Trevor Sargent (Dublin North, Green Party)
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Ba mhaith liom buíochas a ghabháil leis an gCeann Comhairle as ucht cead a thabhairt dom an cheist thábhachtach seo a ardú anocht. Over the last month I have received deputations from representatives of ten small and medium-sized indigenous companies operating in the construction sector. They alerted me to a particular scam that is widespread and straightforward.

A construction company, in this case Glenman Corporation of County Galway, won a Government contract to build council housing in Fortunestown, south County Dublin and in Ballymun, Dublin city. It hired sub-contractors to do most of its work. When the work was completed and the sub-contractors presented invoices, in one case for €374,000 and €254,000 in another, some contrived fault was found in the documentation or the work. They were told they would not be paid. When the subcontractors threatened legal proceedings, they were told it would take three years to get to court and by then they would be bankrupt. Instead, they were made an offer of approximately half of what they were owed to take or leave.

It is a clever scam because it uses the laws drafted by this House in good faith against the very people for whom laws are drafted to protect — the most vulnerable. We all know, sometimes from bitter experience, that the law favours the rich and that justice delayed is justice denied. A small contractor will have little choice but to risk going into further debt if he or she decides to take on a larger contractor. The scam also works because we have no effective prompt payments legislation. I remind the House that payment delayed is also payment denied. However, the legislation only governs public bodies and does not cover the private business sector.

Yesterday, before I raised this matter in the House while some hauliers protested outside the gates of Leinster House, I was only aware of ten companies which faced this difficulty. Today, following coverage in the national newspapers, several more have come forward to state that they also face financial ruin at the hands of Glenman Corporation. A plant hire company is owed €180,000, a site security company is owed €10,000 and a haulage company is owed €206,000. This is Government money not reaching people who work on Government projects. I spoke to one man who owes €400,000 to the people he hired to carry out this work. His apartment has been ransacked — we suspect by the creditors — his wife and children have been obliged to move out of the family home and he has not slept in his family home for four weeks because he fears for his life.

Another women who recently started a cleaning firm has been obliged to move out of Dublin to Wicklow. Her two vans have been repossessed and she is living in fear of her life, not because she has done anything wrong, but because she has been let down by our courts and our legislation.

This story will grow bigger as time passes and more people come forward. I believe the scandal is bigger than the Gama one with which we are familiar. I appeal to the House to recognise that the long-term prosperity of this country depends to an enormous extent on small to medium-sized indigenous companies. As a country, we will come to ruin if we do not legally and effectively protect sole traders and small and medium-sized companies. This does not mean grants, State loans or other funding, nor does it mean tax breaks. Legally, small companies are entitled to protection.

I appeal to this House to reform the prompt payment legislation to include all business transactions, to reform legal structures to make it affordable and accessible to all sectors of society and to make it quick and effective. Most of all however, I appeal that we examine the way in which we award Government contracts so that unscrupulous companies no longer have the power effectively to drive small companies to ruin.

Tony Killeen (Clare, Fianna Fail)
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Gabhaim buíochas leis an Teachta as an t-ábhar tábhachtach seo a chur os ár gcomhair anocht. I understand that the company in question has contracts with Ballymun Regeneration Limited, South Dublin County Council and Dublin City Council for the construction of a number of local authority housing schemes. The schemes for Ballymun Regeneration Limited involved are Sillogue, phase 3B, where 58 units are due for completion in December 2005 at a budget cost of €8.8 million, and Poppintree, phase 5B, where 90 units are due for completion at the end of the year at a cost of €15.1 million. The scheme for South Dublin County Council involved is Fortunestown with 112 units and a community facility at a cost of €20.3 million, and the involved scheme for Dublin City Council is Poplar Row, phase 2, with 69 new units and 56 units refurbished at a cost of €17.177 million.

I am advised by the Department of the Environment, Heritage and Local Government that neither they nor the local authorities concerned had any prior knowledge or difficulties with the payment of suppliers or sub-contractors by the company referred to. Having checked the matter with the local authorities, they have indicated that all claims owed to the company concerned are fully up to date. In the light of recent reports, Ballymun Regeneration Limited has sought to contact the company to ascertain the extent to which suppliers and sub-contractors working on the regeneration project are owed money, the amount involved, if any, and its proposals to address the matter. While the issue of payment of suppliers or sub-contractors is a matter for the companies involved in the first instance, the local authorities will maintain a watching brief to see if and how this matter is resolved.

The Deputy has also referred to the general issue of prompt payment of bills by public and private sector organisations and I am happy to clarify the legal position in that respect. In general, this area is governed by the provisions of the European Communities (Late Payment in Commercial Transactions) Regulations 2002, which came into force as SI 388 of 2002. These regulations, which gave effect to a European Union directive on late payment in commercial transactions, came into effect in Ireland on 7 August 2002 and apply to commercial transactions in both the public and private sectors.

The regulations provide essentially that penalty interest will become payable if payments for transactions between undertakings are not met within 30 days, unless otherwise specified in a contract or agreement. A payment is regarded as late when 30 days have elapsed unless an alternative payment period is specified in an agreed contract. In the case of an agreed contract, payment is regarded as late if the payment period exceeds the date or end of the period for payment specified in the contract. Where the contract does not specify a payment period, a default payment period of 30 days will apply. This 30-day payment period begins on the date of receipt by the purchaser of an invoice for payment or the date of receipt of the goods or services where the date of receipt of the invoice is uncertain or the purchaser receives the invoice before the delivery of the goods or services in question. In cases where the parties have agreed a procedure for acceptance or verification of the goods or services, the 30-day payment period starts after this process has been completed.

The interest rate specified in the regulations for late payment is the European Central Bank, ECB, rate plus seven percentage points. However parties to a contract may, if they wish, agree an alternative interest rate. Compensation may be claimed for the recovery costs of the debt, if such costs arise, and the basis on which this may be done is also laid down in the regulations.

Trevor Sargent (Dublin North, Green Party)
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That is easier said than done.