Diverting tale of money, mines and ministers

I HOPE l can be forgiven for diverting for a moment from the great issues of our time to consider the granting in 1976 by a government minister of £9.54 million of taxpayers money to the pockets of four private individuals, in return for nothing. Zilch.

This was done by Justin Keating, Minister for Industry and Commerce, and the full sorry saga of that debacle was described in detail (187 pages) in a High Court judgment two weeks ago.

It concerned the huge lead and zinc orebody discovered by Tara outside Navan in 1970. The orebody lay on two sides of and underneath the river. One-sixth of the orebody was under land (120 acres) on the north and was owned by local farmer Patrick Wright. The minerals under the land to the south of the river were owned by the State.

As was expected, the then Minister for Industry and Commerce, Paddy Lalor of Fianna Fail, agreed to give Tara a lease to mine the orebody on terms yet to be agreed. There were no problems with the minerals owned by the State but because Paddy Wright owned the minerals under his own land, Tara started negotiations with him to buy his 120 acres.

Tara first offered £120,000 and ultimately £500,000. Contracts were about to be signed between Tara and Paddy Wright on March 17th, 1971, but unknown to Tara, Wright was also negotiating with another group which included Michael Wymes, Thomas Roche of Cement Roadstone and his son, also Thomas.

On March 18th, 1971 Wright signed an agreement to sell his lands to a company formed by these people, Bula, of which he himself was to be a shareholder.

Mr Justice Lynch said: "The effects of which were to deprive Tara of the fruits of their drilling programme which had cost them about £300,000 in 1969 and 1970 monies or in terms of present day money some £3-£4 million ... This loss was such as almost to bankrupt Tara who survived only with the greatest difficulty.

"The first Tara knew of these happenings was when they saw in the week following St Patrick's weekend 1971, excavation equipment working and excavating on Patrick Wright's lands. Such machinery was brought on to the lands by the two Messrs Roche, encouraged by Mr Wymes, in an effort to pre-empt an anticipated compulsory purchase order and in breach of and without regard to the planning laws of the State."

MR JUSTICE LYNCH went on to observe: "This acquisition of Patrick Wright's lands of Nevinstown on behalf of Bula reflected no honour on the part of any of the principals involved in it. Tara were quite entitled to regard themselves as having been dishonourably gazumped and claim jumped and cheated of the very substantial investment in drilling which they had incurred."

Meanwhile, Paddy Lalor, the relevant Minister, issued a "minerals acquisitions order" under the Minerals Development Act 1940, compulsorily acquiring the lands and minerals belonging to Patrick Wright. This was challenged by Bula in the High Court on technical and constitutional grounds.

The High Court found in favour of Bula on the technical grounds but the constitutional issues were rejected. The Supreme Court affirmed the High Court decision on March 4th, 1974.

By then, Justin Keating had become Minister for Industry and Commerce in the new Fine Gael-Labour coalition under Liam Cosgrave and, instead of perfecting the deficient "minerals acquisitions order" issued by his predecessor, he entered into an agreement with Bula.

This agreement meant that Bula was left in possession of the lands and minerals but 25 per cent of its shareholding was given free to the State and a further 24 per cent was sold to the State at a price to be determined by an independent expert (later fixed, incredibly, at £9.54 million, which is £38 million to £45 million in current terms).

There were two strong arguments then in favour of compulsorily acquiring the Bula lands and minerals: (a) to do otherwise would be to reward claim jumpers, which in itself would discourage exploration throughout the country; and (b) not doing so opened up the likelihood of open-cast mining being undertaken on the Bula lands, with consequent environmental damage to Navan which is less than a mile away.

Mr Keating has defended this action over the years by claiming that this deal with Bula, whereby the State acquired 49 per cent of the shareholding in Bula gave him leverage with Tara, which enabled him to get 25 per cent of Tara for the State as well.

He has also claimed that there were constitutional objections to his acquiring the Bula lands and minerals compulsorily.

These explanations are curious. First, as the State was the owner of the minerals on the south side of the Blackwater, the State had all the leverage it needed to get virtually whatever deal it wanted from Tara.

Second, in the High Court judgment in the case, the then President of the High Court had stated explicitly that there were no constitutional objections to compulsorily acquiring the Bula lands and minerals.

THIS VIEW was repeated by Mr Justice Lynch in his recent judgment when he said: "The Minister might have recommenced compulsory acquisition proceedings observing the matters which the courts had identified as necessary to be observed for a valid compulsory purchase order.

In the event what Mr Keating did was even more extraordinary. Instead of ensuring that whatever monies the State invested in Bula went into the development of the mine, it agreed a deal whereby the State "investment" went directly and personally to the Bula shareholders.

Mr Justice Lynch had this to say about that arrangement: "If this sum (£9.54 million, between £38 million and £45 million in current terms depending on whether the calculation is based on the beginning or end of 1976) or a substantial proportion of it had been thus paid to Bula then Bula would have had those funds to finance its activities until such time as it got planning permission for the mine - got the mine constructed and commenced production and earning revenue. This is not what happened however and I cannot understand why the Minister agreed in the Inter Party Agreement [with Bula] to pay the whole consideration to the then share ... personally ... The effect of this was that the Minister did not really invest in the Bula mine project at all, he invested in the pockets of the private shareholders."

To compound the issue this vast payment was made in a manner that avoided all tax and, as stated at the outset, this was all for nothing.

Bula is now worth nothing having amassed a mountain of debt and excavated not an ounce of ore in the 22 years since the deal was made.