Oireachtas Joint and Select Committees
Thursday, 7 February 2019
Public Accounts Committee
Business of Committee
We have a quorum. We are joined today by the Comptroller and Auditor General, Mr. Seamus McCarthy, as a permanent witness to the committee. He is joined by Ms Maureen Mulligan, deputy director of audit. Apologies have been received from Deputies Deering and Farrell. The first item on the agenda is the minutes of the meeting of 31 January, which was our last meeting. Are those minutes agreed? Agreed.
The next item is matters arising from the minutes. I have one serious item to raise, which we will be coming back to discuss. It relates to the National Paediatric Hospital Development Board. We had an item of correspondence here the last day, reference number 1897. It was signed by Paul Quinn, chief procurement officer, Office of Government Procurement. We had written to him well before our meeting asking for information about the role of the Office of Government Procurement in respect of the national paediatric hospital. He summarises the limited role it is playing, said it was established and that there is a procurement process and a contracts committee, called the Government contracts committee for construction. He states that the hospital board commenced its engagement with this committee in May 2014 and goes on to say that it sought a derogation because of its unique nature. The Office of Government Procurement, of which Paul Quinn is the chief procurement officer, notes that the derogation was given in respect of working through that committee. Nevertheless, the contracting and sanctioning authority were responsible all the while. He addresses the use of the frameworks and of eTenders and provides a summary of the role of the Office of Government Procurement in the procurement arrangements for the national paediatric hospital. He says his office is at the disposal of the Committee of Public Accounts should we require more detailed information.
What I find totally unsatisfactory with that letter from a very senior Government official is that he makes no reference to the fact that he was a member of the board of directors. He states that the National Paediatric Hospital Development Board commenced its engagement with the Government construction contracts committee in May 2014. His office provides the chair and secretary of that committee. He was appointed as a member of the National Paediatric Hospital Development Board on 2 August 2013 and there is a clear conflict of interest between the two positions, given the derogation, his being a member of the board and his being on both sides of that debate. What I find more disturbing is that he did not inform this committee of this. He should have at least highlighted it. This level of not providing information in response to a letter from the Committee of Public Accounts is totally unsatisfactory. I accept that he had a dual role. We were entitled to be informed of that. This letter is not acceptable from a person of that office. We know there are issues in respect of that matter.
I will take comments on this issue. I propose that we write back to Paul Quinn expressing our grave disappointment that the information we would expect as a matter of courtesy and candour to be made available to the committee should have been omitted.
Yes. It is displayed on the screen. We wrote well in advance to the National Development Finance Agency and the Office of Government Procurement to ascertain their roles in respect of the National Paediatric Hospital Development Board. Depending on the response, we were to decide whether to meet them. We had sought the information well in advance of the meeting and received this reply with no reference to the fact that Mr. Quinn was a member of the board. At a minimum, he should have referred to that. There are other issues on the work programme about the hospital board that we will deal with. I am strictly referring to this letter as a matter arising from last week's minutes.
I was going to raise the issue of the national children's hospital anyway, so I think now is the best time for us to deal with it. Specifically in respect of that letter, could the Chairman remind us what roles Mr. Quinn had? He is head of the Office of Government Procurement.
The National Paediatric Hospital Development Board. He was a director since 2 August 2013. The hospital board and the Government contracts committee, of which the Office of Government Procurement provides the chair and secretary, commenced discussions on the matter in May 2014.
The last line of his letter is very helpful because he says that he is at the committee's disposal, which brings me on to my next point. I think we need the Department of Public Expenditure and Reform before us anyway. That is the logical next step for the committee. We need the Secretary General of that Department. Given that Mr. Quinn is head of public procurement and had that dual role, and that there are questions around management of conflict of interest, I think he should come before the Committee of Public Accounts. The Department should also be here if we have a further sitting. There are now questions about the relationship between the Department and the Department of Public Expenditure and Reform, and about lines of communication in terms of process, that this committee should examine. I propose that we write to the Department of Public Expenditure and Reform asking that the Secretary General come before us. Mr. Quinn says he wants to be helpful and he is at our disposal. It would be useful for him to come to that meeting as well.
I will make one observation of which I want people to take account for a moment. We need to invite the Secretary General of the Department of Public Expenditure and Reform to discuss the management and control of major capital projects, including the children's hospital. If we write to him specifically on the children's hospital, he is utterly within his rights to say he is not the Accounting Officer in respect of that project. I do not want to write a letter to which we are guaranteed a refusal. It is not good for the committee to be making a request that we know will be refused. If we frame the request as being in respect of major Government contracts, for which he has a responsibility, we may have a better result.
Otherwise, he would refuse to attend this committee as he is not the Accounting Officer for that project. He has a broader responsibility and I think that is the invitation we have to extend. He should not refuse that invitation.
When we wrote to him, we did so in a specific context. It was a piece of input that we felt would be necessary to understand the process, to understand controls and where the section he heads up in respect of procurement fits in to making sure proper controls are in place. We did not just pick this out of thin air. It was a piece of information that we required. Is there going to be any issue if he comes here saying he reports to the board? If we are going to have an engagement on this, it has to be on his role and responsibility when he was on the board. Did he report to the Minister? Was he required to report to the Minister? He was not picked out of thin air, either, to sit on that board. There was expertise being placed there. Where was that interaction? We got that reply in response to a request.
We made the request so that we could look at this matter and learn how the process worked. He needs to be able to answer on that, rather than saying-----
I will leave to the Chair the methodology by which the Department of Public Expenditure and Reform comes in here. It is necessary for the Secretary General of the Department to come in and I suspect he wants to come in, to one committee or another. The head of procurement, who sat on the board, should also come in. It is only through this that we can get to the bottom of where this was going.
Circular 12/2010 explicitly states the requirements of a civil servant who sits on a State board. If we go by what the Taoiseach said in the Dáil, however, all the circulars on this matter are a waste of time and not worth the paper they are written on. The requirements were also incorporated, verbatim, into the code of conduct for State boards, which was launched in August 2016 by the current Minister. His responsibility is listed in that circular, as is the responsibility of all civil servants on State boards. It states when he or she must go to the Secretary General and when he or she must immediately go to a Minister. There is a process issue here, beyond this whole topic, and that is also an issue for us on the Committee of Public Accounts. Is this circular being adhered to across the Civil Service? It is bigger than the hospital board issue.
Amazingly, yesterday in the health committee it was confirmed to me that the Minister was made aware of the cost overrun on 9 August. He was in a meeting with the Taoiseach at the time, coincidentally, and the Taoiseach was informed on the same day, as was the Minister for Public Expenditure and Reform, Deputy Donohoe. The steering group minutes show that there were concerns in April, May, June and all the way up. Those steering group minutes-----
The board was reporting to the steering group, which reported to the other board, the one which had been set up by Mr. Jim Breslin. The steering group was set up in May and the other board in September. They obviously had concerns back then or they would not have put in these layers of accountability. It was confirmed to me at yesterday's health committee meeting that attempts were made throughout October, and certainly on 17 October, by the Department of Health to sit down with the Department of Public Expenditure and Reform to discuss this. The Department of Health was not able to sit down with the Department of Public Expenditure and Reform. This is the most amazing and unbelievable thing in all of this, which is why we need the Department of Public Expenditure and Reform to come before us. The budget negotiations were ongoing and the rows between the Department of Health and the Department of Public Expenditure and Reform about budget allocations and overspends were on the front page of every newspaper, but on 9 August the Taoiseach, the Minister for Public Expenditure and Reform and the Minister for Health were all aware of it. The Department of Health was trying to sit down with the Department of Public Expenditure and Reform to discuss it but it never happened.
There are multiple issues here. One of them is the fact that somebody was sitting on the board who was subject to Circular 12/2010. Another is that there was a failure to sit down and discuss the issue, despite the fact that everyone was aware that there was an overspend of at least €200 million at this stage. If that does not justify us getting information from the Department of Public Expenditure and Reform, nothing does.
We will seek clarification on these things and maybe the Comptroller and Auditor General can give that. All the circulars are out there but there is company law governing the responsibility of a director to do his or her fiduciary duty to the board of which they are a member. Does the companies legislation supersede the circulars on the role of a director? Maybe this means half of these circulars are meaningless.
There is old health legislation, under which this was incorporated. Company law does not apply, which means that what the Taoiseach said, though it was probably inadvertently, was inaccurate. It would mean that this circular does apply to the board. Would that be the understanding of the Comptroller and Auditor General?
I ask that you circulate it to members as soon as is practicable in the coming days. I was confused about that role within a company. We have covered the point for the moment and I do not want to go into the nitty-gritty of it now.
At our last meeting we cleared, noted and agreed the minutes of the meetings of 17 January, 22 January and 24 January. The meeting of 17 January was with the Department of Justice and Equality and the Prison Service. We asked the Department to respond to us, in writing, with specific information on two items and we asked the Prison Service to respond on 16 items. Three weeks later, the Committee of Public Accounts has not had any replies to any of the questions. It is not acceptable to the Committee of Public Accounts to write out to these two bodies and not receive answers. Unless we have the response by next Thursday, the same group of people will be back here again. When we write to an organisation for information, they cannot disappear into the wind and not get back to us. There has been three weeks with no communication from them. If we do not have the answers by next Tuesday evening, they will be here on Thursday to tell us why. They are now formally on notice to be here next Thursday morning at the commencement of business at 9 a.m. if we have not received replies by Tuesday evening. Can we agree to that? I propose that this is a procedure we will follow.
If we ask for information, we should receive replies or else an explanation of why it is not possible. We had to do it once last year and I do not intend to start this year on the same road.
As we have noted and agreed the minutes, we will move to the next matter on the agenda, namely, correspondence received since the last meeting. Thank God the correspondence is light because we have been busy over the past few weeks.
In category A, the first items are Nos. 1913 and 1920 from the Office of the Attorney General, providing briefing material and an opening statement. They are to be noted and published.
Nos. 1914 and 1921 are from the Office of the Director of Public Prosecution, proving a briefing note and opening statement. They are to be noted and published.
Nos. 1915 and 1922 are from the Chief State Solicitor's office, providing a briefing note and opening statement. They are to be noted and published.
Nos. 1919 and 1928 are from the Department of the Taoiseach, providing a briefing note and opening statement. They are to be noted and published.
No. 1910, from Mr. Ray Mitchell, assistant national director of the HSE, was received and circulated before the last meeting but we did not note and publish it. It provides a copy of the terms of reference of the review of the escalation of costs in respect of the new children's hospital. We will seek to obtain a copy of the revised terms by the conclusion of the meeting. If they have been completed, we would like a copy. Otherwise, we should be informed. I understand that the revised terms of reference have been published and, therefore, I would like to see them.
We also need to understand what is legally possible in regard to revised terms of reference. If the terms of reference require naming people who are culpable in respect of the overrun, that is unlikely to end up in the public domain.
We are unlikely to learn anything from the matter at the committee. Rather, the information is likely to remain available only to the two contracting parties, according to legal advice I have sought. While the Government may well be given an indication of who is liable according to the terms of reference, nobody else will, and that is entirely unsatisfactory. Whether an identification could legally be made outside of those parameters is another matter. We all know the limits of the committee. There was a referendum on foot of the Abbeylara case. Let us not just merely examine the terms of reference but instead consider what they might or might not deliver. It is not the case that we are demanding a head on a plate. It is a question of where we can fit into the system a method of accountability. Unless we learn a lesson from the matter, we will repeat the mistakes of the past. Can we do what I have outlined, as well as obtaining a copy of the terms of reference?
Yes, when we receive the terms of reference, we intend to consider whether they will lead to the publication of a report or whether they will be written in such a way that it may not be possible to issue a report, and that is important.
I do not meant to be political but the Taoiseach has a habit of making commitments. He did it on CervicalCheck when he said no woman would have to go to court, despite having no legal basis to make that commitment. He has done exactly the same in this regard. If it is just to bounce the issue into the future, it is wholly inadequate. If it is the case that the terms of reference will not do that, we must also consider what we need to do to fix an utterly flawed process. That may well involve inviting Mr. Robert Watt of the Department of Public Expenditure and Reform to appear before the committee.
In summary, if the terms of reference have been made available, we want to obtain them by lunchtime. Otherwise, we should be told. The HSE has committed to reverting to the committee on the matter, after which we can discuss it later in the meeting.
On No. 1910, I refer to the document, Design Build Equip. We have not received the Linesight report. In the document, the figure zero is quoted for the cost because it is described as part of the design team fees-----
The Deputy is referring to No. 1918, from Ms Rhonda Evans of the National Paediatric Hospital Development Board, which provides a note on the children's hospital costs and the list of independent and corporate reports. It is to be noted and published. The Deputy is right that there should be clarification. On the Linesight report, there is no outline of the cost attached to the schedule that was made available to the committee last week.
That is fine. We will move on. The next items of correspondence, category C, relate to private individuals and other correspondence. Item No. 1916, from an individual, dated 31 January 2019, concerns the selection process followed by the Department of Foreign Affairs and Trade to create a panel for election observer rosters. As we have previously noted, the subject matter is not within the remit of the committee, which remains the case, but for information purposes we can request a note from the Department on the selection process used to form the election roster, the rationale thereof and why it appears that the Department did not pursue a competitive process.
Yes, I do not refer specifically to this item of correspondence. On the general issue of the board running over the allotted period, we wrote to the Department and sought clarification on the matter. Have we received a response?
It is a panel of observers which is selected and runs for a specific period, before the process is repeated. It is a matter of processes and accountability, which is all we want to know about it. Given that we have written to the Department, I am just wondering why we have not received a response.
We will return to the matter. The next item, No. 1917, from Deputy Jonathan O'Brien, dated 7 February 2019, renews a request to invite the Secretary General of the Department of Public Expenditure and Reform to appear before the committee in respect of the overrun at the national children's hospital. We note the request and we have agreed to invite the Secretary General. We will form the invitation in a manner that will require him to attend.
Yes, we will ask for it to be as soon as possible. The next items, Nos. 1923, 1924 and 1929, are from the Ceann Comhairle and the Chairman of the Joint Committee on Justice and Equality. I propose we discuss their contents briefly in private session and provide a short summary of our observations when we return to public session.
The next item, No. 1925, from Professor Chris Fitzpatrick, consultant obstetrician, gynaecologist and master of the Coombe Women and Infants University Hospital, dated 6 February 2019, requests an opportunity to appear before the committee in respect of the financial overrun at the national children's hospital. He was in a key position because the co-location involved the Coombe Hospital, of which he was the master, and the issue was fundamental to the decision on the co-location. It was not suggested to move the hospital miles away but he suggested another site, adjacent to the current site, that would have facilitated all the issues. He said he highlighted the cost overruns. Nobody knows when the Coombe Hospital will be co-located with the new paediatric hospital. We will not invite everybody to the committee who writes to it, but we will just hold the door in this regard, while thanking him.
We will not decide just yet. We may decide that he will go to the Joint Committee on Health, if it wants to see him, but his entire email to us is strictly about financial matters related to the project. He could have a useful input to make and perhaps on the day Mr. Watt is to attend the committee to discuss capital projects we might have a separate session. I would not like to dismiss it, nor would I like to accept it straight up.
I agree with the Chairman. First, it is a serious letter from a committed person setting out issues about accountability and money. Clearly, we cannot invite everybody to appear before the committee. I agree with the Chair in that regard, but we have to decide how we will put this matter in context. Therefore, we should not say yes now, but we should certainly come back and look at the letter to see how we will deal with it. I am in favour of him coming, but I see the dilemma. There were different groups yesterday and so on. This matter has to stay on the agenda and we need to come back to it to discuss it and give it proper thought. He has gone to some trouble and, if we are about governance, certainly there are serious issues. That is my tuppence ha'penny worth for the moment.
This private individual has requested to appear in public in order that he will be satisfied that his issue will be dealt with in public. We will have to make quick contact with him because of the GDPR, but I propose that we publish the correspondence. Normally, we do not publish letters from an individual, but this is different because he wants to appear in public. If we have to seek formal agreement to allow publication of the letter, so be it. If it is granted, we should publish it.
The next item of correspondence is from Deputy Jonathan O'Brien, requesting that we follow up on an item with Mr. John Pollock about various meetings and the minutes of the meetings of the finance sub-committee of the paediatric hospital board. We have asked for copies of the minutes as a result of last week's meeting and various other minutes of meetings of different groups. That matter has been dealt with.
The next item on the agenda is statements of accounts received since the last meeting. There is a large list which I will move down through quickly. The first is for the Criminal Assets Bureau which received a clear audit opinion.
The special account established under section 4 of the Hepatitis C Compensation Tribunal (Amendment) Act 2006, an insurance scheme, received a clear audit opinion, as did Pobal.
The Limerick Institute of Technology received a clear audit opinion, but non-compliant procurement to a figure of €663,000 is noted. Without going into the detail every time it arises today, the liaison officer produced for the committee a comprehensive report last autumn on the items highlighted as non-compliant in all of the accounts. I will ask for it to be brought up to date in the accounts received to the end of December. We will include a summary in our next periodic report in the section dealing with the issue of non-compliance. Much work has been done behind the scenes. When the document is updated, we will circulate and summarise it for inclusion in our next periodic report. We need to cover this issue but without delving into every specific detail as we move along. The matter is noted.
Beaumont Hospital board received a clear audit opinion. Again, the figure for non-compliant procurement is estimated at €24 million.
The Health and Social Care Professionals Council to promote standards of professional education, training and competence for health and social care professionals received a qualified audit opinion. The council accounts for the cost of retirement benefit only when it becomes available and is not in compliance with FRS 102, international standards, but it is complying with the direction of the Minister.
They are not the normal accounting standards.
Leopardstown Park Hospital board received a clear audit opinion. The figure for non-compliance was €799,000. We will include this topic in our periodic report.
Dún Laoghaire Institute of Art, Design and Technology received a clear audit opinion, as did the Institute of Technology Tallaght.
The National Haemophilia Council which advises the Minister for Health and agencies on any matter related to haemophilia received a clear audit opinion.
Nscda (Operations) DAC which is developing and running the National Sports Campus received a clear audit opinion.
The Residential Tenancies Board, RTB, received a clear audit opinion, but non-compliant procurement is noted at a figure of €2.9 million. We have raised the matter recently with the RTB and asked for details. We will ask for the matter to be followed up.
The Office of the Data Protection Commissioner received a clear audit opinion.
The Mental Health Commission received a qualified audit opinion, again because it did not comply with international accounting standards in dealing with retirement benefits, as the Comptroller and Auditor General knows.
The Crawford Art Gallery received a clear audit opinion.
Waterford and Wexford ETB received a clear audit opinion. Again, non-compliance with procurement is noted at €3 million.
Health and Safety Authority received a clear audit opinion.
The Health Research Board received a qualified audit opinion. It in the health area and does not meet international financial standards in dealing with retirement benefits at the direction of the Minister for Health.
The Grangegorman Development Agency received a clear audit opinion, as did the Competition and Consumer Protection Commission and Horse Racing Ireland.
The Oberstown Children's Detention Campus received a clear audit opinion. However, attention is drawn to the statement of internal control which discloses that the board did not as part of the audit carry out a review of the effectiveness of the systems of internal control for the period. This relates to its account for 2018. Has it been done since, or has the Comptroller and Auditor General had an opportunity to verify it?
We will include a summary of many of these issues in our periodic report.
The next item on the agenda is the work programme. Today we will be dealing with the Secretary General of the Department of the Taoiseach in considering Vote 1 - the President's Establishment and Vote 2 - Department of the Taoiseach. We will meet in private session to clear some items and then resume in public session immediately after the votes at 2 p.m. to deal with the Office of the Attorney General, the Office of the Director of Public Prosecutions and the Office of the Chief State Solicitor.
Next week we will meet the broadband providers. We will meet representatives of BT at 10 a.m., of Eir at 11 a.m., of the Regional Internet Service Providers Association at noon, of Imagine at 2.30 p.m. and of Enet at 3.30 p.m. It will be an interesting session.
In the following week, on 21 February, we will deal with financial statements for 2015 of Kildare-Wicklow ETB. I hope it will not take all day. In the afternoon session we are proposing to deal with some of the housing issues with which we are dealing concerning the interim regulatory committee of the Irish Council for Social Housing which is the approved housing body.
On 28 February in session 1 we will be back discussing housing matters. In session 2 we will deal with the remainder of the Vote for the local government fund, the report of the Comptroller and Auditor General and central government funding for local authorities. Representatives of the Department of Housing will be here, together with representatives of the Housing Agency and the chief executives of a number of local authorities to discuss housing. The session will be of interest.
In the following week, on 7 March, we will deal with the accounts for which the Minister of Finance is responsible. We will deal with chapters 1, 2, 3 and 22 of the annual report of the Comptroller and Auditor General, the Exchequer outturn, the collection of pension contributions, the control of funding for voted services and the Irish Fiscal Advisory Council. We will also deal with the appropriation account for Vote 8 - Office of the Comptroller and Auditor General. Mr. McCarthy will let the Accounting Officer for his Department handle it.
I am putting the Secretary General or Accounting Officer for the Oireachtas Commission on notice that he will be here to discuss its accounts. We will be comprehensive in our work as we move through the year. I put him on notice and indicate that we will set a date shortly.
On 14 March we will possibly have before the committee representatives of the Central Statistics Office. That essentially is as much as we have agreed to at this stage. We have been referring to the Department of Public Expenditure and Reform as DEPR which is confusing for the public because on the site it thinks we mean digging deeper.
If we have to schedule a separate meeting to facilitate it, we will do so. We have a good schedule of work for the next couple of weeks.
I think we have covered most of the items.
We are all keeping an eye on it. The Deputy will have seen the change in the format of the minutes that we have introduced this year. There is a column on the right hand side opposite each item of correspondence in which it is indicated that we have noted and published it and that there are further items to be followed up. We have a tracking method which we use in the producing the minutes. The secretariat provides a more comprehensive sheet with all of the items we have to follow up, point by point. It is our private working document, as we could not include all of that information in the minutes. We publish summary points in dealing with correspondence.
We had indicated that we would commence the meeting with the Secretary General of the Department of the Taoiseach at 9.45 a.m.