John Perry (Sligo-North Leitrim, Fine Gael)

From 2002 to 2004, which covered the period in question, I was Chairman of the Committee of Public Accounts. We began our consideration of the matter by examining Chapter 7.1 of the 2002 report of the Comptroller and Auditor General. The committee under Deputy Noonan examined Chapter 9.1 of the 2003 report. During its deliberations, the committee also met the representatives of the religious congregations involved, with officials from the Department of Education and Science and the Office of the Attorney General. The committee considered the matter five times. I received the record in question from the committee yesterday, but it is important to put it on the House's record in the aftermath of Deputy Woods's contribution.

The committee first met the Secretary General of the Department of Education and Science, his officials, a Second Secretary General of the Department of Finance and his officials on 2 October 2003, a meeting that I chaired. Following the first meeting, the Department made available to us a large set of documents supporting the negotiation of the agreement with the congregations. In light of this additional information, a second meeting was held with the Secretary General of the Department of Education and Science, his officials, a Second Secretary General of the Department of Finance and his officials on 4 March 2004, a meeting that I also chaired. To achieve a full consideration of the accountability issues involved, the committee held an in-depth all-day meeting with a delegation from the congregations on 8 July 2004. The delegates appeared as voluntary witnesses.

The committee considered Chapter 9.1 of the 2003 report, itself a consideration of Chapter 7.1 of the 2002 report, and Vote 13 - Office of the Attorney General on 25 November 2004. This meeting was chaired by Deputy Noonan. The consideration of the accountability issues was achieved through an in-depth examination of the three audit objectives covered by the Comptroller and Auditor General's office. The Laffoy inquiry, which had powers of compellability, was running in parallel to the committee's inquiry.

The specific accountability issues covered by the then Comptroller and Auditor General, Mr. John Purcell, followed the chronological sequence of events. They were the State's potential financial liability arising from the redress scheme, the negotiation of the agreement with the congregations, the mandate and the negotiating position, the early negotiations, the agreement in principle, the finalisation of the agreement, the role of the Attorney General's office, the involvement of the Department of Finance, the implementation of the agreement and its concluding perspectives.

The committee's findings and recommendations regarding redress were important. It found that a significant contingent liability existed in respect of victims of child abuse, suffered in institutions where the State had a regulatory or inspection function, who sought compensation through the courts. On 11 May 1999, the Taoiseach issued a public apology on behalf of the State to the victims of such abuse. A redress scheme was launched to facilitate the compensation of victims. The final cost of the redress scheme must be viewed in the light of the substantial costs that would have been incurred in any event if no such scheme had been established and if the cases had been processed in the normal manner through the courts.

The Government's decision on the establishment of the redress scheme was informed by estimates of the scale of the likely claim load by the Department. However, it did not use all the data available in estimating the potential ultimate liability from the scheme and did not update its estimate of the liability as new information came to light. Mr. Purcell was vigorously challenged in committee in 2004. The latest estimate of the final cost of the redress scheme was €800 million, a figure given by the Comptroller and Auditor General. The initial estimates were prudent and sought to take account of the ultimate number of claims that might be filed and the appropriation accounts of the Department for 2002 and 2003, which were certified by the Comptroller and Auditor General. The Department stated, "The amounts involved cannot be determined at this point", yet at the time it was aware of the position.

A mandate, which was approved by the Minister for Education and Science for pursuing an agreement for a contribution from the congregations, was drawn up by the Department, in consultation with the Department of Finance and the Office of the Attorney General. The mandate was to provide to congregations contributing to the scheme an indemnity in respect of all civil actions arising from acts of abuse against people who were eligible to make a claim to the compensation scheme. In return, a minimum contribution of €128 million towards the costs of the redress scheme was expected from the congregations.

The mandated minimum contribution bears little relation to the negotiating position that was favoured by the Department of Finance. Insufficient use was made by the Department of the information held about the likely final liability in establishing the mandate and the negotiating position. The underestimation of the final liability had implications for the negotiating mandate adopted by the State side.

The State negotiating team had no prior knowledge of the ability of the congregations to pay the contribution expected and should have pressed for contextual information about the extent of available assets. It is acknowledged that pursuit to a negotiation strategy based on ability to pay would have had implications for the likely time required for the finalisation of the agreement. The State adopted a negotiating position to seek a 50:50 sharing of the ultimate cost of the redress scheme. The congregations viewed this position as unfair.

The initial offer of the congregations of €50 to €60 million, made in June 2001, was considered unacceptable by the Minister and was not taken to Cabinet. In October 2001, the State's negotiation team believed the negotiations had stalled and underestimated the desire of the congregations to be part of the scheme. Media coverage of the negotiations affected the trust and confidence of the congregations in the State's negotiation team.

A letter issued by the Department on 6 November 2001, supported by two meetings between the congregations and the Minister and Secretary General of the Department, enabled agreement in principle to be reached on all main issues, in particular, the amount of the contribution to be made, the extent to which property already transferred could be included and the indemnity.

Written documentation of the original negotiation mandate of April 2001 exists. The documentation of the meetings with the Minister in November 2001 and January 2002, when agreement in principle was reached, was not good. No contemporaneous minutes were kept by the State. The congregations wrote to the Department in January 2002 to ensure a record of its understanding of what had been agreed was available.

Regarding the question of indemnity, a Government decision in principle to approve the Minister's proposals for a deal with the congregations was made on 31 January 2002. When the Government reached this decision, the detailed terms of the proposed indemnity or the value of the previously transferred properties were not known. Formal documentation of policy positions and the progress of the negotiations left a lot to be desired, as reflected by the uncertainties raised by the Office of the Attorney General. There was a considerable difference of understanding over the agreed extent of the indemnity on the State's side. Between January and March 2002, the Attorney General wrote two letters seeking details of the agreement. Officials in the Attorney General's office were not sufficiently aware of the original mandate agreed in April 2001. This was only clarified by a letter from the Minister to the Attorney General in April 2002.

While resort to the indemnity has been low to date, the court award of €370,000 on 1 March 2005 could lead to a change of approach by some claimants, which would favour recourse to the courts rather than the redress board. A substantial change of this kind could have implications for the ultimate cost of the redress issue. The State's power to enter into such indemnity agreements has been based on the premise that the Executive branch of Government has exclusive powers to do so. The Department of Finance was satisfied that the original mandate for reaching agreement with the congregations was met.

Regarding implementation, the full cash element of the contribution has been paid. The Department has been diligent in pursuing the transfers of property and in following up the counselling and education fund elements of the agreement.

It is important to discuss the recommendations, which is where the real problems arise. The strength of the State's negotiation team should be equal, at all times, to that of those with whom they are negotiating. Departments involved in significant negotiations that commit large amounts of money should provide appropriate training and development for staff expected to serve on negotiation teams.

The Civil Service should aim to ensure its capacity to negotiate on significant issues is maintained at a sufficiently high level to match the negotiating strength of the opposing side. Where required, the facility to import the required specialist skills and expertise should be available. To remove any potential doubt about the State's authority to enter into indemnities of this nature, the committee considered that there may be merit in having the law officers of the State review the appropriate measures, statutory or otherwise for authorising indemnities or material financial commitments of this kind.

The Department of Finance accounting procedures for contingent liabilities should be reviewed and brought into line with good practice. The general approach to identifying, recognising and measuring contingent liabilities should be reviewed and updated in light of the experience of the redress scheme. Guidance on suitable approaches to estimating contingencies should be developed so that departments can estimate and report on contingencies in a more realistic way.

A statement of good practice for the formal documentation of policy positions, negotiating positions and mandated positions should be developed by the Department of Finance. There should be a practice note regarding the involvement of the Office of the Attorney General in major negotiations with a legal dimension, particularly where the legal dimension is complex and where large amounts of money may be involved. Further guidance on negotiation strategies should be developed where more than one department is involved. This should include appropriate standards for the documentation of meetings and key decisions and of the information to be provided to Cabinet. The report of the Comptroller and Auditor General of 2002 details the appalling deal which was negotiated and the lack of accountability, such as notes not being taken by the Secretary General of the Department. It has had an impact on many people, regardless of the transfer and value of the assets of the religious to the State. It was poorly done, there was a lack of knowledge and we are now dealing with the current situation.

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