Thursday, 23 July 2020
Saincheisteanna Tráthúla - Topical Issue Debate
Football Association of Ireland
Last week, I raised several issues regarding State borrowing by the Football Association of Ireland, FAI, in circumstances where there are governance questions to be answered. Since then, I have done as the independent chairman of the FAI asked in his late night statement of last week, and checked my facts and find not only that I must stand over my comments but that other serious governance issues and questions arise.
On the question of the independent chairman's authority to sign the memorandum of understanding, MOU, my understanding is that the first the board saw of the MOU was a draft sent on the morning it was signed. Despite emails from directors expressing concerns about its terms no board meeting was held to consider or approve the MOU before the independent chairman went ahead and signed it that afternoon. At a later date, despite the expressed reservations of a number of the board members the board approved the document. They had little choice but to do so as it had already been signed.
The second question I raised is the assertion by the independent chairman of the FAI that the required "expressed sanction" under Article 3.8 of the FAI constitution was given by the council for the State borrowings by the FAI. My question is how can the chairman make this claim when, as I understand it, his own board has not received let alone approved any terms and conditions or other legal agreement from the State for these loans. Bizarrely, my understanding is that board members are unaware of any legally binding loan agreement with the State, even now, for the FAI borrowings. The MOU expressly stated that it is not a legally binding document. It seems the State has lent and the FAI has borrowed significant funds already on the strength of no legally binding contract. Perhaps the independent chairman has signed a legally binding loan agreement with the State and intends to seek his board's approval at a later date, as he did with the MOU. If he did, I am sure they will be hearing from him. I am led to understand that the board has approved no legal contract, as required by the MOU. How can the independent chairman claim express sanction from the FAI council for a legally binding State loan agreement that either does not exist or, if it does, has not been shown or explained to or approved by his own board, let alone the council members? He points to a resolution of the council which was approved by council on 16 March last by email as evidence of authority to borrow these State funds on behalf of the association. There was no reference whatsoever in the formal notice of, agenda for or resolution in which he refers the meeting to State borrowings. They all refer exclusively to the Bank of Ireland borrowings.
The day before the meeting, due to the Covid crisis, council members were asked to consent to the vote happening by email. The formal request from the interim chief executive office, CEO, of the FAI to council members sets out, with complete clarity, what the council was being asked to vote on. It was sent to all council members and copied to the independent chairman and each board member. In it, the interim CEO says:
Tomorrow's meeting has been called solely to approve the re-financing proposals with Bank of Ireland. There are no other items on the agenda for the council meeting.
It also says: "In order to proceed on that basis, we require a majority of you to consent to approving the re-financing proposal with Bank of Ireland via email." The council members then consented to authorising Bank of Ireland re-financing being approved by email. There was no mention of borrowings from the State whatsoever and so no consent to voting on it. The council sanction required is an expressed sanction. According to the Oxford English Dictionary this means formal permission for something that is clearly and intentionally stated. There is no wording in the resolution passed which gives any sanction for the State borrowings. Not only is there no amount, no repayment date, no interest rate and no other terms outlined, there is no reference at all to borrowings from the State. How could there be if the FAI board has not approved them? The independent chairman claims to have a resolution, as if by magic, formal permission for something that is clearly and intentionally stated. The independent chairman's proposition is clearly a ridiculous one. The email vote was sanctioned only on the basis that it was for the Bank of Ireland re-financing, nothing more.
I thank the Deputy for raising this matter. Further to the comprehensive statement provided by the Minister, Deputy Eamon Ryan, last Thursday on the memorandum of understanding with the FAI, I am pleased to provide additional information in response to the Deputy's query.
At its meeting on 30 January the Government authorised the then Minister for Transport, Tourism and Sport, Shane Ross, to enter an agreement with the FAI to provide additional funding support to the association to address its grave financial crisis. This additional funding would be conditional on the FAI implementing reforms to its corporate governance and financial controls on an agreed timeframe. The MOU signed on 30 January by the then Minister, Shane Ross, and the chairperson of the FAI, Mr. Roy Barrett, enables Sport Ireland to restore funding to the FAI of €2.9 million per annum and to provide additional annual funding of €2.9 million for football development up to 2023. It also provides for a repayable grant of just over €7.6 million to the FAI to pay its licence fee for the Aviva Stadium up to 2022.
The MOU sets out broadly the terms upon which funding support can be provided and is to be underpinned by a series of relevant documents which will set out in detail the terms under which funding will be provided. It was agreed that in line with the established grant for sporting bodies, Sport Ireland would oversee the disbursement of funding to the FAI and would enter relevant legal agreements with the association in this regard. In April, a memorandum of agreement was entered into between Sport Ireland, the FAI and New Stadium DAC, the company which operates the Aviva Stadium, for the disbursement of the FAI's licence fee to New Stadium DAC. The agreement outlines that a recoupable grant will be paid in instalments totalling €2,544,600 annually by Sport Ireland directly to New Stadium DAC on behalf of the FAI in each of the years 2020 to 2022. This grant will be recoupable from the FAI from 2024.
Sport Ireland is awaiting confirmation of the implementation of various reforms by the FAI before putting an agreement in place in relation to the remaining funding approved by the Government. At its most recent meeting on Friday, 17 July, the board of Sport Ireland considered the immediate steps necessary towards restoration of funding to the FAI. The board recognised and endorsed recent progress made by the FAI to improve its governance and internal control environment. The board also agreed that the relevant rule and constitutional changes committed to by the FAI are required to be implemented in line with the MOU prior to grant funding being paid.
As the Minister, Deputy Ryan, informed the House last week, the Minister for Media, Tourism, Arts, Culture, Sport and the Gaeltacht, Deputy Catherine Martin, and the then Minister of State with responsibility for sport, Deputy Calleary, confirmed to the FAI on 9 July that the Government would not reopen for discussion any part of the MOU agreed by the previous Government.
I do not wish to cast aspersions on the good name of the independent chairman of the FAI or anyone else but I am bound by my duties to the taxpayer. These are serious issues. Significant State funds are at stake and clearly the independent chairman of the FAI has significant questions to answer and so too does Sport Ireland.
The essence of the independent chairman's role is ensuring that decisions are made in a proper, open and effective way and in accordance with due process and good governance to the exercise of independence. However, the prior association of the independent chairman of the FAI to the interim executive team makes that impossible. A person cannot pretend to be independent. One is either independent or one is not. Further, the independent chairman has made no secret of his desire for the interim CEO to be put forward for a permanent role. How does that affect his independence when he is interviewing other candidates for the role as a member of the nominations committee?
I respectfully suggest to the independent chairman that he is best advised to do two things: he should recheck his facts and, having done so, he should resign. The Minister of State, Deputy Naughton, has confirmed to me this evening that the State has, through Sport Ireland, lent to the FAI a total of €1,386,480, paid up to date to New Stadium DAC. That has been done without the express authority of the council and without the approval of the board.
Have legal documents been executed in respect of these loans? If so, who signed them, what express sanction was provided by the FAI board and its council to sign such documents and when? These are very serious matters of governance. We were promised a new era in the FAI and, frankly, it is appalling. People are not being told what is going on. As far as I am concerned, the State and Sport Ireland are complicit in an effective coup d'etatwhere people at the top - so-called independents - are dictating what is going on without telling their own board. We have lent money, it seems, to an organisation that did not have the express sanction of its council. That is wrong.
It is inconceivable, in the greatest crisis there has ever been in the history of the world since the 1918 Spanish flu, that the Secretary General of our busiest Department, the Department of Public Expenditure and Reform, seems to have spare capacity to go off and pad out his own CV for the exit strategy to the private sector and take up a position on that board. If he was working in the private sector, that would be fine, but the reality is it is a clear conflict of interest. He is not our man on the board; he is on it in a private capacity. A fiduciary-----
He has a fiduciary duty to the FAI when he is on that board and, at the same time, he is the one providing the money from the Department of Public Expenditure and Reform. The Government should reverse this. In fairness to the former Minister with responsibility, Shane Ross, I did not agree with him much but I agreed with him on blocking that appointment in January.
A nominations committee was formed by the FAI to appoint independent directors to the board of the FAI in line with one of the key recommendations of the governance review group report. Sport Ireland was invited by the FAI to nominate two independent persons to the committee. Its nominees were Olive Loughnane and Peter McLoone. Amrop, a world-leading executive-search firm, was appointed as the search partner to assist with the selection of independent directors. The then Minister for Transport, Tourism and Sport, Shane Ross, and his Department had no role in the nomination of the committee or the selection of the independent directors.
On 8 January, the FAI announced the appointment of three independent directors to the board. Roy Barrett was appointed as the independent chairperson, Catherine Guy and Liz Joyce as independent directors, while Robert Watt, Secretary General of the Department of Public Expenditure and Reform, was appointed by the FAI as the fourth independent director on its board on Tuesday, 21 July. That appointment was made by the FAI in accordance with the association's rule book, memorandum and articles of association. Neither the Minister who now has responsibility for sport, nor the former Minister for Transport, Tourism and Sport, nor their Departments had any role in the appointment.
The FAI announced on 4 July that its AGM has been moved to September and that an extraordinary general meeting, EGM, will take place in the near future to vote on the required changes to the FAI rule book and constitution as the association pushes on with governance reform. While the FAI has not yet announced a date for the EGM, Sport Ireland understands it is most likely to be held in the second week of August. Sport Ireland has not paid out any funding to the FAI in 2020 and no Sport Ireland funding is scheduled to be paid in advance of the FAI's EGM.