Oireachtas Joint and Select Committees
Thursday, 29 June 2023
Public Accounts Committee
Financial Statements 2021: Irish Horseracing Regulatory Board
9:30 am
Brian Stanley (Laois-Offaly, Sinn Fein)
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I want to remind all those in attendance to ensure that their mobile phones are switched off or in silent mode. Before we start, I wish to explain some limitations to parliamentary privilege, and the practices of the Houses with regard to references that witnesses can make to other persons in their evidence. The evidence of witnesses physically present, or who give evidence from within the parliamentary precincts, is protected pursuant to both the Constitution and statute by absolute privilege. As they are within the precincts of Leinster House, witnesses are protected by absolute privilege in respect of the presentations they make to the committee. This means that witnesses have an absolute defence against any defamation action for anything they say at the meeting. However, they are expected not to abuse that privilege and it is my duty as Cathaoirleach to ensure it is not abused. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks, and it is imperative that they comply.
Members are reminded of the provisions within Standing Order 218 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policies. Members are also reminded of the long-standing parliamentary practice 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.
We are joined by the Comptroller and Auditor General, Mr. Seamus McCarthy, who is a permanent witness to this committee. He is accompanied by Mr. Mark Brady, deputy director of audit at the Office of the Comptroller and Auditor General. This morning, we are engaging with the Irish Horseracing Regulatory Board, IHRB, on its financial statements for 2021. From the IHRB, we are joined by Mr. Darragh O'Loughlin, CEO and Mr. Niall Cronin, head of communications and strategy. From Horse Racing Ireland, we are joined by Ms Suzanne Eade, chief executive, and Mr. Jason Morris, director of racing and strategic projects. We are also joined by the following officials from the Department of Agriculture, Food and the Marine: Mr. Gordon Conroy, assistant secretary general; Mr. Eoin Ryan, senior superintending veterinary inspector; and Ms Louise McAlavey, assistant principal officer.
To begin, I want to call on the Comptroller and Auditor General for the opening statement.
Mr. Seamus McCarthy:
Go raibh maith agat, a Chathaoirligh. The Irish Horseracing Regulatory Board is a company limited by guarantee. The company was established by the Turf Club and the Irish National Hunt Steeplechase Committee with effect from 1 January 2018 for the purpose of carrying out the regulatory and licensing functions for Irish horse racing, as provided for in the Horse Racing Ireland Act 2016. The members of the board are appointed by the Turf Club and the Irish National Hunt Steeplechase Committee. The board has a number of statutory functions under the Irish Horseracing Industry Act 1994, as amended, including responsibility for making and enforcing the rules of racing, and decisions on handicapping for races; provision of integrity services for horse racing, including doping control and forensic testing; and licensing of all participants in horse racing in Ireland.
The board is funded mainly by grants from Horse Racing Ireland, and licence fees received from trainers and jockeys collected on the board's behalf by Horse Racing Ireland. The budget prepared by the board is submitted to and agreed annually with Horse Racing Ireland. The board received funding of €10.2 million from Horse Racing Ireland in 2021. This accounted for 88% of its income in the year. The board also received €1.4 million in licence fee income. The board generated a small profit in the year, having expended €7.8 million on integrity services, and €3.9 million on administrative expenses. The 2021 financial statements received a clear audit opinion.
However, without qualifying that opinion, my report drew attention to two matters. First, the code of practice for the governance of State bodies issued by the Minister for Public Expenditure, National Development Plan Delivery and Reform requires public bodies to disclose certain information in their annual financial statements. This includes details of the remuneration paid to the chief officer of the public body, and staff remuneration by salary bands. This is standard practice among the public bodies I audit, and I draw attention to any material non-compliance that I find.
The Irish Horseracing Regulatory Board was granted an exemption by the Minister for Agriculture, Food and the Marine, which meant that it did not have to make the salary disclosures in the 2018-20 financial statements. In May 2022, the Minister wrote to the board requesting that its 2021 and subsequent financial statements should disclose both the normal salary band information and the remuneration of the chief executive, to include all short-term benefits and any termination benefits, if relevant. As outlined in note 10, the board has not complied with the Minister's request to make the disclosures in the 2021 financial statement, and therefore, is not compliant with the code of practice.
The second matter is that an early retirement and voluntary redundancy scheme was made available to the board's staff on 11 May 2021. Subsequently, the then chief executive applied for, and was granted, early retirement. A formal agreement was concluded with him on 11 June 2021, providing for his departure with effect from 30 September of that year. The terms of the agreement included a termination payment of €384,870. This exceeded by €141,880, or 58%, the amount payable to the chief executive if the scheme conditions advertised to staff had been applied. It was clearly stated that there would be no exceptions to the scheme conditions. The payment amount agreed with and paid to the chief executive was a significant exception to the early retirement scheme terms.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I thank Mr. McCarthy. Mr. O'Loughlin is very welcome, and he has five minutes to give his opening statement.
Mr. Darragh O'Loughlin:
On behalf of the IHRB, I want to thank the Chair and the members of the Committee of Public Accounts for the invitation to appear. As the chair said, my name is Darragh O'Loughlin. I was appointed chief executive officer of the IHRB in June 2022.
I am joined by my colleague, Niall Cronin, who is our head of communications and strategy.
The IHRB was established in 2018 by the Turf Club and the Irish National Hunt Steeplechase Committee, INHSC, to carry out the regulatory and licensing functions assigned to the racing regulatory body under the horseracing Ireland Act 2016. The mission of the board is to ensure the reputation of Irish horseracing and confidence in the sport are protected by robust and transparent regulatory practices and implemented with integrity by a professional and progressive team. Under the legislation, the IHRB is solely and independently responsible for the making and enforcing of the rules of racing and it operates under a service level agreement with horseracing Ireland, HRI, regarding the provision of horseracing integrity services. The horseracing Ireland Act 2016 provides that HRI is responsible for guaranteeing funding to the IHRB to carry out its functions through an integrity services budget, which is agreed annually.
The IHRB is the internationally recognised racing body for Ireland in respect of its functions. It is a member of the International Federation of Horseracing Authorities and is signatory to the international agreement on racing and breeding which provides the basis for international racing. Although not a statutory body, the IHRB abides by the underlying principles of good governance - accountability, transparency, probity and a focus on the sustainable success of the organisation over the longer term - and aligns with the requirements of a non-commercial State body as set out in the code of practice for the governance of State bodies. The IHRB is governed by a board of eight directors, three each nominated by the Turf Club and the INHSC, all of whom serve without remuneration, and, as of this year, two independent directors. The IHRB board gender ratio is 5:3 male to female. In addition, the IHRB has appointed an independent chairperson to its audit and risk committee. Responsibility for day-to-day operational matters is vested in the senior management team led by myself, as chief executive officer.
As we approach the end of the current strategic plan 2019-2023, the directors and management of the IHRB are currently engaged in extensive internal and external consultations with stakeholders across and outside the industry as part of the development of a renewed strategy for the coming years. Within the past 48 hours, in the course of preparing for this meeting, I became aware of a hitherto unknown issue that occurred in early 2022, which caused grave concern. I immediately brought it to the attention of the chair of the audit and risk committee and the board of the IHRB. The board has commissioned a full review of the matter to be conducted by an independent firm. Additionally, the preliminary facts as they are known have been disclosed to relevant bodies, including the Office of the Comptroller and Auditor General, horseracing Ireland and the Department of Agriculture, Food and the Marine. The committee will appreciate that I am not in a position to give any further details on the matter at this time, pending the outcome of the independent review.
The IHRB is responsible for regulating Irish horseracing, including equine anti-doping control. Our key functions include: making and enforcing the rules of racing; providing integrity services for horseracing; ensuring the provision of on-course integrity services by employing, monitoring and controlling the activities of horseracing officials; licensing all participants in horseracing in Ireland; making all decisions relating to doping control, forensic testing and handicapping; being responsible for the representation of Irish horseracing internationally in respect of our functions; and providing governance for point-to-point steeplechase and enforcing the Irish national hunt steeplechase regulations.
As a 32-county, all-Ireland body, the IHRB carries out its functions through a team of 25 experienced administrative staff working from our offices in the Curragh and more than 100 highly trained, professional racing officials at race meetings across the island, who ensure that the rules are properly observed and that the integrity of the sport is maintained. The IHRB also relies on a network of over 140 volunteer race day stewards and committee members, who lend their professional expertise to ensure Irish horseracing adheres to the rules and is properly governed at all levels.
In 2021, the IHRB presided over 395 race meetings and 54 point-to-point events, up from 332 race meetings and 68 point-to-points in 2020. We held 949 stewards inquiries and 93 regulatory hearings, consisting of 56 referrals and 37 appeals. In 2021, the IHRB issued licences to 654 riders, 366 trainers and 217 restricted trainers, which was an increase on the previous year, when the equivalent licence numbers were 557 riders, 348 trainers and 192 restricted trainers. However, point-to-point handler permits declined to 566 from 574 in 2020. We also registered 3,614 stable staff in 2021, of whom 1,726 were full time and 1,888 were part time, an increase on the 3,444 registered in 2020. Licence fees paid by racing participants amounted to €1.032 million in 2021, representing 9% of IHRB revenue. Fees charged by the IHRB are reviewed on an ongoing basis to ensure they reflect the value of the licence without posing an unreasonable barrier to participation in the sport.
Equine anti-doping is a top priority for the organisation, as it is for the sport, and the IHRB has no tolerance for any rule breaches in this regard. The IHRB’s equine anti-doping strategy has evolved in recent years to operate on a sophisticated risk and intelligence basis, backed by rigorous processes of investigation and follow-through in the event of an adverse analytical finding. As important as it is to take enough samples, it is also crucial to take the right sample from the right horse at the right time to maximise the likelihood of detecting prohibited substances, if they are there, to deter those who might be tempted to cheat through doping and to disrupt inappropriate activities.
Our systems for tackling doping concerns continue to be strengthened, and the appointment by the Minister for Agriculture, Food and the Marine of 12 authorised officers was another welcome development. This allows IHRB veterinary officials to gain access to any thoroughbred in any location in the State at any time.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I will stop Mr. O’Loughlin at that point. Members have the rest of the opening statement. If they are happy, we can proceed to questions to the witnesses. We are watching the time and we have the IHRB statement. Are members happy to deal with it in that way? I m not trying to be abrupt with Mr. O’Loughlin or anything like that.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I thank Mr. O’Loughlin for the opening statement. In regard to the change to the opening statement, we had Mr. Donal O'Shea, the chief financial officer, CFO, on our list of invitees. I understand that, up to yesterday, he was to be here. What happened? Why is the CFO not here?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Since when?
Brian Stanley (Laois-Offaly, Sinn Fein)
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I know Mr. O’Loughlin is going to be careful about giving details. However, in regard to the hitherto unknown issue that emerged and that gave rise to grave concern, and while I do not want him to go into detail, what area does that relate to or what is the subject matter?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Do not go into the detail but just give the subject matter.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Is Mr. O'Shea's absence this morning related to that?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Thank you. I welcome Ms Caroline Ball from the Department of Agriculture, Food and the Marine, who I had not mentioned in the list of witnesses.
I thank Mr. O’Loughlin for the opening statement. We move to questions from members. I call Deputy Catherine Murphy.
Catherine Murphy (Kildare North, Social Democrats)
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I had very similar questions because it is very unusual for us to have a very significant late change to the opening statements, such as the one that Mr. O’Loughlin has given us.
Mr. O'Loughlin said there will be an investigation. Who brought the issue to his attention?
Catherine Murphy (Kildare North, Social Democrats)
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Was it brought to Mr. O'Loughlin's attention yesterday?
Catherine Murphy (Kildare North, Social Democrats)
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Who brought it to Mr. O'Loughlin's attention? Was it the chief financial officer?
Mr. Darragh O'Loughlin:
There are details that I unfortunately will not be able to provide today for fear of prejudicing any review or investigation that has yet to take place. All I can say is that while I was preparing for this meeting, given that it relates to the 2021 financial statements, I was preparing by reviewing those statements and then subsequent, post balance sheet events, to better understand these statements to ensure that I could answer any reasonably anticipated questions here. In the course of that preparation, I became aware of an issue that had occurred in early 2022. It does not form part of these financial statements, which is potentially a relevant matter. It related to governance around financial transactions. When I became aware of the issue, I immediately ended the preparatory meeting for this meeting today and I made contact with the independent chair of our audit and risk committee to report my concerns to him.
Having reported my concerns to the chair of the audit and risk committee, I made contact with the chairman of the board of the IHRB to inform him of my concerns and took legal advice. We convened a meeting of the directors of the IHRB yesterday morning. The board met, took legal advice and made certain decisions. Immediately following the board meeting, I made contact with our colleagues in the Office of the Comptroller and Auditor General to advise them of all the facts that I had in my possession. After that, I made contact with Horse Racing Ireland, as our funding body. I spoke with the chief executive to make her aware of all the facts as I had them in my possession at the time. Following that, I made contact with senior officials in the Department of Agriculture, Food and the Marine again to step them through what had come to my attention and to give them all the facts so they could advise the Minister.
With the assistance of the chief executive of IHRB, we have identified an independent firm which does not currently do any work for the IHRB, which will be carrying out a review of all the circumstances around the matter that I am afraid I cannot describe. The terms of reference of that review were drafted with the assistance of our legal advisers. I expect it will be a thorough and extensive review, at the end of which a full report will be published which will be informative to all of us and will make clear at that stage what it is that, unfortunately, I am not able to tell the committee today.
Catherine Murphy (Kildare North, Social Democrats)
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What timeline can we expect that review to be conducted in?
Catherine Murphy (Kildare North, Social Democrats)
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I want to move on to some of the questions that I have for Mr. O'Loughlin. I want to begin by dealing with the former CEO's early retirement or redundancy, or a combination of both. On 11 May 2021, the then CEO indicated an early retirement and redundancy scheme would be put in place. Exactly a month later, on 11 June, the CEO applied for and was granted early retirement. Obviously, a scheme was set out. It was to stay within the amounts set out. There was €142,000, or 58% more than the amount payable if the scheme conditions had been applied as stated to the CEO, so the CEO benefited from €142,000 additional. Some of that money appears to have been made up by a grant or loan from the Turf Club. Why would the IHRB receive a contribution from a private company to top up an individual who is not an employee of the Turf Club?
Catherine Murphy (Kildare North, Social Democrats)
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A scheme was offered that went above the terms. This is some sort of an additional payment, which is separate from the IHRB, that the Turf Club made.
Catherine Murphy (Kildare North, Social Democrats)
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Does that have the benefit of not having tax applied to it? What happens there? This person was not an employee of the Turf Club. Was it a loan or grant?
Mr. Darragh O'Loughlin:
It was in the form of a contribution from the Turf Club to the retiring CEO's retirement. The Deputy raised a question about the taxation of the additional contribution which was not made up of State funds. We had a review carried out by independent auditors earlier this year so that I could be satisfied that both aspects of the entire payment had been properly taxed. I have been advised that because it was all processed through the normal payroll processes, it was taxed appropriately.
Catherine Murphy (Kildare North, Social Democrats)
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Regarding the opening statement from the Comptroller and Auditor General, the IHRB was granted an exemption by the Minister for Agriculture, Food and the Marine which meant it did not have to make salary disclosures in 2019. The Minister wrote to the board in 2021 and subsequently financial statements disclosed the normal salary band. The IHRB ignored the Minister about the derogations. How many derogations from the code of practice under the aegis of the Department did the IHRB get? Was it just for those years or was it for more than those years?
Catherine Murphy (Kildare North, Social Democrats)
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Can I restate that? Note 10 of the accounts states that it did not comply with the Minister's request to make a disclosure in the 2021 financial statements. Why was that the case? It seems like, with the amount of money that comes from the Department of Agriculture, Food and the Marine, the IHRB would pay serious attention to the Minister's request. Why did it do that?
Catherine Murphy (Kildare North, Social Democrats)
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When Mr. O'Loughlin takes up that position, he presumably takes responsibility for what happened before. The other person is not here to answer. Did Mr. O'Loughlin inquire as to why that happened? Will he give me short answers? I have limited time.
Mr. Darragh O'Loughlin:
When we received the letter from the Minister advising us that he was lifting the derogation, the implications of that were clearly that his wish was that the financial statements in front of us would contain the relevant disclosures. It placed us in a difficult position legally because the contract of employment of the individual in question did not contain any provisions providing for publication of his terms and conditions.
Under GDPR and the payment of wages legislation, individuals have a right to privacy, save where they have waived or contracted away that right.
Catherine Murphy (Kildare North, Social Democrats)
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Chief executive officers throughout the public service have their salaries disclosed.
Catherine Murphy (Kildare North, Social Democrats)
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Would it be unusual when Mr. McCarthy asks for something like that not to then receive it?
Catherine Murphy (Kildare North, Social Democrats)
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Then in terms of not abiding by the Minister's request, what engagement did the Department have with the board as a consequence of that?
Mr. Gordon Conroy:
The Deputy is right. On 26 May 2022, the Minister wrote to the IHRB asking it to remove the derogations. My understanding is that in the interim period, as highlighted there, it was not included in the CEO’s contracts and there were data protection and privacy issues, commercial sensitivities and so on. While it did not appear in the 2021 accounts, we have received the 2022 unaudited accounts and it appeared in that.
Catherine Murphy (Kildare North, Social Democrats)
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Given the fact there was no contract, how can we talk about a contract that did not exist?
Catherine Murphy (Kildare North, Social Democrats)
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I have got to say----
Catherine Murphy (Kildare North, Social Democrats)
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Yes, so they could have been disclosed.
Catherine Murphy (Kildare North, Social Democrats)
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That speaks for it all. Indeed, I am reminded of issues identified in the opening statement about integrity and all of that. Given this is the regulatory body, and I note this is post-dated, but it certainly does not align with how we expect matters to be conducted. We would not expect a Minister to be ignored and we would expect contracts to be in place, at the very least. I would have thought that was self-evident.
Catherine Murphy (Kildare North, Social Democrats)
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I would hope they are because there would be an obligation to do so. How many other people applied for the early retirement or redundancy package?
Catherine Murphy (Kildare North, Social Democrats)
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Did they receive more than the amount set out in the code? Was it only the CEO that received more than the amount, or a grant from another body?
Catherine Murphy (Kildare North, Social Democrats)
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Was this something that was agreed? Is the arrangement between the Turf Club and HRI minuted at board level?
Brian Stanley (Laois-Offaly, Sinn Fein)
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I call Deputy James O'Connor, who has ten minutes.
James O'Connor (Cork East, Fianna Fail)
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I thank the Cathaoirleach. I concur with what Deputy Murphy said regarding it being unusual that we would not have the chief financial officer with us today. I want to ask a couple of questions in that regard. Is it correct that Mr. O'Loughlin was only informed yesterday that he was not going to be in attendance?
James O'Connor (Cork East, Fianna Fail)
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What was the reason cited for that absence?
James O'Connor (Cork East, Fianna Fail)
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Did he give a reason behind the decision to do that?
James O'Connor (Cork East, Fianna Fail)
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I beg to differ because I think Mr. O'Loughlin is. It is not a criminal investigation. Mr. O'Loughlin has taken the decision to do an external review but the IHRB is significantly funded by the taxpayer and I do not think that is an illegitimate question to ask so I am going to ask that question again. Did he give a reason for deciding to take voluntary leave at this time?
James O'Connor (Cork East, Fianna Fail)
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Did the individual give a reason for that decision?
Mr. Darragh O'Loughlin:
Under the circumstances, unfortunately, I cannot say anything that would prejudice any investigation that might take place. I recognise the Deputy's concerns and that we are funded by the taxpayer. I take that very seriously. I take governance issues very seriously. All my conduct since I took up this role has aligned properly with-----
James O'Connor (Cork East, Fianna Fail)
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Actually, I accept that Mr. O'Loughlin is relatively new in his role. His predecessor was there for quite some time, as we know from what has emerged in regard to the early retirement deal. I am a racing man and I love horseracing and everything about the sport and the community within it. However, I believe the decision to go into this review process is going to cause prolonged damage. I believe it is unnecessary. I wish we could just get the answers here and now and get on with the job that needs to be done. So, if Mr. O'Loughlin is not in a position to answer why the chief financial officer took voluntary leave, he might state that.
James O'Connor (Cork East, Fianna Fail)
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In regard to the details of Denis Egan's early retirement and voluntary redundancy scheme, the sum was €384,870 and the payment was received in 2021. To my knowledge, that payment was 58% larger, if I am correct, per the Comptroller and Auditor General, than what should have been paid out under the terms of the scheme. Can Mr. O'Loughlin understand why that is grossly unacceptable from a governance perspective and from a trust point of view? Can he understand why, irrespective of somebody's longevity of service, within the racing community, as both of us know, having knowledge of the racing community, there are so many roles within it that are very well remunerated and people can move on after doing work in organisations such as this one, that such a payment was not in the best interest of horseracing in Ireland? Being 58% larger than what should have been paid out, it was damaging from a public relations point of view as well.
James O'Connor (Cork East, Fianna Fail)
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Really? Does Mr. O'Loughlin think that is acceptable, a payment 58% larger than it was supposed to be?
Mr. Darragh O'Loughlin:
Would I have done it like this? Arguably not. Was the governance around this entirely as it should have been? Clearly not. However, in terms of the fundamentals of the decision that was taken at that time, I believe in the bona fides of the individuals that they took what they believed were the right decisions at that time for the organisation and for the sport.
Well, it would appear otherwise. I take no pleasure in having to make these points, but it is just flabbergasting when we look at the amounts paid out. As I said, it is not a case of there being no roles to move on to after people work in organisations like the IHRB. I cannot understand it.
I must move to the next line of questioning because I do not think we are going to get any satisfaction in respect of our questions concerning the chief financial officer being absent. Regarding motor running costs, in respect of the figures provided to us, the committee notes there was a substantial increase in the IHRB's motor running costs during 2021. Can Mr. O'Loughlin give us an explanation of why there was a €125,000 year-on-year increase? I note as well that this was during the pandemic, when very little travel being undertaken by anybody. I know that racing continued, due to the hard work of some of the people in this room, and indeed outside it, but this aspect is just a bit peculiar, especially due to the costs of diesel and petrol being quite low that year, to my memory. Will Mr. O'Loughlin please provide an explanation for this increase in spending?
Mr. Darragh O'Loughlin:
Our integrity expenses, and this is note seven to the financial statements, are very much geared to activity levels and the Deputy is correct there was a Covid-19 impact at that time. The impact in 2020, however, had been greater. In 2021, we had almost a full card of race meetings, with 395, whereas we had significantly fewer the previous year. As a result, our officials, our vets and our security teams had to travel further to more race meetings and therefore our motoring expenses, which are paid at no more than the Revenue-approved rates, would have been higher simply because more people had to go to work in more locations for more race meetings.
James O'Connor (Cork East, Fianna Fail)
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Okay. That answers that and is satisfactory. Regarding the questions asked by Deputy Catherine Murphy about the early retirement scheme introduced in May 2021, Mr. O'Loughlin said three employees in the organisation successfully applied for it. Is that correct?
James O'Connor (Cork East, Fianna Fail)
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How many were there originally?
Mr. Darragh O'Loughlin:
As I understand it, there were at least two other individuals who applied when the scheme was publicised. They applied for redundancy then, but when their applications were reviewed and evaluated, it was felt the business case was stronger for retaining rather than releasing them.
James O'Connor (Cork East, Fianna Fail)
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Okay. Concerning those accepted, then, am I right in saying three people were successful?
James O'Connor (Cork East, Fianna Fail)
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Yes, but I am asking how many people were involved.
James O'Connor (Cork East, Fianna Fail)
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Did that include Mr. Egan?
James O'Connor (Cork East, Fianna Fail)
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Okay. In terms of the payments made, are there figures available on this that could be provided to the committee?
James O'Connor (Cork East, Fianna Fail)
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Say that again.
James O'Connor (Cork East, Fianna Fail)
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If Mr. O'Loughlin wishes to clarify that, it is okay to take a moment. In the interim, while we are waiting for the answer, can I just put it to the witnesses from the Department-----
James O'Connor (Cork East, Fianna Fail)
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Okay. Turning to Department of Agriculture, Food and the Marine, and we have the assistant secretary with us, I just wish to ask about the matter that has arisen that we are not able to discuss because we cannot get the information on it. When was the Department informed of this irregularity? What has happened to try to address it sufficiently?
Mr. Gordon Conroy:
The State bodies division was informed yesterday afternoon there was a matter that was financial in nature and this caused some concerns. We were informed there would be an independent review of the matter. When we were informed of this, I informed the Minister and the Secretary General about it. Obviously, this is subject to a review and I cannot go into it in much detail. Based on the knowledge I had at the time, late last night I wrote to Ms Suzanne Eade, CEO of HRI, the body with oversight for the IHRB, and to Mr. O'Loughlin, as the CEO of the IHRB, regarding the matter and asking that the independent review be conducted as soon as possible and consider all matters.
James O'Connor (Cork East, Fianna Fail)
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Okay. I thank Mr. Conroy.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I thank Deputy O'Connor. I call Deputy Ó Cathasaigh.
Marc Ó Cathasaigh (Waterford, Green Party)
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I know Mr. O'Loughlin finds himself in a difficult situation on this. I wish to ask about the voluntary leave aspect, because this is, of course, analogous to some of the drip feed we heard concerning the matter we will be dealing with later this afternoon. Did Mr. O'Brien ask to take leave or was he asked to take leave? It is a period of voluntary leave he has taken.
Marc Ó Cathasaigh (Waterford, Green Party)
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Did he ask to take leave or was he asked to take leave?
Marc Ó Cathasaigh (Waterford, Green Party)
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I thank Mr. O'Loughlin. I understand that answer.
Turning to the witnesses from the Department, it does sound to me like Mr. O'Loughlin, as soon as this issue was uncovered, acted very speedily and informed all the relevant people. Will the Department have input, in respect of the terms of reference, into this independent review? Is the Department content that an independent review, commissioned by the IHRB, is sufficient in this respect of this issue? The Department has an insight into it that we, unfortunately, do not. Does the Department feel that it will take a strong role itself in terms of this issue? I refer again to the issue we will be dealing with this afternoon, in regard to which the relevant Department and Minister decided a full departmental external review was merited. Will Mr. Conroy give me his opinion on this aspect?
Mr. Gordon Conroy:
There are several points there. The first concerns the review itself. We want it to be conducted as a matter of urgency. As a Department, we have committed to conducting a review of the governance arrangements around the horse and greyhound fund. My opinion is that when we get this review it may feed into our terms of reference in that regard. I also point out that the governance of the IHRB is, in the first instance, provided by HRI.
Marc Ó Cathasaigh (Waterford, Green Party)
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Okay. I am not long on this committee but we do see similar themes emerging from the different sessions.
Moving to the Comptroller and Auditor General, I have a quick question regarding this contract of employment issue. I just wish to clarify this point. Is it the case that Mr. McCarthy was not furnished with the document or that it was confirmed to him that such a document does not, in fact, exist?
Marc Ó Cathasaigh (Waterford, Green Party)
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This was as CFO.
Marc Ó Cathasaigh (Waterford, Green Party)
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I will put the same question to Mr. O'Loughlin. Which is the case in this instance? Has the Comptroller and Auditor General asked for a document and not been furnished with it or is it the case that such a document, this contract of employment, does not, in fact, exist?
Marc Ó Cathasaigh (Waterford, Green Party)
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Okay, but then you have also told this committee, in respect of the request from the Department to provide the full details of salary, etc., that this information could not be furnished because of a contractual obligation not to disclose. This request has, essentially, been stonewalled.
How can Mr. O'Loughlin stand over that statement when he cannot provide the document?
Mr. Darragh O'Loughlin:
What I said was in the absence of a contractual provision waiving the right to privacy and consenting to the publication of the salary, the advice we received is that we would find ourselves in breach of data protection and privacy law and the Payment of Wages Act because all employees have a right to privacy.
Marc Ó Cathasaigh (Waterford, Green Party)
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Can I ask if the Comptroller and Auditor General would agree with that assessment?
Mr. Seamus McCarthy:
I obviously do not give legal opinions but certainly the issue has arisen previously about disclosure of information relating to people paid out of the public purse. My understanding is there is an expectation, particularly with the more senior people, that information should be provided and can be provided.
Marc Ó Cathasaigh (Waterford, Green Party)
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Am I correct that discussions are ongoing with the Department about ceasing this ministerial derogation from the code of practice of governance of State bodies to which Mr. O’Loughlin’s opening statement said the organisation said it was committed. Is IHRB still negotiating whether this disclosure will happen into the future?
Mr. Darragh O'Loughlin:
No, the correspondence referred to related to the statements for 2021. As I already outlined to the committee and my colleagues in the Department of Agriculture, Food and the Marine have confirmed, the as-yet unaudited financial statements for 2022 contain all of the relevant disclosures.
Marc Ó Cathasaigh (Waterford, Green Party)
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Okay. I just find it difficult to reconcile the stonewalling of a request from the Department when so much of the funding is derived from the Department and Mr. O’Loughlin’s opening statement that the IRHB “abides by the underlying principles of good governance - accountability, transparency [and] probity”. We are not seeing that transparency at all.
I will turn to the issue around the exit package. There is this contribution from the Turf Club which does not appear as a contribution from the Turf Club but gets folded in to IHRB’s general funding. Do I understand that correctly? It does not appear in that payment to the exiting CEO. It is not detailed as a separate contribution from the Turf Club, is it?
Marc Ó Cathasaigh (Waterford, Green Party)
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It is detailed as “other income”.
Marc Ó Cathasaigh (Waterford, Green Party)
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What further detail is provided?
Marc Ó Cathasaigh (Waterford, Green Party)
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IHRB regulates activities such as betting. Well, it regulates activities such as handicapping -----
Marc Ó Cathasaigh (Waterford, Green Party)
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----- which can have an impact on races. Would that be immediately and transparently apparent? Deputy O’Connor would have far more experience of racing than I would. I know very little about it. If I was going to place a bet on a race, would it be immediately evident to me as a rank-and-file punter going in to place a few bob on a race, would it be immediately evident to me the impact of handicapping on the likely outcome of the race?
Marc Ó Cathasaigh (Waterford, Green Party)
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Is it appropriate in that context to accept a payment of that nature and that size when the IHRB’s regulatory function can have an impact on the outcome of races?
Marc Ó Cathasaigh (Waterford, Green Party)
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Okay. The contribution was folded in, recorded as "other income" with no other information, and then paid out as part of this exit package. Did that contribution then also cover other liabilities that would go with that, such as tax and social protection payment, employers' PRSI, which are the other costs that come attendant with making a payment to an employee?
Mr. Darragh O'Loughlin:
Yes, which is why the figure under "other income" appears to be higher than the additional contribution to the retirement because the difference is made up of employers' PRSI and related costs. An issue did arise in relation to the employers' PRSI. I do not know if the Deputy would like me to me to explain it or the Comptroller and Auditor General.
Marc Ó Cathasaigh (Waterford, Green Party)
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So we do not -----
Marc Ó Cathasaigh (Waterford, Green Party)
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Finally, in the very few seconds remaining, yes, Mr. O’Loughlin is new in the role. However, I have to assume that decisions made, particularly regarding the request coming in from the Minister for full disclosure of details of a person’s salary, were discussed at a board level. I have to assume, then, that was subsequently minuted. Has Mr. O’Loughlin reviewed the minutes of the meetings that dealt with the Minister’s correspondence?
Marc Ó Cathasaigh (Waterford, Green Party)
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Would that not be of central importance considering it was a discussion that predated Mr. O'Loughlin's entry to the role that was going to be discussed today?
Marc Ó Cathasaigh (Waterford, Green Party)
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It is extraordinary that in relation to a decision relating to correspondence from the Minister of the Department that provides the preponderance of IHRB's funding that no decision was recorded at board level and minuted. I find that astonishing to be quite honest.
Colm Burke (Cork North Central, Fine Gael)
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I thank the witnesses for coming before us this morning. I fully understand where they are coming from in relation to the decision that has arisen over the last 48 hours and I fully accept that the matter needs to be dealt with before the IHRB representatives can openly discuss it. I fully understand their position on that.
If I may return to the issue with the former CEO and why there was a need for a legal agreement. The whole structure of IHRB's organisation is set up in legislation. A clause was put into the agreement to say that no information about the agreement could be disclosed. Surely when the board gets legal advice, that legal advice should incorporate what it can and cannot disclose. Surely the legal advisers must have advised that this information could not be kept from the public domain?
Colm Burke (Cork North Central, Fine Gael)
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I know but what I am saying is there was legislation in 2016 which dealt with the whole formation, the setting up of this body etc. Surely legal advice was also obtained by the board that such a clause did not have any legal standing? Or else there was a situation where incorrect advice was given. I am wondering was it the case that proper legal advice was not furnished?
Colm Burke (Cork North Central, Fine Gael)
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I know it was a large firm but I am asking about that advice where the agreement was being drafted and there was going to be a non-disclosure clause. Surely there was an obligation on that large firm; in fairness to people on the board, the people employed are not legal experts, so surely the legal advice would also have noted that this clause was technically not enforceable?
Brian Stanley (Laois-Offaly, Sinn Fein)
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The Comptroller and Auditor General.
Mr. Seamus McCarthy:
I have a copy of the legal agreement. The non-disclosure clause is actually very standard and does provide for confidentiality unless, and to the extent required by law or court order or otherwise, the matter is to be kept confidential.
Therefore, the IHRB had an obligation to give me the contract. I had to be able to see it because that is required by law. I then have the right to report on the matter. I think there was a difficulty for the IHRB in making disclosures, having signed that.
Colm Burke (Cork North Central, Fine Gael)
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The point I am making is that regardless of whether the board got advice from their legal people, at the end of the day this document will end up being disclosed because of existing legislation.
Colm Burke (Cork North Central, Fine Gael)
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I am asking whether they were made aware of it. That is the question I have asked. This is why one pays lawyers and this is why they have an obligation to disclose this. When legal advisers are being used, all advice must be furnished, regardless of what the board wants or does not want. It must be legally advised what it can and cannot do.
Colm Burke (Cork North Central, Fine Gael)
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Can I move on to the €385,000-----
Mr. Darragh O'Loughlin:
Can I just answer the Deputy's question? I thank my colleagues in the Office of the Comptroller and Auditor General for their intervention. The circumstances at the time the agreement was drafted - in fairness to the board - were such that the derogation from the Minister remained in place. The derogation from the Minister-----
Colm Burke (Cork North Central, Fine Gael)
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I am not questioning about the board. My question is about the legal advice the board got. Basically, because the IHRB is covered under legislation, the issue was that this document was going to end up being disclosed anyway at the end of the day.
Mr. Darragh O'Loughlin:
The Deputy is correct that our funding is State funding and that our activities are governed by legislation, but at the time the advice was given and was taken and acted on by the board, the derogation was in place. One can only assume that against that backdrop the advice was different from what it might be if we were to seek advice on the same issue today.
Colm Burke (Cork North Central, Fine Gael)
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On the €385,000 paid, did that include tax and social protection payments?
Colm Burke (Cork North Central, Fine Gael)
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It was a gross figure. In other words, that was the full amount that was paid out.
Colm Burke (Cork North Central, Fine Gael)
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Yes, because he would have had to make the tax returns on it.
I wish to move on to another issue. Will Mr. O'Loughlin explain why there has been such an increase in expenditure for the forensic equine unit?
Mr. Darragh O'Loughlin:
The equine forensic unit is the heading under which our equine and anti-doping activity takes place, whether that be stable inspections or race-day testing. The committee will be aware that we have stepped up our anti-doping activity very significantly over the past years. As a result of the increased number of race meetings, and the increase in intensity of our testing activities due to the increase in the equine anti-doping strategy, the cost associated with that has naturally increased.
Colm Burke (Cork North Central, Fine Gael)
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Okay. Are there more people now employed in that area by the IHRB?
Colm Burke (Cork North Central, Fine Gael)
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Does the IHRB feel that it needs to employ more people in this particular area? Mr. O'Loughlin has talked about the increased level of race meetings and so on. Is there a plan to increase further the number of people working in this area for the IHRB?
Mr. Darragh O'Loughlin:
Yes. The Deputy will recall that we had a review carried out by Dr. Craig Suann into our anti-doping programme, which made 18 recommendations in total. We are in the process of implementing those. As the Deputy has pointed out, some of them have a resource implication with increased testing, increased inspections of stables, and so on, to the extent that more resources are needed. Plans are in place to implement those steps.
Colm Burke (Cork North Central, Fine Gael)
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With regard to the stables inspected, on average what would that be? Is one in ten stables inspected every year or is it one in 20? What kind of inspection level is currently in place?
Colm Burke (Cork North Central, Fine Gael)
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That was in 2021. Was that increased in 2022 or was it at the same rate?
Mr. Darragh O'Loughlin:
It should have increased and will continue to increase to the extent that resources allow. As I mentioned earlier, it is important not just to take samples. On a race day we will always take a sample from the winner and we do pre-race testing on horses that are selected randomly. However, testing horses in their yard - not on a race day - is a very effective way of detecting the misuse of substances that may not still be in the horse's system on race day.
Colm Burke (Cork North Central, Fine Gael)
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With random inspections, does the IHRB come into a stable without any warning? Does the inspector just arrive in and carry out the inspection? Is that correct?
Colm Burke (Cork North Central, Fine Gael)
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On the work to date with regard to inspections, Mr. McLoughlin spoke about 140 stables out of 700 stables. Has there been any change? Has it been identified that illegal substances were used? What is the position in relation to the 140 stables that were inspected in 2021?
Mr. Darragh O'Loughlin:
More than 1,000 samples were taken in total across all of those inspections. A number of those returned what we would call an adverse analytical finding, which means we detected a prohibited substance. In any case where we detect a prohibited substance, the matter is referred for disciplinary hearing. We have a referral hearing and we publish the outcome of those hearings.
Colm Burke (Cork North Central, Fine Gael)
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Of the 1,000 samples that were taken, what number were identified as being not in order?
Colm Burke (Cork North Central, Fine Gael)
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Was that for 12 different stables or were they samples taken from one or two stables?
Colm Burke (Cork North Central, Fine Gael)
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What was the number of stables involved? Out of the 140 stables that were tested, and more than 1,000 samples, were those 12 samples from one stable or from a number of different stables?
Colm Burke (Cork North Central, Fine Gael)
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Okay, but let us put it this way; in how many of the 140 stables that were tested was an adverse outcome found?
Colm Burke (Cork North Central, Fine Gael)
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I understand that but it is important that we need to have an idea of what we are talking about. Is it one stable, three or four stables, or 12 stables? This is what I am trying to find out, across the 140 that were tested.
Colm Burke (Cork North Central, Fine Gael)
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So we could be talking about seven or eight.
Colm Burke (Cork North Central, Fine Gael)
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In relation to the adverse outcomes in 2021, have all those cases been dealt with now?
Colm Burke (Cork North Central, Fine Gael)
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What is the time period from the time an adverse outcome is found to the time it is finally dealt with? We are two years on from 2021. Will we have those concluded by the end of this year or will it take longer again?
Colm Burke (Cork North Central, Fine Gael)
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All the preliminary findings of the 12 will be decided by the end of the year.
Colm Burke (Cork North Central, Fine Gael)
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How many of the preliminary findings of the 12 have been finalised at this stage?
Colm Burke (Cork North Central, Fine Gael)
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Why does it take that time period? He mentioned 2021.
Mr. Darragh O'Loughlin:
I agree the impression could well be that it takes that long to process a case; it does not. All the adverse analytical findings from 2022 have been dealt with in hearing. We have had a number of adverse analytical findings in the first part of 2023 and many of those are ready to go to hearing. However, occasionally we get an particularly complex case, which, no more than in any court of law, can take longer to work its way through the system. In parallel to large complex cases that may be in train, we also have the more simple, straightforward cases we can process on an ongoing basis.
Brian Stanley (Laois-Offaly, Sinn Fein)
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On the Deputy's question about the number of statements, is the number more or fewer than six? I am trying to find it.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Is it a single statement?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Is it a small number?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I thank the witnesses. Listening from my office earlier, I began to think there was some competition for headlines today. I was in shock about what I heard, the unusual nature of the opening statement we received and the one that was heard this morning in the committee room. I appreciate Mr. O'Loughlin attending today. It probably would have been easier for him to cancel and reschedule, so from that perspective I appreciate his attendance, given everything that seems to have unfolded yesterday. In saying that, I take account of what he has said in response to the many questions asked by colleagues. How many people work in the financial department of IHRB?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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The five include the CFO who cannot be here today for various reasons. Is there a deputy to the CFO?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Would it have been prudent to have had someone represent the finance department today?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Mr. O'Loughlin said that issues came to light as he was preparing for today's meeting. Is that correct?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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For how long was Mr. O'Loughlin preparing for the meeting?
Mr. Darragh O'Loughlin:
In terms of active preparation and trying to anticipate what questions could reasonably be asked by the committee, my colleague and I and others sat down at 4 p.m. on Monday to ensure we had answers to all questions that might reasonably be asked and reconvened on Tuesday at 10.30 a.m. I became aware of the issue to which I have made reference at 10.40 a.m.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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On Tuesday
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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The timeframe was not too long. I was expecting Mr. O'Loughlin to say preparation started a week ago or so. Given the fact that it started on Monday, issues arose on Tuesday morning, today is Thursday, with that timeframe, I cannot fathom why somebody from the finance department cannot be here. Certain questions are not being answered because of that. As Mr. O'Loughlin will appreciate, the committee wants answers about public finance and cannot get them today. From our perspective, it is quite frustrating to ask questions about, as he said, some of the issues pertaining to 2022 or the previous years' accounts. Does he appreciate why we find it frustrating?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I would take it a step further. Given the fact that Mr. O'Loughlin cannot answer certain questions today - I understand why; he has outlined the reasons - we might need to reconvene when he is in a position to do so, rather than leaving the matters to be answered in notes to come back to the committee or waiting for another calendar year to go by. The issues that cannot be discussed today are of a serious nature. As the Committee of Public Accounts, we need to be assured that money is being spent wisely and is accounted for. Mr. O'Loughlin cannot allay any fears today. In fact, the bombshell that was dropped this morning has heightened awareness of issues within the organisation. Does Mr. O'Loughlin appreciate why?
Mr. Darragh O'Loughlin:
: I fully appreciate the sentiments the Deputy is expressing. To describe it as a bombshell is not unreasonable in the circumstances. Since the matter came to my attention, I have made all the required disclosures and notified all the relevant people. I came to answer questions today to the fullest extent they can be answered at this time and I fully anticipate that there will be further questions at a point of time when they can be answered on foot of the review.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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As I said earlier, I appreciate the fact that Mr. O'Loughlin came before the committee. It is a bombshell for us. I am sure it is a bombshell for him and the organisation. He stated there are five members of staff in the finance department. The head of that department cannot be here. How long has the CFO been in place?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Was the revelation on Tuesday morning something Mr. O'Loughlin discovered during his preparation or was it brought to his attention during his preparation?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I know from the responses earlier that the Department is aware. Has the matter been referred to the relevant authorities external to the IHRB and the Department? I understand the Department only found out about this last night.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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If it is as serious as Mr. O'Loughlin implied it might be, given that he cannot answer any questions on the issue, how soon does he plan on ensuring the relevant agencies and statutory authorities are informed of the disclosures that have not yet been made?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I will turn to Mr. Cronin, head of communication and strategy. If my phone is buzzing over here, I have no doubt that his phone will be melting by this afternoon with questions for the organisation, if not today, through the next few days. How has the issue that arose been communicated to the organisation?
Mr. Darragh O'Loughlin:
As our workforce is distributed - we discussed earlier how we have people all over the country - it was not feasible to convene a meeting. An email was sent to all our staff this morning, which contained the same statement as I unfortunately had to include in my opening statement here today.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Does that communication have any implications for any other staff member?
How many staff are there in total at present?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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The core staff, however, are the 25. Is that correct?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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When Mr. O'Loughlin says all the staff were communicated with, were they the 125 members or just the core staff?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I am a bit perplexed; I asked the head of the communication section and the CEO responded. Is Mr. O’Loughlin concerned from a legal perspective as to why no one else can make a statement about this matter and it has to come from him?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Turning to the Department in respect of engagement, to me, the hint is in the name, whereby it is the regulatory board that is having problems. Will an official comment on the level of engagement that goes on between the regulatory board and the Department? Who oversees the relationship?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I know all the history-----
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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My time is limited.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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How regular is regular? I need answers.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Okay, but again, how regular are the discussions? I attend these committee meetings regularly and that is once a week. Are the meetings held once a week, once a month or what?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Given the nature of the revelations today, we as a committee should look to meet the officials again soon in order that we can establish more information on what has been unveiled today.
Catherine Murphy (Kildare North, Social Democrats)
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Absolutely.
Paul McAuliffe (Dublin North West, Fianna Fail)
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Like Deputy Devlin, I was looking at my notes for the second session of this meeting when I saw the board’s opening statement and I was surprised. I have some sympathy for Mr. O’Loughlin’s position. Clearly, something was discovered and he is taking action, and he does not want to do anything in a public manner that would frustrate that. He is doing that in the best interests of his organisation, the people in it and the industry. As someone new to the position, we can only accept his bona fides on that. Nevertheless, that leaves us with the option to reserve the right to recall him on the issues we had intended to ask about, and he has effectively agreed to that. Is that correct?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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It is a bad time to find out now, is it not?
Paul McAuliffe (Dublin North West, Fianna Fail)
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One would know Mr. O'Loughlin was new to the position.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Everybody accepts an invitation to the Committee of Public Accounts. Perhaps the word "invitation" is incorrect.
Paul McAuliffe (Dublin North West, Fianna Fail)
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To continue the point, there is one issue I would like to clarify. I have some experience of employment law, and the term "voluntary leave" is a very generic one. Will Mr. O'Loughlin explain what it means?
Paul McAuliffe (Dublin North West, Fianna Fail)
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Okay. I am using only words that Mr. O'Loughlin used himself. If there is a disciplinary process, people can be suspended with or without pay or left in post. If people take annual leave, that must be approved by their employer. There is no statutory voluntary leave. That does not exist in law.
Paul McAuliffe (Dublin North West, Fianna Fail)
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It sounds more like involuntary leave, if Mr. O'Loughlin does not mind me saying.
Paul McAuliffe (Dublin North West, Fianna Fail)
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I am not going to seek to trip up Mr. O'Loughlin in regard to what I just said but I think he needs to reflect on the term "voluntary leave". Perhaps on the next occasion, he might explain it to us in fuller terms, even if there remains a potential legal or employment claim. I do not think he has been best advised on the term. It is not a legal term, or certainly not one with which I am familiar.
To the representatives of HRI, some of the questions we had hoped to ask related to the 58% payment. Will they speak to their knowledge of that, the funding mechanism and the organisation’s role in that regard for IHRB?
Ms Suzanne Eade:
HRI opened a voluntary early retirement scheme and we invited the IHRB to be part of that. We had very strict terms and conditions for the eligibility and what the payments would be. We received some requests for funding, some of which we rejected and others we approved but they were all subject to the same assessment. Obviously, I cannot talk about an employee of a different organisation, but I can say HRI was not aligned with any payment made above the terms and conditions, and that was clearly communicated at a higher level than mine and before I was in the role.
Paul McAuliffe (Dublin North West, Fianna Fail)
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Ms Eade might help me understand that. HRI extended an opportunity to the IHRB to be part of a voluntary severance arrangement.
Paul McAuliffe (Dublin North West, Fianna Fail)
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What form did extending that opportunity take?
Paul McAuliffe (Dublin North West, Fianna Fail)
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HRI wanted to have opportunities for people who had been with the organisation for a long time to leave in a voluntary manner.
Paul McAuliffe (Dublin North West, Fianna Fail)
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That was the essence of the reason for the voluntary scheme.
Paul McAuliffe (Dublin North West, Fianna Fail)
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It was to allow people, on a voluntary basis, to leave the organisation.
Paul McAuliffe (Dublin North West, Fianna Fail)
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HRI agreed to fund that process.
Paul McAuliffe (Dublin North West, Fianna Fail)
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I can understand how there might be a business case for doing that, even beyond purely financial ones.
Paul McAuliffe (Dublin North West, Fianna Fail)
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Was a specific application made to fund a severance payment above the terms?
Paul McAuliffe (Dublin North West, Fianna Fail)
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Does the scheme allow for additional or side payments?
Paul McAuliffe (Dublin North West, Fianna Fail)
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Would HRI be expected to be aware of any additional or side payments made in addition to the scheme that is approved?
Paul McAuliffe (Dublin North West, Fianna Fail)
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Surely from a funding and precedent perspective, HRI would also expect to be made aware if additional payments that were not funded by it were being made.
Paul McAuliffe (Dublin North West, Fianna Fail)
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It was not made aware.
Paul McAuliffe (Dublin North West, Fianna Fail)
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What does Ms Eade mean when she says not formally?
Paul McAuliffe (Dublin North West, Fianna Fail)
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There may have been proof----
Paul McAuliffe (Dublin North West, Fianna Fail)
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Ms Eade was not party to it at that point, but there may have been informal conversations between HRI and IHRB as to whether it would be possible to fund this additional payment.
Paul McAuliffe (Dublin North West, Fianna Fail)
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The existence of additional payments in excess of the approved scheme would undermine the overall scheme-----
Paul McAuliffe (Dublin North West, Fianna Fail)
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It could create a precedent. It could create additional funding demands. Other employees coming down the track later could cite it as a precedent, which could lead to a situation where it would have to be funded if it continued as custom and practice for a long period.
Ms Suzanne Eade:
I get the Deputy's point. I understand where he is coming from. One of the things we did with the Department and the IHRB was to strengthen our service level agreement vis-à-visexpectations. We have already put that into place. I have agreed with the CEO of the IHRB that absolutely nothing like this will ever happen again on our watch.
Paul McAuliffe (Dublin North West, Fianna Fail)
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Mr. O'Loughlin has informed us that a number of parties were informed that the CFO would not be present today. Was Ms Eade informed?
Paul McAuliffe (Dublin North West, Fianna Fail)
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That puts everybody in the room in a difficult situation. Does Ms Eade have any comment on that?
Ms Suzanne Eade:
What has happened is very disappointing. We will leave no stone unturned. Mr. O'Loughlin, in fairness to him, informed everybody immediately. He allowed me to choose who would do the independent review. It is not somebody that has any connection, so far, with the IHRB. It is our internal auditors so I will be very close to understanding what has gone on here with the issue. To be honest, what I really need to do now is to support the IHRB through this awful time for them. That will be my call to action on this.
Paul McAuliffe (Dublin North West, Fianna Fail)
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To some degree, we are at a disadvantage because we do not know how awful it is and we do not know what is coming down the track. Does this pose a significant challenge for Ms Eade in terms of being able to secure votable public funds in order to fund the IHRB into the future?
Ms Suzanne Eade:
The main thing is that we get to the bottom of the issue and get it resolved very quickly. There is an urgency about this. It was not on my to-do list last week but it will be the only thing on my list now for a couple of weeks until we really get this underway. The industry is such a wonderful industry and-----
Paul McAuliffe (Dublin North West, Fianna Fail)
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Is there a possibility that this could include a criminal investigation?
Ms Suzanne Eade:
I do not know. I do not know enough about it yet but what I would say is that this is an industry that everybody works damn hard for, including members of this committee, the Joint Committee on Agriculture, Food and the Marine and the Department. It is an industry worth €2.5 billion. We have to protect it and we have to get to the bottom of this quickly so that there is no lasting damage to the bodies-----
Paul McAuliffe (Dublin North West, Fianna Fail)
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Is there a possibility that public funds might have been misappropriated?
Catherine Murphy (Kildare North, Social Democrats)
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I want to ask some further questions. First, I want to come back to the contract or the lack thereof. Mr. Egan would formerly have worked for the Turf Club and then he ended up being the CEO of IHRB. Is that correct?
Catherine Murphy (Kildare North, Social Democrats)
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Nominations for the IHRB come from two sources, namely the Turf Club and the Irish National Hunt Steeplechase Committee, and there are also some independent people on the board.
Catherine Murphy (Kildare North, Social Democrats)
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Mr. Egan was operating on a contract that was from the Turf Club.
Catherine Murphy (Kildare North, Social Democrats)
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The IHRB is a separate legal entity. Is that correct?
Catherine Murphy (Kildare North, Social Democrats)
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That means that the contract is not valid. A new legal entity has not provided a-----
Catherine Murphy (Kildare North, Social Democrats)
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The very fact that he worked for the Turf Club and then went on to be the CEO of the regulatory body is an issue. Questions were raised previously in relation to the people who nominate members to the IHRB and how independent the board actually is as a consequence of that. For the Turf Club to pay a so-called contribution - not a grant or a loan - towards his exit really undermines the whole concept of separation. Would Ms Eade like to comment on that? She is trying to protect an industry and its integrity, in terms of things like doping as well as the financial side of things. What is her view of the muddying of the waters in this regard?
Ms Suzanne Eade:
I understand the Deputy's points on the contract but I understand now that this has been resolved in the current environment we are working in. Maybe they moved quicker on setting up the body than they were actually ready for at the time. One of the things they have really worked on is the quality of the board they now have in place. They now have two independent people on that board and in terms of governance, that alone will help me. Obviously, the issue that has happened is not something that I would like to see repeated.
Catherine Murphy (Kildare North, Social Democrats)
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Ms Eade is the primary person who engages with the Department. That is where the money comes through. Would she have expected to see a contract of employment, as almost one of the first things that would be negotiated? The CEO is the person who is leading or driving an organisation so would she have expected to see terms and conditions set out and a contract put in place? Was she surprised that was not done?
Ms Suzanne Eade:
Yes, I was absolutely surprised. The transparency is there now, with Mr. O'Loughlin in place. His contract, for example, went through a review with us so that it was aligned to the normal CEO-type contract. I know that has all been addressed now but I agree that it is unusual to find people not having contracts of employment with the right body.
Catherine Murphy (Kildare North, Social Democrats)
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As has been referred to earlier, note 6 in the accounts refers to "other income". There is a comparison here with some of the things we are trying to figure out in relation to the session we will have in the afternoon, in the sense of things being opaque. Would that not immediately jump out as a contribution from the Turf Club?
Catherine Murphy (Kildare North, Social Democrats)
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If somebody was taking a set of accounts out, is this entry there to obscure or what is its purpose? One is supposed to disclose things in order that they are transparent, so that when people are going through the accounts they can see what is what, but describing it as other income seems to be a very opaque way of dealing with it.
Ms Suzanne Eade:
They could have disclosed it differently but the notes would have been approved as part of their audit review, I assume. Perhaps the Comptroller and Auditor General asked for a different disclosure but it did not happen. I do not know. I would not be involved in the preparation of their statutory accounts.
Catherine Murphy (Kildare North, Social Democrats)
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Could the Comptroller and Auditor comment?
Catherine Murphy (Kildare North, Social Democrats)
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I want to talk about the scale of this in the context of protecting the industry.
Obviously this is something that will come out, probably over a period of time. In terms of what has been disclosed to Ms Eade, is it the kind of disclosure that would be very damaging to the industry or is it contained within the IHRB?
Catherine Murphy (Kildare North, Social Democrats)
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What is Ms Eade's first assessment of the scale?
Catherine Murphy (Kildare North, Social Democrats)
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On the Department of Agriculture, Food and the Marine, what role will Ms Eade have, or will it go through the IHRB to respond to what has been disclosed to it?
Mr. Gordon Conroy:
As you say, a Leas-Chathaoirligh, in the first instance it will go to the HRI, but we have already written to it to ask for a full and comprehensive review and that we are kept fully informed regarding all matters over the period of the review. We have also undertaken to do a review of governance of the horse and greyhound fund.
Catherine Murphy (Kildare North, Social Democrats)
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Okay.
Mr. Seamus McCarthy:
We will obviously be looking at it in the course of the audit of the 2022 financial statements. Until the review commissioned by the IHRB is completed we probably will not be completing the 2022 financial statements, but if there are any issues that need to have attention drawn to them, I will point them out in the report.
Catherine Murphy (Kildare North, Social Democrats)
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Where are we with the 2022 financial statements?
Catherine Murphy (Kildare North, Social Democrats)
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Okay. To go back to the lack of any kind of documentation in regard to the Turf Club; is there nothing at all? Was there a cheque written? How did transaction happen?
Catherine Murphy (Kildare North, Social Democrats)
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Right.
Catherine Murphy (Kildare North, Social Democrats)
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Is it that there is not any paperwork?
Catherine Murphy (Kildare North, Social Democrats)
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There is a transaction without an explanation.
Mr. Seamus McCarthy:
Exactly. This is the difficulty. You have touched on it, a Leas-Chathaoirligh; it is the walls between the Turf Club and the IHRB. It is really important that everybody is very clear about them, and the controls that operate to ensure that public business and the management of public money is kept separate from any other transactions. We also have the Turf Club and the steeplechase committee nominating the directors of the IHRB, so it is really important that the control environment is very tight and very clear so that we can give the assurance that is necessary around how public money has been used.
Catherine Murphy (Kildare North, Social Democrats)
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We expect to see a regulator being very independent. In fact, there are accounts that most of us on the Committee of Public Accounts would pay particular attention to. We would not expect the Revenue Commissioners, for example, not to have a clear audit opinion. Regulatory bodies would very much fall into the same category, because they are the ones that are setting the standards for the people that they are regulating. That is why this one is particularly important. That is especially the case in an industry that has a very big impact on the economy in terms of the amount of money that is taken in. As a Deputy from Kildare, I am acutely aware of what a big industry it is, so regulating it is of critical importance in order to give the public some comfort. That is why this is a glaring issue.
Are there are concerns in the Department of Agriculture, Food and the Marine about the fact that people continue to be nominated by the Turf Club? We see the crossover here with the Turf Club making a contribution towards an exit package for someone it did not employ.
Mr. Gordon Conroy:
Generally speaking, governance is of critical importance. The Leas-Chathaoirleach speaks of public funds. That is uppermost in our minds as well. It is important to note that as we pointed out earlier, two independent directors were appointed in January of this year. I think that will strengthen the board and will provide assurances that going forward, governance might be fit for purpose. I would also point out-----
Catherine Murphy (Kildare North, Social Democrats)
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Does Mr. Conroy not think it would be better if they were not nominated by the two entities?
Catherine Murphy (Kildare North, Social Democrats)
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It is required, but should it be dominant?
Catherine Murphy (Kildare North, Social Democrats)
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What is the Department's view on the additional contribution that was made by the Turf Club and how was it communicated?
Mr. Gordon Conroy:
I also want to point out that the Minister does not appoint the board of directors to the IHRB. In terms of the second question on when and how it was communicated, in a conversation between HRI and the chief veterinary officer, HRI informed us of the payment. It was made clear to us that no public funds were used, either directly or indirectly, for the additional payment. Subsequently then - in the audited accounts received for December 2022 - as has been mentioned, it was noted by the Comptroller and Auditor General.
Catherine Murphy (Kildare North, Social Democrats)
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Was the Minister made aware of it?
Catherine Murphy (Kildare North, Social Democrats)
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What was the Minister's reaction?
Mr. Gordon Conroy:
As you can imagine, a Leas-Chathaoirligh, he was very concerned. He subsequently wrote a very strong letter to the IHRB and the Secretary General wrote to the HRI about it. We are dealing with a body that receives about 90% of its funding from public funds, through HRI, so governance and financial controls are critical. That is very much the Minister's view, hence why he wrote to the IHRB to express his concerns about this.
Catherine Murphy (Kildare North, Social Democrats)
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What was the nature of the concerns that were expressed?
Catherine Murphy (Kildare North, Social Democrats)
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What about the contribution from the Turf Club? Was there any reference to the inappropriateness of it coming via that source?
Catherine Murphy (Kildare North, Social Democrats)
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That concludes the business of this session. I thank the witnesses and the staff of the Irish Horse Racing Regulatory Board, Horse Racing Ireland and the Department of Agriculture, Food and the Marine for their work in preparing for today's meeting. I also thank the Comptroller and Auditor General and his staff for attending and assisting the committee today. Is it agreed that the secretariat will follow up and seek any follow up information relating to today's meeting? Agreed. Is it also agreed that we will publish the opening statement and briefing provided for today's meeting? Agreed. The sitting is suspended and we will resume at 1.15 in private session before our public session at 1.30 p.m. for our engagement with RTÉ and the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media.