Dáil Éireann - Volume 446 - 02 November, 1994

Private Members' Business. - Irish Nationality and Citizenship (Amendment) Bill, 1994: Second Stage.

Mr. G. Mitchell: I move: “That the Bill be now read a Second Time.”

Claims by the Taoiseach that he had no involvement in his family business during a period when £1.1 million was invested in the company in exchange for two Irish passports by a mother and son from the Middle East are at the heart of [1644] the cause of this Bill being brought before the House by Fine Gael.

There is widespread and growing public concern that passports were gained for investment behind closed doors involving benefit to close relatives and, one way or another, a Minister. The issue is not just the scheme itself — that is indeed a matter for debate. The issue is integrity in Government, self-enrichment as a result of a decision by another Minister and may even have far reaching consequences that cannot be contained within the Cabinet. I stress that I am not making any allegation of breach of the laws I am about to draw to the attention of the House but I want to illustrate that the situation is by no means trivial.

The Prevention of Corruption Acts, 1889-1916 provide:

Any person holding an office remunerated out of the Central Fund or moneys provided by the Oireachtas shall be guilty of a misdemeanour punishable by imprisonment, or fine, or both, if he:

(a) corruptly accepts or obtains, or agrees to accept or attempts to obtain, from any person, any gift or consideration as an inducement or reward for doing or forbearing to do, or for having done or forborne to do, any act in relation to the affairs or business of his Department, or for showing or forbearing to show favour or disfavour in relation to such affairs or business; or

(b) corruptly gives or agrees to give or offers any gift or consideration as an inducement or reward for doing or forbearing to do, or for having done or forborne to do, any act in relation to the affairs or business of the State, or for showing or forbearing to show favour or disfavour to any person in relation to the affairs or business of the State;

(c) knowingly uses with intent to [1645] deceive the Head of his Department any receipt, account or other document in respect of which his Department is interested, and which contains any statement which is false or erroneous or defective in any material particular, and which to his knowledge is intended to mislead.

Where it is proved that any money, gift, or other consideration has been received by a person holding an office remunerated out of the Central Fund or moneys provided by the Oireachtas, from a person or agent of a person, holding or seeking to obtain a contract from a Government Department, the same shall be deemed to have been received corruptly as such inducement or reward as is mentioned in the Acts, unless the contrary is proved.

The penalties under the Public Bodies Corrupt Practices Act, 1889, are as follows:

Any person on conviction for offending as aforesaid shall, at the discretion of the court before which he is convicted, (a) be liable to be imprisoned for any period not exceeding two years, with or without hard labour, or to pay a fine not exceeding five hundred pounds, or to both such imprisonment and such fine, and (b) in addition be liable to be ordered to pay to such body, and in such manner as the court directs, the amount or value of any gift, loan fee or reward received by him or any part thereof; and (c) be liable to be adjudged incapable of being elected or appointed to any public office for seven years from the date of his conviction, and to forfeit any such office held by him at the time of his conviction; and (d) in the event of a second conviction for a like offence shall, in addition to the foregoing penalties, be liable to be adjudged to be forever incapable of holding any public office and to be incapable for seven years of being registered as an elector, or [1646] voting at an election either of members to serve in Parliament or of members of any public body, and the enactments for preventing the voting and registration of persons declared by reason of corrupt practices to be incapable of voting shall apply to a person adjudged in pursuance of this section to be incapable of voting, and (e) if such person is an officer or servant in the employ of any public body upon such conviction he shall, at the discretion of the court, be liable to forfeit his right and claim to any compensation or pension to which he would otherwise have been entitled.

It might be noted, in passing, that section 4 (1) states that a prosecution for an offence under this Act shall not be instituted except by or with the consent of the Attorney General.

I repeat that I make no allegation of criminal activity by anybody but I bring this law to the attention of the House to illustrate the seriousness of the situation. It is not a matter to be considered lightly.

I wish to give a hypothetical set of circumstances as an example. A future Secretary of the Department of the Taoiseach could be a major shareholder in a private company and his friend and colleague, a future Secretary of the Department of the Environment, could write to the Secretary of the Department of Justice stating that he intimately knows a Middle Eastern woman and her son who, it turns out, are investing £1.1 million in the aforementioned private company. As a result the applicants are granted passports.

What would happen when those facts became known? The three departmental secretaries would immediately be dismissed and brought before the courts under the legislation to which I referred earlier. Why should Ministers receive a pat on the back, immediate exoneration and allowed to continue on their merry way? Are some citizens above the law by virtue of their Dáil majority while everybody else must comply with it? This is the nub of the question.

[1647] The Bill being given a Second Reading contains proposals which provide that: (a) the absolute discretion of the Minister for Justice to grant citizenship in return for financial investment would be ended; (b) any person aggrieved by a decision of the Minister for Justice would have the right of appeal to an appeals tribunal who could (i) affirm the decision of the Minister, (ii) set aside the decision and refer the matter back for the Minister's consideration, (iii) set aside the decision of the Minister and grant the application or revoke the certificate of naturalisation as the case may be; (c) the Minister would lay before both Houses of the Oireachtas rules, criteria and forms for the granting of a certificate of naturalisation and (d) the Public Offices Commission (as proposed by the Ethics in Public Office Bill, 1994) would (i) annually in arrears review the granting of certificates of naturalisation for investment and report its finding to Dáil Éireann and (ii) report to Dáil Éireann on every decision made by the Minister under the business migration scheme to grant a certificate of naturalisation at any time over the past 15 years.

I will highlight public concerns in relation to granting passports to “investors” in a company owned by the Taoiseach and close relatives of the Taoiseach and in which he had an ongoing interest while he was a Minister.

I have been informed that the up-to-date accounts for C & D Foods Ltd., have not been lodged with the Companies Office. The last accounts lodged there are for the year ended 31 December 1991. This is a significant point since any “investment” in the company during 1992 would be shown in the accounts for the year ended 31 December 1992 and future years.

Also, the up-to-date accounts would show whether a £300,000 shareholders' loan shown in the previous accounts had been refunded in full or in part. What is [1648] being concealed by the non-lodgement of these accounts? On two different dates the company made lodgements at the Companies Office and had the opportunity to lodge its accounts on the same dates. On 30 May 1994 an amendment to the Memorandum and Articles of Association was lodged and on 13 July 1994 a change of address of a director was lodged yet no accounts were lodged on either occasion even though stiff penalties now apply to the non-lodgement of accounts. What is in the accounts for year ended 31 December 1992 and following years that cannot be lodged at this time?

Furthermore, it is doubtful whether the directors' report with the accounts for the year ended 31 December 1991 which was lodged is in compliance with the law. The report was signed on 28 April 1992 and any significant events since the end of the financial year should have been referred to in the directors' report. There was no mention of the £1.1 million received from the Masris in that directors' report even though, the “investment” was advanced in March 1992, according to the Minister for Justice, and the Masris were introduced in September 1991, according to an article in The Irish Times of 4 June 1994. Why has a company in which the Taoiseach, Deputy Reynolds, has 164,000 ordinary shares, as per the Companies Office file, not lodged accounts for year ended 31 December 1992 and year ended 31 December 1993? I am advised that these should have been lodged, by law, by 31 July 1993 and 28 June 1994 respectively. What does the Minister for Enterprise and Employment have to say about this situation?

Why did the Masris, good citizens one presumes, invest in a company which does not file its accounts? In 1992 some 5,607 companies were struck off for failure to return their accounts. In 1993 the figure was 7,465. Why was no action taken against C & D Foods Ltd? In [1649] November 1993 there were over 40 prosecutions of directors for overdue returns.

Until 19 December 1991 when there were changes in the ownership of the ordinary shares in C & D Foods Ltd., 80 per cent were held by the Taoiseach, Deputy Reynolds, and 20 per cent by Mrs. Kathleen Reynolds, that is 100 per cent between them. Thereafter the shareholding was Albert Reynolds Senior, 41 per cent, Kathleen Reynolds, 10 per cent — between them 51 per cent — Albert Reynolds Junior, 10 per cent and Philip Reynolds, 39 per cent. It is clear from this that the Taoiseach, Deputy Reynolds, continued to have a controlling interest in C & D Foods Ltd. There is no record in the Companies Office that stamp duty was ever paid on these share transfers, if due. It could be reasonably claimed that Deputy Reynolds, Minister and Taoiseach, remained a shadow director of the company.

Shadow director is defined in section 27 of the Companies Act, 1990 which states: “a person in accordance with whose direction or instructions the directors of a company are accustomed to act (in this Act referred to as “a shadow director”) shall be treated for the purposes of this Part as a director of the company unless the directors are accustomed so to act by reason only that they do so on advice given by him in a professional capacity”.

According to Mr. Maalouf, a spokesman for the Masris, quoted in The Irish Times on Saturday, 4 June 1994, the company would not agree to give the Masris equity so the family had to lend the money on the basis of an interest, i.e. dividend, of about 5 per cent each year and an option to take shares in 1997 if the money cannot be repaid. The members or shareholders are the company. I have already illustrated who they are — the Taoiseach and his family. That statement by Mr. Maalouf has [1650] not been refuted — and I know the Taoiseach's propensity for writs.

A sterling investment of £1.1 million at the end of February 1992 would have attracted quoted interest rates of 11.75 per cent to 12 per cent. An insurance company might have given a high rate return bond of 13 per cent. C & D Foods Ltd., not only received a loan of £1.1 million at a rate of 5 per cent which it could invest in its business to make profits but it also received a subsidy on interest rates at that time in excess of 7 per cent. This subsidy was worth about £77,000 per year each year for five years, on top of the use of the capital at 5 per cent. It is clear who benefited from these transactions — the owners of the company. Yet what we have received so far, to paraphrase Disraeli, are lies, damn lies and no current statistics.

The Tánaiste, Deputy Spring, absolved those involved before he saw the files. He was then put under pressure and sent for the files in early June 1994, again absolving all those involved. Did the Tánaiste look at the Companies Office files? These are available to the public in an office under the aegis of his colleague, the Minister for Enterprise and Employment. What do that Minister and the Tánaiste have to say about the state of the company's file and the absence of information which the public are entitled to and which directly relates to the passports purchased by the Masris?

There are a number of questions which need to be answered. Did the then Minister, Deputy Albert Reynolds, know of the “investment” in his business of £1.1 million in exchange for two passports? When did he find out? Did he, while Minister, involve himself in the affairs of C & D Foods Ltd? If he did, would a fair and reasonable assessment be that he behaved at all times as the proprietor and as a “shadow director”? Did Ministers take the decision without knowing the name of the company in which the investment was to be made? If they knew the name of the [1651] company, what steps did they take to ensure that the whole procedure was done at arms length and with transparency? Why was the IDA not asked to assess this investment?

The Minister for the Environment, Deputy Smith, stated that he knew the applicants “intimately”. How long did he know them and how was he in a position to make such a statement? Did they tell him the good news of their investment in his colleague's company, C & D Foods Ltd? Did the Minister for the Environment, or any Minister involved, foresee the possible conflict of interest and controversy that this decision would cause if found out and what steps did they take to ensure that the transaction was transparent, at arms length and seen to be at arms length? Were any laws broken? Were any guidelines or procedures broken which were laid down by the Department of Finance or other Departments?

Will the Taoiseach, as the major shareholder in C & D Foods Ltd. direct that the accounts for the years ended 31 December 1992 and 31 December 1993, and up to date accounts, and any version of these accounts prepared but not made public so far, be made public so that the company law requirements are met and this matter can be independently examined?

The Attorney General is awaiting his long promised appointment to the High Court. All gardaí from the rank of superintendent upwards depend on the Government for promotion in their careers. What we have before us is a politically sensitive issue which involves the Head of Government.

In the next jurisdiction, a senior police officer from an outside region can be called in, as happened when Mr. John Stalker was appointed to investigate certain matters in Northern Ireland. It is not acceptable for the Government or any member of it to say from a cursory examination of one file that all is well. What did the Tánaiste expect to find on the file? I make no allegation of criminal offence nor do I convict anybody of [1652] wrongdoing, but the Opposition must seek answers to questions which are properly in the public realm. We must continue to do our duty in seeking a full and frank explanation of these transactions.

A Stalker-type examiner must be found, one who is above any question as to his or her ability, probity and independence. Perhaps Mr. Stalker, the recently retired Chief Justice or the outgoing Comptroller and Auditor General would be a good choice. Someone of that stature must make an independent and fair assessment of these transactions to assist the Public Offices Commission referred to earlier and make their findings public. If the Opposition cannot find the Government guilty, the Government equally cannot find itself innocent. We must have an independent examination of these facts. Fine Gael does not accept that a member or members of Government should be allowed, behind closed doors, to absolve a colleague whose family business gained substantially from a decision, also taken behind closed doors, to grant citizenship to persons who clearly have no other connection with this country.

It would appear that the rules for granting citizenship to investors were softened at some stage over recent years. It was up to the Department of Justice to check with other State agencies, such as the IDA, as to the appropriateness of any investment made. This was not done in the case of C & D Foods Ltd. The Minister was merely made aware of the fact that “the overall project in C & D Foods Ltd. was IDA granted” according to “inquiries made through the consultant who submitted the application”, as stated in reply to a parliamentary question in my name on 15 June, 1994. What competent authority decided independently that this investment was in the public interest? This is a central question which has not been replied to.

In the cases in question, the passports were issued for payment of £600,000 and £500,000 respectively despite the Minister for Justice in several interviews [1653] and in replies to parliamentary questions on 9 March 1994 stating that the investment required for a passport was of the order of £1 million. The address of the applicants given in Iris Oifigiúil was simply “Haddington Road” — not even a number was given. The Minister had already informed the Dáil, in reply to a parliamentary question on 9 March 1994, that “purchasing a home and living here” were criteria which had to be observed if a passport were to be granted under this scheme. On 15 June 1994 she told the Dáil in response to a parliamentary question that “an investment of about £500,000 would be required and that the applicants would demonstrate an intention of residing in the State by purchasing a residence”. Why were procedures “softened” and when? Why were passports awarded to Mrs. Masri and her son as stated by the Minister for Justice when, as reported at columns 854 and 855 of the Official Report of 31 May 1994, “the husband of the woman and father of the man who had made the aforementioned investments had purchased a residence in Dublin”? Not only did those who were granted the passports not live here, they did not even own a residence here, if this reply is correct.

On 31 May 1994 the Minister told the House — column 857 of the Official Report — that the owner of the residence had subsequently invested £1.5 million in forestry and on that basis she was prepared to grant him naturalisation. At the time of granting naturalisation on 15 December 1992 it would appear that Mrs. Masri and her son did not meet the criterion of owning a home here let alone residing here. On 31 May 1994 the Minister told the Dáil — column 856 — that the owner of the house, Mr. Masri senior, had applied for naturalisation, again through Minister Smith, in October 1993 but was routinely turned down on the basis that he would not meet the criterion as he would have to make a separate investment, which he later did. He could have sold the apartment at any time without consulting his wife or son.

[1654] In addition, the public is entitled to know how the Minister for the Environment intimately knew a family who do not live here and why he recommended them for citizenship. I have tried to raise this matter in the Dáil but the Ceann Comhairle, by way of letter to me, ruled the question out of order since it contains argument. I have the opportunity tonight to put my questions. Why was Minister Smith, a Deputy from North Tipperary, involved in an investment in Longford? How well and for how long did he know these investors? Did he make any further representations, verbal or otherwise, to the Minister who made the decision? Was he asked to do so by a colleague, the then Minister and later Taoiseach, Deputy Reynolds, or any member of his family? Minister Smith has been a close ally and friend of the Taoiseach for many years. Are we to understand that he recommended these investors in the Taoiseach's family business without mentioning to him that he had done so? Minister Smith owes this House a detailed explanation. It is scandalous that he has not come into the House to explain himself. Has the Tánaiste interviewed him as part of his examination “of the procedures followed”?

The investors in C & D Foods Limited do not appear to have received shares in the company. How then can this money be described as an investment? Do they have representation on the board of the company? If not, how do they protect their interests? Did the Tánaiste ask the Taoiseach if he knew the application was being made given that he owned the company? Did the Tánaiste ask him if he stood to benefit from this investment now or in future? These questions must be answered and the matter impartially investigated given that the decision appears to have been made by Ministers only. The role played in this process by the Minister for Justice, the Taoiseach, the former Minister for Justice, Commissioner Flynn, and the Minister for the Environment, Deputy Michael Smith, must [1655] be examined and reported on by an acceptable independent source.

In May 1994 the Minister for Justice stated on television that the investment was made in 1990. The Dáil has been told that the financial controller of the Taoiseach's family firm stated that the investment was made in 1992, after the Taoiseach's appointment. The Minister for Justice stated that this matter was not dealt with in Cabinet. At the end of May 1994 the former Minister for Justice, Commissioner Flynn, was reported in the Sunday Independent as suggesting that the matter was dealt with by Cabinet and, on radio on 30 May 1994 the Minister of State at the Department of Finance, Deputy Eithne Fitzgerald, relied on Commissioner Flynn's assertion, and said the Dáil had already been informed.

In a document read in the record of the House on 31 May 1994 — columns 881 and 882 — which exposed the contents of a document circulated to international “investors” by an international lawyer seeking “investors” it was made clear that: “The project is so structured that it is for the Government's economic advisers, and not the investors, to source and select a suitable investment that conforms to the Government's job creation criteria”. If the criteria stated in this document are correct, which Government economic adviser examined this “investment” in C & D Foods Ltd? These questions must be answered and investigated by an independent and impartial source.

Fine Gael is proposing that the Public Offices Commission be empowered by law to review this decision to grant passports, and every other decision over the past 15 years. However, the political sensitivity of this particular case is such that the Commission should be assisted by an independent examiner in determining the facts. Given Labour Party claims to stand for high standards in public office, I feel certain that it will support these proposals and the reasons for them.

When the Tánaiste examined the [1656] Masri file he will not have found details of the following extract from a book written by Mr. Tim Ryan, a biographer of the Taoiseach. This extract is not only relevant but alarming and, if its contents are sustained, it has the most serious consequences for the continuation in office of the Taoiseach. The following extract is from pages 64, 65 and 66 of that book:

In the summer of 1982 Spence finally initiated legal action against C & D for his shares.

A lot of correspondence was exchanged between both sides, although Albert Reynolds as Taoiseach claimed on 30 May 1994 that he “had not been involved in any way in the running of the company for up to fourteen years”. (In his evidence to the Beef Tribunal, Albert Reynolds said he came back to government in 1987 “having spent four years in opposition, having spent four years developing my own business, which is very allied to this business that we are talking about...” (Tribunal Report, Chapter 6 page 206-207.)

In a speech in Portlaoise in June 1994 the now Taoiseach said he had “as required an arm's length relationship with that company (C & D), since I took up ministerial office, so I cannot be accountable for and have no knowledge of its day-to-day business”.

On 28 June 1982, while Minister for Industry and Commerce, Albert Reynolds, however, wrote to Spence telling him he had “not produced the sales needed”.

In a detailed letter he pointed out that capacity would increase two or three fold when a new factory — to be grant-aided by the IDA — was completed.

He added that it was necessary to introduce a new management structure reporting to Michael Difley, and to set budgets and targets for all management.

“...I must point out,” he said, [1657] “that there was never any mention or question of your being paid 10 per cent of the profits, or receiving 10 per cent of the proceeds of the sale if I sell the company”.

(During the 1983-87 Coalition, Taoiseach Dr. Garret FitzGerald replaced a Junior Minister, Eddie Collins, when it was revealed that he had attended the board meeting of a family company from which he had resigned on his appointment to office. Collins was present at such a meeting when an application for assistance to a State financial institution was discussed.)

On 12 July 1982 Albert Reynolds, as Industry Minister, publicly rejected reports in a British retail magazine The Grocer that two giant British supermarket chains, Sainbury's and Tesco, were pulling out of deals with C & D because of Ireland's stand during the Falklands crisis. Later Reynolds personally telephoned a Mr. Hatch at Sainbury's on 16 July to reassure him. On 28 August Minister Reynolds attended a meeting at C & D along with the company's auditor Bernard Carroll, P. Gillen, head of Kinnear Consultants, and Padraig Groarke, C & D's solicitor.

Article 26 of Government Procedure Instructions states that “in so far as business interests to membership of other organisations are concerned, the underlying principle is that no Minister or Minister of State should engage in any activities that could reasonably be regarded as interfering, or being incompatible, with the full and proper discharge by him of the duties of his office”.

On 27 April 1983 Albert Reynolds was again asked by Sainbury's to come to London to discuss ongoing difficulties with the product. He refused to allow Norman Spence accompany him to the meeting, but agreed to meet him later in the Tara Hotel.

[1658] “There he told me that due to further economies at the plant I was not needed any more. He handed me a letter which he told me to bring home and read, and to put my feet up for a while. The letter was a note of dismissal on the grounds that I had not generated enough business. They offered me something like four weeks' redundancy pay”.

I wish to quote from the letter sent from Mount Carmel House, Dublin Road, Longford on 28 June 1982 to Norman Spence, Esq., Mountain House, Llanteg, Norberth, Pembrokeshire, Wales, regarding C & D Foods Limited:

Dear Norman

I regret the delay in formally replying to your letter of 27th March, but no doubt you will appreciate how busy I have been since then, and in any event, I dealt with all the matters you raised in my last telephone conversation with you.

You say that some misunderstandings may have arisen between members of the company management in the past, but as I have said before, it is results that count and you just have not produced the sales needed.

1. For several years now, the company has not increased its sales volume or gained any significant new customers, and the price increases obtained for its products have been far lower than the increased costs of production, per case, and this despite the huge devaluation of the Irish pound against the British pound.

“Production management” has increased the capacity of the factory from about 15,000 cases per week to nearly 25,000 cases per week in the last few years at a cost extending into six figures. Production management has also made several innovations to improve efficiency and keep costs down. The capacity will increase 2 or 3 [1659] fold more when the new factory is completed later this year.

3. The necessary borrowings and grants have been organised by our accountants internal and external and management consultants employed from January 1981 to advise and support the general management function.

4. Yet sales are now running at only 13,000 cases per week and the company is now making a serious loss.

5. Clearly, irrespective of the minor day to day hiccups of the type discussed in your letter,

(a) Production management has done its job.

(b) Financial and general management has done its job.

(c) Sales management — i.e. you — have not done your job.

Accordingly, it has been necessary to

(i) Introduce a new management structure reporting to Michael Diffley.

(ii) Employ sales and marketing consultants to ensure the proper and planned marketing of our products.

(iii) Set budgets and targets for all management.

As I have said before, the company cannot afford to keep you on the team in circumstances where you do not obtain the sales we need for survival and profitability.

In relation to your final paragraph, I must point out that there never was any mention or question of your being paid 10 per cent of the profits, or receiving 10 per cent of the proceeds of sale if I sell the company. Back in 1974, you had agreed to subscribe for 2,500 shares but the High Court declared this invalid. However, it was subsequently agreed with you [1660] that the company would make pension and life assurance contributions for you and this was done.

I trust this clears the matter and that all management matters can in future be handled in the normal way through the Chief Executive, Michael Diffley.

Yours faithfully,

Albert Reynolds.

The signature on that letter is that of Albert Reynolds, now Taoiseach.

Mr. J. Bruton: He was a Minister at the time.

Mr. G. Mitchell: Deputy Nealon's current guide to the Dáil and Seanad shows that Deputy Albert Reynolds was Minister for Finance from November 1988 to November 1991; Minister for Industry and Commerce from March 1987 to November 1988; Minister for Industry and Energy from March to December 1982; Minister for Posts and Telegraphs and Minister for Transport 1979-81. It will be seen from these dates that Minister Reynolds clearly involved himself in the day-to-day business affairs of C & D Foods Limited while a Minister, a role which he will now try to have us believe he relinquished.

Given this clear evidence I ask the Tánaiste to state publicly and categorically if he still believes that the issuing of passports to the Masri's in exchange for £1.1 million “investment” in C & D Foods Limited was a proper, ethical and arms length transaction. I ask that he urgently address these matters and issue a public reply in the national interest and in the interest of restoring credibility to public life.

There is little further to add. The accounts given by Ministers have been inconsistent, guileful and partial. The Minister for the Environment, Deputy Smith, has given no explanation. This House must now direct that this affair be independently inquired into and reported on. Passing this Bill this evening will help prevent a recurrence [1661] of events of this kind. However, there remains the question of confidence in the accounts given by the Taoiseach and his Ministers. To any fair observer it would be self-evident that the accounts given so far cannot be accepted. Ministers cannot act as defence, judge and jury in their own cause.

The Government Chief Whip, Deputy Dempsey, became Chief Whip as many of these Ministers became Ministers deploring the climate of sleaze that surrounded the Greencore and Telecom scandals. They are the very people who seek to deplore criticism of questionable practices. Writing of this sleaze in The Irish Times on Friday last, Mr. Fintan O'Toole stated:

Does anyone now remember that what brought Brian Cowen to the Cabinet, and Albert Reynolds to the office of Taoiseach, was public disgust at apparent conflicts of interest in the Greencore and Telecom scandals? Does anyone remember the public statement by four Fianna Fail backbenchers, among them Albert's blueeyed boy, Noel Dempsey, deploring the climate of sleaze that surrounded those scandals?

That it was that affair which initiated Albert Reynolds's coup against his leader? That Albert Reynolds and his faction bought shares at that time in the idea that public life must be conducted according to the principle that no perceived conflict between private gain and the public good could be tolerated?

In this House the Minister for Justice made veiled threats against any Member of the House who seeks to raise this matter. She has suggested that other embarrassing details will be brought out.

If this is the price of ensuring clean Government then let that be done. This House must not cower under such threats, which are unworthy of a parliamentarian.

The Labour Party can no longer wash its hands of these practices. It is time for it to cross the floor of the House and [1662] join with the Opposition and other Members of this House who will not allow behaviour of this kind to go unexplained and unquestioned.

I do not indulge in character assassination. I doubt if any Member of this House can find an occasion when I have sought to do so. What I place before the House this evening are the cold facts. Let those facts be replied to truthfully and without any attempt at further smokescreens. Let them be examined openly, fairly, independently and impartially. If that is done then this House will have done its duty and we can await the findings of that independent investigation. We must pass this Bill to allow that to happen. Members of the Government stand indicted; they cannot exonerate themselves of guilt and their guilt or innocence must be established by an independent source. I commend this Bill to the House.

Minister for Justice (Mrs. Geogh-egan-Quinn): Before I deal with the many issues raised I must use this opportunity to refute an absolutely outrageous statement, repeated several times by Deputy Mitchell on national radio this morning, that I misled this House during Question Time last week. I wish to add that in the course of the same programme the question of the fairness of the Chair's office was called into account. No doubt the Chair will deal with that matter.

Deputy Mitchell knows full well that I did not mislead the Dáil last week and yet for mischievous reasons he continued to propagate that lie. I want to nail that lie.

Mr. G. Mitchell: A Cheann Comhairle——

An Ceann Comhairle: No, Deputy——

Mr. G. Mitchell: I have been accused of propagating a lie. Is it in order for the Minister to accuse a Member of the House of propagating a lie?

[1663] An Ceann Comhairle: Deputy Mitchell spoke for almost 40 minutes without the slightest interruption.

Mr. G. Mitchell: I did not accuse anyone of propagating a lie.

An Ceann Comhairle: He must allow the Minister to reply and grant her the same courtesy as was given to him.

Mr. G. Mitchell: The Minister has used a term that I propagated a lie. I want to bring that to the Chair's attention. I want you to tell me, Sir, if that is in order because if it is I will be using it in future dates in this House.

Mr. H. Byrne: Another threat.

An Ceann Comhairle: The Chair has always deprecated the word “lie” or “liar”.

Mr. J. Bruton: The Minister used it.

Mrs. Geoghegan-Quinn: I have to nail that lie.

An Ceann Comhairle: Let us have fair play in this matter.

A Deputy: Fair play is what we want.

Mr. Carey: The Minister used the word.

An Ceann Comhairle: The Deputy on the Opposition side has had 40 minutes, the Minister has only 30 minutes to reply.

Mr. G. Mitchell: You heard the word. The Minister might repeat it. I ask you to ask the Minister to withdraw it.

Mr. J. Bruton: She did use the word “lie”.

Mrs. Geoghegan-Quinn: In reply to a parliamentary question——

Mr. G. Mitchell: A Cheann Comhairle, I am sorry, the Minister said I was [1664] propagating a lie. The record will show that. I am asking you to ask the Minister to withdraw that remark. You would not allow me to say that.

Mrs. Geoghegan-Quinn: ——about the possible extradition of Fr. Brendan Smyth I indicated that provisions relating to the Extradition (Amendment) Act. 1987 had been used for the first time in the context of this case.

An Ceann Comhairle: Minister, serious allegations have been made on both sides.

Mr. G. Mitchell: A Cheann Comhairle——

An Ceann Comhairle: Serious allegations have been made against the Minister and the Minister is entitled to defend herself also.

Mr. G. Mitchell: Not by saying I propagated a lie; she must defend herself within the rules of Parliament.

An Ceann Comhairle: Perhaps she would reconsider the word “lie”.

Mrs. Geoghegan-Quinn: I can consider that, a Cheann Comhairle, and if it upsets Deputy Mitchell——

Mr. G. Mitchell: I ask you, a Cheann Comhairle, to ask the Minister to withdraw that word.

Mrs. Geoghegan-Quinn: I used the word——

Mr. G. Mitchell: Allow me to say to the Minister——

An Ceann Comhairle: I will not be dictated to by you or by any other Member.

Mr. G. Mitchell: The Chair must protect my integrity.

An Ceann Comhairle: I have done so, Deputy.

[1665] Mr. G. Mitchell: I am asking you to ask the Minister to withdraw that remark or I will have to say that she propagates lies in this House, week in week out.

An Ceann Comhairle: Please, Deputy, I have asked the Minister if she——

Mr. J. Burton: You will remember, Sir, that you went to great lengths to get me to withdraw that word. You should do the same now.

An Ceann Comhairle: It is a pity that we are entering into this kind of argybargy. If the Minister alleged that the Deputy was a liar in any sense of the word I feel sure she would withdraw that remark as is usual.

Mrs. Geoghegan-Quinn: I alleged that he continued to propgagate a lie and I have no difficulty in withdrawing that if it upsets him.

An Ceann Comhairle: Thank you, Minister.

Mr. J. Bruton: It is not a question of upsetting anyone; it is a question of order.

Mrs. Geoghegan-Quinn: In the course of my reply to a parliamentary question about the possible extradition of Fr. Brendan Smyth I indicated that provisions relating to the Extradition (Amendment) Act, 1987 had been used for the first time in the context of this case. It is outrageous of the Deputy to continue to suggest that I said it was the first time this Act had been used in connection with an extradition case. He knows as well as I do that this Act has been used in numerous cases since 1987. Given the controversial nature of some of these cases, it is a well documented and reported fact that this Act was used previously. Why then would I suggest otherwise.

It now seems that Deputy Mitchell is unconcerned about the truth, that he [1666] will use any device at his disposal to twist the meaning of remarks made here so that they suit his base political purposes. I will not allow my integrity to be denigrated in this fashion by cheap shot stunts from the Sunday soundbite man.

The Government is opposing this Bill. During my tenure as Minister for Justice, I have always kept an open mind on Opposition Bills in my area of responsibility debated in Private Members' time. If there has been merit in an Opposition Bill, I have not been afraid to say so, as in the case of Deputy Shatter's tenancy Bill. If a Bill could be amended to improve it, I have suggested that. As the Minister in this Government who has probably brought most legislation before the House, I have always adopted a positive and serious attitude to legislative proposals brought forward by the Opposition and I have accepted numerous Opposition amendments to Bills. The record of the House is proof of that, if proof is needed.

This Bill is different. It is not a serious effort to amend the law governing our treatment of non-nationals. I will deal with specific points in that regard later.

The bringing forward of this legislation now is nothing more than a shallow, cynical exercise by Fine Gael to reopen in advance of the Cork by-elections the controversy about investment-based naturalisations on the spurious grounds that it will damage the Government candidates. For 40 minutes I listened to Deputy Mitchell and he did not talk about the Bill.

This is an abuse of a Dáil facility by the Deputy and his party. It is all the more sickening when one considers the non-stop lecturing and hectoring of Deputy Mitchell about the duties and obligations of this House to discuss the issues of the day in a serious and wellinformed debate. Who does he think he is fooling? He should forget about the sleaze by the Lee and concentrate on the real issues about which the people are concerned.

The economic shape of the country has not been as good for many years. [1667] We have peace in the land, and what does Fine Gael make of this? It ignores these issues because it knows this is a good Government which will see out its term of office having transformed this island. Compare that with the paralysis which affected the administration of this State when Fine Gael was last in power. How can we ever forget those days when we lurched from one economic crisis to the next. At the end of it all, what had we? We had a country teetering on the edge of bankruptcy which had been mortgaged to our children's children. That is Fine Gael's record in Government.

The people of Ireland will not forgive or forget this gross mismanagement and incompetency and Fine Gael knows this. That is why it is going down the road of dishing out the dirt in this byelection campaign. This debate is just another chapter in this squalid affair. It almost bankrupted this country and it has now bankrupted itself. It makes scurrilous, unfounded and ill-judged remarks about members of this Government on the basis that the more of these it makes, the greater the possibility some of them will stick.

I have been in Cork over the past two weekends and I have seen the glossy leaflets and the slick shots paid for, no doubt, by the merchant princes and their “yachtie” friends. I have also seen these same sleaze type tactics used to attempt to scuttle the campaign of that great friend of Ireland, Senator Ted Kennedy, in Massachusetts.

There is agreement on all sides of the House about the most challenging problem facing the country. We all want to see unemployment reduced and sufficient job opportunities created for all our citizens. Nobody disagrees with that. Can somebody in Opposition explain why is it so wrong to exchange Irish citizenship for investment in companies where additional jobs are maintained or new ones created?

At least there are some people on the Opposition benches who have the imagination to support this concept. I [1668] am speaking here of four very prominent members of the Opposition parties who contacted my Department to support this scheme in its present format. In a particular case a significant number of jobs were on the line and of course it suited members of the Opposition to support the means by which these would be retained. To the credit of some of those people, at least they had the good sense to keep their counsel when all manner of outrageous allegations were being hurled about this scheme. One may well ask where does this leave Fine Gael in relation to investment naturalisations. Are they speaking in forked tongues? The answer is a resounding yes. When it suits, it is for it and, conversely, when it appears to be politically opportunistic, we get histrionics from Deputy Mitchell.

How cheap and how squalid can he get? What has happened to the once proud Fine Gael Party who served this country without fear or favour?

Mr. H. Byrne: That was a long time ago—

Mr. E. Kenny: The country needs reasonable men.

An Leas-Cheann Comhairle: Let us hear the Minister without interruption from either side.

Mrs. Geoghegan-Quinn: It has become the party of instant political gratification — no tactic is too base, no rumour, however outrageous, should not be spread far and wide and no effort should be spared in doing down one's opponents. Do not get me wrong, I can mix it with the best of them but please spare me the hypocrisy and the righteous indignation which by now is a common occurrence from some quarters opposite.

In pursuit of instant gratification Fine Gael is prepared to add to the not inconsiderable public cynicism to which all of us here are subject. Is it any wonder that significant numbers of the [1669] population are bewildered by what happens here when they see the play-acting of Members opposite? They should stop debasing the currency for all of us, grow up and help restore public confidence in the parliamentary process.

I am grateful to Deputy Mitchell for this opportunity to set out once again the Government's policy in the area of applications for naturalisation linked to investments in the State. It is clear from what he said that there is some misunderstanding, or at least a lack of awareness in this area despite the fact that in reply to a number of parliamentary questions on 25 October last I set out, in a very comprehensive manner, the developments which have taken place over the past few months. Deputy Mitchell's Bill does not take any account of those developments, which include major initiatives, such as the establishment of an advisory group of officials to advise the Minister on each application, as well as definitive terms of reference for that group to include strict criteria by which each application for naturalisation linked to investments will be examined. For those and other reasons which I will outline later, this side of the House will be opposing the Bill.

It is worthwhile outlining the developments which have taken place in recent times on the issue of investment-linked naturalisation. There are, of course, two broad naturalisation categories which, for the sake of convenience, I will describe as general naturalisation and investment-based naturalisation.

The majority of naturalisations granted fall into the general category. These are best described as naturalisation certificates which can be granted by the Minister for Justice to persons who have a certain period of residence in the State. They are also required to fulfil certain other specific conditions which are set out in the Irish nationality and citizenship legislation. While I have certain ideas concerning these naturalisations, all I want to say at this point is that these cases have not been central to the developments which have taken [1670] place in regard to investment-linked naturalisation.

Certain suggestions have been made outside the House and, regrettably, inside the House, that the Department of Justice, or at least some of its officials who deal with naturalisation, apply discriminatory or racist policies when dealing with applications, irrespective of the category in which the particular application falls. A national daily newspaper, The Irish Times, in a recent article on immigration and refugees, reported that no persons from Africa or Asia had been naturalised in recent years, but that several thousand Americans and Europeans had been naturalised. The implication is that there is a deliberate policy of refusing naturalisation to persons of African and Asian origin. The implication is not only untrue but is deeply offensive, not only to me and the officials of my Department who process applications but to the many thousands of non-nationals who have settled here and who would wish to integrate fully into our society by way of naturalisation.

The article, as it turned out, was based on a misinterpretation of statistics — I hope not deliberately misinterpreted by The Irish Times — produced by the European Commission on non-nationals resident in Ireland, as opposed to persons who had been naturalised here. In pointing out the error to The Irish Times, my Department took the opportunity of underlining, for example, that more than 130 persons from more than 30 different countries of origin, such as China, Hong Kong, Malaysia, Pakistan, Vietnam and Ethiopia to name a few, had been naturalised last year.

I have already rejected these extremely serious allegations and I have given opportunities to Deputies who have made such allegations to provide the evidence on which they are based. It is interesting that no Deputy has come forward with any evidence of this type. This is simply too serious a matter to be the subject of wild allocations which may give rise to offence to become the [1671] subject of concern to nationals of any country and to which there is simply no basis. If anybody, inside or outside the House, has evidence of discrimination in a case of naturalisation, I urge that they supply me with the facts.

Turning to naturalisation applications granted on the basis of investments, as a result of my experience in dealing with such applications, I decided earlier this year that the Minister for Justice should have available the ongoing advice of an appropriately qualified group of people to assist in arriving at a decision on individual applications. On my recommendation, the Government agreed last April to establish such an advisory group consisting of representatives of my Department, the Departments of Foreign Affairs, Finance, Enterprise and Employment and the Government agency engaged in the support and development of indigenous industry, Forbairt. This advisory group was established with the functions of examining each application for naturalisation on the basis of “Irish associations” linked to investment in the State and making a recommendation in each instance to the Minister for Justice. In establishing the group, the Government also decided that the Minister for Justice should bring its terms of reference to Government at an early date.

In June, I informed the House that a Cabinet subcommittee consisting of the Tánaiste and Minister for Foreign Affairs, the Minister for Finance, the Minister for Enterprise and Employment, the Minister for Tourism and Trade and the Minister for Justice had been formed specially to advise the Government on the terms of reference for the advisory group. While the flexibility of the whole scheme initially had its advantages, there is now a clear view that more formal, and indeed more transparent arrangements are called for. The Government fully agrees with this view and has already acted in this regard. The Government, therefore, has approved the terms of reference for the [1672] group and they are as follows: 1. to consider applications for naturalisation based on investment in the State received by the Minister for Justice and referred to the group and to make recommendations to the Minister based on the group's assessment of the job-creating or job-maintenance capacity of the investment; 2. the group will examine each application for naturalisation based on investment, with the assistance of evaluation-advice from relevant agencies where necessary and, in making their recommendations, will apply the following criteria:

(a) substantial residence must be purchased and retained in ownership for a period of at least five years with an undertaking to reside in the State for a minimum of 60 days in the two years following naturalisation; (b) the level of investment must involve a net contribution of at least £1 million per applicant; (c) where the investment is in the form of a loan it shall be for a duration of at least seven years at an interest rate not greater than 1 per cent below the representative Government bond yield on the secondary market, or not greater than 1 per cent below DIBOR, whichever is lower. The loan shall be made by an applicant direct to the firm concerned, without involvement by any intermediary. The loan arrangement shall be transparent and open to scrutiny and shall be such as to prevent the loan being factored or sold on. The loan shall not be secured by the assets of the company in which the investment is to be made; (d) as ordinarily naturalisation would be for life, the duration of the investment should be for a significant period: at the very least five years; (e) the number of jobs created or maintained must be readily quantifiable and arise from the investment only; (f) audited and certified confirmation of the investment to be available to the group from an established auditing firm of accountants to the effect that the investment has taken place in accordance with [1673] the rules of the scheme for naturalisation' (g) the investment will be monitored by Forfás to ensure that the conditions of the investment are being maintained and, in the event that they are not, will inform the group who, in turn, will inform the Minister for Justice with a view to revocation of citizenship; (h) police certificate of character must be provided by authorities in the country of origin — and, if required, from the police in any country where the applicant has resided or carried on business or maintained substantial investments — together with express permission to the authorities in Ireland to inquire behind it, and (i) annual certification by the established auditing firm of accountants to Forfás that the investment is being maintained for the appropriate period.

These, then, are the criteria which the advisory group will address in assessing every application before making a recommendation to the Minister for Justice who, I will emphasise, will not even consider an application without it being assessed by the group.

The Government has also decided that the scheme of investment-based naturalisation should be put on a statutory basis. The task of examining this proposed legislation was given in June to the interdepartmental committee established in 1993 to examine policy an practice generally with regard to non-nationals. The committee has been asked to consider the Government decision in the context of its comprehensive review of legislation in this area generally and will report on the matter when it has reviewed all aspects of it.

In the meantime, and to ensure valuable job-creating investment opportunities are not lost to the State, the Government has agreed that the Minister for Justice may continue to make decisions on investment-based naturalisation applications, acting on the recommendations of the advisory group which will operate on the basis of the terms of reference to which I have just referred and which, of course have the approval of the Government.

[1674] The position, then, is that the Government has already decided that the scheme of investment-based naturalisation will be on a statutory basis. The best method of giving effect to this decision is being examined by the interdepartmental committee to which I referred. I do not want to prejudge the recommendations of that committee which is examining the question of naturalisation and citizenship in the broader context. It would be unwise to do that, especially having regard to the fact that the committee canvassed the views of concerned individuals and organisations and will be giving deliberate consideration to all views and proposals in the formation of its comprehensive recommendations.

Turning now to Deputy Gay Mitchell's Bill, there are a few comments which I would like to make on the provisions of the Bill which are somewhat unusual in certain respects.

The Bill provides that, prior to taking any decision under the relevant provisions of the citizenship legislation, the Minister for Justice shall make all relevant information available to the Public Offices Commission as provided for in the Ethics in Public Office Bill, 1994. To put it mildly, this is a rather unusual proposal quite apart from the fact that the Bill has yet to be enacted. As I understand it, the Ethics in Public Office Bill, 1994, contains certain provisions for the establishment, membership and functions of an independent standing commission to deal with complaints and to investigate possible contraventions of the Act by office holders, special advisers, designated directors and those holding designated position of employment in public bodies. The commission will comprise the Comptroller and Auditor General, the Ombudsman, the Ceann Comhairle, the Clerk of the Dáil and the Clerk of the Seanad.

The commission is intended to be a specific investigatory body in response to complaints or, indeed, acting on its own initiative. The role which Deputy Gay Mitchell wants to provide for it in [1675] relation to applications for naturalisation is particularly unclear. Section 4 of his Bill, as I said, provides that the Minister shall make all relevant information available to the commission prior to taking any decision of substance under the Nationality Act of 1956 as amended. The section also provides that the commission will report thereon but is silent on what the report will embrace or to whom the report will be made. The proposal also overlooks the fact that an application for naturalisation is generally expected by an applicant to be processed in confidence.

Section 5 goes on to provide that the commission will present a report to Dáil Éireann on every similar decision taken for a period of 15 years prior to the Act. Apart from the fact that the proposal is particularly insulting to me and to every Minister for Justice in the last 15 years, I remind the Deputy that the numbers of persons naturalised over the past 15 years would be in the order of several thousands. While it would be singularly inappropriate for the Public Offices Commission to be involved as a matter of course in every decision on applications for naturalisation, the suggestion that they should examine every such decision over such a long period of time is not only wholly impractical but ludicrous having regard to the costs and time consumed by such an exercise.

Mr. G. Mitchell: Under this scheme——

Mrs. Geoghegan-Quinn: In addition, Deputy Gay Mitchell's Bill provides that any person aggrieved by a decision of the Minister for Justice in relation to naturalisation should have a right of appeal to the Refugee Appeal Tribunal which is proposed in the Refugee Bill, 1994. I emphasise, again, that while I am optimistic that progress will be made in enacting the Refugee Bill, the position is that it is still before the House on Committee Stage and there is, therefore, no refugee Act, 1994. Again, this is a somewhat unusual provision as [1676] envisaged by Deputy Gay Mitchell in that the function of the Appeal Tribunal as proposed by the Refugee Bill, 1994, is to deal solely with appeals where applications for recognition as refugee have been refused. The Deputy envisages a number of functions for the Refugee Appeal Tribunal which, the Deputy would have us believe, will obviously have lots of spare time left over from dealing with appeals against negative decisions in asylum cases.

I should re-emphasise, that the Refugee Appeal Tribunal is intended to have a specific and limited function. Therefore, it is a singularly inappropriate body to be involved in processing appeals against decisions by Ministers for Justice under the nationality legislation. As well as that, the provisions envisaged by the Deputy provide that the tribunal will have certain powers, including the power to set aside a decision of the Minister for Justice and grant a certificate of naturalisation in accordance with sections 15 and 16 of the 1956 Act. Apart from other misgivings about the provision, I could not possibly agree to such an all-embracing proposal which, on the face of it, would appear to attempt to delegate a statutory function of the Minister for Justice to another person outside Government while, at the same time, the proposal itself is contradicted specifically by the provisions of sections 15 and 16 of the 1956 Act to which it refers.

The Deputy also proposes to remove, in section 2 of his Bill, the absolute discretion of the Minister for Justice to grant a certificate of naturalisation. The result of this, like the rest of Deputy Gay Mitchell's Bill, is unclear, given that the Minister would also be empowered to make regulations containing the rules and criteria for the granting of certificates of naturalisation. On the one hand, the Bill attempts to remove the discretion of the Minister for Justice in this area and, on the other, sets out that the Minister shall establish the general rules by which applications will be assessed. The Deputy's Bill appears to be a mixture of everything, without the [1677] overall thrust being immediately apparent. I suppose I should be grateful that it at least stops short of abolishing the office of the Minister for Justice altogether.

The Deputy referred in his Bill to executive roles in the assessment of applications for naturalisation for bodies which will be established by virtue of other legislation. I have indicated that these bodies are singularly inappropriate to be involved in such executive functions. I can only assume that the fact that these bodies have no obvious role in naturalisation is simply a technical device availed of by the Deputy to get over possible difficulties which his Bill would face if it included proposals for substantial costs on the Exchequer by the establishment of new bodies. That is probably a reflection of the lack of thought which has gone into this Bill and the lack of substance which has emerged as a result. If what the Deputy is primarily arriving at in his Bill is transparency in the operation of the scheme of investment-linked naturalisation, then I am afraid he is already several steps behind the rest of us.

As I already indicated, the Government fully accepts that more formal arrangements in the operation of the scheme are needed now and positive steps have already been taken in that direction, as I outlined. The scheme which we have had up to recently is, of course, the scheme which has existed since the Government decided some years ago that inward-based investment should constitute grounds for deeming the investor to have qualified for naturalisation on the basis of what the legislation describes as “Irish associations”. The scheme had always operated by way of informal arrangements on the basis of a Government decision that the question of granting or refusing naturalisation in individual cases should be left at the absolute discretion of the Minister for Justice.

The strength of the scheme's informality was that it enabled favourable decisions to be made quickly, where necessary, but nobody could deny, with [1678] the benefit of hindsight, that the informality of the scheme, while in one way an asset, was in other ways a feature which left it wide open to criticism. That had lead to the clear view, shared by the Government, that more formal and more transparent arrangements are called for and that is why we have taken the initiatives I have already outlined. Therefore, I oppose this Bill for the reasons stated.

Deputy Mitchell said “I make no allegation of criminal activity by anybody”. His tone did more than suggest corruption in relation to one company and two Government Ministers. His allegation is a wild one, to put it mildly, and abuses the privileges of the House. The naming of the Masri family is particularly unfair. There is a policy in this House that people who are not here to answer for themselves should not be named. For 40 minutes the Deputy gave us a lecture about a company, C & D Petfoods Ltd., and did not address the Bill. That confirms that bringing the Bill before the House is nothing but a political stunt.

Deputy Mitchell said that questions need to be answered. All the questions put to me have been answered in June 1994 and on 25 October 1994. The flexibility of the scheme as it then operated was explained in response to a parliamentary question in June 1994. There never were formal rules until now. The Deputy is alleging that the Masri file was tampered with. I am not sure whether he is suggesting that the tampering was done by a civil servant in my Department, by a former Minister in the Department or by me since I became Minister.

Mr. G. Mitchell: I made no such suggestion.

Mrs. Geoghegan-Quinn: It was initially £500,000 per applicant and the procedures were never softened. They have in fact been hardened.

Regarding the residence, I already [1679] explained in the House that there was a clerical error in my Department in putting the details in Iris Oifigiúil. As Minister I accept full responsibility for that clerical error. Six months before the issue of certificates to the Masri family the details of the address in Dublin were provided to the Department. The applications were not a matter for the Cabinet. I hope Deputy Mitchell, in suggesting that the recollection of a former Minister for Justice was that it went to Government, is not suggesting that I misled the House in June when I said it did not go to Cabinet. None of these cases went to Cabinet. I presume Deputy Mitchell accepts my word on that.

In regard to the document he mentioned which was circulated by consultants, I cannot be held responsible for erroneous or misleading information which is circulated by a third party. I have already condemned the racist references which are said to have been in that document.

I said at the beginning that this is nothing short of a shallow and cynical exercise by Fine Gael to reopen on spurious grounds the controversy about investment-based naturalisations in advance of the by-elections. I believe it is abuse of a Dáil facility. We have seen the glossy leaflets, the slick shots paid for by the merchant princes and their yachting friends. We have seen the sleaze-type tactics called OPPO which have suddenly been imported into the two Cork constituencies from Massachusetts where they were used in the campaign to bring down that great friend and supporter of Ireland, Senator Edward Kennedy. They have not worked there, and I do not believe they will work by the Lee.

I was very interested to be asked a question last week about the investment-based naturalisation scheme nbecause every picture tells a story. The greatest pressure I have come under since I became Minister for Justice 21 months ago was during the summer when, for some strange reason, some [1680] Deputies at a very senior level in both the Progressive Democrats and Fine Gael not alone rang my office and spoke to me personally and to my officials but also put on paper very strong recommendations and representations under the old scheme in relation to a company that had found itself in financial difficulties and whose only hope of surviving and maintaining 100 jobs was by having this type of inward investment-based naturalisation for a person.

Ms O'Donnell: The Taoiseach was not a shareholder of that company.

Mrs. Geoghegan-Quinn: One of the strongest representations was from the former leader of the Progressive Democrats who assured me that there would be no difficulties made by his party if I decided to grant the naturalisation in this case. Either we are going to be fair and honest in operating this scheme or we are not. When it suits certain individuals they are in favour of the scheme. All of a sudden, when it does not suit those same individuals, they are against the scheme. I informed Deputy O'Donnell at the Select Committee on Legislation and Security that it would be grossly unfair if, for example, a company in which she or Deputy McDowell happened to have been a partner was debarred from getting support from a Government agency or Department because those Deputies happened to be in Government. I would not support that in Opposition. It should not matter whether a Deputy is on this or the other side of the House. If he or she is no longer actively involved in the management, shareholding or partnership, that company should be free to work in the same competitive environment as every other company and should not be put at a competitive disadvantage by virtue of the fact that the Deputy in question has been lucky enough to be appointed a member of the Government.

Mr. G. Mitchell: I agree with that.

[1681] Mrs. Geoghegan-Quinn: I listened to Deputy Mitchell for 40 minutes. I heard nothing about the Bill but I felt that in keeping with the tradition in relation to debates on Justice matters in the House I should say why I was not in a position as Minister for Justice to accept this Bill. It has its flaws. I have difficulties with it but I have been prepared in the past to accept Private Members' Bills, either in total or by including some of their provisions in my own legislation. When Opposition amendments have been tabled to legislation introduced by me, I have been open to accepting those where I felt the legislation would benefit and we would have a better Act passed by the Oireachtas. However, I am not in a position, for all the reasons set out in detail, to accept this Private Members' Bill.

Mr. M. McDowell: I am grateful to the Minister for raising a number of issues which have to be thrashed out in the course of these discussions, particularly in relation to the recent operation of the citizenship and nationality legislation and the behaviour of her own Department in respect of the Masri case.

The Minister has stated that she is willing to answer questions about this matter and it is true that we should have accountability in relation to the conferring of Irish citizenship on any person, no matter who they are or how they come to be on our soil and in the position of applying for Irish citizenship.

I have on many occasions been asked by spouses of Irish citizens about their right to become citizens themselves. In all those cases I encountered huge difficulties with the Department of Justice and I note a total difference between the approach of the Department to those who come bearing gifts and those who have merit, family ties etc. The operation of the 1956 Act is discretionary against those who have genuine connections with this country and in favour of those who have produced money in order to sustain their application to become citizens.

[1682] Becoming an Irish citizen is not just a matter of purchasing a passport. A passport is one thing. Becoming a member of our political, economic and civil community is another. On occasions the Minister has tended to reduce the sale of citizenship to a mere formality which can be justified by reference to the capacity of the person in question to bring goodies to the Irish people, either individually or collectively. I do not accept the proposition that anybody can buy Irish citizenship. It has always been the consensus among parties in this House that there is a scheme for genuine business migration, for someone who intends to invest in Ireland, to become part of our community and an Irish citizen entitled to live here. That is reasonable, especially in a society which depended on the willingness on countries like America, England, Australia, New Zealand and other immigrant societies to accept into their ranks Irish people who were willing to play a part in their communities. As the Minister will appreciate, although she will not admit it, it is different for the Government to sell European Union passports to foreigners who do not have tangible links with this country. On the sale of citizenship to people without tangible links with this country. I am alarmed it has taken the debate in which Deputy Rabbitte and I played a leading part to bring before the Irish people the existence of a scheme whereby non-EU nationals could, by presenting a large sum of money — an indeterminate amount — effectively obtain Irish citizenship without proving a real intention to become part of Ireland's civil community. Citizenship was an honour to be bestowed on those who intended to become part of our society. In the Masri case, in particular, there was abundant proof that was not a requirement. I will refer later to the remarks about Diamond Engineering made by the Minister because they deserve special attention.

Regarding the Taoiseach's company in which he is a 41 per cent shareholder, the ordinary shares and all the effective [1683] directorships are held by members of his family, the protest I made which I still make — and on which I believe every decent Irish person must take a stand — is that there was not an intention on the part of the investors to become part of the Irish community. They bought a disused derelict flat in Ballsbridge and used it as a point of convenience for the acquisition of Irish citizenship. There was not an element of additionality to the Irish economy, a point to which I will refer later. There was not an intention on their part to become part of the Irish community as was shown by the fact that none of them have ever resided in Ireland since giving the Taoiseach's firm a loan of £1.1 million. Those are the facts and I challenge the Minister to gainsay what I said, namely, that the people involved do not reside in Ireland, that none of them intend to become members of the Irish political community and that none of them in a real sense made an investment in Ireland. They did something dramatically different. They lent money at a subsidised rate of interest of 5 per cent over a five year period to a company in which the Taoiseach was a 41 per cent shareholder. The Government justified that as an investment in Ireland by saying it produced an Irish association between those people and this country. They did not come to live here, they know nothing of our society, they were strangers to the Ministers who introduced them to our society and the most peculiar fact of all — and one to which the Minister might apply her attention — is that the Taoiseach said in the House that he did not know these people, he never met them and knew nothing about them. Is it not strange that people have Irish associations by investing in a firm in our community in which the majority shareholder knows nothing about them and apparently could not care less and the Minister failed to explain the circumstances in which that investment took place? All the beneficial shareholding in C & D Foods Limited is vested in members of [1684] the Reynolds family, the largest single shareholding of 41 per cent is vested in the Taoiseach, he and his wife own more than 50 per cent of the shares in that company and they at all material times have had effective control of that company. They are clinical cold facts. We are asked by the financial controller of that company who was interviewed on radio by Rodney Rice to believe that in September 1991 there was an approach by two people who were unknown to the management of that company offering an investment. Will the Minister indicate in the context of this Bill if it is normal for a company to be approached——

An Leas-Cheann Comhairle: I want to bring it to the attention of the Deputy and other Members that Members should not under privilege comment on people outside the House and the Deputy has done that. I caution him against doing that again.

Mr. M. McDowell: ——by people out of the blue who offer to invest £1.1. million in it? It is not normal. If they were to offer a £1.1. million loan at 5 per cent which at that time was less than 40 per cent of the commercial rate of interest, the annual value of that investment accumulated over five years would be well over £250,000 because it bore a low interest aspect which effectively meant that it was money given as a gift.

I was careful to critically analyse and parse every line of the Minister's statement to the House about the circumstances in which in future such money would be given by people seeking investment in Ireland to secure Irish citizenship. One of its features, repeated this evening by the Minister was that if one lends money to an Irish company rather than purchase a shareholding, one must take out some security over the assets of the company. In other words a soft loan is not permissible. One cannot give someone money and say it is withdrawable without a time period attached to it and so on.

One must be in a position to prove to [1685] the Department of Justice under the new regime to which the Minister referred, that the loan is secured on the assets of that company. That is necessary because it suggests that people are engaging in arm's length transactions. Normally, nobody lends money to a limited liability company without security unless they are closely connected to the principals of that company. Nobody lends money to another for five years at a low rate of interest without asking for security. Regarding the investment of which I spoke previously, why would two strangers in September 1991 offer money at 5 per cent to a company of which the then Minister for Finance was a 41 per cent shareholder, and say they do not want security? Both the managing director and the financial controller of that company have claimed that the advance of moneys to their company was not predicated on conferring Irish citizenship. We are left with the question, which reasonable people must ask, namely why would people invest in a company by way of a soft loan at 5 per cent if they did not know the proprietor, the main shareholder of the company, and they were not taking security for their investment? The Minister's speech is of particular relevance to this point. She said there must be security in future in respect of loans. In the transaction, as it was publicly known to exist in the company mentioned, why was no security sought for the loan? Why, when I checked the company's office today, did I find no security in favour of the lenders of the £1.1 million? Why would somebody lend £1.1 million to a company at preferential rates and say they do not care if they are at the tail end of the queue of creditors in the event that the company goes bankrupt? The question that immediately arises is why somebody would be so improvident. If they retained an Irish solicitor, why would that person tell a foreigner to invest in a company in those circumstances without requiring security, to give the money below commercial rates without asking questions?

[1686] Two views may be taken of this matter, and I admit I took the darker view at the beginning, that these people simply flung their money at an Irish company and had so much of it that they did not mind whether they got security for it. However, I have recently received information, which I believe the Minister is also in possession of and which I challenge her to deny, that the lenders to the company in question were offered security which was provided by a semi-State company in Ireland. I challenge the Minister to deny to this House that the soft loan to C & D Foods was guaranteed by a semi-State bank in this country. I challenge her to deny that, from the records in the Department of Justice, it was at all times apparent to the Minister for Justice that the loan to C & D Foods was backed up by a guarantee by a semi-State company to the lenders.

These people were either profligate with their money or they obtained security which does not appear on the company's office file, and I was mystified as to why they would choose the former option. However, on the basis of information furnished to me the question arises as to whether a semi-State commercial banking company provided a guarantee to the Masri family that the money lent to the Taoiseach's company would be repaid. The Minister knows full well that is what happened and the Tánaiste, at the time he is said to have inspected the file, knows likewise. These people got security but a decision was made that the loan would not be secured on the assets of the company. That explains in part why the new regime requires that a loan must be secured on the assets of a company rather than by the guarantee of a third party.

The Minister should indicate whether I am right on these matters. If the information supplied to me is correct, that a semi-State body furnished a guarantee to lenders to the Taoiseach's company that the moneys they were lending at 5 per cent, or whatever the rate, over five years would be repaid regardless of [1687] what happened, that company should answer in public the grave question as to why that offer was made and the security provided. I ask the Minister to indicate whether departmental records show what security was offered to the Masri family for the loan they made to C & D Foods. I believe security was offered and it was kept off the balance sheet of the company to conceal the fact of the loan.

The Minister of State, as an expert in company law, will appreciate that if you do not register your security on the assets of a company within a short period provided by statute of the creation of the security, you lose priority in any subsequent winding up. A lender to a company under Irish law who does not register a debenture, mortgage or security of some form over the assets of the company stands as an unsecured creditor in the context of a liquidation. Anybody acting as adviser to a lender in those circumstances would tell them they must secure their position, that they must obtain security over the assets of the company or alternatively obtain a personal guarantee from the directors of the company or from a person or body of worth. Was the information supplied to me to the effect that a semi-State company provided the security in the context of the investment in C & D Foods correct? Was that known to the Department of Justice at all times? Was it known to the Taoiseach and the Tánaiste that a semi-State company lent its name in the form of a guarantee of repayment to the investment in the Taoiseach's firm?

If I am right there are major implications, because this House has been starved of information on this issue. Deputy Mitchell was perfectly right to introduce a Bill for the purpose of raising this matter in the House. It is a fortuitous opportunity to inquire whether security was furnished by a semi-State bank in respect of the Masri loan to the Taoiseach's company. If that is the case I want to know about it. If the Department of Justice has at all times known [1688] about this and if it was known to anyone who investigated the affairs of the company in the context of making the investment, I want to know about it. I challenge the Minister to indicate what security was offered to the Masris for their loan to this company.

There is one other point I wish to raise — I know my time is nearly up but I will come back to this point at the next available opportunity. It has been suggested that the Taoiseach might have been unaware of the circumstances of the investment in question. As I understand it, the financial controller of C & D Foods indicated that the investment in question was first proffered in September 1991. On 5 November subsequently the Taoiseach, then Minister for Finance, was dismissed for supporting a no confidence motion in the then Taoiseach, Mr. Haughey, and he remained out of office as Minister for three months, until 5 February 1992. In a radio interview given by the financial controller of the company in question, he stated that it was only in March 1992 that the deal was finally concluded after negotiation. If that is so it implies, without contradiction, that from September 1991 to March 1992, during the majority of the period under which the loan in question was under negotiation, the chief owner of the largest shareholding in the company was out of office and in a position to take a personal interest in his own affairs.

I demanded an explanation from the Government on how, in circumstances where the chief shareholder of a company was out of office and a back-bencher in this House and had no interest in maintaining a dual personality, it could possibly be stated with any credibility that he was left unaware by close members of his family and fellow directors of an offer of £1.1 million at a time when, according to the financial details registered in the Companies Office, it owed £1.4 million. I demand an explanation from the Government as to how this utterly incredible proposition can be sustained. Ordinary [1689] people apply their common sense to facts unveiled to them.

Debate adjourned.