Today, two contrasting fortunes: medical card holders in the Northern Area Health Board, which encompasses north Dublin, and Mr Tony O'Reilly (I decline to refer to him by his preferred nomenclature) of Independent Newspapers, Fitzwilliam, Rennicks, Waterford Wedgewood and Valentia fame, writes Vincent Browne.
Medical card holders in north Dublin have been refused ophthalmic benefit over the last few months. Poor people, including poor old people who need glasses for their daily lives, are now being deprived of glasses on the medical card scheme.
I asked the Northern Area Health Bord about this and was told: "In line with the current guidelines from the Department of Health and Children, our Board is required to bring service levels in line with available funding. Consequently, we have had to adjust some service levels in line with our current financial resources. In this context, our financial allocation to administer the Ophthalmic Scheme has now been almost fully utilised."
A nice way of saying, "tough luck" to medical card holders who need glasses, no matter how urgently or how desperately.
There may be some hope in prospect. I was informed yesterday that, at a meeting on Monday, the Eastern Regional Authority advised the Board that further funding would be available for the scheme. Contrast the fortunes of the unfortunate old people of north Dublin, who are in need of spectacles they cannot afford, with those of Mr Tony O'Reilly, in his capacity as chairman and a 5 per cent shareholder in Valentia, the company that a year and a half ago bought Eircom for €1 billion.
Valentia is now in a position to pay out to its shareholders €512 million (i.e. more than half the money they invested to purchase the company 18 month ago). This has been achieved not because of any spectacular revolution in the management of Eircom, rather primarily through the juggling of figures, an increase in prices to its customers, the sale of assets and a rearrangement of the company's considerable debt.
Revenues did increase last year, by an unspectacular 2 per cent. There were further redundancies - 1,700 - but these were in train anyway; and in spite of these, the wage bill increased by 2 per cent and the costs of redundancies is working out significantly higher than Valentia budgeted for.
The major changes that have occurred have been in the reassessment of the assets of the company. The Golden Pages, for instance, was sold for €200 million, 10 times the value that had been placed on it. In addition, there has been a 15 per cent hike in the cost of line rentals - the company is an effective monopoly in the fixed line business. And there are pressures to get the telecom regulator to agree to a further price increase.
Because of the drop in interest rates, the debt servicing cost has dropped by 30 per cent. And, most crucially from the perspective of the economy as a whole, there has been a massive decrease in capital expenditure. Capital expenditure in fixed line infrastructure fell to €197 million for the year to the end of March, from €504 million for the year to March 2001.
According to one commentator, the company plans to spend in the current year less than the amount at which its capital assets are depreciating. This means capital investment in the business will be negative.
But they have arranged a new bond loan of €2.4 billion. And in return for all this, the shareholders, including the workers, will pay themselves the €512 million, of which €446 million is a dividend payment.
Mr O'Reilly personally will get around €21 million. And now, Mr O'Reilly and his pals have arranged to transfer the ownership of Eircom out of the State to a shelf company in Britain to avail of what is called "less stringent company law" requirements in the UK and "a more flexible distribution of dividend payments". This is code for avoiding or diminishing the tax that would otherwise be payable here.
If Mr O'Reilly himself were to pay income tax on the €21 million, it would result in additional tax revenues here of over €8 million, more than enough for the Northern Area Health Board to afford glasses for poor people and old people in north Dublin.
For this piece of business brilliance, Mr O'Reilly is extolled (again) in the columns of one of the newspapers he owns here, the Sunday Independent. Last Sunday, its otherwise fearless and outspoken business editor, Senator Shane Ross, (under the heading "Eircom chiefs make a silk purse out of a sow's ear") gushed: "The transformation of Eircom has been dramatic. In barely 18 months, Tony O'Reilly, George Soros and Providence Equity Partners have turned the company around."
It is hardly surprising that the Sunday Independent should think this is not just okay but admirable. More significant is how untroubled our leaders and would-be leaders are about the generation of such massive rewards in return for running a virtual monopoly in a manner arguably injurious to the country as a whole and then seeking to avoid or diminish modest tax payments on those massive rewards.