Wednesday, 20 April 2011
Seanad Éireann Debate
Senator Diarmuid Wilson: I welcome the Minister of State, Deputy Brian Hayes, to the House and congratulate him on his election and appointment as Minister of State. I wish him many long years in the House.
Since March 2010, a cloud of uncertainty has covered the employees of Quinn Insurance Limited in Enniskillen, Navan, Blanchardstown, my native county of Cavan and neighbouring counties. Thousands of families were plunged into uncertainty about their future following the hasty and undue action taken by the Financial Regulator, Mr. Matthew Elderfield, to have provisional joint administrators appointed by the High Court to Quinn Insurance Limited. This action was taken without notice being given to the company. Since then 1,000 redundancies have been announced, 700 of which have taken effect.
I understand the Quinn family submitted a plan in early April 2011 to the Government. Last Thursday, as over 90,000 signatures were handed to a representative of the Minister for Finance at the Kildare Street gates of Leinster House in support of the Quinn family proposal, which would see the State repaid €2.8 billion owed to Anglo Irish Bank by the Quinn family, a spokesperson for the Minister, Deputy Noonan, informed the nation that Anglo Irish Bank had gone to the High Court to have a receiver appointed to the Quinn family shares in the Quinn Group. This resulted in Seán Quinn and his family being removed from any involvement whatsoever in the Quinn Group.
I express my admiration for Seán Quinn and his family. He started 38 years ago, as I have said on many occasions in this House, and provided a job for himself selling sand and gravel in west Cavan and Fermanagh. Some 38 years later, he has created over 7,000 jobs internationally, 5,500 of which are based in the 32 counties of this country. Many thousands of those jobs are in my native county of Cavan and surrounding counties. I consider him to be a practical patriot. He has provided jobs in an area of this island that nobody else would even contemplate looking at, not to mention providing jobs.
The impact of the Quinn Group on County Cavan alone is phenomenal. It directly employs over 2,000 people and operates the internationally renowned Slieve Russell Hotel, the greatest tourist attraction in the north west or north east. It accounts for up to one third of manufacturing and service-based employment in County Cavan and provides more than €60 million per annum in direct wages to employees in the area, combined with indirect contractors, sub-suppliers, etc., which contributes over €200 million per annum to the local economy. The Quinn Group has and continues to provide employment opportunities and economic development in some of the most marginalised areas of this country. To a large extent, these jobs are irreplaceable. For example, the Slieve Russell Hotel put Cavan and the Border region on the tourism map and provided opportunities for women returning to work which in turn enabled many young people of today to go on to third level or further education. Many people were afforded the opportunity to return to their native county to work and raise their families. The social impact of this must not be overlooked. In overall terms, the impact of the group is immeasurable.
I take this opportunity to pay tribute to the all-party Oireachtas group which has worked on this issue for over 12 months. I pay particular tribute to a former colleague of this House, Deputy Joe O’Reilly, who, with me, tabled many motions in this regard in the 12-month period which the Cathaoirleach was good enough to accept.
I pay tribute also to my constituency colleagues, Deputy Brendan Smith, former Minister for Agriculture, Fisheries and Food, Dr. Rory O’Hanlon, Seymour Crawford and Margaret Conlon, who are no longer Members of the Oireachtas, and Deputy Caoimhghín Ó Caoláin, who is the convener of the all-party group. We worked tirelessly together on this issue for over 12 months and the main emphasis of our work is to protect the existing jobs in the Quinn Group, Quinn Insurance Limited and all the various other operations the Quinn Group controlled.
I understand the proposal submitted to the Minister for Finance in early April this year would see the State regain the €2.8 billion owed to it through Anglo Irish Bank over a seven year period. Why was that proposal not afforded full detailed examination and, having received that application, why was the decision taken to move in rapidly to acquire the shares of the Quinn family and to sell the insurance company? The least the employees and the Quinn family are entitled to is that the proposal, which would have seen the State regain €2.8 billion of its money returned to it over a seven year period, be examined.
Minister of State at the Department of Finance (Deputy Brian Hayes): I thank Senator Wilson for raising this matter and recognise the substantial all-party work that has gone on for a substantial period behind the scenes with both this Government and the previous Government to arrive at the result we have on this matter. As the Senator is aware, the appointment of the administrators to take over the management of Quinn Insurance Limited was taken in the best interests of the firm’s policyholders and the purpose of the appointment was to allow the firm to remain open for business and to continue to be run as a going concern with a view to placing it on an ongoing sound commercial and financial footing. From the outset the joint administrators have concentrated on fulfilling this agenda, with one of their initial concerns being to try to ensure the value of the business was maintained to make it as attractive as possible to potential buyers. A key factor was the reopening of the profitable parts of the UK business.
In response to a detailed case from the joint administrators, the Central Bank allowed Quinn Insurance Limited to reopen private motor insurance business at the end of April 2010. Before making its decision, the bank carefully considered the information provided by the administrators on the important improvements in the company’s underwriting model and significant strengthening of its pricing structure. It also consulted closely with the UK. In this regard it should also be noted that the administrators also sought to have the commercial lines of business in the UK reopened. However, the Central Bank decided in September that such a move would not be appropriate as Quinn Insurance Limited would require additional capital which it currently does not have.
The next significant step was the appointment by the High Court on 3 June last of advisers on any prospective sale of Quinn Insurance Limited at the request of the joint administrators. The advisers, on behalf of the joint administrators, issued an information memorandum on 27 August last on the sale of the company to interested parties which set out a two stage process for selecting a purchaser. The first stage required the submission of a non-binding indicative proposal by Friday, 17 September 2010. I understand that following evaluation by the advisers and the joint administrators of the above mentioned proposals, a limited number of prospective purchasers were shortlisted by the administrators to participate in phase 2 of the sale process. They conducted further due diligence, including the consideration of the necessary commercial information, enabling them to make a final bid.
The joint administrators have considered the final bids and have selected the preferred bidder, Liberty Mutual-Anglo, which they believe best meets the objectives of their appointment, namely, a solution that puts the business back on a sound commercial and financial footing while at the same time protecting the interests of policyholders. Another factor in their decision to go with the Liberty Mutual-Anglo proposal is the fact that virtually all the jobs are protected, aside from 24 redundancies in Manchester. The sale is subject to regulatory approval and the completion of contract details. It should be noted that Liberty Mutual is the fifth largest property and casualty insurer in the United States and is a very well respected company. Liberty will own 51% of the joint venture and will operate the insurance company. Anglo Irish Bank will own 49% and will have no involvement in the business. As the Senator will appreciate, the financial details remain confidential and are subject to the completion of legal and other arrangements being finalised.
The position regarding the wider Quinn Group is that Anglo Irish Bank has appointed a share receiver to the Quinn family’s shares in the Quinn Group. The receiver holds these shares on Anglo Irish Bank’s behalf. It should be noted that a share receiver is fundamentally different from a company receiver and will not be involved in the sale of businesses or assets. However, this appointment has allowed Anglo Irish Bank, together with the senior creditors, to restructure the boards and to remove Quinn family members and their associates from key board and management positions.
This decision by Anglo Irish Bank to appoint a share receiver is very much a commercial one and I, in my role as Minister of State, and the Minister for Finance had no input into this matter. In this context it should be noted that under the relationship framework put in place under the Anglo Irish Bank Corporation Act 2009, which governs the relationship between the bank and its shareholder, the State, issues relating to the commercial activities at the bank and day-to-day management decisions are a matter for the board in respect of which the Minister for Finance has no role. I have been informed, however, that the decision to appoint a share receiver will have no significant impact on jobs in the wider Quinn Group.
I understand that the joint administrators did an initial evaluation of the Quinn Group proposal which they considered highly conditional. However, they came to the conclusion that it was not feasible as, funding issues aside, they felt that, among other things, the assumptions underpinning it were overly optimistic, and there was likely to be a consensual agreement with the banks and bondholders. In summary, they felt that the proposal was not a realistic alternative to the Liberty Mutual-Anglo proposal.
Senator Diarmuid Wilson: I thank the Minister of State for that reply. The main emphasis has to be on the retention of the jobs in their current locations. I would like assurance that the jobs will be ring-fenced and protected in their current locations. The big concern is that Liberty Mutual may, after a time, move this operation to the Far East or somewhere similar. The wider concern is that in regard to the group in general, the cement factory and the other factories will be sold off gradually and the jobs will disappear. What guarantees has the Government succeeded in getting from potential purchasers of the various outlets that the jobs will be ring-fenced and will continue in their current locations?
Deputy Brian Hayes: The number one priority for the Government in this entire matter, from the first day in the job, was to secure employment for those people working within the group. This is an issue in the Senator’s area of the country and also in my area. A large number of my constituents work in the Blanchardstown area and it is crucial that we have now received assurances in connection with the total number currently employed within the group. It has been the number one priority of the Government from day one and I believe the position arrived at now, although it was a commercial arrangement and obviously something the State was keen to progress, gives some measure of comfort to people in the current environment because at least they know where they stand. The position before the announcement was made was that they had no intention as to what would happen. The number one priority for the Government is the jobs issue and there is some assurance now that the company can be put on a progressive footing which is based on growing the business which is, as the Senator well knows, a profitable, successful business that has unfortunately been besmirched by the wider issues that have affected the Quinn Group of late. The priority he has articulated is the same as the Government’s.
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