FitzGerald backed nationalisation of Irish Sweepstakes, 1984 files show

Garret FitzGerald initially backed the idea of nationalising the Irish Sweepstakes when he was taoiseach, despite its troubled financial history. At one point he told his officials “it would be unforgivable” to allow such an opportunity “slip through our fingers”.

The former taoiseach appeared to have been convinced by Paddy McGrath’s sales pitch as the former chairman of Hospitals’ Trust Ltd (HTL) tried to offload the sweep before it collapsed.

Files in the Department of the Taoiseach show Mr McGrath and Dr FitzGerald met in April 1984 to discuss the takeover plan.

The taoiseach subsequently wrote to then minister for justice Michael Noonan saying Mr McGrath was seeking £1.7 million (€2.15 million) to establish a national lottery, using the existing 200 staff.

“On the face of it, it seems to me that this proposal to nationalise the Sweep, and to put it on a fully legal basis, no longer dependent on illegal activities overseas, is a very attractive one, both in terms of the possible benefit to the State – if he [McGrath] is correct in suggesting that it could be greater than from the existing Sweepstakes – and in terms of ending a somewhat anomalous and unsatisfactory situation in which the State is involved at one remove with activities that are illegal in other states,” Dr FitzGerald wrote.

Anxious for a response

He asked for a memorandum to be prepared by the departments of justice, health and finance “as rapidly as possible” as Mr McGrath was anxious for a response within two weeks.

A note on April 18th says minister for education Gemma Hussey was instead asked to prepare the memorandum as she had already been exploring a plan to create a sports lottery since the previous December.

When Dr FitzGerald learned of this, however, he was annoyed, doubly so as he had spoken to Ms Hussey and discovered the junior minister at her department was charged with preparing the memorandum. “I gave clear instructions at Cabinet that Justice – who have responsibility for lotteries – were to contact Paddy McGrath a month ago – I even named the relevant Justice official – and determine the terms on which this transaction might be negotiated, with due consultation with Health,” Dr FitzGerald wrote on May 20th.

“The fact that the Minister of State in Education has some idea of starting a sports lottery is totally peripheral . . . [Mr McGrath’s] proposal, if I understood it correctly, seemed to me, and I think to the Government, as potentially very beneficial from the point of view of the State and it would be unforgivable if it were to have been let slip through our fingers.”

On July 26th, a memo was prepared, stating: “The Taoiseach requests the Government to agree in principle: to entrust to HTL the organisation of a national lottery” and “to arrange discussions with HTL to agree on terms for a state takeover of the company at a mutually agreeable date.”

Rehab chairman

Around the same time, Dr FitzGerald was being lobbied by Frank Flannery, chief executive of Rehab, which was concerned about rival lottery schemes being set up.

The taoiseach sent a reassuring letter to Mr Flannery in May saying “the government appreciates the special position of many charitable and voluntary organisations” and would keep this in mind.

The July 26th memo noted that “from the tone” of recent correspondence from Mr Flannery, HTL and Rehab “may be working on the assumption that they have a ‘mandate’ from taoiseach to negotiate the setting up of a lottery between themselves” but this was a “misapprehension”.

It went on to state that Mr McGrath was looking not only for £1.7 million in compensation for loss of a leasehold interest but also a further £1.5 million to compensate the staff of HTL if the government did not retain them to operate the new lottery.

A note in the margins read: “This is unacceptable”.

An interdepartmental committee was set up in late August to analyse the McGrath plan.

In the end, however, the government recommended putting the planned national lottery out to competitive tender.

This was won by An Post and the Irish Hospitals' Sweepstake collapsed amid criticism over unpaid pensions and financial mismanagement.