Oireachtas Joint and Select Committees
Thursday, 20 December 2012
Public Accounts Committee
2011 Annual Report of the Comptroller and Auditor General and Appropriation Accounts
Chapter 19 - Official Development Assistance
Vote 28 - Foreign Affairs and Trade
Vote 29 - International Co-operation
I remind members, witnesses and those in the Visitors' Gallery to turn off their mobile phones because the interference affects the sound quality of the transmission of the meeting. I advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed by the committee to cease giving evidence in respect of a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the House or an official by name or in such a way as to make him or her identifiable. Members are reminded of the provision within Standing Order 163 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policy or policies.
I welcome Mr. David Cooney, Secretary General of the Department of Foreign Affairs and Trade, and invite him to introduce his officials.
Mr. David Cooney:
I thank the Chairman. I am accompanied by Mr. Brendan Rogers, director general of the Development Co-operation Division and Irish Aid; Mr. Michael Gaffey, deputy director general, Development Co-operation Division; Mr. Barrie Robinson, assistant secretary, Corporate Services Division; Mr. Tim Mawe, deputy director, Corporate Services Division; Mr. Joe Nugent, director, Passport Services; Mr. William Carlos, director, Evaluation and Audit Section; and Mr. Frank Griffin, assistant principal.
I call on the Comptroller and Auditor General to introduce the chapters in his report. The full text of the chapters can be found in the annual report of the Comptroller and Auditor General or on the website of the Comptroller and Auditor General at audgen.gov.ie.
Mr. Seamus McCarthy:
The key areas of responsibility of the Department of Foreign Affairs and Trade are foreign policy advice and coordination, promotion of Ireland's economic interests abroad, management of the country's development aid programme and provision of passport and consular services for Irish citizens.
The activities and running costs of the Department are funded under two Votes. Gross expenditure under Vote 28 amounted to €209 million in 2011, the largest element of which was salary costs of 1,250 staff, which came to €92 million. Office premises expenses including costs associated with Ireland's network of embassies and missions abroad amounted to €22 million. The account shows that €48 million was paid in contributions to international organisations while €12 million was spent on support services for Irish immigrants. Vote 29 for international co-operation is administered by the Department's Irish Aid unit. Spending under Vote 29 accounted for 79% of the official development assistance provided by the State in 2011.
Chapter 19 is compiled each year to provide an overview of Ireland's official development assistance programme and its delivery. Having grown over several years to a peak of €921 million in 2008, expenditure on official development assistance declined in each of the past three years. The total programme spend was €657 million in 2011. As the committee is aware, the UN has a long-standing target for developed countries to contribute development aid equivalent to 0.7% of GNP each year. Ireland's programme expenditure reached a peak of 0.59% of GNP in 2008, which had fallen back to 0.52% in 2011. Development aid is channelled through a variety of partner organisations, including Government bodies, NGOs, civil society organisations and multilateral aid agencies. The delivery channel used in each target country depends on the type of assistance required and the conditions which exist there. Risks of fraud, corruption and misappropriation are significant factors to be taken into account in devising an aid delivery strategy. Robust systems are required to provide assurance to taxpayers that funds reach their intended destination, are used for their intended purposes and that projects have the desired impact. The chapter therefore examines the Department's systems for audit and evaluation of its spending.
The Department has put in place a specialist evaluation and audit unit which aims to provide assurance that funds are used for their intended purpose and that value for money is achieved. The primary focus of the unit's audit work is the assessment of the appropriateness and reliability of the accounting and financial management systems of the partner organisations through which aid is delivered. The work of the unit is overseen by the Department's audit committee. In early 2011, the unit adopted a new policy of carrying out formal assessments of public financial management systems in countries where aid is channelled through governmental systems. These assessments encompass all elements of systems including budgeting and planning, accounting, auditing, reporting and local parliamentary oversight. There is a particular emphasis on assessing the status, independence and capacity of national audit offices. The policy is to carry out two assessments during each five-year strategic plan for a programme country. The first assessment is carried out at the planning stage and concentrates on the risks associated with channelling funds through governmental systems. The second assessment is at the mid-point of the five-year term and focuses on any changes to the public management financial environment.
The Department has reported that audit coverage of approximately 90% of expenditure in programme countries has been achieved in recent years through a combination of activities carried out by the Department's internal auditors, audits commissioned by Irish Aid or partner organisations and reports from national audit offices in recipient countries. Qualified opinions were expressed in relation to 7% of the programme country expenditure in 2009 for which audits have been completed indicating that material concerns had been identified in the course of audit. For a further 38% of Irish Aid expenditure in programme countries, the implication of the audit reports received was unclear. This included scenarios in which either the report received expressed no clear opinion or the national audit office expressed a qualified opinion on one department or ministry but it was not possible to identify the precise amount of Irish Aid expenditure to which the opinion related. We recommended that the Department establish a central system to record all audit reports received and to record and track over time the proportion of expenditure in each programme country receiving qualified or adverse audit opinions. Clearer audit assurance must be sought where it has not been obtained in the past.
Irish Aid also provides funding on a multi-annual basis to support the strategic plans of five large Irish NGOs. The evaluation and audit unit audits the control structures and governance arrangements in these organisations on a cyclical basis and completed audits in 2011 of grants awarded to GOAL and Concern. At an overall level, the audits found that both organisations had complied with the requirements of the schemes and that expenditure had been properly accounted for, however the audits raised certain issues on corporate governance in GOAL. The accounting officer will be able to outline the extent to which these have been addressed.
The unit also carries out an extensive programme of evaluation of aid on a cyclical basis co-ordinated with its strategic planning and formal procedures to track and follow up on recommendations. Evaluations completed in 2011 of the country strategies for Zambia and Mozambique found that both were having a positive impact while highlighting a number of issues to be considered in the context of development of the next country strategy papers. Following the recent field trip, members of the committee have first-hand knowledge of the work being done in Mozambique, the impact being achieved and the control issues which arise and how they are dealt with. To facilitate meaningful evaluation across the entire programme of development aid, the chapter recommends that the Department should ensure that funding provided to partner organisations is linked to appropriate and measurable targets.
The committee is aware that since chapter 19 was completed, the Ugandan auditor general has reported on the misappropriation of €11.6 million of donor funding, including €4 million contributed by Irish Aid towards reconstruction in the north of Uganda. It was not only a serious crime against the Irish taxpayer but also against severely disadvantaged communities in northern Uganda who were expected to benefit from infrastructural developments in health, education, water, sanitation and roads. The accounting officer will be able to brief the committee on the outcome of the Department's investigations to date into that matter. I intend to review the circumstances surrounding the misappropriation during the audit of the 2012 appropriation account.
Mr. David Cooney:
I thank the committee for inviting me to assist in its consideration of the 2011 appropriation accounts of the Department of Foreign Affairs and Trade. I am joined by colleagues who have a particular knowledge of aspects of the Department's work which may be of assistance. I understand the committee has been supplied with general briefing material on the Department which gives a factual summary of its main areas of expenditure and receipt and I do not propose to rehearse that information in my brief opening remarks. I will instead address a number of issues I know are of particular concern to the committee. I thank the committee for taking time to travel to Mozambique to examine the Department's development programme there. I look forward to discussing with members their comments on conclusions. The programme in Mozambique is Irish Aid's largest priority country programme and is closely managed by results. It demonstrates how Ireland can make an effective contribution to the fight against extreme poverty and hunger, help to build national systems and move in our lifetimes towards a scenario in which bilateral relations are defined primarily by mutually beneficial economic and trading relationships.
The committee's visit to Mozambique took place against the backdrop of the misappropriation of €4 million of Irish Aid funds in Uganda, which was uncovered by that country's auditor general. It came as a significant shock to all involved in the Irish Aid programme and to the wider donor community. Ireland reacted swiftly and decisively and the donor community has followed our lead. On the Department's recommendation, the Tánaiste immediately suspended all funding through Government systems in Uganda. At our insistence, the government of Uganda has agreed to reimburse the misappropriated Irish funds and will shortly do so. On learning of the fraud, I dispatched a team of auditors from the Department's evaluation and audit unit which reports directly to me to investigate the matter in Uganda. The team's report has been made public and I am committed to ensuring we implement all of its recommendations. A key finding of the report was that the fraud was very sophisticated and elaborate and involved exceptionally high levels of collusion at senior level which could not reasonably or normally have been anticipated. However, the report highlighted a number of important areas in which Irish Aid's management control systems need to be strengthened.
It is clear that, in common with the other donors involved, our risk assessments, based in part on the very strong international assessments of Uganda's public financial management systems, result in a stronger focus on tracking results on the ground than on the movement of funds once they were received by the Bank of Uganda.
Following receipt of the report from the evaluation and audit unit I initiated a full review of all management systems across the bilateral programme to ensure that risks are being identified and managed appropriately. I directed the ambassadors, who are the sub-accounting officers for the country programmes, to carry out a full review of their management and risk assessment systems. I have already received their responses and I have asked the evaluation and audit unit to examine them and identify matters in need of attention. I am arranging to meet the ambassadors to review our systems and to underline the critical importance of managing risks effectively in all programmes supported by Irish public funds. This forms part of a further general strengthening of the Department's risk management arrangements, which I have appointed a chief risks officer to lead and direct. I am also seeking sanction for the recruitment of a professionally qualified chief financial officer to oversee financial controls across the entire Department, including the development programme.
I am ready to answer any questions the committee may have on this matter, on its visit to Mozambique or on the wider Irish Aid programme managed by the Department of Foreign Affairs and Trade. I am also happy to address any of the diverse range of policy, administrative, programme management and public service functions that the Department conducts through its headquarters staff and network of 73 diplomatic and consular missions abroad.
In the period covered by the 2011 report and more recently, the Department has continued to contribute actively to the drive to rebuild Ireland's international standing. The historic back-to-back visits of Queen Elizabeth II and President Obama were successfully organised in 2011. Each visit in its own way represented a major milestone in the consolidation and development of these key relationships and appreciably enhanced Ireland's overall image and profile in Britain and the United States. Ireland is concluding a successful year of chairmanship-in-office of the OSCE, which culminated in the recent ministerial council meeting in Dublin, the largest intergovernmental conference ever held in the State. External feedback on the organisation and management of the complex logistics and agenda surrounding the meeting has been very positive and Ireland's general performance in the chair will contribute valuably to the external perception of our country.
Ireland's recent election to the United Nations Human Rights Council for a three-year term, commencing next month, achieved in the teeth of very strong competition, was a further morale-boosting reminder of the standing Ireland has earned and continues to enjoy in the international community. We are also about to assume the Presidency of the Council of the European Union for the seventh time. My Department is committed to making its full contribution to a successful Presidency performance, delivered with maximum cost efficiency.
The Department continues to reduce its cost base and to make economies. Like all public service organisations we are absorbing substantial reductions in resources, both human and financial. However, despite a drop of 12% in our staffing complement I believe we have managed to maintain the range, quality and geographic reach of the various services we provide. We have achieved significant efficiency gains through ambitious internal organisational restructuring, consolidation of functions and streamlining of our business processes. Regrettably, at the end of 2011 it was found necessary to close three resident diplomatic missions, in East Timor, Iran and the Holy See. The committee may recall that the matter was discussed when I last appeared before this committee in April of this year. Overall, the annual administrative cost of the delivery of the Department's functions has been reduced by over 20% over the past four years. I thank the Chairman for the opportunity to make this short statement. I will do my best to assist him and his colleagues in their considerations.
I welcome Mr. Cooney and his officials here this morning. I will go straight into the interim report on Uganda and the €4 million that was misappropriated. I understand that the money will be in our account within the next couple of days, which is good news. I do understand that this affair has had a profound impact politically and otherwise in Uganda. It is fair to say that the auditor general there did his job. Civil society played its part in uncovering this and there has been a significant fallout, not just here and not just in Uganda but with the other donors. They followed our lead in the aftermath of the situation. The individuals responsible for implementing the controls bypassed key controls and there was massive collusion, not just in political circles but with the Bank of Uganda. On the donor side, controls were not applied, which made the fraud easier.
Section 4 of the report states that in cases of payment made to the Ugandan Government in 2010 and 2011, in some instances receipts were not on file. Irish Aid financial regulations require that a receipt be retained but are not adequately specific on the level of detail required. Ideally a receipt should detail any subsequent transfer of funds to specific accounts. The obvious question for this committee is how that happened. How is it that receipts were not on file? How is it that receipts did not detail subsequent transfers of funds? Has Irish Aid checked the other programme countries to see whether that was standard practice or whether it was isolated in Uganda since the situation there came to light?
Mr. David Cooney:
In general terms, this fraud has created an extraordinary storm in Uganda and has convulsed the political system there. I am sorry to say that this €4 million may have had the greatest impact on Uganda, not for the reasons we would have wished but because the exposure of this fraud perpetrated by the Ugandan system has forced the whole country to face up to the existence of corruption in high places there. It has also been extremely traumatic for the Irish Aid programme and for my Department and most particularly for the embassy in Uganda. The extent of collusion at the highest levels of the public service and the exposure of the fraud was unprecedented in our experience for an aid programme. We have been asking ourselves how this could happen. Obviously the evaluation and audit report has identified some weaknesses in our system. I believe it happened primarily because we were focused on the delivery end, where fraud is most likely to take place. When the money reaches the ground it is most vulnerable to misappropriation. The World Bank and the British Department for International Development, DFID, had made some quite detailed examinations of the Ugandan public financial management system and had expressed themselves satisfied with the procedures in the Bank of Uganda.
In common with the entire donor community, perhaps we were not as alert to the possibility of this type of fraud as we should have been and as we will be in future. In terms of what went wrong in Irish Aid, or more appropriately, in the roll-out of the programme in the embassy in Uganda, arrangements under the memorandum of understanding governing the programme which should have involved the money being tracked through the system were not implemented by our embassy or by the donors as a group. We were all caught out. This is something that should have been done but was not and needs to be done systematically.
When we paid the €4 million into the account in the Bank of Uganda it was not transferred from that account into the account it should have been and, frankly, this should have been tracked. There should be a way of tracking the money to ensure it ends up in the correct account. Once money is put into an account into which many other donors also lodge money there is no way of dyeing it green and tracking through the system as it has become part of the wider pool. However, we should have tracked it to its destination in the appropriate account. We did not do so and we must look very seriously at this. Management failures occurred in this regard.
When I wrote to all of the ambassadors I set out a series of questions I wanted them to answer, including whether we received receipts and whether money was being tracked. This will be an essential part of our follow up. The responses I have received are very reassuring, but we will not leave it there. The evaluation and audit unit will investigate this very thoroughly, after which we will have a follow-up meeting.
Mr. Cooney cannot yet answer the question with regard to other programme countries as the evaluation and audit unit is dealing with it. I asked about the specific fragment of the report which I read out with regard to no receipts being on file for payments to the Ugandan Government in 2010 and 2011.
The report also states receipts obtained were not adequately specific and did not have the level of detail required and that ideally receipts should detail any subsequent transfer of funds to specific accounts.
I will continue. As far as the report is concerned financial management as set out in the memorandum of understanding was not sufficiently followed up by the donors in terms of ensuring they had a clear and proper overview of funding and expenditure in the programme. However, they could not have had such overview because another fragment of the report stated that the peace, recovery and development plan, PRDP, is not a coherent programme as it comprises a number of separate projects brought together in a conceptual programme but not in an actual defined programme. Is it not an issue in itself that in some ways the structure of the PRDP prevented proper financial oversight? This is an issue with regard to being able to audit and evaluate a programme sufficiently.
Mr. Brendan Rogers:
With regard to the receipts, the problem was that a receipt was received for the first payment into the account, but the joint financing arrangement should have ensured we received a second receipt for the transfer from the holding account, which is the donor account, into the consolidated account, which is the treasury account.
Mr. Brendan Rogers:
The mistake occurred at this high level. I have been in the business for 20 years. This money was at the heart of the system in the central bank, which all our risk assessments would have stated was the safest place for money to be. The least safest place for it is in the districts. Deputy Deasy has travelled there and knows it is a very inhospitable climate. We are the only donor with offices on the ground to determine when the money is coming down so all of our focus was on this. This was a mistake and a problem, because we should have also been looking at the top and had a flow chart and a box ticking exercise to follow the money from the first account as it was transferred to the consolidated account and then taken. This was definitely a problem.
The PRDP is a major programme of €600 million but our element is in the districts. We were working with the Swedes, Norwegians and Danes in the districts with our money as part of the greater programme. There are 55 districts which are all fairly well budgeted. The money went into the system and we were looking at what came out in the 55 districts. We added up this money and ensured it was all delivered and that the roads and schools were built. The PRDP, which is the major programme for northern Uganda, is very fragmented according to the report with many other donors, including the United States, working on a project approach. With all of this fragmentation it is very difficult to have a full overview of the entire programme. This is a problem for the Ugandan Government and all donors. We focused on the districts, which Deputy Deasy visited, and this was a sub-part of the programme. Having said this, we were still in error when it came to tracking the money when it entered the system.
Fair enough. I must return to my question on the other programme countries. Is the answer that the evaluation and audit unit is examining the other programme countries to determine whether the same basic shortcomings were repeated elsewhere? Has it been determined whether this is the case or whether we do not have these problems? Which one is it?
Mr. David Cooney:
I have with me my file of responses from the missions and I must say, by and large, having read it myself I am satisfied. Where questions have arisen in my mind I have asked the evaluation and audit unit to take a thorough look before I meet the ambassadors so it is satisfied it has all of the answers. I have already held an inquiry on the situation in Ethiopia and we have tracked it back. Based on what I have received I am now satisfied this is the case. This should not have happened and I find it surprising that it did so. I do not want to see it happening again. This has been a wake-up call. If there is one thing worse than experiencing fraud, it is not dealing properly with that fraud and I am determined we will deal with this properly and ensure, as far as possible, it will never happen again. We did not expect this to happen so I cannot say nothing unexpected will happen in the future but the Deputy is absolutely correct and I cannot disagree with him.
From my perspective, having read the report and looked into this, those who perpetrated this knew the follow-up and requisite financial checking systems were not being employed by the donors and used this to their advantage. They saw an opportunity, which was partly created by the piecemeal nature of the PRDP as well as the fact that in some cases donors throughout the system, including Ireland, did not bother asking for receipts and no attempt was made to know when money was shifted from one bank account to another. Perhaps some good will come of this and it will be dealt with in Ireland and other donor countries.
While there was definitely collusion at the highest levels of government departments and at the Bank of Uganda, there was also a fundamental breakdown in basic financial management and accountability in our embassy and others. Having read the report, that is fair to say. Hopefully, some good will come out of this. I think it will.
I want to shift emphasis. The report refers to $700,000 recovered in kind from UNICEF in respect of losses incurred in a programme in Sierra Leone managed by that body. The programmed involved the provision of therapeutic food. This was reported in late September. Does Mr. Cooney have the details?
Mr. David Cooney:
I will ask Mr. Rogers to provide the detail as he was personally involved in pursuing the particular fraud. Deputy Deasy is correct that there was a misappropriation of therapeutic food. The food is Plumpy'nut, a peanut paste that is of nutritional value to undernourished people and is used widely across Africa. The fraud occurred in a programme administered by UNICEF, which we funded. We became aware through UNICEF's own reporting that $700,000 of the product had been misappropriated. I was informed of the fraud immediately by Mr. Rogers and the evaluation and audit unit and we reported it to the Comptroller and Auditor General. We pursued the matter rigorously. It was a clear failure by a UN organisation to properly administer a programme which we were funding. The end result was that through Mr. Rogers's personal determination and effort an equivalent amount of the product was returned to the programme we were funding. I will allow Mr. Rogers to speak about it in more detail given his involvement.
Before Mr. Rogers answers, I have a further question for him. In 2011, irregularities were discovered in the use of funds in four countries which had previously received grants from the Global Fund which addresses AIDS. The fund identified some €43 million which was not accounted for, of which to date €19 million has been recovered. How much of our money as invested in the global pool remains unaccounted for?
Mr. Brendan Rogers:
Plumpy'nut is a highly nutritious biscuit used in emergencies to bring children back from the brink of death. In a week, it can save a life. It is an important element of our emergency operations. We do not deliver it ourselves, but use NGOs and the UN system to distribute it. It was being delivered by UNICEF in Sierra Leone in this instance when its supply chain monitoring system identified a number of gaps. UNICEF knew a certain amount of the food was missing and we dispatched our evaluation and audit representatives who determined approximately $700,000 worth was missing from the system of distribution in remote areas. We took a very hard line. We do not tolerate fraud. UNICEF is a very good organisation which works very hard and we acknowledge that it works in difficult areas, but our policy is one of no tolerance. We worked carefully with UNICEF to identify the amount involved. I was in New York and met with senior UNICEF management to explain our no tolerance policy and the need to give back the food. The food was replaced in the warehousing system and we worked with UNICEF to ensure that monitoring systems were strengthened. On receipt of assurances, we continued the programme. To date, there has been no problem. It has been a useful case study in which a problem was identified and reacted to quickly. A no tolerance policy was applied, the food was replaced and we have ensured the systems are working.
The Global Fund is the world's largest development fund designed approximately ten years ago to address HIV and AIDS. Since its inception, it has spent approximately $22 billion. Approximately, two years ago the fund determined there were a number of gaps in its own monitoring systems. It was not only a question of money being taken through fraud, but also of money being unaccounted for or used in different projects. The inspector general provided a clear analysis of what happens and determined that approximately €43 million was not fully accounted for, of which €19 million has been returned, leaving a gap of approximately €20 million. Of the $22 billion which has been disbursed by the Global Fund, Ireland has provided approximately $140 million. The amount of our money that would be represented in the unaccounted for figure would be a few thousand euro. The Global Fund has been significantly strengthened over the last two years and we should note that it is the organisation most responsible for turning the tide on HIV/AIDS, TB and malaria over the last five years. It is the most successful fund ever established for that purpose. The tide is turning.
That is fair. Mr. Cooney mentioned Ethiopia and the qualified and unqualified audits in 2009. The figure of 23% qualified audit struck me. Of €27.9 million in Irish Aid funding audited in 2009, €6 million was the subject of qualified audits and an action plan resulted. Can Mr. Cooney set out the progress on foot of the action plan to date?
Mr. Brendan Rogers:
There are qualified audits across programme countries. We carry out an enormous number of audits ourselves and commission private companies to undertake further ones. The Comptroller and Auditor General carries out audits also. When we refer to a "qualified audit" it may indicate something as simple as an unreconciled travel and subsistence claim. The term "qualified audit" is used where the best standards have not been met. We are very unhappy with that and have a system in place in all programme countries to track those particular audits and to determine if there have been improvements or if thing have got worse. The general trajectory over the past five to ten years has been one of improvement, although that can vary from country to country, year to year. We are absolutely on top of the matter and work very closely with our audit and evaluation unit. The qualified audit statistics referred to are not only in Irish Aid funds, but include Irish Aid pooled funds. It is not a question only of Irish money, but of other donor funding. Where a national audit office indicates that there are a certain number of qualified audits in a ministry, we follow up on it.
Mr. William Carlos:
Some issues were highlighted in certain programmes in Ethiopia as a result of which the embassy meets with government and donor representatives monthly to go through the steps which have to be taken. The statistical detail can be provided to the Deputy. Significant steps have been taken. The key with these audits is to access the detail required at a particular time, however some programmes are established in the most remote areas in Ethiopia to provide a very important service.
In terms of audits, it is a matter of finding access to the detail of the information required at the time. Some programmes involve going to the most remote areas in Ethiopia and providing a very important service. When the audit team goes out there, sometimes its members cannot get access to the area because it is so inaccessible. Sometimes, they cannot get access to the people they need and that is where the qualification comes in. The follow-up is to make sure the systems are strengthened. The key element of qualification is a strengthening of the system because people are asking the right questions, following up and improving the systems.
Recommendation No. 11 in the Ugandan report, which Mr. Carlos and his unit put together, says that the evaluation and audit section should review its work plan and consider ways to further strengthen its focus on risk areas. Could or should Mr. Carlos have spotted what was going on in Uganda?
Mr. William Carlos:
With hindsight, possibly yes. What was identified in Uganda goes back to the area of risk. We concentrated a major amount of resources in ensuring the money moved through the system at the local level. In examining what happened in the central bank, we saw that as a low risk and the money was expected to go through. It is a question of tracking those funds. The report highlighted ways of strengthening the system to improve the way we are working. Audit is quite a blunt instrument in that it highlights key issues to be addressed. With regard to the receipts mentioned earlier, in the financial procedures manual more detail needs to be given on the level of detail required when receipts are received.
Mr. William Carlos:
In terms of looking at the audit of the programme, the documentation information is there in the 2010 programme. The issue arises in respect of the collusion and fraud of 2011. An audit of that programme took place at a later date. We undertake robust audits in all of our programme countries and we are examining what goes on in the programme countries. In Uganda, what we have seen is at extreme variance with what we see in other countries.
Mr. Michael Gaffey:
As the Secretary General says, this took us by surprise and traumatised the embassy and Uganda. Ireland is now seen as an anti-corruption champion in Uganda. Over the past ten years, we delivered €2 billion to our programme countries. Those figures surprised me. As far as I know, we have not had a major fraud in that time. It is an enormous amount of money. As the Secretary General said, we must look at the skills sets we have and our management systems to deliver funding at that level.
I am going off the topic here. An article in The Irish Times yesterday dealt with a survey on the pay of chief executives of charities. I noticed that some of the charities are funded by the Department of Foreign Affairs and Trade. They did not answer the questions in the survey detailing how much people are paid. If it is public money, it is a fair question and they should disclose the amount paid to their chief executives and higher paid officials. Does the Department monitor salaries of organisations funded by the public? If we fund charities and they are requested to provide figures on the pay of chief executives, they should provide those figures. The Department should make it very clear that it expects that to happen. The public will not tolerate that kind of obfuscation.
Mr. David Cooney:
Under the new and stringent framework in which we dispense funds, part of the information we require is a declaration of the number of those in a band over €70,000. We do not ask for the specific salary of an individual but we ask how many employees are paid over €70,000. We do not seek information on individuals but we require the information as part of the arrangement we have for dispensing money to NGOs. This case was different because it involved a newspaper. I saw the article to which the Deputy refers but the charities are obliged to provide us with that information.
I mentioned Mozambique. It might have some bearing on the office of Mr. Carlos. I referred to the skills sets that do not exist. Generally, we felt the financial management system is a decent system but is dependent on trained staff to deal with it. If there is one area lacking, it is in that. It does not just apply to the office but throughout the civil service in that country. We found a dearth of skilled staff dealing with those kind of systems. That area deserves attention and includes not just the basic auditing of the figures but the people dealing with the figures on the ground in those offices. It is something we came across on a number of levels.
Mr. David Cooney:
As regards the Administration, Deputy Deasy focused on the national audit office and had some discussions on this point. One fact that emerged is that the number of auditors available to the office dropped from 130 to 100 over the past year. Much work has been done with the national audit office and it is being taken in hand by the Germans and Scandinavians. Sweden, Norway and Denmark are all working with the office. We do not do that because we would be duplicating the work of others. Work has gone on there and between 2006 and 2010, there was a 51% increase in staff numbers. They recently increased the number of judges from three to six so that they can carry out more work. They are responding to the fall-off in numbers. They are introducing legislation in Parliament for performance-based promotions that will allow salary increases for those working in audit offices. In developing countries, one of the major problems is training people in the public service and then they go to work for the private sector.
Mr. David Cooney:
They also encourage staff to go for additional qualifications, which will be funded but requires staff to sign a declaration that they will stay. Work is underhand. I should have said "on hand" but, unfortunately, there is underhand work as we have already identified. This is work that is on hand. These are countries in development. We have an issue in our system and we need to strengthen our skills sets and financial management. There is no doubt the public service embargo, which is there for understandable reasons, has hit us in that we have shortcomings. Every Department has a framework of staff numbers and we have had to reduce staff numbers. Development co-operation and the rest of the Department are all part of the pool.
Unfortunately when managing the sort of money we are managing in the development programme, I am concerned we are not able to fill all the vacancies we need to fill. The problem is that we cannot deal with that by cannibalising the rest of the Department. Until now, everyone has taken some of the pain. Development co-operation, in my view, is better resourced than the rest of the Department. It must be, if it is managing this amount of money.
I spoke to the committee earlier to outline how I am seeking sanction to recruit a chief financial officer. Frankly, every spending Department should have a chief financial officer at assistant secretary level. I am the Accounting Officer but I have no formal training in accountancy or financial management. There should be assistance from a chief financial officer at assistant secretary level who is capable not just of ensuring that the bills are paid but of policing the operation of our financial systems across the Department, and who has the stature and seniority to challenge the other heads of divisions on their management. That is not the practice in the Civil Service but even a chief financial officer professionally qualified at principal officer equivalent level would be of great assistance to me.
Similarly, we have gaps in the development co-operation structure in Irish Aid where we need to get in properly qualified people. In some cases, however, we come up against the embargo while in other areas we come up against salary caps. The fraud in Uganda has forced us to face up to this issue and we must deal with it, even if it requires spending money from the aid budget to recruit the people we need to ensure the money we spend on development is properly administered. The embargo is there for reasons we all understand, and I do not challenge that, but in this situation we must use the money we are spending to make sure the money we spend on development is being properly spent.
I take the point that in ten years in programme countries, with €2 billion spent, €4 million went missing for a short period and we will get the money back in a day or two. I accept that. The report is also very good. It is sufficiently self critical of the systems we had and points to what we need to do. I have faith in how the Department will deal with this and the record of Irish Aid and the team involved with regard to the job that has been done in the last ten years. This will be dealt with, and the €4 million was dealt with very well. Systems will improve. The witnesses have pointed out the deficiencies in the Department that must be addressed.
Since Uganda, however, there has been a political reaction to the €4 million that went missing. It troubles me slightly that some individuals, out of a perverted sense of compassion for the less well-off, are issuing press releases denouncing cuts that target the most vulnerable here, such as domiciliary care allowance and respite care allowance, while at the same time making statements to the media that the Irish Aid budget should be cut by 75%. If anyone wants to witness human depravity at its worst - and I have - he should go to Africa and visit some of the projects conducted by Irish Aid before issuing any more press releases about ending the funds those people rely on to survive. Anyone who wants to get elected to the Dáil should not do it on the backs of the sick and the dying. We have seen in the last week one particular Senator who did both, issuing a press release to talk about the most vulnerable in this country, while at the same time talking about effectively ending the Irish Aid programme. People must be careful and not use this economic environment for such crass populism that will ultimately endanger people's lives. We saw in Mozambique, and I have seen this a number of times with Irish Aid, and with the Department, people doing their jobs, saving other people's lives and doing important work. We got a sense of that after going there, looking at the projects and meeting the people who do the job on the ground. We were impressed by Mr. Ruairí de Búrca and his operation, and those who work with him, throughout Mozambique.
I welcome the witnesses to the meeting. I am sure the Irish Presidency of the EU will be a busy time for them and I wish them all the best for that.
Deputy Deasy makes an interesting point. We all value the health service but we still bring the HSE in here and question it to the nth degree in the interests of improving the health service. That is the purpose behind this exchange. There is no question in the bulk of citizens' minds about the value of the work being done by Irish Aid projects. The question in the mind of every taxpayer, rightly or wrongly, after the Uganda episode, is how does he know the euro he is giving to overseas development projects is getting to the vulnerable people Deputy Deasy mentioned. Sadly, in Uganda, €4 million did not get to those it was meant to get to and did not help those it was meant to help. It is important to mention that.
I have read the interim report on the Ugandan situation. There are obviously issues with the Ugandan structures, as the report acknowledges, and there are obviously systemic problems, as Mr. Cooney and Mr. Rogers pointed out. That is also taken as a given. We cannot, however, escape the fact there are at least three references in this report to key failings by the embassy. I have read and re-read the report and two things stick out in mind. The sixth recommendation refers to within the Irish Aid system, which is acknowledgment the systems are in place but there was a failure at our end to comply with certain controls and that failure to comply lessened likelihood of earlier detection. The recommendation mentions a particular failure to ensure adequate financial data were set out, as per the memorandum of understanding. That is not a criticism of the structures or Uganda; it is a criticism of the Irish embassy.
Page 14 refers to skills and capacity within Irish Aid and to a potentially problematic HR situation, where the internal auditor was on maternity leave, there was not sufficient face-to-face hand-over, the replacement auditor was engaged on a part-time basis, and that person did not have a sufficiently detailed knowledge of the complexities of the programme. There was also the issue of receipts not being on file.
Those are three concrete examples of failure on behalf of our embassy. I do not use the word "failure" lightly and I am not looking for heads to roll for the sake of it but we must get to the bottom of this. It is particularly important on the basis of Mr. Carlos's remarks, from which I took some comfort, that what happened in Uganda was at extreme variance with normal processes in other places. If that is factored in, it leads me to believe that other embassies are following controls and obeying the Irish Aid structures. If that is the case should the staff in the Irish embassy in Uganda put their hands up and accept some responsibility for what happened?
Mr. David Cooney:
Absolutely. I will put my hand up and accept my share of responsibility for that. I accept the report. There was a failure by the embassy to track this money. That should have been done. I acknowledge the staff weaknesses that were pointed out. As I said earlier, one thing worse than having a fraud is not following up properly on it. The report from the evaluation and audit unit will be followed up. We have learned lessons from it, particularly as to how we prepare our staff. Our staff, when they go abroad to take up positions as head of mission, should be better prepared and trained in financial management. There needs to be a proper handover. As regards the auditor, it was a problem that the internal auditor was on maternity leave. Anyone who has worked in a business knows that maternity leave is a fact of life that one must deal with when it happens. We did bring in an interim auditor but that person did not have the same knowledge of the programme as the full-time auditor. There is not too much of a way around it, but there were issues on the staffing side that we must address. I do not dispute any of these reports. There were failings. In some cases it could have been individual failings. In other cases it could be the system failing in that people were not properly prepared.
We have sent out a very thorough letter and have received reports from all our ambassadors. We will be looking at this extremely thoroughly. We do not take this lightly. We have enormous pride in our programme. I know everybody involved in Irish Aid feels mugged by what has happened. We are determined that it will not happen again. If we contributed to this in any way, which we clearly have in certain small aspects, we are determined to ensure that it will not happen again.
As regards personal responsibility, my major concern about dealing with fraud is that we can deal with it properly and that people can deal with it openly. My greatest fear is that the natural human instinct, to cover up to protect the programme, would happen, which would be a disaster. I want to have a system in which people can own up to something wrong without thinking they will be sacked or whether the Secretary General will be fried by the Committee of Public Accounts. Unless there has been dishonesty or corruption in our system or a complete failure of responsibility, we must be able to face up to shortcomings and deal with them. I do not want people to be going about in fear if they discover a mistake or believing, if they discover they screwed up on something, that they must try to cover it up. I want them to know that these things can be dealt with in a mature and responsible way. The most important thing is to get on top of what happened and ensure it does not happen again.
There were shortcomings in the embassy in Uganda. They were identified by the evaluation and audit unit. My job is to ensure that those shortcoming are rectified and they do not exist elsewhere in the system. I am determined to do that.
Mr. Brendan Rogers:
I am familiar with Uganda as I lived and worked there. I visited the country many times. I was in Uganda immediately after the fraud was discovered. We work in Karamoja which is a very difficult inhospitable place and where, up a few years ago, it was not possible to walk around without an armed guard. The embassy staff, to their great credit, have put an enormous effort into working on the ground, travelling out there and setting up an office to ensure that all of the Irish taxpayers' euro are spent correctly. There was a gap at the very top because they believed the money was safe in the central bank of Uganda because the IMF and the World Bank told them so. The fiduciary risk assessment said the money was safe. There was certainly a gap, as the Secretary General stated, in terms of the skills sets that we bring to the game. Public financial management is an area that we must strengthen. We must strengthen the skills sets and the qualifications of the people we have at our disposal. That was quite clear to me when I went out there.
I appreciate the responses. Mr. Cooney's approach of getting to the bottom of the issue and raising the need for a chief financial officer is very reassuring. We are not going to fry Mr. Cooney but we must do our job of work.
I say this to be constructive. The people whom I meet detest, and what I personally detest is, the use of the phrase "systemic failure". Apparently "systemic failure" ruined this country. Individuals are involved. People make decisions. People are paid to manage. Structures are put in place and people are paid to oversee those structures.
The witnesses may not be able to answer this question today, and that is fine, but I want to know if Mr. Cooney is satisfied, based on the correspondence from ambassadors, that a similar situation is unlikely to happen in other countries in so far as he can be sure that it will not happen. If Mr. Cooney is sure and the embassies are following the same structures and systems as the embassy in Uganda was meant to follow, surely the logical conclusion is that at some point, somebody in our embassy did not comply with the systems that Irish Aid had put in place.
Mr. David Cooney:
The Deputy asked whether I am satisfied. I am in the process of satisfying myself. I have started a process. What I have seen initially is encouraging but I have asked the evaluation and audit unit to take a thorough look at this, to look at these reports and interrogate them to identify weaknesses.
In terms of what happened, if the system is okay and something does not work, the usual explanation is that somebody did not do their job. The problem is that I can never guarantee that somebody will do their job. I can guarantee that the systems are in place, but when humans are involved, humans make errors and I cannot guarantee that nobody will make an error. What I can do is ensure the systems are in place and that everybody knows what they are expected to do. I have had face-to-face meetings with the ambassador and the internal auditor in the embassy in Uganda, neither of whom I am blaming, but I have made it clear what should have happened and what needs to happen. I am not trying to finger somebody for doing this. I do not want to go that route of having people in fear that they will lose their jobs because they have done something. The most likely reaction to that climate of fear is that people will try to cover up. If we find somebody who continues to make errors and is not up to the job, we will get rid of them. I want to ensure the system works and that if something is not working, we can deal with it honestly and openly and put it right. That includes coming before this committee and being interrogated on it.
Mr. Brendan Rogers:
On the question of a receipt, getting a receipt would not have protected us because one of the other donors asked for a receipt and they were given a false receipt. That would have been a false sense of confidence.
The very same people who oversaw this programme had been supporting the auditor general. They had been doing a fantastic job in our embassy supporting the auditor general who identified this malfeasance. That is part of the programme as well. As the Secretary General states, working and living in Africa, which I have done for 11 years, is difficult. One puts oneself in harms way and opens oneself to disease. These are difficult, high risk and pressurised jobs. One can be traumatised by them. The people in Uganda work very hard, working all the hours that God gave them, but as the Secretary General said, if there are issues we need to identify, we will do that. We need to support them in terms of the skills sets available. That is quite clear to me.
I return to the Comptroller and Auditor General's 2009 report for programme countries, which audited the programmes in Uganda, Mozambique, Tanzania, Ethiopia, Zambia, Vietnam, Lesotho, Malawi and Timor-Leste. The number of unqualified audit opinions amounted to 55% of the total, in other words, 55% had a clean-----
My understanding is that the term "unqualified" implies a clean bill of health, while the term "qualified" means there is a question mark. One also has the interesting category of "other". We do not need to concern ourselves with the 55% of audit opinions that are unqualified. A further 7% are qualified and we will discuss those in a moment. The category of "other" is interesting and includes instances where the relevant national audit office expressed a qualified audit opinion in relation to at least one department or ministry but it was not possible to precisely quantify the amount of Irish Aid grant affected and instances where audit reports did not contain clear audit opinions. Ireland was pooling money with other countries and it appears no one can ascertain how much of this pooled money, which may have been misappropriated or may not have been tracked, was provided by us and how much was provided by someone else. I ask Mr. Rogers or Mr. Cooney to comment on this issue. The figure of 38% for the "other" category is high. When one adds the 7% in the "qualified" category, one finds that 45% of Irish aid has a question mark over it. How do we get to the bottom of this?
Mr. David Cooney:
I will say something about qualified reports. Ideally, one would not have a qualified report. However, in developing countries a qualified report is not necessarily a bad thing because it challenges the system. Given what we know, if we received audit reports that gave these systems a straight "A", we would be deeply sceptical about them because we know these are countries in development and have serious problems. We should not get too hung up on a qualified report in a developing country in the way one might be sceptical about such a report in a developed country. The programme countries are in a state of transition and have serious problems. One does not like to see qualified reports and we want to see their number reducing because we want the countries in question to improve their systems.
Deputy Harris is absolutely right on the category of "other". As I stated, this group refers to cases where money goes into a pool and is where we fell down in Uganda. We did not track that the money had gone into the pool. Normally, it goes into the pool and because we cannot dye it green, it is mixed with money from other donors and, on occasion, from the country's government.
As I stated, on the surface, one would certainly like the figure of 38% to be much lower and we are working to try to build capacity so that it will become lower. However, it would be naive and we would be fooling ourselves - dangerously so - if we were to believe we would not get any qualified audit reports from Africa. Mr. Carlos would like to say something.
Mr. William Carlos:
In this case, where we are providing money through the major funds, that is, government systems, this highlights that as we provides money across the government - we do not have any connections with some of the government departments - there are some audit issues that are being followed up. For this reason, one cannot provide a clear opinion on all of the government accounts.
The other issue is that when we provide money into the government systems, for example, to the health sector in Tanzania, the group of auditors will do its own audit work. The ministries through which we are predominately working invariably have clean audits. If there are issues, we are following them up with them. This figure is trying to highlight the challenges of bringing this information together. As the Secretary General noted regarding the audit opinion, it is flagging some issues that need to be followed up. That is the basis of the information that has been provided.
The Comptroller and Auditor General made a range of recommendations on foot of this figure. A diagram on page 257 of the report shows the status of recommendations from evaluations completed in 2011. While the Department accepted six of the recommendations, it did not accept one of them. Note B states:
To what does this statement refer?
One recommendation was not accepted by management. It is the view of the Evaluation and Audit Unit, in this case, that the position taken by management was reasonable.
Mr. William Carlos:
In the evaluation of the multi-annual programme, the consultants proposed bringing the non-governmental organisations and Irish Aid division together to discuss issues. As far as I can remember, it was felt at the time - I can provide further detail - that this was not the most appropriate action. The independent consultants have their view and a management response is provided to every evaluation report we receive. This indicates whether management accepts, partially accepts or does not accept the recommendations in the report. The table shows that all the reports we receive provide a detailed analysis of the management response. It also continuously tracks what happened to the management response. These are detailed questions that the Office of the Comptroller and Auditor General wants to track and follow up because the evaluation report provides useful value at the time. However, the most important element is what happens to the recommendations and we must track these.
In the context of the forthcoming Irish Presidency of the European Union, the Financial Times of 18 December 2012 reported that a member of the European Court of Auditors, Karel Pinxten, issued a warning on untracked overseas aid in the European Parliament. Mr. Rogers is probably familiar with the matter. The headline read "EU warned over untracked overseas aid" and the first sentence of the article was as follows: "More than €1.6 billion in EU overseas development aid doled out to poorer countries last year cannot be properly tracked, an auditor has warned, as he demanded changes in the way the bloc awards funds." In the context of appreciating the benefit of overseas development aid, it is interesting that Mr. Pinxten is cited as stating that the risk to taxpayers outweighed the benefits of the system and that it was time for a wake-up call to member states and the European Commission. What is Ireland's role, as a member state, in contributing to the €1.6 billion in EU overseas development aid that cannot be tracked according to the European Court of Auditors? This issue should be examined as part of Ireland's Presidency. A sum of €4 million of Irish funds has been misappropriated and €1.6 billion cannot be tracked at EU level. I ask Mr. Cooney to comment.
Mr. David Cooney:
I thank the Deputy for bringing this matter to my attention. My colleague has just passed me the relevant article. I would have to look a little more deeply into the matter as I do not know whether Mr. Pinxten was expressing a personal view or speaking on behalf of the European Court of Auditors. It is a sweeping statement to make.
We obviously contribute to the EU development co-operation budget, as we contribute to all other aspects of the EU budget. We will chair the Council of Development Ministers during the forthcoming Presidency. All I can say is that this is something we will follow up on and examine. I do not like to read this any more than Deputy Harris does and it is a matter we would want to look at.
Mr. Michael Gaffey:
Something in the region of €70 million of what counts as Irish overseas development aid is our contribution to or share of the European Union's development co-operation budget. We are fully engaged in the processes involving member states and the Commission and its external action service in how this money is spent and programmed. Furthermore, during our Presidency one of the big issues will be the budget for the coming six years under the multi-annual financial frameworks.
I gather this particular report - I have just printed it and I have not read it in full - refers in large part to the issue of budget support. This is a big issue discussed regularly in development co-operation. It is not so much budget support as general budget support which relates to channelling money directly into the treasury of a government to try to help make the greatest possible sustainable change in a country. There is a debate on the tracking of that money. As the Secretary General said, if a country puts money into the treasury of another, at a certain point when it is pooled it does not have a national dye or tag on it. Part of the debate in the European Union on the provision of general budget support refers to this. On the other hand it is universally acknowledged that we want to build institutions in a country and empower societies and countries to lead their own development and move towards a point where we can pull out of development assistance and have countries run their own development. The more we can work through Government systems, the better. If we are to achieve the millennium development goals then the more we can channel money through government systems, the better. A balance must be found in building up reliable, accountable government systems. The best way to do that is probably to build up reliable, accountable national institutions. However, there are some people who believe that the risk is too great and this is a constant challenge for us nationally. We only provide general budget support to two particular countries, Tanzania and Mozambique, but the European Union works through general budget support in a large number of countries. The constant challenge is to get the balance right between effectiveness and the accountability issue. That is what the report is about. It is an annual debate and discussion and one which will come up throughout Ireland's EU Presidency as well.
I wish to make two final points. Deputy Deasy touched on a point relating to the NGOs and payscales. As politicians representing the taxpayer's interests, we find it frustrating when we ask organisations, some of which are involved in overseas aid while others are involved in other areas, for their remuneration figures and they tell us it is a private matter and nothing to do with us. Mr. Cooney has shed some light on the situation and now asks for banding. Does the Department publish that information? Is there a role for the Department in assisting with transparency in this regard?
Mr. Michael Gaffey:
It is an important point. In the past some people in the sector took the view that the question of remuneration of chief executives and others was a matter for the board. However, we take the view - I gather the Dáil and this committee take the same view - that if public money is channelled in large amounts to non-governmental organisations, it is a matter of public interest. I believe this is generally accepted in most NGOs at this stage.
Last year, we reformulated the long-term development grant process to 18 large NGOs and allocated some €65 million per year. We set up a new focus on the results to be achieved but also on the capacities and administration abilities of the individual NGOs. One particular initiative involved the requirement in applying for such multi-annual funding to list the number, but not the names, of officials who are earning more than €70,000. From the applications received, the number of staff in the 18 NGOs, which have received funding this year and for the next four years, earning more than €70,000 per year is 47. We drew up memorandums of understanding with them on that money and we required that from now on, that is, from 2012 on, they should publish in their annual accounts these numbers by band of €10,000 above €70,000. That specific information, not only the number earning above €70,000 but the how many in each band above €70,000, will be available in the 2012 accounts, which will come out in the first part of 2013. I believe Irish Aid has played an important role in this regard in agreement with the NGOs in bringing out this level of transparency. That aside, when it comes to how they respond individually to requests from the media and so on, it is really a matter for them. Anyway, I believe that the environment has changed and that the Charities Act 2009 will change matters when the regulations are brought in. I understand this is being worked on in the Department of Justice and Equality.
That is good news.
Vote 28 relates to the Department. Note 5.2 is a reference to specialist tasks for which two retired civil servants were paid €142,968 in 2011. I am unclear about the nature of the specialist tasks.
Mr. David Cooney:
I imagine one of them was the head of the OSCE task force. He was working full-time on the preparation of the OSCE presidency and continued working through last year. He was an ambassador who had recently retired and brought his expertise to bear. The money paid to a person recruited in such a case on top of his pension would not have brought him above what he would have earned previously. He was not being paid as an assistant secretary on top of his pension. The amount paid meant he was earning the equivalent of what he would have been paid before he retired in that capacity. The other person was Pádraig Murphy, a special representative on Georgia for the OSCE Presidency.
The witnesses are all welcome here today. My view on what happened in Uganda and our overseas aid programme was fundamentally changed by going to Malawi during the summer. I wish to underscore heavily the comments Deputy Deasy ended with. I spent one week at the end of August with Trócaire. It was an interesting experience to go with an NGO as opposed to going as part of an official body such as Irish Aid or the Department of Foreign Affairs. I found it extraordinarily upsetting when I saw the conditions my fellow humans are in. I found it even more upsetting that the people I was with informed me that what I saw represented great progress from where they had been five and ten years previously.
I met several people, including our ambassador to Malawi, Liz Higgins. I also met Anne Conroy from Irish Aid and I spent a good deal of time with the civil servants from the Malawian Ministry of Agriculture and Food Security in particular. I was most impressed. I followed some of the work that Anne Conroy and some of her colleagues carried out. In many ways their work is embedded into the Malawian ministry. When she was introducing me to people, I got the impression that she was almost part of the Malawian Ministry of Agriculture and Food Security organisational tree. She did not suggest that she reported into a particular person but she said a certain person was someone she worked with closely. He was a Malawian civil servant; I believe he was the head of the Ministry of Agriculture and Food Security. I took two things from all of this. The first was the degree of embeddedness, which I had not expected to see when I went over and I found it rather impressive. The second point only made an appearance in our discussions when Mr. Rogers raised it. He suggested that we should be mindful that we are discussing the developing world where they have particular difficulties. The natural climate plays a large part but the remarkable misgovernance difficulties these countries have had for decades are a core contributory factor to the current difficulty.
It is also the reason they are in such desperate circumstances. We need to adopt a policy of appropriate realism about the situation in such countries. My comment is not directed specifically at Malawi. I only spent a week there but I noted that corruption, the use of taxpayers' money in ways we would regard as mind-boggling, is embedded in the governance systems and culture of these countries. We must put in place the strongest systems possible with the understanding that some of the activities at government level in some of these countries are fundamentally unacceptable to us and they contribute to the difficulties in the first place.
Deputy Deasy finished his contribution with a speech and I am beginning with one. What I regard as a good outcome of the Uganda situation is that the Ugandan comptroller and auditor general discovered it. I agree that it is not all that possible to be positive because the situation was appalling. However, the fact that it was uncovered by a Ugandan state official is very positive.
I am open to correction from the delegates on any of my comments. During my visit I saw the Irish Aid operation which is very small but very professional and hard-working. Irish Aid has a policy of including the local population and training them. Would this involvement inhibit the ability of Irish Aid to highlight the kind of difficulty it may encounter in these environments? If I were a local young person operating in one of these environments and I became aware of corrupt activities being perpetrated by the most powerful people in my own country, I would think carefully before putting up my hand. We have seen the difficulty encountered by whistleblowers in Ireland. It is an entirely different scenario in some other countries. I acknowledge that the delegates are the experts in this regard and I am open to correction. My question is about the strategy of localisation and whether this creates difficulties for calling out the kind of problems that may be there or are suspected.
Mr. David Cooney:
The Deputy has made a couple of points to which I will respond. On the general point about aid, I am delighted that Deputy Donohoe visited Malawi. I only wish we had the facility in the programme to bring every Irish citizen out to see the work being done in the field. The aid programme says a lot about the people of this country. I am not responsible for setting the level of the aid programme which is a Government decision. However, I acknowledge that we have kept it at the current level. There is much to feel bad about over the past few years and quite a few things we might feel ashamed about but when we look back, this level of aid will be one of the things in which we can take great pride. Notwithstanding our own problems, we still find the time and money to help people who are less well-off than ourselves. This is part of the Irish tradition. When the country was a lot poorer, people still found the capacity to support our missionaries around the world who were working with people less well-off than themselves. I just wish we were in a position to show the Irish people not only what we are doing, but also to show them the abject conditions in which many of our fellow human beings live and the impact of even a small amount of help given to them.
I was in Malawi earlier this year to visit our aid programme which I regard as having a number of very inspiring and positive elements. Deputy Donohoe mentioned political misgovernance. Malawi has had a recurring problem with misgovernance. When I visited earlier this year, the previous president, Bingu wa Mutharika, was still in power. He was a man who did a lot of good things when he first became president but, as they say, power corrupts and this was certainly the case with him. He became very authoritarian and he was at total odds with the international donor community. He died during the course of the year and his successor as President is Joyce Banda. This is a very positive development from our point of view. She has worked with us and she has visited Ireland. We are hopeful that Malawi is on a better trajectory now. Clearly, issues of governance exist in underdeveloped societies. We need to remember that they existed in Europe when Europe was at a similar stage of development. Much of our work is to support governance in an effort to improve it.
In our view, we are entirely right to use local people in our programmes. We do not simply give them the programme and then throw away the keys. Our people are on the ground observing at macro level the developments in the country and the issues of governance. At governmental level we do not need the locals to tell us when things are not good. Perhaps at the micro level, if someone on the programme is skimming off at distribution level, then we rely on the people working at that level to inform us. That is a risk not only for governments, but for NGOs. We have experience of such occurrences in NGO programmes. When one employs and trusts local people, it is unfortunate that, human nature being what it is, that trust is not always rewarded. One must rely on the people one is working with. I have no doubt that employing and empowering people and bringing income to the local level is the way to go, but we have to be vigilant. That is the reason we keep our own people on the ground. The greater the risk, the more determined we are to have our people on the ground. This is the case in Karamoja in Uganda. We are the only donor with people on the ground watching how the programme is being run, watching how the outputs are being managed. It is all part of the risk that goes with operating in these areas but we have to help people to grow. This is what had to happen in Europe. When we look back from our relative comfort, we must remember that European society saw a lot more corruption and mismanagement in the past and we are still not immune from it.
Mr. Brendan Rogers:
In 1990, I counted what I regarded as three democratic countries in Africa and there are now more than 35. A revolution is under way on the Continent. There is more economic growth and more children are attending school than ever before. Most of the information on corruption which is discussed at this committee and other committees comes from African themselves. The institutions of governance are slowly and surely maturing. However, it is a long journey. In my view, development co-operation means we need to have an exit strategy. We do not want to be discussing charity to developing countries in 25 years' time. We need to be able to end development aid in our lifetime. I think this is under way. As the Secretary General has said, the only way to do this is to empower populations, to ensure democracy, to protect human rights and to ensure those universal values are institutionalised across the Continent. That is beginning to happen. Although we hear all the bad news, there is an equal amount of good news. The Deputy has seen the good news. However, there is a long journey yet to travel. We must focus on building the institutions of governance. If we do that, I believe that in 20 or 25 years, Africa will be transformed.
It has enormous untapped resources. There are more tarmacked roads in Switzerland than in sub-Saharan Africa in its entirety. One can imagine what will happen during the next 40 to 50 years - there will be a real revolution about which I would be very positive. Ireland has played a role in that regard.
Absolutely. Many have written about the African renaissance. There was nothing that made it more clear what it meant to be Irish than standing on the side of a hill in Malawi in unbelievably difficult circumstances and seeing a well being built with Irish taxpayers' expertise and money and learning that the name of the local guy who was taking me around the area was Patrick. I never met so many people with the names Patrick and Francis. They attended Irish schools and were taught by Irish missionaries. It was extraordinary to hear their very different view of Ireland.
In that vein, in regard to the institutions, I wish to return to a matter to which Mr. Rogers briefly referred. It is the idea that if we had been able to get the receipts, we would have been able to ensure this would not have been happening. If a group of people are capable of tapping into and perpetrating a sophisticated fraud on any government institution, they are capable of producing a bunch of counterfiet receipts also. It is the wrong barometer or benchmark to have.
We do not have to go all the way to Africa to find expertise in producing dodgy receipts. If we had received a bunch of receipts and put them in a file, that would not have stopped what was happening.
Mr. David Cooney:
If we had a better tracking system, we might have discovered it earlier. The misappropriation of the €4 million in the way it happened has been a very painful and traumatic experience. As I said, for very wrong reasons, this could turn out to be the best €4 million we have ever spent in Uganda because what has happened is that the Ugandan system has discovered the fraud which it is pursuing. Public opinion and the media are up in arms about it. Uganda is at a crossroads and has to decide what kind of country it is going to be. If it allows corruption to become pervasive, its future will be very badly damaged. We are seeing public opinion rise on this matter and it is challenging the political system. The impact of the fraud in terms of governance in Uganda has been enormous because the perpetrators are being pursued and many of them are in prison. There are demands from the opposition based on public opinion that the matter be dealt with and the government is being challenged. Ugandans are doing this, not Europeans. We are saying we will not give them any more money, which is a huge challenge. Following our lead, the entire international community has frozen its support through the Ugandan Government. We set the benchmark and the international community has followed. They was surprised by our reaction, but having regard to the particular circumstances of this country, the idea that anyone would steal the money we were giving to help people who were more disadvantaged than us was deeply offensive to everyone in this country. The response in Uganda has been significant and one must hope-----
On that point and the issue on which Deputy Simon Harris has touched regarding how we can learn from this experience to make sure this does not happen in other countries, there has been an examination of recommendations on how our systems work. As Mr. Cooney said, we will only deal with this matter successfully if the systems of those who receive money are strengthened. We can strengthen our system as much as we want, but, ultimately, we depend on those who receive the money to do what they say they will do with it. Are there many lessons to be learned from what happened in the Ugandan system which we need to watch out for in the systems of the countries that receive money from us in terms of how they need to be strengthened, as opposed to what is happening on our side of the table?
Mr. David Cooney:
In tracking money through the system, we cannot die it green, but we can track it to the point where it enters the pool, if it is goes through a government supported multi-donor programme. My colleagues might like to speak a little about the work we do in terms of public service reform and financial management which is a significant element of our programme across many countries.
Mr. Michael Gaffney:
In the coming months we will have a job of work to do. The Secretary General has written to all of the ambassadors and we have received the first report indicating that the Secretary General is going to have a regional meeting in Africa in February at which we will discuss this issue for a number of days. During the next 12 months we will carry out a systematic examination of all our systems to learn about what has occurred in Uganda and how we can incorporate that learning. Some of the systems are technical, but others are political. It is about having our radar open to know what is happening on the ground. When I look back on what happened in Uganda during the past 12 months I can see there was a trajectory in regard to corruption. Uganda has a very open press which can be slanderous at times. Everything gets into it. If one looks back at what happened in the past year, perhaps we should have detected that the trajectory was moving in the wrong direction. The lesson to be learned is that we need people on the ground - local people and our own - with our radar open to determine what is happening politically. We also need technical people to be alert to what is happening in the public financial management system. We introduced a new system two years ago, whereby every two years we look at each country and make our own recommendations and determinations on the strength of its systems. Up until then we were using the World Bank public financial assessment systems, but we have introduced our own system to complement them. I hope that in the next year or so we will subject all these systems to a test and there will not be leaks. I hope also that within 12 months Uganda will be in a much better position in expanding the programme.
One of the points I have noted in the report is that the office of the comptroller and auditor general in Uganda had been experiencing difficulties in accessing information within the office of the Prime Minister prior to discovering this issue and that information had been in the public domain. I assume that is one of the points to which the witnesses were referring.
Mr. Brendan Rogers:
The Deputy has pointed out that one of the very good things about this issue is that the Ugandans found it themselves. He may also ask how did we not find it, as there is a €4 million hole in the national accounts. We were going to find it, but the auditor general found it much quicker than we would have.
Mr. Brendan Rogers:
There are two points. We were on the ground expecting to see a certain amount of money come into a number of districts. The first point is that from looking at the figures, that money did not come into the districts and the second is that national accounts are produced in October. In this context, the Ugandan year runs from July to July. By October the national accounts are produced. When one looks at them, one will see that €4 million is missing. We would have found out that the money had not come through, but there is a time lag between putting in the money and getting it to Karamoja. There is a hole in the national accounts of €12 million, not €4 million. We were going to find it, but there was a time lag-----
Mr. Brendan Rogers:
Yes. What the Deputy has said about the receipts is absolutely true. One can receive false receipts which one of the donors received. That is why the lesson to be learned is that not only should one receive receipts but one should also receive bank invoices. That was the key point. We now know that was the problem.
Mr. William Carlos:
In terms of learning and talking about institutions, the national audit office in Uganda has learned a lot. It is connected through an organisation of supreme audit institutions in Africa which are all talking to each other about this issue also. There is broader learning in national audit offices about the key element of making sure the full system is safe. It is an improvement that what is happening in Uganda is also happening in other countries. As a result of the work we are doing, other donors are doing work in national audit offices across Africa.
Perhaps my earlier statement on the environment in which people were operating was overly bleak. Despite the huge progress being made, it is important to recognise that these are extremely difficult places in which to work, with real challenges from a governance and administrative point of view. Ireland is operating within that environment and from what I have seen, I am absolutely satisfied that we are doing as good a job as is possible in managing this issue. I thank the Secretary General, his staff and everyone else for their attendance. On completion of the investigation, I emphasise the importance of publishing the report in the manner in which the Department has to date. In their capacity as public representatives, members must deal with the question asked as to why, at a time when funding for respite care grants is being cut, money is being spent in other countries. Having seen it, I now know the answer, but not everyone will be able to see it. The way members can answer such questions is for the Department to continue to be as transparent about the work when it is completed. That will provide a good answer to that legitimate question.
If members bear with me, I have a few questions. I do not know whether this is a speech because we have heard speeches, confessions and questions and it is Christmas time. We are moving at a reasonable speed in dealing with the issues involved.
To touch on what was stated about frying Secretaries General or Accounting Officers when they attend the committee, as chief fryer and someone with a reputation, I welcome the approach the Secretary General has taken in putting out the full facts, both in respect of what happened in Uganda and the first report and on the need within the Department for a qualified accountant or chief financial officer. In general, were Accounting Officers to approach the work in this way, to deal with problems and not continually blame the system but to improve it, we might have an even better exchange and system by the end of the process. Moreover, people within the system might not be fearful, as some are, of coming forward and explaining just where things or people do not work. Ultimately, everyone around this table or anywhere else makes mistakes. Be it in politics or business, humanity can be messy at times and one must deal with this. Consequently, I welcome the frankness of the Secretary General's exchange.
In addition, I wish to take up Deputy Deasy's remarks on recent press comments. I agree with him and note that a trip to Africa certainly can change one's mind about matters. It was my first time to visit Africa in this way and to look at the situation in Mozambique as we did, with some other members of the committee. Briefly, to separate what we saw with regard to health and agricultural issues, the development of the economy, the clearing of landmines, the provision of the most basic water pump and how that was celebrated within a local community it had to be seen to be believed. It has an impact and leaves a mark or a person with a clearer understanding of what is going on in such countries. I will cite Ruairí de Burca, the ambassador to Mozambique, who noted that if it was perfect, we would not be in the country. That comment stuck in my mind as we went through the different projects and saw their impact. One can relate them to what happens in Ireland and how we stand. For instance, we met a woman who was obliged to walk 27 km to look after her pregnancy and the birth of her child. Similarly, there were schoolchildren who were obliged to walk 7 km to get water and the installation of a pump meant they could now go to school. These are things we take for granted and one does not actually understand their full impact until one meets such people face to face on the ground.
I will repeat a point I made to the staff of the embassy there - the volunteers we met were simply astonishing. I refer to local people who volunteer to attend in the homes of people with AIDS and so on and to provide home care. While I acknowledge this also takes place here, given the other challenges in people's lives there, it is astonishing to think they can park these challenges and take up a different set of challenges. Moreover, by delivering and helping with the investment we are making in their country, they add real human value to what we are achieving. I was also struck by the professionalism of the embassy staff, their approach to audits and desire to achieve the best with the money they were getting. I do not question any of this and I am sure I speak on behalf of all the delegation who travelled there when I express our thanks to the ambassador, Mr. de Burca, and his staff for the businesslike agenda they put together for us. Members of the committee question the use of taxpayers' money and I was conscious of the use of taxpayers' money to enable us to travel there. I consider it to have been money well spent because we were scrutinising the spending of €37 million of taxpayers' money in the context of Ireland's aid to that country. As members have been asked how much it cost and where they stayed, I have asked the clerk to the committee to put on our website precisely how much it cost, where we stayed and what we did while in the country. The public has the right to know this information and it should be our first task to do this as a committee.
While commending all of this, there is an issue in respect of accountability. It has nothing to do with the package delivered on the ground but pertains to the capacity of people within 128 districts in Mozambique and the capacity of those in government in the equivalent of the Office of the Comptroller and Auditor General to do the work. Frankly, this capacity is not present in Mozambique and I can only speak from our experience in the country. On one side, one has young children signing for the pencils they will use to do their homework to account for them, while on the other, the capacity is not present, in human terms, to provide for the necessary accountability for overall expenditure within these districts. Moreover, such a capacity is certainly not present within the court of auditors in that country, the president of which we met, and something must be done in this regard. I cannot and will not stand over the movement of €37 million from Ireland to Mozambique in the context of the level of accountability for it at that most senior level. The president of the court of auditors states it audits 41% of the level of expenditure in the country and presented his accounts to parliament on 30 November, yet when I asked the question with a "Yes" or "No" answer as to whether one could account for the money Ireland gave to Mozambique, it remained unanswered. As Deputy Paschal Donohoe has noted, in such countries one cannot account for everything, which is the nature of the beast with which one is dealing. However, regardless of whether the president would not or could not answer the question, it remained unanswered. This is not satisfactory either from a public accounts point of view at our end or for the people who work for the Department at the other end because they are doing their best. The least one should expect from a government getting most of its revenue through foreign aid is that it be able to state that in Ireland's case, to the best of its knowledge, most of the money was spent and that capability levels within its governance structures were being improved. That was the key issue for me and something must be done about it.
What are we going to do about it? This question must be answered because arising from this hearing and following the committee's visit there will come a report that will be laid before the Dáil and the committee will be obliged to make recommendations. I want to be able to make a recommendation, as I am sure other members do, that will complement the work being done by the Department. While it has a list of achievements, this issue must be sorted out.
What is Mr. Cooney doing about the issue of giving strength on the ground and influencing the equivalent of the Comptroller and Auditor General's office to at least respond directly to a country that is giving €37 million in a way that will give us confidence to continue the aid programme? That has to be done at senior level. There is absolutely no question in my mind about that.
I have another question for Mr. Cooney. In Mozambique - I referred to this as the happiness table - out of total expenditure audited for 2009, 17% was qualified and 26% was counted as "other". I understand Mr. Cooney's point that we cannot get a 100% bill of health, although we can strive towards it, and we did have one in Vietnam. Surely there are signs for the departmental auditors to pick up and say: "Hang on. If there is a query there, the lads back home and those fellows on the Committee of Public Accounts will certainly raise concerns over that, so let's improve our methodology of accounting or audit". If this had been the case, we would have obtained incremental improvements from 2009. There were indicators that things were not all good in Mozambique and Uganda. Yet we did not seem to react as quickly as I would have expected, given the level of funding and its importance for such countries. I am not pointing at any one individual. However, can Mr. Cooney give me a sense of why the signs were not recognised, including the issue of capability in the districts and the auditor general's office?
Mr. David Cooney:
Before I address the Chairman's questions, I thank him for his kind remarks about the committee's trip to Mozambique. I am glad we were able to facilitate him on a productive trip.
As regards the questions, first of all, I welcome these challenges, because we have come here to be challenged about the programme. The Chairman's concerns about capacity are well founded and we have those concerns too. As regards the Chairman's meeting with the national audit office - the Administrative Tribunal - the way in which the president of the tribunal responded to the Chairman's inquiry was unfortunate. He basically did not respond to it. I mentioned earlier the work that is being done to improve capacity there and the fact that Irish Aid has not been in the lead, so I will not go through it again. It is being done by the Germans and Scandinavians. In all honesty, the president would not be able to say that he specifically audited a line of Irish Aid funding. He should of course be able to say that he audited the government budget as a whole, including, therefore, the money that Irish Aid put into that budget. It is certainly regrettable that his answer was not as solid as it should have been.
As regards what we will do about those weaknesses, the Chairman has put down a challenge that we will have to pick up. I will certainly respond to the Chairman in writing, but my colleagues will probably want to come in also. When does the Chairman expect to have his report?
Mr. David Cooney:
As regards not picking up on the weaknesses identified in the audit reports, I would like to think that we do. However, if there are particular instances that we are not aware of, Mr. Carlos may like to address them. I will let Mr. Gaffey respond on the generic issue and then Mr. Carlos can come in on the particular issue of audits.
Mr. Michael Gaffey:
If it is okay, Chairman, I shall deal briefly with the question of the Administrative Tribunal. I know the committee was dissatisfied with the response it received from the president of the tribunal. As the Secretary General said, if we were crafting his answer in the circumstances, we could have thought of a more satisfactory reply to give to a visiting public accounts committee. While I do not wish to make excuses, there are a number of issues concerning formality and translation. In addition, he had just sent his report to parliament and perhaps felt slightly precluded from talking about it in detail. Second, as the Secretary General has said, the president presided over the audit of a percentage of the overall government budget and clearly was not ready to discuss the details of Ireland's contribution, which was an element of that budget.
Setting that aside and taking account of what the Secretary General has said about the work we are doing with the Mozambique system on the capacity issue, concerns have been raised by the committee on that specific office. It could be useful if we were to ask our ambassador to make some recommendations on what specific assistance Ireland can provide through its programme that would take account of some of those concerns. If we could get a report back on that we would be able to satisfy, or at least inform, the committee of some action that will be taken building on that experience.
Pending that response, I wish to say something, which I mean in a constructive way. I do not accept for one minute, as I said to Mr. Gaffey before, that the president of the Administrative Tribunal could not comment on the report as it was being presented to parliament around 30 November. This is a question of giving €37 million, and more at times, to a country. It is a substantial amount of that country's revenue. He should have acknowledged that he was speaking to this committee that is trying to get answers, yet he gave no answer. It was not because he was waiting to give the accounts to parliament. Neither was it a translation issue; he has perfect English. I came away from that meeting absolutely furious because of the fact that he was not clear and concise about his answer. Up to then, we had received clear and concise answers from everybody, including individuals who were not directly employed by the embassy. They were local, qualified people who were giving their own interpretation of how things could be done. In fact, one lady who was very well qualified and assisted in the audit process said we were asking things of Mozambique that we do not even do ourselves at home in the context of auditing. There was a fairly robust exchange about all of this stuff. They have an accountancy system out there that would be well used across Departments in Ireland. I am thinking particularly of the HSE. That is a fact - it is a very good system.
In responding, Mr. Cooney should bear all of that in mind. In spite of the good work that is being done on the ground, the recommendations on this will have to be direct because we must account for that money.
Mr. William Carlos:
On the broader issue of audit, while Irish Aid is not directly supporting the national audit office in Mozambique, it provides a high level of support at the provincial and local levels, where we feel it is extremely important. A lot of work has been done in Inhambane, which the delegation visited, and also in Niassa, where the offices are being supported at a local level.
As regards the audit issue, when the audit reports come out they are examined by the internal auditor and the programme team at the country level. They detail the exact implications and if there are qualified opinions they detail them as to what the exact issue is. A detailed action plan is written out, including actions taken by the team.
This information is gathered in a quarterly report that is sent off to the audit office in Ireland and there is analysis done in terms of the action that is taken.
All audit opinions that are expressed within the national audit, and, indeed, from the other audits that we undertake, are followed up very actively by the team at the country level. These audit opinions are also tracked when the audit team goes to the country and examines what is happening to follow-up. Indeed, the Comptroller and Auditor General's office follows up on what actions are being taken.
The table maps out a benchmark of where the opinion is at at this time. We categorise, because the audit opinion can vary. We detail what priority actions need to be taken and follow that then with the subsequent action plan that will address it. If there are serious issues, then the funding of a programme is stopped until such time as these issues are resolved.
My next question relates to a meeting we had with the IMF. We are receiving money from the IMF and the IMF is in Mozambique dealing with the structuring of government, etc., and it was an unusual type of meeting. At that meeting, the representative from the IMF stated that we should have signed some confidentiality agreement with the IMF and arising from that type of agreement, I took it that we would then receive a great deal of information on the country which, perhaps, we did not have already. Has the Secretary General received clarification on that comment the IMF representative made?
Mr. David Cooney:
We have. We have signed an agreement with the IMF to cover not only Mozambique, but all our priority countries. I have to say, frankly, we were a bit dumbstruck to hear this because we were not aware of these reports. Maybe, if we had from IMF headquarters they existed. We did not know about them. It was a little embarrassing for us.
Annexe A, the overview of Ireland's spend, speaks of €657 million or 0.5% of GNP in a table. On the side of the €414 million bilateral funding, that block of money goes to programme countries, civil society, emergency humanitarian, etc. Is the Secretary General satisfied, apart from the earlier discussion but in the case of the other blocks of funding, that there is a sufficient audit trail and good practice in place governing each and every sum in each of those allocations?
Mr. David Cooney:
We audit extremely thoroughly. Obviously, in relation to the programme countries, we ourselves are auditing. We have a constant ongoing auditing. In the programme countries, we have internal audits, we have our own evaluation and audit, we have the audit institutions of the countries concerned and we have companies that we would bring in to audit independently. Obviously, where we are giving to international institutions or NGOs, we will be looking at their audit and we will be then auditing them and the money that we give them. I am comfortable. I do not like to use the word "comfortable"; I would never be comfortable. I am satisfied that, in terms of our audit cover, it is about as comprehensive as it could be.
Mr. David Cooney:
I rely on my evaluation and audit team which is a very well-qualified team. They are very well-qualified in development work but they cover the whole Department. They report directly to me.
I have an open-door policy, to start with, with the head of the unit, but we meet at least once a month. We meet regularly, once a month, but if he has a concern, he, as he frequently does, comes in to me just to keep me up to date.
I meet the unit three times a year as a unit. They give me a paper report every six months on the work that they are doing. I sign off on their work programme, both on the audit and evaluation side.
As far as is possible, and I have to rely on the advice of others, I am as satisfied as I can be that we are auditing properly.
Mr. David Cooney:
On the multilateral side, it is done differently. Obviously, you give money to the UN agencies. We would be relying primarily on their own audit of their expenditure. Once we give them money, it is a bit like the money we give in budget support or programme support. It goes into a pool, it is not dyed green. We cannot trace it. We are relying on them then.
Mr. Seamus McCarthy:
As the Secretary General has explained, on multilateral aid one relies on the audit arrangements in place for the multilateral agencies. On bilateral aid, I suppose the work that we have been doing over a number of years has been examining in greater detail each year the work that is carried out by the evaluation and audit unit because that is where the assurance comes from for the Irish taxpayer that the moneys are being applied properly.
Lastly, we spoke on the last occasion about the use of embassies, the use of offices for Enterprise Ireland and the use of offices for the IDA Ireland, and combining their usage and reducing rent and staff costs. Is that an ongoing exercise? Mr. Cooney was looking at that at the time.
Mr. David Cooney:
In terms of sharing accommodation, we have rolled that out to the maximum possible. We have an Ireland house concept where it is feasible. We have 17 Ireland house arrangements. In some places it is not feasible, either because they are not there or because the administrative capital is not the business capital.
In terms of moving it to a next stage where we get agencies and the Department to, maybe, double-up in a kind of consulate-type arrangement, we have not yet got there. It is something I would be very keen to look at, for instance, whether we could do it in a place like Rio de Janeiro. That would be a good example. Mumbai also is somewhere where we maybe could have one office doing the two jobs. From the point of view of my Department, I would be more than ready to look at that.
Mr. Cooney will write to us on the other issues raised, including the issue about which we spoke to Mr. Gaffey.
That brings us to the end of the meeting. Is it agreed to dispose of Chapter 19, Votes 28 and 29? Agreed.
I thank the witnesses for attending. I wish them all a happy Christmas. I thank our staff for their work during the year and the Comptroller and Auditor General's office and members and hope they have an enjoyable Christmas and new year. At this point, I also extend those wishes to the other Accounting Officers and Secretaries General.
I hope we did not fry them too much over the year. We will refill the gas cylinders for next year.
Mr. David Cooney:
Before the Chairman concludes the meeting, I reciprocate by wishing him and his colleagues a very happy Christmas. I thank the Comptroller and Auditor General for the support he has provided. We hope this will not be the last occasion for the committee to visit us and examine the work we do because I genuinely believe it is in our best interest to be challenged.