COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 10 Apr 2008

Vote 29 — International Co-operation.

Mr. Dermot Gallagher (Secretary General, Department of Foreign Affairs) called and examined.

Chairman

I welcome everybody to the meeting, which is now in public session. We will examine the annual report of the Comptroller and Auditor General and the audited appropriation accounts for Vote 28 — Department of Foreign Affairs and Vote 29 — International Co-operation.

Witnesses should be aware that they do not enjoy absolute privilege. 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 persons identified in the course of proceedings who are not present may have to be made aware of them and provided with the transcript of the relevant part of the committee's proceedings if the committee considers it appropriate in the interests of justice.

Notwithstanding this provision in legislation, I remind members of the long-standing parliamentary practice to the effect that 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 within Standing Order 158 that the committee shall 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. Dermot Gallagher

I am accompanied by Mr. Brendan Rogers, deputy director general of Irish Aid, Mr. Finbar O'Brien, head of evaluation and audit unit, Mr. Ray Bassett, head of consular and passport division, and Mr. Adrian O'Neill, head of corporate services. Mr. Rogers will become director of Irish Aid this summer on the retirement of the incumbent. I am also joined by my colleagues from the Department of Finance.

Mr. Dermot Quigley

I am employed in the sectoral policy division of the Department of Finance. I am accompanied by Mr. Alan Zambra, who works in the organisation and management division.

Chairman

The officials are all very welcome. I ask the Comptroller and Auditor General to introduce the Votes.

Mr. John Purcell

There is no critical material in my 2006 report on either of the Votes administered by the Department of Foreign Affairs so I will proceed directly to the appropriation accounts of the Votes.

The main expenditure on Vote 28 covers the cost of administering the core activities of the Department, which in 2006 amounted to €180 million. The remaining €47 million mainly comprises contributions to international organisations and support for Irish immigrant services. On the receipt side, the vast bulk of the appropriations-in-aid of €38 million is accounted for by passport fees. Overall, the Department underspent its provision by €16 million mainly due to less than expected spending on the biometric passport project and maintenance and service costs of accommodation.

Expenditure on the International Co-operation Vote came in pretty much on target at almost €600 million. The bulk of this went to fund the bilateral aid programme, which is the main focus of our overseas development assistance effort. Clearly, with the year-on-year increases in the amounts being allocated to development assistance, it is important that control mechanisms commensurate with the quantum of funding being provided are put in place and implemented. In my 2005 report I recorded the results of an examination of the arrangements for ensuring that funds were properly used and accounted for. We concluded that the Department was doing a reasonable job in controlling the disbursement and use of the funding in what is often a difficult operating environment, although we felt there was room for some improvement.

I am aware the Department is anxious to have an oversight framework that ranks with the best and to this end I understand it has been carrying out a wide ranging review of the management of the aid programme in conjunction with the Department of Finance. This is to be welcomed. Other review activities are also ongoing in the Department designed to ensure it can fulfil its mandate efficiently and effectively. However, I will leave the elaboration of these to the Accounting Officer.

Chairman

I invite Mr. Gallagher to make his opening statement.

Mr. Dermot Gallagher

I am pleased to discuss with the committee the appropriation accounts for the Department of Foreign Affairs. At the outset, I thank the Comptroller and Auditor General and his colleagues for the professionalism they have shown over the years in their dealings with the Department. Their constructive approach is of real benefit to the Department and, as a result, to its customers. I understand that the Comptroller and Auditor General, Mr. Purcell, is retiring shortly, so I take this opportunity to show him my Department's great appreciation for his assistance and guidance over the years, as well as our best wishes for the future. As somebody who has been around for a long time, I hope Mr. Purcell's considerable skills and wisdom will continue to be made available on occasion to the public service, including my Department.

As the Comptroller and Auditor General's Report for 2006 does not focus on any particular aspect of the work of the Department of Foreign Affairs, with the Chairman's agreement I would like to briefly draw the committee's attention to some significant aspects of the Department's work in 2006.

In respect of Northern Ireland, the agreement reached at St. Andrews in October 2006 outlined a clear way forward for the restoration of the institutions of the Good Friday Agreement and stable power-sharing. This paved the way for the historic events of 8 May 2007 when the institutions were restored. Today marks the tenth anniversary of the signing of the Good Friday Agreement. As commemorations take place in Belfast, many people will look back over the past ten years, and the years preceding the agreement, to see how far we have come. Having played a small part, I take pride in this and previous agreements. I believe I am the last serving civil servant on these islands to have attended the Sunningdale negotiations in December 1973, which, along with the Anglo-Irish Agreement of 1985, were crucial in terms of paving the way for subsequent breakthroughs. Despite the enormous achievements of recent years, however, significant challenges remain, such as continuing sectarianism and the legacy of the past. Addressing these challenges will remain a key priority for the Department.

Arising out of the White Paper on Irish Aid, a conflict resolution unit was established in the Department's political division. Making an effective contribution in this area will require significant investment of time and effort. Timor-Leste, an Irish Aid programme country, has been selected as the first country for CRU engagement. During his visit to Dili in late February, the Minister for Foreign Affairs, Deputy Dermot Ahern, announced the appointment of Nuala O'Loan as the first roving ambassador and special envoy to Timor-Leste. Her role will be to advise the Minister on the potential for Irish engagement in Timor-Leste, in particular in the area of post-conflict reconciliation. This is our first such engagement. By its nature, the work will be slow and require patience. However, I am confident that Ireland can make a significant and distinctive contribution.

The Department is committed, and I personally attach the highest priority, to continually improving the services it provides to citizens. The most visible of these is, of course, the passport service. In 2006 the Department issued more than 630,000 passports. The e-passport, which incorporates a microchip containing passport details, was launched in October 2006. This was the first project to be assessed under the Government's peer review mechanism for ICT projects and was completed on time and under budget. In providing services, we must also be prepared to deal with the unpredictable. As a result of the outbreak of conflict in Lebanon, the Department organised its first ever mass evacuation of Irish citizens in which approximately 200 Irish citizens were evacuated by land, air and sea. Building on our experience of the Lebanon crisis, we have developed a dedicated crisis centre, which will be used in all similar cases in future.

Turning to Irish Aid, Vote 29, 2006 saw the publication of the first-ever Government White Paper on Irish Aid. It was prepared following a wide-ranging consultation process, with town hall meetings throughout the country. The White Paper sets out clear priorities for the aid programme and the principles which will guide us in achieving those priorities. It is, effectively, the roadmap for the programme as it continues to expand.

In 2006, total official development assistance, or ODA, over all Departments amounted to €814 million. This year will see the total figure rise to €914 million, of which €814 million will be managed by the Department of Foreign Affairs. The financial resources being made available by the Government provide an opportunity for the Department, on behalf of the taxpayer, to make a real difference in the lives of some of the world's poorest people.

We work with a broad range of partners, including UN agencies, NGOs, missionaries, local communities, local authorities and the governments of our partner countries. This range of partners is typical of the aid programmes of other similar donors. It is our partnership with governments that has been the subject of greatest public discussion over recent months, and I will briefly address that issue and some of the concerns raised in that discussion.

In the aid programme, we are trying to deliver assistance to people in some of the most difficult operating environments in the world. The challenges this presents underline why we are working in those countries in the first place.

Broadly, we work with partner governments — in Africa in particular — in three ways. We provide assistance to regions and local authority areas, addressing needs such as basic health, education and provision of clean water. We provide assistance to particular government departments, with a good example being the Department of Health in Mozambique. Finally, we provide direct assistance to governments' budgets to help support comprehensive planned economic and social development in these countries. There are potential risks with all of these approaches, as there are in the delivery of aid of any type, but working with government systems is essential to ensuring progress made can be sustained over the longer term.

In a very balanced and compellingly logical article in The Irish Times on 20 March, the deputy director of Trócaire put it in clear terms when he stated: “We cannot deliver development (or indeed democracy) from outside.” He continued:

Governments are essential to development. There is no way in which a foreign enterprise can take responsibility for areas such as these. Frankly, the people would not stand for it. The key is to be able to support reforming and democratising governments with funding in carefully-planned interventions. Doing this does not involve recklessness with taxpayers' money.

That is exactly what we are doing.

The key question is whether we, collectively, as donor governments, have succeeded. I firmly believe that we are, at the least, getting there. With the Chairman's indulgence, I will give a few examples from Mozambique, one of our programme countries and the country to which we deliver most aid, to back up my belief.

The number of primary schools in Mozambique has almost quadrupled in recent years from 2,800 to 9,000 and the number of children at school has risen from 400,000 to 5 million. Maternal mortality has more than halved and income per head is up from $140 per annum to $210, which is still appallingly low. Inflation is down from 54% to 13%, and is expected to be around 8% this year. The numbers in absolute poverty are down from 69% to 50%, literacy among young people has increased from 49% to 62% and, finally, military expenditure has been reduced by three quarters, with army numbers down from 100,000 to 20,000. That has occurred through dialogue and negotiation with governments, on which we put great emphasis.

I could give similar statistics for Tanzania, Uganda, Ethiopia and other countries. An interesting statistic with a particular Irish dimension is that in 2006, there were 15,000 cases of cholera in Dar es Salaam, but last year there was none. This was achieved through the use of an Irish-made water purification project. We were delighted to be associated with that.

I am proud that Irish Aid, over a period and under successive Governments, has played an important and active role in this work. It is work worthy of these Houses, this committee and the Irish people, with their great generosity and acute sense of caring and solidarity.

There are, of course, internal challenges also. Managing an aid programme of almost €1 billion is far different from managing a programme of €100 million. Therefore, we are working to put in place the structures and systems, as the Comptroller and Auditor General stated, to ensure the programme will continue to be regarded as one of the best in the world.

Working closely with the Department of Finance, we have been undertaking a wide-ranging management review of Irish Aid. That review is nearing completion and its implementation should help build a solid foundation for the programme into the future. Overall, our focus remains firmly on delivering a high-quality programme, which facilitates real change for some of the poorest people in the world, and on ensuring that taxpayers' money is well spent and properly accounted for.

As I have stated, there are risks involved in working in such poor countries. We want to manage and minimise those risks to the greatest possible degree. The wise man whose passion has influenced many of us, Deputy Michael D. Higgins, stated in the foreign affairs committee earlier this year that if one is saying, as some spokespersons do, that one should not deal with countries until they have a model of governance and administration which shows no scintilla of corruption, one's aid programme would very quickly grind to a halt.

In addition to ensuring taxpayers' money is properly used, we want to let them know how it is used. To that end, we have stepped up our public information efforts, including through the opening of an Irish Aid volunteering and information centre on O'Connell Street in Dublin earlier this year.

I have given a brief tour of the work of the Department in 2006 and I will, as always, endeavour to answer any questions the committee puts to me. My colleagues are also here to assist as necessary and in any manner which the committee sees fit. I thank the Chairman.

Chairman

I thank Mr. Gallagher. May we publish the report?

Mr. Dermot Gallagher

Yes.

Chairman

Deputy Thomas Broughan will open proceedings.

Deputy Thomas P. Broughan

I welcome Mr. Gallagher and his staff, as well as the representatives from the Department of Finance, before the committee. We are all very proud of the efforts made by the Irish people through the Irish Aid budget. I will begin with that aspect. Our prosaic job is to check that the funds involved, a large portion of our national income, are being used to the best effect. How many audits did the evaluation and audit unit complete in 2005 to 2007, inclusive?

Mr. Finbar O’Brien

We have a multiannual programme of evaluation work, which would carry out a series of different evaluations each year. Normally, as an evaluation function we will publish three to four major evaluations in any given year. As an evaluation and audit function, we also do the value-for-money studies under the Department of Finance. Again, there is an agreement about the value-for-money studies which take place over a three-year cycle. We average approximately two to three value-for-money studies on the development side within that cycle.

On the audit side, we carry out audit visits as an internal audit function and try to carry out one to each of our programme countries a year. That is not always possible but within an 18-month to two-year cycle, we will visit each of the programme countries.

In addition, we rely very heavily on a large number of other reports generated, for example, by partner governments, NGOs and others. We look at that material as we try to provide assurance. All this material is then provided to the Comptroller and Auditor General's office and the independent audit committee.

Mr. Dermot Gallagher

It might be helpful to give an overview of the audit. I have spent much time on the audit strategy and when I took over some years ago, the first action I took was to go to the programme countries and see what was on the ground and how we could improve. I know Africa and corruption because I lived in Nigeria for two and half years, and in the late 1970s I ran the aid programme.

Audit strategy embraces four separate approaches. The first is our own audit and evaluation unit, which Mr. O'Brien pointed out, and that includes visits to our programme countries.

Deputy Thomas P. Broughan

Our time is limited and I have read——

Chairman

Will Deputy Broughan please let Mr. Gallagher finish? I would prefer if he could finish.

Deputy Thomas P. Broughan

I seek some facts and figures because I have the 2005 report of the Comptroller and Auditor General in front of me.

Chairman

Will Deputy Broughan please have the courtesy to allow Mr. Gallagher finish his contribution? If the Deputy then has a supplementary question he may offer it. Otherwise we will be all over the place.

Deputy Thomas P. Broughan

I have a question to ask.

Chairman

Will Deputy Broughan please give Mr. Gallagher a chance to finish?

Deputy Thomas P. Broughan

We are not dealing the facts and figures.

Chairman

If the Deputy gives Mr. Gallagher time he will come up with the facts and figures.

Mr. Dermot Gallagher

I will be very brief. There are four approaches. Our evaluation and audit unit conducts audits and we have internal audits based in embassies in programme countries. We commission internationally reputable audit firms to conduct audits on our behalf. We participate in jointly funded audits with other donor countries and we receive audit reports from local comptroller and auditors general and so on. I just wanted to set out briefly the strategy and approach.

Deputy Thomas P. Broughan

The Comptroller and Auditor General's report last year indicated, for example, that in Mozambique 33% of funding was not audited, in Tanzania 17% was not audited, in Zambia 15% was not audited and in Ethiopia 19% was not audited. The Comptroller and Auditor General went on to say that 45% of funding given to Mozambique was given only a qualified audit. In South Africa this figure stood at 75% and in Tanzania 70% of the funding we gave received only a qualified audit. In Zimbabwe 75% of the funding we gave received only a qualified audit. Has this situation changed?

The Secretary General knows that category A findings in audits are those that reveal major weaknesses in financial control and recurring problem issues. The Comptroller and Auditor General's report last year indicated that in Lesotho there were 36 category A findings; there were 51 in Mozambique, 64 in Tanzania and 38 in Zambia. On the face of it, this seems to reveal a significant amount of dysfunction in tracking the extensive funds, some €914 million last year, sent to Irish Aid countries. Has this situation improved?

Mr. Dermot Gallagher

I think there is a very clear audit explanation for this situation and I ask Mr. O'Brien to clarify this.

Mr. Finbar O’Brien

Regarding the percentage of moneys audited in a given year, we aim to achieve 85% coverage and there are reasons we would not seek 100% coverage in a given year. Some organisations may not be audited in a particular year because we audit on a sample basis and 85% would be considered a high level of audit coverage, which we seek to achieve. There can be delays, especially when government departments are involved, in completion of accounts and this, in turn, delays audit work on them. Sometimes a report will be published giving a figure below 85% for coverage but over the following six months to a year we will get additional coverage for the same period of funding. We try to achieve 85% coverage and, by and large, succeed in doing so. In terms of audit coverage I feel the level we achieve is high.

The issue Deputy Broughan fairly raised on qualified reports needs explanation. Audit reports can be qualified for many reasons and, on the face of it, two of the examples raised, South Africa and Zimbabwe, have a high number of qualified audit reports. People are aware of the current situation in Zimbabwe and recent years have seen hyperinflation there. In such a situation every audit report will be qualified simply because of hyperinflation. This is a technical reason for having qualified audit reports. In such scenarios we must have people monitoring the situation on the ground, and this has been done effectively in Zimbabwe, so we do not just rely on qualified audit reports. This helps give us a more detailed understanding.

In South Africa many of our partners are Non-Governmental Organisations, NGOs, rather than government representatives and the reason reports pertaining to that country are qualified is, again, technical. The NGOs concerned receive moneys from the public and it is difficult for the auditors to be definite about the income of NGOs. The question of the qualified audit, in this case, does not relate to our funding. It is important that we examine the reasons for qualified audits.

Deputy Broughan asked whether there is any sign of improvements on audits. One of the major developments we have had in the past two years is the strengthening of our follow-up to audit findings. There are people in our programme countries who have the responsibility to follow up on audit findings and when serious audit weaknesses have been detected they can monitor the improvements that are made. We have seen major improvements in following up on weaknesses. As already explained, there will always be weaknesses in the types of environments in which we work and we do not expect totally clean audit reports. There is a constant process of following up on audit findings but there has been progress in that area.

Deputy Thomas P. Broughan

Were frauds detected during the past number of years and, if so, what was the most financially significant one? In general terms, how much of the 2006 budget was misappropriated through fraudulent activity in our donor countries?

Mr. Finbar O’Brien

I will take up this point and my colleagues may wish to contribute. There is a distinction to be made and it is important to understand the two Votes we are dealing with. One relates to audit work for our own organisation in the Department of Foreign Affairs, its missions and so on. These audits are clean and we do not see problems within our own organisation.

We are, therefore, talking about fraud in external partner organisations. As a Department, we may fund an organisation directly and seek to find whether fraud can be identified with regard to the funds we have provided. We have not found significant examples of fraud in this regard. In the broader sense there is the issue of identifying fraud in government systems in countries where we operate. Irish moneys may make up some of the funding that supports a particular government and the comptroller and auditors general in some of our partner countries have identified some examples of fraud. This does not specifically relate to Irish Aid funding, however.

Deputy Thomas P. Broughan

Do we have examples and can the witnesses quantify how much of the budget was misappropriated through fraudulent activity, including fraud involving governments, partner agencies and NGOs? We have been clearly told that the cost of the programme is 4.6% but audit functions are the other side of this. I have a report before me that says the former Zambian President, Mr. Frederick Chiluba, is to be brought before that country's courts charged with stealing over half a million dollars from public funds while he was in office. He has already been convicted in a civil case in Britain. It is alleged that this man regularly visited Ireland to personally pick up his cheque.

Mr. Dermot Gallagher

I will deal with three or four things that have been mentioned. I do not investigate the details of audits. What I am concerned about is that there is follow-on — if there is an audit report that makes recommendations, that those recommendations do not lie on the shelf, as can happen in the public——

Deputy Thomas P. Broughan

I am astonished that the Secretary General cannot give us figures for misappropriation.

Mr. Dermot Gallagher

I am about to give a figure.

Chairman

I ask the Deputy to be patient.

Mr. Dermot Gallagher

I was just about to go on. One thing I am insistent on is that we follow through. At both headquarters and embassies we regularly follow through on recommendations. In the following year, 2007, there were three NGOs on which we did special audits because we were concerned about them. The funding for those three NGOs was suspended and it will not be restored until we are happy they have got their act together. That is a firm policy position on our part.

It has been alleged that the Zambian President used to travel to Ireland and pick up a cheque. There is no cheque given to the Zambian President. We do not give budgetary support in Zambia. What we give is support for particular projects and programmes, and that is ring-fenced and tracked by our embassy. If we give money for supporting schools, it is tracked down to see that those schools are actually built. There is no question of somebody coming to collect a cheque. It is nonsense to say that — not on the Deputy's part, I hasten to add, as he did not say that.

If I can give a very current example, it has also been alleged that Ireland put its head in the sand on Tanzania, where there have been a number of corruption cases.

Deputy Thomas P. Broughan

The Taoiseach visited Tanzania and we promised €170 million to the country over the next three years. Three weeks later, the entire Cabinet was forced to resign over a corruption scandal.

Mr. Dermot Gallagher

I think that is a great reflection of what we are doing. Ten years ago if one went into any of these countries one would not have this kind of situation. What happened in Tanzania was first of all to do with the central bank, which was audited by Deloitte & Touche. Irregularities were shown up and the Minister for Finance and the President, who was very anti-corruption, immediately asked the comptroller and auditor general to ask Ernst & Young to carry out an audit. Based on the findings of that audit, within two days the governor and all the members of the central bank were sacked and a programme of action, agreed with us the donors, on how to correct the issues was put in place. It was said that Finland stopped its funding and that every other country, including Ireland, put its head in the sand. That is not true. We operated as a group of donors.

Secondly, in Tanzania, a parliamentary committee came up with a report on irregularities in the awarding of a contract and, as a result of that, the President, who is ferociously anti-corruption, sacked the Prime Minister. I am glad that we have strengthened the audit unit. We have paid money from Irish Aid to strengthen the audit function in Tanzania and what is happening there is a reflection of what we as donors are achieving. It is a positive, good-news story. The system is working. For the first time in many of these countries there are very active parliamentary committees, a very active free press and a very active civil society supported by us. People are not getting away with what they were getting away with ten years ago.

Deputy Thomas P. Broughan

The budget here is very large — it would be a large budget for an internal Irish Department — but the Secretary General cannot tell me what if any percentage of that was fraudulently misappropriated either in 2006, in previous years, or on an ongoing basis. The United Kingdom, for example, has a Cabinet secretary for international development and an anti-fraud and anti-corruption policy. New Zealand simply withholds payments if the desired outcomes have not been met. Is it not time the Secretary General were able to tell us definitively that allegations such as those made about Uganda or Tanzania could be quantified so that we would know in future at what level any funding given by the Irish people is being misappropriated?

It was reported on 24 March in The Irish Times that the Department had refused to release seven internal audit reports carried out in the past two years following a freedom of information request. Why are these audit reports not made public, given that it is the Irish public that has paid for this aid? They should know in a detailed, transparent and accountable fashion exactly how their hard-earned money is being used.

Mr. Dermot Gallagher

I can definitively assure the Deputy that if any money were misappropriated or misspent we would be aware of it and people would be informed. I have just said that we carried out special audits on three NGOs about which we were concerned. On the audit reports, I have no position of principle — we make all our evaluation reports public on a continuing basis — but I am told that audit reports are an internal mechanism, a tool of management. They are made available to our independent audit committee. Our audit committee is absolutely independent and is completely made up of external people. They are made available to the Comptroller and Auditor General. I have no difficulty with this. I am told they are a management tool. For instance, we have worked with the NGOs on which special audits were carried out because some of them are good and have the potential to be much better in the future. We have suspended their funding but we have worked with them to try to get their structure right. In the case of Self-Help, for example, which had a problem, a very senior person who was previously with GOAL has taken over. It is a good-news story. We have worked to ensure they get their act together and that they now have the structure, on a sustainable basis, to spend money effectively.

Deputy Thomas P. Broughan

I have always been heavily involved in community development in our own country.

Mr. Dermot Gallagher

I am conscious of that.

Deputy Thomas P. Broughan

For all the organisations I am involved with, audits are public business. For example, we are supported by Pobal and FÁS in some programmes. Why would it not be the case that similar audits of projects that are being funded by public money in the nine donor countries would not also be the public business of this committee, our Chairperson and the Oireachtas generally?

Mr. Dermot Gallagher

They were made available, as I said, to the audit committee, which then published a comprehensive report which is on our website and available publicly. I am told that the tradition is that these are a tool of management. For instance, in the case of an NGO, one works with the NGO on the basis of the audit. We give them people and help them in getting their structures together. That has been the practice and I gather it is generally the practice. I have no difficulty — I have no position in principle on it, frankly. However, they are publicly available to the audit committee and to the Comptroller and Auditor General.

Chairman

I saw the same article in The Irish Times about the internal audit reports. The Department stated the reasons these reports were not published. However, the Secretary General also stated that they were provided to the Comptroller and Auditor General. Was there a reaction from the Comptroller and Auditor General? Maybe I could ask Mr. Purcell to come in on this. Did he see these reports and was he happy with the contents?

Mr. John Purcell

I cannot comment on the individual reports because I have not seen them, but my staff would generally review the internal audit activity of the Department because it clearly has an impact on the level of resources we apply to our own work. We consider the total control and governance activity in that area and then decide what we have to do. We did a fairly big job on this in 2005 and reported on it in the report from which Deputy Broughan quoted some figures. We would not go in with the same intensity every year on a particular area. However, what I would say about this area is that as Deputies know, it is a universal problem with all donors. I discussed this only last week with my counterparts, including some from the Nordic countries which are among the largest contributors to these funds. Parliaments in countries such as Norway, Sweden and Denmark are occupied with the same kind of problem, particularly in terms of budget support and how they can be satisfied that the moneys are being used to general good effect for the purposes for which they have been given. The view seems to be — which tallies with what the Accounting Officer has said — that when budget support is being used it must be accompanied by building up the governance, audit and accounting structures in the countries. That is where the long-term benefit is seen to accrue. Some co-operative work is also being done in cases where there are multiple donors, either for individual projects or for budget support generally. There is much activity in those areas.

I realise I have strayed from the Chairman's original question but this may offer context to what is happening internationally in this area. What Irish Aid is doing in this area is consistent with the best principles promulgated at international level.

Deputy Thomas P. Broughan

There is much pride in the country in what we are doing and the Secretary General and his officials are admired in this regard. The tables provided by the Comptroller's staff show us in sixth position overall per capita. I have seen other reports that place us even higher.

In 2006, the year under examination, we spent about €867 million. A different figure, €813 million, exists in accounts for that year. Perhaps the witnesses might comment on that. Last year the figure was in excess of €914. The Taoiseach gave a commitment that we would meet the 2015 target by 2012 which means that we are heading for perhaps €1 billion and a half in coming years.

I ask about a comment made by a former Minister of State for this area, former Deputy Liz O'Donnell, who is, sadly, no longer in the Oireachtas. During the most recent Oireachtas debate on the performance of Irish Aid, Deputy O'Donnell said that it would be reckless to continue a vast expansion of the programme without developing watertight controls. That is my understanding of what she meant. If it is the case that there is not an adequate audit function in the programme of aid, other than the 15 or 16 members of staff, the country's interest would be best served by getting in place the requisite accounting and auditing staff, both in the countries in question and here, to ensure that the people's hard-earned money is not wasted. Is it reckless to expand so fast? Do the witnesses believe the target will be met

Mr. Dermot Gallagher

The target is a Government commitment and I believe it will be met. We are well on the way at the moment, at 0.54%.

The comptroller will know, as do the staff of my Department, that I take a particularly strong view on financing and money. When I took over the first thing I did was to go to the programme countries. I have insisted on follow-up to audit reports and on strengthening the audit function, not merely at home, but in the programme countries. We are the only people in Tanzania to have an internal auditor in its embassy. This is not only being done at headquarters but is taking place in the field.

It is a hell of a challenge to go from a small amount to the present figure of €914 million. By 2012 it will probably be €1.5 billion and that is why we are conducting this major management review with external consultants and with the Department of Finance. The Secretary General of that Department, Mr. David Doyle, is particularly interested in this area. Obviously he is concerned, as am I, at the large sums of money involved, and we ensure that they are spent carefully and properly. Mr. Doyle is particularly interested in the aid programme and its structure and has given me every encouragement and support.

On the matter of the spending money, I ask the incoming director general of Irish Aid, Mr. Brendan Rogers, to comment. He has lived in most of our programme countries and knows in more detail than I do the programme and how we track it.

Chairman

He is welcome.

Before Mr. Rogers speaks, can the committee be told who are the consultants conducting the review? The Secretary General might also address the findings of the Intrack report which stated that the Department needed more accountants and auditors to examine its activities. We do not often say that, especially in the context of the Health Service Executive. In this case, in view of that report, how has the auditing system been strengthened since the report was given to the Department? Mr. Gallagher might also address the issue of corporate memory as affected by decentralisation. Is he confident the staff he retains at very senior level are sufficient to deal with the massive increase in the departmental budget in recent years?

Mr. Dermot Gallagher

The Chairman has asked several questions. The only additional staff sanctioned by the Department of Finance in recent years, other than those in the Passport Office, have been for the aid programme, in particular for audit and evaluation. The company carrying out the review of the management structures of the aid programme and the kind of resources we will need to get it right is Fund Governance Solutions, FGS. I expect it to report before the summer.

Intrack arose after the tsunami during which the Irish were extraordinarily generous and the Government followed with its support. It recommended that for projects over €300,000 there should be a more careful reporting system. Given that we did not have people on the ground, all our support after the tsunami went to international organisations such as the Red Cross or to Irish NGOs. We are in consultation with them at the moment as to how to follow up their recommendations most effectively.

Chairman

To clear any confusion, will Mr. Gallagher confirm that funding was terminated to four NGOs?

Mr. Dermot Gallagher

Three NGOs.

Chairman

I presume they were not Irish.

Mr. Dermot Gallagher

They were not Irish. One was in Kenya, one in South Africa. They were non-Irish NGOs. There was a governance problem with Self Help, an Irish NGO, that stemmed from the farming organisations. We worked with it on the problem. It was very public and I am able to say this which I would do here anyhow. We worked with that organisation in getting its structure right and the former most senior official in GOAL has now taken over as its chief executive. That organisation has huge potential now that it has its board and its staff structure right. The internal dissension has gone.

Mr. Brendan Rogers

Many of the issues have been covered. We have nothing to hide. We have a shared objective which is to reduce poverty. We are testing these systems out on the ground in a way that we have never done before. It is a difficult and risky operating environment.

I have not come across any case of large scale fraud in the years I have spent in the organisation. I can say that quite honestly to the committee. That is not to say that tomorrow or next week, next month, something might not occur. These are very difficult environments. We have had some small cases of fraud. In northern Mozambique we discovered a case of fraud regarding a sum of about €25,000. The person was jailed and we got the money back. There are small elements of that kind but they are not statistically significant.

In principle we could publish these internal audits, as the Secretary General has said, if our capacity to get into the system is not undermined as a result. We get confidential information and we build partnerships with individuals. If we are to publish their names in regard to some of these issues what will happen the following year is that we will not have the same access. It is quite clear we make all of these reports available to the Comptroller and Auditor General and to the independent audit committee and if there was a major fraud we would highlight it. It is in our interests to do so. We do not have anything to hide. Our shared interest is to reduce poverty not to hide corruption.

I lived in Zambia for nine years both as a volunteer and with our embassy. I was there during Mr. Chiluba's presidency and I was there at his inauguration. We do not give any budget support to Zambia. We have a project approach and sectoral support. He came to Ireland on a State visit in 1995. We never give cheques to politicians.

Deputy Jim O’Keeffe

Brown envelopes, white envelopes or any colour.

Mr. Brendan Rogers

We share the concerns about corruption. It is mischievous, because it diverts attention from the real issues of corruption, to say that we are giving cheques to politicians when they visit Ireland. We have never done that. In Uganda we have pioneered tracking studies where we ask the local headmaster to put up on a poster outside the schools how much that school got and the local people come to see it. The headmaster got this amount for books, X amount for something else. If the people do not see they can go to the headmaster. We have had some very good results as a result of that approach.

I was in western Uganda on one occasion when we were building three schools. I decided to have a look at one of the schools and when I put my hands on the plaster it fell away. I approached the local government to ask what was happening and then met the local contractor. Immediately the contract was stopped. The man was jailed a couple of months later and there was a real change. That is what we do but it is a very difficult operating environment. We are testing the systems all the time and we are strengthening the testing.

Chairman

The answer is that the systems in place in Limerick at senior level are sufficient to meet the demands put on Irish Aid by its increased budget.

Mr. Dermot Gallagher

I forgot to answer about the collective memory. I am pleased to say — it took a great deal of work — we have reached an agreement with the development specialists who are key to the programme. We expect that the great majority of them will locate to Limerick. My concern was that we would all go to Limerick on day one, like what happened at the new terminal at Heathrow, and the thing would come apart. Two years ago we appointed a new head of Irish Aid who spent much time in Limerick with Brendan Rogers taking over from him. We have 54 or 57 members of staff there at present. The programme is being phased in and the remainder of staff will go during the summer. That the development specialists are prepared to go is key. I spent more time on that issue but it was worth the effort. One of my fears always was in regard to the corporate memory. We have brought people in on a phased basis in Limerick but also to headquarters in Dublin. Therefore, people are not going in uninitiated and new to the programme.

Deputy Ciarán Cuffe

I welcome Mr. Gallagher and his delegation. On the issue of decentralisation and the move to Limerick, it seems difficult to dramatically increase the amount of aid being funnelled through the Department at a time when the staff of the organisation is moving from one side of the country to the other. Perhaps he would give some of the details in respect of the move to Limerick. Is the move complete at this stage? What were the stumbling blocks? In terms of getting agreement with staff were fiscal incentives given? What was the basis of achieving agreement to move senior staff to Limerick

Mr. Dermot Gallagher

We are part of a decentralisation process so there would not be fiscal incentives in that sense. The Deputy is correct, it is an enormous challenge to go from a limited budget to €1.5 billion in 2012. To manage that and the decentralisation process at the same time is an enormous challenge. That is why we decided to do it on a phased basis. First, we identified the people who would be prepared to go to Limerick. At present, 85% of the 124 posts have been identified. Some 54 of those are already in Limerick. A further 20 have been working in the headquarters in Dublin. We have just had the breakthrough with the development specialists, many of whom have worked for a number of years with us. They were on roll-over contracts and, clearly, they were concerned about their tenure. I had quite a degree of sympathy for that. We worked out an arrangement with them under which they now have security of tenure. We got very considerable support from our colleagues in the Department of Finance and the Office of Public Works.

The people in Limerick are located in an interim headquarters. The Office of Public Works has bought a new headquarters which has been completed externally. Internal work is being done at present. Clearly, we will have to use video conferencing to the greatest degree possible. I am already in favour of that and it is being done generally in the Department with our missions. The committee will be pleased to hear that as it cuts down on air travel. Given the nature of the Department, air travel is necessary and we are probably the greatest user of it but I want to cut it back to the maximum degree. I believe we will be ready to go to Limerick in the summer when the full team will be located there. We could not go into this with present resources.

The White Paper stated that we would have a major external management consultancy review. That review is taking place. It will report to a group chaired by a former Secretary General to the Government, Frank Murray, who would be known to most of those present. Ultimately it will come to the Ministers for Finance and Foreign Affairs and go to Cabinet but that has structural implications and particularly resource implications. We do not want staff for the sake of it. If we get the staff that can effectively administer a budget of, say, €1 billion or €1.3 billion there is no reason that same staff, if the structures are right, would not be able to administer €1.5 billion.

Much of the analysis on the ground is done by our missions, by our embassies. I have tried to strengthen those and build up our expertise by putting accountants and auditors into the embassies as well as people who know what it is like to live on the ground. That is what we have been trying to do.

Deputy Ciarán Cuffe

May I return to the Limerick issue with two specific questions?

Mr. Dermot Gallagher

Of course.

Deputy Ciarán Cuffe

What percentage of senior staff have agreed to go to Limerick? Surely a huge number of development organisations in Ireland are based within the Pale, for example, Trócaire, Concern, GOAL, most of the larger organisations. Will there be a dramatic increase in internal travel in Ireland as a result of the move?

Mr. Dermot Gallagher

I hope not, and it is the intention that there will not be an increase because of video conferencing, which has become very sophisticated. If one speaks with Microsoft it is clear what can be done. This is not something I am just doing for Limerick, I want to do it for the rest of our missions rather than have people travelling to Brussels and elsewhere when work could be done equally effectively with present video conferencing; it is almost as if people are in the room.

The breakthrough with the IMPACT union on the development specialists has just occurred. The key is that a critical mass of staff members will be prepared to go to Limerick and take up their positions there. They have not come back with the precise numbers. The understanding is that the greater majority will go to Limerick. Some will stay in Dublin and that is their right. They will have to be accommodated in some way and we will face that issue when we come to it but the critical mass will go to Limerick, which is important.

Deputy Ciarán Cuffe

Will Mr. Gallagher be specific? He used the terms "critical mass" and "majority". Does it constitute 50%, 60%, 70% or 80% of his senior staff? Is there resistance to the move and, if so, can he quantify the level?

Mr. Dermot Gallagher

No, not now. It is one of the most difficult sets of negotiations we have ever held and it took months to complete. I understand the concern on their side. In negotiations, be it on the Good Friday Agreement or any other, we must understand the argument of the people across the table and they must have something to sell to their members. They are talking to their members and have not defined "critical mass". I genuinely cannot answer the question——

Deputy Ciarán Cuffe

Therefore, we do not know yet.

Mr. Dermot Gallagher

I genuinely do not know and do not want to upset anyone by saying——

Deputy Ciarán Cuffe

I am impressed that Mr. Gallagher was present during the negotiations on the Sunningdale Agreement and the Good Friday Agreement but he said that this was one of the most difficult agreements he had negotiated in his career.

Mr. Dermot Gallagher

I can understand that people who have worked for years want security of tenure, on which I have an instinctive sympathy for them.

Deputy Ciarán Cuffe

As do I. It is clear there are still significant concerns about decentralisation.

Mr. Dermot Gallagher

The Sunningdale Agreement had a less significant role than the Good Friday Agreement. There was a progression from the Sunningdale Agreement to the Anglo-Irish Agreement which was important in the whole process and then the Good Friday Agreement.

Deputy Ciarán Cuffe

I appreciate that.

I refer to the ODA for which in 2006 the figure was €730 million, of which a total of €600 million came from the international co-operation Vote, with the remaining €130 million from other Votes. Will Mr. Gallagher discuss those other Votes and the auditing of those moneys?

Mr. Dermot Gallagher

I can, but I do not have responsibility for them. Such bodies would be the Department of Finance and the World Bank. Others would be the Department of Agriculture, Fisheries and Food, the Food and Agricultural Organisation in Rome, the Department of Health and Children and the World Health Organisation. I may have forgotten——

Mr. Brendan Rogers

Yes, one would be the Department of Agriculture, Fisheries and Food and another the World Food Organisation. Occasionally, the Revenue Commissioners would be involved in regard to the refund of charitable donations. There would also be the contribution by the Department of Finance to the European Union budget, in respect of the proportion of the money allocated for development assistance through the European Union's programme.

Deputy Ciarán Cuffe

There would be an umbrella of auditing——

Mr. Dermot Gallagher

It is all counted. The expert body is the DAC, Development Assistance Committee of the OECD, in Paris. It decides what is, to use the jargon, "DACable", what is acceptable in terms of ODA. We will have an overall figure of €914 million this year, of which €814 will be administered by the Department of Foreign Affairs under the aid programme. The rest relates to the Departments of Finance, Agriculture, Fisheries and Food, etc. We have no auditing role in that regard.

Deputy Ciarán Cuffe

I return to a point Deputy Broughan made about the channelling of funds. The Department works closely with development NGOs. Presumably, that is where the bulk of the funding goes, but how much goes directly through central and local government structures in the recipient countries? Can Mr. Gallagher separate that amount from the overall figure?

Mr. Dermot Gallagher

Approximately two thirds would be bilateral — Mr. Rogers may have more detail on this — and one third multilateral. Through what is called budget support, money is contributed directly to the government. There are only two countries in which we do this — Tanzania and Mozambique. To do so we have to have complete confidence in the development strategy of the country in question. That is the way to go because if the European funds coming into Ireland were to come in separately rather than through the Government, they would not be integrated into the strategy. If things are to change in a country, as distinct from having an oasis here and there, and we are to lift the sovereign people, it must be done on a whole of government basis universally throughout the country in question.

The statistics I gave for Mozambique in my opening statement were significant. All NGOs, with the exception of one, would say the same. At a function marking the 40th anniversary of Concern its chief executive, Mr. Tom Arnold, spoke about the wonderful partnership between Concern and Irish Aid. Ministers for Foreign Affairs in successive Governments from 1975 onwards were invited to the function.

Deputy Ciarán Cuffe

I wish to deal briefly with two other issues.

Mr. Dermot Gallagher

Will the Deputy allow Mr. Rogers to add one further point?

Mr. Brendan Rogers

In general, we do not believe there is an absolute best way to operate. There should be a mix of modalities. We work with NGOs and UN agencies and have local area based programmes. We also work with government departments and central government. When I was based in Zambia, which I am aware the Chairman will visit shortly, I travelled the length and breadth of the country. I visited missionaries who would ask me for money to put a roof on a school. We would provide that money, but there was a shortage of teachers or the education policy was bad. Eventually I realised that for that long period we had to engage with the ministry concerned to ensure teachers were being trained and a decent curriculum was in place to enable the missionaries to deliver education in the schools. I was thanked for the money to replace school roofs but asked to contact the government department concerned to bring about change. That is what we are doing. As I said, it is difficult but things are changing. Good news stories are emanating from Africa right across the board.

Deputy Ciarán Cuffe

That is good to hear.

Mr. Brendan Rogers

The partnerships with NGOs are working. We are helping them with policies at the macro level. We work with UN agencies on the Global Fund and the ship is beginning to turn. Good news stories have come to light in the past six or seven years which have not always made the headlines. This work will require a generational effort. We will be doing it for 25 or 30 years but will eventually reach the point where we will not have to do it.

Mr. Dermot Gallagher

In regard to budget support for Tanzania and Mozambique, donors meet the Minister for Finance. Ireland chairs a group of 45 donors. We work out budget supports with others. For instance, in Tanzania we secured an extra €9 million transferred from travel costs to the allocation for vaccines.

Deputy Ciarán Cuffe

That is all good to hear.

I refer to the passport biometrics project. What progress has been made on it? There was a significant underspend in two consecutive years. Has the project been delivered? Is it complete, and at what stage is it?

Mr. Dermot Gallagher

It is complete. It had to be completed by October 2006; otherwise we would have been outside the period covered under the visa waiver programme, whereby one would not need a visa to travel to the United States. I negotiated that provision when I was ambassador in Washington, as Deputy O'Keeffe will remember. The project was completed on time and it is something Irish people like. If we had failed in this respect, people would have to obtain a visa to travel to the United States, probably have to wait weeks to obtain it and pay $100 for it. We brought in the project considerably under budget. The original figure was a little over €11 million. I received considerable advice from the Comptroller and Auditor General who probably saved us €5 million on the project. A project was previously undertaken and there was a sense that the company which had worked on it would automatically be given the tender for the next one; as a result, other companies were not tendering for this project. We effectively got the word out that this would be a completely open and transparent process for a new project. The cost came down to €8 million. The Comptroller and Auditor General said our terms of reference had been drawn up tightly. The project was administered tightly by Mr. Ray Bassett and the cost came in at €6.1 or €6.2 million. Thus, we saved €5 million, a considerable sum. We also planned the project because the Americans were keen on it; they were introducing this type of passport and we were nearing a time when we would have been outside the period covered by the visa waiver programme. We went to the United States three times and had it tested. We also gave passports to some of our officials who travelled a great deal, particularly senior pilots in Aer Lingus. They travelled around the world using these passports. The project was kosher when it was completed in October 2006 and it has worked well. It is one of the most secure and attractive passports in the world. My daughter who travels a great deal——

Deputy Ciarán Cuffe

That is good.

Mr. Dermot Gallagher

I have spoken about it to the committee previously. The Americans were impressed with it.

Deputy Ciarán Cuffe

It has worked out well. I want to deal with two specific issues on which only brief replies will be required. The first concerns contributions to UN development agencies, namely, totalling €62 million in the past year. There is €10 million for various other funds. Can Mr. Rogers give any details on those other funds? Obviously the United Nations Children's Fund is getting large chunks of money but there is quite a bit buried in the other categories.

Mr. Brendan Rogers

They are the World Health Organisation, UNFPA, some other global funds and a number of small organisations for specific projects. We can give the Deputy a list of them.

Deputy Ciarán Cuffe

I would appreciate that. There is €1 million allocated to cultural relations with other countries but there are no specifics. Perhaps the Fulbright Commission accounts for some of it but could we have the detailed figures for the allocation?

Mr. Dermot Gallagher

The old cultural relations committee, which was under the remit of the Department of Foreign Affairs, as Deputy O'Keeffe will recall from his time there, has been subsumed into the Department of Arts, Sport and Tourism. It has an active programme. We strongly support the Irish College in Paris so a significant amount goes to that. It was restored by the Office of Public Works. We also give each embassy a certain amount to organise cultural events that they believe will bring added value to the promotion of Ireland overall. We delegate an amount to each of our embassies throughout the world.

Deputy Ciarán Cuffe

Does the Fulbright Commission benefit under that?

Mr. Dermot Gallagher

Yes, it does.

Mr. Adrian O’Neill

The Fulbright Commission gets approximately €250,000 and that comes out of the overall allocation. Approximately €150,000 goes to the Irish College in Paris. The remaining €600,000 is divided between what we call embassy initiatives. It involves small amounts of money to our embassies abroad to assist them in doing once off events, such as bringing an Irish writer to a country for an event or the like. Another €300,000 goes to divisional initiatives such as, for example, the travelling Beckett exhibition, which travelled extensively around the world in 2006 to mark the centenary of Beckett's birth.

Deputy Ciarán Cuffe

Thank you.

Deputy Jim O’Keeffe

I am glad to see that the programme has expanded considerably since I was running it. I am also glad the Secretary General is aware of and understands our legitimate concern to ensure that money does not go astray and that the Department achieves value for money. Obviously, a huge amount of thought and effort has gone into ensuring that. Is there any type of best practice internationally, particularly among the Nordic countries which have been ahead of the game for years, that we could adopt that would make the systems in place more secure?

Mr. Dermot Gallagher

The Deputy used to advise me to check that I was in good company and talk to the Nordic countries. We have taken the Deputy's advice over the years and conduct detailed sessions with them. One of the results of that is we do not duplicate any more. In Tanzania, we chair a group of 47 donors. The chair rotates but we chair on health and other countries will chair on other areas. They will do audit studies and we do not duplicate that. We try, in a co-ordinated way, to decide what to do and work it out. Likewise, when we are talking about the budget and trying to get the defence element reduced and ensure the budget benefits the poor, we work out a strategy between us, for example, who speaks and who leads on what issue. As regards our audit and evaluation, they are modelled very much on the Scandinavian and Dutch systems. We have learned a great deal from them. One must always listen and be prepared to use best practice. The new element since the Deputy's time in the Department is the co-operation on the ground.

Deputy Jim O’Keeffe

There is an obvious expansion of the audit role and so forth. Does the Department have enough staff? This might be a sensitive question in that there is a Government policy to cap numbers and so forth. However, in the case of overseas development, with the huge amount of extra money and the need for proper audit, it is crucial that enough staff is provided. I do not know the view of Mr. Quigley from the Department of Finance on that. Does the Department need more accountants, auditors or other support staff?

Mr. Dermot Gallagher

Every two or three weeks I chair a financial overview meeting and we send the Minister and the Comptroller and Auditor General the reports. Mr. Finbar O'Brien is in charge of that area and I always ask him if he has enough staff and assure him that if he does not, I will do everything possible to get him additional staff. I think we have enough staff but we need new resources as we decentralise and as the budget increases. We can manage what we have at present with a stretch, and I believe people should be stretched. However, there is no way we will be able to manage as the budget increases towards €1.5 billion. In fairness, and I have paid tribute to him for this, Mr. David Doyle, Secretary General of the Department of Finance, accepts that. It arises from the White Paper. We did not do this unilaterally but agreed with the Department of Finance that we would set up this management review.

Deputy Jim O’Keeffe

The next issue is transparency and the old principle of justice being done and being seen to be done. There were concerns about those internal audit reports that were not published. Whether it was right or wrong is a matter for debate. Is there some greater process of openness and transparency that should be introduced, either through an Oireachtas committee or otherwise, to ensure that public confidence in the Department of Foreign Affairs and its procedures is maintained and strengthened?

Mr. Dermot Gallagher

I greatly regret that this doubt has been planted in people's minds. I quoted earlier from Deputy Michael D. Higgins at the foreign affairs committee. He made the same point that people must be very responsible in what they say. Many Ministers, including the Deputy, have gone to great lengths to ensure that there is no misappropriation of funds. I spend much of my time on this, as do my colleagues. We publish a number of evaluation reports, which are not very different from audits. They show where we bring added value and where the taxpayer gets value for money. There is a form of the internal audit published. We have an exclusively external independent audit committee and its publishes its annual report. It is on the website and elements of the audit are reflected there. I have no difficulty in principle with publishing but I am advised that it is not the practice and that it would not be helpful to the organisations we are trying to reconstruct. We try to give the evaluation reports publicity but if we could give them more, it would go a long way.

Deputy Jim O’Keeffe

The other issue I wish to raise is the international organisations, such as the FAO, WHO and so forth, and the large amounts of money we give them. It is not the direct responsibility of somebody in Iveagh House or Limerick to track what they are doing but we hear occasional stories about waste, and possibly corruption, in those organisations. It probably must be indirect but what type of process is there in place to ensure that the money that goes to these international organisations is spent on the purpose for which it was given? Is there a value for money result for that money?

Mr. Dermot Gallagher

Mr. Rogers will be able to help on this. My emphasis is always on building up our distinctive bilateral aid programmes; that ratio is about two thirds to one third. I hope that as the budget increases the greater proportion of the money will go to bilateral aid. However, in certain areas, including emergency assistance, the UN is in the best position to do something. It has its own strict audit procedures and obviously its personnel work with us on the ground as it is part of the donor community like the World Bank. Perhaps Mr. Rogers will comment further.

Mr. Brendan Rogers

We are putting new agreements in place with a number of the key UN agencies because, quite rightly, our funding is increasing. We must have those types of agreements which include having a look at their internal audit reports. We are also engaging with the boards of these organisations. Because we are larger donors, we are now beginning to sit on the boards of organisations such as UNICEF. We are in there at the highest corporate governance levels to ensure that all their evaluations and audits are available, and that any particular weaknesses are being addressed. The evaluations determine not only how the money is spent but also if it is being spent effectively. The head of audit and evaluation also chairs the OECD's Development Accounts Committee or DAC, which is the internal network on evaluation and audit. Therefore we are linking in with best practice in the DAC, which is currently chaired by Mr. Finbar O'Brien.

Deputy Jim O’Keeffe

An old hobby-horse of mine involves the value-for-money approach to our embassies and consulates abroad. How many overseas embassies and consulates do we currently have? I was always of the view that we should own such premises as opposed to renting them. I am interested by the fact that we are opening new embassies in the countries of eastern and central Europe that have joined the EU since 2004. We should have been buying property there when it was cheap. Can the Secretary General provide some assessment of the overall picture? How many embassies and consulates do we currently have? How many do we own and how many are being leased? What is the value-for-money consideration from the point of view of ownership or leasing arrangements for those premises?

Mr. Dermot Gallagher

There are 75 missions abroad, including embassies and consulates. We own 34 properties. We have 88 honorary consuls.

Deputy Jim O’Keeffe

The honorary consuls are not an issue as there is no property involved.

Mr. Dermot Gallagher

I am sorry but they were at the back of my mind so I mentioned them. There are 75 missions and we own 34 properties. We would like to own more. One of the reasons there was a underspend was that we wanted to buy or build in Delhi and Beijing, but we have run into a stone wall of bureaucracy and it is difficult at the other end. It is not easy to purchase there. We would like to do so and are still talking to them 18 months later. They are two countries which are growing in importance businesswise and we would like to make more of a statement about Ireland there. We would like to purchase and generally have a policy to purchase now there is funding for that. The Department of Finance has a rule that it must be a multiple of up to 15, so there are financial criteria involved. The Department of Finance has been helpful to us in making money available and we have been purchasing. There is an active policy of purchasing. The two big ones would have been Delhi and Beijing but we did not make a breakthrough there yet.

Deputy Jim O’Keeffe

We have been a good while in Delhi have we not? I remember staying in the embassy there 20 years ago.

Mr. Dermot Gallagher

We could have bought it 100 years ago for next to nothing but we did not. In recent years we have been buying and it makes so much sense because one can do something with it. I believe it saves money but one can also make a statement about the country.

Deputy Jim O’Keeffe

It is not about making statements but, wearing my PAC hat, it is more the money that I want to discuss. I have always had the view that it is cheaper to buy.

Mr. Dermot Gallagher

Yes.

Deputy Jim O’Keeffe

If we are going to stay there we might as well buy. I was particularly interested in the new countries, such as the Baltic states and all the other countries where we have been establishing missions in recent years. In general, did we buy in those countries?

Mr. Dermot Gallagher

We did, if possible.

Deputy Jim O’Keeffe

Or did we lease?

Mr. Dermot Gallagher

We have an active policy and in every place we are we said "Give us the options for buying". In 2006, the year we are considering, we purchased in four places, namely, the Hague, Strasbourg, Slovenia — which is one of the new countries — and Ankara. I assure the Deputy that there is an active policy and it is something that all of us want to do.

Deputy Jim O’Keeffe

I am not putting the Secretary General in a sensitive situation with the Department of Finance?

Mr. Dermot Gallagher

No.

Deputy Jim O’Keeffe

Do I take it that the active approach is a view that is shared by the Department of Finance, and that the Department sees the merits of this approach?

Mr. Dermot Gallagher

The most positive reflection of the Department's position is that it has made the money available to us. I have to say that, right across everything we have tried, if one comes with a transparent and logical case, the Department will be supportive and it has made the money available to purchase. In 2006, as I said, we purchased in four countries.

Deputy Jim O’Keeffe

In the context of the vast expansion that no doubt took place in recent years, that would not be an enormous number would it? Taking the three Baltic states, for example, do we own the premises there? I presume we have a mission in each — Riga, Tallinn and Vilnius.

Mr. Dermot Gallagher

We have, yes. Do we own any of them?

Mr. Adrian O’Neill

Not in any of the Baltic states. When we are setting up a new embassy we tend to enter on a lease basis and then establish what is the best value for money in terms of that local property market. In some cases, the best value for money is a rental option, not a purchase one. It depends basically on the multiple.

The basic guideline is that if we are able to buy an appropriate property in a capital where the purchase is no more than 15 times the cost of the annual rent, that constitutes relatively good value for money. In those cases we are open to purchase, assuming we have the money available. The Secretary General mentioned that we purchased those four in 2006, and in 2007 we purchased an additional two residences for our ambassadors in Mexico City and Brasilia. On a case-by-case basis we examine what makes best business sense in the relevant capital city.

Deputy Jim O’Keeffe

I thank the Secretary General and Mr. O'Neill for their comments. I encourage the development of that policy. I believe in it, particularly if we have the money, although maybe we do not have it now. If there is any surplus money, purchasing is better than leasing from the long-term point of view.

Chairman

I have a number of questions for the Secretary General. What happened in Poland? I am curious about an incident there whereby we had to pay €75,000 in compensation for an incident in the embassy. Does the Secretary General want to go into that?

Mr. Dermot Gallagher

Fireworks were used on the grounds by someone who came in. We fought the case but the legal advice was to settle it. It was at a party in the grounds of the residence. I do not know the date but it must have been around Guy Fawkes's Day in 1992 when someone set off fireworks. It was done by kids and there was nothing malicious in it, but because it was on the embassy grounds and somebody was injured, they took a case. The legal advice was to settle. We held out for a long time, 14 years.

Deputy Jim O’Keeffe

Did it fizzle out on the lawn?

Mr. Dermot Gallagher

We probably got out cheaply in the end.

Chairman

It fizzled out anyway.

Like other Departments, it is desirable to have consultants to monitor tightly and control the increased budget. How trustworthy does the Secretary General find consultants?

We had an issue last week with the Valuation Office where, in my view, very bad advice was given. I came across one example of what I considered to be bad advice given to the Department of Foreign Affairs regarding the University of Bethlehem. It was recommended that funding coming from the Department should either be dramatically reduced or terminated for some of the educational courses that the university was operating for the Palestinians in the town of Bethlehem. At the time, it was cut off from the rest of the territories there. I thought it was a stupid decision. We spoke to the people there. The advice given to the Department emanated from a British-based group of consultants. What controls are in place in regard to the performance of consultants? What controls are in place to control the quality of advice being received?

Mr. Dermot Gallagher

I will come back to Bethlehem University in a minute. There are two types of consultancies. There are the major ones, such as the e-passport. I listened very carefully to what the Comptroller and Auditor General said. Due to tight management and control and ensuring we got the maximum number of tenders, it was approximately €6.1 million, although we initially thought it would be over €11 million.

In regard to Irish Aid, they are mainly small consultancies. Not all of them are always the wisest but over the years, one gets to know people and the majority of them give very good advice. In the case of Bethlehem University, we overruled that. Mr. Brendan Rogers may wish to say something about the aid consultancies.

Mr. Brendan Rogers

We have a database of consultants. Given the specialised nature of this work, we only use 50 or 60 consultants. We try to expand the pot all the time. Sometimes we are successful but sometimes we are not. Overall, we have a fair degree of trust. There is a certain amount of international expertise developing in Ireland as well as abroad.

Bethlehem University is our oldest project and is over 25 years old. Generally, a project should not last more than ten or 15 years because there are sustainability issues. Bethlehem University does excellent work in terms of training, particularly in the medical and health areas. It has said that it knows it is not sustainable and that it must try to raise its own funding. However, given the situation there, we decided, on an exceptional basis, to extend it. We continue to do that.

The consultants noted it was our longest project and asked at what point would it become sustainable. They asked if we wanted to look at a longer-term process of trying to change the funding arrangements. We said that would be a good idea in a normal situation but because of the humanitarian situation, we would continue. They concurred with that and that is why we continue to fund it.

Chairman

I put it to Mr. Brendan Rogers that they concurred with it only after a visit by an all-party group of parliamentarians which looked at the situation on the ground and saw that Bethlehem was circled by a so-called security wall — it was basically under siege — and that people were working under appalling conditions. It was only as a result of the visit by the parliamentarians, who brought back the information to the Department, that it subsequently overruled its consultants. My worry was that these consultants would have dictated policy to the Department which was totally incorrect.

Mr. Brendan Rogers

I headed up the section at the time and I was quite clear that I would continue it because I knew the good work it had done. Obviously, representations are made. It is a very good project. The only issue is the length of time we have been funding it. The aim is to try to put in place a sustainable system so that it can get other sources of funding.

Mr. Dermot Gallagher

I assure the Chairman that as long as the situation remains as it is in Palestine, there is no question but that we will continue funding. It also shows the importance of what the Chairman is about to do, that is, to go to Zambia and South Africa. It shows the importance of parliamentary committees, which are after all our bosses, and that they bring back to us their judgment, thinking and wisdom. That is why I am delighted the Chairman is going to Zambia and South Africa. Obviously, every support will be available.

Chairman

Is the Department of Finance undertaking a detailed evaluation of the use of consultants across Departments? I believe I speak for some members here when I say we were quite horrified when we saw the number of consultants being utilised by the Health Service Executive, for example. In response to a question we put in writing after its appearance here, we got a list amounting to 40 pages.

Is the Department of Finance doing an evaluation of the performance of consultants, the types of reports they produce and how their reports and advice is reflected in subsequent decisions? In other words, are we getting value for money? Should we place greater trust in the expertise of people within Departments say at principal officer and assistant principal officer levels who used to make many of these decisions in the past?

Mr. Dermot Quigley

In regard to consultancies in general, work is under way in the Department as part of the Government's decision that a wide scale efficiency review should take place on the workings of Departments in general. The use of consultants is key aspect of that work. In the efficiency reviews, which are being prepared by the Department of Finance, the role of consultancies is a major factor in that examination.

The capacity of Departments is under examination at present. The OECD, for example, is doing a study under the auspices of the Department of the Taoiseach. A number of Departments, including the Department of Finance, are undertaking a capacity review. This is really a review of the challenges and tasks facing the Department and looking at the skills sets in the Department and the age profile of Departments. It is a source of concern in many Departments that the median age of administrators is higher than it was ten years ago.

The question of maintenance and sustainability of corporate knowledge is being looked at. This has cropped up in other fields, such as decentralisation. The need to retain corporate knowledge in light of the ageing profile in Departments is under examination at present.

Chairman

Has the Department put a figure on the levels of finance spent on consultancies across Departments?

Mr. Dermot Quigley

I do not have figures to hand but I will supply them to the committee. The cost of consultancies has been the subject of quite a number of parliamentary questions. I will certainly supply the committee with the information required.

Chairman

My last question relates to support for Irish emigrant groups and specifically the DION programme which deals mainly with people who have become destitute, dropouts and people living on the streets and in shop doorways in London and other cities. Has an evaluation been done on that programme? How effective is it?

Mr. Dermot Gallagher

The bulk of our support goes to the vulnerable and the marginalised Irish in Britain. Total expenditure in 2006 was over €10 million and it is having a tangible impact. The Simon homeless agency said publicly in a report that the number of homeless Irish in London has fallen from 600 to under 100 in 2006. That is the best possible reflection of it. Simon went on to say that this significant decrease is due, to a large extent, to the money coming from the Government.

In 2007, there was a value for money and policy review. One of the results of that is that the whole grants system is being handled on-line. Mr. Ray Bassett, who is in attendance, runs that. It is like the consular area; it is extremely important. It is part of what we do and of us reaching out to the community.

As the Chairman knows, RTE will be available in London, although I do not know the date. The one slight worry we have is that it will require a box which will cost approximately £200. We are seriously thinking it would be right and proper that a fund should be available to help those who are marginalised and cannot afford it. It would have to be done under clear criteria to purchase the boxes to enable people to receive it.

Chairman

With regard to reinventing the wheel and RTE reaching out to emigrant communities, could the Department come to a business arrangement with, say BSkyB, to broadcast Irish channels through its network to the Irish community in the UK? It is done irregularly because I know people who buy the Irish card and use it in their television sets in London. Could a card system be subsidised for the Irish community rather than reinventing the wheel and providing boxes costing £200?

Mr. Dermot Gallagher

Yes, the Chairman is right. I attended a match in Ruislip recently and a hurling match on TG4 was being broadcast at the venue. Many people have BSkyB. A county was playing London in the national league. I do not know whether BSkyB would be interested.

Chairman

It was just a thought.

Mr. Dermot Gallagher

Perhaps Mr. Bassett would know.

Mr. Ray Bassett

We have discussed this with RTE and the Department of Communications, Energy and Natural Resources and we have discussed a range of options because the programme for Government contains a commitment to make RTE television more widely available to Irish communities abroad and, particularly, to those in the UK. The favoured option is to use Freesat, which is a new satellite system provided mainly by the BBC, and that would serve as a platform, which would be available throughout the United Kingdom and parts of northern Europe. An initial fee is paid to those behind it as well as a small annual subscription. Its main attraction is that it is free to air, whereas pensioners and so on must pay an annual subscription to BSkyB.

Under the Freesat system, the individual would only pay for a box. We have told the Irish community in Britain that we will make available through our emigrant support fund money to Irish organisations for hardship cases. It costs £200 per set and we would make that money available. We will work out criteria whereby older people, in particular, could access that system.

Deputy Thomas P. Broughan

Is the Freesat option not a problem for RTE because of the footprint involved and the effect that would have on buying programmes from the US?

Mr. Ray Bassett

RTE will draw up a new series of locally produced programmes from RTE1, RTE2 and TG4, including the news bulletins at 6 p.m. and 9 p.m. These will also be available on-line. In other words, this will be a separate channel which will mix home produced programmes that do not involve a copyright complication. It will not include sports programme because Setanta Sports has those rights. Programmes such as "Nationwide", in which there is significant interest abroad, would be included. The Chairman is correct that the main feature of advertisements for some properties on sale in Spain is the availability of RTE. This was highlighted during the Amy Fitzpatrick disappearance where most of the Irish community in Malaga followed the story on RTE. The station is widely available but not legally. Freesat would provide RTE legally and for a fee of £200 people could access it. We will work with RTE and the Department of Communications, Energy and Natural Resources to provide a hardship fund.

Chairman

I thank Mr. Bassett. It is great that this initiative is proceeding and, hopefully, it will be successful.

I refer to missionaries and lay volunteers who were in the Third World for many years before returning to Ireland to discover they had no pension entitlements. This issue was raised at the Joint Committee on Foreign Affairs two years ago. Some of them are dependent on supplementary welfare under the Social Welfare Acts and they have been left at the end of their days without any entitlements from the State, except the means tested payments. How much progress has been made in discussions between the Department and the Department of Social and Family Affairs to help people who have spent all their lives doing work in which the Department is involved? Volunteers who travel to the Third World nowadays still find their pension entitlements are affected by the years they spend abroad.

Mr. Dermot Gallagher

I am very sorry about this. I lived in Nigeria and I worked with missionaries. They are incredible people and we fund their development work considerably. We have increased the funding enormously and that is the right way to go. The problem is the Department of Social and Family Affairs apparently has said it is not possible to pay a non-contributory pension to missionaries living overseas without setting a precedent for others nor would it be compatible with EU law. However, the Department brought forward recommendations to deal with this issue. I do not know what they are but, because I am instinctively sympathetic to those involved, I will contact the Department to establish what are those recommendations. My note states: "However, it has brought forward recommendations to address this issue". I feel strongly about this and I will revert to the Chairman. Some missionaries will not return because they have adjusted to living aboard and they are committed to the country in which they are based. It is an anomaly and I do not know how to resolve it.

Deputy Thomas P. Broughan

The key point is whether they have a few stamps or insurance contributions before they left for a career in another country.

Mr. Dermot Gallagher

There must be some imaginative way around it. I do not know.

Chairman

Could volunteers travelling abroad be awarded social welfare credits which would stand to them for pension purposes in later years?

Mr. Dermot Gallagher

I will try to go down any road——

Deputy Thomas P. Broughan

We will have a shot at this after the next general election.

Mr. Dermot Gallagher

I hope I am still around. I am extremely sympathetic and I will see if I can take it forward before I write to the Chairman.

Deputy Thomas P. Broughan

One of the great men in the NGO movement, John O'Shea, said during the debate on accountable foreign aid, which was reflected by Deputies during the Dáil debate last year prior to the general election, that rather than adopting a scatter gun approach to development, we should concentrate on a few countries with whom we had a relationship and a deep empathy and focus on the essentials such as education and health. In the mid-1980s when I was involved in Concern debates we concentrated on four or five African countries, but then we began to provide aid to Asian countries as well. The difficulty is we could enter into a neocolonial relationship with the country concerned. Does Mr. Gallagher have a view on that? He seemed to suggest a quantum leap in development. Members received a useful study entitled, "Turning the Tables: Aid and Accountability under the Paris Framework", via e-mail the other day. One of the countries to which it refers is Mozambique and it makes favourable comments about the work of the Department's staff and the fact that Irish aid is not tied. It states that in Mozambique, for example, there is a lack of communication between the government, parliament and citizens on aid issues and CSOs find it difficult to scrutinise and access information on the budget. Is there merit in strengthening the relationship between the 27 EU member states and countries, such as Tanzania, Mozambique and Uganda, with which we have had a long relationship, with a view to achieving greater accountability? What is the Secretary General's view?

Chairman

The discussion is moving into policy areas.

Deputy Thomas P. Broughan

I am asking a question on accountability and auditing. Would it be easier to take the approach I outlined?

Mr. Dermot Gallagher

I will make a mental reservation and answer on policy. A slight conflict of interest arises in that John O'Shea has been a friend of mine for 30 years. When I ran the aid programme in 1977, at the time of the Cambodian crisis, I probably recommended that the Government give aid to GOAL. It was probably one of the first supports it received from government. I also went to Calcutta with Mr. O'Shea to see the great job GOAL is doing on the ground there. The Department recently gave GOAL €100 million spread over several years, which reflects the work it is doing on the ground. When GOAL officials come into the Department they have nothing but praise for the support they receive and the operation of the Department.

That said, if John O'Shea is wrong on football and development, I will tell him and he is wrong on this issue. These countries are getting 48% or 50% of their GDP from aid. One cannot increase the figure further. Ireland cannot go in and tell a country we will run its health or education services on its behalf. That would simply not be acceptable to a sovereign people and would not work. It is turning the thing on its head. There is no silver bullet. Every NGO except John O'Shea of GOAL will agree with us on that.

I will quote again from the article by the deputy director of Trócaire I cited in my opening statement. It states:

What we cannot do is impose an outdated model which is doomed to failure. If this is the approach we wish to take we are better off keeping the money at home.

I cannot do this. The governments in question are elected and becoming more and more democratic. As I said, in Tanzania we have built up the audit system and influenced the decision to get rid of the governor and board of the central bank and a prime minister. These countries now have robust civil societies and a free media. In Tanzania, not a day passes but the Parliament makes a statement on which the media focuses. People are becoming more and more active and assertive of their rights.

Much as I like John O'Shea, there is no way in this day and age that Ireland can go into a country in some paternalistic way and take over responsibility for running health, education or whatever. One has to work through governments. It is through them that real change comes, as some of the statistics I gave on Mozambique will prove.

On corruption, the Department has strengthened the audit function in Tanzania. Rather than a negative story, I thought what happened in that country was hugely positive in that the clique in the central bank was suddenly thrown over and the President is driving forward an anti-corruption policy. This is what we all want to see. For the first time, Liberia and Sierra Leone have had free elections in which the opposition was elected. We have been involved in developments there. That is a good news story. As Deputy Michael D. Higgins said, if we ran away from the poor because of our concern about corruption, the aid programme would very quickly grind to a halt.

Deputy Thomas P. Broughan

A couple of years ago I landed the Minister for Foreign Affairs, Deputy Dermot Ahern, in a little bother. Having observed the unfolding, unbelievable chaos in New Orleans in the state of Louisiana and the grotesque incompetence of the United States Government, I called on the Minister to send €1 million to the area and was severely criticised by Mr. John O'Shea for doing so. Was the money sent?

Mr. Dermot Gallagher

Yes, we always listen carefully to the Deputy. We sent the money and it was appreciated. It was a token gesture but it was important we made it.

To return to GOAL, it is a great organisation which is doing superb work on the ground. That is the reason I went to Calcutta and the Department gave it €100 million of taxpayers' money for the coming years.

Chairman

A central bank governor's job is up for grabs.

Deputy Brendan Kenneally

I agree we should try to own as many embassies as possible. How many of our ambassadors' and consuls' residences do we own? Do we rent properties for some of them? For how many individuals do we provide residences? Apart from ambassadors, who else is provided with a residence? Is an allowance given to other officials to cover the cost of accommodation while abroad?

Mr. Dermot Gallagher

We try to purchase property. The figure of 34 I referred to in response to Deputy Jim O'Keeffe's question included embassies and residences for ambassadors. We give a rent allowance and what we call an entertainment allowance to other embassy staff. In other words, we provide an allowance to develop contacts and promote the country in every way. In the past, this was given to the person automatically but some years ago, when I took over, we introduced a system of vouched allowances. Staff must vouch for the use of the entertainment allowance and the system is monitored.

Deputy Brendan Kenneally

Do any of our missions have an ambassador's residence and embassy on one property?

Mr. Dermot Gallagher

Yes, in several cases. This depends on the size of the building. London is the obvious example but Paris is also a good example and Moscow is another such case. In some places — where the numbers justify it — we have an Ireland House. In other words, the offices of the Department of Foreign Affairs, Enterprise Ireland, the IDA and Tourism Ireland are located in one place. New York is probably the best example of this but Madrid is another case. There are several of these. It depends on whether the agencies are present in the country.

In some countries, where it is difficult for Enterprise Ireland to operate on its own, it is attached to the embassy and its staff has diplomatic status because it might otherwise be very difficult for them to operate. One such country is Saudi Arabia.

Deputy Brendan Kenneally

My question may stray into policy. Is the Ireland house concept working? It has been suggested to me that some staff do not really communicate with one another and only see one other on St. Patrick's Day.

Mr. Dermot Gallagher

One can have the odd personal difficulty in any institution. I do not think that is happening and I would come down on it like the hammers of hell if I thought it was because it would be ridiculous and a waste of taxpayers' money. What I have tried to do is ensure everybody is aware of everyone else's business plans. It works extraordinarily well in China, for instance. Everyone has one's own responsibility but, in most cases, because of status, the ambassador can open doors and secure a meeting with the chief executive officer of a company in a way that Enterprise Ireland or the Industrial Development Authority cannot. He can open the door for them and deliver. It is critical that business plans be shared. In the Department of Foreign Affairs, we do not want to know the detail of what the IDA is doing with its clients, but we need to have a common strategy, otherwise it is a waste of time. I would throw my hat at it if that were the case.

Chairman

With regard to the overseas aid budget of €914 million, has the Department of Foreign Affairs had any discussion with the Department of Education and Science regarding people who have come from Third World countries as refugees and asylum seekers, some of whom are unaccompanied minors? The education system is under pressure at present to provide these people with English classes. I refer to the policy of integration. Has the Department considered allocating some of its overseas aid budget to some of those people who have come to Ireland recently from Third World countries in order to allow them to develop as individuals and integrate into our society?

Deputy Thomas P. Broughan

I believe that was proposed by a colleague of mine. It would not be a matter for Irish Aid.

Chairman

I have asked——

Deputy Thomas P. Broughan

The Chairman is referring to the education system in Ireland and therefore it should be covered by the education budget.

Chairman

The problem is that the education budget is not sufficient.

Deputy Thomas P. Broughan

Okay.

Mr. Dermot Gallagher

It is a very interesting question. Two or three matters arise, the first of which is that it would not be "DACable". I refer to the Development Assistance Committee of the OECD, which decides what constitutes aid. The closest we have come to it is through our development education programme, in respect of which we have Africa Day, etc. The development education programme helps to build up solidarity — if I can use that strong word — with the people of the Third World. The line Departments, including the Department of Education and Science and the Department of Health and Children, would have a role and we now have a Minister of State responsible for integration. However, apart from development education, the Chairman's proposal is probably outside our remit. It would not be DACable. If the funds available were DACable or usable as aid, we would obviously have to consider the proposal. However, they are not.

Deputy Thomas P. Broughan

The House is debating the Lisbon reform treaty at present. We will also debate it next week and everybody who wants to say a few words thereon will obviously do so. However, it must be noted that one impact of the treaty, which amends the existing European treaties, will be that the European Union will have a legal personality, certainly after 2014. The diplomatic service of the European Union will presumably be in every single country outside the Union. We now have 75 or 76 missions. Does Mr. Gallagher regard the emergence of the European Union as what the "No" side would regard as a state and what the "Yes" side would regard as a friendly——

Chairman

This is beyond the scope of this meeting. The matter is before the House.

Deputy Thomas P. Broughan

The Chairman's colleague, a former Taoiseach, is the EU Ambassador to the United States, who I understand is doing an outstanding job. As time goes on, what will be the implications of EU development for our diplomatic service?

Mr. Dermot Gallagher

I will have to make a third mental reservation. John Bruton, who is a good friend of mine, is doing an outstanding job. There is an Irish foreign service and there will always be one. That foreign service promotes Irish interests robustly and will continue to do so. There is very little thought given to the external actions service. The Commission, which has offices in most countries, will presumably be a significant part of the equation. The fact that it has offices has not in any way interfered with or diminished the Irish foreign service. We have a role to represent this country robustly and effectively and to give value for money. That will be the case until kingdom come.

Chairman

Does Mr. Purcell wish to comment?

Mr. John Purcell

As a member of the Referendum Commission which will have to explain the Lisbon treaty, I was very interested to hear what might be said. I am not any clearer in that sense and will not make any comment. I have very little to say other than to reiterate that we are in a multidonor environment in regard to overseas development aid. It is paramount that there be co-ordination and co-operation between the various donor countries, agencies and the World Bank. It is necessary if we are to counter the risk of duplication. It really would be a sin if this were to occur.

There has been much reference to the need to audit the moneys and to the difficulties that arise. We deal with this at a national level with our counterparts in other countries. We are certainly in touch with the Harmonization in Overseas Audit Practices group but are not yet a member. We see this developing as a way of minimising the audit impact and audit overload in developing countries. One does not want an overly-bureaucratic approach either. One wants enough but not too much, which is sometimes difficult to achieve.

The Paris Declaration on Aid Effectiveness was mentioned. One of the elements of this is to reduce the transaction cost to the recipient, which is very important. We must also recognise the sovereignty of the countries in question and the independence of the national audit institution in each of them. Some of our counterparts have carried out joint audits with the national audit bodies. At international level, aid is being provided through an international organisation of auditors general to build capacity through long-range training programmes and training the trainers in the countries in question. Ultimately, that is the best way of ensuring the money is used properly.

There was something of a bone of contention between Deputy Broughan, some other members and the Accounting Officer in terms of internal audit reports, but this is clearly a question of making an administrative decision. I can see a justification for it in terms of the internal audit reports because, if internal reports or any reports are to be effective, they really must not pull punches and must state the position as it is. Sometimes this can mean individuals are identifiable in the reports. If the reports enter the public domain, they cause different problems, in regard to people's rights, etc. I have seen circumstances in which this has happened and it results in less frank reports, which is not in the long-term interest. The internal audit reports are available to my office, as was stated, and also to the very strong, independent audit committee that operates in the Department of Foreign Affairs. If there is a matter that requires public accountability, I certainly would not be averse to reporting it to this committee.

Deputy Thomas P. Broughan

While we will have a chance to speak about this matter later, it is with very profound regret that I discovered Mr. Purcell intends to retire. He has served the nation with great distinction over the past 14 years or more. When I was previously a member of this committee, it freaked out over the amount of money lost in fraud, which was put at 0.5% of the total budget. I accept that the Department has a difficult role, but by working with our auditors and with foreign auditors would it be able to quantify, even if it is only0.5%, how much of this increasingly important development budget may go missing? Is it not fair that the committee should have this knowledge?

Mr. John Purcell

No, I think the systems are not in place at the moment to support coming up with a real figure. As we increase the amount given in aid and it becomes a larger proportion of State expenditure, the systems will become more sophisticated. We will be into performance measures and indicators.

As a corollary to that, the possibility of coming up with figures that can be backed up with evidence should lead to the type of situation the Deputy would like to see. I understand why the Committee of Public Accounts would like to see this development. If I were in the Deputy's position I too would like to see such a system.

I am reassured from what Mr. Brendan Rogers said from his personal experience in this area. There have been no major frauds. We are concerned that some Irish State moneys are involved when we see media reports of foreign aid moneys being salted away here and there and individuals raiding their country's coffers. Whether it is from Ireland or not, the fact that it is development aid money would concern us.

As representatives of Irish taxpayers, it would concern us if any of this development aid money were to find its way into the Swiss bank account of some dictator or his ministers. More has to be done. However, our systems must become more sophisticated before we are in a position to do more.

Mr. Dermot Gallagher

I agree with the Comptroller and Auditor General. Our concerns about such fraud are why we only have budgetary support in two countries. We would have to be fully confident in the audit systems in other countries before extending the development aid package to them. We only give money to NGOs in countries such as Kenya and Zimbabwe. With the rigorous auditing and evaluation of budgetary systems, we have taken a decision to give budgetary support to countries where we are 100% certain the moneys will not go astray. We are not complacent and we are assured Irish taxpayers' money has not been or will not be embezzled.

Most corruption in development aid occurs in infrastructure contracts. We do not do infrastructure contracts.

Chairman

Does that include housing projects?

Mr. Dermot Gallagher

No. We have contributed a small amount to housing provision in various programmes such as in the 1990s in Zambia, the habitat for the homeless programme and the Niall Mellon Township Trust. We only do housing when there is buy-in from the local government. In the case of the Niall Mellon trust, we have donated €5 million. The South African Government picks up 50% of the costs. It is an exciting project which has had a huge impact on Irish public opinion. There is a development education dimension to it. For example, the hot water in the houses is heated by solar energy. It is the type of project in which we should be involved.

Chairman

I thank everybody for an open exchange of views. I thank Mr. Dermot Gallagher and his staff and the Department of Finance. I find the Department of Foreign Affairs to be the most responsive to Deputies and their needs in the performance of our duties in the Oireachtas and when visiting abroad. We get adequate and excellent briefings at all times.

Mr. Dermot Gallagher

When new third secretaries join the Department, I insist they have absolute respect for Members of the Oireachtas. I remind them that as well as paying us, Members must be elected by the people every five years.

I also insist that anyone who crosses the threshold of the Department or an embassy abroad is to be treated with dignity and respect and helped in every way possible. It is part of the ethos of the Department. I am touched by the Chairman's comments.

Chairman

I am saying that as a former spokesperson for Foreign Affairs. Although I never got my feet under the table in Iveagh House, as an Opposition Member I found the level of co-operation from the Department to be most acceptable.

The committee adjourned at 12.35 p.m. until 10 a.m. on Thursday, 17 April 2008.