Analysis: Fintan O'Toole on the abandonment of one of the biggest claims ever against the State.
The abandonment of Goodman International's legal case against the State brings to an end a sorry tale that began to be told almost 15 years ago.
On December 12th, 1988, Sher Rafique, owner of one of the largest beef-processing companies then operating in Ireland, wrote to the then minister for industry and commerce, Mr Ray Burke, pointing out a curious aspect of the trade statistics just released by the Central Statistics Office.
The figures showed that total Irish exports to Iraq in 1987 were £30 million, and in 1988 £67 million. These figures were unremarkable in themselves, except that they were very much less than the amounts of export credit insurance which had been allocated for Iraq by Mr Burke's predecessor, Mr Albert Reynolds, mostly for beef sent to Saddam Hussein's regime by Larry Goodman's group of companies.
Assuming the CSO figures were right, there was only one logical explanation. It seemed obvious that large amounts of non-Irish beef had been used by Goodman International, even while it was certifying in writing that all of the beef was the product of the Republic of Ireland. At a time of fierce economic stringency, when basic services in health and education were being cut back in the name of "fiscal rectitude", the taxpayer was bearing the risk for beef that was not even sourced in Ireland.
When this was put to the Goodman organisation, it refused to own up. According to evidence subsequently disclosed at the beef tribunal, the company "gave a categoric assurance that all beef exported by the company to Iraq under \ insurance cover was processed in the Republic of Ireland". These assurances were false. In the course of the beef tribunal, it became clear that only 15 per cent of all the beef exported to Iraq by Goodman in this period was commercial beef, bought directly from Irish farmers.
The rest was taken from the EU beef mountain. It had already been bought, processed and paid for. Much of the stuff was not even the product of the Republic of Ireland: 18,938 tonnes of beef declared for insurance purposes and exported at the risk of the Irish taxpayer - 38 per cent of the total - was sourced in Northern Ireland and Britain.
Between the UK and the intervention beef, Irish farmers got no extra benefit from the Iraqi deal. No Irish processing jobs were created, with the exception of the workers employed taking it out of EU boxes and putting it into boxes with labels claiming that it was fresh Irish product.
The beef tribunal report found that the actual economic benefit of the exports underwritten by the minority Fianna Fáil administration was "minimal" and certainly "would not justify the risk involved . . . the benefits to the Irish economy arising from such exports were illusory rather than real". The risks to public money at a time of fiscal crisis were not abstract.
There are good reasons for thinking that Saddam Hussein never intended to pay for the beef, and in fact, after his invasion of Kuwait in 1990, he defaulted on his debts to Goodman. This would have left the Irish taxpayer facing a bill in the region of £170 million, had it not been for the arrival in the department of industry and commerce of Mr Des O'Malley a year earlier. Faced with detailed proof that Goodman International had breached the condition that all of the beef be from the Republic, he had, in October 1989, declared the insurance cover null and void.
This action triggered, within 24 hours, what was one of the biggest and certainly among the most notorious of all legal claims against the State. Goodman claimed that it had been grievously wronged and sought around £150 million in insurance cover, plus damages and costs. A dispute about the precise scale of this claim - which was open-ended and not precisely quantifiable - led to the collapse of the first Fianna Fáil/Progressive Democrats coalition when Mr Reynolds charged in his evidence to the beef tribunal that Mr O'Malley's estimate of £170 million was "reckless, irresponsible and dishonest".
In public, Mr Goodman and his spokesmen continued to maintain until yesterday that this claim was serious. In fact, however, the company seemed remarkably reluctant to bring it to court. It did nothing for some years. Then in 1996 it amended the claim and scaled it down to £85 million plus costs and damages. It was the State, however, which continually pushed to have the case heard. It seems to have been a huge demand on Goodman by the State's legal team for discovery of documents that finally led the company to admit, however tacitly, that the evidence against it was so overwhelming that it could not win.
From the public point of view it is somewhat galling that the taxpayer still has to meet the State's legal costs, though they may be just about offset by the fact - not disclosed in yesterday's statement - that the State will keep the insurance payments made by Goodman, which amount to more than €1 million. Goodman does get away without having to repay €5 million that the State stumped up in relation to one shipment to Iraq, but that money was paid out in 1989 under a scheme in which the State gave the company virtually unconditional guarantees.
For Mr O'Malley, the deal represents a final acceptance that he acted properly in 1989 and that in doing so he has done the State some service. For the public, though, there remains the mystery of why the 1987-1989 government used public money to underwrite a deal whose only beneficiaries were a private company in Ireland and an Iraqi dictator who was, at the time, actually using chemical weapons.