The meeting is now resumed in public session. I understand Deputy Clare Daly is substituting for Deputy Pringle. I also understand the Minister is under serious time pressure and we have at most half an hour to deal with this matter.
I thank the Minister for coming before us to discuss the reappointment of the chief executive of Horse Racing Ireland. I understand he has a statement to make on the matter.
Horse Racing Ireland, HRI, is a commercial State body established under the Horse and Greyhound Racing Act 2001 and is responsible for the overall administration, promotion and development of the horse racing sector. Under the provisions of the relevant Acts, the appointment of the chief executive officer is a matter for the board of HRI, subject to the consent of relevant Ministers.
I can confirm that the chairman of HRI wrote to my Department presenting a case for the reappointment of the chief executive and seeking the necessary ministerial consents. Based on the case presented, my Department supported the case and sought the necessary consent from the Minister for Public Expenditure and Reform.
I am advised by HRI that, having received the necessary consent, the board had a full discussion on the matter of the reappointment of its chief executive at its 21 July meeting and again at its 12 September meeting, and that it has approved the appointment. I am satisfied that in this case the necessary statutory provisions have been observed and that the board has decided to reappoint the CEO.
There is an issue, however, with the sequencing of events which, I understand, the chairman of HRI has acknowledged. In essence, I understand that the board had not had a formal discussion on the case for reappointment prior to the submission of the request for consent. This is most unfortunate and it would certainly have been more appropriate in my view to have had such a formal discussion at board level before the necessary ministerial consents were sought.
The appointment of the chief executive of the HRI can only be effected by its board and therefore there could never have been a question of such an appointment being made without board approval. I should also say that the decision of the board was in no way constrained by the fact that ministerial consent had been obtained. The board was at all times at liberty to make alternative arrangements for the appointment of a CEO.
I am also advised by the HRI that the board is satisfied that the best outcome has been achieved for the organisation.
I ask members to be brief and direct in their questions.
I thank the Chairman for agreeing to put this on the agenda today and asking the Minister, Deputy Creed, to deal with it while he was here. I thank the Minister for addressing it.
Some serious questions need to be answered on the procedures that were used for the unprecedented reappointment of the chief executive of a semi-State for a second time. The Minister's opening remarks did not address those issues. In reply to a parliamentary question from my colleague, Deputy Calleary, last July, the Minister for Public Expenditure and Reform, Deputy Donohoe, indicated that he had granted sanction for the CEO of Horse Racing Ireland, Mr. Brian Kavanagh, to be appointed for a third time on the basis of a business case which had been put forward by the board of Horse Racing Ireland. Specifically, the reply to the parliamentary question indicated that a business case had been put forward by the board of Horse Racing Ireland and had been endorsed and supported by the Minister for Agriculture, Food and the Marine, Deputy Creed.
When the chairperson of Horse Racing Ireland contacted the Department of Agriculture, Food and the Marine, did he contact the Minister and indicate that he was acting with the authority of the board of Horse Racing Ireland or did he indicate that he was merely acting as chairperson of Horse Racing Ireland because that is an important distinction? The Act states that the appointment of the chief executive officer is a matter for the board of Horse Racing Ireland, subject to the consent of the relevant Ministers. If the Departments of the Ministers, Deputies Creed and Donohoe, merely received a request from the chairperson of the board of Horse Racing Ireland, but not indicating that the board had discussed the matter and had made the request, it would have been remiss of the Minister, Deputy Creed's Department to grant that without first clarifying that the board had discussed it and requested it and it was not simply the chairperson making the request.
Given what is in the legislation, I would have thought that would have been a matter of protocol for the Department of Agriculture, Food and the Marine and the Department of Public Expenditure and Reform. Can the Minister clarify what was the nature of the request and how that approach was made? That is particularly important.
In my view, this breaks down into two issues. First, there is the issue of the reappointment for the first time of a semi-State CEO for a third period in breach of Government guidelines. I ask the Minister to elaborate further on why this unprecedented step was necessary.
The second part is whether proper procedure was followed in how the request was made, how it was dealt with by Government and how it was dealt with by the board of Horse Racing Ireland. It has been agreed that it was not dealt with by the board of Horse Racing Ireland and that raises significant governance questions. It behoves the Minister to explore that further and ensure that there is proper examination in the context of making sure that when semi-State body CEOs are being appointed, proper procedure is followed at all times. I would like answers from the Minister to those questions.
A number of issues need to be dealt with here. Primarily, we have been told that a business case was put forward. We need to know where that business case is and if this committee can get a copy of it. Second, who developed that business case? From where did it come and who set out the business case? Was it the board or was it simply the chairperson, because there is some concern that the business case was not something that was put forward by the board of Horse Racing Ireland and, indeed, if it exists at all, that it is a very slim document? We must to get to the nub of these issues. Ultimately, my question is whether the Minister was misled by persons in Horse Racing Ireland in regard to this matter.
There are a couple of matters. While I appreciate that the Minister is here, it is unfortunate that he was not here before two days ago when Mr. Brian Kavanagh started his third term. Questions have been raised on this matter previously and we want to know what action the Minister took in accordance with his statutory responsibility under the Horse Racing Ireland Act 2016 to seek information from the board with regard to these matters.
A number of Deputies across parties have written to the Minister directly, written to the Minister for Public Expenditure and Reform, Deputy Donohoe, or tabled questions. To be honest, the information we have got has been completely contradictory and the Minister has not answered any of the points tonight.
I want to know if the Minister engaged in discussions since being made aware that the so-called business case upon which he told us he supported the decision to reappoint Mr. Kavanagh for a third period came from the board. The Minister was alerted months ago that such was not the case. What steps did the Minister take since being informed that the business case did not come from the board in order to make contact with various board members on the matter? We know that board members did not have sight of it.
The fact that the board subsequently ratified the appointment does not really overcome many of those points in terms of the contradiction. If one looks at it, the Minister, Deputy Donohoe, in reply to a parliamentary question that is a matter of public record, stated on 13 July that the appointment had been made by the board but was strongly supported by the Minister for Agriculture, Food and the Marine. I would like to know if the Minister, Deputy Donohoe, is wrong on that because on the same day the Minister, Deputy Creed, was answering another letter stating that the matter was currently under consideration. I would like to know if the Minister, Deputy Creed, had seen the business case in July. What date was that submitted to the Minister? Was it submitted to him by the chairman or by the CEO?
Were the names of the board members on that business case and, if not, did that not strike the Minister as odd? Did the Minister seek clarification from the board that it had sanctioned the business case submitted? The Minister is telling members it is the responsibility of the board - it is - but it is subject to his consent and that of his colleague. Frankly, diametrically-opposed statements were issued on the same day as to what was going on. The Minister should also deal with an issue I find to be rather strange. He told me earlier that he would look into the matter and that it was under consideration. At the same time, however, the Department's website shows a briefing document was prepared by the Minister's officials in May stating he already had sought the permission of the Minister, Deputy Paschal Donohoe, to extend the contract by five years. This document has been on the website since May, but yet in September the Minister wrote to state that it was under consideration.
Many things do not add up here and while I do not wish to hog the issue, it is also of concern that this is the first reappointment of a person for an unprecedented third term. It is a little scary because while it may be stated - I have heard this - that the individual has great expertise, is almost in a unique position and nobody on the planet has the expertise to replace him, there are two problems with that. First, that is the type of argument put forward to support the Olympic Council of Ireland's ratification of the same person in a position for decades unchallenged. If one is dealing with a board, Government guidelines on appointments stating someone should not serve more than seven years are in place for a reason; it generally is not healthy. A second extension was given on the basis of an open advertisement, which allowed for some transparency, but to give a third one without doing that simply is bizarre because it is not healthy. Every organisation needs fresh blood and the Minister should deal with the fact that the Department of Agriculture, Food and the Marine raised concerns about Mr. Kavanagh's pay and about how he is in substantial breach of the salary cap for such positions while staff members in Horse Racing Ireland have had their salaries cut. Was this raised with the board or the chairman when they came to the Minister on these matters? While I am under some pressure of time, the Minister probably will need to come back before the committee because there is a lot of stuff there with regard to questions.
I raised this issue with the Minister by way of parliamentary question. While I believe it was referred on the same day as Deputy Calleary raised his, the replies did not tally by any stretch. Moreover, I was aware that they did not tally and was surprised by the reply. I am familiar with the way parliamentary questions work and it was to the effect that nothing would happen until nearly September and the matter was under consideration. However, the hen had flown the nest at that stage and consequently, I was not informed correctly as to what was happening. I was somewhat disappointed by that because as the Minister is aware, I have a significant interest in the horse racing industry, probably as great as anyone present, and I spent a lot of time dealing with that Bill. I have a view of how this all happened but I will not express it in public. When the contract was put in place in 2001, it was for seven years. The guidelines have been in operation since 1999, although they have been upgraded and refurbished since then with the end-of-years service. However, when the seven-year period was up, the position at least was advertised and that was allowed for by the guidelines. In 2014, did the chairman write to the Department of Agriculture, Food and the Marine seeking an extension of three years? When it was announced, from where did the five years come?
My view is the Minister apparently gave a consent based on a business plan. Who prepared this famous business plan? Was it the case that the board never saw this business plan prior to the Minister giving his consent? After the Minister gave his consent, it was necessary for the decision to go back to the board. However, as the Minister is giving €60 million on behalf of the taxpayers, would the board not appear very ungrateful if its members started to kick up a row in that context? The cart was in place before the horse in this regard. The first hop of the ball is the board should have discussed the business plan in its totality and then made its pitch.
The Minister then would have been obliged to note that this was a third application and that at a minimum, it would be necessary to advertise or do something in this regard. Everyone is saying no one else could do the job and the outgoing chief executive officer undoubtedly had tremendous expertise and so on. However, nobody would let anybody go if that was the case, because I am sure all chief executive officers have many attributes and much acumen acquired over the years.
The development at the Curragh, with all this money brought in from outside, does not say much. A lot of it was brought in on foot of work by the Turf Club and it does not all reside in the great person who is involved. That would be to mislead everybody because many people were involved in that regard. While it is easy to develop the big courses, the same people used to irritate me when they nearly put the small ones out of business. Part of the problem I have with the whole lot of them is that this is still their view. It is always the three or four big courses about which many of those people are concerned, not the small ones for which members were obliged to fight hard here. Thereafter, even when the battle had been won, little wasps or stingers are still being sent across to the unfortunate small courses seeking more money. I will state straight out to the Minister what my problem is with Horse Racing Ireland, HRI. It has received €60 million or more over the years, yet it always came looking to the bloody unfortunate people who owned or had a few old horses in training or people like that. It was always looking for something like that and I have expressed my annoyance at that behaviour.
Perhaps I am a bit stupid - I probably am - but there is something I cannot understand. There was a board meeting today and as far as I am aware, some people still had not seen the business plan. Perhaps they saw it today or they may have seen a summary of it. This is what I think happened: the Minister gave his consent and appears to have advised the Minister for Public Expenditure and Reform to give his consent. That is the sequence of events and the Minister for Public Expenditure and Reform has stated it was necessary for the Minister to give an advice. The only way in which the Minister could have given an advice was based upon a board decision. The Minister could not do it unless there had been a board decision. In accordance with the Act the Minister has quoted, there must be a board decision and it cannot be just one person.
On a related topic, as the Minister has only been in office for three or four months I will give him a pardon but why has the Department of Agriculture, Food and the Marine refused to carry out a value-for-money audit on HRI? It was one of the recommendation of the Indecon report that I debated here until I got sick to the teeth of it. As that was two years ago, why has that not been carried out? We are paying €59 million; let us see such an audit. This matter should also be addressed because that has not been carried out. A number of issues arise in this regard and I believe that whatever happened in 2011 had consequential knock-on effects for this appointment now.
I await the Minister's answers. Most of the questions that need to be asked have been asked but one underlying fact is that irrespective of what has or has not gone on, members are discussing corporate governance issues here in what is supposed to be an era of new politics. The joint committee is far from that title of new politics this evening by virtue of the Minister's presence before it. One cannot open a newspaper or turn on a radio without encountering this story, which is in the top three headlines. The entire integrity and reputation of the Irish racing and thoroughbred industry is in an almost irreparable position at present. How will that be turned around? It is a serious industry that has been dragged through the gutters in recent days. Moreover, this state of affairs has been brought onto the industry by its governing body, which is supposed to be promoting the Irish horse. The eyes of the world will be on the Prix de l'Arc de Triomphe on Sunday and although one should be hoping for an Irish victory and the promotion of the Irish horse, instead there is negativity.
That negativity would be seen in a parade ring in a racecourse, in a bookie's shop or on the street because of this. The people who are supposed to drive and run the racing industry, along with Government officials, have brought this on themselves. How will we reverse this fall and race to the bottom in the integrity and reputation of this very important industry, which I think is irreversible?
I agree with Senator Daly. This is a world class industry. Many thousands of people are employed in it, including small trainers and breeders throughout the country, all of whom contribute to an industry in which Ireland is at the forefront globally. That reputation has been hard won and we should bear that in mind.
Deputy Penrose spoke about the HRI board meeting today. It issued a press statement afterwards stating that it met today to review matters concerning the reappointment of its chief executive, Brian Kavanagh, and elements of the commentary and misunderstandings which have followed. The board expressed regret that this matter has become the subject of public concern. The board refutes suggestions that the chairman intentionally misled the relevant Departments with regard to the chief executive officer, CEO, appointment process. Dating back to 2011, the then board mandated the then HRI chairman to advance outstanding matters regarding the resolution of the CEO’s contract and any related matters. The issue was transferred to the new chairman, Mr. Joe Keeling, on his succession to office in March 2013. The board confirmed that the chairman’s actions and intentions reflected its views regarding the CEO’s contract. It also recognised that a more collegiate approach would have improved the process but its members were fully agreed that there was no intention to inform the Minister incorrectly or that the board’s views had been misrepresented. The board, having endorsed Mr. Kavanagh’s appointment previously, confirmed today that it is satisfied that the best result for HRI and the industry has been achieved with the successful completion of the new CEO contract.
Many of the issues raised today are appropriate and germane to HRI, the chairman, the board and the CEO. In so far as I have a role in this, it is prescribed clearly by law. Under section 21(3) of the Irish Horseracing Industry Act 1994, “The chief executive shall hold office on and subject to such terms and conditions (including terms and conditions relating to remuneration) as may be approved of by the Authority with the consent of the Minister and the Minister for Finance.” The board was under no obligation by virtue of the consent that was given.
When the Department receives a communication from the chairman of a State authority, it is reasonable to assume that the chairman speaks on behalf of the board. That is a legitimate assumption. We received a communication looking for the reappointment of Mr. Kavanagh as a business case. The case presented in a letter outlined several issues deemed to be critical. They are issues on which the board says today its views and the views of the chairman were ad idem. They shared the same objective. The business case was the basis for the reappointment.
I asked the Minister, when the chairperson of the board of HRI approached him and the Department of Public Expenditure and Reform, whether he did so as the chair of the board or on the basis that he was acting on direction of the board? Did he indicate that he had the full backing of the board for what he was doing and that the business plan was being presented with the endorsement of the board?
The first letter that came into the Department was dated 16 December 2014. It stated that the board wished to confirm Mr. Kavanagh as CEO. It is a legitimate assumption to make that when the Department receives a letter from the chairman of a State board, the chairman speaks on behalf of the board, and the letter specifically said that.
Does the Minister feel therefore that the letter misled him?
I have made the point in my opening contribution that I would have preferred if the sequencing of events had been different. The chairman of HRI acknowledges that too. The net point is if the board was so minded that it did not want to appoint any CEO, no Minister could compel it to appoint a CEO. It is a function of the board. The Minister cannot appoint a CEO against the board’s wishes. The competence for the appointment is an issue for the board. Some of the issues raised could be usefully addressed to the board. The communication was that the board wished to confirm Mr. Kavanagh as CEO. When I get a letter from the chairman, I make the legitimate assumption that the chairman speaks on behalf of the board.
It would seem fairly clear that it was on behalf of the board rather than the chairperson.
That was in 2014 and there has been other correspondence.
The Minister has clarified that and it was a key question. Was it the case that when the first renewal was given to extend the term from seven to 14 years, there was a condition attached to it that under no circumstances should there be a further renewal? If that was the case, the Minister has indicated that in its press statement HRI says the board had mandated a previous chairman of the board to act on its behalf to deal with the CEO’s contract, that mandate lapsed and responsibility for it fell by default on the next chairperson. If it was the case that there was a stipulation on the first renewal of the CEO’s contract that it should not be renewed again, what is the Minister’s view of what the board is saying today, that it mandated a previous chairperson and that mandate automatically defaulted to the next chairperson, who then came to the Minister, and to the Minister for Public Expenditure and Reform, without first getting the consent and agreement of the board for a business plan or authorisation to go to the Minister, against the direction given alongside the second renewal?
In part of the statement the Minister read out today there was the line that there was no intention to mislead. I interpret that as meaning that some people were misled and the Minister seems to be one of them. Is that the case?
The misleading has really to do with the sequencing as to when the letter arrived whether the board had discussed it.
Is this the new board as opposed to the old one?
It is the current board. They are good questions but it would be appropriate to address them to the board, the CEO and the chairman. I have very specific and limited roles, as does the Minister for Public Expenditure and Reform, and they have to do with assenting to, or otherwise, the communication of the board in respect of the appointment of a CEO. I received a communication which I assumed, when it came from the chairman, was coming on behalf of the board.
The Minister says the business case was in a letter. There was no developed business plan or case about what work had been achieved, what needed to be done now and projections, or how or why this person was the only one who could possibly carry out this work. One would expect that when a person is being appointed to a position which is so highly paid by a board and organisation that receives huge sums of State money, the chairperson would do more than merely send a letter for that person to be reappointed. I appreciate the decision was the board’s responsibility but it could not have done so without the support of the Ministers concerned.
The letter referred to a five-year development plan for the industry which is a public document. My recollection is that its ambition is to grow the industry from €1.2 billion to €2 billion. That involves critical infrastructure like the redevelopment of the Curragh racetrack with an investment of €30 million, with considerable funds from the private sector. There is a tripartite approach between the Turf Club, HRI and private funding. The case was made that the CEO was critical to securing access to the private funding element. There is the question of negotiation of media rights. A case was made in the correspondence about continuity at management level given the relatively recent retirement of the chief financial officer and several other things, including Mr. Kavanagh’s membership of several reputable international racing bodies, which would have been important to the reach of the Irish racing industry. Whereas the letter referred to those matters in bullet points it also referred to the five-year development plan.
There are several issues that we probably need to address to the board and the chairman in due course. We will not get all the answers here tonight.
The Minister will need to come back.
My role is extremely limited, as is that of the Minister for Public Expenditure and Reform. It is not to appoint, it is to agree to a recommendation from the board to appoint. The communication to me was always with the inference that the communication reflected the views of the board. That is the sequencing issue.
Senator Daly mentioned the industry’s reputation and this is not doing it any good. Everything is not rosy in the industry. Many trainers are exiting the business saying they cannot make ends meet. Deputy Penrose made the point about a value for money review. Surely that would have been a critical thing for the board to have done, when a CEO was starting his third term, to see whether we were getting value for the public money being spent. I am hearing many things for the first time tonight. How did the board evaluate the CEO’s performance and how was the €59 million spent before starting his third term? We are entitled to know that. The Minister has said there were reasons for the feeling that he was indispensable. No one is indispensable although I accept that reasons were given to the Minister.
At the lowest level of the industry people are struggling and significant trainers have gone out of business in recent months and even one last week. How was the CEO's performance evaluated by the board? To say he is essential to the development of the Curragh racecourse is not enough. There is more to the industry than the Curragh.
It is important to bring the board and the chairman in here shortly.
I take the Minister’s comment in good faith that when he received correspondence from the chairman he assumed it was from the board. If he had known then what he knows now, how would he have acted? Would he have done anything differently?
I would have told the chairman to get the imprimatur of the board, if he did not already have it, before coming to look for assent. As I said in my opening remarks, I would have preferred it if the sequencing had been different. This issue is addressed by the board in today's statement in so far as the board states that its interests and views were reflected in the reappointment and in the chairman's actions.
If the Minister knew then what he knows now, would he have gone back to the board? I assume he would not have given the sanction without seeking further clarification.
As I have said, the issue is the sequencing rather than the appointment. The appointment was made on the basis of the business case.
I call Deputy Daly, to be followed by Deputy Penrose.
These are critical issues. I think the Minister, for whatever reason, is misinterpreting his responsibilities under the Act.
My responsibilities are clearly outlined in the law.
They are. Exactly.
That is the only responsibility I have.
The Horse Racing Ireland Act 2016 inserted a new section 29A in the primary legislation, providing that the Minister shall have the power to request information from Horse Racing Ireland, to give directions to Horse Racing Ireland and to require Horse Racing Ireland to carry out functions in line with "compliance with the Code of Practice for the Governance of State Bodies". It is just not the case that a State body can do whatever it likes without oversight. While the Minister is absolutely correct when he says he cannot compel Horse Racing Ireland to appoint anybody, equally it cannot appoint anybody without the Minister's approval.
Yes, but-----
Can I just finish the point?
With due respect, when I receive correspondence from a chair stating specifically that a board wishes to confirm the reappointment of a CEO, surely it is legitimate to assume that the correspondent is speaking for the board.
The Minister has said that. I have noted his assumption that this statement was being made in such a capacity. We know that this happened in July. We also know that later in July, the Minister was given correspondence and it was put to him in parliamentary questions that the business case was not submitted by the board and the board had not seen it. A parliamentary question was tabled on 21 July by Deputy Donnelly. I want to know what steps the Minister took to rectify the matter between the time he thought the board had made this appointment based on a business plan and the time he was informed that the full board had not seen the business plan. The Minister wrote to me earlier this month to tell me that the matter was still under consideration. Bearing in mind that the Minister was made aware in July that there were problems and that this was not the board's plan, I would like to know when he gave his consent for the reappointment. How can he reconcile his statement that he made his decision on the basis of a letter he received from Horse Racing Ireland with the fact that his own departmental officials gave him a briefing in May of this year saying that a compelling business case had been received from the chairman and the fact that the Minister had sought the consent of the Minister, Deputy Donohoe, at that stage to extend the contract by five years? When was the decision made? The briefing was in May. We know what happened in July. The Minister was saying in September that a decision had not been made. What is the given date in this regard?
I want to make it clear that the decision was communicated to the chairman of the board prior to the meeting of 21 July. I had no correspondence to the effect that this matter had not been brought to the attention of the board. The net point is that the appointment is a matter for the board.
A parliamentary question was tabled by Deputy Donnelly on 21 July. It may not have been a letter. The parliamentary question raised the matter of the board not being consulted. I am not referring to the Minister personally.
If my recollection of the dates is correct, the board confirmed the appointment of the CEO at its board meeting on 21 July.
When did the Minister ratify that?
Prior to that date.
The Minister was telling me in correspondence that he was looking into the matter in September.
We gave our assent prior to that.
Consent was given prior to July.
The board would not be in a position to make the appointment without the assent of the Minister. The board proceeded to make the appointment on 21 July.
On what date did the Minister approve-----
I do not have the exact date-----
Sorry, I am not deliberately-----
-----but it was prior to that.
Can the Minister give a rough date?
The Deputy has referred to correspondence from September. If these matters were brought to my attention, then we would be looking at them. Our decision was-----
Is the Minister saying that when the question was tabled on 21 July, it was too late because the board had already made the reappointment?
We would not have been tracking whether the board was meeting on 20, 21 or 22 July. We replied to the question in good faith. We did not have any correspondence.
No, the Minister said in reply to the question that the matter of the reappointment was under consideration in September.
If the board had made the decision on 21 July, how could the Minister say that it was still under consideration in September?
I do not have the correspondence in front of me but the board made its decision on 21 July.
I have my own observations and views on how this whole shambles has arisen and it goes back to the 2011 contract. Issues arose with that contract and there was an amount of toing and froing. The whole business was never finalised. Is that the position? The Minister knows what follows from a legal standpoint. Issues arose which fell into abeyance in the period when there was a change of chairman. One chairman was dealing with those issues and then they were passed over to his successor.
The second issue that arises is the business case, although I accept that the Minister is not in a position to answer many of the questions that arise. This was the third appointment. When one becomes a county manager, one holds the position for seven years. After that, with a begging letter and every reference possible from local authority members, one might hold the position for a further three years. That is ten years, maximum, for a county manager. County managers are people who run large corporations, so to speak. In order to substantiate this reappointment, surely a business case would have had to be made for going outside the governance rules as laid down by the Department of Public Expenditure and Reform, which were only updated recently. Those rules are now even more strict, rigorous and vigorous than before. This is really the issue, namely the disregard for the guidelines that are in place. Regardless of who is in the position now, this has significant implications for corporate governance and for the Department's guidelines going forward, if they can just be disregarded in this fashion.
I call on Deputy McConalogue to wrap up.
Ultimately, this comes down to the issue of appropriate corporate governance. I asked the Minister a question earlier and he has not yet answered it. When the first renewal of the CEO's contract was agreed in 2011, was a direction given that there would be no further renewal?
My understanding, although I am open to correction, is that there was a reference which stated that nothing in the contract could be relied upon for a further extension.
Okay. A key issue is-----
That would not preclude the possibility of-----
-----whether it was made clear. We would need further detail in this regard because it is an important point. We need clarification on whether it was made clear in 2011 that there would be no further renewal. The Minister said earlier that there are numerous good questions that we must put to the board of HRI and I agree with him on that. I also have a good question for the Minister, whose Department gives €60 million per year to the board of HRI to administer and market the industry. Does the Minister think it was appropriate governance for the board to mandate a previous chairman to deal with all matters regarding the CEO's contract and that this mandate would simply be inherited by a subsequent chairman? If it was the case that it was stipulated on renewal of the contract that no further renewal would be awarded, then it was unacceptable for the chairman to approach the Minister and present matters as if he was acting on behalf of the board - which is what the Minister said - without having brought the issue to it. The previous contract renewal indicated that there would not be a subsequent renewal. I ask the Minister to give his view on the appropriateness of that.
As I understand it, there was a reference in the 2011 contract which stated that the fact that there was a contract could not be relied upon with regard to another contract. In 2014, we received communication from the chairman stating that the board wished to reappoint the CEO.
That is, we received a communication purportedly from the board seeking the reappointment on the basis of a business case. The 2011 contract, as I understand it and am advised, stated that nothing therein could be relied upon as guaranteeing an extension.
The key question to be answered by the Minister, as someone who gives €60 million a year to Horse Racing Ireland, is whether he believes this was appropriate governance? Does he believe it was appropriate that the matter of the CEO's contract was mandated solely to one individual, the Chairperson, that the mandate was then simply inherited by the next chairperson and that that chairperson then engaged with the Minister in the way that he did without reference to his own board? Does the Minister believe that that was the type of governance required?
The issue in respect of the communication with me primarily has to do with the sequencing of events. I stated in my opening remarks that I received a letter purporting to represent the board's viewpoint before the board had been consulted. Senator Daly asked me this question as well. I would have preferred if the board had been consulted and that then I had been asked for my assent. The assent would have been given on the basis of the business case. There are many questions here, but my function and the function of the Minister for Public Expenditure and Reform concern assenting to or consenting to the request of the board. The business case made was the rationale behind the decision made.
Without wanting to cut across anyone, there are a number of questions and we need to get the board and the chairman of Horse Racing Ireland in before us shortly to answer a number of specific questions raised here tonight. We are probably going around the house a bit at this stage.
While we have the Minister here today, a key question is whether he believes how this was handled by the chairperson of Horse Racing Ireland was-----
How many ways can I answer it? I would have preferred-----
Does the Minister believe it was acceptable governance?
I have stated I would have preferred if it was different.
The Minister has repeated-----
Deputy Kenny and Deputy Daly, I would like to wrap this up now.
I wish to make one point. The value-for-money analysis of Horse Racing Ireland was referred to earlier.
I do not have any problem with that.
The Minister stated that that was a very good question for the board. Why did he not ask that question of the board before agreeing to appoint the new CEO? If there were questions there to be asked, which he now agrees were valid questions, why did he, when he states there was a business-----
A value-for-money report is a very different thing to a business case for the reappointment of a chief executive.
There was no business case. The Minister has told us there was no business case. He told us there was a letter about the five-year plan. The five-year plan is not a business case for the appointment of a CEO. The five-year plan is about the entire industry.
I call Deputy Daly, but ask her to be brief.
That gets to the heart of it. We have repeated correspondence stating the decision was ratified by the Department based on a business plan from the board. The Minister now knows that it was not a plan from the board. However, he seems to be saying that it was not a plan but that they wanted Mr. Kavanagh, that that was their strategy - they wanted him. However, that does not justify why the position was not filled by way of open competition. Was there a justification? In fairness, the Minister's officials wrote to Horse Racing Ireland in March of this year and explained that the salary was way above the salary cap. Was there a justification in the business plan for why this individual would not only get a third term without there being an open competition but would get it on a salary in excess of the cap, when the Minister's officials had already warned about it? Was that justified? If it was not justified, why did the Minister not use the opportunity to pipe up on behalf of the taxpayer and say that it was not really the way we want things done in this day and age? While I absolutely agree that there are questions for Horse Racing Ireland, there are questions for the Minister and his Department as well.
I ask the Minister to conclude now.
For the record, when the contract was being renewed, we did amend it in respect of entitlement to bonuses and certain other features.
I thank the Minister and his officials for attending to discuss the two different issues dealt with today.
We will suspend for a couple of minutes before coming back in private session when we will deal with the course of action to take on this particular issue.
