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News : Irish Last Updated: Apr 15, 2013 - 11:47 AM


Monday Newspaper Review - Irish Business News and International Stories - - April 15, 2013
By Finfacts Team
Apr 15, 2013 - 10:09 AM

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The Irish Independent reports that Spain's financial crisis could hit the livelihoods of hundreds of fishermen along the west coast after one of Europe's top fishing companies filed for insolvency.

Pescanova, which has more than 160 subsidiaries in 20 countries including Ireland, shocked the Spanish stock market when it filed for insolvency last week.

The move could affect Pescanova subsidiary Eiranova Fisheries, which has been based in Castletownbere in Co Cork and also has an office in Dingle, Co Kerry. The factory processes brown shrimp and employs around 20 people at its west Cork operation on the main pier of Dinnish Island in Castletownbere. However, many of the smaller boats fishing for shrimp from Castletownbere Harbour also supply their catch to Eiranova.

Around 100 boats fishing from Castletownbere Harbour alone supply their catch to the factory, as well as other boats fishing for shellfish on the west coast from Cork Harbour to Loop Head in Clare.
Local businessman and chairman of the Beara Tourist Development Association, John Murphy, said Eiranova had been a good employer in the area and people were closely watching the situation with its parent company.

"Anything that impacts on the fishing industry in Castletownbere impacts on us all. The local economy evolves around the fishing industry and we would be very concerned about any loss of revenue and the impact it would have on a small, rural community like this," Mr Murphy told the Irish Independent.

Debt

Pescanova filed for insolvency after a month of boardroom battles ended in stalemate and put the future of the debt-laden group at risk. The company suspended its auditors, BDO, and has said it will hire forensic auditors to examine its accounts after reporting discrepancies in its books on March 12, a day after the market regulator said it would investigate the fishing firm over possible market abuse. Pescanova has yet to present audited 2012 results and is in breach of Spanish law as a result. The company, which has been operating for more than 50 years, employs 10,000 people around the world.

The group's creditors, according to a banking source, include Spain's biggest banks, Sabadell, Caixabank, Popular, Santander, BBVA and Bankia.

The Irish Independent also reports that up to 100 new wind farms will be built over the next seven years, which will utterly transform our landscape.

Energy companies and private sector firms have been offered connections into the national grid which will result in the number of farms doubling, according to data obtained by the Irish Independent.

But a state agency is to conduct in-depth research about noise from wind farms amid mounting concerns from rural communities about the impact on their health.

The Sustainable Energy Authority of Ireland (SEAI) wants experts to produce a report by July in advance of new planning guidelines being drawn up for wind farms.

Currently, almost 1,800 megawatts (MW) of wind generating capacity is installed on the national grid.

But applications have been approved for a significant hike in this amount. One MW produces enough power for about 1,000 homes.

By 2020, another 2,200MW of capacity is expected to be installed. But companies have expressed an interest in building more farms which could produce an additional 13,000MW.

The interest comes as Ireland must produce 40pc of all its electricity needs from renewable energy sources – wind, wave and tidal – by 2020 to meet binding EU targets.

About 15pc of our daily needs are currently produced by wind, ahead of national targets, with wind providing up to 50pc of our energy needs when conditions are right.

Data from the ESB and national grid operator EirGrid shows:

• There are 161 wind farms across the country, producing 1,755MW or enough power for about 1.3 million homes.

• Another 99 are at an advanced planning stage, and have been given dates for when they can connect to the national grid.

• The largest is Seecon near Oughterard in Galway, which will accommodate 23 turbines.

• All 99 farms will produce 1,683MW by 2020.

• Offers for another 600MW to connect to the grid are expected to be made in the next year, bringing the total generating capacity to 4,000MW.

• EirGrid says companies have expressed an interest in building another 13,000MW of capacity – which could result in up to 4,300 turbines being installed.

Ireland spends €6bn on imported fossil fuels every year, with oil accounting for 75pc.

But concern about climate change means that 40pc of all electricity must be produced from renewable sources by 2020, and most will come from wind.

Despite these targets, there is mounting local opposition to plans to construct farms, particularly in the midlands, where two separate plans for large-scale farms to serve the UK market have been proposed.

One is from Mainstream Renewable Power, which plans to build farms producing 5,000MW of power for export to Britain via underground cables.

The second is from Element Power, which has struck a deal with the UK's National Grid to supply it with wind energy from 40 planned farms.

It claims up to 2,000 full-time jobs could be created in the €8bn project, with sites identified in Meath, Westmeath, Kildare, Laois and Offaly. Planning permission is expected to be sought later this year.

SEAI is seeking companies to carry out research as new planning guidelines are drawn up.

Industry lobby group Irish Wind Energy Association (IWEA) said that in the past 18 months, some 60pc of all planning applications for wind farms were successful.

The Irish Times reports that the Government is determined to pass laws to reduce public pay if trade unions reject the second Croke Park deal this week, but it has yet to settle on the “fine detail” of the steps it would take in that event.

Any legislation to force a pay cut on public sector workers would be particularly difficult for the Labour wing of the Coalition as the party’s TDs would be faced with the prospect of voting in the Dáil for measures rejected by many supporters.

Very tight vote

With the fate of the pay proposal agreed with union leaders to be determined within days, the expectation in Coalition circles is that the vote will be tight.

Although some Government figures said their gut instinct suggests the deal will be accepted, the proposal has gone down very badly with large elements of the trade union movement.

Taoiseach Enda Kenny has suggested that the Government would legislate, if necessary, to secure the €1 billion saving in the public service pay and pensions bill it is seeking over the next three years.

However, ministers told backbenchers this weekend that no decisions have been taken on how the Government will deal with a rejection of the deal.

Coalition TDs were told that Minister for Public Expenditure and Reform Brendan Howlin will discuss all the issues with Cabinet colleagues after the results of union ballots are known within a day or so.

Government sources said, however, that plans remain in place to introduce legislation to give effect to pay cuts if the deal is voted down.

While TDs were told that no decisions have been taken on measures to meet savings targets, one source said this was a reference to the detailed elements in any legislation to execute pay cuts.

Already members of three unions – the Teachers’ Union of Ireland, the Medical Laboratory Scientists’ Association and the Technical Electrical and Engineering Union – have rejected the deal in ballots.

Larger unions such as Siptu, Impact and the INTO are to announce their ballot results today and tomorrow.

Fearful

On Wednesday the overall public services committee of the Irish Congress of Trade Unions is to meet to consider ratification of the deal, based on the ballot results of affiliated unions.

Senior Government figures are fearful that the INTO vote will be extremely close and could very well go against the proposed agreement.

While any rejection by the INTO would be very important, a similar vote by Siptu members against the deal would be critical for the Government.

The Irish Times also reports that the Government will have to make a commitment on investing up to €200 million in the VHI within the next six weeks if it is to meet a deadline agreed with the European Commission of securing authorisation from the Central Bank by the end of the year, the State-owned health insurer has warned.

The newspaper understands that VHI chairman Martin Sisk also told Minister for Health James Reilly late last month that further significant changes would be needed to the Government’s stance on a controversial risk equalisation scheme in the health insurance market if VHI was to stand any chance of achieving Central Bank authorisation.

Court ruling

The European Court of Justice found in September 2011 that VHI’s exemption from Central Bank authorisation and regulation was in breach of EU directives. Its private competitors in the Irish market must have substantial financial reserves.

The Government told the commission that VHI would not be authorised by the Central Bank until the end of 2013.

Mr Sisk is understood to have told Dr Reilly, in a letter, that VHI will have to make a full application to the Central Bank regarding authorisation by the start of June if the end-of-year deadline is to be met. Clarity from the Government on capital investment and on further reforms to the risk equalisation scheme would be needed by then.

No comment was available from the Central Bank yesterday.

The commission has reminded the Government that the court can impose fines on member states that do not comply with its judgments.

Dr Reilly told the Cabinet in 2011 that up to €220 million could be needed to bring the VHI’s financial reserves up to a level to secure Central Bank authorisation.

VHI is exploring the prospect of entering into re-insurance arrangements, which would reduce the State investment required. However, informed sources said this was still likely to leave the Government having to find at least €100 million to invest in VHI.

A second key element of the Central Bank authorisation process is that the company must show it has a sustainable business model. It is understood that VHI has warned the Government that “significant changes” would be needed to the risk equalisation scheme if this is to be achieved.

The Irish Examiner reports that the battle to recoup about €1 trillion lost annually through tax fraud could threaten the country’s veto on tax issues in the EU.

As just one or two countries now stand in the way of concluding agreements on exchange of bank information and on Vat fraud, EU finance ministers are demanding faster action.

Taxation Commissioner Algirdas Šemeta said the current system, where every country has to agree unanimously to tax legislation, slows down the process and makes change difficult.

“Discussions on the future of the EU treaty should involve the question of unanimity in tax. It should be one of the subjects of debate among member states,” he said.

Germany has said it wants a new EU treaty in 2015, to bring about changes in the structure of the union, especially on economic and political union. Britain is also pushing for a new treaty.

Mr Šemeta said “Sometimes it’s difficult to understand if there is one, two or three member states blocking a solution and the others have to wait until agreement is reached. It slows down the process, unfortunately, and needs lengthy negotiations and lots of compromises to reach agreement among the 27.”

Finance Minister Michael Noonan chaired the meeting in Dublin Castle where Mr Šemeta made his comments. When asked if it was time, due to tax evasion, to change the treaty to remove the veto, he said: “No, I don’t,” adding he had not heard anyone propose it.

Austria found itself under pressure to sign up to the automatic Exchange of Information from 2015, to agree to give details of foreigners’ bank accounts to other EU countries to ensure they are taxed. Luxembourg was holding out, but has now agreed to comply.

Austria’s finance minister, Maria Fekter, however, led a spirited defence of her position at the meeting, pointing to the hypocrisy of other countries who allowed offshore secretive banking in the form of trusts and other vehicles.

She said that Cyprus had been obliged to put in place a trust register and this was something every EU country should do, “including big islands” — referring to Britain and its tax havens such as the Isle of Man and the Cayman Islands.

Many of these offshore islands, facilitating anonymous trusts, were a paradise for money laundering she said, adding that it was unfair to put pressure on Cyprus and say nothing about others.

The Irish presidency is hoping to unblock the Savings Directive and the Vat fraud directive next month and this will unlock a whole series of tax fraud and tax evasion measures that are on the table.

Six countries came together to call for greater transparency and announced they will set up a pilot project among themselves. This was welcomed by Commissioner Šemeta but he said that if they all accepted the measures already on the table, it could all be achieved within a month.

However, he warned that even if all the measures were put in place, including getting the US and other countries globally to make similar moves, it would not automatically release the €1tn currently being lost to EU governments.

“We should not be naive that we would be able to collect the €1tn immediately if the legislation is adopted but it will be a strong incentive and a move towards it,” he said.

Among the measures being discussed is the closure of loopholes used by multinational companies to move money between jurisdictions, taking advantage of various tax regimes. This could see Ireland and the Netherlands having to change legislation.

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