Reaction: The State incurred legal fees of €1.5 million defending the long-running court action by the beef baron, Mr Larry Goodman, which was withdrawn yesterday.
Mr Goodman's claim for €100 million, plus damages and costs, was closely linked to the collapse in 1992 of the first Fianna Fáil-PD coalition, then led by Mr Albert Reynolds.
The events centred on the cancellation in 1989 of Mr Goodman's export credit insurance for beef sales to Iraq by the then minister for industry and commerce, Mr Des O'Malley.
Goodman Holdings dropped the case yesterday, some two months after its lawyers made an approach to the Department of Enterprise, Trade and Employment. In a reciprocal measure, the Government withdrew a related claim by the State for €5 million from Mr Goodman.
A spokesman for the Tánaiste, Ms Harney, said the Government had received legal advice to drop the case.
The decision was prudent in the context of Mr Goodman's decision to withdraw his claim, he said.
Mr Goodman initiated his action in the High Court in 1989, but a full hearing of the case has not yet taken place.
While both sides will pay their own legal fees, the Government's fees of about €1.5 million are offset by the fact that it will not be returning the €1.46 million paid by Mr Goodman in the 1980s as a premium for State-backed export credit insurance.
Ms Harney said such money would cover the State's legal bills.
It is believed that the Government had been advised that it faced legal fees of an additional €8.5 million if the case had proceeded to a full hearing.
In a statement yesterday, Mr Goodman's company said its agreement with the Government meant that "enormously costly and time-consuming hearings into events that occurred up to 14 years ago can be avoided".
Mr Goodman was not available yesterday for further comment.
It is understood that he and his family are pursuing a separate claim for the loss of shareholder value from a UN fund established to compensate firms for losses incurred because of the first Gulf War. Mr O'Malley cancelled the export credit insurance after it had emerged that Irish beef exports to Iraq were significantly less than the amounts insured by the State.
An official report later found that 44 per cent of the beef had been sourced outside the State by Mr Goodman's company.
Mr Goodman lodged an immediate claim for some €179 million from the State after the insurance was withdrawn.
The scheme had been introduced by Mr O'Malley's predecessor, Mr Albert Reynolds, in the Fianna Fáil government of 1987, which was led by Mr Charles Haughey.
Evidence Mr O'Malley gave to the beef tribunal about the sums Mr Goodman was claiming in his action prompted a serious clash with Mr Reynolds, who by then was Taoiseach. The rift ultimately led to the collapse of the government.
The sum Mr Goodman claimed was reduced to €100 million in a revised statement of claim in 1996. The State's action for €5 million centred on a sum it paid to Banque Nationale de Paris after the Iraqi state defaulted on a payment.
Mr O'Malley last night expressed regret that Mr Goodman had kept open his action against the State for 14 years.
Mr O'Malley said the scale of insurance granted to Mr Goodman by the Fianna Fáil government of 1987 was "very unwise".
The cancellation prompted the events that ultimately led to the collapse of the first Fianna Fáil-PD coalition in 1992.
Asked whether he felt vindicated by Mr Goodman's decision to withdraw the case, he said: "I don't like to use that word but I felt that I was right all along.
"It's rather regrettable that it took so long to be proven."
He added: "In a sense it led to the downfall of that government. But on the other hand I think it was doomed anyway."
The Irish Times was unable yesterday to contact Mr Reynolds, who was Taoiseach when that government fell and had granted the export credit insurance to Mr Goodman.
