A former member of the Committee of Public Accounts (PAC), the Dáil’s State spending watchdog, has asked it to investigate the payment of taxpayer-funded Covid supports to businesses that subsequently distributed cash to shareholders in the form of dividends.
Ged Nash, a Labour TD who served on PAC between 2012 and 2014, last month wrote to Sinn Féin's Brian Stanley, the committee's current chairman, asking it to undertake an "an urgent examination" of the terms of the State's employment wage subsidy schemes (EWSS) and its temporary predecessor, the TWSS, which have paid about €9 billion towards the wages of employees in pandemic-hit businesses.
Mr Nash wrote to the PAC following a series of reports in The Irish Times about companies that had taken State subsidies while also making payments to shareholders, including O’Flaherty Holdings, the company with the Mercedes franchise for Ireland. It received almost €1.8 million in subsidies in 2020 while it also sent a similar amount to its offshore shareholder entity in the same year.
The Government has since promised to examine the law surrounding the State subsidies to see if it needs to be tightened to prevent companies receiving subsidies they do not need.
In his letter to Mr Stanley, Mr Nash asks PAC to investigate the issue under six different headings, including how widespread the payment of dividends is by State-supported businesses. The Government does not know how much taxpayers have paid to businesses that subsequently rewarded shareholders.
Preventing ‘abuse’
Mr Nash also asks PAC to look into “what controls and conditions ought to be attached to such schemes in the future to prevent the possibility of abuse of the schemes and to better protect the interests of the taxpayer and the public interest more broadly”.
Currently, there are no barriers to State-supported businesses paying dividends, and no method for taxpayers to claw back supports from companies that subsequently sent cash on to shareholders.
Other State-subsidised businesses that paid dividends while on taxpayer supports include doughnut chain Krispy Kreme, which sent more than €1.6 million to the UK after getting Irish taxpayer support, and John Sisk & Co, Ireland’s largest building firm, which made payment to the wealthy Sisk family.
“The intended purpose of these schemes is to keep workers in employment at a challenging time for the Irish and global economy,” wrote Mr Nash. “I think you will agree that the schemes were not intended to inflate the bottom line of very profitable firms.”
TWSS, which was introduced at the outset of the pandemic, cost taxpayers €3 billion, while its successor the EWSS has cost about €6 billion so far.
Mr Nash said the Government had acknowledged the problem. Taoiseach Micheál Martin, Minister for Finance Paschal Donohoe and Tánaiste Leo Varadkar have all said companies that received State supports and then paid dividends should repay taxpayers.
“Because of the deficiencies in the design of the TWSS and EWSS and the wholesale absence of certain controls and conditions that could have prevented such egregious behaviour in the first place, Ministers have now been reduced to making public appeals for such companies to return the money,” said Mr Nash.
PAC has acknowledged the issue but it has not yet indicated if it will investigate. It is likely to be considered at its next meeting, which has not yet been scheduled.
