Pat Carey (Dublin North West, Fianna Fail)
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I thank the Ceann Comhairle for allowing me to raise this matter. In my constituency, the regeneration in Ballymun is a massive development that is very much welcomed by the residents. The Ballymun project is the biggest urban regeneration scheme in Europe and it is something of which we should all be proud. When I look at the new facilities for young people and families, the plans for the new shopping centre and hotels in the area, together with the relocation of so many families into new houses, it is clear that real progress is being made in establishing the new town centre in Ballymun.

The demolition of the towers has certainly been a huge part of this project for the area particularly in its symbolic importance and, in general, it has been very successful. However, last week I held a meeting with a number of Irish subcontractors who have been involved with the demolition project of the towers. Their experience in this demolition has shown another side to the regeneration.

The contract for the demolition of the high-rise blocks was awarded by Ballymun Regeneration Limited to the Controlled Demolition Group, CDG, a UK company specialising in this sort of project. Controlled Demolition has been paid nearly €6 million by Ballymun Regeneration Limited for the demolition work to date. According to the terms of the contract, CDG was then authorised to subcontract as it wished various aspects of the job to subcontractors. In this task, it chose a number of locally based, Irish subcontractors. I have a copy of the contract entered into by BRL and Controlled Demolition Group.

During the recent demolition of McDonagh Tower, there were problems on the site from early on, in particular with payments to subcontractors. As in many cases the people who were owed money were given the run around. Each subcontractor was told that someone else was holding up payments, be it BRL or another subcontractor. After a number of delays and problems the implosion finally took place on 5 June 2005. At the time of demolition, subcontractors were still owed a significant amount of money even though BRL had completed the majority of payments to CDG.

Following this implosion we received news in September that CDG had gone into administration following the withdrawal of its venture capital investor and Ernst and Young was appointed as administrator. The company was sold but since then it has recommenced trading with the same directors except for finance director. The business and assets were taken over by another company, Linkway Manufacturing Limited, which changed its own name to Controlled Demolition and has continued to perform existing contracts. I am led to believe that it resumed trading within a few hours of the sale. I understand that this practice is known as "phoenixing" in the UK.

Phoenixing occurs where the assets of one limited company are moved to another legal entity, without moving the liabilities. In this way it allows directors to declare the company bankrupt and then start up again under a new name and avoid their legal responsibilities. The problem is that we are aware of at least 15 companies that still have not been paid and have not been contacted to agree any payment plan with the new company. Many of these companies are Irish, some from Ballymun or its environs. Seven Irish subcontractors are owed sums ranging from €294,000 down to €40. One company, a security company, employed and still employs 40 local people from Ballymun. An additional six contractors are subcontractors of McDonald Brothers, the main contractor for Controlled Demolition. A further three UK companies are affected. Tom and Steven McDonald are owed €350,000; P. J. Carey — no relation to me — is owed €50,000; and Lancaster Crushing is owed approximately €206,000. The three UK companies are owed €606,000 with more than €1 million owed to Irish companies.

Recently, Controlled Demolition's managing director, Mr. Palin, stated that 90% of the company's creditors would be paid. However, the fear is that Irish sub-contractors are most likely to be the ones to lose out. Furthermore, Mr. Palin said the company's ability to pay the Irish sub-contractors will depend on the outcome of the settlement of the final account with Ballymun Regeneration Limited. A retention amount of approximately €60,000 to €65,000 is available from the contract.

I am glad of the opportunity to speak on the matter because I cannot allow something like this to happen to what is probably the most prestigious construction project in the country. Small businesses and in some cases sole traders will be badly hit by this. It is unacceptable that companies employed on a prestigious State project should go unpaid for their work. Furthermore, it is unacceptable that a company such as CDG can be allowed to operate in such a manner. I ask that the Minister intervene and assist these companies in recovering some, if not all, of the money owed to them. I also call on the Minister to review the case in terms of both European and Irish law in order that CDG can be made to settle its debts in this country.

I thank the Minister, Deputy Martin, the Minister of State, Deputy Michael Ahern, and their officials for the efforts they have made on my behalf and that of the companies to date. I also thank the officials of the Office of the Director of Corporate Enforcement for their assistance, the representatives of Ballymun Regeneration Limited and, in particular, the representatives of the sub-contractors for the assistance they have given to me in compiling their case.

Noel Treacy (Galway East, Fianna Fail)
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We appreciate Deputy Carey's concern in this matter. The recovery of commercial debts is essentially a civil matter between the parties concerned. I do not have detailed information about the particular circumstances of this case, for example, information relating to the terms of the contracts entered into by the parties concerned or the administration procedure in the United Kingdom referred to by Deputy Carey. Furthermore, it is not clear if Irish or British law or both applies.

While on the basis of the information available, it appears that the Minister for Enterprise, Trade and Employment has no function in the matter, nevertheless, we have considerably strengthened Irish company law, in recent years. The Company Law Enforcement Act 2001 introduced significant changes to the business regulatory environment.

One of the main initiatives of the Act was to establish the Office of the Director of Corporate Enforcement with statutory responsibility for encouraging compliance with company law and investigating and enforcing suspected breaches of the legislation. This remit involves communicating publicly the benefits of compliance and the consequences of non-compliance, initiating fact-finding company investigations and prosecuting persons for suspected breaches of the Companies Acts. It also involves evaluating the conduct of persons associated with insolvent companies, applying to the High Court for the restriction or disqualification of company directors and others and undertaking a number of additional initiatives, including remedial measures, as provided for in the Companies Acts.

Business failure is an unfortunate fact of life. However, the changes introduced in Irish company law, through Part 5 of the 2001 Act in particular, are intended to address the problem of dishonest business failure, in particular, what has been referred to as the "phoenix syndrome".

If the Deputy has any information suggesting that a breach of Irish company law has occurred in the above case, I ask him to bring it to the attention of the Director of Corporate Enforcement who is independent in the performance of his statutory duties and has done an excellent job since his appointment to that office.