New storm for Fahey

Emily O'Reilly, Ombudsman, is to commence a new investigation into the conduct of junior minister Frank Fahey, who is already struggling in a sea of controversy. By Frank Connolly

Emily O'Reilly, the Ombudsman, has started an investigation into the conduct of Frank Fahey when he was Minister for the Marine between 2000 and 2002.

The investigation is likely to cause further injury to Fahey's reputation, which already has suffered a series of blows from allegations of conflicts of interest.

Emily O'Reilly has sent a formal letter of complaint to the secretary general of the Department of Communications, Marine and Natural Resources concerning the Lost at Sea compensation scheme which Frank Fahey introduced as Minister for the Marine and Natural Resources in 2000. Fahey was demoted after the 2002 general election and is now Minister of State at the Department of Justice. He is also the subject of a formal complaint under preparation by Trevor Sargent, leader of the Green Party, for the Standards in Public Office Commission. Sargent has called for the dismissal of the minister on several grounds:

• Over his introduction of the Fishing Vessel Lost at Sea scheme, which has been described by the Ombudsman as "seriously deficient and flawed".

• Over his introduction of Compulsory Acquisition Orders for the Corrib gas pipeline, which resulted in the jailing of the Rossport Five last year and, in one of his last acts as minister, the approval of a foreshore licence for Shell E&P in Co Mayo.

• Over Fahey's decision to build marinas that did not comply with the National Development Plan and which were publicly criticised by his officials in the Department of Communications, Marine and Natural Resources.

• Over his use of departmental notepaper for party political purposes, which the Taoiseach has described as "totally inappropriate".

• Over Fahey's alleged deployment of tax-avoidance measures in the sale of properties in recent years in Gort, Co Galway.

Frank Fahey and the Lost at Sea scheme

Last year, the Ombudsman Emily O'Reilly, in an interim report, described the Lost at Sea scheme as "seriously deficient and flawed" following a complaint by Donegal-man Danny Byrne, whose father and brother drowned when their vessel sank at sea but whose family was not informed until after the closing date that an EU-funded compensation scheme had been established by Frank Fahey.

The scheme, which allowed boats lost at sea to have their capacity registered and transferred to another vessel or sold on, was introduced in 2000 following representations by two constituents of Frank Fahey: Anthony Faherty and Paddy Mullen, both of them based in the Aran Islands. It subsequently emerged that the two fishermen, who discussed the idea with Fahey four months before its introduction, obtained 75 per cent of the total compensation offered under the scheme. The Ombudsman has said the scheme was introduced without adequate explanation in writing on how it was devised. The scheme provided compensation in the form of tonnage quota to families or people who had lost fishing boats between 1980 and 1990.

She found that certain people were informed of the scheme and not others. The division of the department which drew up the scheme did not know of the sinking of the Byrne's fishing vessel, the MSV Skifjord, in October 1981. She said that the department should have consulted a list of fishing vessels lost at sea to ensure equity in the design of the scheme. People entitled to compensation should have been properly informed, she said in her report last year.

While 67 applications were made following the publication of details of the scheme in the marine press, only six resulted in compensation payments. The Byrne family, who lost their father Francis, his son Jimmy, 16, and three other crew members when the Skifjord sank off the Donegal coast in 1981, complained to the Ombudsman that they were not informed about the scheme and had their application rejected because they missed the closing date.

Although the Department of Communications, Marine and Natural Resources is expected to defend itself from the criticisms in the latest formal complaint by the Ombudsman, the controversy is likely to drag on for several more months before the Ombudsman's final report is lodged with the Oireachtas later this year.

Frank Fahey and Corrib Gas

Fahey was also responsible in the Department of the Marine when a series of concessions were made to the developers of the Corrib gas field off the coast of Co Mayo. Fahey was lobbied heavily by Enterprise Oil executive John McGoldrick before the company and the gas field was sold on to Shell E&P Ireland Ltd. Fahey introduced the orders allowing for the compulsory acquisition of lands for the gas pipeline which contributed directly to the jailing last year of the Rossport Five, who refused to allow Shell to enforce the orders. He also granted the foreshore license to land the pipeline and the consent allowing the construction of the pipeline within 70m of people's homes. This latter consent was in breach of international pipeline safety standards and best codes of practice.

As the minister also responsible for Coillte, the national forestry service, he oversaw the sale, for an undisclosed sum, of 400 acres of land at Bellanaboy in north Mayo for a terminal where the unprocessed gas will be cleaned before entering the Bord Gais network.

In 2001, as Minister for the Marine, he also granted the petroleum licence to Shell E&P which requires the government and the taxpayer to purchase the gas at going market rates.

Frank Fahey's marina plan, smoking ban and misuse of Dáil notepaper

Trevor Sargent's complaints to the Standards in Public Office Commission, of which Emily O'Reilly as the Ombudsman is also a member, also refer to a scheme Fahey introduced while Minister for the Marine to build marinas at a number of locations across the country which did not comply with the National Development Plan at the time and were strongly opposed by his own officials.

Before his elevation to cabinet in 2000, Fahey had been criticised by the Taoiseach for the "totally inappropriate" use of Dáil headed notepaper, which he used to promote a party fundraiser.

He was also embroiled in a bitter row with the Vintners' Federation in late 2003 when he first indicated that there could be compromise over the proposed smoking ban and then rowed back. It was particularly controversial because, as Junior Minister for Labour Affairs, he was responsible for the implementation of the ban when it was introduced in March 2004.

More recently he has become embroiled in controversy concerning his alleged involvement, with his wife Ethelle, in a hair salon in Moscow in the mid-1990s in which he claims to have had no direct interest. He is on record as seeking payment for services he provided to the project.

In 2000, he failed to declare his ownership of an apartment in Florida, while just last month at the Mahon Tribunal he claimed that he had a " hazy recollection" of a payment from Monarch Properties and meetings with lobbyist Frank Dunlop, who has admitted to bribing dozens of politicians through the late 1980s and 1990s.

Frank Fahey and Atlantic Dawn

His role in acquiring EU support for the registration of, and transfer of tonnage to, the Atlantic Dawn – the huge trawler owned by Killybegs businessman Kevin McHugh – also placed Fahey under some unsympathetic public scrutiny.

After an intervention with the EU Commission by Fahey and the Taoiseach, Bertie Ahern, the Atlantic Dawn was granted permission to become part of the European fleet. The vessel, which was launched in 2000, was refused access to the fleet unless other vessels of an equivalent tonnage and engine size were taken out of service.

In 2002, Ahern and Fahey lobbied the EU Agriculture and Fisheries Commissioner, Franz Fischler, for a change of policy to allow the vessel join the fleet. As part of the deal, McHugh was forced to remove his other fishing vessel, the Veronica, from the Irish fleet and was granted tonnage worth ?60m when he was allowed to register the Atlantic Dawn. He sold the tonnage attached to the Veronica for ?40m and other fishing boat owners complained that they were forced to buy McHugh's tonnage in order to keep their vessels on the Irish register.

Frank Fahey's property portfolio

While Fahey has endured more than most in terms of controversy since his political career started with his election to the Dáil in 1982, it is his multi-million euro property portfolio which, arguably, has attracted the most negative political attention.

In his most recent disclosure in the Register of Members Interests lodged in the Oireachtas library, Fahey lists no less than 20 properties, including houses in Galway, Limerick, Dublin, Westmeath, Boston, Brussels, France and Portugal (see panel page 19). He is also the director of two property companies, Sage Construction, on whose board his wife Ethelle also serves, and Boston-based Fahey-Higgins LLC .

In 2000 it emerged that his name was on the title deeds of an apartment in Daytona, Florida which had not been noted on the Dáil register of interests – an omission which Fahey promptly corrected. The most recent criticism in the Dáil, during which Trevor Sargent described the junior minister as a "dodgy builder", arose from Fahey's involvement in Sage Construction, which has built houses in his home-town of Gort and in Claregalway, Co Galway.

On 28 June last, Sargent asked the Taoiseach: "Is he [the Taoiseach] going to stand idly by while dodgy builders in the Galway tent like Mick and Tom Bailey, and dodgy builders in government like Minister Frank Fahey, set the real standards in government under this Fianna Fáil/PD government?"

The Green Party leader claimed under privilege that Fahey and his company had employed an elaborate tax avoidance scheme in the sale of the houses and lands at Gort between 2002 and 2005.

This involved selling the lands around the new homes separately from the houses themselves. The sale of the lands by the individual company directors of Sage Construction, including Fahey and Sean Joyce, gave rise to a tax liability of just 20 per cent. In contrast, the sale of the houses attracted a liability of 54 per cent including Capital Gains Tax and stamp duties for the company.

His involvement in property began when he worked as a teacher of catechism and geography in Gort National School – from which he remains on secondment – in the 1970s and 1980s.

His name was first mentioned in connection with planning controversy when his then company, Lally Construction, built houses near Gort on lands that were badly flooded when the Shannon overflowed in the mid-1990s.

A home-relocation scheme for victims of the floods cost the state in excess of ?300,000 in 1996. Two of the worst affected were built by Lally Construction, despite the fact that maps of the area clearly stated that the lands were "liable to flooding".

Fahey has denied any impropriety in relation to his dealings as a property developer, or indeed in any other aspect of his political or commercial life.

"I have been scrupulous in complying with my ethical requirements in respect of my property and everything else. I am absolutely satisfied that I have done nothing wrong," he said.

Earlier this month, Fahey unsuccessfully complained to the Dáil Committee on Procedure and Privileges over what he claimed was the abuse of Dáil privilege by Trevor Sargent over his "dodgy builder" remarks. The committee, voting on predictable party lines, did not get a sufficient majority to support Fahey's complaint and cleared Sargent of any impropriety – a decision that added to the junior minister's misfortunes.


Frank Fahey's assets

1. Occupational Income -

• Teacher on secondment, Gort Community School

• Income from letting and sale of properties

• Income from property shareholding – details under land or property


• Shares in Vodafone

3. Directorships

• Nil

4. Land:

• Apt 8A, 16 Eglinton Court, Galway (letting)

• House at Kilbeacanty, Gort


• Apt at Dun Aengus, New Docks, Galway (letting)

• House at Dun na Coirribe, Galway (letting)

• House at Liscannor, Co Clare (letting)

• House at Rinawade Close, Leixlip (letting)

• Shareholding in apartment at Dun na Coirribe, Galway

• House at Claregalway (letting)

• Shareholding in extended family-owned properties at Moydrum, Athlone (letting)

• Shareholding in four apartments and shops, Lower Gerald St, Limerick (letting)

• Housing development land, Claregalway, construction of 10 homes (Shareholding in Sage Construction Co Ltd)

• Mixed development land, Crowe St, Gort, five-acre site for industrial, commercial, residential development under construction (shareholding in Sage Construction Co Ltd)

• Dwelling house at The Grove, Crowe St, Gort

• Dwelling at Dromard Terrace, Sandymount, Dublin 4 (shareholding)

• Shareholding in residential property at Starthmore Road and Tappan Street, Boston, Massachusetts (shareholding in Fahey-Higgins LLC Boston)

• Residential property owned in partnership at Rue Paul-Emile, Janson, 1000 and Rue De Sceptre, 1015 Brussels

• Apartment at Chancery Lane, Dublin 2

• Apartment at Cathedral Place, Limerick

• House and site at Villefranche, France

• Deposit paid on properties in Porto Do Mos in Lagos and in Mongadoha, Lameira, Alcantarila, Portugal

• Apartment at Irishtown, Dublin

5. Gifts


6. Property and Services:


7. Travel facilities:


8. Remunerated Position:


9. Contracts:



Emily O'Reilly's investigation

The outcome of the formal investigation into the Lost at Sea scheme by the Ombudsman, Emily O'Reilly, is not expected to be completed until the end of the year. The formal letter of complaint sent in recent days to the General Secretary of the Department of Communications, Marine and Natural Resources, Brendan Tuohy, follows several months of inquiry by the Ombudsman's office. The inquiry followed a complaint to Emily O'Reilly's office last year by Donegal man Danny Byrne, whose father's trawler sank off Donegal in 1981.

His father Francis, brother Jimmy, 16, and three crew members were drowned and the family have complained that they were unfairly excluded from the compensation scheme introduced by Frank Fahey soon after his appointment as Minister for Communications, Marine and Natural Resources in 2000.

The Byrne family put in an application for compensation on 31 December 2002, exactly 12 months after the closing date for applications. The value of the tonnage would have reached over ?1m. The department rejected the application as it was a year too late.

The value of the tonnage received by the two successful applicants from the Aran Islands reached ?2m based on the weight of the boats which were lost at sea. They did not receive any cash compensation.

After the Ombudsman receives a reply to her latest detailed letter of complaint from the department, she will formally interview the former minister and department officials involved in the preparation of the scheme.

Frank Fahey has said that he expects the department to fully defend the manner in which the scheme was set up, although it has already emerged that the relevant section of the EU Commission was not informed of its existence until recently.

The formal interview process is unlikely to commence before September and a report will be prepared and submitted to the government before the end of the year.

Frank Connolly