Alan Kelly (Tipperary, Labour)
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86. To ask the Minister for Finance if a series of matters relating to €8.4 million paid to lawyers, barristers and consultants in respect of a tax case (details supplied) will be clarified. [11135/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware, the European Commission decided in August 2016 that Ireland had granted State aid to two Apple companies, ASI and AOE. The then Government decided to appeal the Commission’s decision to the European Courts in November 2016. The European Commission’s decision also required that the State recover the alleged State aid.

The €8.4m in external costs have been incurred by all the State parties involved in the case namely the Department of Finance, Revenue, NTMA, Central Bank and CSSO.

The costs incurred by the State can be generally broken into two components – costs associated with the recovery of the alleged State aid and costs associated with the State’s appeal of the European Commission’s decision to the European Courts.

I will first provide detail on costs incurred in relation to the recovery process, in line with the specific information sought. Of the total expenditure of €8.4m, approximately €4m relates to the recovery process.

Individual State entities are responsible for their specific procurement activities. I understand that solicitor firms drawn from legal framework panels established following competitive tendering processes provided the external legal support in relation to the recovery process and in the case of one State entity with external legal support also provided by Senior Counsel.

In relation to the process undertaken in my Department, a competitive tender process for the appointment of a panel of legal advisors to the Department of Finance was completed in April 2014, and again in June 2018. General Agreements are in place between the successful solicitors’ firms and the Department. A further competitive tender process among the firms on the 2014 panel was run in 2016 to select a legal advisor for the Apple case, in which William Fry was successful. William Fry assisted with the design, negotiation and formulation of the bespoke and complicated escrow legal agreement with the firm concerned to provide the basis for the recovery of the alleged State aid and to provide general assistance.

The legal services agreement allows for the extension of that contract where the services of the company continue to be required by the Department. The contract has been extended on a number of occasions, most recently in June 2020.  The basis on which fees in respect of William Fry are paid is set out in the General  Agreement and are at an hourly rate. These rates are considered commercially sensitive and I am not in a position to make this information available.

Secondly, I will provide further detail on the process around costs incurred in relation to the State’s appeal of the European Commission’s decision to the European Courts.

As regards this aspect, the State is represented by the Chief State Solicitor’s Office (CSSO) and Counsel in the ordinary way. All external Counsel retained by the Chief State Solicitor’s Office were nominated by the Attorney General. EU procurement obligations and national tendering guidelines exclude all of the services involved.

With the exception of the specific circumstances which I outline further below, fees paid by the CSSO to Counsel were processed by the CSSO in the same manner as all Counsels’ fees – that is, according to internal CSSO procedures which includes a value for money appraisal being carried out by the CSSO and the Office of the Attorney General and, if required, sanction from the Department of Public Expenditure.

Professional fees discharged by the CSSO fall into two categories: 

a.  External Counsel

b.  Expert Witnesses 

In relation to External Counsel, the only fees agreed in advance were Counsels’ brief fee for the oral hearing before the General Court in Luxembourg which took place in September 2019. A brief fee was agreed by the CSSO and was based on an initial estimate provided.  Advice from the State Claims Agency, NTMA was provided to the CSSO prior to agreeing these fees. Advance sanction from the Department of Public Expenditure was also obtained prior to agreeing this fee.

In relation to Expert Witnesses these fees were agreed in advance.

Services provided by expert witness before the oral hearing stage were dealt with by way of an hourly rate which was advised in advance and provided to the Department of Finance on engagement. The prior sanction of the Department of Public Expenditure was obtained prior to the CSSO paying these fees. 

Expert witness fees for the oral hearing were also agreed in advance. An estimate was provided to the CSSO and the prior sanction of the Department of Public Expenditure was obtained.

The basis of calculation for Counsels’ fees paid by the CSSO is by way of an assessment on a per worked item – for example brief, opinion, drafting a pleading – not an hourly rate.

The basis of calculation for experts’ fees has been by way of an hourly rate. However, for the attendance of the experts at the oral hearing an additional fee for disbursements was paid and in respect of one expert their hourly fees for attendance at the oral hearing was capped at an agreed amount.

The appeal of the Commission’s decision to the European Courts involved sourcing Counsel and specific experts where required for the provision of specialised and detailed legal and taxation advices given the complexity of the case. In respect of Counsel’s fees and fees for expert witnesses, the amount paid was considered by the office of the Attorney General and the CSSO to be fair and reasonable.

Advice from the State Claims Agency, NTMA was sought in relation to Counsels’ brief fee for the oral hearing before the General Court in Luxembourg, as referred to above, and a request by counsel for a review of other fees paid in the case.

The advice of a legal cost accountant was not sought for the expert witness fees.