Noel Dempsey (Meath, Fianna Fail)
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Bula Limited was formed in 1971 to acquire and develop certain minerals at Nevinstown, near Navan, County Meath. On foot of an agreement in July 1974 between Bula and the then Minister, former Deputy Justin Keating, the State acquired a 49% shareholding in the company but, because of the conditions of this agreement, the State's voting rights only amounted to 28%.

For a variety of reasons, by the early 1980s the deposit had not been brought into production. This has been aired in the long running High Court and Supreme Court hearings of the case brought by directors of the company against Tara Mines Limited, the State and others. During all this time Bula was incurring expenses and running up increasing interest charges on its substantial bank debts, which were secured by a first charge against the assets of the company. The State advanced loans to Bula Limited between 1983 and 1986 amounting to £0.96 million or €1.2 million to cover current interest due to three banks on the company's senior debt, so as to provide breathing space to allow for the consideration of proposals for the future of the company, none of which was successful. No repayment of these loans has been made. Neither has any interest payment been made.

On 9 October 1985, the High Court appointed a receiver on application by the banks. The Bula assets were then offered for sale but this became embroiled in a series of court actions which prevented the sale from proceeding until 2001, when the receiver announced that he had reached agreement on the sale for a total of €34.9 million or £27. 5 million. This was not sufficient to repay all of the moneys outstanding to the banks. Expert advice obtained by my Department was that a sale price in excess of €55 million would have to have been achieved from the disposal of the company's assets by the receiver before any surplus would have been available to repay any part of the advances pro rata with other unsecured creditors. The surplus would have had to exceed €205 million before any funds would have been available to distribute to shareholders. Bula Limited continues to exist as a corporate entity but has no known assets and is not trading.

Once the receiver had been appointed nothing further could be done. During the course of the High Court action, several attempts were made to reach a settlement which might have resulted in the State getting at least some of the money back but these were all rejected by the plaintiffs. Given the nature of the advances and the circumstances in which they were made, it would not have been possible to convert them to a ranking higher than senior debt. The creation of charges and the taking of security follow a strict ranking system which is legally binding.

Since it was clear that the sale price for the asset would greatly exceed the total secured debt, it was considered that there would be no point in incurring further nugatory expense in taking legal action to attempt to recover unsecured debts. Similarly, it would have been pointless to take any security that was subordinated to the bank debts.

To reflect the true position, the relevant amounts are being written off and disclosed to the Oireachtas by means of notes to the 2004 Appropriation Account. This has no implications for voted expenditure in 2004 or any other year.