worker directors in the new company. The amendments are clear in their intent and I await the Minister's response.
Amendment No. 6, in my name, is in this grouping. On Committee Stage I asked whether, if the State's holding goes from 50.1 per cent down to 15 per cent or whatever, it will retain any worker director. My amendment proposes that one such director would be retained with the diminished shareholding. This is a similar point to Deputy O'Shea's, which relates to proportionate board representation.
I recall that the Minister was supportive of the principle. She said she was meeting the ICTU delegation two days after the debate on Committee Stage. We withdrew the amendments on the basis that the Minister wanted to have an overall approach that would not only suffice for Telecom Éireann but also for other State companies, as this is likely to be repeated in future. I look forward to the Minister having another legal formula that will allow some worker director retention. It is important to the unions who have been in contact with us about this matter. I know the Minister is supportive of the principle so I hope we can find some legal device for doing so.
I thank both Deputies for pursuing this matter. On Committee Stage I read the correspondence between Mr. Peter Cassells and myself, and Mr. Dermot McCarthy, the Assistant Secretary in the Taoiseach's office, who was in touch with Mr. Cassells. I understand that they had two meetings; one shortly after our discussions on Committee Stage and the other this morning. As of yet, they have not hit upon a formula.
As we discussed on Committee Stage, the Bill as published provides for the removal of Telecom Éireann from the scope of the Worker Participation (State Enterprises) Acts. It would never be appropriate now because it is no longer a State enterprise.
As the Deputy said, the issue of worker participation on the board is not just specific to Telecom Éireann, but is one that applies generally. Discussions are taking place because clearly what will apply to one semi-State company will have general applicability across a range of companies if and when their time comes to have partners, first of all, and then to be publicly floated. They have not yet come up with a formula of words, however.
I know Deputy Séamus Brennan tabled the amendments, as the Deputy said, but at that stage there was only 20 per cent involving KPN/Telia with a possibility of a further 15 per cent and a subsequent clawback. The 20 per cent figure represented a reduction of the State's holding in Telecom Éireann, but it was still a State company. When Deputy Brennan put forward those amendments it was still a semi-State company but in this case it will no longer be one.
I would like to see a representative for ESOP on the board, but that is a specific task. There should be a person on the board who would have a name for being in concert with the views and ideals of workers. Perhaps that is the formula we will come up with, although I do not know.
To answer the Deputy directly, the talks between Mr. Cassells of ICTU and Mr. McCarthy, who is representing Partnership 2000, have not concluded. Therefore, I am not able to accept the amendment but it is my wish that there would be a person with a clear reputation for being in concert with workers' desires on the board.
Is there a legal device for doing that after the Bill is enacted?
I do not know but a Government commitment would be the plainest one. I cannot insert such a provision because I do not know what they are going to come up with.
This has become a wider issue in that legislation is being contemplated that could apply to all semi-State companies in the fullness of time. I would be happy if agreement is reached with Congress and appropriate legislation follows. There is a clear device whereby that legislation, when passed into law, can be applied to this board.
I am willing to look at that.
Amendment, by leave, withdrawn.
Amendments Nos. 4 to 6, inclusive, not moved.
Bill recommitted in respect of amendment No. 7.
Amendment No. 8 is an alternative to amendment No. 7 and they may be discussed together.
I move amendment No. 7:
In page 5, to delete lines 10 to 13, and substitute the following:
"6.–(1) A reference to the company or to Bord Telecom Éireann, as the case may be, in section 13 of the Post Office (Amendment) Act, 1951, sections 52(2), 96(d), 98, 99 and 110 of the Act of 1983, section 7 of the Broadcasting and Wireless Telegraphy Act, 1988, and in the Interception of Postal Packets and Telecommunications Messages (Regulation) Act, 1993 shall be construed as a reference to ‘a licensed operator'.
(2) Section 110 of the Act of 1983 shall, in respect of the company and a licensed oper ator, apply only for the purposes of section 98 of the Act of 1983 and the Interception of Postal Packets and Telecommunications Messages (Regulation) Act, 1993.
(3) In this section ‘licensed operator' means the company or any person licensed under subsection (2) or (3) of section 111 of the Act of 1983.".
On Committee Stage I accepted the need to extend the relevant interception provisions to all telecommunications operators. That was in the light of Deputy Yates's amendment. At that time I said we would consider the draftsman's opinion and that there would be further consultation. I then brought this to Cabinet as it was a substantial change, and a good one.
Other provisions covered only Telecom Éireann, and I did not see why they should not cover all licensed operators. The relevant provisions are sections 98 and 110 of the 1983 Act and the Interception of Postal Packets and Telecommunications Messages (Regulation) Act, 1993. The proposed amendment also extends five other provisions to all other licensed telecommunications operators. For example, the proposal ensures that certain offences in relation to telecommunications fraud and to making offensive calls are extended to cover those using the networks of other operators. That was more or less what Deputy Yates's amendment suggested.
I thank the Minister for her speedy and detailed response in the short time between Committee and Report Stages. I am happy to withdraw my amendment, as it was somewhat blunt in its approach. The principle was that ESAT and other bodies would be put on the same footing as the Revenue Commissioners, the CAB, the Garda or other bodies who needed to tap telephones for the public good, and now that legal grey area has been removed. I am happy to accept the Minister's amendment.
I am sure that, like me, the Minister has come across the problem of people being upset by obscene telephone calls. My number is not ex-directory, and twice or three times a year I get a call at 3 a.m. from someone who rants drunkenly and anonymously at me. My telephone is beside my bed and I can replace the receiver without too much bother. However, obscene calls are particularly upsetting for women. People breathe heavily, do not speak and do other terrifying things. The telephone cannot be taken off the hook as the person may live alone and need to be in touch with family members. Are there adequate laws to deal with this and are there facilities to trace such calls? Elderly people in rural areas experience much turmoil and distress from such calls. They are terrorised in their own homes and that is outrageous and unacceptable. Will all telephone companies be obliged to put a tracing facility in place whereby this matter can be dealt with? We are told that anything can be done with tech nology. These people are often on the telephone to their victims for a long time.
I agree with the Deputy that such obscene calls are appalling. I am sure that every Member has received such a call at one time or another – I recall such an incident in my own life. These calls come late at night when a person is vulnerable. Like most Deputies, my telephone number is not ex-directory, but I often take the telephone off the hook if it is late at night, if I am on my own and if I figure something may happen. There was a great fuss about this some years ago, and there is now an automatic number indication facility to identify who is calling. The Garda assures me it has powers to trace calls immediately.
When we were drafting this amendment I told somebody about it and the person related an incident where a woman was called persistently at night by a person making lewd suggestions. The Garda drove to the telephone kiosk and knocked on its door as the person was in the middle of a call, so he was caught immediately. My advisers inform me that such calls are immediately traceable. The facility is automatic number identification.
Amendment agreed to.
Amendment reported.
Amendment No. 8 not moved.
I move amendment No. 9:
In page 5, lines 15 to 17, to delete "shall, to such extent as may be sanctioned by the Minister for Finance, be paid out of moneys provided by the Oireachtas" and substitute "shall be borne by the company".
This amendment states that the cost should be borne by the company and not the Oireachtas. If I had a perch on Committee Stage I would have fallen off it when the Minister stated that the potential cost to Merrill Lynch and AIB has been advised to you as being up to £40 million. It may not be £40 million, but the space tends to be filled if possible. Regarding the chairmanship, is the Minister satisfied she is getting value for money from these individuals? If we take her original surge of activity in January regarding the board at the behest of these advisers we can see how that led to a couple of casualties? Is she satisfied that these people are giving the best advice? Can anything be done to tie down the amount of money? Has a bonus system been put in place so that if the company yields £4.5 billion the advisers will be paid a certain sum and if it yields £5.5 billion they will be paid more? Do the terms include an incentive or a speculative element and what are the terms because £40 million is a great deal of money? Will the situation resemble that of Moneypoint and Mr. Gogarty, with the price being talked up afterwards regarding the price variation clause? If the variation can go as high as £40 million there is a great deal of scope for creative accounting. Is there an incentive or proportionate element? When I asked the Minister if there was a retail commission she said that was not the case.
When we commenced the debate about the privatisation of Telecom Éireann, NCB and other equity brokers reported that Telecom was worth £3 billion. When the story about the ESOPs was published in the Sunday Business Post we were told the company was worth £5.5 billion. What is the best estimate of the worth of the company according to the Minister's advisers? There is a great difference between £3 billion and £5.5 billion. I accept that the company has increased in value but I was taken aback by this rise.
The Minister will remember our discussion about pension contributions. There will be quite a windfall to the Government if the figure of £5.5 billion is correct. All my trains, buses and planes will be repaired in that case.
No, they are mine.
They would have been mine. These are very significant resources for public investment and represent a significant opportunity to deal with the infrastructure deficit. If the sum is £40 million it is not acceptable that the Exchequer should bear the total cost. The company should bear some of it. What are the Minister's advisers' best estimate of what the company would yield if it were sold tomorrow? How is the £40 million tied down? Is it, in fact, £4 million and only £40 million in theory? How will the sum be tied down to ensure that we get value for money? We must ensure that this sale does not become a windfall for advisers. The taxpayers and the subscribers who have invested in Telecom Éireann and who stayed with the company through thick and thin should receive the principal benefits of the share sale.
All officials in my Department will testify to the fact that I am extremely detached, if not sceptical, about advisers although I am told that my scepticism is ill-founded and that they are necessary for an exercise such as this. The amount was published in the Estimates last November. It is up to £40 million and the figure will depend on the success of the matter. I too am keen to ascertain a more precise figure.
The legislation does not cover only Merrill-Lynch and AIB Capital Markets. It also covers several other advisory groups which appear to be contingent upon and working congruently with Merrill-Lynch on the matter. When I come to the House with the share statement, there will be a more profuse and precise description of the amount that would be paid. That will depend on the proportion of shares we float. That decision has not yet been taken by the Cabinet and, clearly, the amount to be paid will be dependent on that. Deputy Yates asked my own opinion. I have been cautioned against giving my opinion. Bewildering and wide-ranging figures are being quoted. The figure will depend on the market. At present, shares in Telecom Éireann are hot property but one does not know how long they will remain so. For this reason the flotation will take place at the end of June, depending on the market situation at that time. I have ideas of my own but common sense tells me to keep them to myself. We are about to file the prospectus for Telecom Éireann shares so it would not be appropriate for me to speculate about the figure.
Is the figure nearer £5.5 billion or £3 billion? There is a very great gap between those figures.
There is indeed a great gap. One can only pick one's analyst and take one's chances. Every analyst has a different view on what the final figure will be. Sometimes when I read the newspapers I wonder about it all. I suppose that is rural scepticism asserting itself although I have been told in polite language that my caution about advisers is not suitable in a sophisticated world. When I come to the House with my statement I will attempt to give more precise details about advisers and their costings.
Will the advisers be paid more if the shares go up in value?
Yes. If the shares are deemed to do well, like teachers long ago, the advisers will be paid by results. I will be more precise when I come back to the House.
Amendment, by leave, withdrawn.
I move amendment No. 10:
In page 6, line 1, to delete "The" and substitute the following:
"As and from the date on which legislation is enacted and comes into operation providing for equivalent alternative provision (in relation to the three next following enactments), the ".
This issue was discussed on Committee Stage and I am particularly concerned about the question of redress for customers. The Ombusdman's report for 1998 on Telecom Éireann lists 106 valid complaints brought forward from 1997, 227 valid complaints received in 1998 amounting to a total on hand for 1998 of 333. Clearly, quite a few customers of Telecom Éireann have valid complaints against the company. There is nothing to prevent the Minister bringing in a short Bill to provide a form of redress for customers of a private company.
I presume the Deputy means to refer to redress against any company, private or not.
I am taking into account the global company and its activities – anything operated under the auspices of Bord Telecom Éireann plc. It is an important issue and it is imperative we do not allow this legislation to pass without provision being made for redress for valid complainants.
This matter was debated on Committee Stage. I understood legislation was being prepared for Etain Doyle and that a component of it would be that she would be able to provide the consumer service previously provided by the Ombudsman. I agree with the sentiments expressed by Deputy O'Shea and ask the Minister to perhaps firm up on the commitment as regards the new legislation so that there would be a proper statutorily based consumer division in Etain Doyle's office and that the powers of the Ombudsman could be maintained not only for Telecom Éireann, but for all telecom operators .
I said we would look at what was going on in the ODTR and at a type of consumer unit within it. Last week new regulations were signed which will, among other things, contain a number of consumer oriented provisions for all companies. Those regulations, implementing the EU directive on voice telephony and universal service, will include requirements on telecom operators to put in place procedures for the resolution of disputes with them. Where a dispute remains unresolved, the regulations will provide that consumers may use the small claims court for minor complaints against operators. The limit in the small claims court has gone up from £500 to £1,000, although I stand to be corrected on that. For larger complaints, the matter may be referred to the Director of Telecommunications Regulation.
The regulations also impose restrictions on operators as regards withdrawing services for non-payment of bills. In the past State companies have always had a paternalistic approach to hardship cases and one could make a case to them. I am not referring to telephone bills but ESB and other bills. The regulations impose restrictions on operators as regards withdrawing services for non-payment of bills.
Another development is that the director of the ODTR has recently issued a consultation document on her proposals for the handling by operators of disputes with customers and other operators. She has asked people to come back to her with ideas on her consultation document from which she will formulate proposals which will come to me for policy making.
Telecom Éireann comes under the Ombudsman, prompt payments and other legislation but when it becomes largely privately owned, it will not have obligations under those Acts. Up to now the regulator would have been the relevant Minister and the Oireachtas but now the regulator will be someone who will be amenable to the Oireachtas and to the Comptroller and Auditor General. The regulations were signed last week and have been sent to the director. The import of those regulations will be that all companies will have to have procedures to deal with complaints from customers and the non-payment of bills, and the director has now issued a consultation document.
The ideas promulgated in the Deputy's amendment are in hand but have not yet come to fruition. They will come to fruition only after discussions with the Director of Telecommunications Regulation who will formulate proposals which will go to the relevant Minister.
The Minister has outlined progress on this issue. I am concerned about redress being sought through the courts. The main feature of the Ombudsman service is that it is free and one makes a complaint which is processed through to a decision. What is proposed here weakens, to some extent, the position of the complainant. It will cost money to go to the small claims court. Going to court is an intimidating experience for many people, although we are talking about the small claims court here. If there was a vehicle which would replicate what the Ombudsman has provided until now, not only would it be the best solution but, in terms of equity, it is the one which is required.
Did the Deputy ever attend a small claims court? I did some years ago when I was responsible for labour affairs and we were drafting the Consumer Credit Bill. I wanted to see the court in operation because it came in under consumer legislation. We sat in a room like a very small office. The judge was dressed in a suit without anything on his head and the claimant, who was not represented by a solicitor, said she had bought an item in a store – I will not name it except to say it is up for sale and there is a proposed management buyout. The claimant felt she had got bad value and had been done. She expressed delight at seeing me there because she thought I could help her. I was there to listen and I sat at the back. The claimant showed the judge the receipts and he made a judgment. The difficulty is in enforcing the judgment because firms do not pay up, although they have smartened up in that regard.
The small claims court is not a court, although that is what it is called. The claimant in the case I referred to had bought a sofa and produced photographs of it at the time of purchase and after three months. The small claims court is not intimidating and there is one in Sligo, Cork, Galway and I believe there will be one in Athlone. It is very popular.
My difficulty is that because the word "court" is mentioned people would back off.
The limit in relation to the small claims court was £500 but I believe it has been increased to £1,000. I was also of the opinion it should not be called the small claims court and that perhaps it should be called the small claims redress.
I will send the regulations, which are very explicit, to the Deputies. The EU regulations will be produced, amended and sent to me to make a policy decision on them. Those regulations will certainly give rights to consumers which is what the Deputy's amendment is about.
Amendment, by leave, withdrawn.
I move amendment No. 11:
In page 6, between lines 3 and 4, to insert the following:
"10.–The company established under this Act shall be called Bord Telecom Éireann p.l.c.".
Since we passed the 1983 Act and moved from the Department of Post and Telegraphs to Bord Telecom Éireann, there has been enormous investment in its logo and name. It is abbreviated to BTE or TE and we cannot watch the weather forecast without seeing the light blue, the logo, the nice residences and how lovely Telecom Éireann is. We are now told after decades of investment in a logo and a name that it will be thrown out the window when there are new licensed operators. What will the initials be? Instead of BTE or TE, as it is known by people who do business with it, it will be called E or Eircom. It sounds like a walkie talkie company and is totally at variance with what has been a household name and operated as a monopoly.
I am all for inventing – AIB spent a fortune on its Noah's ark – and twiddling with the logo but "Eircom" will cause confusion. It will have to be explained to investors and all the money spent promoting BTE will go down the drain. We are told it will cost £5 million to change everything from the head office in St. Stephen's Green, the letter heading and call cards to call boxes. All the livery will be changed. It is needless expense. There was no consultation with the biggest shareholder and this issue was decided at a board meeting in November. The Dáil needs to show common sense in the matter and the amendment is worthy of support.
We discussed this matter on Committee Stage. The board, at its meeting in perhaps November, made the decision and I was not informed until 17 or 18 December when, in the course of a meeting about another matter, it slipped into the conversation. This surprised me. I was then told about focus groups around the country – I have a deep suspicion of such groups – who suggested the name Eircom but I cannot get to the bottom of it. I was told that people dealing on the Manhattan stock exchange might think Telecom Éireann was Telecom Iran. I do not know if Iran is a bad word or a country where one might not want to purchase shares. Deputy Yates, and others complained, as I did, in my modest way, with the result that Telecom did not change its name for the flotation. Irrespective of whether one had good or bad experiences with Telecom Éireann, its name was instantly recognisable. The name on the livery, vans, etc. was to be changed to Eircom. In the course of a discussion about the issue in the Department I asked if those buying shares in Eircom would be asked to remember that it was really Telecom. That was when the penny dropped; they realised they would have to sell two names. A massive campaign will have to be embarked on to sell the name "Eircom". When the flotation is over I will not have any control over this.
Is it an open question or has it been predetermined that it will be after the flotation?
A board decision was taken to change the name without telling the main shareholder. The idea of trying to sell the names struck most people as inane. I have been told the name will be changed some months after it becomes a private company. That was a board decision.
It sounds like Alfie Kane rules okay.
We got some of the way. It makes one think how daft some ideas are when you consider the name would have had to be changed on everything. No matter how much we sell, if KPN-Telia takes up its option of 15 per cent it will be the main shareholder as it will have 35 per cent and the unions will have 14.9 per cent. I know there will be great lamenting but that is the likely outcome. This started back in 1996.
Amendment, by leave, withdrawn.
Amendment No. 13 is related to amendment No. 12 and both may be discussed together.
I move amendment No. 12:
12. In page 6, between lines 3 and 4, to insert the following:
"10.–in the sale of shares to be sold by the State arising out of this Act, the Minister may include within the retail offer of shares, a discount scheme, so that there will be a price tier, relative to shares sold to financial institutions.".
I feel strongly about amendments Nos. 12 and 13 and that is why I retabled them. The amendment proposes that discount or free shares be given to subscribers and that bonus shares be given to those who show loyalty by not making a quick buck on selling the shares but retain them for three years. This would give investor equity stability in the company and allow it to reinvest for competitive acquisitions, growth, joint ventures, development in multimedia or whatever it decides to go into. The Minister's response was that she was keeping her cards relatively close to her chest because she wanted to bring a memorandum to Cabinet and discuss it with the parliamentary party, Deputy Roche and others.
It is a matter for the House to assert public policy and in this case Joe Public is entitled to free shares. This has been successful in a number of privatisations. In a reply to a question I tabled to the Minister I was told there would not be any free shares. The experience of the entire British privatisation process across a range of different utilities and commercial State companies was that the more the public was involved the less likely there were to be fat cats who had subsequently to be subject to a windfall tax. I saw an esteemed colleague and friend of the Minister, Deputy Reynolds, on the "Late Late Show" on Friday night.
Hyperbole is not necessary.
I could not resist it. As Minister for Posts and Telegraphs he invested hundreds of millions of pounds of taxpayers' and not pet food company money in the late seventies. Here is an opportunity for the taxpayer to get a pay back on the investment. People had to wait for months to get a telephone and had nowhere to complain about disputed billing and so on. The workers have had their reward, and rightly so, for their loyalty and service to the company through the pension fund and ESOP. There could be an investor in Manhattan or New York, and the Minister was there rubbing shoulders with the good and great at that stock exchange recently – another good photo opportunity for her.
The Deputy is so jealous.
The Minister knows these city slickers will be ready to pounce. If the shares are listed at £1.50 and make £2.00 overnight Joe Public will be forgotten. Presumably the legislation will be passed before Easter and the Minister will be clear as regards the legal basis for action. We were told last week that the draft prospectus was almost ready. Will the prospectus be issued before or after the memorandum to Government? The taxpayers have stayed with this company and invested heavily in it, and now is the time for their windfall. They are entitled to discount shares. The only remaining issue is a regulatory one, that is, will Eircom buy loyalty? That would be unfair to other companies.
My original thought was that each line subscriber should get 100 discounted or free shares. This would create a demand in that city slickers in Manhattan would have to chase the public to buy shares, driving the price upwards. That would be the best way to maximise the price of the company and the return, and it would allow the Irish public to obtain the benefits. Who is to say that members of the Cabinet might not think this a daft idea? I am not getting a guarantee that this will happen.
Some people, such as Deputy Joe Higgins, are opposed to all privatisations but I take a pragmatic, non-ideological approach. It is important that we do not make the same mistakes as were made in the UK, where privatisations got a bad name because they generated private greed rather than public good and shared gain. These are crucial issues and this idea is sensible from the commercial perspective of a broker or analyst, seeking to maximise yield. The public is not represented by ICTU, only by this House, and it has rights. There should be a price tier for these people, and perhaps a ceiling of 200 shares – it is not a question of allowing them to take everything. There will be a gain between the quoted price and the subsequent trading price. This happened with the IPBS and First Active – people said the share price was ridiculously high but when the shares were traded they moved upward, and those who got the option at the listed price gained. The same will happen here, because we do not want a disaster like GPA, where the price was set too high and the shares could not be sold. There will be a gain for whoever gets the shares and the public should benefit – the profit should not be made by someone in Manhattan while the long-suffering public gets nothing.
I presume the Deputy agrees there must be some institutional purchasing of shares, otherwise we will not get what we want.
Yes.
I read an article today which suggested the split should be 60-40 but I want a 50-50 split. That has not yet gone to Cabinet, I am stating a personal view, but our parliamentary party meeting took the strong view that the public should have a good chance of purchasing shares. I hope there will be an equitable distribution between purchasing citizens and the institutional purchasers, which we shall also need. We anticipate that the Cabinet decision on the size and breakdown of the offer will be made in May.
Will the prospectus be issued soon?
It is being drafted at present. The best thing to do would be to give an outline timetable for these events.
I agree with the Deputy about the UK but I think what went wrong was, first, they were strongly driven by ideology and there was wholesale privatisation. Second, workers or employees were never mentioned, the only idea was to sell everything straight away. There may have been an arrangement for employees but not much was said about it. Third, the outcome of those privatisations was a worse service for the consumer. A law had to be introduced to curb directors' and chief executives' fees, they were earning up to £500,000 per year. I am not jealous about what anyone is paid but they went about it in a daft way.
Ireland is much smaller and we will not have that kind of nonsense. At the same time, the Deputy is right to issue a warning. When I bring this to Cabinet we will decide the breakdown, the overall size of the offer, the price, and incentives such as discounts or loyalty bonuses which would be offered to retail investors, that is, individual purchasers of shares. We will then examine what happens in other countries and international markets. It is normal practice to offer incentives to retail investors but it is early in the process to determine what these might be or to make commitments in that regard. We will be going back in May. I do not think anyone would quarrel with Deputy Yates' premise that citizens should have every right to purchase shares, if they so wish, and that they should be able to purchase a large proportion of shares. We need institutional and financial investors to provide large blocks of money but there should be equity. That is what I have decided but what advisers will say and what the Cabinet will decide are other matters. I am conscious that the advisers, without making derogatory remarks, will be from the institutions, that is the milieu in which they operate.
The advisers could soon be working for the institutional purchasers.
These are caveats we will have to remember. I cannot support this because I intend to do what is in the amendment. I will make a statement to the House on those matters.
In the context of issuing shares to as many members of the public as possible, could arrangements be made with credit unions or post offices, where many people put their savings?
This has been in the Department for a long time. The Deputy's question is interesting because the Department initially proposed a particular bank and I suggested the An Post, because the smallest hamlet in the land has a post office. The registration forms, on which one registers interest in buying shares, will be available in post offices. I do not know whether they will be in credit unions. It pays to have common sense. There has been an important announcement. Somebody is watching and I would prefer to think it is the Secretary General of the Department rather than the Attorney General.
I hope he heard my earlier remarks.
The Attorney General has concerns that the proposal to include a provision in the Act as proposed by Deputy O'Shea for bringing the details before the Dáil for approval raises practical issues in terms of the motion to be put before the Dáil and it also raises possible issues of commercial sensitivity. I do not think the Deputy meant that commercial sensitivity issues–
It was so that we would have a chance to debate it.
Yes. As to whether commercial sensitivity was included in the terms, it was not mentioned by the Attorney General and the Deputy knows that.
The Minister may not dispose of any shares in the company other than as provided for in subsection (3)(a) – that applies to employees – without the terms of such sale being laid before the Dáil and approved by the Dáil.
The difficulty is with the terms of the sale. I suggested Deputy O'Shea might discuss this matter with his colleague in the Seanad.
It can be put more in more general terms.
Yes it can be put in a more general sense. I do not intend to display commercially sensitive ideas here but neither do I intend that we should engage in a largescale flotation of a major company without coming back to this House. If the Deputy, the Department and the Deputy's colleague in the Seanad discuss the matter we will draft an amendment to the amendment, to be approved in the Seanad.
It will have to return to this House.
Time will not allow for that.
It has to come back to this House.
Can we agree an amendment on the floor of the House now?
We agreed to an amendment but I put down a caveat in that regard. I suggested Deputy O'Shea discuss the matter with his colleague in the Seanad, but lo and behold big brothers were watching us through the screens and came forward with –
Perhaps we could delete the terms of the sale and substitute "the matter".
To discuss the matter of the sale.
Could we discuss the terms—
I could not discuss the terms.
–of commercially sensitive matters? It is a matter of judgment at that stage.
The Minister may wish to recommit that section to Committee Stage?
Yes.
I will withdraw the amendment and we may have public air time to discuss the matter later.
Amendment, by leave, withdrawn.
Amendment No. 13 not moved.
I move amendment No. 14:
In page 6, line 10, after "Act" to insert ", but not later than the flotation date for the I.P.O.".
There is often a slippage in time plans for the flotation date. The purpose of this amendment is to ensure this Bill, when enacted, is implemented not later than the flotation date. This makes common sense and would be the correct way to proceed. The Minister gave an assurance on Committee Stage that this was the intention and that the flotation date would be the implementation date. There was an issue about some sections dealing with property. I am fascinated about who is watching on the monitor in so far as my remarks on accountability are concerned. I did not allege that the Minister said this should be raised in the Sunday newspapers, but it did occur. It was not that the man was a supporter of mine, but as one who had given good public service he was badly treated.
Will the Minister please let us know the date of flotation? She has given an outline and mentioned that the draft prospectus should be ready in the next couple of weeks. This will be followed by a Government decision on the details of the sale, whether 35 per cent or whatever, and we will then proceed to execute the sale. The Minister said there would be a point where KPN-Telia would have the biggest shareholding, 35 per cent.
If it exercises its right.
It will. I am informed that on the Stock Exchange once one has a shareholding of over 30 per cent it is significant. I am sure there is a deep significance to all of this. Apropos that this will arise, can I take it that because the Minister is relinquishing 50.1 per cent – she may retain 15 per cent or even zero per cent – and KPN-Telia may have been 35 per cent, the board membership, some of whom are the Minister's representatives, will not change and that it will have no effect on the sale? I am trying to tease out the possible consequences of someone having the biggest block, or is it likely that after the sale KPN-Telia will be considerable shareholders? The most shares that would be held by a city investor or institution would be 5 or 10 per cent. Is the Minister painting a scenario that KPN-Telia will be in the driving seat from now on, or for the foreseeable future? Will we have to be alert to certain situations, because this is important not only for the company but for the subscribers?
Is it the position that for a short period before other new investors come in KPN-Telia will have 35 per cent, or will a board in Holland or a Scandinavian country decide our telephone charges, tariffs structures and so on? This would have importance in the context of how many shares are sold in the medium term.
I know.
Will the Minister tease out this matter? Will she outline the consequences of this single group of shares, on the assumption that the company will avail of its 35 per cent?
What is the proposed flotation date? Will the vast bulk of the legislation be implemented on the same date? Will the Minister tease out the implications and ramifications of her point about KPN-Telia having 35 per cent?
The tentative date for flotation is the end of June with share dealing to begin in early July. However, as I continually stress, this depends on how the international telecommunications market is behaving at that point.
The Deputy said he was intrigued because I said an item was mentioned in conversation. Last night talking to members of my family, none of whom will buy shares, I said I did not think people realised that KPN-Telia will be the major shareholder in July when it takes up its 15 per cent option. I suddenly thought of all the rí rá agus rúille búille that will take place when people ask what we have done and say that we have sold our souls and our shirts to a foreign company. However, that is the consequence of the 1996 decision. I do not disagree with it; I agree with the process. I made the comment to start a debate on the matter and I noted the caterwauling that is likely to take place when it happens.
Usual corporate governance will apply. At present KPN-Telia has three directors from a total of 12. The normal rules will apply and the ODTR will have the regulatory role. The company will not decide the price of items. That is up to Ms Doyle and her proper governance. I mentioned the matter because it occurred to me that it will cause another rí rá at the end of May.
Ministerial life is full of rí rá.
I agree, but I may as well start mentioning it now so people realise the implications of the process. This will avoid it bursting upon them and annoying them, leading them to write to the editor 41 times with their stories.
Most of the provisions of the Bill will be enacted before the flotation. I outlined examples of provisions listed for repeal in the Schedules but which cannot be repealed immediately. This relates to certain borrowings.
Regarding lands which belonged to the former Post and Telegraphs company that were used for the telecommunications and postal functions, in 1984 the lands were transferred to the ownership of An Post. However, it was obliged to continue to allow Telecom Éireann to use them.
The Minister mentioned an amendment and this can be taken when we move to Fifth Stage. Perhaps we could dispose of amendment No. 14.
Amendment, by leave, withdrawn.
I move a verbal amendment to amendment No. 2.
To delete "terms of such sale" and substitute "general principles of the sale".
I do not have a problem with the Minister's amendment. However, would the terms of the sale be a description for the prospectus?
No. "General principles of the sale" is fair.
Amendment agreed to.
Bill reported with amendment and passed.