COMMITTEE OF PUBLIC ACCOUNTS debate - Thursday, 25 Nov 2004

Chairman

The topic for discussion today is the 2003 annual report of the Comptroller and Auditor General and appropriations accounts, Department of Education and Science, chapter 9.1, Residential Institutions Redress Board and the Office of the Attorney General, Vote 13.

I remind members that there is relevant correspondence from Brother Michael Heffernan and from Florence Horsman-Hogan which they may wish to take into account.

The attention of members and witnesses 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 who are identified in the course of the committee's proceedings. These rights include the right to give evidence, the right to produce or send documents to the committee, the right to appear before the committee either in person or through a representative, the right to make a written and oral submission, the right to request the committee to direct the attendance of witnesses and the production of documents and the right to cross-examine witnesses.

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

Notwithstanding this provision in 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.

Mr. John Dennehy will make a statement, followed by Ms Finola Flanagan. I call on Mr. Dennehy to introduce his officials.

Residential Institutions Redress Board

Background

The Residential Institutions Redress Act, 2002 (the Act) provides for a scheme of awards to persons who were resident in certain institutions and have or have had injuries that are consistent with abuse received while resident in the institutions.

The redress scheme is administered by a Residential Institutions Redress Board (the Board). A Residential Institutions Review Committee (the Review Committee) has also been established to review awards of the Board. The general scope of the scheme was outlined in my 2002 Annual Report.

The redress scheme extends to former residents of 123 institutions regulated by the State. 87 of these were under the supervision of the Department of Education and Science (DOES). 82 of the 123 institutions were managed by religious congregations represented by the Conference of Religious in Ireland (CORI). 95% of the applications to the Board are from former residents of institutions which were managed by these congregations. 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 Department is examining proposals to extend the scheme to a further set of institutions. It isthe DOES's view that the number of applications to the Board arising from the addition of these institutions would not be significant.

In conjunction with the introduction of the redress scheme, the Government also reached an agreement with eighteen religious congregations, who had been represented in negotiations by CORI, that they would make a contribution of €128m, inclusive of some past contributions, towards the cost of the compensation scheme. 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 for Education and Science, the Minister for Finance and eighteen religious congregations.

In accordance with a commitment given to the Committee of Public Accounts I reviewed the claim outturn to date, the likely cost of redress based on current information, the extent to which the State indemnity has been invoked and the progress of the DOES in collecting the contribution agreed with the congregations.

Redress Costs

The redress scheme has now been operating for 18 months and between the introduction of the scheme in December 2002 and 21 June 2004 the Board has received 3,763 valid applications. Applications have been made at a rate of approximately 48.5 per week.

By 21 June 2004 the Board had made 1,277 offers of awards since it commenced hearings in April 2003. The total amount of awards offered was €98.8m. To date, 77% of the total amount paid in awards has been agreed in a settlement process. The balance involved hearings. Table 1 sets out the pattern to date.

Table 1. Awards by Redress Board, December 2002-June 2004
Nature of award	Number of cases	Total Amount	Average award
		€m	€
Settlement	973	76.4	78,500
Hearing	304	22.4	73,700
Total	1,277	98.8	77,400

Applicants have one month to accept or reject an award or submit the award to the Review Committee, which is wholly independent of the Board. The number of cases sent to the Review Committee up to 21 June 2004 was 33. The Review Committee had 10 reviews on hand and had made 23 awards by that date. The details are set out in Table 2.

Table 2. Awards by Review Committee, December 2002-June 2004*
Nature of award	Number of cases	Total Amount	Average award
		€m	€
Initial award by Board	23	0.96	41,565
Award following Review	23	1.08	46,740

*The awards following review are included in Table 1.

The Board awards costs in respect of expenses incurred in the preparation and presentation of an application. Up to 21 June 2004 the Board had awarded costs, including related High Court costs, in 173 cases. The total amount of these costs was around 15% of the cost of the awards made in these cases.

In cases where agreement about costs cannot be reached, either the claimant or the Board may submit the case to the Taxing Master of the High Court. Following a ruling by the Taxing Master either party has the option of appealing to the High Court. A number of cases have been submitted to the Taxing Master but the process has not yet concluded for any of these cases.

Based on the current level of the Board's own costs and the expected level of claims it is estimated that the Board's total costs (excluding costs paid to applicants) could be of the order of 5% of the cost of awards.

Estimated Redress Scheme Cost

The component elements in any estimate of the cost of redress are

· The number of qualifying persons who will apply for redress

· The extent of any awards made to them

· The extent of any costs which may arise.

Although the scheme has now operated for 18 months and greater estimation precision ispossible there are still inherent uncertainties attached to any calculation. Consequently, I am presenting figures estimated on three different bases:

· An estimate based on a survey of firms of solicitors representing approximately 36% of claimants to the Redress Board up to the end of May 2004

· An estimate based on trends in Freedom of Information (FOI) requests which evidence residency in these cases

· An extrapolation of the claim outturn of the Board.

In addition, I report the Board's own estimate of the likely liability on foot of claims.

For purposes of each estimate, the all-in-cost of awards is estimated at around €93,000 — the average award for cases finalised to date is €77,400 and costs have been estimated at 20%.

Estimate based on Survey of Solicitors

The Redress Board has informed me that almost all applicants to the Board have legal representation.

Using information from a file of FOI requests supplied by the DOES, I compiled a list of 20 law firms who had made 72% of the FOI requests that came from solicitors and around 44% of all FOI requests.

Following consultations with the Law Society of Ireland, and with their co-operation and assistance, I sent a questionnaire to the 20 firms. The information sought was:

· The number of claims submitted to the Board, on behalf of clients, to 31 May 2004

· The number of cases on hand where there was a real prospect of an application being lodged with the Board

· The number of new cases coming to the firm in each month from January to May 2004.

Sixteen firms replied. The results of the survey are set out in Table 3.

Table 3. Survey of solicitors' firms at 31 May 2004 -
	Claims	%
Total applications to the Board to 31 May 2004	1,338	43%
Cases on hand at 31 May 2004	1,775	57%
Total cases	3,113	100%

The results of the survey indicate that less than half of the potential claims to the Board had been made by 31 May 2004. However, the rate of receipt of cases by solicitors in 2004 was declining. 6% of the total cases resulted from instructions received in the first five months of 2004.

The solicitors who replied to the survey accounted for 36% of all claims made to the Board in the period to 31 May 2004. If the cases on hand become claims to the Board and claims from these firms continue to represent around 36% of all claims, additional claims arising from cases on hand at 31 May 2004 could be in the region of 4,930. 3,681 claims had already been lodged to the Board at that date. This would indicate that the total number of claims to the Board could amount to something of the order of 8,900.

At a level of 8,900 claims the all-in cost could be around €828m.

Estimation based on FOI Trends

FOI requests are an indicator of potential claims since the information supplied by the DOES is used as evidence of residency. Residency in the case of the remainder is proved byletters supplied by the relevant religious order, detention orders and by various school documents. Information supplied by the DOES on foot of FOI requests may also be used to otherwise support a claim to the Board.

I requested the DOES to carry out an analysis of the information available on the number of potential applicants at 25 May 2004. Information was supplied to me on foot of this request, as follows:

· A set of data on FOI requests

· A set of data on litigation cases, where the DOES is named as a defendant.

In addition, I obtained a set of data in relation to litigation cases, where the Department of Health and Children is named as a defendant, from that Department.

This information was adjusted in order to eliminate litigants whose claims related to non-qualifying institutions and also to eliminate duplicate records. An amended file containing 7,017 cases was compiled. The details are set out in Table 4.

Table 4. FOI and Litigation cases — May 2004

Category	Number of cases
Total FOI Requests	4,603
Persons, not litigants, who had made a FOI request	1,609
Litigants who had made a FOI request	6,212
Litigants who had not made a FOI request	805
Total	7,017

The amended information was then returned to the DOES.

The Minister directed the Redress Board, under Section 26 of the Act, to prepare a report comparing its applications at 10 June 2004 with this information. The Board had received around 3,750 applications at that time. The Board's report in the form of a computer file, which the DOES forwarded to me, included the date of an application, if any, to the Board for each record. The information was returned in a format that ensured that no individual or institution involved in a redress claim could be identified as is required under Section 28 of the Act.

The following trends emerged from a detailed examination of the file:

· 70% of claimants to the Board had sought information from the DOES through FOI requests

· A sizeable percentage of claims are lodged in advance of the FOI request (around 13% in the period May 2003 to December 2003)

· Currently 70% of FOI requests are from solicitors. This proportion has risen steadily over the years. On average 62% of all FOI requests to date are from solicitors

· When FOI requests are tracked on a monthly basis it was noted that they are translating into claims at a steady rate with requests from solicitors converting into claims at a higher rate than cases where a solicitor has not made the request. To date around 46% of all requests from late 1998, when the FOI process commenced, up to 30 September 2003 have resulted in claims.

Different tranches of FOI requests were examined to determine the rate at which they were translating into claims taking account, in particular, of

· The date of the FOI request — different claim rates occurred for requests made before the Agreement and other key milestones in the process

· Solicitor-lodged FOI requests differed in the extent to which they converted into claims (49% to September 2003) from requests lodged by the public (42% to the same date)

· Litigation cases who also had made a FOI request had a much higher associated rate of claim to date (56%) than litigants who had not made a FOI request (30%).

Overall, it was concluded, based on trends to date, that ultimately between 75% and 80% of all FOI requests are likely to translate into claims.

6,212 FOI requests had been made up to 25 May 2004. Requests are running at the rate of 150 per month for the first five months of 2004, down from 2003 which had a rate of around 180 per month for the first half and 160 per month for the latter half. It is difficult to predict what impact the closing date, the processing of foreign cases and the fact that claims to the Board may be made in advance of a FOI request, will have on the volume of requests. It appears prudent to project an average of around 90 per month for the next eighteen to nineteen months. On this basis, the total number of FOI requests would be of the order of 7,900.

In addition, 30% of all claims to the Board to date have been made without a FOI request. Assuming that this reduces over time to 25%, for future claims, the total claim population, based on the trend in conversion of FOI requests into claims and on the trend in non-FOI based claims being experienced by the Board, would be in the range 8,200 to 8,700.

Based on an all-in cost of awards of €93,000 this could yield a liability in the range €763m to €809m.

Estimate based on Claim Outturn

In the first eighteen months of operation of the scheme, 3,750 individuals have made claims to the Board. Assuming claims continue to be received at the same rate and the average all-in cost of awards remains unchanged at €93,000, the overall liability will be of the order of €700m. However, based on the results of the survey of solicitors it appears that less than half of the claims have been lodged at this point.

Estimate of the Redress Board

The Board, in its annual report, noted that it anticipates receiving between 6,500 and 7,000 applications in the 3 years allowed under section 8(1) of the Redress Act 2002. The Board informed the Minister that this is based on information supplied by a number of the solicitors who have presented the most applications to date.

The Board stressed that this estimate was tentative as there are no precedents for this scheme. In addition, the extent to which potential applicants have postponed contact with their legal advisers and/or the Board until later is an unknown factor.

Based on the average all-in cost of awards of €93,000 this indicates a liability in the range €605m to €650m.

Overall Summary — Likely Cost of Redress

Summarising the estimations made above the likely cost of redress has been calculated as set out in Table 5.

Table 5. Estimations of Liability

Basis of estimation	Liability
Estimate based on survey of solicitors	€828m
Estimate based on trend relating to FOI-based and non-FOI based claims	€763m to €809m
Extrapolation based on claim outturn to date*	€700m
Board’s estimate in Annual Report to Minister	€605m to €650m
* This is a simple extrapolation based on current claim numbers. Solicitors indicate that the ratio of claims on hand to claims lodged could be of the order of 1.3: 1. Adjustment based on this ratio would suggest an outturn of up to €810m.

Sensitivity of the Estimates

All the above figures have been estimated based on the current claim and cost experience of the Board. Each 5% change in award levels would call for an adjustment of around €30m-€40m in the final outcome. It is quite possible that movements may be countervailing since initial indications are that cost trends following taxation may create upward cost pressure while award levels may drop if later cases involve less serious injury or consequences.

While there is a reasonable degree of association between the claimload reported by solicitors and that estimated based on the extent to which FOI data is translating into claims the following factors could impact on the ultimate claim levels:

· Whether the steady trend in translation of FOI requests into claims continues and non-FOI based cases continue to represent at least 25% of the total claims received by the Board

· The extent of overseas cases — during the examination of the file of FOI requests it became clear that, while there was a significant number of requests from solicitors' firms based in the UK, as yet, only a small proportion have become claims to the Board.

The estimates, therefore, will need to be revised periodically to take account of emerging information. Particular uncertainties relate to:

· The impact of cost taxation outcomes on future costs

· The characteristics of the residual population bearing in mind that injury and damage may adversely impact on their capacity to pursue claims

· The nature of the injuries suffered by more recent claimants compared to those whose claims have been finalised.

Only five nil awards have been made to date. Consequently, no downward adjustment for spurious claims is considered necessary.

In regard to the estimation of the redress liability the Accounting Officer drew attention to the fact that the average award has dropped from €84,000 in September 2003 to €77,400 in June 2004 and the rate of receipt of application had dropped from 50 to 48.5 per week. He stated that these figures would seem to reflect the DOES view expressed in my 2002 Report that it is possible that these averages will continue to fall. However, he stressed that any estimate will remain problematic as it involves surmise and conjecture and any view on the DOES former estimate of €508 million should have regard to that context.

Costs arising from the Indemnity

The indemnity has been invoked in relation to three cases. The total amount of the settlements in these cases was €380,000 while costs are of the order of 30% bringing the total cost to the State to almost €500,000.

In addition, the DOES has retained the services of the firms of solicitors who acted for the congregations in relation to litigation cases prior to the signing of the Agreement and has agreed a level of fees for the management of the files and the provision of specific legal services in respect of the files. The fees agreed, effective from 5 June 2002 were:

· An annual fee of €250 for each of the first hundred cases

· An annual fee of €150 for each of the next hundred cases

· An annual fee of €50 for each of the remaining cases

· A fee of €250 per hour for specific types of legal work on a case.

The firms of solicitors were asked to put measures in place to ensure that, as cases are dealt with by the Board, they are removed from the list of open files.

The DOES informed me that the total fees payable to solicitors for the first full year was of the order of €750,000. The management of the indemnity files is to be transferred to the Chief State Solicitor's Office (CSSO) with effect from October 2004 and the solicitor firms involved have been so informed.

Implementation of the Agreement

The Agreement provided for a contribution of €128m by the congregations made up as follows:

· General Contribution€28.44m

· Education Fund€12.70m

· Property€76.86m

· Counselling and Support€10.00m

The general contribution and the payment towards the Education Fund were duly made in accordance with the terms of the Agreement. In addition, the congregations contributed further cash payments totalling €4.99m in substitution for property of an equivalent value.

The total awards and medical and legal expenses paid to claimants by the end of June 2004 amounted to €86.95m. This has been funded from the proceeds of contributions from the congregations (€30.44m), interest earned on that contribution (€0.54m) and Exchequer funds (€55.97m). At 30 June 2004, €2.99m by way of the general cash contribution is held by the Minister for Finance and is available to fund future awards.

Education Fund

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

An ad-hoc committee was formed comprising one representative each from the Further Education Section of the DOES and the National Office for Victims of Abuse (NOVA), one representative from each of the four support groups affiliated to NOVA, the Adult Education Officer at City of Dublin VEC and the Adult Education Facilitator at NOVA. The committee advised on how the fund should be administered and developed a draft application form together with a document setting out criteria for eligibility for a grant scheme to operate from the academic year 2003 — 2004.

Applications by former residents of qualifying institutions and their families are assessed by the Adult Education Facilitator at NOVA to determine if they qualify under the criteria laid down by the committee. Following a recommendation by the facilitator, grants to cover the cost of fees and materials are paid by the Further Education Section in the DOES. To date approximately €502,000 has been paid under the scheme. The Education Fund is held in an account administered by the Minister for Finance and the value of this fund at 30 June 2004 after taking account of interest earned is €12.94m. The DOES has informed me there was some concern regarding the legislative basis for the operation of the Education Fund and that, with the agreement of the Department of Finance, payments to date have been charged to the Vote pending the enactment of legislation.

The DOES intends that the legislation will provide for the establishment of the fund as a separate self-financing entity with a managing board or committee made up of representatives of survivors, the wider education sector and other interested parties.

Property Contributions

Two categories of property were eligible to satisfy the contribution of the congregations:

· Up to €40.32m could be provided by way of property which had been transferred to the State, State agencies, local authorities or voluntary organisations between 11 May 1999 and the date of the Agreement. There was, however, provision for the substitution of other property or cash in the event that this element of the contribution could not be fully satisfied from transfers in that period (previously transferred or substituted property).

· Further transfers of property which were to be made to the State, or its nominees, as soon as practicable after the signing of the Agreement, to the aggregate value of €36.54m (post-agreement property transfers).

Previously Transferred or Substituted Property

By the end of July 2004 the DOES had accepted, in principle, a total of 27 properties and valuations have been submitted for all but one of these by the congregations. The transferees and valuations of the 26 properties are outlined in Table 6.

Table 6. Previously transferred or substituted property accepted in principle by DOES — July 2004
Transferee	Properties	Valuation
		€m
DOES	7	7.04
Voluntary Organisations	13	17.02
Local Authorities	3	3.59
Health Boards	3	0.78
Total	26	28.43

The properties accepted comprise 17 properties which had been transferred prior to the signing of the Agreement. These properties had an aggregate valuation of €21.06m. In addition, by the end of July 2004, a further €7.37m of the contribution had been made in the form of replacement properties offered in instances where original properties were rejected. While the originally offered properties were transferred prior to the Agreement, the replacement properties represent new transfers. One further replacement property was still being considered in July 2004.

The current position in regard to validation is:

· The congregations have submitted professional valuations for 26 of the 27 properties accepted in principle.

· Independent valuation by the Valuation Office of a sample of six properties resulted in five properties being accepted at the initial valuation submitted. A further property has been accepted, in principle, at a lower valuation put on it by the Valuation Office.

· The aggregate value of the accepted properties which were independently valued is €17.02m.

· The value of past grants made by the State in respect of these properties has not yet been determined as it must await completion of the acceptance in principle process.

· The responsibility to establish that a transferor holds a good title to a property rests with each transferee.

· 13 of the properties which the Department has accepted in principle are properties which had been transferred to voluntary organisations. The Agreement provides that any such properties are required to have restrictions on alienation, whereby the transferee cannot dispose of them within a 25-year period without the consent of the Minister for Finance. The Department has sought the advice of the CSSO on the options available to restrict alienation and the CSSO has entered discussions with the congregations regarding the drafting of a Deed of Covenant between the congregations and the transferees.

Overall Summary — Previously Transferred or Substituted Property

The total target set in the Agreement was €40.32m. The DOES has accepted, in principle, 26 properties with an aggregate valuation of €28.43m. The DOES is awaiting the valuation of one property which has been accepted, in principle, and continues to examine one further replacement property offered.

Post-Agreement Property Transfers

The Agreement set a target of €36.54m as the contribution under this heading. By the end of July 2004, when account is taken of cash contributed in substitution for further property, this target had been exceeded, subject to valuation and good title.

By that date, the DOES had accepted, in principle, a total of 35 properties. The transferees of these properties are set out in Table 7.

Table 7. Post-agreement property transfers accepted in principle by DOES — July 2004
Transferee	Properties	Valuation
		€m
DOES	4	5.11
Eastern Region Health Authority	3	1.97
Southern Health Board	19	13.49
Mid-Western Health Board	2	0.66
South-Eastern Health Board	5	1.89
Dublin City Council	1	8.90
Office of Public Works	1	1.27
Total	35	33.29

In addition to the acceptance of property valued at €33.29m, the congregations had paid €4,987,500 to the DOES in lieu of property as follows:

· €4,000,000 from one congregation in respect of a property which the DOES had rejected as not qualifying under the terms of the Agreement

· €987,500, the proceeds of the sale of a property which was the subject of a CPO.

As a result, the congregations have contributed the equivalent of €38.28m, €1.74m in excess of the target of €36.54m for this heading.

The congregations submitted professional valuations for properties. The transferees have been requested to obtain independent valuations of properties and submit these to the DOES. Up to the end of July 2004 the DOES had received these valuations in respect of 27 of the properties which have been accepted in principle.

In regard to previous State grants in respect of the properties, 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 the DOES if any grants have been paid in respect of the properties being transferred.

The responsibility to establish that a transferor holds a good title to a property rests with each transferee.

Counselling and Support

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

In 1997, CORI had 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. Congregations could also provide counselling and other support services other than through Faoiseamh.

In the course of the negotiations the congregations had stated that much of the €10m contribution related to counselling and other services which had already been provided. The DOES sought details from the congregations' legal advisers.

Following the initial replies from the congregations' legal advisers, in May and June 2003, the DOES informed me that it was concerned that expenditure incurred could include the cost of services offered to victims of diocesan abuse as well as that provided to former residents of the institutions.

The congregations have reported 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. Also, in regard to the service generally, the congregations have maintained that they are committed to the continuation of counselling services for as long as they are required.

In response to the DOES's further enquiries the congregations' legal advisers delivered a file of documents to the DOES in June 2004. The DOES is currently examining this file to see if it provides the evidence required to support the qualifying expenditure claimed by the congregations.

Mr. John Purcell

Chapter 9.1 is a follow-up to a section in my 2002 report on the residential institutions redress scheme. The chapter reviews the claim outturn to date, provides estimates for the ultimate cost of the scheme, looks at the extent to which the State indemnity has been invoked and examines the progress of the collection of the contribution agreed with the congregations.

At the end of October 2004, 4,725 applications were made to the redress board and 2,017 awards totalling €156.3 million were made, making the average award €77,500. Applications for compensation are still being received at an average of 48.5 a week. Legal and other costs to date are coming in at 15% of awards, with the board's expenses accounting for another 5%.

In compiling the report, we used three different methods of estimating the final cost of the redress scheme. First, information was obtained from 16 firms of solicitors handling redress cases on the number of cases they had on hand which had yet to be submitted to the board, along with information on the number of new cases being received. The 16 firms in question accounted for 36% of all claims made to the board. Using the figures supplied we estimated that the final number of claimants could be in the order of 8,900. By applying the current average award of €77,500, increased by 20% to cover legal and other costs, we came up with an estimated final figure of €828 million.

The second estimation methodology was based on freedom of information request trends and produced a result that suggested the final number of claims would be in the range of 8,200 to 8,700. Again, applying these figures to the average all-in cost of awards gives a liability between €763 million to €809 million. The third method of estimating the possible number of claimants was by a simple extrapolation based on the number of claims made to date. Assuming claims continue to be received at the same rate and the average all-in cost of awards remains unchanged, the overall estimated liability using this method would be approximately €700 million. Earlier this year the redress board had tentatively estimated that it will receive between 6,500 and 7,000 applications, giving a final possible liability of between €605 million to €650 million.

The last time I was before the committee on this issue, I stated that all these figures come with a heavy caveat. However, I believe we are in a slightly better position than last year when there was a much larger divergence between the estimates of overall cost. At that stage, I was talking about a possible ceiling of up to €1 billion, while the Department of Education and Science was of the view that the total would not exceed the higher end of its overall estimate of €508 million. We now have better information on claims experience and the level of cost, as well as an indication of the cases awaiting submission to the board, thanks to the co-operation of the solicitors involved.

There have been three cases where the State indemnity has been invoked. The amounts of the settlements were €180,000, €150,000 and €50,000, a total of €380,000. When everyone's costs are added in, it is likely that the total of meeting those claims will come to nearly double that figure.

Although good progress has been made on property transfers, there is still some work to be done before the target set out in this part of the agreement will be fully met. While the target of €36.54 million for post-agreement transfers has largely been met by way of properties accepted in principle and cash in lieu, we have reached three quarters of the target of €40.32 million, a target set for previously transferred property, including substituted property. I am satisfied that the Department is pursuing the matter diligently. The other elements of the agreement concerning the value of counselling services provided by the congregations and the arrangements for the use of €12.7 million of the cash contribution to provide educational services for victims and their families have yet to be finalised.

Chairman

In the 2003 report, you projected weekly and monthly numbers of applicants. Is it turning out as projected or is it above or below target?

Mr. Purcell

It is turning out much as I projected. That is to be expected because with the insight into the number of cases in the hands of the solicitors, it is clear they would have a problem in upping the number of claims that would be in state of readiness to go before the board. It seems to have steadied. The current rate is 50 a week. However, if it is averaged out to the beginning of the scheme, it averages out at 48.5. Little over 50 a week are being received. That is a steady figure and it has settled down into that particular pattern.

Chairman

I read in the newsletter from the redress board that a strong publicity campaign was conducted in the United Kingdom by various organisations to make victims aware of their rights. However, the flow of applications from UK-based solicitors seems to be small and has not picked up significantly. Can we draw conclusions from that?

Mr. Purcell

There was a big publicity campaign, re-advertising the scheme in the UK. I believe that has led to a substantial increase in freedom of information requests from solicitors in the UK. However, that has not manifested itself in a material uplift in the number of claims. There is still another year to go and it may occur, but as I understand it to day, it has not been reflected in the claim pattern from the UK.

Mr. Dennehy

I thank the committee for the opportunity to speak on Chapter 9.1 of the 2003 annual report of the Comptroller and Auditor General. This part of the Comptroller and Auditor General's report deals with the likely cost of the redress scheme, based on current information and the progress that has been made by the Department of Education and Science in ensuring that the commitments entered into by the congregations under the indemnity agreement are met in full.

As the committee will be aware, the Comptroller and Auditor General, in chapter 7.1 of his 2002 report, also examined this issue, but with particular reference to the negotiating process that led to the conclusion of the indemnity agreement in June 2002. On foot of that report, I have previously attended this committee on two occasions, in October 2003 and March 2004, and have provided the committee with information on the factors that led to the setting up of the redress scheme and the conclusion of the indemnity agreement with the congregations. In addition, a delegation from the religious congregations met this committee last July and outlined their approach to the negotiation of the indemnity agreement.

While I am aware that the conclusion of the indemnity agreement with the religious congregations has been a matter of some debate, I have endeavoured in my previous appearances before this committee to emphasise that the €128 million received from the congregations was achieved at the end of a long and sometimes difficult negotiation process. The Government had no capacity to force the congregations to pay any sum, and so the outcome, to a large extent, had to depend on their own sense of duty and fairness.

It is clear from the evidence given by the congregations to this committee in July that they considered that the amount of €128 million was as far as they were prepared to go. I do not believe that it would have been possible to obtain a larger contribution or a 50:50 split. In that regard, the congregations, during their appearance before this committee in July, made it clear that under no circumstances would they have agreed to a 50:50 split. Ultimately, the decision to accept €128 million was a judgment call made by the Government. That sum was not based on any apportionment of liability, nor was it based on any proportion of the likely cost of the scheme. The Government considered that the sum was appropriate given all the circumstances.

When this matter is discussed, the erroneous impression is sometimes given that it was the conclusion of the indemnity agreement with the congregations that has resulted in the State being faced with compensation payments to victims of abuse. That is not the case. As I have emphasised at previous hearings, the Government had decided to set up a redress scheme for victims of abuse, irrespective of whether the congregations decided to contribute to such a scheme. I emphasise again that it was the decision of the Government to establish a redress scheme which committed the State to providing financial compensation to victims of abuse and not the signing of an indemnity agreement with the congregations. The signing of the indemnity agreement meant that, rather than the State having to meet the full cost of the redress scheme, a substantial contribution towards the cost of the scheme has been obtained from the religious congregations.

Leaving aside the humanitarian concerns that were the prime factors behind the setting up of the redress scheme, it is also the case that, had it not been set up, the State would have faced the prospect of thousands of former residents taking their cases to court. For instance, by June 2002, there were approximately 2,500 civil litigation cases pending against the State and, had the board not been established, it is certain that many further civil litigation cases would have been lodged. The processing of those cases through the courts system would have resulted in hundreds of millions in legal costs alone, and the courts would have been clogged up for many years.

The final cost of the redress scheme, therefore, must be viewed in the light of the very substantial costs that would have been incurred in any event if no such scheme had been established and if the cases had been processed in the normal manner through the courts. The 2003 report of the Comptroller and Auditor General provides an updated analysis of the total number of claims that may be made to the redress board and the possible overall cost of those claims. The possible overall costs outlined in the 2003 report vary from the estimate of between €605 million and €650 million that has been made by the redress board itself, to the Comptroller and Auditor General's current estimate, which ranges from €700 million to €828 million.

As members of the committee will be aware, the estimated liability in the Comptroller and Auditor General's 2002 report was in the region of €869 million to €1.04 billion. I am glad to see that there has been a substantial reduction in the overall projected cost of the scheme by the Comptroller and Auditor General. I believe that that this reduction in the projected cost illustrates how difficult it was, and continues to be, to put an accurate figure on the eventual outcome. In light of the various different estimates of final outturn still being arrived at some two years after the establishment of the redress board, I believe that the estimate of €508 million provided to Government as the possible cost of awards under the redress scheme in May 2002 was a realistic assessment of the possible cost, based on the information available at that time. I still believe that to be the case today.

If one applies to that original figure of €508 million the legal and administrative costs of 20% currently being incurred by the board, the total projected costs rise to €610 million, a figure that falls within the range of €605 million to €650 million estimated by the redress board itself in its annual report. It continues to be my view that any estimate will remain problematic, and it will not be until the redress board has completed its work that the final cost will be known. The redress scheme has now been operating for almost two years, and the board will continue to accept applications until December 2005. At that stage, it will be possible to determine the number of applications that the board will receive but, as it will take the board some considerable time to deal with all those applications, the final outturn may not be known until some time in 2007.

With regard to the implementation of the indemnity agreement and ensuring that the commitments entered into by the congregations are met in full, as the Comptroller and Auditor General has said, Department officials continue to work to ensure that the full amount of €128 million will be collected in its entirety. In that regard, all cash contributions have been received from the congregations. The indemnity agreement specified that a sum of €12.7 million is to be provided to enable former residents of institutions and their families to avail of educational programmes. Pending the setting up of the fund on a statutory basis, an administrative scheme has been put in place. To date, approximately €1 million has been provided to former residents and their families under the scheme to enable them to avail of various educational opportunities.

Under the terms of the indemnity agreement, the congregations are required to transfer property to the State to the total value of €76.86 million. That property contribution was to be divided into two separate and distinct schedules. One schedule related to property that was to be transferred from the date of the indemnity agreement and was to have a value of €36.54 million. I can confirm that agreement in principle has been reached with the congregations on the transfer of 35 properties to the value of €38.28 million. That figure of €38.28 million includes €4.98 million in cash provided by the congregations in lieu of property.

The second schedule of property related to property transferred between May 1999 and June 2002 and was to be valued at €40.32 million. I can confirm that, at this stage, transfers of 27 properties to the value of approximately €32.93 million have been agreed in principle. The Department has recently written to the solicitors for the congregations and proposed that they should now offer a cash sum to finalise the property aspect of the agreement. I am confident this aspect of the agreement will be finalised in the very near future.

A further aspect of the agreement is the commitment to the provision by the congregations of counselling services to the value of €10 million. At this stage, the Department has agreed in principle that expenditure totalling approximately €9.5 million qualifies as meeting the commitment of the congregations with regard to this issue. Further details have been sought on some other expenditure which the congregations claim should also qualify under this heading. This information will be received shortly. When it is possible to confirm agreement in principle on a sum of €10 million, it is intended that the expenditure claimed by the congregations as meeting their commitment on counselling will be verified by an audit. In the circumstances, the Department has made very considerable progress towards ensuring that the commitments entered into by the congregations under the indemnity agreement are met in full and I am confident that within a very short period of time, all outstanding issues will be addressed by the congregations.

Chairman

Thank you, Mr. Dennehy. Have we permission to publish your statement?

Mr. Dennehy

Yes.

Ms Flanagan

I am pleased to have the opportunity to appear before the committee today on examination of the Office of the Attorney General Appropriation Account for 2003. My last appearance before the committee in respect of the Vote was in February 2000 for examination of the 1998 Appropriation Account. There have been many developments in the office in the intervening four and a half years and I would like to outline some of them.

When I appeared before the committee in 2000, the office had at that stage only ever prepared one annual report and that was for 1996-97. In December 2002, the office published a very extensive annual report for 2001 along with its first client service guide. Earlier this year the office published its annual report for 2002 in English and Irish. We are currently finalising our annual report for 2003 with a view to its publication next month. We are also determined to publish an annual report for 2004 in the first half of 2005.

The office's current statement of strategy for 2003-05 was published in April 2003 in English and Irish. Other office publications include the guide to the functions and records of the office under sections 15 and 16 of the Freedom of Information Act, the office action plan 2003-05 under Sustaining Progress, and the first and second progress report on implementation of the action plan. It is the intention of the office to publish its third progress report on the implementation of the action plan, which has been submitted to the Civil Service verification group on 17 September 2004, as well as the revised action plan submitted earlier this month. This will be published as soon as the office has been informed by the verification group that the documents have been accepted. Members will appreciate from the foregoing that information available on the office's activities is unprecedented.

The office operates under an administrative budget agreement with the Department of Finance. The office is usually in the position of being able to carry forward from one year to another a proportion of savings and €455,000 was carried forward from 2002 to 2003. Expenditure incurred in 2003 was €11,645,000 from an estimate of €13,949,000, thus creating a saving of €2,303,680 of which the office was allowed to carry over €610,000 for 2004. We had an excess of €263,000 on the subhead of salaries, wages and allowances. This arose because of the manner in which pay periods fell at the beginning and end of 2003. In all the other subheads we have had substantial savings. A saving of €194,000 arose in travel and subsistence largely because expected travel in preparation for the Irish Presidency of the EU in the first part of 2004 did not arise. The office's travel policy which stipulates the maximum use of economy travel also contributed to the saving. A similar saving of €196,000 arose in incidental expenses. The use of internal training facilities and little advertising were contributing factors. Substantial savings of €1,226,000 arose in subhead 5 because of continued discussion with CMOD and the Houses of the Oireachtas about the e-legislation project and with CMOD about the human resources management system project.

A saving of €207,000 arose on subhead A6, office premises expenses, because the Office of Public Works bore the full costs of renovations. A saving of €589,000 arose in consultancy services because one position remained unfilled and another was out for some time. A saving of €133,000 arose in subhead D, general law expenses. It is sometimes difficult to predict with any degree of certainty the actual outcome under a particular subhead. Over the last two years the office management advisory committee monitored the position on a monthly basis. Since July 2003, the travel and subsistence and training and development budgets have been delegated to business unit heads.

Staff numbers, including contract staff, increased from 87 to 127 between 1999 and 2003. This reflected the large increase in the workload of the office during that period. Only two posts remain vacant and both of these vacancies occurred since 1 November 2004. Extensive training opportunities are made available to staff and a dedicated training and development officer was appointed in 2001.

The advisory side of the office organises its work around legal specialisms. There are five groups, each managed by an advisory counsel, which is the equivalent of assistant secretary in the general service grades. Each group is available to deal with specific areas of law thus providing an appropriately expert service to clients. The groups were reorganised earlier this year with a view to enhancing client service. There is regular contact between groups and their client Departments. The scope and variety of the legal work is huge, with new areas constantly appearing. The Office of the Parliamentary Counsel is organised into three groups, each of which services a number of Departments. These groups were also recently reorganised.

The administration side of the office is organised into a number of business units which cover human resources, finance, information technology, change management, training and development, internal audit, services and registry. The training and development and internal audit units were established in 2001 and the change management unit in 2002. There are frequent general weekly group and unit meetings as well as more general meetings of staff. Senior management participate in the office management advisory committee while all staff are represented on the office partnership committee and a number of partnership sub-committees on specific issues. Knowledge management sharing is a feature of how the office operates. The office has a know-how officer and precedents, procedures and practices are recorded and made available as appropriate to staff. Earlier this year the office convened three client focus groups on specific issues. This was followed up by a client and customer survey and a client and customer charter is currently being finalised for early publication. It is also intended to convene a client forum before the end of the year and to undertake a follow-up survey next year. The office's client service guide is also being reviewed with a view to publication of a new version early in 2005.

Extensive work has been done in redeveloping and redesigning the office website with a view to making it more accessible. It is hoped to quality-audit the site and provide an Irish version of most of the contents before its release at the end of the year. Work on preparation of the 2003 statutes, statutory instruments and chronological tables is being finalised with a view to making them available on the office website by year end. Work has also begun on preparation of the 2004 material.

Regarding the Mullarkey report, the office has made substantial progress in implementing its plan following the report of the working group on the Accounting Officers. In conjunction with the Office of the Chief State Solicitor, the office appointed an internal auditor in July 2001 and an audit committee in April 2002. There are three external representatives on the audit committee. The audit committee reviewed and agreed 18 reports between 2002 and 2004 concerning the office, the Office of the Chief State Solicitor and the Law Reform Commission. Almost all of the recommendations contained in the reports have been implemented. Copies of these reports have been made available to the Office of the Comptroller and Auditor General. The office has written general accounting procedures in place, a foreign travel policy, an official entertainment policy, a credit card policy, a landline phone policy, an office mobile policy and a taxis and courier policy as well as tendering procedures.

The office library and registry have developed disaster and recovery plans and all groups and units have included risk management as an aspect of their business plans. Since March 2002 and in association with the Office of the Chief State Solicitor, the office has employed a professional accountant. He and the internal auditor have undertaken an evaluation of internal financial controls in the office and the Law Reform Commission. The office, in conjunction with the Office of the Chief State Solicitor, is currently undertaking an expenditure review of the Attorney General scheme and a separate expenditure review on the Law Review Commission has also commenced.

In 2001 the office, in association with the Chief State Solicitor's office, adopted an information technology plan at an estimated cost of €7 million to €10 million, inclusive of VAT. Ten of the 13 infrastructural projects have been completed. Work on a new case and records management system covering the Merrion Street office and the Chief State Solicitor's office aimed at the creation of a single file across both offices in respect of legal and non-legal files in so far as this is appropriate is well advanced. It is hoped to pilot the new system in mid-December with a view to its roll-out across all areas of both offices in April 2005. This has been a huge endeavour for the office involving considerable work over and above normal day-to-day work for staff.

A new financial management system went live in the Office of the Attorney General and the Chief State Solicitor's office on 5 July, coinciding with the transfer of responsibility for the processing of all non-pay expenditure items from the accounts branch, Department of Finance to the finance unit of both offices. Ongoing development of the interface between the financial management system and the case records management system will allow for the development of costing as well as enhanced financial and non-financial management reports so as to enable the office to meet its management information framework requirements. The office is developing performance indicators in line with central deadlines.

It is intended that work on the further development of a new e-legislation solution compatible with e-Cabinet initiatives will be commenced following examination of inter-operability issues arising from the implementation of various applications being developed across the Civil Service such as e-Cabinet, our case and records management system, MIF, FMS and so on. Work on installation of a new human resources management system will be advanced in line with developments at central level.

More than half of the 40 recommendations contained in the knowledge management strategy, 2003-05 adopted by the Office of the Attorney General and the Chief State Solicitor's office in early 2003, have been implemented providing a framework for sharing, the capture and re-use of internal knowledge and expertise so as to enhance the quality of legal services. It is hoped to have all the recommendations implemented by the end of 2005.

The audit committee reviews progress on implementation of the IT plan periodically. There are appropriate IT security policies in relation to passwords, e-mail and Internet usage. I am confident final expenditure on implementation of the IT plan will be at the lower end of the original €7 million estimate. All projects completed to date have come in under budget.

The office is involved in Better Regulation, a Civil Service-wide project. The Statute Law Revision, pre-1922, Bill has now been published following an extensive consultation process in the Civil Service. A number of restatements have been prepared and displayed on the office website. Consultants have been engaged to report on the options for future restatements of the Statute Book, including pre-1922 statutes.

On the Government's legislative programme, members will be aware of the extensive programme which places heavy demands on the office, both in the provision of advice on legislative provisions as well as their actual drafting. Much of the advice has to be provided and the drafting done at relatively short notice. There has been an enormous increase in the number of amendments made to Bills during their passage through the Dáil and Seanad. This places big demands on the office, particularly if there is a considerable period between the original drafting of the Bill and the subsequent drafting of amendments.

The Attorney General has a policy of assigning briefs among a wide number of barristers. The appropriate application form for those wishing to be considered for nomination is available on the office website or by applying to the office.

Having regard to Mr. Dennehy's statement, I can supply information on the administrative arrangements to support progress, in a legal advice context, that we have made in child abuse matters. Mr. David O'Hagan, Chief State Solicitor, could provide information on administrative arrangements made in the Chief State Solicitor's office.

Chairman

Do we have permission to publish Ms Flanagan's opening statement?

Ms Flanagan

Yes.

Deputy Boyle

As I am due to speak in the Dáil within the next 25 minutes, I apologise in advance for my questions being more frentic than usual.

Mr. Dennehy indicated that the agreement reached between the religious congregations and the Department was not based on a 50:50 share out of the eventual cost. Not only is that the likely eventual outcome but events since Mr. Dennehy's last visit to the committee make the proportion to be paid by the religious congregations even smaller. The fact that the Minister has used the provision in the Residential Institutions Redress Act to add another 13 institutions to the numbers covered by the board indicates that the figures we are now examining will be an under-estimate of the eventual cost. Perhaps Mr. Dennehy will comment on this matter.

When making his announcement, the Minister said less than an additional 100 people who went through the various institutions would be affected. I would like to know how such a figure was arrived at, given that there was a reluctance to state how many would be affected by the scheme. There appears to be a large degree of uncertainty in that regard. Given that the provision has been used to cater for another 13 institutions, what is the likelihood of further institutions being added resulting in further costs under the scheme?

Mr. Dennehy

As the Deputy will be aware, when passed, the Act included 128 institutions in the Schedule. They were listed on the basis that section 4 provided that the Minister may provide for the addition to the Schedule of institutions identified as reformatory, industrial, orphanages, children's homes and special schools in which children had been placed and resident and in respect of which a public body had a regulatory or inspection function. As the Deputy rightly pointed out, the Minister recently added 13 institutions to the list. When the Bill was being discussed in the Houses of the Oireachtas in 2002, the Minister made it clear that the schedule of institutions appended to it might not be the complete list of institutions to which the Bill would apply.

Before an institution can be added to the Schedule, it must be identified as one in which children were placed and resident and in respect of which a public body had a regulatory or inspection function. The 13 institutions added to the list satisfy these requirements and were either run directly by the State or managed by one of the 18 congregations which contributed to the indemnity agreement. There is no question at this stage of reopening negotiations with the congregations on the agreement because it specifically provides that institutions not included in the Schedule to the Act but which would be eligible for inclusion are covered under its terms.

The Department is of the opinion that the additional cost associated with the inclusion of these 13 institutions will be relatively small in the context of the overall cost of the redress scheme. In this regard, the records kept within the residential institutions redress unit in the Department in the past 24 months and discussions with the solicitors for the relevant congregations indicate that there are less than 100 potential redress board applications pending inclusion. However, information is becoming available all the time and there is no guarantee that the likely level of applications will remain at 100. Information available to us shows there are likely to be 100 applications. If we had been aware at the time of the passing of the Act of the full details of the 13 institutions concerned, they would have been included in the Schedule.

Mr. Dennehy

The Deputy could be right, as could those who make the various calculations. However, I would like to make a couple of points. Let us go back to basics. The Government decided to initiate a redress scheme on which it did not put a limit of €500 million, €600 million or €700 million. It decided that those detained in institutions needed to be recompensed for the trauma they had suffered within them. The figure of €128 million was by way of addition and not based on any particular proportion of the cost. Also, the Government did not set the addition of that figure as a precondition for the initiation of the scheme. The opposite is true. The Government decided it would initiate a redress scheme with or without the €128 million paid by the congregations.

Chairman

Please allow Ms Flanagan to state her position.

Ms Flanagan

I may return to this issue later in the meeting. I call Deputy Fleming.

Deputy Fleming

I wish to direct my question to Mr. Dennehy. We are pleased to note the progress on the property transfers and that the matter is almost concluded. Chapter 9.1, page 80, contains the estimates, the overall summary and the likely cost of redress. The estimate based on the solicitors is €828 million, the estimate based on the trend under FOI information is €763 million to €809 million, the extrapolation based on claims outturn to date is €700 million and the board's estimate in the annual report to the Minister is €605 million to €650 million. The reason we are looking at that is that the Comptroller and Auditor General's report last year contained an estimate of between €878 million and €1 billion.

It is good to see that the four estimates here, based on the increased number of cases, are all substantially less than the estimate of up to €1 billion, which was the headline figure in the annual report last year. Usually, when the Committee of Public Accounts sees an original estimate of €1 billion, the figure ends up at €3 billion. We are always told what was the original estimate and the likely final outturn. It is unusual that when the likely outturn appears to be less than the original estimate, there is no reference to the original estimate in the chart. If the estimates were much higher, it would have to be drawn to our attention that the figures are increasing when compared to the original estimate.

I was intrigued by one of the statements Mr. Dennehy made today. He said that had the redress board not been set up, the State would have faced the prospect of thousands of former residents taking their cases to court. Listening to Mr. O'Hagan, it is clear that is the case. It is abundantly clear that there would have been a massive liability for the State had the redress board not been established. Does Mr. Dennehy agree?

Mr. Dennehy

I would. Indeed, there would have been a massive liability to the State not alone in potential payments to individuals but also in legal costs. Within the terms of this redress scheme, as has been pointed out, legal and administrative costs come to approximately 20%. In the three cases to which the Chairman referred earlier, which were dealt with in the courts, the costs are in the range of 75% to 80% of the award. There would be massive legal costs, in addition to others.

Deputy Fleming

The three cases that went to court were, on average, within the terms of what has been granted by the redress board but what is significant is that the legal costs were far greater. Going to the courts would be a far more expensive process for the State than going to the redress board. It is the first time that point has been made in this committee. It has taken Mr. Dennehy's third visit to the committee for committee members to have a fuller understanding. There is a perception that the establishment of the redress board in some way helped create this contingent liability to the State. Others have the view that the fact the religious institutions only paid €128 million has somehow added to a large liability for the State. However, many will agree the State was facing a massive liability regardless of whether there was any contribution.

Chapter 7.1 on page 74 of last year's report by the Comptroller and Auditor General is probably one of the biggest chapters we have seen so far in a report from the Comptroller and Auditor General in the last year or two. It states with regard to the objectives and scope of the examination of the redress scheme that the principal objectives of the examination were to estimate the State's contingent liability arising from the establishment of the redress scheme. However, it appears that the establishment of the redress scheme created no contingent liability whatever. In fact, it has probably helped reduce the contingent liability of the State.

There is a myth among the public that the establishment of the redress board is what caused the creation of this contingent liability. It is possible to take the contrary view, however, that the establishment of the redress board helped to corral the costs that would have arisen for the State and the taxpayer in years to come. It also had the extra humanitarian benefit of helping the victims of the abuse and neglect to bring closure to their cases following the apology by the Taoiseach on behalf of the Irish people on 11 May 1999. Does Mr. Dennehy understand the point I am making?

Mr. Dennehy

I do. What I said in my opening statement, and I have said it on other occasions, is that the signing of the indemnity with the religious orders is not what caused this bill. The State had already decided to set up a redress scheme, regardless of whether there was a contribution from the religious orders. That is worth repeating. The amount of money that was negotiated with the religious congregations was not based on any proportion of the final cost, nor was there to be any apportionment of liability. Unfortunately, that is sometimes misunderstood.

Deputy Fleming

It is not actually dealt with. I understand the difficulty with making estimates but if the Department, the Government or this committee had made an estimate of the ultimate cost of dealing with the process in court and an estimate of the cost for dealing with it through the redress board, it would have been nice to have seen a comparison between the two at some stage. It might well show that the establishment of the redress board might have contributed substantially to reducing the State's liability.

I wish to move on to Ms Flanagan and her office's role in this issue. I am pleased she mentioned that she is happy to discuss administrative arrangements relating to the matter we have discussed with the Department of Education and Science. What can she discuss?

Ms Flanagan

I can talk about the arrangements within the office for dealing with the workload that arises with regard to the child abuse area generally. I am talking only about the Merrion Street office, not the Chief State Solicitor's office.

It has an impact on the deployment of resources. The office is divided into five different groups with advisory counsel in each. The matters relating to child abuse are dealt with by one group. It deals with many other matters as well but the child abuse issue is confined to that group, in which there are five lawyers and a group manager or co-ordinator at assistant secretary level. The litigation is spread across the number of lawyers within the group, with specific institutions allocated to the various members of the group. This provides consistency of approach. There is a childhood abuse litigation panel of counsel which is also divided up by institutions, with a limited selection of counsel allocated to each institution. In so far as is practicable, the group sticks to the distribution of institutions among its members in the way I have described.

There are legal issues concerning the Ryan commission and two people deal with that. There is a separate issue which is not covered by the redress board or the indemnity. This relates to day schools litigation regarding abuse that arose in day schools. This is dealt with in the group as well. I understand there are approximately 250 such cases. The groups are organised so that they meet weekly to discuss their work. They would discuss matters relating to these cases and advices.

Chairman

There is no point in having a wrangle. Put the questions.

Deputy Fleming

I want to make a few points and I want a response. As regards the letter from which Ms Flanagan quoted, it was well understood that we never intended compelling her. People representing the religious institutions appeared before the committee voluntarily and they are not employees of the State, like Ms Flanagan. We would have expected at least as good a response — for Ms Flanagan to come voluntarily. We never intended going down the road of compellability.

The reason it intrigued this Committee and why it wanted to seek Ms Flanagan's views on matters of general administration was that in April 2001, Mr. Boland from the Department of Education and Science drew up an outline of the Government's position following detailed consultation with the Departments of Finance and Education and Science, the Office of the Attorney General and several officials. We have copies of all the letter released to us under the freedom of information legislation. The last paragraph of that position stated that the State should, as a quid pro quo for a reasonable contribution, grant an indemnity to the congregations which contributed to the scheme in respect of all civil actions arising from acts of abuse committed on people who are eligible to make a claim in the compensation scheme.

I thank Ms Flanagan for coming today. I am disappointed she was not here several months ago. We could have had this discussion months ago and concluded this topic much earlier. As I indicated, the committee will draft a report. The responses Ms Flanagan has given and those she has felt she has not been able to give relate to matters in the public arena and which have been discussed at length. We will take into account the responses given today when we draft our report which we will lay before the Houses of the Oireachtas in due course.

We would not do such a thing.

I appreciate the Comptroller and Auditor General did all the research he could but a target figure was set, about which I had major concerns. I welcome the merger and, in particular, I wish Mr. Dennehy well in his efforts. The bottom line, however, is the onus was on the State to meet this case and it did so. When the committee reports on the scheme, I hope Mr. Dennehy and the Department will be vindicated. This may be his final appearance before the committee and there will be no more confusion about which of us is being called by the Chairman. I thank him for his help and the effort he has put in.

I refer to the Attorney General. The earlier documentation, which has been seen by the committee because it is available under the Freedom of Information Act, made it clear that once a scheme is set up, the ball is set rolling in a way that would not happen if people were required to go through the courts and that would generate a multiple of the number of claims that might otherwise have been expected if they were dealt with solely through the courts.

Deputy Dennehy

We must allow for the extra cases. The major difference between the two approaches is that under the redress scheme, the money is going to the people who were abused and who need and deserve it, not the legal profession.

Deputy Curran

I was not trying to railroad Mr. Purcell but I found the line of questioning interesting. Mr. O'Hagan mentioned 2,500 court cases. During Mr. Purcell's audits, did anybody calculate the likely cost? Was that ever a consideration?

Mr. Purcell

No, I am not aware of it. Mr. Riordan did much of the field work on this and his recollection is that were no was no calculation of the potential cost of not going this road.

Mr. Dennehy

We certainly pointed this out clearly in our documentation within the Department and we made the Government and the Minister aware of this. However, the Comptroller and Auditor General is correct. We did not attempt to calculate it because, unless we had examples of cases that had gone to court, we would not even have been in a position to make a stab at that. However, we stated the alternative was potentially extraordinarily expensive, apart from the social and humanitarian reasons to do this another way.

Chairman

I would like to take up a number of issues with Mr. Dennehy and Mr. Boland. A number of contradictions have emerged between the evidence they gave originally and that given by the religious orders, particularly by Sr. Helena O'Donoghue. I would like to reconcile the issues for the record. I refer Mr. Dennehy to the issue of whether the religious orders were insured. He informed the committee on one occasion that a sum of €6.5 million had been paid but that he had come upon this information before the meeting and he was quite surprised by this. When the religious orders appeared before the committee, their representatives said that at all times they made it quite clear to the Department of Education and Science that insurance was an issue and they had insurance. There is a minute which shows that they had been advised by one of Mr. Dennehy's officials — I think it was Mr. Boland — that they should get their insurance in order. They went on to say they had subsequently received a kind of ex gratia payment from one insurance company and that was all that had arisen. You will recall the letter one of the sisters wrote to you before Christmas 2001, where the issue of insurance was specifically mentioned before the draft scheme went to Cabinet.

Could you talk the committee through the insurance issue and tell us what was the state of knowledge at different points? Did it ever come up in negotiation and is there any suggestion that any insurance which would be collected by the religious orders would be paid over as part of the compensation to the State?

Mr. Dennehy

First, it is totally incorrect to claim that at all times the religious orders referred to insurance during negotiations. That did not happen. Nor indeed, from my reading of the transcript of what Sr. Helena said — and I have read it very carefully — she did not say that. At the meeting here on 8 July, Sr. Elizabeth Maxwell said that at a meeting held on 25 September 2000 in the Office of the Attorney General, the issue of whether or not the congregations could get an insurance pay-out from their insurers was discussed. From my reading of the transcript, Sr. Helena was not clear who said it. In fact, she felt it might even have been the Attorney General himself. It was not a case of an officer of the Department. From what it says in the transcript, she was not clear but she felt it might be the Attorney General himself, or someone else at the meeting, who advised the congregations to approach their insurers. She said, of course, that there were Department of Education and Science officials at the meeting.

I also understand, although there is no evidence of this in any of our records, that at an early stage of the negotiation the question of whether or not the congregations had insurance to cover this period was raised by officials of the Department and others. However, the State side was always given the clear impression, from what I have been told by people who were involved in the negotiations, that for the period during which it was felt the majority of the claims would materialise, the religious congregations did not have cover. That was the clear message we got. The issue of insurance did not form any part of the discussions surrounding the level of contribution. Perhaps Mr. Boland may also speak because he was present at all of those discussions whereas I was not.

I am aware that Sr. Elizabeth did indicate to the committee that she raised the issue at one of the two meetings with the then Minister, Deputy Woods, in January. I stated to the committee, and I reiterate it today, that I am not doubting Sr. Elizabeth Maxwell's version of events. However, I have no recollection of that being mentioned. From reading the transcript, she seems to indicate that it was mentioned as a minor issue and that is was not, as she puts it in her statement, "up in lights". She said that at that stage they were "hoping and looking" for some insurance pay-out. Again, I am quoting from her transcript. I do not have any recollection of her saying that but if she says she said it I am sure she did.

She did, of course, list insurance among the many other issues she felt were of importance to them around the agreement, in the letter she sent to me in January. As I have already indicated to the committee, this was mentioned in a fairly substantial paragraph which listed a whole lot of other things. I must admit that at the time I did not regard it as significant and it did not register with me. When the agreement was signed on 5 June 2002, my understanding is — I have gone back and checked this carefully with my own officials — that the State at that stage was not aware of any insurance pay-out and it did not form part of the agreement.

I understand that the insurers subsequently paid out the sum of €6.5 million to some of the congregations involved in the indemnity deal. Indeed, either Sr. Helena or Sr. Elizabeth said in evidence that some of the congregations needed that money to make their proportion of the €128 million payment. At no stage was insurance a major issue in the negotiations, that I am aware of. However, I was not present during most of the detailed negotiations.

Mr. Boland

I do no think there is much, if any, conflict between the two accounts. I substantially confirm Sr. Helena O'Donoghue's recollection. My recollection is that the issue of insurance was mentioned very early on in discussions. How could it not be in a situation where individuals other than the State are potentially being sued?

My memory is that the clear impression conveyed by the congregations was that they did not have insurance — certainly that the situation was extremely uncertain — but that it was something that, obviously, they would be looking into. As facts finally fell out, they did not have much insurance. One company, as I understand it, made a payment on an ex gratia basis some time after the agreement had been concluded. Otherwise, as I understand it, they had no insurance.

Chairman

We are coming to the end of our inquiries into these matters. I simply want to give you the opportunity to put your version on the record so that we are not left with contradictory positions which have not been put to you.

The second area is one I have already put to you, Mr. Boland. At the final stages of the negotiation on the indemnity the question of the number of institutions to be included became a matter for discussion. It was agreed that the scheme and the legislation would cover a wide range of institutions including, I think, certain hospitals and institutions of such nature. A minute quotes you, Mr. Boland, advising that the negotiating position of the Department should change and that extra compensation should be requested from the religious orders as a quid pro quo for the extension of the remit of the indemnity. That minute refers to a pre-discussion advisory meeting. There is another minute of a meeting with the religious orders where the proposal was actually put. Again, Sr. Helena has no memory of this whatsoever. She says it never happened, there was no question of it, the agreement had been made at €128 million, they were never asked to pay anything extra for the extension of the remit and if they had been the answer would have been a resounding “No”. I want you to comment on that.

Mr. Boland

I wonder if certain timescales are not being confused to some extent. There was never a question or discussion about the institutions. They were fixed in the redress Act and there was always a sense that there would be more institutions. We just could not identify them all.

Even those Estimates need health warnings with them. People could score points here and say the Department started off with €256 million and then went to €506 million. At different times, according to the documentation, we could say that the figure did or did not include costs. There are conflicting things in it. However that is not important. What is important is that people got their awards and the scheme was set up. It is commonly agreed that it was a good scheme, on a social rather than financial basis. It is important for people to know the full extent of what they are getting into, and whether it is €506 million or €800 million plus does not really matter.

Earlier, some people mentioned the recording of the participation of the Attorney General's office in the scheme and the drawing up of the indemnity. It would have been impossible to give the picture to this committee and to the public generally without going into some level of detail about the involvement of the Attorney General's office because of the slightly different type involvement of that office than that we would normally come across where we would have to be very careful about what we would say about the legal advice being given. Clearly where a case is before the courts we will not try to queer the pitch of the State side in any litigation or when negotiations are going on.

In this case members of the Attorney General's office were an integral part of the negotiating team. We had to set that out in order that there could be a full consideration of how the Department, which is the primary accountability unit in this case, discharged its functions. If it had been the case — neither I nor the board suggest it was — that Department went ahead willy nilly, without taking that legal advice on board, that would have had to be teased out.

I will move to the matters of the indemnity, April 2001 and the reference to the indemnity covering all cases that might come before the redress board. An indemnity always had to be on the table in this particular agreement with the congregations. If it was not on the table, they would not have been involved at all and we would have gone down the route of having a redress board with victims capable of taking court cases and the congregations having to meet whatever liability would be established in those courts.

As Mr. Boland said, the matter of the indemnity was about much more than just whether it covered those people who would come within the remit of the redress board. It covered matters like the timescale of the indemnity which is now tied down to cases up to December 2008. It would also have involved matters like where the indemnity would have come into play and where it would have been withdrawn in cases that went to court and where the State would not have control of the defence. There were many issues around the indemnity that had to be sorted out. They could not have been envisaged by a one or two-liner in a memorandum going back to April 2001. I hope that this clarifies some of the issues we dealt with today and in earlier meetings.

Chairman

Thank you.

Deputy Curran

Just one brief comment. Mr. Purcell admitted the scheme was working well and was beneficial. However, he went on to say it was important to know what one was getting into. I accept that, but having looked at it today there is a countermeasure which, from all sides, was never quantified, namely, what we are getting out of it in terms of a saving to the State. When measuring contingent liability, which was what the process started out at, I wonder as to the benefit of doing that if one is not looking at the other side of the equation at the same time.

There is another side to the equation which I see today and which becomes more apparent the longer it continues. There was another side, which is very beneficial to the State from an economic point of view. However, nowhere has an effort been made to quantify that, while on the liability side we are still, a few €100 million here or there, trying to quantify the amount. I am unsure as to the total benefit of looking at one side of the equation without recognising the other. Perhaps an effort should have been made to quantify what would be the saving to the State. I am not saying it would have been an easy exercise, but it would have been equally valid to look at the saving to the State as much as to the liability.

Ms Flanagan

I want to make a brief comment relating to what the Comptroller and Auditor General said. The advice of the Attorney General and his officials was always legal advice. That was the sole function of the Attorney General and his officials in the matter.

Chairman

Is it agreed that we dispose of Chapter 9.1?

Deputy Fleming

Chairman

I am not quite clear what the Deputy has in mind. We will leave the chapter open and we will note Vote 13 of the Office of the Attorney General. Is that agreed? Agreed, much to the relief of the Attorney General's officials. Mr. Dennehy is tougher, he is used to being here, but I do not think he will be back either. I think he has other things in mind.

The next meeting will be on Thursday, 2 December 2004 to consider the 2003 Annual Report of the Comptroller and Auditor General and Appropriation Accounts: Office of the Revenue Commissioners — Vote 9: Chapters 3.1-3.5 (Resumed); Chapters 3.6-3.8.

The committee adjourned at 12.15 p.m. until 11 a.m. on Thursday, 2 December 2004.

COMMITTEE OF PUBLIC ACCOUNTS debate - Thursday, 25 Nov 2004

Vote 13 — Office of Attorney General.

Mr. John Dennehy

Ms Finola Flanagan

Ms Ann Nolan

Mr. John Purcell

Mr. Purcell

Mr. Purcell

Mr. Dennehy

Mr. Dennehy

Ms Flanagan

Ms Flanagan

Mr. Dennehy

Mr. Dennehy

Mr. Dennehy

Mr. Dennehy

Mr. Dennehy

Mr. Dennehy

Mr. Dennehy

Mr. Dennehy

Mr. Dennehy

Mr. Dennehy

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Mr. Dennehy

Mr. Dennehy

Mr. Dennehy

Mr. Dennehy

Mr. Paul Kennedy

Ms Flanagan

Ms Flanagan

Mr. David O’Hagan

Mr. O’Hagan

Mr. Dennehy

Mr. Kennedy

Mr. Tom Boland

Mr. Boland

Mr. Dennehy

Mr. Dennehy

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Mr. Dennehy

Mr. O’Hagan

Mr. O’Hagan

Mr. O’Hagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

Ms Flanagan

COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 25 Nov 2004