Committee Reports > List of Committees > Dáil > 1990 > Committee of Public Accounts > Final Report - Appropriation Accounts 1988

AN COISTE UM CHUNTAIS POIBLÍ

(Committee of Public Accounts)

Déardaoin, 7 Meitheamh 1990

Thursday, 7 June 1990

The Committee met at 11 a.m.

Members Present:

DEPUTY G. MITCHELL in the chair

Mr. P. L. McDonnell (An tArd-Reachtaire Cuntas agus Ciste) called and examined.

VOTE 36 — TOURISM AND TRANSPORT.

Mr. D. O’Mahony called and examined.

Mr. E.O’Sullivan (Department of Finance) called and examined.

Chairman.—The Public Accounts Committee are this morning examining Mr. Donal O’Mahony, Secretary, Department of Tourism and Transport, in his capacity as Accounting Officer for that Department on the audited Votes for 1988. This is Mr. O’Mahony’s first occasion to appear. You are very welcome Mr. O’Mahony. We call on the Comptroller and Auditor General, Mr. McDonnell, to lead us into paragraph 53, Vote 36.

Paragraph 53 of the Report of the Comptroller and Auditor General Reads:

Subhead D.3.—Grand to Aer Rianta cpt for construction of new Dublin Runway

Subhead F.—Appropriations in Aid

The share capital of Aer Rianta cpt, established by Section 68 of the Air Navigation and Transport Act, 1936 and incorporated as a limited company, is fully provided by the Minister for Finance. The company is the agent appointed by the Minister for Tourism and Transport to operater the State Airports at Dublin, shannon and Cork.

Up to 1986 the fixed assets used by the company had been financed by way of grants from voted moneys. Following a review of the agency arrangement and the company’s financial position, the Minister decided in 1986 that expenditure on certain long term fixed assets should in future be financed directly by the company from its own resources, including borrowings, and from 1988 he decided that all new assets should be financed in this way. Accordingly, up to December 1988 fixed assets costing £63m have been financed from voted moneys and fixed assets costing £27.5m have been financed by the company. A total of £12m of the company’s borrowings as at 31 December 1988 is guaranteed by the Minister for Finance under the State Guarantees Act, 1954. The company’s capital reserve, representing the amount of the company’s net surplus retained with the consent of the Minister to meet capital expenditure, totalled £25m at 31 December 1988. The amounts to be retained out of the surpluses arising in future years will be as agreed each year by the Minister.

The assets financed from voted moneys are not reflected in the company’s balance sheet. Consequently the operating surplus as shown in the company’s accounts is arrived at without charging interest on capital or depreciation of these fixed assets. Neither is the cost of services provided by the Department e.g. Air Traffic Control, Meterological services, charged against the company’s revenue. The company is, however, required to pay to the Department each year out of its operating surplus an amount determined by reference to Exchequer budgetary considerations and the working capital needs of the company.

In 1988 Aer Rianta surrendered £11.8m of its operating surplus to the Department comprising:

Mr. McDonnell.—Chairman, all I am doing in paragraph 53 is outlining the revised arrangements for financing Aer Rianta’s fixed assets. In the past, that is, up to 1986, Aer Rianta paid over its annual operating surplus to the Exchequer and had its capital expenditure met from year to year by grants from the Vote and the ownership of the fixed assets financed in that way vested in the Minister. There was a partial change to this arrangement in 1986 and, eventually, in 1988, it was decided that all fixed assets would be, in future, financed directly by the company from is own resources, including borrowing. This had the effect of reducing the amount available for surrender to the Exchequer each year compensated for by the Exchequer not having to provide for the company’s capital expenditure. I understand it is the Minister’s intention that title to the assets which are financed by Aer Rianta itself will ultimately vest in the company.

Chairman.—Mr. O’Mahony, if the Minister’s intentions are fulfilled we will have the assets which have been acquired by Aer Rianta’s own resources included in the balance sheet but the assets which were acquired by the State’s other Exchequer resources will not be included in the balance sheet. Does that give a true and fair view of the operation of Aer Rianta, in your opinion?

Mr. O’Mahony.—Thank you, Chairman. Maybe I should give some background on the reason for the changes. As members of the Committee are aware, Aer Rianta is the agent of the Minister for Tourism and Transport for the purposes of the management of the three State airports at Dublin, Cork and Shannon. They were given responsibility for managing Dublin Airport back in 1950 under section 23 of the Air Navigation and Transport Act. With effect from 1 April 1969 they were given responsibility for managing Shannon and Cork Airports. The assets of the three State Airports continued to be vested in the Minister for Tourism and Transport and, under the Air Navigation and Transport Acts 1936 to 1988, the Minister retains full power and authority over the operation of the three airports.

The situation vis-à-vis Aer Rianta has been considered over the years on a fairly regular basis, with particular reference to the agency arrangements. Some changes were made arising from the deliberations some years ago of an interdepartmental Committee, comprising representatives of our Department, the Department of Finance and Aer Rianta, and particularly having regard to the significant improvement in the financial performance of Aer Rianta in recent years, a number of changes have been introduced since 1986 in the financial arrangements under which Aer Rianta operates. The reason for those changes was to give the company more direct control over its own affairs. These changes include the introduction of new financial arrangements for funding of capital expenditure at the State airports from Aer Rianta’s own resources, including borrowing, approval for the treatment of capital expenditure financed by the company from its own resources as Aer Rianta assets in the balance sheet, approval for the creation of a fixed assets replacement reserve and a capital reserve in the company’s balance sheet, to provide for capital expenditure on airport related projects and for the company’s working capital requirements and, more recently in 1988, the granting of delegated authority to Aer Rianta for capital expenditure on items up to £500,000.

That may not appear significant to the Committee, but up to 1987 the limit was £27,500. That was a significant increase. Those changes, which are referred to in paragraph 53 reflect the increased importance of Aer Rianta and their changing status in recent years. It is our view that the changes have enabled the board of Aer Rianta and its management to give a more commercial orientation to the company’s annual accounts. The Chairman asked whether this is fair.

Chairman.—Does it give a true and fair view of the accounts, was the question.

Mr. O’Mahony.—I think it does give a true and fair view of the accounts in that the property at the three State airports continues to be vested in the Minister and Aer Rianta continues to act as the agent of the Minister. That is their status.

Chairman.—As I understand it, Mr. O’Mahony, assets which are purchased by the company from their own resources are still vested in the Minister and are included in the balance sheet but assets which are purchased with Exchequer money and, for all intents and purposes, used by Aer Lingus and if they were part of their own assets, do not appear in the balance sheet. Does that not distort the balance sheet of Aer Rianta effectively, or am I wrong?

Mr. O’Mahony.—It does distort the balance sheet of Aer Rianta but, one has to remember that we are dealing with an agency arrangement. If and when Aer Rianta are given full autonomy as a State body, the question of the transfer of the assets to Aer Rianta will have to be considered and then the balance sheet will reflect the full picture.

Chairman.—We will pass on to the question of surpluses surrendered to the State. Aer Rianta surrender substantial surpluses, a dividend, to the State on a regular basis. What effect will the abolition of duty free facilities have on this arrangement? Is it likely to erode completely the surplus Aer Rianta would have available for surrender to the Department?

Mr. O’Mahony.—Undoubtedly, it will have an effect on Aer Rianta if a decision is taken to get rid of duty free facilities. However, this question has come up for discussion in the EC on a number of occasions and, so far, no final decision has been taken. I cannot say this is going to happen at a particular time in the future. It may or it may not or, if it does, there may be some other arrangement. In the meantime, we are encouraging Aer Rianta to do everything possible to improve their commercial situation at the airport, which they are doing very well. They are involving themselves in commercial activities overseas, which they are also doing very well. If the day comes that duty free facilities are abolished, then Aer Rianta will have improved their financial situation so much that it will not have the serious impact it otherwise would have had.

Chairman.—In your opinion, duty free facilities will not be abolished on 1 January 1992?

Mr. O’Mahony.—Chairman, I did not say that.

Chairman.—That is a question.

Mr. O’Mahony.—I am not in the business of forecasting what is going to happen on any date. I cannot say. I do not know.

Chairman.—On the question of Aer Rianta’s overseas operations, would you give the Committee some idea of the extent of their overseas operations, how profitable these are, what likely extension is in the pipeline and where they stand at this moment?

Mr. O’Mahony.—Aer Rianta have developed their subsidiary activities quite considerably over the past several years. In fact, the first involvement by Aer Rianta in this area was in 1983 when they set up a barter arrangement with Aeroflot at Shannon Airport, where Soviet fuel was provided as payment for airport charges at Shannon. This fuel was sold by Aer Rianta to other airlines and was used to attract airlines to Shannon. I can say that the revenue from sales of this fuel in 1989 was in the region of £5.5 million. In 1988 Aer Rianta established a facility at Shanon for painting and refurbishing Aeroflot aircraft. That activity has produced in the region of 50 jobs and in 1989 had a turnover of £5 million. In 1988 Aer Rianta established a painting and refurbishing facility at Shannon, again in the context of painting and refurbishing Aeroflot aircraft. That activity produced in the region of 50 jobs and in 1989 there was a turnover of £5 million. As you know, Aer Rianta have established quite a reputation in relation to duty-free shops. They have established duty-free shops at Moscow Airport and they opened a duty free shop at Leningrad International Airport in the middle of 1989; they are involved in the provision of in-flight duty-free sales on all Aeroflot International flights out of Moscow, they are involved in the operation of a downtown shopping centre in Leningrad, and they are even involved in the management and sale of advertising space at Moscow and Leningrad Airports.

I understand from Aer Rianta that agreement has been reached on similar joint venture projects with Aeroflot at other locations in the Soviet Union and a number of these will commence business in 1990. You asked what return Aer Rianta had from these projects. The joint venture projects generated turnover of just over £20 million in 1989 and gave rise to the creation of about 120 new jobs for Irish workers at Shannon and in the Soviet Union. I should say that, in addition to the benefits I have just mentioned and the employment created, there are other spin-offs involved from the point of view of Irish suppliers of goods and materials who provide these goods and materials to Aer Rianta. There are also spin-offs in the building and design sectors because Aer Rianta employ Irish consultants and Irish builders to do the work where possible, and that includes work done in the Soviet Union.

Chairman.—Is there some proposal to develop duty-free shops at the Finnish-Soviet border and frontiers of that kind?

Mr. O’Mahony.—I understand there is. I should also mention that Aer Rianta got a contract for the management of the duty-free shop at Bahrain. They are doing extremely well.

Chairman.—A success story.

Mr. O’Mahony.— It is a success story and we are delighted to see it. They built up this relationship with Aeroflot in the early eighties and it has developed ever since.

Chairman.—Can you finally tell the Committee something of passenger numbers managed by Aer Rianta, what the trend has been and is?

Mr. O’Mahony.—I can tell you that for 1988 the Dublin figure was 4.397 million passengers, and I know that for 1989 that, for the first time, the figure went beyond the 5 million. I am referring to terminal passenger traffic at Shannon, where the terminal traffic is important, the figure in 1988 was 858,175. In Cork the figure for 1988 was 530,492. In each case there was a significant increase over 1987. In the case of Dublin, the increase was 24.8 per cent, in Shannon 16 per cent and in Cork 22.7 per cent. There has been a very substantial increase in passenger numbers which, of course, has helped Aer Rianta considerably.

Chairman.—And Dublin figures in 1989 are up on 1988; and presumably the Shannon and Cork figures were up as well.

Mr. O’Mahony.—Yes.

Deputy Flood.—There are a few points I want to raise with Mr. O’Mahony. Are Aer Rianta responsible for the provision of security for passengers at airports and for fire safety?

Mr. O’Mahony.—Aer Rianta are responsible for security at the three State airports.

Deputy Flood.—Does this involve security covering passengers going on to aircraft?

Mr. O’Mahony.—Yes.

Deputy Flood.—In view of the serious incidents which have occurred internationally where we saw aircraft blown out of the sky, have Aer Rianta taken any particular precautions with regard to issues of security on aircraft?

Mr. O’Mahony.—Perhaps I should explain the background here. We have in our Department a National Civil Aviation Security Committee which is chaired by a senior officer of my Department at assistant secretary level. On that Committee you have representatives of all the Government Departments concerned, including the Department of Justice, the Department of Defence and the Department of Foreign Affairs. There are also representatives of the air companies, as well as the Garda Síochána. The Committee meet on a regular basis and they keep updated on events on the international scene. Staff of my Department attend international meetings abroad which are devoted entirely to security at airports. They report back to the Committee and the Committee decide at any one time what measures need to be taken. Aer Rianta are represented on the Committee and they execute the wishes of the Committee at the State airports to ensure that security at our airports is at a very high level.

From time to time there are visits by security experts from abroad, in particular from the United States, who, with our approval, look at the security arrangements at our State airports. I have met these experts and they have had nothing but praise for the level of security at our airports. Whenever there is some unfortunate tragedy, such as at Lockerbie, we look immediately at the need for any further measures to be taken at our airports. It is something we are very conscious of. I can assure the Deputy that there is nothing lacking. Security is something that is before our minds all the time.

Deputy Flood.—I am very glad to have heard that report. Can I just turn briefly to the question of fire safety? As we have seen from recent incidents, particularly one or two in the United Kingdom, these occurrences can be equally as deadly on the ground. What personnel and modern equipment have you available at the airports to deal with a fire emergency or other incident of that kind? Are the personnel continuously being trained and updated on modern methods of dealing with the sort of incidents with which we are all familiar?

Mr. O’Mahony.—I can assure the Deputy that, as in the case of security, we have at the airports a modern fire-fighting service, where personnel are part of the airport security staff. They are very well trained. They have to be, because, quite apart from the possibility of something happening within the terminal building, there could be problems with an aircraft. They must be ready and available at all times to deal with any situation like that. I can assure the Deputy that, in this particular area, Aer Rianta as well as the Department, are fully conscious of the need for vigilance. They are well prepared to deal with emergency situations.

Deputy Flood.—I am glad to hear that report. Aer Rianta are obviously very effective in managing the three airports mentioned. At this time, are there any proposals for Aer Rianta to become involved in the management of Knock Airport or any of the other smaller airports around the country?

Mr. O’Mahony.—As the Deputy is a aware, Connaught Regional Airport is a private airport; it is not a State airport. To give you a direct reply, I am not aware of any plans for Aer Rianta to take over the management of Knock Airport or of any of the other regional airports which, at this time, appear to be running quite effectively.

Deputy Connor.—In relation to the fixing and collecting of landing fees—I take it that, that is the duty of Aer Rianta and that, obviously, has an impact on the number of flights that come and go—how do Aer Rianta compare internationally in terms with other airports?

Mr. O’Mahony.—This is an issue which comes up from time to time. I do not have the exact state of play as to where they are on the chart. Normally, we have a chart that runs maybe from one to thirty or maybe one to twenty, and we can say that Aer Rianta is at a particular place on that chart. I would have to say that they are not worse than many major airports. It has been Aer Rianta’s policy not to increase charges at the State airport since 1987. The last increase in airport charges approved by the Minister was 2.5 per cent, effective from 1 April 1987. It was not that the Minister has disapproved increases since then. It is just that Aer Rianta took the decision that, in order to attract traffic and to assist the Government in encouraging more tourists to visit Ireland, their contribution would be not to increase their charges, and their charges have remained static since 1987. This is something we welcome—since they are doing so well they can actually afford to take this action.

Deputy Connor.—Their charges would hardly compete with landing charges at the Regional Airport at Charlestown — it calls itself the Horan International Airport. It has facilities you would find at an international airport. It has a very long runway and very large jets can land there. Could you comment on the fact that if you fly an aircraft of a certain size from a European destination, with a certain number of passengers, you could land and unload a awful lot cheaper at an airport like the one in the West than at Dublin, Shannon or Cork?

Mr. O’Mahony.—It is difficult for me to comment on that because, at the end of the day, it is a matter for the regional airports to decide at what level they will set their charges. If they can set their charges at a particular level to attract custom, and they can do it economically, they will do so. Normally a small airport or a small airline, because it does not have the overheads, can have low charges. Sometimes, it happens in practice, that, as the overheads grow the charges have to grow. The fact that Aer Rianta have been able to keep their charges at the same level since 1987 tells a lot.

Deputy Connor.—Speaking with the Aer Rianta hat rather than the Department of Tourism and Transport, Mr. O’Mahony, could you tell me, in relation to deregulation of the airports, if you call it that — I am talking about the Shannon stop-over — do Aer Rianta hold a view on that. Do they view it with trepidation, enthusiasm or what?

Mr. O’Mahony.—Deputy, you are moving into a policy area but I will tell you what I have read in the newspapers. I have seen that the chief executive of Aer Rianta indicated that he would not welcome a change in the existing Shannon arrangements.

Deputy Taylor.—How come a large sum of public funds was expended in the construction of a high rise car park at Dublin Airport which, as far as I know, was never used? How did that arise? How much did it cost? What is the intention in connection with that building? Why was it put up and never used? Is it going to be left there in that condition for ever as a white elephant?

Mr. O’Mahony.—Deputy, you are going back a long way now. I do not have the cost figures for that high rise car park but, sometime after it was built, the National Civil Aviation Security Committee that I referred to earlier advised against using that car park, because of the times we are living in. That is a matter that is kept under review. The advice still is that it should not be used as a car park, To my knowledge Aer Rianta are using part of it to house their security force. They have some office accommodation in it. It is not being used as a car park, and for the time being it will not be used as a public car park for security reasons.

Deputy Taylor.—When was the last time it was reviewed from a security point of view? Why is it that multi-storey car parks in other airports are used and there appears to be no security problem there? Is there any forward plan in connection with that building?

Mr. O’Mahony.—I am speaking from memory on this one. This was last reviewed last year. I can say that because I was chairman of the Committee at that stage. The Deputy will appreciate that I cannot go into any details on matters of security, beyond saying that this question was reviewed and the advice of the Committee remains the same. You say it is not being used but Aer Rianta, as I mentioned, have made some use of it and, I understand, they have plans for making further use of it. I have no details but I can say that it will not be used for car parking.

Deputy Taylor.—Have assesments been done on the likely trend in forward air traffic use in the years ahead? When were these assessments done as to likely increases or decreases in air traffic? What plans have been made to cope with the trends indicated by such studies if they had been done? How well are Aer Rianta geared to cope with increases in traffic that will arise within the decade?

Mr. O’Mahony.—On the basis of our experience since 1986, when we have seen very substantial increases in traffic through our airports and given what is happening at present in Brussels to liberalise air transport further, we can look forward to further increases in traffic through our airports.

I should again mention by way of background information that looking at the figures of what has happened at our airports over the period 1979 to 1985, we see that traffic through our State airports was static — it might go up a few thousand one year or down a few thousand, but it was absolutely static. Since 1986 — and I would have to give much credit to the fact that a new Irish airline came on the scene which introduced an element of competition — we have seen astounding increases in traffic at our airports. In the case of the Dublin-London traffic route since 1986 there has been a 100 per cent increase in traffic. That was stimulated by the low airfares that were introduced by the airlines, first as a result of competition but secondly as a result of Government policy to encourage the development of tourism.

We actively canvassed our airlines to reduce fares and the net result is that we have had very substantial increases in traffic. Occasionally, because of those increases, there have been strains at our airports. Aer Rianta have been developing their accommodation to meet those strains. Looking forward to the future, they are planning an expansion of the terminal building at Dublin airport and any other changes that are necessary. I believe there will be further substantial increases in traffic.

During the Irish Presidency — the second phase of the air transport liberalisation package has been under discussion in Brussels. It is our hope that, at the Council of Ministers meeting in the middle of June, the package will be adopted. The effect of this package will be to liberalise further access for Irish airlines and the amount of capacity that they can put on. It is not generally appreciated that there are in many cases bilateral restrictions on the amount of capacity that an airline can put on. In addition airlines will be able to have very flexible fares. Once they have approval for a fare they will be able to float the fare up or down depending on the circumstances, provided the fare meets certain conditions. The package is a very liberal one and it contains increased fifth freedom opportunities for Irish airlines — this is the opportunity to land at an airport in another country, say in Britain, and pick up passengers there to carry them on to a third country. Those fifth freedom rights which have been jealously guarded over the years by member states but, as part of the general liberalisation, and strongly encouraged by Ireland — we were the forerunners in asking that fifth freedom rights should be covered — there will now be a substantial increase in the numbers that can be carried on a fifth freedom basis. It will increase from 30 per cent of capacity to 50 per cent. The net effect will be that more passengers will be encouraged to travel by plane, assuming that competition will ensure that fares will come down rather than go up.

Deputy Taylor.—Assuming that the increases in traffic develop as you have indicated, which seem quite likely, and that such increases are substantial, are Aer Rianta and the Department geared from the point of view of buildings, resources, runways, finances, to cope with that expected increase from their own resources? Have plans been made in connection with it, or would it be likely that financial calls from the Exchequer would be required to meet the increased needs from the increased traffic flow that you anticipate?

Mr. O’Mahony.—So far as Aer Rianta are concerned, the Deputy will be aware that only last year a new runway was opened at Dublin Airport at a cost of some £30 million — I think it was £32 million when you included associated road changes. With that runway, Dublin Airport will have the capability of meeting any traffic demands. From the Department’s point of view, what has been a more serious problem is air traffic control. These unprecedented increases in traffic have put strains on air traffic control.

These strains have been tackled. We are in the process of investing up to £28 million in air navigation equipment for our three State airports. That work is well under way, and much of it has been completed. Whereas up to a few years ago the emphasis had been on reducing staff numbers as part of the Government’s cutback in public expenditure, we have fully understood the need to increase staff numbers to deal with increased traffic and in 1990 — and I am speaking from memory — we will have 30 extra staff in our air traffic control service, and over the next couple of years we expect to recruit about 20 more. From that point of view, we are facing up to the problem. Undoubtedly, increased traffic creates new pressures, but we have been tackling those pressures.

May I anticipate a question from the Deputy? He may say that he was travelling last week and had to wait an hour at Dublin Airport because the plane did not take off. In many cases — I would have to say in most cases — these delays are not caused by air traffic control at Dublin Airport; they are caused by the same pressures in London, Paris, Brussels and indeed all over Europe. The situation is aggravated by the fact that there are industrial relations’ problems — happily not in Ireland, because we have addressed and solved them — in France, Spain and Belgium and the net result is that at any particular time the staff may decide to work to rule and delays can occur. Apart from that, given the very substantial increase in traffic which affects other airports in Britain and in Europe, they are faced with exactly the same sort of ATC problems we have been faced with. They have to introduce flow control which means they will limit the number of aircraft that will land at an airport in one hour to a particular figure. They control the numbers in the interests of safety of operation. We have actually tackled that problem already. I can assure you that my Minister both in Eurocontrol and in the EC has been making strong efforts to encourage other Minister to take the necessary action to ensure that in Europe this type of problem will also be solved. The European Civil Aviation Conference — a Conference of aviation experts which meet in Paris — recently produced a detailed report which addressed this question of air traffic congestion. The Ministers of Transport from the 22 ECAC member states met and decided to implement the report. Eurocontrol are working at present on its implementation.

Chairman.—That is a very comprehensive reply but we have to move on to other questions.

Deputy Taylor.—I am happy with that reply. There is one final matter I want to touch on, that is transport to and from Dublin Airport in particular. As you say, the traffic at Dublin Airport has escalated hugely over the last few years and may escalate further. I want to talk briefly about transport to and from the airport. As you say, for security reasons the multi-storey carpark at present cannot be used and the present surface carparking covers a vast area and is not terribly satisfactory. As you are aware, at virtually every major airport in Europe there is a rail link to the airport.

It is high time urgent attention was given to providing some form of rail access to Dublin Airport. That would be in the interests of the environment and efficiency which has been recognised at all the major European airports. I would like to know if any examination has been done on this issue. Have any studies been carried out? Are there any proposals or projects to provide some form of rail link connection to Dublin Airport?

Mr. O’Mahony.—It is all a question of avail ability of money and the priorities that have to be fixed, depending on the amount of money available. Obviously, it would be nice to have a rail connection to the airport; we are looking at the possibility of a rail connection but it is merely a study. I would not put it very high on our list of priorities. It would be nice to have it if somebody gave us the money and said do it. It would certainly be a good thing to have.

Deputy Taylor.—Was a feasibility study ever carried out as to what the cost would be and what the benefits would be? Has the usual cost benefit study been carried out?

Mr. O’Mahony.—Not yet, but at this time we are looking at it.

Deputy Taylor.—It is high time it was done.

Deputy Flood.—Mr. O’Mahony referred to industrial relations in European airports which can sometimes give rise to delays which he outlined from Dublin and into Dublin. Are industrial relations with regard to the air traffic controllers at a satisfactory level now? Were there not difficulties with regard to arrangements, agreements and different requirements for the air traffic controllers? Has the Minister reached agreement with them and settled those differences because it is important that the air traffic controllers who work under conditions of stress need to have any difficulties relating to their employment and conditions of employment dealt with as expeditiously as possible. That appears not to have been the case for some years.

Mr. O’Mahony.—Yes, Deputy, I could not agree more. When I am flying into Dublin Airport I like to think that the air traffic controller is happy in his work. We did have some problems but they have been solved. ICTU helped and an agreement was reached with our air traffic controllers. They are happy with it, and that is why I said we do not have industrial relations problems at this time. I agree with you that air traffic controllers work under pressure. I would like to feel they are not thinking about industrial relations problems at the time they are doing their work.

Chairman.—Is it the intention that air traffic control will be handed over to Aer Rianta?

Mr. O’Mahony.—As the chairman will be aware from an answer my Minister gave in the Dáil recently, he is considering the future of the Air Navigation Services Office. It is a policy issue and I cannot anticipate what the Minister’s decision will be.

Deputy Allen.—I note that £12 million of the 1988 operating surplus of Aer Rianta was transferred to your Department. In relation to the spending of money by Aer Rianta and the flexibility they have, what is the limit Aer Rianta can spend on any one project without getting the Department’s approval? In relation to the air traffic controllers everything is not as rosy as it is presented here today. We have not heard about the operating limitations imposed on say, Cork Airport. Cork opens from 7 a.m. until midnight and the reason I got was that there is a shortage of air traffic controllers. Would you like to comment on this?

Mr. O’Mahony.—I informed the Committee earlier that we increased the delegated authority of Aer Rianta in respect of capital expenditure from £27,500 in 1987 to £500,000 in 1988 — £500,000 is the limit at this time. To come back to your question about air traffic control. I do not think I said the position was rosy; I said that we had got over our industrial relations problems. I freely accept that because of the increased traffic, we had a shortage of air traffic controllers, and that would apply to Cork as anywhere else. We are in the process of increasing staff numbers — I mentioned that we are getting 30 new controllers this year and another 20 over the next two years. I am surprised to hear what you say about Cork because normally the decision on whether to provide air traffic controllers would depend on the traffic that is offering. I seem to remember occasions when Cork Airport was open until 1 a.m. to take in sunflights, but I was not aware that there was an actual difficulty at the time.

Deputy Allen.—Just to inform you: because Cork-Airport does not open until 7 a.m. flights out of Cork into Dublin do not make the flights going to European capitals. There is a difficulty there. Normally the airport closes at midnight but if a flight is delayed the airport remains open until it arrives. The explanation I got about the difficulties that Cork have is that there is a rostering problem at different levels, including air traffic, and air traffic control is one of the major factors in preventing Cork from extending its opening hours.

Mr. O’Mahony.—It all goes back to economics. We would not open an airport at 6 a.m. to facilitate one flight. The opening hours are fixed according to demand; it is not just tied up to a shortage of air traffic controllers. It would go beyond that. Would it be economic to open the airport?

Deputy Allen.—I could argue all day with Mr. O’Mahony on this one, but I do not want to bore the Committee. What I am saying is that that one flight is the feeder flight for access to all the European capitals and as the second city I think it should rise above basic economics. It is justified. It is something I will take up with you at a later stage rather than bore the Committee. The difficulty does arise from the shortage of air traffic controllers basically.

Mr. O’Mahony.—We have always ensured that Cork got its fair share, Deputy.

Deputy Allen.—I shall desist from being too parochial.

Chairman.—I think it would be a good idea from the Committee’s point of view if the Committee were to get a detailed briefing from Aer Rianta on the workings of Aer Rianta since they have a very peculiar and unusual agency relationship with you. Since it is a success story, it would be very useful for the Committee to get a detailed briefing as to how exactly it operates. Many people confuse Aer Rianta with Aer Lingus. Somebody recently told me that he thought Aer Rianta was the Irish for Ryanair. I think it would be a useful exercise if the Committee agrees, that you would arrange that at some stage we would get a briefing from Aer Rianta on how the whole operation works, and perhaps you would attend that briefing yourself, Mr. O’Mahony?

Mr. O’Mahony.—If it falls within the brief of the PAC, Mr. Chairman, I would have no objection to Aer Rianta attending and I would be prepared to attend also.

Chairman.—We need not meet here, We could meet at Dublin Airport or somewhere like that. They do not have to attend here. We will note the paragraph and the clerk of the committee will be in touch with you. We will now deal with the Vote.

Deputy Allen.—In relation to subheads B.2, B.3, B.4, B.5 and B.6 on which there are no explanatory details, what controls do the Department employ to ensure that these massive amounts of money are spent in a proper manner? Is Mr. O’Mahony satisfied that the returns from the investment are up to his expectations? Do the Department have their own people within those organisations to ensure that the moneys go to the projects that are set out? We are talking here about close on £30 million. Were any contributions made to Aer Lingus as the State aviation agency?

Chairman.—I might just point out that we did get a note on this after the appearance of the last Accounting Officer. The reason there is no note is that it is a grant-in-aid and there is no variation in the amount voted and the amount spent. The questions, nonetheless, might be addressed by the Accounting Officer.

Mr. O’Mahony.—We certainly do detailed monitoring of Bord Fáilte’s expenditure of the grant-in-aid. We get a monthly profile from the Board of projected expenditure under each subhead in line with the Estimate provision. On a monthly basis the Board will make returns of expendilture in respect of the previous month and also provide an updated projection of monthly expenditure up to the end of the year. In the Department, we examine the Board’s returns in the context of the original profiles and, if there is any major variation, then questions are asked and we look for explanations.

In addition to the monthly monitoring of expenditure, there are regular departmental and Ministerial contacts with the Board level to ensure that their activities fully reflect Government policy in relation to such matters as pay, sectoral development and tourism objectives. These contacts would also focus on, among other things, the scope for improving effectiveness within the organisation, monitoring of progress towards achieving the tourism growth targets and general matters relating to the development of tourism. The Department do not generally dictate to the Board the level of promotional spending they should apportion to each market, given the Board’s own experience in this area and the need for flexibility. Department approval — and, indeed, in some cases Government approval — has been necessary for special marketing campaigns undertaken by the Board over the past two years for which additional Exchequer funds were provided made over and above the original Estimate.

Finally, of course, the Board’s annual accounts are subject to examination by the Comptroller and Auditor General. I think you can take it that there is a fair degree of monitoring by the Department of the manner in which the grant-in-aid is spent by Board Fáilte.

Deputy Allen.—In relation to Aer Lingus——

Chairman.—Can we deal with the Bord Fáilte question? Deputy McGahon indicated that he wanted to come in on Bord Fáilte. Deputy Cullimore is waiting to come in also.

Deputy McGahon.—On Bord Fáilte, how much money, roughly, is spent on promoting Ireland abroad on the European Continent? How difficult is it to sell Ireland abroad with the other campaign being waged in Europe— the killing of Australian nationals and English servicemen, babies and women in Germany? How much money is expended on your campaign in Europe? How much is the IRA campaign affecting tourism from Europe?

Mr. O’Mahony.—Deputy, to answer your first question on how much is spent in Europe, I have a figure here showing £2.919 million direct expenditure on publicity, marketing and product development — this excludes pay and administration costs generally — was spent in 1989 for marketing in Europe. To get to the second part of your question, it is very difficult to give an answer. Whenever anything happens, be it what you referred to or anything that reflects on Ireland, obviously there may be some impact. On the other hand, I would have to say that Bord Fáilte have been very successful in promoting and increasing numbers coming to Ireland from Europe. The figures have been extraordinarily good. Subject to correction, I think the figure for the increase last year from Europe, other than Britain, was 35 per cent. We have had great success in promoting Europe in recent years as can be seen if you travel to any part of Ireland and look at the Italian, French, German visitors in particular, apart from the tourists who always came here from the Netherlands, etc. We have had a substantial increase in visitor numbers from those countries.

Deputy McGahon.—How many offices have we in the European capitals? Where are they based?

Mr. O’Mahony.—We certainly have one in Paris. There is one in Amsterdam and one in Germany, but beyond that I cannot say.

Deputy McGahon.—Mr. O’Mahony, you referred to the number of Italian and French cars to be seen in Ireland. They are certainly not seen in the Border area. That brings me to my second question. Can you give us a breakdown of where the money is spent in this country in promoting the various regions? Why is my impoverished region of the Border neglected so shamefully by Bord Fáilte? Why is the money spent in the south and west of this country, virtually to the exclusion of the east coast, particularly the Border area, where tourism is only a fledgling industry?

Mr. O’Mahony.—Deputy, I would have to say to you that Bord Fáilte’s promotional expenditure relates generally to the promotion of Ireland as a single entity. They do not pick out any particular county, whether it is in the south, west or east of the country. They do, however, provide an annual grant-in-aid specifically for tourism promotion and development work carried out by the regional tourism organisations in their respective regions. The grant-in-aid in 1988 amounted to £1.385 million. I have here a breakdown of the Board Fáilte subvention to each of the regional tourism organisations in 1988.

Dublin and the Eastern RTO, which would include the Deputy’s area, received £388,500; Cork-Kerry RTO by comparison received £230,500; the Western Regional Tourism Organisation, £241,500; Donegal-Leitrim-Sligo, £210,500; the Midland Regional Tourism Organisation, £130,500; and the South-East Regional Tourism Organisation, £183,500. The biggest sum of money among those is given to the Dublin and Eastern Regional Tourism Organisations, £388,500, and that covers the Deputy’s area.

Deputy McGahon.—It does, but a large slice of that money is eaten up by Dublin. There is another extension in this country and, certainly, the only Italian that you would see driving around the Border area would be selling fish and chips. There are no tourists coming there now and I would ask you why is that? Why have Bord Fáilte failed to attract people to the Border areas? I know you can quote figures and statistics but the reality of it is that we have no tourists in that region. We are entitled to the same promotion; indeed because we are so weak we are entitled to an extra effort being made on the part of Bord Fáilte. That is not happening and they are not having success in an area which has as many attractions as the Carlingford Lough area or as any other part of this country. What is wrong?

Mr. O’Mahony.—Could I say first of all, Deputy, that while I have given the figures for Bord Fáilte. I should also mention that the International Fund for Ireland allocated almost £2 million for a joint Bord Fáilte-Northern Ireland Tourist Board programme to promote tourism in the North and in the Border regions. The Border regions would presumably cover your area and it is a sum of £2 million.

Chairman.—I do not think we can allow a policy debate to develop. The Deputy has travelled the point quite well.

Deputy McGahon.—I am not satisfied with the International Fund because they recently provided £600,000 for a hotel in County Leitrim. The owner of that hotel was a US financier, based in Guam in the Pacific, and that is for the use of the international jet set. It does not manifest itself down on the street with ordinary guesthouses, and that money, in my opinion, is being misspent by the International Fund.

Deputy Allen.—In relation to Shannon Free Airport Development Corporation and the transfer of the promotion of that area from Bord Fáilte to SFADCo in 1988 by Government decision, they are now receiving £1.54 million. Are the Department satisfied that there is no element of duplication in the efforts of Bord Fáilte and SFADCo in the United States in the selling of Ireland? Like Deputy McGahon, I would have grave reservations about the manner in which the International Fund moneys for Ireland have been spent. On my visit to the United States recently I read very strong comments from Irish-Americans discrediting the manner in which the money has been spent. I would like to know what real control and input the Department have as regards the manner in which this money has been spent. Some of the money is going to projects that are far distant from the purpose that the money was supposed to be spent on. What control have the Department on the spending of that money?

Mr. O’Mahony.—A short answer to the second question from Deputy Allen is that the Department of Tourism and Transport have no control over the expenditure. There is an independent Board that determine International Fund expenditure, and our Department give advice. We cannot have any involvement in the decision-making on individual applications. It is entirely a matter for the Board.

Deputy Allen.—And there is no consultation whatsoever between the members of that Board and the Department on the best way in which to spend those moneys? My belief is that there is a danger that support in the United States for the fund will be eroded because of comments being made — justified comments in some cases — by people in the United States.

Chairman.—A brief comment on that, Mr. O’Mahony, because it is not within the voted money here.

Mr. O’Mahony.—Very brief. We do give advice in individual cases, but we have nothing to do with the decision taken. That is a matter for the Board. May I refer to the Deputy’s first question which relates to Shannon Development and whether there is overlapping. I would have to express the hope that there is not. Shannon Development have a particular mandate and that is to promote the mid-west region. They were given the additional tourism mandate in April 1987. Before that they had responsibility for the development of traffic through Shannon Airport. I am not aware that there is any conflict between the roles of the two Boards. I am aware that there is fairly regular discussion between the chairman of Bord Fáilte and his executives and the Managing Director of Shannon Development and his executives, because clearly they have to work together and it would be a waste of resources if they were both selling the same product. I do not think that that is the situation.

Deputy Allen.—I would have to beg to disagree, in that I wrote a very strong letter to Delta Airlines sometime ago to which they did not respond. Delta Airlines were sponsoring a major promotional programme for SFADCo in the United States on the west coast. I felt that what in fact was happening was that Bord Fáilte and SFADCo were competing for the one market, but what you had was a siphoning off by SFADCo of that market into one area. Looking at the figures that have been produced and the letter dated 19 December 1989 for the regions under the Bord Fáilte heading and the amount under subhead B6 for Shannon Free Airport, could I have the total amounts allocated to the regions under the Board Fáilte heading? We do have the amount for Shannon Free Airport which is £1.54 million. This is just for comparison.

Mr. O’Mahony.—While we are looking for those regional figures that I gave a few moments ago and that I put aside, I will just talk about Shannon Development. They have, as you say, a figure of £1.54 million. Their job is to promote and develop tourism and air traffic to the mid-west region. The reason that the Government assigned the responsibility to them was to have one agency which would be responsible in the mid-west for all aspects of tourism promotion. The counties covered are Limerick, Clare, Tipperary North Riding and West and south-west Offaly. When Shannon Development took over the tourism function, they also took over direct responsibility for the management and promotion of a number of tourism products including the Cliffs of Moher and Lough Gur which are now added to their existing portfolio of Bunratty Castle and Folk Park, Dunguaire, Knappogue Castle, Creggan Owen and the Hunt Museum. These are now managed by a subsidiary of Shannon Development—

Chairman.—I think the question is, could you give the breakdown of the expenditure among regions compared to SFADCo?

Deputy Allen.—My difficulty is that in the letter that you sent to the Committee in December 1989 we have the Board Fáilte subvention to each of the regions. What we have before us here under Subhead B.6 is the Department’s subvention to SFADCo. You do give the total operating budgets for each of the regions in page 2 of the memorandum. For example, Dublin would be getting £1.2 million, Cork-Kerry £609,000. What I am trying to establish is, is the figure from the Department of Tourism and Transport of £1.54 million the only income going to SFADCo, or is there money coming from other Departments. In relation to the other areas, you give the total operating budget but we do not have that in relation to SFADCo. What we have is the subvention from the Department of Tourism and Transport. To make a real comparison you have to get the total operating budget of SFADCo, not just the subvention from your Department.

Mr. O’Mahony.—I shall have to give you a note on that. I do not have the breakdown. The figure of £1.54 million that we have for Shannon Development covers all tourism and traffic development activities including the running of the castles and Shannon Heritage generally. You would be comparing apples and oranges if you were to try to compare the £1.54 million with the figure of £1.385 million for the regional tourism organisations. Therefore I must offer to give you a note on that particular point.

Chairman.—They obviously get money under the Industry and Commerce heading as well which is to do with their comparative IDA operations. What the Deputy is looking for is their total budget for tourism.

Deputy Allen.—For tourism and traffic development.

Mr. O’Mahony.—The figure is £1.54 million for tourism and traffic development not industrial development.

Chairman.—Would they not have income themselves from Bunratty or other sources which they would use?

Deputy Allen.—Yes, in other words, they would have revenue-generating activities which the other areas would not have. The £1.54 million, say, for SFADCo and the mid-west as against a sum of £250,000 for the Western Regional Tourism Organisation makes a very poor comparison. I am saying that Shannon Free Airport has an allocation of £1.5 million while the rest of the country has less than that.

Mr. O’Mahony.—I know what the Deputy wants now and the note I will give you will show what other resources are available.

Deputy Cullimore.—Mr. O’Mahony, under subhead E — Sea Ferries — £800,000 has been granted to the Cork-Swansea route. Is it correct to say that the policy of the company operating that route is to employ non-Irish nationals and to employ cheap labour to service that route.

Mr. O’Mahony.—I am not aware that Cork-Swansea have any such policy. I know that when you wet lease a vessel, you will take crew members with it. But certainly I am not aware that it is the policy of Cork-Swansea to employ cheap labour.

Deputy Cullimore.—Is it correct to say that the people crewing that ferry are not paid union rates?

Mr. O’Mahony.—You are talking about a private company of which I would not have day-to-day knowledge. They got a subvention from the Government but the day-to-day activities of that company are a matter for themselves. I would have no knowledge of what the Deputy is referring to.

Deputy Cullimore.—Would it be fair to say that when taxpayers’ money is being granted to a ferry the union rates should be paid to bring fair competition and to provide the same standards and criteria for other companies operating? I am thinking of companies operating in my own constituency in County Wexford, in Rosslare Harbour, who have to pay the full going rate.

Mr. O’Mahony.—In so far as the Government decided to subvent this service, the purpose of the subvention was to enable the Swansea-Cork service to operate. After that, it is a commercial matter for the people who are managing the company to decide and, indeed, for the people working in it to negotiate wages and so on. I have no personal knowledge on the aspects the Deputy is talking about and it is really outside my remit.

Deputy Allen.—As a former director of the company myself, I would like to declare an interest and also to refute the allegations that the company employ any non-nationals or any non-union labour. They operate a ship on a charter; the ship comes with its crew and the company have operated under very difficult circumstances in that they were competing with State companies who were enjoying major subsidisation because of Government policy, and I would like to reject the allegations.

Chairman.—You have made your point and Deputy Cullimore has made his point. Are there any other questions?

Deputy Flood.—Under subhead C.3 — Traffic Management Schemes — with a grant of £165,000, what are these schemes all about?

Mr. O’Mahony.—The provision we have here, £165,000 for traffic management schemes provides for capital expenditure on bus priority and traffic management schemes approved by the non-statutory Dublin Transportation Task Force which was reconstructed by Government decision with effect from 1 January 1988 on the dissolution of the statutory Dublin Transport Authority. The task force had a previous existence from 1981 until the establishment of the Dublin Transport Authority in 1986. In general, expenditure under this subhead supports schemes which are intended to increase the productivity of existing roads and public transport systems and they represent an essential low cost alternative to investments in inherently expensive infrastructure which might otherwise be necessary. The expenditure in 1988 involved two areas. First, bus lanes here in Dublin, with which we are all familiar, cost £33,343. This expenditure related to the restoration of road markings essential to maintain the integrity of a number of bus lanes and busy routes, where the original markings had eroded over time.

The second part of the expenditure, which was quite large, was £135,906 on closed circuit television traffic monitoring systems. This involves remotely controlled cameras at key vantage points in Dublin city centre, which are linked to a central control room in Dublin Corporation’s Civic Offices. These give a continuous picture of traffic conditions in the city centre, permitting prompt action to be taken in the event of traffic disruption. Two new cameras were purchased in 1988 to add to the basic 10-camera system, and ancillary recording equipment was provided for use in traffic surveys. The system gives bus controllers in two Dublin bus garages direct access to the television pictures, so as to facilitate bus priority opportunities and a better service for the users of the bus service.

Apart from these capital investments, the task force review bus and coach parking arrangements in Dublin during 1988. They endeavoured to bring some measure of control over road openings by the Dublin local authorities and they sought better enforcement of the traffic laws. The note here tells me that the task force made representations to the Minister for the Environment to introduce wheel clamping of illegally parked vehicles. Generally, this is a non-statutory body which is representative of my own Department, the Department of the Environment, the Garda Síochána, CIE and so on, and Dublin Corporation, of course.

Deputy Flood.—You are referring to the closed circuit television cameras. Are these the cameras we see sometimes erected on the top of traffic signals leading out into the suburbs?

Mr. O’Mahony.—These cameras are in the city centre, to my knowledge. They are on high buildings in the city centre.

Deputy Flood.—What are they used for?

Mr. O’Mahony.—For monitoring the traffic as it goes.

Deputy Flood.—Are they related to or connected to the cameras which I have referred to and which are located on top of the traffic signals out in the suburbs. For example, there is one in Kimmage. Who is providing those, is it CIE?

Mr. O’Mahony.—You are out of my area now. It is Dublin Corporation who provide the traffic signals; that is a different thing. This is merely a system for monitoring the traffic, how the buses are running and so on.

Deputy Flood.—On subhead C.I—Grants to Córas Iompair Éireann—£113 million, do we have any information regarding the income that CIE enjoy I know that the company is broken up into three units now, but what would be the income, for example, of Dublin Bus, and is it going up?

Mr. O’Mahony.—I can give you the 1988 customer revenue figures. Are you interested just in buses, or railway and buses? I can give you all of them.

Deputy Flood.—All of them.

Mr. O’Mahony.—The mainline railway customer revenue was £61.135 million; DART, £8.2 million; Dublin city bus services £74.206 million; Bus Éireann Provincial City Services, £9.389 million; and other Provincial bus services, £62.808 million.

Deputy Flood.—Do you have any income figures for non-customer revenue, like advertising and so on?

Mr. O’Mahony.—Included in the figure of £74.2 million, which I gave you for Dublin City services for 1988, there was a figure of £788,000 for miscellaneous receipts which would include advertising.

Deputy Flood.—Have you any information available that the income is improving for 1989? Is that a fair question at this stage?

Mr. O’Mahony.—I do not have the 1989 figures. I can look at the figures for 1987. By way of example, I can tell you that for Dublin Bus in 1987 I have a figure of £66.644 million, which compares with the 1988 figure of £73.418 million, which excluded miscellaneous receipts. Certainly, in that period there was an increase, but I would have to say that the 1987 figures commenced on 20 January 1987 which I presume was the date when the company was set up. So there is not a full year there. I am sorry I do not have the 1989 figures.

Deputy Flood.—The final question that I will put to Mr. O’Mahony is in relation to security on buses, particularly in the Dublin region. There was some attempt to improve security by installing cameras, etc. Did that work. or has it fallen down? There seems to have been a lot of criticism lately about the genuineness of the installed cameras? It was felt that some of them were fake cameras. It seems to me a waste of time. However, have you any information on improvements in that regard?

Mr. O’Mahony.—The Deputy will appreciate that the cameras are a deterrent and I am told that they are supposed to have improved the situation somewhat. The fact that not all of the cameras were working would not be known by the people on the bus. It was less expensive, I understand, to proceed on that basis and it is based on the experience in other European cities where they follow this pattern. Again, it is all a question of trying to achieve something while keeping the costs down.

Chairman.—Mr. O’Mahony, could you tell the the Committee the difference, in a couple of sentences, between Aerlínte and Aer Lingus?

Mr. O’Mahony.—Aerlínte is the official name for the air company which operates the transatlantic routes. Aer Lingus is the official name for the airline which operates the European services. But traditionally we now refer to Aer Lingus as covering the lot. The Aer Lingus Group covers all the services.

Mr. O’Mahony.—So the consolidated accounts of Aer Lingus would show the income and expenses of both Aerlínte and Aer Lingus?

Mr. O’Mahony.—Yes.

Mr. O’Mahony.—With regard to these accounts, Mr. O’Mahony, are you satisfied that your Department supervise them correctly and that you get proper accountability in connection wih the Aer Lingus accounts?

Mr. O’Mahony.—The accounts that are presented to the Department by Aer Lingus are audited accounts.

Chairman.—Such audited accounts as recently presented were understated by £10.1 million, is that correct? Or overstated in terms of profit?

Mr. O’Mahony.—You are referring, Chairman, to Aer Lingus Holidays. Aer Lingus Holidays is a subject that is difficult for me to discuss. When you say that the accounts of Aer Lingus Holidays were overstated, you are aware of the reply given by my Minister in the Dáil on that subject. What the Minister said in Dáil Éireann on 16 May 1990 was that the Craig Gardner report had confirmed that Aer Lingus Holidays Limited over a period of years incurred previously unreported trading losses of £7.3 million, of which £3.6 million was incurred in the year ended 31 October 1989 and £3.7 million in earlier years; that the report also revealed unreported property losses amounting to £2.1 million in the years 1988 and 1989 and unaccounted for property borrowings of some £700,000. If those figures are added up, there is a total of £10.1 million.

Chairman.—May I ask, Mr. O’Mahony, if it is the £700,000 unreported property losses or borrowings that are the subject of the Garda investigation or is it the whole £10.1 million?

Mr. O’Mahony.—The Craig Gardner report was referred by my Minister to the Garda Commissioner for an investigation.

Chairman.—In its entirety?

Mr. O’Mahony.—In its entirety.

Chairman.—We have here Mr. Eugene O’Sullivan, Principal Officer of the Department of Finance. Mr. O’Sullivan, the Finance Accounts of the State show that the State did not receive a dividend in 1986 or 1987, but that in 1988 the State received a dividend of £2.18 million and in 1989 a dividend of £2.52 million from Aer Lingus. Presumably that dividend was based on these inflated accounts, or what was it based on?

Mr. O’Sullivan.—It was based on the audited and reported annual accounts of Aer Lingus, and the figures were decided by the Minister and the Government as appropriate.

Chairman.—Presumably, now that they have to revise their accounts for those years, it is not going to affect the income that you receive by way of dividend? In other words, the dividend you got in those years remains good and dividends for future years will suffer rather than the historic dividend?

Mr. O’Sullivan.—There would be no question of revising the dividends retrospectively. Obviously, dividends for future years will be a matter for decision again by the Minister and the Government.

Chairman.—Are you satisfied with the supervision by the Department of Tourism and Transport and your own Department of the accounts of Aer Lingus and companies like Aer Lingus in view of this development?

Mr. O’Sullivan.—I would not like to add to what Mr. O’Mahony has said about this particular incident.

Chairman.—In other words, you take audited accounts at face value and you do not do any further analysis on them? Is that the situation?

Mr. O’Sullivan.—No, Mr. Chairman, there is monitoring of State bodies under various headings. There is a corporate planning procedure whereby State bodies produce their plans for future years and they set targets, and they are monitored against those targets.

Chairman.—What about the accuracy of the accounts? When something like this goes wrong, such as the matter of unreported losses, to use the term that has been used so far, does that not cause concern to your Department?

Mr. O’Sullivan.—It is obviously a matter of concern which is reflected in what the Minister for Tourism and Transport has said in the Dáil and the action he has taken, and there will be a response from the company.

Chairman.—Would you not agree that the recommendation of this Committee that the Comptroller and Auditor General should have inspection and report rights to the Public Accounts Committee in these very circumstances would be a desirable development from the point of view of parliamentary accountability?

Mr. O’Sullivan.—I would not be in a position to comment on that. I do not have an overall view of these matters in the Department of Finance.

Chairman.—I think you should take that view back to the Department of Finance. The Committee has already made that recommendation and it is for circumstances precisely such as these where the Committee have recommended that the Comptroller and Auditor General should have the right of inspection, should report to the Public Accounts Committee, and that where there is nothing in the area of policy but in the area of veracity or in the area of accuracy of accounts and accountancy procedures and proper financial control, the Comptroller and Auditor General, as a parliamentary constitutional officer should have the right of inspection and report back. If that were in place then at least the picture would be complete, because we would have some feedback into the parliamentary system. As things stand that is very badly missing.

Mr. O’Sullivan.—I will certainly report that view.

Chairman.—Lastly, may I ask you Mr. O’Mahony, can you assure the Committee that you are satisfied that no person at Aer Lingus boardroom or higher executive level was involved in masking these accounts? The reason I ask that is that the report was actually referred to the board for disciplinary action, if necessary. Are you satisfied that the people whom this report was referred to were not involved in masking these accounts?

Mr. O’Mahony.—I would again go back to what my Minister said in the Dáil yesterday afternoon, on 16 May:

“Yesterday afternoon I issued instructions to the Board of Aer Lingus (1) to furnish to me immediately a detailed report on the measures which have been taken to improve the internal system of financial control within the Aer Lingus Group; (2) in particular to satisfy me that there are now adequate controls in place to ensure that irregularities such as occurred in Aer Lingus Holidays Limited cannot be repeated anywhere in Aer Lingus or in any of its subsidiaries; (3) to take disciplinary action, where appropriate, in the light of the Craig Gardner report and advise me in due course of the action taken; (4) to take appropriate civil action, where necessary, and let me know the outcome; and (5) to make arrangements for a phased and orderly withdrawal by Aer Lingus Holidays Limited from the tour operating business at the end of the current season.”

He ended — if I may quote for the record — by saying:

I regret that it is not possible to publish the Craig Gardner report or make any further comment on the matter. I am advised that its publication or further comment could prejudice any legal action which might be necessary.

Chairman.—Mr. O’Mahony, as Accounting Officer, you have a statutory duty to report to this Committee, and when this matter is concluded by the Garda I expect that you will send this Committee a note letting this Committee know precisely what the background to this whole situation is and what steps have been taken to improve these accounting procedures and to ensure that there is no repetition. That is your statutory duty, not anyone else’s statutory duty. Would you ensure that the Committee get that note when the investigations have been completed?

Mr. O’Mahony.—I will take note of that, Mr. Chairman.

Chairman.—Thank you.

Deputy Flood.—I would like to ask Mr. O’Mahony if it is intended to question the role of the firm of auditors in connection with the final accounts of Aer Lingus Holidays?

Mr. O’Mahony.—That is a matter for the board of Aer Lingus.

Deputy Allen.—Is Mr. O’Mahony satisfied that everything has been done to date by the board of Aer Lingus and is being done at the present time to get at the nucleus of this problem? What steps has your Department taken by way of having your own accounting officers go in and examine the procedures and records of Aer Lingus? Has that been done by your Department or are you fully confident in the ability of Aer Lingus people to get to the nucleus of the problem?

Mr. O’Mahony.—I read out what my Minister said about the instructions he issued to the Board of Aer Lingus. Already he has been assured by the Board that a comprehensive action programme, part of which has already been implemented, is under way to strengthen financial controls within the Group. The assistant chief executive — finance, who was recruited externally last September, is in the process of filling seven new senior finance appointments, as part of a reorganisation and enhancement of the Head Office finance function.

Aer Lingus are also taking steps to strengthen substantially their corporate legal function. The Minister has been assured that the changes that are being finalised will satisfy him that all appropriate steps are being taken to prevent a recurrence of irregularities anywhere in the Aer Lingus Group, such as occurred in Aer Lingus Holidays.

Deputy Allen.—I am speaking as a member of this Committee, but I would think that, aside from the investigation by the Fraud Squad, a mere internal investigation by the Aer Lingus board is inadequate. What is required is a top level investigation of all aspects of the situation by departmental officials. I believe that, until such time as that is done, the investigation is inadequate. Furthermore could I get an assurance that the financial losses arising from the situation there will in no way have to be funded by the consumer or the taxpayer and that we will get to the nucleus of the problem? Would Mr. O’Mahony, as a result of what has been said, now consider that it is appropriate that departmental investigators should go to Aer Lingus immediately to look at all aspects and not depend merely on an internal investigation?

Mr. O’Mahony.—I would have to say to you that, in my view, it would not be appropriate for people from my Department to carry out such an investigation of the affairs of a State body. State bodies are set up under statute, and a Board is appointed by the Minister. It is the duty and obligation of the Board to carry out any investigations that are necessary in a case like this. As well as that, as you mentioned yourself, the Minister has referred the Craig Gardner report to the Garda Síochána for investigation. I could see no question of departmental officials carrying out a separate investigation within Aer Lingus.

Deputy Allen.—As a taxpayer and as a public representative, I believe that in the situation where there is £10.1 million of public moneys under scrutiny, people other than Aer Lingus executives should be investigating the situation. This Committee will have a lot to say later on if they find that the culprits have not been fingered.

Chairman.—I think you have noted the comments which have been made, Mr. O’Mahony, and we look forward to getting that note from you. We can note the Vote for now and we will conclude the examination at that.

The witness withdrew.

The Committee adjourned.