Mary Lou McDonald (Dublin Central, Sinn Fein) | Oireachtas source

Perhaps you will give me a few minutes to brief the committee. I have already spoken to the Comptroller and Auditor General in respect of information that has been given to me from a former employee of the Central Bank. This employee was tasked with carrying out a review of the code of practice for the governance of State bodies. The Central Bank had been found not to be in compliance with those measures previously. The Comptroller and Auditor General had correspondence with it in that regard.

This individual joined the Central Bank in July 2014 to cover what was a temporary promotion but which subsequently transformed into a permanent promotion within the internal audit unit. Between August and September 2014 this person carried out the field work in respect of the audit task in question and in October 2014 produced a draft report, of which I have a copy. In the course of November there were discussions on the draft report and it is the strong view of the whistleblower that they were encouraged or instructed to omit, delete and amend certain findings within the draft. The individual was so concerned that they made a protected disclosure on 17 November 2014 to Professor Patrick Honohan, the then Governor of the Central Bank. The whistleblower had no further involvement in respect of completing this audit report. He was tasked with other duties.

In December 2014, Deloitte was invited to carry out an assessment of what had happened. I also have a copy of that assessment. Deloitte acknowledges that the whistleblower had resisted amending, deleting and omitting elements of the findings, however Deloitte found that, in its view, the actions of management in respect of the report may have been appropriate and in keeping. I am trying to mimic the language it uses, because its language in the report is somewhat conditional. On 21 December, the whistleblower was informed of the decision of Deloitte and on 23 December they were informed that their contract was coming to an end. The person concerned has a live unfair dismissal action within the system, so we must respect that procedure. Finally, on 29 January, the final audit report was produced, and I have it with me. It does not bear the name of the whistleblower anywhere on it, even though they had been involved throughout the process.

The reason I raise this, and the reason I approached the Comptroller and Auditor General, is that three very important issues arise. The first is the behaviour within the audit division of the Central Bank and the practice of asking, encouraging or attempting to coerce people - who is to say? - into removing, altering or amending findings in an audit report. The whistleblower concerned consulted with their professional body to establish, to the best of their ability, what their professional responsibilities were. I have seen that correspondence also.

An issue arises in this regard.

The second issue is the treatment of the whistleblower and the question that arises in my mind is was the whistleblower punished for speaking out, and for not going with the flow? That is an important question.

Finally, in the longer term the issue for this committee relates to the finalised internal audit report which the Central Bank issued on 29 January 2015 and which was distributed to the then Governor, Patrick Honohan, the deputy governors, the chair of the audit committee and the chair of the risk committee. It does not make for very good reading. It shows that the Central Bank, as at 29 January 2015, is not compliant with the code of practice for the governance of State bodies. As I cast my eye down the document I see the results as follows: in terms of composition of board and code of ethics, it is partially compliant and on remuneration or pay it is partially compliant. We know there was a recent controversy around retention payments, or bonuses or whatever they are called, within the Central Bank. In terms of risk management accountability internal control, it is partially compliant; on procurement it is partially compliant; on travel it is compliant - the only such case on the list; in terms of disposal of State assets and access to assets by third parties, it is non-compliant; and on tax compliance it is partially compliant.

That is a very troubling account of the level of compliance of the Central Bank and in saying this it is not to adopt a fetish around the precision of audits or to argue over technicalities. The reason I believe this report is troubling is that a lack of regulation, oversight, sloppiness and groupthink were all ingredients which led us to a catastrophic situation, not so much for the banks but for citizens, taxpayers and so on. We can all in this committee room recall that time. I have this document because it came in the package of documentation given to me by the whistleblower as a protected disclosure. I emphasise that I have not been given anything that carries commercial sensitivity or that relates to another institution supervised or regulated by the Central Bank.

The question is what we are to do about this. I raised this matter yesterday with the Comptroller and Auditor General. My view is that there is a need for some serious questions to be answered in respect of practices within the audit division and in respect of the culture and the atmosphere within it. That it would be considered, in any way, shape or form, good practice to lean on somebody to take findings out of a draft report smacks of the worst of the bad practice of the old days. There are questions around the whistleblower, not including the unfair dismissal issue, which is separate. Was the whistleblower punished? Is that what happens within the Central Bank? I would like to know.

Finally, and perhaps most important, we need answers as to why, at 29 January 2015, there is a litany of non-compliance on the part of the Central Bank. We have a right to expect best practice from the Central Bank and I do not think it is an outlandish thing to look for. This is an internal document as audits, by their nature, tend to be but good practice and compliance within the Central Bank are not a private matter. They are a matter of the utmost public concern and we need to find a mechanism through which we can investigate it. I suggest the committee seek a copy of the internal report of 29 January and seek an opportunity to question the Central Bank on these matters. There are obvious issues for the Minister for Finance, Deputy Noonan, and I do not know if he has had sight of this document. If he has, I would like to know his response to it and what he proposes to do about it. If he has not seen it, I would like to know why. I am conscious that I have documentation which other committee members do not have so I will seek advice as to whether I can share the information with members of the committee.