COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 26 Jun 2008

Bord na gCon Accounts 2006.

Mr. C. Haugh (Secretary General, Department of Arts, Sport and Tourism) and Mr. A. Neilan (Chief Executive, Bord na gCon) called and examined.

Chairman

The committee is examining the special report of Bord na gCon, covering its accounts for 2006.

I wish to make witnesses aware that they do not enjoy absolute privilege and I draw their attention to the fact that, as and from 2 August 1998, section 10 of the Committees of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons who are identified in the course of the committee's proceedings. These rights include the right to give evidence, to produce or send documents to the committee, to appear before the committee either in person or through a representative, to make a written and oral submission, to request the committee to direct the attendance of witnesses and the production of documents and the right to cross-examine witnesses. For the most part, these rights may only be exercised with the consent of the committee. Persons invited before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to made aware of these rights and provided with a transcript of the relevant part of the committee's proceedings if the committee considers it appropriate in the interests of justice.

Notwithstanding this provision in the legislation, I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official, 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 also refrain from inquiring into the merits of a policy or policies of the Government or of a Minister, or the merits of the objectives of such policies.

I welcome Mr. Con Haugh, Secretary General of the Department of Arts, Sport and Tourism. Will he introduce the delegation?

Mr. Con Haugh

I am accompanied by Mr. Sylvester Carruth, principal officer, and Ms Michelle O'Mahony, assistant principal officer.

Chairman

I welcome Mr. Neilan, chief executive, Bord na gCon. Will he introduce his colleagues?

Mr. Adrian Neilan

I am accompanied by Mr. Dick O'Sullivan, chairman, and Ms Majella O'Connor, financial accountant.

Chairman

I ask Mr. Buckley to introduce the special report on Bord na gCon and the Bord na gCon accounts for 2006.

Mr. John Buckley

When the committee last examined the operations of Bord na gCon in July 2006 following the publication of the Dalton report, the then Comptroller and Auditor General undertook to review certain financial management matters discussed at the meeting and report to the committee on the outcome. In addition, we examined a further set of issues which arose from the audit or public concerns. At least half of the issues of financial consequence related to administration at a subsidiary company of Bord na gCon which runs Shelbourne Park. Certain financial commitments were entered into and expenditure in respect of some of them was not controlled properly. These included: the purchase of a 20 year old generator as new; not getting full value for bar equipment, resulting in a figure of €20,000 in non-effective expenditure; and erecting glazed screens without proper specification or planning permission. A settlement with Revenue became necessary as a result of deficiencies in the arrangements for the procuring of security services. More generally, two managers were in receipt of benefits-in-kind which involved the use of cars supplied by a commercial firm to them. A settlement was also made with Revenue in the case of one of the managers, the cost of which, together with some overpaid travel expenses, was recouped from the manager concerned.

Overall, head office supervision of affairs at Shelbourne Park at the time was not effective, in that there was a division of responsibilities which the chief executive of Bord na gCon saw as excluding Shelbourne Park from his remit. In addition, centrally promulgated procedures covering administration at the tracks were only developed and introduced to Shelbourne Park towards the end of 2000, but these could not be said to have been effective during 2001 when most of the transactions occurred. Much of this took place against a backdrop of a redevelopment of the track during the period 2000 to 2002. This redevelopment ultimately cost €10.6 million before VAT. The outturn on the two contracts was almost double the value contracted for. However, we were satisfied that the extra expenditure was largely attributable to works which had initially been pared out of the specification to conform to budgetary constraints but which were subsequently restored when funding became available from the horse and greyhound racing fund set up at the time. A variation arose on the racing track, work on which cost €1.1 million before VAT. During 2001, while the managing director at the track was either on sick leave or available on a restricted basis, the project was managed with the assistance of professional project managers and architects. Leaving aside the expenditure on the generator, there is no evidence that the money was not applied for the purposes intended.

Turning to administration generally, in a number of instances procurements did not comply with norms. In catering, which Bord na gCon sees as a central magnet for attracting patrons to its race meetings, there were two instances. In one case there was a failure to carry out a tender competition, while in the second the procedure was flawed, resulting in awards totalling €79,000 to unsuccessful bidders. Also in the area of procurement a deficiency in the specification of criteria for an information technology communications hub to facilitate the operation of the tote led to an expense of €1.4 million. However, the report acknowledges that at all times the award committee acted in good faith.

We also set out the facts surrounding the need to incur a cost of €95,000 to unwind a reversionary interest that a former chief executive had conveyed to a tenant of an annex to Bord na gCon's head office. The payment was made because Bord na gCon was seeking was seeking possession to facilitate a redevelopment which did not subsequently occur.

A figure of just less than €4 million was incurred in legal costs in the period 2000 to 2006, of which some €2.3 million arose from the management of personnel related matters. The former chairman has pointed out that the termination decisions were taken in the best interests of the industry and that the demands placed on staff in Bord na gCon were no different than from those that would apply in successful commercial undertakings elsewhere.

During the years our audits indicate that the organisation has progressively been coming to terms with the governance requirements established in the code of conduct for State bodies and has been adapting its internal controls to meet these requirements. However, the slow pace at which it did so contributed to some to the shortcomings outlined in the report.

In the area of governance any lack of clarity will militate against effectiveness. The lack of role clarity was evident, given that the chief executive saw his authority as not extending to Shelbourne Park in 2001. Once matters had been delegated to the managing director at Shelbourne Park, the lack of procedures to ensure definitive management authority during his absence due to illness was evident. A disagreement about functions and vision between the board and the chief executive in 2005 was never fully and openly addressed until the point of no return in the relationship was reached. Notwithstanding these shortcomings, considerable change was driven by Bord na gCon and management throughout the period, as the report acknowledges and documents.

When an organisation operates through small local units, the full range of internal controls and division of duties are not always practical. This demands, by way of compensation, that procedures be centrally promulgated and that greater checking from the centre be imposed, whether in the form of internal audit or otherwise. It is clear that it took some time for the procedures manual to become effective as a source of control and guidance. Maintaining a focus on oversight and conformance with procedures are best achieved through having an active audit committee but this did not pertain for a period.

Carrying out major capital developments through a small local unit, the primary expertise of which is in the area of track management brings increased risks, some of which materialised. The general lesson appears to be that central expertise needs to be developed when an organisation structured on the lines of Bord na gCon is implementing a major capital programme. The report records the views of the former chairman, the current management and the Department of Arts, Sport and Tourism. The accounts for 2006 which also fall to be considered by the committee record a surplus of €1.8 million for the year. In 2006 Bord na gCon received €14 million from the horse and greyhound racing fund and had a net debt of €11.2 million at year end.

Chairman

I call Mr. Haugh to make an opening statement.

Mr. Con Haugh

This special report has its provenance in matters brought to the attention of the former Secretary General of the Department of Justice, Equality and Law Reform, Mr. Tim Dalton, during the course of his independent assessment of corporate governance and related matters affecting Bord na gCon. In February 2006 Mr. Dalton was appointed to carry out this independent assessment and examine the circumstances surrounding the decision of the Bord na gCon to terminate the contract of employment of the chief executive. The Dalton report was published on 4 July 2006 and examined by the Committee of Public Accounts on 6 July that year.

During the course of his work a number of matters outside the scope of his investigation were drawn to Mr. Dalton's attention on the basis that they might merit examination by the Comptroller and Auditor General. Mr. Dalton submitted these documents to my predecessor, the then Secretary General of the Department of Arts, Sport and Tourism, Mr. Philip Furlong, as Accounting Officer for the Department. They were then referred to the Comptroller and Auditor General who informed the Department that to try to establish matters of fact having a significant financial dimension and in the light of other matters that had also come to his attention in the course of his audits of Bord na gCon, he had concluded that an examination by his office was warranted. As the committee will have noted, the report highlights serious shortcomings in the areas of corporate governance, management of capital projects and other propriety concerns during the period 1995 to 2006.

Responsibility to run greyhound racing in Ireland is entrusted to Bord na gCon through its statutory remit. However, the Department of Arts, Sport and Tourism has a duty to the taxpayer to ensure there are appropriate checks and balances in place in order that it can be satisfied that Bord na gCon is complying with the code of practice for the governance of State bodies. While the Minister appoints the chairman and members of Bord na gCon, as well as providing a statutory, financial and policy framework for the organisation, the issues highlighted in the special report clearly come within the remit of Bord na gCon and the day-to-day operational responsibility of the chief executive officer and his staff.

I should point out that from 2003 onwards, which was the first full year of Bord Na gCon reporting to this Department, the Department has, on an annual basis, received written assurances from the chairman of Bord na gCon of Bord na gCon's compliance with the code of practice for the governance of State bodies. In addition, regular contacts with the management in Bord na gCon would have given us assurances that the organisation complied with best practice in its administration.

In his comments on the issues under investigation, I have noted the view of the Comptroller and Auditor General that the findings, which occurred in some cases as far back as the 1990s, should not be read as a commentary on the current operation of Bord na gCon. Since 2006, there have been significant changes in the management of Bord na gCon at board and executive levels with a new chairman, Mr. O'Sullivan, several new board members and a new CEO being appointed.

Since then, the Department's relationship with Bord na gCon has improved significantly, with mutual understanding and respect for each other's roles and responsibilities and, in particular, for the requirements of corporate governance. The relationship with Bord na gCon now mirrors the Department's relationship with the other 20 agencies that report to it. Since 2007, the Department now holds three formal liaison meetings each year with senior management of Bord na gCon. These meetings are used as a vehicle to discuss and review capital development progress, corporate governance and any other relevant matters arising.

In that context, since 2007 the CEO of Bord na gCon has, on an ongoing basis, made the Department aware of the changes and initiatives that have taken place, primarily in the areas of strategy, organisational structure and performance management, which in his opinion have made Bord na gCon more able to manage the areas highlighted in this report.

Since the approval by Government of the publication of the Dalton report and the implementation of its recommendations in 2006, the Department has commenced implementation of the recommendations regarding the tenure of the chairman and ordinary members of the board through the Greyhound Industry (Amendment) Bill and is scheduled to conduct a review of greyhound legislation with a view to bringing it into line with current best practice. It has also overseen an enhancement of the doping control procedures operated by Bord na gCon.

The Department is confident that the special report brings to an end a period of turbulence in Bord na gCon which impacted on its relationship with the Department and believes that Bord na gCon can now concentrate again on the development of the greyhound industry with the ongoing support of the Department.

Chairman

May we publish the report?

Mr. Con Haugh

Yes.

Chairman

I ask Mr. Neilan to make his opening statement.

Mr. Adrian Neilan

I take this opportunity to thank the committee for inviting me and my colleagues from Bond na gCon to attend today to assist the committee in its examination of the 2006 accounts and the special report of the Comptroller and Auditor General on Bord na gCon.

It is widely acknowledged that the greyhound racing industry in Ireland has been transformed over a period of just over a decade. In that time, it has gone from an industry that was, in the main, limited in its overall public appeal and narrow in the field of spectator interest to an industry that is vibrant and modern and has widespread interest and support across all strata of Irish society. With Government support through allocations under the horse and greyhound racing fund, it is now an industry that is in a sustainable period of growth. It currently employs more than 11,000 people and contributes more than €300 million to the local economy each year.

A brief examination of the key performance indicators for the industry between 1995, the year before the fund was established, and 2007 graphically illustrates the significant and sustained growth that has been achieved across all sectors. In that period, attendances at race tracks have more than doubled from 586,000 in 1995 to almost 1.3 million last year; prize money has gone from €2.4 million to more than €12 million; the tote turnover has risen dramatically from €6.7 million in 1995 to €50 million last year; and in the same period, bookmaker betting has gone from €22 million to more than €90 million. Over that time, sponsorship, which is an important ingredient in building a successful industry, has gone up from €610,000 in 1995 to more than €2.1 million in 2007.

It is fair to say that any industry that grows and expands as solidly and spectacularly as the greyhound industry has in recent years will invariably face its fair share of evolving issues and challenges both within the industry and outside it as it goes through a necessary period of transition, transformation and change.

The recent report of the Comptroller and Auditor General, which the committee has indicated it wishes to address today, and the earlier Dalton report, raised issues of concern regarding certain aspects of the organisation and management structures in Bord na gCon as they existed during the periods with which the reports were concerned. Both reports and the hearing held by the Committee of Public Accounts in July 2006 are viewed by the board as valuable contributions in assisting in identifying perceived shortcomings in corporate governance practices and in recommending ways these and other matters should be addressed as a matter of urgency. In addition, the recommendations from a Deloitte & Touche report submitted in August 2006 are giving key focus to the organisation. I assure the committee that these issues have been and are being addressed with considerable urgency.

Bord na gCon's accounts for 2006, which are before the committee today, outline details of the review of management and control systems, including its governance arrangements, which were immediately initiated by the board of Bord na nCon in consultation with the Department of Arts, Sport and Tourism in light of the Dalton report. I will expand on these and outline to the committee the significant and comprehensive changes and arrangements implemented in 2007 and implied commitments to further reforms and improvements deemed necessary that will further improve the performance of Bord na gCon as an organisation.

In 2007, we delivered on many significant changes and reforms. An independent control committee, chaired by Kevin Heffernan and whose members include two vets and a solicitor, has been established. This team meets monthly to adjudicate on any cases and this activity is conducted without any input from the board. It is totally independent and all its findings are routinely published. Bord na gCon, under the existing powers available to it under section 9 of the Horse and Greyhound Racing Act 1999, implemented the new arrangements rather than waiting for the relevant legislative changes. Furthermore, this reform was completed with the appointment of an independent appeals committee chaired by Frank O'Leary and whose members include a barrister and a vet.

The second change concerns the submission of the first five-year strategic plan for the industry to the Department of Arts, Sport and Tourism. The executive team and industry stakeholders were involved in the creation of this plan and it was universally agreed by all. The plan allowed the Government to increase Bord na gCon's overdraft limit to €25 million to put it in a position to complete an ambitious capital development programme that will ensure remaining under developed facilities are brought up to the standard of developed stadiums, thus making a positive capital contribution to overall industry.

A permanent chief executive has been appointed and a significantly improved relationship with the Department of Arts, Sport and Tourism has been achieved under which issues are discussed and strategies agreed. In addition, there is now weekly interaction with Department officials as a means of solving and resolving mutual problems. There have also been a significant number of meetings and increased dialogue with the Office of the Comptroller and Auditor General which has resulted in common objectives been clearly understood.

There has been significant organisational change, with a strong focus on clarity and accountability in roles. The implementation of an industry wide Skillnets training programme, which is funded from the Department of Enterprise, Trade and Employment, has improved the way we do our work. Overall, these initial changes have helped enormously in increasing the morale of employees.

Bord na gCon is implementing a performance management system with a clear focus on key performance indicators. It has delivered a capital surplus of €5.5 million, which represented an increase of more than 250% from 2006 levels as detailed in the consolidated accounts.

Our flagship stadium, Shelbourne Park, delivered a record contribution to the industry of around €2.5 million. Driven by the strategic plan, a number of important yearly accomplishments were delivered, including the following: significant improvements in track maintenance and welfare improvement projects; continued progress in the capital development programme under which a new Limerick site was purchased which will eventually deliver a substantial incremental cash flow improvement; key breakthroughs in terms of product positioning and customer focus; development and advancement of an overall industry Skillsnetprogramme aimed at overall industry training and employee advancement; and significant cost reduction projects delivered by ongoing IT innovation.

Clear divisions of roles have been established between board directors and employees of Bond na gCon. This direction has been driven by the chairman of Bord Na gCon, Mr. Dick O'Sullivan. Except for their contribution at board meetings, the interaction with board directors and the management team is primarily on a requested advisory basis. Board members combine diverse skills and expertise that enable greater strategic direction to be given to the management team. Board agendas are more strategic in nature with more focus on long-term issues.

There is an agreement whereby Bord na gCon runs the horse racing tote in Dundalk with consequential improved synergies and reduced costs for both Bord na gCon and Horse Racing Ireland. The audit committee chaired by Mr. Tony McKenna and supported by the appointment of Deloitte & Touche as external consultants has been reinvented. The committee met four times in 2007 and, in each instance, its report was reviewed at subsequent board meetings. The new performance management system has, for the first time, criteria regarding internal audit findings. A separate legal and procurement department has been established. A common and unified approach fully consistent with Government standards meant that ten tenders and 25 contracts were processed in 2007.

Another beneficial aspect of the industry that tends not to receive much media attention is in the area of assisting fund-raising or hosting of benefit nights at our numerous stadia. I am pleased to inform the committee that, in 2007, more than €7.5 million was raised by various causes, including schools, community groups, sporting organisations and charity groups that used our facilities to raise badly needed funds that would otherwise not have been available to them.

Our industry is vibrant and modern and has growing enthusiasm and support across society and an increasingly impressive status in the world arena. It has the potential to continue to go from strength to strength. It employs more than 11,000 people, a number that can grow with further expansions and significantly enhanced facilities and attractions. This is an industry in its stride. It has and is addressing issues central to its continued growth and success. It is an industry committed to making an even greater contribution to sport and society in general in the years ahead.

This modern and vibrant industry, with its employment level of 11,000 people and a €300 million yearly contribution to the local economy, has witnessed considerable growth since 1995 and the new approaches employed in organisational structure, performance management and corporate governance in 2007 have enabled the organisation to deliver a capital surplus of more than €5.5 million, which represents an increase of more than 250% over 2006 levels, as detailed in the consolidated account. This capital surplus will allow further improvement in prize money and a significant contribution towards our capital development programme, which is vital for the industry.

The greyhound industry has witnessed an exponential entrepreneur-led growth curve in recent years. Many management studies have shown that, in these situations, management structures, systems and processes typically lag behind overall company development. The industry is no different in this regard and we are now addressing these issues in a rapid manner that, coupled with the need to keep a sharp business focus, delivered exceptional industry results in 2007. I am particularly pleased to be in a position to inform the committee that the industry is continuing on its solid growth pattern and all indications are that, despite the current economic slowdown, 2008 will deliver further significant results across all the main sectors of the industry.

Since the events under investigation in this report occurred before the chairman and I took up our new roles, we cannot debate in any great detail the specifics of various areas under investigation. We can, however, discuss in detail with high levels of assurance the actions and steps we have put in place to implement the recommendations made by both this report and the Dalton report.

Chairman

May we publish Mr. Neilan's report?

Mr. Adrian Neilan

Yes.

Chairman

To clarify, are the figures being referred to in dollars or are they misprinted in the report?

Mr. Adrian Neilan

My apologies, as the figures should be in euro.

Chairman

We will publish the report with the correction.

Deputy Pádraic McCormack

The crux of the matter is the Dalton report. I compliment Mr. Dalton on a great achievement, namely, publishing a report in June 2006 despite his only being appointed in February of that year. Some inquiries were ongoing for ten or 15 years without reports being published. Were the Dalton report's recommendations on a more accountable and transparent operation implemented?

Chairman

To whom is the Deputy addressing his question?

Deputy Pádraic McCormack

Mr. Haugh.

Mr. Con Haugh

The report, which was published in July 2006, made a significant number of recommendations, particularly in respect of the tenure of board membership. The implementation of the recommendations requires amending legislation. The Department is working with the Attorney General's office and Bord na gCon on finalising the amendment Bill. Government approval for the Bill's draft heads has been received and we are working on finalising the other elements.

Deputy Pádraic McCormack

Recommendation No. 4 on the appointment of the board for a fixed term of five years and of the chairman for three years is pending legislation.

Mr. Con Haugh

There is a legislative provision in the 1958 Act whereby members are appointed for three years. Mr. Dalton recommended amendments in this respect and in which terms we are working.

Deputy Pádraic McCormack

Are the appointments staggered or do all of the members leave simultaneously?

Mr. Con Haugh

Under the 1958 Act, people are appointed for a number of periods. Mr. Dalton recommended that members could be appointed for two terms, a recommendation to be implemented via the amending legislation.

Deputy Pádraic McCormack

Regarding the generator's installation in Shelbourne Park, what is the result of the investigation? Is the generator still in use?

Mr. Con Haugh

That question is more appropriate to Mr. Neilan.

Mr. Adrian Neilan

The generator is still in use. The outcome of the recommendation in this regard was a review of the issue by PricewaterhouseCoopers. Following the review, it was indicated to the then board of management of Bord na gCon that no further action would be necessary. The key lesson for our organisation is to ensure that satisfactory procurement processes are followed, that is, tendering procedures, identifying need so that the right person can understand the business issues, drafting and issuing of tenders by the correct Department and checking services against expectations.

Deputy Pádraic McCormack

Is the generator still in use?

Mr. Adrian Neilan

I believe so.

Deputy Pádraic McCormack

In the Comptroller and Auditor General's report, figure 2.4 relates to a recommendation concerning expenditure of €10 million at tracks other than Shelbourne Park. I assume the money has been spent because significant improvements have been made to the facilities at the Galway greyhound track and, since 1995 and as acknowledged by Mr. Neilan, elsewhere. The Galway track is first class and its facilities have been significantly improved in terms of customer comfort. Attendance figures have also improved. I presume the €10 million was spent on other tracks.

Mr. Adrian Neilan

Correct. The money was split between various tracks. There has been much development in Galway, Cork, Lifford and Dundalk, but smaller tracks also received an element of capital support to keep their facilities up to standard. Money was also spent on small discrete projects necessarily undertaken to aid the overall facilities.

Deputy Pádraic McCormack

Good work was undertaken at the Galway track. I assume similar improvements were made elsewhere.

Mr. Neilan referred to something that is a regular feature at the Galway track, namely, benefit nights. Deputies, business people and others are often asked to sponsor these enjoyable family occasions fully or partly. The board should encourage the various track managers to pursue these advantageous benefit nights. I have no further questions.

Chairman

My main concern is whether Mr. Dalton's recommendations have been implemented in full. Will the delegation pinpoint recommendations that have not been implemented? Mr. Dalton recommended that a senior official of the Department be appointed as a member of the board of Bord na gCon. Has that happened?

Mr. Con Haugh

The Department's policy on having officials as board members works on a case-by-case basis. Previously, from January 2003 to 2005, a member of staff of the Department was on the board of Bord na gCon. That person left the board. We do not have a representative of the Department on the board but in the context of the wider numbers on it, as recommended in the Dalton report, we will address the issue.

Chairman

The report was published in 2006 and in 2008 the Department does not have a representative on the board. It was one of the key recommendations.

Mr. Con Haugh

It was one of the recommendations and we will consider it. We will examine it in the context of new appointments.

Chairman

There was a recommendation that the use of local stewards to conduct testing should not be introduced because the use of outsiders provides greater assurance. What is happening? Is there a link with the Irish Sports Council which has been developing its programme to provide an independent system?

Mr. Dick O’Sullivan

One of the first things I did, two months after being appointed, was to look at the control committee which was made up of board members. Those reported for transgressions at tracks came before board members. This was not satisfactory and an issue on which Mr. Dalton commented. Board members could recognise people coming in, etc. I chaired two of them and, just before Mr. Neilan came on board, decided we would not wait for Government legislation to provide for an independent control committee. Under existing regulations, we could appoint one. We appointed an independent committee, chaired by Mr. Kevin Heffernan, a well known figure, formerly of the Labour Court. There was also a doctor, a vet and an ex-official. The committee meets on a monthly basis and the board has nothing to do with it. It does not know who is before the committee or what penalties are imposed. It is carrying out a totally independent job but not costing an arm and a leg. If we were to fund an independent regime similar to the Turf Club in horse racing, it would cost millions each year to run. I hope the legislation will mirror what it going on.

We regard integrity as the basis of a successful greyhound racing business. I was happy to hear Deputy McCormack comment on the track in Galway. It is the same at tracks all over the country; the people coming to them must have confidence in what is going on. As a former veterinary surgeon, I have great regard for animal welfare, on which we spend €2 million. We have an independent set-up — our laboratory is independent. We never have dealings with the head of the laboratory. Whether that continues or we join with another body such as the Irish Sports Council could be discussed. From a commercial point of view, it might be a good decision. I am happy this system is in place; it was a key matter to give us confidence and implement the recommendations of the Dalton report.

Chairman

Since introducing the system, what is the level of detection?

Mr. Dick O’Sullivan

To demonstrate to the Chairman the degree of independence, I cannot answer that question. It would have to be put to the chairman of the control committee, Mr. Heffernan. The committee does not report to us.

Chairman

Surely if there are detections, the board should be made aware of them.

Mr. Dick O’Sullivan

There are detections but we do not discuss at board the number, what or who is detected, or where they come from. If one were to start doing that, people could be pinpointed. People appear on a monthly basis before this group which includes individuals from Galway, Kerry, Dublin and Longford. The board is not involved.

Chairman

If there are detections and people are found guilty of administering drugs to greyhounds, it should be a matter of record and disciplinary measures taken. As the governing body of the sport, the board should be aware of this and should take appropriate action. Mr. Neilan is Accounting Officer for the organisation.

Mr. Dick O’Sullivan

To clarify, where there are transgressions, where people appear before the committee and are found guilty and fined, their names are published. Everybody knows and it is not alone a report to the board but to the whole country.

Chairman

That was the point.

Mr. Dick O’Sullivan

The fine is not the problem, it is the appearance of one's name in the newspaper. Nobody escapes.

Chairman

There are detections and the details are published.

Mr. Dick O’Sullivan

Yes, I should have clarified that first.

Deputy Seán Fleming

I thank Mr. Neilan for his comprehensive update report. We wish him every success in his new position. I have a major issue with the last paragraph of his statement. This report was published by the Comptroller and Auditor General three and a half months ago, on 13 March. I refer to the final paragraph of the opening statement of Mr. Neilan: "Since the events under investigation in this report occurred before the chairman and I took up our new roles, we cannot debate in any great detail the specifics of various areas under investigation." It is not a personal criticism but that must rank as the most wholly unsatisfactory situation we have been presented with on this committee, where a report is issued by the Comptroller and Auditor General and 15 weeks later those before us are saying they are not in a position to discuss the details.

I know it was before the time of the current CEO of Bord na gCon and that it is unfortunate that they were not the people involved. From the perspective of the Committee of Public Accounts, it is farcical that they cannot discuss a report issued three months ago. That is not for the delegation to answer but is a matter for the committee in terms of how it does its business. It is not satisfactory.

When did the board of Bord na gCon give corporate clearance to the report? Has it given corporate approval at any stage?

Mr. Adrian Neilan

The report was issued in draft format to us on 13 February. It was put before the board which was asked for its views on it. Its views are set out in the report, on which it has signed off.

Deputy Seán Fleming

Is it mentioned in the report?

Mr. Adrian Neilan

Yes.

Deputy Seán Fleming

It is mentioned on page 30. Bord na gCon cleared the draft report and I take it the final report is accepted.

Mr. Adrian Neilan

Absolutely.

Deputy Seán Fleming

Bord na gCon has accepted responsibility for the report before it but is not in a position to answer any questions on it. Mr. Neilan understands my point. If I were asked to sign off on a report, I would make it my business to know what was in it and not put myself in a position——

Deputy Pádraic McCormack

The Deputy would read it from cover to cover.

Deputy Seán Fleming

I would, with the annexes.

I thank Mr. Haugh for his opening statement. His Department took over dealing with Bord na gCon in 2003. For a great part of the period under investigation, this matter was included in the remit of the Department of Agriculture, Fisheries and Food. It is unsatisfactory that persons from this Department who were responsible for matters during the period under investigation are not before the committee. I know they are not the current Accounting Officer because responsibility has been transferred to another Department. I, therefore, understand Mr. Haugh's position. He is not responsible for what happened when the matter was included in the remit of the Department of Agriculture, Fisheries and Food. Many of the matters mentioned in the report are under investigation and we have no one from that Department to deal with them. This is not a criticism of Mr. Haugh. It is how we do our business but we must find a mechanism. Somebody in the Department of Agriculture, Fisheries and Food has knowledge of them and could have helped us today.

In his opening statement the Comptroller and Auditor General referred to various issues, including that the procurement process did not comply with norms. He carried out a detailed investigation and stated many matters were unsatisfactory. Since 2001, his office has issued unqualified audit reports. Six years later he has returned to highlight a range of issues in respect of which proper procurement and Government procedures were not complied with. Where was he for the past seven years if these matters are only being reported on now? The Chairman may find this an unusual question. The first thing I do is examine the report in front of me. On page 2, the Comptroller and Auditor General states in paragraph 1.10, "I have accordingly issued unqualified audit opinions on the financial statements for all years". However, we now have this report. I was here on a previous occasion when the Comptroller and Auditor General qualified the accounts of Teagasc owing to unvouched mileage expenses by a member of staff. I find it hard to reconcile all of the problems which were the subject of a special report and a clean audit report being issued in the intervening years. It is a straightforward question.

Chairman

May we deal with the questions to Mr. Haugh first?

Deputy Seán Fleming

Yes.

Chairman

I find it incredible that one of the key recommendations of the Dalton report was that the Department be represented on the board of Bord na gCon but two years later it had no such representation. It is a gigantic leap of faith that Mr. Haugh as Accounting Officer and the Department have——

Deputy Seán Fleming

I was going to ask the Chairman's question. As a supplementary question, will the Secretary General outline the circumstances and explain why the departmental official resigned from the board of Bord na gCon? Did the circumstances surrounding the resignation cause concern within the Department? Did this lead Mr. Haugh to immediately address the matter?

Mr. Con Haugh

The Dalton report states consideration should be given to restoring the arrangement, whereby the Minister appoints a senior official of the Department to be a member of the board of Bord na gCon. It does not state such a person must be a member. I cannot tell the committee for certain but I am not sure whether any appointments have been made in the past while. As I stated previously, in the context of a widened Bord na gCon, the opportunity for doing so would be greater.

Chairman

If I was an Accounting Officer coming before the committee, the first thing I would do, in view of the history, would be to protect my own butt and the interests of taxpayers and the Department by putting in somebody to have his or her hand on the pulse. There is nobody there.

Mr. Con Haugh

It is fair to say State boards have a responsibility to carry out their duties efficiently. Having somebody there means his or her responsibility is to Bord na gCon primarily. It would not be taken that the person concerned was a squealer for the Department.

Chairman

No, but he or she would be a representative of the Department to ensure compliance.

Mr. Con Haugh

It would not be his or her responsibility to ensure compliance. That responsibility rests with the chairman and the full membership of Bord na gCon, not one member of it.

Chairman

Let us get real. If a Minister or a Secretary General of a Department were to appoint somebody to represent the Department, that person would not be a squealer. He or she would represent the interests of the Department, the Government and the taxpayer. That has not happened.

Deputy Pádraic McCormack

Does the Minister appoint the members?

Chairman

Yes.

Mr. Con Haugh

Returning to Deputy Fleming's question, the Department assumed responsibility in 2003 on the change of Government. I have no reason to believe my colleagues at the Department of Agriculture, Fisheries and Food would not have discharged their responsibilities in the same way as we do.

Deputy Seán Fleming

We would like the opportunity to ask these questions. I am not casting any doubt.

Mr. Con Haugh

A code of practice has been in place for many years for all State bodies. As the Deputy is aware, a number of responsibilities flow out from it.

Deputy Pádraic McCormack

Is the appointment of a person from the Department awaiting legislation?

Mr. Con Haugh

No, there is room within current legislation to do so, should the Minister decide to appoint a departmental representative.

Deputy Pádraic McCormack

Deputy Fleming should have a word with the Minister.

Deputy Seán Fleming

I understand. I am not casting aspersions on the Department of Arts, Sport and Tourism or the Department of Agriculture, Fisheries and Food; I am only stating, from the perspective of the Committee of Public Accounts, that it would be useful to have before it all of the individuals involved during the period under investigation. Will the Comptroller and Auditor General comment on what I thought was an obvious point when I read the first page of the report?

Mr. John Buckley

I would like to make a number of points. We took over responsibility for the audit in 2001, at which point it was a commercial State sponsored body in transition. We found all of the matters catalogued in this report. We took the view in the first year that we needed to leave a reasonable space for Bord na gCon to put its house in order. The issues raised would not necessarily impact on the audit certificate. A materiality limit needs to be breached for the accounts to be qualified.

Deputy Seán Fleming

The Teagasc report involved an issue to do with travel expenses.

Mr. John Buckley

To widen the matter a little, because I understand where the Deputy is coming from, the appropriation accounts volume includes many reports on issues of public concern. However, few of them impact on our opinion because they are not at such a materiality threshold in money terms that we could not state the accounts give a true and fair view of, or properly present, the transactions of the year. Taking the full range of our responsibilities, we examine probity — how people do business; regularity — that the transactions are such that money is applied for the purpose intended — and governance. Many of these features feed into our reporting rather than certification work, if the Deputy sees what I mean. Unless there is a material breach, our audit certificates are not necessarily qualified.

We also took the view that the organisation was in transition, as the then Comptroller and Auditor General pointed out in his 2004 statement before the Committee of Public Accounts. He explained that it had not all been plain sailing and that the organisation was gradually coming to terms with the requirements of the code of practice and other corporate governance requirements. He signalled that, while he had given a clear audit report, it did not necessarily mean that everything was rosy in the garden. It does not preclude the production of a more discursive report on issues, as we have done, in response to the committee or other concerns, including the responses of the Department and the organisation, as well as the various players involved.

Deputy Seán Fleming

I understand what the Comptroller and Auditor General is saying but he must appreciate that people who do not have a technical background would view it more simply, argue that this is a report covering all issues and ask why it was not referred to before now. The Comptroller and Auditor General is explaining it but it is difficult for the ordinary person to make the subtle distinctions that he is making between the certification work and reporting work of his office and the fact that they are two different areas. He has explained it to us but I do not think the man in the street would grasp the subtleties of what he has said. I appreciate what he has said but I am sure he can understand where I am coming from.

There are a number of questions arising from the report, but if they cannot be answered now, I will accept that. A few items intrigued me, including the fact that the two managers of the racecourses in Dublin had an arrangement with a garage for a car. What was in it for the garage? Where was that transaction recorded? What was the background to that? It sticks out as a curious issue. Does anyone know anything about that? If someone can answer, well and good. If not, I will not push it.

Mr. Adrian Neilan

The key thing is that we are not aware of the transactions. I cannot talk about them because I do not know enough about them, except what is stated in the report. The key point, which I stand over, is that all of the recommendations from the report in terms of what we need to do as an organisation to improve have been taken on board. In that context, the organisation will ensure everyone understands the code of employee conduct and what they can or cannot do or offer. We are spending a lot of time and effort ensuring the code is distilled for everyone.

Deputy Seán Fleming

Is it the case that Mr. Neilan does not have the old information?

Mr. Adrian Neilan

That is correct.

Deputy Seán Fleming

There is a lot in the report about litigation, much of it apparently relating to staff issues. If Mr. Neilan cannot answer this, perhaps the Comptroller and Auditor General can, given that he produced the report. How much was paid out owing to staff difficulties and allegations of bullying or harassment? Separate from the people who were at the centre of the allegations, did anyone on the board examine those issues from Bord na gCon's point of view? If there were allegations of harassment or bullying, they may have underlined a number of the litigation cases. The morale of the board was also referred to in the Dalton report. Did anyone, apart from those against whom the allegations were made, investigate the claims on behalf of the board from an independent point of view? Who was instructing the legal team on behalf of the board concerning the settlements?

Mr. Adrian Neilan

Again, one of the fundamental points emerging from our strategic plan is that we will not be successful in achieving the goals set out in the plan unless we ensure the employee environment is at its best. People must be happy in their roles and know what their job is and we must ensure proper performance management is in place. New initiatives in this regard include Skillnet training, more general employee training and regular performance reviews. For example, every month, each stadium manager participates in a teleconference with the other managers where we discuss how the stadiums are performing and how everything is progressing in general terms. My brief is to ensure the employee environment is as good as it can be, going forward. I cannot talk about what it was like in the past.

Deputy Seán Fleming

Mr. Neilan can understand that it is very frustrating for us. The report is only three months old and no one can discuss the detail of it with us. If this report was issued a year or two ago, it would be understandable but it was only issued this spring.

Chairman

I apologise for interrupting the Deputy but——

Deputy Seán Fleming

I am frustrated with where we are today.

Chairman

Mr. Neilan referred to the internal practices. Deputy Fleming is asking about terminations of employment which were a major problem in the past.

Deputy Seán Fleming

There is a full page devoted to it in the report.

Chairman

What internal practices are in place now?

Mr. Adrian Neilan

I guess I can talk about our current practices. We announced to the Department last year that, given how the industry was evolving and the competitive challenges on the horizon, we had to become much more efficient in the running of our business. In consultation with the Department and various union bodies, we put in place a voluntary redundancy programme. We have offered the redundancy option to all members of staff. People who were interested have applied and been accepted. It is a voluntary programme.

Deputy Seán Fleming

How many weeks pay per year of service have been offered in that redundancy package?

Mr. Adrian Neilan

The package is seven weeks' pay per year of service.

Deputy Seán Fleming

Is it acceptable to Mr. Haugh for the 20 agencies under the aegis of the Department to have redundancy packages that offer seven weeks' pay per year of service? That is the current package on offer.

Mr. Adrian Neilan

That is correct.

Deputy Seán Fleming

Is that normal across all agencies?

Mr. Con Haugh

We do not have a normal redundancy package in any of our other agencies, as far as I am aware. This is a commercial State body and the requirements are different than for——

Deputy Seán Fleming

Who is the shareholder?

Mr. Con Haugh

It is a statutory body set up under the 1958 Act.

Deputy Seán Fleming

Is one of the Ministers a shareholder?

Mr. Con Haugh

No, there are no shareholders at all. It is a statutory body.

Deputy Seán Fleming

Did the Department of Finance clear that package of seven weeks' pay per year of service? Is that available across all commercial State bodies? Has Bord na gCon obtained clearance from the Department of Finance?

Mr. Adrian Neilan

The package has been negotiated with the union representatives. We conducted an analysis of the average redundancy package available and we have put it before——

Deputy Seán Fleming

Is that the average in the private sector?

Mr. Adrian Neilan

Yes. It is the average in the private sector in terms of what is attractive to people.

Deputy Seán Fleming

According to Mr. Haugh, there is no redundancy package in place in the other agencies. How has Mr. Neilan benchmarked the seven weeks package within the public service if the Department has no other such packages? Has the Department of Finance cleared that?

Mr. Adrian Neilan

As I say, we have——

Deputy Seán Fleming

I am referring to the current arrangements.

Mr. Adrian Neilan

We have a human resources manager who conducted an industry-wide review. He has a lot of experience——

Deputy Seán Fleming

Based on what industry? Bord na gCon is the industry.

Mr. Adrian Neilan

Correct.

Deputy Seán Fleming

How could he conduct an industry-wide review when Bord na gCon is the industry?

Mr. Adrian Neilan

The review was not only in the public sector but also in the private sector.

Deputy Seán Fleming

Perhaps Mr. Haugh can answer my question or we may need to address it to someone from the Department of Finance. It appears that in this commercial State organisation — and perhaps there is nothing wrong in this — there is a voluntary redundancy package in place of seven weeks' pay for each year of service. I am simply asking if that is standard across the public sector or has Bord na gCon been given special permission to do that. Is it in line with the public service generally? Mr. Haugh has said that there is no general scheme of which he is aware. Where did this scheme come from and did it get clearance?

Mr. Con Haugh

We have a number of agencies reporting to us, including two commercial State boards, namely, Horse Racing Ireland and Bord na gCon. All the others are statutory agencies which are governed by normal Government rules and regulations. There is no redundancy package, that I am aware of, approved for them.

Chairman

All of this raises another question. Mr. Neilan gave us a very detailed report on Bord na gCon's development in recent years. Why is there a redundancy package in place in a developing industry? Is it a weeding out process or what is its purpose?

Mr. Dick O’Sullivan

May I intervene? Without taking from what Mr. Neilan has said, I wish to make an observation. There is an employee culture in all companies which generally develops over a number of years. If staff feel the company is not successful or if the company is under a cloud for a number of years, as was the case with Bord na gCon, it affects the employees negatively. If, in a commercial operation such as Bord na gCon, one does not have employees who are geared up to the current day challenges of commercial activity, one will never get anywhere. I presume that in the management appraisals carried out by the company, five, six or perhaps seven people were identified who Mr. Neilan would like to change, for one reason or another. Indeed, they may have wanted to change jobs themselves. I presume he offered them the redundancy package as a way out, rather than saying they did not fit the bill anymore. The redundancy package is a way of changing staff and bringing in people who are more qualified to do the jobs in question.

Deputy Fleming has spoken about his frustration but I found it very frustrating to go into a semi-State company. I was a civil servant at one time but when I went back into the public sector, I was very frustrated. One is trying to turn the boat as quickly as possible but one cannot do it. What we must learn is that one turns the boat according to the rules, but one must turn it. That is where Mr. Neilan is coming from. One cannot just appoint a racing manager — even if that person is the best racing manager in the country — to a sales and marketing role. That may explain the matter. It is only a small number of people.

Deputy Seán Fleming

This is a commercial semi-State body, so perhaps the committee should write to the Department of Finance asking whether seven week redundancy packages are available across the State or if this is an isolated case. Does it require approval? We need to clarify that with the Department.

Chairman

We can consult the Department.

Mr. Adrian Neilan

I can revert to the committee with a breakdown of the package because I want to be sure in regard to communicating the correct information.

Deputy Seán Fleming

Perhaps Mr. Neilan will correspond with us directly after this meeting.

Mr. Adrian Neilan

I want to be sure the committee has the correct terms. Further to Mr. O'Sullivan's remark, it is a matter of predicting the challenges that lie ahead and putting the right people in new roles to progress the industry. We are trying to achieve that in a manner that is fair to everybody.

Deputy Seán Fleming

I wish to raise two points with the Comptroller and Auditor General arising from his report. Can he summarise the amount paid out in employment severance agreements?

Mr. John Buckley

It was €2.3 million.

Deputy Seán Fleming

How much of it comprised litigation?

Mr. John Buckley

Three main cases involving managers accounted for approximately €1.5 million.

Deputy Seán Fleming

Was that divided between three people?

Mr. John Buckley

Yes.

Deputy Seán Fleming

Did they have ongoing pension entitlements subsequent to their severance?

Mr. John Buckley

I cannot answer that. Our focus was on their exit package. It would make sense that they have such entitlements.

Deputy Seán Fleming

Is Bord na gCon paying pensions for any former employee?

Mr. Adrian Neilan

Yes.

Deputy Seán Fleming

Presumably, the three people who shared €1.5 million will continue to receive pensions from the organisation, in addition to their severance payments.

Mr. Adrian Neilan

It depends on the specific circumstances of each case.

Deputy Seán Fleming

Perhaps Mr. Neilan will answer my question by way of correspondence. I do not wish the three people in question to be identified. The report does not mention whether their pensions are payable for life.

I take issue with the Comptroller and Auditor General on a small matter pertaining to the lease of the building in Limerick city. His report notes that the head office is a listed building and that planning would have been complicated but also states: "However, the annexe was not a listed building and there was no restriction in relation to the development on that score." With the greatest of respect, that sentence is not accurate from a planning point of view. If even part of a proposed development site is within the curtilage of a listed building, the complications of the listed building attach to the planning application. The previous paragraph of the report noted that Bord na gCon wanted vacant possession of the annexe because it had development plans for the site. Were the plans investigated?

Mr. John Buckley

We have seen the proposals made by the developer but these did not amount to anything.

Deputy Seán Fleming

They did not proceed.

Mr. John Buckley

Yes.

Deputy Seán Fleming

I shall leave it at that. I wanted to make a point about the annexe and the curtilage.

Deputy Róisín Shortall

I shall start off by asking questions regarding the board of Bord na gCon. Perhaps Mr. Haugh will inform us on the board's present composition.

Mr. Con Haugh

The board comprises a chairperson and six ordinary members.

Deputy Róisín Shortall

Do vacancies exist on the board, apart from the Department's own nominee?

Mr. Con Haugh

I do not think so.

Deputy Róisín Shortall

There is one.

Mr. Con Haugh

There is no vacancy on the board for appointments. The board has its full complement of chairperson and six members, each of whom has a term of office.

Deputy Róisín Shortall

The Department could add another person.

Mr. Con Haugh

We cannot add another person because the legislation does not allow us to do so at present. As I noted earlier, the 1958 Act would have to be amended to increase the size of the board.

Deputy Róisín Shortall

The Department had the option of appointing a nominee but did not take it up.

Mr. Con Haugh

When the Minister made the appointments, we did not nominate somebody from the Department because Mr. Dalton advised that consideration should be given to that. People have not been appointed from the Department.

Deputy Róisín Shortall

It is very hard to understand why that is the case. Perhaps Mr. Haugh can explain it. Given the relationship between the Department, the board and the industry in general, it is difficult from our point of view to understand why the Minister did not take up that option.

Mr. Con Haugh

When vacancies arise, the Minister takes the opportunity to find people with certain expertise and talents who can contribute to the board of Bord na gCon. He has exercised that right on several occasions over the past 18 months. However, nobody from the Department has been appointed to the board.

Deputy Róisín Shortall

How long has it been since there was a Department representative on the board?

Mr. Con Haugh

Subject to correction, a Department representative sat on the board between early 2003 and 2005.

Chairman

Mr. Haugh did not answer an earlier question regarding why that person resigned.

Deputy Róisín Shortall

I was about to ask that question.

Mr. Con Haugh

I understand the person left for personal reasons.

Deputy Róisín Shortall

Was there any question of the Department receiving a complaint about the manner in which that person was treated on the board?

Mr. Con Haugh

No, I think the member of staff would have said that the board meetings were quite challenging and that issues were addressed energetically.

Deputy Róisín Shortall

Perhaps the Secretary General will explain what he means by "challenging" and "energetically".

Mr. Con Haugh

The Dalton report and the Comptroller and Auditor General's report both state that significant challenges were faced by the board. They also refer to the energy of members of the board. The person in question resigned for reasons that were personal to herself.

Deputy Róisín Shortall

It would seem natural for the Minister to appoint a replacement representative from the Department. Given the challenges that the board was facing, there was a clear interest on the part of the Department to ensure the changes recommended in the Dalton report were implemented.

Mr. Con Haugh

The Dalton report was published in July 2006. This happened before we received the report.

Deputy Róisín Shortall

Being aware that serious challenges and difficulties existed within the board, how was it that the Department did not continue to be represented?

Mr. Con Haugh

The Department took the view that it had arrangements in place whereby the board reported to the Department in an appropriate manner. I am not sure that somebody on a board is the ideal guardian of corporate governance. While the person would obviously be able to make his or her point of view known, I am not sure he or she would be able to guide the entire board on issues.

Deputy Róisín Shortall

The Secretary General said the view taken was that the Department's relationship with the board was appropriate in the circumstances. Perhaps he will explain the nature of the oversight role played by the Department.

Mr. Con Haugh

The Department would have held liaison meetings on a regular basis with the chief executive of the board to discuss important issues in respect of strategies. We annually received the board chairman's annual certification to the Minister that there was compliance with corporate governance requirements. Following from that was the annual audit of the accounts of the board carried out by the Comptroller and Auditor General. We had in place three layers of checks and balances with Bord na gCon, as we have with all our other agencies.

Deputy Róisín Shortall

At what level within the Department would those meetings have taken place?

Mr. Con Haugh

They would have taken place at assistant secretary level, supported by the principal officer in the unit and probably the assistant principal officer. Typically the assistant secretary, principal officer or assistant principal officer meets the chief executive of Bord na gCon and some members of the senior management team.

Deputy Róisín Shortall

At what point did the Department see things being turned around and progress being made in tackling the underlying problems in Bord na gCon?

Mr. Con Haugh

The Dalton report brought a number of issues to a head and crystallised them. This committee examined the report in July. New management was put in place in the organisation since. As I said, the Department has a relationship with Bord na gCon that mirrors its relationship with other bodies. There is no heat in the system.

Deputy Róisín Shortall

Is the Department satisfied with how things are going, or is there still some way to go to reform the corporate governance procedures and practices of the board?

Mr. Con Haugh

There has been a new CEO in place since January 2007. Our view is that the relationship is positive. We have regular interaction with the board. The accounts for 2006 have been authorised by the Comptroller and Auditor General and we are not aware of any issues. As I said, the issues raised in the special report relate to a particular time in Bord na gCon.

Deputy Róisín Shortall

It is not enough to say it is in the past and that things are different now. Issues arise on oversight of what went on both for the board and the Department since 2001. One cannot just say it is history.

Mr. Con Haugh

From 2003 the Department has exercised its responsibilities in a very meticulous manner and dealt with all the issues that needed to be dealt with. The issues raised in the Comptroller and Auditor General's report are day-to-day issues. Unless we have somebody riding shotgun on Bord na gCon, we would not be aware of them. If it were checked, we would probably find the board was not 100% aware of what was happening at the various tracks.

Deputy Róisín Shortall

They may have been day to day issues but they were fundamental.

Mr. Con Haugh

There is no way the Department can assume responsibility for a board which has its own responsibilities. There were checks and balances and we made arrangements for checking they were complying with what they were supposed to comply with. We have a regular arrangement for doing this.

Deputy Róisín Shortall

It seems to most reasonable people that the Department having a representative on the board would receive some assurance that progress was being made.

Mr. Con Haugh

That is not the way State boards report. If one examines the code of practice for the governance of State bodies, there are clear responsibilities as to how relationships with the parent Department are to function. It is not a question of having a member on the board telling the Department what was said at the board meeting. There is a formal procedure by which that is done.

Deputy Róisín Shortall

I shall move on to the board and ask a few questions. Deputy Fleming raised the issue of the voluntary redundancy or early retirement package on offer. How many have availed of it since it was introduced?

Mr. Adrian Neilan

Approximately six or seven people have availed of it. So far we are broadly happy with how many have signed up for it. Others might have requested to participate but on the balance of their role and where we saw them in their future in the organisation we did not accept their applications.

Deputy Róisín Shortall

How many of those six or seven were from the management grade?

Mr. Adrian Neilan

One person was at head office management grade. Others were on various track or at administrative levels. It is top to bottom.

Deputy Róisín Shortall

Mr. Neilan said the package on offer was seven weeks' pay for each year of service. Were those terms exceeded in the case of any individual?

Mr. Adrian Neilan

My apologies to the committee, I am clarifying the seven weeks aspect. There are two weeks pay by statute in every programme.

Deputy Seán Fleming

We understand.

Mr. Adrian Neilan

Therefore, the figure of seven might have been reached by three and two. I will write back to the committee with the exact terms.

Deputy Róisín Shortall

What is meant by three and two?

Mr. Adrian Neilan

I need to clarify what the terms were for the committee.

Deputy Seán Fleming

It might be five weeks, including the two, or seven weeks, including the two.

Mr. Adrian Neilan

That is correct, but I need to clarify the matter. What was Deputy Shortall's question?

Deputy Róisín Shortall

Were those terms exceeded in the case of any individual?

Mr. Adrian Neilan

No.

Deputy Róisín Shortall

Therefore, that was the maximum available and it was a standard package.

Mr. Adrian Neilan

Yes.

Deputy Róisín Shortall

On the Tralee catering contract where one of the tenderers was allowed to tender twice, contrary to proper public tendering procedures — this was identified by the Comptroller and Auditor General — did any investigation of the incident take place in the board and, if so, was any disciplinary action taken?

Mr. Adrian Neilan

I cannot comment on what action was taken, but we recognise that it was a serious breach of tendering guidelines. In our current tendering for catering services there was an absolute commitment to the procedure. The procedure has been rolled out by our legal and procurement department to ensure it is consistent with all guidelines. We are happy we have addressed all the shortcomings in the tendering process and will continue to do so.

Deputy Róisín Shortall

As Deputy Fleming said, it is very unsatisfactory that we are falling back on the dead man defence. Somebody must be in a position to answer questions on what happened regarding the issues covered in the Comptroller and Auditor General's report. I do not know if Mr. Haugh is in a position to respond. I want to know what happened regarding that issue.

Chairman

Surely there are minutes of board meetings and decisions made and by going back over the minutes of the meetings one could answer many of the questions being put. Has Mr. Neilan examined the minutes of the meetings?

Mr. Adrian Neilan

The approach we took with this report was that many had been involved in its drafting. It was delivered by reviewing all the minutes available at the time and interviewing various people. What we took from it was the recommendation to ensure absolute adherence to procurement guidelines in the future. That is our position. I am sorry we cannot talk about what happened 11 years ago but I appreciate the concern.

Deputy Róisín Shortall

I am sorry but we want to speak about what happened 11 years ago. That is the purpose of the report and this meeting. It is not satisfactory that Mr. Neilan says this is history and has nothing to do with him. We need to know what happened and how these very important issues were dealt with. Somebody must be accountable for it.

Mr. John Buckley

These contracts were awarded by the board of the Tralee track, which is a subsidiary. Our audit found no evidence that any action had been taken as a result of the award.

Chairman

One thing that puzzled me was the mention of statutory redundancy payments being made. I thought statutory redundancy payments could be made only where a job was closed off and that one could not use them for persons taking early retirement. How could one use statutory redundancy payments to encourage or facilitate people to leave if they were being replaced by others?

Mr. Adrian Neilan

I shall write to the committee with the full details of the programme and its aims. In many cases, due to various IT innovations which automated many of the processes, the position would no longer have been needed.

Deputy Róisín Shortall

On the membership of the board, did any current board members serve on the board before 2006?

Mr. Dick O’Sullivan

I understand there are two.

Deputy Róisín Shortall

Two. What is the current practice regarding bonus payments for staff within the board?

Mr. Adrian Neilan

The current practice, as distinct from the previous practice, is that in coming up with our budget for the following year, we consider various matters. The budget is compiled three or four months in advance of the incoming year and it is effectively agreed by the board. The budget sets out various targets and one which we consider is the amount of funds left as capital surplus. Last year, that figure was €5.5 million, as set out in our strategic plan.

If we hit that collective target — the full organisation has to hit the target in order for anyone to get a bonus — the bonus plan will be implemented. Depending on a person's grade, a percentage of the bonus will be given out. That works throughout the full organisation.

Deputy Róisín Shortall

How much was paid out last year in bonuses?

Mr. Adrian Neilan

The rough figure would be €400,000.

Deputy Róisín Shortall

What would the maximum payment have been?

Mr. Adrian Neilan

The maximum payment would have been circa €25,000.

Deputy Róisín Shortall

With regard to the very considerable subvention to the board from Government, is there potential in the near to medium future for the industry to cover its own costs? Much progress has been made in terms of making it much more commercially viable in recent years. Is there potential for the industry being able to wash its own face in that regard?

Mr. Dick O’Sullivan

To give a small example, we have seven or eight tracks we would term as developed. These include Galway, Shelbourne Park, Lifford, Dundalk, Harold's Cross and Mullingar. These tracks are commercially viable but the undeveloped tracks are not. The Limerick track, at this time, is losing €250,000 per year. We have to subvent that track to a loss because there is a significant greyhound population around the city, as well as a big following, but the track is a disaster. The Cork track makes €750,000 a year and there is no reason the Limerick track will not be every bit as good if it is developed.

This answers the Deputy's question. The horse and greyhound fund has been the injection which has given this industry the real go-ahead it has had. This was helped by the vision of the former chairman and we are working to the same formula of that marvellous vision.

To come back to the fund, we are the envy of every country in the world. Greyhound racing has collapsed in England and is on the way down in America. Continental Europe does not have it. We have the industry thanks to the fund. In addition to the commercial viability of greyhound racing — it is our aim to have it self-financing — another major aspect which is sometimes forgotten or criticised because of gambling issues is that greyhound racing in rural Ireland in particular is a facility that is badly needed.

If one goes to a rural track, such as Tralee, there may be younger people upstairs, with families or visitors having dinner. However, downstairs and sitting in a warm atmosphere with a carpet under them and nice tables will be the ordinary plain people who are the backbone of the greyhound business. The Government and the Oireachtas — it was an all-party decision to fund greyhound and horse racing but I am speaking about greyhound racing — did a marvellous job at a time when post offices and Garda barracks are being closed.

I saw a big initiative recently from the GAA concerning people living alone in rural Ireland. Greyhound racing is the answer to this and if one walks through any of the tracks in the country, it is marvellous to see the different levels of society intermingling. It is the common sport of all the people.

I take my hat off to that decision, which is money well spent. I would stand before anybody to outline its merits.

Deputy Pádraic McCormack

The Galway case is now a viable track. It almost closed before.

Deputy Róisín Shortall

I accept what Mr. O'Sullivan has said in that the commercial success of the industry has been phenomenal in recent years. It also plays a very important social role and like race meetings, these are places where the rich and poor mix and it is sometimes very hard to tell which is which, as somebody once commented on the crowds at race meetings.

In the context of the commercial success of the industry in recent years, I have some concerns over two areas, on which I would like the delegates' views. The first relates to the Dublin tracks in particular, where there is very high turnover. What is the potential for money laundering and is it an issue at all? It has been said these meetings are occasions for families to come out together, etc., but there is an issue about young people and children in particular gambling? Do the witnesses share that concern or is it at the point where it is a problem?

Mr. Adrian Neilan

To address the two points, one of factors we are trying to bring to this organisation is a process of management, a way in which we ensure our money is spent wisely. There is a growing cost focus in this organisation. We have bi-weekly manager meetings where we review accounts at various facilities, which must report across a number of key performance indicators. We look at how each track is performing.

Given that kind of cost focus every month, we can quickly spot if there are any deltas. We look at figures based on a per head basis, so a big figure cannot be masked. The figure is divided by the number of people attending so we know how Galway is doing versus Dublin, for example. We also have an internal auditor function and that person, as advised by the audit committee in conjunction with Deloitte & Touche, would come up with what we call a risk register. That would consider the main risks to the overall organisation, which would be detailed. The audit committee would select where would be the highest risk and that would determine where investigation is required.

Over the past year, for example, various audits would have been conducted at all our tracks. In as much as possible and within our control, we ensure everything is done properly.

Deputy Róisín Shortall

Is there evidence to any extent?

Mr. Adrian Neilan

There is no evidence of money laundering.

Deputy Róisín Shortall

It is very hard to pick up on it.

Mr. Dick O’Sullivan

I saw four dud €50 notes one night in Lifford but it is certainly not a general problem coming before us. We have no evidence of it. It is a very small community of people going to the tracks, particularly those who would bet heavily. They are well known.

I have been going to dog or horse race meetings since I was very young. It is like drinking in that if people handle things and learn to use them properly, there is no problem. Maybe it makes people quite street-wise.

Mr. Adrian Neilan

In terms of the concern on betting, we do not allow any betting by under age people.

Deputy Róisín Shortall

That is not true.

Mr. Adrian Neilan

I will expand on the point. Families with children come to our tracks. They are under the responsibility of the parent and the parent needs to understand that. We put the onus on them.

Deputy Róisín Shortall

Do you accept bets from children?

Mr. Adrian Neilan

It is the responsibility of the parent to make sure everything is done properly.

Deputy Róisín Shortall

Yes, but there is an issue there. Certainly children use the tote on a widespread basis at all the tracks.

Mr. Adrian Neilan

We do not accept bets from children.

Deputy Róisín Shortall

What do you mean?

Mr. Adrian Neilan

It is basically the responsibility of the parent.

Deputy Róisín Shortall

Is Mr. Neilan saying he does not accept bets from children? What does that mean?

Mr. Dick O’Sullivan

It means the father or mother is beside the child.

Deputy Róisín Shortall

That is not true. I have seen it often myself. At the dogs, children place bets on the tote all the time.

Mr. Adrian Neilan

Our view is that it is the responsibility of the parent to make sure things are done properly.

Deputy Róisín Shortall

Saying it is the responsibility of the parent is a different thing. Do you accept bets from children at the tote desks? What is the advice to staff?

Mr. Adrian Neilan

Our direction to tote staff is not to accept any bets.

Deputy Róisín Shortall

I find that very hard to believe. I have spoken to people who work at the tote and I have seen it with my own eyes. There does not seem to be any obstacle to children of any age putting on bets at the tote.

Mr. Adrian Neilan

That is the direction we give. Perhaps it is something we need to push harder.

Deputy Róisín Shortall

The board needs to consider its policy in that regard. There are long-term implications for children who are facilitated in gambling.

Chairman

In the report of the Comptroller and Auditor General, he spoke about poor tender documentation in the award of a printing contract to a company which had a connection with a board member. This is mentioned on pages 17 and 18 of the report. Is printing still outsourced in the two Dublin tracks and, if so, was a new tender publicly advertised and a competition held since 2005?

Mr. Adrian Neilan

It is all internal printing. This is because of the cost savings as identified.

Deputy Thomas P. Broughan

I welcome all our guests. I apologise for missing part of the meeting, but I had another meeting. I have one or two questions about the accounts. With regard to subsidiaries, I note that in 2006 a Galway agricultural show society consented to the assignment of the lease from Bord na gCon to Galway greyhound stadium, another subsidiary created for the purpose of running racing. Why did that happen? What was the rationale, in terms of the board's operation, for having so many subsidiaries?

Mr. Adrian Neilan

This is a historical structure that we have inherited. We consider at all times what is the best and most efficient way to run the organisation. While I cannot speak in great detail on the Galway set-up, I knew there was involvement with a Galway show society and that was how we acquired the greyhound track. Over time, in most of these cases, we would look to take ownership. It is an evolving structure. We continually look to see the benefits of the subsidiary committee and whether it results in too much of an administrative overhead despite its advantages. We look at these things closely and plan to continue to do so.

Deputy Thomas P. Broughan

Much of the material we are talking about is historical, but it is still the case, obviously, that a great deal of discretion is allowed to subsidiaries. For example, the local track manager determines spending on advertising.

Mr. Adrian Neilan

Sponsorship is a litmus test of the public's perception of the sport of greyhound racing as being something with which they want to be associated. Thus, each local general manager has the wherewithal to entice new sponsors. Sponsorship deals could be on a signage basis or as part of an overall stake in which a firm sponsors a race and is signed for a year. It is a key focus of ours to maximise sponsorship return at all our locations.

Deputy Thomas P. Broughan

With regard to some of the key findings in the report, particularly corporate governance, can we say now, a couple of years on, that the recommendations in section 4.6 are now in place or in the process of being put in place? I refer to the failure to clearly outline the functions reserved to the board and those delegated to the executive, the division of duties between the CEO and the boards, the tendency for the chairman to act as an executive chair, and so on. Can we say that most of the issues referred to in that section and the other conclusions of our report have been dealt with?

Mr. Adrian Neilan

Absolutely. We have a very strong momentum in this area. All of the recommendations in this report have been implemented and in some respects it has been driven by the chairman, who has a very clear view on the division of roles between his board and my executive team.

Deputy Thomas P. Broughan

The dysfunctional nature of the audit committee in the past was mentioned. Has that structure continued into 2006 and 2007?

Mr. Adrian Neilan

Yes. The audit committee is now chaired by the director of Bord na gCon, Tony McKenna, and supported by Deloitte & Touche. Also, in 2007 it was embellished by the addition of a board director who is an accountant by profession. The committee has met four times a year and we have followed all the recommendations of Deloitte & Touche in terms of process. We are happy with the amount of work we have done in that sector in 2007 and will continue to do in 2008.

Deputy Thomas P. Broughan

In the 2006 accounts I notice reference to deferred taxation whereby the company obviously made provision for possible liability. Has that matter been dealt with? On the taxation side, are there any other issues relating to the amazing and extraordinary events — astonishing developments — to which this report and the Dalton report allude?

Mr. Adrian Neilan

In all cases in which there were concerns about tax liability, the board made full disclosure of those liabilities to the Revenue Commissioners. As far as I understand, settlements have been made with the Revenue Commissioners across all the issues identified here.

Deputy Thomas P. Broughan

With regard to corporate governance, to which my colleague referred in general terms, given the existence of an active director of corporate governance and also the ODCE, are there any issues of director performance over the period in question — the period covered by this report and the Dalton report — which are being investigated or are the subject of a report being prepared by the Director of Corporate Enforcement, Mr. Appleby?

Mr. Adrian Neilan

I am sorry; could the Deputy clarify the question?

Deputy Thomas P. Broughan

It is a function of the ODCE to invigilate all boards and those — including myself, for example — who act as directors in the performance of their duties of corporate governance. Are there any ongoing investigations by Mr. Appleby and his organisation into the performance of directors as mentioned in the report of the Comptroller and Auditor General and the Dalton report? In other words, will there be any further action in this regard other than the work of the Committee of Public Accounts and the Comptroller and Auditor General?

Mr. Adrian Neilan

It is my key desire and that of the board that we move forward. A signal of that is whether we have to come before the PAC on an ongoing basis. I hope this will not happen. At this point I understand that all investigations have been concluded; there are no ongoing investigations. As I mentioned earlier, from an audit perspective we engage quite closely with Deloitte & Touche and ensure that if there are any key areas on which we need to improve we accept its recommendations and implement them.

Deputy Seán Fleming

I have a general question on the industry. Bord na gCon has 11 subsidiaries, most of which are individual race tracks. Can the representatives give us a picture of the number of tracks that are in private ownership and not owned by any of the subsidiaries, which Bord na gCon probably licenses and regulates? How do the witnesses deal with the financial arrangements? How do the private tracks fare commercially vis-à-vis Bord na gCon’s? Did Bord na gCon give them grants to upgrade their facilities, or were they entirely privately funded?

Mr. Dick O’Sullivan

The private tracks play a big role. They are focused on not losing money.

Deputy Seán Fleming

The nearest one to me is in Newbridge.

Mr. Dick O’Sullivan

The track in Newbridge is owned by the Cox family and does good business. It washes its face each year and makes a profit, but a very small one. We subvent it to an extent each year and provide backup services with regard to quality of the track, the boxes and the integrity side. We do that much, as we do with all private tracks. What is the annual subvention?

Mr. Adrian Neilan

There is an operating grant of €40,000.

Deputy Seán Fleming

Does it pay Bord na gCon for the services provided?

Mr. Dick O’Sullivan

It does not. We take the tote takings. That is our profit.

Deputy Seán Fleming

Does it cover the €40,000?

Mr. Adrian Neilan

Absolutely.

Deputy Seán Fleming

In that case Bord na gCon makes money from the private tracks. It is a net beneficiary.

Mr. Adrian Neilan

We are.

Deputy Seán Fleming

That is fine. I have no problem with it.

Mr. Adrian Neilan

That is the basis for why we might——

Deputy Seán Fleming

Are there many private tracks?

Mr. Adrian Neilan

There are approximately eight private tracks, of which the most developed are in Dundalk, Lifford and Newbridge.

Mr. Dick O’Sullivan

Some would struggle but for the good of the industry we keep a track such as that the one in Longford going because there is a great number of greyhounds in the area.

Deputy Seán Fleming

What about the track in Kilkenny?

Mr. Dick O’Sullivan

For three or four years we have been trying to build the track in Kilkenny. Perhaps it will happen some day.

Deputy Seán Fleming

There is also the track in Thurles.

Mr. Dick O’Sullivan

That is a private track which, again, is just about washing its face.

Deputy Seán Fleming

They are stand-alone commercial organisations. Bord na gCon takes the tote money from them and provides services.

Mr. Adrian Neilan

Correct.

Deputy Seán Fleming

I just wanted to have a general picture.

Deputy Thomas P. Broughan

Regarding the catering contract at the track in Tralee mentioned in the report, did any heads roll? What action was taken in the matter?

Mr. Adrian Neilan

That is a repeat of Deputy Shortall's question and the answer is as stated by Mr. Buckley.

Chairman

As that wraps up our business, I ask Mr. Buckley to address some of the issues raised.

Mr. John Buckley

The report was a statement of facts and evidence relating to specific issues that we were asked to undertake following previous meetings. We set them out in so far as we were able to gather evidence. In future audits we will continue to review all these issues, including probity, regularity and corporate governance. We shall take into account what was said in this discussion and report on any material case in the future, if warranted.

Chairman

I thank Mr. Buckley. The committee has decided not to pass the note today and will defer disposing of it because we must reflect on what we have heard today and discuss some of the issues raised. We shall dispose of it next week or in the near future. I thank all those who attended. We have a responsibility to ask hard questions, to which we expect to receive answers. Generally, we have received a positive response and will consider what we have heard, as will the Comptroller and Auditor General. Is it agreed to defer disposal of the special report on Bord na gCon and the Bord na gCon accounts for 2006 until a future date? Agreed.

The witnesses withdrew.

Chairman

There is no other business. I am looking for approval to arrange a meeting for Thursday, 3 July. The agenda will include special report No. 59, Management Information Systems in the Institutes of Technology Sector; the 2006 report of the City of Cork Vocational Education Committee and special report No. 8, National Educational Welfare Board -Lapses in Internal Control. The committee agreed in private session the running order for the meeting. Therefore, we shall invite delegates to attend on a staggered basis in order that they will not have to sit idly by outside.

I thank everyone for attending.

The committee adjourned at 12.25 p.m. until 10 a.m. on Thursday, 3 July 2008.