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Seanad Éireann díospóireacht -
Wednesday, 29 Aug 1990

Vol. 126 No. 7

Companies (Amendment) Bill, 1990; Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time".

A Chathaoirligh, the Bill I am bringing to the Seanad to-day is to a considerable extent the same as Part IX of the Companies (No. 2) Bill, 1987, which passed through all Stages in this House some time ago. There are, of course, some changes which reflect the consideration of the Bill by the Dáil, as well as the fact that Part IX is now effectively a stand-alone piece of legislation. While the 1987 Bill is currently at Report Stage in the Dáil, it has been decided, for reasons which I will touch on later, to accelerate the progress of these measures now by way of this separate legislation.

Our economic fortunes are never totally within our own control. Movements in international interest rates, fluctuating exchange rates, changing oil prices and other such factors have tangible and ever-changing effects on our daily lives. The present events in the Middle East have sharply reminded us, if that were necessary, that despite good economic management — and, as I remarked in the Dáil yesterday, the Government's record is second to none on this respect — it is simply not possible to control all the forces that affect commercial life. What the State can do, however, is to try to improve the environment that assists and encourages companies to cope with difficulties which arise, whether as a result of international developments or otherwise. That, of course, is the purpose of the measure before the House today.

The decision to accelerate the passage of these particular provisions is a recognition that significant extra difficulties may be faced by Irish companies as a result of the present unrest in the Middle East, and that to wait for the passage of the main companies Bill later this year might deprive some companies of the benefits of having this particular type of mechanism in place.

Turning to the Bill itself, the provisions involved provide what I believe will be a valuable new mechanism for the rescue and return to health of ailing, but potentially viable companies. I would not normally expect to see them being used by healthy companies or, indeed, in the final analysis by firms without prospects of future viability.

The central feature of what is being proposed is the appointment to a company by the High Court of an expert — called an examiner in the Bill — and the placing of the company concerned under the protection of the court for a limited period. Essentially, in order to "qualify" for protection, the company concerned must, under section 2 of the Bill, be unable to pay their debts, or be likely to be unable to pay their debts. At the same time that section gives guidance to the court as to whether the company should get protection — in other words, it may take a view as to whether the company have a chance of survival as a going concern.

Petitions for the appointment of an examiner can, under the Bill, be sought by creditors or shareholders of the company, by the company or by their directors. In the case of shareholders, section 3 provides a standard cut-off point whereby they must hold at least 10 per cent of the share capital in order to apply to the court.

From the date the court becomes involved, the debts of the company will effectively be frozen, since under section 5 no enforcement action can then be taken by creditors. Neither can proceedings for a winding-up of the company be commenced, nor a receiver appointed. The purpose of this stay is to preserve the status quo, to enable the company to be stabilised and the process of rehabilitation to be put in place.

I should emphasise, however, that the temporary suspension of these normal remedies or procedures is only being allowed within the specific parameters set out in the Bill, under the supervision of the High Court and with the aim of achieving the restoration to health of companies in financial difficulty. Granting this breathing space is designed to allow the company's difficulties to be resolved in an orderly way and in a less threatened environment. The aim would be to achieve a result that is much more desirable than the result of any rash action to close the company.

To provide for a situation where companies operate within a group, section 4 provides for the making of orders in the case of related companies.

I should perhaps mention at this stage that in most cases the examiner might be expected to be just that — an examiner, analyst, diagnostician or whatever. However, it must be accepted that there will also be many cases where the examiner will have to take action himself, in terms of asset disposal, trading policies and so on which the existing management is either unwilling or incapable of doing.

For example, there may be an asset which is a drain on the company's resources but which in the normal course of events could not be sold because it is subject to a charge. Subject to provisions recognising the interest of the security holder, section 11 of the Bill will allow the court to authorise the disposal of such an asset by the examiner.

Similarly, the assets might need to be protected if there was a danger that action might be taken in relation to those assets by the directors or management which might prejudice the interests of the company or its creditors. In such circumstances section 9 will allow the court to order that all or any of the powers of the directors can only be exercised by the examiner.

While the main role of the examiner is, of course, not to run the company, the court may nevertheless feel that giving the examiner control of certain functions would be in the best interests of the company or its creditors. Once the examiner is in place, he will carry out an initial assessment of the company's affairs and if he considers from this initial assessment that the company, or part of it, can be saved, he will proceed to draw up a rescue plan.

The examiner will, of course, have a vital need for a full flow of management information, and sections 8 and 9 will give him some important powers in this respect. As a start, he must be given details of the company's assets and liabilities and information relating to creditors, within seven days of his appointment. In addition he will be able to attend all meetings of the directors as well as general meetings of the company.

In cases where a provisional liquidator or a receiver have already been appointed to a company it is important that the court can ensure in subsequently appointing an examiner that the actions of either the receiver or the provisional liquidator do not frustrate the rescue process. Section 6, therefore, will allow the court to make certain types of orders in relation to both.

Having conducted his initial assessment of the company the examiner will report back to the court within three weeks of his appointment and section 16 sets out what that report must contain. While obviously containing financial information, it must also give the examiner's view as to whether the company and the whole or part of its undertaking would be capable of survival as a going concern, what conditions are essential to ensure such survival and whether compromise proposals might be more advantageous to shareholders and creditors than the winding-up of the company. The examiner must also give his own recommendations as to what course should be taken including, if warranted, actual draft compromise proposals.

If, on the other hand, the examiner's initial assessment is that the company would not be capable of survival, then the court must hold a hearing at which all affected shareholders are entitled to be heard. Following the hearing the court may make an order as to what should happen to the company — for example, whether it should remain under the protection of the court, wound up, or some other course of action would be appropriate.

Assuming, however, that the examiner's initial response is favourable, he would, as I mentioned earlier, proceed to the next phase without a court hearing. This would obviously involve rounds of discussions with classes of creditors and shareholders, meetings of various kinds and so on, in an effort to work out an acceptable rescue package or, in the terms of the Bill, compromise proposals.

These proposals must contain certain specific information and meet certain criteria set out in section 22. They must, for example, provide equal treatment for each claim or interest of a particular class of creditors or shareholders. They must also show how the different classes would be affected and provide for mechanisms as to how the ovarall plan is to be implemented. One particularly useful piece of information to be included is an effective comparison between the effect of the proposals as against the probable financial outcome of a winding-up for the various parties involved.

I do not think any of us should underestimate the difficulty of doing this and it really will take a major effort, even in the smallest of companies, to make the whole thing work. However, assuming there is sufficient agreement to his proposals, the examiner can then seek to have them confirmed by the court. For its part the court must be satisfied that the proposals meet certain tests — for example, that they are fair and equitable to any class of members or creditors that have not accepted them and whose claims or interests would be impaired. If the court confirms the plan, it will be binding on everyone concerned, the examiner's appointment will be at an end and the company will cease to be under the protection of the court.

The Bill recognises the value of consultation with the creditors of the company and allows the court to direct that a committee of creditors be appointed to assist the examiner. I would like here to point out that the need to keep all interested parties informed is catered for throughout the Bill. For example, notification of the presentation of a petition in the first place must be delivered to the Registrar of Companies straightaway; when the examiner is appointed notifications must be published; the examiner must give the committee of creditors, if there is one, a copy of the proposals and there are provisions for consultations with members and creditors on the proposals.

The whole system is designed to operate within a tight timescale. I strongly believe that this is the only way of ensuring that the mechanism can be successful and used to the full. In fact, one of the main criticisms of similar systems operating elsewhere is that they can be too long drawn out and, therefore, obviously too costly.

It is important that all those affected by the use of the provisions of this Bill should be reassured by the certainty that the system being introduced is to operate within this tightly defined timescale. Thus, the court protection period is restricted to three months, with an additional 30 days if needed to facilitate the examiner in the preparation of his final report. There are also time limits within which the examiner must furnish his reports — the one giving his initial assessment within three weeks of his appointment and the second one containing his actual proposals within a further three weeks. Again, I know these limits are quite demanding, but there are so many interests to be balanced in this whole process that, quite literally, time is of the essence.

While it is not the practice to discuss the financial affairs of individual companies, I took the opportunity yesterday in the Dáil to disclose information relating to the affairs of Goodman International, about whose position there has been substantial speculation and comment. I was authorised by IBI Corporate Finance Limited, on behalf of Goodman International and Goodman Holdings, to provide that information in relation to Goodman International and other relevant companies. For the benefit of Senators, I will give the same information here from the communication I received from IBI Corporate Finance Limited in a letter to me dated 27th August 1990 and I would emphasise that I am now quoting:

As at 17th August, 1990, Goodman International and its subsidiaries (other than Food Industries plc) owed banks approximately IR£460 million which had been available on an unsecured short term basis. In addition, banks had guaranteed obligations in respect of the performance of Goodman International and its subsidiaries (other than Food Industries plc) under beef supply contracts in an amount of approximately IR£200 million.

Goodman International and its subsidiaries (other than Food Industries plc) are owed IR£180 million by Iraqi entities, this figure includes £11 million of interest due.

Goodman International and its subsidiaries (other than Food Industries plc) are owed IR £203 million by other companies owned by Goodman Holdings of which it is estimated not more than IR £90 million will be recovered.

Shareholders funds of Goodman International as shown by the consolidated accounts to 31st December, 1989 were IR £191 million and the net worth of Goodman Holdings as at that date was IR £273 million. These did not take into account any major provisions in relation to the Iraqi debt or amount owning by other subsidiaries of Goodman Holdings which now stand at the amount stated above.

The trading operations of Goodman International continue to be substantially profitable before interest which mainly arises from the failure to receive payment for beef shipments to Iraq and the inability of other subsidiaries of Goodman Holdings to repay the debt outstanding.

Food Industries plc is a separate listed company with its own independent board of directors and management. It continues to trade profitably and arranges its own finance independently. It has virtually no trading links with Goodman International There is no inter-dependence of borrowings between Food Industries plc and other subsidiaries of Goodman Holdings and/or Goodman International. The links between Food Industries plc and Goodman International are the ownership of 68% and some common directors.

I repeat that this information was provided to me by IBI Corporate Finance Limited.

I would like at this stage to comment on the beef industry, its achievements and some of its problems. The pre-eminent position of the cattle and beef industry in the Irish economy is best illustrated by the fact that it contributes some 10 per cent to gross domestic product. Output of cattle and calves for 1989 was valued at £1,211 million or 36 per cent of gross agricultural output, while cattle and beef exports amounted to £760 million and represented 32 per cent of total agricultural exports and 5.2 per cent of total exports. If export refunds are included, export earnings from the beef sector increase to £1,010 million and their contribution to agricultural exports and total exports increase to 43 per cent and 7 per cent, respectively.

The beef sector has achieved very significant progress over the past 20 years in terms of moving away from live exports and increasing value-added exports. This situation is evident from the fact that our live cattle exports represented 46 per cent of the total destined for export in 1969 and less than 11 per cent by 1989. Indeed, the level of live exports to destinations outside of the island of Ireland in 1989 was down to less than 3 per cent.

Over the same 20 year period the industry progressed from producing cattle for export and subsequent slaughter in other countries to one which now exports 75 per cent of our cattle output as beef to destinations throughout the world. It has progressed from then exporting 87 per cent of our beef in the bone-in state and only 13 per cent boneless to now exporting 58 per cent boneless and 42 per cent bone-in. There are some 100,000 farmers involved in the production of cattle, the raw material of the industry. The industry is also of major benefit to the services sector particularly in the area of transport.

There is no doubt that our membership of the EC and the access to the various support schemes have contributed more to the increased production of the beef industry over the last 20 years than has our access to the large EC market of consumers. We have manifestly failed to penetrate this sophisticated and increasingly valuable continental EC market to any significant degree, a market where we sell only 40 per cent of steer production. As a consequence we have relied on volatile Middle East markets as outlets for much of our beef exports. Serious problems have recently arisen in our principal markets abroad. Examples of these include the following. We stand to lose a major outlet for our beef due to the embargo on trade with Iraq. This embargo prevents all exports of beef to a destination which took 51,000 tonnes of Irish beef in 1989 and which could reasonably have been expected, in the absence of the embargo, to take between 30,000 and 40,000 tonnes in the remainder of this year, an export quantity which we now stand to lose. There is a widespread threat to our third country exports in general due to the BSE scare. Iran and Egypt are of most serious concern. Iran, which is the most important of the third countries with which we have BSE problems, took 61,000 tonnes of Irish beef in 1989. The demand for beef in the UK and the Continent is down by at least 10 per cent and there is little prospect of a significant improvement in the short term. The outlets for our live cattle have also been affected, particularly in Libya, by concern about BSE.

Overall, if the present situation continues unchanged, the prospect is that over the September-December period the only realistic outlet for our beef will be the intervention system. Under existing arrangements for intervention the safety-net mechanism which gives guaranteed access to intervention for certain categories of steers is operating and we anticipate that this will continue for the rest of the year. However, this will not take all of the steers and heifers and cows do not qualify for intervention under existing EC rules. While this safety net is of assistance to our industry it is an expensive system for the Community and there may be some difficulties when the system comes up for review again at the end of 1990.

The possibility of difficulties arising for companies generally because of the current Middle East crisis has accentuated the desirability of having these provisions put in place as soon as possible. Notwithstanding that I have given details in one particular case, I want to stress again that today's measure is one of general application. It should, therefore, I suggest, be judged on its potential to meet the needs of companies in general, as were the provisions contained in Part IX of the 1987 Bill. I hope that the Seanad's previous experience of that Bill will assist the passage through the House today of the similar measure which is now before it. I am confident that the Bill will be an encouragement to firms experiencing difficulties to tackle in a new way their problems at an early stage and initiate action that can ensure their continued existence.

I look forward to the passage of the Bill into law, and I commend it to the House.

We are discussing a piece of legislation today that went through the House some three years ago. At that time the Bill was accorded exceptional treatment here. The then Minister accepted scores of amendments which certainly enhanced the legislation. I recall long and earnest discussions on the whole question of insolvency, the area before the House today. The only amendments that I tabled to that very comprehensive Bill during the course of the discussions here related to this group of sections.

The underlying problems the Oireachtas are dealing with are the first effects of the war in the Middle East — and thankfully it is still a cold war. This House must, I submit, expel personalities from our considerations and devote our efforts to the harsh economic effect of the embargo on our developed trade and on the consequent frightening knock-on effects, not just for workers in our meat factories but for farmers and the factory operatives in other industries which have close ties with the processed or added value beef industry — the paper and packaging industry for example, the plastic and tape manufacturers and indeed, as the Minister has said, the transport and shipping companies. All of these, I take it, have not been left for payment for their goods and services as long as Goodman International has been left by the Government of Iraq.

The main factor for Mr. Goodman's success, as I see it, in his dealings with Irish farmers over the past 30 years was that he paid on the nail, as it were, for livestock or any other farm produce he dealt in. I think it is true to say that he paid substantial sums to farmers for produce delivered in good faith by them to factories that failed for whatever reason and ones that he then took over. It is well known that the Goodman companies bailed out concerns like Dublin Meats, DJS in Donegal and Clover Meats. Indeed, if my memory serves me, that organisation paid in excess of £2 million to farmers in good faith to rescue them from the effects of the Clover Meats affair. At that time the Government and the farming community were very glad that the Goodman Group helped to pick up the pieces and we have a colleague in the House who was very severely affected by the Clover closure.

Just as our Government used the opportunities presented to them to successfully liberate Mr. Brian Keenan, much to the pleasure and delight of persons of goodwill everywhere, so too must we look to and support every effort to ensure that our citizens who availed of work opportunities and positions in both Iraq and Kuwait are allowed home safely. This, we must recognise, represents a most difficult task for our Government and I think we must be supportive of the Government's efforts in that area.

The Government must be part of and supportive of the United Nations Resolutions and of the policies of the European Community. If I were an Austrian citizen I would hang my head in shame at the action of their President. How can a statesman condone the actions and posturing of Iraq just 51 years after 1939, unless one supported the policies of expansion then as now.

The Government are asking this House to pass legislation today to prevent the collapse of the Goodman Group. The prospects facing the agricultural industry before this recent bombshell were bad enough, but this collapse could be the final straw. There are thousands of families deeply concerned because of recent developments. Many jobs are at risk and many small businesses are facing possible closure yet the Government remain silent about the circumstances which brought about this sad situation. The failure of the Taoiseach and his Ministers — particularly those involved in 1987 — to disclose publicly the circumstances which led to the reintroduction of the export credit insurance or goods to Iraq in 1987 forces me to ask the Minister to set up an inquiry into events at that time.

The decision of the present Minister for Finance and his colleagues to restore export credit insurance cover clearly signals support by the Government for the development and expansion of trade with Iraq. I refer my colleagues to the various debates in the Oireachtas where there is clear evidence to support what I have just said. Deputy A. Reynolds when introducing the Insurance Export Guarantee Bill, 1988, as Minister for Industry and Commerce said that as a result of the successful growth in business contacts in Iraq and in the context of the Irish/Iraqi Joint Commission, it was decided to provide export credit facilities in respect of Iraq. He also said that this was a positive development in terms of sustaining export growth in the long term.

Deputy Ray Burke, answering in the Dáil on 3 May 1989, as Minister for Industry and Commerce said: "For my part, I would like to confirm the Government's confidence in the well being of our economic relations with Iraq". This action was taken and these things were said at a time when many other European countries, so far as one can judge decided not to grant cover for Iraq because the risks were too high because of the war.

It should not be forgotten either that in 1986 the Government decided not to underwrite any further risks for Iraq because of the risks involved. There is an obligation on the Government to explain why they took the decision to restore insurance cover for that country and to expose this country to potential liabilities well in excess of £100 million. We should be told why they encouraged the expansion and development of trade, particularly in the beef sector, with Iraq.

We should be given details of the discussions which took place between the Government and Goodman International in 1987 in relation to contracts for the supply of meat to Iraq. We should also be told if discussions took place between the Taoiseach and members of the Government and representatives of the Goodman Group and, indeed, Mr. Goodman himself regarding the provision of export credit insurance to cover contracts secured for the supply of meat to that country. Were members of the Government aware that in order to fulfil the contracts some meat would have to be provided from outside our jurisdiction?

These are all relevant points especially when one considers the litigation between the Minister for Industry and Commerce and this group on the cessation of the export insurance scheme. It is unfortunate that the Goodman Group is now owed such a colossal amount of money by Iraq. The Irish economy faces enormous difficulties. I should like to ask the Minister if meat is the only commodity for which the Government of Iraq have been slow to pay. Can we expect that other Irish companies will find themselves in the same situation? For example, if they did not pay for the medical services provided by PARC, would the losses sustained deal a crippling blow to Aer Lingus? Would their third subsidiary find itself in financial difficulties? These are disturbing questions.

The Minister should withdraw the court action and pay the export insurance cover to the Goodman Group because if that case were to prove successful from the organisation's side there would not be much use paying £80 million or £100 million to them if in five or six months time they go into liquidation. These are disturbing problems. The farming industry face huge uncertainties at a time when farm incomes are on the decline and margins are once again being significantly reduced.

The Bill before us, as the Minister has so very clearly pointed out, is Part IX of the Companies (No. 2) Bill, 1987. We had a very long and indepth discussion on every aspect of that legislation as it progressed through this House over a period of 15 or 18 months. There was some criticism that the legislation was passing too slowly, but many amendments proposed and accepted enhanced that legislation. Members recognise the benefit of having these kinds of provisions in place, as they are in the US and the UK, for example. Our companies and exporters are entitled to the best possible protection if difficulties arise as a result of activities outside their control.

I wish the passage of this Bill success. I hope the Minister will bear in mind not just the problems facing one company but the knock-on effect. I had hoped we would have an opportunity to go into the Bill in greater detail on Committee Stage and I very much regret that the agreement reached yesterday has been changed without notice. That is an unfortunate way of dealing with what is probably the most important legislation to come before the House in a long time.

I would like the Minister to explain how he sees the examiner having access to funds in order to keep a company ticking over, particularly in the early days of his appointment. The reality is, I presume, that wages will have to be paid and creditors, who would be asked to continue to supply goods or services must be satisfied that there are funds to cover their costs. There are many areas that need clarification. Our experience of this Bill, especially Part IX, is that it needs solid and painstaking consideration. I believe that more than one company will be affected by the difficulties in the Middle East. It is useful to point out that the Goodman company traded profitably for the last 30 years and their salient feature, which is very much appreciated, is their prompt payment to the farming community.

The withdrawal of export credit insurance after it had been reintroduced with guarantees by the Government is very important. I doubt if that export trade would have continued without some very definite guarantees. The House is entitled to a clear statement on the situation regarding the withdrawal of that insurance cover.

The third point I wish to make is very appropriate. While I agree that the Government must be very much part of and supportive of the United Nations resolution, the Minister should have been aware of the knock-on effects and difficulties that would arise by his support of sanctions. The whole question of the propriety of including food as part of a blockade sends shivers down the backs of many Irish households. It is over 150 years since we had the Famine but it is a very live issue in our folklore and in the minds of third and fourth generations of Irish people. Very few people would be supportive of an international campaign to starve out a whole country of people just because another large country want to secure their supply of a very valuable commodity. Do we really subscribe to the policy of starvation of innocent people in our legitimate desire to see justice for Kuwait?

I put the case to the Minister that perhaps he and the Government should consider seriously withdrawing the court proceedings and the claim for insurance payment at this stage. If that payment were made it would go a long way towards ensuring that many jobs would be saved and that the cloud which is hanging over many people and households would be lifted.

Can I clarify for the House that agreement was reached with the Whips that contributions would be of 15 minutes duration and that the Minister would be given ten minutes to reply? It is a matter for the House.

I am prepared to go along with what the Government Whip has suggested if we have a consensus in the House. Is that agreed by the Opposition? Agreed.

I was waiting to be pulled up.

Acting Chairman

We are in no sense being critical of Senator McDonald's speech. The facts are that the Whips have agreed on 15 minute contributions from Members and on a ten-minute contribution from the Minister but it was not put onto the record of the House formally and this is merely regularising that position. You can take it as of now, given that it has been proposed by the Government Whip and agreed by those members of the Opposition here present, that we are now operating a schedule as outlined by Senator Wright.

I will try to set an example in regard to the time standards which have been laid down. I congratulate the Minister for Industry and Commerce, Mr. O'Malley, all his officials and the Government on the alacrity they have displayed in putting the Companies (Amendment) Bill together and presenting it to both Houses. It is particularly timely and appropriate that the decision should have been taken to recall both Houses of the Oireachtas in order to implement this very important legislation in view of the Gulf crisis and the possible repercussions and reverberations this might have on companies throughout the country.

I am glad that, by and large, the majority of the Members of Dáil Éireann avoided, in general, the temptation to use the occasion to involve themselves in a political dogfight or the settling of old scores because of this issue. It was particularly heartening to see that the debate in the other House, through all stages, was constructive and the degree of cooperation shown between the Opposition parties and the Government was excellent. I hope that all Members of this House will respond in like manner and as responsibly.

As has been indicated by the Minister, this Bill is virtually identical with Part 4 of the Companies Bill as it had been agreed and passed in special committee. The new Bill to enact Part IX of the old Companies Bill has only relatively minor changes from the original Bill which has already come before the Dáil and Seanad. Such changes as have been made have been purely to permit Part IX to stand alone.

It is unfortunate that some people, not necessarily all politicians but some media personnel, have also been involved, have seen fit to misrepresent the intentions of the Minister, his Department and the Government with regard to the emergency legislation before the House and the need to pass it as soon as possible. This Bill is not designed for any particular single company. It is for all those who might be affected as a result of the crisis that has arisen internationally.

The horrendous and frightening events in the Gulf States which could not have been foreseen and which happened like a bolt out of the blue, sent shock waves throughout the financial markets of the world. This, unfortunately, has led to a real crisis in stock exchanges. It has resulted in major falls in the exchanges in Wall Street, Tokyo, London and our own Stock Exchange. As a consequence, millions of pounds, dollars, yens and Deutsche Marks have been wiped off the value of shares. This has been one major effect of the Gulf crisis. The interdependence of the finances of individual countries on each other has been clearly exemplified by the events of the last three or four weeks and the relative volatility of the international financial market has been clearly exposed and its vulnerability in the face of calamity is now clearer than it may have been heretofore. For example, who would have thought that almost $400 billion would have been wiped off the capital value of shares on the New York Stock Exchange over the last three weeks? Who would have thought that the comparative value of sterling on the international money markets would have risen to the height it has as overseas investors buy into British high interest rates and visualise the benefits of sterling's residual status as a relatively new found petro-currency? Those examples clarify for us the amazing changes which can take place on the international financial markets and within the currency value ratings in a matter of a few weeks.

Since these events have clearly shattered and altered the world's money markets, it is obvious that they would impact themselves to a major degree on many companies who had a dependence on trading within the troubled regions of the Gulf State countries. There are many companies throughout the world, both public and private, who have had major trading relations with many of the Gulf States and, because of the Gulf war, they are now exposed. They are in a very vulnerable position. I am aware of a number of companies in the United Kingdom who will be put to the wall, if not go bust, as a result of the crisis. They are companies who for commercial reasons, traded to a very high extent with the Gulf States and, as a consequence, are now in a most difficult position. It is clearly obvious that companies who had major trade dealings with Iraq will be even more exposed than those who dealt with the other Gulf States because of the agreed embargo and sanctions on trade with that country.

Ireland is just one of many countries which will suffer because of the activities in the Gulf States and, because of the possible extent of the repercussions on our small and very open economy, it is only right, appropriate and proper that the Government should try to find some way of limiting the damage for the sake of the employees who work for these companies and those who trade with them, all of whom may suffer disastrously as a consequence. I am pleased that the Government have grasped the nettle. The knock-on effects throughout our economy could be disastrous and many thousands of people's livelihoods would be seriously damaged, if not wrecked, if action had not been taken.

In discussing the Bill it would be totally inappropriate to concentrate on the problems of any individual company because the Bill is obviously framed and presented as a stand alone part of the original companies Bill. As such, the main thrust of the legislation was already encompassed within the original Bill and was taken in cognisance of the fact that events can arise and, indeed, have which could put companies into a precarious situation. Those companies could possibly trade themselves out of their difficulties given the opportunity to do so and so be salvaged. This legislation is not for any single company. It can be availed of by any company which qualifies under the terms described by the Minister.

The analogy the Minister has put to us with regard to the rescue of companies, and in relation to the medical connotations that are contained in it, are appropriate and simplify the interpretation of this for many people. Clearly, it is intended to help to cure on a permanent basis those who are temporarily ill. It is not intended to be used by healthy companies or by companies who are terminally ill and in their dying throes. It would not work in such situations. It is intended to provide a breathing space for potentially viable companies who have short-term cashflow problems or are in trading difficulties. It is being produced to provide adequate and safe protection under the careful scrutiny of the courts following detailed reports by the examiner. It will prevent the liquidation of potentially viable companies and will protect potentially viable companies from having to take fire brigade action in relation to the sales of some of their assets. It will allow them time and a breathing space in which to resolve their difficulties in an orderly way which should result in a more desirable long-term future than that which might result from rushed actions in either closing the companies or the fire brigade action of selling assets.

Time, well-thought out and organised actions can be vital in rescuing companies in the face of apparent impending financial disaster. This gives an opportunity for reflection so that the best overall approach can be taken to overcome the difficulties to the benefit of all — the country, the company, the creditors and employees, thus ensuring that the "ifs" and "buts" which we so often hear about after the collapse or the liquidation of a company, would not arise. We have all heard that if this bank or that financial institution had held fire and did not ditch a certain company into the arms of a receiver or liquidator all would have been well given time and patience by the financial institutions concerned. How often have all of us listened to those comments with either sympathy or in total disbelief? I have been told such stories on many occasions but was never quite sure what to believe because the gates had been opened and the horses had bolted. At least now there will be no place for the "ifs" and "buts" stories.

In general, I think highly of our financial institutions but, like the rest of us, they are not infallible and they too make mistakes. They can be very much like an ailing company who sometimes precipitately panics and take fire brigade action in relation to the sale of assets. Sometimes financial institutions also panic and rush madly to liquidators to salvage their loans to companies, without thinking the issue through to see if there is a better way.

This Bill should ensure that this does not arise any more. We are all well aware that this emergency legislation has focused special attention on the beef trade and the ramifications of this on the national economy and farmers' incomes. That is reasonable and fair given that the beef industry constitutes approximately 10 per cent of our gross national product and 36 per cent of our agricultural output.

The very rapid development of the beef trade over the past 15 to 20 years has been one of our outstanding achievements and, in particular, the progression from live exports to increasing value-added exports, as exemplified by the fact that our live exports in 1969 were 46 per cent as against 11 per cent in 1989 and our live exports to destinations outside Ireland last year were just 3 per cent. This development and achievement has had major spin-off effects on the national economy. Now some 5,000 people are directly employed in the meat processing industry and approximately 100,000 farmers are directly involved in cattle production. The knock-on effects of this progression have been huge and have benefited the entire economy and the living standards of a large section of our society. Consequently, an impending disaster in our cattle industry would have major knock-on effects in a downward direction on farm incomes and the incomes of all involved in the cattle industry.

The Government have a duty to protect, in as far as they can, this major part of our economy. The sanctions on trade with Iraq will cost us nationally the loss of some 40,000 tonnes of beef this year, an enormous loss to our economy. The cattle industry is getting a lifeline now. There are probably other companies besides the one that has been spoken about and so well publicised, who may have to seek the protection and comfort of the examiner and the courts in this crisis. I hope this is not the case but at least we, as legislators, will have done our duty in providing the necessary legislative structures to deal with the crisis.

I realise that there may be some imperfections in this legislation; there is nothing completely perfect or correct. I am glad that there will be tighter restrictions on the time scale in this Bill as distinct from, say, the old Chapter 11 system as it operates in the United States which is a long-drawn-out system, very ineffective, costly and does not seem to work. We will have an opportunity to observe the workings of this legislation, the amendment to the Companies Acts. I hope we will not have too many opportunities but I have no doubt that we will see how it works and perhaps, if necessary, we can alter and amend it when the full Companies Bill comes before the House.

An Leas-Chathaoirleach

Before I call the next speaker I would like to welcome to the Chamber Senator Edward O'Reilly from Kansas. I understand his relatives originate from Cavan, and I want to extend a warm welcome to him.

I am glad to have this opportunity to speak. I cannot say that I really welcome the Bill and I believe the Government have been less than honest in their statements about it. I listened over the weekend to various Government Ministers claiming that this had nothing whatever to do with the collapse of a particular company namely, the Goodman company. Any simple-minded citizen of this State knows this is not the case. What else is it related to if it is not related to this company? Why was this date chosen if it is not related to a crisis in the Goodman company? Why are we told that the Seanad must conclude this debate by 2 p.m. if there is not some particular urgency that relates to a particular company? Therefore, first of all, I have to reject what the Government have said with regard to the reasons for rushing this Bill through. I also express general concern at the way in which this happens and at the readiness of the Government to come to the rescue of their own friends. Let there be no mistake, this is precisely what is happening.

I would like to ask a few general questions before I get into some technical matters regarding the precise operation of the Bill itself. How is it that the Goodman company obtained such enormous unsecured tranches of credit running into hundreds of millions of pounds secured against nothing in terms of the company's assets, secured only against the personal guarantee of Mr. Goodman? This seems a quite extraordinary arrangement and I wonder why it was allowed. I wonder is there, to use an oft-quoted phrase of political hackery these days, a level playing field. What about the small people? Is that lady in New York right? I cannot remember her name — the property tycoon who claimed that only the small people paid taxes. Are we to assume that there are certain differentials operated by banks here with regard to particular forms of creditor? Was Mr. Goodman a preferential creditor? What rates of interest was he expected to pay? Why is it stated in newspapers this morning, for example, that he is going to be allowed to wipe away very substantial amounts, running into millions of pounds, of bad debt? The average person with a mortgage will wonder why this is the case and if there is something special about Mr. Goodman.

I would like to ask if there is any longer anything special about Fianna Fáil, the Republican party. What kind of republic are they now leading us into? I am not an expert on the beef industry; I am an ordinary, average citizen of this country. I have watched — as I believe the majority of the citizens have — with astonishment the unparalleled concentration of power in the hands of one person financially. Five per cent of our gross national product and 40 per cent of our beef industry, accumulated over a very short space of time, was concentrated in the hands of one private individual.

As an ordinary person listening to the news, watching the television and reading the newspapers I witnessed over the last few years massive campaigns all over the countryside including the advice of a number of politicians to shareholders in co-operatives to allow themselves to be absorbed into the Goodman empire, as it was called. They were promised financial rewards for this, a good deal. I wonder how those people are feeling this morning or this week when they see this little carrot of greed exposed as the hollow sham that it was. I wonder if we can have some comments on that, because we have watched this accumulation of power grow into a kind of South Sea bubble that has now, apparently, burst and we are expected to gallop in to the rescue.

I listened during the week to another programme on which a small farmer with a farm of about 70 or 80 acres was being interviewed. He said it was increasingly difficult for him, with bank interest charges and so on, to deal with the economic circumstances of his life. He was being forced off the land, forced out. I think from what I heard that he was probably one of those whose small holding was established by the operations of the Land Commission which broke up the large estates. He said what an extraordinary irony it was for him in this republic to find that, his family having been given those 70 or 80 acres of land, economic circumstances were now pushing him out and that his holding would inevitably be taken over by what he called a rancher. There will only be ranchers; there will not be many more small farmers because they are being pushed out.

We have seen this massive concentration also with the cattle business at the level of co-operatives, the dairy industry, the beef industry and so on. It seems that to Fianna Fáil big is beautiful and the bigger the more beautiful. This has tragic consequences for people in this country. I wonder, when I see the way in which we are being brought back here, why the rights of the people involved in the Gateaux strike, for example, were treated with such contempt in the Seanad this morning. I asked for a debate and was told there just would not be one and I was given no explanation. What about the workers of Irish Shipping, some of them with 40 years service, individuals with very little financial muscle who have been defrauded by the State out of their pension rights, assets sold off and applied to general State purposes, not to the pension funds? We are talking of the pension funds of people here. It was the same with the Irish Sweepstake workers. The assets of that, the land holdings out in Ballsbridge, were liquidated and disposed of back into the central assets of the State and eventually some piddling amount was made available — a couple of hundred thousand pounds, £3,000 or £4,000 each. I wonder at the morality of this. We are always being treated to hogwash, particularly in these Chambers, about the Christian and democratic nature of the State. I wonder how Christian and democratic the divergence of attitudes is towards Gateaux, Irish Shipping and Sweepstake workers, on the one hand, and Mr. Goodman's enterprise on the other.

I would like, as a footnote, to place on the record that I am involved in a company, I am the managing director and principal shareholder of a company, which has done work with regard to the gay community, the AIDS epidemic and so on, that has been recognised in this Chamber. There was a debate here and all sides agreed that we must have money to rebuild the Hirschfield Centre which was burned down, probably maliciously. It was supported by the Oireachtas Joint Committee on Women's Rights to which the Taoiseach gave responsibility to prioritise lottery funding. It was approved for £50,000 by Dublin Corporation and it was axed a couple of weeks ago by the Minister for the Environment, Deputy Flynn. I have been seeking a meeting with the Taoiseach for the last year to deal with this and today I got my first response in writing — he is unable to meet me but it will be borne in mind. Of course, I am not Mr. Goodman; I am not dealing in beef and my market is not Iraq.

We are all being so high flown and so moral about this situation. I accept that jobs must be saved, but I wonder at the business acumen of these people. I wonder at the business acumen of the banks who expose themselves to these risks. We have seen it already in the Insurance Corporation of Ireland where bad commercial decisions were made by banks. I wonder who is running our banks.

Let us look at the market. The Minister, Deputy O'Malley, is a man for whose business acumen I certainly have a great deal of respect. Our earlier trading history with Iraq was certainly a happy one and as one who was involved in it, I am happy to acknowledge that. I wonder how happy we all are today when we see the record of Saddam Hussein in human rights. There is no equivalence between exporting beef and the country to which it is exported. The market was a very dubious one in ethical terms because we knew perfectly well what was going on in Iraq and we did not give one solitary damn about it.

Even in practical terms, what kind of a market was it for us to develop? It was clearly unstable. President Hussein only stayed in power by eliminating opposition. It was also inimical to everything this country stands for with very little respect for our traditions, beliefs and ideals. I also wonder about the product. After all, we are having difficulties with marketing our beef internationally. There is the scare about Bovine Spongiform Encephalopathy and there is also a growing distaste for red meat in the western European market. Since this is a diminishing market, why this enormous investment in it?

I would like to turn to one or two matters concerning export credits. I do not want to rehash what has been said before but I would refer people who are interested to the speech made by the Minister, Deputy O'Malley on 10 May 1989 where he pointed out that the most extraordinary preferential treatment was being given to one company, and he named it — Goodman International. Three years ago he pointed out the dangers of exposing this country to this and he put his finger on the nub of the problem when he said that we would eventually be expected to pick up the tab when the situation exploded and it has exploded. He suggested very clearly here that a large proportion — £50 million, £60 million or £70 million — of those export credits were being used to guarantee beef that did not originate in this country and here we are today rescuing and propping up this company.

I would like to ask a question which, the Minister might answer or the examiner will look into. In terms of the patriotism of Mr. Goodman, is it true that when the initial contract with Iraq went through, the haulage contract did not go on the open market but instead was secured through the Bulgarian state transport haulage company at preferential rates because they were capable of doing it at 25 per cent of the European normal cost for hard dollar currency? If that is true, what does it tell us about the patriotism of Goodman International?

I would like to ask a couple of questions with regard to the technicalities of the Bill because I have had some information from chartered accountants. They point out that because of the complicated mechanisms involved, the usefulness of this Bill for small companies is questionable. They also question the need, for example, for Fóir Teoranta to be specifically identified since it would presumably fall within the definition of a creditor anyway.

In relation to the appointment of an examiner, notwithstanding the prior appointment of a receiver, certain technical difficulties may flow from this: first the discharge of the company's preferential liabilities which were crystallised on the appointment of a receiver; secondly, the settlement of employee entitlements arising under various labour legislation; thirdly, the status of a signed contract for the sale of some or all of the assets; fourthly the commitments entered into by the receiver following his appointment; and fifthly, the appointment of an examiner in circumstances where the receiver has already ceased to trade. It also should be pointed out that it would be unfortunate, or perhaps dangerous, to allow somebody who has already been appointed an examiner of a company like this subsequently to become the receiver.

Finally, I would like to place on the record five principal points.

An Leas-Chathaoirleach

I have to ask the Senator to conclude. We are running out of time and many speakers have indicated their wish to speak. I appeal to the Senator to conclude.

I take the Leas-Chathaoirleach's point and I will not abuse the time. The Institute of Chartered Accountants in Ireland have produced an exhaustive briefing which is available, and perhaps I can make it available to the Minister. I do not have the opportunity to place it on the record of the House for the reasons indicated by the Leas-Chathaoirleach but it would be valuable to take into consideration the merits of their technical comments on the Bill.

I welcome the Minister to the House on behalf of the Progressive Democrats. I would like to open with a quotation which says:

Politicians are very small-minded. Frankly I couldn't care less about them. They take up too much of our time and they certainly miss the bigger picture in relation to agriculture with their petty behaviour. They really don't understand the industry and they are looking for political mileage.

The House will be relieved to know those are not my words. They were used in an interview last October which was broadcast on LM FM, which goes out in the north-east of Leinster, repeated on RTE and published in the agricultural press. The speaker in that interview, when referring to problems with the take-over in the milk sector, put it all down to politicians interfering with commerce. It was stated then that politicians tended to stick their noses into things they did not understand and that they were not very interested in the opinions of those in the industry. The person who said that went on to say that over the past two years in excess of 430,000 tonnes of beef had been sent to Iraq. He added "This year that market is not in operation; not one kilo of Irish beef is going there at present"— that was last October. They are the words of Larry Goodman.

I can only wonder what he would have to say today and what the situation might be without the intervention of the Minister for Industry and Commerce and the politicians in both Houses, who do understand. That is not to take from Mr. Goodman's achievements and his contribution to the beef industry or to be unaware of our responsibilities to help to alleviate the present difficulties which have profound implications, not just for the agricultural sector but for the whole economy.

I welcome the legislation before the House and I congratulate the Minister on acting quickly and decisively to help companies cope with the unique and difficult trading conditions caused by the crisis in the Gulf and, in particular, for moving to safeguard the beef industry. The Minister referred to the general application of the Bill and I am glad that companies which might run into trouble, and which are capable of trading out of their difficulties, will be given the chance, within a tight timescale, to avoid immediate winding up and receivership and to seek the protection of the courts.

It is notable that under section 3 creditors also have recourse to the courts. I do not subscribe to the notion which has been canvassed in several areas over the last few days that this legislation will make either domestic or foreign banks any more reluctant to advance money. It could be argued that a more prudent approach to lending by the banks in the past might have diminished the necessity for the urgency of this legislation. Responsible profitable companies do not have any reason to fear that their legitimate borrowing requirements will be affected by the Bill.

The Bill's strength is that it allows an independent assessment to be made of the state of a company and that under sections 8 and 9 the examiner is given adequate power to establish the facts. Yesterday in the Dáil, and this morning in the Seanad, the Minister gave an outline of the financial position of Goodman International as supplied to him by IBI Corporate Finance Limited. It is my hope that if and when an examiner is appointed it will be possible to unravel what I suspect is a very complicated web.

Our greatest priority in this House must be to ensure that farmers will have an outlet for their beef, that they will get paid for the 800,000 cattle that will be available to slaughter between now and the end of the year and that the jobs of the 5,000 people in the meat processing sector are protected. That must be our primary responsibility. The crisis in the cattle trade is bad enough, and farmers are losing heavily enough, without matters being made worse. A heading in this morning's issue of The Irish Times which states that £700 million is needed to save the beef trade was not very helpful. It is true that if one multiplied 800,000 cattle by their price per head one would come up with that figure but that is to suggest that they will all be bought and paid for in one day, whereas the money is turned over. The figure is substantially less than that.

Nationally, a build-up in disposable stock numbers is a good thing and we have recovered to something like the 1986 peak of finished cattle but if farmers cannot dispose of those cattle at a profit it will not be long before the numbers will be moving in the wrong direction again. The huge seasonal imbalance in the slaughtering of cattle here is undesirable. Killing half of our cattle in the final quarter of the year and having factories closed or on short-time for the rest of the year is undesirable.

I share the Minister's view about the achievements of the beef industry since we joined the Common Market but I also share his view about the missed opportunities in relation to how we have marketed, or mis-marketed, our beef to a population of 350 million consumers within the European Community. The extreme seasonality to which I referred, is a product of the EC system which discourages winter fattening. It is hoped that the scope of intervention can be extended, that initiatives to secure Iranian and other Middle East contracts will be successful and that the problems in relation to the disposal of cows and heifers can be dealt with. Our immediate problem is how we deal with the numbers that will come on the market over the next four months.

This legislation must be central in helping in that regard. That is not to say that Goodman International should get one red cent in assistance from the Government. Such help would be entirely inappropriate and, quite rightly, would not be tolerated by the taxpayer. It should not be the Government's or the taxpayers' responsibility to pick up the pieces from very private companies who take risks in the expectation of large profits which they intend to retain, and even less so for those who use funds to build a stake in the stock market or in property.

The taxpayer has already reason to be grateful to the Minister for Industry and Commerce for his action in cancelling export credit insurance on beef sent to Iraq. His foresight in this regard looks like saving the hard-pressed Irish taxpayer in the order of £180 million. If it is possible at present to make £60 to £80 a head out of each steer sold into intervention, it should be possible for any plant owner killing cattle to make a tidy profit. The fact that that sort of aid and assistance is available, not that it is not badly needed, explains our inability to market effectively on the European market. Presumably, those selling to high risk countries would, in the normal course of events, expect to make even more than that.

The perils of too much dominance within the sector has already been referred to this morning and that is particularly evident in relation to commodity purchasing. Those perils have been well aired and, but for the Minister for Industry and Commerce, it is probable that things would be even worse than they are. The phrase, a level playing field, is a cliche that has been used in recent debates in this House and elsewhere but I wonder to what extent the co-operative meat plants, and other smaller players in the field, failed to survive because they were playing by the EC's Government rules while others may have been bending or ignoring the rules.

There are many points I disagree with Senator Norris on but I share his view that the banks do not come out of this incident with very much credit, if that is the correct word to use. It is hard to blame any farmer, or person with a mortgage, for being astonished to learn that many millions of pounds have been lent by the banks without any security. Trade creditors who are looking for their money are likely to take the same view. Farmers, or householders, who have lodged their deeds, worth five or ten times the value of their borrowing, cannot be blamed for feeling cynical about the conduct of banks. Some small borrowers have suffered profoundly where they defaulted in such circumstances. As a public representative from a rural area, I know of cases, like others, where that sort of hardship has been experienced.

There have been achievements in the beef industry during the early years of operation of the Goodman group. However, we must now rebuild the beef slaughtering industry and I know that this legislation will help that process take place smoothly. I congratulate the Minister for Industry and Commerce on the speed of his initiative and I am glad to see him in the House.

The first, and most mind-boggling contradiction in all this is that we were reassured last week that this was a routine matter, despite the fact that that could not have been true given that the recall of the Seanad is anything but routine. Today's newspapers show us some of the dimensions of the iceberg but what we do not know at this stage is what the iceberg will look like when everything unfolds. What we are seeing in the Larry Goodman crisis is to some extent part of a pattern in the beef industry. It is most spectacular and damaging but it is part of a pattern.

These series of collapses have been part and parcel of the meat industry over the past number of years. They have given rise to all sorts of behaviour. There have been kidnappings, court cases and movements which amounted to something approximately to lynching gangs moving around. The reputations of some people were destroyed and the meat industry gave rise to a new political phenomenon in the last general election, if one's information is correct. It gave rise to a phenomenon whereby bounced bank cheques were used as election literature. If my information is correct some of those bounced cheques found their way onto telegraph poles in the North. That certainly was a remarkable phenomenon. It is part and parcel of the type of industry we are talking about.

The Minister this morning in his address outlined very briefly some of the dimensions of the significance of the beef industry; I will not bother repeating them but there was one other dimension he could have mentioned, that was, the degree to which the beef industry over the years spawned a whole series of reports, one after another, pointing out the potential of that industry. You could fill a library with them. One after another they have turned out to be useless. It is potential which failed to be harnessed. One of the basic reasons that potential failed to be harnessed was that the political will was not there to capitalise on that industry for the country. We allowed to develop a series of political situations which gave rise to exploitation and opportunism and facilitated those people whose attitudes to business were derived from the same principles that inspired the behaviour and the attitudes of cattle jobbers over the years — when many the time they spent their lives trying to fool farmers and rip them off. That is the background.

We do not know what the dimensions of this crisis are. We do not know how the crisis will work its way through the economy. We have too many uncharted waters. This is an enormous problem and we do not know how it is going to work its way through the system. Farmers are in a miserable state. Many of them depend on beef; something like 52,000 farmers have no farm income and exist on something like £2,500 per year. They are now facing the prospect that this autumn the bottom will be ripped out of a market in respect of the value of cattle. Cattle prices have been knocked back to the order of something like £50 to £100 per head. That is the dimension we are talking about.

I am sorry to note that this morning the Minister did not refer to the workers in the course of his speech. If I am correct in saying that. I think it is a great pity that the welfare of the workers in this industry and, indeed, the welfare of many other workers in the broader, wider economy does not seem to have been given the same level of concern as has been afforded to the farmers.

As was said in the other House yesterday, this Bill confronts many fundamental aspects in relation to how this country works. It raises very basic questions about democracy. It raises questions about how special relationships can arise between one man and the Fianna Fáil Party. It gives rise to questions why and how it can be possible for somebody to meet his bankers in the morning and fly by helicopter for lunch at Kinsealy later that day. I have spoken about its effects on agriculture. There was the question of its effects on the international standing of Ireland. Most of the money has been borrowed outside the country. What will be the effect of that in the longer term? What will be the effect on the credibility of other Irish industries? What will be the effect on the credibility of the Irish Government and how it does business with Irish entrepreneurs, when this turns out to be a sorry sordid mess? The reality is something that nobody should go away from.

We are seeing the end of Larry Goodman. Larry is gone; it is goodbye Larry and the game is over. Humpty Dumpty has fallen off the wall and he definitely will not be put back together again. All the Taoiseach's horses, all the Taoiseach's men and all the toddling around that was done, will not get him back. It is over; it is over for a number of reasons. The most important reason is that Larry has lost his Midas touch. He is no longer Midas. Credibility and belief in him have been removed and that is the most important thing of all. It is shocking and appalling that somebody can get to that stage, finish up as he is, and control 5 per cent of the economy. It is absolutely terrifying that that could happen and could be allowed to happen.

I believe that the Bill before us will not do anything much for Larry. It will give him just a certain amount of time, as it were, on the economic or the business life support machine. That is the size of it. My honest view is that at the end of the three month or four month period the banks will simply move in. It would make sense for them to move in at that stage and zap what will remain. What you are seeing now is a set up to keep the show on the road for the next three or four months. All one can say about that is that I certainly hope it will succeed because the implications of it not succeeding are too terrible to contemplate.

In relation to some of the specifics of the Bill, there is a three months' deadline, as I understand it, with an extra month if the courts agree. It says that a report is to be brought in in three weeks and following that report, as I understand it, a plan will be worked out in another three weeks. I do not think that can happen. I do not think anybody has the capacity to readily and easily unravel this whole business in the space of three weeks, come to a conclusion and, following that, come up with a viable plan in the space of another three weeks. I do not think that that is going to happen. I would like to ask the Minister one straight question on one provision of the Bill. Why did the Minister not take the power to go to the courts and look for the appointment of the examiner? I would like to hear why that was not done.

Essentially what happened is that working capital available to Mr. Goodman, through his contacts and his credibility because of those contacts, was effectively diversified into a gamble. That, of course, arose because of the special relationship which existed between himself and the Fianna Fáil Party. It also arose for other reasons. It arose because of his bullying attitude, his intolerance of any criticism, which was spelled out fairly clearly in the extract from the interview which Senator Dardis read for us here this morning; and it arose because of the way he muscled in and, as it were, frightened the living daylights out of certain aspects of the Press. It must be quite paradoxical and fairly sickening for a number of people in RTE now to read back on the grovelling apology which they issued to Mr. Goodman after honourable, decent journalists tried to expose in the agricultural programmes some of that carry-on. Certainly, there are fairly fundamental issues involved in relation to freedom of speech and the interaction between freedom of speech and the welfare of the country. There are very important issues arising in all that conflict.

Of course, there was the credit insurance. Let me say, to be fair to the Minister, that his record stands. He is to be congratulated on his attitude there. It would be unfair of me not to acknowledge that. Then there is all this other stuff such as the great press conference in 1988 when Larry was going to do it, when Larry was going to develop Tuam, and create the jobs there. Lo and behold, it was just another bottle of smoke. It was absolutely useless and a low grade, sickening piece of PR.

Senator Dardis referred to banks as well. I am coming to the conclusion that in the banks, and particularly the higher up you go in the banks, almost at weekly intervals there should be readings for these people — compulsory, if I can be permitted to say so — of the story of the "King's New Suit". I think they would benefit greatly from reading that little essay. It could be given to them through little talks, like they do at the end of the night on television. Many people in banks, who go around with all these new technological gadgets would benefit from reading the "King's New Suit" once a week. It could be done at one of those lunches I believe they indulge in, perhaps on Fridays. It could be "King's New Suit Day" for these people. The principles of the "King's New Suit" and the capacity to see nakedness have stood the test of time. There must be some other people who could benefit from a reading of this essay. There would be those enthusiasts for Larry as a milk person. Larry was swimming in the milk, when he went around waving his cheque book and the unfortunate poor devils who took him seriously and believed in him, and believed that kind of stuff could work. People were prepared to cast aside the historical relevance and the historical achievements of the co-operative movement. It was all to be cast aside on a few waves of Larry's cheque book. Some of those people must be feeling fairly sick this morning.

I extend congratulations to and say "fair play" to T.J. Maher in particular. He put his head on the political line because, basically, he stood for a belief against that kind of stuff. I have differences with T.J. Maher on many issues but on that I would certainly have to say I admire him and the fact that he stood for old values and old decency in terms of communities trying to stick together, make a go of it and move away from the whole cheque book mentality.

Very briefly, I wish to say that I agree with the idea that it is absolutely imperative that not one red penny goes to Mr. Goodman arising from what we are going to see in the next few days. He has had his "shot". That should be the end of it. Whatever means are used to beef up farming and keep it going should be kept very far away from Mr. Goodman. I appreciate the Minister saying that Mr. Goodman will not be getting any direct money. I question whether or not it is possible for him to get money indirectly bearing in mind his capacity to sell into intervention and so on, arising from what can be negotiated. Also I want to question what is going to be the the set-up when Deputy O'Kennedy gets back from Iran, if he gets the contract. Mr. Goodman should be kept very far away from that type of contract.

In relation to what should be done, and what we should learn from all of this, I certainly agree with the call from the Leader of our party, Deputy Dick Spring, that there should be a sworn inquiry. I was pleased to hear the Minister, Deputy O'Malley this morning on radio not ruling that out, even if he did not go along it. I hope the Minister will consider the issue further and will accede to that request. Indeed, I hope the Government will allow the full facts to be examined. This is one of the biggest economic scandals to hit this country since the company was founded all those years ago. It is absolutely shocking. It is imperative that the full facts be ascertained.

Second, it is very important that we learn from the effects of the secrecy with which Mr. Goodman surrounded himself, the way he could use loopholes in the law to, effectively, keep the whole thing secret and yet protect himself through a company in the Channel Islands which is, apparently, worthless. It is very important that that item is confronted and not allowed recur.

Finally, in the heel of the hunt this comes back to politicians and the way they allow people to get out of control. The buck, ultimately, stops in this House and in the other House of the Oireachtas. Members of these Houses should set about keeping control of people such as Mr. Goodman, no matter how powerful they become. It may not make political sense in the short-term but in the long term it will certainly pay dividends.

In rising to support the Companies (Amendment) Bill, 1990 I should like to compliment the Government, and the Minister, on their prompt and very necessary action to expediate the introduction of this wise legislation. In the extraordinary circumstances in which we now find ourselves I believe it is sensible to implement this Bill at the earliest possible opportunity. The advantages are obvious, particularly as many of our companies must now seek to operate in adverse financial conditions due to external circumstances beyond our control.

Unfortunately, the events which are being experienced owing to the ongoing crisis in the Middle East will have grave implications for companies, particularly those engaged directly or indirectly in the beef industry. Indeed, the effect would have a serious impact on our economy generally. I believe the tremors are beginning to be felt. The constraints of the present situation demand that special measures be taken as quickly as possible to ensure short-term judicial protection to companies which are vulnerable and find themselves exposed at present.

Essentially, many companies which may be substantially sound in the long term will be the unfortunate victims of detrimental circumstances, unless we move to enact protective measures to help companies trying to trade as normally as possible. The effects of the current crisis are too awful to contemplate and the consequences for all of us are obvious. It is now our duty, as responsible legislators, to anticipate eventualities which may arise and act as quickly as possible to generate a suitable trading environment for the many businesses which stand to suffer overwhelming losses and, ultimately, to cease to trade.

I need hardly refer to the implications of that scenario in the context of economic buoyancy and financial stability. Until the current difficult influences abate, it is our duty to see to it that companies which are viable in the long-term are allowed to trade while under the supervision of the court. This new mechanism is absolutely imperative. In general, the legislation empowers the High Court to appoint an examiner who will be accountable to the court. The role of the examiner will be to review the operations of the particular company and, if necessary, to make recommendations for the company's restructuring. In effect the company will be protected from immediate insolvency while allowing their assets, if necessary to be disposed of in a controlled and measured fashion. This facility is vital to prevent a rapid off-loading of assets in an effort to shore up their financial position.

No enforcement action can be taken by creditors. The company's debts will be, in effect, frozen and proceedings for winding up or for the appointment of a receiver are precluded. Swift action is necessary. I hope Senator Upton is wrong and that the banks do not do what he says is obvious to them in three months' time.

A lot of people will be watching to see exactly what the banks will do because, as has been said already, they are not exactly innocent in this whole affair. The 5,000 people directly employed in meat processing, the 100,000 farmers involved in cattle production and a huge number of others will be indirectly affected if this vital legislation is not accelerated. Clearly, the conditions likely to obtain will have frightening repercussions for all of us. The situation now dictates, beyond a shadow of a doubt, that adequate protective measures be introduced immediately. Nobody will thank the Government, or the Opposition, if we are seen to stall with this legislation.

The cattle and beef industry is paramount to our economy. That industry alone contributes some 10 per cent to GDP or 36 per cent of gross agricultural output, valued in 1989 at £1,211 million. It represents 32 per cent of total agricultural exports and 5.2 per cent of total exports. The industry is now facing one of its most difficult crises due to many factors not least the collapse of the Iraqi market. Such whimsical trading conditions must be urgently addressed. I believe that legislation now before us extends some protection to companies who have had to bear the brunt of such conditions. The impact must be cushioned in the manner outlined in the Bill.

The onus now rests on legislators to support and encourage companies to address their financial difficulties while seeking to prevent their total derailment. In so far as is practical to facilitate this process, the Bill proposes the extension of court protection to an ailing company for a restricted period of three months, with an additional 30 days if necessary. This support will be extended if — and only if — the court is satisfied that a company are unable or likely to be unable to pay their debts while taking into overall consideration the protective viability and potential of the company as an ongoing concern.

This procedure allows the fullest consultative process. A High Court petition can be sought by the company, by their directors, creditors or shareholders holding a minimum of 10 per cent share capital. Equally, provisions are in place to facilitate the swift necessary flow of information to the examiner from all relevant parties concerned with the affairs of the company in question. The expeditious nature of this procedure is vital. I welcome the fact that excessive formality and delay are avoided.

Equally, it is obviously necessary that legislation of this kind be flexible and that the examiner be given a reasonably wide degree of discretion in discharging his duties. The circumstances of each company seeking High Court protection will be entirely different. As all facts cannot be envisaged by statutory measure, the examiner must enjoy some latitude in the exercise of his role. This legislation is straightforward and uncomplicated in my view. This is a tremendous benefit if it is effective in securing its objectives. This legislation represents a considerable and rational approach towards alleviating operating difficulties and has the capacity to prevent precipitous action where assets are indiscriminately off-loaded or, at worst, a company is closed.

Actions which might be prejudicial to the overall interests of the company can be prevented by the examiner. He, and only he, under court order as provided in section 9 of this Bill, can exercise the power of the directors. The time factor involved in this legislation is also crucial. If a company is to be rescued successfully action must be immediate and deliberations cannot be in any way protracted. I welcome the time structures inherent in this mechanism. Court protection is restricted to three months, or an extra day if the situation demands it. The initial report of the examiner must be submitted within three weeks of his appointment and his precise recommendations must be received within a further three weeks. Companies on the brink of disaster will, undoubtedly, welcome this new measure as a useful breathing space while their operations are undergoing severe difficulties which are, in the long term, soluble, given adequate time and protection.

I am pleased to be associated with this Bill. The Government have no choice but to create circumstances in which companies can trade. In the current situation they have no option but to assist companies in whatever practical ways they can to stave off utter destruction and all the implications for our economy.

My understanding is that we each have 15 minutes to speak here today and my colleague, Senator Naughten is keen to make a very brief intervention of approximately three minutes and with your consent I would like to share my time with him to that extent. So if you would allow me 12 minutes.

Acting Chairman (Mr. Farrell)

Agreed.

I welcome this debate. It was absolutely necessary that the House be reconvened because of the problems that we are discussing here today. We are living in very strange times. We have been through a summer recess. There have been many calls for the re-call of the Dáil and the Seanad during this summer recess, not because of the issue we have been brought back to discuss, but because of the possibility of the world being engulfed in a war in the Middle East or because of the Iraqi invasion of Kuwait. The perception around this country for the last two to three weeks has been that this might have been the overwhelming reason why the Dáil and Seanad might be recalled. It is remarkable that, of course, we are recalled and that our recall has nothing whatever to do with the crisis in the Gulf. Because of the crisis in this specific Goodman company we were all brought back to Dublin to implement, very urgently, the Companies Bill and, of course, with good reason.

Obviously, the emphasis among most speakers — and the emphasis in the media — is not on the minutiae of the Companies Bill. We have not been brought back in the middle of the summer recess to discuss such minutiae as though it was the continuation of the legislation process. We have, in fact, been brought back because of the Goodman crisis. It has been of legitimate concern to legislators and others to home in on what on earth is happening in so far as the Goodman company are concerned.

I am glad to see the Minister in the House today. It would be very churlish of me, in Opposition, not to compliment him because his hands are particularly clean on this issue. It took considerable courage for him, late last year, to face up to the Goodman issue and to halt the export credit guarantees which up to that time for a couple of years had applied in so far as sales to Iraq were concerned. I want to compliment him. It was a brave act. It was distinctly to the advantage of the Irish taxpayer that he took that profound action at that time. Having said that, on balance, in so far as the export credit scheme is concerned we have to question what has been happening in so far as the country of Iraq is concerned and the perceptions within the Government in regard to the risks in Iraq.

We have to point out that in 1986 the then Government made a decision that there would be no further underwriting of Iraqi risks on export credit guarantee schemes because of the perception of risks entirely independent of an invasion of Kuwait by Iraq. We had in 1987 the dramatic reintroduction of an export credit guarantee scheme by the Government at that time. We have on the record the remarks of the Minister for Finance, Deputy Albert Reynolds in introducing the Insurance Export Guarantee Bill, 1988, when he said that as a result of successful growth and business contacts in Iraq in the context of the Irish/Iraqi Joint Commission it was decided to provide export credit facilities in respect of Iraq. He said this is a positive development in terms of sustaining export growth. Additionally, the Minister for Industry and Commerce, Deputy Burke, in May 1989 said that he would like to confirm the Government's confidence in the well-being of our economic relations with Iraq. In so far as Goodman may be a private company with supposedly unlimited liability there is, of course, a political issue involved here. When you talk about export credit guarantees — which you are talking about — if the scheme fails because of the specific risks in the country or the company to which the company is selling, then the tab is picked up by the Irish State and, without putting a tooth in it by the Irish taxpayer.

Specifically in this case, of great interest to the taxpayer will be the whole question of what is going to happen in relation to the case pending at this time between the Goodman company and the Department of Industry and Commerce. If the Department of Industry and Commerce win their case — we are talking about potential liabilities here that are quoted in excess of £100 million — then it is a problem for the Goodman corporation. If the Department of Industry and Commerce lose their case, it means that the taxpayer is sucked in through this guarantee scheme in funding Goodman because of the export guarantees reintroduced by the Government in 1987. It is extremely questionable why that should have been done at that time given the perception of risk and given the views that no doubt existed within the Insurance Corporation of Ireland and within the Department of Industry and Commerce. It is certainly a matter that is worth probing at this time, because it is a major issue.

The political judgment of the Government and of the Taoiseach in so far as the Goodman company is concerned, to divorce it from the personality of Mr. Goodman, is also fairly suspect. That is clear from the press conference two years ago which the Taoiseach held jointly with Mr. Goodman and with the IDA when it was announced that there would be an investment in the order of about £260 million in food processing industries in this country. Their judgment, I believe, has got to be suspect if that event could take place and if the Government was underpinning its projections for the food processing sector in this quarter, when we see what is happening at this stage.

I do not propose in any sense to get involved in a personal criticism of Mr. Goodman. Mr. Goodman is an entrepreneur. There are positives; there are negatives; there are huge negatives of which we are reading. Having said that I believe it is fair to put on the record that had Mr. Goodman not existed it is not apparent that there was any other giant in the meat industry in Ireland who might have developed the meat industry to the extent to which Mr. Goodman did. Nor is there any evidence that any Government or any Minister in any Government had a scheme or plan in mind which might have developed aspects of the meat industry. I do not want to get in to any question of character assassination when we are talking about this particular debate.

Having said that, the Minister here present and his colleague, Senator Dardis, who spoke a short time ago, were absolutely right in stating that under no circumstances whatever should there be or will there be Government aid in the form of grants for the Goodman company, as presently constituted. Both from what the Minister told us in the House yesterday and what we have learned from other sources, including a speech from Deputy Spring, and from the comments in today's papers and in the financial press from reputable sources, it would be inconceivable for the Government to aid this company as presently structured. In today's paper Government sources are quoted as stating that the Fraud Squad will be investigating the possibility of a fraud of the order of about £25 million within the Goodman group. We read of debts to banks of £460 million. The diversification obviously was disastrous. There were enough problems already in trading with the Middle East in a specific sector that the group apparently knew, without the type of grandiose diversification into the United Kingdom, into the sugar industry and into other areas, which has led to huge losses and which has bled the company of whatever liquidity it might have had.

That having been said, obviously the object of the Government — and it seems that the Government are doing this — is to protect the agricultural sector and specifically to protect the meat sector and the meat industry. I agree with Senator Dardis that a banner headline in The Irish Times today speaking of some hundreds of millions being necessary to bail out the cattle industry is unduly alarmist. We have to give some reassurance to the farming community in this country that there is not an impending disaster in so far as the fundamental health of the cattle sector is concerned.

I am pleased to note that, in what the Minister quotes from what he has been told by the Investment Bank of Ireland yesterday, there is a statement to the effect, from a reliable, sober source, that the trading operations of Goodman International continue to be substantially profitable before interest. That should give heart to the farming community. They should be made aware that there is not and need not necessarily be a crisis in so far as the cattle trade is concerned because of a restructured group with equity possibly coming from other sources or with the Government stepping in. For example, the business editor of the Irish Independent, in contrast to what The Irish Times are suggesting, says that the examiner should, in this instance, be able to borrow working capital needed for cattle purchases and that, even if the Government have to guarantee the loans, the exposure should be no more than £30 million to £40 million and certainly, if an exposure for the Government in guaranteed loans to a company being run by prudent hands can shore up and pin down the cattle industry for this winter, the problem in so far as the national interest or the farming interest is concerned need not be entirely as dramatic as are those facing Mr. Goodman and the people at present involved in the Goodman structure.

We must have regard to what has been stated in the Dáil yesterday by a number of Deputies, to the comments in today's national press from many sober sources and to the list of issues which we have read about, the long list of allegations of debts running to £700 million in cash in guarantees, allegations relating to 30 banks, allegations that Mr. Goodman circumvented personal liabilities with a limited company in the Channel Islands, allegations concerning the Classic Meats Company, allegations concerning the export credit guarantees in the recycling of beef from outside Ireland through the system, libel actions mentioned threatening journalists, and allegations concerning PAYE. I would take the view that, most certainly in this instance, there is a case for an inquiry.

My understanding from Senator Upton and from the leader on this side of the House is that the Minister present being interviewed on radio this morning stated that he had no objection personally to a judicial inquiry taking place but that he did not necessarily see the point of it. I suggest that the Minister consider this judicial inquiry, that in the light of the welter of allegations which have been made and continue to be made, it is probably necessary at this stage that such a judicial inquiry takes place. Again, I want to compliment the Minister for his very strong action in relation to Goodman and export credit guarantees late last years. It was a very fine decision of which this country at the present time is reaping the benefit.

First, I want to put on record my disgust at the fact that only three hours was given to the debate on this very important issue, probably the most important issue, in my view, to be put before this House prior to this and for many years to come. I do not know who was responsible for the decision that this House should be given only this limited time. It is a disgraceful way to treat the House.

First, I want to say that anybody who thinks this legislation is before the House other than because of the collapse of the Goodman Company is absolutely crazy. The reason the legislation is being brought before this House is to provide a means to salvage part of that company. I believe that the Goodman empire is finished. I want to put on record, as far as I am concerned, that over the last 20 years there is no doubt whatsoever that Larry Goodman did for the beef industry what nobody was able to do before. In fact, he was the first man who tried to give added value to beef and to get a market abroad for it.

I regret very much that the collapse, as I see it, of this company was from gambling on the British Stock Exchange. That is one of the major problems and one of the reasons that we are here today. That, of course, together with selling to countries which were very questionable, and indeed the whole question of export credits which were given to this company some three years ago to sell to Iraq. Indeed, I note that the Comptroller and Auditor General in his 1988 report referred to the fact that ICI were open to cover for £107 million worth of beef at 30 June 1989. This is a scandalous situation because trading with Iraq was a dodgy business in any event. I cannot understand why the Goodman Company were not able to get oil instead of money when they were unable to get money. I would like to know what efforts were made.

My colleague, Senator Staunton, referred to the possibility of a judicial inquiry. I think it is only right and proper that there should be a judicial inquiry. I also think that the banks and their whole involvement in the Goodman affair should not be excluded from the inquiry. It is unbelievable that the banks handed out money to this company without guarantees, and whether we like it or not, the Irish taxpayer or the Irish farmer in the beef industry is going to have to meet the cost of this. Again, I regret very much that there is not more time to debate this.

I warmly welcome the introduction of this Bill. I believe it is necessary at this time. I compliment the Minister and the Government on their prompt action. It indicates an awareness of current affairs in the Middle East and the consequences for those who are selling in that area. I certainly believe that it is right, timely and necessary.

The Senators who opposed the Bill in this House are negative people, in my opinion. They even use the passage of the Bill to attack Larry Goodman. Senator Norris asked the question "Is there anything special about Larry Goodman?" I believe that the vast majority of the people in Ireland strongly believe that there is something special about Larry Goodman. Larry Goodman is a very aggressive salesman who has been part of a team who have succeeded in getting markets for our products. He is the kind of person with the kind of company that this country needs to succeed in selling our products. I strongly support Larry Goodman, not for any political contribution that he would make to the party I belong to, because I have survived and the party have survived for years before the name of Larry Goodman ever was mentioned or known to me. I welcome Larry Goodman's initiative, his progress and that of all the others with him.

I believe there are six major players selling in the Middle East. If Larry Goodman has found himself in difficulty now, it is sad not only for the people of this country but in a special way for the small farmers, the small producers in the west of Ireland, the small men who are depending on cattle exports. We know how quick the reaction and the consequences can reach those small farmers. In one day and one week the cattle mart actually is a complete non-event and the small farmers who expect to have a cash flow are very seriously affected. I believe that the firms, including Larry Goodman's, that are in difficulty now deserve our maximum support.

Export credit guarantees are not a new thing in the world. Most countries have export credit guarantees, whether they are selling plant, machinery, ships, aeroplanes or even guns. There are people who gave Iraq export credit guarantees and sold them guns. It behoves the legislators and public representatives in this country to recognise that in business you are not right every time and you will not always choose the right customer.

There are people here who believe it would be prudent to use the passage of this legislation to destroy Larry Goodman and his empire. That would be a tragedy and it would be narrow-minded. It would serve those negative people in this country who belong to splinter parties, who will never be part of a central party big enough to form a government to legislate for this country. Those are the people whose arrogant outbursts, in a democracy, have to be listened to. I believe it is right that they have a voice; but, thank God, they will never be part of main stream politics in this country that will influence the legislation because I would fear the consequences.

Rubbish.

You are part of it.

I know that.

I believe that the six major players who are selling in an area where there is concern at the moment deserve our maximum support and I think that anybody who takes a contrary view is not in tune with the wishes of the Irish people. We are concerned for our citizens who are in that region. We are concerned equally for our citizens, our farmers, all the people whose economy and livelihood are affected. I, coming from very near the grassroots, from a small farm in Donegal, know the difficulties that those small farmers have in selling their cattle and sheep. Whatever you may say about Larry Goodman and his cheque book, he lifted the horizon in this country to a pitch where there was competition. He has done a lot for the farming community.

Before you criticise Larry Goodman, Goodman International and the five other major players in the beef export business, you should ask yourself how much this country is contributing to the promotion of sales. To my knowledge, it is quite a paltry sum we are giving to the CBF. While other European countries are giving large amounts of money to promote the export of their products, we are at the bottom of the league. We are a small country and we know each other's business. There are many jealous operators. If anybody survives and makes a success of their business, it is said they have done so only because of their political involvement. There is a lot of score-settling going on and the attitude that one should never miss an opportunity of having a bash at anybody who is having difficulties in business. If you look at how much Britain, France, Germany and Denmark have given to support the sales of their products, the sales of beef——

Not much to Iraq.

I do not have any difficulty in convincing the reasonable people in this country that we are at the bottom of the league in supporting the sales of our beef, our lamb and our farm products. Here I believe that there is an inconsistency when we crib and concern ourselves about how much we are given. On the week of 25 August the farmer's paper reported "Major Grant Package On The Way" and stated that over the next four years £1.2 billion would be injected into Irish farms through capital grants and incentives. I wonder what the capital grants and incentives are for. They are mostly for cattle sheds, for farm improvement, for pollution control, for disease eradication — all orientated to help sustain people on small farms that have the rearing of cattle as their sole livelihood. Would it not be very unwise to spend £1.2 billion in four years and not be concerned about the people who are in the front line trying to sell that very same product? I am glad that no such short-sightedness exists at Government level because, if it did, that would be a disastrous situation. Whatever the Minister's reservations about Goodman International, I do not believe for a minute that they will prevent the Minister from taking what he sees as appropriate action on the day to protect the industry that is so vital to this country.

The international standing of Ireland, as somebody referred to, was never higher. We have people who were ready to knock our Presidency of the EC. The vast majority of the Irish people recognise that the Presidency was a big occasion for this country and it lifted this country internationally to the point where we have a recognition far in excess of our capacity, our numbers and our size. This country enjoyed a great Presidency and the value of that Presidency and the manner in which it was handled are paying dividends; and some of these dividends have only borne fruit in the last week. I think the Minister for Industry and Commerce enjoys, with other Ministers in the Cabinet, a very high profile internationally. I think he is in a position to get in touch with any Government in the world.

The crisis in the Middle East and Iraq is unavoidable. As far as we are concerned in this country, we cannot contribute very much. We cannot even get our own people who are trapped in that situation out of it because of the dictatorship that exists in that country. I believe this legislation is necessary. I hope the banks and those who have been involved in financing Goodman International and all of the other people who are in difficulty — and it is not Goodman alone — will have consideration and support in the long term and be allowed to trade themselves out of the current difficulties. I think that that is the general wish of all in this country. Whether it is the Staggs, the Springs, or the De Rossas or other minority sections, I do not think they are going to influence the correct decision being taken by Government. There is a groundswell of support for Larry Goodman, for the other five, and for the Government's initiative here. Anybody who assesses the situation to the contrary is miscalculating what the current situation is. I urge the Minister to continue to do his utmost to rescue those who are such a vital part of our sales campaign abroad. I think they are doing great work and I sincerely hope that this problem will be solved and that nobody will have to go out of business.

I do not detect the groundswell of support for Larry Goodman which Senator McGowan has detected, but I bow to his closeness to the grassroots which he boasted to us about a few minutes ago. This is the first time in the last ten years that this House has been called back in an emergency session to rescue a major company in the private sector. I think that the first one was PMPA, the second one was ICI and this time, whatever shadow-boxing, cosmetics or civil service protective language is put on it, we are here today to allow the Goodman organisation to seek the protection of an examiner tomorrow or the day after, and I think that is what is going to happen when this Bill is passed through.

Whether it is right or wrong, I think we have got to realise that there is something very strange about the fact that history is repeating itself regularly in this country in that three large companies have had to be bailed out by the State in circumstances which in all three cases should not have been allowed to happen.

Normally, I am not one for advocating constraints upon private enterprise, but there is something wrong with the workings and the runnings of our financial institutions and our indigenous industries if history continues to repeat itself in this particular way. There must be a better way of running industry and commerce than allowing individuals or institutions to get so big that they are not properly policed but come cap in hand to the Government to be bailed out when they get into trouble. This situation is unacceptable; it is unacceptable morally and it is unacceptable to the taxpayer. Although I know we are actually operating in the dark to a certain extent today, because we do not know the details of what has happened to Goodman International, we do know that in plugging another hole we are dealing with a sad, sorry tale for industry and private enterprise in this country.

I do not think it is the time, despite what Senator McGowan said, to go into recriminations against individuals in the company because we really are not in possession of the details of what has been done, what has been neglected, what wrongs have been done and what unwise investment decisions have been made. These are obviously going to emerge when the examiner gets down to his job in the next day or two. We do know on a very general basis that the Goodman International group of companies was operating in extremely tricky terrain, in extremely difficult areas of business in an unsavoury country for doing business and was making very large profits as a result. We do know that the Iraqis were notably bad at paying on time, that that country was unstable, that it was a war zone during the Iraq-Iran war and is a war zone again. We do know, morally, that we were dealing with one of the most repulsive regimes in the world and we were quite happy not only to allow it but to encourage it.

My knowledge of the beef industry is almost zero, but we were also dealing with other countries who are not friendly countries to the State, and I include Iran and Libya in that. So the whole beef industry, all the outlets for our exports of beef, were precarious to say the least. It was not just Mr. Goodman, if he was at fault, it was ourselves in this House and it was the people in the other House and the Government in particular who were undoubtedly encouraging and had encouraged Mr. Goodman to go after these very large profits regardless of whom he was dealing with and what the commercial practices were. Mr. Goodman was encouraged by the Government — indeed, his empire was, I think, created by the Government — and now the Government have to pick up the tab. It seems to me that the export credit guarantees which were given to Mr. Goodman were very wisely withdrawn by Deputy O'Malley recently, but not before Mr. Goodman had put himself in a situation in the beef industry which, if it is not a monopoly — and we still do not really know but it may emerge whether it is a monopoly or not — was so powerful, that so many people depended upon him, that it was unacceptable.

I do not know the extent of the knockon effect of the apparent collapse of Mr. Goodman's empire, but I do know that having created him, having put him in a position of such industrial and commercial power, it appears that he is now being abandoned and left high and dry by the Government. We cannot in some ways blame Mr. Goodman — the Goodman Group — for going after the huge profits which he was encouraged to do. We cannot blame him either for using some of those large profits or the credit which was extended to him in trying to build up a major food industries group in his purchasing of Berisford and Unigate shares. It seems to me that those decisions were appallingly bad commercial decisions. They do not appear to have had any particular industrial or commercial strategy behind them. They appear to be fliers and to be motivated by a desire to get bigger willy-nilly and they appear to have been extremely extravagant and unwise. We ought to have known in this country that if we were putting power and huge commercial muscle in the hands of one particular man, giving him access to liquid capital and cash, we were also likely to see that man over-expand with the large profits which he gained from the beef industry which we had encouraged. It was a possible danger that this very thing would have happened, but it appears that before last week there were no warning signs given or seen by the Government who had created this particular problem by their incentives.

I regret that we have not heard during this debate — and the debate has been so curtailed as to be absurd — about the plans for the beef industry in the post-Goodman era. One only has to have a basic knowledge of the beef industry in this country to know that it is in trouble because of our trading partners, because of BSE and because of the changing eating habits in the western world. It seems to me that, whereas the beef industry accounts for 10 per cent of GNP, there are no obvious new markets open to this country, that Europe will be dependent on intervention, that we are continuing, probably wrongly, to try to push beef with Iran and that we want to see more plans for diversification if it is possible to rescue the industry from the appalling state it is in. What I regret in this Bill is that it raises more questions about the future than it answers and it is fraught with lack of information about the specific company that we are here to rescue.

First of all, I want to say that I am glad the Oireachtas was recalled on this occasion. I disagree with the observation that it was a piece of hypocrisy to have the Oireachtas recalled in order to bail out a particular individual. That is far too simplistic an interpretation and also underestimates the opportunity we have, even in this very brief period, of turning our attention to the wider context which we will be doing in the afternoon. I, for one, was glad to be plucked from the bosom of a reluctant family in the sunny south, whatever about other people.

We are not, as has been observed, just bailing out an individual, even if we are not strictly speaking bailing him out. We are expressing concern and mounting a rescue operation for a vital industry. As has been said, by Senator Norris among others, it is about time we began to take stock of the beef industry as our mainstay in view of the changing world and changing habits. All I want to do is make some general reflections on the situation that this Bill now represents and the contrast between the euphoric situation two years ago when Mr. Goodman's genius was launched in a flurry of euphoria by the then Taoiseach and the Minister for Agriculture, and the shambles we have today.

First, as has been said, one is astonished at the apparent gullibility of the banking business in contrast to their rigour and severity when they deal with the ordinary punter. There is a parody of Longfellow which says:

Lives of rich men all remind us

We can make our lives a blank,

And departing leave behind us

Lots of money in the bank.

Apparently, Mr. Goodman did not even put money in the bank to begin with. Those of us who are sometimes mystified by the economy should reflect that economistsin the end may not know very much at all — to adapt the famous remark of the Swedish Chancellor in the 17th century: "you do not know, my son, with what little wisdom the economy is governed". Sooner or later, whether or not this Bill will stave off disaster, there will be a day of reckoning for those in the beef industry. The farmer will pay and the taxpayer will pay but what concerns me is, will Mr. Goodman pay? What is his personal financial empire? Will that be immune from the general retribution? Is he personally fire-proofed in respect of his jets, helicopter and lifestyle against the loss of personal fortune? If there is to be a sworn inquiry into all this business with its undertones of fraud, scandal, incompetence, ruthlessness and obsessive empire building, then let that inquiry take in Mr. Goodman's own personal fortunes as well.

In this country, we take for granted that a person has a right to accumulate personal fortunes. Indeed, far from the stereotype that we are all a nation of begrudgers, we are all a nation of servile and facile admirers of the cult of the rich, including journalists in every Sunday newspaper, and there is this vulgar, peasant idea at large that a man cannot do any good for you unless he does good for himself. That has been the peasant wisdom to justify the as yet hitherto unexplained accumulation of the Taoiseach's personal fortunes. I suggest that in the light of the trials and tribulations of rich men in the last few days in this and the neighbouring island, we should begin to ask ourselves how fortunes are made. I do not believe that a man makes millions by the sweat of his brow. There is no brow so superior that it will make millions. It is somebody else's brow that is sweating for that kind of fortune. Let us also remember that it has been wisely observed that behind every fortune there is at least one great crime.

Finally, the moral we should draw in the terms of the economy is that we should begin to re-examine the cult of the entrepreneur. I know that is the essence of the doctrine of some parties of this House. Some years ago I was slammed for being totally naive, if not idiotic, for talking about nationalising the land and the agricultural economy. I do think if we had nationalised the agricultural economy we could not have done any worse than give it to an entrepreneur who has made a total mess of it. My last line would be another adaptation of a biblical statement, put not your trust in entrepreneurs.

I wish to share my time with some of my colleagues. I welcome the brief opportunity to speak on this Bill and congratulate the Minister on the decisive action he took. On too many occasions Ministers have failed to move when they should have but not on this occasion. Over the last number of years, the Minister has signalled difficulties in the beef industry and when he was in a position to do something about them, he moved decisively to take Iraq off cover. We reap the benefits of that action today.

I would like to pose one wider question that has not really been touched on in today's debate. It is one which has been bubbling under the surface over the last number of years and it is our failure to take action to control the growth of companies in many different areas of industry. As has been pointed out, this is not the first time that the Seanad and Dáil have been recalled. In the last two to three years in other industries the growth of companies has been such that they effectively control the whole sector. That is extremely dangerous and that is why we are here today. At the outset when companies begin to grow, we all want to get on the band-wagon, wish them well and hope that they are the knights in shining armour that will bring an industry into healthy profits and grow. The problem is that if one company eventually controls the whole industry and anything happens to that company then the whole industry is effectively undermined and we arrive at the situation we are in today.

We are all at fault for not moving in this area. I would hope that the incumbent Minister for Industry and Commerce, who has expressed views on this question in the past, will be keen to move in this area. After all if we do not set down the ground rules of how businesses should operate we cannot then blame people for bending the rules or sailing close to the wind in how they operate their companies. That failure must be shared by all of us. There is no point in us standing here today berating one or two individuals and hoping that because our failures can be put onto somebody else we are all excused. I do not take that point of view. I do not agree with berating Mr. Goodman in his present situation. That will not solve anything. The fact is that the company grew over the years and the question marks that have been raised as to how that happened will be answered more fully in due course. The initial question of the need for this legislation, and the introduction of the Companies (Amendment) (No. 2) Bill in 1987 has once again been highlighted. The sooner that that Bill in its entirety is passed by both Houses the better. It has taken too long and painstaking a course to get to the stage it is at now. Taking out this section and making it law indicates the urgency and importance of having the full Bill as part of our legislation.

The other question I would like to pose relates to the lack of development of a brand image of our beef. We have taken the easy option and allowed a company like Goodman International to take the easy options in getting markets for this product. We have totally and abjectly failed to develop the European market for Irish beef and yet we pride ourselves on our environment and on the wholesomeness of our agriculture. There is a demand for products produced free from chemicals. Yet, one of the largest industries here has failed to develop an image for its product. That is a failure on the part of the IFA, the farm leaders, companies and the Department of Agriculture. If some attempt had been made over the preceding years to develop the beef industry in terms of a quality image the European markets could have been developed and we would not have had to depend on the Middle East markets. These markets have always been extremely volatile and open to question. In the circumstances pertaining in the Gulf they will be so for at least the next decade.

Today's debate has been brought about because of the serious problems in the Goodman organisation. What are we proposing to do in the immediate future to develop this industry? Shoring up one company, as this legislation may do — hopefully it will not be the demise of the company but may change how it operates and is now constituted — will not be sufficient to develop one of our most important industries, the beef industry. Decisions will have to be taken by the leaders in agriculture in the private and public sectors and in Government to develop this industry. If we fail to take this opportunity to address this issue in all seriousness, then we can talk about the demise of the beef industry. Those involved in the debate should be thinking about the development of the beef industry and where it goes from here. The dairy industry has successfully developed an image but the beef industry has not done so. A leaf could be taken out of their book.

I accept that it is difficult to limit the growth of various companies in their market share. Nevertheless, some mechanism will have to be found to achieve this otherwise we will end up in a situation where one dominant company can effectively control our industry. In Germany, for instance, when one supermarket in the retail trade tried to grow beyond 8 per cent of its market share, the Government refused to allow it to open another supermarket because they felt that 8 per cent of the total market was enough and that anything beyond that would be dangerous. Here two supermarkets control 52 per cent of the business. Over the last number of years they have attempted to control sections of the supplying industries to the retail section. That is extremely unhealthy.

In the long term, for companies to develop outside this country we have to have a margin of flexibility. It is obvious in the dairy sector, where amalgamations are going on at present, that this is necessary. Companies wishing to compete with the great European conglomerates will have to have a turnover in the region of between £1 billion to £2 billion if they are to have a say in how the industry develops. Questions have to be asked and answers have to be given. The Legislature and the Department of Industry and Commerce will have to take the lead in this area by coming up with answers. We have asked questions over the last number of years but all Departments and many Ministers have failed to deal with them. What happened in the Goodman International Group has prompted this question. It must now be answered and effective measures taken.

Ireland needs entrepreneurs. I would hate to think that, out of this debate, we, as politicians, would be seen to be berating people who have the foresight and ability to develop industry because by their foresight they create many needed jobs. I congratulate any Irish entreperneur who invests in this country, who sticks his neck out, and helps our young people to remain at home. What we must have is responsible development and action by the Government to control the type of development that takes place. There are not enough controls or legislation in this area at the moment and we need that type of legislation to come onstream soon.

On a point of order, would it be in order to point out that on such a sensitive national issue a large number of Senators, including myself, have gone to the trouble of preparing contributions but by stunting this debate we are not able to take part? It is an absolute disgrace.

Acting Chairman

That is not a point of order. I am bound by the decision of the House this morning.

I thank Senator Cullen for sharing his time with me. There are precedents for this type of legislation, not just in Ireland but in other parts of the world. It usually comes about in the case of large companies which might damage the national interest. I recall the Chrysler case in America and the Rolls Royce case in Britain. Here we had the famous cases of the ICI and the PMPA, two cases I, being in the insurance business, had a particular interest in. I can recall listening to the present Minister for Industry and Commerce very attentively on the morning of the PMPA debate. His first few words were "the chickens have come home to roost" and he went on to explain his thinking on that problem.

What we are talking about here is legislation which will apply to all companies which might find themselves in difficulties. When the Companies (No. 2) Bill was discussed in the Seanad it was welcomed by business people and by the political parties. Basically what we are doing here is bringing forward Part IX of the Companies (No. 2) Bill and making it a Bill on its own. The reasons given have been many. It was said that if a company is not able to solve its own financial problems, it should get help. Goodman has, of course, been mentioned, I would make the point that when this Bill was being discussed, in particular part IX, the name "Goodman" was never mentioned.

It is true that Mr. Goodman is now a big player in this business and the companies are in a critical situation because of events in the Middle East. They have other difficulties as well. While stressing that the Government are not bailing out Mr. Goodman — that has been said by many Government speakers — what we are doing is passing all Stages of a Bill to enable the company to bring about a restructuring or refinancing. It gives them a chance to sort out their financial and other problems. The underlying assumption is that the Goodman company are in a position to trade out of their difficulties. What they need is a breathing space to allow them to bring about this restructuring or financing.

Mr. Goodman has been mentioned many times. I do not know Mr. Goodman personally. The fact is that he is a very big player in the business world. His business and his company are important to our economy. The Government have a clear duty to help, not to bail them out but to help and they are doing this in what they see as the most effective way by bringing forward the Part IX of the Companies (No. 2) Bill for debate in this emergency session of both Houses of the Oireachtas. The Government are right to move swiftly. They have a duty to ensure that there is no disruption in the beef market in the critical autumn period when cattle are being sold.

There are many things I would like to say about the Bill but I will confine myself to what I would see as the immediate situation we face. It would appear that there is a huge problem in the beef industry particularly in relation to some of the bigger processors. The consequences of not passing this legislation would be that the people most severely affected would be the employees, the small suppliers and the unsecured small creditors. It is to protect these people that this legislation is needed. I welcome the Bill and also the provision under section 33 (2) (a) and (b).

Acting Chairman

In accordance with the decision of the House this morning I now call on the Minister.

I thank Senators for their contributions on this Bill and for the universal support which it has got in this House, for which I am grateful. I cannot, in the very short time at my disposal, deal with all the points that were raised but I will try to deal with some of them and in particular those that were raised by a number of Senators.

Senators McDonald, Upton, Staunton and one or two others talked about the possibility of holding an inquiry. I see no great objection to an inquiry but I have considerable reservations about the holding of a judicial inquiry particularly of the kind that we have known in this country over the last five or ten years where on a number of those occasions very prolonged inquiries went on for 60, 70 and 80 sitting days, enormous sums of money were spent running into millions of pounds on some of those occasions, and where very tenuous conclusions, to say the least, were drawn at the end. One had to question whether it was worth holding the inquiry at all.

I have looked for some time at the provisions of section 165 and the following sections of the Companies Act, 1963, in relation to certain companies about whose activities I was not terribly happy. I considered whether I should put in an inspector or inspectors under those sections to carry on an inspection into the company or group of companies about which I had certain reservations. I had to fall back on my experience in the Department of Industry and Commerce on a previous occasion when, against the advice of the Department, I put inspectors into a number of companies where flagrant misconduct had gone on. The Department advised me not to do it because it was a waste of time and that the provisions of section 165 and the following sections were of little use as they were unenforceable. I regret that events proved the Department right, but nonetheless I did not regret putting them in because I hoped thereby to demonstrate my disapproval of what was going on or what had gone on.

Under the Companies (No. 2) Bill, 1987, which I hope will be passed in the Dáil in November and which this House has already passed, there are ample provisions under Part II, sections 7 to 23, inclusive, to hold proper and meaningful inquiries into things that go on internally in companies. When that becomes law, as I expect it will in the autumn, I will give consideration to an inspector going in to investigate internal activities in some companies that it is impossible to look into at the moment. That might be the most useful, expeditious and the least expensive way of approaching this matter.

Senator McDonald raised the question of whether non-payment to PARC in Baghdad at the moment would cause problems for Aer Lingus. I would like to assure him and the House that it will not, for reasons I need not go into here, cause any problems for Aer Lingus. Senators McDonald and Upton in the course of their speeches said that the Minister should withdraw the action he has taken in respect of export credit insurance and should pay the Goodman organisation the £70 or £80 million in question, that it is no good paying them in five or six months time when it might be too late. I do not want to get into this in great detail but I want to assure Senator McDonald and anyone else who thinks along those lines that I did not initiate the action. I cannot withdraw it. It was taken against me and I have no intention unless I am ordered by the High Court and subsequently the Supreme Court to whom I would appeal, of paying any money in respect of insurance policies where written declarations were made that all the goods were of Republic of Ireland origin and where it transpired that 40 per cent or more of the goods were not of Republic of Ireland origin. It would be wrong of me to do otherwise. Senator Norris and others who call on me to act in accordance with sentiments I expressed in the earlier part of 1989 should look at my actions over the past 12 months.

I accept that.

Everything I have done since assuming office in regard to certain matters are very much in line with the sentiments I expressed in the Dáil when in Opposition in the early part of 1989, both with regard to export credit insurance and also with regard to the matter that Senator Cullen raised of the undue dominance or possible monopoly situation of one group in trying to acquire further companies in the same section to bring their percentage of that sector up to an unacceptably high figure. I am glad to say that pending legislation will deal not just with any specific company, but in general terms, with the problem of the creeping monopoly, the possible abuse of a dominant position and so on. That is the Competition Bill which is with the draftsman now and which I am promised will be completed before October to enable me to introduce it in the Dáil at that stage.

Senator Ross referred to the fact that this was a bailing out Bill. It is not. If some companies which have run into difficulties want to avail of its provisions, then that is fair enough, but it is legislation that was before this House more than two years ago and which is part of general legislation. If there is any Bill that I want to see enacted it is the Companies (No. 2) Bill, 1987, and for a very good reason; there are an enormous number of potential malpractices that can go on in Irish commerical life today which we can do nothing about.

If people talk today about the credibility of Irish business being affected in some fashion vis-a-vis foreign banks and others, then one of the reasons why its credibility might be affected if that is the case, is because we have not got the legislation that we should have. This legislation covers the various points. It is not a criminal offence in this country to indulge in insider dealing. That is regrettable. It is not wrong legally, whatever about morally, to engage in a phoenix syndrome company creation and leave loads and loads of creditors and small people to whom you owe money high and dry. That is permissible at present. There are many things that this Bill will get to grips with and that is why it will have to be given priority in the Dáil. Then it will come back here with more than 300 amendments made since it passed through this House on 4 October 1988. I look forward to the co-operation of the House in dealing with those amendments in order that they may be adopted and the Bill signed into law.

It is only inevitable that we should contrast our lack of control with events in a court in London yesterday. We will give our own businesses and entrepreneurs credibility and better respect when they work within certain parameters rather the way it is at the moment. I am all for encouraging freedom of enterprise but it has to be freedom within certain parameters of conduct. We have failed to lay that down so far and I think we should do it now. This Bill is not so much about conduct as about rescue and trying to bring about a situation where companies, as I put it in the other House, that are judged not to be terminally ill are given an opportunity to resuscitate themselves. There should be some alternative between just carrying on as normal and going into receivership or liquidation. There should be some middle course. We lacked that in this country but it has been used beneficially in other countries.

The Bill before you today may not be perfect but if there are problems in regard to it we can, when we come back in the autumn with the main Bill, take the opportunity then to rectify any deficiencies or defects that come to light at that stage. I again thank the Seanad for its reception of the Bill and ask the House to pass it.

It is now 2 p.m. and in accordance with the order of the House I must now put the question: "That the Bill is hereby read a Second Time, agreed to in Committee and is reported to the House without amendment; and Fourth Stage is hereby completed and the Bill is hereby passed."

Question put.

We wish to point out that we are opposing——

That is not necessary.

Senators

Sit down.

The Seanad divided: Tá, 32; Níl, 18.

  • Bohan, Eddie.
  • Byrne, Seán.
  • Cassidy, Donie.
  • Conroy, Richard.
  • Cullen, Martin.
  • Dardis, John.
  • Fallon, Seán.
  • Farrell, Willie.
  • Finneran, Michael.
  • Foley, Denis.
  • Hanafin, Des.
  • Haughey, Seán F.
  • Honan, Tras.
  • Hussey, Thomas.
  • Ormonde, Donal.
  • Ross, Shane P.N.
  • Keogh, Helen.
  • Kiely, Dan.
  • Kiely, Rory.
  • Lanigan, Michael.
  • Lydon, Don.
  • McCarthy, Seán.
  • McGowan, Paddy.
  • McKenna, Tony.
  • Mooney, Paschal.
  • Mullooly, Brian.
  • Murphy, John A.
  • Ó Cuív, Éamon.
  • O'Donovan, Denis A.
  • O'Keeffe, Batt.
  • Ryan, Eoin David.
  • Wright, G.V.

Níl

  • Cosgrave, Liam.
  • Harte, John.
  • Hourigan, Richard V.
  • Howard, Michael.
  • Jackman, Mary.
  • Kennedy, Patrick.
  • McDonald, Charlie.
  • McMahon, Larry.
  • Manning, Maurice.
  • Naughten, Liam.
  • Neville, Daniel.
  • Norris, David.
  • Ó Foighil, Pol.
  • O'Reilly, Joe.
  • Raftery, Tom.
  • Ryan, John.
  • Staunton, Myles.
  • Upton, Pat.
Tellers: Tá, Senators Wright and Haughey; Níl, Senators Norris and Harte.
Question declared carried.
Barr
Roinn