Vol. 510 No. 3
25 Mr. Connaughton asked the Minister for Agriculture, Food and Rural Development the grounds on which his Department appealed the Emerald Meats case to the Supreme Court, taking into account the previous judgment given in the High Court; if damages have been agreed with the company; if so, the extent of these damages; and if he will make a statement on the matter. [22581/99]
The background to the Emerald Meats case concerns entitlements to licences for the import of beef into the EU under special arrangements almost ten years ago. In 1990 a dispute arose between the meat processors and Emerald Meats, both of whom claimed entitlement to 70 per cent of the licences. My Department decided to allocate the disputed licences to the beef processors who had been allocated the licences when they first became available in 1985 because it believed that, on the basis of the facts then available to it and on its interpretation of the EU regulations, Emerald Meats had acted as an agent of the processors in the case of these licences. The remaining 30 per cent of the licences were allocated to Emerald Meats.
The High Court ruled against my Department in the judgment it delivered in 1991. The Department appealed it to the Supreme Court on the basis of advice from legal counsel and the Office of the Attorney General that its interpretation of relevant EU regulations, in particular in relation to the agency issue, was open to question. The legal advice was that greater consideration should have been given in the High Court to the fact that the disputed licences had not been transferred to Emerald Meats in accordance with the Community's licensing arrangements and the fact that Emerald Meats had explicitly described itself, in a letter dated 26 January 1989 to my Department, as having acted in 1988 "on behalf of" the processors. In addition, Emerald Meats failed to comply with EU regulations which oblige an importer to state on customs documentation whether he is acting on his own behalf or on behalf of another person. The appeal to the Supreme Court was heard in December 1995 but the judgment was not delivered until March 1997. My Department unreservedly accepts the ruling of these courts and has fully implemented them.
As far as damages are concerned, the High Court awarded Emerald Meats economic damages of over £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. 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 it 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 Chief State Solicitor's Office 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 the two and a half years since the judgment of the Supreme Court in March 1997. This claim also has to be seen in the context where rights to the licences were fully restored to Emerald Meats from 1991 onwards 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. 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.
While the courts found against my Department, all decisions in this case were taken on the basis of legal advice. The costs and damages awarded against my Department were promptly paid to Emerald Meats. The case will continue to be handled in accordance with legal advice and normal legal procedures. 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 kind 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 the 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 and 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. The Department has introduced a system of fair procedures and a customer complaints unit, which deals with weaknesses identified by the Emerald Meats 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.
I and the Department recognise 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, 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 type of schemes have changed dramatically and we must position ourselves to deal with the serious issues and challenges facing agriculture over the next decade.
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 were promptly paid to Emerald Meats. The position in relation to general damages is that Emerald Meats has not substantiated its claim despite the lapse of two and a half years since the Supreme Court judgment. The case has been and will continue to be handled in accordance with legal advice and normal legal procedures.
Allegations were made against me on the Adjournment last week. I reject them outright and wish to make my position clear. I had no dealings with the meat processor mentioned. I have met him no more than three times in the past decade, once as part of a broader industrial delegation and otherwise in the context of trade organised business receptions. Neither he nor his companies have privileged access to me or my Department. I wish to nail this misconception and reject allegations of collusion.
This is a serious matter. Serious allegations were made on the "Prime Time" programme. I worry greatly about one matter. I do not intend to delay Question Time today about interpretations and whether Emerald Meats were agents or otherwise. The problem is that a particular settlement arose after the High Court action and the strong judgment issued by the court. Why was the case appealed to the Supreme Court, given that ruling? To people outside the legal profession, such as myself, the judgment appeared to be so strong there was no reason to go to the Supreme Court.
What factors influenced the decision to appeal to the Supreme Court? What were the damages awarded in this case? Had the Department accepted the ruling of the High Court, the damages would probably have been less than £1 million. However, current reports and even the Minister's reply indicate that the matter has not yet been finalised. Figures are being bandied around and it is said that the taxpayer could be exposed to a bill ranging from £11 million to £15 million. The Minister must explain why he appealed to the Supreme Court, despite the information then available to the Department, against the strong ruling from the High Court. That decision is where many of the problems arise.
I did not go to the Supreme Court. The Department went to the Supreme Court on the basis of legal advice from the Office of the Attorney General and its own legal counsel.
Will the Minister publish the legal advice?
I have no problem with that.
Was it official advice? Did the officials decide?
We will publish all legal advice both from the Attorney General at the time and the Attorney General during the rainbow Government's term. I have no problem with that. I do not wish to prolong this case further. The options open to the Department were to reject the legal advice, ignore it or accept it. The legal advice was to appeal to the Supreme Court.
It was strange.
It is easy to say that with hindsight. Anybody looking at it now would say it would have been better to leave well enough alone because the damages then were £400,000. We do not know what they are now because there is no substantiated statement of claim. The decision was based on legal advice to the Department. On the basis of that advice, the Department appealed the case to the Supreme Court. The Supreme Court heard the case in December 1995 and deliberated on it until March 1997. If it had not been a complex case, the court would hardly have spent that length of time on it.
Did the Minister say that this case must go back to the court again? When will it come to finality? There is great concern that it could drag on for another three or four years. Given that concern, will the Minister outline where the case must go now?
The Minister's Department does not have a great record in regard to cases that are appealed. I accept that is a separate matter, but the—
If the Deputy wishes to get a brief reply from the Minister, he should allow the Minister to reply now.
I have a good deal to say about that. The Department's record is not good in regard to the way it deals with cases following High Court decisions on them.
I call the Minister to make a brief, final comment.
In relation to this case and other cases in which my predecessors were involved, the Department has dealt with them on the basis of legal advice, which may be good, bad or indifferent. In relation to this case, the Department is awaiting a substantiated statement of claim. We can hardly pay out taxpayers' money without a claim being substantiated.
If that claim is substantiated, will the Government pay out £7.5 million?
We must proceed to the next question.
No, that is a matter for the High Court to determine.
So the case goes back to the High Court.
I call Question No. 26.
While the courts have found against the Department, all the decisions in the case were taken on the basis of legal advice. The costs and damages awarded against the Department were promptly paid. In relation to general damages, Emerald Meats has not substantiated its claim, despite a lapse of two and half years since the court judgment. The case will continue to be handled in accordance with legal advice and normal legal procedures.
Will the Minister publish the legal advice and place it in the Library?
Yes, I will do that.
The court case arose because there were two legal opinions.
