Oireachtas Joint and Select Committees
Thursday, 24 November 2016
Public Accounts Committee
Business of Committee
We are joined by the Comptroller and Auditor General, Mr. Seamus McCarthy, as the permanent witness to the committee. He is accompanied by Mr. John Riordan, deputy director of audit. Are the minutes of 16 and 17 November agreed? Agreed. There are no matters arising.
The next item on the agenda is correspondence received, in category A is the opening statement from Mr. Brendan McDonagh, chief executive and Mr. Frank Daly, chairman of NAMA.
We were scheduled to start at 9 a.m. The two opening statements from NAMA arrived at approximately 8.20 a.m this morning. Members have not had time to consider them.
Chairman, the statements have arrived too late, which is not fair to members, to the committee or to anyone. It is inappropriate. We have to spend a great deal of time preparing for these meeting. There is a significant level of correspondence. These statements are central to the proceedings but they arrived three quarters of a hour before the start of the meeting. We have to digest them. We have to shape our day in the Dáil around these meetings. In normal circumstances I would ask that the meeting be postponed because of the late arrival of the statements. This is totally unacceptable.
We must plan our days around committee meetings. To get crucial evidence, answers and statements 45 minutes before a meeting is frankly insulting.
It should be on the public record. I made the point when we met in private that it is totally unacceptable. They are treating the Committee of Public Accounts with contempt. It is our duty. We are not in the Dáil and we miss things because we have given a commitment to serve on this committee. The Chairman, the officials from the Office of the Comptroller and Auditor General and members have given their full commitment to the work of the committee. Providing documents so late is treating the committee with utter contempt.
Chairman, it is contemptuous to treat the committee in this way. Sadly, it seems to be part of NAMA's pattern. We can put that to them. We certainly need time to study the statements, but I think the representatives from NAMA need to understand that as a consequence of their approach this will not be their final appearance before the committee. There is no doubt in my mind that we will need them to come before us again. Deputy Cullinane and I had many questions that we wished to put them. The statements have come late in the day.
I believe Mr. Daly, Mr. McDonagh and others will be required to return next week, so in addition to marking their cards for disrespecting the committee I think they need to be put on notice of that, just in case this is a ruse for them to bounce in statements late in day or early in the morning in the hope that they will just manage their way through the meeting today and then they are out through the gap, home and hosed. They need to understand that that is absolutely not the case. This examination will be finished when it is complete and when we have answers to all of the pertinent questions. Chairman, you might familiarise Mr. Daly and Mr. McDonagh with those facts.
I know this is not a court but it would be usual in a case that an applicant or defendant would put in a replying affidavit on the morning of the trial so that he or she would have to get an adjournment because one does not have enough time to go through it. That would be the common course of events. I do not say we should adjourn today but we are on the back foot because we have not had time to assimilate the information, go through it, make notes and make bullet points. I feel compromised today, but if we park that to one side, I am still well capable of doing it. However, it is not the way we should conduct these proceedings in the future.
I fully agree with that. The problem for this committee is that it is not the first time that we have received opening statements very late, so if we cancel meetings every time that happens we will very rarely get business done because, as has been said, from their perspective, they took a decision not to furnish us with the information. Perhaps they thought it would be leaked to the media, but that is no justification for it. It is reasonable for us to have a recess, perhaps until after 10 a.m., but we need to meet them today. As Deputy McDonald said, we will probably need them to come back again. It may be that following questions today there are some board members who were central to some of the board meetings where minutes were recorded and they will also have to come back before the committee.
I think we should adjourn for half an hour to let us read the statements. I agree with Deputy McDonald that it could be that so many issues will arise that we will just do our best today and reserve other questions for another day.
We will make the point at the beginning. We will put them on notice that due to the short notice if we do not get finished today it is not our responsibility. We will move on then. We will commence the main business shortly.
The first item of correspondence is 189B (i) to (iv), from Niamh O'Donoghue, Secretary General of the Department of Social Protection, providing follow-up information to the committee from our meeting in October. Is that noted, agreed and published? Agreed.
The next item is 190B, correspondence from Mr. Mark Curran, in the Garda Commissioner's office responding to a query from the committee in relation to our hearings on NAMA's sale of Project Eagle. I just wanted to have the letter. Essentially, we wrote to the Garda Commissioner to find out if there was any issue in relation to inviting any particular witnesses. He concluded by saying it was appreciated that the committee had very real concerns that an appearance before the Committee of Public Accounts may prejudice ongoing criminal investigations in other jurisdictions. In that regard, any public questioning of an individual about matters which may form part of a criminal investigation in any jurisdiction has the potential to interfere with that investigation and subsequent due process. I am just putting that on record. We are noting the letter.
The next item of correspondence is 192B. It is correspondence from Mr. Ronnie Hanna declining an invitation to attend, principally because of concerns regarding the ongoing investigation. Essentially, he made two remarks - one is he has a duty of confidentiality still to NAMA which he has not been released from and, second, because of the investigation by the NCA-PSNI he believes, respectfully - he means no discourtesy to this committee, he is refusing to attend. We will note that.
The next item is a letter from Mr. David Meissels, managing director at Fortress Investment group, declining an invitation to appear before the committee Essentially, he said his company was the unsuccessful bidder and investigations are ongoing on Project Eagle. He previously submitted written responses in detail and he, respectfully, declines the invitation to send a representative to the public meeting. We will note that as well and publish it.
Then we have correspondence from Peter Robinson. He said that he understands the constitutional reasons he is not answerable to the Committee of Public Accounts and it is complicated by the fact that the NCA inquiry in Northern Ireland is ongoing. He gave evidence to the Northern Ireland committee. He recognises there are some similarities between our remit and that of the committee in Northern Ireland and he attaches a copy of the statement he made to that committee. He said that if we want his views on any specific issue we can write to the e-mail address given and he will be happy to provide a response. I take that to mean in writing.
We will publish his statement, even though it is already published in Northern Ireland. Much of the statement he made to the Northern Ireland committee flatly contradicts the evidence of Deputy First Minister, Martin McGuinness, who said he was not in the loop. We will adjudicate on that but we are not adjudicating on it now. Martin McGuinness got the opportunity to give his point of view in public and the letter from Mr. Robinson flatly contradicts a number of the statements made by him. We will have to consider those issues in drafting our report. Neither individual is present now so we will not discuss it.
We will need to do that but could I just note at this point that Mr. Robinson has the opportunity to come before the committee to have his evidence tested. That is the distinction, if you do not mind me saying, Chairman, just as the Deputy First Minister availed of.
I am disappointed that Mr. Robinson is not taking the opportunity to come down. They gave out about NAMA not attending before the committee in Northern Ireland. They said it would have been very helpful if NAMA had attended. I believe it would have been very helpful if NAMA had attended. Equally, I believe it would be very helpful if Mr. Robinson attended here. We are now placed in a very difficult position. I agree with you, Chairman, that Mr. Robinson has flatly contradicted what the Deputy First Minister said here. Now we have the benefit of the Deputy First Minister giving us that evidence and then a letter which absolutely contradicts him, practically on every point.
Deputy Connolly's point is noted. That is a complication for our committee and another exact example of that situation is the PIMCO letter. PIMCO did not attend before the committee in public. NAMA contradicted it in person but all we have from PIMCO is its written statement on the matter. As has been said, we do not have the opportunity to test its evidence in public. We did invite PIMCO and it declined to come. That will always be an issue for us.
Yes, and it adds to our issues as a committee.
The next item is 195B, follow-up information received from NAMA in response to a number of questions. That is the issue that has given rise to the recent discussion. This is a 54 page document that has arrived within a half an hour of the commencement of the meeting. We will not discuss it now. On an ongoing basis we have been sending letters to NAMA with a series of questions. We have got back a series of letters every week and one happened to arrive this morning. There are lots of letters in the system. They are not specific to today's meeting. The reply is in response to questions we have submitted previously. People might want an opportunity to raise some of these issues and follow them up. NAMA has been sending us other correspondence on a weekly basis that is in our file. It is up to the committee to deal with the responses received as part of our previous specific queries. This process is not completed in terms of questions we might ask of NAMA in writing.
On behalf of the members - if the members agree - Chairman, you should forcibly make the point to NAMA that we need whatever documentation it has not provided or information that was heavily redacted. NAMA has offered a justification as to why it cannot provide it but we need to be robust in asking again for information. Are you agreeable to taking such an approach, Chairman?
I am. We will do that today. We will also check whether there is provision in our Standing Orders to facilitate the receipt of confidential information by the committee. That is a point we will come back to.
The next item of correspondence is in category C, item 181C. It is correspondence from the North Meath Communities Development Association in relation to an ongoing issue with the HSE. Could we defer it in order that we can check for a previous response to the issue, which is an ongoing one? Is that agreed? Agreed.
Next we have correspondence item 182C(i) to (iv) and 191C(i) and (ii). We have two items of correspondence with attachments from a translation company in relation to the transparency of an Office of Public Procurement tendering process. The operations manager of the translation company draws attention to delays in the tendering process.
I propose we write to the Office of Government Procurement for a response, notwithstanding the legal considerations, and deal with it when we receive it. Is that agreed? Agreed.
Correspondence items Nos. 184C(i) to 184C(iii), inclusive, comprise a letter from an auctioneer-estate agent enclosing copies of correspondence with the Residential Tenancies Board on an ongoing issue. These will be noted.
Correspondence items Nos. 188C(i) and 188C(ii) comprise a letter from an individual attaching a newspaper article referring to the man and an assault case. The matter is not within the remit of the committee. I suggest referring it to the justice committee. Is that agreed? Agreed.
The following reports, statements and accounts of bodies audited by the Comptroller and Auditor General were laid since last week. First, the Defence Forces canteen board. Second, the Limerick Institute of Technology, for which there is an audit report but there is a reference to a payment of €550,000 made to seven suppliers without going through the competitive procurement process. The Institute of Technology Tralee has a clear report but it has incurred a deficit in the past three years, which has been highlighted by the Comptroller and Auditor General. As for Waterford Institute of Technology, a qualified report. The institute has consolidated results of its campus companies for the first time in 2013 and 2014. Attention is drawn to the fact that the group had an accumulated deficit of €15.1 million on 31 August 2014. The audit committee did not issue an annual report for 2013-14 to the institute's governing body until June 2015. There was a situation where some companies in the institute were not consolidated into the overall accounts. That has been done now but there was a previous issue.
This had been raised before. I think there are six or seven institutes of technology with deficits. Waterford is one with a particular problem. We were told there was a plan in place, a contingency plan. From what I am reading here, it does not seem to be dealing with the problem, however.
Mr. Seamus McCarthy:
I think the situation in Waterford is different to the ongoing deficit situations in other institutes. The point of the restructuring was to identify the level of deficit which had accumulated in Waterford. As the 2013-14 accounts are the first where they were consolidated, we now begin to see what the problem is in Waterford. I think there is a separate plan to deal with the situation there. There is a more general plan to deal with the deficit situation in other institutes. One will see from the other accounts that there are six or seven which have recurrent deficit situations.
The next item is Letterkenny Institute of Technology with a clear audit report and, again, highlighting a deficit in the past five years. The next item is Galway-Mayo Institute of Technology, a clear audit report and, again, a reference to an accumulated deficit. The next item is the Royal Irish Academy, a clear audit report but the deferred pension funding asset recognition issue has arisen there again.
Next item, the University of Limerick, a clear report. Again, it states the foundation has net assets of €15.1 million, the financial statements have not been consolidated with those of the university group. There is a deferred pension asset issue and the university procured a material level of goods and services during the year without competitive tendering.
Is there an issue about companies operating under the University of Limerick which are not being incorporated into the university group set of accounts?
University of Limerick on the one hand is within the remit of this committee and the Comptroller and Auditor General audits its accounts as a public body. There is a foundation operating separately on behalf of the University of Limerick but its accounts are not included in the Comptroller and Auditor General's audit.
Yes, I did and I thank the Chairman for raising it. The Comptroller and Auditor General mentioned how these foundations have not been consolidated with the university groups. He then referred to Galway a particular example. Why is that? Is it the level of assets in NUI Galway?
Mr. Seamus McCarthy:
It has incurred deficits in each of the past four years. With a number of the institutes, they had accumulated surpluses from earlier years. What has happened with the running of deficits in the past number of years is that those accumulated surpluses have diminished. In Galway-Mayo Institute of Technology, I am drawing attention the fact it is now in an accumulated deficit position of €643,000.
Mr. Seamus McCarthy:
It is a situation where it does not have reserves to fall back on. The Higher Education Authority is aware of it. Recently, either in September or October, it published a report on the funding of the institutes of technology and financial difficulties. The matter is being addressed by the Higher Education Authority.
Mr. Seamus McCarthy:
It is a situation which I think is improving because of the committee's and my office's attention over the past several years. It still does occur. I draw attention to the situation if I find that non-competitive expenditure is of the order of €500,000 or more. If it falls below that level, we still keep a focus on it but I do not draw attention to it.
Mr. Seamus McCarthy:
Generally, from donations.
The colleges pay the administration costs by giving a grant to the foundation but the foundation's activity is geared towards raising money for capital projects. We have encouraged the universities to disclose in their financial statements the level of funding they are transferring to the foundations. On occasion we have drawn attention to cases where the administration costs of the foundations were being borne by the college but there is no corresponding significant donation stream coming in.
The next item is St. Patrick's College and again we have a clear audit report. There is also a repeat of the issues relating to the funding of pensions and to procurement. A total of €884,000 did not go through the proper competitive tendering process.
The next item is the National Transport Authority, NTA. The authority has recognised losses of €975,000 relating to leased premises vacated by the authority and subsequently re-let at a lower rent than the authority's obligation. The cost comprises expenditure of €225,000 up to the end of December 2015 and a provision in the 2015 accounts in the amount of €750,000 in respect of the remaining term of the lease. We will write directly to the NTA and ask for a detailed explanation of how it got itself into that position.
Again, that is a huge loss on a leased building and this is not the first time this has happened. I cannot remember the details but a similar situation arose with regard to a premises in Dublin and the sum involved was substantial. I think the amount involved was around €1 million.
Mr. Seamus McCarthy:
The expenses can be quite significant. My recollection here is that this arose when the Taxi Regulator was absorbed into the National Transport Authority. It had a separate premises but then its activities were transferred to the authority's premises. The authority inherited the lease on that premises, effectively and was not able to get out of it. When the authority sublet the premises it did so at a level lower than the obligations in the lease. The authority has provisioned to the tune of €750,000 because the lease does not expire until 2024. The authority is taking the full hit.
The Comptroller and Auditor General will tell us later on. That is the end of that topic. At this stage we have completed our review but we are asking for a detailed note on the premises that was sublet at a lower rate.
The main item on our agenda today is to deal with the witnesses from NAMA. In view of the fact that the opening statement from the chief executive, which runs to 11 pages and the opening statement from the chairman, which also runs to 11 pages only arrived at 8.20 a.m. or 40 minutes before our meeting commenced, members have not had the opportunity to review those documents.
Yes, there is also a 54 page information document. Such documents are coming to us on an ongoing basis in response to queries raised at previous meetings. In view of all of that, I suggest we suspend the meeting at this stage for 30 minutes. When we resume we will make our views known very clearly at the beginning of the public session.
Deputy Cullinane wishes to say something.