Tommy Broughan (Dublin North East, Labour)
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Question 64: To ask the Minister for Communications, Marine and Natural Resources his views on the recent collapse of Media Lab Europe; his further views on whether this amounts to a serious setback in the area of research into new and digital technologies here; his plans for a new research facility for the digital hub project; and if he will make a statement on the matter. [3698/05]

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Question 65: To ask the Minister for Communications, Marine and Natural Resources if his attention was drawn to the crisis at Media Lab Europe in Dublin prior to its closure; if so, the date on which his attention was drawn to the crisis; the steps he took to avert the job losses and recoup the Government's investment in this company; the total spend by the Government since the conception of this project; and the plans for the staff of the company, its site, equipment, expertise and innovations. [3859/05]

Noel Dempsey (Meath, Fianna Fail)
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I propose to take Questions Nos. 64 and 65 together.

Media Lab Europe, MLE, was formed by an agreement between the State and the Massachusetts Institute of Technology and was in operation since early 2000. It was established to conduct non-directive research in the field of digital media.

The Government invested €35.5 million in start-up capital for MLE. Property was also purchased for MLE to the value of €22.5 million. The property remains in State ownership. The Government has met all its contractual obligations arising from the venture.

While it is acknowledged that research will generally require State support, the uniqueness of the MLE model, as presented initially to Government, was that it would be self-funding by 2005. However, the financial situation deteriorated significantly in recent times due to MLE's being unable to raise the necessary sponsorship and corporate income required, as envisaged in its business plan. In February 2004, the Government liaison committee, comprising Departments with an interest in the MLE operation, wrote to the board of MLE requesting it to undertake a fundamental review of its business model and produce a strategic plan. The board submitted its strategic plan to the Department on 7 May 2004 and it included a request for additional Exchequer funding of €9 million over three years.

Following this review, there were extensive efforts to agree a restructuring plan for MLE that would allow it to move forward on a sustainable basis. These included detailed independent assessment of MLE's strategic plan and its progress towards achieving its high-level objectives; discussions with the relevant Departments; discussions with the research and educational agencies and third-level institutions; discussions with the business and development agencies; direct negotiations with MIT and discussions with the board and executive of MLE. However, a package acceptable to the Government failed to emerge and the decision was taken that no further Exchequer funding would be provided. The board of MLE took the decision to wind down operations.

I am considering the options for a new research entity at the MLE facilities. Issues being addressed include the need to secure the following: greater focus on sustainable research and more directive research in a new business model; better links to Irish universities and third level institutions generally; improved corporate governance in accordance with general guidelines for State bodies and effective management.

Considering the importance of the ICT sector to the Irish economy, the significance of digital media in the broader ICT sector and the need for commitment to research and development in this field, there is a need to make a comprehensive assessment of what model and structures should be put in place as part of a new research entity. It is my intention, therefore, to initiate a consultation process with third level institutes, industry, Government agencies, the private sector and the digital hub to establish what the research focus, structure and objectives of the new entity should be. Drawing on the results of the consultation, Government will make decisions regarding the shape of a new research entity. It is envisaged there will be an open tendering process for any new entity to be established on the site and that Irish third-level institutes and universities will be eligible to apply.

Tommy Broughan (Dublin North East, Labour)
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I thank the Minister for his reply. It was regrettable that he was not taking questions on the first day of the session, on which I raised this issue. I hoped we might have had a full-scale debate.

Does the Minister agree that the Committee of Public Accounts or the Committee on Communications, Marine and Natural Resources, or both, should investigate State expenditure at the location in question, with particular reference to grants to MLE? Would he welcome such an investigation? Does he agree that the MLE project was, to some extent, the Taoiseach's pet project and that he did not invigilate it closely? Was the Taoiseach not remiss when the project began in that he did not set out clearly its objectives? Is he not personally liable in this regard?

The Minister stated the net amount spent in start-up capital for MLE was €35.5 million. Will the State receive any revenue from the liquidation? Is there any other return to the State? What was the size of the workforce within six months of the closure and on the date of closure? What will happen to the fine researchers and graduates that worked for the company?

I am glad the Minister stated he will initiate consultation with local universities and research institutions. Does he not agree that the Government having embarked on this project without having fully consulted the Dublin Institute of Technology and Trinity College Dublin, both of which were within a mile of the company, was arrogant and foolish? Does he agree that the Taoiseach made this decision?

Will the Minister comment on the fact that 50 people have been left without jobs and that the Liberties, an important area of our city, has been left without a flagship project? Bearing that in mind, does he not deplore the fact that four chief executives departed the company, one after the other, with golden handshakes worth up to €400,000 although they had only served for very short periods?

Noel Dempsey (Meath, Fianna Fail)
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On the last question, that four chief executive officers left over a period of five years is a clear indication of the correctness of the decision made and of the fact that MLE certainly had its difficulties. The company made its own decisions in this matter and it had nothing to do with the Department. The company was a stand-alone company and not a semi-State company and therefore the decision on job cuts was the responsibility of the board. This also holds true for the decision to liquidate the company. The latter decision was made on foot of the Government's decision that no further funding would be made available.

At the time of liquidation, the number of staff amounted to no more than 50. Many of these were researchers and were not employed by the company on a full-time basis. They were contracted to work for specified periods. A number of students were also employed, who were obviously associated with colleges and continued to do their research.

On the question as to whether there was any return on the €35.5 million invested or whether the State expects to obtain further returns, the buildings are and were State-owned. That the company employed people over the five years of its existence resulted in the lodgment of a number of patents, thereby resulting in some returns to the State. The details on achievements over the five years are available on the Department's website.

Tommy Broughan (Dublin North East, Labour)
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How much?

Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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Allow the Minister to respond without interruption.

Noel Dempsey (Meath, Fianna Fail)
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On the question of whether the committee shadowing my Department or the Committee of Public Accounts should investigate the matter, nobody has alleged that there was any wrongdoing in respect of this issue and therefore I would not use the word "investigate". My Department and I would certainly have no objection to co-operating if a committee wanted to seek the background details on the matter. I would certainly not term it "an investigation".

Tommy Broughan (Dublin North East, Labour)
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Does the Taoiseach have personal responsibility?

Noel Dempsey (Meath, Fianna Fail)
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I am the Minister for Communications, Marine and Natural Resources. The body was under my aegis since I took up that position. It is my responsibility.

Tommy Broughan (Dublin North East, Labour)
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The Minister did not set it up, however.

Noel Dempsey (Meath, Fianna Fail)
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We made a collective decision in that regard. It was a Cabinet decision and not an individual decision by the Taoiseach. I recall the relevant memo coming to Government. It was an exciting project and it was unfortunate that the dip in the dot.com sector and the general recession occurred when they did because the company could have delivered had economic conditions remained favourable.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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What steps are being taken to ensure that the digital hub is successful and is not associated with the failure of Media Lab? Does the Minister not agree that the departure of four chief executive officers in such a short period should have rung alarm bells for the Government?

Bernard Durkan (Kildare North, Fine Gael)
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It should have set the red lights flashing.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Exactly. The concerns and scepticism of many when the project was initiated should also have come to the Government's attention when the company failed to achieve self-funding status and was unlikely to do so by 2005. Has the Minister met the staff of 50 whom he mentioned, the innovators and researchers since the announcement of the closure?

Was he aware of the work of the south-west inner city computer clubhouse which, in its infancy, provided excellent opportunities for young children in a disadvantaged area targeted by RAPID and the drugs task force? These children never hoped for such opportunities. What will happen to the clubhouse on the site of Media Lab and will money be set aside to ensure it will continue while the Minister decides the future of the rest of the project?

Were the patents of Media Lab held by the Massachusetts Institute of Technology or the State? What is the breakdown of the money which I hope will accrue from much of the innovative work conducted in Media Lab? I visited it shortly before the announcement of its closure. It is to be hoped that some of the projects and patents will make up for some of the bad investment. Has the Minister visited the site and, now that it has closed, has he any intention of doing so to speak to the staff and ascertain their hopes for the company?

Noel Dempsey (Meath, Fianna Fail)
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I visited the site at least twice in the three months since I took office to see Media Lab and the digital hub. I am aware of the clubhouse and the work done there. We brought Mrs. Kofi Annan to visit it and she was impressed by the activity there. That continues as does the Government's commitment to it which will remain in place.

In the files covering its five years of existence and the departure of four chief executive officers, there is no item to suggest that this was raised in the House or that people called for the closure of Media Lab as a result of what was happening there. Nobody raised any serious concerns about it.

It was a five-year experiment which was due to be reviewed in 2005. That review began in 2004 because at that stage, three of the chief executive officers had moved on. There were difficulties of which the Department was well aware. It asked the company to produce its strategic plan which it did three or four months later in the middle of 2004. Officials in the Department, and my predecessor, regarded the plan as inadequate. Experts were brought in whose report came to me shortly after I entered the Department.

There was a general commitment to making this work and we did all we could to reform Media Lab as it was, to give it an extra lease of life and continue but that was not possible. That is the basis of our decision. We are still committed to and believe strongly in the concept of research into digital media. We will try to put something different but related to digital media research into that area.

Tommy Broughan (Dublin North East, Labour)
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The Minister is covering for the Taoiseach. He has effectively thrown his body in front of him, which the Taoiseach did not do for the Minister in his previous office during the controversy about third level fees. The Minister's remarks are not true. I contributed to the debate on Committee Stage of the Bill on 6 March 2003, supported by Deputies Coveney and Eamon Ryan, both of whom expressed concern. We all wanted to see a successful digital village or district in our city. Our concern grew as time passed. The Taoiseach set the project up under the wrong auspices. That was the problem, as the Minister has effectively conceded today.

The Minister has proposed some dramatic initiatives in the past, although the electronic voting machines are rotting away somewhere. Could he not be more ambitious and study Kuala Lumpur and other cities for examples of a proper digital district with everybody on-line? This could be a pilot scheme with perhaps six or eight other pilots the country. The Minister should drive the project and build on this serious set back.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Is there a timeframe for the work the Minister suggests of tying Media Lab to a university or some other third level institution?

Noel Dempsey (Meath, Fianna Fail)
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There is a timeframe for consultations, namely, the end of this month and early next month. I hope we will receive expressions of interest. The tender document has been released inviting these by the middle of this year when they will be assessed.

In response to Deputy Broughan I wish to enter a caveat that we should not allow the failure of the experiment with Media Lab to overshadow the success of the digital hub concept. There are over 40 companies working there employing approximately 400 people, and significant work is taking place in the local community, which is a beacon. Ironically, Media Lab was destined to be the flagship of the digital hub which has now superseded it and is self-sustaining.

It is a pity my socialist friends in the Labour Party did not give me more support on the third level fees issue. We might have made more progress on it if they had.