SELECT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE díospóireacht -
Tuesday, 6 Nov 2007

Vote 6 - Office of the Minister for Finance (Supplementary).

Chairman

Apologies have been received from Deputy Mansergh. Deputy O'Hanlon, who is welcome, will act as his substitute. The business of the committee pertains to the consideration of a Supplementary Estimate. On 24 October the Dáil ordered that a Supplementary Estimate for Vote 6 - Office of the Minister for Finance, be referred to this committee for consideration. A proposed timetable for today's meeting was circulated to members. It allows for opening statements by the Minister of State and the Opposition spokespersons, followed by an open discussion on the Vote by way of questions and answers. Is that agreed? Agreed.

On behalf of the select committee, I welcome the Minister of State, Deputy Noel Ahern, and his officials to the meeting. Briefing materials provided by the Department have been circulated to members and I call on the Minister of State to make his opening statement.

Minister of State at the Department of Finance (Deputy Noel Ahern)

I thank the committee for its co-operation in taking this Supplementary Estimate. The Supplementary Estimate arises on Vote 6 - Office of the Minister for Finance, and is required to facilitate a settlement to a litigation case taken by 46 plaintiffs who claimed compensation for loss resulting from advice on pensions given to them in 1976 by the Agricultural Credit Corporation, ACC. Under an indemnity provided as part of the ACC sale agreement the Minister for Finance is obliged, subject to the approval of the funding by the Dáil, to cover the cost of this outstanding litigation.

The settlement agreement with the 46 plaintiffs was concluded on a confidential basis in July this year and results in a total liability for the Minister for Finance of approximately €3.491 million, taking into account the ACC's legal costs. The Minister for Finance's legal advisors, A&L Goodbody, and senior counsel have advised that the proposed settlement represents a good commercial solution that he should accept and that the settlement compares favourably with the possible outcomes at trial.

I seek approval of a token Supplementary Estimate of €1,000 to enable the transfer of €3.491 million to subhead B, expenses arising from the sale of ACC Bank, from savings under other subheads. The funds to provide for the additional €3.491 million come from savings that the Department of Finance has identified across a number of other subheads

Subhead E, which pertains to Ordnance Survey Ireland, OSI, provides for a contribution towards the general expenses of that organisation. In 2007, savings of €1.5 million are expected because of a combination of stronger than expected commercial receipts and slightly slower expenditure on a number of capital projects due to timing factors. OSI continues to invest in new technologies to provide customers with spatial data which is up to date, accurate and relevant to their needs.

Subhead I provides for expenditure by the Centre for Management and Organisational Development, CMOD, in the Department of Finance for work undertaken on behalf of other Civil Service Departments and offices. Savings in 2007 arose as a result of a number of factors. These include: €210,000 that had been allocated for identity management for hardware, software and solution development procurement, which was not required because a more incremental approach than previously planned was adopted; €290,000 that was saved on Government networks following a favourable renegotiation of tariffs in contracts; and €500,000 that was intended for finishing projects previously funded under the IS fund but which was not spent as Departments and offices made their own administrative arrangements to deal with continuing development work.

Subhead N1 provides for the PEACE and INTERREG programmes. The Department of Finance co-funds INTERREG IIIA under the integrated local developments strategy priority of the programme. This comprises business and economic development, the knowledge economy and training. The Department provides funding to the special EU programmes body, SEUPB, for onward transmission to business-related projects such as business incubation units, business networks, grassroots media enterprises and projects to support tourism. All of the funds allocated to these measures have been committed and savings identified by the Department of Finance are purely as a result of timing issues. Any shortfall will be made up during 2008. The Department of Finance has been informed by the SEUPB that this will not result in a loss of co-funding to the programme from the European Commission.

I thank members for their co-operation. If there are questions, I will do my best to answer them.

Deputy Richard Bruton

I thank the Minister of State and welcome him to the committee in his first appearance in his new capacity. I wish to share my time with Deputy O'Donnell.

Chairman

Is that agreed? Agreed.

Deputy Richard Bruton

Will we see a further Supplementary Estimate in respect of the recommendation of the review body on higher remuneration in the public sector which has recently been agreed by the Government? I understand it would cost €16 million, a great deal more than the figure included in the Supplementary Estimate before us. This should be discussed by the select committee because a recommendation from a review group which has no representative of the taxpayer should not be accepted without some debate. As we are entering into a difficult economic period, this is not the correct time for Ministers to award themselves substantial settlements. Most importantly, however, we cannot agree to remuneration packages at the top end of the public service without insisting that there be matching achievements in terms of delivery. How can we turn around to public servants lower down the scale and expect them, under benchmarking, to make changes and institute modernisation and reform in return for their settlements while allowing this through without the corresponding results being achieved? This is an important issue on which I would like to hear the Minister of State's views.

In principle, I have no objection to the Vote before us, but I have a number of questions. What was the nature of the bad advice given to ACC employees that resulted in this litigation? Is bad advice still being tendered? Are there other examples of bad advice being given either in State bodies or the public service, in which the State may have a liability? There is a growing media campaign in which it is being alleged that bad advice is being offered to public servants in terms of the choice between additional voluntary contributions under pension fund arrangements and buying back notional years of service. Allegations are being made that they are being wrongly advised in this respect. As the case we are discussing has resulted in the State being exposed to a payment of €3.5 million, I would like to hear whether this media campaign could represent another such case because this is the first time I have seen the State caught in respect of bad advice on pensions.

In respect of the settlement, what is the breakdown in terms of the costs paid to the various legal teams involved and the money paid to the 46 plaintiffs? The total is €75,900 per plaintiff, but how much of this went to the individuals involved rather than being soaked up in legal costs? Were we judicious in minimising such costs by not allowing this to go to the steps of the court, so to speak, which would have maximised legal costs, but instead settling at the last minute? How was this issue handled to minimise legal costs?

Presumably, this issue dates back a long time because it predated the sale of ACC. Was this flagged to the Government prior to the sale? Were there ways by which the Government might have mitigated its responsibility? What was the background? Could we have reduced our exposure or was it inevitable that we sign up to the indemnity to which we appear to have signed up? I was not close to the sale of ACC but I do not recall the details of such an indemnity being offered. Are there other indemnities that we have offered in respect of ACC that might come back to bite us later? I would like a little more information on the background to this, rather than simply from where the money might be found.

Deputy Kieran O’Donnell

I concur with my colleague, Deputy Bruton, in wishing the Minister of State, Deputy Noel Ahern, all the best in his new post.

I have a few questions on the settlement. The briefing we received states that the only provision made was €115,000 last year. That is unusual. How long has this legal case been ongoing? Was provision made for it in the accounts of ACC, as would normally be the case? There should have been some form of provision, whether an accrual or a contingency. What form did it take in the accounts? I would not like to see Supplementary Estimates coming before this committee on an ad hoc basis. A provision should be made at the start of the year, as in any set of accounts. Has it been accepted? The brief mentions that agreement has been concluded, but has an agreement been signed? I would like to know the exact details of how and why it arose.

I also note that the briefing makes reference to the advice of senior counsel that most other employees would be statute barred. Is there a possibility of other employees taking further claims? It is not sufficient to state that it may not arise. I would like to know how many employees could possibly take a claim and that we would bring the figure down to exact value terms.

The Minister of State made reference to where the €3.49 million is coming from and gave various figures, but he did not give an exact breakdown. I want a detailed breakdown of from where the €3.49 million is coming so that we can make value judgments in terms of from where the money is being taken.

As a general observation, when a budget is going through every year there appears to be no latitude in terms of from where money can be pulled. However, here is a Supplementary Estimate for which money is being pulled from various projects with relative ease. The Minister should not come along at the end of the year pulling moneys from various projects which may be of benefit. We have little time to consider it.

I ask the Minister of State to deal with the following: a detailed breakdown; whether the figure was provided for in the accounts; whether the agreement has been accepted; the precise details of how it arose in the first place; how many years the case has been ongoing; and the possibility of other former employees taking a claim.

Deputy Joan Burton

I congratulate the Chairman, and the Minister of State, on their new exalted offices.

There are 46 staff involved in the ACC case. Are these retired persons, persons who transferred with the staff of ACC and therefore were nearing pensionable age in the context of transferred employment, or persons, some of whom are retired and some of whom are still working with ACC, who identified a failing in pensions advice? The loss resulted from advice on pensions given to staff in 1976 by the ACC. Was this the subject of contractual arrangements or was it simply the case that when persons entered the employment of the ACC, they were given an indication that they were to be part of the pension scheme? In those days it would have been the norm for the ACC to be advised by pension advisers and trustees. Several very well known operators covered most of the Irish pensions business transacted. In that case, does a counter-claim lie against the pension advisers, actuaries or pension fund company or is it the case that because it occurred so long ago any claims against them are statute barred? If the ACC was in default in terms of advice given to employees, perhaps, in turn, its advisers were also in default to some extent? Was this identified as an issue at the time of the sale when it would have been normal to carry out some kind of due diligence test? When such a test is carried out nowadays, pension liabilities, stated or unstated, are usually a major part of such procedures.

Regarding the savings made on the finance Vote, the first saving is made under subhead 1 which concerns CMOD. As I understand it, CMOD is the computer and IT section of the Department of Finance. An amount was referred to in the media recently regarding the difficulties in proceeding with decentralisation. In addition, at the height of the PPARS dispute, during the lifetime of the previous Dáil, CMOD rode to the rescue as the Government's IT specialist. PPARS also had a very extensive programme in hand at the time, about which it advised us on a number of occasions. Is it possible to be more specific as to why some of the various IT programmes it described enthusiastically did not proceed and have given rise to the consequential savings? At the height of the crisis various members of the Government, from the Taoiseach to the Minister for Finance, referred to CMOD as the section which would sort out the problem.

Do the savings on the INTERREG and PEACE III programmes represent overall savings on programme administration or do they relate to projects for which for some reason or another local or the applicant bodies did not have the relevant applications fully processed? I presume the funds will be rolled over and capable of being drawn down in future years.

Deputy Edward O’Keeffe

I welcome the Minister of State, Deputy Noel Ahern.

The issue relating to the ACC dates back to 1976. Why was it not picked up by the board of the ACC? There is a civil servant from the Department of Finance on the board. Why was he or she not more vigilant in sorting out the problem before privatisation took place? Does the fault for letting this slip through lie with the legal side, the accountancy side or the Department of Finance which polices matters closely in State organisations? I accept the amount involved is not very big but there is a principle involved. If this were to happen in every privatisation, substantial losses would accrue. I want to know why this happened. It would not happen if the proper procedures were in place. It is easy to close the stable door when the horse is gone. In this case, the horse is well gone. What was the legal section in the ACC doing? What were the accountants and auditors doing? A civil servant was appointed by the Government to the board to act as a watchdog. This matter comes back on the Government after 31 years. How was it not discovered during the previous 31 years or the privatisation? I would like these simple but important questions answered.

Deputy Seán Barrett

I welcome the Minister of State and his officials and wish him well in his new post. It is not clear from his statement and the other documentation provided when all of this occurred. All that is referred to is advice given in 1976. Who gave it? What was it and on what grounds was it given? When did all of this come into play? I suggest it was not in 1976, when the advice was given. Who handled this matter in the meantime, during which time we allowed the situation to evolve and vast sums of money accumulated which were paid over to those giving legal advice?

The background note states senior counsel advised that the compromise achieved would compare favourably with the possible outcomes at trial. Did no one ask senior counsel what the chances of winning such a case would be? We have a situation where senior counsel advised that we had better accept this offer because if the case went to trial, we would not do any better. Someone should have asked him or her what the chances of winning were long before this drawn-out affair ended up with a settlement of €3.491 million.

I ask these questions because public bodies, local authorities or otherwise, seem to think they can drag out such cases because their money is not involved. If it was my business, I would not allow a case to drag out and be settled on the steps of the High Court, where I would possibly suffer the loss of a huge amount of money in legal costs. However, this is the trend with regard to local authorities and other public bodies. People do not seem to accept they are handling the public's money. It is not a question of whose chest is being beaten best; it is a question of practicalities.

While I do not blame the officials of the Department of Finance present, I want to know who is handling this matter on behalf of the taxpayer. It is very unusual for a case to be brought as a result of bad advice given on pensions 31 years ago in what was effectively a State-owned company. Who gave this advice and what was it? Pensions are not that complicated, if one is part of a scheme as an employee of a State company. The information seems vague. It is important we know precisely what the advice was and why, 31 years later, this matter is suddenly arriving on our desk at a cost of €3.491 million.

If we have no option but to approve this, we should learn lessons from it. The advice from senior counsel was that we should accept this compromise and not go the full way. That is the real worry. If somebody had asked senior counsel long before now, we might have saved ourselves a lot of money.

Deputy Noel Ahern

It is a matter of public record that several former employees of the ACC claimed compensation for losses resulting from, it is alleged, bad advice on pensions. The agreement entered into on the sale of ACC in 2002 obliges the Minister to indemnify the ACC against certain costs incurred in that pension litigation. The solution was agreed this year. While I accept Deputy Barrett's point, the Minister's advisers, A&L Goodbody advised that the settlement represents a good commercial solution. They and senior counsel recommend that the compromise achieved compares favourably with what might happen.

The indemnity given to Rabobank was in respect of litigation that arose in certain strictly defined circumstances. The provision was regarded as an appropriate solution to deal with legal uncertainty which might otherwise have been a major obstacle to the sale of ACC at the time. Two basic issues might have resulted in claims against ACC. Had Rabobank carried the risk it would have sought a considerable reduction from the €150 million it was paying. The indemnity was regarded as the best way to deal with that problem. As a result, the Minister was made liable for costs and expenses incurred by ACC in the defence of two separate sets of litigation, in respect of pensions, and the financing of the Four Seasons Hotel. The ACC was the lead financial institution in raising the funds for the hotel which was more costly than had been expected. That claim was settled over a year ago. The sale price would have been reduced by a far greater amount than the sum of the settlement because of this litigation.

The €115,000 was intended to cover the cost of the Minister's legal advisers only. At the time it was not known that the settlement would be agreed this year. If €10 million had been provided that would have implied an expectation that the cost would reach that level.

Deputy Kieran O’Donnell

I asked whether the ACC accounts were qualified in the auditors' report in respect of this potential liability. Was it provided by way of a note to the accounts? Deputy Barrett asked how long this had been going on and for how long it was mentioned in the accounts. This raises the question of the Government representative on the board. It was a matter of due diligence for Rabobank when it examined ACC. If Rabobank brought it up, it must have been a material element and, therefore, it was either mentioned in the accounts or the auditors' report. It is a valid question and it should be answered.

Deputy Noel Ahern

I do not know if it was in the ACC accounts over the years but it came to the fore when due diligence was being done.

Deputy Kieran O’Donnell

Did it?

Chairman

We will let the Minister of State conclude before asking supplementary questions.

Deputy Noel Ahern

It came to the fore when due diligence was being done and it then became a relevant factor in the potential sale which might have delayed it or reduced the sale value. That is why the indemnity was provided and it is deemed to have worked well.

Going back to the original issue, the person who gave the advice worked in ACC but has since died and I do not know if it would be appropriate to name him. That was the situation in the court case since that person is not around to give advice. He was an official in the ACC bank who gave advice and the impression is that he may have given a bit more than advice - nowadays people would be more careful, advice is exactly that: advice.

Deputy Seán Barrett

Especially if a person is qualified to give advice.

Deputy Edward O’Keeffe

Did Rabobank's due diligence show the liability?

Deputy Noel Ahern

The Four Seasons Hotel and this were the two issues where there were questions when the sale was going through.

Deputy Edward O’Keeffe

Why was it not corrected at that stage?

Deputy Noel Ahern

It could have been corrected at that stage but the choice was to give the indemnity.

Deputy Edward O’Keeffe

Which bank ignored it - ACC or Rabobank?

Deputy Noel Ahern

Neither ignored it. At the time of the sale it was identified and it was a case of reducing the sale price or giving the indemnity.

Deputy Edward O’Keeffe

It was only reduced by the €3 million.

Deputy Noel Ahern

The €3 million would not be known at the time. Some of the figures that were talked about for a reduction in the sale price were far greater.

The basic issue goes back to 1976, when advice was given to the employees at the time about integration and non-integration. People in ACC had their own pension scheme but had the option to get a social welfare old age pension as well. The advice was given in that period but now people would make it clearer that advice is given as guidance. Best practice by today's standards is that employees are given the facts and the opportunity to make up their own minds.

The question was did this gentleman in 1976 give the advice more forcibly. It probably seemed like good advice at the time but the social welfare pension has increased a lot in recent years in comparison to what it might have been some years ago. What seemed logical in 1976 did not turn out to be a good deal and this case has only arisen in recent years. It is has not been around since 1977 or anything like it. It goes back to advice given at the time regarding integrated and non-integrated staff.

Deputy Joan Burton

The briefing note states there are 46 plaintiffs. Will the Minister of State inform us what were the highest, average and lowest awards?

Deputy Noel Ahern

I would rather not. The matter has been settled on a confidential basis.

Deputy Joan Burton

I do not think that would be a breach of confidentiality. The Minister's indications are rather tantalising. He indicated the equivalent of an old age pension, which means it must be €200 to €300 a week, based on the Government's promises in the general election. What are the highest, average and lowest settlements? I am not asking the Minister of State to breach confidentiality by giving the names of the persons involved.

Deputy Noel Ahern

There are 46 people involved; the net amount they have received is less than half of the €3.4 million figure.

Deputy Joan Burton

Less than half? Does that imply the other half went on legal and accounting advice?

Deputy Noel Ahern

The money paid has been paid net. A lump sum has been paid to the individuals which is a net amount. A lump sum would be paid gross. They had to be given a net figure because they have to pay tax and PRSI. The amount of money these people received is less than half of €3.49 million. If it was paid in gross terms, that statement would not be correct.

Deputy Richard Bruton

I recall the outrage when we discovered 40% of insurance settlements were going on legal costs. This led to much wringing of hands and tugging of forelocks. In this case, the State is involved in a situation where even more was dissipated in legal costs.

It goes back to Deputy Seán Barrett's question. Did the State drag its heels, let the case go to the steps of the courts when it was a bad case to defend and then settle, having incurred these costs? We should be voting on an Estimate of €1.7 million instead of €3.5 million.

The Minister of State did not answer my earlier question. Are there other examples where bad advice on pensions created exposure for the State? Are there other cases of integrated pensions where advice was given? I know that it applied in several other bodies. It may be, as I referred earlier, related to advice regarding additional voluntary contributions, AVCs, as opposed to taking out notional years. I understand it was prevalent for people to be advised to go into AVCs even though it would have been much more advantageous for them to take up notional years on their public service pension.

I had not heard of cases of the State getting caught for issuing bad advice. I would like a reassurance from the Minister of State that we will not see a rash of cases, even if it is not in the ACC and other bodies, where similar bad advice on pensions was tendered to people. This type of advice was not facts-only and bounced people into making decisions.

We also need more of an explanation as to how the legal costs of €1.7 million were allowed build up.

Deputy Noel Ahern

I am trying not to give the details. I do not want this to be public knowledge because it was settled on a confidential basis. People got a net sum of money. There was PAYE and PRSI to be paid to the Revenue, which was practically as much again. There was also a contribution to the plaintiffs' legal costs. The ACC's legal costs were much smaller. The plaintiffs received a net amount, less tax and PRSI, and a considerable contribution was made to their legal costs.

Departmental officials have no information that any similar pension issue is likely to arise in the future. The general rule in recent years is that facts are imparted, as one would expect, and it is for people to make their own decisions.

Deputy Seán Barrett

I accept totally that an agreement was entered into whereby the amounts received by the 46 complainants would be held in confidence. However, the committee is entitled to know the amount expended in legal costs. I am not asking the Minister of State to indicate the sums for individuals, but it is important that we have some indication of the costs involved. No Department or local authority should be allowed, off its own bat, to enter into protracted legal battles where the chance of success is 50:50 at best. Rather, it should be obliged to make its case to some overseeing body, perhaps through the legal advice section of the Department of Finance.

The current practice is akin to closing the stable door after the horse has bolted. I spoke to a constituent last night who, for some three or four years, has been battling with a local authority that simply refuses to pass over a map. This person will go to the Supreme Court today for the sixth time. It is appalling that these officials seem to be answerable to nobody. If this case is settled and Dún Laoghaire-Rathdown County Council is liable for some €1 million in legal costs, it is the unfortunate local residents who will pay through increased charges for waste disposal and so on. Individuals working within Departments and local authorities must be answerable to somebody in respect of any actions they propose to take that may impact on public moneys.

I seek some indication of the legal costs in this case so that a lesson can be learned by all of us. I accept that the officials in attendance today are not responsible in any way for what happened. However, if we are to have any function as parliamentarians, it is important that we learn lessons from this. The Minister of State, Deputy Noel Ahern, should convey to the Tánaiste and Minister for Finance that it is the view of this committee that the latter should come back to us presently with an assurance that he has examined this issue and that the Department proposes to save money in future by ensuring any future such cases are examined carefully before being brought to the courts.

Deputy Joan Burton

I will once again ask the question I put to the Minister of State earlier. For the purpose of the committee making a judgment on what happened in this case, will he give an indication, including both gross and net figures, of the highest, average and lowest amounts paid? Do I understand the Minister of State is saying, with the settlement being €3.491 million, the figure of €1.7 million mentioned at one point is the legal cost? Have I misunderstood the statement?

Deputy Noel Ahern

I do not believe I said that.

Deputy Joan Burton

If not, what was the overall legal cost? There is a paragraph in the note from the Department dealing with what is called a contagion risk, which I presume deals with the possibility of other employees of ACC, or other State bodies, actually taking a case. The senior counsel has indicated that most employees of ACC would be statute-barred and the possibility of new claims succeeding was low. There is concern that publicity around the settlement could result in further claims, which although likely to fail, would result in lengthy and expensive proceedings, with associated costs for the State.

If some legal people took the case for the 46 on a percentage basis, would this very successful solicitor or barrister not be almost immediately inclined after achieving this outcome to perhaps advertise their wares to others? It is important, in terms of the ongoing discussion regarding the legal profession and the issues in newspapers currently, for us to know roughly what are the legal fees. It is a reasonable request by the members of the committee.

Deputy Terence Flanagan

The Minister of State has indicated total liability to be approximately €3.491 million but is there any chance the figure will rise? How many people received advice at the time in 1976, and is there a chance pensioners other than the 46 people claiming now could come forward now? Will the Minister of State reassure us that no more claims for pensions will be made?

Deputy Noel Ahern

I do not know. There were clearly more people in ACC at the time and at one stage there was talk of two more people joining the case. They did not come forward so I am not sure how many people felt they received bad advice at the time. We feel reasonably confident there will not be any more claimants but does anybody know for certain in a case like this?

There are two lumps of legal costs. The ACC's legal bill is under €400,000 and the contribution to the plaintiffs' legal representation is much more than that. One could argue that less than €400,000 out of €3.4 million is approximately 10%.

Deputy Seán Barrett

It is only €400,000.

Deputy Noel Ahern

Okay.

Deputy Joan Burton

There is also ACC's legal costs.

Deputy Seán Barrett

The plaintiffs' legal costs would not have been accrued unless somebody was fighting it, so we are talking about total legal costs.

Deputy Noel Ahern

ACC's legal bill is under €400,000 and that of the plaintiffs is double that figure. With regard to Deputy Burton's question, the amount paid to people was the same in each case in net terms.

Deputy Joan Burton

What was the average payment?

Deputy Noel Ahern

They all got the same.

Deputy Joan Burton

The Minister of State is suggesting ACC's cost was under €400,000 and the legal advisors for the plaintiffs got somewhat more than that. That leaves a sum of €900,000. We are on a figure of €1.3 million.

Deputy Noel Ahern

I would like to be helpful but I am trying to be vague at the same time.

Deputy Joan Burton

The Minister of State is not denying €1.3 million as a ballpark figure.

Deputy Noel Ahern

The Deputy's brain is working more quickly than mine so I do not know. They all got a net amount.

Deputy Seán Barrett

The figure is €38,000 each, if one divides the total amount.

Deputy Noel Ahern

They got the same net amount.

Deputy Joan Burton

Is the contagion risk considered significant?

Deputy Noel Ahern

No, on the basis that it dates back such a long time. We do not know how many could claim at this stage that they received bad advice in 1976.

Deputy Kieran O’Donnell

Perhaps the Minister of State would clarify two points. Did this issue arise when a due diligence test was being carried out or was there awareness of it before then? Let us say it arose at due diligence stage or beforehand, why did the State not settle it then? Why did it not seek legal advice? Obviously, the legal costs have been growing for the last five years. If that was the case, the matter should have been settled. Second, will the Minister of State give an exact breakdown of where the figure of €3.491 million comes from? Why is it taking so long to settle the matter? If it arose at due diligence stage, why was it not settled at the time? Furthermore, if it was ongoing prior to that date, why was it not settled?

Deputy Rory O’Hanlon

Under the PEACE programme heading, there is a saving of €990,000. Can the Minister of State assure us that there will not be a loss to that fund in 2008 and that the sum of €990,000 will be additional to the normal allocation? Also, can he assure us that there will be no loss of funding from EU funds? Will the saving this year result in any delay of the worthwhile projects being funded with this money?

Deputy Noel Ahern

No, it is just a question of timing. There is no loss of funding. In fact, a new INTERREG programme is about to be signed off. We are informed by the special EU programmes body that there will be no loss to the programme as a result of this shortfall. All of the funds have been committed to the programme before the June 2008 cut-off point.

Earlier a member mentioned that while we had outlined where the savings had accrued, we did not say what the figures were in each case. There was a saving of €1.5 million in the case of Ordnance Survey Ireland; a saving of €1 million under the second heading, CMOD, and a saving of €990,000 under the INTERREG heading.

Deputy Kieran O’Donnell

Will the Minister of State answer my question about whether the matter arose during due diligence stage?

Deputy Noel Ahern

It arose at that stage, the lead-in period to the sale of the bank.

Deputy Kieran O’Donnell

Had it not arisen before then?

Deputy Noel Ahern

I do not know; it is a long time ago. I do not know whether it was an issue that was rumbling under the surface.

Deputy Kieran O’Donnell

And costing the State a great deal of money.

Deputy Noel Ahern

It probably became more of a burning issue in recent years when people started to retire. The information and advice might have been solid a long time ago--

Deputy Kieran O’Donnell

Did the 46 come on stream together or piecemeal?

Deputy Noel Ahern

They came on stream together but I do not know for how long it was an issue within the ACC.

Deputy Kieran O’Donnell

Why was it not settled during due diligence stage and when ACC was taken over by Rabobank?

Deputy Noel Ahern

That is a reasonable question. The main pre-occupation at that stage appeared to be to complete the sale of the bank, to which this was seen as a block. Having the indemnity and putting it aside allowed energy to be concentrated on the sale of the bank.

Deputy Kieran O’Donnell

The only outcome appears to be that legal fees continued to accumulate at a cost to the State.

Chairman

We have dealt with this matter in a comprehensive manner. I thank spokespersons and members for their contributions. On behalf of the select committee, I also thank the Minister of State and his officials for attending the meeting.