Oireachtas Joint and Select Committees
Thursday, 13 March 2014
Public Accounts Committee
Business of Committee
Are the minutes of the meeting of 6 March 2014 agreed? Agreed.
We have revised the decision of last week’s meeting on two items, namely, the documentation relating to the HSE and Rehab and the records relating to the whistleblower. The committee will hold on to the box provided to it by the whistleblower until such time as our work on it is completed.
We agreed this morning to issue a request to Rehab for it to submit documentation directly to the committee.
No. 1, correspondence, dated 5 March 2014, from SOLAS regarding follow-up information requested at the meeting on 27 February 2014 is to be noted and published, as is correspondence, dated 11 March 2014, from the Rehab Group regarding further information requested at our meeting of 27 February 2014. No. 3B6 is correspondence from Tom Casey Solicitors, dated 11 March 2014, regarding a statement from John Kelly. The committee reviewed this correspondence earlier. The statement contains several serious allegations against named individuals who have or had associations with the Rehab Group.
The committee has taken legal advice on the statement and has decided to forward a copy of the correspondence to the Garda Síochána, pursuant to its obligations under the Criminal Justice Act 2011 and other enactments. The allegations contained in the statement fall outside the committee’s remit and could potentially involve criminal wrongdoing. In that regard, the committee has agreed to refer the matter to the appropriate authorities, in this case An Garda Síochána. The document is no longer a document of the committee and therefore, if published, does not have privilege.
We have a letter, dated 11 March 2014, from Rehab which is the reply to the committee on outstanding issues from our meeting of 27 February 2014. It will be published. It falls short in answering our queries of what we expected from Rehab.
A number of issues arise from this correspondence and have not been dealt with. We have no details on how much was paid to Mr. Flannery for his consultancy work or the source of the money. That raises the question whether it was part of the €700,000 referred to at the meeting which came from the charitable lotteries fund. One of the major issues on the Rehab Group is the lack of transparency regarding how public moneys are accounted for, therefore as part of the next hearing we will extend an invitation to Mr. Flannery and to the director of finance for the Rehab Group. We are doing this to give the group and the director of finance an opportunity to walk us through the various accounts so we can follow the public money and the charitable donations that come to Rehab. This is a key issue.
We will also need to know more about Mr. Flannery's consultancy work in the context of lobbying the Government and the charitable lotteries fund. Much information has come into the public domain in the past week and we need to clarify this in terms of public accountability. We are anxious to hear direct evidence from Mr. Flannery. The salaries being paid to senior executives are out of line with the charities sector and based on information the HSE gave in the context of the Central Remedial Clinic, CRC, they appear to be above public service norms. The HSE is doing a piece of work on returns from section 39 agencies and will be able to comment on this aspect of our work. The information supplied from the Towers Watson report does not provide a basis for making decisions on salaries. I am sure that whether or not this is the full context of the Towers Watson report, we will need to hear about this from the remuneration committee, who will be invited to the next hearing.
We need to know how much is charged back to the HSE and SOLAS for executive salaries. We need to know how the profitability of Rehab Enterprise is contingent on a subsidy from the Department of Social Protection and whether other states have made similar subsidies. If these are factors, they clearly point to the fact that Rehab is very much a public sector, not a private commercial, operation. We need that clarified. We need details from the remuneration committee of the bonuses paid. Up to €14,200 was paid to senior executives. We also need to know the bonuses paid to Ms Kerins. We have not been provided with Mr. Flannery's pension arrangements and whether an abatement rule applies in respect of his consultancy work as is the case in the public sector.
We intend to schedule our next meeting with Rehab for Thursday, 10 April. We will issue an invitation to Rehab to ensure the chairman of the board, Ms Kerins, the remuneration committee, Mr. Flannery and the director of finance attend. This morning the committee agreed to schedule that meeting and invite the witnesses, as recorded. Is that agreed? Agreed.
The response is a smokescreen. It does not give us what we sought and it is deliberately obscure. It makes life harder for us and is typical of the characteristics of the replies we receive that we get nothing that we want, particularly in the case of the Towers Watson situation. This was the promised report on salaries. Instead we got a kind of PowerPoint summary. Yesterday we wrote back to Rehab saying we want the full report. What is the response to that?
That is typically unsatisfactory. It is more of the smokescreen. As everybody on the committee knows, we got a very bland summary which gives us no idea of the basis on which people were being paid, what they were being paid and the pattern of pay. If we get the full report we should get full details of what happened. There is correspondence which specifically shows that Towers Watson allowed for the release of this report only if it was released in full and therefore Rehab is in breach of its agreement with Towers Watson by giving us an abridged version of that. If we get the Towers Watson report I suspect we will get the information we seek. Again, it is part of the smokescreen. It is being deliberately withheld and is not being given to us despite its promises. We are getting no more on the bonuses and the chief executive's salary. It is shocking that people who were getting €150,000 or more during a recession were getting bonuses. We are not being told specifically who is getting what. We should have got that. What we got is totally unsatisfactory and that message should go out to Rehab, that we do not want them to come here again, not give us the full information and just stall for five or six hours.
I agree with Deputy Ross on the Towers Watson report. The correspondence specifically mentioned that its consent to the sharing of the report was contingent on the disclosure of a complete copy of the report. Rehab compares its salaries to industry averages, yet refers to reference and desired Rehab pay policy and philosophy. That is a little subjective and very vague. It is incredible that 12 people receive a total of €1.7 million in salaries. They gained bonuses between €6,000 and €14,000 in 2012. It is a stark and incredible figure for the ordinary person looking in. We need clarity on how this arose. The documentation refers to a management charge of €4.5 million from Rehab Care paid to Rehab Group. We need to know the breakdown of that. The correspondence from SOLAS states that 64% of the senior management salaries are funded by Rehab funds. That is two thirds of senior management salaries coming from State funding. There are major implications there. We need to get replies back from Rehab and Mr. Flannery as quickly as possible. When do we expect to hold a hearing on the matter? Have we set a date?
I suggest that in the normal course of inviting witnesses to the Committee of Public Accounts we deal with Ms Kerins and the group of people we mentioned. However, because of what is happening we should also ensure letters go directly to all the individuals concerned because we cannot rely on the information being passed on to them. We do not even know if Mr. Flannery was notified of the last meeting. To avoid all that for the future we will issue the invitation to Ms Kerins and then to the individuals concerned.
We agreed the date of the meeting this morning and he will get the invitation. We relied on the usual committee procedure for issuing these invitations and we made it specifically clear to Ms Kerins, by telephone to her office, that it was the wish of the committee that Mr. Flannery, the remuneration committee and the chairman accompany her on the last occasion.
That was completely ignored. In the interests of absolutely clarity the same invitation will issue to Ms Kerins and the Rehab Group and we will also issue an invitation to the individuals concerned so there is no ambiguity.
The response we received from Rehab is incomplete and does not deal with many of the points. The level of public funds being spent is €83 million. RehabCare and the National Learning Network are its two main companies which function in Ireland and they receive almost 95% of their funding from the State. The public is entitled to know the precise details from Rehab and all interested parties.
With regard to the correspondence we received on Rehab I am pleased we will invite it back on 12 April. We are dealing with the issue of pensions, but I will not personalise it as it applies across the board in Rehab. A letter received by the committee states that under the Data Protection Acts 1998 to 2003 without the consent of the individuals referred to pension details cannot be disclosed to the committee or any other body. The HSE and State organisations are putting more than €83 million into an organisation, but the HSE states in writing today it is not in a position to disclose a detailed breakdown of the cost of pensions for any individual unless the individual agrees to it under the Data Protection Acts. I am highlighting this as an issue for the Committee of Public Accounts. Even though the committee brings before it people in public session, and the Comptroller and Auditor General has done a full report, an organisation can receive tens of millions of euro from the taxpayer and the HSE can send a letter quoting the Data Protection Act as the reason it cannot give details of pensions without the consent of the individual. We must ask ourselves as the Committee of Public Accounts whether we can continue to allow this situation. A large proportion of taxpayer funds going into any organisation goes on pensions, and we are being told this information will not be disclosed to us, or to the Department providing the money, because of data protection issues. We need to address this. I would like us to have a mechanism in place before 12 April whereby the committee can obtain information on pensions, and I am not personalising this as every organisation we deal with has former employees. This is a new obstacle being put in front of the committee to prevent it from finding out on behalf of the taxpayer the details of where taxpayers' money goes.
For clarification, the meeting is on 10 April. It is an issue which is a cause of concern and we can deal with it in the context of the recommendations we might make. We will operate under these guidelines and legislation at our next hearing and this will not change.
This has not been thrown at us before and it is becoming a practice to quote data protection. It has been quoted at meetings and now it is being quoted in written correspondence. I am concerned it will be used as a mechanism to stop us finding out information on behalf of taxpayers.
I agree with everything said so far on this. With regard to missing information and the submission we received from Rehab on the coffin venture with Complete Eco Solutions, this week the committee received anonymous correspondence on an invoice from Complete Eco Solutions. The numbers simply do not tally. In her letter Ms Kerins stated there was a one-off purchase in 2010 of two containers of coffins and 252 coffins were purchased. We have an invoice, No. 4016, which one must presume is legitimate, made out to Mr. Michael Horgan, Rehab Enterprises Limited which mentions four 40 ft containers with 132 coffins in each container which amounts to 528 coffins. Even the very basic information with which Ms Kerins provided us on the coffin venture does not seem to be accurate based on the invoice information we received.
There is an invoice for 528 coffins and Rehab was asked to pay one third upfront. What happened to the rest of the coffins? Ms Kerins is trying to state Rehab only bought two containers as a one off but there is more than double this on the invoice. If we are corresponding with Rehab we might send it this invoice and it might provide an explanation.
I am quite astonished at the scant information we received. We have been waiting nigh on two weeks for this information. It is not necessarily informed by the fact Rehab officials could not locate the information; it is more informed by them finding the best way to present it to minimise the damage done to the organisation.
I wish to move onto the consultancy work Mr. Flannery did for the organisation. I stated here two weeks ago, and have repeated it since, that any remuneration for company directors associated with Rehab is expressly prohibited by a provision under the organisation's memorandum and articles of understanding. According to media reports in recent days, Mr. Flannery was paid for this work through a UK subsidiary or associated organisation of Rehab. It is important for completeness, and to assist in our discussion with Mr. Flannery if he accedes to our request to meet us on 10 April, to receive information about the company in the UK, how it is structured, who are the directors and it is memorandum and articles of understanding.
We will ask for this. Before we move on to the next item I wish to add my voice and agree with Deputy Ross from the beginning, that the information we asked for was relative to our investigation into the spending of public moneys. I am taken aback by the fact Rehab would not deliver this information in as full and comprehensive a form as possible and allow us get on with our work. It is doing untold damage itself to the sector it represents by not doing this. I encourage it, Mr. Flannery and anybody else who comes before us to come with full information, give a complete statement and answer the questions directly. We did not have a good exchange of information on the last occasion and there was a certain reluctance to answer questions. Some questions were simply not answered.
If we are to complete our analysis of this we need to send a clear message to Rehab and others who come before us that it is far better to co-operate with the committee, deal with the issues which are raised and allow us continue our work. The decisions made this morning in private session, and dealt with again in public session, are decisions made with the agreement of all members of the committee. There was no dissenting voice to the invitations to be issued or to how this was to be approached. It is with the full support of the Committee of Public Accounts we undertake this work. Ministers and Members of both Houses should take note of this before making public comments.
With regard to Mr. Flannery, it is not personal.
We have a job to do and ask him for his full co-operation.
We will now deal with correspondence from individuals. No. 3B.1 is correspondence received from Mr. William Treacy in regard to issues to do with Horse Racing Ireland and the Turf Club. The correspondence is to be noted.
No. 3B.2 is correspondence, dated 2 March 2014, from Mr. Ham Goulding, The correspondence is to be noted and published. Mr. Goulding requests that a copy of the forthcoming report by the HSE interim administrator be forwarded to the former CRC board members prior to its release. That is a matter in the first instance for the director general of the HSE who will receive the report. We will ensure all witnesses will receive adequate notice of our meeting. In that regard, all witnesses will have a full opportunity to read the report in advance of our meeting. We also asked at a previous meeting that Mr. Goulding receive a transcript of the last meeting. It has been sent to him.
We wrote to Mr. Goulding because we were seeking the documentation which he believed would be of assistance to the committee and to which he had referred on a radio programme a number of months ago. The Chairman will recall that when the then board of the CRC and the HSE came before us, there were a number of missing pieces of correspondence, in particular the minutes of the remuneration committee meetings. Mr. Goulding was a member of the remuneration committee and the man who had presented the "goodbye" package for Mr. Kiely to the board. We have still not received the minutes. I understand he is saying he must consult and take account of the confidentiality agreements, but he gave a very clear commitment on the national airwaves that he would be sending the documentation to the Committee of Public Accounts. It has been dragging on a little. We would be very grateful if we could receive the documentation as quickly as possible.
Mr. Creegan informed the clerk and me that he would have the report finished by the end of March; he believed it would not go beyond that date. He said he would then hand the report to Mr. O'Brien in the HSE and that we would receive it thereafter. They know how urgent it is and of our interest in it. I think we will receive it without delay.
By way of a general observation - the Chairman referred to this - the Committee of Public Accounts is dealing with the charity sector. It is extremely important that the general public has confidence in the sector. The staff working in charities are doing fantastic work. It is important that the organisations coming before us deliver the information we have sought in order that no damage is done to the fantastic work charities up and down the country are doing.
The Secretary General of the Department of Justice and Equality will appear before the committee today. That Department is responsible for the charity sector. I have received numerous telephone calls from charities telling me that they respect the work of the committee and encouraging it to complete that work, but it is the charitable organisations which are holding up the process. I agree that the sooner we get to the end of it, the better. We will be asking the HSE and the organisations involved to put their minds to it and complete the task. For that reason, Rehab should acknowledge what has happened and is happening, understand the damage that has been done and co-operate fully with the committee.
No. 3B.3 is correspondence, dated 21 February 2014, received from Mr. John Temple regarding Cluid Housing at College Manor, Dundalk. The correspondence is to be noted and a copy forwarded to the Department for a response.
No. 3B.4 is correspondence received from an anonymous source regarding Rehab. The correspondence is to be noted. We dealt with the matter when dealing with the issues of invoices and coffins.
No. 3B.5 is correspondence from Mr. Frank Flannery regarding correspondence from the committee. The correspondence is to be noted and published. We have also dealt with this matter.
No. 3B.6 is correspondence received from Tom Casey Solicitors. We have taken a decision to forward the correspondence to the Garda Síochána.
No. 3C is correspondence relevant to today's meeting. No. 3C.1 is correspondence received on 6 March from the Department of Justice and Equality on the briefing paper. The correspondence is to be noted and published. No.3C.2 is correspondence received on 11 March from the Department of Justice and Equality on the opening statements. The correspondence is to be noted and published.
No. 4 is reports, statements and accounts received since our meeting on 6 March. There are a number of bodies listed, including County Mayo VEC, Laois VEC, Leitrim VEC, the Drug Treatment Centre Board, Leopardstown Hospital Board, Bord na gCon, the Health and Safety Authority, Beaumont Hospital Board and the National Haemophilia Council. The accounts are to be noted, with the exception of No. 4.7, those relating to Bord na gCon, as we must invite its representatives to discuss its 2012 accounts. There is also a report due from the Comptroller and Auditor General.
We are requesting a note from the Department of Education and Skills on expenditure at County Wexford VEC. There are serious questions in respect of this body and the way it has incurred non-effective expenditure of €400,000, which is a scandalous waste of money. We will deal with this issue when we receive the note from the Department of Education and Skills.
Will Mr. McCarthy outline the position on the report on Bord na gCon?
Our work programme is on screen. We have agreed to resume the hearing on Rehab on 10 April. Is it agreed that at our meeting on 27 March we will meet the Department of Social Protection to examine the 2012 annual report of the Comptroller and Auditor General and Appropriation Accounts: Chapter 16 - Expenditure on Welfare and Employment Schemes; Chapter 17 - Regularity of Social Welfare Payments; Chapter 18 - Welfare Overpayment Debts; Chapter 19 - Domiciliary Care Allowance; Chapter 20 - Invalidity Pension; and Vote 37 - Department of Social Protection, as well as the social insurance fund annual accounts for 2012? Agreed.