Oireachtas Joint and Select Committees
Wednesday, 18 December 2019
Joint Oireachtas Committee on Transport, Tourism and Sport
Governance and Funding of Football Association of Ireland: Discussion
I am joined by the Minister of State, Deputy Griffin, who will also give an opening statement. I am also joined by two officials: Mr. Ken Spratt, who is an assistant secretary in the Department of Transport, Tourism and Sport, and Mr. Peter Hogan, who is a principal officer in the sports division of the Department. I would like to respond to what the Chairman said about my opening statement being provided late by apologising for the fact that it was not possible to share a copy of the statement with the committee earlier than this morning. I was receiving responses to queries from UEFA, the Attorney General and Sport Ireland yesterday afternoon. Therefore, this statement was not finalised until last night. In fact, one or two changes were later this morning after the script was provided to the committee.
It is deeply disappointing to be before this committee once more to discuss the need for major reform of the FAI. It was on St. Patrick's Day that we first read in The Sunday Timesabout a most irregular financial transaction, namely, the 2017 loan of €100,000 by the former chief executive. This was prompted by a financial crisis in the FAI. The association was looking at a situation in which it could not settle its creditors. The national governing body for football in Ireland, which is one of the largest sporting bodies in the State, found itself without funds to pay for its day-to-day operations. In such circumstances, the board of Sport Ireland had no choice but to suspend funding to the FAI for this breach of funding conditions. The Minister of State, Deputy Griffin, and I confirmed that no funding from the Department’s sports capital programme would be provided until the corporate governance and financial control issues had been resolved to our satisfaction. I regret that this position remains unchanged today, notwithstanding the good efforts of Sport Ireland, the Institute of Public Administration and the professional firms that have been advising the FAI throughout this process.
The initial story in The Sunday Timeswas followed by a distressing drip feed of stories in the national media outlining years of poor corporate governance, poor financial management and a complete lack of proper oversight or key controls. This culminated in a disastrous appearance of representatives of the FAI before this committee in April. The former chief executive appeared before the committee but chose not to respond to the important questions tabled by members. The members of the FAI board who attended that meeting did nothing to restore confidence. It was clear after the meeting that there was a need for a robust independent review of all financial matters and of the governance structure of the FAI. Like the members of the committee, I am dismayed that the FAI has decided not to appear here today. I made it clear some months ago that there was a need for a total clear-out of the FAI board as part of a complete break from the past. In respect of the appointment of an interim chief executive, I stated explicitly that it was not in the FAI's interests to appoint anyone associated with the old regime. I was rebuffed in both cases, as was the FAI's right, firstly by the appointment of Mr. Noel Mooney as the interim chief executive and then by the decision of the President of the FAI, Mr. Donal Conway, and Mr. John Earley to stand for re-election to the board in July. I understand that both of them have finally decided to step down, and that Mr. Earley has already resigned.
The governance review group carried out a serious review of the weaknesses in the FAI's governance which have led directly to this crisis. The group made many recommendations, all of which were accepted by the FAI. As the committee will be aware, one of the most important recommendations involved the appointment of an independent chair and three other independent directors. As we have seen, recommendation is one thing and implementation is apparently completely different. It is a source of great and ongoing frustration that, five months later, these independent directors have incredibly not yet been appointed. I have not received a satisfactory explanation of the reason for the non-completion of this process. This should have been one of the first things the FAI did to start the process of restoring trust in the association. Instead, as we approach the end of the year, we find ourselves still waiting for these vital appointments. I have been advised that the appointments will take place in the very near future. I reiterate that filling the posts of the independent chair and the independent directors must be and is the first priority for the FAI. Thereafter, it should move without delay to launch a robust and competitive process to recruit a new independent chief executive.
The final report of the KOSI audit was received by Sport Ireland at the end of last month. I am restricted in what I can say about the KOSI report, which is with An Garda Síochána and the Office of the Director of Corporate Enforcement, ODCE. Transparency is always crucial when it comes to tackling difficulties like those of the FAI. On foot of requests from this committee for the report in full, or even a redacted version, I have taken legal advice from my Department's legal adviser and the Attorney General. They have insisted that it would be unlawful for me to furnish the committee with a copy of the report. I have also consulted An Garda Síochána, which has advised me that the matters outlined in the KOSI report are central to its investigations and those of the ODCE. The Garda has further advised me that making the report public at this time could have serious implications for any criminal proceedings subsequently brought by the Director of Public Prosecutions.
While I would very much like to share the KOSI report, and my instinct is to do so, it is clear from the advice I have been given by the Garda that even a heavily redacted copy could undermine its work. Consequently, I am not in a position to share the report with the committee today. I hope I will be able to furnish it at some point in the future when the investigations that are under way have been concluded. I am somewhat relieved to confirm to the committee that the KOSI auditors found that the State funding given to the FAI was expended for the purposes for which it was provided. This was one of the key questions we wanted the auditors to answer. The committee was clear in its desire that the audit would be forensic in nature. I am pleased to assure members that the KOSI audit team pursued a forensic approach in its assessment of the FAI's compliance with the terms and conditions for Sport Ireland grant funding.
The second key question for KOSI was an assessment of whether the association could demonstrate its fitness to handle public funds. The committee will be aware that after the board of Sport Ireland considered the KOSI audit on 27 November last, it decided against restoring funding to the FAI.
While I have been advised that it would be unlawful to share the full details of the KOSI auditors’ findings, I can confirm that their opinion is that the FAI is not fit to handle public funds. They acknowledge that some steps have been taken to address shortcomings, but there is a steep mountain to climb before we can reinstate funding to the FAI.
In the interim, we have been looking at all options to continue our support for those who really matter, namely, the clubs, players and coaches at the heart of Irish grassroots soccer. We have developed a scheme through Sport Ireland to support the players on the women’s national team. Sport Ireland has engaged BDO Ireland to deliver funding and other support to the players, with the assurance that no public funds will be disbursed directly or indirectly to the FAI. This arrangement will enable us to continue to support the players as they seek to clinch qualification for the women’s EURO 2020, while assuring taxpayers that funding will be safeguarded. I am pleased to be able to reveal to the committee that Sport Ireland has put together a similar scheme to deliver support for the youth field sports programme which has been the primary vehicle for public funding for the development of soccer. This funding will ensure continued support for 60 development officers and the programmes they deliver throughout the country. This scheme will begin next month, and if necessary will deliver funding of €2.3 million to the development officers throughout 2020. Notwithstanding the suspension of Sport Ireland funding, there has been no break in these programmes and there will be no break. Mr. Treacy will be able to provide the committee with more detail about this funding scheme. Not one euro of this funding will go to the FAI. It will not receive a single cent, directly or indirectly, until we are fully satisfied that all weaknesses in governance and financial control have been fully addressed. The funding will be channelled through a payroll processing company which will make payments directly to the development officers themselves. That company will also ensure the payment of deducted taxes, PRSI and expenses as appropriate. Development officers play a vital role in supporting clubs throughout the country, and the last thing we want to do is disrupt their important work. Grassroots football must not suffer because of the mistakes of those at the top of the greasy pole.
As members of the committee will be aware, the Minister of State, Deputy Griffin, and I met with members of the FAI board on Monday evening. The delegation was led by the vice president and executive lead, Mr. Paul Cooke, along with the FAI's financial advisers from Grant Thornton. It was a sobering experience. As I have stated, the FAI delegation accepted the need for a full changeover of the board, and for the urgent appointment of an independent chair, directors, and chief executive without undue delay. The FAI delegation presented the stark reality of the association’s financial crisis and outlined their proposed business plan to overcome these very considerable challenges. They came seeking a bailout. Deputy Griffin and I made it clear to the FAI that we cannot and will not provide it with taxpayers’ money. The KOSI report makes it clear that the association is not in a fit state to receive public funds and we must respect that. However, we did tell the delegation that we would meet with UEFA to discuss the FAI’s challenges. Officials in my Department are in contact with UEFA with a view to arranging a meeting as early as possible, which we expect to be held in early January.
Before concluding, Deputy Griffin and I pay tribute to the forgotten stakeholders - the FAI staff who are facing an uncertain future. The staff at the FAI have endured pay freezes and more over the past ten years, and have been shocked to learn about the previously undisclosed pay agreements with the former chief executive. They are not the ones who caused this problem and they deserve recognition, not victimhood, for their service to Irish football. Deputy Griffin and I will be meeting with SIPTU and the employees’ representatives later this evening to hear their concerns. I assure them that we will continue to engage with them over the challenging days to come. I will now hand over to my colleague, the Minister of State with responsibility for tourism and sport, Deputy Brendan Griffin.