Written Answers. - Telecom Éireann Board.
Joe Higgins
Ceist:
29
Mr. Higgins (Dublin West)
asked the
Minister for Public Enterprise
the implications for Telecom Éireann of the appointment of its former chairman as chief executive and chairman of a United States based multi-national company in the telecommunications area operating in Ireland; and the advisability of proceeding with the planned privatisation of Telecom Éireann.
[8896/99]
Ivan Yates
Ceist:
35
Mr. Yates
asked the
Minister for Public Enterprise
the discussions, if any, she had with Mr. Brian Thompson, the former chairman of Telecom Éireann, prior to his appointment in January 1999; if his period of office, loyalty or exclusivity were discussed; if not, the reason in this regard; if she has satisfied herself that the newly appointed chairman of the company meets the criteria that she set out at the time of the appointment of Mr. Thompson; the reason the vice-chairman of the board saw fit to resign; and the advice, if any, she has received on the effect of these resignations on the share price at the floatation of the company.
[8894/99]
Joe Higgins
Ceist:
36
Mr. Higgins (Dublin West)
asked the
Minister for Public Enterprise
if she will make a statement on the appointment and subsequent departure of Mr. Brian Thompson as chairman of Telecom Éireann and the appointment of Mr. Ray MacSharry as his replacement.
[8895/99]
Bernard J. Durkan
Ceist:
72
Mr. Durkan
asked the
Minister for Public Enterprise
if she had anticipated the recent developments in the formative membership of the board of Telecom Éireann when she made her previous appointments to the board including the nomination of the chairman; and if she will make a statement on the matter.
[9405/99]
Bernard J. Durkan
Ceist:
73
Mr. Durkan
asked the
Minister for Public Enterprise
the further restructuring, if any, she proposes on the board of Telecom Éireann; and if she will make a statement on the matter.
[9406/99]
I propose to take Question Nos. 29, 35, 36, 72 and 73 together.
Mr. Brian Thompson was appointed as a director and chairman of the board of Telecom Éireann on 20 January 1999. Mr. Ray MacSharry and Mr. Jim Flavin were also appointed as directors effective from the same date. Mr. Thompson, Mr. MacSharry and Mr. Flavin were each appointed to the board for three years. Mr. Thompson, Mr. MacSharry and Mr. Flavin paid a courtesy call on me on the eve of their appointment to the board of Telecom Éireann and I subsequently met with Mr. Thompson for a general discussion on the preparations for the initial public offering (IPO) of shares in the company. I had, of course, met Mr. Thompson several times during 1998 in his capacity as chairman of the Advisory Committee on Telecommunications, which reported to Government last November.
These appointments were made in the context of the initial public offering (IPO). This was done on the recommendation of the advisers engaged by my Department that the board should be strengthened by the appointment of new non-executive members who had wide experience of board membership of major listed companies and relevant international industry and-or telecoms experience.
The fee payable to directors of Telecom Éireann is the standard fee of £5,000 per annum, while the Chairman receives a fee of £7,500 per annum. Mr. Thompson had resigned as vice chairman of Qwest Communications International at the end of 1998. Mr. Thompson's role as chairman of the Advisory Committee on Telecommunications was undertaken by him for a period of six months in a voluntary capacity for which there was no financial consideration, except for his travelling expenses. It is not practicable for Government to impose loyalty or exclusivity conditions in relation to appointments to State boards.
I learned on the evening of Friday, 19 March 1999 of Mr. Thompson's impending appointment as chairman and chief executive officer of Global TeleSystems (GTS). I immediately instructed officials to discuss the matter further with Mr. Thompson. That took place over the weekend.
ITL is a licensed provider of telecommunications services in Ireland. Global TeleSystems became its ultimate parent company in December 1998. There is, at present, limited amount of competition existing between the Irish operations of Global TeleSystems (International Telecommunications – ITL) and Telecom Éireann – in that International Telecommunications resells minutes, which it buys from Telecom Éireann at wholesale rates. Going forward, as both companies develop their businesses, there will be, almost certainly, other areas of potential competition of far greater significance than the existing limited competition. These existing and potential interests of GTS and Telecom Éireann required that Mr. Thompson resign from his position of chairman in order to remove any potential or actual conflict between Mr. Thompson's roles as chairman of Telecom Éireann and his position in GTS, where he took up his new role as chairman and chief executive on Monday 22 March. The clear advice from the advisers engaged by my Department was that a conflict did exist which required Mr. Thompson's resignation as chairman. A confidentiality agreement has been signed by Mr. Thompson following his departure and a copy of the agreement has been placed in the Oireachtas Library.
Brian Thompson has made a substantial contribution during his tenure as chairman of Telecom Éireann. He has played an enormously significant role in positioning the company for its forthcoming flotation. While I am disappointed that he is not in a position to continue in this role I would like to wish him every success in his new post. The Government greatly appreciates his contribution to Telecom Éireann and his invaluable work in chairing the Advisory Committee on Telecommunications. The report is indeed regarded as a great blueprint for developing Ireland as a global e-commerce centre. In addition to Mr. Thompson's work with the advisory committee he has been an active member of the Ireland-United States Economic Advisory Board and has made a very valuable contribution in that forum.
Following Mr. Thompson's departure, I have appointed Mr. Ray MacSharry as chairman.
On Tuesday, 23 March Mr. Ron Bolger, vice chairman of the board, tendered his resignation. It is with regret that Mr. Ron Bolger has chosen to resign from the board. He has served Telecom Éireann well as a director and as a chairman and I wish to thank him for this contribution. Mr. Bolger did not state any reason for his departure in his letter of resignation addressed to the chairman.
I have appointed Mr. Pat Molloy as non-executive director with immediate effect. Mr. Molloy is a former group chief executive of Bank of Ireland; he is chairman of Enterprise Ireland and is a non-executive director of CRH plc., Bank of Ireland plc. and a number of other public companies. I am very pleased that a person of the calibre of Pat Molloy has accepted my invitation to join the board. He is a highly qualified appointee.
As we continue to progress the flotation of Telecom Éireann, plans for which are well advanced, I am glad that Mr. MacSharry has agreed to steer the company through the remainder of this process and lead it into the new era as a publicly quoted company. I am satisfied that the preparations for the forthcoming flotation are well in hand and I am confident that the process will be copperfastened by this important appointment.
Mr. MacSharry is a former EU Commissioner and has held numerous ministerial posts and was previously Tánaiste and Minister for Finance. He has served as governor of the European Investment Bank and is a director of the following companies: Bank of Ireland Group; Jefferson Smurfit Group; Green Property plc.; Ryanair and is chairman of London City Airport. He has also served as chairman of Ryanair when it became a publicly quoted company. He was recently appointed chairman of Coillte. His track record is outstanding and he has been closely involved with the flotation process since his appointment to the board.
I have also appointed Mr. William Ferguson as non-executive director. Mr. Ferguson is a former chairman and chief executive officer of NYNEX Corporation in the United States. He has over 40 years' experience of the communications industry. Mr. Ferguson began his career with Michigan Bell in 1952 before moving on to the role of vice president of New York Telephone. He returned to Michigan Bell in 1978 as executive vice president and chief operating officer. In 1983 he was appointed president and chief executive officer of New York Telephone until his appointment to NYNEX in 1987. I am very pleased that someone of Mr. Ferguson's expertise and background in the telecommunications industry has accepted my invitation to join the Telecom Éireann Board.
Mr. MacSharry's contribution as chairman, together with the other directors, will successfully steer the company through this historic phase of its corporate development. I am satisfied that his experience in steering Ryanair through flotation and his substantial experience gained through his membership of the boards of some of Irelands most respected companies will be vital for Telecom Éireann going forward into a new era. His experience, together with the experience of Mr. Molloy in corporate stewardship and Mr. Ferguson in the telecommunications industry, undoubtedly meets the criteria of wide experience of board membership of major listed companies and relevant international industry and-or telecoms experience.
I also welcome the appointment of Mr. Malcolm Fallen as finance director. His appointment completes the 12 member board of Telecom Éireann.
I have no advice to suggest that the changes I have outlined will in any way affect the very healthy fundamentals of Telecom Éireann as we move into the more public phase of planning for flotation. The plans for the flotation are well advanced and the process is close to commencing. The IPO will be publicly launched in late April and I anticipate that the company will be successfully listed as planned.
