Thursday, 27 October 2016
Horse Racing Ireland
6. To ask the Minister for Agriculture, Food and the Marine his views on corporate governance at Horse Racing Ireland; his plans to institute an inquiry into corporate governance at the organisation in the past five years; and if he will make a statement on the matter. [32195/16]
This question also relates to Horse Racing Ireland. I heard the Minister's reply to Deputy Martin Kenny. It suggested that, because the horse racing industry employed a lot of people and produced accounts, we should almost not be asking questions, which I found shocking. As a result of the process involved in the appointment of the CEO, as well as other allegations about staff and other matters, is it not time to have an inquiry into corporate governance in the organisation in the past five years? What has the Minister done to investigate the matter further?
Horse Racing Ireland, HRI, is a commercial State body established under the Horse and Greyhound Racing Act 2001 and responsible for the overall administration, promotion and development of the horse racing industry. The Deputy will be aware that the board of HRI has its own obligations in relation to compliance with corporate governance standards. In this context, I understand HRI operates a formal internal audit function which is outsourced to an external third party firm. I understand that, in its most recent corporate governance internal audit review in September 2015, HRI received a satisfactory assurance rating and that internal auditors did not raise any matter of significant concern. It is also the case that HRI publishes annual accounts which are laid before the Houses of the Oireachtas each year. These accounts are subject to external audit by the Comptroller and Auditor General and I expect HRI to engage constructively in that process.
I also understand HRI has arranged, through its legal advisers, for a detailed briefing and training on the new code of practice for the governance of State bodies which was recently published by the Minister for Public Expenditure and Reform. The Indecon report commissioned by my predecessor in 2012 reviewed certain aspects of governance and financing of the horse racing sector. Many of its recommendations in relation to governance have been taken on board in the Horse Racing Ireland (Amendment) Act 2016 which was finalised by my predecessor earlier this year. My Department has arrangements in place to monitor the activities of State agencies. In this context, it is also working on the development of a new formal written framework to formalise performance and compliance monitoring to reflect the provisions of the new code of practice.
HRI is a public body which is and will continue to be subject to significant levels of internal and external scrutiny, which is as it should be. I am aware that there have been issues relating to the sequencing of events in the recent appointment of the CEO. These have been acknowledged by the chairman and I have received written assurances that arrangements will be put in place to ensure the development by the board of a robust succession plan before the expiry of the current contract.
At the committee we heard members of the board state they were going to initiate the provision of training on corporate governance, the implication being it had not been provided before. Anyone who attended the meeting and watched the performance of board members could see that, while they were certainly interested in horse racing, their level of professionalism or, rather, lack of, was utterly shocking. There are huge amounts of public money at stake in this organisation. The figure is almost €250 million since 2011. The point has been made that, while the people on the board are clearly committed to the development of horse racing, it is a very small community. Opportunities may arise for many of the people concerned or their projects to benefit from some of the moneys that come through Horse Racing Ireland. I am not suggesting that is the case, but we need to be assured that it is not. To my mind, the only way to receive that assurance is through having a proper inquiry into corporate governance at HRI in the past five years. We would learn a lot and receive more than the assurance that has been provided, given the nature of the horse racing community.
There are other issues about staffing that were not aired at the committee. There were allegations about payments being made by the CEO, probably without the knowledge of the board, to settle workplace claims. There are the concerns about the high turnover of staff in HRI, bullying and so on. All of these matters have to be investigated.
On the amount of money at stake, it is substantial for a substantial industry which is estimated to be worth €1 billion and has approximately 14,000 employees. There is an accountability structure in place, with its audited accounts being subject to verification by the Comptroller and Auditor General. As I said to Deputy Martin Kenny, it is not a case of handing over funds without there being any accountability on the part of the board. In the context of the debate on the appointment of the CEO, at the committee the chairman of the board did acknowledge that the process was not as it should have been. That is the view of my Department and it is also mine. The board expressed the view that the outcome, albeit achieved in a rather circuitous manner, was the one it had desired and wished for.
I also made the point to Deputy Martin Kenny that the industry was very mobile. If one looks at the reports on the horse racing industry, it is to be found in every county in the country. It is important that we support it. It is not simply about handing over money that will find its way into the pockets of the big players. I acknowledge - this point was also raised by Deputy Martin Kenny - that there are issues around the viability of the industry at lower levels for those involved in point to point fixtures and breeding horses, etc. Many of them live for the dream, but to make it a reality, perhaps more resources must be provided at that level. The board could reflect on this issue. Collectively, we could make a contribution to its deliberations on it by expressing our concerns about that side of the industry. It is a great industry that provides great employment. It is a global leader owing to the people, the human capital, involved in it. The board has taken the lead in that respect, but it did not have its finest hour in dealing with this issue.
I have not seen any evidence to suggest the public moneys have not been used for horse racing projects and I am not suggesting it. However, given that the board is made up of people who have a stake in the industry and do not have professional expertise in corporate governance, what assurances do we have that some interests are not being promoted over others? That is the issue. Some projects, sweetheart deals or pet causes - we can call them what we like - are being pushed, while the greater good of the horse racing industry, in its broadest sense, is not being promoted. I am not the only one who has raised that question or concern. Many people with a real commitment to horse racing and who are involved at various levels are also raising it. There is also the high turnover of staff. A huge number of people are being lost and there are serious workplace claims and so on. Something is not right in the organisation. To me, the best way to protect all jobs and all of the good people who want to be involved for the right reasons is to have an independent inquiry into corporate governance at HRI in the past five years. That would give us a good picture of what is really going on.
In respect of all of the accusations the Deputy raises, it is interesting to note that the members of the board represent the various interest groups in the industry, including owners, breeders and staff. The full range of sectoral interests in the industry is reflected in the board. In theory, this should give rise to an appropriate consideration of all of the competing interests for scarce resources. I referred to the geographical spread of the resources provided to improve racing facilities for punters. This is manifestly broad in horse racing. Every industry with the significance of horse racing needs a flagship. The IRFU and the FAI have the Aviva stadium, the GAA has Croke Park and the horse racing industry also needs a flagship venue which will be the redeveloped Curragh racetrack. However, investment is spread across the country.
The various constituent members of the board are best positioned to articulate the competing demands for funding, of which there are many. We discussed the local issues of concern raised by Deputy Martin Kenny, on all of which the board, in its wisdom, is obliged to reflect. In terms of the decisions it makes in the allocation of funds, the audited accounts are available for public scrutiny and subject to commentary by the Comptroller and Auditor General. There are appropriate checks and balances. The alternative, that the Department micro-manage the industry, would not be appropriate. The composition of the board reflects the various elements of the horse racing industry. Horse Racing Ireland has, by and large, maintained Ireland's international standing as a leading player in the horse racing industry.