Mr. Joe O'Flynn:

I thank the committee for allowing us the opportunity to appear today and make a statement in respect of the SKILL programme and national health and local authority levy fund. We are not a public body and, as such, we appreciate the fact that the committee has acceded to our request to attend.

SIPTU is the largest trade union in Ireland, representing more than 200,000 members, two thirds of whom work in the private sector and one third in the public sector. We are a membership organisation with approximately 10,000 voluntary representatives working through an extensive membership network of locations throughout the country. The union was organised on a branch based structure until October 2010 when it was restructured along divisional lines. Within the union, the term "levy fund" has had a specific meaning. It indicates an account operated by a branch under its own control and rules and governed by branch trustees. Crucially, such funds derive their income from the branch members. The commonly understood use of the term "levy" refers to a levy of the particular branch membership. Typically, levy funds are intended to assist members with educational grants or contributions to alleviate hardship, or otherwise to assist members as the trustees of such funds shall decide. Within the union, there are a number of such levy funds bearing the name SIPTU in their title. These are managed by the trustees of the relevant fund and for this reason are not included in the union's books and records. The national health and local authority levy fund did not receive any money sourced by way of a levy on members and was not a "levy fund" within the understanding of the union, as I outlined.

We first became aware of an issue relating to the SKILL programme when we were contacted by Health Service Executive audit personnel in September 2009 seeking a meeting. The HSE was engaged in an audit and had been dealing with the administrator of the fund for some time on this issue. At that time, the fund administrator was on sick leave following a serious accident in August 2009. He had been engaged in the audit process until then. Given the sense of urgency expressed by the HSE audit team, we immediately responded to the request.

The HSE was seeking SIPTU's assistance in completing its audit. At the meeting with the HSE, we were advised that grant payments had been paid into the national health and local authority levy fund. This was the first time we had been informed that such grants were paid to the fund. It was the HSE's assertion that the grants were meant for SIPTU. We advised that no such money had been paid to SIPTU under the SKILL programme. We presented copies of our annual audited accounts to Dr. Geraldine Smith who was leading the HSE audit when we first met. We subsequently learned that moneys from several public bodies had been paid by way of annual grants and reimbursements to the fund over a number of years.

The union's national trustees determined to inquire into the allegations surrounding the payments into the fund. Two members of the trustee body were requested to carry out a thorough investigation with the assistance of professional advisers. As members are aware, their report was published on 25 March 2011. Much of the information was compiled by way of examination of bank records, return pay cheques and interviews with the fund administrator. The report identified that the levy fund had been established in 1998 without approval or consent from the national officers or national executive council of the union.

The trustees report considered the extent of knowledge which existed within SIPTU as to the operation and organisation of the training, seminars and travel which took place. Apart from the fund administrator, those aware of the SKILL programme activities believed matters were arranged through the office of the project manager of the SKILL programme. This was an office within the HSE. We understood that all activities were approved and funded with the full knowledge of the Departments and agencies involved. This is what we were told by the fund administrator when we asked about the sources of the moneys to which he had access.

No grants were paid to SIPTU by the various State agencies or by way of the fund. However, a number of transactions were made over the years between the fund and branches and other units of the union to the value of €68,000 in total. These were understood as transactions between the levy fund and union. At no stage did any of the funding agencies directly contact SIPTU head office or pay SIPTU head office any grants. As members know, the vast majority of the transactions associated with the account were captured by way of the copy bank statements we obtained going back as far as 2002.

We thank the Comptroller and Auditor General and his staff for the professional manner in which they have compiled their report on this matter, the findings of which we accept. The Comptroller and Auditor General reports total State funding of the national health and local authority levy fund of €4.049 million and total lodgements to the fund of €4.448 million. The Comptroller and Auditor General's report also found that between 2002 and 2010, the fund expenditure totalled €3.854 million, while the net cost to taxpayers of the fund's operation was in the order of €3.15 million.

We know there was some concern expressed at this committee that our organisation was not co­operating fully with the Health Service Executive in its inquiries on this matter. This was never the case and we gave every assistance we could by way of providing all information that was within our control, as we have done with the Comptroller and Auditor General's investigation. It was SIPTU which proposed that the Comptroller and Auditor General investigate this matter. As there were numerous public bodies involved, we took the view that the statutory powers of the Comptroller and Auditor General would be far more effective in securing the data necessary to complete a comprehensive report. We assure the committee that we have co-operated fully with the Comptroller and Auditor General and have provided complete and open access to all data and records available to our organisation.

Concern was expressed at the meeting of the Committee of Public Accounts held on 15 December 2011 surrounding two alleged payments of €190,000. We wrote to the Health Service Executive following that meeting seeking all documentation relating to the alleged payments but secured no evidence that they had ever been paid. Arising from comment and speculation regarding these alleged payments, we referred this matter to the Garda fraud squad and met with it formally to outline our concerns.

The inquiries and report of the Comptroller and Auditor General confirm reference in correspondence to such payments being approved in 2001 and 2002. In fact, the payments were never made. This money has not gone missing and is not unaccounted for, as the Comptroller and Auditor General confirms on page 10 of his report It states:

While records in respect of issues of public money and of receipts into the Fund account are incomplete for the years 1998 to 2001, the inspection team found no evidence of public money issued to the Fund in that period having been misappropriated. All sums of public money identified as having been issued by public bodies for the Fund in the period 2002 to 2009 were lodged to the Fund bank account.

We can advise the committee that following the union's taking control of the fund and on foot of the trustees' report, we ensured that all public moneys remaining in the account were returned to the Exchequer. The committee will note that almost €1 million was returned overall by way of refunds to the Exchequer.

There was responsibility on the part of the funding agencies to have service level agreements and proper oversight arrangements in place regarding the disbursement of public funds. It is incomprehensible that these arrangements were not in place. There was also responsibility on the fund administrator to keep proper books of accounts.

No income and expenditure statements were compiled or requested by the funding agencies. Unquestionably, there also should have been greater controls in our organisation in respect of the setting up of such funds and their oversight.

We did not know the manner in which this account operated. We should have known. We have, as the committee will note from the Comptroller and Auditor General's report, changed our rules in this regard and also had an external review of all our financial procedures to try to ensure that nothing like this ever occurs again.

Unfortunately the nature of the operation of the fund, in conjunction with the practices of the funding agencies, resulted in Departments and agencies effectively funding activities without proper oversight and accountability for taxpayer's money. This was totally unacceptable and we note the Comptroller and Auditor General's recommendations in this regard.

There has been controversy surrounding the use of some of this fund in respect of travel, hospitality and the use of money for non-SKILLs associated expenditure. Our organisation has never condoned the inappropriate use of public money. We believe we must always strive to ensure the highest standards of governance and accountability on behalf of the taxpayer.

This has been a very difficult issue which has caused damage to our union and hurt to our members. It is an event in our history that conflicts with the enormous positive contribution which our members have made in the development of a modern economy where rights are respected and the dignity of work is paramount. It is unfortunate that the lack of proper controls and oversight regarding taxpayers money has tarnished such an excellent concept in respect of employee training and development.

Regrettably, a cloud has been cast over a very worthwhile programme, which has helped thousands of low skilled workers to up-skill and develop their talents and which has added real value to the provision of quality public services in the health and local authority sectors throughout the country.

We believe the Comptroller and Auditor General's report has helped to verify the facts pertaining to SIPTU in this matter and we remain available to assist the Comptroller and Auditor General and the Committee of Public Accounts in concluding its inquiries.