Justice in beef sector takes its toll on hapless taxpayer

As if he was not in enough trouble this week, the Minister for Agriculture also had the sheriff gunning for him.

On Tuesday, for the second time in five days, the City of Dublin Sheriff notified Mr Walsh's Department of his intention to impound "the goods and chattels of The Minister for Agriculture" if he did not immediately pay court costs of £536,000 to Emerald Meats, a small trading company in Dublin.

The threat worked. By yesterday most of the money had been paid and the prospect of bailiffs storming Agriculture House to seize the Minister's furniture had receded.

The intervention was the culmination of an extraordinary saga that casts a cold light on the crisis in the meat industry. It is a tale of unlawful collusion between the Department of Agriculture and some of the biggest players in the beef-processing industry, in which the ultimate victim is the Exchequer.

In essence, the Department took money from the managing director of Emerald Meats, Mr John McCarthy, and gave it to companies owned by Mr Larry Goodman. This involved what the High Court and the Supreme Court have found to be gross breaches of Irish and European law. The cheques paid this week bring the amount of public money paid in damages and costs so far to Emerald Meats to £1 million.

"At the very start of all of this in 1990," Mr McCarthy told The Irish Times yesterday, "I warned the Department that they would end up wasting large amounts of taxpayers' money just to sponsor Goodman and the other processors. I told Charles Haughey, who was then the taoiseach, the Garda, up to chief superintendent level, and the then minister for justice, Ray Burke, that the law was being broken and pleaded with them to intervene. But no institution of the State did anything to stop this scam and to protect the public purse."

The saga began with an apparently insignificant detail in the world trade deal, the General Agreement on Tariffs and Trade. Under GATT, the EU was obliged to import a small amount of beef from the US, Latin America and Australia.

A licence to import this beef was the next best thing to a licence to print money. You could buy the beef at low world prices and sell it in the EU at artificially high European prices. The profit for a company with a GATT licence was about £1,000 a tonne.

From 1986 onwards Ireland had to take its share of these imports - about 400 tonnes a year - and the Department of Agriculture decided to divide the licences between the major beef processors, including several companies in the Goodman group. This was, in effect, money for nothing. The companies did not even go to the bother of importing the GATT meat. They simply sold their quotas. Almost of all of them were bought by John McCarthy's outfit, Emerald Meats.

The Department knew that Goodman and the other meat companies were not actually processing the beef, or even importing it. In 1988, when this was pointed out to the Department secretary, he commented on an official document: "Did we ever think they would?"

But in 1989, as a result of an unrelated law case, this cosy arrangement fell apart. Instead of the Department allocating the quotas, the EU Commission had to do so. It decided, reasonably enough, that they should go to the "traditional importers" of the beef, and it passed a regulation to this effect. This regulation became a binding part of Irish law. This, though, was terrible news for the processors. Since they had never imported the GATT beef, they were not now legally entitled to the quotas, which would pass to the actual importer, Emerald Meats.

What happened next has cost the taxpayer more than £1.5 million. Instead of acting on the new law, the Department conspired with the beef companies to flout it.

In January 1990, after meetings with the beef processors, the Department decided that Goodman and the other processors would be recorded as the traditional importers of the beef, even though they had not.

The Department and the beef companies decided to lie to Brussels. As Mr Justice Costello put it in his High Court judgment on the case, "to conclude, as was done, that the meat processors had `imported' the meat was a travesty of the true position". The sole purpose of this deception was to take a valuable property [the licences] from John McCarthy and give it to Larry Goodman and others.

The Department sent a fictional list of "traditional importers" to Brussels. Emerald wasn't on it; several Goodman companies were.

Like most lies, this one created a pattern of deceit. A diligent official in Brussels noticed that Emerald Meats had previously been listed as the importer and asked the Department to explain why it had now been painted out of history. The Department then claimed it had received new information in 1990 which indicated Emerald Meats was not an importer at all, but merely an agent for the meat processors. The official who sent this reply to Brussels later admitted in the High Court it was "untrue".

From the start of this process, John McCarthy made it clear that he would sue. A note of a telephone call between himself and a Department official on the morning of January 31st, 1990, records Mr McCarthy saying "that the Department was up to its neck in this - that they were wrong - that they would ultimately end up wasting lots of Irish taxpayers' money compensating me just to sponsor these guys [the beef-processors]".

Some days later he made a formal statement to the Garda Siochana, complaining of "a conspiracy to defraud my company of its entitlements" under EU and Irish law. Nothing came of these complaints.

John McCarthy had, in the meantime, started civil proceedings against the Department and the beef companies in the High Court.

In 1991 Mr Justice Costello ruled comprehensively in favour of Emerald, which was awarded £462,638 in damages, plus costs. The judge specifically ordered the Department of Agriculture to recover half of these costs from the Goodman companies.

Instead, the Department decided to appeal the ruling to the Supreme Court, increasing still further the cost of the whole debacle to the Exchequer. The chances of overturning the High Court ruling were so small that, even before it heard the appeal, the Supreme Court ordered the Department to pay the damages.

In 1992 Mr Justice Egan of the Supreme Court said: "I find it difficult at this stage to think that the conclusions of [the High Court] will not be upheld." In effect, the Department was told it would not win an appeal. It went ahead regardless.

In March 1997, after hearing the case, the Supreme Court duly found in Emerald's favour, rejecting every one of the Department's grounds for appeal. It actually made things worse, from the public point of view. Whereas the High Court had awarded Emerald specific damages for the losses sustained, the Supreme Court ruled that Emerald was also entitled to "general damages" yet to be specified.

By the end of last week, when he had still not received either the High Court or the Supreme Court costs, John McCarthy decided to send in the sheriff.

Yesterday he offered to assist any investigation into the affair. "This has been hard on me and on my company," he said. "But in the end the courts did ensure that we got justice. The real victims of all of this are the taxpayers.

"A million pounds of their money has been paid out so far by the State, as if there were nothing better for the Government to spend a million quid on. The people who actually benefited - mainly Larry Goodman - have paid nothing. If there is anybody out there interested in recouping this money for the taxpayer, I'm available to help."