Minister seeking scapegoat for EU fines - Goodman

FOR the first time since he gave evidence to the beef tribunal in 1994, Mr Larry Goodman, chief executive of Goodman International, answered questions about malpractice within the company yesterday.

Clearly stung by the Minister for Agriculture's statement in the Dail on Thursday that he would shed no tears if Mr Goodman withdrew from the beef industry, he accused Mr Yates of seeking a scapegoat for the £103 million in penalties the EU Commission is threatening to impose on the State.

Mr Goodman received some support yesterday from the Fianna Fail spokesman on agriculture, Mr Brian Cowen, who accused Mr Yates of "bluster and vitriolic personal abuse".

A spokesman for Mr Yates said last night that the Minister was standing over his Dail statement and retracting nothing.

The proposed EU penalties relate for the most part to the Department's failure in 1990 and 1991 to prevent beef companies, including Mr Goodman's, from taking intervention beef into their own stock and selling it to their own customers.

Two Goodman executives were found guilty of fraud last year for such malpractices at the company's plant in Rathkeale, Co Limerick. The Irish Times put these and other allegations arising from the beef tribunal to Mr Goodman.

The following is an edited transcript of the interview.

Clearly, one of the things that lies behind the Minister's criticism of you is the Department's view that your company has issued public statements saying it would recompense the Department in relation to the losses at Rathkeale, and that it has not in fact done so. Could you explain why the company has not paid back the money?

What we said was that we would pay the appropriate amount. We haven't changed our mind on that at all. And we haven't tried to back out of it. I think it was very unfair of the Minister to state that the company said it would pay and then when asked to pay it sent a solicitor's letter . . . Some of our people had met the Department, they had made our case. Some of their technical people presented a figure to the tribunal. Now, we're saying that the figure should be this not that. We said that if the technicians can't agree on the figure that we were happy to call somebody in to arbitrate. That's still the position. The Department are holding about £1.6 or £1.8 million of the company's money, so they are well covered. So either there's a misunderstanding or there's a totally different spin being put on it.

(The financial controller of the group, Mr John O'Donnell, later told The Irish Times that the company suggests it will pay £158,000. The Department believes £907,000 worth of beef was misappropriated in the Rathkeale boning hall.)

That's one of the issues in relation to Rathkeale. The other is that raised by the judge in sentencing two members of your staff who were found guilty of fraud. He stated his view that those two people were neither the instigators nor beneficiaries of the fraud and that it seemed to him someone at a higher level in the company was the instigator of the fraud.

I didn't instigate it and I knew nothing about it. I didn't personally benefit from it and I don't believe the company benefited from it.

Why do you say the company didn't benefit from it?

Well I'm led to believe the company didn't benefit from it.

There clearly was an amount of beef that was misappropriated and sold to commercial customers.

Yeah, but for some reason the figures don't seem to add up. If the company did benefit, so be it, but I didn't suggest it. I didn't initiate it and it was never discussed with me until after it happened.

Have you attempted to find out who in the company was the instigator of the fraud?

We have and I think the authorities have looked at it as well.

The view that the judge took was that you have to look at who benefited from the fraud. And that it seemed logical to suggest that somebody within the company instigated the fraud.

But possibly someone outside the company benefited.

Benefited from the sale of the beef itself?

Based on all the investigations, who am I to say? There are possibilities in and outside the company and they don't all lie within the company. They certainly don't all lie with senior management.

Would you accept that given that serious crimes were committed, undoubtedly, and that people were found guilty of those serious crimes, that the way you have approached this in public is not such as to convince the public that the company is seriously concerned about those frauds?

I don't think that we're maybe very good at dealing with those matters and I would accept that. But we took advice and I believe that we dealt with it as we were advised to do. Does it make sense that there was a programme on TV about me personally and the company, and the outcome of that is allegations in the Dail and the tribunal? Does it not call into question that even if something was going on before that, that it would continue after it? It defies reason, does it not?

Well one answer to that might be precisely that there had been mal-practice in the company before that and the company had not been brought to book in any serious way before, and therefore you had no reason to believe that you wouldn't get away with it again?

The malpractice before was in Waterford. And it now turns out that, a la the recent Hibernia Meats case, that if we had gone the legal route instead of offering to pay whatever was deemed to be the appropriate amount, the fine wouldn't have been sustainable. It would have gone on perhaps until now. We would have at worst the use of the money for all those years, and at best not to have pay anything and even get damages.

Another issue which is clear behind the Minister's statement is the question of the 68 per cent from intervention. The company has issued a statement claiming that the beef tribunal report clears it in relation to this. But what the report points out is that it was the deliberate practice and policy of company management to take any meat which was over the 68 per cent into its own stock and sell it to its own customers.

Provided it wasn't main commercial cuts. If it was trimmings, fine. I've never ever authorised anything more than that.

But the beef tribunal found that that practice itself, even if it was only taking trimmings, was in breach of EU law.

I believe that with the exception of Rathkeale, there were never any cuts taken. I think in relation to the yield that it's a very technical question. The figures show that our yield was the same as anyone else's. If there's a problem it's with the entire industry. But why should there be a problem if the Department accepted it for umpteen years? I think it's a question of buck-passing, of scapegoats and passing the spotlight elsewhere.

The Department did write to your company and all the other companies in March 1989 to say that it suspected there was widespread misappropriation of intervention beef and asking the companies to cease. Presumably you saw that letter. Presumably it must have been a concern to you at that stage that this practice was being engaged in and ought not to have been stopped. Yet it wasn't stopped.

I didn't personally see the letter "but at the same time my understanding was and is that all the meat with the exception of trimmings went to the Department of Agriculture. I didn't authorise at any stage the taking of any meat other than what was the entitlement of the company. It was part of the negotiated agreement with the Department ... The trimmings went to the processor as part of that negotiated package. Why did the Department allow this extra meat to be taken?

Are you saying that the Department of Agriculture colluded knowingly in the practice?

I wouldn't say they colluded. My understanding was that once the main cuts were there and 68 per cent . . . the trimmings over and above the 68 per cent all went to the company. I believe we told the truth about that at the tribunal.

The beef tribunal report, while it does accept that you personally were not aware of malpractices, does accuse you of failing to exercise effective control over your staff and failure to ensure compliance with EU regulations. It is that failure precisely on your part that the taxpayer is going to end up paying for.

I don't accept that at all. The Department were the agent. They introduced the system. They administered it. Why lay the blame at my door for something like that? ... Yet the media continuously hammer away at this. And if there was an infringement at Waterford or in Rathkeale, I think that's infinitesimal compared to our throughput and turnover. I'm in business since June 1954. I didn't get to where I am by running a fraudulent operation.

There's a problem that on the one hand the company relies on the beef tribunal in certain respects and on the other you're saying that you don't accept key findings.

I'm saying that it's very easy for someone to pick out one or two incidents like the Minister is doing. There were a few incidents and of course there were. But what industry is there not? ... There are a number of people out there and some of them are professional journalists who believe that everything in the company is rotten ... It's unfair to me and it's unfair to the company.

Well, one of the things that supports that view when it is held is the uncontested evidence that the company engaged in a major tax fraud and the evidence from the beef tribunal is that you personally were aware of that systematic and widespread conspiracy to evade taxes. That has to be a very major factor in the way the public looks at these questions.

I didn't benefit from that personally and the system that was there started off as being totally legal. Perhaps it, wasn't administered properly. Would you accept that the company had an ability to export relief dividends to correctly pay employees tax free?

I would also accept the finding of the tribunal that that was not what was done, and that that was an ex post facto way of attempting to make legal a completely illegal practice - paying people under the counter.

Maybe that's the finding, but that's not reality. And the tax-free payments were not the privilege of the chosen few at the top of the company as is the case with many large PLCs and private companies. I could have benefited from it but I didn't try to. I didn't need to. It was a system that went right down to the shop floor. It was a small percentage of the individual's receipts.

Are you happy with the invention of so-called hauliers that did not exist to whom cheques were made out to get cash to pay money under-the counter - a system of calculated and systematic fraud?

I didn't invent that system.

Were you happy when it was discovered?

At the time we discovered it, I was unhappy. I didn't invent it and I discovered it long after the event. But there was an appropriate and legal way to deal with it.

Why did the company flout the law if it could have done it legally?

There's been several tax amnesties. There's been hundreds of millions paid ... Why not ask the same question of everyone else? Why does the professional media not look at that and why do they continue to badger me about it...

How do you answer the ordinary person on the street who sees that there were serious crimes committed in Rathkeale and the people who instigated those crimes have never been brought to justice? This creates an atmosphere in which there's bound to be suspicion.

I accept that. But why do the same people write all the time about the same issue? I bring you back to the tax amnesty. Was there serious fraud there? Was there serious crime there? And why weren't those people brought to justice? I mean what industry is there in this country that's dealing with the same turnover as ours, that's dealing with the technicalities we're dealing with, that hasn't had problems? Can you answer me that? I think it's very unfair, I really do.