When I in my turn took over the Luas portfolio, I discovered that the previous Cabinet had been very divided over the way forward. Fundamental questions still remained unanswered. Was it to be over ground; was it to be underground; should it be a combination of both? The debate had raged internally and in the media, while resentment bubbled within CIÉ at the idea of huge sums of money being pumped into an alternative transport system. At this stage, Donal Mangan was the CIÉ Project Director of Luas.
When I initially perused the files, it became clear that, yes, there had also been bad feeling high up in CIÉ decades earlier, when DART was mooted. So what’s new, I thought? Seán O’Connor, a young man who was in the Dublin branch of Fianna Fáil and a grand-nephew of Seán Lemass, suggested that I set up a kind of ‘Shadow’ Committee within the Department but with my own nominees on it, who would ensure that the work was done. I thought it a very good idea and asked Pádraic White — the then CEO of the Industrial Development Authority (IDA) — if he would chair it, and luckily he was happy to do so. This new committee was an entirely voluntary one with no payment for those involved in it, but all of its members, who were very experienced people — like Pádraic White and Pat Mangan, the Assistant Secretary of the Department of Transport — had huge records in the field, and took to their task with energy and enthusiasm.
Meanwhile, both at Cabinet and in the papers, the debate over the way forward for Luas grew ever louder and more declamatory. I found very quickly that when you are going to embark on a mammoth project such as this one was, everybody is an expert — or thinks they are. Cabinet, it seemed, could be divided in three camps: those who thought it should be on the ground; those thought it should be under the ground; and those who thought it shouldn’t go ahead at all. As for me, I kept my ears primed and my eyes open and absorbed everything I could. I knew that public expectation was high. On one of his radio programmes at the time, Tom McGurk christened me ‘Mama Luas’!
Finally, I was ready to bring my proposal to Cabinet. The day in that summer of 1998 when the scheme for Luas — which was to be over ground — was approved and finally given the go ahead was an exciting and very satisfying one for me and all those who had helped me along the way. At that point, the work had only just begun in real terms, as there was the funding and European drawdown to be sought and countless other matters to be attended to, all of which made for a busy, busy time for me. The Taoiseach dug the sod for the first Luas line and Dublin was at last to get the urban transport network which had been so long in the planning. To this day, whenever I see the Luas gliding along the streets of Dublin, I genuinely feel a sense that I was part of the history of Irish transport.
On the home front, in 1999 Enda had a serious health scare and had to be hospitalised in the Mater in Dublin. Fortunately I was able to go to see him there frequently. He was really quite ill but proved very resilient both physically and mentally, and was able to rally through and in time come home, under a very strict regime of rest and medication. I will be forever indebted to one of my sisters-in-law, Maureen O’Rourke, for the help she was able to give us at this difficult time. An ex-theatre sister at Sir Patrick Dun’s Hospital in Dublin and now retired, Maureen took wonderful care of Enda when he came home. Although it had been recommended by his medical team in the Mater that he should recuperate in a nursing home for some time after his discharge from hospital, Enda was adamant that all he wanted to do was to come home as soon as possible, and I was with him on that. After all, when you are bruised, hurt and shaken, what more do you want than to get back to your own bed, among your own familiar surroundings? Of course, work dictated that I had to be away during the week, but Maureen moved in for two weeks and stayed overnight with Enda on week nights until I came home each weekend. She shopped and cooked and made him exercise and take his tablets, and in general, it was as if he was in the best nursing home in the world: he had the care of his own private nurse in his own comfortable home. The fact that Maureen was able to do this gave me much peace of mind while I was away. I was most appreciative of her efforts then and remain very grateful for her generosity of spirit. Enda’s two other sisters, Eithne and Gertie (who has since passed away) were always so kind to me, Enda and my extended family too.
The next semi-state up for our attention in the Department was Telecom, which later became called Eircom. The issue at hand, which had been on the cards for several years previously, was the proposed flotation of this state-owned company. Two key decisions needed to be taken: firstly, whether the flotation should happen at all and secondly, if so, what the opening share price should be. We were aware that these were hugely important, momentous decisions, but no one could have predicted what the outcome would be — that the sale of Eircom would become a saga almost biblical in its implications, soon to be referred to by the critics as ‘the Eircom debacle’. However, those of us who inhabit the grown-up world know that shares go up and shares go down, and that there is absolutely no guarantee ever that their value will hold or stay consistent.
Throughout 1999, we had numerous meetings on the matter, with Bertie Ahern, Mary Harney, Charlie McCreevy and myself, together with each of our civil service advisors. Finally, after much debate and toing and froing, the decision was taken at a full Cabinet meeting that Eircom would be floated. I strongly felt it was the correct thing to do. Even once this decision was formally made, there were many more deliberations before the final steps to put things in motion could be taken.
A very important side issue related to the flotation of the company involved a prior arrangement with the trade unions, which went back some years. In the Fianna Fáil Party manifesto of 1997, we had pledged that if Eircom went to flotation, the unions would be given 14.9 per cent of the share value. Mary Harney of the PDS had also been party to this pledge to the unions. Early on in my time in Public Enterprise, I had been visited in Kildare Street by David Begg, heading up a trade union delegation of the Communication Workers’ Union (CWU), along with their then General Secretary, Con Scanlon. They were very clear that, if the flotation were to go ahead, they were going to call in the government’s promise. I consulted with Bertie Ahern and Mary Harney, and they confirmed that both Fianna Fáil and the Progressive Democrats were inextricably bound to this earlier commitment.
After numerous further meetings, the only question remaining was what the share price offering should be at flotation. Too high, and the shares wouldn’t sell. Too low, and they would be given away. This led to many more arguments, debates and another series of discussions. Although this is not generally known even now, it transpired that at one of the last tense meetings on this issue of thrashing out an equitable, middle-of-the-road price for Eircom, Charlie McCreevy said that his Secretary General would resign if such and such a price was not achieved — and this would be the price at which we eventually floated. Charlie was quite determined on it because, quite rightly, he did not want to see the government and the country deprived of a fair price. Ultimately, the billions earned through the sale would go into the National Pension Reserve Fund and so, in an odd way, it is that fund which is now helping to get Ireland out of some of the banking and financial difficulties in which we find ourselves. What goes around comes around, indeed.
While we at Cabinet debated as to the price, Con Scanlon and his team of advisors for the trade unions in Eircom were busy negotiating the terms and conditions of their 14.9 per cent. Even now, I recall distinctly the long night when the government vacillated at the very eleventh hour, wondering whether it would go ahead with the flotation at all and what should happen about the union stake, and so on. David Begg assumed a pivotal role in these discussions, demanding that the promise be fulfilled, and on the night in question, he and his fellow union members did not leave the government buildings until midnight and they had secured the final guarantee on their 14.9 per cent.
Eircom was floated on the New York Stock Exchange on 8 July 1999. We went there for the flotation and visited the Stock Exchange. I stayed
one day and one night, during which time I also had a meeting with some industrialists who were interested in coming to Ireland. Then I came straight home.
As the months passed, myths grew up and criticism of our handling of the Eircom sale became a very popular bandwagon to be jumped upon. As the figures showed, the share price initially held up well above the flotation price for over twelve months. When, however, the share value began to fluctuate, as all share prices do, it seemed that ‘the Eircom debacle’ was born. Of course, as I have since said and will continue to say, it was up to any individual to cash in their shares at any time during the first twelve months if they wished to make a profit. Many people did, in fact, and made quite a handsome little profit. But for some reason, others thought that they should hold on to their shares and that the price should keep going up and up — and of course that was never to be. When I now hear David Begg, inter alia, saying from time to time that Eircom should never have been floated, I smile and remember. This is not in any way meant to be castigatory of David Begg, but I cannot help but recall how hard he pushed for that 14.9 per cent for the trade unions.
By May 2000, condemnation far and wide of the course of action taken by us on Eircom had reached a kind of fever pitch, and so I was in fact very glad when Fine Gael’s Ivan Yates put down an Adjournment Motion in the Dáil. The request for an Adjournment Motion is a measure which, if agreed, leads to the immediate interruption of normal business by the House for the discussion of a matter or issue deemed to be of urgent public importance. This gave me a much-needed chance to go to the Dáil and to set out the situation exactly. What follows here is a verbatim copy of my statement of 24 May 2000, in which the importance of the detail can be appreciated.
Adjournment Debate
24 May 2000
Ms Mary O’Rourke, TD, Minister for Public Enterprise
A Ceann Comhairle
As you know I am always very happy to come into the House, to debate issues and to share information on matters for which I have direct political responsibility.
On this occasion, however, I would like to ask my colleagues in the House to exercise great prudence in refraining from say anything under privilege which might give rise to erroneous investor perceptions of Eircom.
As the Deputy is aware, Eircom is now a private company and I have no responsibility in relation to either its commercial operations or its capital structure.
The Prospectus and the price range set prior to the flotation were agreed by both Government and the Company. The final price of £3.07 was within this price range and just above the mid-point of the range.
The balance sheet of the Company at the time of the flotation was very strong. The price set by the Government for Eircom at the flotation date was set on the basis of what the market was prepared to pay.
The strategic partners in Eircom, KPN and Telia, were prevented from selling their stakes in the Company for up to six months. This position was made clear in both the main Prospectus and the mini-Prospectus. The mini-Prospectus was distributed to all of the 1.2 million people who registered their interest in purchasing shares.
The pricing of the shares in July 1999 was a delicate one of balancing the need for a fair price for taxpayers and the need for a fair return for retail and institutional investors. Criticism was expressed in the immediate aftermath of the flotation from certain quarters, that the price of the Eircom shares was in fact set too low by the Government.
The Government could have chosen to float the Company at a higher price than it did, but chose not to do so. The Government received advice from one of the Joint Global Co-ordinators, Merrill Lynch, to the offering (sic) to float the shares at £3.27. Merrill Lynch are now advising the Company.
As the House knows, the launch price was £3.07 (Euro 3.90). In the immediate aftermath of the flotation, the share rose in price by 20%. The share has traded well above flotation price most of the time since the flotation. The share price has been below the issue price on 35 days out of 230 days since the launch.
In the first three months of this year, the share price was never below the issue price and reached a high of £3.78 on a number of occasions in that period, a premium of 23% on the flotation price.
The potential returns to Eircom investors have been available against the background of a market which has been, at best, sluggish or in decline since the flotation.
Bonus shares of one for every 25 shares held will issue to people who retain their shares up to 7 July 2000, which is equivalent to 4% interest.
An interim dividend of 1.26p (1.6 Euro, cents) per share was paid on 14 January 2000. A further dividend of 2.4p (3.0 Euro, cents) per share will be paid shortly. The two dividend payments are equivalent to over 1% interest.
Deputy Yates has suggested that I should apologise to the people who bought shares in Eircom. I would like to say to him that I was very careful throughout the process to stress that the price of shares can and does fluctuate. Contrast with this Deputy Yates’ statements on Morning Ireland on 22 April last year. He stated that ‘this is not a risky investment; this is a sure bet’ and went on to say, ‘I’m telling people, this is money for old rope’. The interviewer, Richard Crowley, even suggested to Deputy Yates that he was ‘doing a great sales pitch, they [Eircom] don’t need to spend £3 million if they had you working for them’.
As I have said, I was grateful to have the occasion of the Adjournment debate to be able to face down some of my critics at the time. I cannot say there was no satisfaction for me in being able quote back to Ivan Yates those infamous words of his on Morning Ireland: that an Eircom share was ‘money for old rope’. I have often thought about the matter since, and how much he must have regretted that early morning interview! It would not be until some years later that it became quite clear, as evidenced by well-known economic commentators, that the Eircom flotation was not a ‘debacle’. A good price was achieved for the government and the punters had a chance to make their money over the share price for quite a while afterwards. I would have been devastated if we had priced too low and by so doing, we had denied a fair price to the government and to the country.
As can be imagined, it wasn’t easy being under such intense public scrutiny at times, and sometimes the only way through was to see the funny side. It was, of course, during my time as Minister for Public Enterprise that the then Chairperson of CIÉ, Brian Joyce, resigned. Asked in a live media interview at the time what I had been doing when I had heard of the resignation, I had replied, perhaps a little too spontaneously, that I had been in the bath listening to the radio when I had first learned the news. Lo and behold, the cover of the next issue of The Phoenix was an image depicting Bertie Ahern and me in a bubble bath together when we got the news of Joyce’s departure!
With the year 2000 fast approaching, Ireland was in the grip of millennium fever. Séamus Brennan, our Chief Whip, was appointed Minister for the Millennium and he set about putting together an inspiring programme to mark the new century, pivotal to which was a small sum from our Lotto which he made available to communities throughout the country to apply for a particular commemorative statute or event or memorial. Each project of this kind would be vetted rigorously by a very competent committee before any money was awarded.
One of my own favourite initiatives relating to the millennium celebrations came from An Post, in fact. As well as issuing a magnificent special issue of their wonderful commemorative stamps, they set themselves the goal of giving a ‘millennium tree’ to everyone in Ireland. Each person was to receive a certificate bearing the ‘address’ of their tree — i.e. details of the place where it had been planted. The idea was that they could go to visit it to see how it was doing. The project quickly caught the public’s imagination. Just the other day I came across my own certificate and, poignantly, a certificate for Enda. Our trees were planted out beyond Glasson, but I have friends whose trees are in Kilkenny, in County Dublin, and so on. I don’t know if people have kept up the viewing of their
trees. The last time I went to see mine was about two years ago, and it was growing tall and strong. I think this was one of the more fanciful ideas for the celebration year, but one which took root (if you will pardon the pun!), and was a real success.
I remember now so well New Year’s Eve 1999, when churches all over Ireland held commemorative ceremonies. I can still recall how Enda and I went to St Peter’s in Athlone that evening at 7 p.m., and how everyone held hands and sang hymns and ushered in the year 2000. With a new century in the offing, it seemed that perhaps a new Ireland with new hopes lay ahead of us too. If only it was so easy to erase the hurts, the bitterness and the difficulties of the past, and to dress in shining new clothes.
Just as I was, Enda was very enthused about the year 2000 — we often talked together about the new century, about new lives and fresh hopes. It seemed as if he had forgotten his illness of the previous year, had risen above it and was determined to go forward with new energy and health. And so he would do for a good number of months until the day in late January 2001 which, all these years later, is still so difficult for me to contemplate.
Just Mary Page 16
