Glanbia - Milking the Government's Indulgence

* A story that kind of slipped under the radar in terms of public awareness.

by Seán McCárthaigh

Glanbia facilitated breaches of rules governing the allocation of milk quotas by one of the group’s own directors, according to a Department of Agriculture report.

It concluded that Glanbia – one of the country’s largest public limited companies – had taken verbal instructions a non-executive director, Bill Carroll, “to facilitate an incorrect reallocation of milk supplies between two suppliers.”

Mr Carroll, a dairy farmer from outside Clonmel, Co Tipperary, resigned as a director of Glanbia in November in the wake of the controversy.

Letter written on behalf of Simon Coveney to Glanbia on June 4, 2014

An investigation by the Department of Agriculture examined allegations that he had sold almost €300,000 of milk to Glanbia from his Co Tipperary farm using the quota attached to Clongowes Wood College, a well-known private boarding school run by the Jesuits in Co Kildare.

Milk quota rules stipulate that farmers are prohibited from supplying milk that has not been produced by their own cows on their holdings. Anyone who infringes such regulations is liable for substantial fines if they supply more than their quota.

Documents obtained by the Irish Examiner under the Freedom of Information Act show the Minister for Agriculture, Simon Coveney was highly critical of Glanbia’s role in the controversy.

A report by his officials into milk quota irregularities found Glanbia’s recording system was not operated in accordance with milk quota regulations.

It found the group’s systems were “amenable to alteration on the basis of a verbal instruction, either from a party outside or within the company, and the necessary robust checks and balances were not in place.”

A letter written to Glanbia’s chief executive, Jim Bergin, on behalf of Mr Coveney in June 2014 stated: “It is clear the control systems employed within your company were not, in this instance, of regulatory standard and were contrary to the departmental rules in relation to the administration of milk quotas and that [Glanbia] as a result facilitated a series of non-compliant transactions.”

The department ordered Glanbia to take immediate action to reallocate the milk incorrectly allocated to Clongowes Wood College to Mr Carroll’s account and to collect the appropriate superlevy from him – an amount of €143,000.

It required the company to address control weaknesses in its quota management system and to inform the department exactly what measures it had taken.

The department also instructed Glanbia to arrange and fund independent verification that its control weaknesses had been identified.

Mr Bergin was informed that the matter had also been referred to the Chief State Solicitor to see if a criminal prosecution was warranted.

He replied: “We trust that further action will not be necessary.”

The department was forced to contact Glanbia again last October after it emerged that Mr Carroll had benefitted from the distribution of unused milk quota – known as flexi-milk – to the value of €30,000.

Follow-up letter to Glanbia on Oct 22, 2015

The department’s assistant general secretary, Brendan Gleeson, ordered Glanbia to withdraw any flexi-milk allocation to Mr Carroll and to arrange to collect any outstanding superlevy from him. The letter again expressed Mr Coveney’s “deep concern” about “the manner in which this matter has been dealt with by Glanbia.”

The department instructed Glanbia to redistribute the superlevy collected from Mr Carroll to the 290 famers who had been disadvantaged by about €112 each as a result of the allocation to the form

In a reply on November 6 last year Mr Begin said Glanbia had “at all times taken this matter very seriously and co-operated fully with the department’s investigation.”

The Glanbia chief executive acknowledged that an internal review carried out by the group on foot of the allegations against Mr Carroll had highlighted there was “insufficient documentation in place to support the manual amendments processed by Glanbia milk department.”

However, Mr Bergin also stressed that it was “an isolated incident involving a range of exceptional circumstances.”

During a Dáil debate in November, Mr Coveney said he had accepted the recommendation of his officials that a criminal prosecution of the matter should not be pursued.

The minister declined to reveal the legal advice he had received from the Chief State solicitor but said his officials had regard to the fact that corrective action was taken, there was no financial gain for any of the parties  and a superlevy had been paid.

Sinn Féin TD, Martin Ferris observed the case “stinks to high heaven.”  “This was blatant attempted fraud at the very least,” said the Kerry North TD.

He claimed he had received information that the Chief State Solicitor had recommended the issue be referred to gardaí.

M Coveney said he had been advised by the department’s secretary general, Aidan O’Driscoll, that the facts of the case were “not so clear as to provide a sufficient degree of probability that a prosecution would succeed.”

The Department refused to release documents containing a record of an interview carried out under caution with Mr Carroll.