Tipperary Enterprise legal action settled out of court

A CASE being taken by a German national against Tipperary Enterprise (in voluntary liquidation) which was a company formed by local businessmen of national and international prominence, has been settled subject to certain conditions, the High Court was told yesterday.

Mr Josef Einke, Ballybrado House, Cahir, Co Tipperary, and a company Ballybrado Ltd, had taken the action in the dispute over EU funding for an organic farming project, against Tipperary Enterprise, Birdhill, Co Tipperary, and the Minister for Agriculture, Ireland and the Attorney General. He claimed breach of contract and damages. The defence denied the claims.

Tipperary Enterprise was formed by a number of businessmen including Dr Tony Ryan, Mr Tony Fitzpatrick, former senator Mr Des Hanafin, Mr Gus Kearney and former EC Commissioner, Mr Richard Burke.

The case opened in the morning but after discussions out of court in the afternoon, Mr Justice Shanley was told that the action against the State parties could be struck out and that the case against Tipperary Enterprise had been settled subject to the Committee of Inspection which was appointed to the company when it went into liquidation in 1993.

Opening the case, Mr Hugh O'Neill SC, for Mr Finke and his company, said the case had arisen out of the funding for a rural development programme by the European Commission. The Leader Programme was introduced in March 1991 and it proposed that money be made available to local bodies who would distribute the funds for local projects. One of the local bodies was Tipperary Enterprise.

The Minister for Agriculture and the Department acted as intermediaries and a monitoring body. Tipperary Enterprise was a company put together by a number of prominent businessmen living in the Tipperary area and of national and international prominence.

Mr Finke, a German national living in the area for seven or eight years, put forward proposals which related to organic farming. One project found favour and that was the possibility of manufacturing organic baby food and he put forward a feasibility study.

Tipperary Enterprise was formally appointed as the local body for the Leader programme in April 1992. The company indicated to Mr Finke that he should go ahead with the study and that it would cost £42,000.

Mr Tony Fitzpatrick, the chief executive officer of Tipperary Enterprise, told them to go ahead with the study. Up to the end of 1991 Mr Finke proceeded with the study. He was given various excuses as to why the monies were not being paid to him.

Following the formal signing of the agreement between the Department and Tipperary Enterprise, the Department paid out £375,000 in May 1992 and £366,000 in September 1992.

In 1992, there was a level of disquiet as to the manner in which Tipperary Enterprise was carrying on its business and this came into the public domain. In August 1992, the Department sent an inspector to the company to carry out an audit.

Notwithstanding the audit, the Department nevertheless paid out the second payment. The disquiet increased and multiplied and in December 1992, Dr Michael Ryan, a consultant, was brought in by Tipperary Enterprise for the purpose of carrying out a business and financial audit. He was to report to the Minister for Agriculture directly.

The report claimed that there was a total lack of management in Tipperary Enterprise and that there was a total misuse of Leader monies paid to it. Only £45,000 was spent on Leader programmes or projects which qualified for Leader funds. The rest of the money was utilised to pay off an overdraft of in excess of £100,000.

Of the second payment of £366,000, most of that had not been expended and the Department recovered a significant amount of that, in the region of £300,000.

Under the terms of the agreement between the Department and Tipperary Enterprise, an insurance bond was put in place and the Department recovered £216,000 on it.

Mr O'Neill said that Mr Finke claimed that Tipperary Enterprise had a contractual commitment to pay the £42,000, none of which was paid. Also, that the Department was liable, as Tipperary Enterprise was its agent in relation to the distribution of money or alternatively that the Department was negligent in failing to supervise the Leader scheme.

Mr Justice Shanley adjourned the action relating to Tipperary Enterprise for two weeks and struck out the action against the State parties.