COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 8 Jul 2004

2002 Annual Report of Comptroller and Auditor General and Appropriation Accounts. Chapter 7 — Department of Education and Science.

Section 7.1 — Residential Institutions Redress Scheme (resumed).

Chairman

Witnesses should be aware that they do not enjoy absolute privilege and should be apprised as follows. Their attention is drawn to the fact that, as and 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 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 be exercised only with the consent of the committee. Persons invited to appear 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 them and provided with a transcript of the relevant part of the committee proceedings if the committee considers it appropriate in the interests of justice.

Notwithstanding this provision in the legislation, I remind Members of the long-standing parliamentary practice to the effect that they 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 refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policy or policies.

I welcome the delegation from the religious congregations, Sr. Helena O'Donoghue, Sr. Elizabeth Maxwell and Br. Kevin Mullan as voluntary witnesses before the Committee of Public Accounts today. The function of the committee is to examine and report to the Dáil on accounts audited and reports made by the Comptroller and presented to the Dáil. It is a general function which covers all aspects of the chapters set out in the Comptroller's reports. In this instance, the accounts in question are those of the Department of Education and Science for 2002 and the relevant part of the report is chapter 7.1. In this regard it is the conduct of the Department which is being examined.

The congregations have been asked to appear and are doing so on a voluntary basis. This is being done because there are aspects of chapter 7.1 of the 2002 report of the Comptroller and Auditor General which need further examination. The committee has agreed that it wishes to hear from the congregations so that it can form a more complete view on how the Department performed.

The aspects to be examined have been grouped in the following manner. Module 1 will cover negotiation issues relating to the period October 2000 to 31 October 2001 and will be divided into: (a) the congregations’ understanding of the nature of their participation in the redress scheme, including whether there was any mutual understanding that their participation was a prerequisite to the commencement of the scheme; (b) the discussions surrounding ability to pay, including issues of resources of individual congregations and insurance, if any; and (c) will be the computation of the congregations’ estimate of their liability in a court situation. Module 2 will cover process issues relating to the period 1 November 2001 to 30 January 2002 and will be divided into: (a) the context of the letter from Sr. Maxwell to the Secretary General on 14 January 2002; (b) the congregations’ records of the meeting with the Minister; and (c) the extent of the contact meetings between the congregations and their representative and the Minister or State representatives in the period November 2001 to January 2002. Module 3 will cover the agreement-indemnity issues relating to the period 31 January 2002 to 5 June 2002 and will be divided into: (a) the congregations’ understanding of the agreement reached at the meeting with the Minister on the transfer of past properties to non-governmental agencies; (b) the implementation of the agreement, including evidence proffered to date in respect of counselling services; and (c) the congregations’ understanding of the indemnity being offered prior to meeting the Minister.

Having set out the issues and before inviting members to contribute, I call on the Comptroller and Auditor General, Mr. Purcell, to reintroduce chapter 7.1.

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

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 20003. 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 elements of Redress	Severity of Abuse	Medically verified physical/ psychiatric	Psycho-social sequelac	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 award
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

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
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 has been 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 estimates 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 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 10,80047.

·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 Treasury 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 Congregationsclaimed 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
		€
DOES	11	10.24m
Voluntary Organisations	18	22.12m
Local Authorities	4	6.98m
Health Boards	1	0.12m
Unidentified	3	1.51m
Total	37	40.97m

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

·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 givenby 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 than 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 counseling

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

The origin of this chapter dates back to a meeting of the committee in early 2003 when concerns were expressed about the nature of the agreement made by the State with the religious congregations. That was in the context of the potential cost of the statutory scheme of redress for persons who suffered abuse as children in residential institutions. Consequently, I undertook an examination with a threefold objective: first, to estimate the State's contingent liability arising from the establishment of the redress scheme; second, to review the negotiation of the agreement with the religious orders to establish if proper use was made of the available information and if appropriate approval arrangements were in place; and, third, to review the implementation of the agreement concluded.

The committee first considered this chapter in public session on 2 October 2003, when it heard evidence from the accounting officer for the Department of Education and Science and also from a senior official of the Department of Finance. The committee's next public hearing on the subject was on 4 March 2004 after it had received and reviewed documentation from both Departments and had discussed the matter on a number of occasions in private session. In the course of its deliberations, the committee decided to invite representatives of the religious orders who were party to the agreement to a meeting in order to help it form a more complete view on how the Department of Education and Science discharged its function in the matter.

It might be useful to recap my report briefly. The first part deals with my attempt to put a figure on the potential cost of the redress scheme. As I have said on many occasions, this is an area fraught with uncertainty. We are now just over half-way through the period during which claims can be made, and my information is that to date approximately 3,900 claims have been received and are continuing to be received at a rate of 50 per week. There have been 1,350 or so awards made, at an average of €77,383 each. On the basis that nearly all claims made to date have been successful, we can say with some measure of assurance that the existing liability is around €350 million when allowances are made for legal and other costs. That figure will change dramatically if, as expected, the current rate of claiming continues. As I indicated previously to the committee, I am carrying out further work in this area with the co-operation of the Law Society and firms of solicitors. I hope to come back in a few months with a clearer picture of the overall estimated liability.

The other two parts of my report are more directly related to today's meeting. First, how the State conducted the negotiations with the religious congregations and in particular how the available information and legal advice was used. In this regard, at earlier meetings I pointed to factors like the increasing potential cost of the scheme during the course of the negotiations and the lack of knowledge on the part of the State representatives about the extent of the congregations' ability to pay. We also heard that there was some confusion over what was agreed on property transfers at the meetings between the congregations and the Minister and the Secretary General.

Having completed my examination, I was of the view that greater diligence by the Department would have added extra rigour to the State's negotiating stance, whatever about achieving a better outcome. We can only speculate on that. However, Members will recall the accounting officer made the point that while the objective of the negotiations from the State's point of view was to achieve the highest possible contribution, there was no capacity to coerce the congregations into any agreement. The last part of the report deals with how the agreement was implemented. The main outstanding element relates to property transfers and, as the current position will no doubt emerge during this hearing, I will leave it to those who are closer to the action to deal with that matter.

As for the other elements, I understand the Department is currently examining documentation on the congregations' provision of counselling and other support services. On the education side a scheme was put in place for the academic year 2003-04 to cover fees and materials for those availing of the education fund. I will stop there and if the committee wishes to refer back to me at any stage during the proceedings it is, as always, welcome to do so.

Chairman

Thank you. Sister Helena, do you wish to make an opening statement?

Sr. Helena O’Donoghue

No, Chairman. We are happy to be here today. Sr. Elizabeth Maxwell, Br. Kevin Mullan and I represent 18 congregations which have been party to the agreement with the State. Those are all separate and disparate in their own way so we are very much representing a collective body. We are happy to be of assistance insofar as we can. The Chairman said he envisaged dividing today's business into three parts but I was unable to keep every piece mentioned together, though they relate to the question areas submitted to us. If that outline were available it would help us not to stray into the different modules mentioned.

Chairman

Module (a) covers the negotiating issues from October 2000 to 31 October 2001. It deals with the congregations' understanding of the nature of their participation in the redress scheme, including whether there was any mutual understanding that their participation was a prerequisite to the commencement of the scheme; (b) the discussion on the ability to pay, including issues of the resources of individual congregations, and insurance, if any; and (c), the computation of the congregations' own estimate of their liability in the core situation.

Deputy Fleming

On my behalf and on behalf of the members I welcome Sr. Helena, Sr. Elizabeth and Br. Kevin here today. As has been made clear, we are examining the accounts of the Department of Education and Science. That is our role, not examining the accounts of religious institutions, and I do not want anyone to think that because of the witnesses' presence. They are here because they have information on various issues which might assist us in our assessment of the Department and how it conducted its negotiations.

I am dealing with the earlier part of the negotiations — where it all started and I will ask some questions to establish background. In May 1999 the Taoiseach 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. Were there any discussions with the religious prior to the Taoiseach making that apology? Were you aware that this was coming? Did you have any input or was it something the Government did on its own behalf.

Sr. O’Donoghue

Sr. Elizabeth, as secretary general of CORI at the time, will respond to that.

Sr. Elizabeth Maxwell

The answer is no. We had absolutely no contact with the Government or the Taoiseach's office and we had no advance knowledge that such an apology was about to be made.

Deputy Fleming

It was a unilateral decision by the Government and the Taoiseach. As the Taoiseach said, the State had failed the people in these institutions and he apologised for the State's failures over many years. That is the starting point from which everything emanated.

When were the first contacts with yourselves? In October 2000 the then Minister for Education and Science sent a memorandum to Government which, among other things, referred to the fact that the Government was committed to providing the necessary funding with a contribution from the religious congregations if one could be agreed. Were there discussions with yourselves before that went to Government in October 2000? Who made the first contact? How did it come out? How did the discussions start?

Sr. O’Donoghue

Sr. Elizabeth will continue with that.

Sr. Maxwell

I was then secretary general of CORI and the Laffoy commission had been put in place. In August 2000 — I could say 24 August but I am not sure — there was a small piece in the Irish Independent which suggested the Laffoy commission was to become a compensation tribunal. Someone drew my attention to that and I made a phone call to the Department of Education and Science, specifically to Mr. Tom Boland, because earlier, when the Laffoy commission legislation was at the draft stage, we had made a submission directly to Mr. Boland. His was the only name I had so I tried to contact him but I was told he was on holidays. The purpose of my call was to clarify this piece in the Irish Independent because I knew it would have significance for the continuation of that inquiry.

If I am correct it took some days — the piece may have been in the Sunday Independent but I am not sure, though I know it was late August. It was 15 August before I got a response to the call, which came from Fergus Costello, who explained again that Mr. Boland was on holidays but that they would be interested in the Department in meeting with representatives of CORI. The date suggested was 27 September. That date did not suit us and we eventually decided on 25 September. The President of CORI and I, as Secretary General, went to the Attorney General’s office. Present from the Attorney General’s side were Liam O’Daly, Chris Boudren and from the Department of Education and Science Mr. Tom Boland and Mr. Fergus Costello. We clearly understood the nature of the meeting was to consider our response to an invitation to become contributors to a compensation scheme. It was made very clear to us that the scheme was being put in place whether or not we contributed. The phrase used was, “It is not predicated on your becoming part of it or not”. I recall it because it was such a Latinate word. We made it clear from our side that as we were a representative group we could not make decisions for the congregations. However, we were told we could have possibly a month in which to consider the matter and the Attorney General’s office would welcome a response by the end of October, and so we came back.

Many issues were raised at the meeting which we found to be of huge interest. We were told at that point there were approximately 750 cases against the State, most of them relating to institutions such as reformatories and industrial schools and some orphanages. Some related to approximately 40 day schools, prisons and care institutions of that nature. It was acknowledged that no one knew — I took it on the State side — what the extent of the claims could eventually be if such a scheme were put in place. It was estimated that it could reach 2,000 maximum.

The reasons given at the meeting for setting up such a compensation scheme were that it would be a decent, humane and generous thing to do for former residents of these institutions who, we all acknowledged, had a very difficult time in their earlier life. The assumption was that the religious, who had already taken some initiatives in healing and outreach towards them — we had set up the independent counselling help line in 1996, and a range of services were already being provided by religious congregations in the area of housing, education and social services, such as help with funerals, weddings and holidays — would say "yes" to the opportunity to contribute once more to the healing initiatives that were already taking place. However, I could not say that definitively — I had to refer back.

It was also obvious to us — I do not think it was a secret — that the State side did not look forward to the prospect of endless litigation. It was not an attractive vista from its point of view. Neither the State nor the religious felt it was in the interest of the former residents who had suffered so much and who were looking for some gesture of financial compensation. We understood the Laffoy Commission was complaining that it could not get on with its work because of the failure to address the financial aspect.

It was presented as something that was decent, humane and generous. It was presented in the interest of the former residents and, by and large, it was something we felt could be of interest to us. It was outlined to us that the alternative was that the Department could deal directly — and would do so because the State was determined to put in place the compensation scheme — with the claimants, pay them a certain sum and then tell them to go after the religious for the remainder of the sum. That would still require the claimants to endure the rigours of cross-examination in court. We all agreed this was not attractive to former residents.

I then shared the information with the congregations. We did not get a month in which to make up our minds. Luckily for me, I had met the nine congregations who had been named in "States of Fear". I got a positive initial reaction. Therefore, when the announcement was made at 11 p.m. on 3 October that such a compensation scheme was about to be put in place, we were taken somewhat by surprise. I was confident enough the following day, in response to media inquiries, to be able to say that I was confident the religious congregations would be happy to make a voluntary contribution towards the scheme.

Deputy Fleming

Following the Taoiseach's apology, the State was determined to deal with the issue in its own right, regardless of whether the religious institutions were involved, because it was the decent, humane and Christian thing to do.

Sr. Maxwell

Yes.

Deputy Fleming

Sr. Maxwell said the State indicated there would be approximately 750 cases. Were there many cases against the religious institutions at the time? When you began to consider the detail of the scheme in terms of your own liability and ability to pay, what was your early estimate of the potential liability? You said you represent 18 institutions. Presumably some of the institutions or orders had a much greater liability. Is it appropriate for the representatives to comment on how they would spread the liability because the institutions with the biggest liabilities may not be the institutions with the biggest amount of assets?

I want to clarify the issue of insurance, which arose previously, because it affects the ability to pay. It was indicated at a previous meeting that senior officials of the Department were not aware of the insurance issue until quite late. Following that statement, I and other members made clear statements that we felt this was not good. I saw the subsequent statement that the Department had been made aware of the issue well in advance of telling us that they only became aware of it at our committee. Perhaps the confusion that arose in that regard on a previous occasion was based on information supplied and was not due to any malicious intent on the part of members of the committee. We acted on the information available. During the discussions on the ability to pay, how did the insurance issue factor? We understand there was a payment of approximately €6 million and is there more to come?

Sr. O’Donoghue

Br. Mullan will deal with the issue of ability to pay and so on.

Br. Kevin Mullan

On the issue of ability to pay, it has already been stated that 18 congregations were involved in the discussions. They were all quite different; some were small and some were large. Some had a great many assets and a small number of claims and vice versa for others. It was also felt that some congregations would not have ready access to large amounts of cash but they might have property, or some could have large amounts of cash and little property. There is quite a disparity in the resources of the congregations and in the nature and extent of the claims the congregations would have faced. That was the scenario when the 18 congregations began to examine the issue to see how they would be involved in the discussions with the State.

As the discussions went on, the State wanted the issue to be dealt with on a 50:50 basis. From the beginning, we, as negotiators on behalf of the congregations, never accepted that stance. The reason for this was that we felt we had to look at it in terms of our legal exposure to these claims if they all went through the court system. Our reason for doing so was that the State had decided to implement the scheme, which was decent and humane. We felt we had to look at it from the point of view that we had a number of claims and, if we proceeded with these in the courts, which could easily have happened, what our exposure would be. Each congregation looked at that situation. They used a particular pattern and looked at every claim they had ranging from substantial claims to ones that had little substance in them. Every claim was taken into account. Then, particular calculations were done on that and the congregations came together. During that work we estimated that the liability of the 18 congregations was in the region of €50 to €60 million. That is where the question of ability to pay arose for us.

Deputy Fleming

When did the insurance issue enter your reckoning or your ability to pay consideration?

Sr. Maxwell

It was one of the factors I should have mentioned in that very first conversation on 25 September. The question of insurance was raised.

Deputy Fleming

By whom and by which side?

Sr. Maxwell

I honestly cannot say. I remember, and I do so because I was almost surprised that we were advised by the State's side — I cannot say whether it was the Attorney General or the other — that we could and should approach our insurers about this. The caveat was issued but it should be remembered that they would have their legal advisers behind them as well. The issue of insurance was raised at the very first meeting on 25 September.

Deputy Fleming

From day one.

Sr. Maxwell

Yes.

Deputy Fleming

I conclude my questions because other speakers want an opportunity to contribute.

Deputy Connaughton

It is fair to point out, as the witnesses are more than well aware, that this committee is a value for money one. Obviously all individuals in this State hope that everything than can possibly be done will be done for the victims of abuse. That is the overriding factor. Those people were so badly sinned against and their lives ruined that everything that can be done should be done for them. I assume we are all on the same track.

The committee is deliberating today. It is a harsh fact that we are here on behalf of the State and for every man and woman therein. We are trying to find out whether the State got the best possible deal. In other words, was it fair in the overall balance of things? In that way, as the witnesses are probably well aware, many people doubt that the State did get the best deal.

I do not want to go over things again. On the day when the Taoiseach apologised on behalf of the people of Ireland, Sr. Maxwell said she knew nothing about it and that it was entirely the Taoiseach's and the Government's initiative. Is it true that she had no inkling about it?

Sr. Maxwell

Yes, that is true.

Deputy Connaughton

In a press release in October 2000, the religious congregations welcomed it and said they were prepared to make a meaningful contribution. I took that to mean a meaningful financial contribution. I assume at that stage that the congregations began to work around this and that they would have liked to have been financially involved in this particular deal.

Sr. Maxwell

Yes, we can respond fully to that. It would be true to say that we were as concerned about the difficulty for former residents and those who had suffered so much to go through the court route which was the only route available to the religious. We appreciated the fact that the State put in place a scheme that would be so beneficial to so very many. We would have liked to have seen that redress, healing and reconciliation happen much faster. That was one of the reasons we saw it as good to be part of the scheme devised by the State.

I think that there is a difficulty for us. Perhaps it is around different assumptions. The issue around value for money is related, I think, to the idea that the number of claims equates with culpability or guilt. This is a difficulty for us. At the time that we had the negotiations we had the figure of somewhere between 1,500 to 2,000 claims. They had come through litigation or the Laffoy commission as it was then. The timing of the redress scheme came in advance of the work of the fact-finding aspect of the commission. Congregations had to make a decision on the basis of how they could calculate from the claims that they had without discriminating between good or bad. This was done because congregations have responsibility to their resources. They have a trustee responsibility. They may not give out resources without some kind of warranty or degree of obligation being shown, whether that be for their mission activities or in any other area. The contribution that we were making was a voluntary one in advance of any establishment of our determination around the claims.

Deputy Connaughton

Like many people I have the height of regard for what many of the congregations have done down through the years. Today I want to get something across to them. Earlier Br. Mullan said that the congregations decided on their exposure to claims or on what it would cost them. I imagine that it was an in-depth study of all of the various congregations. However, many people cannot understand why an evaluation was not done at the same time on the property values. That appears to have been left out of the equation. I have no idea and do not know whether any other committee members have either of the property values. It might be, and it probably is, that the amount of money the congregations volunteered was as much as could be given. The problem is that the figures arrived at did not seem to be evaluated against what the congregations owned or owed. Perhaps the witnesses would indicate why the State did not look for it? There was no onus on the congregations to do it. Why did the State not insist on finding out how much the congregations were worth?

Br. Mullan

I cannot speculate on why the State did not do it.

Deputy Connaughton

It did not do it.

Br. Mullan

It was not raised with us. The other point I would make in relation to the assets of congregations generally, as Sr. O'Donoghue mentioned a while ago, is that they are held in trust. The religious members themselves are not beneficiaries of these particular properties or assets. They are there for the good of people that we serve. They are there for the purpose of our mission. Spread across this whole country there are schools, hospitals, child care centres and addiction treatment centres for the service of the public. There is a perception that these assets could be suddenly realised. They serve the people. I would feel that if we started to liquidate them, services would cease to operate which would be quite serious for the country.

Deputy Connaughton

I could not agree more. Most people would graciously accept that a great deal of work has been done and times have changed. Many people still find it difficult to understand that in serious negotiations on such a grave issue there was not some attempt to quantify or prove to everybody that this was as far as the congregations could go. On account of the good work done by so many congregations, the last thing people want is to see a situation develop where they might have to declare bankruptcy. The State left itself open to the accusation that it did not find out how much was available from the congregations. Many meetings were held and strong negotiation took place between both sides, which is the way it should be.

Sr. O’Donoghue

: To respond to the Deputy, in the absence of determination by an independent body such as the investigation committee, the only avenue of assessment the congregations had was the number of claims they had across the 18 congregations, the age of the victims and the seriousness of the abuse etc. I do not think an audit or assessment of assets arises until some degree of determination is made. The congregations made a voluntary contribution on an assessment on undetermined cases they had, but recognising that that reflected what everybody accepted, that there was a great deal of pain and suffering and that abuse had actually happened. However, the determination of that was not there. Therefore, an assessment or requirement for what was the total assets of congregations did not arise.

Deputy Connaughton

Did the congregations think the number of cases would increase as they have done? In reply to a parliamentary question yesterday, the Comptroller and Auditor General stated there were almost 4,000. This number will rise because we are only half way through the process. Did the congregations have any indication there would be so many when the negotiations started?

Sr. O’Donoghue

We had no idea. As we began we had somewhere between 800 and 1,000 cases. By the time the negotiations were completed it was around 2,000. However, the issue of the rising number of cases, in terms of the redress scheme, is not equal to an establishment of culpability because the redress scheme is prohibited from defining, establishing or determining either fault or guilt. They are not equated in that sense.

Deputy Connaughton

On the other side of the coin, if it transpired that the Government went ahead with what it said it would do — we could call it a threat — that is go ahead even if the congregations did not go with it, there would then have been litigation all over the place. As Sr. O'Donoghue rightly pointed out, this would have been difficult for the victims. However, would it not also have been difficult for the congregations?

Sr. O’Donoghue

It would. It is recognised that many of the cases would have had a difficult passage through the court system and many might have fallen. We did not take advantage of the fact that it might have been a much more positive scene for us to go through the court scene. We wanted to take an approach that showed concern for every case that had come to us and that is where we made our assessment.

Deputy Connaughton

My time is coming to an end. Deputy Fleming mentioned the issue of insurance claims and said a sum of €6 million was mentioned here at previous meetings. Can I take it that money was paid?

Sr. O’Donoghue

On the insurance, can I ask the Chairman if he can explain the relevance of the insurance issue to the remit of the committee?

Chairman

The fact that concerns us is the source of the cash settlement or what resources the sisters would have with regard to the settlement and where they would get the cash from and whether the insurance company paying the settlement would indicate that the congregations had cover and that they would cover the options on this.

Sr. O’Donoghue

In so far as I can be helpful I can say we did, as Sr. Elizabeth mentioned, talk to our insurers at the beginning of the negotiations and they followed on a parallel track of negotiations. However, the insurance companies, as I think most people would understand, did not feel they had given us cover in policies for the various kinds of allegations that were against us. That was a matter of dispute for a long time. Just one insurer agreed to make a contribution, because of a long-standing commitment over many decades. However, that was only agreed six months after we had finalised the negotiations with the State and it was minimal in terms of the overall picture. Some 15 of the 18 congregations would have benefited in different portions from that €6.5 million sum. For some congregations within the 18, the recovery of whatever was their small part of that insurance figure was critical to their capacity to pay their cash portion of the agreement. All of the congregations have set aside what they got for the services of former residents in one way or another.

Deputy Connaughton

In so far as the deal was concerned, the Department of Education and Science, the Attorney General's office and the Department of Finance appear to have insisted right up to the finalisation of the deal that any properties that changed hands to non-governmental agencies prior to a certain date would not be taken into account. The Government at that stage, as we know from the letters here, appears to have been rock solid against entertaining that proposal. However, it appears that all in one week, early May 2002, there appears to have been a dramatic switch around. Why did that happen?

Sr. O’Donoghue

There was no doubt in our minds that part of our package agreement with the Government included properties that were transferred to State or voluntary sector within three years of the Taoiseach's statement. Included in the Government's press statement on 30 January 2002 there was specific reference to State bodies and voluntary organisations. Some misunderstanding would have arisen as the matter was being nailed down in terms of a legal agreement and the matter came back to us as congregations. We were very clear and had the written evidence, in terms of the Government press statement on 30 January, that it was so. I am not conscious of any further difficulty.

Deputy Connaughton

The day the Secretary General of the Department was here he seemed to be equally clear that it was not included.

Sr. O’Donoghue

This is how it was with us and I am one of the people who has been at every one of the meetings all along. There was no lack of clarity in terms of the gifts that had been given to the voluntary sector as well as the State because it was clear that in the voluntary sector particular charities were providing services the State seriously needed in terms of its commitment to people in need.

Deputy Connaugton

Can Sr. O'Donoghue remember who it was, whether at a committee or negotiation meeting or a private meeting with the Minister, who accepted that at the finish?

Sr. O’Donoghue

The issue of voluntary or State sector was not an issue or focus of attention. It was simply under the general heading of properties already given, which had been talked about from June 2001 right through to the end.

Deputy Connaughton

Somebody had to say that the congregations' version of what the agreement was would be accepted. When did that happen?

Sr. O’Donoghue

That happened in May of 2002.

Deputy Connaughton

Were both negotiating teams in attendance on that occasion?

Sr. O’Donoghue

Our legal team which was working out the details of the agreement at that time indicated to me that there was a difficulty with the issue from the State's side. I had written to both Mr. Dennehy and to Mr. Boland about our understanding of that matter.

Deputy Connaughton

To your knowledge, did the Minister deal with that item himself?

Sr. O’Donoghue

At that time or earlier?

Deputy Connaughton

At that time.

Sr. O’Donoghue

I have no idea about that time.

Deputy Noonan

Br. Kevin Mullan mentioned that the estimate of liability, if cases proceeded through the courts, was €50 million to €60 million. Is that correct? Were you surprised when you read the report of the Comptroller and Auditor General which indicated that the total liability of the State could be in excess of €1 billion?

Br. Mullan

Yes, I would be surprised but I would feel that the exercise that the 18 congregations was undertaking was somewhat different from the one being done by the Comptroller and Auditor General.

Deputy Noonan

In what way?

Br. Mullan

As I said earlier, each congregation had a number of claims on its books, so to speak. They looked at every one of those claims in terms of what would happen if they went to court. Every claim was included in that consideration; none of them were discounted. The legal advisers of each congregation did this. The claims were brought together and that is what led to the figure of €50 million to €60 million.

Deputy Noonan

The nub of the issue for this committee, in its role as an inspector of State finances, is that if, finally, there is a liability in excess of €1 billion, the contribution of the congregations seems disproportionate. It seems to be very little. It looks as if the congregations got off lightly in circumstances where everybody acknowledges the State's responsibility for the institutions. The members of the 18 congregations ran the institutions and they or their employers perpetrated any abused that occurred. It seems reasonable then, from the point of the view of the man or woman on the street, that a 50:50 arrangement would be fair and balanced. It would acknowledge the responsibilities of both the State and the institutions. That is the nub of our problem. I find it hard to see how a settlement was made for a figure of €100 million, made up with property transfers, as was indicated by the congregations, against an emerging liability of possibly €1 billion. I want to explore how the congregations came up with the figure of €50 million or €60 million. Br. Mullan stated it comprised cases on the books of 15 congregations.

Br. Mullan

The number is 18 congregations.

Deputy Noonan

Were these cases being taken on the basis of sexual abuse or were there wider issues?

Br. Mullan

Every congregation was asked to look at every claim it had. Those claims could include quite serious sexual claims down to claims of which we had no substantial account. There was a whole range of claims that each congregation included in that exercise.

Deputy Noonan

Would it be fair to say that at the time, solicitors would have advised people to carry sexual claims, rather than claims of physical abuse, for example? It was a harsh time in Ireland. The regime in institutions was harsh.

Br. Mullan

Referring back to what each congregation did, each congregation looked at every single claim against them at that time. They could range from quite serious sexual abuse allegations to where there was simply an initiating letter from a solicitor acting in the name of a claimant which contained no detail and no great substance.

Deputy Noonan

I am trying to establish whether it is possible that the reason for the discrepancy between the emerging liability and the congregations' assessment of liability at the time is that what was being taken to the courts was a very narrowely focused set of cases of sexual abuse while wider issues which are now within the redress scheme, such as neglect, were not included.

Br. Mullan

It is true the definition of abuse in the working of the Laffoy commission and of the redress scheme is much wider than just sexual or physical abuse. It includes things like emotional, psychological abuse and neglect. In terms of what the congregations possessed at the time, there were claims at one end which were extremely serious sexually and other claims which were not spelt out in any detail.

Deputy Noonan

The assessment of the congregations was if they fought everything in court——

Br. Mullan

We presumed on every one of those claims going to court and assumed they would all be successful. We did not presume that most or half would fail. Every claim was counted in. One particular difficulty which congregations have which the State does not have relates to the fact that globally we can all say that abuse occurred. Congregations have said that and have apologised and so has the State. When one comes down to a particular case, it is somewhat different because in a particular case there will be two accounts of what allegedly took place. The congregations must consider not only the person making the complaint but the person against whom the complaint is made and that is a difficult thing to balance. We had to consider it in terms of justice for all concerned. We decided to regard all the claims as serious and as succeeding in the courts and we based our calculation on that.

Deputy Noonan

I read in one of the files that the legal advisers to the congregations took a range of possible outcomes and computed the range of liability at somewhere between €50 million and €110 million, following which the average figure was taken.

Br. Mullan

I do not think that pertains to us. We did not deal with figures like that.

Deputy Noonan

It is in the files but it is not that important. I will not pursue it but it is documented.

Br. Mullan

I do not think it is a document that any of us have seen, with those kinds of figures. I am quite certain about that. The first time I saw it was when I received the booklet from this committee, if it is the same document we are talking about. That was my first sighting of that document.

Deputy Noonan

You do not think that was what happened? You do not think it was made up that way?

Br. Mullan

No. I do not think it was made up that way. I am not saying I do not know, but I do not think it was made up that way.

Deputy Noonan

The congregations had rightly taken legal advice all the way through. Did you receive advice from anywhere else? Did CORI or the individual congregations contact religious communities in the United States, for example? Did you receive advice from Canada, where they had long experience of this?

Br. Mullan

No. Simply the leaders of the 18 congregations and our legal adviser were involved in the negotiations. We had no contact during the negotiations with people from other countries.

Deputy Noonan

There was no input about how sister and brother congregations abroad had dealt with the issue?

Br. Mullan

That was not relevant. We were dealing with the situation here. We were dealing with the claims of which we were aware and trying to work from there. There was not any consultation with other countries or other parts of the world.

Deputy Noonan

What was the bottom line for the congregations in the negotiations with the Department of Education and Science? At what point would you have walked away?

Br. Mullan

As has been said already, we saw definite merits in the scheme. We saw that the purposes of the scheme were very much in line with purposes we ourselves as congregations would want to see happen for people who were victims of abuse. We were taking a positive attitude towards the scheme but there were aspects of the scheme about which we had some questions and problems. For example, we had questions regarding the level of validation contained in the scheme. We also had some questions about the dilemma of the rights and due process for our members. That was one of our concerns. Whereas the scheme certainly in its intent was good and humane and decent, it did pose problems in terms of our making a contribution to the overall working of the scheme.

Deputy Noonan

Can you explain the circumstances which led to the negotiations moving from between the congregations with officials from the relevant Departments and that being set aside and negotiations being carried out directly with the Minister and the Secretary General of the Department of Education and Science?

Sr. O’Donoghue

Sr. Maxwell will take that point. If I might——

Chairman

That matter might relate to the next module.

Deputy Noonan

I would like to clarify the module parameters.

Sr. Maxwell

That would be the next module.

Chairman

It would appear to be the next module.

Deputy Noonan

I will leave it at that.

Sr. O’Donoghue

Sr. Maxwell will deal with the moving of negotiations from working with the officials to working with the Minister himself.

Deputy Noonan

I thought we were taking it to October.

Chairman

The first module is up to 31 October 2001. The next module would be from November 2001 to 31 January 2002.

Deputy Noonan

Did the switch take place at the end of October?

Chairman

That is in the next module. We should conclude this module.

Deputy Noonan

It is not the next module. I am asking about the circumstances surrounding the relationship with the Department officials during the summer months up to October, which led to the switch.

Chairman

It is appropriate to deal with that matter now.

Sr. Maxwell

We made an offer in June to the Government. We were in negotiations and we understood that was what one did. We put an offer on the table. We were probably quite assertive about it and we said it was our final offer, but we expected a response from Government. That was in June of that year. No response came. It was never put to Cabinet. We understood it would be. Following June during July and again in August I think there were two leaks to newspapers, one to the News of the World. We felt — and I am on record as saying — that we were being treated shabbily by somebody on the State’s side. Efforts were being made to bounce us from the offer we had made to a higher figure. We were learning that that was somewhat the way of negotiations.

We expected to go back into talks in September. I, as secretary general, was led to believe that was the intention, but in fact nothing happened in September although I had rung to ask when we would be resuming. The next meeting occurred on 16 October and a different civil servant was in the chair.

It was a very different style of meeting at which it was put clearly to us £100 million or nothing. There was no use talking about anything else; £100 million was required from us. There was no point in talking unless we were in a position to agree to that. Frankly, we were not in a position to agree to it. So that meeting ended rather unsatisfactorily.

We said we were not in a position to say £100 million. For one thing we would have had to go back to the congregations and see how we could move from what we had put on the table. After that we were invited to meet the Minister directly and we took some time before we agreed to do so. Meantime a letter came from Mr. Paul Kelly, the chairman of the October meeting, which was very different in tone and outlined a number of things we wanted and agreed to them, including the indemnity. I believe members of the committee have copies of that letter. We met the Minister the following day.

Those were the circumstances leading up to it. The question has been asked of us as to whether we did not consider that unusual and we did not because right through our negotiations, certainly in the early part, we were suggesting that at some stage negotiations could not be concluded by groups of people. We felt that the principals involved would have to agree eventually and so given that the then Minister, Deputy Woods, was there at the very first meeting at which it was publicly announced that we were in negotiations, we did not see it at all as unusual that he would now come to a meeting or ask us to come to a meeting and so we did.

Deputy Noonan

Does Sr. Maxwell know who leaked to the News of the World? That leak caused many problems.

Sr. Maxwell

I have no idea. The one thing I was pretty sure of, as secretary general, was that it was not a leak from our side.

Deputy Noonan

The correspondence would suggest that Sr. Maxwell thought it might have been someone on the negotiating group on the officials' side or perhaps someone higher up in the chain of command.

Sr. Maxwell

What I said in the letter was that we were very annoyed. It was an experience that shattered our confidence in our ability to continue in negotiation. We were sure and pretty confident that it was not a leak, as I said, from our side. So it followed that it had to come from somewhere else. I have no idea and I was not able to point the finger at any one person.

Deputy Noonan

How high was the issue of the indemnity in the criteria of negotiation?

Sr. Maxwell

It was there throughout.

Deputy Noonan

Was it a bottom line issue?

Sr. Maxwell

Yes, a bottom line issue.

Chairman

Does Deputy Rabbitte want to ask his questions now or should we suspend for the Dáil division?

Deputy Rabbitte

I am sorry about this, but I presume we ought to vote.

Deputy Dennehy

I can stay and pair with the Chairman.

Deputy Rabbitte

I will ask a few questions, as I have a commitment on radio at 1.15 p.m.

Chairman

We are dealing with module 1.

Deputy Rabbitte

Sr. Maxwell has traced the background with Deputy Noonan. Obviously she recorded that in a letter of 31 October in no uncertain terms to the assistant secretary of the Department in which she set out her unhappiness at what had transpired in the leak and the manner of the negotiations. Is that the case?

Sr. Maxwell

That is right, yes.

Deputy Rabbitte

At that stage negotiations had log-jammed if not broken down.

Sr. Maxwell

Does the Deputy wish me to respond to that?

Deputy Rabbitte

Yes.

Sr. Maxwell

We never understood that negotiations had broken down, nor did we consider that they had broken down. We would admit that it was a very difficult period. We were not anxious to walk away from them.

Deputy Rabbitte

As Sr. Maxwell has said, she then received a letter dated 6 November with a very different tone. We are having difficulty tracing the process from the letter of 31 October and — I hope Sr. Maxwell will not mind my describing it as — her annoyance on behalf of the congregations with the officials' side. What could have conditioned the extraordinary change of tone in the letter of 6 November?

Sr. Maxwell

I saw the matter of the leaks as separate. I felt it could not go without my referring to it. In other words I could not fail to put on record our feelings about the leaks and I did.

Deputy Rabbitte

However, the letter of 6 November changed more than apologising for the leaks.

Sr. Maxwell

Yes.

Deputy Rabbitte

It changed the entire substance of the negotiations.

Sr. Maxwell

I connect that, because of who wrote it, to the meeting in October where we had made it clear that we could not agree at that meeting to €100 million and that we needed to refer back to our congregations that had mandated us to negotiate on their behalf. There was no other meeting and there were no other contacts, but somewhere along the line something changed between the October meeting and that letter. I can only attribute it to reflection on the part of the State's negotiators and to a change of direction or whatever. I cannot explain it.

Deputy Rabbitte

We cannot explain it either, so we are ad idem on the matter. Sr. Maxwell said to Deputy Noonan that the Minister then invited her to meet him directly. When did that happen?

Sr. Maxwell

That happened after the meeting on 16 October.

Deputy Rabbitte

Was it before the letter of 31 October?

Sr. Maxwell

Yes.

Deputy Rabbitte

You do not make any reference to it in the letter of 31 October. If you had an invitation from the Minister, you would be inclined to mention it in the letter of 31 October.

Sr. Maxwell

Was I not trying to deal with the annoyance factor in the letter of 31 October?

Deputy Rabbitte

Yes, you were certainly doing that but I am interested in whether you were doing more than that.

Sr. Maxwell

I appreciated that one could express one's feelings but that it did not necessarily deflect from the business of the negotiation. I was, however, putting down a marker that we did not want to be treated the same way.

Deputy Rabbitte

That was clearly the case. How was the invitation from the Minister communicated to you?

Sr. Maxwell

It was communicated by telephone.

Deputy Rabbitte

Can you recall by whom in the Department?

Sr. Maxwell

Mr. Tom Boland.

Deputy Rabbitte

You think that was before 31 October.

Sr. Maxwell

Yes, it was during the afternoon of 16 October.

Deputy Rabbitte

When did you respond to it?

Sr. Maxwell

We took some time because we had to refer back to our 18 congregations and ask ourselves what it meant. We decided it was probably better to respond to a ministerial request for a meeting. As I stated, this was not inconsistent with our stance. We believed that if negotiations were to be brought to some kind of conclusion, we would have to meet face to face with the people who had direct responsibility.

Deputy Rabbitte

What was the substance of your response?

Sr. Maxwell

It was simply to say that we would attend.

Deputy Rabbitte

You did that in a telephone call to Mr. Boland.

Sr. Maxwell

Yes.

Deputy Rabbitte

For what date was the meeting fixed?

Sr. Maxwell

I believe it was 7 November.

Deputy Rabbitte

When did you receive the letter of 6 November? Was it sent by snail mail or was it delivered by courier or e-mail or other means?

Sr. Maxwell

I cannot recall that. The two things came very close together but I know that——

Deputy Rabbitte

Did you expect it?

Sr. Maxwell

No, I had no advance warning that it was coming.

Deputy Rabbitte

Since the letter of 6 November dramatically changed the position of the State, can you help the committee by explaining the reason it came out of the blue at midnight on the eve of the meeting with the Minister?

Sr. Maxwell

I cannot explain the reason the position changed. On the other hand, there was nothing in the letter that we had not already asked for in the course of negotiations.

Deputy Rabbitte

Yes, but you had not got what you had asked for. Correct me if I am wrong but the position until then was that the Department was insisting on a 50:50 position and had not conceded on the question of the indemnity or that properties previously transferred would be taken into account. Is that correct?

Sr. Maxwell

Yes.

Br. Mullan

My memory is that we had signalled the indemnity from very early on in the negotiations. I would say that in May 2001, much earlier than the period we are discussing now, we were fairly confident we would get an indemnity if we made a contribution.

Deputy Rabbitte

We do not have any documentary evidence of that.

Br. Mullan

No, but that is my sense of the position we had arrived at in May. We were going to make a meaningful contribution and were saying that if we were to do this we needed an indemnity to match our contribution.

Deputy Rabbitte

The meeting was attended by the Minister for Education and Science and the Secretary General or were others present?

Sr. Maxwell

It was attended by the Minister, Deputy Woods, and Mr. Dennehy.

Chairman

The Deputy has strayed into the second module. I ask him to confine his questions to the first module.

Deputy Rabbitte

You will never be admitted to the Bench, Chairman. You seem intent on frustrating the committee's logical processing of this matter. Are you saying the meeting of 7 November is beyond my——

Chairman

You are the lead questioner on that issue in the next module. If members agree, you may continue your questioning on it now.

Deputy Rabbitte

I am merely trying to follow my head. As the meeting with the Minister, Deputy Woods, and Mr. Dennehy took place, did you have the letter absorbed and in your fist when you sat down?

Sr. Maxwell

I do not know if Sr. Helena or Br. Kevin had absorbed the letter but I certainly had not absorbed it. I maintain that there was nothing in the letter that had not already arisen in our discussions and negotiations. The only advances coming through was that there was an agreed figure, or at least a figure had been proposed, and there was agreement to give an indemnity and cap the figure at £100 million.

Deputy Rabbitte

Several things in the letter are substantial, even dramatic, changes for example, it 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.

That is a major change in the Department's position.

Sr. O’Donoghue

No. As Br. Kevin mentioned, we had given the State a draft indemnity document in May, which was comprehensive and would have covered all claims eligible to come before the redress board in due course. The Department's position on that issue was not, therefore, a surprise to us. At the meeting, the issue on which we were surprised was the willingness of the State to accept past properties dating back three years to the Taoiseach's apology in May 1999. To give us credit, that definitely helped bridge a gap we regarded between the figure we felt we could offer and the figure the State required, which we regarded as pretty well unbridgeable. It was in the conversation with the Minister and Mr. Dennehy on 7 November the idea of reaching agreement and being able to bridge the gap between us was raised and we went away from the meeting to consider whether this would be a possibility for us. As we did not have details of what properties had been transferred within the three-year period previous to the meeting, we needed to go back to the congregations to check this and ascertain if the proposed way of reaching an agreement, an accommodation as it were, between the State and us would be acceptable to the congregations.

The capping did not strike me strongly for the simple reason that the State had been seeking a minimum contribution of £100 million throughout. My difficulty was that I could not understand how the State computed that figure or on what basis it was requiring that we provide that sum. It did not seem to relate in any way to the cases we had and on which we had done our assessment. The State had the same cases.

The Residential Institutions Redress Act had not yet been passed so the issue of claims increasing significantly after that was not a matter of discussion and was not an issue of which we were aware at the time. We had real difficulty in finding how the State could validate the £100 million it required of us because we were making our contribution on the basis of the claims we had. To require £100 million or a 50:50 ratio meant that we were being asked to assume the guilt of individuals who had not had an opportunity to be defended.

Deputy Rabbitte

I understand that. I am trying to clarify if you can point us to any documentary evidence about the change. For example, in terms of the State having taken a position up to then of rejecting properties already transferred, in the first page of the letter, a sentence reads: "Perhaps this can be re-examined in the context of the date of the State's apology." Another sentence reads: "In the absence of hard information on the scale of that cost, we have indicated we would be prepared to recommend an approach based upon a 50:50 contribution", which had been the position and there is also reference to "an absolute cap", which changes things dramatically. The question of the permanent State indemnity against all cases became the subject of dispute with the Office of the Attorney General on which the then occupant of the office subsequently made public remarks. I am trying to find out what happened. You know nothing of what would have caused that different tenor of letter to be written the night before you were to meet the Minister.

Sr. O’Donoghue

No. There was a very clear understanding that we were in two places that did not seem bridgeable on 16 October. We were not able to go any further than that. It was a matter of consideration for us as to whether we were in a situation where we would not be able to meet an agreement, but as Sr. Elisabeth said, we did not close down or close off.

Deputy Rabbitte

Who was on your side of the table when you met then Minister, Deputy Woods, and Mr. Dennehy?

Sr. O’Donoghue

The three of us here, Sr. Elizabeth, Br. Kevin and I. The Minister asked to meet us by ourselves without our advisers. We took some time to consider whether that was right for us to do, on the basis that a conversation would be appropriate, principal to principal, if we were in a situation to try and find a way forward. At that point we agreed we would meet the Minister with the knowledge of the congregations and of our legal advisers ——

Deputy Rabbitte

Sr. Elizabeth said she did not have time to absorb the import of the letter. Was the letter on the table before you? Had you received it, read it and studied it?

Sr. O’Donoghue

No. We had received it the day before. It was in my office the day before. As I said, the main issue for me was the fact that the properties that had previously not been acceptable were again a possibility. That would have been the dominant thing in it for me.

Deputy Rabbitte

What was the business transacted between you and the then Minister, Deputy Woods, and Mr. Dennehy?

Sr. O’Donoghue

We discussed, in particular, the issue of the contribution at the meeting going through our June 26 offer.

Deputy Rabbitte

The elements or the amounts?

Sr. O’Donoghue

The elements of the June 26 offer which had come to roughly between €50 million and €60 million and the question of the possibility of including some properties but within a three year time limit, and whether us going away and looking at the scene could help us approximate to something closer to the figure requested by the State side.

Deputy Rabbitte

On what essentially was your objection to the 50:50 split based? Was it that it was unfair as a concept or did you fear the total would be entirely unrealisable in terms of your capacity to pay?

Sr. O’Donoghue

Both of those. First, to accept a 50:50 split would have been based on an assumption of fact; that all of those who were accused were guilty. There had been no fact finding in any proper investigative forum so congregations were not in a position to say they would take an exact proportion, whether it was 50:50 or any other because it would have been based on an assumption of the guilt of those who had not had an opportunity to defend themselves.

Second, the scheme was not our scheme, it was a State scheme and the State had the freedom to proceed along those lines whereas we did not, on the grounds that the individuals who had not had an opportunity to defend themselves would be assumed to be guilty if we were to make such a contribution. Congregations do not have an open-ended cheque book, as it were. We do not have the freedom to give our resources to anything and everything. It has to fit in with our mission and trustee obligations. Without any formal obligation having been established, the only way open to us was the way we took, which was to make a measurement of the cost of the claims if they were successful and we enhanced that figure. We felt we had made a fair, just, moral and generous contribution.

Deputy Rabbitte

I am not sure I understand why a 50:50 apportionment could be tantamount to conceding responsibility or guilt against those whom accusations were made.

Sr. O’Donoghue

On the basis that the State was taking its responsibility, if congregations were taking the same kind of equal responsibility then, as a member of a congregation, if I had been accused I would have been able to say to my congregation that it had paid out money on my behalf without my case having been heard. The congregation's money belongs to its members so there was a very real dilemma for congregations.

Deputy Rabbitte

Would you again explain to the committee what you mean when you say that the money would have been paid out before the case would have been heard?

Sr. O’Donoghue

If we had made a 50:50 contribution then that would——

Deputy Rabbitte

That would only become payable as the cases were processed.

Sr. O’Donoghue

That was not the nature of the negotiation or the agreement. We were making a finite agreement at a particular stage in advance of the redress scheme being set up.

Deputy Rabbitte

Can we go back to your second reason which is capacity to pay and so on. Did the State or any of its agents ever ask you about ability to pay? Did they ever ask you to do an audit of your property or anything like that?

Sr. O’Donoghue

No. We have great difficulty with that question because one is asked about an ability to pay if it has already established that there is an obligation to pay. In this case, many individual members of congregations vigorously deny the accusations against them. Their guilt has not been determined in any place. Congregations were not free to automatically assume guilt or to indirectly indict the accused by paying on their behalf from the resources of the congregation.

Deputy Rabbitte

On what basis did you leave that first meeting with the then Minister, Deputy Woods?

Sr. O’Donoghue

It was accepted that we would go away and examine the three year possibility and that we would look at the package we had presented in June and see if it could be reformulated in a way that would be acceptable to the congregations, but would also perhaps be somewhat closer to what the Minister felt would be important from his perspective.

Deputy Rabbitte

Essentially, he underpinned what was already in the letter of the night before.

Sr. O’Donoghue

There was no indication otherwise to us.

Deputy Rabbitte

When did you resume after that?

Sr. O’Donoghue

We indicated to the Minister at that meeting that perhaps we might have something by the end of the year, before Christmas, in the middle of December. However, that was not possible to arrange and a meeting was arranged for 7 January. Elizabeth might be able to fill you in on that. That was when the next meeting took place.

Sr. Maxwell

That was so. We had to revert to the congregations and await their response to us about the number of assets that had been transferred in the three year period dating back to 1999. I think we got confirmation of that on 18 December. In other words, we knew what congregations would be able to offer as part of that package. I communicated that to Mr. Dennehy and said we were ready for a meeting on a date that would suit. The date offered was 7 January.

Deputy Rabbitte

Had there been tick-tacking in the normal way between the Minister's senior civil servants and the congregations between the two meetings

Sr. Maxwell

I do not recall any other tick-tacking. I dealt directly with Mr. Dennehy on that issue. As I understood it, we had been speaking on 7 November. I would have spoken to the same people — the Minister and his Secretary General.

Deputy Rabbitte

When Sr. Maxwell sat down before the meeting of 7 January, was it a formality or was substantial business there to be done?

Sr. Maxwell

At that stage we had looked at other presentations of the package and other contributions we were making in counselling. We also wanted to address the issue of access to education, which was a recurring theme among former residents of institutions and their need for opportunities to be made available to them. We wanted that included or recognised in the cash contribution, some of which was to be hived off for an educational trust, as we thought, which was subsequently seen as not the ideal way to go. It was left to the Department of Education and Science to administer that money. It was a question of presenting our package and putting all the elements together to equate with £100 million or €128 million because we had just crossed the threshold into euros at that stage.

Deputy Rabbitte

What then prompted the letter of 14 January, which seems a shock to those of us who come to it from outside? It seems an unusual precaution to take on the night before the package went to the Cabinet.

Sr. Maxwell

We were concerned that there be no misunderstanding of what had been agreed and understood to have been agreed between the two sides. The Deputy will recall we had already had the experience of two serious leaks. I know that if there was yet one more leak, that was the end of it for the congregations. I thought it very important that what we had agreed would be committed to paper and that there would be a record of it.

Deputy Rabbitte

Fear of leaks did not seem to be the import of the letter of 14 January. I am not sure that is the case.

Sr. Maxwell

I am talking about misunderstandings. Perhaps that is a euphemism.

Deputy Rabbitte

Sr. Maxwell must have been advised at that stage that it was intended to bring it to the Cabinet the next day.

Sr. Maxwell

We understood it was going to Cabinet. In fact, it did not get to Cabinet as quickly as we thought. Explanations were given as to why.

Deputy Rabbitte

Did Sr. Maxwell fear that what went to Cabinet would not accurately and in the precision required express what she thought the congregations had agreed directly with the Minister? Was that the motivation behind the letter?

Sr. Maxwell

I simply thought it prudent and conferring with my colleagues and our legal adviser that we should commit to paper what we understood to have been agreed with the Minister. One could see it as an aide memoire for him but also for us. We had to report back to our congregation.

Deputy Rabbitte

Did no documents transfer between both parties after either of the meetings? This letter is the first——

Sr. Maxwell

The letter is the record of what happened.

Deputy Rabbitte

Did Sr. Maxwell take notes at the meetings between the Minister and the congregation?

Sr. Maxwell

I took very few notes because it was very clear in my mind as to what was being agreed to. I was also quite under the weather at the time and, in so far as there would be anything — they are probably privileged anyway — they are scrappy.

Chairman

Was the congregation's legal adviser in attendance at the meeting of 7 January?

Sr. Maxwell

Yes.

Chairman

Why was it felt necessary to have him at that meeting?

Sr. Maxwell

Prudence. We felt it important to have a witness to what was agreed.

Chairman

At that meeting.

Sr. Maxwell

Yes.

Chairman

Who at the meeting represented the Department of Education and Science?

Sr. Maxwell

The Secretary General and the Minister for Education and Science.

Deputy Dennehy

I welcome the three witnesses before the committee.

Like Deputy Connaughton, I have some concerns about trying to deal with this very emotive issue on a value for money basis. However, we have a job to do. I am concerned at some of the comments we have heard in the past 12 months. Some people will say it is fine for the State to apologise to victims but that, when it comes to compensation, we will take a different approach. Nonetheless, we will try to get on with our job. Our modules have drifted a bit. We might have had one or two questions at the end of the first session but the witnesses are doing very well.

Most of the criticism of the Government and the Minister is based on the fact that no analysis of the State's possible liability was carried out and there was no way of knowing what finance might be available from the institutions involved. That is the kernel of the issue. We had not previously heard that, as Brother Kevin stated, a draft indemnity was prepared in May 2001. Were there many alterations to that indemnity between then and the indemnity form which issued on 5 June 2002?

Br. Mullan

Our position from the beginning was that if we were hoping to make a contribution, we would obviously seek an indemnity. Therefore, we offered this draft indemnity to the State side in May 2001. To my recollection, there was no further discussion of the indemnity up to the time of January 2002 when we met the Minister on two occasions. My recollection is that when we had reached that point, I took away from that meeting a strong sense that if we made a contribution, there would be an indemnity. However, there was no subsequent discussion in any great detail at our meetings about the indemnity.

Deputy Dennehy

Sister Elizabeth made it clear at the outset, in response to Deputy Fleming's questions, that regardless of any contribution, the State would have a redress scheme which would proceed regardless of cost. That is in conflict with the criticism that no analysis of the State's possible liability was carried out. If it had been decided to set up a redress scheme, it would have been regardless of cost. Do the witnesses agree that it was clear from day one that the Government was proceeding regardless of whether the congregation made a contribution?

Sr. Maxwell

Yes. We were without doubt about that. The issue of our difficulties with each side meant that was reiterated many times. We had a very positive approach to being involved in the process. There was always the possibility that we might not be able to manage it. We were assured that the scheme would go ahead regardless.

Deputy Dennehy

We have had various questions in respect of minding the public purse because the taxpayer is liable. During the negotiations in the early days with Mr. Doyle, the figure being discussed in respect of the potential cost was £200 million. Obviously the congregation did not want an open-ended case and, accepting that the State has lowered the burden of proof, will there be any reconsideration by CORI, given the new costs that are emerging, not of a re-negotiation but perhaps an added gesture over and above what has been agreed?

Sr. Maxwell

We would be speculating there. It is not an area we want to get involved with at this point. I do not know if it is within the area the committee will explore.

Deputy Dennehy

That is why I qualified the question. The question has come into the public arena because some people have said there is a moral duty. I hope it will be considered.

We are considering three different aspects. Deputy Rabbitte has already asked about the letter of 14 January. Politicians have their antennae out and they know it would be unusual for somebody to get a letter such as this the night before a Cabinet meeting. However, Sr. Maxwell has explained what was behind this in that you were laying out what you saw as being correct. Is that the context in which the letter was written? Was it that you wanted to make sure both parties were playing with the one deck?

Sr. Maxwell

Yes. To me it was a simple, common sense thing to put on record what was our agreement. I do not have much experience of political life but I did appreciate that this material going to the Cabinet was crucial, so it needed to be clear.

Deputy Dennehy

From our side, it was unusual. This was one of the items of which we had been specifically notified; we were asked to check it. I presume that Mr. Dennehy would not have had time to get back to you before the Cabinet meeting. The meeting was on a Wednesday while the letter was probably written on a Monday.

Sr. Maxwell

I cannot remember whether it was a Monday, but the Cabinet meeting was on a Wednesday, yes.

Deputy Dennehy

Is it the case that there was no ulterior motive behind the letter and you were simply setting out what had been agreed?

Sr. Maxwell

Even now, I cannot imagine what the ulterior motive might have been.

Deputy Dennehy

My question was about what led to the writing of the letter, as it was unusual to receive such a letter. However, Deputy Rabbitte has gone through that.

The other area Deputy Rabbitte and I were briefed about is the extent of the meetings between the representatives of the congregations and the Minister or representatives of the State in the period November 2001 to January 2002. There seems to have been a logjam in the process and people were anxious to know what exactly had gone on at the meetings according to the records. How many meetings with the Minister took place during that time?

Sr. Maxwell

We just had the two meetings.

Deputy Dennehy

Did the representatives meet with the Secretary General and the Minister on both occasions?

Sr. Maxwell

Yes.

Deputy Dennehy

People were suspicious because it seemed as though nothing was happening and then there was a breakthrough. Am I correct in stating that CORI represents 18 religious bodies, which is only a third of the total number?

Sr. Maxwell

The proportion is not even that high. CORI has 128 member congregations.

Deputy Dennehy

Was any attempt made to include the remaining members? Did they have any involvement in the process?

Sr. Maxwell

No, no attempt was made. Am I misunderstanding the question?

Sr. O’Donoghue

The 18 congregations in question were all of those that were involved in institutions. None of the others were involved in institutions which had claims.

Deputy Dennehy

I was trying to figure out whether there was room for another separate agreement and whether there were any cases applying to other congregations so that everybody with a possible claim would be covered. I do not have a difficulty in this area. The comment was made that greater diligence was needed and I am trying to interpret that. Somebody had a job to do and once the commitment was made to have a redress scheme, we were seeking benefits.

Has any attempt been made since to evaluate the assets? Br. Mullan mentioned earlier that he just did not know what was available in charitable trusts and so on. Have there been any attempts since——

Br. Mullan

No, I am not aware of any such attempts.

Deputy Dennehy

The matter of insurance was mentioned earlier. It was felt strongly that there should be some kind of record in this respect. I can appreciate, however, that there would be a mixture of charitable institutes, places in trust and so on. I am happy with the outcome of this section.

Deputy Boyle

We are dealing with the initial stages of the negotiations.

Chairman

We are dealing with the other module also.

Deputy Boyle

I am interested to know whether CORI's role as an umbrella body for the 18 congregations was set up on foot of the initial media response and the Government's reactions to this. Has it always been the case that CORI has acted as an umbrella body in these situations?

Sr. Maxwell

CORI has been in existence since the 1960s. One purpose of the conference is, according to its statutes, "to provide a common representation for religious with constituted authorities both ecclesiastical and civil".

Deputy Boyle

Is there any informal internal agreement among the 18 congregations concerned about how the responsibility is being shared? I imagine all 18 have different experiences. The institutions in which they were involved vary in size and the number of young people over whom they had direct responsibility vary in number. Br. Mullan also referred to the scale and intensity of the abuse that may have occurred at each institution. Was there any internal weighing process to determine how the responsibility is shared among the 18 congregations?

Br. Mullan

That comes back to what I referred to earlier. The 18 congregations came together and worked through the whole series of negotiations, sometimes with difficulty. They wished to be able to make a contribution to the scheme. They had used a method in which they considered the claims being faced by each congregation and tried to put a pattern on them. That is what led the congregations to move ahead collectively.

Deputy Boyle

Among the 18 congregations there would be some with a heavier load.

Br. Mullan

Yes. Some congregations might have had a high level of claims and others much fewer. There was a wide range.

Deputy Boyle

Could you describe in general what the range might be? Are you taking about 700 for one congregation and a couple of dozen for another?

Br. Mullan

Yes, it could go from double figures to three figures.

Deputy Boyle

What about the matter of determining the distribution of cash and property under the original agreement of £100 million and the establishment of funds on the basis of work ongoing and previously done with the members of the institutions? Was that apportioned in a specific way among the congregations? Was it determined by CORI on the basis of the congregations' own ability to pay or meet costs in this way?

Br. Mullan

Could you repeat the question?

Deputy Boyle

CORI negotiated with the Department a general package that comprised cash, land and funds on the basis of work ongoing and previously done. Was that the same for each congregation or did each one contribute different amounts?

Br. Mullan

Congregations contributed differently to some degree in terms of what they had available or what they could offer to the package. There was a cash contribution and a property contribution from each congregation, but the weighting might have varied from one congregation to the other depending on what each could offer to the total package.

Deputy Boyle

Would it be fair to say that there might be an anomaly in that a congregation that had a large number of claims and therefore a greater share of the responsibility might have offered a contribution in property rather than cash to the overall fund?

Br. Mullan

Yes, there could have been variations such as that within the overall contribution.

Deputy Boyle

Would CORI ever be prepared to share the breakdown of how the 18 congregations have contributed to the overall fund?

Sr. Maxwell

We would not be privy to that information.

Deputy Boyle

I am just asking in general terms. The religious institutions were responsible for two thirds of the 123 institutions and there were another 41 institutions that were not the responsibility of, or managed by religious institutions. There was no separate agreement with those 41 institutions and those responsible for running those on behalf of the State are not covered by the indemnity. Did CORI consider it strange that negotiations were being conducted separately with it, that an overall agreement would not cover people responsible for one third of the institutions and the indemnity would apply to other people engaged by the State to care for young people?

Sr. O’Donoghue

It was an obvious approach on the part of the State given that the congregations had responsibility for two thirds of the institutions. We have no knowledge of whether the State approached the authorities in other non-religious institutions. The religious congregations worked in a wide area and while there were discussions about other areas in which abuse might have happened the working through of this was specific because the congregations and the State were very closely related in terms of responsibility for the institutions.

Deputy Boyle

Would it not be fair to assume that the remaining 41 institutions, which might be smaller and deal with fewer young people, might have been exposed to similar levels of abuse? Surely the CORI concerns about not exposing the people in institutions run by religious congregations to court examination applied to all young people involved in institutions. It seems strange to have a selective agreement covering two thirds of the institutions but not all the young people who would have been involved in institutions or those who would have been involved and subject to institutional abuse.

Sr. O’Donoghue

I recall that reference was made at some point to other bodies besides the religious ones but it was a State scheme and it was not for us to extend the scheme to whomsoever.

Deputy Boyle

In putting together the original offer of £100 million, elements of the fund for ongoing and previous work were mentioned, namely helping people to provide for funerals or holidays and so on. Did CORI put an initial costing on that ongoing work by religious institutions, which that scheme should have taken into account?

Sr. O’Donoghue

Does the question relate to the final piece of the agreement which covered counselling and other supports?

Deputy Boyle

That seemed to have two prongs: it referred to the promise of future counselling and ongoing support but it also said the congregations argued they had already done considerable work in this area. They wanted a value put on that and to have it included in the £100 million. How did CORI value that at the time?

Sr. O’Donoghue

The idea was agreed in principle with the Minister as part of the discussions and it was part of our 26 June package which included various pastoral supports to former residents. We have verifiable figures to accompany the ongoing elements of that but they are over and above those required at the time of the agreement, which was €10 million.

Deputy Boyle

Are these figures subject to negotiations with the Department and not figures that this committee has seen? We have seen the global figures.

Sr. O’Donoghue

We have no objection to the Department of Education and Science presenting the committee with the figures we have of the various supports provided by the congregations among the 18. They include the Faoiseamh helpline and counselling system and several other supports offered by the different congregations.

Deputy Noonan

Why did Sr. Maxwell feel it necessary to write the letter of 14 January, a week after reaching agreement with the Minister and the Secretary General of the Department?

Sr. Maxwell

I was conscious that there had been two leaks to newspapers in the previous six months, and that we were at a crucial stage in the agreement and in reaching the conclusion, as I hoped, of all our discussions with the Department. I thought it prudent and important that what we had agreed would be committed to paper and put on record.

Deputy Noonan

The letter does not do that. The agreement is not committed to paper and put on record. There is nothing in the letter about the contribution or its composition, and the lack of capping. The letter is not a summary of what was agreed.

Sr. Maxwell

The Deputy is correct but one of the exercises of that meeting was to record those figures in what was to form the press release on 30 January. They are on record. I was happy that was on paper and the Minister had taken down the figures.

Deputy Noonan

Did Sr. Maxwell have discussions about the press release that was to come out after the Cabinet meeting?

Sr. Maxwell

Yes, about the figures that would be included in the press release. Once agreement would be reached in Cabinet, and we hoped it would, we were happy to see those figures included in the joint press release we would have to issue.

Deputy Noonan

The second paragraph of the letter refers to several issues, namely critical items, the precise institutions which would be indemnified, the question of a contribution from insurers, the need for amendments to the Bill in the area of validation, regulatory consents or approval by the charity commissioners, and the position of individual congregations which might require attention, obviously referring to discussions at the meeting there the previous week. It lists those concerns.

Sr. Maxwell

Yes.

Deputy Noonan

The indemnity is the main issue in the letter. It is very strong on that. Any reasonable reading of the letter would say that Sr. Maxwell felt secure in all elements of the agreement reached but doubted that the indemnity which CORI thought it had agreed with the Minister would not necessarily be the indemnity that would come from the Cabinet. Is that correct?

Sr. Maxwell

We never explored all the detail of the indemnity directly with the Minister. We had supplied a draft indemnity. There was never any definitive response to that but it was on the record. In our discussions with the Minister in November and again in January we continued to refer to the indemnity we anticipated, or for which we hoped.

Deputy Noonan

The letter is very strong on this point. It states that it is particularly important that the Cabinet would be under no misapprehension about the nature of the indemnity which the Government would necessarily provide to the congregations to cover claims capable of being brought before the redress board, even if not brought to it, or if brought to it and rejected. It notes that the Department had a draft of such indemnity for some time and that all these matters appeared to be clearly understood but that it would be undesirable that there would be any misunderstanding, or that in the aftermath of a successful Cabinet meeting comments would be made publicly, perhaps by persons not directly involved in the discussion, which unwittingly misrepresented the precise situation. That is not a shot in the dark at putting material on the record. It gives the impression that in the week between the meeting with the Minister and the Secretary General and the drafting of the letter, Sr. Maxwell had some inkling that there was a problem with the scope of the indemnity. The problem was not coming from people at the meeting but some unknown person who might make statements.

I am pursuing this because it an extraordinarily prescient letter when it is taken in the context of subsequent letters from the Attorney General to the Secretary General of the Department. The Attorney General in subsequent letters to the Department at the end of the same month is asking what was agreed about an indemnity and was there any note or statement. This became a public row later on when at the beginning of the hearings of the Committee of Public Accounts, the then Attorney General went public and had a difference of opinion with the Department. If there was no inkling that there would be difficulties with the Attorney General's office about the indemnity, then this is an extremely prescient letter.

Sr. Maxwell

I had no inkling or conversation with any Department or State official about the indemnity between the time we met with the then Minister, Deputy Woods, and Mr. Dennehy and the writing of that letter.

Deputy Noonan

I accept that and I congratulate Sr. Maxwell on her prescience.

Sr. Maxwell

It was honed in the school of experience.

Deputy Rabbitte

Divine inspiration.

Sr. O’Donoghue

To clarify, the two meetings on 7 November and 7 January mainly focused on the amount of the money and its break-down. We were concerned that we had not had much discussion on the elements of the indemnity. At our meeting with the then Minister on 7 January, we emphasised that we needed an assurance that the indemnity was in place, just as we had given him an assurance of the break-down of the money. Following that meeting, a clear recollection stayed with us that the issue of the indemnity had not been responded to by Government officials. In that sense, the reiteration in the letter that the elements of the indemnity we required was necessary because we had not had sufficient and detailed discussions about it. Most of the discussions had been on the amount of money.

Deputy Noonan

The press statement of 30 January after the Cabinet meeting stated that the Government for its part would indemnify the congregations directly concerned against all present and future claims arising from past child abuse which were covered by the Residential Institutions Redress Bill. The congregations got precisely what they wanted.

Sr. O’Donoghue

Yes.

Deputy Noonan

On "Morning Ireland" around the same date, the then Minister for Education and Science gave a different version of the indemnity. Was this brought to the congregations' attention?

Br. Mullan

We were not aware of that.

Deputy Noonan

The issue was that the scope of the indemnity was such that if a claimant did not process the claim through the redress board but claimed within the redress board's remit that such a case would still be covered, even if it went to the High Court without ever going to the board.

Sr. O’Donoghue

It was our understanding.

Deputy Noonan

Yes and the congregations held out on that and got it in the press statement. When the then Minister was explaining it on "Morning Ireland" the following morning, he stated that cases that went to the redress board would be covered. No further clarification was sought on that?

Sr. O’Donoghue

In the following months when the agreement's technicalities were worked out, the issue of time-limiting the indemnity came to the fore. In many ways what we had hoped for had not been fully achieved at that stage. The State's side achieved a time-limited indemnity. It is still a full indemnity but it is limited to a particular time. We are conscious of the rowing back that happened in the months following the agreement in principle until it was finalised.

Deputy Noonan

It is an indemnity for the three years after the redress board's period has concluded. The congregations' position is that a ten year timeframe would have been involved.

In Sr. Maxwell's letter on 4 January, some issues were raised. Most of them come up for serious discussion later between the congregations, the Office of the Attorney General and Department officials. Regarding the precise institutions that would be indemnified, I notice later that the congregations succeeded in getting an amendment to the Schedule of the Bill which included special schools and hospitals. Is that what the congregations had in mind?

Sr. O’Donoghue

We are not able to be certain in what we say on this. To us, it was a surprise. We did not ask for it. We are not able to say with absolute certainty that somebody somewhere from the congregations did not ask for it. We had no knowledge that the inclusion of hospitals or long-stay places for children who were ill would be included in the Bill. We simply learned of it through the news. As far as we can say, we did not ask for it. I cannot be absolute about it but to us it was a surprise.

Deputy Noonan

I take Sr. O'Donoghue's assurance. However, while the congregations were pegged back on the time limit of the indemnity, it was extended to cover other institutions where litigation might arise.

Sr. O’Donoghue

We had no knowledge of that. That information was made public by the then Minister long before we had reached the conclusion of the indemnity agreement.

Deputy Noonan

Claims made by victims that they were abused in hospitals run by the religious orders and special schools are covered by the indemnity. The indemnity now has a wider scope and covers more than the schools we were originally led to believe.

Sr. O’Donoghue

That is our information but we had no part in initiating this.

Deputy Noonan

Did the congregations subsequently examine the claims against congregations that ran hospitals? A number of allegations have been made about child sexual abuse in hospitals run by religious orders. I know of one serious case that was highlighted.

Sr. O’Donoghue

We are not in a position to answer that because I am not sure whether the hospitals belonged to a group within the 18 congregations. If they are, we would not be privy to what would be specific to any individual congregation.

Deputy Noonan

The indemnity is only for the 18 groups.

Sr. O’Donoghue

That is our understanding.

Deputy Noonan

The second issue referred to in passing was a contribution from the congregations' insurers. Why was it necessary to mention a contribution from the insurers in this letter?

Sr. Maxwell

Because we raised it that day.

Deputy Noonan

Was the issue that the State's side might want to hold on to the insurance money in addition to the congregations' contribution?

Sr. Maxwell

The then Minister never indicated that. We were reiterating what we had raised throughout our discussions with the State officials. We were looking and hoping for insurance. In some cases, particularly in one, without the insurance the capacity of the congregation to pay its portion of cash was not there.

Deputy Noonan

How was it relevant to the Cabinet meeting?

Sr. O’Donoghue

We referred to it in the sense that if we were all able to come to this agreement, then it was dependent on the number of items. We told the Minister that day that we had not reached an agreement with our insurers. We did not reach one for a further six months, or longer. In some sense it was a question of just pointing to something that was there.

Deputy Noonan

Was it attached to an issue of the timing of the payments?

Sr. O’Donoghue

No.

Deputy Noonan

The witness referred to the question of amendments to the Bill in the area of validation. What had she in mind there?

Sr. Maxwell

The necessity to include in the Bill the opportunity for due process.

Deputy Noonan

That did not happen subsequently?

Sr. Maxwell

It did.

Sr. O’Donoghue

There was an element of due process included before the Bill was finalised.

Deputy Noonan

That was not included in the original draft?

Sr. O’Donoghue

No.

Deputy Noonan

The witness then made reference to the charity commissioners and so on. Her argument was that property which had been transferred not only to the State but local authorities, health boards and charitable organisations would be deemed to be reckonable.

Sr. O’Donoghue

The reference in that letter had to do with congregations getting the commissioners of charity to transfer property to the State because if they had already transferred it to a charitable organisation they would have gone through the process of getting the permission to do that. The issue was that we did not know if a difficulty would arise in being able to transfer properties because we could not assume the agreement of the charity commissioners with regard to that, if a property was held under charity law.

Deputy Noonan

The witnesses had a series of concerns.

Sr. O’Donoghue

We had.

Deputy Noonan

Sr. Maxwell lists and expands on the witnesses' concern about the indemnity. At the end of the letter, Sr. Maxwell says: "Accordingly I would be grateful if you could confirm to me that we have a shared understanding of the nature of the proposal before anything is put to Government. Can you please confirm this as soon as possible?" Was this confirmation given?

Sr. Maxwell

I got no letter but I got a telephone call. Mr. Dennehy explained to me that the matters of detail that I had outlined in the letter would require legal involvement and could not be put in a letter without legal advice being given, or legal agreement.

Deputy Noonan

However, he gave assurances that it would be all right on the night, so to speak.

Sr. Maxwell

We had proceeded on the basis of trust. The meeting with the Minister and Mr. Dennehy had restored that trust, which had almost been lost. I believed that they would as far as possible honour our agreement and we certainly gave undertakings that our part of the agreement would be honoured, as it was.

Deputy Noonan

The witness did not get a written reply, for the reasons given, but got a telephone call. Was she simply informed that she would not get a written reply, or was there a conversation which in an informal rather than formal way gave her the assurances she sought?

Sr. Maxwell

I got no assurances. I got a very clear message that a letter would not be forthcoming at that point. It never did come, for the reason I gave, namely that the matters of detail that I had outlined could not be contained in a letter delivered at the speed I would have liked. The legal experts would have had to be involved.

Deputy Noonan

Mr. Dennehy has indicated that he did not reply to the letter.

Sr. Maxwell

That is technically true. He did not write anything to me.

Deputy Noonan

Yes, he said that. He also indicated that he had no idea why the witness wrote him this letter. He forgot to mention that he had a telephone conversation with the witness.

Deputy Connaughton

Regarding the indemnity, I assume this was a core part of the negotiations, and that irrespective of what went before it, that had to be there from the witness's point of view. Did that take up a lot of time at the various meetings with the two negotiating teams? Was it mentioned at every meeting?

Br. Mullan

As I already indicated, we had mentioned it very early in the discussions. In May 2001 we presented a draft indemnity to the State officials with whom we were dealing. I do not recollect that it was mentioned at every meeting, but from May 2001 onwards I clearly understood that if we made a contribution to the scheme, there would be an indemnity.

Deputy Connaughton

Would the witness regard it as being a sort of retrospective insurance?

Br. Mullan

Not really. In negotiations of this type, where the congregations were working hard to make a significant contribution to the scheme, it was obvious we could not make the contribution without having some assurances about the indemnity. It was quite central to our approach.

Deputy Connaughton

From reading the documentation it would appear that it seemed to be the keystone of the negotiations, from the witness's point of view. Is that correct?

Br. Mullan

Yes. It was quite central.

Sr. O’Donoghue

It is true that we could not have envisaged a contribution without an indemnity. That is because we could not pay on the double. We could not give a contribution and also be expected to pay in court. Neither could we make a contribution and find ourselves in an open-ended situation where we would not be able to quantify what might have to be paid out in the future. There was really no question of being involved unless an indemnity was given.

Deputy Connaughton

The witness noted that an element of distrust arose in the negotiations. Why did that happen? Did those on the State side believe that they were not succeeding in bringing the agreement to conclusion? Why should that have happened half way through? On one side is the State, with a very specific role, while the congregations also had a similarly specific role. Why was it necessary to have such a falling out half way through?

Sr. Maxwell

I never believed we fell out irrevocably.

Deputy Connaughton

Things did not look good.

Sr. Maxwell

I admit that things were difficult, but we had made an offer in June. We are very clear now, because of the documents in our possession, that the Government was determined to get £100 million from us, or £150 million if possible, though it would have been satisfied with £100 million. We did not have that information at the time. We thought we were in genuine negotiations, in the sense of both sides inching forward to a point of agreement. We made our offer and never got an official response to it.

Two leaks to newspapers put us in a very disadvantageous light as being mean, paltry in what we were offering and unwilling to contribute to the alleviation of suffering and pain. It was not only the 18 congregations who felt badly about that. All religious suffered from the negative comments freely floating about in the media, particularly the print media, at that time. The general feeling was that we were unsure as to who we could trust. We were keeping to our side of the agreement which was outlined in the press statement at the commencement of the discussions, namely that discussions would be conducted in private, confidentially, though not in secret. We said publicly that we were entering negotiations. We were keeping our side of the agreement but some others were not keeping to their side, and we did not know whom we could trust.

Deputy Connaughton

Did it appear at the meeting with the Minister and the Secretary General that the Attorney General's office and the Department of Education and Science, their negotiators and everyone else involved were effectively sidelined?

Sr. Maxwell

The Department of Finance was always represented as well, so three Departments were represented. The Deputy is saying that it appeared that they were sidelined. We did not put that construction on it. As I said, we had always asked along the way for a point at which we would be dealing directly with the principals, or principal, as we understood it.

Deputy Connaughton

I forgot to mention this in my opening questions. What happened to the facilitator? I am not sure, judging by the documentation, whether it was decided by yourselves, the State, or both that an independent chairperson or facilitator appeared a good thing, particularly regarding what we have discussed. What terrible thing happened to that person?

Sr. Maxwell

I cannot say what happened, but we both agreed and discussed the desirability of having such a person. Names were suggested. There was certainly no decision not to proceed with it until we had had a certain number of meetings, when there was agreement that we would get on with it, as we are now doing. That may have been part of the reason that we said that we would have to meet with principals face to face.

Deputy Connaughton

I am not sure whether it is the second or third module. Like everyone here, I am beginning to get a little mixed up. Regarding the transfer of property and the final decision, can I take it that, even as we speak, in the execution of this agreement there is a problem with property, perhaps because legal rights are not available? Another property is then presented in its place. There is no time limit on that, and it could go on for a long time. My general question on all this is when Sr. Maxwell envisages the total liability being paid.

Sr. Maxwell

Once we had reached the point of 30 January, I withdrew as secretary general of CORI from any further negotiations on the handing over of property and the implementation, since it was not relevant to me then and a matter for the congregations themselves.

Sr. O’Donoghue

As of today, we are very close to finalising the property to be transferred, which was new property being offered to the Government. The target for that was €36.5 million. However, one congregation opted to give €4 million cash instead of its portion, which brought that back to €32 million. Since the conveyancing takes time, in principle the Department has accepted €28 million. One property has already been agreed, which is worth about €7 million. We reckon that the actual target regarding that section has been reached. The second section, property already transferred to State bodies or the voluntary sector back to the time of the Taoiseach's apology, totals €40 million. The amount already agreed with the Department is approximately €27 million, but there are five or six properties on which we are awaiting the Department's decision. Several of them exceed the figure that we still owe, so we believe that we are on the edge of completing these matters.

Deputy Connaughton

Does Sr. O'Donoghue expect that before the end of this year?

Sr. O’Donoghue

Certainly. The Department took the approach this year of trying to bring matters to a conclusion by this summer. Only three or four properties remain to be decided. I can see no reason for that not to be completed long before the end of this year.

Deputy Fleming

There are two issues to follow directly from the line of questioning that has been ongoing recently. One is in connection with the letter of 14 January, in which the order talks about the extent of the indemnity covering all cases that could possibly come before the redress board. I want to take the sisters back through the file. Sr. O'Donoghue will have received documents from us. Document No. 23 dated 30 April from Tom Boland in the Department to his own Secretary General copies a memorandum drawn up in consultation with the Department of Finance and the Office of the Attorney General regarding the negotiations with congregations on their contribution to the compensation fund. That internal document was circulated and agreed by the Office of the Attorney General, the Department of Finance and the Department of Education and Science. It is dated 30 April.

Sr. O’Donoghue

The year is 2001.

Deputy Fleming

In other words, the congregation has seen the State's private negotiating position from the files that have been made available. They would not have been available to it during the course of those negotiations. It had its own negotiating position, but this has now emerged. Let us consider the last paragraph of that document agreed by the Office of the Attorney General. It is document No. 23.

Sr. O’Donoghue

Is that book 1 or 2?

Chairman

It can be displayed on the screen.

Deputy Fleming

It is document No. 23. I want to refer only to its last paragraph. Having looked at the file, I see this as the agreed approach. The State's negotiating position mentions a variety of things and the amount of money. At this point the congregations now see the State's negotiating position, of which it was not aware during the course of the negotiations. I again stress that this was agreed by the Department of Education and Science, the Office of the Attorney General and the Department of Finance. The date is April 2001. The last paragraph states:

The State should, as a quid pro quo for a reasonable contribution, grant an indemnity to the congregations which contribute 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.

Having examined the files, it was clear to the committee long before we spoke to the congregations that all parties to the negotiations from the State side had clearly agreed the very wide range of people who could be covered by the indemnity. That would not have been disclosed to the congregations at that stage. It is clear to us all and everyone involved from the State side that that was its agreed negotiating bottom line and that the indemnity would cover all those eligible to make a claim to the compensation scheme. They did not have to make the claim to the redress board, but they were eligible. That was the State's position.

The congregations will be familiar with the letter dated 6 November 2001 from Paul Kelly, the Assistant Secretary General, to Sr. Maxwell. It is document No. 39. That is the letter she received the day before the meeting with the Minister. In it, at the end of the first paragraph on the second page, the last sentence reads: "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." The congregations had that in writing from the Department, and that is essentially the position agreed by the Office of the Attorney General, the Department of Finance and the Department of Education and Science the previous April. They only put it to the congregations at that stage. The letter from the congregations of 14 January, to which extensive reference has been made, says essentially the same thing. It was the broad indemnity to cover all cases which could come under the remit of the redress board. There is a consistency from the State's negotiating team right up to the letter issued in advance of the meeting with the Minister. Throughout the negotiations it was clearly understood there would be a meeting with the Minister and, as evidenced by the congregations' understanding of that meeting when it was put in writing on 14 January 2002, the indemnity covered this full range. Perhaps the congregations do not wish to go into this, but when the Comptroller and Auditor General issued these reports, the person who was then Attorney General and is now a Minister of Government flatly contradicted that this was his understanding of the position. The files would clearly indicate to the committee that if he did not know, he should have because his office knew. Would CORI be prepared to comment on that? Was it surprised by the rumpus, given that the documentary evidence does not support the case the Minister made?

Sr. O’Donoghue

We have just seen this documentary evidence in the last few days. It has been helpful to us that it was part of the agreed State approach, although that was not communicated to us. Neither was there much discussion, as Br. Mullan says, in our meetings around the indemnity itself, which left us feeling we needed some assurance. That is why it was raised at the last meeting on 7 January, and it is in Sr. Maxwell's letter that the indemnity would be what we understood it to be. We are encouraged by seeing this correspondence. People forget the different pieces of the jigsaw puzzle, in that sense, as time goes on. We recognise that pinning the indemnity down to the actual legal document would present us with some difficult questions. However, we made the agreement and believe that it is a good one from our viewpoint. What we received in relation to it is fair, just, moral and generous.

Deputy Fleming

I believe we are to discuss the indemnity agreement separately. I will leave a question for that. Going back to the insurance issue and following what has been said, CORI indicated it was in negotiations with an insurance company and this was not resolved until six months after the Government decision — possibly even after the indemnity agreement was ultimately signed during the course of the summer. Some €6.5 million was ultimately received, as CORI indicated. Since that contribution from the insurance company to one or a number of the religious institutions, has the Minister or the Department ever contacted CORI and asked it to consider forwarding some of this money to the State? Has there been any correspondence from the Department since, specifically as regards the insurance issue?

Sr. O’Donoghue

Can I just confer with my colleagues for a moment as regards that? Some time this year or last year — I forget the year we are in — the Minister approached CORI——

Deputy Fleming

It would have been 2003.

Sr. O’Donoghue

Yes, but I am thinking in terms of the Deputy's question, as to whether we were approached. It would have been some time in the middle of last year, 2003, that the Minister approached CORI with a view to having some discussion on the issue of insurance. We did not respond to a direct question as to whether the insurance money would go towards the scheme. However, the congregations would have expressed the view that the insurance money was for all of them, in different ways, a means of recouping the losses they had experienced but also a means of continuing to serve former residents.

Deputy Fleming

As far as I am aware, that is new information in the public arena. Does this mean that the Minister made a request for the insurance received to be made available as a contribution under the scheme?

Sr. O’Donoghue

I have not got the exact correspondence, but in a general meeting which the Minister requested with CORI, to cover a number of areas — probably around the time when there was a good deal of discussion in the public arena — he would have named the insurance issue as one of the topics he wished to discuss. I do not believe it was more specific than that.

Deputy Fleming

I suggest to the Chairman that we need to seek the information at this stage from the Department of Education and Science — because it was this Department's Vote — regarding any subsequent correspondence, documentation, notes or meetings which have not yet been submitted to the committee. I get the clear impression that there is information of a more recent nature that may indicate the Minister's views on the congregations' receipt of the insurance payment. If such a request has been made, we would like to hear about it from the State's viewpoint. I understand CORI does not have the letter here, but we will pursue that directly with the Department. Perhaps a note could be made on that.

Chairman

We will do that.

Deputy Curran

My questions are more of a technical nature and I shall be brief. One is for Sr. Maxwell. She referred to the early stages of negotiation and commented that there were 750 cases against the State at that stage. What period was she referring to?

Sr. Maxwell

That information was given to us at the very first meeting on 25 September 2000.

Deputy Curran

At that point, did the congregations collectively have any idea how many cases might be pending against the religious orders?

Sr. Maxwell

Not at that particular time. That was the meeting before we entered into formal negotiations. The number eludes me and perhaps Sr. O'Donoghue or Br. Mullan might be able to come up with the first number we had to deal with. However, the Department of Education and Science shared with us, as a negotiating team, the number of claims it had in which we were cited as co-defendants. In return, the congregations reciprocated with the information they had on file and there was an attempt to reconcile the two.

Deputy Curran

At that early stage, there was good co-operation between the two sides.

Sr. Maxwell

Yes. There was co-operation all along until that period between June and October.

Deputy Curran

There is one technical point I would like to understand. When the congregations decided they would be part of the agreement, they had to look at what their contribution would be. As Br. Mullan said, they analysed the cases to assess what the liability might be. That was a reasonable approach. A number of times it was stressed that whatever agreement was reached, it would have to be generous, compassionate and so forth, so that exercise was crucial. The projection was around €50 million or €60 million — that type of range. It just dawned on me while I was listening to Sr. Maxwell to ask whether the Department of Education and Science had access to how that calculation was done.

Br. Mullan

The answer to the Deputy is "no".

Deputy Curran

Did the Department ask for it?

Br. Mullan

When we put our first proposal to the Department's negotiators, in June 2001, we said that each congregation had done an exercise and produced the overall package that comprised our offer. The elements of the package were spelt out for the Department.

Deputy Curran

Did nobody ask to see the background to the €50 million to €60 million? Was it not offered?

Br. Mullan

No.

Deputy Curran

It was taken as an absolute. I am not disputing it, but from the point of view of negotiating a deal, would the congregations have been prepared to make it available?

Sr. O’Donoghue

We indicated that the figure was based on all of the known claims and that the lawyers for each congregation carried out the assessment based on an agreed common approach. For each congregation, that would have been privileged material. We as the negotiating team were not party to that privilege nor did we have the specific information available. Only the methodology we used and the total figure which emerged from it was available for communication.

Deputy Curran

I appreciate that much of the information was privileged. My point is that the figure of €50 million to €60 million was crucial, but there was no great scrutiny into how that figure was arrived at, especially in the light of Sr. Elizabeth's comment on the good flow of information and the correlation of cases. I am just somewhat surprised at that.

Chairman

On that point, it is quite surprising that the Department did not challenge that figure.

Sr. O’Donoghue

The critical point to remember, and which we would like to reiterate, is that it was a voluntary contribution. We find it hard to convey that it could not be assessed on anything very concrete. It was intangible in a way because it was at the beginning of the investigative committee and no fact finding had been established. One needs concrete grounds on which to base the findings on whether the offer matched the responsibility. This had not been determined.

Chairman

Was there no discussion on that figure with the Department?

Sr. O’Donoghue

There was no discussion in terms of toing and froing about it, but we were very clear on how we had arrived at that figure.

Chairman

Had the Department major discussions with you on that figure?

Sr. O’Donoghue

No, except it was too low.

Deputy Rabbitte

I wish to return to the point, Sr. Helena made about being satisfied that the deal was a good one from the point of the religious and that it was just, moral and generous and so on. Sr. O'Donoghue will understand that in our capacity as members of this committee, we are not that much concerned about how good the deal was for the religious communities. We are concerned about the exposure of the taxpayer and whether a prudent deal was done from the viewpoint of the exposure of the taxpayer to a bill somewhere between €127 million and rising possibly up to €1 billion. I probably should say that what I have concluded so far from today's meeting is that if Sr. O'Donoghue was negotiating for the taxpayer, they would have been in good hands. Does Sr. O'Donoghue understand as a taxpayer why I would be concerned about the rejection of the 50:50 concept?

Does Sr. O'Donoghue think that the negligence, neglect, lack of invigilation and all the rest by the State was such that we deserve what we get and that we should be there to pick up the tab, or does she think that we rushed into it, without quantifying it or studying the implications of where we were going and that the religious orders made as generous a contribution as they could according to them, whether that is based on responsibility, culpability, property or whatever other matters may be considered? The issue on which we must draw a conclusion is whether it was prudent to expose the Irish taxpayer to a bill that may rise up to a €1 billion, which is an extraordinary bill, notwithstanding the terrible hurt and damage that was done.

Sr. O’Donoghue

The only comment I can make is that I think the redress scheme being devised is definitely a humanitarian scheme geared to responding to hurt and pain which is very obviously there. We were glad to have been able to work through an agreement and be party to that because we would want to contribute in the same way. However, the only other way, and that would have been the State's decision, would have been to wait until determination had been achieved and then to apportion blame in whatever way. We were not in that situation and I think the Government made a decision in the line that we would agree with, and that is if one were to wait until that time, many people would not be able to avail of whatever recompense they might get from this for a childhood which had been severely affected by their circumstances and which they had carried with them all the years.

I am a taxpayer and I am happy that in some way the religious congregations with the State can make some contribution to the easing of that into the future. I do not think it is for us to say that the decision the State took to go this route was not wise. We were a party to it because we could see that any other route would be much more difficult and fraught with further pain and perhaps further abuse and difficulty for both sides involved. From that point of view, we cannot answer the question as to whether it was good for the taxpayer or not.

Chairman

We should be finished within the hour on the final module.

Deputy J. Higgins

In the context of the total contribution of the religious congregations of €127 million, the transfer since 11 May 1999 up to the time of the agreement of past properties to non-governmental agencies as part of the agreement is said to compose almost one third, €40.32 million. Leaving aside the issue of whether we agree with the indemnity or the amount, we would be concerned from the point of view of the taxpayer that the amount in question, namely, €127 million, would turn up in hard cash or benefits. How on earth were the religious congregations able to convince the then Minister for Education and Science and his officials that properties transferred to non-governmental organisations, which transfer had nothing to do with the controversy of abuse, could be construed as forming a part of the payment to compensate the taxpayer?

Sr. O’Donoghue

As we have talked already about the progress of the negotiations, when we made our offer in June 2001, the €50-60 million envisaged was a long way from what the State wished to obtain from us. By 16 October it was very clear that we were not going to be able to bridge the gap with property and cash that the congregations could give. The issue was whether there was some ground on which we could agree. During our conversation, there was an acknowledgement by the those representing the State that the congregations had been involved in very significant transfers of properties through the State for the benefit of many, particularly for people in need. These actions had significantly affected the assets that congregations had. The idea then developed that property which had already been transferred to other bodies could be taken into account. If that did not happen, we probably would not have reached agreement. We therefore had to look at the realities of the negotiation sequence and whether the State and the congregations could agree.

Chairman

I propose a 15 minute break as I am conscious that Sr. O'Donoghue has been here since 11 a.m.

Sitting suspended at 2.35 p.m. and resumed at 3.00 p.m.

Chairman

Deputy Higgins may wish to resume his line of questioning.

Deputy J. Higgins

To recap, the question was why €40.32 million worth of properties transferred by the congregations in the past could have been offset against liabilities arising out of abuse at the institutions to which Sr. O'Donoghue made an initial response before the break. In one report that I have, 37 properties were involved. Why would those properties have been transferred to the Department of Education and Science, voluntary organisations or local authorities?

Sr. O’Donoghue

I am not sure what the Deputy means as to why they would have been transferred? Does the Deputy mean originally?

Deputy J. Higgins

What was the motivation behind the transfer of those properties?

Sr. O’Donoghue

Past transfers.

Deputy J. Higgins

Yes.

Sr. O’Donoghue

The occasions which give rise to the transfer of properties to the State or to organisations are where a service is going on in them which, for the most part, we would hope would be continued or would enable a service to be provided, such as social housing, accommodation for Traveller groups, a centre for Alzheimer's patients. They would have been transferred for those reasons. Transfers directly to the Department of Education and Science would have involved either sites for schools or the continuation of a school for which a congregation could no longer be involved. Does that answer the question?

Deputy J. Higgins

Yes. This would all have been done for the general good. I do not know if Sr. O'Donoghue understands the point I am trying to get at. From the point of view of the taxpayer, if I can put it flippantly but with a serious intent, the congregations might have seen these as acts of charity or acts dictated by the public good, Christian charity or whatever. In the days before Vatican II, the indulgences would have been falling on the heads of the congregation as a result of this generosity and St. Peter would have put it on the right side of the ledger for when the donors arrived at the gate. Then we have a crisis and suddenly there is a retro-active cancellation of the acts of charity and it becomes part of what some might see as a hard-headed business arrangement with the Department of Education and Science.

Sr. O’Donoghue

The agreement we reached was an agreement in which the State was willing to count various ways in which the congregations involved had provided for social need over the preceding years and those provisions would have come from the congregations' assets. The issue is not that we did it for charitable reasons or whatever. It is what we are about. It is what we do. I do not think they would fit the Deputy's description. The idea that property was in almost constant movement towards State or voluntary bodies from congregations at this particular time was recognised as a fact and a reality by the State side. In many of these cases if the congregations were not doing it, the State would have had to provide it which would have meant it would have had to spend funds on doing that. It was in that context that credit was given to the congregations for the transfer of properties. It was also related to what we believed we could provide as a contribution to the scheme and what the State was expecting from us and there was a considerable gap. The acknowledgement of what had been going on for the good of society was taken into account.

Deputy J. Higgins

I suggest it was one of the more difficult aspects of the congregations' deal with the State to agree on, as shown in a letter on 29 April from the Department of Finance in which it is still strongly resisting this idea.

Sr. O’Donoghue

The resistance at that particular time was as a result of the fact that we had documentation on our meeting of conclusion with the Minister on 7 January, and the press release following the Cabinet acceptance of it in principle on 30 January, all indicated property transfer to State and voluntary bodies. One of the critical aspects is that very often property that goes to voluntary bodies could as easily go to State bodies. The only difficulty is that State bodies are much more difficult to deal with in acquiring property than is a voluntary organisation. We have met the problem time and again. The restrictions on a health board in acquiring a property often prevent it happening. One of the avenues that congregations would have used would have been the avenue of the voluntary sector — the voluntary bodies.

Deputy J. Higgins

In regard to the €40 million or so, was it the case that the valuation put on it by the congregations themselves was largely accepted by the State?

Sr. O’Donoghue

The congregations got professional valuations for each of these properties and the indemnity agreement provides for a checking of that by the State side by the State valuation. Should a dispute arise, there is a mechanism in the indemnity to deal with it.

Deputy J. Higgins

In a report I have read by the Comptroller and Auditor General, only ten of 37 properties were independently valued by the State.

Sr. O’Donoghue

That is a matter for the State. We would have done our valuation on each particular property and it was there for examination. It was done professionally. It is not easy to talk about the sections of the property with any degree of preciseness for the simple reason that properties came in and came out over the past two years. In regard to the particular ten properties, I am not sure whether they are all there at this stage.

Deputy J. Higgins

Of the sample of ten properties taken by the State, two were rejected and another two were not proceeded with in terms of valuation because there were no marks. The State, therefore, carried out valuations of the remaining six properties and in one case there was a serious discrepancy between the congregation's valuation and the valuation arrived at — which was much lower — by the State. Would it not surprise Sr. O'Donoghue that the State might say that there could be discrepancies in respect of the further 30 or so remaining properties and that the congregations might have seriously overvalued them? Could this be checked independently?

Sr. O’Donoghue

That is totally transparent. We are completely open to any independent examination of the valuations. The valuations carried out by congregations are done by professional bodies which must stand on their status in respect of such valuations. These valuations can be checked or questioned and we have no difficulty in that regard.

Deputy J. Higgins

From her point of view, Sr. O'Donoghue is correct. However, I was asking if it would surprise her if the State was not rigorous in pursuing the matter.

Sr. O’Donoghue

I cannot answer for the State.

Deputy J. Higgins

Okay. The other element was the implementation of the agreement and this included evidence proffered in respect of counselling. A figure of approximately €10 million was agreed in regard to counselling, including that already provided, and other pastoral services. Is this not a very nebulous concept? How does one quantify, in monetary terms, counselling that may have been engaged in by the religious congregations?

Sr. O’Donoghue

In terms of that matter, the only thing that is provided is what is documented. We have the documentation on the provision of any kind of pastoral or counselling services, wherever these are offered by any individual congregation. It is professional counselling so it is billed and documented in full. We have provided to the Department of Education and Science full details of the implementation of the agreement under that heading. As of today's date, for the 18 congregations involved the figure we have provided is nearly €12 million. We are quite happy that the Department of Education and Science may, if it so chooses, check, audit and inspect any of the documentation, all of which is available for examination.

Deputy J. Higgins

Has a rigorous or any other kind of audit been carried out by the Department?

Sr. O’Donoghue

We have provided the Department with the material. For example, a good portion of that is the Faoiseamh helpline and counselling service. The latter is a company and its accounts, which are audited, are available in the Companies Registration Office for anybody to see. It is the same with the other different elements which would be part of the various congregations' contribution to supports for former residents. The congregations are very happy to provide their books in respect of this matter for inspection.

Deputy J. Higgins

If we leave Faoiseamh for a moment, would this have come down to quantification of personnel, hours worked, clients seen, etc.?

Sr. O’Donoghue

Yes. Funds created, such as a €2 million fund created by one congregation and a €1 million fund created by another, and various ways in which a number of the victim group organisations apply for various funds, all are part and parcel of it.

Deputy J. Higgins

Would the clients encompassed by the service — which has cost approximately €10 million — also be involved in the redress scheme?

Sr. O’Donoghue

Yes, they are all clients who are former residents in the institutions of the 18 congregations.

Deputy J. Higgins

I accept that this is not strictly a question on accountancy but have any difficulties arisen in terms of the congregations providing the service to those who were abused by former members of some of the same congregations?

Sr. O’Donoghue

It may not be relevant to the committee's deliberations but, by and large, the provision of services by the congregations is done independently. At an early stage there was a strong indication that clients using the service provided by a congregation might have some difficulty if members of the congregation were involved in any way. It has moved into an independent operation.

Deputy J. Higgins

I will move on to the third and final section which covers the indemnity that was offered and eventually agreed. Br. Mullan indicated that the congregations were extremely anxious to have, from an early stage, an indemnity agreement in place. At the same time, however, and if I understand correctly what was said earlier, Sr. O'Donoghue would not agree that, if all these cases had gone to court, the congregations' exposure would, relatively speaking, have been that massive. Is there not a kind of contradiction in that regard?

Sr. O’Donoghue

Br. Mullan might like to answer that question.

Br. Mullan

The Deputy is correct in the sense that the indemnity was a central part of our negotiations with the State. Given that we were making a contribution and that the indemnity was the other part of the equation, we could say that we had made our contribution and that the indemnity had been put in place. We could also say that if people who availed of the redress scheme received awards that would be fine. If they chose to go to court, however, we did not see why, having made our contribution to the scheme, we should again be involved. The indemnity was central. We could not really pay on the double.

Deputy J. Higgins

The congregations eventually agreed to a figure of €127 million. If I understand correctly what was said earlier, that would be far more than the amount to which the congregations might have thought they might have been exposed in a legal process. To a certain extent, people might find it difficult to believe that if the congregations were of the opinion that they could have had the amount capped at €50 million or €60 million in the courts, they would opt to have an additional €70 million included in the indemnity agreed with the State.

Br. Mullan

This brings us back to matters upon which we touched earlier. In the negotiations, a question arose regarding what taking the route of going to court would do to the people who had been resident in the institutions. We believed that the court procedures could have been long and drawn out and could possibly have caused more hurt and trauma to some of the former residents of the institutions. The scheme was offering a more expeditious way of trying to help them and bring about healing. If one is comparing our original figure with that with which we ended up, we were really saying that this was our contribution to try to make the scheme expeditious and to give people help in a fairly non-adversarial forum.

Deputy J. Higgins

When it subsequently emerged that figures of €600 million, €700 million or €800 million might be involved, what was the congregations' attitude? Did they breathe a sigh of relief that agreement had been reached on indemnity?

Br. Mullan

Having lived through the ups and downs of the negotiations, it would be fair to say that the congregations were pleased when matters came to a conclusion during the period January to June 2002. I cannot speculate about the overall cost of the scheme.

Deputy J. Higgins

If I understand what was said earlier — either by Sr. O'Donoghue or Sr. Maxwell — correctly, it was the case that the congregations agreeing a figure of €127 million was really a matter of their indicating that this was the level of their outside ability to pay and if matters went beyond that they would not be able to pay. Was that what dictated the final settlement?

Sr. O’Donoghue

Yes, I think we did have to have a finite sum. We tried to base that finite sum on some relationship to the claims we had and, by the way, we never examined the merits of those claims. We took them all, so it was making a stretch as far as we could in relating this to the final outcome. We were not in a position to know what the follow-up might be once the redress scheme was in place and numbers were rising, as the Deputy suggests. Congregations will continue, forever and a day, including these 18 congregations, to try to help people who were members of our families as children and with whom, in spite of all that has happened, we have maintained a relationship, fractured as it may be. We want to continue that. Often our community houses are their homes when they come back from abroad so we will continue that. The €128 million was part of a particular agreement made with the Government in order to give the redress scheme a way forward without waiting for the investigation and fact-finding to finish.

Deputy J. Higgins

I accept what Sr. O'Donoghue is saying, but nevertheless that figure had to come from somewhere. What assessment of the means of the 18 congregations was done by those congregations to arrive at a maximum figure of €127 million?

Sr. O’Donoghue

The maximum figure of €128 million was not arrived at on the basis of means. It was arrived at on the basis of the numbers of claims we had without discrimination and which might eventually involve considerable outlay in the courts. Our preference was that that outlay would go directly to the former residents rather than into the courts system. It was not related to the assets of congregations and we do not believe it arises that it should.

Deputy J. Higgins

When the State was pursuing a 50:50 arrangement the congregations resisted that because they thought it would go to amounts that congregations could not afford or were unwilling to pay, and then the State obviously accepted that argument. What diligence did the State show regarding the congregations' means?

Sr. O’Donoghue

The reason the Deputy gave was just one of the reasons we could not have an open-ended system and go on to expend what we did not know. The 50:50 option was also resisted because no fact-finding had been established, therefore there was no basis on which congregations — which are trustees of property and resources which are not their own — could automatically accept and then assume responsibility where responsibility had not been established.

Deputy J. Higgins

Yes, but obviously the Department of Education and Science bought the argument. Perhaps that influenced them as well but I imagine what Sr. O'Donoghue referred to as congregations' ability to meet this would have been decisive with the Department. Did they conduct any independent examination of the means of the 18 congregations to establish whether, in the view of the State, a figure much greater than the €127 million could be afforded?

Sr. O’Donoghue

No, and I reiterated that it did not arise and could not arise because there is a difference in the State's attitude to the redress scheme: to respond to the evident hurt and pain which was expressed by people. It did not have the situation the congregations had — the people who caused that hurt and pain were being individually accused. Congregations could not move into an acceptance of all of that and take the 50:50 option without the development of some kind of fact-finding process.

It is a bit like calling to someone's door and asking a person for money for some needy cause. If they say they have nothing in their purse, unless they are obligated one cannot ask to see what is in the purse. In a sense the question of assessing or auditing the assets of congregations did not arise because the issue of fact-finding did not develop. It was a Government decision to set up the redress scheme, which we agreed with, in advance of that and therefore to enable a greater number of people, perhaps, to avail of it.

Deputy J. Higgins

In the context of the final agreement and the likely amount of damages which will arise in liabilities for the State, would it be fair to say the contributions of the religious congregations was, though I accept there was some hard cash also, really a symbolic restitution rather than a hard material amount, in contrast with what the State will incur in liabilities?

Sr. O’Donoghue

I assure the Deputy that €128 million is definitely hard for congregations and is definitely more than symbolic. Whatever the final outcome of the redress, it is not based on establishing culpability or guilt. For that reason, congregations have a different path to that of the State. The congregation has to carry a tension between wanting to respond to the evident pain and hurt and not unjustly taking the rights of their members. The State does not have to carry that. It does not have individual members.

Deputy Connaughton

I will go back to the counselling. Following on from Deputy Higgins' contribution, can Sr. O'Donoghue give us any indication of the numbers of people who are getting counselling? Does she have any numbers for that?

Sr. O’Donoghue

I am sorry I do not have it here. We have the actual number in the counselling service. Each of the congregations would be able to provide numbers but I do not have that today.

Chairman

Could Sr. O'Donoghue forward that?

Sr. O’Donoghue

Certainly.

Deputy Connaughton

Has the number increased? Have numbers going before the redress board increased? When that particular kitty, €10 million or €11 million, is exhausted, what will happen to those people? Many of them will have to get counselling for many years.

Sr. O’Donoghue

The counselling service we have, in terms of Faoiseamh, is ongoing. I do not have the figures though I saw them recently. This is ongoing and there is no time limit on Faoiseamh.

Deputy Connaughton

Will it expand or will some agency be able to provide the counselling for a much higher number, as now appears to be the case?

Sr. O’Donoghue

The State is also providing counselling nationally, which was part and parcel of the Taoiseach's programme of responding to former residents. The Faoiseamh helpline is national but handles a good deal of calls from the eastern side of the country. A number of congregations provide counselling throughout the country and that will continue as long as people want to avail of it.

Deputy Fleming

I have questions on the indemnity deal and how it was put together. Sr. O'Donoghue mentioned earlier that a draft copy had been submitted to the Department in April or May 2001, with the final document signed on 5 June 2002. She mentioned she prepared a draft of the original indemnity. Was the final signed indemnity produced by the religious side and signed by the Government side or was it produced by the Government side and signed by the religious side?

Sr. O’Donoghue

Only our legal people could answer that fully. Our understanding from March until June 2002 was that the work would have begun in earnest on the draft we had provided initially. To my uneducated eye, the final document does not look much like the one presented in May. However, I am sure there were a number of draft——

Deputy Fleming

I am pleased to hear that. You referred to the document which was presented in May and you also said that around the time of the Cabinet meeting you were reaching agreement in principle. You said issues changed in terms of the indemnity agreement when it came to finalising it up to 5 June. Can you outline some of the principal changes that took place? You did not say the State drove a hard bargain, but I understood it extracted extra restrictions during the course of the final negotiations.

Sr. O’Donoghue

Yes.

Deputy Fleming

The implication up to now is that the State drove a soft bargain. The evidence will indicate that the State drove a better bargain when it came to finalising the deal over these two months. Perhaps you will clarify some of the issues.

Sr. O’Donoghue

It is true that we found all the negotiations tough and at times very difficult. When we moved to formalising the agreement in the document known as the "indemnity", a restriction to which we agreed was that it should be time limited to three years after the life of the redress scheme. Second, we accepted a constriction on properties transferred to voluntary bodies so that the State's interest would be protected, namely, that the voluntary body could not off-load the property for 25 years without the consent of the Department of Finance. We had no difficulty from the beginning in securing that from everyone — there may have been one where it took a little longer, but it was forthcoming. These are the main issues. There were some time factors included but the Department of Education and Science and ourselves have been able to work satisfactorily through these issues.

Perhaps there was an impression that if a deal was signed on 5 June, everything could be delivered on 6 June. People who are used to working through these aspects will realise that is not feasible. In our discussions with the Minister at the time, we would have spoken about a period from three to five years. We are just two years into that timescale. Everything has been completed apart from formalising the terms of the agreement relating to the property and finalising the 25 year restriction. There were aspects the State side achieved at the end which were not our preference.

Deputy Fleming

On the time limit, I take it the original indemnity was open-ended, therefore, the State put a clear time limit on when claims could be made and accepted under the deal, which was an improvement. Sr. O'Donoghue also said the Minister for Finance included a transfer restriction on properties transferred to voluntary organisations. Given that the State was to assume all costs, and your contribution was fixed, I understand the State took full control of the litigation procedures. It took charge of all cases and the congregations had no say in how the State might defend a case. I understand you specified in the agreement that your side would co-operate and provide all the information necessary to assist the State in its defence, or in handling any litigation cases, and that if one of the signatories to the agreement on your side decided to take a particular case to court, you would forfeit the indemnity in the particular case. Perhaps Sr. O'Donoghue will confirm whether this has arisen in practice or is it likely to happen? It is obvious that the State was ensuring it would not pay on the double. It would not pay this amount and then pay for a case one of the religious orders might take on a unilateral basis because it was determined to vindicate its good name, or the good name of its members, and not use the redress scheme. Is it the case that if people wish to take a case on your side you must forfeit the indemnity?

Sr. O’Donoghue

Yes.

Deputy Fleming

That is important from the State's point of view.

Sr. O’Donoghue

Yes. That was agreed and we did not have difficulty working through it. If a particular congregation wished to take and defend a case, obviously it would do so for very good reasons, in which case the indemnity fell. In other areas, we have agreed that the State will do the defending and we will provide what is required. In regard to what has happened since, we understand — even though I do not have detailed information — that the indemnity in terms of court cases was called down on just three or four cases in the past two years. I am not sure if any of these related to where a congregation took the case — it may have happened in one case. I do not have that information in our representative capacity here.

Deputy Fleming

I want to put a question to Mr. Purcell in respect of his opening statement on the issue. He said that in the coming months he will re-examine how the scheme is working. It is important to remember that what we are doing here today is examining the accounts of the Department of Education and Science for 2002. That audit was completed towards the end of the summer 2003, and we are examining it since last autumn and into this year. Presumably the 2003 audits are under way at this stage and will be completed. We normally receive the Comptroller and Auditor General's report towards the end of September.

The open-ended liability of the State has been a big factor. It is essential that the spirit of the scheme is operated fully and that the Taoiseach's apology is honoured in principle and in the detail in respect of people who have been abused. While I am aware the redress board may have confidentiality rules, in the course of examinations being carried out in the coming months will the Comptroller and Auditor General examine whether all cases where payments have been made have been fully validated and substantiated from his perspective as opposed to the perspective of the redress board? In other words, will they be independently assessed from a financial point of view, because we want genuine claims to be paid in full, but only these claims.

Mr. Purcell

I hope I did not unwittingly mislead the committee. The main thrust of what I undertook to do at the request of the committee was to try to come up with a firmer figure for the contingent liability because we are a year further down the road. As I said on many occasions, the previous figures were very tentative. This is the main thrust of my work.

On the issue of the validation of the awards being made, I do not see this as part of my function, nor would it be appropriate that I should try to second guess what the redress board will award. There is an appeals system in place whereby individuals can appeal to the review body. If they are still dissatisfied with their award they can go to the courts. The Deputy may be thinking of it from the other point of view. It is hoped the board will weed out any spurious cases but I cannot second-guess this aspect.

Deputy Fleming

The essence of our work here each week is to examine the accounts of agencies and Departments where work ended up costing much more because the financial aspects were not taken fully into account. I can understand that the religious institutions probably felt that the redress board would inevitably lead to a lot of cases coming in with a lower level of proof than would be required in a court case. It is not an area I like treading on in a discussion like this. This committee's brief is to look for accountability for the taxpayer. We would have a function to ensure that there is accountability and that all cases were properly validated before they were paid out. I would not see anything untoward or insensitive for us as members of this committee wishing for it to be done. We cannot leave it to a body without someone along the line doing so. Perhaps it might be appropriate at the conclusion of the redress board for an independent audit to be carried out. I think you understand from where I am coming. If there is €1 billion in claims then we cannot leave it to two people to make decisions about it without anyone being able to say whether they did their job properly in the taxpayer's interest. Somewhere along the line that question must be asked and answered.

Chairman

Does Mr. Purcell wish to make one final comment on that?

Mr. Purcell

Yes. As I understand it, and I am subject to correction, the State can also appeal a particular award to the review body. I have no reason to doubt that the State, in the course of doing its job and its agents doing their job, would do so if they felt that the redress board, for any reason, failed to apply the scheme and its conditions diligently.

Deputy Fleming

If the State always did that we would not be here every Thursday. We cannot assume that will happen. Our experience on this committee is that we are always finding evidence that it does not happen. The Comptroller and Auditor General cannot blame me for being cautious.

Chairman

I have no doubt that the redress board will be answerable, in the overall settlement, when the cut-off date is reached.

Deputy Fleming

Somewhere down the line.

Chairman

I have no doubt that there will be a settlement then.

Deputy Fleming

I have no doubt that it is doing a good job but everybody needs someone to check on them.

Chairman

I am sure there will be a settlement after that period. How much of the €12.7 million educational fund has been spent to date?

Sr. O’Donoghue

We would have given the full €12.7 million as part of the cash contribution to the Department of Education and Science. It undertook to disperse €12.7 million of the original €40 million cash contribution for educational needs. Initially, in our package, we had suggested a trust.

Chairman

Yes.

Sr. O’Donoghue

When it came to March 2002 and we were talking with the Department's officials on how it might happen, both sides agreed that the administration of a trust could eat far into the €12.7 million. Therefore, we agreed that we would be happy that the Department would oversee its dispersal and that we did not wish to have any part in managing or dispersing it.

Chairman

Did the Accounting Officer supply you with information on the dispersal of the fund to date?

Sr. O’Donoghue

No, we have not asked for it.

Chairman

It would be interesting to know. I could pursue that information on behalf of the committee. Would Mr. Purcell like to comment on it?

Mr. Purcell

I could provide that information on the basis of the audit of the moneys within the Department of Education and Science. I suspect the Chairman could get it just as easily from the Department if he so wished.

Chairman

From my own knowledge it is important that this fund has been collected. I would like to know, as it is part of a fund, whether it was dispersed. The fund was a gesture and, therefore, should be dispersed forthwith.

Sr. O’Donoghue

Yes, it was part of our thinking and our make up, in responding to those who had been hurt, we were conscious that money does not necessarily meet all of the needs of people. As Sr. Elizabeth said earlier, the education fund was part of an overall more holistic package to respond to people's need than just a single way of doing it.

Chairman

Is the fund €40 million in total?

Sr. O’Donoghue

No. The cash contribution of our agreement was €41 million of which €12.7 million was for the education fund.

Chairman

Was it ring-fenced for the fund?

Sr. O’Donoghue

Yes.

Chairman

I shall pursue the matter and I hope the Department will respond to my query.

Deputy Noonan

Deputy Fleming posed a question about the negotiations around the indemnity at the implementation stage of the agreement in the spring of 2002. He correctly pointed out that the indemnity was time limited. You also indicated that voluntary bodies, to which property had been transferred, were barred from disposing of them for 25 years.

There is another issue surrounding the indemnity which I raised this morning. It is that the scope of the indemnity was significantly broadened by the inclusion of additional institutions such as hospitals and special schools. As a result of that, after the Cabinet had made its decision, a further significant liability was taken on by the State. Earlier when I asked you about it you indicated that it was not anything that the congregations had requested and that it came from somewhere else. From my reading of the material on this I do not think that is the position. The negotiating team was changed in the spring of 2002 and Sr. Elizabeth no longer attended. Sr. Helena, Sr. Úna O'Neill and Fr. Michael Hughes attended the meeting on 13 March 2002. I want to take you through some things and you will then see from where I am coming. On 12 March 2002, Tom Boland, Department of Education and Science, e-mailed his colleagues in the Department of Finance. He was preparing for a meeting the following day. In paragraph (b), document No. 57, he states:

On a related issue I think we should tease out the congregations' position as regards the extension of the Bill to cover certain hospitals and special schools. These institutions were not covered by the Bill when the agreement in principle on their contribution was reached. Arguably the congregations should either pay more to have the indemnity extended to these institutions or else the indemnity may not cover them at all. The congregations' position is probably predictable, but I think it is worth pursuing.

I do not want to walk you into anything and I shall give you the full context before you comment. At paragraph (g) of the same minute he says: "The congregations have indicated that they want to discuss an amendment to the list of institutions in the Bill. My preferred approach to this would be to make any additions by way of Order as provided in the Bill."

The meeting took place the following day. On its minute the people who were present, whom I have indicated earlier, were accompanied by three people from Arthur Cox Co. Solicitors, one of whom was Mr. Nick Moore. Paragraph 7.1 continues:

Nick Moore said that there was a need to substantially increase the institutions in the Schedule to the Bill and asked if the Bill could be amended. Tom Boland pointed out the difficulty with parliamentary time and the run up to the dissolution of the Dáil and said the matter might best be addressed by ministerial order. Tom Boland asked, if in the light of additional institutions, e.g. hospitals and special schools being included in the Schedule of the Bill since the congregations' agreement with the Minister, the congregations would increase the level of the contribution being made to the redress process ... Sr. Helena considers that the overall package agreed with the Minister stood and that any additional institutions fell within the definitions in the Bill.

You were negotiating for additional institutions.

Sr. O’Donoghue

On a point of clarification, we might have different meanings for lists. I genuinely have no recollection of the extra institutions under the headings of hospitals and special schools. On the other hand, we were concerned since December that the list of institutions to be appended to the Bill was not complete. We were talking about the residential institutions as they had moved on from the early days of the 1930s, 1940s, 1950s and 1960s. Following that, in the 1970s and 1980s many of them moved out of the large big buildings into group homes. Therefore, what was, for example, St. Michael's grounds was now St. Luke's, St. Brendan's and St. John's because there were now three little group homes instead of one big building. Our concern was that in the operation of the redress scheme the children who had been in any one of the group homes would be as entitled as anybody who was in the larger house. That was our main concern.

We would have provided to the Department of Health and Children, in the early days of March 2002, a list from every one of the congregations of what they understood were the institutions by their present day names, or by the names they had been for the past ten or 15 years. However, when it came to the enactment of the Bill, the original list was the list that was appended to it. I talked with Tom Boland about that in advancing the matter and he assured me that it was not that there was any difficulty in including them but simply that they did not have time as a Department, in advance of issuing the Act, to check each one. We still have difficulties with regard to that because no ministerial order has been made since the Act was enacted to include the list we had.

My conviction concerning the issue of hospitals and special schools is genuine. I have no recollection of where that came from. I read the correspondence the Deputy referred to over the weekend when we got it from this committee and was surprised to find that in Tom Boland's note it was assumed the proposal came from us. I had no knowledge of it. I cannot be certain that some other congregation did not raise the issue but I have no knowledge of it. We thought it must have come from some other lobby group who wished to have the hospitals and special schools included. Our major concern was that all of the residential institutions that were industrial schools or reformatories would be included under their more modern names as well as their previous names so that nobody who had been in them, for instance, in the 1970s and 1980s would be excluded because the name of their place was not on the list.

Deputy Noonan

With Sr. Elizabeth off the pitch for those particular implementation meetings, could it have come from Sr. Úna O'Neill or Fr. Michael Hughes?

Sr. O’Donoghue

I do not think so and cannot say for certain but I think I would know if it did.

Deputy Noonan

Mr. Boland's minute is very straightforward.

Sr. O’Donoghue

What I am interested in is his notice previous to the meeting of 13 March. We had no meeting from 7 June to that time. Therefore, I do not know at what point or where it could have been communicated.

Deputy Noonan

His e-mail was on 12 March.

Sr. O’Donoghue

In my response in the document to which the Deputy referred, I would certainly have included the smaller, by and large, institutions which we wanted appended to the list but which had not at that point been included.

Deputy Noonan

I understand and accept that. Basically, I am establishing that at this point a significant extension of the scope of the indemnity was conceded by the Department of Education and Science. It is clear the Department thought it was quite significant because it asked the congregations to increase their contribution above the €128 million value, because of the extension on the indemnity. The Department talks about hospitals and special schools and mentions that an increased contribution was sought from the congregations because of the extension but that Sr. Helena turned it down flatly.

Sr. O’Donoghue

I certainly recollect that. The reason was that we did not see that we had anything to do with the extension having happened.

Deputy Noonan

I have a final question on the issue of the education trust, which brings us again to that implementation meeting. The issue arises in Mr. Boland's preparatory e-mail. He says that the Department should hear the proposals for the education trust fund and that although it would not be keen to have the Department involved in direct administration there might be scope for it as joint trustees and that in any case the trustees needed to have some independence from the congregations. The Department, therefore, seems to envisage a separate fund administered by trustees in which both the congregations and the Department would take part but which it did not want to run itself.

On the minute of the meeting where this issue arose, Sr. Helena said this idea came from a desire to assist abuse victims and their families with better education opportunities. She added that during the final negotiations the Minister said he would consider matching the contribution of the congregations. Sr. Helena said that the congregations would prefer not to be involved in the setting up and running of the proposed trust and made that position clear.

I have seen nothing further on the issue on file since that. Coming into that meeting it was envisaged that the Minister would match the €12.7 million the congregations had contributed and that some board of trustees would administer it. She probably cannot help me but can Sr. Helena shed any light on that?

Sr. O’Donoghue

I recall the conversation where we told the officials that the Minister had said that perhaps he would match it by €12.7 million. However, we did not have that in a document anywhere so it did not bind anyone in that sense.

Deputy Noonan

I know. Will the Chairman, when he is communicating with the Department about the trust fund, ask whether it has set up trustees to administer the fund and whether it is matching the funds as promised by the Minister and as minuted here?

Chairman

Yes, it is important to get that clarification. We can deal with that straight away.

Deputy Rabbitte

Did Sr. Elizabeth or Sr. Helena have any knowledge of the turmoil the deal provoked, between the Attorney General and the Minister and between the Attorney General's Office and the Department of Education and Science, as evidenced in the correspondence they have, presumably, now seen?

Sr. Maxwell

I did not because, as I said, I ceased to be part of the negotiation at the end of January. I must say that when I read the documentation supplied, it did surprise me. However, I had no direct knowledge of it at the time.

Deputy Rabbitte

It is unusually acerbic. The Attorney General of the day apparently said to the Minister, after what appears to have been a rather unfriendly encounter in the Taoiseach's office, that his office had no knowledge, good, bad or indifferent, that it was excluded and asked to be sent any note, memorandum or minute there was of what was agreed. It went on to say that it would be appreciated that the Attorney General's office had been, effectively, out of the loop since the previous negotiations broke down. The term "broke down" was used, but we demurred from that earlier. Therefore, it continued, the official in the office dealing with the matter, Liam O'Daly, was operating in what it described as a knowledge vacuum. Can Sr. Elizabeth understand why it is so puzzling for us to understand how all of this should be transpiring post hoc?

Sr. Maxwell

As I recollect, the last time Mr. O'Daly was at a meeting was the meeting in October. As we have told the committee, the next movement was with the letter of 6 November and then we were into the meeting with the Minister.

If it is in order, I would like to qualify something I said this morning apropos of when I spoke how we, as a negotiating group for the congregations, expected that down the road the principals would have to meet face to face. While we made that point and envisaged such a meeting happening, we did not expect that the Minister personally would be the principal negotiator in the face to face meeting. However, when it happened, we saw it as being kind of consistent with what we had asked for, so we did not query it. My last meeting with Mr. O'Daly was at that meeting of 16 October.

Mr. Rabbitte

It casts your letter almost in the realm of divine inspiration, does it not?

Sr. Maxwell

Prayer can work.

Sr. O’Donoghue

If I may add to what Sr. Elizabeth has said, when we reached the agreement as far as could be, on 7 January, we understood from the Minister that it would then go to Cabinet. In fact, it took three weeks from then until the public announcement and Cabinet approval. In one sense, the Attorney General is part and parcel of Cabinet. I do not know whether it was referred to at the first meeting which we think was cancelled, but it went through two meetings, of which we are aware, at Cabinet level in January of that year. In a sense, from our point of view, everybody who needed to know was au fait with it.

Deputy Rabbitte

Is it not odd it did not conclude its passage through Cabinet at that time?

Sr. O’Donoghue

It did on 30 January.

Deputy Rabbitte

Two meetings.

Sr. O’Donoghue

In principle.

Deputy Rabbitte

In terms of the Department initially not even conceding the principle of an indemnity and holding its cards close to its chest, is it not odd that it broadened it in the manner in which Deputy Noonan traced in that the Department would voluntarily act in this way? That has to have its origin somewhere.

Sr. Maxwell

The indemnity was always on the table. We had provided the draft. There were references to it at almost every meeting. I know nothing about the expansion of the hospitals.

Deputy Rabbitte

While the Attorney General's officials were attending the meetings, did they ever comment on the draft you say was always on the table? The draft came from the congregations' side. Any good negotiator knows that one puts one's own draft on the table and if one can get the other side to negotiate on one's own draft, one is halfway there. Did the officials from the Office of the Attorney General say, "We know it is on the table but we are not engaging in that at the moment"? Or did they say, "Sections h, f and g, must be changed."?

Sr. Maxwell

I accept what the Deputy is saying. My memory is that while it was on the table and it was in written form and we had supplied it, they were non-committal about it. They never took a section and tried to tease it out. It was never part of the discussion.

Deputy Rabbitte

So there was never any negotiation on the elements of the indemnity as such?

Sr. Maxwell

No.

Deputy Rabbitte

You put forward your version of what the notion of being indemnified would be.

Sr. Maxwell

Yes.

Deputy Rabbitte

As regards teasing through the implications of it, paragraph by paragraph, that was not done?

Sr. Maxwell

No, absolutely not.

Deputy Rabbitte

On a point of clarification, Deputy Joe Higgins asked whether the £100 million or the €127 million was determined by capacity to pay. Sr. Helena O'Donoghue said that you wanted a finite figure and I can understand why you would want a ceiling. That is not the same as answering "Yes" to Deputy Higgins's question. In terms of us having to go back over the transcripts of this meeting when we are preparing a report, you are not telling the committee that the capacity to pay determined the figure of €127 million or that you did not have a capacity to pay €129 million?

Sr. O’Donoghue

I find it difficult to respond. The issue of our "ability to pay" was not the grounds on which we worked through what we felt we ought to pay. In terms of perhaps increasing it, the ability to pay might have been relevant in the case of some congregations.

Deputy Rabbitte

That was not the primary consideration?

Sr. O’Donoghue

The primary consideration was what should we, as a group of congregations who were very concerned and upset at the pain of so very many people, do in the situation where we did not have any determination of responsibility. It was to try to do the best by taking every claim we knew of, without counting its merits, and making an assessment of what all those claims would cost and to contribute that directly to the scheme.

Deputy Rabbitte

In conclusion, I refer to document No. 13, which sets out the concerns of the religious without prejudice. I refer specifically to section 6, paragraph 6 and I ask that it be displayed on the screen. It states:

The critical feature of the scheme as far as the congregations are concerned is the indemnity which will be provided. A necessary feature is that in return for a contribution from the religious congregations, the State would agree to provide an indemnity against all claims made to, or to be made in respect of, persons who are or have been resident in institutions of which the State bodies had regulatory or supervisory functions up to the date of commencement of the scheme. This should apply even if the claimant elects not to accept the award.

I presume it is obvious why the congregations inserted that clause.

Sr. O’Donoghue

Is the Deputy talking about the final clause?

Deputy Rabbitte

I am referring to clause 6. What were you seeking to protect against there?

Sr. O’Donoghue

If I may confer for a moment, please. It is no more than we have already said which was that in order to make a contribution, we needed to have the assurance that we would not then find ourselves in the court situation where we would have to pay on the double. That was the situation and some people might elect not to access the scheme but instead would elect to go to court. It was in that context.

Deputy Rabbitte

Did anyone on the Department's side engage with you on that point?

Sr. O’Donoghue

There was a response to that document from the Department. Whether the response was point by point, I am not sure. It is as we have said already that discussion on the details of the indemnity really did not take place throughout the period up to January 2002. Following that date, there was detailed discussion but it stayed within the discussions by the legal people on both sides.

Deputy Rabbitte

Does Sister O'Donoghue understand the significance of this from the point of view of the committee? You were very clear in the goals you wanted to achieve but the other side never came to grips with the elements of the waiver of indemnity until the deal was done by the Cabinet and the legal people started to analyse it. It is scarcely surprising that those in Attorney General's office took fright.

Sr. O’Donoghue

The Deputy will understand that from our point of view we were trying to envisage the situation as time would go on and because there are 18 independent units with us as a group negotiating, we had to envisage what might be the various scenarios and in a sense ensure we were not finding ourselves in, if one likes, double jeopardy in some kind of way. I think the three of us as representing the congregations were in a very difficult situation regarding them so that we did not overstep because we did not have authority from any of them except the mandate that they would have given to us. On that matter we were very conscious that individuals might choose to use the court route rather than the redress route and in a sense we were trying to cover all of the claims of which we had been made aware.

Deputy Dennehy

I might cover some of the points already raised. Suggestions have been made that different things were happening very quickly before the 2002 general election. It has been suggested that spur of the moment decisions were made about indemnity, for instance. However, if one bothered to read the documentation, as Deputy Fleming did earlier, all of this work was going through. An extensive point-by-point response to the CORI submission of 21 March was sent. Items that were mentioned and were taken from Sr. Maxwell's letter were in fact dealt with as early as 20 March 2001.

It is important to point out that the Attorney General was involved throughout this time because these points have been made in a manner suggesting there was some collusion at some point. However, reading the full agreement shows what was going on all along including emphasis on different matters. It might be difficult for those looking at this matter to understand that two cases were being built up at the same time. The State was carrying out its negotiating and had its private files. CORI had its own material and we can only now marry the two.

While the consistent battle was for a 50:50 split, a cap of £100 million was accepted on 6 November 2001. Deputy Rabbitte said that we might have rushed into this agreement. If we accept that, the next logical question was whether the Taoiseach rushed into his apology of 1999. Should he have delayed that and, if so, for how long? Should he have delayed for another ten years to see if there was more trauma and if more people came forward? We need to make these points in the interest of balance. The interpretation, the language used and even the definition of those who suffered were all laid out in the correspondence.

When we receive evidence, we must accept somebody's word. Suggestions have been made of a sweetheart deal at one of the meetings with the then Minister and the Secretary General of the Department of Education and Science. We have sworn evidence from Mr. Dennehy, the Secretary General of the Department of Education and Science, who stated: "To clarify matters for the committee, the indemnity was not discussed at those meetings, [referring to the two meetings] although the issue was raised [that is, there was an indemnity] but the Minister absolutely refused to discuss it." Can Sr. O'Donoghue confirm that there was no discussion of the details of the indemnity?

Sr. O’Donoghue

That is correct. We spent the time on the money figure.

Deputy Dennehy

In the letter of 13 March 2000, article 58, to the deputy director at the Office of the Attorney General it is stated:

As regards the key issue of the form and extent of the indemnity which the State is to give to the congregations, it was confirmed at the meeting by solicitors for the congregations that the draft indemnity ... It was accepted, as noted by the Secretary General, that there was no detailed discussion on the indemnity with the Minister.

Despite this evidence, it is being suggested perhaps in a backhanded way that there was some kind of sweetheart deal. That matter should be laid to rest.

We are addressing this matter as we got a letter from members. The matter is based on the issue of liability and obviously they are referring to liability of the State. The primary reason for our hearings is to address the issue of the liability of the State. From CORI's point of view, if no agreement had been reached with the Department of Education and Science, would the higher burden of proof required in a civil case compared to a tribunal of compensation have resulted in a reduced liability for the religious institutions?

While I am not privy to CORI's discussions, did anyone from the 18 congregations feel they would be better off fighting the cases individually in the courts? The State's side would not have wanted that. Was it suggested at any stage that the 18 congregations should battle on or did they feel they might have reduced their liability with individual cases?

Br. Mullan

We had taken the approach of looking at all the claims we had, which we have mentioned several times before. We obviously preferred to have this agreement with the State. However, if things had broken down, I believe the congregations would have said: "We have done our homework and if we go into court with these we at least know the approximate figure we might be facing." We had used that figure in the negotiations with the State. In terms of what happened during the negotiations, the negotiations were tough; they were up and down. If at some stage they had broken down I believe the congregations would have had to pursue the matters through the courts. I suppose this was not the desirable way to go, but if it had broken down that is what we would have been facing.

Deputy Dennehy

Was everybody 100% supportive of going with the State deal?

Br. Mullan

I would guess that when we reported back to the congregations after various meetings there was an overall desire that we would reach some kind of agreement with the State. That would have been the almost unanimous position of the congregations. They were hoping this would be achieved, but at times we wondered whether it would happen.

Deputy Dennehy

I again refer back to the two meetings. The former Minister, Deputy Woods, has more or less said this would make or break the congregations. He then decided to try to break the logjam. Mr. Dennehy, the Secretary General of the Department of Education and Science, in his evidence to this committee said that both meetings had been relatively short and went on to say: "At the first the Minister put it to the congregations that they were either in or out and to be in they would have to at least reach a level of €128 million." The former Minister has publicly stated that there was a logjam, matters were not progressing and he decided that he had a duty to break it and let them know they were either in or out. Would that accurately describe the meeting?

Sr. O’Donoghue

I am not certain whether it was at the meeting of 7 November or the meeting of 7 January, but the Minister said to us that if we were not in he would have to take the indemnity out of the Bill. It was very clear that it was a question of making a decision. What was the second part of the Deputy's question?

Deputy Dennehy

Would that summarise the meeting? Was that what it was about?

Sr. O’Donoghue

Yes. Following that statement by him the meeting looked at what our package was to see where there could be room for any kind of reformulation, which is what happened for 7 January.

Deputy Dennehy

I reiterate what I said at the outset that most people would accept the work that has been done over the years. Considering all that is happening, I ask CORI to review the situation, perhaps in 12 months. The congregations have taken considerable criticism, much of it unfair and based on partial information, leaks and so on. I appeal to CORI to revisit the deal in light of the increasing liability of the State and taxpayers. I accept all the qualifications which would have to apply, such as lowering the onus of proof and so on. I do not expect an answer to my appeal today but the matter could be examined on the grounds that it would be in the future interests of the congregations.

Sr. O’Donoghue

To clarify, our agreement with the State stands. We would not make any commitment with regard to the Deputy's request because we believe re-negotiation is not on.

Deputy Dennehy

I accept that.

Chairman

I thank Sr. Helena O'Donoghue, Sr. Elizabeth Maxwell and Br. Kevin Mullan for their forthright responses. The conduct of the Department was being examined today and members of the committee very much appreciate that the witnesses attended the meeting voluntarily. We have had a frank discussion which has helped complete the jigsaw. It has been a long meeting and concludes our deliberations on Chapter 7.1 of the Comptroller and Auditor General's report.

Our next meeting will be attended by representatives of the Department of Transport and the National Roads Authority to discuss the primary routes improvement programme.

The committee adjourned at 4.20 p.m. until11 a.m. on Thursday, 15 July 2004.