Oireachtas Joint and Select Committees
Thursday, 14 February 2019
Public Accounts Committee
Business of Committee
We are joined by the Comptroller and Auditor General, Mr. Seamus McCarthy, who is a permanent witness. Apologies have been received from Deputies Aylward, Cassells and Deering.
The first item on the agenda is the minutes of our last meeting on 7 February. Are they agreed to? Agreed.
That is fine.
The next item on the agenda is correspondence. There are three categories, the first of which is briefing notes and opening statements for today's meeting. Before we get into the details of the correspondence received, what I have is quite a lot but not all of the documentation we have received in recent days on various meetings and reports in connection with the national children's hospital. We will hold all of it together for a separate discussion and deal with the other correspondence received first, but I want to give members an indication of the volume of material that has been sent to the committee as a result of our questioning at a previous meeting.
Nos. 1943A and 1958 are items of correspondence received from Mr. Peter McCarthy, CEO of Enet, providing briefing material and an opening statement for today’s meeting. We will note and publish them. Is that agreed? Agreed.
No. 1953A is correspondence received from the company Imagine, providing an opening statement for today’s meeting. We will note and publish it. Is that agreed? Agreed.
No. 1959A is correspondence received from BT for today’s meeting. We will note and publish it. Is that agreed? Agreed.
No. 1962A is correspondence received from Eir for today’s meeting. We will note and publish it. Is that agreed? Agreed.
Nos. 1963A and 1964A are items of correspondence received from the Regional Internet Service Providers Association, providing an opening statement for today’s meeting. We will note and publish them. We will also note and publish the documentation received. Is that agreed? Agreed.
The second category is correspondence received from Accounting Officers and-or Ministers as a follow-up to requests made at Committee of Public Accounts meetings.
No. 1932B is a letter received from Mr. Robert Watt, Secretary General of the Department of Public Expenditure and Reform, providing information requested by the committee on the Government banking service contract in respect of the service being provided by Danske Bank. Mr. Watt does not provide specific details, but he mentions the fact that there are up to 50 million transactions, mainly involving the Department of Employment Affairs and Social Protection which accounts for some 43 million of them. Mr. Watt says the service delivery and relationship management aspects of the contract are primarily managed by Danske Bank's Dublin based team supported by the head office in Copenhagen in Denmark. It had a pre-existing arrangement with An Post for cash and cheque transactions, etc. We will note and publish the correspondence. Is that agreed? Agreed.
No. 1937B is correspondence received from Dr. Des Fitzgerald in the University of Limerick, providing information requested by the committee. We asked for the total number of subsidiary companies; a breakdown of the staff and the board membership, as well as the most recent financial statements for Plassey Campus Centre. All of the information is provided, with a list of all the companies over which it has control and the financial statements for Plassey Campus Centre, a company limited by guarantee, formerly known as Plassey Campus Centre Limited. I note that the company which is controlled by the University of Limerick has a turnover of €37.168 million and revenue reserves of €36.273 million. I will ask the Comptroller and Auditor General to confirm same. Is the company consolidated in the accounts of the University of Limerick?
That is an important aspect. We want to make sure the figures are incorporated into the accounts of the University of Limerick. If anyone wants to review the financial statements, he or she should, please, feel free to do so.
The next item is No. 1938B, correspondence received from Ms Julie Sinnamon of Enterprise Ireland, providing information requested by the committee, outlining Enterprise Ireland's full investment in FeedHenry, including its involvement in supporting and contributing to the commercialisation of the project. Ms Sinnamon confirms that Enterprise Ireland invested €1.59 million in the project and received €4.5 million from the proceeds of the sale. This was mentioned in passing the last day and we asked for a detailed letter on the matter. Other than Waterford Institute of Technology and Enterprise, did any other State organisation receive some of the proceeds of the sale?
We will note and publish the correspondence as we want to balance the discussion. There has been much debate about returns to the State. It is clear that on an investment of €1.59 million by Enterprise Ireland, it received €4.5 million in return. That helps to complete the picture on the matter.
The next item is No. 1939B, correspondence received in connection with the national children's hospital. As we have a large volume of items in that regard, we will note and discuss the correspondence with all of the other correspondence received on the national children's hospital. No. 1940B is also correspondence related to the national children's hospital.
No. 1942B is correspondence, dated 7 February 2019, received from Mr. Aidan O'Driscoll, Secretary General of the Department of Justice and Equality, providing follow-up information requested by the committee at an earlier meeting. What is provided includes information requested from the Irish Prison Service. There are three items outstanding which the secretariat will be monitoring. I will make a brief observation and know that other members wish to comment. There has been much public criticism of us by another Oireachtas committee asking these questions, but I wish to put in context the reasons we are asking them. There is a complication as the issues are within the remit of the justice committee, but equally they are within the remit of this committee. Some committees of the Houses believe that if a matter is within their remit, it cannot come within ours, but there are matters that fall within the remit of more than one committee. We must deal with that issue. If a topic falls within the remit of a line committee, it should not necessarily be excluded from the remit of the Committee of Public Accounts. I will not get into the detail as I know members wish to comment on the issue.
We followed up with the State Claims Agency on the matter of medical negligence and the cost of claims against the State. There are approximately 1,685 such claims against the Irish Prison Service from current and former prisoners which may bring a serious cost to the State. We were acting within our remit in inquiring about the background and matters such as how prisoners were dealt with while imprisoned. There are also concerns about potential medical claims, which is why we asked about the medical service. We asked about the level of prisoner injury and compensation claims. The reply from the Department of Justice and Equality is that the information is awaited from the State Claims Agency. The fact that the agency is dealing with the matter is proof that it is very much one within our remit. We also asked about cases being taken against the State on the issue I mentioned. That request is with the State Claims Agency. We asked for details of compensation paid in cases where prisoners had harmed themselves. Again, the Department is awaiting information from the agency. We asked for information on compensation payments related to protected disclosures. Again, information is awaited from the agency.
We were concerned about the health of prisoners as if the State was not providing adequate medical services, it might well lead to compensation claims against it. We want such matters to be dealt with. I was shocked by the response to one of the questions asked. We asked about the number of prisoners with mental health or drug dependency issues, including the percentage of prisoners who passed through the system every year on medication or prescriptions. The reply states: "Information on the level of mental health conditions in the prison population is derived from studies done in 2003 and 2005". If information is based on 15 year old studies, it is utterly unacceptable and possibly on the negligent side of things. That is if this is the most up-to-date information available. The reply also states the rate of prescribing in the Irish Prison Service is "currently" - the letter dates from last week - 63% of the total number of prisoners in custody. They have an active prescription which indicates that serious issues may arise at a later date. The reply gives the cost of maintaining a prisoner in a high security prison, a medium security prison and an open prison. The average cost was €68,535 in 2017.
There is much detail included in the correspondence. As a committee, we requested a number of pieces of information. The correspondence indicates that there are three elements that will be responded to at a later date, but as there may be more, we might liaise with the clerk on the outstanding requests.
The first point made in the reply is related to surveillance and is mind-boggling because of the way it is written. One has to read it two or three times in order to understand it. It states: "In relation to the request by the committee for an information note on any costs for surveillance in any of the prisons or any prison offices over the past five years, the Irish Prison Service has no information to suggest that any authorised covert surveillance of a prison officer has been undertaken by the Irish Prison Service". That relates to authorised, not unauthorised, activity. The reply continues:
Companies were engaged by the Irish Prison Service operational support group. Records show that one company was paid a cumulative total of €9,586.59 in 2011 and €8,641.68 in 2012. A second company was paid a cumulative total of €10,774.12 in 2011. It is not possible from the information available to determine if these payments relate to the surveillance of prison staff.
Effectively, the Irish Prison Service does not know why the money was paid. The executive summary states money has been spent, but the service has no idea why it was spent. It is mind-boggling.
It is a comprehensive set of documentation, on which I agree with most of the Chairman's observations. What are we doing with it? We now have the response and witnesses were called before us. If there are issues relevant to the work of the Committee of Public Accounts, we must isolate and deal with them. It also strikes me that some of this relates to policy and that the documentation could be forwarded to the justice committee. It could deal with the policy matters with which it must deal, while we can examine the cost or control matters relevant to our work.
When the secretariat is drafting a periodic report, it checks to see if we have all of the answers. It will go back to obtain the information. Therefore, our periodic report will be based on up-to-date information. As a period could elapse between the public meeting and the date of publication of our report, we always check. That work goes on behind the scenes.
No. I do not want to go into private session now. We have received a lengthy and wordy reply, but, unfortunately, some of the stuff included in it just does not stand up and we will probably have to revisit it. I have a concern that, with the best will in the world, the service administration in Longford does not really know what is going on in certain prisons or aspects of the work.
If we look at the mess committee stuff that came back here, it does not really add up. There is other stuff as well. We are not sure that money spent on surveillance was of staff. It is just not credible. Expenditure is supposed to be okayed by the director of operations of the Prison Service. Why would he or she ever okay something without being told what it was for?
This is a response and I thank the Secretary General for giving us a response. He probably gathered information from various people in good faith. However, in many aspects the response is just not credible.
The State Claims Agency straddles all Departments. While the biggest contingent liability is in the area of health, there are liabilities and risk assessments in other Departments and it is quite useful for us to be able to match one against the other. We could see there was a drop in some claims by actions that were taken in respect of the risk assessments that were done in some of the prisons. That was one of the things that came out. If we are doing a piece of work on open disclosure, the HSE, the State and contingent liability, there are other liabilities under the State Claims Agency that could be part of that report. What we are really trying to get at concerns the State Claims Agency, how we function, how litigious we are and how much is potentially being spent in the courts unnecessarily. This will be useful in that context.
We can park the issue while accepting the point that has been made by Deputy MacSharry that we will need to come back to it. It is important to put it into one package of issues and that really comes under the heading of mitigating against claims, reducing claims or becoming less litigious and taking corrective action.
We note and publish that. It is an issue we will come back to. It will form part of our periodic report and feeds into the State claims issue as well. The next item of correspondence is No. 1944B from Mr. Mark Griffin, Secretary General, Department of Communications, Climate Action and Environment, providing follow-up information in respect of metropolitan area networks and mobile phone blackspots. We will note and publish this. Some people will be interested in the information.
Next is No.1945Bin connection with the children's hospital. We will hold that over and discuss it in a moment. No. 1946B is also in connection with the children's hospital. We will hold it over and discuss it in a moment. No. 1948Bis from Mr. Maurice Buckley, chairman of the Office of Public Works, providing information requested regarding the procurement arrangements for the Pope's visit. We will note and publish this.
This is one I have been waiting for us to receive. When we inquired into the issue, we got a note back with a little box ticked saying that they had gone through the procurement process. We asked what the procurement process was, specifically around some of the contracts. The largest one would have been for the fencing and security. Essentially, what they are saying is that confirmation of the Papal visit of 28 August was only received in June. That was the issue about the timeline to tender. They used existing frameworks for some of the procurement. My understanding is that they were on some preferred contractor list or something like that. Someone might correct me if I am wrong on that. That will happen. There was not a specific tender for this. However, going by the report that came back from the Department with the box ticked, one would have presumed there was a specific tender. This letter is saying that there was not but that, after discussions with other parties, having considered the issue, and as there was insufficient time and resources to run multiple tender competitions, the OPW had no alternative but to use the existing frameworks. Could we explain the existing frameworks? Does anybody know what they are?
Mr. Seamus McCarthy:
Obviously, 2018 expenditure would be a matter for us to examine in the context of the audit of the 2018 appropriation account. In general, if I may explain how a framework agreement works, the Office of Government Procurement or a large organisation puts a framework agreement in place. They look for contractors who are capable of providing a class of service. They pre-qualify them and put them on this framework arrangement. Normally, when an organisation then wants to avail of the framework, it will go to a number of the contractors and run what is called a mini-competition. It will state specifically what it needs and ask for prices, running a constrained competition. Some people refer to a framework agreement when what they mean is a draw-down contract, whereby there is an arrangement for a certain amount of service to be provided but where more of the service can be drawn down. The terms tend to be used interchangeably in some of the correspondence we have seen. I do want to look at this procurement in the context of the appropriation account. If there is something significant around procurement I may report on it.
I also want to note that this matter has also been discussed with the Office of Public Works in recent days at the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. Next is correspondence No. 1949B from Martin Whelan, head of public affairs at the National Treasury Management Agency, providing a note on the Ireland Strategic Investment Fund, which is part of the NTMA, and its investment in the Irish infrastructure fund, IIF, which, although it sounds similar, is a completely different organisation. The Ireland Strategic Investment Fund is part of the State under the NTMA. The second last paragraph of the letter states that one of the Ireland Strategic Investment Fund's investments is in a privately managed Irish infrastructure fund. While the abbreviations are similar, they are distinct and different entities. The Ireland Strategic Investment Fund is a State-owned fund and the IIF is a privately managed fund. There is a bit of confusion about the names out there. Investors in the privately managed IIF purchase their investment via unit holdings. This is common practice in fund-based investments. Consequently, the Ireland Strategic Investment Fund does not own shares or have a shareholding in the privately managed IIF but does have a commercial interest via unit holdings. The letter further states that the Ireland Strategic Investment Fund holds 49.5% of the units in the privately managed IIF and has a commitment of €250 million to the privately managed fund. A chart is provided showing that there are 27 investors in the IIF who have control of 50.5%, while the State involvement is 49.5%. Am I reading it correctly?
Yes, the letter goes on to say that some of the other investors that have units in this fund are Irish investors, including pension funds, trusts and local investment managers, while there are three international investors as well. The Irish investors include university trusts, union pensions, religious orders, construction worker pensions, pension funds of a number of Irish companies, and Government bodies. They have a lot of investment directly from the State and through major pension funds.
That is not an insignificant issue, either, even though it is not State money. Going back to what happened with Anglo Irish Bank, part of the reason people said there was Irish interest in it was that there might have been pension funds or credit union funds, things like that.
The more opaque something is, the more concerned about it I become. If there are very clear straight lines, it is transparent. The two names are very similar and we are being told we are misunderstanding this. It is a very similar name. In fact there is a certain amount of State money involved in this and there are people who have a stake in it through their pensions.
Yes, as my colleague said, it is opaque. On top of that, it is a system set up to promote infrastructure. The privately managed IIF holds investments in five Irish infrastructure companies in the energy, healthcare, telecoms and hospitality sectors. There is a presumption that all of this is right. Of course we need infrastructure. I am not questioning that. However, this is supposed to be good without any analysis of what is good. The State holds 49%. There is a push in a particular direction. For example, I would immediately think of climate change. Some infrastructure projects may make us more vulnerable to climate change. The officials from the National Treasury Management Agency, NTMA, were very good. They put their hands up and said they had not considered climate change in making investments. Fair play to Mr. O'Kelly. Since then the NTMA has taken action. We are seeing the same thing in this matter. We are struggling.
The NTMA is saying it does not have any shares, it just has a unit. That agency has given its answer on its involvement. Mr. McCarthy is right. To help the public to understand what is going on here, we will ask the Oireachtas Library and Research Service to look into it and give us what information it can. We are not suggesting there is anything wrong, but we would like to know what is going on.
The Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach has dealt with some of these issues in the past, so I have picked up on some commentary. It is described as a wealth fund. It leverages private funding.
Mr. Seamus McCarthy:
The sources include funds held by university trusts, pension funds, religious order funds and construction worker pensions. There are a lot of pension funds there. When people make their contributions to pensions, those contributions have to be invested. They have to generate returns for the pensions to be paid in the future. That funding is out there looking for a home that will generate a reasonable expected rate of return. That is what the pensions industry is about.
Finally, it says the privately managed IIF is managed by AMP Capital, an international infrastructure investment fund manager, and Irish Life Investment Managers. They are the firms that manage it and receive fees for doing that.
We are not letting them go. We will ask the Oireachtas Library and Research Service to give us a paper on this. We will ask the service to check with the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach and find out what information is already available through that source so it does not duplicate its work. We will note and publish that.
No. 1949B has been dealt with. No. 1950B concerns the national children's hospital. We will deal with that in a moment. No. 1951B is correspondence from the Secretary General of the Department of Transport, Tourism and Sport, dated 8 February. He has provided a detailed note on the procedures and processes in place for granting money under the sports capital programme and through Sport Ireland. The correspondence also refers to matters relating to Galway GAA, which received no funding from Sport Ireland. Members should note that a related briefing note by the Comptroller and Auditor General's liaison officer was circulated earlier this week. We will note and publish that.
That is good. No. 1952B concerns the national children's hospital. We will hold off on that for a minute. The following items relate to the national children's hospital: Nos. 1954B, No. 1955B, No. 1956B, No. 1957B and No. 1960B. We will discuss those in a minute. No. 1961B also concerns the national children's hospital, which we will discuss in a minute.
Included in the category C correspondence is letter, dated 2 February, from a company that provides details of meetings between the Department of Agriculture, Food and the Marine and Horse Sport Ireland. The correspondent raises what he believes to be lobbying of the Department by Horse Sport Ireland. We have requested a note from the Department on the oversight arrangements for moneys given to Horse Sport Ireland and a copy of the service level agreement in place. We expect to receive that in the coming days. That is in line with what the correspondents ask the committee to do. We note that.
No. 1931C is correspondence from an individual dated 4 February regarding the Irish election observation roster. We have dealt with that extensively. We have checked. The Department has provided information to the committee regarding this matter and we will forward it to the correspondent. I propose we note this item.
If anyone wants to bring it up next week, they may do so. So much for Nos. 1931C and 1934C. No. 1936C is correspondence from an individual who went to get a bank draft from Ulster Bank the other day. He was told that the price of a bank draft was €2.25 but it would be rising to €10 at the end of the month. He says this is exorbitant. We will note that.
We will forward that to the Joint Committee for Finance, Public Expenditure and Reform, and Taoiseach for any action its members consider appropriate. They may want to investigate it. We will not get into the issue of the cost of the banking collapse today.
No. 1941C is from an individual relating to a protected disclosure. The matter was discussed at a private meeting last week and a response conveying the committee's decision will be sent to the individual. Can we note the item and agree that our consideration of the matter is now closed?
In No. 1947C, the head of communications for the Irish Wind Energy Association provided the committee, and every Member of the Oireachtas, with a report on wind energy. It is in public circulation and we will note it.
The next item is statements and accounts received since the last meeting. The first is Údarás na Gaeltachta, where there is a clear audit opinion. The next is the Financial Services and Pensions Ombudsman. It is a clear audit opinion but it raises the issue of the accrued pension liability, as happens in a lot of public organisations. No. 4.3 is the Ombudsman for the Defence Forces, where there is a clear audit opinion. The next is the Commission for Railway Regulation, for which there is a clear audit opinion. The credit institutions eligible liabilities guarantee scheme account has a clear audit opinion. The National Council for Curriculum and Assessment has a clear audit opinion and the City of Dublin Education and Training Board, CDETB, 2017 accounts have a clear audit opinion, though attention has been drawn to non-compliant procurement of €2.7 million. The board had no internal audit resource in 2017. Why is that? Is this coming to us late?
Mr. Seamus McCarthy:
The board traditionally has its own internal audit because of its scale but the internal auditor left in 2017 and the board was unable to fill the position. It also could not avail of the common arrangement for ETBs, which was put in place by the Department and operates out of Cavan. There has been a problem in that function but the board has been gearing up. Many ETBs have drawn attention to the fact that they did not have an internal audit resource in the period in question.
We are going to write to them so that they can explain it. We will ask if the City of Dublin ETB will be part of the internal audit function based in Cavan. We will ask what arrangements the board has put in place since 2017. We want to know how many meetings it has held since that time.
Mr. Seamus McCarthy:
It states that, due to the retirement of the CDETB internal auditor in December 2016, it was agreed that the internal audit unit for ETBs would provide a service with effect from 2017. The board carried out a recruitment competition and on two occasions failed to fill the post. As an interim measure, the internal audit unit for ETBs has appointed an external resource to undertake internal audits in the board. Effectively, it has been outsourced. The ETB internal audit unit was only in a position to carry out one internal audit in quarter 3 of 2017, in the area of specialist training providers with field work. There was no report for the audit committee in the year and the report on the audit I mentioned was issued in December 2018. The resource that is available to them in the period in question is very light.
The City of Dublin ETB disclosed a non-compliant procurement of €2.7 million. Here we go again in matters relating to compliance in the area of procurement. I do not know how many times we have raised this and we have received a number of reports from the Office of the Comptroller and Auditor General when it has been flagged in audit opinions. Sometimes it has no implications for spending and sometimes it does. The Comptroller and Auditor General's special report into the Kildare and Wicklow ETB showed that there had been incomplete documentation in relation to certain procurements. There was a cost of €483,000 to the State in additional expenditure because of change orders relating to the construction of a school. We have to be more vigilant and start to go under the bonnet of some of this stuff. As Teachta Connolly has said in several meetings, it is almost like a David and Goliath situation for us as we try to do our work in this area.
Procurement is at the heart of the big issue of the national children's hospital, with which we will be dealing in a few minutes. Every time our attention is drawn to an issue with procurement we should follow up on it, rather than just note it. What was the €2.7 million for in this case? What can we do to get more information on it? Why was there non-compliance?
The Comptroller and Auditor General liaison officer worked on a report last year relating to all the reports before us which listed non-compliant procurement. It was for the period up to October and it is currently being brought up to year end. A very significant piece of work will be presented to us shortly on precisely what the Deputy is requesting.
Mr. Seamus McCarthy:
The statement on internal control gives some detail on what the €1.7 million is made up of. There are a number of categories. Purchases of goods and services were procured locally in 50 locations. These were in line with CDETB procurement policy but due to the aggregation of spend across the organisation, they exceeded the national procurement threshold. When a board spends more than €25,000 it is supposed to put the contract on eTenders but because this organisation has devolved procurement to different areas, individual schools or training centres were making purchases from the same supplier. These were in areas such as school books, arts and crafts material, coach hire, document storage, disability service providers, merchant banking services, school food provision and managed print services. These contracts should be available to anybody who can supply them.
In another area, there were purchases of goods and services where the tender was extended beyond the specified contract period, for which the total cost incurred in 2017 was approximately €1 million. It included expenditure relating to mobile phones, wide area network, ICT network support, design and print services, ironmonger and hardware supplies, plumbing and electrical supplies. These are also the types of activities that suppliers would be interested in competing for.
The Comptroller and Auditor General has highlighted this, which is his job, and then we draw attention to it, but we cannot keep going into the minutiae of these accounts. We can highlight these things and call representatives in to meet us but-----
I will tell the Deputy.
At the commencement of our work three or four years ago, we found that only 30% of the 300 bodies audited by the Comptroller and Auditor General had submitted their accounts within three months of the year end. That figure rose to 78% for 2017, not only as a result of the Comptroller and Auditor General's insistence but also the committee's refusal to accept it. One can clearly see that we will hold to account the boards of the education and training boards or whatever the organisations are. As we did in the case of the non-provision of accounts in a timely manner, we might end up having to bring four or five organisations before the committee, which will send out a clear message. I suspect that within 12 months most of them will address the matter. It should be the boards' responsibility, not ours. If they fail to do their job, however, we will ensure that they will do it, whether they like it or not. We should not have to do it but nobody else will and we want it done.
The report being carried out for the committee by the liaison officer will be useful. We previously gave the matter some discussion and we were waiting on the report to see what we would do with it. There were some major issues with justice and policing, for example, and there was one case where it was too late to make changes and, therefore, the contract was just rolled over. That was fairly substantial. There are a number of issues and, in some cases, it is a matter of small organisations not having the expertise or capacity. Some of the explanations are benign while others are not, and some of the issues cost the State money while others do not. The one constant is a note in the Comptroller and Auditor General's audit opinion but, as far as I can see, there is no sanction for organisations that do not comply with the rules. We need to consider compiling our own report if we do an examination of the issue, or perhaps it should be included in a periodic report.
If a Department commissions a body to carry out a report on weaknesses in procurement, similar to the Mazars report that was done on the national children's hospital, in which procurement failures and weakness were identified, should that body as a matter of course forward the report to the Comptroller and Auditor General? Is that the practice?
Mr. Seamus McCarthy:
We seek to ensure that within the governance structures of the organisation, it has systems to follow up on all recommendations made by its own internal audit. As we have put a great deal of focus on the procurement of goods and services, many organisations are getting better at this. They are getting better at understanding what they are buying, collating information for procurement and so on. Progress is being made. The one area where there is a systemic problem is the health sector. Relative to the total spend in many of the organisations, the spend to which we are drawing attention is not so great. Nevertheless, pressure needs to be maintained to avoid the problem becoming worse.
We will move on. I expect people to be satisfied that the matter is on a work programme. We will request the details of the note on the internal audit function.
The next matter is the Mayo, Sligo and Leitrim Education and Training Board. There are similar issues, such as non-compliance. We will not discuss this now but we will request a detailed note. Concerns arise regarding internal audit resources, the failure of the finance committee to meet properly and the absence of a review by the board of the effectiveness of the system of internal control. We will write directly to the ETB.
These are two ETBs where problems have occurred. The committee has received a special report from the Comptroller and Auditor General on one ETB which flags up weaknesses in the sector. Whether it is in our work programme or we deal with it now, will we have a meeting in respect of the report? I think we should.
We need representatives from the Department to appear before the committee to deal with that report, and all the issues which have been flagged in the audit opinion need to be discussed at that meeting. Will we return to this matter in our work programme?
Yes, we will do so presently. The next items are the State property miscellaneous deposit account, for which there is a clear audit opinion; the Ireland-United States Educational Fund, for which there is a clear audit opinion; the intestate estates fund account, for which there is a clear audit opinion; and the sundry moneys account, where amounts are held pending the final instructions of the Department of Public Expenditure and Reform on their destination.
There are four organisations. In one, money is in a suspense account waiting to be allocated. In the intestate estates fund, the balance is in the fund. The State property deposit account money mainly comprises the residual assets of dissolved companies. Who manages these funds? Are they not managed by the NTMA?
Mr. Seamus McCarthy:
I think it is also managed by the Department of Public Expenditure and Reform. Sundry moneys is an account with the Paymaster General where moneys are coming in but it has not yet been determined where they will go. The balance at the year end was €63 million but the throughput of the account was approximately €149 million. I intend to examine the balances.
Mr. Seamus McCarthy:
A determination is made. I examined the 2017 account and there were a number of receipts from the month of December - around 22 or 23 December - from the EU. These are moneys that arrive just before year end and they would probably be moved into the appropriate account in the first week or two of January. I intend to examine the timing of that and why there would be a delay in the recognition of where the moneys should go.
I return to the Mayo, Sligo and Leitrim ETB. Notwithstanding procurement, the finance committee met only twice and identified significant organisational challenges, potential control weaknesses, an outdated financial management system and so on.
Mr. Seamus McCarthy:
The Deputy may recall that the Mayo, Sligo and Leitrim ETB had a particular difficulty in getting its financial statements once it was amalgamated. It was bringing together three different systems, as well as training centres, and it had considerable difficulty producing financial statements of a standard that could be audited. It gave a detailed account of that in correspondence with the committee and it was one of the ETBs that appeared before the committee.
Mr. Seamus McCarthy:
It has largely caught up and improvements are being made. Out of an abundance of caution, it is drawing attention to the matter. Bear in mind that we are referring to the 2017 account, which was the year during which it appeared before the committee. There is a firm purpose of amendment.
We will now examine the work programme on the screen. We wish to discuss some of the correspondence received in respect of the national children's hospital. We will not have a lengthy discussion on the matter now because there is nothing major. The key issue is that we know who is appearing before the committee later in the meeting.
Next week, we have arranged a session on the Kildare-Wicklow ETB financial statements 2015 and the Comptroller and Auditor General's supplementary report, which was published yesterday. The Comptroller and Auditor General might make a brief observation because he seems quite critical of the board and its functions. Perhaps his criticism applies to all ETBs. There will be restrictions in respect of what the Department can answer on the day because a Garda investigation is ongoing. In the afternoon, we will separately deal with housing as part of the housing meeting. We have invited Mr. Robert Watt, Secretary General of the Department of Public Expenditure and Reform, to appear before the committee and discuss the control of and procedure for capital projects. We are aware that he was busy in recent days due to the nurses' dispute and we have not yet received an answer. I am aware of invitations from approximately four Oireachtas committees to Mr. Watt to discuss the same issue. He will not appear before all four, however, and I propose that if he agrees to appear before our committee next Thursday, as we have suggested, we postpone the discussion on the Kildare-Wicklow ETB. Otherwise, we will proceed with that report. We will receive confirmation tomorrow.
We only saw that yesterday. The former CEO has now retired. At the time he committed to appear before the committee subsequently. I know there is another investigation. Is he being asked to come in?
We will definitely invite the chairman of the current board and the chief executive. They will be the two key people. They will be here next week. We did not invite the former chief executive. He is not there now. We know he said here on the record that he would come when the report was completed.
The Comptroller and Auditor General's report on the Kildare-Wicklow ETB speaks for itself. It is quite a damning report in highlighting mismanagement, conflicts of interest and poor governance with information not being brought to the attention of the board and just poor decision making. It speaks for itself. We just discussed the Mayo, Sligo and Leitrim ETB, which has accepted its problems. It is trying to put in place improvements and is flagging issues to us, which is good. We should recognise and encourage that.
We obviously have to deal with the report which is before us, which speaks for itself. Some elements could form part of a criminal investigation-----
-----so we will not be able to deal with them. I thought the Department's response to the Comptroller and Auditor General report was inadequate to say the least. I have concerns over how it responded to that report. I imagine officials from the Department will be coming in.
We will hold over discussion on that. Departmental officials will be here. The Comptroller and Auditor General might wish to make a quick comment. As of now it is on our agenda for next Thursday unless the Secretary General of the Department of Public Expenditure and Reform appears instead, in which case we will reschedule it as urgently as possible thereafter.
Mr. Seamus McCarthy:
My particular interest in producing the report was to try to focus on the ongoing systemic issues that might apply to any ETB. There are questions that each ETB should be looking at for itself. I think there is a willingness in the sector to do that and in Kildare-Wicklow ETB to address the thing.
There were very particular circumstances about this and the capacity of the ETB to deal with those issues when they came to light and whether it has the systems in place that allow, let us say, the board itself to take legal advice and take action. The Department is seized of improvements that need to be made in the functioning of boards generally.
We will hold over discussion on that until the meeting with it, which will happen very quickly - either next Thursday or soon thereafter.
We will not go through the work programme. Members can see the gist of it and we have discussed it previously.
Before we complete this issue, at the last meeting Deputy Kelly asked about the reporting obligations of directors of State bodies to Ministers. The Comptroller and Auditor General has presented us with a factual briefing on the matter. I ask the Comptroller and Auditor General not to read the whole section, but to give us-----
Mr. Seamus McCarthy:
Basically, it reiterates the points I made last week at the committee. It looks particularly at the code of practice for the governance of State bodies and specifically the reporting obligations of directors of State bodies. I draw attention to the legal basis of State bodies. The point I made was that most of them were set up under statute - either specific Acts or statutory instruments. However, in some cases State bodies are set up as companies under the provisions of the Companies Act. If they are set up as companies, they must observe all the requirements of the Companies Act. In addition, there may be requirements, in terms of reporting and so on, imposed by the line Minister or the Minister for Public Expenditure and Reform.
It is probably worth bearing in mind that the legal basis for a State body is not synonymous with the depiction or the designation of the body as commercial or non-commercial. For example, Pobal is established as a company, but is classified as a non-commercial State body, while the ESB is established under an Act of 1927, but is classified as a commercial State body. There is a bit of greyness around what applies in the code of practice because of those differences in designation.
The code of practice deals with fiduciary duty obligations on board members in general terms, but the terminology used relates to the interest of a company. So there is a bit of ambiguity there as to whether the same principle should apply to any public body. The specific bullet points that are included in the code are lifted more or less from the Companies Act. It would seem to suggest that is specific to State companies as opposed to bodies.
Mr. Seamus McCarthy:
Yes. There is also a section in the code dealing with the obligations on civil servants who are board members. This refers back to a circular letter from the Department of Finance, as it was called then, circular 12/2010. It deals with a protocol for civil servants nominated to the boards of non-commercial State bodies and outlines steps to be taken where a civil servant nominee to the board of a non-commercial State body has a concern that they have raised but that has not been answered to their satisfaction where a significant public policy issue is at stake. This requires the Minister to be notified without delay where: there are serious weaknesses in controls that have not been addressed despite being drawn to the attention of the board or the chairperson; there is a significant strategic or reputational risk to the State body that is not being addressed; or there are serious concerns about possible illegality or fraud occurring in a State body. The note was just trying to give greater detail on the points I made at last week's meeting.
I thank the Comptroller and Auditor General. I have been raising this for weeks and what he has said is crystal clear; it reinforces the answers he gave me last week. The way the National Paediatric Hospital Development Board was constituted under the Health Acts means that circular 12/2010 and the code of conduct for State bodies which was brought up into line in August 2016 would apply to civil servants on that board. Is that not correct?
I thank the Comptroller and Auditor General; that is crystal clear. The Comptroller and Auditor General is obviously not in the political sphere so we will not go anywhere near that with him. Repeatedly, including again last night, the Minister, Deputy Donohoe, and the Taoiseach have said that the representative, the civil servant - I have no opinion or issue with him personally - who sat on this board was acting in a personal capacity. We now know that is wrong and completely and utterly inaccurate. That individual had a responsibility as outlined in the circular to bring it to the attention of the Secretary General and then the Minister.
Very specifically, the Minister needs to be notified "without delay" where "there are serious weaknesses in controls that have not been addressed despite being drawn to the attention of the Board or the Chairperson" or "there is a significant strategic or reputational risk to the State body that is not being addressed". We have an overrun of at least €450 million. It started at more than €60 million, increased to €200 million, increased again to €391 million and then increased to €450 million. Given what we now know and given the responsibilities set out in the code of practice in Circular 12/2010, how could that representative on the board not have brought these issues to the attention of the Minister? They certainly come within the meaning of "serious weaknesses in controls" and "significant strategic or reputational risk to the State body". We need to bring this circular and the opinion given to us here today to the attention of the Minister for Public Expenditure and Reform and the Taoiseach and ask them to explain and answer how this is the case.
That is all the more reason the Secretary General of that Department should come before us. We have asked for the head of the Office of Public Procurement to come before us as well. Is that correct? Has that invitation been issued?
To be fair to the individual in question, I agree with Teachta Kelly that there are issues here. Where weaknesses in controls are identified, there is an obligation on an individual who is a senior civil servant to notify the Minister and that did not happen. That is something that we need to probe. We need to give this circular to the individual in advance of him appearing before the committee because a number of issues issue. The steering committee, which is a steering committee of the board and the Department, was made aware of issues. Those would have had to have been reported back to the board. The individual in question sat on the board but I do not think he sat on the steering committee. I know the Comptroller and Auditor General cannot comment on the matter. We need to be clear as to what meetings he attended. I assume they were the board meetings. We also need to be clear about what information was presented to him, as a board member. We have the minutes and we can go through them. This information would enable us to put questions to him fairly and he will be able to respond to them fairly, if he appears before us. We should give him this circular in advance of him doing so. I am confused as I thought we had agreed at the previous meeting that he would appear.
We are finished with the work programme. We are dealing with all of the correspondence that I referred to earlier. We note them all. We should have a quick discussion on this as we cannot spend all morning on it.
-----obligations under the legislation that is applicable and under the circular that dates back to 2010.
Our time is limited. At the previous meeting, I asked who was protecting the public purse and various colleagues, notably Deputy Jonathan O'Brien, took up the issue, which was very helpful. The chairperson of the board did not seem to know who on the board was protecting the public purse or representing the ordinary person. It subsequently emerged from, I think, the Department of Health that the gentleman who was named was the nominee on the board but that was not clear. I cannot remember what answer was given about his reporting duties. The circular has provided some clarification that has particular significance for this board. It also has a wider significance in terms of appointments to various boards generally and who protecting the public purse and acts as the voice for the public. There is the specific issue of the hospital board and then generally. This is just the beginning in clarifying where accountability lies. The 2010 circular, which was issued eight years ago, refers to contributing to greater accountability in non-commercial State bodies. Everything set out in the circular was good but it did not happen. That is my comment on the matter. I welcome this as the first step.
I understand that the Department of Public Expenditure and Reform would set this out for others. We are telling that Department what is in its own circular and that Department is supposed to make sure other Departments and agencies understand what is in the circular it issued. That seems extraordinary to me.
I tabled a parliamentary question on this matter. The Department of Public Expenditure and Reform responded that the circular applies to its officials and, as Deputy Murphy just said, all other civil servants. Based on the factual statements - not opinion - we have had this morning on the National Paediatric Hospital Development Board, and all of the issues and consequences that will arise from this and our requests for people to revert to us or appear before us, there is a broader issue here. If we are meant to believe that the most senior procurement officer in the Department of Public Expenditure and Reform did not interpret this circular in the way in which it is set out, what is going on across the whole Civil Service and the various institutions and boards and how they are made up? What is going on, as Deputy Connolly said, as regards reporting lines and their role in protecting the public purse? This whole topic seems to be all over the place.
I suggest we return to that topic because it is broader than the children's hospital. I was a member of the previous Committee of Public Accounts. The Oireachtas has generally accepted until now that a public servant on the board of a company would be constrained by company law and the fiduciary duty on directors in terms of informing a Minister. This circular does not tally with what I believe was the general presumption in the Oireachtas. We will probably have to do a trawl of each Department and ask what issues have been highlighted to each Minister by civil servants in his or her Department in respect of the membership of civil servants on various boards. We need to get that list or perhaps it does happen or is ignored. That information might be useful. We will not sign off on that today. Deputy Kelly has highlighted the broad issue. Now that it has been highlighted, I do not believe this committee can walk away from that without following through. Maybe we will not do so today but we will certainly come back.
On correspondence, how do members want to proceed? We are behind time and we want to catch up. We have invited guests coming. They are not normal witnesses who are required to be here.
Yes. Two big reports have been presented to us. We have minutes of boards all over the place. There are hundreds of pages. As a matter of form we cannot publish them without having read them because we are giving parliamentary protection to everything in there. It would be imprudent to publish the material without having seen it.
I understand it just noted them. We will ask the secretariats to work out what has been published already. We will agree to ask the HSE, the Department of Health and the various boards to which these documents relate to immediately publish them. Let them take the responsibility for publishing their minutes as it not our function to publish them.
We want to highlight two reports that are separate from the minutes. One is a review of the new children's hospital project at the Mater Hospital. It is the Mazars final report on the National Paediatric Hospital Development Board, which issued on 17 December 2018. I propose that we agree to publish this because it is the seminal document that everyone relied on last December. It is a very hard hitting report. Deputy Cullinane is about to comment. We will probably have to get clearance or consent for it to be published because I am sure it was not part of the engagement that Mazars would agree to the document being published by the committee.
Okay. I propose that we write to the board saying we wish to publish it, get its consent and consent from Mazars. If we get their consent we will publish. We will indicate our intention to do so but we will not do it if they do not give their consent. Is that a reasonable approach? I know the Deputy wants to discuss it without publishing it, which is fine. We can discuss it but we cannot publish it unilaterally if that is contained in the terms and conditions on which the report was published. I know that people have circulated it. It is in wider circulation at this stage. That is only an observation. I call Deputy Cullinane. We will spend only a couple of minutes on this topic because we have to get into the broader work.
-----that we should prioritise this on the correspondence. My issue is that we had the Secretary General of the Department before us on this issue. We were dealing specifically with the processes and procedures around procurement and the spend of taxpayers' money in respect of the national children's hospital. We had to drag information out of the Department in respect of the cost overruns. From the €983 million to the €1.4 billion to the €1.7 billion, we spent the entire morning getting that information. We eventually got a breakdown, which we should have had before the meeting started. How in God's name did the Department not give us the Mazars report in advance of those witnesses coming in? To be fair to Mazars, its report nails many of the issues. It is a very good report. It outlines the 57% increase in costs as soon as the project started. In my view it is a damning indictment of the work of the design team and the implementation board. It is a damning indictment of the reporting relationship between the board and the Department. There was very poor oversight. We talk about reporting lines in respect of civil servants sitting on boards. The reporting lines between the board and the Department were very weak.
What we have now established from our work in the Committee of Public Accounts is that in April of 2018 the steering committee became aware of very significant cost overruns. The Department was not informed until August and the Cabinet and the Minister for Public Expenditure and Reform was not informed until November. That is where we ended up but my point is that the Mazars report highlighted all of these weaknesses yet we were not given that report before the witnesses came in. We were given it afterwards. I believe that was disingenuous of the Department not to do that. We had to go looking for that and when we got it, we saw that it answers many of the questions we would have wanted to put to them. In my opinion it is a way of avoiding accountability because a report such as this one is done for a reason. It is to identify where weaknesses exist and our job is to probe those weaknesses to seek improvements. We are not here to do anything other than protect the taxpayer, make sure that if there are weaknesses in the system we can identify and highlight them and recommend changes and improvements. That is our purpose. We cannot do that if valuable and important documentation is not provided. I cannot understand why that report was not given to us. We got it on Monday with a mountain of other documentation that it is not possible for any member of this committee to go through. I made the David and Goliath comparison earlier. We are not the Goliath, and some people have their views about the Committee of Public Accounts. We are doing a very difficult job with the mountains of correspondence that we get, and we cannot keep up with all of it. I believe in this case it was a deliberate tactic by the Department not to give us that report because I think it would have been a very different meeting. That is my point. Do we come back to it?
The first page of the Mazars report states that before this document or any part of it is disclosed to a third party, its written consent must first be obtained. I presume it got consent to give it to this committee because that is written in black and white. If we are having a discussion on this shortly, I believe it would be useful that the public can see what we are discussing. They cannot follow the discussion if we are referring to a document they cannot access. I propose that we write to them asking for consent for this committee to formally publish it.
On a general point, the previous Government and, I presume, the current Government agreed to an open Government approach but it does not feel as if that is the case here. I accept there are reports that can be commissioned for a particular purpose. However, in terms of informing us but also in terms of the estimates of public money being spent that help to inform an understanding of what happens, we need to ask exactly what is meant by the open Government approach and how that is being pursued. My understanding is that that comes under the Department of Public Expenditure and Reform also.
I want to concur with my colleagues. The report should have been given to us. I am looking at it, and the Chairman has read out that the written consent of Mazars is required. We have the Mazars report in front of us and we are supposed to be talking about it today or another day but nobody else can have it. The word "bizarre" comes to mind-----
-----but I now have a report before me that I have read, as have my colleagues, under pressure. At the very least, we should not be here wondering about written consent. That should have been done.
That should have been sorted out when this report came to us. We should have been told that we have the consent from Mazars and we do not need to proceed in a bizarre manner with a report before us that we cannot talk about.
The Chairman is absolutely right to be cautious. I have underlined the sentence that it written consent must first be obtained. The Chairman has to be cautious but this should have been sorted out by the board that was sending us the report. It should have stated the board had got the consent of the people it commissioned and paid, using taxpayers' money, that we could now use it and that it apologised for not giving it to us before now. We are sitting here now waiting for written consent. The Chairman is absolutely right but it just adds to unaccountability, all in the guise of accountability and hours of questions and answers in the Dáil yesterday. This should have been before us.
I have a slightly different view. I would publish the report now but if there is a wisdom that we need to get permission to do it, it should be sought very quickly. If we get it we should publish the report because, to be honest, it is out there. Every media outlet has it. We need to stop messing around with this type of stuff. There is a damning report. We are waiting for another report that will cost ten times more than this one cost. This is a report that answers some of the questions. In my view it should be published in the public interest. Let us get that advice, if the Chairman believes we need it.
In all the minutes of the sub-committees, which we got also, reference was made to the joint finance and construction sub-committees and that cost overruns were identified in those sub-committees of sub-committees. That is the world we are in. Can we get the minutes of those meetings because we need to follow that through? If we are to get the witnesses in again, we do not need to hear, "There is another set of minutes over here" in which there may be more information.
I propose that we agree that we will publish this report. We want to seek clarification that Mazars has given its consent. If it has given its consent, the secretariat can publish it today, tomorrow or as soon as it is confirmed. If the consent is not available, we are requesting that consent and when we get it, it is our intention to publish that report. I was cautious not just because of what is written in it. We were here previously with the HSE regarding the reporting to the charity Console and its internal audit report. The HSE was happy for us to publish it but would not publish it itself. The HSE wanted to use the Committee of Public Accounts to get parliamentary privilege for its internal report, with which we chose not to oblige it. I am cautious about people using the Committee of Public Accounts to get parliamentary privilege for some documents.
We have to be cautious from our perspective and that is why I am cautious here. If there is agreement, we will publish it as quickly as possible once we have consent. Second, we will ask each of the organisations that sent us the minutes to publish theirs straight away, and if not, to give consent for us to publish them. Then we are to get any further minutes that have been referred to any organisation.
Yes, and the Deputy can tell the secretariat precisely. It goes without saying that we will discuss it again under correspondence next week. At this stage I will take a brief suspension before we move on to our meeting with the broadband providers.
It is a phenomenal amount of documentation. It probably would have been helpful if there was a schedule at the beginning. Maybe there is a schedule such as the freedom of information schedule with a list of documents. It would have been useful had we got an index of everything we were getting. We got bundles of stuff.