Committee Reports > List of Committees > Dáil > 1940 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1939 - 1940

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Dé Céadaoin, 29adh Bealtaine, 1940.

Wednesday, 29th May, 1940.

The Committee sat at 11 a.m.

Seóirse Mag Craith (Ard-Reachtaire Cunntas agus Ciste) and Mr. C. S. Almond (Roinn Airgeadais) called and examined.

VOTE 57—INDUSTRY AND COMMERCE.

Mr. J. Leydon called and examined.

Paragraph 62, Report of Comptroller and Auditor-General:—

Subhead I—Glasgow Exhibition, 1938.

“The expenditure during the year on the construction and decoration of the Irish Pavilion and charges incidental thereto, transit and insurance of Irish exhibits, etc., amounted to £13,721 3s. 7d. Included in this figure is a sum of £3,767 19s. 4d. in respect of the purchase of samples of Irish produce. The sale of these samples at the Exhibition realised £4,563 3s. 5d. and this amount is credited to Appropriations in Aid. In addition, samples to the value of £35 14s. 1d. were, with Department of Finance approval, distributed free to genuine trade inquirers.

The charge to the subhead also includes various unvouched minor items of expenditure amounting in all to £34 16s. 7d. As noted in the account. vouchers for these payments were not reasonably obtainable and the certificate of the High Commissioner was accepted in lieu. The sanction of the Department of Finance was obtained for the charge to the Vote.

As noted in the account, a gift of ten panels dealing with industrial production, provided for use at the Exhibition, was made with Department of Finance sanction to the Federation of Irish Manufacturers.

Included in a payment of £443 5s. 6d. to an electrical company was a sum of £280 for the wiring of the pavilion. In conveying sanction for expenditure on the wiring, the Department of Finance stipulated that competitive tenders were to be obtained and the contract given to the lowest tenderer. The tenders received have not yet been furnished to me.

The total expenditure incurred in connection with this Exhibition to 31st March, 1939, amounted to £16,082 17s. 9d., while the receipts from the sale of samples, etc., amounted to £4,563 16s. 4d.”

736. Chairman.—Have you yet received copies of the tenders, Mr. McGrath, which the Department stipulated should be secured?

Mr. McGrath.—As a matter of fact, these tenders were not secured, but I have received sanction from the Department of Finance for waiving that stipulation.

737. Chairman.—Can you give us any information, Mr. Leydon, why tenders were not secured?

Mr. Leydon.—The architect who was entrusted with the task felt that the contractors who would do that kind of work at the Glasgow Exhibition were all very fully occupied at the Exhibition and, apparently, he selected a firm which in his opinion was the most competent to do the work and most likely to carry it out satisfactorily; he got them to do it on the best terms he could obtain from them.

738. Chairman.—Can you tell us, Mr. Almond, why you changed your mind and waived the tenders stipulation?

Mr. Almond.—We were given an assurance that the work was given to the firm most capable and most reasonable in price.

739. Chairman.—In the circumstances, I think you were perfectly right in changing your mind.

Mr. Leydon.—The work had to be done in a very great rush and I do not think there was much choice about it in the circumstances in which it was carried out. All available contractors were very fully occupied at work at the Exhibition at the time on various other Pavilions. In the case, I think, of nearly every Pavilion, it is true to say that there was a very great rush to get them finished in time.

740. Chairman.—The only other matter in that note to be commented on was the astonishing fact that there was a profit made on the sale of samples, which was a remarkable achievement.

Mr. Leydon.—We do our best.

741. Paragraph 63 of the Report of the Comptroller and Auditor-General is as follows:—

Subhead J—New York World Fair, 1939.

“63. The original Estimate of £20,000 for preliminary expenses, cost of construction and equipment of the Irish Pavilion, the provision of exhibits, etc., in connection with the above Fair was increased by Supplementary Estimate to £37,400. The expenditure charged in the account is £25,876 10s. 3d., showing a saving of £11,523 9s. 9d., which, as explained in the account, arose from delay in construction, as a result of which only a part of the cost came in course of payment within the year.

Provision was made in the Supplementary Estimate for receipts in respect of allocations of space for exhibits in the Trade Promotion Pavilion and receipts under this head, amounting to £2,165, are credited to Appropriations in Aid.”

Chairman.—Is it true, Mr. Leydon, that your expenses in connection with the erection and construction of the exhibit in New York were greatly inflated by all sorts of trade union regulations, or had you any difficulties of that kind?

Mr. Leydon.—There were certain difficulties encountered in connection with it. I think it is fair to say that there was a certain amount of expenditure incurred which we had not bargained for, which, at the time, we felt we had no choice but to incur. It cost about £0,000 over the original Estimate to carry out the work.

742. Chairman.—There is no exhibit in the World Fair this year?—No, there is no exhibit this year. The Cultural Pavilion is being maintained, but there is no trade exhibit.

743. The Pavilion is being maintained? —There were two Pavilions. There is no trade exhibit this year, but the Cultural Pavilion is being maintained.

744. Are there officials of the Department at the Cultural Pavilion in New York, or are all the representatives hired in New York?—I hope you will make allowance for my difficulty in answering questions about the current position, because I have been associated with the Department of Supplies since September last and, therefore, I shall have to ask my colleagues about the present position.

Chairman.—I see that at once.

745. Paragraph 64.—Comptroller and Auditor-General’s Report:—

Subhead L—Minerals Exploration.

“With the exception of £12 12s. 7d., all the expenditure during the year related to the investigation of the gypsum deposits in the Carrickmacross-Kingscourt area. The total amount spent on this investigation to 31st March, 1939, was £5,225 2s. 11d., viz., £397 7s. 8d. in 1937-38 and £4,827 15s. 3d. in 1938-39.

The payment of £12 12s. 7d. represented arrears of salary due to the resident mining engineer who had been employed in connection with the investigation of the coal deposits at Slieveardagh, to which reference was made in previous reports. The total expenditure on this investigation, including this payment, was £10,937 5s. 2d.”

Chairman.—Have any results come to hand as a result of the Carrickmacross-Kingscourt investigation?

Mr. Leydon.—The report has been received and is at present under examination in the Department of Industry and Commerce.

746. Is it intended to exploit the deposits of gypsum in that area?—There, again, I have some difficulty in answering questions about the present intentions of the Minister. In any event, I think that there might be some difficulty about disclosing at this stage just what it is proposed to do on the basis of a report of that kind, because, quite obviously, a report about mineral resources in any particular area necessarily will have effects one way or the other on various private interests, and, therefore, it is a matter which requires careful consideration before there is a disclosure of the Minister’s intentions. You will appreciate that a premature disclosure of his intentions might lead to undesirable types of speculation and might affect adversely the interests of private parties.

747. Has the investigation been completed?—Yes, it has been completed, and the total cost of the operations was £9,590.

748. Deputy Cole.—Had you any income as a result of that expenditure?— No income yet.

749. Deputy McMenamin.—Is this a deposit which has been worked by a private company for some years, or is it a separate area?—It is probably part of the same deposit. It was not just a question of opening up old workings and seeing what was there. A deposit of that kind would extend over a very wide area. It is, I think, part of the same deposit.

750. Is this deposit in the area acquired by the private company and would they have an option?—It would be the same deposit, because the deposit would extend over a wide area. But the private interests of which you are thinking, I understand, have a right over only a small part of the deposit.

751. Deputy Cole.—Does the Government control the rest?—I am afraid I could not say off-hand how much of the total deposit is under Government control. That is always a difficult question, because it is affected by the Land Commission operations in the area.

752. Deputy Brasier.—Would the Act of Parliament with regard to minerals override all private interests?—In certain circumstances, of course, it does give powers to the Minister to override private interests, but then, of course, questions of compensation and so on would arise.

753. Chairman.—Has gypsum been determined to be a mineral for the purpose of the relevant Acts?—I think so, but I am not in a position to give a more definite answer.

754. You remember a similar difficulty arose in connection with certain quarry operations?—That is a difficulty that has arisen in connection with other matters.

755. Deputy Cole.—There is a private company in control at Kingscourt?

756. Chairman.—No. It has been explained that there is a private company operating on a small portion of the total area exploited, but the exploration extends to a far wider area than that at present being exploited by the private company. Has the report on the Slieveardagh deposits been completed?—Yes, and decisions have been taken on the basis of the information contained in that report.

757. Can you tell us what those decisions are?—Perhaps it would be sufficient if I tell the Committee that legislation is in draft, and will be introduced, I understand, at a fairly early date.

758. I think we can now turn to the first two paragraphs in the Comptroller and Auditor-General’s note to Subhead M —Production of Industrial Alcohol. The first two paragraphs in note 65 are as follows:—

“The Industrial Alcohol Act, 1938, provided for the transfer to a company to be formed under the Companies Acts, 1908 to 1924, of the assets and liabilities of the State in respect of the industrial alcohol undertaking and for the issue of shares to the Minister for Finance. The company was incorporated on the 16th November, 1938, and the 21st March, 1939, was, by Statutory Rules and Orders, 1939, No. 69, appointed to be the appointed day for the purposes of the Act. On and from that date the company became responsible for all expenditure in connection with the undertaking.

The total expenditure charged to Vote from the commencement of operations in 1934-35 to 20th March, 1939, was £443,276 5s. 10d., while receipts from sales of alcohol, etc., credited to Exchequer Extra Receipts during the period amounted to £135,161 7s. 4d. The net expenditure was, therefore, £308,114 18s. 6d., against which the company has issued to the Minister for Finance, in pursuance of Section 11 of the Act, fully paid up shares of the company for £238,756, and, in addition, has accepted a liability of £45,000 to the Minister for Finance.”

I understand that the £45,000 has since been paid off?—So I understand.

759. I understand that the difference between the amount of the shares issued to the Minister, and the amount of money laid out by the Minister, is made up of certain figures agreed on between the company and the Minister, which the Minister undertook to bear?—That decision was based on the new that it was reasonable that the Government should incur a certain amount of expenditure on the development of this new industry.

760. I understand that part of the liability accepted by the Minister was £7,963, this being the amount which the company alleged was the trading loss?— That is correct. There was only one distillery in operation during that period.

761. Is there any information available of the basis upon which that loss was arrived at?—Perhaps the Committee would allow Mr. Almond to answer that question. The Department of Finance is represented on the Board, and the figures have been agreed upon between the Department of Finance and the Department of Industry and Commerce.

Mr. Almond.—I think I can answer that question in this way, that the costs of production exceeded the receipts from the sale of alcohol. During the months that have been mentioned that situation could not have been avoided, because there was only one factory out of five working and, therefore, in order to cover the costs of production an exorbitant sale price would have had to be fixed.

762. Chairman.—When you speak of the costs of production, do you include in those costs any allowance for depreciation, and, if so, was depreciation allowed in respect of the factories which were not actually in production?

Mr. Almond.—I do not think it was a question of the factories not being in production. They were not ready for production, and depreciation would not have arisen until they were actually handed over by the contractor.

763. Chairman.—Can you recall as to whether any allowances were made for depreciation, or for any other capital charges, in the profit and loss account before that figure of £7,963 was arrived at?

Mr. Almond.—I know that they were included in the liability that the company took over, but that only dated from the 1st October, 1937. The company took over liability for depreciation from that date.

Mr. Leydon.—I do not know that a charge for depreciation could properly arise before the factories were completed.

764. Chairman.—That is my point. I am not satisfied that, in fact, such a charge did arise. What I am trying to find out is whether such a charge improperly arose, involving a charge on the Exchequer which might not have been properly made. I quite agree with you that I think no charge could properly arise for depreciation. Can Mr. Almond tell us whether, in fact, any charge did arise?

Mr. Almond.—In the loss that is shown up to the 1st October, 1937, there was no figure for depreciation. Depreciation could only arise in fixing the amount for which the new company would take liability.

765. Chairman.—Can you let the Committee have a copy of the trading account for the period referred to, showing how this loss of £7,963 was ascertained?

Mr. Almond.—I think we could give those figures.

766. Chairman.—I take it that there was a trading account prepared?

Mr. Almond.—I do not know whether there was a formal trading account. The accounts that were kept of every transaction were sufficiently complete to enable the figures to be arrived at.

Mr. Leydon.—Would it meet the Committee if we were to give particulars showing how the figure was arrived at?

767. Chairman.—I do not see how you could arrive at the figure of loss incurred over a given period if you have not a trading account before you?

Mr. Leydon.—The other factories did not come into production until after that date. In fact, they were brought into production as soon as they were completed.

768. Chairman.—You will observe that we are informed that there was a trading loss on the undertaking from the 1st January, 1937, to the 30th September, 1937, and that this loss has to be borne by the Minister. How could that trading loss be ascertained if there was no trading account?

Mr. Leydon.—There was an account, but I doubt whether there was a trading account in the ordinary commercial sense of that term. The position was that the Cooley factory had worked for a trial period from the 18th May, 1937, to the 10th June, 1937. It came into production on the 22nd November, 1937. The next factory came into production on the 13th December, 1937; the next on the 3rd January, 1938; the fourth on the 7th February, 1938, and the fifth factory on the 22nd March, 1938, so that I think you might really say that, for the purposes of ordinary trade, none of the factories came into production until the end of November, 1937. I doubt whether one would expect trading accounts, in the ordinary commercial sense of the term, before that stage was reached. There was what you might call a preliminary trial run from the 18th May, 1937, to the 10th June, 1937. That is the only period that falls within the period referred to here, the period from the 1st January, 1937, to the 30th September, 1937.

769. Chairman.—I think you will agree with me that, if a trading loss on the undertaking has been ascertained, there must have been trading, and there must have been accounts.

Mr. Leydon.—I certainly agree that there must have been accounts, and the accounts have been kept, but whether you will get accounts just to show that period of trading I do not know.

770. Chairman.—How then was this loss of £7,963 ascertained?

Mr. Almond.—It is a mistake to call that a trading loss. It was a cash loss. The question of ascertaining the trading loss did not arise until October, 1937, when it was agreed that from that date any losses incurred would be carried forward to the new company which was then being contemplated.

771. Chairman.—Perhaps Mr. McGrath could tell the Committee how this loss came to be described as a trading loss?

Mr. McGrath.—I viewed this transaction from the point of view of the total sum allowed by the Minister, namely, £24,358, which is explained in three items: the net amount on development expenditure to be borne by the Minister which was actually paid over to Messrs. Noury and Van der Lande for expert advice; capital resources to meet the claim in connection with the Maas case, £2,897, the balance being made up of the trading loss on the undertaking from the 1st January, 1937, to the 30th September, 1937. When I came across this particular item of £7,963, I considered it to be a portion of the £24,358: that it was an estimate by the advisers of the Minister of the loss they made during the period from the 1st January, 1937, to the 30th September, 1937. I believe it is only an estimate, and probably an underestimate, of the loss. I cannot prove what I say, but I looked upon it at that time that the loss did not contain any item for depreciation or interest on capital: that it was an actual loss, and that they failed to account for the production costs plus the cost of raw material by the sum of £7,963. I always bracketed this £7,963 as being a loss, but that it could not be fully explained. We saw from the file that the Committee advising the Minister believed that they made a loss during that period when they were not in full production.

772. Chairman.—I am sure you will agree that if the Comptroller and Auditor-General says that there is in question a sum of £7,963, the disappearance of which has not been fully explained, it calls for further investigation?

Mr. Leydon.—I cannot agree that it has not been fully explained. This is the first intimation that we have had that it had not been fully explained.

Mr. Almond.—Nobody disputes that a loss was incurred during that period. That figure represents the amount of the loss incurred but, as I have said, it was a cash loss, and is explained by an excess of expenditure over receipts.

773. Chairman.—I think you will agree with me that the position of the Public Accounts Committee is one of difficulty if the details of that loss have not been fully furnished.

Mr. Leydon.—I am prepared to furnish an explanatory memorandum or if you so desire I will come back with the full details. I did not understand that the Comptroller and Auditor-General took the view that it was not explained.

Mr. McGrath.—I did not quite catch what Mr. Leydon said.

Mr. Leydon.—I gather that this item is regarded as a loss which has not been explained.

Mr. McGrath.—I regard it as portion of the loss of £24,000 which the Minister has explained he is satisfied to bear himself. He has explained the other two items of the loss but I have not seen details of that particular trade loss. I said before that I believed it is a trade loss—if you count the depreciation and interest it is more—but, as Mr. Almond has said, it is only the cash loss which has not been explained.

Mr. Leydon.—I am sure there is no question of refusing to give the details.

Mr. McGrath.—No, but I am giving the information as I know it. As a matter of fact, Mr. Leydon may have explained it to the Auditor who took up the audit at a subsequent period, but, personally, I could not say how that figure was made up. It was considered by the Committee that the loss was that figure and when I asked for details the answer I got was: “I do not know.”

Mr. Leydon.—Did the Comptroller and Auditor-General ask for any information as to how this figure was arrived at?

Mr. McGrath.—Not officially, but I asked and was told that this represented a loss as ascertained by the advisers of the Minister.

Mr. Leydon.—I do not think there is any difference between us.

Mr. McGrath.—I am merely stating the facts and I think the Department has stated the facts.

Mr. Leydon.—And I hope I am stating the facts too. I am sorry I am not in a position to give you the full details to-day. I would have brought them with me, had I anticipated that any such question would arise; but if you so desire I will come back again or send you a memorandum* as to how this figure was arrived at. It was only an experimental run of this one factory which was completed first.

Mr. McGrath.—I might add that this figure of £24,358 was a Government decision—that the Government have decided that it will bear that much loss and I did not go into much details beyond that as it was a Government decision under Section 11 (a) Industrial Alcohol Act, 1938.

775. Chairman.—I am very grateful, Mr. Leydon, for your offer to return to discuss this matter if the necessity should arise. I suggest that we would require your Department to prepare a memorandum on this item and if its contents are not fully understood by the Committee then, perhaps, you will come along and help us. When on a previous occasion, we raised the question of the claims of Mr. Maas against the Government, we were told that proceedings were pending. We subsequently learned that Mr. Maas received a substantial sum in settlement. Can you give us details now of that transaction?

Mr. Leydon.—Mr. Maas was appointed on the original agreement on the recommendation of Messrs. Noury and Van der Lande, the Dutch firm who had been called in as experts. Very serious difficulties and friction arose in the early stages. Mr. Maas’s attitude was found to be extremely provocative to all Government Departments, including the Department of the Comptroller and Auditor-General. He had rows with the Revenue Commissioners, with the Departpartment of Industry and Commerce, with the Department of Finance and, I think, the Department of Agriculture, the Board of Works and the Stationery Office—in fact, every Department with which he had any dealings. His difference with the Comptroller and Auditor-General’s Department arose from his refusal to send vouchers to Mr. McGrath for examination. These difficulties became acute and it became necessary to terminate Mr. Maas’s appointment. He took an action against the Minister on the ground that he did not get sufficient notice and on certain other grounds set out. I can say that the action of the Department was taken at every stage in close consultation with the office of the Attorney-General, but when it came to the point of actual litigation the company had taken charge. The case was settled by payment of £2,500 plus costs. That settlement was made on the advice of the legal advisers of the company, which included two leading senior counsel as well as a junior counsel and the company’s solicitor.

776. Chairman.—Am I to understand that the Attorney-General’s office advised that Mr. Maas had no claim against the Government or the company, and that the company, which is Government—subsidised by State funds—proceeded to settle the claim of this man?

Mr. Leydon.—I do not think it would be correct to say that I said the Attorney-General advised that he had not any claim. What I did say was that every step taken in connection with the termination of the appointment was taken in close consultation with the Attorney-General’s Department. At that stage it was perhaps a fairly safe assumption to make that there would be no litigation as a result of this action. If there had not been any litigation everything would have been all right. But once litigation is launched the chances as to the decision of the Court are almost incalculable. The advice we got was that it was better to settle. The Department concurred in the steps taken. It was not a case of the company taking a different line from the line the Department would have taken. Personally, I felt at the time that, in view of the advice given by counsel there was practically no choice but to take the course taken.

777. Chairman.—Did this necessity arise from some flaw in the original agreement made with Mr. Maas or was it due to the fact that the Department acted improperly in dismissing Mr. Maas?

Mr. Leydon.—I do not think it was due to the fact that the Department acted improperly in dismissing Mr. Maas. I think the biggest mistake they made was not to have taken that step at a much earlier stage. I am sure the Comptroller and Auditor-General will agree with that.

Mr. McGrath.—Yes, I certainly agree there.

778. Chairman.—How could Mr. Maas claim rights against the company to the tune of £2,897?

Mr. Leydon.—No, £2,500 and that includes everything plus costs. The actual claim was £2,500 plus about £1,300 costs.

779. Chairman.—Surely, it does appear that Mr. Maas at some stage found himself in a position to make a claim against the company for over £2,000 which the company felt itself in a position to resist at first and later settled. This must be due to some remissness on the part of the Department at some stage. One does not get claims against the Government or against a company for nothing.

Mr. Leydon.—It really turns on the question of the period of notice. Actually, Mr. Maas was dismissed on 24 hours’ notice with a month’s salary. At that time Mr. Maas had sent in a number of claims. When appointed, his salary was £1,800. He made at this particular time demands including an increase of salary to £2,000, free of tax, plus a refund of what he had already paid in income-tax, plus a gratuity of £400, representing leave that he had not taken and some other claims. That would be sufficient indication to you, Sir, of the kind of man we had got. But, coupled with that indication, we had his intimation that if these demands were not met, he proposed to give us a month’s notice. If I may use the expression, we then thought we were on velvet in giving him a month’s notice, or a month’s pay in lieu of a month’s notice; we got rid of him. He did not, in fact, get 24 hours’ notice, but in lieu of the notice he got a month’s pay. When the lawyers got hold of the case they, apparently, took the view that the Court would probably hold that for an appointment like that of Mr Maas’s a month’s notice was too short. That was really the kernel of the trouble. Do you agree, Mr. McGrath?

Mr. McGrath.—Certainly: the Department had great patience with this gentleman, and I was greatly surprised that damages were to be paid, because I know that the Department suffered a good deal from this individual. He appeared to me to be doing things his own way, regardless of the Department’s instructions. It was not a case of the Board making up its mind in a trice, but they had been aware for weeks and months of the unsuitability of this individual.

Mr. Leydon.—The settlement was effected in Court on the morning of the day on which the case was to be heard. We were all ready with our case.

780. Chairman.—I do not question the prudence of the Department or the company in getting rid of Mr. Maas. What I question is how such a man could be given £2,500 damages, plus £1,300 costs. Frankly, I do not understand that at all.

Mr. Leydon.—Well, the law is often very disappointing to a litigant.

781. Deputy McMenamin.—If this man’s character and his behaviour was such as we have heard, how could he come before a jury and defend himself?

Mr. Leydon.—I do not know that we can advance the matter by pursuing it further at this stage, but I can say that it was with the very greatest regret that the Department agreed to the settlement but only on the unanimous advice of our legal advisers. The Department was in it as much as the company. The Department accepted full responsibility for the settlement which was made by the company. They did act in close consultation with us and with our agreement.

782. Chairman.—Did the Department or the company receive a written opinion from counsel to the effect that a settlement should be made, setting out the grounds on which counsel took the view that a settlement should be made, or was the advice verbal?

Mr. Leydon.—I could not say if it was written, but I know that counsel were most emphatic about it on the day the case was coming up in Court. At the last stage there was no time for a written opinion, but the settlement was actually effected in Court on the day fixed for the hearing.

783. Chairman.—Frankly, I think it is well to say precisely what is in my mind. Other members of the Committee may agree with me or not, but it is right to give you an opportunity to comment upon this. The situation that suggests itself to me is that the Department or the company recoiled from the revelations that might be made in the course of the court proceedings if the case proceeded, and preferred to pay this money as legal blackmail, rather than face legal proceedings which might reveal activities that this company undertook prior to the institution of the action by Mr. Maas.

Deputy McMenamin.—I would add to that: “Done by a blackmailer.”

Mr. Leydon.—I understand your feelings, and I can assure you that my own feelings have been very much stronger. I do not think it would be correct to say, or for any member of the Committee to infer, that the settlement was due to the element of blackmail, which is always present in cases of this kind. Certainly, as far as the Department and the company were concerned they were quite prepared to fight to the last ditch. The first suggestion of a settlement came not from the Department but from Mr. Maas’s legal advisers. The main consideration in taking that decision in the end was that it would cost as much, and possibly more. While there was a chance that we might win, the odds were against us, according to the legal advice we got, as to the actual amount that it would cost if we went on with the case. That was the main factor. There were other factors, too. I do not suggest that it was not taken into consideration by both sides, by his side as well as by us, that if a case of that kind went on there is always a lot of mud-slinging, abuse and innuendo and that, no doubt, a certain amount of damage would be done to the public interest. While that factor was in mind, and was given consideration in coming to a decision, I think we were all perfectly confident that, at least, we could give as much as we got.

784. Chairman.—I think you will agree that it is a cause for concern when a servant of a Department and of the State has his employment terminated in circumstances which induced the Department of State to pay him £2,500 damages and £1,300 costs?—The £1,300 included costs on both sides.

785. Yes, but it calls for inquiry as to the circumstances in which the employment was terminated, or the circumstances in which the employment commenced, which left the Department in the position that they were obliged to pay the costs rather than face the circumstances of the dismissal?—I agree that it was a most unpalatable incident for the Department at the time. It was very distasteful to me and to everyone concerned to have to agree to that course. So far as inquiry is concerned the papers are available for the Comptroller and Auditor-General, and the Department have always been ready to give him and the Committee any information they want. I think Mr. McGrath will agree to that.

Mr. McGrath.—Yes.

786. Deputy Brasier.—Do I take it that the underlying reason for the action of the Department was that a newspaper report sometimes does not give a real representation of what takes place, and might misrepresent the Government or the Department by placing them in a light that would be misunderstood by the public?—I do not want to have any misunderstanding about what I said. That consideration was not ignored, but the main consideration which induced the company and the Department to agree to a settlement was the advice of two senior counsel, junior counsel and the company’s solicitors, all of whom stated that it would cost us more to go on. The costs alone might have been tremendous because as the Committee can see the costs on both sides amounted to £1,300 although the case never proceeded to hearing. If it lasted for several days it would cost a lot more.

787. Deputy Brasier.—Were the costs taxed?

Deputy McMenamin.—Probably there was an agreed sum.

Mr. Leydon.—I understand the costs were taxed.

Chairman.—However, it is not an unfrequent arrangement in a settlement of that kind that there is an agreed sum for costs and a form of taxation is not gone through.

788. The paragraph continues:

“Provision was made in the 1938-39 Estimates for expenditure amounting to £213,900 for this service but this figure was subsequently altered to £192,715 in a Supplementary Estimate. It will be seen that the expenditure charged to Vote in the year under review amounted to £132,887 13s. 9d., representing a saving on the final Estimate of £59,827 6s. 3d. As stated in the account, the saving is due to the factories not being in operation to the extent anticipated and to the transference of the undertaking to the company before the end of the financial year.

As in the previous year, all payments, with a few exceptions, were made by the managing director of the undertaking from imprests issued to him by the Department of Industry and Commerce. The total amount payable under the contracts for the erection of the distilleries and additional works was £129,170. The payments made to the contractors, including £6,392 11s. 3d. in the year under review, amounted to £139,528 12s. 11d. The excess of £10,358 12s. 11d. was in respect of items not covered by the original specifications. The Department of Finance, in giving covering sanction for the excess, also agreed to waive the obligation imposed upon the Secretary of the Department of Industry and Commerce by clause 3 of the building contract, which required him to authorise, by an alteration order in writing, all substitutions, additions or alterations for or to the works as laid down in the specifications. No such alteration orders had been issued during the progress of the work and the various alterations and additions were executed on the instructions of the Architect acting in collaboration with the former Managing Director of the undertaking.”

You will observe that in regard to these alterations the Department of Finance appears to have been very accommodating, because they seem to have waived the requirement with regard to the alterations. Why did the Department waive the requirement set out at Clause 3 of the building contract?

Mr. Almond.—The attention of the Accounting Officer was not drawn to the requirements by the architect in charge of the work. There is no doubt that if the attention of the Accounting Officer had been drawn to them at the time, he would have made the necessary alteration orders.

789. Chairman.—I understand the proviso was put in in order to make sure that the alterations would not be made without prior consultation with the Department of Industry and Commerce. What is the use of putting them in if they are ignored?

Mr. Almond.—I explained that the reason for not making the orders was due to an omission by the architect. There is no doubt whatever that these works were necessary, and the prices charged perfectly reasonable and satisfactory.

790. Deputy McMenamin.—Is the Department satisfied that the work involved by the extra cost was actually done?

Mr. Almond.—Quite satisfied.

791. Did you verify them?—We did.

Mr. Leydon.—The cost was the actual cost of materials used.

792. Chairman.—Surely it is a revolutionary situation when a building contract is entered into by the Department, with a proviso that it must be consulted before it is altered, that persons who were not State servants could authorise work to the tune of £10,000. I never heard a case before where public money could be spent by persons who were not in the State service?—I agree that it would be more satisfactory and regular if they had been referred in the ordinary way and if alteration orders were signed by the Secretary of the Department of Industry and Commerce, but, in fact, the architect could do that.

793. Deputy McMenamin.—Has the Department any guarantee that while the work was done the amount of money purported to be expended was in fact expended, or that the work could not be done for a smaller sum?—Both Departments are satisfied on that point. About £2,000 of that sum was attributable to extra cost arising out of the Conditions of Employment Act, and £4,000 was due to the actual cost of items which were higher than at the time the contract was made. The rest was due to extra work, including certain equipment and other items, which the Advisory Board is satisfied was required.

794. Chairman.—Surely it is an utterly chaotic situation if contracts entered into with the Department of Industry and Commerce can be altered?—The contractors did not do it. It was the architect-in-charge, and he was acting in close co-operation with the managing director. As will be seen by the Comptroller and Auditor-General’s note, it was the managing director, Mr. Maas, who actually authorised them.

795. Deputy Keyes.—According to the paragraph the excess of £10,358 12s. 11d. was in respect of items not covered by the original specifications. If the £4,000 was for the extra cost of materials, was that for extra extensions to the original building? From the reading of the paragraph it would seem that the managing director, in conjunction with the architect, found it necessary to make additions.

796. Chairman.—I agree that the paragraph gives cause for very grave concern?—I am not sure that the reference to extra work may not be misleading, according to the particulars before me. Perhaps Mr. McGrath would like to look into the matter again. Of the £10,000, a sum of £2,000 would be for extra cost arising out of the Conditions of Employment Act, and £4,000 was due to the cost of certain things included in the contract, the cost of which was higher than the fine cost.

797. Deputy Cole.—Has the architect power to increase the amount of work to be done without consulting the Department?—There was no provision in the contract by which the architect could claim to be the final arbiter.

Deputy Keyes.—It is rather an important point, because if the £2,000 is included in the £10,000 mentioned, that is incorrectly set down in the paragraph.

798. Chairman.—Have you Mr. Ferguson’s minute which was referred to by Mr. Almond in his letter of March 6th, 1939, refs. No. S99/36/35, in which he intimated to the Secretary of the Department of Industry and Commerce that the Department waived the obligation on the Secretary of the Department imposed by Clause 3 of the building contract? That letter arose from a minute of Mr. Ferguson of the 20th February, 1939, refs. No. TT.D. 2/88/a?

Mr. Leydon.—Yes, I have that minute of the 20th February.

799. Chairman.—Does that minute set out the details of the sum of £9,993 4s. 8d. payment made to Mr. G. P. Walsh and Netherlands Harbour Works Company?— If you look at the first page of that minute you will find a net figure of £3,966, which is the figure I have rounded off to £4,000.

800. Chairman.—Perhaps Mr. Almond’s memory may be fresher, and he may recollect the details which Mr. Ferguson submitted to him, and which he approved in his letter of the 6th March, 1939.

Mr. Leydon.—The figures I have given you are simply a summary of the figures set out in Mr. Ferguson’s minute. The first is £4,000 odd.

801. Chairman.—Perhaps Mr. Almond could give us the details.

Mr. Almond.—In respect of adjustments on P.C. items in the contract, there was an excess of £9,542 11s. 2d. on certain items, and a saving of £5,576 9s. 6d. on other items. The net extra expense was £3,966 1s. 8d.

802. Chairman.—These were additional works?—They were adjustments on what are known as P.C. items. The contract provided for payment of the actual cost of these items, the amounts shown in the contract being merely estimates. The second item is in respect of extra steel used in construction, and the sum is £706 4s. 2d. The arrangement was that we would pay for the actual steel used.

803. Deputy McMenamin.—Were these items vouched?—They were certified by the architect. Payments are made under a contract on the strength of certificates by an architect.

804. Chairman.—What were the other items?—Extra works done and expenses not covered by original specifications, £5,686 7s. 1d. There is a detailed explanation of that item, if you wish to have it.

805. Is there any other item?—No. The total is £10,358 12s. 11d.

806. Did the architect or manager of this enterprise give orders for extra items amounting to £5,686 7s. 1d. without reference to anybody?

Mr. Leydon.—I think that that is so. The managing director may have had some consultation with the advisory committee at that stage, but they certainly did this without reference to the Department.

807. Chairman.—And the Department of Finance retrospectively sanctioned that proceeding?

Mr. Almond.—The works were necessary if the factories were to function.

808. Chairman.—These items represented the brain-wave of a gentleman who was afterwards dismissed for gross incompetence.

Mr. Leydon.—At that stage the question of his dismissal had not arisen. One of the difficulties that always arise in connection with any commercial or semicommercial enterprise is that of reconciling the requirements of business procedure with the requirements of Government control of expenditure. We frequently had complaints from Mr. Maas and the Dutch firm that nominated him for the position that the ordinary procedure involved in complying with Government regulations was totally unsuited to their enterprise and was causing delays, obstruction and so forth. We did give him as much liberty as we possibly could in the running of this particular enterprise. Even at this stage, which was the construction stage, we gave him as much liberty as we could.

809. Chairman.—Did this liberty, in fact, result in the offices of the contractor being equipped in a style which did not in any sense commend itself to the Board of Works?—I am not in a position to say that there is any justification for that statement. I do not know that the Board of Works would ordinarily be competent—this is no reflection on the Board of Works because they have no experience in the matter—to pass judgment on the style of structure or the standard of equipment which would be proper to industrial alcohol factories. That is not the function of the Board of Works and that is why we had to employ this outside firm.

810. Does that extend to the office equipment?—No. In the case of some of the items, the Board of Works and the Department of Industry and Commerce were of opinion that something more modest than that which the managing director’s ideas seemed to require would have been ample for the necessities of the situation.

811. Were any of these extravagances included in the sum of £5,686 7s. 1d.?— No. These items relate only to the construction of the factories.

812. Chairman.—Are there many items in that sum of £5,686?

Mr. Almond.—No. Extra works, proper, amount to £1,350 5s. 11d.; penalties for delays caused by the plant contractors, Messrs. Skoda Works, in accordance with terms of contract, £1,100; extra wages under the Conditions of Employment Act, 1936, £1,950 12s. 8d.; works done by Messrs. Walsh and Netherlands Harbour Works in connection with the erection of plant and not embodied in the specification by either building or plant contractors, £920 0s. 3d.; works done in connection with erection of plant but recoverable from plant contractors by the Minister, £365 8s. 3d. These are all the items. That sum of £365 8s. 3d. was deducted from the sum of £10,358 12s. 11d., leaving a net total of £9,993 4s. 8d. The sum of £5,686 7s. 1d. was paid on the strength of the architect’s certificate, No. 11, dated 10th December, 1937.

813. Chairman.—What is the nature of the penalty item?—When you are putting up a factory which involves two contracts —one for building and one for plant— there is usually an arrangement that if one contractor delays the other contractor a penalty is payable.

814. Was the penalty ever recovered from the defaulting contractor?—I do not think so. Under the contract, we could recover only in the event of strikes due to some action of the other contractors. If an act of God or a strike for which they were not responsible occurred —for example, a strike in Ireland and not in Czecho-Slovakia as it was then—then we had no power to recover from them. That strike was taken to be an act of God. This is a small item.

815. It is, but surely nobody need have hesitated to apply for the certificate of the Department of Finance before liability was admitted for it. There was no question of urgency. It would seem that this gentleman did not care twopence for his obligations under the contract or for the Department of Industry and Commerce. Could there be any excuse on the basis of urgency for failure to apply for the certificate of the Department of Finance?

Mr. Leydon.—That excuse could be pleaded in respect of the major portion of these items.

816. Chairman.—Could it be pleaded in respect of the penalty item?—At the moment, I am not in a position to say that the excuse of urgency could have been pleaded in connection with that item but there were very great difficulties with the managing director from an early stage. He did not consult the Department on all the matters on which, we thought, he should have consulted us.

817. What astonishes me is that the Department of Finance waived all objections to this procedure and permitted this gentleman to get away with conduct of this kind, particularly in view of the fact that he was levying heavy damages on the Department for illegal dismissal. In my opinion, he should have been dismissed very much earlier for gross breach of his obligations?—Looking back on it now, I agree that it would have been better if Mr. Maas had had his appointment terminated at a much earlier stage. I must say that quite frankly. When the original contract was made with the Dutch firm, it provided that, as they were to be responsible for the running of the scheme, they were to have power to nominate the managing director. As matters stood, that seemed to be an eminently reasonable stipulation. They nominated Mr. Maas. Whether we liked it or not, we had to try to work with Mr. Maas. We tried as long as we possibly could and, at one stage, we insisted on their coming over to discuss with us the difficulties that arose from the procedure and the attitude which Mr. Maas adopted to various Government Departments. We tried our best to get some system under which we could make the thing work. All the Departments concerned tried to find some basis of accommodation under which the business could be carried on.

Deputy Keyes.—I hope Mr. Maas has carried away with him generous appreciation of Irish liberty.

818. Chairman.—I hope he has and I hope that the procedure here followed will not be regarded as a precedent for future relations between contractors and Departments.

Mr. Leydon.—I can assure you that the history of this business will be a lesson to all the officials of the Departments who have had anything to do with it for the rest of their official lives.

819. Deputy Brady.—Making allowance for the additional price above the estimated cost from the time the contract was taken for the extra steel, and making allowance for the amount involved in the increase in wages under the legislation that took place at the time the contract was taken and up to the time it was completed, it would appear that the amount involved in the extra buildings altogether was £1,350. That represents the actual cost on the extras as apart from the increase in wages and the other increased costs. One gets that figure out of the whole amount of £10,358. I think it is unfair to the Department to give the impression that Mr. Maas got away with £10,358 when really the amount was only £1,350.

820. Deputy Keyes.—I do not think that is quite correct.

821. Deputy Brady.—I understood from Mr. Leydon that the price increases from the time the contract was taken until it was completed account for £3,996 3s. 8d. Is that the position, Mr. Leydon?—That is the net effect of the adjustments on the P.C. items.

822. The wages adjustments amounted, roughly, to £2,000 consequent on legislation passed in the Dáil; the delay penalty was £1,100; there was additional plant procured to the extent of £920, or was it additional steel for £706? Then there was a sum of £369, which was recovered as a result of some adjustment, so that actually on the whole total of £10,000 the amount involved in extra building was £1,350 odd. I think, in fairness to the Department, that that figure should be definitely shown. The impression given to members of the Committee was that Mr. Maas got away with £10,000 on extra buildings. That is not specifically stated, of course, but that was the impression. I think that impression should not go out and that figure of £1,350 should be segregated.

823. Deputy Keyes.—The amount specified for the erection of the distilleries and additional work was £129,170, and the payments made to the contractors amounted to £139,528. There was an increase of £10,358, and that was allowed to be spent by the gentleman responsible for planning the buildings. That additional £10,000 was spent without the sanction or approval of anybody, excepting Mr. Maas and the architect.

Deputy Brady.—I suggest that is not in accordance with the facts.

Chairman.—We will make out our report in the light of the evidence submitted, and later on we can discuss what it may be appropriate to say.

824. Chairman.—Continuing paragraph 65, we read as follows:—

“In addition to amounts due under the main contracts for the supply of plant and equipment, payments amounting to £5,200, approximately, were made to the contractors for certain miscellaneous equipment, etc. I understand that the covering sanction of the Department of Finance has been sought for this expenditure.”

Chairman.—I understand, Mr. Leydon, that the Department of Finance sanction has since been received?—Yes, the Department of Finance sanction has been received.

825. Did Clause 3 of the building contract apply to these items?—If they were not included in the original contract, Clause 3 could not apply.

826. Deputy Brady.—These were extras?—Yes.

827. Chairman.—Were you consulted before these extras were ordered, or were you informed before they were ordered?— About £2,000 related to spare parts, electrical motors and certain tools. There would have been very great difficulty at a later stage if we wanted to get them. It would be impossible to procure them now, and it was in order to have them readily available that they were purchased. A sum of £1,400 was expended on works which were required to comply with the stipulations made by the Revenue Commissioners for the purpose of safeguarding the revenue. Most of the remaining items, which amount to £2,500, were ordered by the managing director on his own responsibility.

828. Without any reference to you?— Without any reference to the Department.

829. Chairman.—Did the Department of Finance advert to that, Mr. Almond, when they issued their sanction for these payments?

Mr. Almond.—No. We were assured that the articles ordered were required in connection with the factories. It must be remembered that the managing director was on the site as each factory was being constructed, and on occasions he ordered additional parts which he thought were necessary. He always took the view that in a business undertaking of this kind he was entitled to some little elasticity. There was no suggestion that the items were not obtained or were not actually in use in the factories. I am prepared to admit that if we had had a managing director of the type that we now have, the position might have been more satisfactory. There would certainly have been a reference on every possible occasion to the Department and to the advisory board, but that did not happen with Mr. Maas. He was the nominee of the firm that was running the factories for us, and we had to face up to that position.

Mr. Leydon.—I think it is only right, by way of general comment, to say that neither Department at any stage was happy about the procedure we had to adopt and the relaxations to which we had to agree to enable the scheme to be carried on at all. There were discussions between the officers of the two Departments about the difficulties that arose, and we did try to make the best arrangement we could; we stretched the regulations to almost breaking point to meet Mr. Maas. It is only right to say that practically all the difficulties that arose were really due to the personality of the managing director.

Chairman.—I will reserve comment for a later stage, Mr. Leydon. It would not be reasonable to delay you in order to make it now.

830. Deputy Brady.—Were the Departmental officials in the position, Mr. Leydon, that these alcohol factories, being the first undertaking of their kind in the country, had to have expert advice and there was no expert advice available except Mr. Maas?—That was the position at the beginning. There was nobody here who knew anything about the production of industrial alcohol, and it was for that reason we decided to engage a firm of experts from outside to take general responsibility for running this scheme. The alternative would have been to get some individual who would be a paid employee and set up an Irish company, or run the enterprise as a branch of the Department. After consideration we came to the conclusion that it would be better to get the accumulated experience of a firm of high standing and for that purpose this Dutch firm was selected. One of the provisions of the agreement with the firm was that they should nominate a managing director.

831. So far as the Departmental officials were concerned, they had to have a certain amount of confidence in Mr. Maas with regard to some of the steps he was taking—that he was doing the right thing?—We had to do our best to work with him. We made representations to them on more than one occasion about the procedure adopted by Mr. Maas and the difficulties he was creating with various Government Departments. One of our difficulties was that the first reaction on their part was to adopt and stand over Mr. Maas’s point of view as against the Department and the standing regulations governing the expenditure of public funds.

Mr. Almond.—Perhaps it would help the Committee to some extent if I quoted from the letter from the Department of Industry and Commerce in regard to those items ordered by the managing director on his own responsibility. They say: “There is no evidence that the charges are excessive and the work undoubtedly added to the efficiency of the factories. It may be stated also that every item of expenditure mentioned on the enclosed statement is supported by certified vouchers which have been carefully examined and checked.”

Report of the Comptroller and Auditor-General:—

“I inquired whether the normal procedure was followed under which lists of contracts placed and purchases made exceeding £25 in value are required to be submitted to the Government Contracts Committee, and was informed that such lists were not submitted as it was felt that owing to the commercial nature of the undertaking it would not be feasible to follow this course.”

832. Chairman.—Is that the general principle which you are prepared to sponsor, Mr. Leydon?—I should not think it is a general principle in the case of Government or semi-Government undertakings, though there may be a great deal to be said for it if, in fact, the procedure of inviting competitive tenders is observed by the undertaking itself. I do not think I could go further than that. The procedure of reference to the Government Contracts Committee is a procedure which is intended for ordinary Government purchases, not for purchases for an enterprise that is really commercial in character, although in this particular case it was initiated as an enterprise run directly by a Department of State. For example, if we had adopted at the outset the course that has since been adopted, if we had started with a limited liability company to run this enterprise, I do not imagine any question of referring these matters to the Government Contracts Committee would have been raised. I think that is the sort of consideration one might keep in mind when looking at a question of this kind.

833. Yes, Mr. Leydon, but if the company subsequently called upon the Treasury to meet the deficit, then the question of the propriety of exonerating them from consulting the contracts committee would have to be investigated. If the contract system is to be circumvented that will have to be dealt with. Allowing the Treasury to make up the deficit as a result of the committee not having been consulted surely means that the whole purpose of the contracts committee is avoided?—I do not suggest that that would be the purpose in setting up an enterprise of this kind. I think that, for the purpose of carrying on a commercial enterprise, the particular sort of machinery provided for by the Companies Acts is better than that provided by a Government Department. If the company itself does what the contracts committee ensure is done in the case of Government Departments, if the company sees that there are competitive tenders, then I think the principle which the contracts committee was established to safeguard is in fact safeguarded sufficiently, particularly where, as in this case, the Department of Finance and the Department concerned are both represented on the board of the company, as they were on the advisory committee.

834. What is the procedure if purchases have been made during a month and are subsequently submitted to the contracts committee? Can the contracts committee demur to prices paid during a previous month or should those lists of purchases be submitted to the contracts committee before they are made?— Perhaps Mr. McGrath would deal with the procedure in that case.

Mr. McGrath.—In cases where these lists are submitted, I understand the procedure is that the contracts committee will examine the list and send back to the Department a note saying they are satisfied with the contracts made, and if they are not satisfied they will point out the reasons why they are not satisfied.

835. Chairman.—Would it have been unreasonable restriction of the enterprise to comply with that procedure?

Mr. Leydon.—I can only say that I think it would be inconsistent with the idea of running the enterprise on a commercial basis.

836. These purchases are submitted to the contracts committee for the purpose of obtaining a certificate that the prices paid are fair and reasonable. Apparently, that precaution had not been taken in this instance. Surely it is not an excessive demand to make that people should submit their prices to the contracts committee for that certificate? Does it not make for the presumption that the prices were neither fair nor reasonable if the person who made them would not submit them to the contracts committee for examination?—I am prepared to agree that it is not an unreasonable point of view that, up to the time when the company was established, these lists should have been submitted to the committee after the contracts had been made; but I do not think it is fair to say that the omission to do so creates the presumption that the prices were not reasonable.

837. What other reason could be advanced?—The main reason is the one which I have just given, whether you accept it as satisfactory or not, that this was regarded as an enterprise which should be run, as far as possible, on a commercial basis. Every effort was made —or should have been made—to obtain competitive tenders.

838. I note your interpolation “should have been made”. I quite agree with the presumption that every effort should have been made, but there is no proof that any effort of any kind was made. In fact, the presumption seems to go all the other way. However, that is as much information as you are able to give us?—I am afraid that is so. The question—like a great many others—must really be viewed in the light of the general difficulties surrounding this whole enterprise. The Dutch firm of experts were themselves inclined to take the view that the requirements of official procedure in connection with Government-financed enterprise here were totally unsuited to a scheme of this kind.

839. There is a further part to paraGraph 65 by the Comptroller and Auditor-General as follows:—

“A contract for the supply of four molasses plants at an inclusive cost of £7,248 was placed during the year. Only one Irish firm tendered for the work, and although this tender was not the lowest received, it was accepted by the Minister for Industry and Commerce, the covering sanction of the Department of Finance being obtained subsequently. In the period under review, £2,416 was paid under this contract.”

Can you give us the amount of the lowest contract received from any source?—The lowest tender from any source was £6,190.

840. What was the actual amount paid? —The amount of the tender accepted was £7,248.

841. Had the firm making the tender of £7,248 any previous experience in constructing works of this kind?—They had sufficient experience in carrying out contracts which were analogous to this one. I understand that the structural steel part of the work was a fairly straightforward job.

842. Did the contract here referred to include the equipment, or was it just for the building?—I understand it did not include all the equipment. Certain parts had to be purchased separately.

845. There is a further part to paragraph 65 by the Comptroller and Auditor-General as follows:—

“The charge to the Vote includes a final payment of £1,806 11s. 4d. to the supervising company in accordance with the settlement referred to in paragraph 68 of my report on the accounts for 1936-37. Royalties amounting to £2,588 10s. 3d. were also paid to this company during the year under their agreement with the Minister for Industry and Commerce.

Unvouched or partly vouched expenditure amounting to £355 15s. 0d. is also charged to the subhead. This expenditure includes petty cash balances held on 20th March, 1939; personal imprests and other advances outstanding (including sums due by the former Managing Director) on the same date, and overpayments in respect of sick absences, travelling, etc.”

Were the sums due by the former managing director ever paid?—These various items, amounting to £355, were outstanding at the time the company was established and were transferred as an asset to the company.

846. From a note I have here regarding a query made it would appear that, at the date of the termination of the services of the managing director, he owed a sum of £110 2s. 8d. in respect of imprests, overpayment of salary, and petrol and oils supplied to him, and also a sum in respect of the loan of two stillage barrels which were not returned. The reply was that so far Mr. Maas had refused to adjust the matter by furnishing an account and remitting the amount of the outstanding balance. Is that so? —That particular item was taken into consideration in the settlement of the action.

847. That £110 may be added to the amount of the damages which Mr. Maas extracted from the Department?—They were taken into consideration in arriving at a settlement.

848. And he was released from any obligation? If that is so, I am going to look for a job as an alcohol manager under the Department of Industry and Commerce.

Mr. Leydon.—It is not going to be easy to get a job of that kind again.

849. Chairman.—There is the concluding part of paragraph 65 by the Comptroller and Auditor-General, as follows:—

“Receipts from the sales of alcohol, wash, etc., were estimated to realise £168,100. Actual receipts amounted to £128,101 2s. 4d. and included £105,960 12s. 0d. from the sale of industrial alcohol; £20,014 16s. 2d. received from the Revenue Commissioners in respect of an allowance of 5d. per proof gallon on spirits used in the making of power methylated spirits; £1,050 4s. 11d. from the sale of stillage, and miscellaneous items, £1,075 9s. 3d.”

Would you tell how it is that the Industrial Alcohol Company recovered £20,000 in respect of alcohol used in the manufacture of power methylated spirits from the Revenue Commissioners when, in fact, they paid the Revenue Commissioners no excise duty on any of their products?— I am afraid I am not in a position to explain this is any great detail. It is apparently a payment that has been made by the Revenue Commissioners under an Act of 1921, which was passed at a time when nobody visualised the coming into existence of industrial alcohol companies.

850. I understand we have to go back to 1906 and that we have to consult the Finance Act of 1920, as amended by the Finance Act of 1921; but what has puzzled me was that all these Acts contemplated that duty would be paid on spirit, which would then be recovered from the Government Department if used for the manufacture of methylated spirit. How does it appear that you have recovered from the Revenue Commissioners duty which was never paid?—I am sure the Revenue Commissioners would never pay £20,000 unless it was correct to do so.

Mr. Almond.—That money has to be paid until the law is amended.

851. Chairman.—Was that not under contemplation when the spirit was being manufactured and was that not in the minds of the Revenue Commissioners?

Mr. Leydon.—It is hard to say what may have been in the minds of the legislators of 1906.

Mr. Almond.—I understand it is still payable in England in respect of alcohol fuels.

852. Chairman.—Do they pay an excise duty now?

Mr. Almond.—They do now.

853. Chairman.—In this country no excise duty is paid on industrial alcohol yet the Industrial Alcohol Company recovers £20,000 from the Treasury on a payment they have never made.

Mr. Almond.—I would not use the word “recover”.

854. Chairman.—I am trying to be fair. It looks to me like a straight subsidy from the Exchequer. Is it not?

Mr. Almond.—That is a difficult question.

855. Chairman.—However, I take it, Mr. Leydon, that the Industrial Alcohol Company still receives this £20,000?—I understand it is correct to say that the company is still receiving payment.

856. May I inquire whether that was taken into consideration when the loss for which the Minister accepted responsibility was being estimated?—I am afraid I could not answer that off-hand. We shall deal with it in the memorandum* which we shall send you about that loss.

857. Also it would be of interest to the Committee to know whether the Minister bore this subsidy in mind when he was arriving at the cost of industrial alcohol for the purpose of determining what was a fair price for the Industrial Alcohol Company to charge or has the subsidy turned up fortuitously?—That is a matter that was borne in mind in connection with the fixing of the price.

858. And the Minister is fully advised that this subsidy is being paid annually to the company?—Yes, Sir.

859. You do not recall when the payment was first made?—It was paid first I think in 1937.

860. The first claim for the rebate was made in the financial year 1937-38?—That was the year in which production started.

861. Then we have the astonishing situation that the receipts of the Industrial Alcohol Company include a refund of duty from the Revenue Commissioners amounting to £20,000, duty which the Commissioners never received. Is not that the case?—That appears to be the case.

862. The next paragraph (paragraph 66) of the Comptroller and Auditor-General’s report is as follows:—

Turf Development Board, Limited.

“Issues to the above Board out of the Grants-in-Aid provided under subheads O. 1. and O. 2. amounting to £13,100 and £861 1s. 11d., respectively, were made during the period under review with the consent of the Minister for Finance.

Repayable advances made from subhead 0.3 amounted to £259 15s. 2d., and were sanctioned by the Department of Finance on the conditions as to repayment referred to in previous reports. During the year a sum of £750 was repaid by the Board and credited to appropriations in aid. The amount, including interest, outstanding at 31st March, 1939, in respect of advances and of the £16,000 due by the Board for sacks purchased from Vote and placed at its disposal in 1934-35 was £18,810 0s. 11d. No arrangements have yet been made regarding payment for certain office supplies and technical equipment also transferred to the Board in 1934-35.”

What is the position in regard to the sack now?—The position is still under consideration by the Department of Finance.

863. Where are the sacks?—I am afraid Sir, that I have to say that a lot of the sacks were worn out, destroyed or lost. Some of them were taken back by the Post Office.

864. The bulk of them have disappeared?—Yes, they were worn out in the ordinary process of wear and tear.

865. And the Turf Development Board is indebted to the Department to the sum of £18,810 0s. 11d.?—At the moment, yes.

866. I wonder was I far wrong when I said on the occasion of the introduction of the Estimate that the only man who would make anything out of this turf scheme would be the man who would make the bags? I take it that you will advise us in due course as to the basis upon which this matter is settled?—I am sure the Comptroller and Auditor-General will keep a watchful eye on that.

Mr. McGrath.—I shall keep it in mind.

867. Chairman.—The Comptroller and Auditor-General’s Report goes on (end of paragraph 66):—

“Issues out of the Grants-in-Aid for the development of Clonsast Bog (subhead 0.4) and the development of Lyracrompane Bog (subhead 0.5) amounted to £60,000 and £5,000 respectively. The issues out of these subheads are repayable by the Board on conditions which have already been referred to in my reports on the accounts for 1936-37 and 1937-38. In the case of Clonsast, repayment is to commence when the bog comes into production, and in the case of Lyracrompane the arrangements proposed for repayment are to be submitted to the Minister for Finance for consideration as soon as production commences. I understand that production at Clonsast has not yet commenced, and that Lyracrompane is not yet in full production.”

Have any conditions in the Lyracrompane case been submitted to the Minister yet? —It is hoped that repayment of interest and capital will commence in 1942, but it is a bit early to say definitely what the rate of development will be there. It is expected that something in the region of 14,000 tons will be produced this year at Lyracrompane.

868. In what form is the turf being produced? Is it briquettes or just turf? —It is machine-won turf.

869. Is it pressed?—There is a certain amount of compression, but it is not the same as the briquettes.

870. Is it going to be distributed in bags?—I understand the intention is to distribute it in bulk.

871. Much on the same lines as coal?— Yes.

872. Paragraph 67 reads:—

Industrial Research Council.

“As in previous years, the expenditure, £3,337 16s. 0d., charged to subhead P. 4.—Special Investigations, related mainly to payments to University Colleges for investigations connected with peat waxes, seaweed and turfburning apparatus. The payments made were covered by Department of Finance sanction.”

Are we to understand that the Industrial Research Council, being a responsible body, gets a grant for any industrial research which they consider may have economic results?—Yes, Sir, if they can make a case for it, but they do not get grants for all the research schemes for which they would like grants. There has been a certain amount of difficulty because of the exercise of a certain restriction on their freedom of action by the Department of Industry and Commerce. In other words, they have to make a case to the Department of Industry and Commerce before they get a grant.

Chairman.—If the Department were a little less liberal with Mr. Maas and more liberal with the Industrial Research Council, the results would have been more beneficial.

873. Paragraph 68 reads:—

Fees under the Sugar (Control of Import) Act, 1936.

“These fees, which are credited to Exchequer Extra Receipts, are paid by the Irish Sugar Company, Limited, in respect of licences issued to them by the Department of Industry and Commerce to import sugar under the provisions of the above Act. It has been arranged that a provisional fee of 1d. per cwt. is paid on the issue of a licence, and an audited account is submitted by the company at the end of an importing period showing the expenses connected with the sugar imported, including the provisional fees and the receipts from sales. The surplus on the account is paid by the company to the Department for credit of the Exchequer.

The estimated receipts in respect of these fees for 1938-39 were £1,500, while the actual amount credited was £27,950 14s. 5d. The receipts included sums received from the company during 1937-38 which had been placed in suspense pending final adjustment with the company in respect of the fees due for a certain importing period.”

That is a formal paragraph to show the amount of duty paid.

Mr. McGrath.—There was an item of profit in that £27,900. It is on imported sugar.

874. Chairman.—The consumers of sugar paid the profit?—Yes, but I do not think the consumer of sugar would get his sugar any more cheaply if it was not brought into the Exchequer. It is really a method of adjusting the fees on imports so as to ensure that the importer would not make an unreasonable profit: that is probably a fair way of describing it. The importing company is the Sugar Company.

875. Chairman.—It is designed to equate the prices of imported sugar with that of Irish manufactured sugar?—Yes.

876. And to pick up on imported sugar the duty which is remitted in respect of home manufactured sugar?—In part.

877. We shall now pass on to the items in the Vote itself. Arising out of subhead N.1, has the Prices Commission now been transferred to the Department of Supplies?—Yes, Sir. Lest there be any misunderstanding, perhaps I should explain the matter a little more fully. The whole staff have actually been seconded to the Department of Supplies but the salaries for the present continue to be carried on the Vote for the Department of Industry and Commerce. The functions which the Minister for Industry and Commerce exercised in connection with the control of prices have been transferred to the Minister for Supplies.

878. That was done by Order followed by a second one transferring the functions under the Bread Act as well?— Yes.

VOTE 58—TRANSPORT AND METEOROLOGICAL SERVICES.

Mr. Leydon further examined.

879. Chairman.—There is a note here by the Comptroller and Auditor-General, as follows:

Subhead B—Civil Airports.

“69. The expenditure charged to this subhead amounted to £16,116 12s. 11d. and related mainly to payments for the acquisition of land in connection with the construction of Airports at Collinstown, Co. Dublin, and Kilconry, Co. Clare.

The Department of Finance approved of the lettings of certain lands acquired for Collinstown Airport which became surplus to requirements, and directed that the receipts therefrom be accounted for as Exchequer Extra Receipts. The amount credited during the year, as shown in the account, was £235 10s. 0d.”

What acreage was let to yield the rent of £235 10s. 0d., or do you remember?

Mr. Leydon.—I think that the crazing of practically the whole of the area acquired was let for a part of the time.

880. On a contract of agistment?—Yes. I have not the figures at the moment, but I can get them for you.

I do not want the figures, thank you, as it is hardly a matter of importance.

881. The note continues:—

Subhead BB—Subsidy in respect of Air Services.

“70. Provision was made by supplementary estimate for payment of a subsidy of £33,000 to Aer Rianta, Teoranta, in accordance with an Order made by the Minister for Finance under Section 79 of the Air Navigation and Transport Act, 1936. Under this Order (Statutory Rules and Orders, 1939, No. 31), the Minister for Industry and Commerce was authorised to pay to the company a subsidy of an amount equal to the losses, as determined by the Minister for Finance and the Minister for Industry and Commerce, sustained by the company and the subsidiary company (Aer Lingus, Teoranta) up to 31st March, 1938, and in the year ended 31st March, 1939, or of £33,000, whichever was the less. As the actual losses as determined, and as shown in the audited accounts of the companies, exceeded £33,000, this sum was paid to the company with the concurrence of the Minister for Finance.”

882. Deputy Brasier.—What sum is contributed with regard to the airport at Collinstown, Mr. Leydon?—Nothing, so far.

883. Am I to understand that nothing would be expected from them, or are they expected to bear any of the cost?—I hope they will bear 50 per cent. of the cost.

884. Fifty per cent.?—Yes, I hope so. There has been a good deal of discussion with the Dublin Corporation and with the Dublin County Council about that question, and the matter was never brought to a conclusion.

885. Am I to understand that you build the airports and then look to the local authority for a contribution?—Well, it would not be quite fair to look at it in that way. Before constructing them, we approached both bodies. Without pursuing the matter too far, perhaps it would be sufficient to say that they wanted to make certain conditions which, in the opinion of the Minister for Industry and Commerce, were impracticable, and at any rate we could not accept them. They were prepared to accept certain liabilities, subject to certain conditions, but the Government decided not to accept these conditions, and so the question of a contribution from the County Council and Corporation was left in abeyance for the time being.

886. But you built the airport irrespective of that?—Yes, we built the airport.

887. Will they be bound to make a contribution?—There is no statutory requirement under which they could be compelled to make the contribution at the present time, but I suppose that, if it were so decided, it would be possible to pass an Act requiring them to make a contribution.

888. Chairman.—The next paragraph of the note is as follows:—

Transport Services.

Meteorological Services.

“I am in communication with the Accounting Officer as to the nature of the records maintained of stores and equipment held in connection with these services, including any stores and equipment taken over from the British Air Ministry.”

Are these communications proceeding satisfactorily, Mr. McGrath?

Mr. McGrath.—Yes. Arrangements have been made for inventories of the stores to be made regularly.

889. And you are satisfied with the conditions now?—Yes.

VOTE 59—RAILWAY TRIBUNAL.

Mr. Leydon called.

No question.

VOTE 60—MARINE SERVICE.

Mr. Leydon called.

No question.

VOTE 61—UNEMPLOYMENT INSURANCE AND UNEMPLOYMENT ASSISTANCE.

Mr. Leydon further examined.

890. Chairman.—There is a note here by the Comptroller and Auditor-General:—

Subhead J—Unemployment Assistance.

“72. The original provision of £1,160,000 for unemployment assistance was increased by a supplementary estimate to £1,335,000. The actual expenditure during the year amounted to £1,338,931 14s. 7d., showing an excess of £3,931 14s. 7d., which is stated in the account to be due to an unforeseen increase in the number of persons entitled to unemployment assistance.

Under Section 20 of the Unemployment Assistance Act, 1933, every application for unemployment assistance and every question arising thereon or in relation thereto shall be determined by an unemployment assistance officer, and such determination shall, subject to certain rights of appeal, be final. Section 13 (2) of the Unemployment Assistance (Amendment) Act, 1935, provides that where an unemployment assistance officer reverses or revises a previous determination under Section 20 of the 1933 Act with the effect of refusing or decreasing unemployment assistance previously allowed, such reversal or revision shall, if the unemployment assistance officer is satisfied that the original determination was made on account of or in consequence of any statement by the applicant which was deliberately false or misleading, have effect from the date of the original determination, or from such later date as the unemployment assistance officer may fix. The sub section also provides that in any other case the reversal or revision shall take effect from the date thereof.

A number of cases were observed where rates of unemployment assistance were reduced on revised determinations, new facts having come to the knowledge of the unemployment assistance officers, but as the question of fraud was considered not to have arisen no question of recovery of overpayments arose, and the payments made on the original determinations remain a final charge on the Vote. Numerous cases also came under notice where determinations made by unemployment assistance officers had subsequently to be revised and the unemployment assistance previously allowed refused or decreased, although the facts in each case were before the unemployment assistance officers when the original determinations were made. The payments allowed under the original determinations in these cases, being regarded as having been made on valid operative decisions of unemployment assistance officers, also remain a final charge on the Vote and are not regarded as recoverable from the recipients.”

Can you tell us, Mr. Leydon, how it comes about that the officers having determined, on the facts put before them, that persons were entitled to unemployment assistance, on a review of these same facts taking place the decisions of these officers were reversed?

Mr. Leydon.—I am afraid the explanation is to be found in ordinary human frailty to which we are all subject. An officer might make a mistake with regard to the number in the family, or something like that, or a mistake might be made in going through the papers, it must be remembered that some of these people have to work under very heavy pressure at times, and a mistake might be made for which allowance would be made if the circumstances seemed to warrant it. The only thing the Department can do is to keep a close eye on the record of these individual officers if they have been making mistakes of that kind, and deal with the matter by some administrative machinery, but not necessarily of a disciplinary character.

891. When you speak of numerous cases. Mr. McGrath, have you any figure in mind?

Mr. Leydon.—Perhaps I might be permitted to answer that question, as I have the figures here. The number of overpayments in 1936 would be nearly 11,000, or over 10,000 at any rate, and at the present time the number is down to 1,600 per annum. It is a diminishing problem.

892. Deputy Brasier.—Would it not be possible to get closer co-operation between the Department’s officials and the boards of public assistance? Superintendent assistance officers complain that there is a very decided lack of co-operation between the unemployment assistance officers and the home assistance bodies?—I do not think that has any bearing on the question raised by the Chairman, but I may say that we have always been anxious to get the closest co-operation between the various bodies concerned. Here, however, it is a question of a mistake or error of judgment.

893. Chairman.—There are really two cases here: one is the case raised by Deputy Brasier and the other is the case I raised with you. Mine was in regard to an officer, having all the facts before him, making a mistake, and then the decision being reversed on the same facts, and Deputy Brasier’s case is that the officers very frequently do not have all the facts before them but could get them if they had the co-operation of the superintendent assistance officers. Are the unemployment assistance officers instructed to seek co-operation in any case of doubt?—They certainly have not any standing instructions to refer all cases to the home assistance officers.

894. Would it not be well to direct their attention to the valuable source of information that is available through the superintendent assistance officers?—They are well aware of that. I could not say what is the extent of the co-operation, but I am sure there is a good deal of co-operation. On the other hand, if we were to stress that too much, there would be the danger that it might lead to a good deal of delay if all cases were to be referred in that way.

895. Deputy Brasier.—Well, they could have had discretionary power and it might help to bridge the gap which exists at the present moment between the time which elapses when a man goes off unemployment assistance and the time when the home assistance officer must step in to give relief.

Chairman.—Well, this is hardly a question for us, but I am sure we should be glad if Mr. Ferguson’s attention were directed to Deputy Brasier’s observations.

Deputy Keyes.—May I suggest that any such attempt would lead to further delay, which is already an objectionable feature in these cases. I believe that the men who do the investigation of means at the moment are quite competent to do it, and this further business of waiting for the co-operation of the assistance officer would only lead to more delay.

896. Chairman.—I think it would help Mr. Ferguson if these matters were brought to his attention—the views expressed both by Deputy Brasier and Deputy Keyes.

Mr. Leydon.—Very good, Sir.

897. Chairman.—The paragraph further continues:—

“During the year, cash recoveries of unemployment assistance overpaid, credited to appropriations in aid, amounted to £439 10s. 10d. In addition, as noted in the account, further recoveries totalling £1,338 17s. 10d. in respect of overpayments included in the accounts of previous years were identified since the close of the last account as having been made by deduction from unemployment assistance to which applicants subsequently became entitled.

Included in the charge to this subhead, with Department of Finance sanction, are sums amounting to £12 8s. 0d. in respect of payments of unemployment assistance for which vouchers were found to be missing or incomplete. A suitable note appears in the account.”

So far as these matters are concerned, Mr. McGrath, you are now satisfied?

Mr. McGrath.—Yes.

898. Chairman.—Paragraph 73 of the Report is as follows:—

Subhead I.—Appropriations in Aid.

“Receipts from certain local authorities under Section 26 of the Unemployment Assistance Act, 1933, as amended by Sections 6 and 7 of the Unemployment Assistance (Amendment) Act, 1938, amounted to £166,189 17s. 10d. during the period under review. I mentioned in paragraph 74 of my last report that the Department was examining the possibility of promoting legislation to solve difficulties which had arisen in connection with the calculation of the sums due by the local authorities concerned. I understand that this legislation has been introduced.”

The legislation has since been introduced and passed?

Mr. Leydon.—Yes.

899. And passed in face of the figures produced from all sides?

VOTE 62—INDUSTRIAL AND COMMERCIAL PROPERTY REGISTRATION OFFICE.

Mr. Leydon called.

No question.

VOTE 70—EXPORT BOUNTIES AND SUBSIDIES.

Mr. Leydon further examined.

900. Chairman.—There is a note here by the Comptroller and Auditor-General. In regard to Vote 70, gentlemen, I am only calling your attention to it because this Vote is answered for by the Department of Finance having regard to the export bounties. Mr. Leydon helps us with regard to one part of this Vote just as Mr. Twomey also helps us. Mr. Leydon can give us information in respect of subhead A—Bounties and Subsidies on Exports of Industrial Products. Have you any list at hand, Mr. Leydon, showing the heads under which the bounties were paid?

Mr. Leydon.—Yes, I have it here. It reads as follows:—Mine and quarry products, Linen piece goods and manufactures, Embroidery work, Blacking and polishes, Shirts, collars and Hosiery, including pyjamas, Horticultural and nursery goods, Biscuts, Jute manufactures, Margarine and edible fat, Basic slag, Glass bottles, Stained-glass windows, Goldsmiths’ and silversmiths’ ware, Tailor-made clothing, Agricultural machinery, Brushes, Paper (excluding stationery), Church metal and other ornamental metal work, Patent malt. Buoy and beacon lights, Patent mattresses, pillows, etc. Bog oak carvings. Monumental sculpture work, Rosary beads, hand-woven woollen piece goods, Carpets and floor rugs, Poplin piece goods and manufactures, Manufactures of wood (bobbins, ladder rungs, ferrules, rail oak keys, and so on), New curled hair, Handcoloured prints, calendars and cards. And then a miscellaneous list, including recondition work for the Great Northern Railway, smoking pipes, travelling rugs, certain patent electric dryers and heaters, and so on.

VOTE 71—PEAT FUEL DEVELOPMENT.

Mr. Leydon further examined.

901. Chairman.—There is a note on this Vote by the Comptroller and Auditor-General on page xlv:—

“103. In accordance with the note to the estimate the Grant-in-Aid of £30,000 provided for Peat Fuel Development was paid over to the deposit account, from which sums totalling £26,500 were transferred to the Peat Fuel Company, Ltd., during the year, the balance of £3,500 being transferred in April, 1939. Including the advance of £35,000, referred to in paragraph 5 of my previous report, the total advances to the company to 31st March, 1939, amounted to £61,500.”

Am I right in believing, Mr. Leydon, that these advances of £61,500 are in addition to the grants which we have been discussing on the Department of Industry and Commerce Vote?—Yes, sir; they are entirely different from those grants on the Department’s Vote.

902. Both sums are payable and lendable to the same company now?—That is so now.

903. All these grants and loans have come into the one ownership since the Peat Fuel Development Company was established?—Since the Turf Development Board has taken this over from the Peat Fuel Company.

904. Quite. The note continues as follows:—

“The estimates provided that the amounts advanced are to be secured by debentures charged on all the assets of the company, and to be repayable at such times and on such terms and conditions as the Minister for Finance, after consultation with the Minister for Industry and Commerce, may determine at the date of the advances or subsequently. I understand that no arrangements have been made for the payment of the advances.”

Have such arrangements since been made?—No, Sir; no arrangements have yet been made for repayment.

905. I see that the Estimate under which this advance was made provided that it should be secured by a debenture on the assets of the company. Has such a debenture been drafted?—Yes; the debenture was obtained before the advance was made.

906. And was there an interest provision contained in the debenture and, if so, has the interest been paid?—I regret to say that I am not in a position to tell you just now whether there was an interest provision in the debenture or not.

907. Perhaps you would let us have a note* on that as to what the terms of the debenture were and what its ultimate fate has been?—The debenture was taken over by the Turf Development Board.

908. Quite, but perhaps you would let us know whether the Turf Development Board has accepted liability for the interest, if there was an interest provision in it? We came across another debenture in which we suspected that there was an interest provision but no interest was being paid and we subsequently discovered that the whole thing had been obliterated on its being transferred to one of these new-fangled companies. We would be glad to pursue the fate of this debenture, to see if it met with a similar fate? —I will furnish a note on the debenture and the fate of it.

Chairman.—There is only one subhead on this Vote, Grant-in-Aid, the terms of which are set out in the Estimate under which it is provided.

The Committee adjourned at 1.20 p.m.

* Appendix X.

* Appendix X.

* Appendix XI.