Department of Education and Science — Chapter 7.1 Residential Institutions Redress Scheme (resumed).

Mr. John Dennehy (Secretary General, Department of Education and Science) called and examined.

Witnesses should be aware that they do not enjoy absolute privilege. Members and witnesses' attention is drawn to the fact that from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons who are identified in the course of the committee's proceedings. These rights include the right to give evidence, the right to produce or send documents to the committee, the right to appear before the committee either in person or through a representative, the right to make a written and oral submission, the right to request the committee to direct the attendance of witnesses and the production of documents and the right to cross-examine witnesses.

For the most part, these rights may only be exercised with the consent of the committee. Persons invited before the committee are made aware of these rights and any person identified in the course of proceedings, who is not present, may have to be made aware of these rights and provided with the transcript of the relevant part of the committee's proceedings if the committee considers it appropriate in the interests of justice.

Notwithstanding this provision in legislation, I remind members of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House, or an official, either by name or in such a way as to make him or her identifiable. Members are also reminded of the provisions of Standing Order 156 that the committee should also refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits or objectives of such policies.

I invite Mr. Dennehy, Secretary General of the Department of Education and Science, to introduce his officials.

I am accompanied by Mr. Tom Boland, chief executive officer, Higher Education Authority and former head of our legal services, Mr. Paul Kennedy, principal officer, and Brian Duggan, principal officer.

I invite Mr. David Doyle, Department of Finance, to introduce his officials.

Mr. David Doyle

I am accompanied by Mr. John Conlon and Ms Anne Nolan.

Chapter 7.1 of the Comptroller and Auditor's General's report reads:

7.1 Residential Institutions Redress Scheme

Background

Approximately 29,500 people, born since 1930, were committed by the courts to industrial and reformatory schools. In addition, significant numbers, which cannot be accurately quantified by the Department of Education and Science (DOES), were committed by parents.

Widespread concern was expressed in the 1990s about the extent and effect of child abuse at institutions supervised by the State in previous decades. Such abuse included sexual, physical, emotional abuse and neglect.

The Taoiseach, in May 1999, apologised on behalf of the State to the victims of abuse and announced the establishment of a Commission to inquire into this matter (the Laffoy Commission).

The Laffoy Commission was established by legislation in 2000. The Commission operates either by affording victims an opportunity to tell their story without investigating their allegations or to have their allegations investigated.

Addressing the redress issue

In October 2000, the Minister for Education and Science (the Minister), in a memorandum to Government, outlined his general policy position in relation to redress.

The principal points made were that:

·Requiring victims to pursue claims for compensation through the courts would not be consistent with the desire, evident in the Taoiseach's apology, to face up to and deal with the issue of past child abuse

·He was of the opinion that there was a compelling case for setting up procedures outside the court system for dealing with claims from victims of abuse, in order to avoid significant delays and costs in litigation

·Victims could face great difficulties in bringing claims through the courts and it was appropriate to offer a quicker and less demanding process for the award of monetary compensation

·The Government was committed to providing the necessary funding, with a contribution from religious congregations if one could be agreed.

In addition, Judge Laffoy had, by this time, expressed concerns that victims would not co-operate with the Commission in the absence of a compensation scheme.

The Government, following consideration of the matter, agreed, in principle, to establish a redress scheme. It was envisaged that the scheme would compensate people who as children were victims of abuse while resident in institutions where the State had regulatory or supervisory functions.

Compensation would be paid on an ex-gratia basis, without establishing any liability on the part of State bodies but subject to a claimant establishing to the satisfaction of the compensation awarding body that he or she had suffered abuse and resulting damage.

In response to the Government decision the Conference of Religious in Ireland (CORI) indicated their willingness to become involved, in principle, with the Government in setting up and implementing the proposed scheme. In November 2000, the Minister and the religious congregations agreed to enter into formal discussions on the details of the congregations' participation in the compensation scheme.

In February 2001, the Government approved the drafting of the Victims of Child Abuse Compensation Tribunal Bill to provide for a compensation scheme, which would validate claims in a non-adversarial way. At that time, the Government noted that discussions were to continue between the State and the religious congregations with a view to securing agreement on a meaningful contribution to the compensation scheme in advance of the publication of the legislation.

The Bill was enacted into law, on 10 April 2002, as the Residential Institutions Redress Act, 2002 (the Act) and provides for the establishment of the Residential Institutions Redress Board (the Board) and the making of awards to persons who, as children, were resident in certain institutions and have or have had injuries that are consistent with abuse received while resident in the institutions.

In addition to claims from residents of DOES supervised institutions, former residents of certain institutions not under the supervision of the DOES can also apply for redress.

The redress scheme extended to former residents of 123 institutions regulated by the State. 87 of these were under the supervision of the DOES.

82 of the 123 institutions were managed by religious congregations represented by CORI. The remaining 41 institutions were not involved in the negotiations about a contribution nor will they benefit from any indemnity.

In January 2002, the Minister had announced that agreement, in principle, had been reached with the congregations about the level of the congregations' contribution. Further negotiations took place culminating in the approval by the Government, in June 2002, of an agreement under which the congregations would make a contribution of €128m inclusive of some past contributions. In return, the State agreed to indemnify the congregations in respect of all cases where a person would have been eligible to make a claim under the Act, with the indemnity to apply to those cases where litigation was commenced within the following six years. On 5 June 2002, an Indemnity Agreement (the Agreement) to give effect to this was signed between the Minister, the Minister for Finance and eighteen religious congregations.

The Redress Scheme

The Act provides for the making of awards to assist in the recovery of people who have injuries that are consistent with abuse received while resident as children in certain State regulated institutions. The Board has been established to determine awards while a Residential Institutions Review Committee (the Review Committee) has been established to review them.

The Board has two main functions:

·To make awards in accordance with the Act

·To make all reasonable efforts to ensure that those who were resident in the institutions listed in the Act are made aware of the Board's existence so that they may apply for redress.

In order to qualify for redress an applicant must establish, before the Board:

·His or her identity

·That he or she was resident, while under the age of 18, in one of the institutions listed in the schedule to the Act

·That he or she was abused while so resident and suffered injury

·That the injury is consistent with abuse suffered while so resident.

Applications must be made within three years of the establishment of the Board on 16 December 2002.

In a case where a person, who would have qualified as an applicant, dies after 11 May 1999 the spouse or children of that person may make an application on his or her behalf. The Board may, in exceptional circumstances, extend the time limit.

The Board makes a preliminary decision as to whether an applicant is entitled to an award. It requests its medical advisers to prepare a report on the injuries received by an applicant and then makes an award in accordance with established redress bands.

If the applicant accepts the award, then he or she must agree in writing to waive any right of action against a public body or a person who has made a contribution under the Act.

An award may be paid by way of lump sum or in instalments, if an applicant requests this and the Board agrees to the request, or in circumstances where, having heard submissions, the Board directs that the award should be paid in instalments or otherwise than by way of a lump sum.

The Board may make an interim award, not exceeding €10,000, where it makes a preliminary decision that the applicant is entitled to an award, that the award is likely to exceed the amount of the interim award and is satisfied, having regard to the age or infirmity of the applicant, that the interim award is appropriate.

An applicant has one month to accept or reject an award or to submit the award to the Review Committee, which is wholly independent of the Board.

An applicant may submit any of the following matters for review:

·The rejection of an application because the criteria laid down in the Act have not been established

·The amount of an award made by the Board

·A direction by the Board that an award is to be paid in instalments, or otherwise than by way of a lump sum, to an applicant deemed incapable of managing his or her own affairs.

Objectives and Scope of the Examination

The principal objectives of the examination were to:

·Estimate the State's contingent liability arising from the establishment of the redress scheme

·Review the negotiation of the Agreement with particular reference to the information, advice and arrangements for approval of the acts of negotiation

·Review the implementation of the Agreement concluded as a result of those negotiations.

It is outside the scope of my audits to comment on policy issues. It is, however, within my remit to examine, and form a view on, the quality of information underlying key decisions in the formulation of a policy.

The scope of the examination included a review of files, including notes of meetings, legal advice, correspondence and records of decisions. Discussions were held with officials of the DOES and the Redress Board.

The Contingent Liability for Redress

The extent of the State's liability for redress is dependent upon a number of contingencies and future events. Consequently, any estimate of future liabilities arising out of the redress scheme is made in circumstances of uncertainty, particularly since the Board has not yet functioned for a full year.

The principal uncertainties inherent in any estimation of liability surround:

·The potential population of claimants

·The number of those potential claimants who will apply for redress

·The extent of any awards which depends, in turn, on the nature of abuse suffered by applicants, its impact and consequences

·The extent of costs which may arise.

The liability outlined in this section is, therefore, a contingent one and can only, due to these uncertainties, be treated as a preliminary indication of the extent of the liability.

The possible cost of redress

Between the commencement of the scheme in December 2002 and the end of July 2003 the Board had received 1,662 applications. Applications have been made at a rate of approximately 50 per week to that date and 48 had been rejected as not coming within the terms of the scheme.

The ultimate cost of the scheme to the State will be a factor of the average award made, the number of valid applications and the costs. None of these can be estimated with certainty at this stage.

Level of awards

An Advisory Compensation Committee was established by the Minister in 2001 and brought together expertise from a range of disciplines, including legal, medical, psychiatric and psychological. The Committee considered the experience in other countries in the course of its deliberations. Its report "Towards Redress and Recovery", known as the Ryan Report, was presented to the Minister in January 2002 and included, inter alia, recommendations for the assessment of redress.

The Committee recommended that redress should be assessed under four headings with a weight to be attached to the different elements in accordance with Table 7.1.

Table 7.1 Weighting scale for evaluation of severity of abuse and consequential injury - Severity of injury resulting from abuse

Constitutive

Severity of abuse

Medically verified physcial/ psychiatric illness

Psycho-social sequelae

Loss of opportunity

Weighting

1-25

1-30

1-30

1-15

The Committee recommended that, having regard to the cumulative rating, the amount of redress should be determined in accordance with redress bands set out in Table 7.2.

Table 7.2 Amounts payable for weightings allocated

Redress Band

Total weighting for severity of abuse and injury/effects of abuse

Award payable by way of redress

V

70 or more

€200,000 to €300,000

IV

55-69

€150,000 to €200,000

III

40-54

€100,000 to €150,000

II

25-39

€50,000 to €100,000

I

Less than 25

Up to €50,000

In December 2002, the Minister, in regulations made under the Act, incorporated the recommendations of the Ryan Report into the redress scheme.

Having determined an award under these redress bands, the Board may make a further payment of up to 20% of the assessed award in exceptional circumstances and may also make a payment for medical expenses and reasonable expense incurred in the making of an application (e.g. legal fees).

Estimates of average awards

The Redress Board commenced hearings in late April 2003. Only a limited number of cases have yet been heard and it may take some time for a definitive trend to emerge. Up to the end of July, the Board had made offers in 108 settlement cases and 25 awards in hearings. Awards ranged from €10,000 to €200,400.

The average award was just over €84,000.

If allowance is made for a variation, in future awards, of 15% of the average awards made to date this would place awards in the range €71,400 to €96,600.

By way of comparison this trend is borne out by the level of average awards from three of the compensation schemes which operated in Canada where awards made were, broadly speaking, based on matrices similar to that recommended by the Ryan Report and adopted in the Irish Regulations.

The relationship between average award levels and the maximum potential award in the three Canadian schemes is set out in Table 7.3.

Table 7.3 Claims and awards in Compensation Programmes relating to Institutional Child Abuse in Canada, 1993 to 1999

Schemes

Final number of claims

Maximum award

Average award as % of maximum

Nova Scotia (3 institutions)

1,260

$120,000

26%*

Ontario — Grandview

329

$60,000

62%

Ontario — St. Johns & St. Josephs

1,200

$108,000

31%

*The average award in Nova Scotia, 26%, includes a separate counselling award.

The trends which can be noted in the Canadian cases are:

·The average award represents something of the order of 32% of the maximum available.

·As the number of cases increases, the average award tends to fall. If only the two schemes with the higher number of applicants are considered the average award is around 28.5% of the maximum available.

This, if replicated in Ireland, would place average awards in the range €85,500 to €96,000.

The Accounting Officer pointed out that awards in army deafness cases may be a more reliable indicator of average awards than the Canadian experience. In furtherance of this view he described army deafness as very much a 'home-grown' class action which, in particular, demonstrated how the amount of awards lessens with time. Army deafness awards are finalised either by loss adjusters or through court hearings.

Since redress and deafness claims are very different in nature I do not consider that any adjustment should be made, at this point, in the estimation process because:

·The scheme will only operate for three years

·Awards will be based on formulae

·The disposal of claims during the three years may be as much a factor of the timing of receipt of claims and evidence as of the nature and consequences of any alleged abuse.

Moreover, the average level of award in army deafness cases settled under the Early Settlement Scheme has not materially changed since its introduction in January 2001.

Costs

The regulations provide for the payment of reasonable costs. The awarding of costs will be a matter for the Redress Board to agree with an applicant and his/her solicitor. In the absence of agreement, costs will be decided by a Taxing Master of the High Court. For the purposes of estimating the liability, it is assumed that costs will be approximately 15% of awards.

All-in award levels

Applying this level of costs to the estimated award range calculated on the basis of determinations and to the average award actually made to date by the Redress Board yields the following estimate of the all-in cost of awards:

·The average all-in cost would be around €96,600

·If awards were at the lower end of the scale they might average approximately 82,100

·If awards were at the higher end of the scale they might average around €111,000.

Number of claimants

The ultimate number of claimants will be a factor of the potential population of claimants and the numbers who ultimately apply for redress.

In regard to the population of claimants, information is available from a number of sources:

·Litigation, where victims had commenced or threatened cases against the congregations

·The number of people who had applied to give evidence to the Investigation Committee of the Laffoy Commission

·Freedom of Information requests from former residents of institutions.

I requested the DOES to carry out an analysis of the information available on the number of potential applicants at 30 June 2003. Information was supplied to me on foot of this request, as follows:

·A set of names from the litigation cases and the FOI requests, compiled so as to eliminate duplication

·The overall results of a comparison of this set of names with the names of those who applied to give evidence to the Investigation Committee of the Laffoy Commission in order to give an up-to-date "base population" of possible applicants to the Redress Board, again eliminating duplication.

In addition, the Minister directed the Redress Board, under section 26 of the Act, to prepare a report comparing its applications at mid-July 2003 with a combined set of names, obtained by combining the FOI and litigation data. The Board had received 1,551 applications at that time.

To date, the Redress Board's experience has been that 30% of existing claimants, from former residents of institutions under the aegis of the DOES, have provided evidence without first making a FOI application.

Consequently, an allowance must be made for claims which are not supported by evidence obtained under FOI. This would suggest around 778 potential applications from this source at 30 June 2003.

The analysis carried out by the Board also showed that around 6% of its applications are from former residents of non-DOES institutions. This indicates that the non-DOES claimant numbers at 30 June 2003 would have been of the order of 410.

Claimant population — Potential claims at 30 June 2003

The combination of these lists resulted in the derivation of the following base population at 30 June 2003:

Potential Redress Applications at 30 June 2003

Total

Persons who has instituted cases or FOI requests

People who had initiated cases and made FOI requests

1,448

People who made FOI requests only

3,060

People who instituted cases only

884

5,392

People who applied to give evidence before Laffoy Investigation Committee but not included above

270

270

Other Claims

Claims from DOES supervised institutions not included above

778

Claims from residents of institutions not under DOES

410

1,188

Total potential claimants at 30 June 2003

6,850

Further potential claims

Further potential claims are likely to arise because:

·Requests for information under FOI continue to be made at a current rate of around 180 per month

·Certain claims may be received without recourse to FOI

·The trend in claims from non-DOES cases is likely to continue at least at the existing level of 6% of all applications

·The experience in Canada has been that the actual creation of a non-confrontational redress scheme induces more victims to come forward and make claims. In the two Ontario schemes the increase in the number of claimants varied between 2.6 and 3.4 times the known likely number of claimants at the start of the schemes.

While, to date, 30% of applications to the Board are not supported by FOI based evidence it hasbeen assumed that, given the fact that the Board is encouraging applicants to use the FOI route, the percentage of non-FOI supported cases will drop to around 20%. In estimating future potential claims under these assumptions, FOI requests have been taken as a key indicator of claims since the information supplied by the DOES is used as evidence of residency. Analysis has been carried out on the basis of two levels of requests — 86 and 140 per month, during the period July 2003 to December 2005.

An estimate based on these levels of requests would suggest that potential future claims might be of the order set out in Table 7.4.

Table 7.4 Potential further claims to December 2005

FOI requests of 86 per month

FOI requests of 140 per month

Projected claims based on assumed new FOI requests

2,580

4,200

Potential applicants from DOES institutions who do not make an FOI request

645

1,050

Potential applicants from non-DOES institutions

206

335

Estimated number of potential future claims

3,431

5,585

Total potential claimants

Combining the estimates of claimants at 30 June 2003 with that of future potential claimants would yield a possible range from 10,281 to 12,435 claims.

If a further assumption is made that around 5% of potential applicants who have instituted legal proceedings will not apply for redress and that only around 85% of the remainder will apply, then the stimates indicate that the final number of claimants could lie in the range of around 9,000 to 10,800.

These adjustments are made in an attempt to take account of the fact that the age of claimants may militate against the pursuit of redress in all cases 46 and a certain base level of applications under FOI is for purposes of tracing relatives and gaining insight into the background, family history and circumstances of a referral to institutions regulated by the State.

It is difficult to interpret the initial relatively slow rate of applications to the Board. Only 15% of the 884 litigation cases mentioned previously have claimed to date. Assuming that all of these litigation cases will become claims and that a similar claim pattern applies to non-litigation cases it would suggest that final claims may be of the order of 10,300.

As part of the estimation process these calculations will need to be revisited by the DOES from time to time as the trends upon which they are based become clearer and if more institutions are added to those listed in the schedule to the Act.

Estimates of the contingent liability

The trends apparent in the Canadian schemes examined suggest that as the number of claimants increases the average award might be towards the lower end of a range.

This would be consistent with the fact that:

·The base population at the date of conclusion of the agreement contained a high proportion of persons who had instituted legal proceedings and were, therefore, committed to the more onerous pursuit of redress through the courts

·It also contained a segment of claimants who had opted to give evidence before the Investigation Committee of the Laffoy Commission

·Even if more recent additions to the population of potential claimants all result in claims, it may be reasonable to estimate the average award on the basis that, taken in the aggregate, additional claims, while valid and genuine, may progressively arise from persons who have coped better with the psycho-social consequences and loss of opportunity that arise from abuse.

In summary, the following assumptions appear relevant to the estimation of the State's contingent liability:

·Claim numbers may lie in the region of around 9,000 to 10,800.

·Average awards would be around €96,600, including costs, but might lie in the range €82,100 to €111,000.

·It is likely that the average award level would be higher at lower claim levels and lower in a situation where claim levels were high.

Taking account of these assumptions the contingent liability might be as follows:

·If the average award level is applied — €869m to €1.04bn

·If the awards vary as assumed with the claim numbers this results in a liability of between €887m and €1bn.

These contingent liabilities must be viewed with caution until the claim and award trend emerges in the light of the further experience of the Redress Board. Consequently, it will be important for the DOES to periodically rework the figures in order to provide the most accurate projection in the light of each new set of claim data.

Department's views on the liability

The DOES takes a more conservative view of the potential liability. It bases its estimate on the Redress Board's caseload to date. The Board is receiving applications at a rate of 50 per week and is now eight months into its operation. If it is assumed that it will continue to receive this level of applications for the next three years it implies a total caseload of 7,800. The Accounting Officer's view is that it is likely that the flow of applications will abate as time goes on, with possibly a flurry of activity in the final months before the closing date in just over two years time. Under this scenario the maximum number of applicants is, in his view, unlikely to exceed 8,000.

Allowing that the average award of just over €84,000 remains static, and taking the total number of applications at a level of 8,000, would imply a cost of awards in the order of €672m. Adding 15% for costs implies a total maximum cost in the order of €772m. However, this is likely to be an exaggerated estimate since it takes no account of diminishing numbers of cases and a diminishing average award as time goes on. The Accounting Officer stressed that the Department will keep the issue under regular review.

The Accounting Officer bases his analysis on the claim experience of the Redress Board to date and his calculation of the likely cost of the redress scheme may indeed be valid. However, the figures produced in my calculations are estimates of the contingent liability or the liability that may arise if the potential population claim in accordance with the pattern set out in the assumptions. It is only as the claim pattern becomes clearer that the DOES will be in a position to assess the liability with a greater degree of precision.

The Agreement and its Negotiation

While internal briefing papers noted that the decision to set up the scheme was not dependent on a contribution from the congregations, the Act provided that a person, with the consent of the Minister and of the Minister for Finance, could make a contribution for awards. This was designed to provide for a situation where the State would reach agreement with the congregations on an indemnity to be provided in return for such a contribution.

Formal discussions on these matters took place throughout 2001 and the first half of 2002.

There were, broadly speaking, three phases in the negotiations.

·During the period up to October 2001, officials conducted the negotiations in the course of which the congregations made their opening offer. These negotiations reached an impasse.

·From November 2001 to January 2002, the Minister was involved in direct negotiations with the congregations, leading to the announcement that agreement, in principle, had been reached.

·Further negotiations between officials took place during the period from February to June 2002 when agreement was reached.

Negotiations to October 2001

In the period up to October 2001, the State's negotiating team comprised representatives from the DOES, the Attorney General's Office and the Department of Finance. Legal advisers accompanied the congregations' representatives. The congregations were concerned that those negotiating on behalf of the State should have the power to bind the State and at various stages they expressed concerns about the process and how the Cabinet could be kept involved. Both sides accepted that negotiations would be on the basis that nothing is agreed until everything is agreed.

Key issues in the negotiations

While the negotiations covered a range of items, including issues surrounding the validation of claims, two interlinked issues were central. These were:

·The level of the congregations' contribution

·The nature of the indemnity to be provided in return.

The congregations' negotiating stance

The congregations took the view that the level of contribution required from them should be in proportion to the level of validation of allegations decided by the Government and their ability to pay. In their opinion, the contribution should also take account of:

·The fact that it was the State that had decided to proceed with this particular form of redress

·The fact that the State had set the level of validation lower than that of the Courts

·The congregations' own assessment of their liability in a Court situation.

Also, the congregations maintained that account should be taken of the contributions made by them to the Faoiseamh Helpline and other pastoral services which had been made available to former residents of institutions. In addition, the congregations indicated that any contribution should take into account the ministry which they continue to carry out and, where appropriate, the resources of individual congregations.

In return, the congregations were seeking an indemnity against all claims by persons who would be eligible to make a claim to the Redress Board.

The State's position

The State's estimate of the liability, which would arise from the creation of a redress scheme, had developed during the period February to June 2001.

·In February, the estimated upper limit of the liability was €254m.

·By April, a DOES memorandum indicated that it would be reasonable to operate in terms of a maximum potential cost of €381m.

·In June, a further DOES memorandum stated that the liability might be as high as €508m.

The initial stance taken by the State was that the congregations should pay 50% of the cost of the scheme.

The congregations responded that this went far beyond what they had envisaged.

In April 2001, officials sought Ministerial approval for an approach whereby, while a contribution of 50% would be sought, it should be subject to a maximum limit. While the opening figure sought should be €190m, representing 50% of the then estimated liability, in the event that the congregations could provide convincing reasons for resisting this approach, a lower limit of €127m could be set. If not satisfied as to the contribution, the State should be prepared to refuse to accept the participation of the congregations and should, in that case, amend the law to ensure that claimants could, even if compensated through the scheme, pursue their claims independently against the congregations.

A DOES memorandum of 30 April 2001 stated that the congregations had been given a figure of a possible 2,000 claims with a final cost in the region of €254m but that it had been stressed to the congregations that the final cost might be much higher. However, a possible capping of the contribution was not mentioned to the congregations at this time. In March 2001, the DOES had pointed out that the provision of an open-ended indemnity would have significant implications for the State and that the issue would require further detailed discussion.

The initial offer

At a meeting on 26 June 2001, the congregations outlined their proposed contribution. The offer amounted to approximately €108m, €57m in new resources and past property contributions valued at approximately €51m. The offer included:

·Cash payments of €25.4m over a five-year period

·An education trust fund of €12.7m

·Transfers of property worth €12.7m to the State

·€6.35m for counselling and other support services, some of which had already been spent

·Property, valued by the congregations at €51m, which congregations had transferred to the State for little or no consideration over the previous 10 years.

In return, the congregations wanted an indemnity against all claims in respect of institutional abuse of children up to the present.

The congregations maintained that the offer exceeded their exposure in litigation by a considerable margin. The congregations also claimed that, by establishing the scheme, the Government had increased the number of claims far beyond the number the congregations would have been required to meet in litigation.

Figures were submitted by the congregations outlining a number of possible outcomes if cases, approximately 2,500, were taken through the Courts. Various assumptions were made concerning the number of cases that would succeed and the possible range of awards and costs in such circumstances. There was an assumption that between 78% and 89% of the cases would fail.

The congregations estimated that, over a range of different liability apportionment scenarios, their exposure would lie between €21m and €106m. On the basis that each of these scenarios had an equal chance of occurring, and that the expected cost would be an average of the cost in all of the scenarios, the congregations went on to estimate their probable exposure in litigation at around €54m.

The Department's response

DOES officials, in putting the offer to the Minister, noted that the value of the offer amounted to €57m, unless the State was prepared to accept the congregations' approach and include the past property transfers. This fell far short of the State's objective of 50% with a minimum contribution of €127m. The officials noted that the property transfers had occurred without any reference to abuse compensation.

The officials emphasised that the State had no reliable information on the congregations' assets and their ability to pay. In addition, the value of the indemnity requested and the resultant cost to the State were not quantifiable.

The Minister for Finance was informed and wrote to the Minister stating that the offer was quite inadequate and left the State to bear virtually the full cost of the redress scheme.

Impasse in the negotiations

The negotiations slowed in the months following the offer by the congregations. There was some publicity which caused discord between the two sides. A further meeting was held in October 2001. Handwritten DOES notes from this meeting indicate that a contribution of €127m was mentioned but the notes also show that the State negotiators considered past contributions to be of no value.

Following this meeting, the congregations wrote to the DOES. The letter indicated that the congregations felt that the June proposal had not been taken seriously by the State and that the leaders of the congregations were going to meet to decide on their future participation in the negotiations.

The Negotiations — November 2001 to January 2002

On 6 November, prior to the first meeting involving the Minister, the DOES wrote to the congregations. This letter marked a significant change in the stance being adopted by the State in relation to past contributions. Included among the points made in the letter were the following:

·The State would provide a permanent indemnity against litigation in cases which would come under the remit of the Redress Board.

·A package involving cash, an education trust and property transfers could form the basis for the congregations' contribution.

·The DOES would like to see the congregations contribute 50% of the cost of the redress scheme. While the State estimated the likely cost at €254m to €508m, the congregations' contribution could be capped at €127m, which represented 50% of the lowest cost estimate.

·A problem existed with the proposed inclusion of past property transfers to the State, given that they occurred without reference to a redress scheme, but the issue could be re-examined in the context of the date of the State's apology.

·The congregations' proposed contribution, when past transfers are excluded, represented only 10% to 20% of the likely cost.

Negotiations took place in the period from November 2001 to January 2002. No contemporaneous records of these negotiations were available during my examination. On 12 March 2002, the DOES prepared a retrospective memorandum on the negotiations conducted by the Minister.

The memorandum, which was prepared by the Secretary General who accompanied the Minister during this phase of the negotiations, stated, inter alia, that:

·The negotiations had reached stalemate after the June offer and the congregations were also concerned about confidentiality. In the interests of seeking a final resolution, the Minister agreed to meet the congregations accompanied only by the Secretary General.

·Two meetings were held between the Minister and the Secretary General of the DOES, for the State, and the representatives of the congregations. These meetings were held on 7 November 2001 and 7 January 2002. The legal representative for the congregations attended the second meeting.

·The discussions centred on the amount of the contribution and how it was to be structured. Agreement was reached, for a contribution of €128m, and announced on 30 January 2002.

·The indemnity was only discussed to the extent that the congregations indicated that a draft they had proposed should form the basis for the final indemnity. The Minister and the Secretary General indicated that they did not have the legal expertise required to deal with this subject.

·The congregations also sought amendments to the Bill that would focus on injury rather than abuse or would give a right of reply to accused people.

·Prior to the matter going before Government, the congregations sought written assurances in relation to the proposed indemnity. However, the DOES informed the congregations it could not be recommended that the Minister be bound legally to the agreement without the formal involvement and advice of the Attorney General's Office.

The papers indicate that the Minister made an oral report to Government on the outcome of the negotiations at the end of January 2002 and this was followed by the Minister's announcement that the Government had agreed, in principle, to a set of proposals. The agreement, as announced, would see the congregations contributing €128m to the redress scheme — €38m in cash including €12.7m for an education trust, €80m in property transfers including transfers made since 11 May 1999 and €10m in counselling and other services. In return, the Government would indemnify the congregations concerned against all present and future claims arising from past child abuse which would be covered by the redress legislation.

The Negotiations — February to June 2002

Following the announcement by the Minister, on 30 January 2002, that the Government had agreed in principle to the proposals, negotiations resumed in March. At the first meeting, the congregations' representatives were accompanied by their legal representatives. Thereafter, the legal representatives attended alone. The DOES represented the State. The first two meetings had representation from the Chief State Solicitor's Office. From the third meeting, which was held in April, a representative from the Attorney General's Office joined the negotiations.

Two items dominated proceedings:

·The nature of the indemnity to be provided

·Whether or not previously transferred property could include property transferred to Non-Government Organisations (NGOs).

The nature of the indemnity

The issue of the indemnity had not been agreed in the previous discussions with the Minister. The Minister had said that the detailed terms of the indemnity could only be finalised with the involvement of the Attorney General's Office. The congregations' stance was that agreement in principle had been reached that the indemnity would cover all cases which could come within the remit of the Redress Board and that the indemnity should be open-ended.

In the preparation by the State side, for negotiation on the indemnity, it was necessary to conclude on the State's stance. The Attorney General's Office, in correspondence, noted that their understanding, when the Office was previously involved in negotiations during 2001, was that the indemnity would only extend to cases which would actually go before the Redress Board. The Minister, in a letter to the Attorney General's Office, clarified the policy objectives — that the indemnity would cover all cases which would come within the remit of the Board but that the indemnity would be time-limited.

Agreement was reached. The indemnity would cover all cases which could potentially come within the remit of the redress scheme and would operate for any related litigation which had commenced within three years of the last day for applications to the Redress Board.

The indemnity applies only in cases where the State has full control over the defence. Where a congregation or an individual wishes to adopt a course with which the State does not agree then the indemnity will not apply.

Previously transferred property

The agreement in principle provided for property previously transferred to be included as part of the congregations' contribution. The issue arose as to whether this could include property transferred to NGOs. The DOES took the view that only property transferred to the State could be accepted, as it was important that non-cash assets would be capable of being realised by the State. The Department of Finance took the same view. A note from a meeting held in April states that the Secretary General had confirmed that there was no agreement on the inclusion of properties transferred to NGOs. The congregations were adamant that the agreement reached with the Minister provided for the inclusion of such property.

The State, following further consultations, agreed to accept property transferred to the State or a public body (e.g. local authority or health board) in the period from 11 May 1999 to the date of the signing of the agreement. In addition, property previously transferred to a registered charity would be accepted, subject to a restriction on the sale or disposal of the property for a period of 25 years. The DOES would not accept the inclusion of any property transferred to a body owned or controlled by any religious congregation or other Church body. In cases where the 25-year restriction could not be provided, the congregations would replace the property with another or with cash, at their discretion.

Other adjustments agreed

Other adjustments were agreed, at this stage, including an increase in the cash element of the contribution and a corresponding reduction in the property element.

In the course of the negotiations, the congregations sought to extend the number of institutions in the schedule to the Bill, with the additional institutions (e.g. hospitals and special schools) being included without any increase in the contribution. The DOES accepted that additional institutions could be added to the schedule.

General views of the DOES on the negotiations

The Accounting Officer has pointed out that a fundamental element of Government policy in respect of the redress scheme was that the Government decided to set it up with or without a contribution from the congregations. The Government also decided to set it up notwithstanding that the final cost was not quantifiable. This in itself is not unusual in respect of Government programmes. As regards the contribution from the congregations, the Government's policy was that such a contribution was a desirable, but not an essential, element of a redress scheme. It was desirable as a factor in bringing closure to the issue of abuse for victims. Leaving them in a situation where they could sue the congregations in the courts for part of their compensation provided no such closure for them, or indeed society more generally. There was also, of course, a financial consideration — a contribution from the congregations meant that the State would not have to provide all the funding required. The objective of the negotiations was to achieve the highest possible contribution that the congregations were prepared to make. There was no capacity to coerce them into any agreement and, in all probability, if they were not part of the scheme then they would have avoided most, if not all, the costs of compensation.

Negotiations commenced and proceeded for a time on the basis of a 50/50 split of cost. However, negotiators for the State realised early on that if the congregations were to be persuaded to make a contribution they would not do so on the basis of an open-ended 50/50 split and would not do so without an indemnity. As early as April 2001 the Minister and the Minister for Finance had agreed that the State would accept a capped contribution amounting to €127m. This was not related to any proportion of likely minimum or maximum cost. The discussions continued on the basis of seeking a 50/50 contribution as a means of seeing how far the congregations could be persuaded to go.

The Accounting Officer accepted that there is a reference, in correspondence with the congregations, that €127m represented only 50% of the DOES's lowest estimate, but this was intended as underlining that it was a line below which the DOES would not go in seeking agreement. What was at issue in seeking that agreement was a contribution that could be considered by the Government to be satisfactory.

The Final Agreement

The final agreement, signed on 5 June 2002, quantified the contribution and outlined the indemnity.

Contribution

The agreed contribution of €128m to be made by the congregations to the redress scheme comprised the following:

·Cash payments amounting to €41.14m, of which €12.7m will be used by the State for educational programmes for former residents of institutions and their families.

·Transfers of real property which have been made (previously transferred property) to the State, State agencies, local authorities or voluntary organisations since 11 May 1999 to the aggregate value of €40.32m.

·Transfers of real property which are to be made to the State, or its nominees, as soon as practicable, to the aggregate value of €36.54m.

·Counselling and other support services for former residents of institutions and their families, already provided or to be provided, to the value of €10m.

The amount of past contribution included in the final agreement would be between €40.32m and €50.32m, depending on what proportion of the counselling contribution had been spent prior to the signing of the Agreement.

Indemnity

In return for the contribution, the State agreed to indemnify the contributing congregations in respect of liability in litigation which had commenced within three years of the last day for applications to the redress scheme and which would qualify to be dealt with under the Act.

Information, Advice and Approval Arrangements

In negotiating the agreement, the following information and advice would be critical to the adoption of an informed negotiating position by the State:

·Information about the possible liability, which would inform any demand in relation to the amount of a meaningful contribution by the congregations.

·The possible costs facing the congregations if all cases went to Court, as this was the figure underpinning the congregations' negotiating stance.

·Legal advice on the implications of any indemnity agreed. Information about the Liability

Information was directly available to the DOES from a number of sources to estimate the possible liability.

Number of claimants

Information was available from the number of litigation cases, those applying to give evidence to the Investigation Committee of the Laffoy Commission and the Freedom of Information requests from former residents of institutions. In addition, information was available on a number of compensation schemes in Canada.

Litigation

It would be reasonable to assume that individuals who were prepared to pursue a case through the courts would avail of the right to seek redress.

When the Government approved the drafting of the Victims of Child Abuse Compensation Tribunal Bill in February 2001, the memorandum noted that 865 cases were pending against the State in November 2000. It had been estimated, in 1999, that the number of litigation cases would be of the order of 2,000 and, the memorandum further noted, there was nothing to indicate that this estimate would be significantly wide of the mark.

In June 2001, the congregations had based the calculation of their exposure in the courts on a likely 2,500 cases and in June 2002, the congregations notified the State that there were 2,551 cases where court proceedings had been issued, or litigation was threatened, in respect of alleged abuse at institutions covered by the Agreement. The State was named as co-defendant in 2,460 of these cases.

Laffoy Commission

The Commission comprises two committees:

·A committee to investigate allegations of abuse (the Investigation Committee) before which individuals and institutions implicated in allegations of abuse would have full legal rights available to them, including the right to cross-examine witnesses. The committee will produce a report identifying institutions where abuse took place and, possibly, naming perpetrators. The committee may report on individual complaints but will not name individual victims.

·A committee which gives victims an opportunity to tell their story (the Confidential Committee) but which does not investigate any allegations.

The Ryan Report, published in January 2002, noted that there had been 1,957 requests to give evidence to the Investigation Committee of the Commission and 1,192 requests to give evidence to the Confidential Committee. 1,375 former residents of Industrial and Reformatory institutions made 1,695 of the requests to the Investigation Committee with the balance coming from people who attended other schools and institutions.

While details of the complainants to the Confidential Committee are not available, if the same ratios applied, approximately 835 former residents of Industrial and Reformatory institutions would have made requests to this Committee giving a total of just over 2,200.

Freedom of Information

The DOES had, from the coming into force of the Freedom of Information Act, 1997 (FOI), received requests from former residents of institutions for personal information from the Department records.

There had been 62 FOI requests to the end of May 1999. The Taoiseach's apology and increasing publicity surrounding the issue, both on TV and in the print media, appeared to trigger an increase in the number of requests. The number had grown to 386 by the end of 1999, 1,020 at the end of 2000, 2,245 at the end of 2001 and 2,840 by the end of May 2002.

While individuals may seek information for reasons other than to obtain evidence to support a claim in litigation or to the Redress Board, it is plausible to suggest that there will be a strong correlation between the number of FOI requests and applications for redress.

Amount of awards

Information was available on award levels as follows:

·Experience in the courts of award levels in a major case involving abuse in a family setting

·The Ryan Report recommendations.

Use of the information

During the initial phase of the negotiations, the State was seeking a contribution of approximately 50% of the possible liability. In order to pursue this demand, a best estimate of the liability, using the available information, should have been available at all times.

Claimant numbers

The overall information available on potential claimants included the list of litigants, the FOI requests and those applying to give evidence before the Investigation Committee of the Laffoy Commission.

During the course of the negotiations the State agreed with the congregations that additional institutions could be included. This would also impact on estimates of claimant numbers.

While the Department produced estimates at various points it based them only on the number of litigation cases and the likely number of claimants in excess of this, which might arise due to the creation of the non-confrontational compensation scheme. The earliest estimates had put the potential claimants at 2,000. By November 2001 the DOES was estimating that the number of claimants was likely to exceed 3,000 and might rise to 4,000. By June 2002 it was being estimated that the number of claimants could be 5,200 or more.

As a consequence of basing estimates solely on litigation cases the trend in FOI requests was not fully taken into account. By the end of 2001 FOI requests were being made at the rate of approximately 100 per month. This trend continued during the first half of 2002 and it would have been reasonable to assume that the trend provided some indication of the likely effect of the compensation scheme on claimant numbers.

The experience in Canadian schemes suggests that more claimants are likely to pursue a claim in a non-confrontational compensation scheme, than would through the courts.

In any event, once the decision was taken, in November 2001, to cap the contribution demanded from the congregations it effectively meant that the contribution being sought, assuming a 50:50 liability split, was based on the equivalent of 2,000 claims.

Cost of awards

Estimates were informed by the results of a leading law case. The memorandum to Government, in February 2001, noted that in this case the damages to victims of abuse in a family setting were agreed at €190,000 each, by the State, in a settlement. This figure was used as a basis for estimating the likely award level in a redress scheme which was estimated to be around €127,000, including costs. This figure was based on an assumption that approximately one third of awards would be in the region of the €190,000 and that average awards in the other cases might be around €51,000 with costs around 25% of awards.

The Ryan Report, which was presented to the Minister in January 2002, was not available to inform liability estimation in the earlier part of the negotiation process.

The evidence from Canada suggests that average awards in a compensation scheme are likely to fall with increases in the number of claimants and that the working estimate used at all stages by the State may be slightly high.

Implications for the liability

As additional information comes to hand it would be reasonable to expect that the full range of potential costs, including the lower estimate, would be revised. In fact, no revision of the lower estimate of the potential cost, €254m, was made, at any stage, despite evidence that the minimum number of claimants was likely to be greater than the 2,000 upon which the estimate was based.

When the State agreed, in November 2001, to cap the congregations' contribution at €127m, this represented 50% of the lowest estimated cost.

However, by this time the Department was estimating that the number of claimants would probably exceed 3,000. Using the Department's estimate of the average award this have would put the minimum liability at €381m.

For purposes of the calculation of the contribution no allowance was made for adjustment on the basis of any increase in numbers after the agreement of a scheme. The Canadian experience was that the number of applicants might increase by a multiple of approximately three times the known number of likely applicants at the start of a compensation scheme.

While the DOES did not carry out detailed analysis of the information on known likely applicants, the underestimation of the likely minimum cost of the scheme could have been identified by using the Department's own estimate of the likely cost of awards and its information from any one, or a combination, of the available sources for identification of potential applicants.

·An estimated 2,200 former residents of Industrial and Reform institutions applied to give evidence to the Laffoy Commission.

·In June 2001 the congregations estimated the number of litigation cases at approximately 2,500.

·There were 2,840 FOI requests at the end of May 2002.

Using a more conservative multiple than that suggested by the Canadian schemes and assuming only a doubling of any one of these figures would have indicated that the minimum number of applicants might be in the region of 4,400 to 5,700. Even without combining the populations and eliminating overlaps, using the DOES's estimate of the average cost of an award of €127,000 would have put the likely minimum liability in the range of almost €560m to €720m.

The DOES has stressed that, once the decision to cap the demand was taken, no relationship was made thereafter between the contribution and the minimum cost of the scheme. Consequently, minimum cost levels were not a factor in the ultimate negotiations of the congregations' contribution.

Information about the Congregations' Exposure in Litigation

In the course of the negotiations, the congregations asserted that any contribution should not exceed their exposure if all the cases were to go before the courts.

·In June 2001, the congregations' said that their best estimate of their likely exposure in litigation was €54m with their highest estimate at €108m.

·On 30 May 2002, a DOES document prepared for discussion with the Minister in advance of the proposal going to Government stated that the congregations' estimate of their exposure in the courts might be correct. Plaintiffs could face formidable legal obstacles. On the other hand, the document points out, it could be expected that the courts might take a benign view of plaintiffs in many cases and juries might be sympathetic and the costs for all concerned could be much greater than the congregations anticipated.

·While the DOES made no detailed assessment of the congregations' figures or of the likely apportionment of liability by the courts, the Government, in considering the agreement, noted that its approval reflected the understanding of evidence which could be produced in any court proceedings as to liability by the State. Subsequently the Secretary General of the DOES provided the Secretary General to the Government with the available information which the DOES had on the issue of State liability.

Legal Advice

Participation in negotiations

While the teams of negotiators were meeting, in the series of meetings which reached an impasse in October 2001, the State's team included representation from the Office of the Attorney General.

However, from October 2001 to April 2002, the Office of the Attorney General was not represented at meetings with the congregations and had no contact with those negotiating on behalf of the State. The Accounting Officer has pointed out that there were only two meetings between officials and the congregations in the period. Neither meeting focused in detail on legal issues and the first on 13 March 2002 specifically agreed to refer the matter of the indemnity to a group comprising the solicitors for the congregations and representatives of the Attorney General's Office and the Department.

In order to be in a position to offer further advice, following the oral report of the Minister to the Cabinet and the announcement of the agreement in principle, in January 2002, the Office of the Attorney General sought information on the detailed negotiations, including the extent of the indemnity. A letter requesting information was sent to the Minister by the Attorney General on 31 January 2002 and this letter was followed by a further letter from his office on 1 February 2002. As no reply had been received by 13 March 2002, the Attorney General advised the Department that his Office could not participate in negotiations or offer legal advice in the absence of the requested information. As the negotiation details had not been documented the Secretary General prepared a retrospective memorandum on the negotiations conducted by the Minister up to that point. On 13 April 2002, the Minister wrote to the Attorney General outlining the policy approach he proposed to adopt in the further negotiations in relation to the indemnity. He proposed that the indemnity should extend to all the persons who could apply for redress and that the period should not be any longer than 10 years.

Senior Counsel's Opinion

The Office of the Attorney General sought advice from Senior Counsel in late May 2002 on the terms of the Indemnity Agreement.

The Senior Counsel addressed the issue of cases which go to court and where a congregation (or an individual) has an established constitutional right to defend his or her good name and advised that while the intent to indemnify was clear he was not sure that indemnity of every party could be compelled or assured in circumstances where there are individually named defendants who are separately represented and whose interests might not converge with the interests of the congregations.

He raised the question of the risk of a substantial award in a case, perhaps due to the way in which the congregation conducted the defence, and the possible implications for other cases including those which might have gone to the Redress Board.

Attorney General's advice/observations to Government (June 2002)

The Attorney General, in June 2002, noted that the draft Indemnity Agreement reflected the policy position adopted by the Minister in relation to the extent and breadth of the indemnity. He pointed out that an estimate of the doubling of the number of cases to 5,200, based on the number of litigation cases, might be conservative and pointed out that the highest estimate of the liability, €508m, was based on an estimated 4,000 claims. In addition, he pointed out that the contribution of €128m might be regarded as insufficient and highlighted the lack of a mechanism for increasing the contribution from the congregations if the number of cases increased greatly.

In relation to the defence of litigation to which the indemnity applied the Attorney General pointed out that the State would have to be mindful of possible subsequent defamation proceedings, numerous actions having been undertaken in Canada by individual members of congregations on the basis that the resolution of a claim by way of payment to the claimant was damaging to the reputation of the individual referred to in the claim. The Attorney General suggested a related amendment to the agreement and the relevant clause was amended to incorporate the change.

Approval Arrangements

The lines of communication during the negotiations were that memoranda were sent to the Secretary General for discussion with, and direction from, the Minister. Approval was sought from the Government at certain stages.

Key milestones in the supervision of the negotiation process were:

·Government approval for the redress legislation in February 2001

·Ministerial approval for the negotiating approach in April 2001

·Consideration of the congregations' offer in June 2001

·Direct Ministerial involvement from November 2001 leading to the announcement of the agreement in principle

·Ministerial clarification of the extent of the indemnity in April 2002

·Briefing in advance of approval for the Agreement in May 2002

·Government approval for the Agreement in June 2002.

Implementation of the Agreement

The DOES has established the Residential Institutions Redress Unit. The responsibilities of the unit include overseeing the implementation of the Agreement. The following progress has been made in collecting the contribution agreed and bringing any funds to account.

Cash Payments

The Agreement stipulated that the cash payments should be made as follows:

·€12,654,000 to be paid on execution of the Agreement

·The balance to be paid in four equal instalments (€7,121,500 each instalment) on 5 September 2002, 5 December 2002, 5 February 2003 and 5 May 2003.

The Congregations duly made the payments as stipulated.

Application of the proceeds

Up to 5 June 2003, the total value of the funds was €41.77m. This was made up of contributions from the congregations of €41.14m and interest of €0.63m. The contributions and interest are held in two funds as set out in Table 7.5.

Table 7.5 Investment and deposit of contributions

Investment/Deposit

Redress Fund €m

Educational Fund €m

Total €m

National Treasuty Management Agency (Exchequer Notes)

23.91

12.86

36.77

Paymaster General

5.00

5.00

Total

28.91

12.86

41.77

Strictly, under the Act, the part of the proceeds pertaining to awards to be made by way of redress should be lodged in an account with the Paymaster General. In fact, only €5m has been so lodged. The remainder was invested directly in Government securities through the National Treasury Management Agency. I will be auditing this account, in due course, after it has been prepared and presented for audit.

Transfers of Property

There are two categories of property provided for in the Agreement:

·Property transferred between 11 May 1999 and the date of the Agreement (previously transferred property)

·Property to be transferred in the future (future property transfers).

Previously transferred property

The Agreement stipulated that property previously transferred to the State, State agencies, local authorities or voluntary organisations providing health or social services could be included in the contributions.

In May 2002 the Congregations supplied the State with a schedule of 37 properties which the Congregations claimed had been transferred after 11 May 1999. The valuations, as of the date of transfer, submitted by the Congregations put an aggregate value of €40.97m on the properties.

The recipients of the property, which the Congregations claimed to have transferred since 11 May 1999, are set out in Table 7.6.

Table 7.6 Recipients of properties identified by congregations

Transferee

Properties

Congregation Valuation

€m

DOES

11

10.24

Voluntary Organisations

18

22.12

Local Authorities

4

6.98

Health Boards

1

0.12

Unidentified

3

1.51

Total

37

40.97

The Agreement set a target of €40.32m under this category.

The DOES put a process in train to review the schedule to determine if the properties represented qualifying properties under the terms of the agreement. Discussions are ongoing with the legal representatives of the Congregations.

The key validation steps required for these properties are:

·Determining whether the properties qualify, in principle, under the Agreement

·Agreeing the value of the properties

·Determining the value of any previous State grants in respect of these properties 52 Insufficient information was received to enable the Department to identify these transferees.

·Confirming that property transferred to voluntary bodies will not be alienated for at least 25 years

·Taking account of any consideration paid

·Confirming good and marketable title.

Qualifying properties

The DOES sought to establish that the properties listed had been transferred to a qualifying body during the designated period. Arising from this the DOES has informed me that it has rejected, or is likely to reject, eight properties, valued by the congregations at €8.11m. Two further properties, valued at €0.76m, have been transferred to the schedule of future property transfers.

Valuation

The congregations submitted professional valuations for each property. The DOES selected a sample of 10 properties for valuation by the Valuation Office. Prior to the valuations being carried out the DOES had rejected two properties in the sample as not qualifying under the terms of the Agreement and the Valuation Office did not value two further properties, as it did not have maps of the sites.

For one property, a site of 7.4 acres in Co. Galway, there was a major difference between the valuation of €3.5m submitted by the Congregations and the value of €1.85m per the Valuation Office. In the event that agreement cannot be reached, either party can apply to have the matter determined by an independent valuer.

In the remaining five cases, the opinion of the Valuation Office was that the valuations submitted were reasonable.

Grants or other payments provided by the State

The Agreement stipulates that a valuation of any property must take account of any grants or other payments provided by the State. The State has not yet accepted, in principle, any of these properties. Consequently, it has yet to investigate and determine whether, and to what extent, any such grants have been paid.

Restriction on transfer or alienation of a property

The implementation of this provision has given rise to difficulties. The religious congregations do not appear to be in a position to provide evidence that there is a legal 25-year restriction on the transfer or alienation of properties previously transferred to voluntary organisations. In order to address this issue, the Congregations have obtained letters from the transferees stating that they will not further alienate or transfer properties without the consent in writing of the Minister for Finance. The matter has been referred to the Chief State Solicitor's Office for its observations.

Properties previously transferred where the State paid consideration at the time of transfer Where property was transferred below open market value, the difference between the consideration paid and the open market value at the date of transfer should be taken into account when assessing the value of the contribution.

There were three previously transferred properties which the State had purchased for consideration. The Congregations claimed that the consideration paid was below the open market value and claimed credit for the difference. The State has rejected two of these properties as not qualifying under the terms of the Agreement. The DOES took the view that the difference between the consideration paid and the open market value could not, in the circumstances, be considered as a contribution under the scheme.

The first of these properties was a 5.5 acre playing field purchased in 2000 by a Vocational Education Committee from a congregation. A condition of sale was that, in the event of the VEC disposing of the lands within 10 years, the congregation would receive 50% of any increase in price. The DOES rejected the property as not qualifying under the terms of the agreement.

The second property was in Dublin. A religious order had sold a convent and an adjoining residence to a voluntary housing association for €6.98m in 2000. An independent valuation put the open market value of the site at the time of the sale at €10.2m. The congregations claimed credit for the difference. The contract of sale included a restrictive covenant in favour of the order recognising the fact that the property was being sold for less than open market value and entitling the order to 25% of the proceeds in the event of the property being sold within 21 years for any purpose other than for social or affordable housing. The aggregate credit sought by the congregations for these two properties was €4.62m.

The third property where the State paid consideration was a property in Co. Mayo, which a religious order had sold to the Western Health Board for €275,000 in November 1999. The sale included a restrictive covenant that the property was to remain in community use for the benefit of locals. The valuers for the order put the loss of market value due to this covenant at €125,000. The DOES is seeking further information from the congregations' legal representatives about this property.

Good and marketable title The State has not yet accepted any of the previously transferred properties. Consequently, the matter of the title has not yet been clarified.

Summary

To date the State has not accepted any of the properties listed as previously transferred property on the schedule provided by the Congregations. The DOES says that this is mainly due to deficiencies in the information supplied by the Congregations and has raised the matter with the Congregations' legal representatives.

The following is the DOES's position at the end of June 2003:

·One property, valuation € 0.57m is likely to qualify under the terms of the Agreement

·A further twelve properties, with an aggregate valuation of €17.29m are likely to qualify if the State is satisfied that undertakings about the 25-year restriction are legally enforceable. There is disagreement about the valuation of one of these properties

·Further details are being sought by the DOES in regard to ten properties with a total valuation of €8.89m

·Two properties, with an aggregate valuation of €0.76m, have been transferred to the schedule of future property transfers

·The DOES has rejected, or is likely to reject, ten properties with an aggregate valuation of €12.73m

·The congregations have withdrawn two properties, valuation €0.73m.

Future property transfers

In May 2002, the Congregations provided the State with a schedule of 43 properties to be transferred. The valuations submitted by the Congregations put an aggregate valuation of €38.74m, as of the date of the agreement, on 42 of the properties. No valuation was submitted for one property which is the subject of a Compulsory Purchase Order (CPO). Two properties were transferred from the schedule of previously transferred property bringing the total to 45 properties with an aggregate valuation of € 39.5m, excluding the unvalued property which is the subject of a CPO.

The Agreement set a target of € 36.54m under this heading.

The DOES reviewed this schedule to determine if the properties being offered were qualifying properties under the terms of the agreement. Discussions are ongoing with the legal representatives of the Congregations.

The principal considerations in the review are:

·Determining whether the properties offered will be of use or benefit to the State

·Agreeing the value of the properties

·Determining the value of any State grants

·Confirming good and marketable title.

Use or benefit to the State

The State had nine months under the Agreement in which to refuse to accept a property if in its reasonable opinion it will be of no use or benefit to the State. This period was subsequently extended to 30 April 2003.

The DOES circulated details of the properties to Government Departments to identify Departments or State agencies that could benefit from a transfer. Those that expressed an interest were provided with details of the property. Many of the properties were already being used by Health Boards and the Boards indicated their interest in acquiring a fee simple interest in those properties.

The DOES has rejected eight properties, with an aggregate value of €9.85m, taking the view that the properties will be of no use or benefit to the State. Decisions are pending on five further properties. The total value of four of these properties is €10.18m while no valuation has yet been supplied for the remaining property.

By the end of June 2003, the DOES had accepted 32 of the properties offered, conditional on good and marketable title being established and their valuation being agreed. Subject to this, these properties will be transferred to public bodies as set out in Table 7.7.

Table 7.7 Property transfers accepted in principle by DOES

Transferee

Properties

Congregation Valuation

€m

Eastern Regional Health Authority

3

1.97

Southern Health Board

19

12.24

South Eastern Health Board

5

1.80

Mid West Health Board

2

0.61

Office of Public Works

1

1.20

DOES

2

1.65

Total

32

19.47

Valuation

The congregations submitted professional valuations for properties. The DOES has requested the transferees to treat the transfer of a property in the same way a prudent purchaser would. The transferees have been requested to obtain an independent valuation of the property. The DOES will seek a copy of all independent valuations.

By the end of May 2003, ten of the Southern Health Board properties had been valued by the Valuation Office. The aggregate valuation given by the Valuation Office was €2,600,000 while the aggregate valuation according to the Congregations was €2,666,600.

At 23 July 2003, the DOES had not received any other independent valuations.

Grants or other payments provided by the State

The DOES has written to the Health Boards, who are the transferees for a number of the properties to be transferred, requesting them to inform it if any grants have been paid in respect of the properties being transferred.

Good and marketable Title

The DOES takes the view that it is the responsibility of the transferee to establish that a transferor holds a good title to a property.

Summary

To date, the State has accepted, in principle, 32 properties, subject to good and marketable title and agreement about the valuations of the properties. The aggregate value attributed to these properties by the Congregations is €19.47m.

The DOES has rejected eight properties with an aggregate value of €9.85m.

Decisions are pending on four further properties whose aggregate value is €10.18m and a fifth property for which no valuation has been submitted.

Replacement Properties

The agreement stipulates that, in the event of the State refusing to accept a property, the congregations have the right to replace it with cash or other property at the congregations' discretion. Replacement properties are to be valued at the date of the Agreement. The Agreement does not stipulate the timeframe within which the Congregations must offer a replacement property or cash.

The Agreement also provides that if the aggregate value of the properties contributed by the congregations falls short of the aggregate value of the properties which they have committed to provide, then the contributing congregations will be entitled to make up the shortfall in cash or property as soon as possible but not later that 6 months from the date the shortfall is ascertained and notified in writing to the congregations by the State.

As the State has rejected a number of properties, the aggregate value of the remaining properties is likely to fall short of the value which the Congregations have committed to provide.

The DOES prepared a schedule of locations where it wishes to acquire sites for the development of primary and post-primary school facilities. This schedule of sites was sent to the legal representatives of the congregations in October 2002 and subsequently updated to include a number of properties being sought by Health Boards. There are currently 21 locations and properties on the list. The Congregations have been asked to focus further offers of property on these areas.

Arising from this, the DOES was offered, and has accepted, land for school building development in Co. Kerry. The value attributed to this site by the congregations is €2.6m. The DOES is of the view that further properties may be offered arising from the schedule. The congregations have also submitted a list of 14 alternative properties. The Department is considering this list.

Counselling and other Support Services

The Agreement states that the Congregations' contribution shall include counselling and other support services for former residents of institutions and their families, already provided or to be provided, to the value of €10m.

Previously delivered counselling

In 1997, CORI established an organisation called Faoiseamh with the aim of providing a confidential listening service and face-to-face counselling for adults who, as children were abused by religious or diocesan clergy. Under the Agreement, the Congregations may spend money on counselling and other support services other than through Faoiseamh.

Claims for contributions to date per the Congregations

In the course of the negotiations the congregations stated that much of the €10m contribution related to counselling and other services which had already been provided. The DOES wrote to the legal representatives for the congregations on 10 March 2003 requesting them to forward a further report detailing expenditure incurred in respect of counselling and support services for former residents of institutions and their families.

A reply from the congregations' legal representatives in March 2003 stated that the amount spent on counselling and other support services to that time was just over €11m. The information supplied, however, did not indicate the precise amount attributable to the provision of counselling and support services to former residents of the institutions and their families. The DOES, therefore, sought clarification.

Further letters on behalf of the congregations in May and June 2003 stated that in addition to contributions to Faoiseamh of €4.53m to date, there was also a further €7.1m of qualifying expenditure for counselling and other support services.

The Department continues to seek evidence from the legal representatives for the Congregations that the expenditure claimed has, in fact, been spent on providing counselling and other support services for those envisaged in the Agreement.

In regard to the service generally, the congregations maintain that they are committed to the continuation of counselling services for as long as they are required.

Education Fund

The Agreement allocates €12.7m of the cash contribution to be used by the State for educational programmes for former residents of institutions and their families.

Administration of a scheme

The overall administration of the fund will be by the DOES and the initial administrative costs were met by the Department. The fund, including investment income, was valued at €12.86m at 5 June 2003.

The DOES stated that it was not possible, within the time constraints to develop a scheme for the 2002-2003 academic year.

The National Office for Victims of Abuse (NOVA) has been approached to establish if it would be prepared to administer an application process on behalf of the DOES. An ad -hoc committee was formed comprising one representative each from Further Education Section of t he DOES and NOVA, one representative from each of the four support groups affiliated to NOVA, the Adult Education Officer at City of Dublin VEC and the Education Facilitator at NOVA. The committee was to develop an application process and framework document in order to have a grant scheme in operation for the forthcoming academic year.

Following a number of meetings the ad-hoc committee has advised on how the fund should be administered and developed a draft application form together with a document entitled criteria for eligibility.

In order to include those victim support groups that operate outside the umbrella of NOVA, individual victims and other interested parties, the committee decided to circulate a copy of the draft documents and invite observations in writing. This exercise covered both Ireland and the UK-based Outreach centres.

The Department's initial proposal was to issue payments for the 2003-2004 academic year through the City of Dublin VEC. However, victim support groups have expressed concern about this procedure and the Department is to examine the possibility of setting up an Education Trust with a view to having the Trust in operation for 2004.

Mr. John Purcell

When the committee last considered chapter 7.1 in public session on 2 October 2003, it heard evidence from the Accounting Officer for the Department of Education and Science and from Mr. Doyle, a senior official from the Department of Finance. Since then the committee has received a fair amount of documentation from both Departments and the matter has been discussed by members on a number of occasions in private session.

To recap briefly, the content of my report can be conveniently broken down into three parts. The first concerns the estimation of the potential liability for the cost of the claims brought through the redress board; the second considers the way in which the agreement with the religious congregations was negotiated and, the third looks at the extent to which the provisions of the agreement have been implemented. As regards the potential cost, I will repeat what I have said before to the committee, that this is an area fraught with uncertainty even now — the unknown number of claims still to be received that will be successful, the future level of awards, and the extent of legal and other costs to be incurred. We can make a reasonable stab at the minimum potential cost on the basis of the claims received to date, and applying the average level of award to that figure, plus 15% for legal and other costs. Just over 3,000 claims have been received, so taking the average award as €80,000 we arrive at a minimum figure of €276 million, including costs. Clearly, Chairman, it gets much more difficult to come up with a maximum figure. If we assume that the current rate of claiming at about 50 a week will continue unabated to the end of the scheme in December 2005, we reach an estimated total claims figure somewhere in the region of 7,000. Using the same formula as I mentioned earlier, the final potential cost could be in the region of €650 million. On the other hand, I see from ministerial replies to parliamentary questions that the Department considers that the final cost will come in at around €500 million. The outer limit of the potential cost computed at €1 billion in my report, takes account of the possible impact of cases of litigation commenced or threatened against the congregations, freedom of information requests, which are still running at quite a considerable rate, and the level of applications to give evidence to the then Laffoy investigation committee. That is the context for the €1 billion figure but we are not yet half way through the claim period so it would be wise to treat all computed figures with a high degree of caution.

The second part of the report outlined how the State conducted the negotiations with the congregations. It looked at how the available information and legal advice was used in the course of negotiation. In this connection, during the October public session I pointed to factors like the increasing potential cost of the scheme during the course of the negotiations. I also noted that there was a lack of knowledge about the extent of the congregations' ability to pay, and no effort to stress test the congregations' assessment of their financial exposure in potential litigation.

While the Attorney General's office was involved in finalising the legal documentation to give effect to the deal, the deal was agreed in principle directly between the Minister and the congregations. It is a matter of judgement as to whether any of these factors made a difference to the final outcome.

The third part of the report deals with the implementation of the agreement. Here the cash element of €41.14 million has been paid over, as stipulated. The property element is being diligently pursued by the Department, although, as might be expected, there is some way to go before this side of the agreement can be finalised. To recap, the agreement envisaged that property previously transferred to the State or its agencies, or to registered charities in certain circumstances, would constitute €40 million of the property contribution, with another €36 million coming from future property transfers.

The remaining two elements of the agreement were the provision by the congregations of counselling and other support services for former residents of the institutions and their families to a value of €10 million, and the allocation of €12.7 million of the cash contribution to education programmes for former residents of the institutions and their families. I am sure the accounting officer will be able to bring the committee up to date on those particular issues.

This is the second opportunity for the committee to discuss chapter 7.1 of the 2002 annual report of the Comptroller and Auditor General, which deals with the residential institutions redress scheme. I welcome the opportunity it gives to address any issues outstanding from the meeting of 2 October 2003. At that meeting I sought to provide members of the committee with the information they required concerning the establishment of the redress scheme and the conclusion of the indemnity agreement with the religious congregations. However, and without wishing to repeat in detail what was dealt with at that meeting, it may be useful to outline briefly again the considerations which informed Government policy in respect of past child abuse in institutions that were regulated by public bodies, although owned for the most part by religious orders.

Given the enormous concern in society generally about this issue in the late 1990s, the Government responded with an initiative with three elements — the commission to inquire into child abuse, counselling and the redress scheme. In deciding to set up a redress scheme, the Government was motivated by a combination of social, humanitarian and legal considerations. It was the view of the Government that the religious congregations that ran the institutions were prepared to adopt only a legal strategy. However, the Government was not prepared to do so. There was a serious social and humanitarian problem crying out for an early resolution. The Government decided that a compensation scheme should be set up without delay as a response to that problem. It also considered that the fairest scheme from the victims' viewpoint, and the only one which was likely to be successful in removing the issue of child abuse from the courts, was to provide victims of abuse with awards that were comparable to High Court damages.

In deciding to establish a redress scheme, the Government decided to do so with or without a contribution from the congregations involved in running the institutions, although the achievement of such a contribution was, from the outset, a policy goal. Accordingly, it should be understood that it was not the conclusion of the indemnity agreement with the congregations which led to the putting in place of the scheme and the creation of the liability, which is the subject matter of the report of the Comptroller and Auditor General.

As I have already said, it was — for a number of reasons, including financial — a policy goal that the congregations that owned and managed the institutions should contribute to the scheme. From an early date, the congregations indicated that they wished to make a meaningful contribution. The Government had no capacity to force the congregations to contribute any particular sum. The outcome had, therefore, to depend on the congregations' own sense of duty and fairness. In the event, after long negotiations and one refused offer, the congregations proposed a sum of €128 million. This sum was not based on any apportionment of liability or any proportion of the likely cost of the scheme. The Government considered that the sum was appropriate in all the circumstances. At the end of the day, the decision to accept €128 million was a decision made by Government after months of negotiations and on the basis that this was the best offer the congregations would make. Had the Government decided not to accept the offer from the congregations, the options available included having no redress scheme and allowing the courts to decide on liability on a case by case basis; paying partial compensation to victims of abuse and allowing victims to sue the congregations separately for the balance; paying full compensation and subsequently suing the congregations for a contribution or paying full compensation with no financial impact whatever on the congregations.

In the course of policy development, each of these scenarios was considered and ultimately not accepted by the Minister and the Government. They would have led to a situation where one of the basic tenets of the redress scheme — the provision of a forum whereby these cases could be dealt with, without the need for victims to undergo the traumatic and lengthy process of court proceedings — would have been negated. Alternatively, lengthy legal proceedings involving the State and the congregations would have been necessary with a very uncertain outcome. As regards fighting each other in the courts, there was also every likelihood that the State would in that event pick up the full cost because of technical rules relating to joint co-defendants and the fact that the State generally would be seen as the party with deep pockets.

Central to the policy approach of the Government at all times was a concern for the needs of victims of abuse in childhood and the desirability of bringing closure to a painful time for survivors of abuse, and for Irish society generally. At this stage, and based on the information currently available to us, even the heavily qualified estimate of the likely cost of compensation awards of €508 million remains, in our view, a reasonably likely outcome. To date, the board, which has been operating for 18 months, has received 3,015 applications and has made a total of 765 awards or settlements. Some 21 awards or settlements were not accepted and have been sent to the redress review committee. The average award at this stage is approximately €80,000 and the total amount committed is approximately €60 million.

While it is still impossible to predict the final outcome of the redress scheme, if the level of claims received in the first year of its operation were to continue for each of the three years in which it will accept claims it would receive approximately 7,650 claims. However, it is impossible to predict whether this will occur and it is possible there could be a fall-off in claims being received or in the level of awards being made as the work of the board progresses.

Mr. Dennehy, may your statement be published?

On 6 November 2001, when the letter from the Minister to the religious congregations was sent, the number of claimants was 3,000 and the estimated cost was €381 million. This exceeded the original estimate of 2,000 claims. The State had put a cap of €127 million on the congregations' contribution, based on the estimate of 2,000 claims. Was the decision made in November 2001 to cap the contribution based on the estimate of 2,000 claims, when it was known that claims were running at 3,000, incorrect? Did that hamper the State's ability to get a better deal for the taxpayer?

At all times the view of the Government was that a redress scheme would be put in place, regardless of whether the congregations contributed. It was a policy aim that we would get the congregations to contribute as much as could possibly be obtained. At no stage was it decided that the contribution would have to be a proportion of the total cost of the scheme.

At the very beginning there was a view that we should aim in the discussions for a 50:50 deal, based on the information we had. As the discussions progressed it became quite obvious that this was not going to be the case. On 30 April 2001 agreement was reached between the Ministers for Finance and Education and Science on the position to be adopted during the negotiations. This was done at that stage with the full knowledge of the Attorney General's office as well.

Between October 2001 and April 2002, the Office of the Attorney General was not represented or had no contact with those negotiating on behalf of the State. The accounting officer has stated that two meetings took place in this period and that neither discussed legal issues in detail. An announcement was made in January 2002 that an agreement had been made in principle. The Attorney General wrote seeking information of the negotiations and of the extent of the indemnity on 31 January 2001 and in February 2002. No reply was received and on 13 March 2002 the Attorney General wrote to the Department, advising that his office could not participate in negotiations or offer advice. On 13 April the Minister wrote outlining the policy on the indemnity.

If the Department was sure of the agreement and satisfied with its content in January, why did it take until 13 April to reply to the Attorney General's queries of 31 January and 1 February? It was only when the Attorney General advised, on 13 March, that his office could not act for the State because of this lack of information that he received a reply, on 13 April, outlining the policy approach to be adopted in further negotiations on this indemnity.

The Department of Finance was excluded from 16 October 2001 until 31 January 2002. The Attorney General noted, on the indemnity, that an estimate of the doubling of the number of cases to 5,200 might be conservative. He pointed out that the contribution of €128 million might be insufficient and also highlighted the lack of a mechanism for increasing the contribution if the number of cases increased greatly.

On the absence of the Attorney General's office from those two meetings in March, during that period the Attorney General's office, very reasonably, wanted the Minister to decide on the policies and principles which would underpin the indemnity agreement before engaging in any detailed discussion with the lawyers for the congregations. There were two key issues which the Minister had to decide. Those two issues were what cases should be covered and the period for which the indemnity would apply. It was in the context of those issues that the Attorney General wrote to the Minister in January and again on 12 March.

During that period the Minister and officials took some time to formulate the policy responses to the issues being raised, and that took some time. It would be a misunderstanding to think that during that period there was no contact between the two offices. While no formal letter of reply was sent during that period there was substantial contact between officials from the Department of Education and Science and the Attorney General's office.

The Attorney General wrote on 13 March advising the Department that his office could not participate in negotiations or offer advice.

How could he make that statement on 13 March if there was contact prior to that date?

There was constant contact. What the Attorney General or his officials could not get involved in was formal legal discussions between the State side and the lawyers for the congregations until some of the policy issues had been signed off on by the Minister for Education and Science.

Did the negotiation team not consist of representatives of the Departments of Finance and Education and Science and the Office of the Attorney General? Why is only one section of the team doing the deal?

They were not doing the deal. No deal was being done during those dates. While there were no formal meetings or letters exchanged there was constant contact and consultation between our Department and the Department of Finance and the Office of the Attorney General.

At a meeting of the Joint Committee on Finance and the Public Service in July last, Ms Anne Nolan, an official of the Department of Finance, stated that the Department of Finance had no contact with the negotiations during the period October 2001 to 30 January 2002.

That would be correct. There was a period when the Department of Finance was not present at the discussions. On those occasions, it was legal and technical issues that were being discussed. While there was a raft of meetings — I can read them into the record; there are pages detailing formal meetings which took place — there were a number of meetings at which the Department of Finance was not present because no financial issues were being discussed at that stage. In addition, there were a number of meetings at which the Attorney General's office would not have been present because, again, no legal issues were being discussed.

I could bring Mr. Boland in to clarify some of these issues. He was present at all of those meetings.

Mr. Tom Boland

Chairman, in the interest of complete clarification, I think the period you are talking about — October to January — was the period during which there were two meetings between the Minister and the congregations. If my recollection is correct, there were no meetings at official level with the congregations or their representatives during that period. There were two meetings between the Minister and the congregations.

At the Joint Committee of Finance and the Public Service it was stated that there was no contact whatever between the Department of Finance and the negotiating team during that period.

Mr. Boland

The negotiating team did not convene during that period. That is absolutely correct. That is because the negotiations were being conducted by the Minister personally.

It was agreed when the negotiating team was set up that it would consist of three strands, the Minister's office, the Department of Finance and the Office of the Attorney General. I refer to the Attorney General's letter of 13 March which states that the office could not participate in negotiations or offer advice. He had to wait for a month afterwards before receiving a letter from the Department. He stated that he had concerns at the time.

Mr. Boland

Effectively the negotiations at official level concluded at the meeting in, I think, October, when it was apparent that we would not reach agreement at official level. The Minister then personally took the negotiations forward until the agreement in principle in January.

The Attorney General pointed out that the contributions of €128 million might be regarded as insufficient and he highlighted the lack of a mechanism for increasing the contribution if the number of cases increased greatly.

He indeed pointed that out and that is available in some of the documentation we sent to the committee. From the very outset within the Department of Education and Science we made the Government aware that it was almost impossible to predict what the eventual cost of this scheme would be. That was pointed out by the Attorney General and it was pointed out clearly to Government. The Minister for Finance made the same observation. The decision ultimately, based on all the information available to it, was taken by Government with respect to signing off on the sum that would be acceptable.

I will return to that but I will allow Deputy Fleming now. It is quite extraordinary that the Attorney General had to send such a letter and had to wait until the following month before receiving a reply, from March until April. What was the reason for the delay?

My understanding from the officials who were dealing with this issue and indeed from discussions I have had with my colleagues in the Attorney General's office, is that during that period there was constant contact between officials while the key policy decisions were being worked out by the Minister for Education and Science prior to going to Government with a proposal.

I will follow up with the issue mentioned by the Chairman in a few moments. I wish to deal with three topics. The first is the matter of the overall estimate of the potential cost for the redress scheme. The Department is satisfied that €508 million is the most reasonable likely outcome. The report of the Comptroller and Auditor General states that it could amount to up to €1 billion. There is a very big difference between the two estimates. From the point of view of the Department, which estimate is correct or when will it be possible for anyone to state the actual cost with any certainty? Is it possible for the Department to give an accurate prediction at this stage?

Any estimate given at the moment would still be problematic as it would involve surmise and conjecture. Based on the claims settled to date, the Department is still of the view — but it is a very qualified view — that the figure will still work out at around €508 million. However, until the scheme comes to an end, we will not know with certainty precisely what it will cost. All documentation submitted to Government from the Minister for Education and Science — as the Chairman has said, this was supported by the views of the Attorney General and the Minister for Finance — stated that we did not know with certainty, but based on the information available to us, were still of the view that it should come in at around €508 million. There would be one difference between our figures and the figures compiled by the Comptroller and Auditor General; we are not including legal costs in that sum of €508 million.

I will ask the Comptroller and Auditor General the same question. The Department is satisfied that the reasonable likely outcome from its point of view is €508 million and the Comptroller and Auditor General states that it is potentially €1 billion. I am aware that all the views are qualified but who is correct? When will this committee or the public see a conclusion? Is it possible at this stage to accept either figure or must we wait?

Mr. Purcell

The basis on which the Department has made its estimate is reasonable. It is based on what has happened up to now but there are other imponderables. I mentioned that there are almost 6,000 freedom of information requests. My information from the Department is that approximately 70% of those requests are made by solicitors, so they are not exploratory in that sense. There will also be a certain element that will be requested out of personal concern and to elicit family details and so on. Such a high percentage of requests coming from solicitors is a great imponderable. We might need to do a little more work and try to analyse what those freedom of information requests contain, before deciding what impact they might have on future claim patterns.

We are a little wiser now than we were last October but not that much wiser. There are avenues we can use to firm up on those figures. It may even be possible to make contact with some of the larger firms of solicitors dealing with these cases and on a voluntary basis glean some information from them about the type of claims backlog they are dealing with and what they are processing. I do not know whether they would co-operate but we would consider making the approach to try to establish what might be in the pipeline so that we could report and bring the committee up to date on that kind of information, in my next annual report to be published before 30 September 2004.

As I stated in my opening remarks, any of the estimates, no matter how well founded they may seem, are at the mercy of many uncertainties and it is difficult to produce a reliable figure.

I agree with the Comptroller and Auditor General on this point. We are in possession of one piece of information which is that when the Comptroller and Auditor General did his report, the average award was around €84,500. In October that had dropped to €80,745. We understand from the redress board that currently the average award is approximately €79,900. There is at least an indication that the average award is coming down but it remains to be seen whether it will continue in that direction.

The second issue I wish to deal with is the indemnity agreement between the State and the religious congregations. I will ask Mr. Dennehy to comment. He attended a meeting of this committee several months ago and subsequent to that meeting he sent in a letter to the committee dated 10 November 2003, reference 3.4 on the documentation the committee dealt with that day. The letter was in connection with setting out the State's position on these negotiations. The Department of Education and Science has provided the committee with a very comprehensive file and a lot of documentation in recent months on this matter.

What was the State's position? Why did the then Attorney General see fit to write a letter seeking information and clarification and why was there a delay? I have reviewed the files we received from the Department of Education and Science and, independently, from the Department of Finance. This documentation was the subject of agreement by the Department of Education and Science, the Department of Finance and the Office of the Attorney General in April 2001. I refer to document No. 23 from the file the Department of Education and Science sent to the committee in April 2001 and to Mr. Dennehy's letter which deals with the same issue.

These documents outline the State's position. Document No. 23 states that on 30 April 2001, the Minister for Finance and the Minister for Education and Science agreed the position to be adopted in the negotiations with the congregation. It also states that the position was agreed with the knowledge of and in consultation with the Office of the Attorney General. According to the document, the position adopted included an indemnity for the congregations contributing to the scheme in respect of all civil actions arising from acts of abuse committed on people who were eligible to make a claim to the compensation scheme. The position included a cap of £100 million, which ended up as €128 million, as the lowest contribution which would be accepted from the congregations.

In April 2001, the Department of Education and Science, the Department of Finance and the Office of the Attorney General agreed that all civil actions arising from acts of abuse on people who were eligible to make a claim to the compensation scheme would be dealt with under the agreement. That included cases which did not necessarily go directly to the redress board. It included all claims, including those which could go directly to court. It was agreed by all parties in April 2001 that the minimum contribution which would be accepted was £100 million. Is that an accurate assessment? The Department of Education and Science provided the committee with the confidential document which was prepared for the Secretary General by Tom Boland. It includes a reference to the Minister's agreement in writing and outlined to whom it was circulated in the Department of Finance and the Office of the Attorney General. It states the position agreed at the end of the process. Is that an accurate reflection of the State's position at that time?

Yes, it is.

The Office of the Attorney General was fully satisfied that all cases which were capable of being dealt with before the redress board, whether they went before it, would be covered by the agreement. Mr. Dennehy may wish to offer an opinion, but following on from the Chairman's comments, that it is a bit strange that the Office of the Attorney should seek in January or February of the following year an outline of the State's position when it had agreed the position in April 2001. It would help the Committee of Public Accounts if officials of the Office of the Attorney General would attend to explain why, if they signed up to the agreed position in April 2001, they sought to write letters wondering what was the position when there had been no change.

I understand from the Department of Finance that the position the Department of Education and Science signed off on in April 2001, is substantially the position which was ultimately agreed in spring 2002. There was no change of the financial parameters of the agreement when the discussions were among officials, when the negotiations broke down or when the agreement was brought to the Minister directly involved over the winter period and, ultimately, agreed by the Government at the end of January. Having looked at all the files presented by everybody involved, the case appears clear cut. The only question to be asked is why the Office of the Attorney General wrote the letters it did having signed up to this agreement eight months earlier. I do not expect the Secretary General to be able to answer that or to speak for the Office of the Attorney General.

The committee has requested officials of the office to present themselves at this meeting and they have chosen not to do so on the basis that their discussions and advice in this matter constitute privileged legal advice. The Chairman and members will concur with me that a great deal of non-legal advice was issued on the manner in which this issue was dealt with. The Office of the Attorney General could confirm whether it received document No. 23 and agreed to it. Representatives could confirm without commenting on the legal aspects of the matter whether the document was passed to the then Attorney General or dealt with by officials in the office. Interestingly, Mr. Dennehy's opening remarks centred on the Office of the Attorney General and the Attorney General. There is a definite gap here today. Officials of the office must attend this committee to answer questions about the letters.

This issue is referred to in the 30 page report of the Comptroller and Auditor General.

The Office of the Attorney General has not refused to attend today, but it has refused our invitation to come before the Committee of Public Accounts. I support completely the stance Deputy Fleming has taken. I will be very disappointed if officials of the office do not attend.

While we accept the extent to which they are subject to legal constraints, there are issues by which they are not legally constrained. They could help this process because they were involved in it. Some officials attended regular meetings and could simply confirm that. It is not a legal issue.

The Secretary General, Mr. Dennehy, has outlined in summary the State's position on this matter as agreed by all parties in April 2001. On page 83 of the report of the Comptroller and Auditor General, it states that in April 2001 officials sought ministerial approval for the following approach. While a contribution of 50% would be sought, it should be subject to a maximum limit. The report summarises the State's position to the effect that while the opening figure sought should be €190 million, representing 50% of the then estimated liability, in the event that the congregations could provide convincing reason for resisting this approach, a lower limit of €127 million could be set. That was the figure which was ultimately agreed. The report states further that if not satisfied as to the contribution, the State should be prepared to refuse to accept the participation of the congregations and should, in that case, amend the law to ensure the claimants could, even if compensated through the scheme, pursue their claims independently against the congregations.

That is fine in so far as it goes and Mr. Dennehy would concur with it. The documents to which we have referred and the letter Mr. Dennehy read out today state that in April 2001 the State decided, as aquid pro quo for a reasonable contribution, to grant an indemnity to the congregations contributing to the scheme in respect of all civil actions arising from matters of abuse committed on people eligible to make a claim under the compensation scheme. Does Mr. Dennehy consider that to be a fundamental aspect of the State’s negotiating position as agreed by everyone?

That is correct.

I wish to turn to page 83 of the report of the Comptroller and Auditor General. It does not accurately, fairly, fully and truly reflect the State's position on such a fundamental issue. This is the reason the Chairman was so confused about the position of the Office of the Attorney General in January and February of the following year. If one reads the report of the Comptroller and Auditor General, one would not be aware that the Departments of Education and Science and Finance and the Office of the Attorney General had agreed to that position in April 2001. Therefore, if the Chairman is working from that report, I can understand why he would think the Office of the Attorney General would have reservations the following year because the report of the Comptroller and Auditor General is not a full and fair assessment of the State's position. Will the Comptroller and Auditor General comment on that, because the fact that this report was not fully comprehensive in this respect has been the kernel of the political bugbear?

Mr. Purcell

It is not clear it was the State's decision at the time because, in January, the Office of the Attorney General did not seem to think that was what was agreed to. Therefore, there was some confusion on its part at the time. In compiling the report, I felt that if it was that clear, it would not have taken the three months from the end of January until April to establish exactly what the position was.

The Deputy is quite right — we probably need to hear from the Attorney General's office on this matter. Nevertheless, if it was that clear, it would have been the first thing to be pointed out by officials of the Department of Education and Science to the Attorney General's office when they first raised this point, immediately consequent to the Government's agreement in principle.

Therefore, it is not clear whether this was the State's position. The Attorney General's office, by virtue of the correspondence which is quoted in the report, does not seem to think so. If it was that clear from the beginning, it would not have taken that long to resolve. Therefore, I am working from commonsense principles in this when I refer to it as "the agreed State position".

Perhaps it would be helpful if I asked Mr. Boland to come in on this issue as well because he was dealing directly with the Attorney General's office on these issues at the time.

Mr. Boland

In a letter to Mr. O'Daly, deputy director of the Office of the Attorney General on 31 January 2002 — which is document No. 50 in the list we sent to you — in regard to the contribution of €128 million, I stated that:

In return for this contribution, the Minister agrees the congregations would receive an indemnity. The detailed terms of that indemnity were not discussed. In principle, however, it was agreed that the indemnity would be such as to cover all qualifying claims, by which we understand all claims which are dealt with through the redress board or which could be so dealt with within the terms of the Residential Institutions Redress Bill 2001.

That is precisely the position that was agreed in April 2001. To that extent, in fairness, the Attorney General's office was aware of that position in January 2002.

It is not my business at all to speak on behalf of the Attorney General's office and I will not do so but my understanding of its particular concern was that it always wanted a very detailed note or minute of what precisely was discussed, just to be sure to be sure, of the meetings with the Minister.

Mr. Purcell

I would point out, and we have common cause on this, that Mr. Boland was not at the negotiations. We were relying very much on two memos prepared by the accounting officer in his capacity as Secretary General of the Department, which were provided at the behest of the Attorney General's office at the time. Let us put that in context.

Chairman, I am not letting go of this. I will ask other members.

Is there a suggestion that Mr. Boland's information is not accurate when you say he was not present?

It is not that, rather the fact that he was not at the committee.

What is the relevance of his not being there?

That clarification is important.

It is very important.

The Chairman began in detail with this topic. It is fine if members of the Committee of Public Accounts have to do anything. I have to take issue with the Comptroller and Auditor General in regard to this aspect of his report, as is my entitlement.

Let us take the "commonsense approach" to which the Comptroller and Auditor General referred. The Attorney General's office and the Departments of Finance and Education and Science signed off on this position in April 2001 on what was ultimately agreed and transpired to be the final position. At the end of January, the Comptroller and Auditor General's office wrote to the Department of Education and Science seeking clarification and a senior legal adviser wrote back on the same day confirming it. Whether or not Mr. Boland was at the meeting — it is a matter of fact he was not present — I can take it that if he was writing in his capacity as director of legal advice in the Department of Education and Science, he was speaking for the Department. One could reasonably ask what further reply was necessary from the Department of Education and Science during that period because the position was eminently clear to everyone involved, including the officials in the Department and the Office of the Attorney General. The only wonder is that a subsequent letter came and the matter was ultimately dealt with. The position was clear.

I take issue with the Comptroller and Auditor General in regard to the drafting of his report because I do not understand why, given that all three had signed up and the correspondence was on file, just because one person writes one letter, he states that the issue is now unclear. It was not unclear. It was clear to everyone that it had been signed off. Perhaps we will have to resolve why that letter was issued.

On page 83 of the Comptroller and Auditor General's report, in which he summarises the State's position without reference to that document, does he think, given the files in front of him and the position signed off by the Department of Education and Science, the Department of Finance and the Attorney General's office, his assessment of the State's position on page 83 is a full, true and accurate assessment of the State's position in April 2001?

Mr. Purcell

I think it is fair to say that reference could be made to the indemnity.

I am happy to leave it at that. It would have been fairer for the Comptroller and Auditor General to have included that reference to the State's position in his report in this regard. Perhaps the Chairman and everyone else would have understood the State's position far more clearly from an earlier date. I have made the point before that the outlining of the State's position could have been more fair — to use the Comptroller and Auditor General's words — if it had included a reference to the indemnity and might have avoided much political fallout in the interim. I am happy to move on from that topic.

Mr. Purcell

I have spoken before about the compilation of a report. The Deputy has seen the amount of documentation available here. To put it all in a readable form is not the easiest job — particularly on an issue as complex as this one. I take full responsibility for what is in the report but it is not something which appears all of a sudden in the Department. Right along the way, we would have been having discussions, agreeing the report and the detail in it with senior officials of the Department, culminating in the final draft going to the accounting officer. It is the common procedure that where the accounting officer is asked to make suggestions on the report, he or she will do so and we invariably take them on board unless there is a very good reason for not so doing. While I have the responsibility for what is in the report, and I am not in any way trying to transfer responsibility to the accounting officer, I would have thought if the Department felt there was an unfair presentation of the facts, it would have pointed that out at the time and would have been encouraged to suggest an alternative wording.

We are constantly trying to improve the quality of reports and I will take on board any further suggestions made by any members as to how that might be achieved. However, I felt — I was not the only one — that there was a serious conflict about the position of the State at the time the agreement was made. There was clearly a difficulty in the Office of the Attorney General. I concur with what Deputy Fleming and the Chairman have said, namely, that the only way to resolve this is to hear from the people who also had that misunderstanding and were confused about the position of the State.

My understanding of the communication from the Office of the Attorney General in January to the Minister of the time was that it was trying to ascertain whether there was any change in the State's negotiating position as a result of the meeting that took place between the then Minister and the congregations. That was the issue on which the Attorney General was seeking clarity.

Does Mr. Purcell agree that the tone of such a letter would be different?

Mr. Purcell

It was my understanding of what was being sought at the time.

Everybody is agreed that it would be helpful for the officials of the Office of the Attorney General to attend a meeting of the committee and tell us as much as they can. We can then move on from there.

My last question is directed to the representatives of the Department. I will quote from the report of the Comptroller and Auditor General, referring to the congregations' negotiating position. I accept everything that is here. The report states:

The congregations took the view that the level of contribution required from them should be in proportion to the level of validation of allegations decided by the Government and their ability to pay.

The fundamental issue is the institutions' ability to pay. The report goes on to state:

In addition, the congregations indicated that any contribution should take into account the ministry which they continue to carry out and, where appropriate, the resources of the individual congregations.

Clearly, the ability of the congregations to pay was an important aspect of the negotiations. The report also states under the heading "Contribution": "The agreed contribution of €128m to be made by the congregations to the redress scheme comprised the following ...". The following is well known.

Finally, in the section dealing with cash payments, the report states: "The Congregations duly made the payments as stipulated". While the congregations were paying, their financial position and ability to pay was a fundamental issue. In the press release issued by CORI on Sunday 29 October 2000, which is document No. 1, mention is made of the congregations' willingness to participate in the redress scheme and help bring closure to everybody involved. The theme of the congregations' ability to pay runs through everything and is an important issue. To the knowledge of the Secretary General, have the congregations received any reimbursement of the money they paid to the State from insurance companies?

At the outset of the discussions, the issue of whether the congregations were insured was raised. The clear impression given to the negotiating team was that they did not have insurance to cover them for the period during which the abuse is alleged to have occurred. During the discussions that took place, there was no indication at any stage from the congregations that they had any form of insurance, and this obviously did not form part of the agreement. However, we have information in the Department, although there is no certainty about this, that the congregations are supposed to have said they had received anex gratia payment from their insurers. I presume they received this some time relatively recently. The sum I was told was involved is about €6 million. However, I emphasise that this is anecdotal information based on the information available to the Department.

At a meeting in the Department yesterday involving representatives of the congregations and officials, the question of whether they had received an insurance settlement orex gratia payment was raised. They were not in a position at this meeting to discuss the issue. They said they would do it in another forum. The meeting held yesterday, which happens to have occurred the day before this committee meeting but had in fact been arranged for a while, was to do with trying to bring closure to the property aspect of the deal. At the meeting, however, there was no discussion. At a meeting the Minister had with the congregations some time ago, he said that if they had received any insurance settlement, it was his view from a moral perspective that that money should be available as part of the deal.

This is clearly new information being disclosed in the public arena. It now appears there is the possibility of a recent payment of €6 million from the insurance companies to the religious institutions. Can Mr. Dennehy confirm that the meeting was held yesterday?

At yesterday's meeting——

Mr. Dennehy said there was a meeting with representatives of the congregations yesterday.

At yesterday's meeting the issue was raised with the congregations and they refused to discuss it. We have information in the Department but I must emphasise again that it is anecdotal information. We understand the congregations may have received up to €6 million as some form ofex gratia payment from their insurers.

This committee last considered this matter in public session on Thursday, 2 October 2003, which meeting Mr. Dennehy attended. Has that information come to him since then?

It has come to me within the last week.

I feel the questions and prompting of the Committee on Public Accounts might in some way have led to the release of this information. My preamble related to the religious institutions' ability to pay and their financial resources. At no stage did anyone present have any knowledge that there was an insurance company involved in the matter of this payment. I take the view that this is new and serious information. Will the Chairman compel representatives of the religious institutions to attend a meeting of this committee at the earliest possible date? I know we have had discussions with them, but the situation has changed. Was the information disclosed to the Secretary General during the course of the negotiations that the congregations may receive a payment eitherex gratia or from an insurance policy? Practically every payment is ex gratia without admission of liability. Was he made aware of this?

No. In preparing myself for today's meeting, and in internal discussions with some of our officials, this is how this information came to my attention within the past few days.

Mr. Dennehy has anecdotally mentioned a figure of €6 million paid in recent times, and further funds may be paid over in the near future. Notwithstanding the tremendous work carried out by the specific religious institutions over the years, many people will be hurt when they hear today that it was not the religious institutions who were making the contributions, or part of them, but some insurance company. This information was not disclosed during the negotiations. As a Member of Dáil Éireann I would have expected the religious institutions to have been more open and transparent in their negotiations with the Department officials, and to have indicated a possibility of some funds being obtained from an insurance company to cover the cost, or to say that this would be the outcome.

The names of the legal advisers who attended the meetings are in the file. These people would be known to act often on behalf of insurance companies. It is clear to me that some insurance company was holding the hand of the religious institutions at all stages during the negotiations. This alters the entire premise on which the indemnity agreement was reached.

Is the Deputy suggesting——

I am asking a question, and the Deputies can follow up the matter. Was the agreement fairly entered into between all parties on the basis of trust and transparency? I will ask the Government, the State and the Attorney General to revisit the agreement on this basis. I suggest that now might be the opportunity to reopen the negotiations on the basis that this time we would obtain information regarding the assets and resources of the religious institutions and regarding any insurance company which may be helping to finance their contributions. I am asking the religious institutions to attend voluntarily and immediately. If they do not do so, let us compel them if we have the powers to do so. A fundamental question mark has been put over the good faith in which this agreement was negotiated, and this has now come into the public arena for the first time. This is important information, and we must give serious consideration to how we take the matter from here.

Anecdotal evidence must be treated as such.

The evidence is anecdotal, but a respected Secretary General would not make such a comment lightly. We need details of this anecdotal evidence to find out if further such payments may be made or to establish if a payment was made. We need to know the position of the religious institutions and theirbona fides at all stages during the negotiations. Some people believe that the religious institutions got off lightly in these negotiations with the State given the possible €500 million to €1 billion eventual liability to the State. If people hear today that an insurance company reimbursed the religious institutions for some of those contributions, that alters matters. We need to return to this matter urgently at the earliest possible date.

I read the documents from the Department of Education and Science last night, and a matter of fact arises in them regarding insurance. There is a letter to Mr. Dennehy from Sister Elizabeth Maxwell, dated 14 January 2002, in which the insurance issue is raised. This is document No. 43 in the file. In the second paragraph, Sister Maxwell says: "In particular, I would be anxious that everybody involved would be clearly aware of the nature of the proposal made and those matters which are critical to it, such as the final agreement on the precise institutions which would be indemnified, the question of contribution from our insurers [and] the need for amendments to the Bill ... ".

That letter to Mr. Dennehy refers strongly to Mr. Dennehy and Sister Maxwell understanding what was agreed, but because the issue was going immediately to Cabinet, it needed to be clarified for other people. There is a reference to the contribution from the insurers. This is directed to Mr. Dennehy himself. The context suggests that Mr. Dennehy knew about this and that he had detailed information about everything Sister Maxwell refers to but that she needed clarification about it going to Cabinet, because of other people being involved. At the end of the paragraph she says that the position could be misinterpreted by persons not directly involved in the discussion, which unwittingly misrepresented the precise situation. Whether cleverly or with legal advice or otherwise, the issue of a contribution from insurers is placed on the record by the religious orders, under the signature of Sister Maxwell, on 14 January 2002 in a letter to Mr. Dennehy.

I had no discussion and no detailed information regarding whether there was any contribution from the insurers.

Did Mr. Dennehy spot the reference at that time?

No. I admit I did not.

For clarification, a memo was prepared by the Department in July 2001 which was not sent to the Government. It is noted in section 5.2. It follows on from Deputy Fleming's point. It states:

The Minister for Education and Science accepts that the congregations have made a valuable contribution to Irish society in the past. It is not in the public interest that their capacity to continue to make a contribution should be seriously jeopardised by the amount of their contribution to this scheme. However, as no reliable information on the congregations' assets and ability to pay have been provided, it is not possible to determine how much weight can be given to this argument. In addition, since the total amount of the contribution proposes €45 million, this represents less than €4 million per congregation concerned. This would seem to be a small fraction of the value of the assets of most of the congregations.

That was the view of the Department in July 2001. The memo was not sent to Government. It is important to put this on the record in the context of Deputy Fleming's point and with regard to the figures.

Mr. Boland

In the interests of trying to be helpful, having attended all the discussions between officials and the congregations and operating to some extent on recollection, I concur with what the Secretary General said earlier. In the early meetings there was some discussion about the question of insurers being involved regarding the payment of any contribution that the congregations would ultimately have to make. However, the congregations were not particularly forthcoming with information on that, or on their assets. The clear impression conveyed was that the congregations were going to pay from their own resources all or most of any contribution to be made. There was some emotional discussion about the possible suppression of congregations as a result of this. That would certainly not fit in with a context where a substantial part of the contributions would be made by insurance companies. My understanding was that, as the Secretary General said, the insurers would not play any significant role in this matter because some 70% of claims, or likely claims, are from the 1960s and before and the congregations did not have that kind of insurance for that period.

I do not know what the precise position of the congregations is regarding insurance. Some of what has been spoken of is speculative or anecdotal. I have outlined the actual position at the discussions. By and large, the officials took it on good faith that this was the position. Since the officials never got past first base, in terms of getting the congregations to agree to any amount, the issue of insurance was never discussed in any great detail after that.

There was no stock taking of their asset register concerning their valuation. One had no idea of their ability to pay. The memo to Government which was not sent would indicate this view, would it not?

Mr. Boland

There was some discussion on the issue of their ability to pay. Ability to pay could best be ascertained by having a full register of their assets. That was not forthcoming.

That was not sought?

Mr. Boland

It was discussed, yes.

In his contribution today, Mr. Dennehy used a phrase that the payment of a contribution by the religious congregations depended on their own sense of duty and fairness. In light of what we have heard to date, has Mr. Dennehy any reason to believe that such a sense does not exist in any way?

We entered into the negotiations with the religious at all times hoping that on both sides there would be a sense of duty and fairness in the discussions. I have no evidence——

Anecdotal evidence?

I am a bit concerned about anecdotal evidence. I was asked a direct question and I am truthfully giving the information that was made available to me in the last few days in discussion with officials while preparing for today's meeting.

Knowing that a meeting was taking place yesterday involving representatives of the congregations and our officials, I asked them to raise that issue and seek clarification with the religious. We did not get that. I got some anecdotal information.

Have there been many such meetings between the congregations and the Department since the last meeting of the Committee of Public Accounts?

This is the first one.

On the January 2000——

To correct the record, the Minister also met them in December but this is the first meeting between officials——

Was that Deputy Noel Dempsey?

On the issue of the January 2000 letter that Deputy Noonan referred to, Mr. Dennehy seems to have missed a reference to the possibility of insurance payments being forthcoming from the religious congregations. How many people in his Department would have seen such a letter and would also have missed such a reference?

I honestly do not know.

Would it be two, three or up to six?

It would be two or three at the most.

I wish to return to the figures on how the €128 million was originally decided. The additional information that Mr. Dennehy supplied us with on 10 November referred to a cap of £100 million, which is €127 million, for the religious contribution. In February 2001, it was estimated that the overall cost would be €254 million, which was the first estimate made by the Department and is the equivalent of £200 million. From €127 million to €254 million is an increase of exactly 50%. Was it presumed that this was meant to be a 50% contribution and, thus, a 50% liability?

No, it was not. While in principle the negotiations began from a position that a 50-50 deal should be sought, it became quite obvious to the negotiators that this figure would not be reached. This information was conveyed to the Ministers involved. Ultimately, the decision was taken that the settlement would be on the basis of the best or highest sum of money that could be obtained. In no way would it be deemed to be any particular proportion of what, ultimately, this redress scheme might cost. There was no proportionality involved.

It was 50-50 from the first estimate to the first——

The initial negotiating stance was that an attempt would be made to get the congregations to pay up to 50% of what we then thought the scheme might ultimately cost.

The February assessment was re-assessed in April 2001 to €381 million which is £300 million and was subsequently re-assessed again in June 2001 to the current figure of €508 million, which is £400 million.

They seem to be remarkably even figures. They are re-assessed by £100 million every time.

At that stage, they were the best estimates that could be reached. It is an inexact science to try to estimate precisely what this will cost the State within the parameters that I have spoken about, as both Mr. Purcell, the Comptroller and Auditor General, and I have already said.

The €127 million that was decided upon, which was meant to be a bottom line, also included a reluctance on the part of the State negotiators not to accept the inclusion of property transferred over the previous ten years.

It did not include the transfer of properties to bodies other than directly to the State and voluntary agencies.

It did not include the establishment of a fund for providing counselling to victims.

That is correct.

There would have been a subsequent decision by the State negotiating team to relent on its bottom line.

The subsequent decision, which is the decision or agreement that was reached on 30 April, was based on the assessment of the negotiators. Following on from the negotiation, they felt that the religious congregations were prepared to go as far as the sum total of €128 million but that they would go no further. If that was not accepted by the State, then they would withdraw completely from the negotiations.

Subsequent to yesterday's meeting, which I assume was the ironing out of some details of the transfer of property to third parties and also the issue of counselling, where lies the level of agreement between the congregations and the Department on those matters?

Quite a bit of progress has been made on a number of issues. All the cash element has been paid over. In addition to that, the educational fund is up and running and, to date, €400,000 has been paid to individuals to enable them to pursue education courses or programmes.

There are two areas which have been disappointingly slow and one of these is the issue of sorting out the counselling. There has been a good deal of contact between the Department of Education and Science and the solicitors representing the congregations about the amounts of money that may have been paid out in the past by congregations on counselling. We are in contact with the solicitors in question and we expect shortly to try to agree with them finally about counselling that either took place or is taking place with a view to finalising that aspect of the deal.

Something similar is happening concerning the issue of property. We have made a good deal of progress on the question of property to be transferred since the date of the deal of June 2002. To date, we have accepted 34 properties, in principle, subject to finalising valuations. Their value is put at €22.6 million. In addition to that, we have received a further €5 million in cash in lieu of property. There is another set of properties that we are in the final stages of agreeing with the congregations.

My understanding from members of staff in the Department who are involved in the negotiations is that the property element should be sorted our pretty quickly. Since May 1999 up to yesterday, 3 March 2004, only one property was finally accepted. I am referring to properties that may have been transferred to the State, local authorities or voluntary bodies. As a result of yesterday's meeting, the Department can now write to the religious congregations and formally accept a number of additional properties and an arrangement has been reached with them that this issue will be concluded shortly. While yesterday's meeting was the first to discuss these issues — up to now it was dealt with mainly through correspondence — the arrangement is that they will meet regularly in the coming weeks to try to get this aspect of the deal closed. I understand also that yesterday the person leading the team from the religious congregations said that the congregations were determined to bring the matter to closure and pay "every last cent that was owed to the State through this scheme". They said also if final agreement is not reached in the relatively near future on properties, they will make cash payments in lieu. It has been a slow, long drawn out, complicated process. I have found it to be disappointedly slow. However, I have been told by advisers in the Department one has to allow a reasonable time because of valuations and leases and the complexity of property transfers. My officials were happy that very considerable progress was made at yesterday's meeting.

What would be the cash equivalent value, as of now, of what remains to be agreed?

I will have to check that. As of now, the value of property to be transferred is approximately €14 million, and the value of the property that is in the process of being transferred since May 1999 is €40 million, with one property having been formally accepted up to yesterday and others to the value of €18 million will be agreed in the coming weeks. Work is continuing on the remainder.

Is there a code of ethics in the Department or in the Civil Service for those engaged in negotiations? I have no reason to believe one way or the other whether the members of the original team negotiating on behalf of the State had external associations with the people with whom they were negotiating. Let me cite an example, if I worked in the Department with responsibility for youth affairs, I would consider it inappropriate for me to negotiate with voluntary youth organisations because of my past involvement with voluntary youth organisations. I am anxious to know that prior to forming a negotiating team, vetting takes place to ensure that the judgement of members would not be compromised by their associations outside their role on behalf of the State.

I am not aware of any formal vetting system, but I think that civil servants would not alone be very keen to do the right thing, but be seen to do the right thing. Given the calibre of the staff involved, a potential conflict of interests would have been immediately drawn to my attention and the person would have sought not to be involved.

In the context of the strategic management initiative, there might be cause for such a vetting procedure to be put in place.

That is a very good point which I will take on board and discuss with my colleagues.

Subsequent to his last attendance at the Public Accounts Committee, Mr. Dennehy became aware of one incident of the use of the indemnity and advised the chairman by letter on 3 October. Does this remain the single incident of the use of the indemnity through the court system?

It has been used three times in total up to today.

If the average amounts being paid are reducing, albeit marginally, will more people go through the legal system because of dissatisfaction with the smaller settlements?

There is no indication at all of that. As I understand it, the amounts in those three cases were well within the parameters of payments from the redress board.

I am interested in the on-going investigative process and how this committee operates. I am not suggesting that there is anything wrong if it has happened. Has any member of this committee sought or received briefings from Department officials on the issues we are investigating?

I am not aware of any.

On Deputy Boyle's point, at the last meeting he attended in October, the Secretary General said that to the best of his knowledge nobody was considering using or invoking that indemnity

I subsequently wrote to the committee the following day to clarify that because there had been one case of which I was not aware. As I mentioned to Deputy Boyle, to date there are three cases.

I believe the settlement of that one case at that time was in excess of €150,000.

Some of them are, but others are much lower. While we are not permitted to disclose the sums involved, my understanding is that the three cases settled to date come within the parameters of the overall amounts paid out by the redress board.

In one case it is reported, and I am not saying there is confirmation, that up to €150,000 was paid. That would be way beyond the sum paid by the redress board.

No, it is not. The redress board can go to €300,000, but the average is €80,000 at present.

In the letter of 6 November the scope was widened. It extended the remit to include the court and legal costs. The people have two options. If they get legal costs, they can go to the courts. The level of inquiries by legal representatives through the freedom of information process clearly indicates that people are checking settlements and the possible return on taking a case. Would that not indicate that people will be cavalier and will go for the highest payment, whether through the courts or the redress board?

That is not what is happening at the moment. A total of three cases have sought to go through the courts out of the 3,015 cases that went before the redress board, of which 765 have been settled.

The indemnity covers the possibility of going through the courts. All of the cases to date have been settled. In one case of which I was made aware it was considerably higher than the redress payment.

It was higher than the average.

Would that not indicate that 70% of inquiries under freedom of information legislation are by the legal profession?

I honestly do not know.

This has been an interesting morning so far and we are all aware of the fact that, where matters of conflict arise, they can only be resolved if we can question officials from the Attorney General's Office and members of the negotiating team for the religious orders. The situation is that one key player is present and two are missing so we will not be able to conclude satisfactorily unless we get the attendance of both parties.

I would like to take Mr. Boland through some of the documents in the Department of Education and Science file. The Department of Education and Science took a tough negotiating stance until June 2001. The position had softened significantly with the letter of the assistant secretary, Mr. Kelly, on 6 November 2001. Something must have happened in the intervening period and now we have a good idea what happened. I would like to take Mr. Boland through what I think happened.

Mr. Boland wrote a note to Mr. Dennehy on 27 June 2001 outlining the offer made by the religious orders, which was their first. In the course of the note, he stated that the congregations gave the clear impression that this package was their only and final offer and, if not acceptable, the negotiations would end. This is document No. 28. Was Mr. Boland firm in the conviction that this was a first and final offer from the congregations?

Mr. Boland

Yes I was. I might always have harboured the expectations that the negotiations with the officials would fail but that there might be further negotiations at a higher political or official level. It was my feeling that that group of officials were not going to make any more progress with the congregations at that stage.

Mr. Boland stated that the negotiations had reached a critical point and that, if the proposed package were to be rejected, it would be likely to end the current negotiations. He also stated that there might be a possibility of reviving them later. He listed the difficulties he believed would arise. If it was perceived that taxpayers were shouldering the cost of resolving the problem, there would be public criticism. However, a settlement with the congregations which was seen as inadequate could be as damaging as no settlement in the project of bringing closure to the abuse issue. That corresponds with my view of the situation by the end of June. Mr. Boland then recommended to Mr. Dennehy that the proposals should be taken to Government. Did he prepare the draft memorandum which did not go to Government and which was circulated yesterday to us?

Mr. Boland

Yes, I did.

Why did the issue not go to Government?

Mr. Boland

The decision to take it to Government rests with the Minister. My recommendation that it should go to Government represented something of a pinnacle in the discussions. It was not for the officials or the Minister to say "no" at that stage. The congregations had put forward a position which they had said was final. They wanted the Government to consider it and, therefore, it should have gone to Government. The reason it did not go was because the Minister took a view that he did not agree with it and therefore could not recommend it, in which case it was unlikely to be accepted by Government. Rather than have the Government reject a proposal and the chance of an agreement receding, he decided to let matters rest over the summer and to try once more in the autumn.

That confirms my understanding that the negotiating stance was a tough one and that this was supported by the Minister. In document No. 29, his position is supported by the Minister for Finance as well who said the offer was inadequate.

Document No. 30 is a letter which Donal O'Donnell, a senior negotiator and legal adviser to the religious congregations, sent to Mr. Boland. It arose from an article in theNews of the World The headline on the front page read: “Irish church: €200 million snub to abuse victims”. I have read letters from counsel before, but there is a level of anger in this that I have not come across previously. Did Mr. Boland think that it was an intemperate letter or that it encapsulated the views of the people Mr. O’Donnell represented?

Mr. Boland

My response indicated that I thought it intemperate to some extent, but I understood where he was coming from. Both sides entered negotiations in good faith. The congregations were always concerned that the negotiations would be conducted in public and that there would be leaks, either deliberate or otherwise, with some attempt to try to pressurise them unfairly. They were always sensitive that the negotiations should be confidential on the basis that nothing should be agreed until everything was agreed. They clearly felt that the story in theNews of the World was a leak from a high official source. He seemed to imply that it might have been the Department of Education and Science, as my reply to him suggests. It was because of that leak that there seemed to be a palpable sense of anger.

Did Mr. Boland think that Mr. O'Donnell was accusing him of authorising the leak?

Mr. Boland

There seemed to be that implication. I raised that in my reply to him. As far as I can recall he replied that this was not the case.

Mr. O'Donnell stated in the letter that there was a serious question mark over the State's approach to these negotiations, whether there was any point in further negotiations and asking how could he or his clients trust anything that was said to them.

He then continued with the second issue in the negotiation, stating that the newspaper purported to quote directly from two sources. He claimed he was very disturbed that such a calculated and deliberate attempt should be made to damage the religious orders and to create controversy for them in the course of the negotiations. He continued to talk about such deliberate and malign tactics and how they raise fundamental issues of trust and good faith. He effectively claimed that, if it was not officially leaked by the negotiating team, then it had to be leaked by someone higher up, which was a small circle of officials and politicians.

In his last paragraph he stated that he did not believe that this could be swept under the carpet. If there were to be any further discussions it seemed to him that Mr. Boland would have to be in a position to explain to his clients how, by whom and why the story was set running. He wondered whether it was a coincidence that the paper carried an article written by the Minister for Education and Science, and claimed that it was the only newspaper that did not carry severe criticism of the Department and the Minister that weekend. There was a certain amount of finger-pointing in the direction of the Minister.

That newspaper does not criticise the Minister any weekend.

Is that correct?

Did Mr. Boland think this was genuine outrage and fury by Mr. O'Donnell or did he think Mr. O'Donnell was negotiating and, as a consequence, softening the Department's negotiating position?

Mr. Boland

In the best traditions of the Law Library, he may have articulated his view more strongly than he held it. However, there was a genuine sense of breach of trust because of that article.

Mr. Boland's reply to Mr. O'Donnell on 1 August was a temperate letter. However, Mr. Boland stated that he agreed that the leaks had "cast a pall of dishonour over the participants in the discussions from the State side". Mr. Boland continued that "it may have been motivated by persons who wanted to stop the negotiations". What had Mr. Boland in mind?

Mr. Boland

Mr. O'Donnell was implying that his clients might well withdraw from the process because of the breach of confidence. The point I was trying to make in an attempt to pour oil on troubled waters was that this may well have been the intention of those who made the leak. They were unlikely to have been friends of the process, that being to try to reach some accommodation between the congregations and the State in regard to what their contribution would be in the context of bringing some degree of finality to the issue of past child abuse.

In subsequent correspondence, Mr. O'Donnell stated he did not believe that was the motive, rather it was to embarrass the religious orders in public and to force them to make a higher financial contribution. He stated that the leak was carried out at a high level, was organised and was to put pressure on the orders. While he did not say whether he believed it was official or political, he puts both sets of senior people in the circle. Is that correct?

Mr. Boland

Yes.

Mr. Boland was obviously trying to pour oil on troubled waters through his letters. He stated:

. . . for the State we are considering this matter and I believe that jointly we should discuss how we might now proceed. I have agreed with Sister Elizabeth that I will make contact with her on her return from leave.

Later, Mr. Boland states:

[That] it has been made more difficult by these events is undoubted but I hope that rather than causing a terminal breach in our relations, it will cause us to redouble our efforts.

I will now move to document No. 32, a briefing note from Mr. Boland to the Secretary General, Mr. Dennehy, dated 4 August. In it Mr. Boland informed the Secretary General of the damage the leaks caused to the negotiating position. He stated:

The letter aptly reflects the sense of outrage caused by the article and the strongly held belief among the negotiation team for the congregations that the leak which led to it was officially inspired and sanctioned at a high level.

That is tough stuff coming from Mr. Boland.

Mr. Boland

It merely gives my understanding of what Mr. O'Donnell and his clients felt.

Yes, but Mr. Boland stated that it accurately reflected the sense of outrage.

Mr. Boland

Yes.

Does Mr. Boland agree with the proposition?

Mr. Boland

No, the Deputy cannot read that into what I said. The letter merely reflects the sense of outrage. I have no idea how the leak came about. Mr. O'Donnell's sense of concern would arise from a reasonably time-honoured tradition among legal advisers that, when negotiations are under way in regard to such issues, they are confidential. The Attorney General's staff, who are practising lawyers, and Mr. O'Donnell were part of the negotiations. An element of professional ethics was, therefore, involved and there was a concern that a process which was quasi-legal had been breached in this way.

It is clear that Mr. Boland was seriously concerned because he stated:

If that process was to be the subject of deliberate leaks from other official sources (and this of course has not been established) then our bona fides are seriously undermined.

Mr. Boland

As a civil servant engaged in negotiations which I entered on the understanding they were confidential, to have them leaked by any source was a personal affront to me.

Does Mr. Boland agree that this put him and his fellow negotiators on the back foot?

Mr. Boland

We were not on the back foot in any sense of making us feel indebted to the congregations or wishing to mollify them by changing our position, but in terms of our professionalism and sense of honour.

Mr. Boland stated at the end of the letter:

. . . the Government should be aware that there is now very real possibility that the congregations will not agree the kind of financial contribution which is sought. In that situation the Government will have to decide whether to accept what is offered or refuse it. In either event there will be a considerable difficulty.

It seems that Mr. Boland was again in August advocating that the issue should be taken to Government when that position had been arrived at in June. Is that correct?

Mr. Boland

It is probably correct. If there was to be no further change in the position, it is obvious that the proposal of the congregations would have to go to Government at some stage. It was not for the Minister to reject the proposal unless there was some change to it.

Document No. 33 shows that Mr. O'Donnell wrote to Mr. Boland on 6 September. It is a more temperate letter which stated:

For my part, I would be very happy indeed to accept that no member of the team attending these discussions either from the Department of Education or the Department of Finance or the Attorney General's office had any part in this leak. Indeed, I would have been both surprised and extremely disappointed if this were not the case.

He continued on to say that the fact remained that there was a leak and it appeared that it issued from persons at a senior level. Had Mr. Boland any idea who leaked it?

Mr. Boland

No.

Was there an internal inquiry?

Mr. Boland

No, not that I am aware of.

It is a more temperate letter but Mr. O'Donnell continued:

It is hard to over-emphasise the importance of this issue at this time. It seems to me critical that the State side should be able to address this issue clearly and comprehensively before we can proceed further. I don't need to tell you that the negotiations were already at a very delicate and different [I presume he means "difficult"] point and the enforced delay over Summer has only added to [it].

A short meeting took place on 16 October. There are hand-written notes on document No. 34 which are turned into a minute in document No. 35. It seems there is movement at this meeting, even though it is a difficult one at which the religious orders are upset. "The congregations stated that they feel shabbily treated" is a phrase from the minute. If I understand the hand-written notes correctly, that view is expressed by Sister Elizabeth Maxwell.

Mr. Boland

That is correct.

The rest was Mr. O'Donnell's contribution. However, that the contribution from the congregations could be capped at approximately £100 million emerges at this stage. It seems to be the first time this was hardened up.

Mr. Boland

It was the first time it was stated in the negotiations with the congregations. It obviously featured as the bottom line of the State position in the document of 30 April 2001 and agreed by the Ministers and the Attorney General.

There was some movement at that point because document No. 40 includes a note from Mr. Eugene O'Sullivan from the Department of Finance to Mr. Jim McCaffrey, also from that Department. It states:

Jim has mentioned the main new event at the above meeting was that Mr. P. Kelly stated that the contribution needed towards the cost of the scheme was 50% of the cost, with a cap of £100 million.

This seems to be the first serious move on the part of the State expressed across the table to the negotiators. Mr. Boland was unfortunately caught by the media again the following day. After some progress was made on 16 October, Mr. Joe Little of RTE ran an item on the news on 17 October, the transcript of which is here as document No. 36. It seems from the text of this document that Mr. Boland received a phone call shortly after the news from a rather irate Sister Elizabeth Maxwell.

Mr. Boland

That is correct.

Unreasonably, Mr. Boland sees the meeting that was to patch up affairs in a bad light.

Mr. Boland

Sister Elizabeth Maxwell and, I presume, her colleagues were annoyed that, a day after we had had a meeting with the congregations, we held what was supposed to be an off-the-record briefing for the media and that that subsequently became a lead item on the news. I will explain the reason. There was a meeting with people from the media. I think that it was over lunch, although I am not sure about that. There was a sense in the Department that the media coverage of the child abuse issue, the negotiations and the Laffoy commission showed a lack of understanding of the technicalities of what was going on and of the policy approach. We therefore thought that it might be useful to bring together those who were interested and talk about it informally. In the course of that briefing, it was inevitably asked what was happening with the negotiations with the congregations, because that was the most topical issue of the day. I think I indicated that we were not going to discuss that in any great detail, but I was unfortunately led into some discussion as to what was happening in Canada, and that ultimately formed the basis of the story in the media that subsequently caused a frisson with Sister Elizabeth Maxwell and her colleagues.

A call immediately after the six o'clock news would have put Mr. Boland on the back foot again from a negotiating point of view.

Mr. Boland

In negotiations generally, it is important to maintain good relations with the people with whom one is negotiating. The story looked bad, and in hindsight, as I think my letter to Sister Elizabeth Maxwell says, I should at least have told her the previous day that we were having the meeting and to be prepared in case anything came out of it. As it happens, I did not expect a major story to come out of an off-the-record briefing, but there we are. That was perhaps naive of me, but I will not be naive any more.

In his letter of 18 October 2001 to Sister Elizabeth Maxwell, document No. 37, Mr. Boland states: "It was certainly furthest from our mind that RTE would use the briefing to largely concoct a story from disparate elements of the discussion." I can understand his position, because I have often been in the same position. He expressed regret at the end of the letter. I will not pursue that, but it seems to me that, because of theNews of the World leak which he could not control, and the briefing, the negotiators on the other side of the table had a lot of ammunition to put him on the back foot. They also had genuine cause for grievance that the matter was in the media again in the middle of October.

Mr. Boland

Notwithstanding all of that, at no time did Sister Elizabeth Maxwell or her colleagues believe that I was acting in bad faith. Although the record does not show that, I never felt that they did or that I needed to offer them something or do something to get back into their good books. It would not have been of any interest to me to be in their good booksper se other than to have good relations to try to progress the negotiations. I think that, at the end of all that, we understood that the second leak was an accident and that I was not involved in the first.

I accept all that, but it is still interesting to examine the sequence of events. A fortnight later, the negotiation moved up the chain of command: the next letter, document No. 38, was not from Sister Elizabeth Maxwell but from Sister Helena O'Donoghue to assistant secretary Paul Kelly. It indicates general unhappiness with the position and states that the only way that they could proceed was to have a general meeting of their congregational leaders and that they were not in a position to continue negotiations without reference back to their principals. The letter, which contains strongly expressed views, states:

While it is right to acknowledge that some of these matters have been the subject of apology and explanation, it is fair to say that cumulatively, they have increased the sense of dismay, bewilderment and scepticism on the part of the Religious Congregations involved.

Relations were at a very low ebb at that point.

We then come to document 39. After all the pressure over the summer months, assistant secretary, Paul Kelly, wrote to Sister Elizabeth Maxwell and effectively set out a new position. There is a significant change of position. He reviews and comments on the offer that the religious orders made and, in the middle of the second paragraph, states:

A problem does exist with the proposed inclusion of property transfers from the Congregations to the State over the past ten years. It is difficult to see how such transfers can be included in the final package of measures, given that they occurred without any reference to a redress scheme for former residents in institutions. Perhaps this can be re-examined in the context of the date of the State's apology.

That is the first major concession and potential breakthrough. Once the date of apology became the effective date, that last sentence subsequently cost the Government €40 million, because that was the value that was put on the transfers that took place back to the apology in 1999. That was a big, serious movement.

With regard to the cash contributions, the letter also states:

We are also prepared to recommend that final agreement should allow for a situation where the cost of the scheme is greater than we anticipate, by capping the Congregations' contribution at a figure of the order of £100 million — a figure based on the lower of our estimates of overall cost. In return, the participating Congregations would receive a permanent State indemnity against any and all litigation in cases which come under the remit of the Redress Board.

Whatever doubts there were about the negotiating position as set out in the document of April 2001, to which Deputy Fleming referred in his first series of questions, there is no doubt when we come to assistant secretary Paul Kelly's letter of 6 November 2001: the date of the apology becomes the effective date for the transfer; the 50:50 contribution is moved and the £100 million cap is put in; and a very strong commitment is made on indemnity.

In the letter, Paul Kelly refers to the media and makes passing references and general apologies, but they only contextualise the negotiating position. The last paragraph of the letter is interesting. It begins: "I fully realise that there are voices on your side which are counselling that your interests would be best served by not participating in the Government's redress scheme." Was Mr. Boland aware of that?

Mr. Boland

Yes. It was said many times in the negotiations that many in the orders believed that any participation in the scheme would be an admission of guilt on the Congregations' part for abuse that was not proven.

Paul Kelly goes on to state: "there is yet much to be discussed in relation to the size, nature and timing of the Congregations' possible contribution to the scheme particularly around the possible transfer of further property." However, at that point, the game was well in play. What happened after that is also interesting, because the negotiating team was effectively stood down — that is perhaps the wrong term. In the next round of negotiations, the negotiating team was not used and the negotiations were taken up the chain of command to Secretary General Dennehy and the Minister for Education and Science. The meetings then took place at that level.

By that point, two things had happened. First, the State's negotiating position had softened and major concessions had been made by way of letter before the Minister and the Secretary General met the religious orders and Donal O'Donnell SC. Second, the negotiating group is reduced in number to include the Minister and the Secretary General of the Department. I would like Mr. Boland to comment on whether that is because of the leaks. Does he agree that the concerns about leaking were so strong, that, without making any adverse comment on Mr. Boland's group of negotiators, the negotiation was confined to the smallest possible group of people? Does he agree that it was the leaks and the anger at them that resulted in, for example, nobody from the Office of the Attorney General being present when the indemnity was proposed in the draft document?

Mr. Boland

The leaks had nothing to do with the letter from Mr. Kelly; it was far more the fact that a conclusion was reached. As matters stood, the congregations were not going to move any further unless they were encouraged to move. For the State, the negotiating team decided that that was the time to declare our bottom line — the point beyond which we could not and would not go — in an effort finally to get agreement on the matter. The State's objective was always to have the congregations involved, not only from a financial point of view, but to try to bring everything together as a package, rather than leaving a situation in which the congregations could be sued separately in the courts. I think the Secretary General mentioned that in his opening statement. The view was taken that that was the time to state the point beyond which we could not and would not go and find out whether there was a basis for agreement. If there was not, there would be no agreement and a key policy objective would have to have been jettisoned. The Government would have proceeded on its own and the congregations would have been left facing a situation in which they could be sued separately. It was a critical point in the discussions and had nothing to with the leaks.

I partly agree with Mr. Boland that the team was coming back to its bottom line. If the document of April 2001 was the full negotiating position, it was the negotiating team's bottom line that, on an estimate of £200 million, it was looking for £100 million. The State wanted half of the estimate; that was the bottom line in April.

Mr. Boland

I correct Deputy Noonan again. The £100 million cap was discussed in the context of trying to give some context or proportion; it was a proportion of a particular estimate. The way in which it was approached was more likely that, when we talked about 50:50 contributions, we were talking about such contributions without a cap. That would have been an ideal situation for the State, but we knew from an early stage — perhaps even from the outset — that the congregations could never agree to it because it would have exposed them to an uncertain financial liability that they would not know whether they would be able to afford, no matter how big their assets were. We were therefore always aware that there would have to be a cap if the congregations were to be brought into the scheme at all. The question was how much of a cap there should be. I suppose that £100 million is a nice, round figure, but it was considered a reasonable and substantial contribution from the congregations.

I am not particularly pursuing that point. I agree with Mr. Boland that that position was fairly clear as far back as April 2001, but what was new was the change in position on property that had been transferred previously. That was not the negotiating team's bottom line at any point; it is not anywhere in any of the documentation and comes as a bolt from the blue in Mr. Kelly's letter. When it was worked out subsequently and applied to registered charities and non-governmental organisations, as well as local authorities and health boards, it was €40 million out of a total package of €128 million. It was a very significant move at that point.

There is a blank in the documentation after that, because the matter went to the Minister and Mr. Dennehy. I think that there was a meeting on 10 November 2001. I ask Mr. Dennehy whether that is right.

Is Deputy Noonan referring to the first meeting?

That was on 7 November.

Mr. Kelly's letter was dated 6 November, so the meeting was obviously fixed before Mr. Kelly put pen to paper. Was the letter actually sent, or was it handed over at the meeting on 7 November?

Nothing was handed over at the meeting, so the letter must have been sent in advance.

The religious therefore went into the meeting with the understanding that there was a new negotiating position. That meeting was not very long, if I recall what Mr. Dennehy said.

The first meeting was a short one to agree in principle whether the religious felt that they could move the agenda forward and bring the negotiations to a conclusion.

They had Paul Kelly's letter of the previous day, which had changed the position dramatically, so it was a sort of meet-and-greet meeting in which the congregations thanked the State and said they would go away and consider the letter. Is that how the meeting ended?

It was a short meeting. The information that I had at the time was that there was every likelihood that the religious would walk away from the deal and not finalise it. That was the basis on which that first meeting took place. The Minister wanted to seek confirmation from the congregations that they were willing to continue in discussion or negotiations.

The second meeting was after Christmas in early January 2002, was it not?

At the Attorney General's request — I was going to say under pressure from the Attorney General — Mr. Dennehy prepared a retrospective memorandum.

I did a formal note on it from my own notes on 12 March 2002.

I thought Mr. Dennehy told us previously that no notes had been taken at the meeting.

No formal notes were taken at the meeting, but I may have jotted down a few points on a page.

Donal O'Donnell, SC, took notes at the second meeting.

He probably did. I am sure that he did.

I am nearly finished. I will ask about the letter to which I referred earlier when I intervened, I apologise for intervening, but I thought it was the time to get it on the record. That letter is document No. 43; the letter from Sr. Elizabeth Maxwell to Mr. Dennehy. It is an interesting letter, because it is dated after the second meeting, when a final package had been agreed and just before the package went before the Cabinet for agreement. She clearly felt that there was no misunderstanding between her and Mr. Dennehy about what had been agreed. The timing is interesting. She starts by saying:

I am writing to you to raise one matter before the proposal we discussed with you and the Minister is submitted to the Cabinet. While I believe that there was and is a very clear understanding between us as to the basis of the proposal we discussed with you and the Minister, we would be anxious to try and remove any residual possibility of confusion about the essential structure of the proposal.

It is a letter putting on record an understanding that Sr. Elizabeth Maxwell says is clear to both sides, both sides being Mr. Dennehy and her.

I would say not. Both sides would be the Minister and I on one hand and Sr. Elizabeth Maxwell on the other.

I take your point, because she says, "we discussed with you and the Minister". The letter continues:

Our main concern is that we will not know until Wednesday whether the Cabinet has been prepared to agree to the proposal or not and thereafter, events may proceed very quickly and any later disagreement would be very disappointing for everyone involved given the amount of effort that has been put into even reaching the point we have now arrived at.

In particular, I would be anxious that everybody involved would be clearly aware of the nature of the proposal made and those matters which are critical to it, such as the final agreement on the precise institutions which would be indemnified, the question of contribution from our insurers, the need for amendments to the Bill in the area of validation, regulatory consents or approval by the Charity Commissioners and, indeed, the position of the individual Congregation which may require attention.

The difficulty in which that puts the committee are that those are the elements that she says are critical to the agreement, and included in the critical elements is the "contribution from our insurers". She puts that in the context of Mr. Dennehy and the Minister, and her and her fellow negotiators having a full understanding of the detail of the agreement and the need to formalise it for the benefit of others to avoid confusion or avoid Cabinet members not fully understanding the position. Will Mr. Dennehy talk to me about insurance again?

To my recollection — and I would certainly have remembered it — insurance was not discussed at any stage in the discussion between the religious congregations and the Minister when I was present. The reference in that letter to the congregations' insurers did not register with me at the time.

Would Mr. Dennehy not accept this was a critical element of the package going to Government?

There was no mention at any stage in any documentation that went to Government about the insurers nor at any stage during the negotiations, when I was being informed of how things were going, was the possibility of some of the contribution coming from an insurer brought to my attention. I was not made aware of it.

Was Mr. David Doyle from the Department of Finance aware of the insurance aspect?

Mr. Doyle

First of all I was not involved in the negotiations and my knowledge of it comes from the review of the papers concerned. From the papers that I reviewed, it is not evident to me that the Department was concerned or aware of an insurance angle regarding the letter under discussion now. What appears on the screen would be the first time we would have seen that letter. I could comment on its relevance. On the point Deputy Noonan made, I do not see from the letter that Sr. Maxwell is making the point that from the Government side the insurance is part of the deal, but we could see that from addressing her audience, her congregations, there is an aspect that they will get the funds from insurance to contribute to the €128 million package and that would be relevant from their side.

I could go further and comment on why I thought that would be relevant to their side, but that is their business. I would see this from the discussion we had the last day I was here. Why did the Government accept that a contribution of €128 million, capped on the basis that it was, was appropriate? A whole series of policy decisions and a whole series of legal considerations led up to that. One of those was that there was a long track record. An established pattern had emerged that was identified as far back as the Kennedy report in 1970 that the State had for its part failed to discharge its obligations in terms of the inadequate contribution of funds to these institutions, that there was a failure to ensure that people working in the institutions were properly trained, the inadequate nature of the supervision and inspection regime and the alleged failure to follow up on information that allegedly may have been there.

So the question of the degree of culpability of the State in its capacity as guardian of children in these institutions was a major part of that. From the religious orders' point of view, they were asserting that if the full range of court procedures was to be brought into play in determining financial attribution for what had occurred or what was alleged to have occurred, they were determined in a court setting to rigorously defend those who were accused. They were asserting that because of the passage of time, the fact that many people were deceased and the fact that there was a huge gap of decades in some cases. The extent to which they felt their legal exposure would be confirmed by the courts was a big argument on their part against a contribution and against accepting a major share for the deal the Government put in place. The policy under which decisions were made was to have to the maximum extent possible a soft process for the people who were abused so that they would not be exposed through the redress process to the full range of critical examination, counter-examination, cross-examination, etc. that would happen in the courts.

If there was an insurance deal behind this — I do not know what the story was — one would imagine that an insurance arrangement would be based on a particular legal basis, which would require formal proof of culpability and exposure. I heard Mr. Dennehy refer to anex gratia contribution. It may be that the insurance companies, if they were there against the background that I have outlined, would have asserted that they did not have a financial exposure.

So from Sr. Maxwell's point of view, I do not read that letter, having just seen it for the first time, as asserting that it is a critical part of this deal on the Government side.

I accept most of Mr. Doyle's analysis. He has given a fair overview of the policy considerations on both sides. There was some conflict in policy considerations and ultimately a settlement was agreed. One of the issues for the public and for the committee is whether the religious orders got a very easy deal out of this. In effect, that is the public question. Other issues have now been raised by the Comptroller and Auditor General. When I speak to my constituents I am told the Government let them off very softly.

I am pursuing what led to this final outcome. I have difficulty with Mr. Doyle's interpretation of the phrase "the question of contribution from our insurers". It is a curious letter, which appears to have been written with the intention of having its contents placed on the record. While it starts by saying there was no misunderstanding between those represented by Sr. Maxwell, and the Secretary General and the Minister, it indicates that the critical elements were put in writing for the sake of clarity. She did not mention the cash contribution or the transfer of property. She had two problems, namely indemnity, which was very large, and the issue of insurance, which was dragged in. Perhaps she thought they would have been accused of bad faith if insurance existed in the background, which they had never mentioned prior to this and which was then placed on the record. If this is the case someone should have spotted it and pointed it out to Mr. Dennehy, who cannot spot everything.

Let us look at the detail in the letter on indemnity, which states:

It is particularly important that the Cabinet should be under no misapprehension about the nature of the indemnity, which would necessarily be provided by the Government to the congregations, which would cover claims capable of being brought before the redress board even if not brought to it or if brought to it and the awards rejected. I know you have had a draft of such an indemnity for some time and indeed that all these matters appear to be very clearly understood between us, nevertheless it would obviously be undesirable that there should be any misunderstanding whatsoever or that indeed in the aftermath of any successful Cabinet meeting on Wednesday that comments were made publicly perhaps by persons not directly involved in the discussions which unwittingly misrepresented the precise situation.

On seeing that I think of the draft memorandum that was not sent to Cabinet at the end of June 2001. That memorandum had some legs under it, because it was circulated to the Departments and the comments from the Attorney General were attached. While I cannot prove it, I believe that Sr. Elizabeth Maxwell knew the Attorney General had serious doubts about the nature of the indemnity deal and she was covering her position before a Cabinet meeting at which the Attorney General would raise these doubts. Please do not ask me to prove it. We have all been over the fences and we have all been around before. The level of detail suggests there was knowledge of an opposing position which was going to be expressed on the Wednesday morning and she is making absolutely sure, from the Department's point of view, that there is no misunderstanding between the Minister for Education and Science and the religious orders. Subsequently, Mr. Dennehy will notice when the conflict runs on with the Attorney General's office, it ends when the Minister for Education and Science writes a letter setting out the policy. This letter takes it away from the remit of the Attorney General — this is not legal any more, this is the policy, this is the kind of indemnity we want — and asks them to now negotiate the detail. I hope I did not take up too much time. The sequence is a good insight into how a major Department of State operates in the conduct of its affairs. Mr. Dennehy was up against a fairly tough team on the other side also.

As soon as I got that letter I discussed it with Mr. Boland. There were issues in it with which I would not necessarily agree. While she was looking for some reassurances at the time, I telephoned her to say I was not responding to the letter without seeking legal advice from the Attorney General's office which I offered to get. At that stage she was satisfied to leave things as they were. I would not be in a position to deal with that letter without legal advice.

She was not expecting a reply. That was clear from a first reading of the letter.

I do not intend to go back over the ground covered last October. The longer we debate this problem, the more questions are raised. It puts us, on this side of the House, in a particularly difficult position and I appreciate Mr. Dennehy is in a difficult position. I have heard aspects of this case that I did not hear previously, and I have studied it. We were very involved on the last occasion Mr. Dennehy was before the committee. Although I had heard it on the grapevine, this is the first time I heard about the insurance contribution. I will pick up on a point raised by my colleague, Deputy Noonan. In all of this business, the principle was to help those poor unfortunate victims whom people, both inside and outside the House, desperately want to help. However, the method employed to help them is getting murkier by the day. Although it is what we expect in our democracy it is to Mr. Dennehy's eternal credit, that it is his second time to come before the committee. Obviously, there are many questions that I and my colleagues would like to ask the Attorney General's office and the religious congregations. I assume it is a well-known fact that we have invited the religious congregations to come before the committee on a number of occasions but so far they have not appeared before the committee. From the point of view of the Committee of Public Accounts we cannot bring closure to this matter. After today's meeting members of the public will ask if the Government side was out-witted by the people with whom it was dealing on the basis of the insurance.

I thank Mr. Dennehy for being as open as he normally is on occasions like this. He mentioned a sum of €6 million. I have no idea at this stage what the religious congregations intend to do with the €6 million if they get it. Is it part of the €128 million? Can they stitch it in as part of this deal or can they slip it into their pockets, outside of the deal? The public will draw its own conclusions and I will not give the verdict on its behalf. Were it not for the fact that Deputy Fleming raised the matter and that Mr. Dennehy was here to answer it, the public may not have heard it or known of its significance. I am sure Mr. Dennehy appreciates where we are coming from.

It was mentioned on the last day that there were two occasions when minutes were not taken on very important aspects of the negotiation. While all that is happening, one cannot expect a committee such as this to be overly happy about such a performance and certainly one cannot expect the taxpayers to be happy. If we have another meeting in a fortnight, even with the same players, perhaps something else will come to light. Against that background, in order to square the circle all the players would need to come before the committee. At the end of the day we want what is right to be done for the victims who so genuinely need help. It is no harm to put that on record. Whatever else happens, they were badly treated. The Committee of Public Accounts is a value for money committee. We have to report to the taxpayers. After a number of long meetings, we have not resolved this yet and we are as far away from resolving it now as we were three or four months ago.

On the issue of the Comptroller and Auditor General's figure of €1 billion and Mr. Dennehy's figure of €508 million, I have no idea which is correct. In fairness to the Comptroller and Auditor General, his decision to quantify it was based on measures already in place. It was brought to our notice only before the meeting commenced, that arising from a tribunal that started its life in 1992 payments are still being made 14 years later and it is against that background, one does not know where all those things will finish up. It is hard to get a clear, definitive cut-off date. There are two technical questions I would like to ask Mr. Dennehy. When is the last official date for making application to the redress board?

16 December 2005.

Do I take it that after that date no applications will be taken?

Yes. That is my understanding.

Is that written in stone?

I have been advised it is in the legislation.

I notice that so far 765 awards have been made by the redress board. Is that correct?

I understand that a total of 22 have been rejected. Is that correct?

Twenty-one have been sent for review.

What does "sent for review" mean?

I will have to call an expert on this matter, Mr. Kennedy.

Mr. Paul Kennedy

There is a mechanism built into the redress scheme, as outlined in the redress Act, whereby if an applicant is dissatisfied with the amount of the award or settlement being offered by the redress board, he or she can ask for his or her case to be reviewed by a separate review committee. That review committee is chaired by a former Supreme Court judge, Mr. Justice Frank Murphy. It re-examines the case and reviews the material and it can decide not to change the award or make a higher or a lower award. That is the end of the process.

Is it the applicant who seeks the review?

Mr. Kennedy

The applicant can look for a review, as can other parties, but as I understand it, any reviews have been sought by applicants.

Has anybody who came before the redress board had his or her application rejected?

Mr. Kennedy

The redress board would have received applications which it has rejected, perhaps because they related to institutions not covered by the Act.

How many such applications have been rejected?

Mr. Kennedy

I understand the board has rejected 57 claims. We would not know the details of any individual claims. That information would be available from the redress board's website. I imagine that such rejections would have been due to the institutions concerned not being covered by the Schedule to the redress Act.

I have always believed indemnity is the central issue in this case. After the expiry date for applications under the scheme, for what period is it possible for people to go directly to court to pursue their claims? I presume they could pursue a claim after that date or many years later.

It is three years after that date. For a case to qualify, it must be commenced in court within six years of the commencement of the Residential Institutions Redress Act. That would be three years after the date. I presume it would be December 2008. Am I right?

Mr. Boland

To clarify, the State has to be put on notice within the period of the scheme, which is three years from the date of commencement, and the legal proceedings have to be commenced within a further three year period. If I could explain why that is so. It is to assist in the situation where a person may apply on the very last day of the scheme but continue to have the option to accept or reject and to go to the courts with his or her case. The view was taken that at the outside the redress board should have finished the very last case three years after it accepted it. It is given a three year period for mopping up.

Do I take it then that it is not impossible that we could have a discussion like this in ten years' time and that cases would still be going through the courts?

Mr. Boland

It is possible, but highly unlikely, if a case was brought to notice within the life of the scheme, was commenced within a further three years but then took what effectively would be four years to get into the courts. It is highly unlikely.

One of the great ironies of what we have heard today and the previous day is that when the parties were negotiating it was significant that they were seldom all in the one room at the one time. On some days representatives of Mr. Doyle's Department were not present. On other days the Attorney General's people were not present. The only constant was that the religious orders were always present, as were representatives of the Department of Education and Science. The same is happening here. We cannot get them all in the one place and I find it extraordinary that in any negotiation, and I have spent a lifetime in negotiations of one description or another, all the relevant parties would not want to be in the same place at the same. Perhaps that is one of the reasons for the many letters that went to and fro, the mistrust and so on. Whatever about taking minutes of all those meetings, how was it that in regard to something so important, being done for the first time ever and with so many people's lives involved and so much taxpayers' money, all the various factions, so to speak, were not in the room at the same time?

In effect, there were up to 20 meetings in all, although I would have to count them, and in approximately 15 or 16 of them all the parties on the State side were in the room at any given time. There were a number of meetings at which the Attorney General's people were not present because issues of a legal nature were not being discussed. There were a limited number of meetings at which representatives of the Department of Finance were not present because issues were not being discussed on which their expertise and advice was needed; they would have been more technical-legal issues.

I always thought they liked to hear everything that was going on.

They do, and we tell them everything as well. In fact, in at least three quarters of the meetings or more, the entire State's negotiating side, involving the Department of Education and Science, the Department of Finance and the Attorney General's office, were present at those meetings.

I find it difficult to understand the reason they were not present.

I want to try to get some idea of the ballpark figure. Mr. Dennehy says his best stab at the ultimate cost is approximately €508 million and the Comptroller and Auditor General says it could be €650 million if the 50 applications per week continue but both parties are agreed that neither of those figures include the legal costs, is that right?

Mr. Purcell

My estimate includes the legal costs. No real basis has been established yet for the legal costs but 15% of the awards is being used in our calculations. Any of our calculations, therefore, will include the level of award plus 15%.

How many claims did the Comptroller say were made under freedom of information legislation?

Mr. Purcell

Almost 6,000 at this stage.

And 70% of them are from solicitors or companies of solicitors.

Mr. Purcell

Yes, 70% of a sample. That is the feedback we are getting from the——

The normal reading of that is that would be a precursor to contemplated litigation.

Mr. Purcell

Normally that is what solicitors do.

It is not possible, based on that kind of sample, to make any "guesstimate" of the additional costs? I know it is probably not possible to make a reliable one.

Mr. Purcell

I indicated earlier that we intended to do some more work in that area to try to analyse freedom of information requests which went on to be claims to the redress board with a view to trying to establish a pattern and come back to the committee with that kind of information.

I presume there are some companies of solicitors with a large number of cases.

Mr. Purcell

I believe there are, yes. I indicated earlier that it may involve, with the co-operation of those firms, trying to make a stab at the number of potential cases they have that will go to the redress board.

Good case management would require no less than that.

Mr. Purcell

I would imagine solicitors, and certainly the larger firms of solicitors, would be organised in such a way to have that kind of information.

Whatever the figure would be, what proportion of it is the Comptroller saying might be in excess of the €650 million? Is what we are talking about here in excess of the €650 million?

Mr. Purcell

The result would probably be in excess of €650 million. It is just a different method of trying to calculate the potential maximum liability. However, the result would increase it above the €650 million.

Is Mr. Dennehy saying he uses a different methodology or does he simply feel in his gut that the numbers will not increase to that height? Does he have a quibble with the Comptroller and Auditor General's opinion? Mr. Dennehy conceded that he was not including legal costs in his figure.

We conceded we are not. We have co-operated fully with the Comptroller and Auditor General on this and on every aspect of this case and we would gladly co-operate with him in the type of exercise he suggests today. It is in all our interests to try to get more accurate information. I would value that and the Department would give every support and help in that exercise. Perhaps it is something we could do jointly.

When a parliamentary question was tabled by my colleague, Deputy O'Sullivan, on 10 February the Department was unable to answer questions at that point. However, if memory serves, the Minister, Deputy Noel Dempsey, quoted the figure of €708 million, to the House. How does that reconcile with Mr. Dennehy's €508 million?

The figure I saw in replies to parliamentary questions is €508 million. Without seeing the Official Report, I do not know. The figure we and the Minister are using is €508 million.

Am I wrong about that and that he did not use the figure of €708 million?

I do not know. I was not aware that he had.

Mr. Purcell

I have seen the Official Report containing that question. The reply was brought to my attention. The figure used in the reply to Deputy O'Sullivan's parliamentary question is €508 million, if we are talking about the same question.

I wish to return to Sr. Elizabeth Maxwell's letter. Deputy Noonan said he understood Mr. Doyle's reasoning. I did too. However, I am not sure I understand why Mr. Doyle disputes the insurance matter being critical. Sr. Maxwell says it is critical. She details the issues she considers critical and one is the precise institutions covered by the indemnity. Everybody understands why that would be critical. Never in the history of the State has such an open handed indemnity been given to so many. There was the Sligo case where the State, even though it was not a party to the case and did not even know about it, was obliged to step in and pay the costs on both sides under the indemnity. She refers to the matters which are critical. Why does Mr. Doyle dispute that it is critical?

Mr. David Doyle

I am not disputing anything. The first time I saw this was when it was put up on the screen so I am reading it for the first time. It has a list of issues that are critical to both sides, a list of issues that are critical to her side and a list of issues that are critical to the Government's side.

This one could not be critical to the Government side because Mr. Dennehy never knew about it.

Mr. David Doyle

She is saying that everybody involved would be clearly aware. There are two sides, themselves and the Government side. If I was looking at it as the financial adviser to the congregation I would tell them: "If you are paying €128 million, where are you getting the money? What about your insurance company?" I am just speculating. With regard to the Deputy's question as to what that means, it lies with Sr. Maxwell.

Deputy Connaughton made a good point. This is the oldest committee of a sovereign parliament and we are muddling through in the best way we can to ensure there is value for money and that it is spent on the purpose for which it was voted. It would be desirable if Sr. Maxwell would allow herself to be examined by the committee at an early date. We have allowed a number of months to elapse in a polite exchange of correspondence. I presume she will appear before the committee.

With regard to the rationale, Mr. Doyle said to Deputy Noonan that this has to be seen against the background of the State's culpability, such as the lack of invigilation of these institutions, not responding to matters brought to the attention of Ministers and departmental officials and so forth. Is that not the point of the State's culpability, Mr. Dennehy, and is it not one of the points that finally broke Ms Justice Laffoy? Did she not say in the third interim report, on pages 158 and 159, that she made contact with the Department, ultimately by way of order for discovery, for the documents that might have underpinned the Minister's decision to allocate liability in the fashion in which it was allocated, in other words, by imposing the cap of €128 million? She sought discovery of those documents. Does Mr. Dennehy recall that?

I do. It is my understanding that when the then Minister spoke about culpability or about the State being liable, he was talking about a moral rather than a legal liability. Within the Department, and these documents have been discovered to the committee, there are, for example, the Kennedy report and other documents which clearly spell out the appalling neglect by the State of the people in those institutions. They do not necessarily spell out where, for example, sexual abuse is alleged to have happened. However, there is documentary evidence setting out the neglect that occurred in some of these institutions. In addition, many of the survivors groups have discussed in detail the circumstances within those institutions with officials and with Ministers. My understanding is that when the then Minister spoke about this issue, he did so on that basis rather than on any documentary evidence there might be within the Department of a legal liability on the part of the State.

Ms Justice Laffoy says that at the beginning of June of the same year the committee became aware of media statements attributed to the then Minister about the State's responsibility for abuse in institutions which suggested that the Department might have been in possession of records which would assist the committee in its inquiry. She goes on to talk about a discovery direction being made and its terms. She says these were reflected in the agreement between the Minister and the Conference of Religious of Ireland on behalf of 18 religious congregations made in June 2002 and the statements and comments made by the Minister and his spokespersons reported in the broadcast and print media. Is Mr. Dennehy saying the Department could not have such documents discovered because there are no such documents?

With regard to the legal liability, there are no such documents. However, there are documents on the circumstances that prevailed within those institutions at the time in question. It might be helpful if I brought Mr. Boland in on this. He has been dealing with that issue and was dealing with the commission about it at the time.

I have no difficulty with that. I welcome Mr. Boland. Did Mr. Dennehy write back to Ms Justice Laffoy and say what he has just told the committee?

Therefore, she should have known when she wrote this that he was saying there were no such documents and that it was merely a moral compulsion that the Minister was feeling at the time he gave the interview.

Mr. Boland

I shall explain more fully. One of the key functions of the commission on child abuse, apart from listening to individuals and making decisions in individual cases of abuse, is to apportion responsibility for what happened between the State and the congregations — the obvious parties. That is going to happen, as I understand it, under the chairmanship of Mr. Justice Ryan in phase two in a couple of years' time.

When the Minister made his statements, Ms Justice Laffoy, quite reasonably, stated, "Hold on a minute," and asked that if, in fact, the Minister for Education and Science had stated that the State was "primarily responsible" for the abuse, had he not done her job; that if there were documents showing apportionment, why would one waste the time of the commission going through it all again. It was in that context that she asked to see the original documents used by the Minister on which that view was based.

A number of matters emerged. There was a discovery direction directed at me with which I complied. There was also a procedural hearing. Ultimately, senior counsel for the commission and the State met and counsel for the commission reported to the committee. As Ms Justice Laffoy states, the report was accepted by the committee as having resolved the issues which had arisen in the procedural hearing. She goes on to state that consideration of the documents discovered — the documents I discovered — suggests that there is little contemporaneous documentation held by the Department evidencing the existence or possible existence of abuse in industrial and reformatory schools during the period with which the commission is concerned — this is important — other than general and medical inspection reports. She states, in particular, that there is no record of contemporaneous knowledge of sexual abuse by a person in authority.

What the commission seems to have been looking for were reports of individual instances of person A being abused by person B. There are few, if any, contemporaneous reports of this kind but there is in our records a very substantial number of documents which Ms Justice Laffoy describes as being of a general and medical inspection nature which show the level of non-regulation and non-inspection of the institutions by the State authorities. It is in that context — to some extent, the correspondence between Deputy Rabbitte and the Taoiseach also outlines this — that the State felt responsible, from a social, humanitarian and moral point of view, but there may additionally be a legal liability arising from that "negligence" in regulating the institutions.

I would have thought Ms Justice Laffoy went wider than that. Did she not state, for example, that she was looking for this information — if it was in the control of the Department — to determine the basis on which the Minister and/or his officials had reached conclusions as to the culpability of the State and the regulatory authorities for abuse of children in institutions, the investigation of which lies within the statutory remit of the commission, and the apportionment of blame between the State and the said regulatory authorities, on the one hand, and the managers of the institutions on the other? That seems very broad. It seems that she was looking for the basis on which the apportionment had been made.

Mr. Boland

There is a misconception on the part of the commission that there was apportionment. There was no apportionment of blame in the context of the indemnity agreement. This is specifically stated in the indemnity agreement.

Does Mr. Boland mean that the Department just got as much as it could get?

Mr. Boland

Exactly. There was no apportionment of blame. These matters were brought to the commission's attention through correspondence with its senior counsel. There was a procedural hearing and the matters were resolved. Nevertheless, I think the commission was unhappy that its job had not been made more feasible by the availability of actual documents.

Mr. Boland told Deputy Noonan that a 50:50 deal with a cap was the ideal arrangement — I presume he means from the point of view of taxation — but that the religious congregations could not contemplate this because it would have an unimaginable limit way beyond their capacity. Surely the same applied in reverse, that it would have an unimaginable limit from the point of view of the taxpayer?

Mr. Boland

From a purely practical point of view, not arguing the merits or otherwise of it, the State has recourse to taxation in a way that the religious orders do not. I am not saying that is right or wrong.

Of course, it is in the eye of the beholder whether moral compulsion goes that far.

Mr. Doyle

In that regard, the key point is not the level of resources available to the State. In reviewing the documentation it is clear that at a certain point the religious side would have resolved to challenge the outcome in terms of the assertions that had been made against members of their congregations. It was in that context there was a crossing point for them relating to the extent to which they would challenge what was being asserted and the level of contributions. It is not, therefore, just a question of the financial sum involved.

It raises other questions which, to be fair, are not proper to this committee about policy and embarking on an initiative such as this without first thinking it through but that is another matter. Can Mr. Boland help the committee with the circumstances in which the baton was handed to Mr. Paul Kelly?

Mr. Boland

I did not hand on anything to him. I am not quite sure at what stage he joined but shortly after he joined the Department he was assistant secretary with responsibility for this area. I was very closely involved at all times.

Was Mr. Boland party to the formulation of the letter written by Mr. Kelly opened to the committee by Deputy Noonan?

Mr. Boland

Yes. Although I may be mistaken, it was in response to a letter from Sr. Elizabeth Maxwell. I take it I am mistaken — there was then another letter from Sr. Maxwell to Mr. Kelly.

This marked a change of direction. The letter to which I refer preceded the day of the breakthrough. What considerations brought about this change of heart by the State which up to that point had held a straight bat? It suddenly made decisions, for example, in respect of accepting past property transfers.

Mr. Boland

With that exception, there were no sudden decisions because the proposals outlined in that letter are precisely the same as those which had been agreed in April 2001 by all of the State parties. There would have been some discussions at official level — with the Ministers involved; certainly the Minister for Education and Science would have been informed — on the issue of property in the interests of breaking the log-jam. With past transfers going back ten years — I think this is what the congregations wanted — out of the question, this showed that there might have been some scope — I think the letter states this — to talk about transfers from a date that had some meaning. The date that had most meaning was the date of the Taoiseach's apology.

Does Mr. Boland have a ball-park figure for properties that might have transferred in the five years prior to the making of the apology?

Mr. Boland

The congregations gave us figures at some stage covering a ten year period but I am not sure what they are.

Would Mr. Boland, at his convenience, let the committee have an idea of the property transferred in the previous five years?

Mr. Boland

In the proposal that did not go to Cabinet there was a figure for properties transferred in the previous ten years. I am not sure but we can look into it. The Department can look at it because I am no longer there.

Mr. Dennehy stated that, even though there might not have been an exchange of letters with the Attorney General's office, there had been substantial contact. Does this mean that at all stages of the discussions, even if the Attorney General's staff were not present, Mr. Dennehy's officials would have brought them up to speed on what had transpired at any given meeting?

That is correct, yes. There were certainly very regular contacts between Mr. Boland and his counterpart in the Attorney General's office. There is often contact on a daily basis on many issues.

Mr. Boland

As the person involved, may I add to that? There were two meetings the Attorney General did not attend. I informed the Attorney General's office of what happened at those meetings.

It would certainly be unthinkable to suggest that any of the leaking would have taken place crossing the wires to the Attorney General's office. That would not be very likely, would it?

Mr. Boland

The meetings we are talking about took place well after the fuss about the leaking, six months later.

At the time of the leak to theNews of the World and subsequently, for example in terms of trying to find out who was in the frame, the Attorney General’s office or the Attorney General himself would have been in the frame, would they not?

Mr. Boland

I would not like to speculate about that.

I am not asking Mr. Boland to speculate, I am just asking were they in the frame. Did they know?

Mr. Boland

The Attorneys General knew exactly what had been leaked in the sense that the Attorney General's office was party to discussions which then seem to have inspired a leak.

Who was at the meetings with the religious at the time? Yourself and who else?

Mr. Boland

The Attorney General's office and the Department of Finance. The minutes of the meeting clearly indicated the names of the individuals present and the Deputy has those minutes.

Nothing ever leaks from the Department of Finance.

I will go back briefly to Sister Elizabeth. Mr. Boland told us the last time he was here that he is a barrister as well as his other many talents. When the two meetings happened subsequent to that letter, he was not included, is that not right?

Mr. Boland

That is right.

Why was that decision made Mr. Dennehy? There were barristers on the other side of the table and if the Minister or you felt the Attorney General's office should not be included, would it not have been prudent to bring in your colleague barrister who was familiar with all of this?

There was no barrister on the religious side at the first meeting, there was at the second meeting. The Minister at the time had set up a meeting with the religious congregations where he wanted to move the agenda forward, re-establish a position of trust and see if an agreement could be reached. He asked me to come along with him, he did not ask for any other official nor did I recommend at the time that there should be. The Minister was aware that at the time I worked on this issue very closely with Mr. Boland and that I kept him informed after and before meetings.

Had you been involved in the negotiations with the religious yourself at that point?

That was a very brief meeting on 7 November.

Yes. I was there but I was not involved directly in the discussions.

Why was Sister Elizabeth so confident in introducing that letter that you thoroughly understood everything. There was and is a very clear understanding between "us" as to the basis of this. If you had not been involved, how come she is——

I understood the "us" to mean both sides, the State, the Minister and the Department of Education and Science and the congregations. I did not take that letter as meaning that there was an understanding between Sr. Elizabeth and me.

You inferred that she meant between CORI and the Department.

That would be my interpretation.

The Department and CORI weread idem. Who was she getting at then who was outside the loop?

I would say the Department of Education and Science, the Department, the State side and CORI weread idem. Who did I think she was getting at?

You think she is referring to the entire State side?

I think so.

Do you think she includes the Attorney General and his office in that?

Which correspondence is this?

If all the State side, meaning the Department of Finance, the Department of Education and Science and the Attorney General, were encompassed in her remarks, why would she write the letter in the first place? Who possibly could rebel later? If the Department of Finance, the Department of Education and Science and the Attorney General were all intimately concerned within this rubric of what she calls "very clear understanding between us", who could rebel? What was she afraid of down the road?

I honestly do not know and I do know not why she wrote that letter. I did not respond to that letter. Deputy Noonan has put on record his view as to why the letter was written.

She was giving a stick to the Minister for Education and Science for Cabinet on the following Wednesday, when the Attorney General would object. He had a piece of paper to say "look, if you get your way there's no deal, here's the letter". That is what it was about.

I cannot think of another rational explanation, can you Mr. Dennehy?

I cannot think of a reason, no.

Someone like that does not write a letter like that. That is why I make the point about going into a room without lawyers. Some of us would be sufficiently intimidated by meeting representatives of CORI on their own but when they have senior counsel with them, we would certainly pause for thought. If the Attorney General's people were not available, I would have brought Mr. Boland with me. Do you think it was more of a political meeting between the Minister and the religious?

Yes, it was a meeting where he, as Minister wanted to move this agenda forward and move the discussions towards finality. This is how he explained it to me.

You said the Attorney General's people were not present because there were no legal issues. Are you saying the only reason the Attorney General's people were not present at any given time is because there were no legal issues?

That is certainly my understanding and the understanding of our own negotiating team — the people within the Department of Education and Science. At no stage were the Attorney General's staff excluded from meetings, they simply were not present at some meetings where no legal issues were being addressed.

Right. I asked you the last day about the finance procedures. You said you reckoned that was covered by the Residential Institutions Redress Act. Do you remember that?

Is that still your view, that there is somewhere in the Act where the State could cover this liability?

Section 23 of the Residential Institutions Redress Act provides a specific statutory framework for the contributions from the congregations.

That was a fund to receive moneys.

What about our liability? That section is concerned with receiving moneys from the religious, not the taxpayer's liability.

Mr. Boland

In so far as the taxpayer is paying money, the Residential Institutions Redress Act provides the complete basis for it in that it provides a statutory basis for the setting up of the redress scheme, the making of applications and the paying of money. In addition, it sets an underlying context for the indemnity agreement and it may be here perhaps on the last day that a small misunderstanding arose. As I understand the legal position, the Government, by virtue of being the Government, has the capacity to enter indemnities. The Residential Institutions Redress Act provides the reason and the context for doing so in this instance. A person may make a contribution to the scheme provided for in the Act with the consent of the Minister for Finance. The indemnity then kicks in to provide the indemnity cover. The indemnity is done by way of executive rather than statutory authority.

If the Office of the Attorney General present on this, I wish to give notice that it is one of the matters I will pursue with it.

For example, will Mr. Dennehy outline from what subhead of the Department would moneys connected herewith come? Do they come from the moneys for the commission?

Mr. Kennedy

There is a separate subhead for any issues relating to redress. It is OME B 24. I cannot remember the exact payments.

Is that under the same subhead as the commission or is it separate?

Mr. Kennedy

It is a separate subhead. I understand that is subhead 19. There are separate subheads for the commission and issues associated with redress.

There is a reference in a memorandum prepared for Cabinet — it did not go to Cabinet in the end — that states that the observations of the Attorney General are set out in appendix 3. It highlights one or two of these observations for the memorandum. Did the Committee of Public Accounts get a copy of that appendix?

Mr. Boland

That memorandum does not refer to the observations of the Office of the Attorney General, but a later one does.

Mr. Boland

There is a short summary of the memorandum in so far as it does not relate specifically to the observations as they do not relate to legal matters. As far as I know — I can be corrected on this — the committee did not receive the full appendix 3 because some of it related to legal matters.

Deputy Noonan took one meaning from it, which I presume is correct, when Mr. Boland said that the Minister stopped it because he did not agree with it. What did he not agree with?

Mr. Boland

He did not agree that it was a sufficient contribution. He was not prepared to accept it.

Are we back to the earlier memorandum that was prepared rather than the one I am addressing.

Mr. Boland

We are. There are two memorandums, one of which went to Government. The earlier one did not.

In the second memorandum, the Office of the Attorney General is clearly flagging its disquiet. For example, it states that the indemnity does not contain any mechanism by which the aggregate contribution of €128 million from the religious orders can be increased if there is a marked increase in the anticipated numbers of claims covered by the indemnity. The memorandum further states that the Government should note that a contingent liability is created by the indemnity. That document did not go to Cabinet either.

Mr. Boland

I do not want to be contentious but I do not think it is quite right to say that the Office of the Attorney General was flagging disquiet. It was merely setting out certain legal facts about the document. The full appendix 3 with the full observations of the Office of the Attorney General which the Deputy does not have, did go to Cabinet in June. There was no disquiet in the Office of the Attorney General. These were the legal implications of the document which the office has a duty to bring to the attention of the Government.

Is it as clear as that? At the stage we are discussing, only 2,600 claims had been ascertained. Accepting the manner in which we speak and write English in Dublin — politely — we should look again at the reference by the Attorney General. It states that the indemnity does not contain any mechanism by which the aggregate contribution of €128 million from the religious orders can be increased if there is a marked increase in the anticipated number of claims covered by the indemnity. Such a sentence would set me——

Mr. Boland

I am not aware of any disquiet. This is a matter of policy which the Office of the Attorney General generally does not enter. It was a matter of policy for the Government to decide, given the legal and factual position and the likely effect of this agreement. The Office of the Attorney General was simply stating the facts. It was not registering dispute or satisfaction but giving objective legal advice.

Can Mr. Dennehy tell me what kind of properties will be handed over? Are they suitable for social housing, educational purposes or building another Luas?

I do not think they would be suitable for the Luas. Mr. Kennedy is involved in the discussions.

Mr. Kennedy

I do not have the list with me. However, many of the properties have been handed over to health boards, some to city councils and the Department of Education and Science is looking at some for possible school sites.

It is about 40:40:40 for ease of comprehension. Under the past transfers, does the State have these properties?

Mr. Kennedy

Yes. We had a meeting yesterday on those properties. There were some legal issues surrounding the fact that if they were transferred to voluntary bodies, there must be a 25-year restriction whereby they cannot be sold.

I am talking about past properties from the date of the apology. Does the State have the deeds of those properties?

Mr. Kennedy

We have agreement in principle. There are a number of stages we go through, the first of which is agreement in principle. Then if these properties were transferred without consideration, such as the transferees agreeing the valuations with the congregations, the Department would insist on independent valuations.

Let us suppose I was waiting for social housing, how soon could I expect to be housed in one of these prime sites?

Mr. Kennedy

A number of the properties may be suitable for social housing. As a Department we liaise with the transferees. However, the transferees are nationwide and can range from Dublin City Council to the Southern Health Board.

Yes, I know. However, when can I expect to move in?

Mr. Kennedy

In effect, while we may not have accepted them for the purposes of the agreement, we have transferred them. However, before we sign off on those properties, we want to ensure the titles and everything else are okay. The legal transfer is a long process but some of the properties are occupied by health boards and so forth.

How many properties have been transferred in the next tranche?

Mr. Kennedy

If we look at properties that have been or are expected to be transferred, the Department has accepted, in principle, 34 properties valued at €22.5 million and €5 million in cash in lieu of other properties. There is a current shortfall on that schedule of approximately €9 million. There was a meeting with the congregations yesterday. Another meeting is scheduled for early April. In the meantime, more progress on the matter is expected. As for the other properties already transferred, while no formal acceptance was made at yesterday's meeting, it is expected that there will be substantial progress within the next three to four weeks. At that stage, the Minister will be in a position to release further details. I am not in a position to give those details today. However, I expect a number of meetings over the next two to three months to bring this matter to a finality.

With regard to Deputy Rabbitte's point on the €128 million, if the €40 million and €10 million for counselling were subtracted, would the deal not actually be €78 million, particularly considering that only one property is agreed in principle from 1999 to 2002?

Mr. Kennedy

I was not involved in the negotiations on the indemnity. My task is to ensure the €128 million is received in full by the State. While that property has not yet been accepted, we made it clear at the meeting with the congregations yesterday that we will be looking for it. In fairness to the congregations, they made it clear that they will ensure that any commitments entered into under the indemnity agreement will be met by them.

Has any timeframe been suggested regarding when a cash replacement might be made, if there is arbitration on property that the Department cannot get?

Mr. Kennedy

There is a mechanism. We intend to hold possibly two or three further meetings with the congregations in an effort to reach finality on this matter by the summer. The congregations yesterday undertook that if there is a shortfall, if we cannot get sufficient properties suitable to or of benefit to the State, they will consider increasing their cash contribution.

Is that with regard to phase 1, from 1999 onwards?

Mr. Kennedy

Yes. If there is going to be a shortfall it would be on that schedule.

Regarding the level of costs for counselling, on which there was a disagreement, from when were they benchmarked, and how much was provided?

Mr. Kennedy

There is no date for that. The cost relates to past, present and future counselling services. We received information some months ago from the congregations that indicated they believed they had given €11 million and that they had met their contribution. We were not satisfied with the information we got and we are seeking much more detail. I have been assured we will get those details very soon. We will consider whatever additional material is provided.

That is an important point. The sum is part of the €50 million. Is the Department hoping for a settlement, a resolution, within a certain timeframe?

Mr. Kennedy

Yes. As a Department we are trying to ensure that any outstanding issues relating to the indemnity are concluded by the summer. We are following that up.

In a letter dated 3 October 2003, you stated that the letter of 6 November 2001, which was sent to the Department, gave a set of possible ways forward for further negotiations, and not a final Government position.

Mr. Kennedy

I have to check. I am not sure what letter we are talking about.

You stated at that meeting in October that the letter did not give a final position but outlined possible ways forward. The letter indicated a major change in the deal.

Mr. Kennedy

Yes. Obviously, what happened afterwards is that the Minister and Secretary General met the congregations and concluded an agreement broadly in line with what was set out in that letter.

With regard to the possible further inclusion of other religious congregations in the scheme, have many more been included?

Mr. Kennedy

There have been a number of applications by other institutions. There is a facility to enable the number of participating institutions to be increased, but none have yet been added to the list. There is some discussion going on.

What are the legal criteria for their exclusion?

Mr. Kennedy

There is facility in section 4 of the Act whereby the Minister may add additional institutions to the Schedule. In order for them to qualify, it is necessary for them to have been inspected or regulated by a public body. For institutions that might have ceased to exist some 40 or 50 years ago, it can be very difficult to establish that.

Under the legislation, have they not got a credible case for inclusion?

Mr. Kennedy

Under the terms of the Residential Institutions Redress Act one can only include additional institutions if they were inspected or regulated by a public body. That is a criterion that must be met in order for the Minister to make an order.

How many claimants are there from the UK and from further outside the Irish jurisdiction?

Mr. Kennedy

Regarding the education aspect of the indemnity deal, about 30% of the people who sought funding came from outside the State, mainly from the UK.

I asked about that because regarding the pre-1953 pensions, there was a total underestimation by the State. What was originally assumed would cost €8 million cost €130 million because the numbers of people who emigrated had not been taken into consideration. Has the Department considered this aspect?

From the beginning it was obvious to us that there would be claims made by people outside the State, and many of the survivor groups have been met in Britain by some of our officials and the Minister. We have also been in contact with survivor groups in other countries.

Has the scheme been actively promoted in the UK?

A range of information, new and revisited, has been discussed here today. When all the evidence has been taken from all sources, the committee will decide its position in private session. Thank you very much.

What is the status of the documents circulated? Are they now public documents?

No. We hope to consider them in private session. Certain documents have been released under the Freedom of Information Act.

What about the ones we opened here in discussion and were shown on screen? Are they not public documents?

I will take advice on that from our legal adviser. The agenda for next week's meeting on Thursday, 11 March, is the Courts Service, Vote 22, regarding the refurbishment of the Cork courthouse.

The witnesses withdrew.

The committee adjourned at 3.05 p.m. until11 a.m. on Thursday, 11 March 2004.