John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Today we will examine the report on the Bytel project, which was jointly carried out by the Northern Ireland Audit Office and the Office of the Comptroller and Auditor General here. We had a meeting in Stormont on this and we dealt with it there. The report has been published.

Before we begin the hearing, I want to remind members, witnesses and those in the Visitors Gallery to turn off their mobile phones because they interfere with the sound quality and the transmission of the meeting. I ask people to take their phones away from the area in front of the microphones, as I think that is part of the problem.

I want to advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give to this committee. If they are directed by the committee to cease giving evidence in relation to 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 they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor 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 also refrain from inquiring into the merits of a policy or policies of the Government or the Minister of a Government or the merits of the objectives of such policies.

I welcome Mr. Mark Griffin, Secretary General of the Department of Communications, Energy and Natural Resources, and ask him to introduce his officials. I know this is Mr. Griffin's first time before the committee.

Mr. Mark Griffin:

It is, Chairman. I am joined by Mr. Martin Finucane, who is the finance officer for the Department, and Mr. Tim O'Sullivan, who is an assistant principal in the telecoms area of the Department.

Mr. Pat Colgan:

I am chief executive of the Special EU Programmes Body, SEUPB, and I am joined by Ms Gina McIntyre, our director of corporate services.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Mr. McCarthy can make his opening statement.

Mr. Seamus McCarthy:

I thank the Chairman.

Special Report No. 90 is the result of a co-ordinated examination between my office and the Northern Ireland Audit Office, NIAO. It concerns a cross-Border broadband project which aimed to provide high-speed connectivity on a line between Belfast and Dublin. The project promoter was Bytel Networks Limited. The Bytel project was grant-aided by the EU-funded INTERREG III programme under a measure designed to improve inter-regional economic infrastructure. The Special EU Programme Body, SEUPB, was accountable to the Government, the European Commission and the Northern Ireland Executive for the management and delivery of the INTERREG III programme, which ran from 2000 to 2006. SEUPB appointed the Department of Enterprise, Trade and Investment, DETI, in Northern Ireland and the Department of Communications, Energy and Natural Resources as joint implementing agents for the measure.

In October 2004, the two Departments offered grant funding of €4.3 million to Bytel, based on estimated total project costs of €12.4 million. At just under 35% of the project cost, the grant offered was almost the maximum payable, and the grant was paid in full between November 2004 and November 2005. Subsequently, it was found that almost none of the project spend was eligible for EU grant assistance, and that the actual project costs were significantly lower than the projected €12.4 million. There were major failings at each stage in the handling of the project. The project proposal only narrowly passed the assessment for entry to the EU programme. There were weaknesses in the project appraisal, including weaknesses in the definition of what was to be delivered by Bytel. There was little evidence to support the projected project costs. The strength of a proposed partnership between Bytel and a company called Aurora Telecom was also not probed adequately. When Aurora withdrew from the project and was replaced by another service provider, the nature of the project changed significantly and the project costs fell. This should have led the Departments to reappraise the project and recalculate the grant payable, but this did not happen.

The two Departments were responsible for checking and approving Bytel’s claims for grant payments. The first such payment included €1.3 million for the purchase of equipment that was to have been paid for from Bytel’s resources. That equipment, bought from a sister company in the Bytel group, was not ultimately used in the project. There is a doubt as to the market value of the equipment. The final claim for €2.07 million contained no backup or verification evidence but, despite this, was paid in full. The Department of Communications, Energy and Natural Resources considered that it had no direct role in this area and it relied on DETI and on other advisers for assurance that expenditure claimed by the project promoter was valid. In circumstances in which it was relying on others for assurance about the validity of payments, the approach taken by the Department of Communications, Energy and Natural Resources showed, in my view, a lack of awareness of the risks. There was no evidence to show that it had put appropriate controls or checks in place.

The Departments missed an early opportunity to identify problems with the project. Whistleblowing allegations were made to DETI by a director of the Bytel company in June 2006. An internal investigation was conducted by DETI and concluded that no further action was necessary. However, its investigation was later found not to have been sufficiently rigorous or independent and its findings were not supported by adequate evidence. The Department of Communications, Energy and Natural Resources was made aware of the allegations by DETI but decided not to attend a meeting with the person who had made them. Further allegations about the project were made to the NIAO in June 2008 and were referred to DETI, which commissioned a review of the project. By September 2009 it found there had been irregularities. DETI only informed the SEUPB that there was a possible irregularity in May 2010, and informed the Department of Communications, Energy and Natural Resources in December 2010. Details of the irregularity were only forwarded to both in February 2011. A further review of the project was then commissioned by SEUPB, which found that 97% of the €4.3 million paid to Bytel was based on ineligible expenditure and should not have been paid.

My primary interest, and that of my counterpart in Northern Ireland, was to identify any lessons to be learned from the management of this project which could improve the administration of EU-funded projects in a cross-Border context and more generally. The very complex arrangements put in place for the administration and funding of the INTERREG III programme contributed to the delay within the bodies concerned in recognising that a financial loss had occurred, in reporting the loss and in accepting the appropriate degree of responsibility for its occurrence. We have tried to summarise the complexity of arrangements in Figure 2.2 of the special report. As members will see, there is nothing simple about the relationships. The illustration shows the funding flows and the number of agents involved in the project. Almost inevitably, the complexity of the arrangements and the number of actors involved led to a lack of clarity about roles in the oversight of the grant. The outcome in this case points to a need for more straightforward accountability arrangements for future cross-Border projects, with a reduced number of layers and clearer definitions of each agency’s responsibilities.

A key feature of the management of grant administration for the project was the poor sharing of information between the Department of Communications, Energy and Natural Resources and DETI. Formally, as joint implementing agents, both Departments had equal responsibility for the measure. Each had the same agreement with SEUPB but, significantly, they had no formal agreement between themselves. The communication arrangements between the Departments were informal or ad hoc. In my view, they were inappropriate for important inter-regional infrastructure funding worth almost €8 million. They were also ineffective. This project highlights the need for formal arrangements to be put in place to ensure that key decisions are agreed and recorded, and that important issues arising in the course of a project are communicated in a timely way to the relevant bodies.

The Departments did not put in place adequate processes to manage basic project risks arising from the Bytel project, including the risk of failure to deliver the project as planned, and risks arising from changes to the scope of the project. In addition, they did not operate effective controls over validation and authorisation of payment claims, particularly in circumstances in which grant claims were submitted close to payment deadlines.

In general, the arrangements and criteria for funding projects and recoupment of associated EU grant funding are complex. Funding and recoupment can be spread over a number of years. Due to the number of projects and programmes, the multi-annual nature of the funding and the summary nature of the financial reporting by Departments and agencies, it is generally not easy to see in any set of financial statements what has happened when a claim for funding is withdrawn or is disallowed by the EU. For example, the loss to Irish taxpayers of €1.76 million in potential EU funding as a result of the late recognition of problems with the Bytel project was not clearly accounted for by the Department of Communications, Energy and Natural Resources or by the Department of Public Expenditure and Reform. Neither of those Departments reported that the grant of €2.3 million paid to Bytel from Irish Exchequer sources was to no good effect. In my view, it would provide greater transparency if relevant Government Departments and agencies published a note to their accounts setting out, by programme, the value of EU funding requested in a year, the amounts received from the EU, the value of claims withdrawn or disallowed and the balance outstanding at year end. My office will discuss the development of an appropriate format with the Department of Public Expenditure and Reform.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank Mr. McCarthy, and invite Mr. Griffin to give his opening statement.

Mr. Mark Griffin:

The recently published Comptroller and Auditor General and NIAO reports clearly set out the issues that have arisen in implementing the Cross-Border Extreme Broadband Project between Dublin and Belfast, with nodes in Dundalk, Drogheda and Armagh. The project was to be funded under the INTERREG III-A telecoms measure, but due to irregularities, which are set out in the reports of the Comptroller and Auditor General and the NIAO, INTERREG funding for the project was ultimately withdrawn. At this stage, funding of over €2 million has been lost to the Exchequer. Recoupment of all funding for the project, including funding contributed by the Northern Ireland authorities, is the subject of court proceedings.

It is clear from the reports of the Comptroller and Auditor General and the NIAO that there were deficiencies in the oversight of the Bytel project. While DETI in Northern Ireland was in the lead role for implementing the project, processes in the Department of Communications, Energy and Natural Resources should have been better at critical junctures as the project evolved. This includes Bytel's signing of the agreement with Eircom UK to replace Aurora, extending the broadband project to the north west.

This changed the structure and costs of the project and a revised letter of offer should have issued to Bytel. This could have ensured that some of the expenditure on the north-west extension of the project was eligible for INTERREG funding. Instead, following the ASM review, all of the expenditure on the north-west extension was deemed ineligible.

Since critical deficiencies in the project were brought to the attention of the Department in 2011, we have been fully engaged in dealing with them. This includes participation on the project board established by the SEUPB to review the project, co-operating with ASM in the conduct of the forensic audit of the project, initiating with DETI a technical review of the project by PRISA consultants and fully engaging with the Office of the Comptroller and Auditor General in its preparation of the report on the Bytel project.

It is worth noting that the technical review undertaken by PRISA in 2013 concluded that the network delivered through Bytel-Eircom met all the objectives laid out in the grant application and the letter of offer and that the project was very beneficial for the entire region. The reach of the delivered network went beyond the original objectives as the north west was included in the network with additional nodes at Omagh and Derry. The fibre also extends to Bridgend and Letterkenny providing network resilience through the networks in the Republic.

It is regrettable that a project of this regional significance had to be withdrawn from the INTERREG programme and that better value for money was not delivered. There are issues for all of the parties involved, including the Department of Communications, Energy and Natural Resources, regarding oversight of the project. I assure the committee, however, that the Department now has in place more stringent oversight and monitoring processes for INTERREG projects and indeed projects across all expenditure programmes. I look forward to assisting the committee with its consideration of the issues related to the Comptroller and Auditor General's report on the Bytel project.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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May we publish Mr. Griffin's statement?

Mr. Mark Griffin:

Absolutely.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I invite Mr. Colgan to make his opening statement.

Mr. Pat Colgan:

During the EU Structural Funds period 2000 to 2006, the SEUPB acted as managing authority and paying authority for the INTERREG IIIA programme and the PEACE II programme. A total of 420 projects were funded under the INTERREG programme and 7,500 under the PEACE programme. The joint value of both programmes was in excess of €1 billion. The Bytel project was a cross-Border broadband development initiative funded under the INTERREG programme.

The arrangements for the implementation of programmes during the EU funding period 2000 to 2006 relied on the use of implementing agents. There were 56 implementing agents for the PEACE programme and 25 for the INTERREG programme. Implementing agents acted under a service level agreement, SLA, with the SEUPB. Under the terms of this agreement, the implementing agents were responsible for the management of a part of the programme and for the provision of funding to eligible projects. Responsibility for the Bytel project came under the control of two government departments - one in Belfast, the Department of Enterprise, Trade and Investment, and one in Dublin, the Department of Communications, Energy and Natural Resources. Responsibility for the assessment, approval, monitoring and funding of this project came under their responsibility. The implementing agents were also required to inform the SEUPB of any changes in the nature of the project and to report any irregularities.

In May 2010, as the formal process of programme closure was drawing to a conclusion, the SEUPB was made aware by DETI of a potential irregularity with the Bytel project. No details of this irregularity were provided at the time. The SEUPB signalled this potential irregularity to the European Commission as part of the closure process, indicating that further details would be provided when they became available to the SEUPB.

In February 2011, the SEUPB was made aware of the extent of the irregularity involved with the Bytel project. On foot of the information that became evident at that time, the SEUPB initiated a full review of the project. This review was concluded in March 2012. It was evident from the conclusions of the review that the Bytel project was not eligible for funding under the INTERREG programme. The SEUPB informed the relevant accounting officers in the government departments concerned that it intended to withdraw the project from the programme and from the final claim for drawdown of funding from the European Commission. The European Commission was informed accordingly.

The withdrawal of the project from the programme resulted in a loss to the Irish Exchequer and the Northern Ireland Executive of €4.3 million. The SEUPB has co-operated fully with the Comptroller and Auditor General in Ireland and the Northern Ireland Audit Office in the review of this project. The reports represent a fair summary of the facts associated with this project. The SEUPB is happy to answer any queries the committee may have and to provide any additional explanations of clarifications that may be required.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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May we publish Mr. Colgan's statement?

Mr. Pat Colgan:

Yes.

Derek Nolan (Galway West, Labour)
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I welcome Mr. Griffin, Mr. Colgan and their officials. I thank the Northern Ireland Audit Office and the Public Accounts Committee in Northern Ireland for hosting us in Stormont a number of weeks ago to discuss the project. It is shocking reading all of this material in that it sets almost the gold standard for management incompetence and project and oversight failure. From the beginning, there was a litany of flags being raised and problems arising but none the less cheques were written and money was paid out. It is so broad across every aspect of the project, it leads one to question what was going on and whether there were ulterior motivations. If one looks at it from the beginning, a company with no track record in delivering this kind of project with a balance sheet of almost nil fails to win a project and yet a month later, is re-evaluated and wins a project. It engages with Aurora Telecom on the basis of the letter of offer, it fails and Aurora Telecom pulls out. It goes in with another company and the entire nature of the project changes but nobody on the department side changes any of the consequences. We see a bill issued for €1.3 million for equipment worth €30,000 which was bought from a sister company of the company concerned. This was never used in the project and yet we see further cheques being written.

A whistleblower comes forward in 2006 and the department in Northern Ireland says there is nothing to be seen here. Another whistleblower comes forward in 2008 and eventually, we start to see some movement. However, while that is going on, the Department of Communications, Energy and Natural Resources is not told about that second issue. However, it failed to attend a meeting in 2006 with the whistleblower, at the invitation of DETI, to talk to them about their concerns. Mr. Colgan's organisation, the SEUPB, is not told until 2010 that there are problems and must then be the body to instigate a forensic assessment of the project to discover the real detail of what was going on instead of the departments involved. Is there any sense that this is more than just a failure in governance and that there was some form of corruption or bad influence on the part of the company and possibly people in the department in Northern Ireland?

Mr. Mark Griffin:

The Deputy has provided an excellent synopsis of the project and the issues faced from when it was conceived in 2004 through to 2013 when PRISA completed the technical evaluation, which was the last report prepared prior to the Comptroller and Auditor General and the Northern Ireland Audit Office preparing their detailed reports. For the benefit of other members of the committee, I will flesh out some of the issues raised by the Deputy.

Derek Nolan (Galway West, Labour)
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We have all read the reports.

Mr. Mark Griffin:

Would the Deputy prefer if I took his last question?

Derek Nolan (Galway West, Labour)
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Yes.

Mr. Mark Griffin:

I cannot give him a straight answer to it. A range of issues were raised in the various reports undertaken by the telecommunications branch in DETI in Northern Ireland in 2006 that would obviously give us cause for considerable concern. Ultimately, we have lost €2 million of Irish Exchequer money, which is part of a court case underway in the High Court in Belfast. It is a matter for that court to determine whether the issues raised by the Deputy in his question occurred.

However, enough issues certainly were raised in the forensic review carried out by the ASM consultants starting in 2009 and finishing, I believe, in 2012 that would give grave cause for concern regarding both the governance of the project and on the nature of the transactions and the payment claims that were submitted to the DETI for approval. I refer to the four payment claims that were submitted to DETI between November 2004 and November 2005.

Derek Nolan (Galway West, Labour)
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I understand civil proceedings are under way in the High Court in Northern Ireland to recoup money. Can I ask Mr. Griffin two questions? What is the current financial status of Bytel? Is it a company of assets from which money can be recovered? Second, has the Department discussed with DETI as to whether, particularly given the invoice for equipment which was not worth the value, this has been reported to the police?

Mr. Mark Griffin:

As far as I am aware, it was reported to the police. As for the structure of Bytel, if my memory is correct Bytel has been reincarnated as a company called Atlas. The statement of claim the Northern Ireland authorities issued with regard to the court proceedings - I believe this was in 2011 - set out clearly the specific concerns that were raised. These included, for example, the use of a sister company for the processing of some of the claims, particularly with regard to the Nortel racks. In respect of the final claim submitted on the project, it was a claim of €2 million based on a single-page document comprising the provision of infrastructure that we believe was not provided in the manner set out in the payment claim. I refer to the fact that this payment claim only amounted to a single page and represented a valuation on the works done of €17 million which, as we subsequently know from the Prisa Consulting report, was a valuation of multiples of the actual cost of the infrastructure that was delivered. As I stated regarding those court proceedings, the statement of claim has been issued, the case is yet to be heard and I am constrained in expressing a view with regard to what exactly happened on this particular project on the range of issues the Deputy has highlighted in his statement.

Derek Nolan (Galway West, Labour)
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Two issues relate directly to the Department of Communications, Energy and Natural Resources. The first is that the letter of offer was based on Bytel and Aurora working together and while Aurora subsequently pulled out, it was a subsidiary of Bord Gáis Éireann, which was a semi-State company that was responsible to the Department. First, the company that pulled out should have reported back to the Department of Communications, Energy and Natural Resources to let it know it had pulled out and that something therefore needed to be done. This point specifically relates to this Department here in the South, that is, to the Department of Communications, Energy and Natural Resources. Second, I refer to the meeting in 2006 to which the Department of Communications, Energy and Natural Resources was invited to listen to the whistleblower's allegation and to which the Department decided not to send anyone. Why did that happen?

Mr. Mark Griffin:

I would add a further point to that. As I mentioned in my opening statement, there were several critical junctures in the evolution of the project where the Department should have been more assertive. A view was taken at the time - I believe rightly so and this was confirmed by my counterpart in Northern Ireland at the Committee of Public Accounts hearings on 18 March - that he was the lead for the day-to-day management of the project, the management of payment claims and so on. Notwithstanding that, on looking at the papers there probably were three times where we could have been more involved. The first was in respect of the actual scoping of the original project. The Deputy will recall from reading the ASM and Prisa reports that one difficulty they had in determining exactly what was delivered and exactly what was eligible for payment was the inadequacy of the technical documentation provided regarding the definition of the project back in 2004. As a Department that had an overall responsibility for management rather than the day-to-day operational issues, we should have been more involved at that stage in scoping out or making sure that the project was adequately scoped out. This would have involved greater technical input from our Department at that point but this did not happen.

Second, when Aurora decided not to participate in the project, it changed things fundamentally in terms of the project structure. One had a project that was to involve the provision of dark fibre on the Aurora network between Dublin, Drogheda, Dundalk, Armagh and Belfast. The nature of the project then changed with the withdrawal of Aurora. Let me deal with the role of Aurora. It is clear from the documentation I have seen that there was a commitment at a relatively senior level within Aurora to be involved in the project. We have letters that are signed by a senior project manager in Aurora that set out clearly the company's intention to participate in the extreme broadband project. A review was conducted late in 2004 by the Aurora parent, that is, Bord Gáis, of the operations of the company in general. As I understand it, what arose from that review was a decision not to progress with the Aurora project. I suppose two issues then arise. The first is whether the Department should have been more involved in determining the exact nature of the partnership agreement between Aurora and Bytel and the second is whether, when Aurora decided to withdraw, the Department should have been involved in trying to convince it that this was a project with which it was worth continuing. In answering that question, I should note that Aurora was a subsidiary of a commercial semi-State company that operated under the aegis of the Department. As a Department, we do not involve ourselves in the day-to-day operations or the day-to-day projects of subsidiaries of our commercial semi-States. That is a practice and if one accepts that by and large, although we obviously have in place certain oversight arrangements, the commercial semi-States that operate under the Department have an independent mandate to discharge their commercial duties, at that relatively micro level pertaining to a single project under a subsidiary of one of the Department's commercial semi-States, I would have thought it unlikely and probably inappropriate for the Department to get involved in a direct way.

What this does not remove from the circumstances that pertained at the time is that by virtue of Aurora opting out of the Bytel project, the entire project changed. The letter of offer was predicated on certain things. It was predicated on a substantial contribution in kind from Aurora in the provision of its dark fibre in its network as a sort of underpinning of the Bytel project. This should have triggered alarms in both DETI and in the Department of Communications, Energy and Natural Resources to the effect that the nature of the project had changed, that by definition this altered the letter of offer and, therefore, a new letter of offer was required. Had an intervention taken place at that stage, it is quite possible that a new letter of offer would have stated explicitly, for example, the involvement of Eircom in the project. This would have rendered that expenditure eligible for INTERREG funding and would have rendered eligible for INTERREG funding the additional work that formed the new Bytel-Eircom relationship, which was the extension of the line to Omagh, Derry, Bridgend and Letterkenny. This certainly was an oversight on the part of my Department and on the part of DETI at that time.

Derek Nolan (Galway West, Labour)
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To clarify, is there paperwork or documentation in the Secretary General's Department from that time noting that Aurora had pulled out of the project?

Mr. Mark Griffin:

There was, but its significance does not appear to have been understood. My own assessment is that the focus was on delivering a project that in broad terms would have achieved the objectives the original project was designed to achieve.

The perspective I have just given is backed up by a number of e-mails on file between DETI, the Department of Communications, Energy and Natural Resources and Bytel saying that we can save this project and can involve Eircom in the delivery of the system. That seems to have been the focus of attention - how could we substitute a very significant component of the original project that is no longer capable of being delivered with an alternative that could broadly do the same thing?

Derek Nolan (Galway West, Labour)
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Does it not attempt to rescue the project without realising the parameters within which the project is eligible for EU funding?

Mr. Mark Griffin:

There was an attempt to rescue the project and I do not believe attention was given to the fact that by rescuing the project and putting in a different arrangement the clock was reset in terms of the letter of offer. That certainly did not seem to have been part of the consideration at that time.

Derek Nolan (Galway West, Labour)
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Can Mr. Griffin talk about the 2006 whistleblower allegation?

Mr. Mark Griffin:

We were copied on an e-mail in early June 2006 which stated that these allegations had arisen and that a meeting was being set up for the latter part of June 2006. I do not know why we did not attend. There is no evidence on file in relation to it. In fairness to the individual involved in the project at the time, the e-mail certainly indicated his intent to attend the meeting, but we did not attend the meeting. Had we attended the meeting we might have got a better sense as to the seriousness of the whistleblower allegations, although the conclusion drawn subsequently by DETI was that this was an internal dispute among the directors of Bytel. ASM concluded in its own forensic audit in 2009 that we took our eye off the ball. If the seriousness of the allegations made by the whistleblower in 2006 had been fully appreciated, again, there may have been an opportunity to step in at that stage. The project was concluded, but it would have allowed us to determine at an earlier stage that the funding was ineligible, and we had still a number of years left on the INTERRIG III programme to allow for the possible reallocation of funds to other projects that would have been eligible. Mr. Pat Colgan may have a view on that.

Derek Nolan (Galway West, Labour)
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So that is the third juncture at which something could have been done to deal with the failure along the road?

Mr. Mark Griffin:

I believe so.

Derek Nolan (Galway West, Labour)
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Was it the case that people saw this as merely EU money that we would get back, so it did not warrant the same concern as, say, direct Exchequer funding, even though it was direct Exchequer funding that was to be claimed back? Was there any sense from the investigations that this was EU money and that it was not costing us anything?

Mr. Mark Griffin:

No. I do not see any evidence of that. I think we relied to a very significant extent on the de facto arrangements that were in place for the management of INTERREG projects. The committee would have heard some of this at the Northern Ireland PAC hearings in March. For INTERREG III projects, a service level agreement was put in place in terms of the telecoms measure between the SEUPB, DETI and the Department of Communications, Energy and Natural Resources in the Republic. That agreement set out what appeared to be joint responsibilities in relation to who did what. It is worth looking at the service level agreement. This is important in terms of the question the Deputy has posed. The service level agreement would have been provided to ourselves and DETI and would have been signed off by both Departments. The implementing agents would have been required to provide matching funding for the SEUPB. We did that. In that regard, we certainly discharged our role. Did we facilitate applications for funding? We did. That was also undertaken by DETI. Did we undertake project assessments? We were involved in the project assessment in 2004 with the DETI and Western Connect, the consultant appointed to the telecommunications measure, which looked at the Bytel project and ultimately put it forward for assessment. Did we issue offers of grants to projects? We did that by way of the letter of offer. There were a range of other things.

Custom and practice seems to have built up whereby a lead implementing agent was assigned for particular projects. All but one of the telecoms measures would have been led by DETI. We led on one of them. The day-to-day operational issues such as looking at payment authorisations, forwarding payment authorisations to the SEUPB, monitoring the project and post-project evaluations would have been undertaken by DETI and, in relation to the earlier part of the project, by Western Connect, the consultant established to assist in that process. It is instructive to look at the first two payment claims, for which approval was made by Western Connect and countersigned by DETI. When Western Connect's contract ended, the payment claims were authorised by DETI and countersigned by ourselves. It is worth noting, again, looking at the documentation that backed those up, that all the documentation was held in-house by either Western Connect or by DETI and did not go past our own Department. That is a practice that was built up. There was no formal partnership between the two Departments. If I was to add a fourth issue on which we should have done better, it would have been to formalise what was the de facto working arrangement between the two Departments.

I do not get any sense that the fact that this was EU funding was in any way a consideration in terms of how the project was managed, other than the fact that funding was available. Certainly, there was pressure in 2004 to identify appropriate projects that could be included for INTERREG III funding under the telecoms measure. Again, that is cited in the ASM report, and the pressure is particularly evident in the Northern Ireland authorities. We have one e-mail on file in the Department, to which the Comptroller and Auditor General referred in his report, which appeared to give the impression that the N+2 consideration - that funding is allocated at a particular point which one has two years to spend - may have been a consideration for us, but I do not see anything in the content or tone of that e-mail which would lead me to that conclusion.

Derek Nolan (Galway West, Labour)
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May I ask Mr. Colgan if the SEUPB has suffered any financial loss as a result of what has happened? Mr. Colgan awarded work to DETI and the Department of Communications, Energy and Natural Resources as joint implementing agents for a project, yet appears to have been kept in the dark about all instances of worry and concern until late in the day. What is his overall impression of the relationship between the SEUPB and the two Departments, and was there any loss or impact on his operations and work?

Mr. Pat Colgan:

It is important to emphasise that the way EU programmes were managed back then was based on a cascade of governance and assurance type of arrangements. In that sense we had to be satisfied that there were robust systems of control within the implementing agents, and we took assurances from the internal audit that that was the case. We had to put a service level agreement in place which laid out exactly what their roles were. We delegated authority in relation to their fulfilling that role and dealing with those things in a way that was set out. We provided training, guidance and procedures manuals to ensure that everybody was perfectly clear as to what their roles were. There were robust systems in place.

The weaknesses happened at individual manager level or some point within the system where there was not an awareness of the importance of certain developments that should have been raised to another level. There are a number of instances. I will reiterate what Mr. Griffin said. There was a point in 2006 when the whistleblower allegation was raised. We were made aware of the allegation. We asked for a meeting with the Northern Ireland Department of Enterprise, Trade and Investment to discuss that allegation. That meeting took place on 19 July 2006 with one of my staff. We went through the allegations with DETI and we received absolute assurances from that department that there was no significance to it and no issues that needed to be taken further.

The Article 10 report was commissioned and undertaken by consultants. It raised a number of concerns in respect of the Aurora and Nortel racks as well as some of the other issues. We addressed these issues directly with DETI. Again, we would have received assurances from the department. That is the way the system worked back then. We were basing it on a system of assurances and the view that people's internal systems of control were robust enough to give us comfort to the effect that they were doing what they were supposed to be doing. In fact, it turned out that was not happening.

There were some other critical points, particularly in 2008 when the second whistleblower allegation emerged. We were not informed about that. We were not informed about the subsequent review commissioned by ASM Accountants in 2009. That ended in a draft report that was never finished. We were not made aware of that.

In 2010 as we came to the process of concluding or closing off the programmes, we received a two-line correspondence indicating a potential irregularity with Bytel. We were surprised about it, but we had to include the matter in our final declaration to the Commission. We pointed out that there was a potential irregularity with the particular project and that we would come back to the Commission with further detail when we knew more. For the rest of 2010 we were in contact with DETI. Eventually, I wrote to the department in December 2010 urging those responsible to provide us with the detail we needed. I did not receive it until well into 2011. In fact, I went to a North-South Ministerial Council sectoral meeting involving the two relevant Ministers. I had to tell them that this irregularity was still outstanding against the final drawdown of funding for INTERREG III, without having detail of it. Eventually, at a meeting on 8 February 2011, I and a member of my staff were made aware of the seriousness of the issues. We were made aware for the first time about the 2008 whistleblower allegation and of the ASM review in 2009, which had never been completed. We were also made aware of some internal audit reviews that had been carried out as well. We were made aware for the first time that there was litigation under way and that DETI had initiated legal proceedings on the matter.

Two days later I wrote to the Accounting Officers in various Departments stating that we were taking certain steps to take the matter in hand. That led to the setting up of a project board to investigate the whole case and the commissioning of a detailed forensic audit, which ended up reporting in March 2012 in some detail around everything which has now come up to the surface.

I wrote again in March 2012 indicating that I would have to withdraw this project from the programme. The question from the committee was whether we have lost any money. The Special EU Programmes Body does not have any money. We manage money on behalf of the member states. Basically, our role is to draw down money from the European Commission against expenditure that has been incurred. We receive the cashflow for that expenditure from various Departments and we use it to pay projects. Subsequently, we draw down the money from the European Commission against verified and certified claims for expenditure. In this case when it came to the final claim for a drawdown of expenditure from the European Commission, we had to deduct an amount in respect of the Bytel project. That is where the loss occurred. From that point it ceased being an EU project. It stopped having anything to do with us. From that point it was outside the EU programmes as such. It became a loss to the Northern Ireland departments and the Irish Exchequer.

Derek Nolan (Galway West, Labour)
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I am keen to ask a final question although I realise I am approaching the limit of my time. The question is for Mr. Griffin and his Department. To what extent does Mr. Griffin believe DETI, as opposed to the contractors, is responsible for the Irish Exchequer being out of money on account of its poor management of the project? Mr. Griffin many have to be careful how he answers that.

Mr. Mark Griffin:

I think Dr. McCormick clearly set out his perspective on the role DETI had in the project and the difficulties it experienced when he was before the Committee of Public Accounts in March. He acknowledged clearly that in terms of the day-to-day operation, DETI had responsibility for the authorisation of payments.

In fairness to my colleague in Northern Ireland and his Department, if we had been more hands-on at particular stages, things could have been different. I did not mention one point when I spoke about the revised letter of offer and Eircom coming into the equation as a project partner. This was something that needed to happen jointly between ourselves and DETI. If we had revised the letter of offer at that stage, not only would it have rendered funds potentially eligible for INTERREG funding but it would have significantly re-calibrated the cost of the project as well.

I maintain there is a responsibility on both departments. However, I am not going to put a percentage on the level of responsibility. There is a responsibility on both departments in terms of the management of the project which ultimately led to a loss from the Irish Exchequer's point of view of €506,000 that we contributed by way of matched funding to the project and the €1.762 million INTERREG funding that was withdrawn.

Deputy Nolan will forgive me if I do not give him a blunt answer to the question, but we both had culpability to a greater or lesser extent in terms of the management of this project.

Derek Nolan (Galway West, Labour)
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Are there any other projects involving the two departments, Mr. Colgan's body or Mr. Griffin's Department that have been re-examined or that may need to be checked again to ensure things were done properly?

Mr. Mark Griffin:

No, the INTERREG III programme was closed out and got a clean bill of health, other than in respect of the Bytel project. It is interesting to note that the regulation which succeeded the INTERREG III programme - for some reason the Commission called it INTERREG IV - was much clearer in respect of the assignment of responsibilities between Departments when it came to cross-Border projects. If that specific arrangement had been in place when Bytel was being progressed as a project, we might not have had these types of projects.

We are involved in another project, the Kelvin project, which was referenced in passing in the Comptroller and Auditor General's report. This relates to the provision of fibre infrastructure in Northern Ireland and an Atlantic fibre link coming into Portrush by Hibernia Atlantic. It got a clean bill of health. We have also had an internal audit report on another cross-Border project, the Irish-Scottish Links on Energy Study or ISLES project, in which all the issues flagged in the Bytel project in terms of the letter of offer, the informal nature of the communication, the lack of steering groups and project controls needed for these types of projects were considered. We got a clean bill of health on that. I would like to think that the Bytel project was an exception.

Mr. Pat Colgan:

Sub-measure 2.1 C of the INTERREG III programme had six telecommunications projects. Bytel was the only one that resulted in any significant problems. We have worked with the Department of Communications, Energy and Natural Resources and DETI on other projects, in particular the Kelvin project. Kelvin was audited extensively by the European Court of Auditors. The court raised some queries and questions but we got a clean bill of health at the end of it. In the new programme period, that is, for the period 2007 to 2013, under INTERREG IV we have a new system whereby an independent external audit authority checks verifications and claims for expenditure.

It does an audit of what is happening in respect of those activities. There is a regulatory requirement that the error rate regarding these verifications and audits shall be no more than 2%. At present, our error rate is well below 1% and usually is approximately 0.05%. We have a very good track record with the Commission, with the audit authority and generally in respect of monitoring, managing and dealing with irregularities and any suspected fraud. I will make one further point, which Mr. Griffin also raised during his presentation, which is that had we known of this earlier - I think the cut-off date probably was in or around June 2009 - we would have been able to find a replacement project that could have absorbed this money and there would not have been any loss of European Union funding. This is something we have done in the past.

Derek Nolan (Galway West, Labour)
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It is then specifically the Department of Enterprise, Trade and Investment. That then is the quod erat demonstrandum, QED.

Mr. Pat Colgan:

It is saying that the failure to inform the SEUPB of the issues that had arisen with this project resulted in a loss. Mr. Griffin has been very open and honest in stating they were jointly responsible for ensuring that there was proper governance and control over this, while DETI had the day-to-day lead role in terms of the project. Have I interpreted correctly what he said?

Derek Nolan (Galway West, Labour)
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Mr. Colgan's final point throws a great deal of light on the financial loss. I thank Mr. Colgan and Mr. Griffin.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Did anyone get sacked, demoted or sanctioned in any way?

Mr. Mark Griffin:

In my Department, no. From my perspective, and I am sure it was the case for predecessors in my Department, I am much more interested in figuring out what we can learn when there are failures in this regard and in how we put in place systems to ensure they do not happen again. I think we placed a lot of store in DETI in terms of its role in the day-to-day operation of the project, perhaps too much store. However, to be frank, I do not believe that anything was done by any of the staff members in my Department that merited the sort of actions the Chairman has outlined.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We have just lost €2.3 million of taxpayers' money.

Mr. Mark Griffin:

Yes, and we are taking efforts to recover that.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Only because the whistleblower came on the scene. A whistleblower to which the Department did not listen.

Mr. Mark Griffin:

A whistleblower to whom we should have listened more closely.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Department did listen to him.

Mr. Mark Griffin:

Bear in mind that at the time, in 2006, as the whistleblower allegations were being assessed, they were assessed by the Department of Enterprise, Trade and Investment, which gave an unequivocal guarantee to my Department that all the paperwork was in order, that all the payment claims that were processed were based on appropriate documentation and that in so far as DETI concluded, the issues that arose were an internal dispute among directors of the company concerned. We accepted those assurances. As I stated earlier, perhaps at the time we should have been more hands-on at this particular juncture. As to whether this would have led to a different outcome, I cannot say because I imagine that in our engagement with the whistleblower, we perhaps would have relied again to a significant extent on DETI, which had day-to-day responsibility for the management of payment claims, along with Western Connect, on this particular project.

Joe Costello (Dublin Central, Labour)
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I welcome Mr. Griffin, Mr. Colgan and their colleagues before the committee today. Perhaps I can start with the last point raised by Deputy Nolan as to whether anything of this nature could happen again or whether this could have happened with the other 420 projects of that nature in INTERREG III. While the witnesses felt that this was an exceptional situation, how can they come to that conclusion, considering that the only reason we have been able to have the results we have seen unfold here today was because of a whistleblower? Moreover, it was not just because of a single whistleblower but because of two whistleblowers. In the case of the first, no attention was paid to the details of what was presented and in the second case, eventually it came to the conclusion. The SEUPB's own damning report from 2012, when it set up an independent audit of the entire project, came to the conclusion that 97% of the funds that were paid out were ineligible for European Union funding. The report found that the entire project was poorly managed and appraised. The SEUPB's own independent investigation in March 2012 is a damning indictment of the entire project. However, the only reason it could have come to that conclusion was because of a whistleblower. As there were no whistleblowers in the other projects, how can one now present this committee with an assessment that this is exceptional? I understand there were 420 other projects under INTERREG III and 7,500 projects under the PEACE programme, all of which were drawing on European money, all of which was linked to various Departments. Obviously, a substantial number of projects were in place. Will the witnesses answer that question first? Would they like to revise the conclusion that both have presented, namely, that they would perceive this Bytel situation as being exceptional?

Mr. Mark Griffin:

On the basis of the information available to me, which includes an audit assessment that was carried out by DETI on all the projects other than the Bytel project, the conclusion is that for the purposes of the INTERREG III programme, they have a clean bill of health. The Deputy should bear in mind that one is dealing with projects that, in the case of Bytel, go back approximately a decade. Consequently, things have changed considerably over the past ten years in terms of-----

Joe Costello (Dublin Central, Labour)
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We are talking about programmes that came under the Structural Funds from 2000 to 2006, that is, under the INTERREG III programme, of which there were 420, as well as under the PEACE funding, which was for more or less the same period.

Mr. Mark Griffin:

I can only speak for the projects for which my own Department was responsible and I will let Mr. Pat Colgan deal with the broader issue. Deficiencies were identified in respect of the European Regional Development Fund, ERDF, funding programmes. I do not know whether this was exclusive to INTERREG or more broadly but certain aspects of those funding programmes could have benefited from a different type of management approach. I believe Mr. Colgan has set out some of this in the briefing he has provided to the committee. I mentioned earlier that in so far as the INTERREG programmes are concerned, the European Commission has changed the approach for the projects that are funded under the INTERREG IV programme.

Joe Costello (Dublin Central, Labour)
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I do not wish to discuss what has happened since. I simply wish to find out how the Secretary General can come to a conclusion that Bytel was an exception.

Mr. Mark Griffin:

Because DETI's internal audit unit conducted a review of all the INTERREG III telecommunications projects that were funded at that time and for which that Department was the lead, at least for the vast majority of them, and it gave those projects a clean bill of health and reassured the Department of Communications, Energy and Natural Resources at that time that this was the case.

Joe Costello (Dublin Central, Labour)
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DETI had already, in 2006, given the project a clean bill of health despite the fact that a whistleblower had come forward.

Mr. Mark Griffin:

Yes. I accept that.

Joe Costello (Dublin Central, Labour)
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It had conducted its own internal audit at that time on it.

Mr. Mark Griffin:

If the Deputy is asking me whether we have gone back and conducted separate audits of all the other INTERREG projects at that time, the plain answer is "no", as we have not.

Joe Costello (Dublin Central, Labour)
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Does the Secretary General then wish to withdraw his statement?

Mr. Mark Griffin:

No, I do not. What I wish to say is that on the basis of the information available to me, Bytel seems to have been the exception. I do not know that there is much more I can say on that particular issue. We are working-----

Joe Costello (Dublin Central, Labour)
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Can I ask how many of the 420 INTERREG projects would have come under the Department of Communications, Energy and Natural Resources?

Mr. Mark Griffin:

How many of the 420-----

Joe Costello (Dublin Central, Labour)
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On how many of them would the Department have been a partner of DETI or some other body in Northern Ireland?

Mr. Mark Griffin:

I think there were six or seven projects under the telecoms measure. I might have that information.

Mr. Pat Colgan:

There might have been some projects under some other measures of the programme.

Mr. Mark Griffin:

There were six telecoms projects. Bytel was far and away the largest of them. We would have been involved in a number of INTERREG projects on the energy front, but I do not believe any of them involved the North. They would have been east-west, rather than North-South.

Joe Costello (Dublin Central, Labour)
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Were they INTERREG projects?

Mr. Mark Griffin:

Yes.

Joe Costello (Dublin Central, Labour)
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Were they not cross-Border projects? I thought all INTERREG projects were cross-Border projects.

Mr. Pat Colgan:

They would have been cross-Border.

Mr. Mark Griffin:

Okay.

Joe Costello (Dublin Central, Labour)
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I mean that is the definition of INTERREG. It deals in cross-Border projects. It must have involved some linkage with the authorities in Northern Ireland.

Mr. Pat Colgan:

All INTERREG projects have to satisfy certain criteria. Most importantly, there must be an element of cross-Border participation in the preparation, management, staffing and funding of these projects. All of them would have met those criteria. The Department of Communications, Energy and Natural Resources would probably have taken the lead on some of the energy projects referred to by Mr. Griffin. For example, we looked at a project called the ISLES project, which would have involved looking at east-west energy connectivity opportunities.

Joe Costello (Dublin Central, Labour)
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East-west is cross-Border as well.

Mr. Pat Colgan:

Exactly. The energy section of DETI would definitely have been involved in the project as a co-partner. It may not have had a front-line role in it.

Joe Costello (Dublin Central, Labour)
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Rather than pursuing this point any longer, perhaps we could get a statement on all the projects under INTERREG III in which the Department was involved from 2000 to 2006.

Mr. Pat Colgan:

I would like to make an intervention in relation to the general point that has been raised by the Deputy about whether we can be satisfied-----

Joe Costello (Dublin Central, Labour)
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I am coming to Mr. Colgan.

Mr. Pat Colgan:

-----that Bytel was only an exception.

Joe Costello (Dublin Central, Labour)
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Can he be generally satisfied-----

Mr. Pat Colgan:

We cannot say that with absolute certainty. We can say that the programme has been closed with a clean bill of health apart from the Bytel project and that extensive auditing has been carried out by the SEUPB, the European Court of Auditors and the director general for our European Regional Development Fund in Brussels. Indeed, the fund would have carried out its own audits. A number of statutory regulatory audits are required during the lifetime of the programme. These are all done and finished. None of them has thrown up any significant issues. The nature of auditing means that one cannot be absolutely certain about it. The PEACE and INTERREG programmes both have an excellent record in dealing with irregularities. This is one that stands out as having been particularly poorly managed. I think all the facts have been put out on the table. I have been involved with INTERREG and PEACE for the past 11 years, and I am not aware of anything that is even remotely like this.

Joe Costello (Dublin Central, Labour)
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Have any other whistleblowers come forward in relation to any of the programmes?

Mr. Pat Colgan:

Yes, we deal with whistleblowers quite regularly on both PEACE and INTERREG.

Joe Costello (Dublin Central, Labour)
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The answer is "Yes".

Mr. Pat Colgan:

Yes. Since 2006, we have had protocols in place for the management of whistleblower allegations. There are very clear procedures regarding what happens when we get a whistleblower allegation.

Joe Costello (Dublin Central, Labour)
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Can Mr. Colgan give me an idea of the number of whistleblowers who have come forward?

Mr. Pat Colgan:

We have a register of suspected fraud and whistleblowing incidents which would be put in front of our own audit and risk committee. We are not talking about very large numbers. We could be talking about a dozen or so over the past number of years. We have some people in our organisation who have been trained as independent investigators up to criminal evidence standard. When we get a whistleblower incident, they immediately take control of the file. They look at it independently, separate from anybody who may have had any other involvement in it, and report back directly to me. We would also immediately notify any other key stakeholders who might be involved in this. We would alert them as to the potential fraud or whatever the case may be. If necessary, we would also alert the Garda and the PSNI in relation to a potential fraud or whatever. We would then carry out our investigation into the case, make our determination in relation to it and produce a report to be put on file.

Joe Costello (Dublin Central, Labour)
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Can I go back to Bytel? How did the selection process take place? Was it put out to open tender? Did Bytel come forward? Did somebody select it?

Mr. Mark Griffin:

Maybe Mr. Colgan can come in after I have kicked this one off. Western Connect was appointed as consultant for the telecoms measure. There was a call for proposals inviting interested parties to submit applications for projects that would have been appropriate to fund under the measure. The initial application that was submitted by Bytel in April 2004 did not progress at that stage. I think the view was taken that while it was a worthwhile project, certain issues needed to be clarified. After a second application was submitted in July 2004, an assessment panel comprising two members of Western Connect, DETI and my own Department was put in place.

Joe Costello (Dublin Central, Labour)
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What other bodies or companies replied to the request for consideration?

Mr. Mark Griffin:

I do not have the details of that. Some of the companies that we mentioned among the six projects that were progressed would have applied as part of that call for applications. There would have been others that applied as well, but did not pass the eligibility threshold.

Joe Costello (Dublin Central, Labour)
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Was this a competitive tender?

Mr. Mark Griffin:

It was. It was a call for proposals

Joe Costello (Dublin Central, Labour)
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Does Mr. Griffin know how many companies were in competition with Bytel for this project?

Mr. Mark Griffin:

I do not have that figure to hand. We can get it for the Deputy.

Joe Costello (Dublin Central, Labour)
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It would be particularly interesting to know, given that Bytel was rejected on appraisal in the first instance and it only narrowly succeeded the second time. Surely it would be interesting to know what other companies were there. Were they all rejected as well?

Mr. Pat Colgan:

The system back then involved open calls for proposals, which the implementing agents would have published and advertised. They would have received a number of applications for funding in response to that. Under the particular measure for which Bytel was successful, an additional six projects would have applied and been rejected. They would not have been successful in their applications. This project would have come in along with the other applications, it would have gone through an assessment and evaluation process and a recommendation would have been made to the steering committee. As the Deputy has rightly said, the first steering committee that met deferred the application pending the receipt of further information. Technically, it had been rejected first time around. They were invited to come back with additional information and with additional clarification around issues. This is what got it over the line the next time around.

Joe Costello (Dublin Central, Labour)
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It seems amazing that nobody with the required qualifications was interested in such a valuable contract, which was worth over €12 million. A company that had initially been rejected was brought on board again and barely met the requirements the second time around. It does not indicate that there were too many companies out there with the relevant skills.

Mr. Seamus McCarthy:

On a point of clarification, it is a bit different from a procurement process in which the Department or agency running the competition specifies the service or infrastructure that it wants to be provided. In this case, we had money and we had conditions that needed to be satisfied. As I understand it, the proposals from the different competitors would have been for different types of projects in different areas, serving different communities. All of them had to meet the criteria that would have been laid out in the invitation. If the Bytel project had not gone ahead and the money had been applied for something else, it could have been in a completely different area of the Border. Would that be fair?

Mr. Pat Colgan:

That is right.

Mr. Seamus McCarthy:

I suppose part of the assessment in a situation like that involves trying to compare the money one is being asked to pay by way of grant with the benefits that would or could be delivered by the proposal.

Mr. Mark Griffin:

A further point is that once the project assessment was concluded, the recommendation was made to the steering group and the sign-off of the steering group was achieved, one of the conditions was that an economic appraisal would be undertaken of the project. That was undertaken by Deloitte and it concluded that this was a project that had significant benefit. It is important in all of this, even though there are very significant issues that arose in the governance and management, and in terms of payment claims and so on, to note that this was a project that had very significant potential benefit for broadband provision in the Border region and the North of Ireland. It also had significant potential benefit for business, education, research and development and SMEs, as well as in terms of creating more competition, given competition in the market at the time was quite restricted, as I understand it. Those would have been considerable advantages and drivers in the assessment panel's consideration of the project.

Despite the fact an awful lot has happened, including many things that should not have happened, the conclusion of the PRISA report in 2013 was that an effective piece of infrastructure was provided which had added benefits over and above the scope of the original project, albeit that it was a fraction of what was claimed and valued at a fraction of the grants that were paid through the INTERREG programme.

Joe Costello (Dublin Central, Labour)
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We will come to that. When Aurora Telecom came in, was that a major reason Bytel was successful?

Mr. Mark Griffin:

It was a significant part of the justification for that.

Joe Costello (Dublin Central, Labour)
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Aurora only lasted one month, from November to December 2004.

Mr. Mark Griffin:

Yes.

Joe Costello (Dublin Central, Labour)
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Was it coming on board as a sort of a ready-up to get Bytel across the line? How could it leave? Did it not have a contract as well? How could it just step in and step out so quickly after the contract was given to Bytel?

Mr. Mark Griffin:

There was no contract in place. There was a letter of commitment from a senior project manager in the company.

Joe Costello (Dublin Central, Labour)
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What legal status has that? That is not actionable.

Mr. Mark Griffin:

It would have been much more preferable if there had been a formal partnership arrangement that could have been relied upon, as I believe the ASM report concluded, or if the commitment to participate in the project had been authorised at senior level in the company, perhaps at board level. That did not happen. I do not get the sense that this was in any way a ready-up.

Joe Costello (Dublin Central, Labour)
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It seems very strange. Was any explanation given as to why a semi-State company related to Bord Gáis would have come in on a major contract and then, a month after it was granted and after the hard work was done, it should suddenly leave?

Mr. Mark Griffin:

As I understand it, there was a review by Bord Gáis of its operations generally and its strategic direction. As part of that review, the offer from Aurora fell away from the project.

Joe Costello (Dublin Central, Labour)
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Whatever that means.

Mr. Seamus McCarthy:

I might make an observation on that. The problem is really at the assessment stage where the structure that was being proposed and the certainty of engagement of Aurora with the project should have been identified as a critical risk. If it was not nailed down, then perhaps the decision to approve the project was not the right one. It is at that juncture that the risk should have been spotted.

Mr. Mark Griffin:

To pick up on that point, Aurora was in the project from April 2004, so it had been involved in-----

Joe Costello (Dublin Central, Labour)
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There was prior work done, then a month after it got the contract, when the hard work was done, it stepped away.

Mr. Mark Griffin:

Companies make business decisions. I do not know the rationale for that decision.

Joe Costello (Dublin Central, Labour)
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It must have come back in after the initial rejection of Bytel. It was a contributory factor in the final success.

Mr. Mark Griffin:

Yes, absolutely, and it was there until December 2004.

Joe Costello (Dublin Central, Labour)
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There is a serious question mark there. Has anybody asked Aurora to give an explanation as to why it tendered for this project, became semi-partners with Bytel and then did not pursue it? That is the key area in that everything goes wrong as soon as it pulls out.

Mr. Mark Griffin:

It is. I do not have any evidence as to whether that question was posed by the Department, although I do not believe it was. I suppose-----

Joe Costello (Dublin Central, Labour)
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The Department could still pose that question.

Mr. Mark Griffin:

We may well do so. The way I look at it is this: one loses one partner in December 2004 and one is active in pursuing a second partner to make sure the project proceeds. The more fundamental issue is why we did not adjust the letter of offer.

Joe Costello (Dublin Central, Labour)
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That is the point. Once Aurora pulled out, as Mr. Griffin said, the project had fundamentally changed but no new letter of offer was presented. If there was a fundamental change in the terms of the project, why were the alarm bells not going off? Why is it that somebody in the Department or, indeed, somebody in the SEUPB, would not insist that the new terms were reflected in a letter of offer to the new participants, or that there was not a reappraisal of the situation to ensure the new participants were doing the job they were supposed to be doing? They did not do the job they were supposed to be doing. They came down from Belfast to Dublin but they also went off to Tyrone, Donegal and Derry, which was not part of the contract that was given to Bytel. Surely somebody should have seen there was need for a fresh letter of offer and that we were facing a fundamentally different situation with a new partner, Eircom UK. That seems to me to be at the nub of the problem and where everything goes wrong. There was no appraisal, no supervision, no oversight and nobody recognising that the project had fundamentally changed. In retrospect, the witnesses are now agreeing to that. Why did that happen?

Mr. Pat Colgan:

If I can answer on behalf of our organisation, back then, the responsibility for monitoring and managing the conditions and implementation of the letter of offer sat firmly with the implementing agents and we took our assurances from them. The Deputy is right that this was a critical juncture in the lifetime of this particular project and I think that, had we been aware of the seriousness of it at the time, we would have acted differently. As it was, we asked for-----

Joe Costello (Dublin Central, Labour)
Link to this: Individually | In context | Oireachtas source

Was the SEUPB aware that Aurora was gone and there was a new partner in place?

Mr. Pat Colgan:

The SEUPB was aware there had been a change in the partnership and we sought reassurances from DETI that this did not fundamentally change the project. We did not have any telecoms people employed at the time.

Joe Costello (Dublin Central, Labour)
Link to this: Individually | In context | Oireachtas source

It did fundamentally change the project.

Mr. Pat Colgan:

It did. I agree with the Deputy. We took assurances from the implementing agencies that there was no fundamental change to the letter of offer, and we acted on those assurances. That would not happen today because we have changed the system entirely. We have a centralised control over the monitoring of conditions of letter of offer and anything like that would trigger a different kind of response nowadays. Back then, we relied on the assurances we received from two government Departments.

Joe Costello (Dublin Central, Labour)
Link to this: Individually | In context | Oireachtas source

I ask Mr. Griffin why the Department of Communications, Energy and Natural Resources and DETI gave those assurances to the SEUPB if everything had changed fundamentally.

Mr. Mark Griffin:

I said in my opening statement, and in some of my earlier responses, that this was a very significant opportunity to do something that would have made it clear what the nature of the revised project was.

It would have allowed us the opportunity to approach SEUPB with regard to a redefinition of the project, to have sought a revised letter of offer, to have secured an additional element for the project which would have been very beneficial to the north west of Ireland and to have reset the project costs, which would have led to a situation whereby the project promoter would not have been over compensated for work that was not done.

My own sense of it is that there was an urgency on the part of my own Department and the Department of Enterprise, Trade and Innovation to get a resolution to the difficulties that were posed by the project being changed by virtue of Aurora's withdrawal and to make sure that the original objectives of the project were achieved. Not enough attention was paid to the fact that from a governance and administrative point of view, the changes that arose would absolutely have required a change to the letter of offer. That cannot-----

Joe Costello (Dublin Central, Labour)
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That should have been obvious. It does not require rocket science to realise that fundamental changes had taken place and a new letter of offer was required to ensure eligibility in terms of being able to draw down the funds. Instead of going south, the project was going west and north west. Essentially, it was a different project from the one for which the funds had initially been drawn down.

Mr. Mark Griffin:

Yes, it was, although it was a project that would still have delivered the original objectives as defined in the original letter of offer, which involved Dublin and Belfast, via Dundalk and Drogheda, but-----

Joe Costello (Dublin Central, Labour)
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That is fine, but it is the extensions and the additions.

Mr. Mark Griffin:

I cannot answer that question and I do not know why that did not happen because the letter of offer is very clear. It states in black and white that when there is a change to the original letter of offer, the SEUPB must be notified and any changes approved. Those changes include, according to the letter of offer, "change in the content of the project from that set out in the original approved application, e.g., changing the scope, delivery or aim". All of those boxes were ticked in terms of absolutely requiring a revision of the letter of offer. Putting myself in the shoes of the people who were involved at that time, I suspect that the principal focus was on getting the project back on track and ensuring that they delivered an outcome. That appears to have put the requirement to deal with the administrative aspects and the need to draft-----

Joe Costello (Dublin Central, Labour)
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Would Mr. Griffin agree that it is unacceptable that a second letter of offer was not drawn up?

Mr. Mark Griffin:

Absolutely, there is no question about that.

Joe Costello (Dublin Central, Labour)
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I wish to raise one last point relating to the infamous Nortel racks and the fact that they were not eligible to be purchased under the letter of offer in the first place. The racks were obsolete. A sum of €1.3 million was paid for them, even though they were only valued at €30,000. The racks were never used and yet the money was paid up quickly. How could something like that happen? Would anybody like to answer that?

Mr. Mark Griffin:

From our own point of view, the role of the implementing agent at the time was to carry out verification of expenditure and to assure us that it was appropriate and proper. We did not have a direct role in doing that kind of verification at the time.

Joe Costello (Dublin Central, Labour)
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So it was the two implementation bodies?

Mr. Mark Griffin:

We took assurances from them and they submitted paper work to us. We carried out our own review.

Joe Costello (Dublin Central, Labour)
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They submitted paper work to verify that they were satisfied that this was money that was being spent properly. They would have been contacting the Department about the draw down of the grants.

Mr. Mark Griffin:

That is right.

Joe Costello (Dublin Central, Labour)
Link to this: Individually | In context | Oireachtas source

The Department would have been the channel for the drawing down of the grants.

Mr. Mark Griffin:

That is right.

Joe Costello (Dublin Central, Labour)
Link to this: Individually | In context | Oireachtas source

Therefore, the two bodies would have given confirmation that they were satisfied that this was verified and that it was proper to draw down €1.3 million for obsolete equipment that was never used and that was not eligible for purchase under the letter of offer in the first place.

Mr. Mark Griffin:

That is a fair summary of what happened.

Joe Costello (Dublin Central, Labour)
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Is that not major negligence? Taxpayers' money was spent but obviously no verification was done. Had verification been done, it would have been obvious that this was not right. To make matters worse, it was a sister entity of Bytel which provided these obsolete goods so there are other questions to be answered in that regard.

Mr. Mark Griffin:

There are a few issues involved in this, which is probably one of the more controversial aspects of the whole project. The Deputy is right that the letter of offer that was issued listed in the annexe an extensive list of items that the project promoters would fund themselves. That list included the €1.3 million Nortel equipment. When the payment claim was made we were not aware at the time that Aurora would not be part of the project ultimately. The payment claim was made in November 2004 and Aurora withdrew from the project in December 2004. At that time, on the face of it, the Nortel racks would have been required to light the Aurora dark fibre. That does not obviate the fact that the Nortel racks were meant to be a contribution-in-kind by Bytel to the project. The conclusion drawn in the Northern Ireland Audit Office, NIAO, report was that in the face of the possibility of EU funding being lost due to an impending N+2 deadline, it was agreed that the Nortel racks could be grant aided within the first claim. I presume the assumption was made that there would be an opportunity later in the process to claw back any moneys from the subsequent and final claims that would be made so that the overall figure of €4.3 million that was to be grant-aided from INTERREG would not be exceeded.

The other issue which arises with regard to the Nortel racks is that of their valuation. The ASM review and the whistleblower allegations that fed into that concluded that the Nortel racks were only worth a fraction of the value of the €1.3 million claim. I believe a figure of €30,000 was put on them. In mitigation, I would draw attention to the economic appraisal of the Bytel project that was conducted in 2004, prior to the project being approved. In that appraisal, Deloitte valued the Nortel racks and deemed that the figure of €1.3 million was more or less in line with the market price for these racks. The ASM report concluded that on balance, based on the information provided to ASM, it was appropriate in November 2004 "to rely on the Deloitte economic appraisal". When one looks at what ASM subsequently concluded following its evaluation of the four payment claims that were submitted to the Department of Enterprise, Trade and Investment, the €1.3 million racks were discounted in terms of their entitlement to be eligible for INTERREG funding and that was on the basis of the fact that they were to be a contribution-in-kind by Bytel to the project.

There is a range of issues surrounding the Nortel racks and I understand that they are one of the issues which are the subject of the statement of claim for the writ in Northern Ireland. That said, we need to distinguish between what was known at the time and the information that was available subsequently. What was known at the time was-----

Joe Costello (Dublin Central, Labour)
Link to this: Individually | In context | Oireachtas source

Was it known at the time that they were obsolete and could not be used?

Mr. Mark Griffin:

No.

Joe Costello (Dublin Central, Labour)
Link to this: Individually | In context | Oireachtas source

That was not known at the time. Is Deloitte included in the statement of claim?

Mr. Mark Griffin:

I do not believe so.

Joe Costello (Dublin Central, Labour)
Link to this: Individually | In context | Oireachtas source

But Deloitte gave a clean bill of health for €1.3 million?

Mr. Mark Griffin:

Deloitte gave a clean bill of health as part of an overall economic appraisal of the project. It verified that the valuation of the Nortel equipment that was required to light the dark fibre would be in the order of €1.3 million.

In fairness, Deloitte would not have done an assessment on the specific equipment that was to be used, nor would one expect as much. Deloitte would not have known, for example, the equipment used on the project was not new.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I will conclude on this point before I call Deputy O'Donovan. Where are the racks now?

Mr. Mark Griffin:

I have no idea.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who owns them?

Mr. Mark Griffin:

Again, I do not know that.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who paid for them?

Mr. Mark Griffin:

They were paid for through the payment claim that was authorised back in 2004. Again, that is the subject-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

No. Who paid for them?

Mr. Mark Griffin:

Bytel paid for them.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Who paid Bytel?

Mr. Mark Griffin:

The payment claim was authorised by Western Connect and approved by the Northern Ireland Department of Enterprise, Trade and Investment.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who paid for it?

Mr. Mark Griffin:

It was funded through the INTERREG grant.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Whose money was it?

Mr. Mark Griffin:

It was EU funding, which was subsequently recouped.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who wrote the cheque to pay Bytel?

Mr. Mark Griffin:

The cheque was probably written by the SEUPB.

Mr. Pat Colgan:

It was written by the paying authority, the SEUPB.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It was written by the SEUPB. Is that the case?

Mr. Pat Colgan:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Where did that money come from?

Mr. Pat Colgan:

It would have been cashflowed by a drawdown from one of the departments, DETI or the Department of Communications, Energy and Natural Resources. We would then have claimed it back from the Commission.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Hold on. I missed that point. Where did the money come from? I am referring to the fund or the cheque the SEUPB wrote to pay Bytel.

Mr. Pat Colgan:

It came from DETI and the Department of Communications, Energy and Natural Resources in the first instance.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Therefore, it came from your Department, Mr. Griffin. I acknowledge the fact you were not there at the time. We are simply discussing the Department and how it functions. Department money was paid to Bytel and Bytel paid for these famous racks. Who owns the racks now?

Mr. Pat Colgan:

I think Bytel owns them, but I am not sure. I do not know, Chairman.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The SEUPB paid for them.

Mr. Pat Colgan:

Yes, we paid for them.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

So who owns them?

Mr. Pat Colgan:

It was a grant given to the company as part of the funding of the project.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Therefore, the SEUPB does not even have scrap value. Is that the case?

Mr. Pat Colgan:

That is another matter. As I said, it no longer forms part of the European Union programmes. It is a matter between DETI and its engagement with the company in respect of the legal issues.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The Department of Communications, Energy and Natural Resources has nothing to do with that legal process. Is that the case?

Mr. Pat Colgan:

I did not say that. I am not sure.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

You only mentioned it. I presume from your answer, therefore, it is only DETI. If it is not only DETI, then you should say it.

Mr. Pat Colgan:

DETI definitely issued the writ. I do not think the Department was associated with the writ. Is that fair enough, Mr. Griffin?

Mr. Mark Griffin:

We are not party to it.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I did not ask you who was party to the writ. I am asking whether Irish taxpayers' money was involved in the payment to Bytel for the €1.3 million worth of racks.

Mr. Mark Griffin:

There would be some Irish taxpayers' money.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Since that was a grant, the Department has no hold over the equipment. Is that the case?

Mr. Mark Griffin:

No.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is that "No" that the Department has no hold over the equipment or "No" that it has?

Mr. Mark Griffin:

It is "No". We do not have a hold over it.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What did ASM Accountants say about these racks, if anything? What was the role of Deloitte? Deloitte is a reputable company. It has stated the racks are worth €1.3 million. Someone else has said they are only worth €30,000. Which do you think is the correct figure?

Mr. Mark Griffin:

The Deloitte appraisal, which was done in 2004 when the project was under consideration for funding under the telecommunications measure, concluded that the valuation on the Nortel racks of €1.3 million was reasonable. I would need to check it. I am not sure whether Deloitte was making a general statement in respect of that type of equipment to the effect that it would be appropriate to assign a value of €1.3 million-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

No, Deloitte is saying-----

Mr. Mark Griffin:

-----or whether the specific equipment that was to be used in the project was worth €1.3 million.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I will tell you what Deloitte is saying. Deloitte is saying that €1.3 million is reasonable on the basis of the information available to the firm.

Mr. Mark Griffin:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

You have made statements "on the basis of the information available" to you. You used that phrase as well.

Mr. Mark Griffin:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Everyone seems to be saying "on the basis of the information available to me". That is the get-out explanation. That is how I perceive it. You will have to forgive me; I am only a layman. I put it to you that if I was paying out €1.3 million, I would not be doing it on a nod from someone else. I would be doing it on the basis of an assessment.

We are either saying that the equipment is worth €1.3 million on the basis of the Deloitte report or we are saying that it is only worth €30,000 based on someone else's report. I am asking you what you think it is worth based on what you have read and the details of this complete inefficiency in terms of the spend of taxpayers' money. It is a shambles. What do you think those racks are worth? How does the Department ascertain what they are worth? Does it go by Deloitte or by whoever told the Department they were worth €30,000?

Mr. Mark Griffin:

I go by what ASM says as well. ASM concluded in its report that on balance, and based on the information provided to the firm, it was appropriate in November 2004 to rely on the Deloitte economic appraisal. These are reputable forensic accountants and that is stated in page-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is that the €1.3 million figure?

Mr. Mark Griffin:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Then where did the €30,000 come from?

Mr. Mark Griffin:

I believe that was an assertion by the whistleblower in 2008.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Did anyone investigate the whistleblower's information or why that person believed the racks were only worth €30,000? By the way, without naming the whistleblower or whistleblowers, who were they? Were they people who thought they knew something? Were they people who knew something? Obviously, they did. Were they directors of the company? Were they two different people?

Mr. Mark Griffin:

Certainly, in the 2006 allegations the whistleblower was a director of the company.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Was that whistleblower the person who told the Department they were only worth €30,000?

Mr. Mark Griffin:

I do not know if that figure was quoted in 2006. It was part of the 2008 allegations, which were notified to our Department in December 2010.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who notified the Department of that?

Mr. Mark Griffin:

We were notified by the SEUPB when it became aware-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Was that a different whistleblower?

Mr. Pat Colgan:

That was in 2008. In 2006 - I mentioned this in my earlier intervention - we were alerted to that whistleblower incident and we had a meeting with DETI officials.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Was that the company director?

Mr. Pat Colgan:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who was the other whistleblower?

Mr. Pat Colgan:

The incident in 2008 was a separate whistleblowing incident. I do not know if it was the same person. We were not informed about that incident.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who knows about it?

Mr. Pat Colgan:

We did not know until February 2010.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The SEUPB did not know about that whistleblower. Who knew about the second whistleblower?

Mr. Pat Colgan:

The Northern Ireland Department of Enterprise, Trade and Investment knew.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Where was that person? Was that another director?

Mr. Pat Colgan:

I do not know who the second whistleblower was.

Mr. Mark Griffin:

We understand it was the same director.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Only a minute ago, Mr. Griffin, you told Deputy Costello that there were two different whistleblowers. Is that not right?

Mr. Mark Griffin:

There were two different whistleblower allegations, one made in 2006 and one made in 2008.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

They were made by the same whistleblower. Is that the case?

Mr. Mark Griffin:

Yes, as we understand it.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I take it that was the same whistleblower. Did that whistleblower tell the Department that these racks were worth €30,000? If not, who told the Department that?

Mr. Mark Griffin:

That was in 2008.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

A director of the company must have had knowledge of the purchase of this type of equipment. He probably knew how much that equipment was purchased for. He told the Department that it was worth €30,000.

Mr. Mark Griffin:

He told DETI.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

He told DETI. Is that right?

Mr. Mark Griffin:

Yes, and that information was made available to us in-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What the Department's report is saying to the committee, and what your answer is telling me, is that rather than relying on that, the Department is relying on the information that Deloitte gave to the Department to the effect that the equipment was worth €1.3 million.

Mr. Mark Griffin:

No, I am relying on the ASM review.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

You are referring to the company that carried out the report. Is that right?

Mr. Mark Griffin:

It was on foot of the 2008 whistleblower allegations.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That company has said that the equipment is worth €1.3 million in its report.

Mr. Mark Griffin:

ASM stated that on balance it was appropriate in November 2004 to rely on the Deloitte economic appraisal.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That is gobbledygook to me. Mr. Griffin is telling me that in 2004 it was okay to rely on something, but Deloitte said it made the report on the basis of the information available. On the basis of the information available from the whistleblower the figure was €30,000, so where did Deloitte get the information that gave them the confidence in the figure of €1.3 million?

Mr. Mark Griffin:

They based it on industry price lists at the time.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

There is an industry price list stating the equipment was worth €1.3 million, but a director centrally involved in the case blew the whistle and said the equipment was worth €30,000?

Mr. Mark Griffin:

He blew the whistle four years later and our Department was advised two and a half or three years after that.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I am not asking that question. I want to find out what the foundation was for the belief that the value of the equipment was €1.3 million. The next question is the obvious one. Why is there such a difference between the two figures, €30,000 and €1.3 million? Did someone investigate that? Did somebody go further than Deloitte or ASM and go back to the whistleblower to ask him where he got the figure of €30,000? Did anyone ask for the original purchase invoice for the racks or documentation between the company that sold them and the company that bought them? Has anybody seen the invoice?

Mr. Mark Griffin:

It is an allegation.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

An invoice is not an allegation. Did anyone ask for or see the invoice for the purchase of those racks?

Mr. Mark Griffin:

I do not know the answer to that question.

Mr. Pat Colgan:

May I make an intervention? The information we have, which is contained in the report, is that the DETI internal audit looked at the accounts of XMCC, which was the account involved in that transaction. In the 2005 accounts it states that the company may have sold an asset for significantly more than it had cost. It goes on to state that Bytel was unable to produce an original supplier invoice for the equipment. That is from the DETI internal audit.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Where, then, did Deloitte get the information it relied on and which gave it comfort to tell the Department and the SEUPB that it was worth €1.3 million? It is very vague. It does not say it is worth €1.3 million but that "on the basis of information available" it is worth €1.3 million. Can Mr. Colgan or Mr. Griffin give me the documentation that will clearly show the information on which Deloitte based its conclusion?

Mr. Pat Colgan:

The answer to that is "No". The Deloitte report was an overall economic appraisal of the project. One element of the report was an opinion on the potential value of the equipment in question, and our understanding is that they gave an estimate based on their experience within the industry.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

They gave an estimate based on the information available to them. All I am asking Mr. Colgan to do is to go back to Deloitte and ask them to explain how they arrived at the information on which they based their estimate of €1.3 million. What is the rationale behind it and what paperwork did they use?

Mr. Pat Colgan:

When we commissioned the ASM report in 2011 we spoke to Deloitte about the matter and they could not provide any satisfactory explanation.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

So it is a nonsense.

Mr. Pat Colgan:

I am only putting the facts in front of the Chairman.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I know, but Mr. Colgan should be doing more than that. It is a complete nonsense. Mr. Colgan is using the name "Deloitte" to give some weight and significance to what happened. We have a figure of €1.3 million and we have no background information behind it. It is ridiculous to come to the Committee of Public Accounts and put before it the notion that his body has a weighty document telling us the equipment was worth €1.3 million when it does not have any such thing. It does not even have the invoice from the seller to the purchaser, just some information that states the company got substantially more money than the value of the racks. The witnesses do not even know where the racks are. We do not even own them and we are not even sharing them with the agency in Northern Ireland.

How much did the ASM report cost?

Mr. Pat Colgan:

Does the Chairman mean the 2011 report?

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Was there another one?

Mr. Pat Colgan:

A draft report was commissioned in 2009.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That is the one that was unfinished.

Mr. Pat Colgan:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

How much did that cost?

Mr. Pat Colgan:

That one was commissioned internally by DETI. It had nothing to do with us.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Did Mr. Colgan not ask them?

Mr. Pat Colgan:

It concerned their own expenses.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Did Mr. Griffin ask DETI how much that report cost?

Mr. Mark Griffin:

No.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We do not know how much the unfinished report cost. How much did the finished report cost?

Mr. Pat Colgan:

There was an initial estimate of costs of £19,347 plus VAT. Some additional work needed to be carried out in 2011, which cost an additional £10,000, making a total cost of £29,347 plus VAT.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Why was the additional work not included in the original request?

Mr. Pat Colgan:

The draft of September 2011 which was presented to the project board went through the initial analysis, and the initial findings identified the need to go back and ask some further questions, particularly of the directors of Bytel and some other key individuals. That work required a number of interviews to be carried out and the report to be written up.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

How much did the Deloitte report cost?

Mr. Pat Colgan:

The Deloitte report of 2004-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Sorry to interrupt, but who paid for that report?

Mr. Pat Colgan:

It would have been paid out of technical assistance from the INTERREG programme which we managed. It was based on a submission from DETI to us.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

More taxpayers' money.

Mr. Pat Colgan:

Yes. It cost £11,460, including VAT.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What was that for?

Mr. Pat Colgan:

That was Deloitte.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

So the £19,000 plus VAT, the £10,000 plus VAT and now the £11,000 was paid out of the European funds.

Mr. Pat Colgan:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Despite all those reports, we still do not know the real value of the racks and we still do not own the racks. There are a number of other things, which I will raise after Deputy O'Donovan has finished, that we do not know about either. I find that shocking.

I am coming to my last question. Does the paperwork provided to the Department for payment show how many payments were made relating to the millions that were lost?

Mr. Mark Griffin:

There were four payments.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Can the witnesses give me the amount of each payment?

Mr. Seamus McCarthy:

At the top of page 28, figure 3.1 contains the details of the payments. It is shown on the screen.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

When did we make the payments?

Mr. Mark Griffin:

The first was made in November 2004, the second in September 2005, the third in October 2005 and the fourth in November 2005.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Were they the overall payments?

Mr. Mark Griffin:

Yes, they were the total payments made.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

How much did we pay?

Mr. Mark Griffin:

The INTERREG grant was €4.3 million. The Irish Exchequer paid €0.5 million of our own matched funding and €1.762 million of ERDF funding. This was subsequently deemed ineligible and had to be repaid to the ERDF, which was done by retaining funding due to Ireland under INTERREG IV.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who wrote the cheques at the Irish end of this?

Mr. Pat Colgan:

The cheques would have been written by the paying authority in the SEUPB.

Mr. Mark Griffin:

Our Department would have paid our matched funding to the SEUPB.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who signed off on them?

Mr. Mark Griffin:

They would have been signed off in our Department.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

At what level?

Mr. Mark Griffin:

They would have been signed off ultimately by the accounts branch in our Department, although I am not sure at what level. The individual who was monitoring the project and dealing with that aspect from the Department was at a junior level.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Tell me exactly what happens with that type of payment. Does an invoice arrive?

Mr. Mark Griffin:

The invoice came in to DETI, as I understand it. For the first two payments, Western Connect and DETI would have signed off on them in terms of their eligibility. The copies would have been sent to our Department. We would have paid the match funding that was due relative to the claim to the SEUPB, and the SEUPB pays the project's promoter.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Essentially, although the money goes to Mr. Colgan's section, your Department gives him the money to pay it out.

Mr. Mark Griffin:

We give him some of the money to pay out.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What payments were issued directly to Mr. Colgan's agency?

Mr. Mark Griffin:

Over the period of the four payments, it would have amounted to a total of just over €0.5 million from our Department to the SEUPB. The SEUPB would have added its ERDF or INTERREG funding to make the relevant payment to the project promoter, in this case Bytel.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What paperwork would have been received in the clearance from Northern Ireland?

Mr. Mark Griffin:

We would have received a copy of the Bytel payment authorisations with the notification from Western Connect and DETI that the documentation is held by both parties and that they have been assessed, and approved, by Western Connect and DETI.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is it a junior official that signs off?

Mr. Mark Griffin:

It was at that point.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That official signs off-----

Mr. Mark Griffin:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

-----and then the payment is made.

Mr. Mark Griffin:

The payment is made from our accounts section.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

There are no cross-checks with anybody else within the Department.

Mr. Mark Griffin:

No. Within the Department, at that stage in the payment process, there was not.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

On how much money, at that time, was a junior official allowed to sign off? Was there a limit?

Mr. Mark Griffin:

It is not clear that there was a limit.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

There was no limit.

Mr. Mark Griffin:

I am not aware that there was a delegation of a signing authority to the official concerned. I suppose, in mitigation-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

There was a signing authority to the official concerned, but there was no limit on that signing authority.

Mr. Mark Griffin:

The limit was dictated by the overall level of match funding, which was €0.5 million.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

If it had been €1 million, that junior official would still have been able to sign off on it.

Mr. Mark Griffin:

I am not clear if that is the case, but I would imagine so.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I call Deputy O'Donovan.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am a relatively new member of the committee and what I have heard this morning is staggeringly unbelievable as regards the level of incompetence with taxpayers' money in the organisation over a period of time. This sum is probably at the lower level in the context of the amount that the Comptroller and Auditor General normally deals with, but there was no control of any description.

Did the Secretary General of the Department at the time make the Minister aware of it?

Mr. Mark Griffin:

First, one must bear in mind that the allegations regarding issues and potential irregularities with this project were first raised in 2006, which was at least a year after the project concluded. The second set of allegations were made in 2008, which was three years after it concluded. We were not advised of the issues relating to the second set of whistleblower allegations until December 2010.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I know that. Was the Minister told?

Mr. Mark Griffin:

I do not have any evidence that he was.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

A whistleblower makes an allegation to the Department-----

Mr. Mark Griffin:

Yes.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

-----through a convoluted web and the Department, at some stage, realises that there is a problem and that €2 million has vanished into thin air, but nobody thought it important enough to tell the Minister.

Mr. Mark Griffin:

First, the whistleblower allegations were made to DETI. They were not made to our Department-----

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I know that; we have heard that several times.

Mr. Mark Griffin:

It is important to understand that.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I know that. However, when the Department of Communications, Energy and Natural Resources became aware of it, realised it was a problem and took action, although the action it took was very limited, why did it not tell the Minister?

Mr. Mark Griffin:

I do not know if the Minister was told. The Minister may well have been told and I will check the records to see if that is the case. Certainly, the Secretary General of the Department was all over this when the allegations were advised to us in December 2010.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Comptroller and Auditor General has produced a report which Mr. Griffin is before the Committee of Public Accounts today to discuss. Surely somebody in the Department, in advance of this meeting, would have deemed it important to find out whether the Minister of the day was apprised of the situation.

Mr. Mark Griffin:

I will check that and let the committee know.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Chairman, it is unbelievable that the Accounting Officer of a Department does not know if the Minister of the day was told that €2.3 million of taxpayers' money vanished into a vanity project that was never going to be-----

Mr. Mark Griffin:

Ultimately, on issues such as this the buck stops with the Accounting Officer. It is important that the Accounting Officer is all over this.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

With respect, the difference is that Ministers get fired. The Chairman asked Mr. Griffin earlier who had been fired because of this, and Mr. Griffin said nobody had been. Ministers are the people who ultimately carry the can for public expenditure. With the greatest respect, Mr. Griffin will not be held to the same level of accountability as a Minister. I feel as if I am on the set of an episode of "Yes Minister", in which Jim Hacker was asked about the famous hospital that had no patients and he knew nothing about it. This was important. If the Secretary General of a Department does not know whether his Minister was apprised of the disappearance of €2.3 million in taxpayers' money, that is very serious.

Mr. Mark Griffin:

I need to check whether the Minister was informed at that point in 2011, almost three years after the whistleblower allegations were made in the North and advised to us. I know for a fact that as soon as the information was made available to our Department we took steps, in conjunction with the SEUPB and DETI, to see what needed to be done to get to the bottom of this. That involved the ASM review, which was a very forensic analysis of what happened. Second, we commissioned-----

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That analysis was so forensic that we do not know where the racks are, we do not know how Deloitte managed to pluck €1.3 million out of the sky as it appears to have done in an economic appraisal, we do not have an invoice and it was also so forensic that all these years later we do not know if the Minister was told.

Mr. Mark Griffin:

It may well have been the case that ASM looked more forensically at the issue of the Nortel racks and the valuation that was put on them at the time of €1.3 million. It concluded that, at that time, it was reasonable to accept a valuation of €1.3 million. I cannot tell the Deputy, for definite, what that was based on, but I will find out and I will let the committee know.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

From what we have heard so far, we are aware that the whistleblower was in some way connected with the company that purchased these things, so one would imagine that he would have known what the true value of these items was. He put a figure of €30,000 on it.

Mr. Mark Griffin:

One could take that view. However, one could also take the view, as was asserted back in 2006 when the initial whistleblower allegations were made, that this was an internal company dispute. I cannot say whether it was €30,000, €1.3 million or a figure in between. This matter will be the subject of consideration in the court proceedings that we discussed earlier.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. Colgan said that somebody has informed him that these racks were purchased for far less than the sum for which they were sold, at €1.3 million.

Mr. Pat Colgan:

Can I clarify, Chairman?

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Yes.

Mr. Pat Colgan:

I was referring to a 2009 DETI internal audit review of the situation, at which point DETI would have looked at the accounts of XMCC, which is the company involved.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

For Deputy O'Donovan's benefit, will you tell him again what you told me in this regard?

Mr. Pat Colgan:

The finding of the DETI internal audit review at the time was that XMCC's 2005 accounts - remember it was in 2009 that it discovered this - indicated that the company may have sold an asset for significantly more than it had cost.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Will you repeat that?

Mr. Pat Colgan:

The 2005 accounts of the company involved, XMCC, which related to transactions in 2004, indicated that the company might have sold an asset for significantly more than it had cost.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is Mr. Colgan referring to the auditor's report?

Mr. Pat Colgan:

It is the internal audit report which was compiled in 2009. It also stated Bytel was unable to produce an original supplier invoice for the equipment. It is important to point out that both we and the Department of Communications, Energy and Natural Resources were in the dark in respect of these issues. We were not informed of them.

The terms of reference for the ASM report commissioned by us in 2011 were very clear. We asked the consultants to look at the project, determine the eligibility of the expenditure incurred and come back to us with a determination. ASM's forensic approach, therefore, was focused entirely on the eligibility of the expenditure.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

In other words, its examination of the matter was not as forensic as we might have been led to believe?

Mr. Pat Colgan:

It was forensic in the sense that it went into-----

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The review just looked at the issue of eligibility; it did not look at the outcome. We do not know where the racks are or whether they have any scrap value. We do not know who owns them or whether we will get anything back for the taxpayer. We are left with a lot of unanswered questions. It has cost £30,000 in investigations to get to this point.

Mr. Pat Colgan:

I informed the Minister for Public Expenditure and Reform and the Northern Ireland Minister for Finance and Personnel of what we knew about this matter at a meeting of the North-South Ministerial Council in January 2011.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Was this the first knowledge the Ministers had of the issue?

Mr. Pat Colgan:

I only became aware of it in December 2010.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Was it at the January 2011 meeting the Ministers first had notice of the matter?

Mr. Pat Colgan:

Yes, as far as I am concerned.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Therefore, the first the Minister for Public Expenditure and Reform who is ultimately the paymaster in this matter heard of it was from Mr. Colgan in January 2011?

Mr. Pat Colgan:

It is the nature of how these funds are-----

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is it the case that the Department of Communications, Energy and Natural Resources did not inform the Department of Public Expenditure and Reform?

Mr. Pat Colgan:

It would not have been the responsibility of the Department of Communications, Energy and Natural Resources to do so.

Mr. Mark Griffin:

I have already said I do not know whether the Minister was informed.

Mr. Pat Colgan:

The Departments to which we are accountable are the Department of Public Expenditure and Reform in Dublin and the Department of Finance and Personnel in Belfast.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

To clarify, the Minister for Public Expenditure and Reform was informed of this matter by Mr. Colgan at the meeting of the North-South Ministerial Council and this was the first he had heard of it?

Mr. Pat Colgan:

Yes.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That is unbelievable. This money has vanished; nobody was or will be fired as a consequence, and the first the person ultimately responsible for the State's expenditure knew of it was when Mr. Colgan notified him at the meeting of the North-South Ministerial Council.

Mr. Pat Colgan:

It is important to point out that the SEUPB only became aware of the seriousness of the issue-----

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I do not have a difficulty with that. My concern is that there seems to have been no communication between the Department of Communications, Energy and Natural Resources, the Southern leg of the arrangement, and the Minister for Public Expenditure and Reform. Does Mr. Griffin accept that is a fair conclusion?

Mr. Mark Griffin:

The Department of Public Expenditure and Reform was informed of the ASM report.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

However, the Minister was not.

Mr. Mark Griffin:

I do not know what that Department did internally with the information it had received.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Mr. Griffin does not even know if his own Minister was informed.

Mr. Mark Griffin:

I have already answered that question. I told the Deputy I would find out whether he was informed at the time.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

It is the Minister who will ultimately be held accountable by the public in this matter. Mr. Griffin has indicated that nobody was fired as a consequence of what had happened. Are all of the departmental staff who dealt with this matter in the same roles or has any of them been promoted?

Mr. Mark Griffin:

The individual who dealt with this has moved to another Department. In fact, if memory serves me right, he moved around 2006.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Has he been promoted?

Mr. Mark Griffin:

I do not know.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Where is he now?

Mr. Mark Griffin:

He is in another Department.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Does he have an expenditure remit?

Mr. Mark Griffin:

I have not tracked his career.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Has the Department to which he moved been made aware of this matter?

Mr. Mark Griffin:

I suspect not.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

After serving as Accounting Officer in the Department of Communications, Energy and Natural Resources, this individual was moved to another Department. We do not where he is - a little like the racks - and what new role he is performing.

Mr. Mark Griffin:

In fairness to the individual concerned - I do not like to personalise this issue------

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Neither do I.

Mr. Mark Griffin:

However, the Deputy is doing so. I set out clearly the role of the Northern Ireland Department of Enterprise, Trade and Investment and the role of my Department in terms of how these matters are managed. It is very clear where the demarcation of roles was in practice. The Deputy might not have been in the room when I said there were a number of junctures where the Department should have become more involved and where it could have made a difference.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The taxpayer is out of pocket to the tune of €2 million.

Mr. Mark Griffin:

I understand that and we are involved-----

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I have been here for all of the meeting. In response to Deputy Derek Nolan, Mr. Griffin said he was confident, based on internal audit reports from the DETI and others, that what had happened here could not happen again. I cannot say I am similarly confident, based on what I have heard today. In fact, I would say all of the INTERREG projects to which Mr. Colgan referred should be examined as a matter of urgency.

Mr. Mark Griffin:

There were audits of the INTERREG projects by the DETI and also separately by the SEUPB.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Were they internal audits?

Mr. Pat Colgan:

There would have been quite a significant component of external auditing of the programme as part of the closure procedure but also during the lifetime of the programme by the European Court of Auditors, the Directorate General for the European Regional Development Fund in Brussels which would have undertaken its own audits and by way of regulatory-required audits which would have been commissioned and carried out by us. There is a suite of audits. The SEUPB is audited by the Northern Ireland Audit Office in co-operation and partnership with the Comptroller and Auditor General. It audits our accounts and does sample checks on verifications and a range of different things we do. As I said, it is the nature of auditing that one cannot give an absolute guarantee-----

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

It is the nature of auditing that has us here. The Minister for Public Expenditure and Reform did not hear about this matter until 2011. We do not know whether the Minister for Communications, Energy and Natural Resources has been told about it. He will probably read about it in tomorrow's newspapers and, for all we know, it might be the first he will have heard of it. It is a shambles. Has An Garda Síochána been notified of the matter?

Mr. Mark Griffin:

No.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Why not?

Mr. Mark Griffin:

The Garda was not notified because the project was primarily dealt with in the North. The Police Service of Northern Ireland was notified and a court case is being pursued in the High Court in Belfast.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Based on all of the information we have been given today, or the lack thereof, we are looking at valuations and no valuations, invoices and no invoices, whistleblowers' information not being acted on, actions taken by directors and a clatter of other things. It is an unseemly mess. Does Mr. Griffin agree that it is necessary for the Department to notify the Garda that there could be a problem?

Mr. Mark Griffin:

The project was implemented in the North and the case is being pursued in that jurisdiction. Any money recouped through that case will be shared between the Northern Ireland Exchequer and the Southern Exchequer.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is it a police investigation?

Mr. Mark Griffin:

No, it is a civil matter, as I understand it.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Has the DETI referred the matter to the PSNI?

Mr. Mark Griffin:

I understand it did so at one point in time.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

What was the outcome?

Mr. Mark Griffin:

I do not know.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Did the PSNI contact the Department of Communications, Energy and Natural Resources to request assistance in the matter?

Mr. Mark Griffin:

To the best of my knowledge, it did not.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The matter has not been investigated south of the Border?

Mr. Mark Griffin:

It is a civil matter that is being pursued in the courts in the North.

Patrick O'Donovan (Limerick, Fine Gael)
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That should be reviewed. There is a great deal in the report that stinks to the high heavens. The way in which the matter was handled, from a public point of view, was absolutely appalling. Has there been any demand from the EU authorities for a refund in the aftermath of this incompetence? In other words, will there be any penalty for Ireland as a consequence of this shambles?

Mr. Pat Colgan:

There is no question of a refund because we never drew down the money for the project from the Commission.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Mr. Griffin has indicated that he is satisfied the other INTERREG projects to which he referred are okay. He has mentioned that Bytel has been reincarnated as a company called Atlas Communications.

Mr. Mark Griffin:

As I understand it, that is the case.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Has the Department had dealings with that company?

Mr. Mark Griffin:

From a business perspective, no.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Does Mr. Griffin know whether the State has had further dealings with it?

Mr. Mark Griffin:

I do not know.

Patrick O'Donovan (Limerick, Fine Gael)
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Is that something which will be checked out? Does the Department have any relationship with the new company?

Mr. Mark Griffin:

No, we do not.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Deputy Patrick O'Donovan made a point about the amounts of money involved and the amount of money lost. We have had hearings on cases in which far greater sums were lost.

The issue that arises relates to governance, proper procedures, etc. Mr. Colgan stated that there was a cascade of governance and assurance-type arrangements and procedures and manuals in place and outlined his view to the effect that these were sufficiently robust. I inferred from his statement that people on the administrative side in both Departments were educated and up to speed regarding what they were dealing with in this project. Am I correct?

Mr. Pat Colgan:

I am satisfied that the systems that were put in place had been designed and agreed in partnership with the two member states-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is not what I asked.

Mr. Pat Colgan:

The answer to the Chairman's question is "Yes."

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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So individuals were briefed, trained and educated.

Mr. Pat Colgan:

We would have provided training on specific dates in 2004 and again in 2006 in respect of the role.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is Mr. Colgan disappointed that the educational process failed?

Mr. Pat Colgan:

Everybody associated with the project is very disappointed with the way it has been managed.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is Mr. Colgan disappointed that the individuals who were trained did not measure up?

Mr. Pat Colgan:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Were these individuals from the Department?

Mr. Pat Colgan:

Representatives from both implementing agencies would have been involved in the training.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who would have been involved - and at what level - from the Department?

Mr. Pat Colgan:

The same person who would have been responsible for the day-to-day management of the project within the Department would have been involved in that training.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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At what level did that person operate?

Mr. Pat Colgan:

That is really a question for the Department.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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No, it is a question for the SEUPB, because it trained them.

Mr. Pat Colgan:

I do not know what grade the individual held. He was the person nominated by the Department to be responsible for the management of the project.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Would the SEUPB not have requested a person at a particular grade?

Mr. Pat Colgan:

Not particularly, no.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

So the SEUPB did not mind who was appointed as long as someone turned up to the show.

Mr. Pat Colgan:

It is the responsibility of the Department to put in place somebody who is capable of managing a project and to ensure that person is of-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

And the SEUPB does not check whether that person has the ability to manage a project?

Mr. Pat Colgan:

As stated earlier, we accepted assurances from two Departments, one in Belfast and the other in Dublin.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

So the SEUPB relies mainly on assurances.

Mr. Pat Colgan:

Back then we did. We have changed the system in the interim.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I want to know what happened back then.

Mr. Pat Colgan:

That is fair enough.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Back then the SEUPB took it for granted that the people who ran the Department would have the common sense to select the person best qualified to manage this type of project.

Mr. Pat Colgan:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is Mr. Griffin of the view that the individual chosen was the best person for the job? Will he indicate whether it was one person or a number of people?

Mr. Mark Griffin:

It may have depended on the measure. There was the telecoms measure but we were also involved in energy projects.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What about this particular project?

Mr. Mark Griffin:

From what I can see, one individual was dealing with the project as part of what was probably a range of other work in which he was involved.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What grade did the person hold?

Mr. Mark Griffin:

He was at a junior level. He was an executive officer in the Department.

Patrick O'Donovan (Limerick, Fine Gael)
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How junior was the individual concerned?

Mr. Mark Griffin:

The grades within the Civil Service are clerical officer, executive officer, higher executive officer, administrative officer-----

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

So he was a grade above clerical officer level.

Mr. Mark Griffin:

An executive officer is a grade above clerical officer.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is that the basic or entry level?

Mr. Mark Griffin:

Yes. I would not necessarily see that there was an issue with regard to the grade of the individual who undertook the work.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That is fine. My next question relates to that matter. Will Mr. Griffin indicate what qualifications the person held?

Mr. Mark Griffin:

I do not know what qualifications he possessed. I presume he would have been trained in the relative-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is the difference between what Mr. Griffin's Department does and what we do here. The Comptroller and Auditor General does not presume; he is obliged to deal with facts and figures. That is what causes us to meet here every Thursday. I do not want to presume; I want to know the qualifications held by the person involved.

Mr. Mark Griffin:

I will obtain that information for the Chairman.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

There is another question to which I require an answer. Is the individual to whom we are referring the same person who paid out the money?

Mr. Mark Griffin:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

So the person who paid out the money was an entry-level civil servant. He was trained by Mr. Colgan's outfit and therefore would have known what to expect when doing the job. According to Mr. Colgan, he would have known that there was a cascade of governance and assurance-type arrangements in place. In addition, there was an expectation that he would be reporting.

Mr. Mark Griffin:

That is true.

Mr. Pat Colgan:

The trend would have been in and around understanding the implications of the service level agreement, being aware of what the procedures manual actually required the implementing agents to do, understanding the guidance notes provided and knowing the procedures that needed to be followed in all cases. That would have been the subject of the training. It would have included matters such as assessment and approval of projects, the issuing and monitoring of letters of offer, verification of expenditure and overall financial accountability for the project.

Mr. Mark Griffin:

He would have been working in an environment where there were certain other parties involved in very specific roles in the project.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is Mr. Griffin referring to the project in question?

Mr. Mark Griffin:

Yes. Western Connect, a firm of technical and financial consultants, was involved, as was DETI. The Chairman will see from the payment claims processed that the first two - one of which included the Nortel racks - were approved by Western Connect, as the managing agent, and countersigned by DETI. All the documentation, certification and authorisation was conducted by those two parties in the North and all the documentation was held there. In respect of the next two payment claims-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Does what Mr. Griffin just outlined in respect of the first two payment claims mean that the officer concerned did not see the paperwork, which was held in the North?

Mr. Mark Griffin:

He would have seen not the paperwork but rather the payment authorisation - which would have been a relatively short document - at the very end. This would have shown-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That would have said "I looked at the paperwork and the figures are okay."

Mr. Mark Griffin:

-----what was submitted by DETI and Western Connect and that it was in order for our Department to pay the matched funding, which would have been that proportion of the-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

So that junior official relied on the expertise and sign-off of those two agencies.

Mr. Mark Griffin:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

When the document, which was short, came to the person in question, the cheque was issued on the basis that everything seemed okay because the other two agencies had signed off on it.

Mr. Mark Griffin:

I refer here to the expertise, sign-off, expectation and understanding in respect of the role they had on this particular project. DETI was the lead implementing agent, as was acknowledged at the Public Accounts Committee in Northern Ireland. That assigned certain functions to them in terms of the day-to-day management.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

In the context of the point made by Deputy Nolan, is it not the case that they were negligent and that our Department has a case against them?

Mr. Mark Griffin:

The Department's overriding consideration is to ensure that the €4.3 million that is now the subject of the claim in the Northern Ireland High Court is won and that the proportion of money that is due to the Irish Exchequer is returned.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

So the answer to that question is "Yes."

Mr. Mark Griffin:

The answer is - I said this earlier - that I believe Western Connect and DETI could have done better in respect of the authorisation of the payment claims. Our Department had a role to play at critical junctures in the evolution of the project and this could have mitigated some of the issues that have arisen.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

As Deputy O'Donovan asked, were the Minister or the Secretary General informed at that point?

Mr. Mark Griffin:

In 2006?

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

No, when everything started to go wrong or when a sense of unease arose in respect of this matter. Was the Secretary General informed at that point?

Mr. Mark Griffin:

The indication that there were issues with the project only came to light in 2006 when the whistleblower allegations-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Was the Secretary General informed at that stage?

Mr. Mark Griffin:

I am not aware that the Secretary General was informed but I believe that those at more senior management levels within the Department would certainly have been made aware of the whistleblower allegations.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Those individuals would have been less senior than the Secretary General.

Mr. Mark Griffin:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Mr. Griffin is suggesting, therefore, that the information relating to this matter only reached a particular point in the management structure. Would it not have been raised at a meeting of the management advisory committee?

Mr. Mark Griffin:

I will need to check. I have seen a number of e-mails which seem to suggest that it was not raised at Secretary General level at that time.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Was it not raised at meetings of the MAC?

Mr. Mark Griffin:

I would need to check the minutes of those meetings. However, on the basis of a preliminary trawl of the Min-MAC minutes from 2004, I do not believe the issue of Bytel was raised. I would need to check the Min-MAC minutes from 2006 to see if it was raised then.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Would it be possible for copies of the various items of paperwork to be supplied to the committee? I refer to the two letters signed by the Department and the document on which, as Mr. Griffin indicated, payment was based.

Mr. Mark Griffin:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The other paperwork is not available and would not have been seen by anyone in the Department because it is held in the North.

Mr. Mark Griffin:

That is correct.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Will Mr. Colgan and Mr. Griffin indicate whether there was a certain attitude towards whistleblowers which led to their being ignored?

Was there a type of attitude that this was just some fellow who had a chip on his shoulder?

Mr. Pat Colgan:

Certainly not in the SEUPB. However, as I stated, we were only aware of the 2006 whistleblowing allegation and we did what we thought was correct at the time, which was to talk to the Department. We held a meeting about it on 19 July 2006 and went through a list. I have to hand a minuted note of the meeting and we were given absolute assurances that it had investigated this thoroughly internally and that there was no issue to be followed up on it.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

And what of Mr. Griffin's Department at that time?

Mr. Mark Griffin:

No, there is no evidence and, the same as Mr. Colgan, when the whistleblower allegations were notified to us in 2006, we were invited to a meeting in Belfast to meet the whistleblower and discuss the issues. In my belief, we should have followed up on that at that point. There is no indication there was any concern that, as the Chairman has described it, this was someone who basically came in with a chip on his shoulder. This certainly is not reflected in any documentation I have seen. As the Chairman is aware, we were not made aware of the 2008 whistleblower allegations until December 2010. When we were made aware of them, we worked with the SEUPB and commissioned the ASM report, as well as with DETI, on the commissioning of the Prisa Consulting report to ascertain exactly what was provided in the ultimate project and what was its cost.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The Secretary General stated earlier the Department does not get involved with the semi-State bodies in terms of their micromanagement. While I accept this is the practice, out of this, as well as in respect of other Departments that are responsible for some semi-State bodies, is there not an argument that there should be far more scrutiny in a general way of the taxpayers' money that goes into these organisations?

Mr. Mark Griffin:

Absolutely. I should clarify that for all the commercial semi-State bodies under the aegis of our Department, there are processes in place whereby the intended capital expenditure, for example, whether it is by the ESB, Ervia or EirGrid, is approved by the Minister at the start of the financial year. There are certain delegated sanctions that allow the commercial semi-State bodies to progress with capital works programmes without being obliged to revert to the Department and those thresholds are set and agreed. Where there are significant transactions that are to be completed, there is a requirement for the commercial semi-State body to get the approval of the shareholding Department, as well as of the Minister for Public Expenditure and Reform. In recent years, we have had NewERA as the shareholder executive that provides significant support to Departments that have commercial semi-State bodies and which does a great deal of financial analysis of those bodies. Where the distinction arises is where the Department will get involved in what is a relatively small project, relative to the overall level of capital activity by a commercial semi-State body, the likes of which had been proposed by Bytel-Aurora.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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In Mr. Griffin's current position as Secretary General, would he expect to hear from officials under him should something like this arise? Has the Secretary General changed the accounting or reporting processes within his Department in order that he at least is given a heads-up on most matters?

Mr. Mark Griffin:

Absolutely. Some of these arrangements were in place long before I took over the role as Secretary General and Accounting Officer in the Department. For example, there is oversight at the management committee in the preparation of the capital and current Estimates, which also are approved by the Minister. Expenditure at sub-programme level and any exceptions that arise are reported on each month by the finance officer and this is dealt with by the management committee. We have a departmental risk register in place that includes a range of strategic reputational and financial risks, and this is reviewed by the management advisory committee, MAC, on a quarterly basis. We have in place a fraud policy since May 2011 and this provides for a confidential reporting mechanism, which obviously we must update on foot of the-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

In general, for these management meetings, the Secretary General covers a lot more ground than what was covered back then.

Mr. Mark Griffin:

I cannot say because I have not looked at the management meetings. However, I am aware that in respect of public financial procedures, there has been substantial change over the past decade, as the Chairman is aware. We have in place a procurement unit and a contracts register and-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

How many Secretaries General have been in place over the past five years?

Mr. Mark Griffin:

From 2004, I am the third.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I wish to revert to a point raised by the Chairman. Without scapegoating the aforementioned junior official, this official was appointed and put in place by somebody essentially to take responsibility for paying out money. Is that somebody within the Department, who put that junior official in that place, still there?

Mr. Mark Griffin:

Is the Deputy asking whether his immediate supervisor-----

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Yes.

Mr. Mark Griffin:

To the best of my knowledge, he is not.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Has that person retired or left or been promoted?

Mr. Mark Griffin:

No, that person is working in another Department.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Basically, the aforementioned junior official had no limit in terms of the amount of money he could pay out, did he? Once the demand came, it was just a case of paying it out.

Mr. Mark Griffin:

A budget threshold of half a million was set in terms of the Department's matching funding for this particular project.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Was there a requirement for him to report to anybody within the Department when he was signing off or paying out?

Mr. Mark Griffin:

As the payments went through the Department's accounts branch, ultimately the payments were paid from our accounts branch into the SEUPB.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

But he was not obliged to get authorisation or sign-off or second sign-off or anything like that.

Mr. Mark Griffin:

I am unsure, in respect of the signing processes at the time, whether he would have required a counter-signature to that specific payment claim. From looking at the payment authorisation that came to us from DETI, it appears as though he simply was a counter-signatory.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Was there another signatory?

Mr. Mark Griffin:

There were signatories from Western Connect, that is, the technical and financial consultants, and from DETI.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

How many signatories were there from within the Department of Communications, Energy and National Resources?

Mr. Mark Griffin:

Presumably there were signatories from within the accounts branch in terms of the release of the funding, but I would need to check that.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

How many?

Mr. Mark Griffin:

I do not know. I would need to check.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Since all of this has blown up, is a policy now in place whereby there is more than one signatory?

Mr. Mark Griffin:

Absolutely and there is separation of functions in order that the approver of the work is separate from the individual who ultimately sends it off.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

On what amount of money can a person at his grade of executive officer now sign off?

Mr. Mark Griffin:

I am not sure whether we have formal delegated assignments in terms of the funding levels that can be signed off at individual grades within the organisation.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Can he still sign off on half a million?

Mr. Mark Griffin:

However, in terms of our approvals process, I can see that the management of contract awards, that is, of procurement, involves senior level oversight. Significant contracts are brought to senior level, to Secretary General level and indeed to ministerial level for approval before they are progressed.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

On how much can a person at his grade sign off today?

Mr. Mark Griffin:

I do not believe we have formal delegated assignments at this stage.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Therefore, he still can sign off on half a million.

Mr. Mark Griffin:

I would not necessarily say that. All I am saying is I do not believe we have formal delegated financial assignments.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

If this has not been formally delegated, presumably it is business as usual.

Mr. Mark Griffin:

To the best of my knowledge, in respect of the award of major contracts, there is an approval system within the Department whereby in the first instance, sanction to progress a project is agreed at senior level. There is a complex set of requirements that are gone through thereafter, including the procurement process. At different stages in the life cycle of a project, the submissions are made up the line to get approval to proceed, whether it is for the appointment of consultants or to progress the substantive tender related to the project and that-----

Patrick O'Donovan (Limerick, Fine Gael)
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In respect of the stage payments for a project at present, I note it is akin to building a house. Were this entire fiasco to start again, is there anything to prevent a person at his grade from being scapegoated? There could be an attempt to scapegoat him because he is at such a junior level. I do not believe that.

I believe the responsibility lies with the Secretary General who set up the system which allowed somebody with such limited experience, and so far down the food chain, to sign off on half a million. Could a person in your Department sign off a stage payment for half a million today?

Mr. Mark Griffin:

No. There are ceilings written into the financial management systems in the Department.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

What is the ceiling today?

Mr. Mark Griffin:

I do not know.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Could it be half a million?

Mr. Mark Griffin:

I can check for the Deputy. It is done on a project basis, not on the basis of a particular grade.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I know, but the question I asked was, if this whole thing were to start again, could it be the case in Mr. Griffin's Department that a poor unfortunate executive officer was told he or she had the power to sign off on half a million. We do not know today whether that situation has changed or not. The officer could still be in the same position.

Mr. Mark Griffin:

No. I do not believe for a second that it would be the same position, because the project controls that are in place clearly set out a hierarchy of matters to be considered-----