Beef fine a tough mouthful to chew on

OVER a period of five years, a combination of administrative laxity and private greed clocked up a series of liabilities for an unsuspecting public. Between them, the failures in state control of the beef industry could yet cost the public anything between £150 million and £350 million.

The primary responsibility clearly lies with those in the beef industry who abused public money for private gain.

But yesterday's EU Commission decision reminds us that abuse would have been impossible without the compliant attitudes of both the political and administrative arms of the State.

The penalty is being levied against the State for its failure to apply European Union law.

And it is important to remember that failure was not a mere sin of omission.

Many public servants did their jobs and pointed out what was happening in meat factories. But their warnings were never followed by decisive action from the top.

In the case of one element of yesterday's penalties, the £18.5 million for abuses of the intervention tendering system, the Department of Agriculture was an active partner in the breach of EU law.

The regulations state that interested parties "may submit one tender only for each category". Yet the Department submitted to Brussels multiple tenders from many meat groups.

One telex from the Department to the Goodman group in July 1990, seen by The Irish Times, announces the acceptance of tenders from no fewer than 23 listed companies in the group.

The Department will appeal this penalty to the European Court of Justice on the basis that the Commission turned a blind eye to the practice, but its case would be immeasurably strengthened if it had sought written clearance from the Commission at the time.

In the case of the second part of the penalty, collusion may not have been so active. But it is entirely clear that there was detailed official knowledge of what was going on in the meat factories and that very little was done to stop it.

On May 11th, 1989, the Department wrote to all meat plants involved in intervention de boning, stating that "certain meat plants were attempting to misappropriate significant amounts of beef for their own use . . ."

Yet almost every Irish plant continue to return the minimum 68 per cent yield of meat from each carcase, and no more whereas in Denmark, the United Kingdom and France, the yields returned to the EU in 1991 were over 70 per cent, only 0.67 per cent of Irish plants returned 70 per cent or over.

But random inspections of particular intervention jobs at Goodman plants in 1991 - one of the years for which the EU is imposing the penalty - show that yields of up to 76.8 per cent were being achieved.

Even knowing all of this, the Department of Agriculture did not fully apply the EU regulations for policing the beef industry. One part of the relevant regulation obliged the Department to carry out random examinations of cartons of beef before and after freezing.

The report of the Tribunal of Inquiry into the Beef Processing Industry noted that there was "no evidence from the Department of Agriculture" that this was ever done. If it had been, it would revealed precisely how much meat was being siphoned off.

In fact the report makes it clear that the Department, once it got its 68 per cent yield, asked no questions about what happened to the remainder.

Its officials in the plants "did not as certain or in any way query the extent of the trimmings obtained as a result of the de boning."

What is even more disturbing is that the Department failed to take action even when it was presented with specific and detailed evidence (photocopies intervention documents from one factory which showed that £400,000 of intervention beef had been misappropriated and sold to commercial customers in the UK) in July 1991.

And, bizarrely, in the negotiations with Brussels over the proposed penalties, it continued to pretend that nothing had really happened. It commissioned a report from a British consultancy to show that the minimum yield returned in 1990 and 1991 by the Irish factories was perfectly reasonable.

Nor are yesterday's fines the end of the losses for the Exchequer in the administration of the intervention system.

The latest reports from the Comptroller and Auditor General for the years. 1992 and 1993 reveal that the Department may have to foot the bill for a fire at a coldstore in Ballaghaderreen, Co Roscommon, in January 1992 in which 7,000 tonnes of intervention beef was destroyed.

The Department has claimed £23 million insurance for losses in the fire, but the insurance companies have refused to accept liability, claiming that the beef was off cover at the time.

The report reveals in its small print that there were losses of £65.4 million on borrowings to fund EU intervention schemes when the pound was devalued. These losses, too, will be borne by the Irish Exchequer rather than by the EU.

As if all this were not enough, there remains a serious danger that the other aspect of public support for the beef industry over the last decade the commitments of export credit insurance for beef to Iraq - could result in huge losses to the exchequer.

Goodman International has made it clear that it is continuing to pursue its High Court claim for about £200 million against the State in relation to the cancellation of that insurance.

It is a grim record, compounded by the very modest degree of success in negotiating a 25 per cent reduction in the £93 million in penalties which had been threatened by the Commission.

And the Department seems resigned to the fact that the public purse, rather than the companies involved, will bear these losses.

The price of meat, even for those who no longer want to eat it, is proving to be very high.