Tuesday, 18 January 2011
Quinn Insurance Group
We have met Quinn workers, the Quinn group and concerned Irish businesses about this serious situation. There is currently a bid to take over Quinn Insurance. As politicians we have listened to local concerns that this process should be open and transparent, and that whatever decision is made will take into account the 6,000 jobs in the Quinn group and others that rely on it. In addition, taxpayers must be taken into consideration at all times. We will meet various groups and agencies to ensure that the concerns of Quinn workers, businesses and taxpayers will be taken into account in whatever decision is to be made. That is why we have raised this matter in the House today. I will now hand over to Deputy Seymour Crawford.
I welcome the opportunity to speak on this extremely urgent and serious situation. In March 2010, the people of the Border region, North and South, were thrown into disbelief and horror at the action taken by the Financial Regulator, Mr. Matthew Elderfield, who appointed provisional joint administrators by the High Court to Quinn Insurance Ltd. We now know that for years there had been no real regulation here. However, it is clear from the information now available that this action was less than necessary and the problem could have been dealt with in a different way.
I make no excuse for the fact that Seán Quinn and his family made a major blunder through their involvement in Anglo Irish Bank shares. In fairness, Mr. Quinn put up his hands and immediately admitted the exact situation and how it had caused difficulties. However, in spite of the fact that the Quinn group provided a minimum of 6,000 jobs on this island, some of the national media tried to make out that things were much worse than they proved to be. There were suggestions of a smoking bomb which was about to go off, but of course this never happened. Despite all the bad publicity, Quinn Insurance staff have managed to maintain and increase the insurance business that the regulator allowed them to deal with. This proves the value of the Quinn Insurance structure.
My question to the Minister of State is a simple one. My interest is not in any individual but in the retention of 6,000 jobs mainly in the Border region, where the IDA or similar organisations showed no interest. Why were negotiations broken off between the Quinn group and Anglo Irish Bank without any explanation and, thus, the administrator did not receive that proposal? Is it not correct to say that Anglo Irish Bank is fully under Government control and, as such, answerable to the Minister for Finance?
I recall our visit to the Minister for Finance, Deputy Brian Lenihan, as an Oireachtas cross-party group, when he advised us of the importance of Anglo Irish Bank to the solution. Does the Minister agree that it would be better to lodge sufficient money as a guarantee, which would almost certainly never be drawn down? The majority of the 6,000 jobs would thus be retained, rather than putting them at risk and ensuring that the taxpayer would have to bear the brunt of the €2.8 billion the Quinn family might not be able to repay under a different solution.
I make it clear that the Quinn Insurance group is going well. However, the Government and this House need to ensure that whatever has to be done is done to save those jobs.
I welcome the opportunity to make a brief contribution to this Adjournment debate. Everybody knows that since April 2010 Quinn Insurance has been placed in administration. That decision changed the lives of many people who became worried and fearful about their employment prospects, and with good reason. Following that decision, 1,000 redundancies were announced of which 700 have taken effect. A process was put in place to elicit expressions of interest in Quinn Insurance as a going concern. The closing date for that process was 8 December 2010.
What irritates me most is that for eight or nine months the management of Quinn Insurance worked tirelessly with Anglo Irish Bank in preparing a proposal to be submitted for consideration. It was the considered view of the management that there was positivity towards this proposal. Why then was it not submitted for consideration? Did Anglo Irish Bank lead the management on a merry dance and, if so, why? By all accounts, this proposal was comprehensive and well thought out. It would protect the policy holders - of whom I am one - and it would maintain jobs in Ireland, while offering an opportunity for the business to grow in future. It would also facilitate a very important point - the repayment of the €2.8 billion owed by the Quinn family. That surely has to be a big consideration because it is taxpayers' money.
I want to know plainly and simply who made the decision that this proposal could not be considered and why was that decision made? If there were deficiencies with it, why could they not be highlighted in an open and transparent manner, teased out and worked on? My colleagues on all sides of the House and I agree that this proposal is worthy of consideration in its own right and should be judged on its own merits.
At this late stage, before the decision is made, I appeal to the Minister to assist us in getting answers for the workers and management of the Quinn group who deserve no less. They have not been treated fairly and Anglo Irish Bank has not been honest with them. Different messages were given to various people. We are all of the view that the jobs are of paramount importance. There is no queue of foreign direct investors coming our way. West Cavan and Derrylin were barren, desolate places before Seán Quinn took a risk and invested in the community and its people. I do not want to see a situation whereby we would return to the previous scenario. The workers and management of Quinn Insurance deserve to know the truth.
I welcome the cross-party nature of this evening's attempt to address this hugely important issue. However, while I welcome the fact that the Minister of State, Deputy Mary Alexandra White, is taking this Adjournment matter, I regret that the Minister for Finance, Deputy Brian Lenihan, is not here in person. I understand that he may be preoccupied with a matter concerning a single job - that is, the leadership of his own political party. At the core of what we are seeking to address, however, is the issue in regard to many multiples of jobs across Quinn Insurance in Cavan, Enniskillen, Blanchardstown, Navan and elsewhere. Our concerns are real and valid, and we have very important questions to put to the Minister.
We would like to know the full extent of his information on the so described Quinn-Anglo proposals in regard to the future of Quinn Insurance Limited. We would like to know the information he has on how that worked out set of proposals over a period of several months was derailed in terms of its final journey. We would like to know what influences were brought to bear to derail that very sound set of proposals that guarantees the future of the existing jobs in all of the current sites and offered the best prospect of the return of the €2.8 billion owed to the taxpayer - to Anglo Irish Bank now in State ownership - from the Quinn family.
It defies our understanding at this point in time, in the absence of all the information, to appreciate how we could have arrived at this position when after a period of some nine months Quinn Insurance representatives of Anglo Irish Bank, leading up to the Christmas period at the end of last month, were working continuously and fastidiously on developing their proposals and fine-tuning the detail in regard to projections of Quinn Insurance into the future.
We have key and salient questions but, sadly, the Minister is not present and the Minister of State, Deputy White, will deliver what is a prepared response. That is not adequate and, with colleagues here, we are seeking a direct meeting with the Minister for Finance, which I hope will be accommodated at the earliest opportunity. The Minister's reflection of this appeal, on an all-party basis, would be much appreciated.
I hope that in a short period of days this collective of Deputies and Senators across the region, and colleagues from north of the Border who are cosigned to our appeal, will have that opportunity to meet with the Minister for Finance as we are already now embarked on engaging with several of the other decision makers and stakeholders in this very sorry saga.
Mary White (Minister of State with special responsibility for Equality and Human Rights, and Integration, Department of Justice, Equality and Law Reform; Minister of State, Department of Community, Rural and Gaeltacht Affairs; Minister of State, Department of Education and Science; Carlow-Kilkenny, Green Party)
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I am taking this Adjournment matter on behalf of the Minister, Deputy Brian Lenihan, who would like to thank the Deputies for raising this issue.
At the outset, Deputies will understand that the Minister for Finance is constrained about what he can disclose to the House in respect of a competitive sales process in regard to the sale currently under way in respect of Quinn Insurance Limited, including the participation of any party to that process. It is important to keep in mind that responsibility for the sales process is a matter for the joint administrators who were appointed by the High Court. The administrators are currently deciding on a preferred bidder with a view to entering into detailed discussions with them to seek to conclude an agreement on the sale of Quinn Insurance Limited. It is important in that context that the confidentiality of the process is respected and that we remain careful in our debate to ensure the fair process and the commercial nature of the transaction are respected.
Deputies will be aware that the Minister for Finance has responsibility for the development of the legal framework governing financial regulation. The day to day responsibility for the supervision of financial institutions, however, is a matter for the Central Bank, which is statutorily independent in the exercise of its regulatory functions. It was in this independent capacity that the Central Bank, then the Financial Regulator, applied to the High Court to have Quinn Insurance Limited placed in administration.
For the benefit of the House, it made its decision because it had a number of concerns in respect of the financial position of the company, the manner in which it was being managed, and its inability to comply with supervisory regulation. These concerns included an ongoing breach of the Central Bank-imposed solvency ratios; the discovery of guarantees, through unregulated property subsidiaries, to senior lenders - a syndicate of banks led by Barclays and a number of bondholders - over insurance company assets which the Central Bank was unaware of until March 2010 and which had the potential to significantly increase its solvency shortfall; and the manner in which the business was being managed raised governance and accountability questions about the internal control mechanisms as well as the accounting and administration procedures and practices within the company.
The appointment of the joint administrators, pursuant to the Insurance (No 2) Act 1983, to take over the management of Quinn Insurance Limited was taken in the best interests of the firm's policyholders to allow the firm to remain open for business and to continue to be run as a going concern with a view to placing it on an ongoing sound commercial and financial footing.
From the outset the joint administrators have concentrated on fulfilling this agenda and one of their main aims is to ensure that the value of the business was maintained in order to make it as attractive as possible to potential buyers. A key factor here was the reopening of the profitable parts of the UK business.
In response to a detailed case from the joint administrators, the Central Bank, in the first instance, allowed Quinn Insurance Limited, QIL, to reopen private motor insurance business by the end of April. As part of its consideration, the bank considered the information provided by the administrators in regard to key improvements in the company's underwriting model and significant strengthening of its pricing structure. It also consulted closely with the UK Financial Services Authority. Later on, the administrators also sought to have the commercial lines of business in the UK re-opened. However, the Central Bank decided in September that such a move would not be appropriate as QIL would require additional capital which it currently does not have.
The next significant step was the appointment by the High Court on 3 June 2010 of advisers on any prospective sale of Quinn Insurance Limited at the request of the joint administrators. The advisers, on behalf of the joint administrators, issued an information memorandum on 27 August 2010 on the sale of the company to interested parties which set out a two stage process for selecting a purchaser. The first stage required the submission of a non-binding indicative proposal by Friday, 17 September 2010.
The Minister for Finance understands that following evaluation by the advisers and the joint administrators of the above mentioned proposals, a limited number of prospective purchasers were shortlisted by the administrators to participate in phase two of the sale process. They have conducted further due diligence, including the consideration of the necessary commercial information, enabling them to make a final bid.
The joint administrators are currently considering the final bids. In doing this the Deputies should note that the administrators are working to find a solution that addresses the issue of putting the company back on a sound commercial and financial footing. As part of that process their role is to assess bids which will protect the interests of policyholders and which will enable the company to continue to operate as a going concern. The retention and protection of employment is another important element of the administrators' responsibilities subject, as always, to their statutory responsibilities.
Once a preferred bidder is chosen the administrators will enter into detailed discussions with them to seek to conclude an agreement. The Minister for Finance understands that the administrators wish to conclude a sale transaction as soon as possible.
As the Deputies will know, the final decision of the joint administrators is subject to the approval of the High Court. It is important to be clear that neither the Minister for Finance nor the Government has any input or influence over the administration process, including any decision on the sale of the company. It should be noted, however, that he is very conscious of the employment implications of any decision made by the joint administrators in regard to the sale of Quinn Insurance Limited and is keen that as many jobs as possible are safeguarded as part of this process. However, the Minister is of the view that it is inappropriate to speculate as to what may happen in regard to jobs before any decision is made on the sale of the company.
Nevertheless, the Deputies will be aware that last year, in response to the developments in Quinn Insurance and its impact on the employees' jobs, the Minister, Deputy Batt O'Keeffe, established an inter-agency team comprising Enterprise Ireland, FÁS, IDA Ireland, the relevant county enterprise boards and the Department of Social Protection. The group meets regularly under the chairmanship of Dan Flinter.
The Minister, Deputy O'Keeffe, considers that the inter-agency team has been an effective solution to co-ordinate the activities of the relevant Departments, State development agencies and county enterprise boards in order to support employment opportunities for the people concerned.
The Government continues to monitor the position on employment and the Quinn Group generally. That is why the outcome of the sales process is important in putting the company back on a sound commercial and financial footing. This is the best way of protecting jobs and the wider interests of the taxpayer.