Business Opinion/John McManus: There are few things more amusing and at the same time disconcerting as watching the civil service at work. A recent request under the Freedom of Information Act to the Department of the Marine has unearthed a classic example in relation to the MV Atlantic Dawn.
In the midst of the tortuous negotiations that took place with the European Commission in 2002 to get the fishing behemoth onto the Irish register, one of the civil servants involved flagged a potential problem.
Under the terms of the deal, Mr Kevin McHugh - the owner of the Atlantic Dawn - was to take his other smaller boat, the MV Veronica out of the Irish fleet entirely. But he was to be allowed hold onto its lucrative fishing rights, which could be assigned to Atlantic Dawn and its valuable Irish tonnage, which could be sold or transferred to another fishing boat.
Ms Josephine Kelly of the Sea Fisheries Administration division of the Department questioned the wisdom of the later part of the deal.
In a three-page memo to her superior, deputy secretary general Ms Sara White, Ms Kelly runs through the proposed deal and then concludes that Mr McHugh should be made surrender the Veronica's tonnage in return for getting Atlantic Dawn onto the Irish register for three reasons.
The first was equity and fairness. Why should Mr McHugh be treated differently to anyone else trying to bring in a new boat?
"We require full replacement capacity for even the smallest boat. The Atlantic Dawn company is getting access to EU etc waters and should provide full replacement capacity based on this access," Ms Kelly wrote.
The second reason was that, by allowing Mr McHugh retain the MV Veronica's tonnage, it was, in effect, giving him a very substantial asset. Anybody wanting to get into the profitable pelagic (mackerel and herring) fishing business would have to deal with Mr McHugh, who "would control entries to the pelagic segment for the foreseeable future, including the possible introduction of an additional substantial vessel into the segment.
"This would not be in the interests of the responsible management of the segment and the pelagic sector in general," she said.
The third reason why Mr McHugh should be made surrender the Veronica's tonnage was, in effect, the corollary of the second; if the State took the MV Veronica's tonnage in exchange for allowing the Atlantic Dawn onto the register, "it will give the State a significant asset in its task of managing fleet capacity", she said.
It was strong stuff and, not surprisingly, a response was issued from Ms White a few days later. "I fully accept that you have bona fide concerns but I have to say I remain firmly unconvinced that, on grounds of equity, fleet policy consideration and practical fleet capacity management, the case stands up."
Ms White argued that the issue of the MV Veronica's tonnage has to be seen in context of the wider deal, which was one of a kind.
The withdrawal of the MV Veronica and the introduction of the MV Atlantic Dawn were part of the resolution of a long-standing row with the European Commission over the size of the Irish fleet (in terms of engine power). This was achieved by taking the MV Veronica's engines out of the equation.
"Taking the overall package in the round, as well as the broader issues of governance and management of the fleet, it [the State taking the Veronica's tonnage\] is not an appropriate or even equitable course of action," argued Ms White.
She then said that her decision was that the "appropriate policy response" to the issue was to ensure that whatever Mr McHugh did with the Veronica's tonnage "should be a priority and in every respect strictly subject to advance approval".
With a final flourish, she added that she was writing to Mr McHugh to tell him this and had asked for the matter to be brought to the Minister's attention.
A letter duly issued and there the matter seemed to rest until it blew up in the Department's face spectacularly last year when the European Commission ruled that a number of other Irish boat owners could not avail of something called safety tonnage to increase the size of their boats.
As you might expect, safety tonnage was a provision that allowed the enlargement of boats as long as it was for safety purposes.
The problem was that these six fisherman has already rebuilt their boats in anticipation of getting the safety tonnage. As a result, they were left with two choices, either stop fishing or buy tonnage from Mr McHugh who was the only seller in town.
Needless to say, they bought the MV Veronica's surplus tonnage from Mr McHugh, who charged them around twice what they expected to pay and made something in the region of €40 million.
The restrictions put on the use of the Veronica's tonnage by the Department appear to have had no bearing on the sale.
Which all goes to confirm that Mr McHugh is a very bright businessman who has run rings around the Department of the Marine. Particularly when you remember he got the 14,000 tone MV Atlantic Dawn onto the Irish register as well.
But at least we can take some comfort from the fact that at least one person in the Department saw it coming.
