Brendan Smith (Cavan-Monaghan, Fianna Fail)

The Irish National Stud Company Limited, INS, is a commercial State body established in 1946 and is a company registered under the Companies Act. It does not receive grant aid from the State. The INS is operating in a competitive international environment and the international bloodstock industry has not been immune from the consequences of the global economic downturn in recent years.

The board of the INS is responsible for the operations and management of the company. Appointments to the board are made by the Minister for Agriculture, Fisheries and Food following consultation with the Minister for Finance. Recently, I appointed two new directors to the board of the INS, and a further four appointments will be made as vacancies arise in the coming weeks.

The Government has established a system of corporate governance to ensure State agencies are directed and managed in such a way that they serve the interests of the State. A code of practice for the governance of State bodies was issued in 2001, and an updated version of the code was issued in 2009. The revised code is evidence of the Government's recognition of the need to adapt to a changing environment, setting out an enhanced system of corporate governance for State agencies for the future. Prior to 2009, State bodies were obliged to adhere to the requirements of the earlier code, published in 2001, and it was this earlier version of the code that was in place when the events to which the Deputy refers took place.

Back in 2001 my predecessor, the Minister for Agriculture, Food and Rural Development, former Deputy Joe Walsh, wrote to the chairman of the INS drawing attention to the introduction of the code and its mandatory nature across all State bodies. In addition to frequent departmental correspondence, I also wrote to the chairman of the INS in November 2008 and again in October 2009 about the board's responsibilities with regard to corporate governance.

My Department monitors the compliance of the INS with the terms of the code of practice, ensuring that the annual report and audited annual accounts are submitted in a timely manner and, following presentation to Government, are laid before the Houses of the Oireachtas. It is important to distinguish between the role of the board in meeting the requirements of the code and those of the Department in monitoring compliance with the terms of the code. It is not the responsibility of the Department to have in place a parallel system of management to that of the board. Since the introduction of the 2001 code, my Department has received assurances on an annual basis from the chairman of the INS that the company is compliant with the code.

Like the Deputy, I was most concerned when I learned from press reports in September 2009 of certain financial matters affecting the company which had the potential to damage the reputation of the company. I immediately sought and received a full report from the chairman of the INS on the matters raised. The chairman confirmed to me that she was satisfied that the expenses to which the Deputy refers were approved and adjudged to be necessary for the conduct of the business of the company; that international travel is an integral part of the CEO's functions; that no first-class travel had been incurred by the former CEO; and that the board has since revised its travel policy with a view to achieving greater efficiencies.

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