Taking the taxpayer to the slaughter house

IN February 1987, in the headquarters of Goodman International in Ardee, Co Louth, there was a meeting to review the performance of the company's beef processing plant in Waterford. Present were the group's deputy chairman, Peter Goodman, its two divisional heads, Aidan Connor and Gerry Thornton, and the manager and accountant of the Waterford plant.

The plant accountant, Patrick McGuinness, mentioned that the weights of beef being declared for EU subsidies were being inflated so as to get more money from Brussels. According to Mr McGuinness, "Peter Goodman said, `Don't get caught - perhaps you should take out more meat'."

Peter Goodman was never called to give evidence to the beef tribunal, and the other senior Goodman managers present denied in sworn evidence that any such discussion had taken place. Peter Goodman's brother, Larry Goodman, repeated this denial to me a fortnight ago. But the State spent a lot of money to find where the truth lay in this kind of conflict between allegations and denials, and in this case Mr Justice Liam Hamilton was entirely convinced that the conversation had happened and that the denials were untrue.

Not only that, but he found that it would be surprising if conversations like this hadn't happened, since what was being discussed was just the normal business of large parts of the beef industry. "The reaction of Mr Peter Goodman... consisting of a warning to avoid detection and a suggestion that more meat be taken out and transferred to own stock was not an unexpected one, in view of the policy of the group to transfer into intervention storage beef representing a yield of 68 per cent or slightly in excess thereof and to regard any meat in excess of such yield as trimmings' which they claimed they were entitled to retain and transfer to its own stock."

GOODMAN International was not, however, the only company involved in the misappropriation of intervention bee. The tribunal report noted that fat levels in excess of 12 per cent on cuts of forequarter beef were "indicative though not conclusive" evidence of the misappropriation of intervention beef. In extensive Department of Agriculture tests carried out in 1992, eight companies exceeded this level.

In the case of three major companies - Tunney Meats, United Meat Packers and Master Meats - there was very substantial evidence to corroborate the indications of these tests, and the tribunal found that they had indeed taken large amounts of beef that didn't belong to them. The evidence at Tunney Meats, for instance, was that for every five to six hundred cartons of intervention beef deboned, between 20 and 40 cartons would be siphoned off for commercial sale. Between them, these three companies and Goodman International accounted for well over 50 per cent of the Irish beef industry.

There is, in other words, a great deal of detailed and specific evidence about individuals and companies who are responsible for the EU penalties on Ireland. On Tuesday, however, Ivan Yates told us that the taxpayer would have to pay the fines because of legal advice that "it would not be possible to recover in the form of a general levy, either under European or national law, such a fine."

But, in fact, this legal advice does not at all imply that the taxpayer should pay the fine. What the advice says is that you can't legally punish an entire industry - the innocent companies as well as the guilty ones - for malpractices in some factories. And that is a perfectly reasonable conclusion. It would be unjust, as well as unlawful, to force companies which were at a competitive disadvantage because they were well behaved to fork out for the misdeeds of their competitors.

But all this means is that you can't impose a general industry wide levy. It says nothing about the key question - why legal action has not been taken against those known to have been involved in specific malpractices which have caused the fine.

And in fact there is a particular irony in using this legal advice to conclude that the taxpayer should bear the fines. The whole point of the legal advice, surely, is that you can't punish the innocent for the actions of the guilty. To conclude from that advice that what you ought to do is to punish an even wider group of even more innocent people - the ordinary workers who bear the weight of the taxation system - is perverse. If it's unjust to penalise a whole industry for the actions: of some companies within it, why is it just to penalise a whole society?

In some respects, of course, these are questions for the Director of Public Prosecutions, who operates independently of the Government, and as such they are unanswerable. The DPP has not found it possible to bring prosecutions on foot of the beef tribunal report, except in the cases of some local managers in the Goodman plant in Rathkeale. Neither, unfortunately, has he seen fit to use his powers under the 1990 Companies Act to apply to the High Court to have specific individuals disqualified from being company directors, even though the tribunal report made it clear that those individuals had failed in their duties to protect public money and to ensure compliance with EU law.

WHAT the Government can and should do, though, is to Pursue the companies through the civil law. However much its own behaviour contributed to the debacle (the fines are, of course, being levied against the Department of Agriculture for its failure to police the system, not against the beef industry), the State and its citizens are clearly an injured party in this whole saga. Yet, with the exception of the Rathkeale case, it has not instituted proceedings for damages against individuals and companies who enriched themselves at the public expense.

The beef companies for their part have shown no such reluctance to use the civil law. A fortnight ago, Larry Goodman told me that he and his company would continue to pursue his legal case against the State over export credit insurance "very seriously". "It's moving along, we're happy with the way it's progressing." In that case, which is expected to come to court next year, Goodman International is claiming that the Exchequer owes it up to £200 million for beef it exported to Iraq and for which Saddam Hussein declined to pay.

Why has the State not shown anything like the same determination to defend its interests? Why is it not suing, at the very least, those companies and individuals known to have contributed by overt acts, or by gross negligence, to the whole debacle? And how does it answer the caller to RTE's Liveline during the week who said that he can't even afford to eat beef and yet is to be penalised for the actions of some of those who have made huge fortunes from processing it?