Dáil Éireann Debate, Thursday - 18 October 2012
7. Deputy John Browne asked the Minister for Transport, Tourism and Sport the reason for his non-intervention in the events involving the students at the Pilot Training College in Waterford; and if he will make a statement on the matter. [45168/12]
Amharc ar fhreagra77. Deputy Pádraig Mac Lochlainn asked the Minister for Transport, Tourism and Sport the steps he is taking to help the people who were let down by the pilot training college having paid large tuition fees. [45131/12]
Amharc ar fhreagraI propose to take Questions Nos. 7 and 77 together.
These questions relate to the situation at the Pilot Training College, PTC. This issue arose from the failure of PTC, a privately-owned and operated flight training school, to meet its contractual obligations to its students for the completion of their training.
The Irish Aviation Authority, IAA, has responsibility for approving and overseeing flight training organisations. Its primary functions in this regard are oversight of the safety, quality and standard of the training being delivered and the conduct of examinations and flight tests. It considers issues such as whether the company has sufficient resources to safely provide the training required to the internationally determined standards. It had no involvement in, or responsibility for, the contractual arrangements between PTC and its students. The IAA's role is based on European rules. PTC is not, unfortunately, an isolated example. There have been similar failures in other countries in the recent past in respect of which the students involved also suffered losses. Unfortunately, many businesses have, in the current economic climate, failed, leaving their suppliers and customers out of pocket, including businesses in respect of which a State body has a regulatory role.
In July, the High Court appointed an examiner to PTC Ireland. The IAA worked with the examiner to assess the options available but unfortunately on 28 September the court ordered the company's liquidation after a final potential investor withdrew. While I sympathise with the students and their families, many of whom have suffered considerable financial losses through this company's collapse, neither the Government nor the IAA, has any liability in this regard. The Irish taxpayer cannot be liable for a company’s debts simply because it had approval of some form from a State agency.
I thank the Minister for his reply, although the information provided does not give any comfort to the parents and students who find themselves with an enormous financial burden.
I refer to young people who accepted a place with the PTC in the belief that it had the backing of the State, not just in terms of the regulatory role of the Irish Aviation Authority. The Minister said that, as part of the authority's remit, it would have to determine whether the PTC had sufficient resources to provide training. One wonders whether it was possible at the outset to establish whether there were sufficient resources to ensure the training of potential pilots.
In recent weeks, it has been reported in public that another training company has been established in Waterford. It has a very similar name, Clearsky Pilot Training College Limited. From company records, it appears to have a set of directors similar to that of its predecessor. This is of particular concern to the parents. Will the company seek to be recognised by the Irish Aviation Authority? If so, will the authority be compelled to provide it with the necessary credentials provided that it is technically able to provide training to prospective pilots? Will there be capacity in this instance to deal with the issue of providing sufficient resources?
From a couple of perspectives, we need more clarity. We need to know whether the law is strong enough to protect against the phoenix-like emergence of a new company. Without more evidence, I do not want to repeat some of the allegations that have been made about the stripping of assets and resources of one company in order to provide for the establishment of another. This would be very serious if it were true. Does the Irish Aviation Authority have appropriate investigative powers and other appropriate powers to prevent what I described from happening?
There are a few relevant points. PTC's accounts were signed off, without qualification, on 29 August 2011 by professional auditors. The accountants were satisfied that "the group, including PTC, will continue as a going concern" and they stated the directors are satisfied that sufficient financial resources are available to the group from its budgeted profits, banks and shareholders. The Irish Aviation Authority reviewed the company's financial projections for 2011-13 and its projected profits for each year to the end of 2013. As recently as early June 2012, the authority met PTC's CEO, who assured it that the company had sufficient funding in place until at least the end of 2012. It is worth pointing out in this regard that, had the authority come to a decision that the college did not have sufficient resources – there is no evidence to suggest it – the only action open to it would have been to de-recognise the college and require it to cease trading. Therefore, those affected would be in exactly the same position as they are now. The problem would simply have arisen a few weeks earlier.
A Government regulation is not the same as a bond or guarantee. If an airline or travel agent fails, customers are protected because of the bond. There is no bonding system in these circumstances. Perhaps we need to consider this but we cannot make provision retrospectively.
As with me, I am sure the Deputy has constituents who have been burned by this problem. We all have considerable sympathy for those affected. In some cases, they are losing a lot of money because of what has happened. One should bear in mind that they are not the only creditors. If the Government were to decide suddenly to compensate the creditors, including the very large number of foreign students, airlines and the business in Florida, it would have to compensate them all on the same basis. This would cost the taxpayer millions of euro in this case alone and set a very significant precedent for future cases. Ultimately, I have no money. The only money I have is money that belongs to the taxpayer. It would be irresponsible of me to offer compensation in this case or any similar case.
Clearsky Pilot Training College Limited has been established and registered at the same address as PTC. Following the reports, the Irish Aviation Authority inspected the premises of the company on 4 October last. The new company was providing refresher training for an international non-EU client. The training does not meet the standard required for an Irish or EU pilot licence. Should the new entity wish to provide training meeting EU standards, it, like any other company, will have to apply to the Irish Aviation Authority for approval. To date, the authority has not received any such application.
The Irish Aviation Authority, a State organisation, granted the college a licence to operate. The authority was charged with ensuring the company had sufficient resources to provide training safely. The college never had the resources required for students to complete their courses. We now face a debacle in that a large number of people are left stranded abroad with huge debts. They are unable to complete their training and education. This is a serious issue for them. We met many of them outside Leinster House and they told us stories about borrowing money and of their being up to their eyes in hock. It is just unacceptable.
To what extent did the Irish Aviation Authority scrutinise PTC when it decided to grant it a licence? There is an onus on the State to address this because the authority is a State institution that needs to be made accountable for what happened.
It is important to state nobody has been stranded abroad.
People were stranded.
They were but they subsequently came home themselves or were repatriated at the expense of the Irish Aviation Authority on a no-prejudice basis, or on humanitarian grounds. I do not have the exact figures in front of me but I am informed that most of the trainees have resumed their training. Arrangements have been put in place in other colleges to allow the trainees to pay in instalments so they will not have to borrow large sums of money upfront. In addition, the Irish Aviation Authority made sure it got its hands on the trainees' records so training done to date will be recognised. There was a case previously in which this did not happen. Assistance was provided in so far as this was possible.
The PTC was audited by independent accountants and no issue arose in respect of the audit. Any inspections or reviews of the financial protections carried out by the Irish Aviation Authority showed the college had sufficient resources. Even if the authority had determined that the college did not have sufficient resources, all it could have done would have been to remove its licence. With the exception of a small number of people who paid fees in the weeks just before the college closed, everyone is in the exact same position. This would have been the case even if the Irish Aviation Authority had determined that there were insufficient resources.
As I stated, a licence is not a bond or guarantee. Perhaps there should be a bond, and we will examine this. A bond will come at a cost, and that cost will have to fall on the trainees.
The Ceann Comhairle was kind enough to allow me to raise a Topical Issue on this subject but, thanks to a mess-up in my office, I missed the debate. I apologise and appreciate the opportunity to raise the matter again.
The Minister referred to professional audits and qualified accountants. However, if he reads excerpts from the report, he will note it states the negative capital and reserves of the company were almost €2.2 million underwater as of 31 December 2010. It also states: "These conditions indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern." Furthermore, it states: "The financial statements do not include any adjustments that would result if the Company was unable to continue as a going concern." The latter is repeated twice. These three statements raise serious concerns that should have stood out significantly.
The Irish Aviation Authority, a State agency with regulatory responsibility, gave the college a clean bill of health. Enterprise Ireland, a semi-State body, granted €400,000 to the college on top of an earlier grant of €8,000.
It could be any Irish family but we are focused here on our constituents who spent their life savings so their children could fulfil their ambitions.
The full imprimatur of both the Irish Aviation Authority and Enterprise Ireland had been given to this company even though it is clear from its accounts that it was in serious difficulty. Families now hear about companies like Clearsky Pilot Training College Limited and the Shemburn Group, which allow the same directors to start again and possibly get a licence. Where is the justice in this? I know the Minister has met the families and knows the issue very well but I appeal to him to reconsider. The Irish Aviation Authority will be appearing before the Oireachtas Joint Committee on Transport and Communications next Wednesday morning. I ask the Minister to look at the transcript of that meeting afterwards. I appeal to him to reconsider because this is very unfair to dozens of Irish families who face serious hardship. I admire the Minister's approach to many of these matters so I ask him to reconsider the issue.
Deputy Dooley may ask a quick supplementary question.
Deputy Mac Lochlainn has covered the two issues I had in mind, which related to Enterprise Ireland and the audit committee. Has the Minister considered referring any report that either he or the Irish Aviation Authority might have produced to the Director of Corporate Enforcement? If there is a phoenix company-type situation arising in respect of a new company, there is certainly a requirement to refer the matter to Director of Corporate Enforcement.
It is possible to read sections of accounts but, ultimately, the finding of the auditors was that it was a going concern and would continue as such. If it is the view that the Irish Aviation Authority somehow failed in its duties, it is open to the people concerned to take legal action against the authority. It is then, ultimately, for the courts to decide if that is the case. Based on its own advice, the Irish Aviation Authority, which is the statutory body responsible for this matter and not my Department, is confident that it was not negligent in any way.
The issue of phoenix companies causes huge anger and frustration but there is a reason why we have limited companies. If an honest businessperson has two businesses and one of them fails, it would not be right to allow the business that failed to bring down the good business. This is why we have limited liability - so that the failure of one business does not bring down other businesses.
I do not know if there are any issues here for the Office of the Director of Corporate Enforcement but if there are, I would expect the Irish Aviation Authority to make a referral to the relevant authorities. I am not aware of any referral.
