Morgan
20-05-2008, 01:10 PM
Coillte has made no payments to exchequer since 1989
Government orders State forestry company to cough up dividends
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The state forestry company has been ordered by the Government to hand over some of its profits to the taxpayer after eight years of refusing to make payments.
The company and officials at the Department of Finance admitted last week that despite owning seven per cent of the country and making over €200m profits in the last seven years alone, Coillte Teoranta has never made a payment to the exchequer since it was set up in 1989.
Officials say they believe it's the only state company which has never returned profit dividends to the Government.
The company claimed last week that its failure to make a single return in 19 years was because it has been "in development mode".
A senior official in the Department of Finance said the company has now been told in no uncertain terms to begin making payments after almost a decade of requests, made directly and via Coillte's parent department, currently Agriculture and Food (DAF).
"Our position is well understood by the management, that dividends must be paid henceforth, that profits should be returned to the taxpayer," he said.
"It's been subject to discussions for the past eight years or so -- at various stages we were trying to come up with dividend values and it was knocked on the head for one reason or another.
"It would have been put forward to agriculture and the company directly, in writing, verbally, by email, all types of communications."
Coillte was set up in 1989 as a State-owned private limited company with the Minister for Finance as the only shareholder.
It was given ownership of the State's forests, about 376,000 hectares, or 1,500 square miles.
Estimates of how much the state could have collected, based on the 30 per cent profits returned to central funds by the ESB, amount to €60m since the year 2000. But officials say there are no plans to seek back payments from the company.
It has made significant profits for many years, including over €40m last year, but has been heavily criticised for poor environmental policies and business strategy.
The company cost the taxpayer €8m in 2003 when the Government had to repay EU grants it had taken illegally for five years.
A recent Government-commissioned report concluded that the mistake had made the company unable to afford to plant trees.
Despite the failure to pay back the fines or make any payment to the exchequer, Coillte's senior management has received performance bonuses of between €200,000 and €400,000 each year for nearly a decade.
A spokesman for Coillte explained the lack of payments.
"It is correct that we have not paid a dividend to date and that there have been requests for us to do so from Finance.
"Coillte's board and management have taken a view to date that as the company was in development mode any cash surplus was to be used for reinvestment in the business, for acquisitions -- such as Medite in 2006 -- and to reduce group debt.
"We would have had discussions from time to time with Agriculture on the issue of a dividend and in recent months specific proposals have been put by Coillte to the Department of Agriculture in relation to paying a dividend.
"It is hoped to reach a conclusion on the issue in the coming months."
There are currently 17 state-owned companies operating. Last year returns to the exchequer totalled over €84m. The ESB was the largest contributor with over €63m.
Finance officials say no guidelines currently exist for calculating dividend payments each year and that it is done on a "case by case" basis.
- ENDA LEAHY
</blockquote>
Government orders State forestry company to cough up dividends
<blockquote>
The state forestry company has been ordered by the Government to hand over some of its profits to the taxpayer after eight years of refusing to make payments.
The company and officials at the Department of Finance admitted last week that despite owning seven per cent of the country and making over €200m profits in the last seven years alone, Coillte Teoranta has never made a payment to the exchequer since it was set up in 1989.
Officials say they believe it's the only state company which has never returned profit dividends to the Government.
The company claimed last week that its failure to make a single return in 19 years was because it has been "in development mode".
A senior official in the Department of Finance said the company has now been told in no uncertain terms to begin making payments after almost a decade of requests, made directly and via Coillte's parent department, currently Agriculture and Food (DAF).
"Our position is well understood by the management, that dividends must be paid henceforth, that profits should be returned to the taxpayer," he said.
"It's been subject to discussions for the past eight years or so -- at various stages we were trying to come up with dividend values and it was knocked on the head for one reason or another.
"It would have been put forward to agriculture and the company directly, in writing, verbally, by email, all types of communications."
Coillte was set up in 1989 as a State-owned private limited company with the Minister for Finance as the only shareholder.
It was given ownership of the State's forests, about 376,000 hectares, or 1,500 square miles.
Estimates of how much the state could have collected, based on the 30 per cent profits returned to central funds by the ESB, amount to €60m since the year 2000. But officials say there are no plans to seek back payments from the company.
It has made significant profits for many years, including over €40m last year, but has been heavily criticised for poor environmental policies and business strategy.
The company cost the taxpayer €8m in 2003 when the Government had to repay EU grants it had taken illegally for five years.
A recent Government-commissioned report concluded that the mistake had made the company unable to afford to plant trees.
Despite the failure to pay back the fines or make any payment to the exchequer, Coillte's senior management has received performance bonuses of between €200,000 and €400,000 each year for nearly a decade.
A spokesman for Coillte explained the lack of payments.
"It is correct that we have not paid a dividend to date and that there have been requests for us to do so from Finance.
"Coillte's board and management have taken a view to date that as the company was in development mode any cash surplus was to be used for reinvestment in the business, for acquisitions -- such as Medite in 2006 -- and to reduce group debt.
"We would have had discussions from time to time with Agriculture on the issue of a dividend and in recent months specific proposals have been put by Coillte to the Department of Agriculture in relation to paying a dividend.
"It is hoped to reach a conclusion on the issue in the coming months."
There are currently 17 state-owned companies operating. Last year returns to the exchequer totalled over €84m. The ESB was the largest contributor with over €63m.
Finance officials say no guidelines currently exist for calculating dividend payments each year and that it is done on a "case by case" basis.
- ENDA LEAHY
</blockquote>