Oireachtas Joint and Select Committees
Thursday, 24 September 2015
Public Accounts Committee
Galway-Mayo Institute of Technology: Financial Statements 2013
I remind members and witnesses to turn off their mobile phones as interference affects the sound quality and transmission of the meeting.
I advise witnesses that they are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to 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 asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the Houses or an official by name or in such a way as to make him or her identifiable. Members are reminded of the provisions within Standing Order 163 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister or the merits or objectives of such policy or policies.
I welcome the Secretary General of the Department of Education and Skills, Mr. Seán Ó Foghlú, and ask him to introduce his officials.
Mr. Seamus McCarthy:
As the members are aware, the Higher Education Authority is the statutory planning and policy development body for higher education and research in Ireland. It is the primary funding authority for the universities, teacher training colleges, institutes of technology and a number of other designated education bodies. The HEA dispersed over €1.1 billion in grants in 2014. The majority of its income comes directly from Vote 26 - Education and Skills.
I have issued a clear audit opinion in respect of the HEA's 2014 financial statements. However, as in previous years, the audit certificate draws attention to the HEA's practice of funding certain universities for notional employer pension contributions in respect of members of pay-as-you-go pension schemes. As a result, they are funded approximately 15% above the level actually required to pay the related staff members. The HEA allows those universities to retain both the notional employer and actual employee pension contributions and to account for them in what are called pension control accounts. The accumulated funds are recognised in the university accounts as sums due to the HEA. The balances held in the five universities concerned in respect of pay-as-you-go model pension schemes stood at €159 million at 30 September 2014, up from €125 million at end-September 2013.
The universities also record amounts due from the HEA in relation to pension payments already made under separate, closed pension schemes. The result has been net underfunding for pension expenditure in some universities and net overfunding in others. When we raised this matter first in 2012, the HEA stated that the pension control accounts mechanism was a short-term one. I understand that steps are now being taken to bring the pension funding more into line with expenditure.
Apart from providing funding for the third level sector, the HEA carries out an oversight and regulatory role in respect of higher education institutions. My office is currently undertaking an examination of that function. At a high level, the examination is considering the role and responsibilities of the HEA with regard to governance in the sector and the adequacy of systems it has put in place to achieve its objectives. Progress on that examination has been delayed by an unavoidable change in personnel on the examination team but I hope to finalise the report on the examination early in 2016.
I turn now to the Galway-Mayo Institute of Technology financial statements for 2012-2013. The consolidated income and expenditure account for the Galway-Mayo Institute of Technology shows an operating deficit of almost €1.3 million for the year ended 31 August 2013, compared to a deficit of €200,000 in the previous year. The institute’s income for the 2012-13 financial year was €56.2 million, with the largest amount, €25.3 million, coming in the form of grants from the HEA. A further €19.2 million related to tuition fees, including student contributions. Other significant sources of income include research grants of €2.4 million and retained employee pension contributions of €2.2 million. Since institute of technology pensions are paid centrally, the latter is, effectively, a further State grant. The institute incurred expenditure of €57.6 million in the year, with staff pay costs accounting for nearly €42 million, or 72% of the total. The institute’s financial statements for the year ended 31 August 2013 received an unqualified audit opinion. However, the audit certificate draws attention to a disclosure in the accounts concerning the high costs of an investigation into the manner in which the institute dealt with a case of plagiarism that occurred in 2009. At 31 August 2013, the aggregate cost of the investigation stood at €436,000, of which nearly €187,000 had been incurred in the year of account.
Issues around the process for consideration of a proposal to establish a technological university for the south east, through a merger of Waterford Institute of Technology and Carlow Institute of Technology, have arisen at committee meetings on a number of occasions. Progress on the proposed merger is reviewed by my office each year in the context of the audit of the financial statements of the two institutes. I have no observation to make at this time on the report that is before the committee today.
Mr. Seán Ó Foghlú:
I thank the Chairman for allowing me to make this opening statement regarding the investigation of plagiarism at Galway-Mayo Institute of Technology, GMIT, the establishment of a technological university for the south east and the 2014 financial statements of the Higher Education Authority. As requested, I have forwarded some advance briefing material to the committee.
The Department first became aware of the investigation of plagiarism at GMIT in November 2013. The detailed response on the investigation of plagiarism at GMIT is more appropriate for Mr. Jim Fennell, acting president of GMIT, to outline. However, the Department’s view is that while there are issues arising with how the investigation was managed during the process, the management response to the issues has, ultimately, been comprehensive. Following consideration of the reports on the investigation of plagiarism in GMIT, the Higher Education Authority issued advice to the presidents of all HEA-funded higher education institutions in May 2015 on the matters to be considered in order to manage the costs of independent investigations. Mr. Boland of the HEA will outline the advice provided.
The National Strategy for Higher Education to 2030, published in January 2011, recommended the consolidation of the institute of technology sector and the creation of a small number of multi-campus technological universities. The technological university, TU, for the south east project was initiated in 2011 and consists of a consortium of two institutes of technology - Carlow Institute of Technology, CIT, and Waterford Institute of Technology, WIT. The process for designation as a technological university consists of four stages and requires the merger of two or more institutes of technology prior to application for designation as a TU. The four stages are set out in more detail in the briefing document supplied to the committee.
The consortium for the technological university for the south east project made good progress initially and submitted a stage one expression of interest in 2012. However, following this promising start, the consortium encountered a series of challenges and difficulties and did not succeed in finalising a stage two plan prior to the decision by WIT to suspend all merger activities in October 2014. Following meetings with both institutes, in early November 2014, the Minister for Education and Skills announced the establishment of a new process of engagement and consultation with the governing bodies, staff and students of both institutes, together with the wider community in the south east, in order to articulate and develop the following: a shared vision for a technological university to serve the south east region and to report to the Minister within ten weeks on the feasibility and steps required to progress an application for technological university status within an acceptable timeframe. This is to be done having regard to the published criteria and process for designation as a technological university which is already in place.
The Minister appointed Mr. Michael Kelly to lead the process of consultation. While a ten-week timeframe was initially set for the process to be completed, the timeframe to completion was extended due to a number of factors. Due to other commitments of Mr. Kelly, a substantive start was not possible until early January 2015. The intention then had been to complete by first quarter 2015 but, in light of progress made and an assessment that some further time would be beneficial to the outcome, the Minister’s agreement to extend the time to completion by a further period was obtained. The detailed response on the process itself and the contents of the report is more appropriate for Mr. Kelly to outline. The Department’s view is that the process has been most beneficial in seeking to reinvigorate the project. It has first and foremost confirmed that the project is viable. In addition, it has also provided an opportunity to articulate for the first time the ambitions of regional stakeholders for a more vibrant regional performance in the future with a technological university as a core feature. It has also set out a set of steps required to successfully reinvigorate the delivery of the project. Mr. Kelly met the Minister for Education and Skills on 2 July 2015 and presented his report at that meeting. The Minister subsequently met with the presidents and chairs of the two institutes on 21 July 2015 following noting of the report by Government. The report was then published on 27 July 2015.
The focus is now on continuing the work progressed by Mr. Kelly and to assist with building mutual trust and respect between the two institutions. In that regard, a preliminary engagement process is now under way between the two institutions, as recommended by Mr. Kelly.
I assure the committee that governance and accountability for the bodies under the remit of the Department of Education and Skills, including the Higher Education Authority, are of paramount importance to the Department and that is why steps have been taken in recent months to strengthen even further the Department’s role in the oversight of all institutions and bodies across the education sector.
Within the Department a committee on sectoral governance and accountability was established earlier this year and two meetings of the committee have been held since then. The Department’s role is to support the development and implementation of best practice governance arrangements across the sector through oversight and regular assessment of its approach to governance. The committee’s focus will include the non-commercial agencies under the Department’s aegis, the higher education institutions as well as the education and training boards. The committee’s membership includes the chief executive of the HEA and an external member who can provide an additional element of insight and experience in the area of governance oversight.
A principal officers sectoral governance and accountability network has also been established. Its role is to support the work of the management advisory committee sub-committee by facilitating discussion regarding compliance requirements, to provide feedback, highlighting issues arising in each sector and to disseminate best practice across the Department’s bodies. It has also been decided, in principle, to establish an internal audit sector forum for personnel with internal audit functions in the Department, its agencies, higher education institutes and ETBs.
In addition, as part of strengthening its role on governance and accountability oversight, the Department is tendering for the supply of services from suitably qualified companies for the purposes of conducting reviews of corporate governance compliance by education sector bodies with their relevant codes of practice which underpin their corporate governance frameworks. The HEA is joining the Department in contracting this service in respect of bodies for which it has responsibility.
The HEA has also introduced a number of measures recently to enhance its role further in the governance and accountability of the higher education institutions under its remit. The HEA is to brief the committee in more detail about these measures. I want to mention in particular the meetings that have taken place in recent months between the HEA, the Comptroller and Auditor General and the institution’s representative bodies which will assist, among other things, in providing an early flagging of any issues in the sector. This new collaborative approach will assist all stakeholders across the sector in delivering a more robust system of governance and accountability in higher education. The Department is committed to working closely with the HEA in achieving this aim.
I am conscious that the Department has been in correspondence in recent times with this committee on a number of issues particular to higher education. In this regard, I assure the committee that the issues raised in the sector are, and continue to be, of great concern to the Department and we are working with the institutions, through the HEA, to seek to have the issues dealt with appropriately and as efficiently as possible. I am happy to answer questions from the committee.
Mr. Tom Boland:
My statement will cover the following areas as set out in the agenda: the investigation of plagiarism in Galway-Mayo Institute of Technology, the engagement and consultation process for a technological university for the south east, the HEA 2014 financial statements, and the governance and accountability developments in the higher education sector.
On the investigation of plagiarism in Galway, the committee will recall that I wrote to it in May of this year regarding the investigation of plagiarism in GMIT setting out the background and issues arising, particularly on costs. The committee has also been provided with a detailed note setting out the HEA’s interaction with GMIT in the case as well as with Quality and Qualifications Ireland.
On the specific incident of plagiarism I wish to emphasise at the outset that the management of academic affairs, including course curricula, the marking of students and the handling of allegations of plagiarism is first a matter for individual higher education institutions. The report prepared by Professor Bairbre Redmond found that the plagiarism detection, investigation and penalty procedures in place in GMIT at the time, in the main, were fit for purpose. The HEA notes that since then the institute has made improvements in the policies in question. The HEA’s main area of concern relates to the costs incurred in the investigation carried out into the manner in which GMIT responded to and dealt with complaints of plagiarism. Higher education institutions, like all public bodies, have a duty of care in the expenditure of Exchequer funding, especially as it relates to administrative processes. Notwithstanding the importance of an independent investigation that was thorough and comprehensive in its remit, it is clear that there was failure on the part of GMIT in managing the costs and timelines of the investigation. As we have emphasised to GMIT, it is especially unacceptable that such high costs were incurred in the context of a challenging financial situation in the higher education sector.
To avoid such incidents in the future, the HEA expects GMIT and other higher education institutions to inform us, the HEA, of major unexpected expenditure in a much more prompt manner. Clearly the experience from this case in GMIT is salutary for the rest of the higher education sector. Earlier this year the HEA wrote to all institutions under its remit on the subject of independent investigations and in particular the need to protect the independence of such investigations while at the same time having appropriate systems for cost control within the institution. As part of revised governance reporting requirements introduced by the HEA in 2014, institutions are required to report on significant expenditure incurred from such investigations.
On the issue of a technological university for the south east, the HEA welcomes the publication of Mr. Michael Kelly’s report to the Minister for Education and Skills on the engagement and consultation process on a technological university for the south east. I will give the committee some background. The National Strategy for Higher Education to 2030, published in January 2011, recommended the consolidation of the institutes of technology sector and the creation of a small number of multi-campus technological universities. The process for designation as a technological university consists of four stages and requires the merger of two or more institutes of technology prior to application for designation as a TU. The technological university for the south east project was initiated in 2011. It made good progress initially and submitted a stage 1 expression of interest in 2012. However, following this initial promising start, the consortium encountered a series of difficulties and did not succeed in finalising a stage 2 plan prior to the decision by Waterford Institute of Technology to suspend merger activities in October 2014.
In early November 2014, the Minister for Education and Skills, Deputy Jan O’Sullivan, announced the establishment of a process of engagement and consultation with the governing bodies, staff and students of both institutes together with the wider community in the south east. Mr. Michael Kelly was appointed to lead the process of consultation. Mr. Kelly carried out a thorough consultation process in the region. His reports set out the results of this consultation and of particular note are his observations that there is very significant convergence of thinking and approach by both institutions to many aspects of the design of a TU; if sufficient resolve exists within both institutions, the remaining issues should be capable of resolution; external stakeholders emphasised that any TU should support the economic and social development of the south east; and it is likely that the consortium of Waterford and Carlow institutes of technology would meet the quantitative TU designation criteria within a period of three years. Mr Kelly also set out a number of options for the future, including the recommendation that a re-invigorated process to found a TU for the south east be established at the earliest feasible date, as well as the development of a facilitation process. The HEA will continue to assist the two institutions to the greatest extent practicable.
On the matter of our financial statements, I am pleased to note that in his audit certificate accompanying the HEA’s 2014 financial statements, the Comptroller and Auditor General records that the HEA has kept proper books of accounts and that the financial statements are in agreement with the books of accounts. However, I draw attention to one issue. Over recent years the Comptroller and Auditor General has referred to the issue of pension funding to the universities in the HEA’s financial statements. As our briefing paper sets out, the accumulated funds of approximately €159 million referred to in the Comptroller and Auditor General’s notes relate to the model pension schemes in the five older universities. The model scheme membership has a much younger age profile compared with the closed funded schemes in the universities. This means that the amount of employer and employee pension contributions going into the model scheme is much higher than pension and lump sum payments coming from it, resulting in a surplus. The accumulated funds of €159 million in the model scheme must be seen in tandem with a shortfall of approximately €156.5 million that exists in respect of the closed funded schemes in the five older universities. This shortfall has arisen due to an existing and increasing cohort of retirees in receipt of pensions and lump sums coupled with the fact that membership of the scheme itself has been closed to new entrants for some years now. This means that the level of pension payments and lump sums greatly exceed any pension contributions from employer or employee, hence a shortfall in 2013-2014 of €156.5 million. Therefore, the accumulated funds of €159 million in the model scheme must be offset against the accumulated shortfall of €156.5 million in the closed funded schemes. Although these figures represent an almost break-even position, it is anticipated that the accumulated shortfall in the closed funded schemes will continue to grow and will ultimately surpass any surplus on the model scheme.End of Take
The HEA remains in discussions with the Department of Education and Skills and the Department of Public Expenditure and Reform with regard to future funding requirements for the universities.
In addition, I will be happy to update the committee on recent developments in governance and accountability in the higher education sector which includes strengthened and more rigorous requirements expected from institutions in terms of reporting on governance matters to the HEA as well as enhanced engagement and information sharing with the Office of the Comptroller and Auditor General with regard to the audits of financial statements in the higher education sector. I am happy to take any questions from committee members.
Mr. Jim Fennell:
Thank you Chairman. The background to the plagiarism investigation is that an incident of suspected plagiarism by a student on a masters degree programme in the school of business was detected by a lecturer in November 2009. The incident was determined by the school management to be one of minor plagiarism and, accordingly, the incident was considered by a school plagiarism committee in February 2010, which found the student guilty of plagiarism and imposed a penalty relating to the work submitted. The student subsequently went on to graduate later that year. In November and December 2010, reports relating to the incident appeared in the media alleging that a lecturer had assisted the student in the act of plagiarism and implying that the matter had been improperly handled and that the institute was engaging in a cover-up.
Following two internal reviews by the registrar and HR manager and following receipt of legal advice, I, as acting president and in consultation with the chairman, decided that an external investigation was required to safeguard the reputation of the institute and on 31 March 2011 informed the governing body accordingly. On the advice of the institute’s solicitors, Professor Bairbre Redmond, deputy registrar of UCD, was appointed to undertake the investigation. Professor Redmond requested a second investigator be appointed and on the recommendation of Professor Redmond, Mr. Ed Madden, barrister-at-law, was appointed as co-investigator. The terms of reference for the investigation were drawn up by the institute’s legal advisers, agreed with the investigators and issued by the president on 13 June 2011. A fixed fee of €1,500 per day was agreed with each of the two investigators. However, it was not envisaged that the investigation would require the level of input it did, resulting in costs of €436,061 being incurred. As the investigation progressed, concern was mounting at the increasing cost. The president tried on a number of occasions to bring closure to the matter. However, as the matters under investigation related to an alleged cover-up by the institute, it was important to protect the independence of the investigation and it was not appropriate for GMIT to influence the conduct of the investigation or to terminate it.
At a very late stage in the process, a significant disagreement occurred between the investigators regarding the compilation of the report, resulting in Professor Redmond stepping down as investigator. Mr. Madden submitted a document which the president deemed as not satisfying the terms of reference. Acting on legal advice, the president subsequently re-appointed Professor Redmond to provide the final report. Additional legal and investigator costs were incurred in dealing with this aspect.
The Redmond report, which issued in October 2013, concludes that the plagiarism detection, investigation and penalty procedures in place at the time of the incident were, in the main, fit for purpose. The investigation also concludes that the issues associated with the management of the alleged incident of plagiarism under investigation were far less connected to a poorly constructed policy than to how these policies were interpreted and implemented. A key conclusion arising from the investigation is that there was a failure on the part of a senior member of staff to provide relevant and significant information to the president and registrar of GMIT in February 2010 and in the period thereafter up to March 2011, regarding the involvement of a lecturer in procuring restricted material for a student.
A number of important lessons can be learnt from GMIT’s experience of this process. It appears such an investigation will inevitably become more complex and hence more costly than originally envisaged as new witnesses and material emerge during the course of the investigation. Accordingly, particular consideration must be given in the terms of reference to allow provision for review of costs where the original plan cannot be achieved. If appointing more than one investigator, one should be designated as the lead investigator. Investigators should retain a direct reporting line to the president or nominee and be required to consult with the president in advance of taking any significant decisions impacting on the investigation.
I wish to apologise to all our stakeholders and, in particular, to our staff and students that such expenditure was incurred at a time when these costs can only be borne by reducing expenditure in areas which directly impact our staff and students. I wish to assure this committee that the unethical behaviour which was the subject matter of this investigation is not representative of our staff whose commitment to high academic standards and professional integrity has enabled GMIT to contribute so much to the social and economic development of the region over the last five decades.
I welcome the witnesses to the meeting. I wish to concentrate initially on the plagiarism issue, following on from Mr. Fennell's statement. There is considerable concern at the cost involved, particularly given that the final report found that everything was fit for purpose. It does not seem to stack up with the level of expenditure involved. To go back to the beginning, this incident was detected in November 2009 and was brought before a committee. It was seen as a minor plagiarism issue and sanctions were put in place. At that stage, the matter was considered finished.
Mr. Jim Fennell:
Yes, the lecturer detected the plagiarism in November 2009 and reported to the school's head of department, as was appropriate. It was then referred to the head of school, where it was determined to be an incident of minor plagiarism. Consequently, it was determined that it should be dealt with by a school plagiarism committee. That committee met in February 2010, the student was found guilty and a sanction was imposed.
Mr. Jim Fennell:
My understanding is that a whistleblower is not somebody who anonymously gives information to the media but reports appeared in the media. There were continuous reports appearing that there was a lecturer involved, that the matter had not been handled properly and that the institution itself was engaged in a cover-up.
Considering how the institute had handled the matter initially, was it not happy enough to say that such reports were wrong, that it had followed the correct procedure and that there was no need to do anything further?
Mr. Jim Fennell:
I became very concerned about the reputational damage that the institution was incurring. We asked the registrar and the HR manager to conduct two initial internal reviews. Shortly thereafter, the lecturer who detected the plagiarism asked to see me and advised me of certain matters. I referred these to the HR manager in the course of his review and his report, when it was completed, was sent to the institution's lawyers who advised that there was a need for an independent inquiry.
Mr. Jim Fennell:
The advice from our solicitors was that an independent investigation was warranted and that it was necessary to appoint a senior academic from outside the institute of technology sector because of the nature of the allegations being levelled at the institution. That left us looking at one of the seven universities. It was also decided not to approach our colleagues in NUI Galway to ensure it was seen to be independent.
Arthur Cox was requested to recommend an appropriate senior academic. It approached two people but one of them was not available. Arthur Cox came back and recommended Professor Bairbre Redmond, the deputy president and registrar in UCD.
By the way, I imagine the board met Professor Bairbre Redmond at this stage and told her from its process that it did not believe there was a significant issue. She would have thought at the start that the work she would be doing would not involve a huge amount.
The fee was €1,500 per day and the report was due in several weeks. However, this inquiry quickly turned into a runaway train.
Was there a breakdown or a justification given for such a fee of €1,500? What people are zoning in on is the fee of €1,500 per day. It is an extortionate amount of money. As I have no expertise in this area, will the institute explain in greater detail as to how that fee was arrived at?
GMIT is making a decision with no advice from the HEA or the Department and arrives at a fee of €1,500 per day. Professor Redmond then brings Mr. Ed Madden, who is on the same deal, into the process. Was there any measure put into the terms of reference to ensure they would report in four to six weeks?
They start to do their important work which has to do with the independence of the institution and that it maintains its excellent reputation. Who from the college maintained contact with them to ensure weekly, monthly or bimonthly updates?
Mr. Jim Fennell:
The president was dealing with it. I note that he tried on a number of occasions to bring closure to the matter. However, as the matter under investigation related to an alleged cover-up by the institute, the question was what would be the consequences of the reputational damage that would be suffered by the institute in bringing the investigation to a halt without it being completed.
Number 12 of the terms of reference states the investigation team will furnish the report as soon as practicable with an expected timeframe of four weeks after the investigation team confirms the investigative stage of the process has concluded. They held all the cards on that one.
I am trying to get to the nub of this. At this stage, a significant amount of money has been spent. The institute does not have a report. It has taken several years and €1,500 is spent a day on this investigation. The two investigators then fall out.
Mr. Jim Fennell:
The information I have is that the president was advised on 2 August 2013 that Professor Redmond had resigned from the investigation team. Mr. Madden provided the president with a sole authored report four days later on 6 August. However, there were a number of matters in that report which were queried by the president and to which Mr. Madden declined to respond. The president concluded the report was not compliant with the terms of reference.
The first report is from Mr. Ed Madden. Professor Bairbre Redmond is gone at this stage after their argument.
Where did Mr. Madden's report fall down in relation to the terms of reference? Can Mr. Fennell point out to me where in any of the 12 of terms of reference? What was the reason? Which one could we pick to show that this is why Mr. Madden's report does not add up? At this stage, Mr. Ed Madden has received €217,890 for his report, which GMIT, its head, has now said it is not accepting.
That is unbelievable. It is remarkable that he provides a report that took a lot longer for the €217,000 and that the institute does not like it. Was there any other issue? Did GMIT not like what was in the report, what was said and what its outcomes were?
Mr. Jim Fennell:
There were a number of times during the investigation where the president intervened in terms of trying to manage the cost. Professor Redmond, at one point, responded by agreeing to continue working pro bono. Mr. Madden relied on his terms of reference.
There was also significant correspondence between the president and Mr. Madden in relation to the final fees at this juncture, particular correspondence around November 2013. Mr. Madden's concluding remarks were that he requested, once again, that his invoice be paid, and that should he not receive confirmation by 29 November that the invoice would be paid, he would have no alternative but to put the matter in the hands of his solicitors.
Our solicitors are Arthur Cox. I inquired of Arthur Cox in more recent times what the situation was at that time and the information which Arthur Cox provided to me was that the institute would have had to pay the invoice under the terms of reference and to continue to refuse to pay it would have resulted in expensive legal proceedings which, probably, the institute would not win.
The position then was that the report came back, GMIT was not happy with it, Mr. Madden did not respond and €217,000 was gone on this. At this stage, did the institute go back to Professor Bairbre Redmond?
Mr. Jim Fennell:
First of all, the manner in which they allocated the work between them was a matter for them. However, we did try to get some clarity on that. There are a couple of points. First, VAT was applicable on the invoices from Mr. Madden which was not applicable to Professor Redmond. Professor Redmond worked pro bonofor a period of time. To the best of Professor Redmond's knowledge, she states, Mr. Madden drafted and distributed all section 10 letters for the investigation and dealt with their replies.
I am sorry to cut across, but what I do not understand is that at the very start of this process Professor Redmond was the first person on board. She then asked for a second person, and that became Mr. Madden. At this stage, who was calling the shots in relation to the pay agreement, terms of reference, etc.? Where was the decision-making process?
When GMIT went back to Professor Redmond to say that Mr. Madden was gone and GMIT was not happy with the report, was it merely for her to finish the report or was it to go back over the issues that GMIT was not happy with in Mr. Madden's report?
Mr. Jim Fennell:
No. That was a decision of the president. However, the president appointed an advisory committee, made up of the chair of the governing body, the chair of the audit committee and the governing body members of the audit committee, to advise him on the process after Professor Bairbre Redmond's report issued.
Therefore, the president made the decision that it did not comply with the terms of reference and he was sending it back. Some €217,000 later, he was not happy with it. They can come back to him if they want but if they do not, the institute will keep going on.
After several years, the money involved is very substantial, yet one man saw the report and did not like certain elements of it, although it was probably correct in its terms of reference, and did not consult anyone else on the matter.
Mr. Jim Fennell:
Yes, there would have been a process of going through the report, reverting to the author, making the determination that it did not comply, and re-engaging Professor Redmond. The report issues on 28 October. My understanding is that she was to write the report based on their joint work in the investigation. There was no new investigation required.
Mr. Jim Fennell:
No, Professor Bairbre Redmond's report was not published. The governing body decided to appoint an advisory sub-committee to the president made up of the chair of the governing body, the chair of the audit committee and the governing body members of the audit committee. There were five members in total and I understand the Redmond report was provided to them.
Mr. Jim Fennell:
No; it was anything but okay. One of the key conclusions was that a senior member of staff had failed to provide relevant and significant information to the president and the registrar in February 2010 and in the period thereafter up to March 2011 regarding the involvement of a lecturer in procuring restricted material for a student.
That begs the question as to what disciplinary action was taken. This is a very serious outcome. Mr. Fennell stated that disciplinary action was taken, but the person is still in the college. I am unsure as to what that disciplinary action could have been.
In that case, I will not go down that road any further. However, without being able to say what it was, one presumes nothing happened. The report stated that this was a big problem and there was an issue, yet nothing happened. I will not push Mr. Fennell any further about what did or did not happen, but the message that comes across is that no heads rolled and nothing changed.
I am not pushing for a name, but people have a right to know, after all this money was spent, what changed, what came out of the report and what is different four years later. There is nothing wrong with that.
Mr. Jim Fennell:
There was one thing that was very significant that I would see. The allegations that were being made in 2010 went to the very core of what the institute does in terms of the awards that it makes. If allegations are made in the media about an institutional cover-up, it brings into question the very value of the awards that we have given to our graduates and that our students are studying towards. It was extremely important that there was an independent inquiry that confirmed that the institution had not engaged in a cover-up. The actions of one or two individuals do not an institute make.
According to a media report, while the amount involved was significant, it should be borne in mind that the institute's annual budget is in the region of €57 million and the cost should be viewed in the context of ensuring public confidence in the academic reputation of the institute. That is a fair point, but after this whole mess, it is one that is hard to explain. After all the money and time-----
Mr. Jim Fennell:
I am not justifying the expenditure. In fact, I have apologised to all our stakeholders for the enormous expenditure. However, the reputation of the institute and of the awards that we make is extremely important. It gets to the core of why the institute exists and is funded by the taxpayer.
Given what occurred in GMIT, I ask Mr. Boland to outline what lessons the other institutes of technology have learned from what occurred. What changes have been made in governance? What has come into play since then?
Mr. Tom Boland:
We have alerted all of the institutes and the universities to the situation that happened in GMIT, particularly the uncontrolled nature and cost of the inquiry. We have instructed them that they should agree terms of reference of any such inquiries legally and that the terms of reference should specifically contain a provision for the inquiry to be reviewed by the president and, if necessary, wound up by the president at a particular time. We have strongly emphasised the importance of ensuring value for money in any such investigations.
Mr. Tom Boland:
That is a little unfair, because the Deputy is asking me to second-guess the president. I will say, however, that it is an absolutely fundamental mistake, either in the terms of reference or in the appointment letters of the people involved, that there was not a process put in place to control both the length and cost of the inquiry.
I totally accept the position that it is very difficult for an institution which has set up an inquiry to interfere in it. There is a way in which one can interfere properly in an inquiry and there could have been processes in place for interim reports which would allow the president and the governing body to make decisions on how it should go forward. There could also have been fixed or particular terms around the costs and the timing. There are measures in other legal situations where one would set a maximum fee for a piece of work, no matter how long it took. At the very least that can encourage speed in the conclusion of inquiries.
Mr. Tom Boland:
It absolutely should not happen again. I will not say that it will not, but it absolutely should not happen again. We have made our position abundantly clear to all of the institutions. I would be very surprised if it did happen again. In fairness, it has not happened in the recent past, that we are aware of, and we have made inquiries. That is the best I could say.
Let me put a question to Mr. Fennell. In his remarks about the fee of €1,500 per day, he said he understood that this level of fee was the going rate for these type of investigations. Were there other investigations in the college before or after this of which we are not aware?
Mr. Jim Fennell:
There are not many occasions where the case has to be heard externally. There are 8,000 adults between staff and students and things happen. In the main, the vast majority of cases can be dealt with internally but sometimes, by their very nature, they have to be dealt with externally and sometimes they move to a certain point of the process where there is an external appeal.
Mr. Seán Ó Foghlú:
We were not aware of the investigation. However, HETAC, the awarding body, which gives delegated awarding sanction to, which deals with quality assurance issues, which has now become another body after an amalgamation, was aware of the plagiarism issue. The matter was discussed with them because they are the regulator when it comes to quality assurance issues. They are not a regulator in terms of expenditure but they are a regulator in terms of quality assurance issues.
With a significant issue such as this and given the fact that the Higher Education Authority, HEA, and the Department of Education and Skills must be answered to, as funding from the Department via the HEA is being received by the institute, would the institute not have asked whether they had a mechanism that cost less than €1,500 per day? They - or someone else - are responsible for quality assurance. For example, would the institute not have engaged with the agency mentioned by Mr. Ó Foghlú to determine the best route to take in this situation? It seems that the institute took this course to protect the college's reputation. It would have been much cheaper to take its own advice, namely, one act of plagiarism does not a bad college make. The institute seems to have spent €400,000 plus only to buy itself bad publicity.
That is essentially what it has done. For a college and a college president to take that course of action is difficult to understand. Every business with that number of employees experiences some sort of difficulty. Ignoring the issue might have been the best option.
Neither does the HEA. We heard that previously. Mr. Ó Foghlú and his Department say more or less the same. It is incredible that, according to today's opening statements, while everyone was shocked, it was not the speaker's fault, but that of the "man over there". Everyone pointed the finger at everyone else. Mr. Fennell and his college should have taken greater care but, in light of the audits that we have received today, the figure in question as well as the attitude of the HEA, the Department and many colleges towards governance in the education sphere are shocking. We will address those colleges later.
I am being told that people have learned from this situation. If Mr. Boland and Mr. Ó Foghlú had been overseeing the HEA, had the HEA been overseeing the college or had Mr. Burke's Department been involved proactively, this would not have happened. They are telling me that the processes were fit for purpose - that is what the report asserted - yet this happened. The processes are not fit for purpose. Taxpayers' money has been squandered in this and other instances. Mr. Boland and Mr. Ó Foghlú tell me that they have learned lessons. They have bolted the gate but the horse is gone again. That is what I read from the opening statements. They can dress it up in any way they like but that is what happened. I expect greater oversight of taxpayers' money by Departments and agencies than I have seen in the HEA and the Departments of Education and Skills and Public Expenditure and Reform.
Centralised procurement guidelines? I can point to audits of instances when centralised procurement guidelines by large State agencies have been ignored, costing the State a fortune. Mr. Burke's Department does not seem to have the muscle necessary to ensure that procurement processes are in place and adhered to. This is the issue for each of the witnesses. They might believe that the difficult time they are having this morning will be over when they walk out the door, but it will not be over. Many people are disgusted by the manner in which these processes are policed. The committee has highlighted such instances a number of times and referenced them in special reports, yet they are still happening. Dressing up an opening statement and claiming that someone has learned for the future is not good enough. The authorities before us have not been overseeing the bodies that they are expected to oversee properly. They are at fault as much as the college. I am sure that the public does not disagree much with my view.
I wish to ask about the accounts. One of the college's figures is for room hire at €2,500. Has the college no rooms of its own to use?
Oh dear. The college paid Arthur Cox €39,673. Did the college question it about value for money, its costs or its time? Did the college push Arthur Cox to the limit to achieve value for money for the taxpayer?
As an add-on to what the Chairman stated, it is not overstating the matter to say that it is clear from our work that certain Government agencies and Departments treat the centralised procurement guidelines as a matter of opinion. This is substantiated by the work of the Comptroller and Auditor General. We deal with the issue continually. I believe that this is the committee's view. There is a problem. Citing the centralised procurement guidelines is no longer sufficient, given the regular infractions, particularly by a couple of large agencies.
In hindsight, does Mr. Ó Foghlú agree with the idea that €1,500 per day was the going rate? People ask whether we learn anything from these issues. As Mr. Fennell pointed out, when a body has 8,000 people, such issues arise. They must be investigated. Does Mr. Ó Foghlú agree that €1,500 was a reasonable amount to pay, regardless of the overrun? Does his Department plan to implement set guidelines across the sector in terms of similar investigations?
Mr. Sean Ó Foghlú:
Two issues are involved, one of which is the duration of any arrangement and the cost of same. In considering commencing an investigation or tendering process of any sort, an institution should have regard to these issues or have access to a tendering framework.
For example, on harassment and other issues, the ETBs have put in place a framework on the basis of which they can operate and from which they can draw down in terms of the costs involved. Those sorts of frameworks are the arrangements that should be put in place for investigations. Now, every investigation depends on trying to get the right person to do the job. A particular example is one of which this committee will be very aware. I am not talking about costs in this regard. When we carried out the investigation into WIT, we had to find the right individual for the job. We would very lucky in employing Dermot Quigley to do that work. There is an issue about the nature of the investigation and matching the expertise to it. A call was made, which appears to have been an appropriate call, that this would be academically driven, in the first instance, because it was an academic inquiry. Then there is an issue with regard to finding the right cost base for it. A cost of €1,500 a day seems excessive. In that context, a process was not undergone in the context of deciding on the amount.
Let me ask a different question. Is there a facility to allow the Department to have purview over any investigation and the framework drawn up in respect of it from here on? Would it make sense for the Department to have a second set of eyes on future investigations?
Mr. Seán Ó Foghlú:
I do not believe that the Department or, indeed, the HEA, should second-guess agencies.
In relation to the matter of detail, I think we are at a very important stage. I have listened to what the Chairman said. We are concerned about the activities of institutions and agencies. We have endeavoured to put in place much more effective frameworks. We had frameworks in place and we have been seeking to improve them. Within the Department, we are seeking to bring together the three groups we have - namely, the ETBs, the HEIs, with the HEA, and the national agencies - and to look at best practice. The big way we can bring about change is in the context of the culture within the institutions. This is reflected in the work the HEA is doing in organising briefing seminars on procurement and other issues for the finance officers and other people in the institutions entitled to do it. Improved behaviour will not come about by centralised control, it come about through cultural change and an element of increased regulation and that is what we are seeking to put in place. It is about having an improved framework in place; not seeking to control every activity. That is the balance that we have to take because neither the Department nor, indeed, the Department of Public Expenditure and Reform can seek to engage in that level of detail with each institution so we have new early warning mechanisms and improved liaison with the Comptroller and Auditor General.
The list the committee has seen this morning reflects exactly what we do in the Department, the exception being that we are trying to get that list earlier, where there have been breakdowns, in order that we can intervene. The HEA is following up on every matter with the higher education institution to which the Comptroller and Auditor General's report refers. The HEA has quarterly meetings with the Comptroller and Auditor General so that if issues are emerging, it will hear about them. There are different ways of proceeding but having departmental or HEA approval for every action of an institution is not one of them. I just do not think that will work.
I am not so sure I specifically advised that there should be departmental approval. There is a difference between strict departmental sanction and just having knowledge of particular terms of reference. There is a big difference. I am not saying a matter needs to be referred up the line in the Department before approval is given for the sanction of finances in respect of a particular investigation. At the very least, it should be sent to or communicated to the Department. If, in such circumstances, the Department had an issue with it, then that would be made clear.
That is fine. The Secretary General has lobbed out my suggestion and I do not disagree with him. It seems like a fairly common-sense measure that someone would at least be aware and cognisant of these issues as they arise and of the kind of money that, potentially, would be spent on each investigation. I am not so sure that is such a crazy idea, to be honest.
I wish to return to the point made by Deputy Deasy. I do not want to labour the point because there are other people waiting to join us. The HEA funds Institutes of Technologies Ireland, IOTI, in the context of the audit of the institutes. My understanding is that Deloitte has won the contract in that regard. Is that correct?
Is it beyond the remit of the HEA or IOTI at that level - or the Department - to request Deloitte to supply all of the results under the various headings? For example, one could say that, according to the accounts, the amount paid by GMIT in respect of travel and subsistence was €727,000 in 2012 and €723,000 in 2013. Under that arrangement, Deloitte would be able to say, looking at the travel and subsistence for CIT, for example, that it was almost €2 million in 2012 and €2 million in 2013 and an organisation with oversight, such as the HEA or IOTI, would be able to ask why that was the case. This would constitute governance in a very simple fashion by means of auditing the figures of every single institute and it would mean that we could ask GMIT, for example - representatives from which are with us today - why its catering facility lost, if I am correct in my estimation, €33,000.
Somebody with oversight of those institutes would be able to ask why something occurred. Out of those audits, as they are compiled and centralised, somebody could also ask why a particular organisation did not lodge details of its accounts with the Comptroller and Auditor General for the past four years. The latter has happened. Someone might be able to ask why an organisation has not kept up with proper procurement practice as laid down by Mr. Burke's Department. Has Mr. Burke no interest in ensuring, for example, that something like that happens? His Department has all the information. It would be easy to just draw down the figures if the Department has that amount of information.
-----because somebody is overlooking them. They are not doing much. From what I have seen in the audit reports presented this morning, they are not doing much because there are examples here of the procurement process being ignored left, right and centre. I want to stick with this matter and then I shall finish.
The figures indicate that the cost of travel and subsistence for both 2012 and 2013 was in the region of €750,000.
By comparison, CIT is €2 million. Then there is bad debt provision of €287,000, with a loss on catering of €33,000.
Mr. Jim Fennell:
Yes. The process we have is that we register all students who accept a place and, particularly over the last number of years, we put a payment plan in place for those who struggle to afford the fees. Our policy is that we do not remove the students from the classroom or debar them from attending exams. We allow them to complete the year they are on and then we refuse to admit them to any subsequent year if they have not paid the debt from the previous year.
Mr. Tom Boland:
Yes, what the Chair suggests is doable. I will come to address some of the elements we do undertake. He must bear in mind that the accountability framework here is that the president is an accountable person, there is a governing body, there are internal auditors and there are external auditors in the form of the Comptroller and Auditor General. In the last year or-----
Mr. Tom Boland:
What we are doing in that space is not going nearly as far as the Chair is suggesting, with us doing individual audits of aspects of institutions. There are three things that are relevant here. First, we have for some time been doing what we call a trend analysis of expenditure across the sector, which gives us a sense of the different levels of expenditure in the different institutions, to see how they compare. In response to more recent difficulties, we now also require the institutions to share generic issues that arise in their internal audit, whether that they are not adequately dealing with procurement or that there are issues with travelling and subsistence. We are, therefore, requiring them to inform the sector as a whole of issues that arise in their internal audit so that a degree of learning is going on. Very importantly, we have not done it yet, but we have signalled to the sector our intention to conduct, in co-ordination with the Department, what we describe as rolling reviews of various aspects of expenditure in the sector. We have not officially informed the institutions of this, but I would like to see procurement as one of the first areas where we would do a system review of what is happening in the area and get professional people to take a system view of what is happening, in addition to the various levels of accountability.
This is where I see the problem. Deloitte is doing all this other work with the institutions. That is where all the information is. It has everything, down to the cost of everything, or it should have, and it does not share that information.
I know that but between Deloitte, Mazars and the Comptroller and Auditor General someone is falling down and there are piles of information there, if I understand audits. That is my view on it. It is seriously remiss of the Department and the HEA if they do not go back over Deloitte's working papers and have a central base to compare figures. The figures I have given the witnesses today are extraordinary. The bad debts written off amount to €287,000, there is a loss of €33,000 on the catering company and issues arise, like the one we are talking about. All we get from all the witnesses is words like, "Yeah, it happened, but listen, we've locked the gates firmly now". Great.
Are there any other questions?
I know we are on the GMIT issue, but I mentioned this at the start of the meeting and the Chairman said it might be appropriate to ask it later on. Can I now ask about the issue I raised regarding the University of Limerick and the Limerick Institute of Technology?