The Government has accused Anglo Irish Beef Processors, the meat business owned by Mr Larry Goodman, of committing fraud when it obtained £80 million (€101.5 million) in export credit insurance in 1988.
The Master of the High Court was told yesterday that Goodman companies gave warranties to an insurance company, acting for the Department of Industry and Commerce, that the beef being exported under the scheme was from the Republic - as required under the terms of the scheme - when they knew that up to 40 per cent of it came from outside the Republic.
The allegation of fraud was made by counsel for the Department of Enterprise, Trade and Employment - which superseded Industry and Commerce. The department's barister, Mr Colm Ó hOisin was making an application for discovery against Mr Goodman's companies in order to prepare the State's defence against a claim for £80 million, plus costs and damages being taken by three companies in the Goodman group.
Goodman initiated its action 12 years ago after the then Minister, Mr Des O'Malley, cancelled the insurance cover in 1989. The policy was intended to protect the Goodman group if its client, the Iraqi government, defaulted. The Iraqi government's failure to pay Goodman and the subsequent voiding of the insurance policy by Mr O'Malley contributed to the circumstances that led to the collapse of the company in 1990. Mr Goodman only regained control of the group in 1999.
Mr Ó hOisin said Mr Goodman's lawyers had refused to disclose the current ownership structure of the Goodman companies or whether any third party had an interest in the litigation. He said the State wanted to establish whether the company had signed over its rights to compensation to its banks as part of a restructuring deal in 1995. The State wanted to know if "the group is only acting as the agent of the banks", he said .
The structure of the defence that the State will put forward when the full case comes to court was outlined to Mr Edmund Honohan, the Master of High Court. The Government will contend that the main insurance policy, EC2436 - which was written in February 1988 - was not valid because the company broke the terms of the underlying contract with the Iraqis.
Under the terms of the contract with Iraq, the beef to be supplied was all to be of Irish origin and killed by traditional Islamic methods. Around 40 per cent of the beef that was supplied was not of Irish origin, and around 80 per cent came from EU intervention beef, which was not killed by the Halal method.
Furthermore, the State will argue that the insurance was invalid because the Goodman companies breached the terms of the insurance policy, which also specified that all the beef supplied under it had to be from the Republic. The allegation of fraud relates to the company giving warranties that all the beef being supplied was Irish, when it had already exported non-Irish beef under the scheme.
The Government will also contest the existence of two other tranches of insurance that Goodman has alleged were agreed with the then minister Mr Albert Reynolds at a meeting in November 1987.
The agreement was for $30 million (€34 million) in cover almost straight away, and another £80 million when the statutory limit on the amount of insurance that the Department could underwrite was raised. The State denies this agreement was ever made.
It also claims that no policy was issued in respect of the $30 million of cover and that a payment of $182,000 from the Goodman group did not constitute a premium payment. It also claims that representations were made "falsely and fraudulently" that the beef was of Irish origin.
