Dáil Éireann díospóireacht -
Tuesday, 9 Nov 1999

Vol. 510 No. 3

Written Answers. - Emerald Meats.

Pat Rabbitte

Ceist:

48 Mr. Rabbitte asked the Minister for Agriculture, Food and Rural Development the amount of money paid in compensation and legal costs to Emerald Meats arising from recent litigation; the amount of legal expenses incurred by his Department in defending the legal action to date; the amount of compensation being claimed in exemplary damages by Emerald Meats which has still to be heard by the courts; if he will respond to the issues raised in a programme (details supplied) regarding the handling by his Department of this case; and if he will make a statement on the matter. [22432/99]

Minister for Agriculture, Food and Rural Development (Mr. Walsh)

The Emerald Meats case concerns entitlements to licences for the import of beef into the EU under special arrangements in 1990.

As far as damages are concerned, the High Court awarded Emerald Meats economic damages of more than £400,000 in respect of profits foregone by the company as a result of the Department's decision. This amount was paid in full and without delay by the Department to Emerald Meats in 1992.

As far as the legal costs of Emerald Meats are concerned, the courts ruled that these costs should be shared between my Department and the meat processors. These have been paid to Emerald Meats. The legal costs deemed appropriate to my Department amounted to approximately £342,000. In line with the ruling of the court, my Department has recovered all of the meat processors' share of the legal costs with the exception of £9,600. I have asked the Chief State Solicitor's office to commence legal proceedings to secure payment of the outstanding amount.

In its March 1997 decision, the supreme court gave leave to Emerald Meats to seek general damages and referred this issue back to the High Court for determination. There is no agreement on the amount of general damages due to Emerald Meats. While Emerald Meats have offered to settle the case for £7.5 million in a short half page letter to the Chief State Solicitor's office in January 1998, the company has not submitted a substantiated Statement of Claim. My Department has been advised both by the CSSO and legal counsel that it should only consider offers for settlement based on a substantiated Statement of Claim. This remains the position. As far as the claim itself is concerned, it has not been substantiated despite the lapse of two and half years since the judgment of the Supreme Court in March 1997. This claim also has to be seen in the context where the rights to the licences were fully restored to Emerald Meats from 1991onwards and for which the company was fully compensated in 1992 for the only year in which it was without the licences in dispute, that is 1990. There has also been the suggestion that, with added interest, the claim could now amount to substantially more. I am advised by the Office of the Attorney General that the award of interest is not automatic in this situation and any consideration of this could only take place in the context of a substantiated Statement of Claim and even then it would be at the discretion of the judge.

In a statement which I issued last week, I outlined my Department's response to the allegations made against my Department in relation to this matter. The Department's decision in 1990 was based on its interpretation of the regulations and after consultation with the Office of the Attorney General. It should be emphasised that while the courts found against my Department, they did not find that there was any collusion between my Department and the meat processors to deprive Emerald Meats of its entitlements under the GATT quota scheme. My Department unreservedly accepts the rulings of the courts and has fully implemented their findings.

While the courts found against my Department, all the decisions in this case were taken on the basis of legal advice. The costs and damages awarded against my Department have been promptly paid to Emerald Meats. The case will continue to be handled in accordance with legal advice and normal legal procedures. I want to make it clear that I do not wish to prolong this case but obviously I can only consider any settlement on the basis of a substantiated Statement of Claim.

The decision on the Emerald Meats case was taken almost ten years ago and in the interim there have been major changes in the operations and procedures of the Department. Major initiatives have been taken over the past decade and substantial progress has been made in eliminating the scope for the kinds of error which occurred, and in ensuring that there is no departure from high standards. The CAP reform of 1992 switched the emphasis of Community support from market supports – notably export refunds and intervention, which is in progressive decline – to direct income support to individual farmers. The Department's handling of this major undertaking has been an acknowledged success. Its performance in delivery of these income support payments is among the best in Europe.

Strong financial control and audit procedures have been introduced in recent years. The Department is now certified annually by an independent auditing firm as paying agency of the Commission by complying with the rigorous requirements of the FEOGA Accreditation process. The reach and capacity of the Department's IT services have been vastly extended. An upgraded internal audit unit was established in 1994. An audit committee headed by an external accountant was also established in 1994 to advise management.

The approach to controlling meat plants has been transformed. There is now greater reliance on unannounced inspections which were first introduced in 1991. Special control teams have been set up and chains of command have been clarified. My Department has introduced a system of fair procedures and a customer complaints unit, which deals with a weakness identified by the Emerald case. A modernisation programme has been under way for some years encompassing major improvements in the financial control environment and service culture of the organisation.

The Department recognises how difficult this matter has been for Emerald Meats. It was not a comfortable time for the Department either. I know that everybody concerned in the Department, as well as the shareholder in Emerald Meats of course, acted in good faith throughout, notwithstanding the suggestions that have been made to the contrary. The handling of this case has been reviewed internally in the Department and it is clear that there were shortcomings in the Department's management of the scheme concerned, by way of lack of administrative care and failure to afford the company fair procedures in dealing with its applications and representations. This was a unique situation, which I do not want to happen again, and it would therefore be unwise to argue from the particular in this case to the Department in general.

There have been substantive changes in the Department over the past decade, the nature and the type of schemes have changed dramatically and irrespective of whether we like it, we have to position ourselves to deal with the serious issues and challenges facing agriculture over the next decade.