I welcome the report and compliment the Joint Committee. It is the first report I have seen which carries such a depth of argument and fact finding and a quite clear ending to all its consultations. It is a very good outline of what a Joint Committee can do and should do. First and foremost I compliment the members of the committee for their trojan work in the presentation of this document, the contents of which are very clear and in certain instances very shocking. It is really the bringing forth of a knowledge which hitherto has been kept absolutely secret and away from the public eye.
The performance of Óstlanna Iompair Éireann Teoranta — in times gone by the subsidiary of the CIE company, under the chairmanship of CIE — leaves no doubt that it was a mismanaged organisation which made decisions on its own, on many occasions without consultation with Government, without consultation with the Minister for Transport. In some instances described in the report they more or less told the Minister that he had no say in the matter at all, that it was not his business, that under the legal system by which they were formed he had no right to question certain misdemeanours, which have now been proven, in regard to many aspects of their performance.
There is one point on which I would differ with Senator Ferris. Indeed, the report differs also. It is a fallacy to say that CERT have taken over the affairs of the Great Southern Hotels. That is far from the truth. CERT have no say in the day-to-day policy, the day-to-day management or future proposals for the Great Southern Hotels. In fact CERT are the owners of the share capital which was reallocated to them. The board have now been appointed directly by the Minister with no consultation with CERT and no input by them. This will prove in time to be another mistake. I do not want to start this debate in this vein but one can see, looking at the report of this committee, the performance of the previous board. I want it to be known quite clearly in this House and throughout the country that CERT have no input in the day-to-day workings of the hotels. They have no involvement whatsoever and they should not be blamed in any way for decisions made — whether good, bad or indifferent — in any of the Great Southern Hotels. The committee more or less intimated that argument in saying that they did not fully agree with what the Minister had done in setting up this new structure and new board.
There are a few things one could say about it. If we look at the functions of semi-State organisations — in general as well as in particular — one can always say that the Houses of the Oireachtas, whenever in difficulty with any aspect of those projects, as soon as they became a hot potato, they then made it semi-State, appointed a board and handed over their responsibilities to that board. I have seen that happen in recent years. Instead of the Houses of the Oireachtas and the Government taking on the problem and sorting it out and instead of the Minister responsible taking over that project and sorting it out, they handed it over to this new State board. All the Houses of the Oireachtas were asked to do was to supply the money and the financial backup to all those semi-State boards. There is a common belief in the Houses of the Oireachtas that all problems can be solved by forming a semi-State organisation.
In the submissions sent by Óstlanna Iompair Eireann Teoranta that comes out very clearly — for example letters of guarantee take a high priority and letters of consent by the Minister did not stand for anything. They had to get the guarantee or nothing. If the State did not guarantee it, it was null and void. No more letters of goodwill or good wishes would stand credit even from one semi-State organisation to another as was proved in this case. Up to 1972 the Great Southern Hotel Group had been a profitmaking organisation, making not a huge profit but a reasonable one. One could understand that there could not be a very big profit because this group was a big employer and had a big labour content. That is good in itself and one would not be demanding such huge profits. Out of the blue, and seemingly for no reason at all, the board responsible for hotels made this crazy decision to purchase a hotel in Belfast. That seemed to be the downfall of the organisation. From that day on things went wrong. On page 19, paragraph 37 of the report it states:
This subsidiary company of Ó.I.É. was concerned solely with the Russell Court Hotel, Belfast. In August, 1968 approval was granted to Ó.I.É. to purchase a sixty bedroom hotel in Belfast (the Russell Court) and adjoining property which was to be used to provide an additional fifty to seventy bedrooms in early 1970's. The total cost of the completed project was estimated at £500,000 and this limit was agreed under the Public Capital Programme. A revised estimate of £555,000 for the project was given by Ó.I.É. in February, 1970. Later in 1978 it emerged——
——and this is where I say that we handed over authority to people who showed no responsibility for it——
——that work was well under way on a project radically different from the one that had been approved in 1968. The original Russell Court had been demolished and the superstructure of a new 198 bedroom hotel on the site was well on the way to completion. The design of the new hotel also allowed for expansion to 350 bedrooms for which planning permission had been secured. At that stage the capital costs of the project were estimated at £2.6m., to be funded by £0.6 m. grant from the Northern Ireland authorites and the balance from Ó.I.É and lending institutions. The final cost of the project was £3.1m. approximately.
Imagine the board of a semi-State organisation which were given the normal capital allocation by the Houses of the Oireachtas taking it upon themselves to go from £555,000 to £3.1 million without even having the courtesy to report back to the Minister in question and tell him that what they had asked for and got in good faith had now been abandoned and that they had gone their own way with a project costing £3.1 million. If I had been the Minister in question I would have disbanded that board and sent them into oblivion, because from that day the Great Southern Hotels started going downhill.
The board were let off the hook and they continued to make serious errors one after the other. They tried to salvage something by selling off the little hotels around the country which had been making a profit — and which have continued to make a profit each year since they were sold. I can name a few of these hotels. They sold the Kenmare, Bundoran, Mulrany and the Sligo hotels for £550,000. Rather than believe they had made an error in Belfast, they continued to make further errors. That is where the rot started. I blame the Minister.
I appreciate the work done by this committee in pinpointing those issues. Eventually pressures were exerted on certain Ministers to sell that hotel, or practically to give it away when it was realised that it could not make a profit. They almost gave it away eventually. I remember the night it was sold. The man who purchased it, Mr. Eastwood, came on television and the words he said were "I bought it for a song". After crippling the whole of the Great Southern Hotels complex, which up to 1973 had been profitable, that was the comment from the man who purchased that hotel. He was right.
I remember suggesting in 1981 to the then Minister that I had information that the Mater Hospital in Belfast needed that site and building. I believe to this day, and nobody has proved me wrong, that despite informing the Department of Transport at that time that the Mater Hospital in Belfast were interested nobody had made an approach to them. Little wonder Mr. Eastwood could loudly and clearly state on our national network that he bought it for a song. He obviously knew what was going on. It was a sad drama. It was a terrible tragedy for that industry. It was a terrible tragedy for all the hotels, particularly where I live on the west coast, whose committed staff were very proud of the hotels in which they worked. We had three different grades of hotels. First we had the Great Southern Hotel, Grade A; second, we had the lesser hotels in Mulrany and Bundoran — they were very good hotels and served the community well and third, we had the new hotels, such as the Corrib Great Southern in Galway, which dealt with the motoring trade, the night trade and commercial trade, all working very well. This board sold for a nominal figure of £550,000 some of the most beautiful, and financially rewarding hotels in the group.
This can never happen again in any semi-State organisation because now semi-State organisations must take note that Joint Committees like this committee on commercial State-sponsored bodies who have brought out this first report, have sounded the warning bell that these semi-State organisations will have to behave themselves in future. There is little point in us doing that if the Government do not follow it up with action. The whole procedure has got to be tightened up. Capital invested by the taxpayers is the responsibility of the Minister for Finance, the Government of the day and the duly selected Minister for that particular Department or State-sponsored body. This comes over loud and clear from this report. The committee devote many columns to talking about the bad decisions, not the bad management, of the board. That seems to be the overriding factor in this report. For example, who made the decision not to pay the PAYE and PRSI employees' contributions — somewhere around £2 million? This money was kept by this board. It was not the hotel management who made this decision. Those cheques were paid to the central office. Who was responsible in the central office but the managing director and the board of this company. Imagine, for example, private hotels in a city like Galway. Demands are being made on them for PRSI and PAYE payments and in hard years the management of these hotels are striving to honour those payments. Imagine what they thought when they discovered that the management and board of a semi-State organisation decided to withhold £2 million PAYE and PRSI payments. I could never understand — and I still cannot understand — why the board and management were let off so lightly. There are people in our jails for a lot less than the disgraceful behaviour of that board.
The Minister, even at this late stage, should come in here and say what he proposes to do to that company which withheld that money, who literally stole that money from their employees. Something has to be done about it. This is remarked on on numerous occasions in this report and fair play to the committee who highlighted this. This Minister who talked about rectitude should do something about this. I appeal to the Minister and the Minister of State, Deputy G. Birmingham, before something else happens because the scene has been set, to do something about the manner in which the new organisation is set up.
We have an appointed board which is responsible only to the Minister. They are not responsible to CERT. The way this board is set up they can again put their hands into the till belonging to the PAYE and PRSI people, and can make another decision similar to that made in Belfast when they were given permission by the Houses of the Oireachtas to spend £500,000 and spent £3½ million. We have got to tighten this procedure. I ask the Minister and the Government to tighten the structures concerning expenditure on capital projects as well as the other matters that I mentioned. This report brings this out in their summary of recommendations; the committee are beseeching the Government to do something.
CERT is a wonderful organisation which has done an enormous amount of work for restaurants, hotels and tourists. It is involved in tourism and quality food and requires high standards in our restaurants. We have courses in regional technical colleges, secondary and technical schools organised by CERT. We have symposia in tourist districts organised by CERT to show the need to balance and to produce good food. Despite all those training facilities, we have a group of hotels which the public believe CERT own, and this, is true but CERT have no administrative authority over the running of these hotels. It is very important that that should be changed. There are lecture classes in each regional technical college in this country. During the summer months certain students could gain practical experience in any of the hotels. This would lead to better service and would mean that incoming hotel staff would be better educated.
Each year the regional technical colleges have a great problem trying to place students who have gone through a very grinding course for the summer and to give them practical experience. Here was one opportunity. Many hotels are just doing summer business. Their main business in the winter time is low and they do not need a big staff. It would be a wonderful experience for those young students to help provide a first class service. Under the new structures, could CERT take on a certain number of students in different grades this year, put them into their hotels as a part of their education — not as cheap labour — and at the end of that practical scheme say they will sit their examinations and then pass them? These students can get remuneration for their work. I do not expect them to work for nothing. It is not the remuneration aspect that is in my mind but the furtherance of their practical education. I beseech the Minister to think along those lines. It would be an outlet for the regional technical schools in particular, and for other catering schools as well. As CERT are involved in hotels and schools, this is an obvious choice.
The lessons that we must learn from this are loud and clear. A reappraisal has to be made straightaway as to the responsibility of that board and to whom they are responsible. If they were responsible to an organisation of the calibre of CERT, one can rest assured that some of the obnoxious happenings of previous times would not recur. It is not good enough for the Minister to think that he is depending upon a friend. Whoever was appointed chairman of this particular board was a close friend of the Minister, either politically or personally. If he was not a close friend of the Minister, he was a friend of the Labour Party. He was a Coalitionite of one description or another. This has happened with us, but not to the same extent of course. The point is that that is not just good enough when you are talking about the expenditure of such quantities of taxpayers' money.
I would make the suggestion that the responsibility for and the practical administration of those hotels, and not alone for the ownership of them, should rest on CERT, an organisation that has wonderful technical knowledge. A board should be appointed and they should be responsible to the Minister when CERT have finished with their responsibilities or vice versa. In other words, let CERT pick the board, let the board be responsible to CERT and let CERT be responsible to the Minister. At present CERT are responsible to the Minister and the board are responsible to the Minister, but the board and CERT are not responsible to one another. That is the missing link which has to be filled. I suggest that the Minister do a rethink on this.
I have made a few points because some of the decisions of this board were really serious and I appeal to the Minister to do something about them. The decision to keep the workers' PAYE and PRSI contributions was most serious. Everybody seems to have passed it over, and the board have got away with £2 million. There are men serving 20 years in jail for a lot less. That is the truth. I know a man who spent 12 months in jail because he owed £241. That is only a drop in the ocean when compared with what these boys have got away with. I beseech the Minister and the Government to rectify this position, seeing they are the Government of rectitude and that everything will be perfect when they are finished. Our tourist industry has improved significantly this year. The standards are now clear and set. I hope the Minister will take those few points into consideration when he is replying.