Oireachtas Joint and Select Committees
Wednesday, 17 July 2019
Joint Oireachtas Committee on Transport, Tourism and Sport
Governance Review Group Report for the FAI Board and Sport Ireland: Sport Ireland
I welcome to our meeting Mr. John Treacy, CEO of Sport Ireland, Mr. Kieran Mulvey, chairman of Sport Ireland, Mr. Aidan Horan, chairman of the governance review group and director of the Institute of Public Administration, and Mr. Paul McDermott, from Sport Ireland.
By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that evidence connected only with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.
I invite Mr. Treacy to make his opening statement. He is to be followed by the chairman of the review group, Mr. Horan.
Mr. John Treacy:
I thank the Chairman. I am joined by Mr. Kieran Mulvey, Mr. Aidan Horan and Mr. Paul McDermott, as the Chairman said. Mr. Horan will make an opening statement on the work of the governance review group and its report, which was furnished to members of the committee on 21 June, in advance of its publication.
Sport Ireland has attended meetings of this committee on two occasions in recent months. Matters pertaining to governance in the FAI were discussed at length. Today I will give Sport Ireland's perspective on the recent developments towards reform and examine the next steps in regard to the adoption of the reform proposals and, ultimately, the conditions by which restoration of Sport Ireland funding may take place.
The board of Sport Ireland welcomes the report of the governance review group. The report provides a clear and comprehensive pathway for the fundamental reform of governance within the FAI, and a pathway for the FAI to emerge from its current difficulties. The report is a significant piece of work and draws on the expertise and experience of the various group members, particularly in the areas of corporate governance, financial management, change management and football administration.
The report is detailed and explicit in its recommendations. It gives serious consideration to the input of many stakeholders, as well the outputs from the football stakeholders' forum, hosted by the Minister, Deputy Ross, and the Minister of State, Deputy Griffin, and attended by the Chairman of this committee and some of its members.
What is clear from the discussion at that forum and the large number of submissions received from members of the public and the football community is that a palpable appetite for change exists. Indeed, the recommendations in the report have been widely welcomed and the commentary following publication has been overwhelmingly positive.
While Sport Ireland is a key funder of the FAI, it is important to acknowledge the significant roles played by international partners UEFA and FIFA from a governance and funding perspective. It is therefore welcome that the group consulted both UEFA and FIFA as part of this process and benchmarked its proposals against the principles and regulations of both, as well as those of other international football federations. In this regard, Sport Ireland was pleased to hear that the outcome of the group's work has been endorsed by UEFA and FIFA. This is an important development and sends a clear message to stakeholders at all levels of the game, from grassroots to professional, that these recommendation need to be implemented in the best interest of the game.
The report clearly and appropriately identifies the collective responsibility of the new board of the FAI in leading and directing the organisation's activities. It will be up to the new board of the FAI to show leadership in the implementation of these critical, yet achievable, recommendations. It is the view of the Sport Ireland that the timely implementation of these reforms is essential to the restoration of public trust and confidence in the FAI.
A new outlook is necessary if real change and reform are to be realised. We now have a timely opportunity to commence the process of change. The urgency arises from the need to provide the public, football community and stakeholders with assurance that there is determination in the FAI to enact necessary reforms. The adoption and implementation of the recommendations of the review is only a starting point; the actions and steps that will follow will take time.
While the report has been widely welcomed, one challenge facing the board of the FAI is reassuring all its constituents that the 78 recommendations included in the report of the governance review group are in the best interests of the organisation and the game of football in Ireland.
There have been media reports in recent weeks on some reservations expressed by some affiliates of the FAI regarding the proposed composition of the new board. It is natural for reluctance to change and reform to exist among some groups in any change process. We respect the autonomy of such groups but it is vital that they reflect on the current situation, as well as the implications and practicalities of the recommended committee structure and where their respective inputs and expertise are best suited. One aspect worth highlighting is the establishment of the new football management committee. This is essentially the new football board for the FAI and will oversee the business of football. The football management committee will be the forum where all matters pertaining the game of football at all levels will be discussed.
It is also important to note that the governance review group report recommends appointing an interim board for a period of one year. The board must show leadership. Its role in this regard is clearly outlined in the report and the skill sets required by members of the board to carry out its role and ensure the future successful governance and management of the FAI are detailed.
These include, among others, skill sets in the areas of law, governance, finance, and risk management. The report further states: "The necessity for the presence of these skills and experience on the Board is reflective of the requirement on the part of the Board to oversee the management and strategic development of a significant organisation."
Sport Ireland notes that the FAI has been conducting roadshows around the country to discuss the recommendations with key constituents. This is welcomed. It is hoped that these discussions will lead to a better understanding of the proposals and the reason these changes need to happen.
The board of Sport Ireland views the adoption of the recommendations of the report by the FAI as absolutely essential. As part of the implementation of the governance review group report recommendations, the FAI will establish an implementation oversight group which will review the recommendations in conjunction with the FAI's rulebook and constitution. The first task for this group will be to draw up an action plan, with associated timelines. The FAI has invited Sport Ireland to appoint two representatives to the oversight group. Sport Ireland has nominated Mr. Joe O’Leary, who was a member of the governance review group and who is an experienced consultant, business psychologist and facilitator; and Mr. Angelo McNeive. Both representatives will bring substantial expertise to the table and have the range of skills required for the group. The FAI has welcomed these additions.
As a joint commissioner of the governance review group report and as the statutory agency with responsibility for the development of sport, Sport Ireland will pay close attention to the work of the implementation group and will seek periodic updates on its progress as part of an ongoing liaison process with the audit and risk committee of the board of Sport Ireland.
As the committee will be aware, in May of this year, Sport Ireland appointed KOSI Corporation Limited to carry out an extensive independent audit of the FAI. The KOSI audit, which commenced in late May, is an exercise commissioned entirely independently of the association and will address the key issues Sport Ireland requires to be examined. The KOSI team comprises senior auditors, including a forensic accountant. The audit is independently assessing the expenditure of Sport Ireland grant funding in accordance with the FAI’s approved submissions. It is also examining in detail the FAI's wider financial administration and internal control environment, which includes assessing the FAI's fitness to handle public funds.
This audit will include, but is not limited to, assessment of the compliance of the FAI with the terms and conditions set out by Sport Ireland in respect of the award of grants between 2015 and 2018; a consideration of good practice requirements and expected financial controls and of how the FAI matches up against these requirements; an assessment of the financial control framework within the FAI and the FAI’s fitness to handle public funds; an assessment on the FAI’s overall financial and cash position and its overdraft facilities to meet its financial obligations; an assessment of the existence and effectiveness of the FAI’s financial policies and procedures pertaining to current practices within the FAI; and the undertaking of reviews, to include sample testing. It is anticipated that KOSI will deliver its report in September, in accordance with the original timeline. As the committee has requested, the audit will be detailed and extremely well done. It is essential.
At its meeting on 9 April of this year, the board of Sport Ireland decided to suspend and withhold future funding to the FAI in accordance with clause 1.1 of its terms and conditions of grant approval. This suspension and withholding of funding remains in place, and the board of Sport Ireland continues to review this decision at each of its meetings. The board feels a number of factors are of particular relevance to the restoration of public funding. These include, but are not limited to: the adoption of the recommendations of the governance review group, the establishment of new governance structures, and the completion of the KOSI audit and adoption of recommendations.
As in previous years, the FAI financial statements for 2018 will also be presented to Sport Ireland. Sport Ireland’s financial controller will analyse the financial statements submitted by the FAI and highlight any concerns, potential risks or questions that may arise. We expect the FAI to address any queries or concerns arising from that analysis. Sport Ireland is aware of an ongoing investigation into matters relating to the association by the Office of the Director of Corporate Enforcement, ODCE. Sport Ireland understands that the ODCE investigation is serious and will be very substantial.
The board of Sport Ireland will continue to monitor these matters as they develop and progress. A decision to restore funding will only be considered when the structures, controls and governance arrangements are in place within the FAI. The board must also be satisfied that the FAI is equipped to ensure ongoing compliance with the terms and conditions of grant approval.
Sport Ireland places a high premium on good governance and encourages high standards in governance from all funded bodies. As a development agency, it is our aim to provide leadership in this area while empowering sport organisations to take responsibility for their own governance and to meet the challenges they face. Sport Ireland has reflected on the FAI issues, listened to the comments of members of this committee, and discussed matters with the Department of Transport, Tourism and Sport. Since Sport Ireland’s attendance at this committee on 3 April, there have been a number of significant and pertinent changes in our oversight relationship with funded bodies and the supports provided to those bodies. At its meetings on 28 May and 4 July, the board of Sport Ireland approved revised terms and conditions of grant approval for all Sport Ireland-funded organisations to come into effect for 2020 funding.
A key amendment to the terms and conditions is the strengthening of the audit clause to explicitly confer full audit, inspection and investigative rights on Sport Ireland for every funded body. The right to audit, inspect, and investigate may also extend to any matter of concern to Sport Ireland in respect of the organisation rather than just the use an organisation makes of Sport Ireland grant funding. Other key amendments include making it an explicit condition of funding that Sport Ireland appointed auditors are entitled to request and receive all the information and explanations they require for the proper performance of their job; making it a condition of funding for all national governing bodies of sport and local sports partnerships that they must provide details of the full remuneration packages for their chief executives to Sport Ireland; and requiring that Sport Ireland be provided with independent verification that each organisation is fully compliant with the code of practice for good governance of community, voluntary and charitable organisations in Ireland by the end of 2021. Failure to co-operate fully with any audit, inspection, or investigation on a timely basis will entitle Sport Ireland to suspend or withhold grant funding or to claim repayment of any grants previously advanced.
The board of Sport Ireland is satisfied that these measures are appropriate and necessary in light of the recent learnings from the FAI situation. We are confident that the additions will further strengthen Sport Ireland's authority in respect of overseeing public funds. Good governance does not just live on paper; it is mutually dependent on behaviours and attitudes. While formal terms and conditions play an important role in safeguarding public funding, they have a limited role in promoting and embedding good governance within organisations. This is why Sport Ireland takes a multifaceted approach to ensuring that good governance is prevalent throughout the sector. This includes encouragement and training and education to complement the outlined terms and conditions.
The Government’s national sports policy, published in July 2018, tasks Sport Ireland with overseeing a process whereby all national governing bodies for sport and local sports partnerships adopt the code by the end of 2021. Since we last attended a meeting of this committee, Sport Ireland has adopted the governance code for the community and voluntary sector as a governance code for sport. This follows the decision of the governance code working group to retire the code. Based on previous meetings, the committee will be aware of the numerous training and development opportunities and interventions available to funded organisations through Sport Ireland’s organisational development and change unit. This unit has been tasked with stepping up its output in building the capacity and enhancing the volunteer leadership capability of the sporting sector through strengthening governance, enhanced training and development of boards. The FAI will hold an extraordinary general meeting, EGM, on 20 July to facilitate the implementation of the first phase of the governance review group report's recommendations prior to the annual general meeting, AGM, which will take place on Saturday, 27 July.
The recommendations in the report of the governance review group outline a pathway, which will secure the sustainable future of Irish football.
Sport Ireland respects the independence and autonomy of all funded organisations, including the FAI, and the right of their membership to make decisions on leadership and governance structures. What is required now is reflection and determined action for the betterment of football across Ireland.
That is the FAI piece. Will I continue with the other matter?
Mr. John Treacy:
I will deal briefly with international recognition for Irish athletics. We are aware that a delegation appeared before the committee in recent weeks under the banner of "Friends of Irish Athletics". I would have been aware of this group some years ago. However neither Sport Ireland nor the then Irish Sports Council has received correspondence from this group in many years.
Sport Ireland recognises Athletics Ireland as the independent, autonomous national governing body, NGB, for the sport of athletics in Ireland. Athletics Ireland is affiliated to the IAAF, which is the world governing body for the sport. Sport Ireland provides funding to Athletics Ireland to support its programme of activity across the pillars of participation, performance and high performance. The IAAF constitution states that "the jurisdiction of members shall be limited to the political boundaries of the Country they represent". This ruling was passed by the members at the IAAF Congress in 1934. That rule has remained unchanged in the intervening years. Of more than 60 national governing bodies of sport, 47 exist on an all-island basis. Sport Ireland works closely with all national governing bodies of sport on an all-island basis and we work very closely with Sport Northern Ireland as well.
Member federations of the IAAF must abide by the constitution of the IAAF. The rules of the IAAF supersede all other federation rules. Member federations must clearly state this in their constitutions. Under international relationships, an article of the Athletics Ireland constitution states, "The association recognises, accepts, applies, observes and abides by the current Constitution, rules and regulations of the IAAF as well as by any future amendments."
Since the establishment of Athletics Ireland in 1999, extraordinary progress has been made in the day-to-day organisation of the sport on the island of Ireland. It can be unequivocally stated that the current relationships between Athletics Ireland-Athletics Northern Ireland, ANI, and the Ulster Athletic Council, UAC, are the best in the history of the sport. These relationships are enshrined in a memorandum of understanding, MOU, between the three bodies. There is also a separate operational document between Athletics Northern Ireland and the Ulster Athletic Council. A liaison committee of equal representation from the three bodies reviews the MOU regularly. This MOU has also been formally approved by the IAAF. The primary objective of optimising all the athletic resources on the island is working with considerable success.
As evidenced by athletics teams comprising athletes from North and South, a pathway exists whereby athletes may represent Ireland in international events, including European, world and Olympic games. Sport Ireland and Athletics Ireland are not aware of any current or recent athletes who have expressed dissatisfaction with the current arrangements in relation to the international recognition of Irish athletes.
I thank Mr. Treacy. I now ask Mr. Horan, director of the Institute of Public Administration, IPA, and chairman of the governance review group, to make his opening statement.
While Mr. Horan is getting ready, I propose to the members that we adopt the process we used at the previous meeting where we went round in the order of Deputy Catherine Murphy, because she raised the issue first, then Fine Gael, Fianna Fáil, Sinn Féin, Independents and then those who are not members of the committee. On the previous occasion, each speaker got ten minutes. I note there may be parties here with more than one representative, and if the members get back to me after Mr. Horan's contribution, we will reach agreement on the best way to do that, or the parties may nominate somebody. I am conscious of Senator Feighan's important contribution that he probably felt he was not allowed to make on the previous occasion. I understand the Senator's concerns, and congratulate the Senator on his election nomination.
Mr. Aidan Horan:
On behalf of the governance review group, I thank the committee for the invitation to meet and discuss the governance review group report for the FAI board and Sport Ireland, which was published on 21 June last. Within this opening statement, I propose to provide details on the group and the work undertaken to deliver the report, our agreed definition of governance, an overview of the main sections of the report, and our overall conclusion.
In terms of the group and work programme, the group comprised five members, three of whom were external members nominated by Sport Ireland and two of whom were nominated by the FAI board. The FAI nominees were Ms Rea Walshe and Ms Niamh O’Donoghue. The Sport Ireland nominees were Mr. Joe O'Leary, Dr. Moling Ryan and, as independent chair, myself.
The group met on a total of 11 occasions over a busy eight-week period and, following the agreement to the terms of reference, we finalised a work programme to ensure completion and delivery of the final report by 21 June where we had committed to have a draft report by 14 June. We were well aware of the seriousness, importance and urgency in delivering on a very detailed terms of reference so that any of the governance reforms we were recommending and those that were accepted could be adopted by the FAI as part of the July 2019 AGM process.
Our work programme and methodology included examination and review of documents and reports, including UEFA and FIFA statutes and regulations, and legal, regulatory and governance reports, codes and guidance. We undertook research and engagement on governance arrangements and structures in peer football associations and a detailed review of all the submissions. We attended the stakeholder forum attendance and we had direct engagement and meetings and interviews with key stakeholders. We also reviewed FAI board and committee minutes as well as a range of relevant FAI governance and commercial agreements. As chair, I confirm to the committee that all requests for information and material made by myself and the external members to the FAI were responded to expeditiously and professionally and there were no instances where information, where this information and material actually existed, was refused.
The report includes 78 recommendations which focus on governance principles, governance arrangements and governance structures within the FAI and which we consider, if implemented as envisaged, will commence the process of rebuilding and restoring confidence, trust and faith in the association and in how it is governed. In a review of this nature where the focus is on good governance obligations, norms and standards, the emphasis is necessarily on what has gone wrong, on weaknesses and deficiencies, and on areas where urgent and significant improvement may be necessary. I would highlight and acknowledge that during the review we were provided with much evidence and commentary by many people of the great and unsung work done by so many volunteers, mentors, coaches, FAI staff and others throughout the country. It is quite clear that people care passionately about football and are invested in the game at so many levels, and they, like us all, want to see a much more successful, vibrant and well-governed FAI. This report is our contribution to that aim. In my chairman's statement in the report I included what I see as a critical issue, in that the report calls for serious reflection and determined action by those who have the authority and power to support and endorse these recommendations. We also call for a serious reflection by those who see themselves as taking on a governance position in the FAI to acknowledge the profound duties, responsibilities and expectations that go with these roles.
Initial work was to come up with a so-called working definition of governance to direct the work programme. I include the definition as follows. Governance comprises the arrangements put in place to ensure that the Football Association of Ireland fulfils its overall purpose and achieves its intended outcomes for all its stakeholders. It is concerned with leadership and direction, structures and authority levels, processes for decision-making, accountability arrangements, risk management, internal controls, and culture and related behaviours within the organisation. At many of the events I have attended, I have tried to emphasise governance is a means to an end, not an end in itself. The end in itself is the betterment and promotion of the game. Governance as a means to an end has been a important theme that we have tried to address.
The report includes sections on submissions. To clarify for the committee, as part of the review, we gave opportunities to people to engage with the group on governance related matters. We received a total of 127 submissions, and all of these submissions were individually reviewed by each member of the group so that we were all in a position to have a wide discussion on the views and perspectives provided in the submissions. Stakeholders also had an opportunity to make an input at the Department of Transport, Tourism and Sport Irish football stakeholder forum, which was convened on 31 May. The output was collated and given to us by the Department on 5 June 2019 so that it also informed our deliberations.
The nature, quality and insightfulness of many of the submissions were of the highest standard and I am pleased to have the opportunity to publicly thank all those who made submissions. We also met many stakeholder groups, which are listed in appendix 3 of the final report. We held constructive meetings with UEFA and FIFA, as well as with clubs, players, referees, supporters, Sport Ireland, departmental officials and FAI board members, management and staff.
A section of the report focuses on principles and rules within the FAI. In examining these, we relied heavily on the governance principles, regulations, statutes, reports and guidance from UEFA and FIFA, as key authoritative sources in this area. We also looked at the code of practice for good governance of community, voluntary and charitable organisations in Ireland, the UK corporate governance code, the charities governance code, and the code of practice for the governance of State bodies, among other documents. The group recommended that six principles, which we consider the most appropriate principles, hallmarks and standards for the association, should be adopted by the FAI. These principles should underpin the ethos, approach and philosophy of all those involved in the association, from clubs all the way up to the FAI board. The proposed principles, as listed in the statement, are good governance, effective leadership, accountability and transparency, ethical behaviour and integrity, stakeholder engagement, and professionalism. As part of our work programme, we undertook an analysis of the extent to which FAI rules are aligned with UEFA good governance principles. This analysis is interesting, as it reaffirms the contention that formal rules play an important but limited role in promoting and embedding good governance. Most of our recommendations focus on how governance should operate in the FAI, as well as related cultural and behavioural considerations. These do not require rule changes as such but we advocate a better way of doing business, which revolves around culture and behaviour.
In the corporate governance section of the report, we focused on norms and standards across 16 key governance areas, which are of direct relevance and import to the FAI as a large enterprise with a high national and international profile, and as the national governing body for a sport with the highest level of participation in the country. The 16 areas are roles and responsibilities; leadership; strategy planning and implementation; performance monitoring and reporting; risk management systems; performance accountability arrangements; internal control; board and sub-committee structure effectiveness; transparency and disclosure; capacity and capability of governance and leadership team; compliance with legal, regulatory and governance obligations; stakeholder relationships; engagement and management; ethics, conduct and behaviour; financial governance; management controls and reporting; and audit and assurance arrangements. We also examined governance obligations in relation to joint ventures, third party arrangements and funding agreements, which were covered in section 5 of the report.
Our recommendations in the section on the board's role and composition are framed so as to better position the FAI to deliver on its governance agenda and to reflect the modern structures which are necessary for the successful governance and management of a football association. It is widely accepted that the requirements of football administration and the associated governance demands have changed significantly in recent years. The FAI now has a staff of 206 and an annual budget of approximately €50 million. Its operations impact on almost every community in Ireland and thus have a resonance at local, regional and national level. The structures in Ireland have changed little to reflect these realities and there is now an imperative to put structures in place which reflect the reality of modern-day football administration and governance obligations. In order to ensure delivery of this multifaceted role, the group has recommended that the FAI board be supported by a number of committees which will relate to either the business or football elements of its role. The football committees, while maintaining a direct reporting line to the board, will also have a separate reporting line to a newly established football management committee, as will the business committees. The football management committee will play a key role in the future governance of the FAI, and its remit will include oversight and advice on the development, promotion and regulation of football at all levels. I am enthusiastic about what the football management committee can achieve for Irish football into the future. This report has set out clear recommendations on the composition, memberships, skills and attributes for the new board, as well as clear proposals on the composition of board committees on both business and football matters. These recommendations herald a serious and radical overhaul of current board and committee governance arrangements, with immediate follow-on implications for the council and the AGM. Given the nature and extent of the challenge facing the organisation, and the issues that will arise and need to be addressed over the coming weeks and months, we believe it would be appropriate to have an interim board for a period of 12 months, given the current circumstances. The recommendations in this section, which include new governance arrangements and practices, a new board, new committees and greater stakeholder representation, will allow for more effective and better functioning governance arrangements.
The group was conscious from the outset of the urgency of and necessity for change as well as the timelines for resolutions and changes to the rules on future governance arrangements and structures. As I indicated earlier, many of the recommendations on corporate governance, third parties and the board's role can be implemented speedily and do not require formal rule changes. What is required, however, is a fundamental change in approach, culture and attitude to how good governance operates within the association. This change must be led by those who exercise and are entrusted with governance and leadership roles across the FAI, at council, board and committee levels, as well as across executive management. We identified 16 immediate implementation priorities to be endorsed, sponsored and progressed in the coming weeks by the board of the FAI, which include the acceptance and endorsement of this report, the appointment of an implementation oversight group and an internal implementation team within the FAI as well. Detailed preparatory work for the AGM must also be undertaken and rule changes and comprehensive terms of reference for the new board and committees must be put together. This work has already commenced and significant detailed terms of reference for the committees have been prepared and circulated. Comprehensive terms of reference for the new board have also been drafted. This is further evidence of the importance, urgency and seriousness of the work which is under way to embed good governance in the FAI by clarifying the roles, responsibilities and accountabilities of those with governance and leadership roles within the organisation.
I will make some final observations. In the report, we identified several important areas and initiatives which merit consideration, including the quality, range and diversity of FAI programmes and projects across the country; the recent staff forum initiative within the organisation; the establishment of a supporters’ forum; having executive leads to support the governance structures and harnessing the knowledge, skills and expertise of staff and others; and examining FAI strategy and priorities for the future. There is much goodwill from people who want the FAI to be successful and everyone acknowledges that urgent change is necessary and needs to be expedited. There is a genuine and strong hope that these reforms will herald a new beginning. We also identified additional areas which require more detailed analysis and consideration, with a view to tabling further proposals and recommendations at the July 2020 AGM. These include membership, the AGM, review of the rules and the constitution, and the composition and role of the council.
On my behalf and on behalf of the group, I again acknowledge the valuable input, assistance and genuine constructive challenge from the individuals and groups we met. In particular, I thank all those who made submissions and contributed to the stakeholder forum. Discussions from the meetings and submissions were carefully considered and reflected upon and informed our deliberations and recommendations. The report's findings and recommendations highlight the need for fundamental change and reform to facilitate better governance practices at all levels in the FAI. This will necessitate greater clarity of roles and responsibilities at all levels, in addition to better planning, reporting, oversight and accountability, in order that those who are tasked with governance and leadership are in a position to carry out their duties more effectively, whether at board, committee, council or other levels. This may require a further realignment of senior executive and management roles within the organisation to support the new arrangements. The report's findings and recommendations, when considered in their totality, propose a new governance framework including principles, arrangements and structures which will support the board and the organisation in achieving and observing good governance practices. This was the governance review group's key task, as outlined in our terms of reference. It is important to emphasise that better governance is a means to an end to ensure the FAI continues to deliver, and can deliver, on its most important mandate, namely, the promotion and development of the game for all. Our report is hopefully a positive contribution in this regard.
Before I conclude, I would like to make one final comment. Since publication on 21 June, there have been some misunderstandings and misinterpretations about areas within the report.
An example relates to the six football nominees to the new board and the fact that they will come from the newly expanded council and not from the old council. Those nominees will be asked to benchmark themselves against knowledge, skills and competencies required under a new constituency model. If the recommendations are accepted by the FAI at its AGM and EGM, eight of the new 12 board members will be appointed on 27 July or very close to the 27 July, at which stage the task then becomes the search for, sourcing and recruiting of the four independent directors who will go onto the board. Today is an opportunity to clarify some of those matters.
I attached to my submission a copy of appendix No. 10 of the report around governance structures. This might be helpful to the committee. I thank the Chairman. It was my pleasure and privilege to chair the group. I publicly acknowledge the work that my colleagues have put into the report. I am very happy to answer any questions or provide clarification for the Chairman or the committee members.
I thank Mr. Horan. If it is acceptable we will first take Deputy Murphy, then Fine Gael representatives for ten minutes, Sinn Féin representatives for ten minutes and then on to the Independent members. We will then go back to the members of the committee who have not spoken and then Oireachtas Members who are entitled to be here, if this is fair to everyone.
Before we move on, I am aware that Mr. Mulvey has no statement but I want to be fair to everyone here and I am happy to ask Mr. Mulvey to give his comments if he wishes. There are some questions that need to be cleared up before we open up the discussion to the floor, one of which is the question raised by the Minister about the number of two people who may be given certain positions where they could run the organisation without the consent or knowledge of others. Perhaps one of the witnesses could respond to that issue. It is critical to one of the points being made.
Mr. Kieran Mulvey:
I will answer that Chairman, but first I will summarise. Since the last meeting of the committee we took on board the voice of the committee as expressed to us very trenchantly at those hearings. We undertook the governance review, which Mr. Horan has outlined in detail, and I do not intend to go through that. An enormous amount of work has been done in a short period. We also undertook to appoint forensic auditor accountants. We had considerable difficulty in that as there was no response to our procurement. I personally contacted a number of firms after that. While they engaged in conversation, they were reluctant to get involved. This was largely related to reputational risk on behalf of some of these accountancy firms given that the Office of the Director of Corporate Enforcement was involved and Deloitte had put up a notice regarding it. There was a reluctance. We got a firm from Northern Ireland to undertake this forensic audit for us and we expect it to report by the end of September.
We have put an emphasis on the fact that there is a grant funding round to consider after the budget and we need the report in. The FAI is our biggest grant recipient in terms of national governing bodies. The committee had asked us to explore our options around the terms of grant funding and our possible stretch with regard to the legal powers Sport Ireland might have. We have done that and have now imposed, as we have submitted to this committee, new and onerous terms on governing bodies for their funding that go beyond the audit of funds given by Sport Ireland. Of importance is that these terms are obligatory on them and include the remuneration packages of chief executives on which there was pushback previously because of commercial sensitivity etc., as enunciated to us. Now we have cleared with our own auditors and legal advisers that this is quite within our remit to do in the context of new developments in corporate governance and so on. Those terms will be in place for all the submissions made for grant funding for 2020. We have met those specific concerns of the committee.
The Chairman asked about the board members. Sport Ireland is ad idemwith the Minister with regard to the issue he has raised with the president of the FAI.
Mr. Kieran Mulvey:
We agree with the Minister. The president of the FAI wrote a letter to the Minister, which he read at this Oireachtas committee, that indicated the FAI was standing down new officers. We understood that very clearly and unequivocally to mean that they would not be standing again. We have no difficulty around the statement made by the Minister. It is the view of the board and the office of Sport Ireland that the Minister's wish in this regard would be listened to very strongly and adhered to.
Mr. Kieran Mulvey:
I apologise, the Chairman is referring to the quorum. I have answered another question that the Chairman might have asked anyway. There is a confusion around the quorum. The issue is that the rules of the FAI require six board members. To have a quorum of two from a body of 12 is absolutely nonsensical. It would not pass muster in any challenge. The quorum is six members under the rules of the FAI, and we will insist on this through the report. I believe this is also Mr. Horan's position.
Mr. Aidan Horan:
The FAI constitution mentions two but the constitution says also that the rulebook takes precedence. The revised rulebook that has gone out has the quorum as six. This is where the confusion lay. The legal constitution said two but the rulebook takes precedence, which is six of the body of 12.
I thank the witnesses for being here and for their opening statements. I want to put on the record that it is very positive that some of the changes put in place by Sport Ireland will also a apply to all of the other organisations it funds. It is evident that there has been good learning out of this process. It may well stop us from having situations such as this in the future.
Sport Ireland has made the point that this should be a new beginning for the FAI and this is what we all hoped for. One of the key issues will be the interim board. Mr. Mulvey referred to the nomination for the post of president and that he was not expecting that it would be one of the outgoing people, such as someone who had spent 14 years on the board, was the president for a number of years, and was there during 2017 when all of the difficulties with the accounts arose, as discussed here. Has Mr. Mulvey spoken to the FAI about that, and if so, what response has he received? If not, what does Mr. Mulvey intend to do about it?
Mr. John Treacy:
Sport Ireland's view is on the record that no one from the board should go forward for the new board. We met the FAI on Friday and we articulated very clearly to it that it would be best if no one from that board went forward. It is very important, as we have said, that all of the proposed board positions would run for election and that there should be a process around every position. This was also articulated. The response is one of disappointment but it is up to the membership of the organisation to emerge. This is not the first time this has happened within sporting organisations. The membership need to take responsibility and someone needs to step forward around the governance review group. Donal Conway has shown leadership in all the work that was undertaken and that needs to be acknowledged.
Another thing that should be acknowledged is that he did steady the ship within the FAI. He has delivered a very good report and our view is that it is time to hand it over and get on with it with new people and the entire board.
Mr. Aidan Horan:
Can I come in, because it is directly relevant? The governance review group, which was composed of three external persons and two internal persons, was independent. We put in the report in terms of managed transition and managed handover. In terms of the loss of knowledge, competencies, skills, insights and relationships, we suggested that some consideration should be given to one and possibly a maximum of two members of the existing board being still involved to smooth over that handover. That is covered at the end of section 7 or 6 in our report. We thought everybody walking away posed a more serious risk. In terms of the transition and handover, which we call handing over the baton, we independently considered two to 12 was the most appropriate thing to do so that this knowledge and insight would be there. In respect of the letter that has been provided, we were conscious of resignation and stepping down, but that is what we put in our report as our considered view about managing the transition and handover. I wanted to clarify that because I know it has been mentioned here.
That may well have given cover for this. I agree with Sport Ireland with regard to this. The witnesses have just told us how difficult it was to get a forensic accountant because of the risk of reputational risk. We know its own report is due in September and that a serious review by the Office of the Director of Corporate Enforcement is under way. That brings with it reputational risk, particularly if it involves somebody who is the subject of that, because that person was on the board, potentially being in front of the courts. How will that help the FAI to re-establish trust and calm an organisation towards focusing on a more solid governance arrangement?
Mr. John Treacy:
The Deputy is right. The Office of the Director of Corporate Enforcement is producing a serious report. It would be our view that it would be better if the entire board had gone. It will come out with its findings. We will be watching very carefully. Our own Compliance Oversight Solutions Ideal audit will be carried out as well. Any plan around implementation must be implemented straight away. These are very serious issues. If someone is a member of the former board, it will reflect back on the FAI, but there will be a piece where the FAI will have to take on board all these recommendations. They are very important steps because, as the Deputy outlined, there is a piece here around public trust. When Sport Ireland looks at restoring funding, that public trust piece needs to be in place. This is what we will be looking for in terms of implementing the reform agenda, putting the proper committee structure in place, and ensuring there is good internal auditing and good financial oversight, along with all the pieces that were not there before. This is the type of thing we need to see happen. If one presided over a regime that was not robust, and it is fair to say that it was not robust, it would reflect badly on the organisation.
As we are aware, the nominations have closed. I must question whether these people have been validly nominated. It will be up to the AGM to consider and I think it needs to do so. I presume it will be open to it to convene an AGM and then possibly adjourn it because Sport Ireland's review is due in September. That will be available to those in attendance. It will convene without a set of accounts, which seems extraordinary given what has happened. What concerns would Sport Ireland have about the AGM convening without a set of accounts being available to the members, because that is central to where the concerns are?
Mr. John Treacy:
There is a parallel piece around the governance review group in terms of starting to change the rule book, implementing change, putting proper structures in place and getting independent people on the board. It is very important that this happens. Sport Ireland would regard financial accounts going to a board as per normal business. We would get them normally after they go to the AGM and would then review them. It is highly unusual for the accounts not to be at the AGM. We want the other work to proceed as well, and that is an important piece. Obviously, the auditors are carrying out their audit. I think it took a while to bed everything down for the auditors to get started, but things are progressing. There were delays. Obviously, there are issues that will arise during the financial statements and there might be revelations in them that we had not seen before.
Again, there is further potential for reputational risk in this. It is so disappointing that we are here going into an EGM and then an AGM and instead of the new future that was hoped for, there is a real sense of "here we go again". That it is a great disappointment. With regard to those-----
I have one more question. The people who are eligible to go forward for officer positions need two years' service on the council. Only one of the 58 members, or one out of 206 people with votes, is entitled, which is a very narrow focus. To run for election, a person must be one of 58 council members. This excludes the vast majority of people, including some very good people who have put themselves out there and said that they are interested in this reform programme. Is this not a significant impediment to bringing in new people? It is also very male dominated, which is a problem in its own right. Is this not an impediment?
Mr. Aidan Horan:
There are two pieces here. One involves the people who will be entitled to be nominated to the board of the FAI. Those six nominees to the board of the FAI will be drawn from the larger expanded 78 member council, not the 58 member one. The fourth constituency model will allow for six potentially new people from those constituencies to come forward to go on to the board. The issue relating to the nominee for president may be part of what the Deputy mentioned. That comes from somebody who has had two years' council membership experience. The point I made at the end of my statement was that the six new nominees to the board of the FAI will come from a much wider and more representative council, not the narrow 58 member one.
Mr. Aidan Horan:
What I have been led to believe is that the resolutions are out there regarding who will be nominated for the council. The hope is that on or very close to 27 July, the new 79 members will be available so that eight members of the new board will be in place - the president, vice president and the six nominees. This is the process of speed. That is what they are trying to do to get these nominees in place in the broader council, not the narrower older council model.
Regarding the AGM, I was invited to go to all the governance review group roadshows that are taking place throughout the country.
On the AGM and the non-availability of accounts, the AGM will convene, make decisions that are important in the context of governance and will adjourn until the accounts are ready and available at some future date. That is what is being presented at the moment.
Why does Sport Ireland not insist on that in the interests of setting the tone. This is about setting the tone for the future. It can present a draft set of accounts if it wishes. The FAI has a turnover of €50 million per annum. It is not a corner shop but a business with corporate responsibilities under the Companies Act. By the way, it is disappointing to note that the Act is only mentioned once in the governance review group report. More work needs to be done on that. We want to see more vigilance from Sport Ireland on what is going on, notwithstanding that we all want the old regime gone. I do not see why these people could not be consulted without having them in the association. That goes to the heart of all this. We need to stand up to this carry-on and ensure that Sport Ireland shows its teeth in this regard.
I thank the witnesses for the presentation. I thank the governance review group for its report and all the work it has done on this to date.
To pick up on a point made by Mr. Horan on the flow of events, he expects the AGM to be convened and the governance structures to be voted upon, after which the AGM will be adjourned pending the presentation of the accounts. To use Mr. Horan's words, this is what is being presented at the moment. Given that we know from the letter from the Minister for Transport, Tourism and Sport, Deputy Ross, that what has been presented at the moment can often change at short notice as to the board standing down and not standing up again, to use Mr. Treacy's words, does Mr. Horan believe that is what will transpire or does he believe we are being given the runaround here?
Mr. Aidan Horan:
To try to clarify what is being presented at the moment, the governance reforms that are advocated in this report are critical and fundamental to establishing better governance within the FAI. On the issue of the accounts not being available, that was not my jurisdiction and I had no role in that.
Mr. Aidan Horan:
If the association is to move forward seriously to implement the recommendations as soon as is possible - I do not know what that date will be - the accounts will have to be brought before the membership in a formal structure. The governance roadshows that are taking place are an attempt to go out to the membership around the country. I was invited to explain the report and that is all I am doing. It was an attempt to explain the necessity and reasons for reform and the timelines around the EGM and AGM, albeit that the issue of the accounts not being available has been well addressed here.
I have to look at this positively. The reforms have been endorsed and accepted by the FAI board and UEFA and FIFA have endorsed them as well. Much work has been done in the three or four weeks since the report was produced. I have seen evidence of this in the terms of reference of the committees, the starting of the nomination process and so on. This shows an intent to make these reforms happen as expeditiously and professionally as possible.
Deputy Rock asked me directly if we were being given the runaround. I do not consider it to be a runaround.
I appreciate that Mr. Horan is not answering on behalf of anybody and I respect his independence and professional input. However, the fact is that key decisions are being made and people are being elected to office without even draft accounts being presented. Key corporate decisions are being made without the facts.
If I may intervene, once these decisions are made, for example, a decision on the new president of the FAI, they tend to last. I am not sure if it is right or proper for this to be done in a vacuum and in the absence of vital information that is pertinent to the good governance of an organisation. I do not know if Mr. Treacy has a view on this but it seems to me that draft accounts should be presented before any board member is reappointed to the FAI, particularly one who is running unopposed, having given a commitment on more than one occasion to stand down, as per the Minister's letter.
Mr. John Treacy:
From what I gather, the accounts are not ready. I am not sure if they are in draft form. I believe there was an issue with Deloitte getting in there and doing the work. Those issues have been overcome and Deloitte is now in the process of doing its work. When those reports are available the full picture will be on the table as to the possible liabilities the association may have. This may show up pieces that are embarrassing to the former board. It is our articulated view that we would prefer if no one from the board would stand and there would be a new beginning.
There is a big piece here around restoring public trust. I go back to that because it is really important. We are on a journey. Very good work has been done on the reform agenda on corporate governance and I do not want to lose sight of that. The past is also being dealt with and a number of investigations are under way. For example, KOSI is doing an internal audit and Mazars is doing its piece. The full picture will not emerge for a number of months. I do not believe it will reflect very well on the association. It would be better if we had a new beginning and a new face for the FAI. One has to depend on the membership of the association to step forward. We are not seeing that leadership emerge, which is disappointing. That definitely needs to happen.
Mr. Kieran Mulvey:
If I may return to a question asked by Deputy Catherine Murphy and the Chairman, we will not restore funding until we have an audited set of accounts. It is as simple as that. The imperative is upon the FAI to meet its obligations, either under company law, the code of governance or its grant funding. I want to make that clear.
It would be enormously helpful to Sport Ireland, in moving this forward, to know when the investigation by the Office of the Director Corporate Enforcement has been completed. That is essential. It is the primary investigative element that has been undertaken. We can have all the forensic audits but unless the ODCE can give the FAI a clean bill of health, we will continue to wait. I urge it here to move that forward as expeditiously and rapidly as possible. We cannot do anything until we have that report.
On the governance review and Mr. Horan's contribution, the most salient point about the governance review report is everything the FAI did not have in place. All of this must now be put in place. It did not exist or where an element of it existed, it was never observed. The governance report is changing the FAI, its culture, structure and operational arrangements. It is separating the management of football from the management of business, both of which got conjoined in the past and created problems with the League of Ireland, the international team and funding. As Mr. Treacy said, these are pieces that are coming together over a period of time. This is enormous, earthquake-type change within the FAI. It knows what it needs to do to have Government confidence and funding and Sport Ireland funding restored and it has to do it.
One thing is troubling me and I am coming back to it again. This resembles a movie sequel in some ways, where some of the cast members change but some of them do not. Mr. Noel Mooney has resurrected into the position of interim chief executive officer. Mr. Donal Conway is now running unopposed for president. There are two vital dates ahead for the adaptation of the report, namely, 20 July and 27 July. Those are vital dates because otherwise, all the hard work that has been done and the progress made will fall by the wayside. How can our guests simultaneously reconcile the ideas of the report being adopted and the desires of the Minister being abided by, whereby Mr. Conway is not elected president? Is a process set down whereby the president, being the sole nominee, can somehow not be elected the annual general meeting?
Mr. Aidan Horan:
I will respond to part of that because some of it is outside my knowledge. There are 78 recommendations, which probably tells one the journey of travel that the FAI must take. Since the report was produced on 21 June, I have been providing clarifications and updates to the FAI and a significant body of work has been done about process, procedures, work programmes and terms of reference in order that the implementation oversight group, when it is established and provided the recommendations are approved, can go forward. Our review outlined what the organisation prospectively needs for the future. The 78 recommendations are prospective in nature, rather than retrospective, which is what many of the current investigations are. They are retrospectively looking back at transactions and so on.
I do not know the legalities of the question the Deputy asked. I just know that, from the point of view of the governance review report, this is being presented as a necessary, priority package of reform that needs to be done and, although other reviews are in place, nothing in this report will invalidate or be inconsistent with the norms and standards which are going to come from these subsequent investigations. We are trying to adhere to best practice standards for the organisation in the future.
I cannot answer the dichotomy or dilemma that the Deputy outlined, other than to say that the reason I am happy to try to promote and explain the report is that this is a necessary package of reform that must happen if the structures and arrangements are to be better than they have been. That is as much as I can say.
I appreciate where Mr. Horan is coming from. It is worth reading a sentence from the Minister's letter to Mr. Conway. It says: "Together with your decision to appoint former FAI employee and loyalist Noel Mooney to the post of general manager, this development means that the new regime has a very old look about it." My concern is that some reforms will be implemented and others will not. A set of accounts might be presented at some stage. I understand, from talking to members within the FAI, that this vote on 27 July is very much in the balance and may not pass. What will happen then? What if the accounts are presented, the reforms are not passed and some old people are still at the helm? Will funding be restored in those circumstances? What are the boxes that must be ticked in order for funding to be restored?
Mr. John Treacy:
As I outlined in my statement, the tick boxes are very clear. The financial accounts will have to be presented to the annual general meeting, and to ourselves, when they are ready. That must be in place for any national governing body of a sport we are funding before it gets its second moiety of funding. That is a really important piece. We want to see the adoption of the governance review group recommendations, which are essential to the corporate oversight of the organisation and the funding that we give. That is an essential piece that we need to see.
The third piece we need to see is a complete audit with an action plan for any recommendations made in that audit. That is a big piece of work and we expect to have that report in September. If one is funding an organisation, one obviously needs to know the liabilities of that organisation, what outstanding things are coming down the road, if the organisation is fit for purpose, has it the right structures in place and are there any legal risks associated with it. All these things are issues that must be taken into consideration. When the Minister gives Sport Ireland funding, we need to be assured that all those pieces are in place. There needs to be an element of public trust.
The Deputy referred to the appointment of the general manager. I articulated to the FAI before that appointment that what was needed was a public face that the public could say was a good appointment, someone with experience in change management and leading an organisation. That decision was not made.
Mr. John Treacy:
It did not fulfil those criteria in terms of the public's trust. Noel Mooney, the general manager, has assets that he will deliver for the FAI but, for the sake of public trust, the FAI needed someone with profile, independence and experience, someone about whom people would say that is a good move, that he or she will take the organisation through the necessary change management, be able to talk to the media and this committee with authority. Those are the types of things the FAI needed to put in place and it was a missed opportunity.
People are now emerging for the post of vice president. We are glad there will be an election but we are really disappointed there is no election for president. That is happening in the vacuum of the independent chair, which is a critical piece. The appointment of an independent chair is going to happen as part of this governance review and that person will be directing the board and leading the organisation. The role of president will be different; it will be a step back. The president will not be leading the organisation or its commercial aspect. The independent chair will take the organisation forward and that will be an important piece in the future.
We know there are good, independent people out there and we will engage with a commercial organisation to help us appoint such people. Sport Ireland will have a strong say in those appointments, as will UEFA and FIFA. We must ensure we get the right people because we are trying to restore public trust in this organisation. It needs to go forward. There is evidence that there has been some change but sometimes one takes two steps forward and one step back and that has happened this week.
Deputy Coppinger said at our most recent meeting that this is like a marathon and I agree. We are probably at the three or four mile mark at present.
Mr. Aidan Horan:
I will try to help the Deputy about the commentary that is coming back. Roadshows have happened and will continue to. It is a clarification of the report. There is genuine, constructive and open dialogue at those events. Some 50 or 60 people attended last night's meeting. The message is clarifying the necessity for change and a conscious effort is being made to take note of what is happening. I discern that people understand that the implementation of the report is absolutely required. They understand it is a journey, not a destination, and this is a reform journey they are on. Any concerns they have are being noted, taken back and will feed into the implementation oversight group. There is a reality check about where the organisation is and what needs to be done on 20 and 27 July.
I thank the witnesses for their presentations. I thank Mr. Horan in particular for the excellent work he has done with the governance report. It is difficult, however, to define a governance report. Mr. Horan described it as a means to an end, but I suggest it is a bit more than that; it is an essential prerequisite for any body in receipt of State funds. It is not a journey in that sense; it is either right or it is not right. I have no doubt Mr. Horan's report will feed into great reforms. From a professional perspective, how can Mr. Horan authoritatively say that this is a template that is assured to win when there are five other reports and investigations into the unknowns?
I do not doubt that. I agree that the headline issues are very good things but in real terms, would Mr. Horan prefer not to have been starting from there at all? Let us say, in an ideal world if Mr. Horan was dealing not only with his terms of reference but the Mazars report reviewing the issues of concern, the Grant Thornton report to conduct an internal review of the association's books, records and ledgers, the ODCE investigation - Mr. Mulvey said he would very much like a date for the end of that - KOSI consultants work to examine in detail the wider financial administration and then the KPMG investigation of hacking of FAI computers. In an ideal world, would Mr. Horan like to be charged with that task, with all of those reports, to have the most credible opportunity to provide a bespoke governance reform programme for an organisation?
Mr. Aidan Horan:
I will only pick on one. We put a section in on financial governance, control and reporting. Irrespective of the reports that come out, I do not see anything we have in here that would be in any way inconsistent with what any of the reports will say. They are doing detailed forensic controls, audits and reviews.
By definition, he was doing it without all of the information. I will come back to that in a moment.
I must ask some questions of Mr. Treacy and Mr. Mulvey because I am new to the committee. Did alarm bells not go off each January in Sport Ireland when the phone rang and an organisation with a turnover of €50 million doing such good work in all our communities throughout the country and with our national team was looking for an advance on its allocation of €3.2 million?
Mr. Kieran Mulvey:
Not really, in the sense that the FAI has a particular funding arrangement that is not the case with the IRFU, the GAA or other bodies. We were very conscious that the FAI depended for a substantial amount of its income on the success of the international team. It was very highly dependent on that. Unfortunately, as members are aware, in recent years the success of the team has varied. When funding requests came in from the FAI over the years - the FAI is not the only body to make such requests-----
Mr. Kieran Mulvey:
-----we made an evaluation and assessment and we gave it the tranche of funding earlier than we would normally have given it. For example, we gave it probably at the end of January or in early February rather than in late March or early April. The FAI has an extensive development programme, largely in working class areas and in rural areas.
How then could we be assured that was the case? I respect and accept that is what Sport Ireland was told, and that it accepted that, but in terms of follow-up, how could Mr. Mulvey be sure the money was spent in that way and that it was not used for twine, for want of a better expression, to keep the lights on?
Mr. John Treacy:
I will repeat some of the points I made previously at the committee. We normally give out the funding for the national governing bodies, NGBs, in January. The three main field sports are a bit later. It is not unusual to start giving out money in January to the NGBs.
Every year, we received a letter from the FAI's auditor to say the funds were expended for the purposes for which they were given. We sent in our own auditors and the audits came back clean as well. We did follow up on the public funding and every time we got a letter back to say the funding was expended for the purposes for which it was given.
Mr. Treacy alluded in a letter to Deputy O'Keeffe and I on some of these matters, much of which was covered in the opening statement as well, that FIFA and UEFA are broadly happy with the proposals for rule changes. Is there written correspondence confirming their approval?
Mr. John Treacy:
During the period this unfolded, we did meet with UEFA and FIFA as well as the FAI and they came into our office. They were on board in terms of the governance review piece that was going on. They were hugely supportive of what was happening and they were glad to see the FAI and Sport Ireland taking a very active role to make sure that the reforms come in as soon as possible. There was a piece around that as well.
Mr. Treacy said in his letter and in his opening statement that the urgency of moving forward arises from the need to provide the public football community and stakeholders with assurance that there is a determination in the FAI to enact the necessary reforms. He mentioned rebuilding public trust and confidence as quickly as possible and that in some way is driving the urgency. I put it to him that if we look at the Genesis report from 17 years ago, which took more than a year in terms of implementation and to'ing and fro'ing with Sport Ireland and yet here we are doing this so quickly. We have ascertained from Mr. Horan that in an ideal world we would have the results of all of the reports before setting out the pathway for the future.
He himself said the full picture will not emerge for a number of months. It will undermine public confidence and trust if we proceed as hastily as we are in a financial vacuum. As Deputy Rock has said, we have queries around the legality. I know the letter around the holding of the AGM states Sport Ireland has assurances from the FAI that the holding of the AGM without the accounts is not a problem. I query that and have concerns that there is a problem. Certainly, to be pressing ahead with such a level of rule change is madness in the extreme without having the detail that is about to come to us. Mr. Mulvey rightly said the ODCE is hugely important.
Mr. Aidan Horan:
The vast majority of these recommendations are not about rule change at all, as I said in my opening statement. This is about how it does its business as an organisation, as an entity. If the better governance arrangements are what we are trying to embed, the rule changes are about putting in place structures to allow those arrangements to breathe and to happen. It is interesting that, at the start, people were saying this was all about rule change but the vast majority is cultural and behavioural change, as distinct from rule change. The appendix I sent to the committee outlines how we would put an infrastructure in place that would allow better governance to flourish within the organisation, and that is why it is there, and nothing more.
I hear Mr. Horan on that. However, he has had to do that on the blind. There is nothing to say these five other reports will produce outcomes that will determine that that structure needs to be different.
Mr. Aidan Horan:
We agreed a work programme at the start. I disagree with the Deputy. We got all the information we required for our review. What was recognisable, however, was there was stuff we needed for our review that was not available. That is not because we were prevented but it just was not available. We need to look at the 78 recommendations in the round. Were there any internal audits? No. Is there a risk management register? No. When we look at it, we were not operating on the blind, as the Deputy suggests. We were not.
Mr. Horan could take that report as a template and apply it to any agency, and I respect that. What I am saying is that we have the biggest crisis ever in the FAI and we are taking key decisions without having fully identified the problems.
I want to make a couple of points. One of the issues is that if a new chief executive is not put in under a proper, comprehensive and internationally benchmarked process, the drift could very well continue. That is a huge point. Whatever changes happen, the new CEO, whoever he or she is, is going to be the kingmaker for Irish soccer.
Mr. Kieran Mulvey:
From the perspective of Sport Ireland, we were at two very long meetings of the committee previously where a very robust debate took place and there was questioning around what needed to be done. What we wanted to do was to have no dilatory action on our part. We needed the review of the governance to go ahead. That had to be done as, otherwise, there would have been a drift.
Parallel with that, we have the investigations. There is a bit of realpolitikaround this. There are two parallel processes, over one of which we have control, namely, to provide the governance pathway for the FAI and then for the FAI members to vote on that freely and deliberately, with all the information available. As to the other process, I accept the point the Deputy is making in regard to the accounts of the FAI, which, understandably, I would say, Deloitte is still working through because of other issues it had with previous accounts, and the notice it put in, which led to the corporate enforcement investigation. We have our forensic audit going on and they have Mazars. I do not mean any disrespect to any profession, although sometimes I might say things, but in trying to push them to move with the alacrity we all would wish, and I have done myself in the past in getting disputes resolved, they do not seem to have the same deadlines. We are trying to put deadlines on our report, which we have, but we have no control over the corporate enforcement. To me, and I have said it, that is critical to the future. Whatever they come up with may lead to certain changes being necessary in the way in which the FAI reports its financial and corporate affairs, either under the Companies Act, the code of governance or otherwise. There will be an implementation period in which that will be addressed.
The other issue around that parallel process is the implementation. We are central to that. We are central to the appointment of independent directors in the sense that that will be an independent process conducted with full public transparency. On the timeline involved in this regard, this time next year, I would expect that all of these processes will be in place so that, when the next AGM of the FAI comes up in 2020, it will amend whatever needs to be amended in the light of the reports that will then emerge.
One of the reasons I do not go into this is because, when I hear the words "corporate enforcement", and I hear other things, alarm bells ring in my head. As Mr. Treacy said earlier, he understands these to be serious and substantial in the engagement with the Office of the Director of Corporate Enforcement. All my hope is that if they are that serious and that substantial, we need traction on this, we need early deliberation and we need early report. I know it is the anniversary of the Apollo mission but this is not rocket science, is it?
Talking about rockets, I think it was a journalist called Mark Tighe who actually started putting a rocket some places, and fair play to him because that is where the whole lot came from and initially drove everything.
I am delighted that Mr. Treacy and Mr. Mulvey are supporting the Minister, Deputy Ross' letter of yesterday evening. I presume that is also the Government's stand and his Department's stand. I am delighted to see that Sport Ireland, the Department, the Minister and the Government are together on that, which is a very important message.
In regard to the EGM next Saturday, 20 July, and the AGM on 27 July, at this stage, surely, they need to be postponed, particularly in light of this letter. Would the witnesses agree with that? I suggest it be postponed for three to six months. I will not go through all of the details as to why it should be postponed because that has been extrapolated here but I would value the opinion of the witnesses.
Mr. John Treacy:
A lot of these changes need to happen. The pieces the review group came up with are sensible solutions that need to be put in within any sporting organisation or any other organisation. Some of these are urgent. If we are talking about getting independent people on the board, they need to get independent people on the board and they need to agree terms of reference for various committees. These are essential pieces that need to happen. I would not want a vacuum as that would only create more confusion and more delays. We need to get people into the organisation who can add value and can lead the organisation. That is critical. We need to get an independent chair in and we need to get a chief executive in.
Excuse me. I am short on time. I accept the point that there is an urgency. However, if we go in with urgency, we could miss a whole lot of points, as Deputy MacSharry said. We are waiting for a whole lot of reports that, in my view, will significantly affect the structure and corporate governance. I laud and applaud, as everyone here has, the document that has been prepared.
There are audits by KOSI, which is an unfortunate name, Mazars, Grant Thornton and the Office of the Director of Corporate Enforcement. KPMG is investigating hacking in the FAI computer system. There are so many potential train crashes that we should take stock and reflect to get it right first time. We should measure twice and cut once rather than urgently saying we will go and do something.
I believe that 80% of Mr. Horan's report could have been written about any business. It is good, proper corporate governance strategy. About 20% of it is directly related to FAI issues. One or two areas should be considered in greater detail, including the role and job specification of the CEO. It is mentioned in recommendation 7, but in this issue it is far more important and relevant.
The other FAI-specific part of it is the engagement and interaction between the board and the management. Mr. Treacy and Mr. Mulvey know well that that is a critical relationship and that there is no overlap between the two of them one way or the other. There is concern that there has been significant overlap regarding the FAI.
I believe the witnesses may have partly answered this question. How is the FAI currently funded without the €2.8 million or €3 million grant it gets? When did Sport Ireland last give funding to the FAI?
There could, therefore, be significant cashflow issues coming down the road. If Sport Ireland gave the FAI some funding in February or March, it would have got auditors' reports and accounts in respect of that, as Mr. Treacy said earlier. I believe there is a big issue with going concern if the FAI needed €100,000 from its CEO.
There is significant concern that the articles of association state that two people can make a quorum. This was mentioned by Deputy Catherine Murphy. What are Mr. Horan's views on that? Will that change? We are talking about an EGM coming up with these rules in place. We will end up with the same old, same old. I am sure everyone here supports Sport Ireland and the Minister, Deputy Ross, on the matter. It is difficult to get change. It is the Titanic model again.
I did not see much reference to this in Mr. Horan's extremely good document. In any business with €50 million in turnover, which makes the FAI one of the largest businesses in Ireland, a key component is the skill sets of the people on the board. Recommendation 62 is generally referred to. That is absolutely essential here. For me that should be up in red lights, particularly with the FAI experience.
Mr. Aidan Horan:
Section 6 of the report covers skills and competencies of board members. We listed eight areas, including finance, legal, governance, risk, board experience, business management, and human resource management. In terms of expressions of interest, the new incoming board members will effectively benchmark the skills they are bringing against these. When it actually goes to appoint the independent directors, it will be cognisant of the skill sets that are there in order to get complementary skills around the board table. The issue is about trying to disaggregate the corporate business piece from the football business piece. Recommendation 51 has a list of skills and competencies and the preceding section outlines how essential they will be, not just for the board but also for the five business committees that will need audit, risk and compliance, finance-----
Mr. Aidan Horan:
I would have seen the expressions of interest coming forward as being people not just independents coming on the board but potential co-options on to the various business and other committees to bring that skill set that I would agree needs to be reflected in a big business such as this.
Mr. John Treacy:
I do not think it has caused public trust issues. This committee asked us to review our terms and conditions and strengthen them. I think we have done that substantially without going into the regulatory role. We work in collaboration with organisations. We have so much power over these organisations. At the same time, they are autonomous organisations. If we give funding to an organisation and auditors come back confirming that funding was expended for the purposes for which we gave it, I am not sure we can do much more.
We have taken more steps regarding our terms and conditions of funding. The last time we appeared before this committee, we heard about the complete audit of organisations. We have taken that on board and put it into our terms and conditions of funding. I think it is okay because if taxpayers' money is going into any organisation, it needs to stand over its financial procedures. We took that advice from this committee on board and the board implemented it straightaway. We have acted in the best interests of the taxpayer, the Minister and this committee in the recommendations. We take these committee hearings very seriously. We go away and think about how we will react. As we demonstrated today, we have come up with a clear action plan from the previous committee meeting we attended. We have been very proactive.
Forgetting everything else, the FAI is not a charity, it is a company. Many of the reforms are processes within committees and so on, which I fully support. What is happening in the context of making the association fully accountable under the Companies Acts? What would happen if there was an insolvency? What role would Sport Ireland have in that regard? This is a serious issue. There is the possibility of a hugely adverse event.
Mr. Kieran Mulvey:
On fiscal responsibility and as Mr. Treacy noted, we have expanded our terms of reference in terms of the obligatory and extensive nature of grant reporting obligations. We have been informed, legally and corporately, that this is okay. It arises from the controversies that arose not only in the FAI but also in other sporting and charitable organisations. We are heavily reliant on other State agencies, particularly the Office of the Director of Corporate Enforcement, which has a regulatory function under the Companies Act. On my last appearance before the committee, I may have posed the question as to who audits the auditors, but we also rely on auditors to do absolute due diligence. It came as a surprise to everyone that Deloitte placed in a H4 notice on previous accounts of the FAI. We do not have the competence or skill to undertake those audits. We have our own audit unit but, ultimately, when it comes to the law, there are bodies in place for regulatory purposes.
Deputy Catherine Murphy and Senator Ó Céidigh asked about the risks into the future. In the terms of reference relating to its audit, we have asked KOSI to evaluate those risks. We are aware, as Mr. Treacy indicated, that the FAI received either a letter of comfort or forward grant funding from UEFA-FIFA in the context of other moneys that may be due to the association from broadcasting rights relating to our international team, which is such a big focus of its activity. We will have to wait and see what they come back with in the context of identifying the external risks. I expect they are: first, loans the FAI must repay; second, potential income over the next season that it may achieve from broadcasting, transmission and attendances; third, the FAI's commercial arrangements with its sponsors, including the period for which the latter will continue to sponsor the association; and, fifth, the grant funding available from Sport Ireland, which is €2.78 million annually, as well as capital funding from the Department's regional programme and that for the individual clubs under the sports capital programme. There are myriad risks to current and future funding in that regard. The Minister has made it clear, as has Sport Ireland in the context of the funding we provide, that unless the Augean stables are cleared, there will be no forward funding.
We are holding the last tranche of the Sport Ireland grant until we are reassured that the FAI is governed appropriately and properly, that these reforms are accepted in their entirety and that it is given a clean bill of health. We await Deloitte's finding on that, what comes out of the Office of the Director of Corporate Enforcement and the KOSI audit, which I would like to see go coterminous in the autumn because our funding round for 2020 begins once we know what we are getting in the budget. Then our board will meet, look at the applications from our NGBs, local sports partnerships and others and we will make decisions as a board in December for the payout of funds, if we can, before the end of December so that NGBs can forward fund their own programmes, or in January. Many things need to come together in the audits, some of which we have control over and some key issues we do not.
In the key amendments Sport Ireland has made to its revised conditions for grant approval - which basically relate to full audit and inspection - making it a condition to provide details of full remuneration packages of CEOs, etc. and independent verification of good practice both represent major improvements. Was it not all very simple in the end? At the first meeting Sport Ireland representatives attended in March or February, they informed us that their hands were tied. We were told that sporting NGOs have their own agency and that no level of compliance could be imposed by Sport Ireland. Today, it seems that conditions can be imposed on sporting bodies.
Mr. John Treacy:
We would have done a complete audit on any organisation that we had funded by over 50%. If we provided funding of less than 50%, the main organisations being the three main field sports, we just audited the money we gave them. We would have received some push back in the past from the field sports, one in particular, around audits and going in there. When we attended the committee last time, we listened carefully to what it said to us. We spoke to the Department and the Minister, to our auditors and to legal people, and we are now pushing out the boat in terms of our powers. We also made an assessment and spoke to some of the NGBs which would be impacted upon. The board reached a-----
Mr. John Treacy:
We probably pushed out the boat more than many organisations which give money to bodies. In fact, we were way ahead of the posse in auditing these organisations. Other sectors do not carry out audits or go into that area. We review the financial statements of all the organisations on an ongoing basis. Not only do we do that, but we also go back to the organisations with feedback. We have a good regime. Of course, Sport Ireland is audited by the Comptroller and Auditor General. Our regime is robust. The committee asked us to take a step further. We listened carefully, consulted with the Department and NGBs and we have taken the extra step.
That is to be welcomed. However, at the first meeting, I recall asking whether Sport Ireland would withhold funding as a deterrent and Mr. Treacy was very reluctant to do so. Now there are very stringent conditions.
Mr. John Treacy:
We have been accused in the past of being a bit heavy-handed with some of these organisations. No one likes for us to be in a situation where we withdraw funding from any organisation. That is not great. We are always trying to balance this. The FAI has changed everything and has moved things on with audit and the impact will be felt by everyone in sport. Mr. Horan will verify that the systems in place, even prior to this, were fairly robust and we probably went further than many organisations.
As an example, remuneration packages for CEOs would have been a significant source of unhappiness throughout society, especially in the football community. I am glad that Mr. Mulvey has included it as a condition, but I wonder why it was not included before.
Mr. Kieran Mulvey:
We anticipate that there may be a pushback from some sports organisations on the new terms and conditions we will apply in the provision of grant funding. I have heard noises in the wind, asking if Sport Ireland is now trying to run every sports organisation in the country. There is a little of that in the undergrowth. It was an issue in the past, too. As Mr. Treacy indicated, when we went in in a way some people may have said was heavy-handed, we were rebuked for it, including by Ministers. The second issue is balancing it with governing bodies. In the past there was a pushback on remuneration packages for CEOs, not just from the FAI. There was the issue of commercial sensitivity in the case of some contracts which was related to the ability of CEOs to realise commercial value of the sport for the organisation. They said the matter was entirely private and did not relate to the grant or remuneration, as the CEO's salary did not come out of any public funding provided. One had to watch that. We are trying to be as positive and adventurous as we can without incurring legal action against us such as judicial reviews in exerting an authority for which we do not have a foundation. As Mr. Treacy indicated, the FAI has changed that, as have the investigations of Oireachtas committees into charities and such. The remit of the State may extend further than people realised in the past.
How has the discrepancy arisen between the clean sweep of the board for which the Minister is arguing and which we all thought would happen and the insistence in the report on maintaining two board members? When we last discussed this issue at the committee, I asked why would we wait until July. I am not pointing at anyone personally, but it is a fact that it is now July and we have found out that Mr. Conway is being nominated for the position of president. He sat in this room when we tried to get answers from the former CEO and was happy to lead the FAI in a merry dance around the committee. He will be the president because there is no other competition. There is already a significant problem with the report.
Mr. Aidan Horan:
The group is independent. There were three external nominees who were nominated by Sport Ireland. From the point of view of a transition in governance and a hand-over, when we looked at this issue and put it in the report, given that we are talking about a new board, independent directors and an independent chair, we considered that it would be a more serious risk to allow everybody with knowledge, an insight, relationships, corporate memory, etc. to walk away, rather than allow more than one or a maximum of two of the 12 to hand on the baton in a reasonable way.
Did Mr. Horan not see the potential for it to happen with that recommendation? The nominee for president is somebody who has a long track record of facilitating whatever went on in the FAI and allowing the former CEO to sit there gagged and not to answer questions from elected persons, journalists or anybody else. Considering how small and monocultural the board was, could Mr. Horan not have had a stipulation that that would happen? He is putting continuity above a clean sweep.
Mr. Aidan Horan:
We were not commissioned to do this work until after it had happened, but I take the Deputy's point. It was a suggestion, rather than a recommendation, that it could happen. We put the onus back on the board at that stage following the resignations of seven people to reflect on the hand-over and transition and make the decision. It was not to leave an avenue, but we considered that it should be a suggestion. However, I take the point the Deputy is making. We have held the line on the issue which has come up in a number of guises. The recommendation is robust, although it has facilitated the situation about which the Deputy is talking. Even allowing for the exceptional circumstances, having a transition and hand-over is a safer way to do it than not having one at all. If one goes for a full sweep, one relies completely on the executive of the organisation, on which there was commentary. We viewed having some transition as a better outcome.
There is a danger that an impression is being given that we are entering a new era of reform and that the problems of the past will never be investigated or uncovered. I do not think that is acceptable. That is something for the Chairman of the committee to consider. The last time we were all at this committee we were in a farcical situation, with the Kerins judgment hanging over our heads, which the former CEO of the FAI used to say nothing, except whatever he wanted to say. In the light of the clarity provided on the Kerins judgment, we should consider inviting the former CEO of the FAI back to the committee.
We heard from the president but not from the person from whom we all wanted to hear. In the light of the clarity provided on sending an invitation with clear information in advance, we should re-invite the former CEO to answer these questions.
That is something we can discuss in the autumn. While there is a process ongoing, it is appropriate that any citizen involved in it should have his or her right to decide whether to come or not, as he or she so wishes.
Mr. Aidan Horan:
One of the biggest issues which bedevils governance is the lack of clarity on roles and responsibilities, about which there is confusion. Much of our report tries to nail down that there is not a cross-over or a hand-over between the executive and the non-executive. We tried to implement committee terms of reference, on which work is ongoing in order that nobody would be under any illusion about what his or her job was in terms of oversight or the accountability of the executive or the board. That is why there will be independent directors and an independent element on various committees. There is a process for holding people to account. Building in structures to allow that to happen is a recurring theme in the report. We are acutely conscious that it is a requirement in the roll-forward of governance in the FAI.
In the delegates' recommendations on the make-up of the new governance boards they draw attention to the gender imbalance in the FAI, but it would not be the only sinner in the country in that regard. It is not too much better in the Dáil. There are two women to represent women's football out of a council membership of 58.
One looks back and asks whether it is any wonder that the women's team received the treatment they did, not least in light of the Women's World Cup, which engaged people's attention, enjoyed a high viewership and included some very good football. That a chant that rang around the stadium was for equal pay cannot be lost on the people who will run the FAI. Nevertheless, I wonder how it will be achieved. Our guests recommend a 33% female-----
Mr. Aidan Horan:
The group acknowledged the challenge and hill to be climbed to achieve a gender balance. FIFA and UEFA talk about representative democracy in society, gender balance on state boards and so on. In a way, we are saying that within one year, we will attempt to achieve 33.3% on the board and that within three years, there will be a gender balance on the councils and at AGMs. There is much effort being done throughout the structures of UEFA and FIFA to build female leadership capacity and to get people to step into the roles. A programme of work will be required to get people to come forward for the roles. Throughout the country, the governance roadshows are predominantly male, which is not surprising.
The timeline is a target, although it is probably more than that because change is required. In view of the success of the women's team, the Women's World Cup and so on, it is clear that for representative democracy in the sport, it has to move towards a greater gender balance. While I concede that, currently, only two of the 58 members are female, the addition to the council of eight representatives of the women's league team, as per the recommendations, should give an injection to the council membership above the two who are in place. The target has to be supported by initiatives at FAI level to grow people and embrace a greater gender balance.
I thank our guests for their presentations and for their ongoing work on the issue. I return to a point made by Mr. Treacy about Sport Ireland's meeting with the FAI last Friday, at which Sport Ireland outlined its concerns about a completely new board. Did I read that correctly?
Mr. John Treacy:
We met the FAI and Mr. Donal Conway. We were aware that two members of the existing board intended to run for election. One was going to be opposed, whereas the other was not. We had previously articulated the view that the entire board should stand down, and at the meeting, we articulated that, at a minimum, there should be an election.
Mr. John Treacy:
The response was that Mr. Conway had led many meetings throughout the country. He is seen as having a reform agenda and had done a great deal to drive that agenda forward in recent months, with which I believe everyone would concur. As I said previously, he stepped in, calmed the waters within the FAI headquarters and added some value. We are firmly of the view, however, that everyone should resign and a new broom should be brought in. New faces are needed.
I agree and I am glad those points of clarification were made. I prepared questions based on our guests' opening statements, which suggested they all were happy with the progress, but then the Minister's letter was published yesterday evening. I was surprised that the clarifications were much stronger than what they was contained in their opening statements.
Mr. John Treacy:
We do not enter that area. It is up to every organisation to choose its president; it is not up to us. We do not have a say. While it is in our power to make a suggestion, the members elect the president. The Minister wrote a letter yesterday that changed an awful lot in respect of the issue. We endorsed it-----
I am glad to hear that. When Sport Ireland previously appeared before the committee, I made a comparison with the Olympic Council of Ireland and our guests very much agreed on the way that process was started. In that case, although the president who was appointed, Sarah Keane, had been on the board for a couple of years, she had been an open critic of what had been going on. She has done a wonderful job and she was elected.
The optics of this issue, however, are in contrast to that. As has been noted, at Mr. Conway's appearance before the committee, he was given an unfair job by his own CEO to protect him. From that point of view, Mr. Conway did the job quite well. This is a start, as Mr. Treacy indicated, but it is not a good start as a straw in the wind of what might happen down the road. That is the danger. The impression I get is that the reforms have a 50:50 chance of being voted down. It appears that the crisis thus far might look like a tea party compared with the crisis that is to come.
While I can see the argument for some continuity, the continuity in this case will be provided by someone who has been a member of the board for 14 years. While he may have steadied the waters, he was in place throughout the period when incorrect and questionable decisions were made. The Institute of Public Administration's report is independent but I detect a difference of opinion from that of Sport Ireland. The latter wanted a clear-out whereas the former's report made a different point.
Mr. Aidan Horan:
I might make an independent observation. The report was issued on 21 June. We had briefed the board of the FAI with the draft report on 13 June. The board received the final report late on 20 June and it was published on the website on 21 June. At the first press conference, which was the first briefing, the president acknowledged that the culpability for what was identified in the report, namely, the trouble that had been visited on the association, rested with the board. I have been invited to explain the report at the governance roadshow workshops that are taking place. The president takes the lead on them and acknowledges, in a public and open way, where the board was wrong and the deficiencies that existed. He has been challenged in respect of that and has indicated strongly that this reform package needs to be delivered for the FAI. Throughout the country, the members understand the challenge but it appears that they have vested trust in the man in question to lead the reform package.
He has stated publicly that this is an interim board, which will sit for one year. I do not think he envisages being there for more than a year. I will let him speak to that but that is definitely my understanding. The report and the package represent a recognition that this is the organisation's plan A. This must be the way forward. The question is who can lead that. I wish to emphasise that we were not leaned upon by anybody. No influence whatsoever was used to induce the committee to create an opportunity for someone to sit. That did not happen. We saw it as an important and prudent way to manage transition and renewal. I wish to underline that to people. The outcome is what we have at the moment.
I wish to go back to the point about the Companies Act. I accept the issues concerning the committees and clubs, but this is a commercial operation. That is the question. Its governance is completely and absolutely inadequate. The question of continuity does not arise in my view. They should all go. I understand the emphasis on Mr. Horan's work, which I respect and acknowledge. I do not think there is enough work in the report regarding obligations under the Companies Acts, the duties of the board of directors and how those directors will be monitored in future. If that is a respectful and fair point to make I would be delighted if the witnesses would come back to us with more work on the issues in the organisation which are absent from the report at the moment, even if that will take until the autumn.
It is of concern to everybody. In fairness to the committee, that is what it has recommended. It was accepted by other parties. That is the compromise as I see it, though obviously I do not agree with it and neither does anybody here. We have to listen. If that is what the committee recommended we cannot change it. However, the organisation can change to make sure that the changes happen. One way of not doing that is electing the president. That is the problem. That is why there has been no change.
The witnesses were asked if they anticipated that this could happen. The person who asked no questions at all about financial goings-on in the FAI, including the extravagant expenses and the so-called loan, is now going to lead the reform movement in the FAI. It just does not stand up.
The last point I want to make is that this organisation could in theory be heading into insolvency, as we were saying. How can a body rescue that when it is just an outsider, in one sense, with some legal or statutory duty of care for a certain amount of the organisation's budget? It is a very serious question. Has additional professional help been offered or asked for by the FAI to deal with these very serious issues? In other words, is the capacity to deal with them available?
I am not being rude but Sport Ireland has a hugely important role here. It has brought about huge change, thankfully. However, Sport Ireland's management should be fully acquainted with what is actually going on now, given the additional duties it has imposed on the FAI in its new regulation. Is that right? In other words, Sport Ireland should be-----
Mr. John Treacy:
I am hearing that the information is forthcoming from the KOSI audit. It was a bit slow at the start but the information is now flowing. It may take time, but Sport Ireland will definitely get all the information we have requested. Otherwise we will not be able to complete the audit, and that is a very major step to restoring the funding. It is as simple as that.
The Minister writes that he is anxious to know if the FAI is responding in a full and timely manner to requests from Sport Ireland. Was Sport Ireland kept up to date with the details of the internal election for president and vice president? That is the nature of the second point. Is Mr. Treacy happy that Sport Ireland was kept up to date? That letter was written yesterday.
Mr. John Treacy:
A lot of that happened very quickly. Sending out a notice about an extraordinary general meeting, EGM, on a Sunday night is not a great idea. Asking for nominations on a Friday is not a great idea either. That was a very short timeframe. We met the FAI and we raised those issues. Its officials' argument was that if people had put forward names for elections, there would be a longer time for people to campaign. We thought that was too tight. We articulated that view to them.
I welcome Sport Ireland and Mr. Aidan Horan here today. Reading this report initially when it was first published, my first fear was that it would have a knock-on impact on other associations in regard to getting their house in order. Mr. Treacy has already acknowledged that there will be repercussions. I welcome the report and I am delighted that the response from everyone was positive. However, we have returned to a personality clash issue. I wish to put on the record that on 9 July the Minister for Transport, Tourism and Sport, Deputy Ross, on foot of a parliamentary question from my colleague, Deputy MacSharry, stated:
I welcome the recent publication of the Report of the Governance Review Group... The Review Group has presented a detailed set of proposals covering a wide range of issues including the association's Board, commercial partnerships as well as audit and risk management.
Had the Minister, Deputy Ross, not read the report by 9 July? It has been referred to umpteen times at this committee, but everybody seems to be passing over this point. I refer to page 74 of Mr. Horan's report.
Its deliberations should be included the record:
In acknowledging the exceptional circumstances that exist, and the many calls for a complete change at the top, the Group considers that, for handover and transition purposes and to manage the serious risks where everyone leaves at once, at least one or possibly a maximum of two members might consider putting themselves forward for positions on the interim Board. This will require the current Board, as a collective, to consider their individual and personal interests but more importantly at this stage consider the interests of the Association and decide what they, as a collective, consider is the best course of action.
I was led to believe that this was all to cover the board on an interim basis for 12 months to 2020. I assume that everyone found that acceptable. In fairness, Mr. Horan acknowledges at the top of the page that the board offered its resignation in full, but the proviso was put into the report that it should reconsider one or two of the members. Do my committee colleagues have the other names that should have been put forward? Two names have been put forward for the position of vice president, one uncontested and the second contested. Is this not going well? In fairness, it is only for an interim board for 12 months. A lot is hanging on this decision and this deliberation because it will create more uncertainty.
My big concern as a member of the public, and in the context of accountability for taxpayers' money, is that the spin is that it is down to the clubs, which were not getting it, although we were led to believe they were. I refer to the development clubs, the sports partnerships and so on. Is this just a last-minute intervention on the part of the Minister, Deputy Ross? This report outlines matters clearly. Had they some other name in mind? I cited at a previous committee meeting the case of a company in my own back yard, namely Dairygold, where changes were made. However, one does not just make a clean sweep of management; one keeps some of the old guard and then moves forward. Many Governments have resigned but then sought re-election, have they not?
I support Deputy Coppinger's comment that not all boardrooms need to comprise top-class lawyers and so on. Tradespeople can be put in place for directors to become board members. I am concerned that we are going off track as far as the report is concerned. Is the report worth the paper it is written on? I assume that when it comes before the AGM or whatever it will be written into the articles and memorandums of the FAI. Am I correct?
Mr. Horan said Sport Ireland had deliberations with FIFA and UEFA. Did it have any proposals that created a red line for them and made them tell it to pull back? Did Sport Ireland have issues with them?
Mr. Aidan Horan:
No, they provided us with information that they thought would be helpful to the review. We gave them an overview of the terms of reference and the background we were using, we talked about the codes and the guidance and we looked at their statutes and the regulations. They were very happy to take on board our independent recommendations as to what the future should be. That is the context within which we worked with them. We got back comments on the draft report from both Sport Ireland and the FAI, both reflecting generally broad acceptance of the draft report, which ultimately became the final report issued on 21 June. This is very much based on UEFA and FIFA regulations, principles and practices, but they took no excess influence on us regarding any of the material here.
Mr. Aidan Horan:
No, we took presentations and received submissions from staff. Our acknowledgement concerned the staff forum initiative, which is now happening; the presence of human resource management, HRM, skills on the board; and a new executive performance and remuneration committee with a staff role. Ultimately, with the new structures, there will have to be an alignment within the FAI into those committees from the staff. If the committees are working, the work programmes will have to feed into the work of the day-to-day staff. That has been presented back to the staff as well. FAI staff were presented with a report on the morning of 21 June at 9 a.m. The first people to get the report were the staff. We met them again last week to talk through any issues they wanted to explore. That has been part of the process with them. It is not an organisational review, but we flagged the alignment of the organisations, executive staff and management with the future structures of the FAI.
It is on the record that Sport Ireland was to come on board this year and that it was the turn of the FAI to be audited this year. If Sport Ireland only had its pre-March account audit skills in all this, do the witnesses think it would still be in a position to unearth what has now arisen? The officials say they have upped the ante regarding the auditing and the forensic accounting techniques for the audit going forward, unlike perhaps some other organisations. If they were still using the same pre-March audit techniques, do they think that if they went into the FAI headquarters tomorrow morning those techniques would be good enough to discover those discrepancies?
Mr. John Treacy:
As I said, up to March of this year we were, for the three main fields of funding, relying on the organisation's auditors to give us a letter stating that the funding we gave them was expended for the purposes for which it was given. The Sunday Timesthrough Mark Tighe changed an awful lot in a very short period. It was a string that probably needed to be pulled, and things unravelled very quickly. Since then, we have highlighted how we have changed our terms and conditions of funding and how in future we will do in-depth audits of all the organisations we have funded. As I have said previously, this has changed things for a lot of sporting organisations. It has moved the goalposts significantly, to use a sporting term. All this work continues, but I said previously that we were well ahead of a lot of organisations that are giving State funding to the community, charitable and sporting sectors, so we are well ahead of the posse in terms of the audits we do.
To clarify, I acknowledge that Sport Ireland has not visited the FAI headquarters in the past three years because it cannot get around to every organisation every year. The witnesses themselves acknowledge that every few years Sport Ireland does visit the organisations' headquarters. It will visit the FAI headquarters this year. That was agreed, and we have been aware of that. If Sport Ireland had come in with the previous audit methodology, pre-March, do the witnesses think that would be good enough to unearth all these difficulties or problems?
It is nice to be here after four months. I was also put on the ticket today to contest the next general election. I hope to be back here as a Deputy but if I am not elected, I hope I will get a Taoiseach's nomination to the Seanad.
I thank Mr. Horan and the review group for their report. I thank Sport Ireland, which has been in a difficult situation for the past few years. It has dealt with this quite well, so far so good. It is a situation it does not like to find itself in. We are very fortunate to have such a competent organisation to deal with a situation none of us wants to deal with. The FAI has form here, going back 17 or 18 years. When the Genesis report was done, it was dragged kicking and screaming. We hear nothing about the Olympic Council of Ireland, OCI, now. It has got its house in order, fair play to it. People must be falling over themselves at FAI headquarters because I have never heard of so many different investigations going on.
Mr. Treacy said Donal Conway calmed the waters. There was talk at the previous meeting of an appetite for change but how can we be sure about that? I understand that Donal Conway has been president of the FAI for the past 14 years and has been nominated unopposed for the presidency again. That is not exactly the appetite for change we were told about. I am trying to be a devil's advocate here. We have asked that all the board members step down unconditionally. Am I right in saying that if Donal Conway was the president he would be there only for an interim term of a year? Nobody has asked me about this but Deputy O'Keeffe referred to continuity. Is there anything in place to ensure that he would be gone after a year? It seems reasonable, not from a political point of view but from a business point of view, to have continuity for a year with somebody who has the knowledge and who, as Mr. Treacy rightly said, has calmed the waters for 14 years?
Mr. Aidan Horan:
He has been on the board for 14 years but he has been president for only one year. The board of the FAI will have an independent chairperson. We have written in the report that we are advocating a more detailed job description for the president and vice president and we are asking them to support the chairperson who is to be independent. The future president of the FAI, after these reforms, will not be the current president in terms of position and status surrounding the governance of the FAI because of the independent chair. The president will chair the football management committee but not the board. It is important for us to remember that.
This is an interim board; it is like a reform board, task and finish, get involved, take forward the implementation recommendations and come to the July 2020 AGM having read the 78 recommendations and focused on the areas we have mentioned for future work. This will be a very busy programme of work for whoever takes on this key governance role or those who are entrusted with the role. I view this as putting people in a position of trust. It is important to recognise that there will be an independent chair of the board and there will be three other independents on the board.
Mr. Aidan Horan:
These are presented as a package. If we say there are governance principles for the FAI, these are the governance arrangements it requires. We have tried to fashion a structure, board, business committees, a football management committee and new committees that will help the arrangements to embed and to work. The 78 recommendations are not a menu. I gather what is coming from the EGMs and AGMs is that this is a package of reform. Of course it can be tweaked as the organisation goes forward but as of now this is what the membership has to vote on to change. The rule changes are there to take those parts of the report that require rule change. Many of the recommendations are not rule changes; they are behavioural and cultural and how it does its work.
Mr. John Treacy:
Sport Ireland supports the Minister's letter to the effect that the board should step down. The Senator mentioned the role Donal Conway has played over the past three or four months. He is the one who filled the vacuum and calmed the waters within FAI headquarters, and led the reform agenda, which was very important. If there was a vacuum we would have made no progress on the report or on any of these audits. I acknowledge his work and his commitment on a voluntary basis over the past three months. That said, we in Sport Ireland believe it is time for everyone to stand down.
Mr. Kieran Mulvey:
That was the statement made by Sport Ireland to this committee, and then to the Minister who conveyed it to the committee. We expected that would happen. Something has happened in the past ten days that has changed that narrative. We have not had a sufficient explanation as to why that occurred.
The time period for nominations is dramatically short - one week. I do not think there is an organisation in the country, trade union, political party or company that would have that truncated period of reflection on who would be nominated for a post.
We want to separate the personality and the individual from the office. We want a new start, a new era for the FAI. That means new people at leadership level and the report reflects that. This is unfortunate. Nobody desired this.
Mr. John Treacy:
They can and do regularly compete. One of our top athletes is from Portaferry. The athletes who come from Northern Ireland have a choice between competing for Ireland or Great Britain. That is in keeping with the Good Friday Agreement.
It works well for everyone. There is real harmony among the various bodies and they all work together. It is also in keeping with the IAAF constitution. This is something that does work. The athletes have choice and this is what is important. They can wear the green and white shirt or the Union Jack. It works for everyone and it is in keeping with the traditions of both communities in Northern Ireland.
To return to a point made by Senator Feighan, the presentation made to us by the athletes made it sound as if there is a loophole. I agree with what Mr. Treacy stated. Perhaps it is a technicality. One can argue that it is not a sporting issue, but it is a big issue for those involved. In the Olympics, there is no issue with people opting for the UK or Ireland. In the case of the IAAF, however, if people choose to represent Ireland, they are representing the 26 counties. We could have somebody from Armagh who technically would not be representing all of Ireland and that is the issue.
Mr. John Treacy:
I read the transcript of their appearance before the committee. I made an inquiry of Athletics Ireland on whether any athlete has complained about representing Ireland or if it had heard about any issue regarding an athlete from Northern Ireland representing Ireland or the UK. It replied that it had not. I read the transcript, I understood what was being asked and I posed the question.
I just want to get this right. We have had an excellent meeting and we are discussing the matter properly before us. The problem is we must finish by 2.15 p.m. We can come back to it afterwards if people want. We will be coming back at 3 p.m. or 3.15 p.m. because representatives from Transport Infrastructure Ireland will be coming before us. I do not want to curtail anybody but I am conscious of our time.
-----who may identify as being from Northern Ireland but may not want to compete for the Republic of Ireland. Potentially, this excludes us from having a wider pool of people who are probably very talented. The athletes have raised an issue and it is something that should be looked at.
With regard to the forthcoming AGM, no FAI rule underpins the election of the president and vice president. A lot will be decided at the EGM. Given this is all about governance, have the candidates for president and vice president been validly nominated? Does Sport Ireland have a function in this? The FAI's constitution specifies what should be transacted at an AGM. It specifies financial statements and the nomination of auditors. How can any of this be complied with? How can Sport Ireland possibly stand over an AGM that does not even comply with its own rules? I accept it will take a very long time to get the association properly constituted but this is its first opportunity to have an AGM and it will be in breach of its own rules. The tight timeframe seems to exclude deliberately other people. This is not the type of voter confidence that will stand up publicly. Does Mr. Treacy accept this is how it will be read?
It is another example. We established that we do not know whether it is solvent. We established that in an ideal world we would like all of the report's results before we move forward with substantive change. Now we have confusion over the new people. Theoretically, from my reading of the rules, they will not even be eligible to be on the board until the next AGM so it is a bit on the never-never.
Another point is that the corporate governance report clearly provides for a list to be drawn up by an external recruitment firm but this is not reflected in the rules. This is what the report says but it is not reflected in the rules. Instead, a nominations committee, comprising mainly of members of the board, will select the independent directors, including the chairperson. In effect, this gives complete control to the board for the selection of the independent directors. It is a derivative of Einstein's comment that to keep doing the same thing expecting a different outcome is insanity.
For what it is worth at this late stage, and bear in mind that I am new to this but I have read and considered the information that is available to us, I urge Sport Ireland to appeal to the FAI - to the extent that it has influence over the association, which is one of its member organisations - to postpone its EGM and AGM until November. Let us get all of these reports, including that of the Office of the Director of Corporate Enforcement if it is available. We will then have a much more holistic view to be able to use Mr. Horan's template, with adjustments as may be required, so we can put in place a bespoke system that best suits it.
I thank our guests for coming before us and I thank Mr. Horan for a very good report. I am very appreciative of the work our guests are doing and the due diligence they are carrying out. Well done. They have explained matters very well.
I return to a question I asked earlier, which was followed up by Deputy MacSharry. It is critically important for our guests to use their influence to ensure that the EGM and the AGM are postponed. In light of what Mr. Treacy stated in response to my question about the potential for the FAI to go into liquidation - not in theory but in practical terms - I suggest that consideration could be given to Grant Thornton, which has a great deal of experience in this area, taking over the management of the FAI in the short term. I do not doubt that Donal Conway has the best of intentions for football. I do not know the man, although I met him once. I have no doubts about his passion. At this time, the FAI needs people with strong professional experience at this level. I am asking our guests to support what I am asking them to consider and to give the committee some feedback on it.
Mr. Aidan Horan:
I would like to say in response to Deputy Catherine Murphy that I understand the FAI intends to convene the AGM and try to operate in accordance with and in advocacy of the rules, before adjourning to take the accounts at a subsequent stage. That is my understanding. I did not give any advice on that. I understand that is what the FAI wants to do.
Are they validly nominated according to their own rules? Are those rules going to be decided on at the EGM? Has this approach excluded people from running validly? These matters are critical to good corporate governance.
I thank the Chair. I thought the meeting was starting at 1.30 p.m. I got my times wrong. When the board of the FAI originally came before the committee, I posed a question that remains unanswered. From my perspective, this was an indication that more than one person was at fault for the corporate governance problems in the FAI. A press release was issued when it was originally identified that there was-----
They were to respond to us on that, but they have not done so. The person who gave the guarantee that he would respond is now the sole nominee for the position of president of the FAI. When I asked him what actions he would take if it were deemed appropriate that all members of the board should stand down as a means of instilling confidence in the board, he replied by saying that whatever actions were deemed to be appropriate would be taken. At the time, there was unanimity across members of the committee of all political parties and none on the need for the existing board to step down in full. We now realise that is no longer the case. Given that the person in question is not giving positive replies to the Minister, who is the funding master, I do not expect him to give positive replies to this committee. I would be interested to hear the views of Sport Ireland on this matter. Quite frankly, I am gravely concerned that despite the need for continuity on any board, there is no need for continuity when bad practices have been put in place by people in the past.
Mr. Kieran Mulvey:
As I stated earlier, in anticipation of similar questions from members of the committee, Sport Ireland is in full concurrence with the Minister's statement regarding the presidency of the FAI. We took at face value and on trust the statement made on behalf of the FAI by Donal Conway to the effect that the board of the FAI would step down at the AGM. Our view was that this would transpire. As also stated, there was no suggestion that some of them would step up again. That is not acceptable to us.