COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 18 Dec 2008

FÁS Annual Report and Financial Statements 2007 (Resumed).

Mr. Brian Geoghegan (Former Chairman, FÁS) and Dr. John Lynch (Former Director General, FÁS) called and examined.

Chairman

I make witnesses 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 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 need to be 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. Brian Geoghegan, former chairman of FÁS, Dr. John Lynch, former director general and former chairman of FÁS, and Mr. Gerry Pyke, retired former assistant director general with responsibility for FÁS corporate affairs. I understand that Mr. Geoghegan and Mr. Pyke will make opening statements and Dr. Lynch does not propose to do so. I also welcome Mr. Denis Rowan, assistant director general of FÁS and ask him to introduce his colleagues.

Mr. Denis Rowan

I am accompanied by Mr. Patrick Kivlehan, director of internal audit, and Mr. Con Shanahan, director of finance.

Chairman

Perhaps Mr. Geoghegan would make his opening statement.

Mr. Brian Geoghegan

Thank you, Chairman, for inviting me to the meeting today. I am pleased to be of whatever assistance I can be to the committee. The Comptroller and Auditor General in his Special Report No. 10 clearly identified examples of unacceptable departure from procurement norms in a division of FÁS. I welcome his and the committee's efforts to bring this investigation, which began with the receipt of an anonymous letter by the then Tánaiste in 2004, to a speedy conclusion.

I was privileged to have served as chairman of FÁS from January 2001 to December 2005, having previously served as a board member of the organisation since 1992. I was an Irish Business and Employers Confederation, IBEC, nominee to the board. During my chairmanship I continued in my full-time role as director of economic affairs with IBEC. I have worked both in the public and private sectors during my career. Prior to joining one of IBEC's predecessor organisations, the Federation of Irish Employers, I was deputy director of the Central Statistics Office.

The challenges facing FÁS in 2001 were considerable. It continued to be seen as the organisation whose only remit was to help deal with the scourge of unemployment. Ireland was a very different place compared with even a few years previously as the labour market turned around completely and demand for skills was very high. An in-depth review of strategy was started with wide-ranging consultation. The review was completed towards the end of 2001 and implementation began.

FÁS responded well to the challenges facing it. In apprenticeship, for example, demand was at record levels and climbing rapidly. FÁS, in co-operation with the institutes of technology, met that challenge in large part through new and more flexible working arrangements. Another example was the task of implementing a decision to bring numbers on community employment schemes, CE, closer to the needs of a society then nearing full employment. That was a major and difficult job implemented at the coalface by dedicated and skilled FÁS employees.

There has been comment on the increase over recent years in the FÁS budget. Close to 40% of the FÁS budget was and is absorbed by direct social welfare substitution payments to participants on CE and other schemes, where allowances are linked to social welfare rates. Furthermore, the massive rise in demand for training of apprentices led to significantly greater payment of allowances. Thus from an overall budgetary management perspective a fresh focus on productivity and innovation was necessary.

I recount these examples, Chairman, as background to my observation that in my experience there were many examples of excellent work, dedication and skill by the staff of FÁS at all levels throughout the country. I make this point with emphasis because I know that morale in the organisation has been badly affected by recent events.

I conclude by noting that I, as chairman, had the benefit of a non-executive board that was hard-working, committed and highly professional. In addition to regular board business, all served in one capacity or another on various sub-committees. The time commitment was considerable as all held other full-time jobs. I have no hesitation in saying that the board was well supported by an able and dedicated director general who had strong qualities of leadership and vision.

Chairman

Can we publish your opening statement?

Mr. Brian Geoghegan

Absolutely.

Chairman

The committee has, on numerous occasions, supported your view that the staff in FÁS do excellent work in the communities. What is happening has seriously demoralised them. We fully support what they are doing and sympathise with them in what they are going through.

Mr. Brian Geoghegan

To be clear, Chairman, I am not referring to what is happening here in the sense that it is affecting that.

Chairman

We are sensitive to that also.

Mr. Brian Geoghegan

I understand that.

Chairman

Perhaps Mr. Pyke would make his opening statement.

Mr. Gerry Pyke

I have filed a statement with the secretariat of the committee. It runs to a few pages and, in the interest of moving the business of the committee forward, I do not intend to read through it. With your permission, Chairman, I will highlight a few of the key points in it. It says a little about my professional history, deals with the trips which have been the subject of discussion at the committee and tries to set the context of the working relationship I had with Mr. Craig.

I retired in early March of this year, after 42 years in the public service, the last 20 of which were spent in FÁS. At the time of my retirement, there were six head office departments reporting to me and I was secretary to the board. One of those departments was corporate affairs. The committee will appreciate that as a retired person I do not have access to all the documentation that FÁS has furnished to the committee, nor do I have knowledge of or access to any legal advice that might have arisen in the context of FÁS working with the committee. In dealing with the issues before the committee, I am relying on memory.

The second part of my document deals with the trips. I took the trips under arrangements then applying, which have been clearly stated by both Mr. McLoone and Mr. Molloy as inappropriate. My statement in the document acknowledges that they were wrong and inappropriate. In an effort to be helpful, however, I have illustrated some of the reasons for travelling and gave examples of the trips. Whatever about the arrangements, the document shows that these trips were both necessary and useful.

Several paragraphs attempt to set out the nature of the working relationship with Mr. Craig. I hope the committee finds the document useful. Anything I can do here to help the committee will be my pleasure.

Chairman

Can we publish your statement as supplied to the committee?

Mr. Gerry Pyke

Of course.

Chairman

I inform members that the committee has received a letter from Mr. Gregory Craig, who has declined the invitation of the committee to appear before it to give evidence in accordance with section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997. I will read the letter. It is dated 15 December 2008 and addressed to the secretary of the Committee of Public Accounts. It relates to the Committee of Pubic Accounts meetings dealing with FÁS matters.

Dear Secretary,

I refer to letter dated 13th December 2008. [That was the letter inviting Mr. Craig to appear before the committee today.]

I am currently reviewing the transcripts associated with your Committee's meetings with FÁS and will shortly send a review of areas that are inaccurate, in order to correct mistakes of fact and mis-statements relating to me, and my work in FÁS which were raised during the Committee's proceedings. You will appreciate that my review of the transcripts is based on my own knowledge and memory of the matters raised and without access to a whole range of documentation, emails and reports associated with my time in the Corporate Affairs Department of FÁS.

In relation to your invitation to appear and give evidence to the Committee, it has been over 7 months since I have attended work and notwithstanding any communications your Committee has had with FÁS, I am advised that it would be unprecedented for a "suspended employee" to appear before your Committee and give evidence which may be at variance with my employer. I am further advised that my attendance on Thursday would prejudice any future action or proceedings I may take against FÁS. Accordingly, I will not be in a position to attend until these matters with my employer are resolved.

Your Committee will be aware that I appealed the "suspension" received from FÁS in a letter received 1st December. In that letter I asked for management to immediately withdraw the suspension, as it is in breach of all FÁS procedures. I also requested FÁS, as my employer, to ensure that the necessary resources be put in place for me to engage with the Public Accounts Committee under Section 10 of the Act. For your Committee's information, I have received no response to this letter to date.

Yours faithfully,

Gregory Craig

Director, Corporate Affairs.

Before I call on members to raise issues, I would like to say that today's meeting represents the fifth public meeting the committee has held as part of its examination of FÁS. At the end of each of the last four meetings, the committee has sought additional information from FÁS.

While we have received huge volumes of material, the committee has been frustrated in doing its work for the following reasons. First, some of the material arrived late, which did not allow members an opportunity to analyse material. Second, some of the information that arrived was incomplete and we have had to ask FÁS for more comprehensive breakdowns, especially in areas of expenditure like capital development, advertising, travel and subsistence, where we were given global figures. Third, much of the data we received came in a format that was difficult to analyse; it clearly had not been analysed by FÁS prior to sending it to us and we have had to ask FÁS for more details. Fourth, some of the information was redacted or censored, which made it difficult to follow. Fifth, in certain cases, the committee was refused access to information that was central to our examination.

Had we got greater co-operation from FÁS, especially in the earlier stages of our examination, we would have moved on from FÁS by now. I make these points because if we are to do the job we were put here by the Dáil to do, and ultimately by the people of this State, we have to be given access to full documentation. Until we get that and analyse it, we cannot make findings and recommendations to deal fully with the issues involved.

That said, the committee has devoted a huge amount of time and resources in examining FÁS, including a number of private meetings, and today we have reached a stage where we hope we will begin preparing an interim report based on our examination to date. It will allow the Comptroller and Auditor General to conduct a comprehensive review of issues in FÁS, which is due to begin in early January.

I will now ask the committee to open its questioning with matters that are relevant to Mr. Geoghegan. I call first on Deputy Jim O'Keeffe, who will be followed by any other members who wish to raise matters.

Deputy Jim O’Keeffe

I listened to Mr. Geoghegan's opening statement which touched on a couple of areas, including the responsibilities of the board. Mr. Geoghegan was apparently a board member for ten years prior to the full development of FÁS, and chairman for five years from January 2001. With that long experience, he will be aware of the code of practice for the governance of State bodies. I am sure he will be fully conversant with all the details. Does he accept that, as part of that code of practice, "it is the specific responsibility of the board to ensure that competitive tendering is the normal procedure in the procurement process of State bodies"?

Mr. Brian Geoghegan

Yes.

Deputy Jim O’Keeffe

Does he also accept that in an annual report to the Minister, the chairman is required to affirm compliance with the procurement procedures?

Mr. Brian Geoghegan

Yes.

Deputy Jim O’Keeffe

Some of the issues of considerable concern to this committee include the fact that procurement procedures were not followed properly in quite a number of instances. We might recall that in one instance a company seemed to be in receipt of carrying out work in advance of the completion of the tendering and contract award procedures. That was in the science challenge programme. Another contract was awarded despite that the procurement process was still in place. The person who got the contract did not even appear to have submitted a tender. That concerned the Opportunities 2003 exhibition. In another instance, payment was being claimed for advertising services and percentages were added on to the bill for subcontractors at a cost to FÁS of €160,000. In another instance, highlighted by the Comptroller and Auditor General, terms of payment were agreed in arrears. That was the Opportunities 2005 exhibition.

What oversight did the board have of these practices? How informed was the board and if it was not informed, why not? That is what is of concern to us.

Mr. Brian Geoghegan

First, I am aware of the series of issues from a reading of the Comptroller and Auditor General's report. I do not have a copy of INV. 137, which has been referred to by this committee. That was presented to the board at a later stage. I just wanted to make that clear. Of course, I am concerned with what has emerged. I am quite sure that all the other board members would have been very disappointed, not to say surprised, that that emerged.

As I said in my opening statement, the board took its responsibilities very seriously. At regular meetings we had updates from an audit sub-committtee, which was chaired by a very capable and educated person. Her name has been mentioned here as Cathy Crowley. Her attention to that job, and that of the other members of the audit sub-committee, was pretty intense. There were regular meetings and a strong agenda. They were working to a set of guidelines which, as the Deputy said, are set out for all State or semi-State bodies. Those parameters were set and demanded by the organisation. As far as I was concerned, as chairman of the board, I was chairing a body which was in compliance with all of the requirements in those guidelines. That is a fact.

We did have issues, of course. In the normal course, one does not have an organisation of the scale of FÁS and its budget without having problems. Part of the safety net for an organisation like that, however, is the existence of a series of controls. Separately, FÁS did and does have a specific internal audit function. That internal audit function was headed up in my time by, if I may say so, a person who was keen and dedicated. I did not know him especially well, but he appeared at the board on a number of occasions. I would say he was the kind of person who was ideal for that kind of job — in other words, someone who was not going to be pushed around. From the board's perspective there was every reason to be confident that the parameters, guidelines and assurances that were set down were being followed.

The events that transpired following the start of the investigation began, as I have said, with an anonymous letter which was formally passed on to me as chairman. That was the subject of a detailed discussion between myself and the then director general. As a result of that, an internal investigation was begun. Out of that — we can perhaps go into this aspect — came the series of findings by the Comptroller and Auditor General. It was in one particular division. I would like to think — I am at a remove here — that it was an isolated case.

Deputy Jim O'Keeffe has listed a number of cases. In terms of structure and approach, however, many issues in other cases came to the board which were the subject of questioning by the board and where the board pushed, if I may use the word, the executive in respect of compliance with procedures. Sometimes in certain areas one can see that an executive would like to push things along quickly in order to get things done but I can tell the committee that the then board and, I am sure, the present board, did not allow that to happen, and would not stray from the parameters of compliance with guidelines. In saying that I am not suggesting that the executive was suggesting shortcuts but rather the board was excessive in its demand that guidelines would be followed.

Deputy Jim O’Keeffe

The issues highlighted by the Comptroller and Auditor General would seem to focus on more than just shortcuts. There seem to be other activities that could not be condoned.

Mr. Brian Geoghegan

Pardon me, I did not imply that either. I was referring to my comment on what came to the board. The Comptroller and Auditor General highlighted serious issues by any standards.

Deputy Jim O’Keeffe

Is the brief answer that the board had no idea that these activities were going on?

Mr. Brian Geoghegan

If the board was aware of any of this, I can tell the Deputy that action would have been taken.

Deputy Jim O’Keeffe

The guidelines in the code of practice are fairly positive that the chairperson must report to the Minister and affirm compliance with the procurement procedures. Of concern to us on the committee would be what did or did not happen in the case of FÁS here, and perhaps that it has wider implications for other semi-State bodies.

Mr. Brian Geoghegan

I read the transcript of the committee's most recent proceedings. I read a detailed and in my view, clear statement of the function of internal audit by Mr. Niall Saul. The functions of internal audit, both the board committee and the audit, would be seen as very important elements in support of the board in discharging that function.

Each year meetings would be held with the Comptroller and Auditor General to discuss issues. Agendas were set on the basis of risk and so on. I do not have documentation but I clearly recall each year a folder which, in effect, went through, in my memory, perhaps between 50 and 100 issues to be signed off in respect of compliance with guidelines. It was not taken lightly. This was not simply a question of ticking boxes and saying that everything was fine. It was not done that way.

Nevertheless, the issues now identified were not known. Certainly, they were not known to me and were not known to the audit committee. There is a question mark, and I would expect the outcome of this committee's investigations and the detailed one by the Comptroller and Auditor General may well give us answers as to how that kind of outcome could have continued without the board's knowledge.

Deputy Jim O’Keeffe

What review of the effectiveness of the system of internal financial controls was carried out by Mr. Geoghegan's board or by him on behalf of the board?

Mr. Brian Geoghegan

There was an annual process of audit. There was also an annual examination of the accounts. The accounts were submitted, examined and signed off by the Comptroller and Auditor General each year. The management structure was in place, as far as I was concerned, to ensure that at all levels there were people checking the work, responsibilities and discharge of functions, particularly in the area of financial matters, at all levels.

From memory, I cannot recall whether we did have a root and branch review of financial systems. I am not sure. Perhaps Mr. Pyke, who was secretary at the time, may well remember if we did. However, I would have been quite confident that the board and the management of the organisation had in place systems which would pick up the kind of things that we are talking about.

Deputy Jim O’Keeffe

The problem for us on the Committee of Public Accounts is that each year the chairman of a State body is required to sign a statement on the system of internal financial control to the relevant Minister. In Mr. Geoghegan's case, on behalf of the board of FÁS, each year he acknowledged the responsibility of the board for ensuring that an effective system of international financial control was maintained and operated. Mr. Geoghegan concluded his statement with the following:

I confirm that in the year ended [in this instance] 31 December 2004, the Audit Committee, on behalf of the board, conducted a review of the effectiveness of the system of internal financial controls.

That is not in place as an empty formula.

Mr. Brian Geoghegan

Absolutely not. As I stated, and I repeat, at no stage, in my view, did the audit committee or the board take any of the responsibilities, particularly in that area, as empty formula or boxes to be ticked. This would always have been seen as a serious matter where, in effect, the responsibility of the board and that sub-committee, was constantly to challenge the executive and constantly to probe. That, I would see, was the responsibility of the board. That declaration, which is a formal and required one, was signed in good faith.

Deputy Jim O’Keeffe

Of course, I accept that. Was the necessary review carried out?

Mr. Brian Geoghegan

I believe so. Clearly, the system was not sufficiently strong to pick up the kind of things that we are talking about. I am as much at a loss as to how that could have happened in the circumstances as anybody else.

Deputy Jim O’Keeffe

This leads me on to the anonymous letter. Apparently, none of these issues were picked up until the anonymous letter was sent on by the Minister in October 2004. Was Mr. Geoghegan made aware of that anonymous letter?

Mr. Brian Geoghegan

The anonymous letter was sent to me, as chairman.

Deputy Jim O’Keeffe

It was to Mr. Geoghegan. I see.

Mr. Brian Geoghegan

Quite how it was sent I cannot remember.

Deputy Jim O’Keeffe

It does not matter.

Mr. Brian Geoghegan

It came in an envelope from the Department, as far as I can recall. I did not keep a copy of it, by the way.

Deputy Jim O’Keeffe

None of us seem to have been able to get a copy of it but that is not an issue here.

Mr. Brian Geoghegan

I recall the shock when I read that letter.

Deputy Jim O’Keeffe

Was that the first idea Mr. Geoghegan had that something was seriously wrong?

Mr. Brian Geoghegan

I am going to be very careful, Chairman, if you do not mind. I want to be as helpful I can. That letter made allegations in respect of a particular individual and if those allegations were correct, of course there were serious implications for the conduct of financial affairs in a particular part of FÁS.

It was taken very seriously, as I have said. It was certainly taken very seriously by me and by the then director general. Immediately, internal audit was asked to investigate it as a matter of urgency. I have to say during the course of that investigation — the committee has already gone through the chronology of that——

Deputy Jim O’Keeffe

Yes, but I am more interested in the broader issue. Mr. Geoghegan was shocked when he got that letter. Are the issues——

Mr. Brian Geoghegan

I am sorry to interrupt Deputy O'Keeffe. Let me put it this way. I am quite sure many people here have seen anonymous letters in their day. "Is this for real?", is the question that immediately comes to mind. Is it something that has substance? But the allegations were so specific and potentially serious that of course it was shocking if it were true.

Deputy Jim O’Keeffe

Apart from having the specific issues put into the system for investigation by the internal audit committee, etc., did the board then, at Mr. Geoghegan's instigation, take any initiative to review the effectiveness of the systems of financial controls at that time, in October 2004, following on from the shock of being apprised that something serious was afoot? Did the board take steps to review the effectiveness of the system of internal financial controls when, in October 2004, it was apprised that something serious was afoot?

Mr. Brian Geoghegan

The matter was referred to internal audit. The audit committee would have dealt with it in the normal course of events. It was taken seriously. We did not make this matter public.

Deputy Jim O’Keeffe

I am not referring to the specific issues to which the letter refers.

Deputy Pádraic McCormack

There is a vote in the Dáil, so I must arrange a pairing. I will return as soon as possible.

Chairman

That is fine.

Mr. Brian Geoghegan

I understand what Deputy Jim O'Keeffe is saying.

Deputy Jim O’Keeffe

I am not referring to the specifics. A number of broad issues arise here.

Mr. Brian Geoghegan

Of course.

Deputy Jim O’Keeffe

Did the Mr. Geoghegan not state at the time that a complete root and branch should take place and not merely one relating to the specific issues that were referred to the internal audit committee?

Mr. Brian Geoghegan

The process relating to getting from that point to where we stand now took far too long. I intend no criticism of the people engaged in that process, which proved to be extremely difficult, particularly in the context of legal issues, etc. The Committee of Public Accounts has been through a number of those. My discussion with the director general would have related to the kind of points to which the Deputy refers. In other words, if the allegations were true, we were obliged to ask how on Earth could the events that transpired not be picked up by our system of control. It would have been my expectation, and it would also have been the norm by any investigation carried out by internal audit, that recommendations relating to a matter of this sort — which was extremely serious in nature — would have implied the necessity for the kind of root and branch to which the Deputy refers.

Deputy Jim O’Keeffe

Would a specific issue such the establishment of a new website which essentially duplicated the functions of FÁS's existing database have arisen? The website to which I refer was eventually shut down in 2001 or 2002, shortly after Mr. Geoghegan became chairman, and the resulting loss to FÁS was approximately €1.7 million. Did any alarm bells sound in respect of this matter?

Mr. Brian Geoghegan

I have read the assessment relating to that matter. Deputy Jim O'Keeffe will appreciate that I had just become chairman at the time and that the decision had already been taken. Mr. Molloy had taken up the post of chief executive just before I became chairman. It did not register with me that a loss of that nature was involved. There was an issue surrounding the duplication of websites. My honest answer is that I would not have been aware that there was either a potential or real loss to FÁS in that particular context. At a general level — and having been responsible for IT systems at the CSO among other organisations — I am strongly of the view that IT facilities and systems of that kind should always be dealt with through a central and co-ordinated function.

Deputy Jim O’Keeffe

Did it emerge at any time during Mr. Geoghegan's time on the board that there had been a loss of €1.7 million to FÁS?

Mr. Brian Geoghegan

I am speaking from memory but I do not believe so. On that specific matter I would be obliged to check the records. If it had arisen in the context to which the Deputy refers, alarm bells would have sounded because it would have emerged that something was not detected by the financial control systems to which I refer.

Chairman

Mr. Geoghegan stated that the website had been shut down or that a decision had been made before he became chairman.

Mr. Brian Geoghegan

I did not. I apologise. I implied that the process was——

Chairman

Yes, but Mr. Geoghegan became chairman in January 2001.

Mr. Brian Geoghegan

Yes.

Chairman

The website was not shut down until April or May of 2001.

Mr. Brian Geoghegan

Yes, I think so.

Chairman

Surely——

Mr. Brian Geoghegan

What I implied was that the issue of the existence of two websites had come to the attention of the executive at that point. The board would have noted and approved the decision in March or April 2001.

Chairman

During Mr. Geoghegan's tenure.

Mr. Brian Geoghegan

Yes.

Deputy Jim O’Keeffe

This committee is responsible for monitoring the spending of taxpayers' money. Did the board of FÁS notice that €1.7 million of such money had gone down the drain in respect of this project?

Mr. Brian Geoghegan

I think I already answered that question. If there had been a question of €1.7 million lost, the board would, to put it mildly, have been displeased and extremely concerned.

Deputy Jim O’Keeffe

Would anyone have raised questions in respect of the matter? Is this the type of issue that would have been discussed by the board?

Mr. Brian Geoghegan

The board regularly raised the issue of value for money. At the time, I was economic affairs director for IBEC and I had a remit to examine matters relating to efficiency, etc., in the context of public spending. In my approach as chairman, I would have had a strong function in respect of value for money. Each member of the board would have supported me in that regard.

Deputy Jim O’Keeffe

Were concerns ever raised among members of the board regarding the extent of foreign travel and the amount spent on entertainment?

Mr. Brian Geoghegan

The board regularly examined the accounts. One of the areas which we would have discussed related to additional costs. These include all non-programme costs, overheads, etc. Foreign travel was not specifically discussed, as far as I recall, in any detailed sense. As stated previously, I had worked in the public sector before and the parameters for foreign travel, as far as I were concerned, were set and determined by the Department of Finance. Any perception I would have had of an organisation such as FÁS or any other State or semi-State bodies, would have been that the Department of Finance would have exercised a quite rigid approach to the level of subsistence, air travel costs and so forth. FÁS had a travel office and it would have been my assumption that it would have been obliged to work within the parameters set down by the Department of Finance.

Deputy Jim O’Keeffe

In light of earlier discussions the committee had with Mr. David Hurley from the Department of Finance, it is clear that the guidelines were specific. Economy travel was the norm but in special circumstances, business class could be used. There was no provision whatever for first class travel. It is clear that these guidelines were flagrantly flouted by FÁS. Is that not the case?

Mr. Brian Geoghegan

I honestly cannot respond to that. In the first instance, I was not responsible for foreign travel. Foreign travel, the level of travel and so on were matters for the executive. The non-executive board did not involve itself in decisions as to who should travel or how they should do so.

Deputy Jim O’Keeffe

I accept that.

Mr. Brian Geoghegan

However, I would have assumed that the Department of Finance's guidelines would have been followed. In my five years as chairman, I only travelled abroad twice.

Deputy Jim O’Keeffe

I am not focusing on Mr. Geoghegan individually. I am concerned about the board, of which he was chairman. The analysis in respect of foreign travel that we received from FÁS indicates that the figure for 2003 was €173,000, while that relating to 2005 was €414,000. That is a massive increase. Would the board ever have become conscious of such an increase?

Mr. Brian Geoghegan

Of course. If we consider the context, there were a number of activities in which FÁS was engaging — including jobs fairs, etc. — which would have given rise to the need for additional travel.

Deputy Jim O’Keeffe

The information we received from FÁS in respect of this matter is somewhat cryptic in nature. It states, "In addition, costs incurred through Centurion Car Services in 2003 amounted to €222,000". I do not understand that. Why is that treated as a separate item?

Mr. Con Shanahan

This refers to an earlier period. It would not have been included the €172,000. That has to be added to the figure of €173,000. The €222,000 was just scheduled separately.

Deputy Jim O’Keeffe

Why?

Mr. Con Shanahan

It is because all that travel went though one particular agency. We had a composite total for it and we included it as an appendix.

Deputy Jim O’Keeffe

Was that done through the appropriate procurement process?

Mr. Con Shanahan

Yes.

Deputy Jim O’Keeffe

Why was it not included in the normal accounts?

Mr. Con Shanahan

With regard to the submission of data on travel generally, we prepared a major spreadsheet, which came to more than 2,200 people. In the process of compiling that, we were relying on documentation and systems information and copying and pasting, where appropriate. Close to the time for submission, a significant volume of travel had already been compiled and not included in the spreadsheet. Rather than waste further time and delay its submission, we included it as an appendix and, therefore, there is nothing sinister or unusual in that.

Deputy Jim O’Keeffe

Did Mr. Geoghegan and the board operate on the basis that the Department of Finance guidelines were being adhered to? Did they never notice or realise they were being clearly breached?

Mr. Brian Geoghegan

The Deputy mentioned first class travel. I was not aware that first class travel was being used, for example. I am not sure how often that was used but I was not aware of that. With regard to the Department of Finance and so on, I assumed, as would normally be the case in an organisation like this, that the person in accounts whose job is to certify and make bookings and so on, would have been obliged by reference to the guidelines to book according to the Department of Finance parameters.

The other point made by the Deputy regarding the growing total cost of travel is an issue for the total budget and so on and it was included in total overheads and so on. An increase of the kind mentioned by him would have to have an explanation by reference to the business of the organisation and the appropriateness of that.

Deputy Jim O’Keeffe

Am I correct that Mr. Geoghegan and the board took a great deal in good faith and that was clearly not justified in a number of instances?

Mr. Brian Geoghegan

I insist that we were a non-executive board. As far as we were concerned, we had an executive, which applied principles of good management of public funds, according to the objects and requirements of delivering FÁS services. That was our function and the detailed management of travel and so on was not matter for the board. I do not imply we are washing our hands of this. If matters were not being dealt with properly, that was an issue for the board. However, for example, no discussion on first class travel arose because it did not arise as an issue.

Deputy Jim O’Keeffe

The problem for us is, following a number of requests, we have sheets of detail on travel, which include references such as "1 July 2003, Mr. Gregory Craig, FÁS management, Orlando, €17,282.17" and a month later, "1 August 2003, Mr. Gregory Craig, FÁS management, Orlando, €9,122.58". It is difficult to understand how such figures would not have been noticed or would not have cropped up at some stage for discussion.

Mr. Brian Geoghegan

The Deputy will appreciate this is the first time I heard of these figures.

Deputy Jim O’Keeffe

I am only quoting these as examples.

Mr. Brian Geoghegan

Figures and issues like that were matters for the executive. This is a part-time and non-executive board, which has strategic functions, overall supervisory functions and specific functions in the area of finance but the responsibility for the detailed management lies primarily with the executive. I am attempting not to give the impression that this is not a matter of concern for the board but I am also strongly asserting that the board has certain functions and its function is certainly not to look at every travel and subsistence claim in a detailed way. How on Earth could the board have been aware of that?

Deputy Jim O’Keeffe

I do not expect Mr. Geoghegan to do that but it appears the board never looked at any of these or even at a broad picture of what was happening regarding travel.

Mr. Brian Geoghegan

The broad picture would have been taken from the total non-core costs or overheads. We focused on that and there were many discussions on the overall budget, in particular when the FÁS budget rightly was being squeezed. An organisation of this size in those circumstances must and should be challenged on spending.

Deputy Jim O’Keeffe

Were the issues of first class travel, trading down, two for one and other practices ever discussed?

Mr. Brian Geoghegan

No, I have read about that in the committee's proceedings. It is not something I would have been aware of in a detailed way.

Deputy Jim O’Keeffe

I take it if Mr. Geoghegan had been aware, he would have been concerned.

Mr. Brian Geoghegan

I have been in a management capacity in IBEC and the Central Statistics Office, for example, and I certainly would have said, "What is happening here? Is this justified?" in regard to the figures quoted by the Deputy but I am not judging that because I do not know the detail or the background to it. The Deputy may well have more information than I have but I do not have the background and I find it hard to say, "Yes, that was wrong", without possession of the detail. As chairman, my function was specifically not to go into that kind of detail.

Deputy Jim O’Keeffe

The problem for us in examining these issues over a number of meetings is nobody shouted "Stop".

Mr. Brian Geoghegan

In an executive position, one is responsible for managing the functions for which one is paid and it may well be that, under each of these headings, decisions were taken and judgment calls may have been made that could give rise to questions. I am not washing my hands of this total but, in terms of the efficient management and operation of a board of our kind, that would not have come to our attention.

Deputy Pádraic McCormack

Mr. Geoghegan said the board took its responsibilities seriously. Either the board was not aware of its responsibilities or it did not take them seriously because it has clearly been established in reply to earlier questions by Deputy O'Keeffe and during previous meetings that there was no provision for first travel. Section 7(2)(a) of the Labour Services Act 1987 states, “A member of the staff of An Foras (other than the Director General) or of the staff of a subsidiary shall be paid, out of moneys at the disposal of An Foras or the subsidiary, as the case may be, such remuneration, allowances and expenses incurred by him as an Foras, or the subsidiary, as the case may be, with the consent of the Minister and the Minister for Finance...”. In reply to a question when this was raised in the Dáil, the Taoiseach said the responsibility had been passed from the Minister to the board. Therefore, according to the Labour Services Act 1987 and to the statement made by the Taoiseach in the Dáil, payments for travel and other expenses was clearly the responsibility of the board. We have the list here for travel expenses for the years between 2003 and 2007, on which almost €2 million was spent, three years of which were under the chairmanship of Mr. Geoghegan. Did the board examine such claims in Mr. Geoghegan’s time or did he have responsibility and give the go ahead for such claims to be paid?

Mr. Brian Geoghegan

No, we did not examine specific claims, because it was not our function to examine them. I appreciate what the Deputy has said with regard to——

Deputy Pádraic McCormack

It was the function of the board and the function of the current board to do the same.

Mr. Brian Geoghegan

I appreciate there is an overall responsibility for the board in respect of financial propriety and of ensuring the parameters, systems and guidelines are in place. However, it extends that rather far to suggest that the board would get involved. I return to some of the points I made in response to Deputy O'Keeffe. The question of the level at which a person would be allowed or at which it would be appropriate to travel was not something that came to the board. I was not aware of the issue of first class travel because that did not come on the radar.

I go back to IBEC, where I come from, in terms of my view on public spending. We take a completely different approach to it, but I do not suggest that view should be imposed on FÁS. I had an overall responsibility. The executive had a responsibility to ensure, particularly in the area of travel, that it was at the appropriate level. Deputy O'Keeffe raised specific claims. I am not in a position now to make any judgment about any specific claim.

Deputy Pádraic McCormack

I know that.

Mr. Brian Geoghegan

To pursue the issue of the appropriateness of claims with the board will not get us anywhere. I do not see what I can add, but I am trying to be helpful.

Deputy Pádraic McCormack

I am not trying to attach any blame, but it is quite clear — I accept the Taoiseach's word on this — that the board is responsible for signing off payments of such expenses.

Chairman

What is the Deputy quoting from?

Deputy Pádraic McCormack

I am quoting from the Labour Services Act 1987.

Chairman

What about with regard to the Taoiseach?

Deputy Pádraic McCormack

I am talking about what the Taoiseach said in the Dáil in response to Deputy Gilmore when this matter was raised.

Chairman

What date was that?

Deputy Pádraic McCormack

I have not got the date but I will get it. It is clear that during his time as chairman, Mr. Geoghegan did not seem to think this was his responsibility, and I must accept that. I only raise the issue from the point of view that it will be the responsibility of the board in future, although the current chairperson who took over from Mr. Geoghegan in 2006 did not think it was his responsibility either and a blind eye was again turned to the issue. I raise the matter so that we ensure that from now on the chairman and the board will take their responsibility seriously in this regard.

Mr. Brian Geoghegan

To be helpful in this area, it would be entirely reasonable and acceptable for the internal audit committee, at any stage, to identify an area of expenditure that should be the subject of a particular investigation.

Deputy Pádraic McCormack

I am not talking of an investigation.

Mr. Brian Geoghegan

Maybe this leads to the point the Deputy is getting at. The audit committee sets itself an agenda in terms of risk and so on. If this area was seen to be an area of risk in the sense suggested by the Deputy, it would be valid for the audit committee to initiate or direct that an investigation be carried out. That would be one route whereby the kind of thing the Deputy has mentioned could have come to light.

Deputy Pádraic McCormack

Fine. Mr. Geoghegan does not accept the responsibility, but I hope the current chairman will accept his serious responsibility from now on, which appears to be the case from the information we have received.

We got the list which shows the extraordinary travel arrangements between 2003 and 2007, which cost €1,919,725.10. I will not go through it all because it is an extraordinary document and is a who's who of who travelled the world in that period of time. However, some points have hit me in the eye. For example, on 13 January 2004, a Mr. G. Stutty travelled from Orlando to Dublin return for €4,670.73. On the same day, a Mr. W. Scott and a Mrs. M. Scott travelled from Orlando to Dublin return for €1,996 for both. It would appear, therefore, that some €2,704 extra was spent for one person to travel than was paid for two people to travel the same journey. Is there any explanation for this discrepancy. Would such figures not make one ask what was going on? Would one not wonder why two people could travel for a fraction of what it cost for one on the same day. There is something seriously wrong with such arrangements and I find no explanation for them.

I will give just one other example. A week later, on 27 January 2004, Mr. G. Craig and Mr. J. Walshe travelled to Orlando for €8,616.32 and on the same day a Ms C. White travelled — it appears she travelled twice the same day — for a total of €983 — €551 and €625. She was able to travel for €993, which is €3,687 less than the cost for Mr. Craig and Mr. Walshe. What is going on in that regard?

Mr. Brian Geoghegan

The Deputy must refer those detailed questions to the executive.

Deputy Pádraic McCormack

I know.

Chairman

Mr. Geoghegan says he would have to refer these matters to the executive, but who authorised the travel of the director general of the organisation?

Mr. Brian Geoghegan

During my period as chairman, I ascertained from FÁS that he travelled abroad six or seven times.

Chairman

That is not the question. Who authorised his travel? Who approved it?

Mr. Brian Geoghegan

I certainly did not authorise it.

Chairman

Was it self approved?

Mr. Brian Geoghegan

It would have been self approved. In fairness, that would be fairly normal. It would not be up to the chairman to say "Thou shalt not go here" or "Thou shalt go there". Obviously, there is a question of oversight and I would have signed his travel subsistence claims. However, in the normal course, flights would be booked via the travel department. I refer again to the responses I gave to Deputy O'Keeffe. These would, in the normal course, be subject to the kind of scrutiny one would expect, in particular to Department of Finance guidelines.

Let me put it this way. If the director general suggested to me that he was going to some extraordinary place where FÁS had no function, I would question it. If FÁS had no function, I would certainly ask a question as to why that would be the case. There were a number of visits to the United States in the context of the Science Challenge programme and the Discover Science programme and in my view they would have been appropriate. Had the question been asked of me I certainly would not have said "No" because it would be appropriate for the director general, if he so judged, to make journeys there.

Chairman

What about in the case of board members?

Mr. Brian Geoghegan

As appropriate, board members would travel. It would be a question for the individual board members.

Chairman

What about former board members?

Mr. Brian Geoghegan

I have read the details of the committee's proceedings and from what I can see, there was reference to a former board member travelling. I have no idea as to the detail of that.

Chairman

Mr. Paddy Duffy travelled to Orlando and separately travelled to Texas. One journey was on 24 October 2005 and the other on 13 January 2004. If as a former board member he travelled on the FÁS account, surely the board must have had a policy on travel for board members and who would have approved it?

Mr. Brian Geoghegan

The first I knew of those particular trips was when I read about them in the transcript of the committee's proceedings and I also read Mr. Cooney's response which implied that Mr. Duffy was providing services. I am honestly saying that was complete news to me. I am not making a judgment on it but I listened to his response.

Chairman

As chairman of the board, you had no knowledge of the travel activities of board members or former board members and you had no control over this?

Mr. Brian Geoghegan

I am not sure if the fact he was a former board member was incidental to the fact that he was providing services. I just cannot say that. With regard to board members, if there was excessive travel by board members that would be an issue for me.

Deputy Róisín Shortall

What services was he providing?

Mr. Brian Geoghegan

I have no idea. Sorry, Deputy, I do not know. All I know on this is what I have read from the transcripts of this committee's proceedings.

Mr. Pádraic McCormack

I refer to the journey to Orlando by the former board member, Mr. Duffy, on 13 January 2004 at the cost of €4,433.31. I do not know what was going on in Orlando but that was the cost of it.

During Mr. Geoghegan's term as chairman of the board or rather in the time covering the three years for which we have figures, 2003 to 2005, some €924,918 was spent on travel. I have to accept what Mr. Geoghegan says, that he did not think that was anything to do with the board but I contend it should have been everything to do with the board or somebody should have stood up and cried "Stop" to what was going on at that time during Mr. Geoghegan's time as chairman of the board and during the time of his successor as chairman of the board. This culture was developing in the country at that time in the years between 2001 and 2007. It was a culture of, "It does not matter, we are all Government-appointed board members and it does not matter what people spend". That is how it appears to me as an ordinary citizen looking at this. Nobody seems to have had any control. This culture has since been identified by the tribunals, a culture of, "It does not matter. Spend away and turn a blind eye to everything." I think the board should have taken some responsibility in the matter. I suggest the current board should be considering its position and I said that to its members at the last meeting. Would Mr. Geoghegan have considered his position when he was chairman of the board if he had fully realised — he did not seem to realise — that this was going on?

Mr. Brian Geoghegan

I do not accept that the board was inconsiderate of value for money or the proper expenditure of public funds. During those years, a particular programme was commenced in the United States and that gave rise to some of the travel that is identified there. In my view, and in the view of the board, that particular programme was of national significance in terms of the overall requirement to raise awareness and skills in science and technology and it still has, in my view, from what I hear, considerable potential.

Deputy Pádraic McCormack

All the travel is not related to skills.

Mr. Brian Geoghegan

I accept that. At least part of it was explained by that.

Deputy Pádraic McCormack

I do not wish to embarrass anyone by reading out the list of where people went.

Mr. Brian Geoghegan

Some of the additional travel related to job fairs which were held in various parts of the world. The Deputy will recall that at the time there were issues to do with supply of labour and so on. One may question as to how effective this was ultimately and in certain cases it was probably very effective but this explains part of the travel.

I reassure the Deputy that during the course of my chairmanship, the board very many times adverted to the question of proper spending and value for money and the question of controls.

Deputy Pádraic McCormack

I have a last question and I will not pursue the matter any further. This is not a question for Mr. Geoghegan because he is no longer chairman or a member of the board. Will anyone check why people travelling on the same day had excessive differences in the cost of that travel to the same destination at the same time? I direct that question to whoever wants to answer the question. Will anyone now check that travel and is it part of the current investigation and the Garda investigation?

Mr. Denis Rowan

I understand that the board of FÁS and the director general have asked for a complete review of the travel abroad. If the committee wishes further data on particular travel events, we will provide same. A review is being carried out now.

Deputy Róisín Shortall

When did that commence?

Mr. Denis Rowan

The board has invited the new director general to carry out a complete review of foreign travel procedures, etc., and this is commencing as we speak.

Deputy Róisín Shortall

When did the board request this review?

Mr. Denis Rowan

In the last week or two. I do not know the precise date.

Deputy Pádraic McCormack

Will the board seek answers to the questions I have asked about the differential in travel expenses?

Mr. Denis Rowan

We would provide information.

Chairman

I ask Mr. Rowan to send the committee a written response on that issue raised by Deputy McCormack as quickly as possible.

Mr. Denis Rowan

We will certainly do that.

Mr. Con Shanahan

With regard to 13 January 2004, Deputy McCormack was comparing a figure of €19,356 with €4,600. The figure of €19,356 refers to a group of seven people who travelled while the figure of €4,600 relates to one individual. This may, hopefully, explain the difference. We are talking here about——

Deputy Darragh O’Brien

There is a general issue here. We could spend all day going through the many examples. I refer to one which was a flight to Brussels that cost €1,157 in 2004 and in 2006 the same flight cost €162. This needs to be examined.

Mr. Con Shanahan

That is what I am asking to be done.

Chairman

I see invoices here where rooms in Orlando were costing €700 a night. Other people had rooms costing €150 a night. How can anyone justify spending €750 on a room, just a bare room for a night?

Deputy Pádraic McCormack

Related to that question, this €1,918,000 in the five years referred to only refers to flight costs. Some of those people travelled out and I do not know when they came back. I would like a breakdown of the total cost of flights plus all the other expenses on these around the world journeys.

Chairman

I will give an example on which I would like to get an answer. I refer to Atlas Travel and the hyatt.com best rate guarantee. There was a room for Mr. Thomas Nolan that cost €695.

Deputy Pádraic McCormack

It must be a timeshare.

Chairman

There are charges for butler services. I do not know what butler services are. There are a group of invoices here, the charges on which seem to be totally over the top. The committee needs to get more detail as to how anybody could justify rooms for €695 and €762. There is a list of them there. It is totally over the top and extravagant. We would like a further breakdown on those.

Mr. Denis Rowan

There was a request for a complete breakdown of all the staff travel and their additional costs. That would be a huge task in itself. It would certainly help us to help the committee if the members could be specific on as many places as it wants. The chairman of FÁS——

Deputy Pádraic McCormack

It is hard to know where to start and where to stop.

Chairman

This information was not supplied by FÁS to the committee. It was supplied to another party as a result of a freedom of information request. That is part of our difficulties. When we seek information, we get global figures and we cannot get to the truth. We would like to get a breakdown on the type of extravagance that has been going on.

Mr. Geoghegan mentioned that the board was not inconsiderate of the spending of public funds. In 2002, the European Commission provided the Government with a report regarding weak and unreliable internal controls within FÁS. I presume that report was passed on to the board of FÁS. What action did it take on foot of that report? In 2002, a letter from the European Commission's financial control unit to FÁS stated that the agency had internal management and control systems which were weak to unreliable. There was a threat to withdraw funding from certain FÁS programmes. What action did the board take on foot of the Commission's audits of FÁS that were provided both for the Government and in a separate letter for FÁS in 2002?

Mr. Brian Geoghegan

The Chairman will appreciate that I do not have copies of documentation. I am a former chairman and do not have access. I do not have recall of those letters. Perhaps other people here may well have recall.

Mr. Con Shanahan

Perhaps I may intervene. I think the letter, to which the Chairman refers, is referred to in a Sunday Business Post article. It would appear to FÁS that that was a mistake and those remarks were not attributable to FÁS at all. No such letter was sent to FÁS.

Chairman

There was no letter sent to FÁS.

Mr. Con Shanahan

There was no letter referring to FÁS's controls, criticising FÁS control systems along the lines indicated.

Chairman

Did a report go to Government regarding internal controls within FÁS?

Mr. Con Shanahan

We have no record or knowledge of any criticism by the Commission of FÁS's controls in that particular field. We feel that is a big mistake.

Chairman

I am glad to hear that Mr. Shanahan feels it is big mistake.

Deputy Róisín Shortall

That should be checked with the Department. Perhaps somebody could do that this morning to establish whether it received a report. It may not have made its way to FÁS.

Deputy Pádraic McCormack

The Chairman referred to information already in the public domain as a result of a freedom of information request. Why can this committee not get that information? We do not have copies of that information. Why is FÁS reluctant or refusing to supply the committee with information that is already in the public domain?

Mr. Denis Rowan

That point about frustration levels and all that was mentioned at the beginning of the meeting by the Chairman. This has been said a few times when we were here. There is no attempt by FÁS to delay or frustrate the work of the Committee of Public Accounts. For any information that has been asked of us we have made every attempt to get it to the committee on time or whatever. That is the position of FÁS and we are very keen to ensure the committee has any data. If it requires any further data based on the data it has or has got from other sources we will——

Deputy Pádraic McCormack

So far that has not been our experience.

Mr. Denis Rowan

I assure the Deputy, on behalf of FÁS, that that is the position of FÁS. We provide any information. I have made an offer this morning particularly around the travel. I just suggest that the committee does not ask for all the people, which would be a massive task, and be specific in terms of particular travel.

Deputy Darragh O’Brien

FÁS has done extensive work on foreign travel between 2003 and 2007. It could use that as its benchmark to investigate the subsistence and accommodation in that period.

Mr. Denis Rowan

Okay.

Deputy Darragh O’Brien

That should be done with the agreement of the Chairman. That might be somewhere to go. I understand FÁS cannot investigate back to 1990.

Mr. Denis Rowan

I am just speaking in terms of time and the task of it.

Deputy Darragh O’Brien

Yes.

Mr. Denis Rowan

There have been specific travel events that the Deputy has raised. It is up to the Chairman. Whatever the Chairman of the committee wants will be supplied.

Deputy Darragh O’Brien

Perhaps FÁS should proceed on that basis given that most of the analysis of the travel has been done. I am aware that it would be a large undertaking.

Mr. Denis Rowan

That is not a problem.

Chairman

I thank Mr. Rowan.

Deputy Róisín Shortall

I thank Mr. Geoghegan. I would just like to pick up on some of the issues raised earlier by Deputy Jim O'Keeffe. I ask him about his early days as chairman of the board and the question of the Jobs Ireland website. He said that things were in train to close that down at the point when he joined the board.

Mr. Brian Geoghegan

What I said was that the issue of the website was on the mind of the director general. He would have discussed it at an early stage. A proposal came to the board — I gather it was probably March or April — to in effect close down that website.

Deputy Róisín Shortall

What discussion took place at board level on that debacle? A substantial amount of public money went down the drain. The total cost was €1.7 million. It is estimated that at least €1 million was wasted on that. What action did the board take on foot of that?

Mr. Brian Geoghegan

I do not have the board papers from that period. My recollection is that a decision had also been taken around that time to engage in a detailed review of IT and in effect to have a new IT strategy, part of which would have been to integrate systems like this. The entire effort of the board was in effect to put everything, including IT, on a sound footing. A sound footing would have implied the integration of the website.

Deputy Róisín Shortall

I accept that.

Mr. Brian Geoghegan

I believe I responded earlier that I do not have a recollection that a figure of a €1.7 million loss was put in front of the board.

Deputy Róisín Shortall

I accept that Mr. Geoghegan took steps to deal with IT. Was there not some consideration of how this issue had arisen and how one individual could have responsibility for expenditure like that, which was duplication?

Mr. Brian Geoghegan

I am not sure that this was a decision or a departure by one individual. I do not think that would have been discussed at the board.

Deputy Róisín Shortall

Did anybody ask?

Mr. Brian Geoghegan

Sorry, I mean brought to the attention of the board.

Deputy Róisín Shortall

Presumably this was a big issue that arose at board level.

Mr. Brian Geoghegan

It is when we look back on it now and the kind of investigation that has happened.

Deputy Róisín Shortall

At the time, did people not ask how much it had cost the organisation? Closing down a website is a significant decision to take. That decision was discussed at the board. Did somebody not ask how it arose?

Mr. Brian Geoghegan

I suppose we were looking at a decision that had been taken earlier to have two websites. In effect it was separate from the central FÁS system, as I understand.

Deputy Róisín Shortall

Did the board not engage in the process of trying to find out how the two websites came to be set up and the duplication of work which took place?

Mr. Brian Geoghegan

It did not investigate the matters that are, from what I read, being investigated now. I refer to decisions that were apparently taken in contradiction of procurement rules.

Deputy Róisín Shortall

I would have expected the board to do more than rubber-stamp the decision. It should have asked how this happened, or was allowed to happen, and who was responsible for it.

Mr. Brian Geoghegan

I am trying to recall the exact details. I am certain that there was a detailed discussion of the organisation's approach to information technology issues in general. Members of the board expressed the view that we needed to have a coherent approach to information technology. The board decided, in the context of what it was doing as a new board, that things needed to be put on a sound footing. Issues such as the need for a stand-alone website would not have arisen. I take the Deputy's point. With hindsight, we might have come to a different conclusion if the issue of how this decision was taken in the first instance had been probed further.

Deputy Róisín Shortall

I accept that Mr. Geoghegan did not become chairman until January 2001. He was a board member prior to that, however.

Mr. Brian Geoghegan

That is correct.

Deputy Róisín Shortall

He would have been involved at an earlier stage.

Mr. Brian Geoghegan

I was involved as a board member.

Deputy Róisín Shortall

Was Mr. Geoghegan aware of this as a major issue within the organisation?

Mr. Brian Geoghegan

Not particularly. I have read the transcript of the committee's recent proceedings on this issue. Jobs fairs were organised in the context of the urgent requirement to bring people into the country at a time when there were significant skills shortages. The board probably thought there was a need to put mechanisms in place to deal with that.

Deputy Róisín Shortall

Prior to becoming chairman, I presume Mr. Geoghegan, as a board member, was made aware by the previous director general of what was happening in respect of the Jobs Ireland website. The thing fell apart — the website had to be closed down — in the year in which Mr. Geoghegan became chairman.

Mr. Brian Geoghegan

Yes.

Deputy Róisín Shortall

There were serious costs involved.

Mr. Brian Geoghegan

Yes.

Deputy Róisín Shortall

Did the board take any action on foot of that?

Mr. Brian Geoghegan

The board would have seen the establishment of the website as a quick response to what was an urgent issue. It was considered that the fact that the website was separate from the main thing would give rise to longer-term damage to the proper functioning of the FÁS information services. The board dealt with that. It was seen as an adjustment to a system that had been put in place for a specific reason.

Deputy Róisín Shortall

The board was remiss in its responsibility if it did not examine this issue in detail; consider the loss to the organisation and to the State, in terms of taxpayers' money going down the drain; deal with it adequately; and ask questions about how it could have arisen, who was at the centre of it and who was responsible.

Mr. Brian Geoghegan

The board dealt with it through the mechanism I have mentioned. In effect, all information technology development and systems were——

Deputy Róisín Shortall

Mr. Geoghegan is referring to the approach the board took going forward. It had a responsibility to deal with the situation that had arisen. It seems that it did not do so.

Mr. Brian Geoghegan

The situation that arose would have been seen as a kind of response to the kind of thing that had emerged — an IT development that was outside the norm.

Deputy Róisín Shortall

The net effect of that was that nobody within the organisation was held accountable for the waste of €1 million.

Mr. Brian Geoghegan

I suppose one could put it that way.

Deputy Róisín Shortall

Is it not the case?

Mr. Brian Geoghegan

I do not have the papers in relation to all of that. I do not recall the detail of what was presented to the board by way of decision on the closure of the website.

Chairman

I have a simple question. Are the minutes of the board meetings that were held available?

Mr. Denis Rowan

Absolutely.

Chairman

Could we see them?

Mr. Denis Rowan

They are published and are available within FÁS. There is no problem in getting the minutes of board meetings.

Deputy Darragh O’Brien

I am aware that the minutes of some board meetings have been redacted. Some such minutes have been sent to the committee. I am thinking in particular of a set of minutes that related to the internal investigation. Everything was blanked out. Is Mr. Rowan saying that we can get minutes that are not redacted?

Mr. Denis Rowan

I am not aware of that happening. I assume that took place on foot of legal advice that was given to FÁS. In general terms, they are available and can be made available to the committee. It is obvious that certain legal issues are at stake.

Deputy Darragh O’Brien

I have just noticed that the minutes to which I refer relate to meetings of the audit committee. I apologise.

Mr. Denis Rowan

That is all right. I had assumed that the Deputy was talking about the minutes of the meetings of the main board of FÁS.

Chairman

Mr. Geoghegan has spoken about hindsight. I understand that a report from the IT manager was in existence at the time of the closure of the website. I understand that it was in place even as the website was being developed. I am working on the basis of my memory of a file I read some weeks ago. In the report, the manager in question, who was responsible for the development of information technology, expressed serious concern about the development of a second website which would be controlled by an outside source. Was the manager's report brought to the attention of the board? If not, why not? If it was, why was it not taken into consideration?

Mr. Denis Rowan

I am not aware of the detail of that report. I would have to examine the relevant files. I am not up to date on that particular report. We will have to get back to the Chairman on that point. I was not aware that it would be raised this morning.

Chairman

Was Mr. Geoghegan aware of the serious concerns that were expressed by the IT manager?

Mr. Brian Geoghegan

No. We are going back quite a few years. I do not have any recollection of that. The board's strong desire would have been to ensure that spending commitments in the information technology area were properly accounted for. The point raised by Deputy Shortall is a valid one. Information technology development issues have affected many organisations as they have tried to make their systems right.

Deputy Róisín Shortall

I accept that fully.

Mr. Brian Geoghegan

I remind the committee that I was responsible for the information technology systems in the Central Statistics Office at one point.

Deputy Róisín Shortall

I accept what Mr. Geoghegan is saying in that regard. I accept that steps were taken. Accountability issues also need to be raised, however.

Mr. Brian Geoghegan

It may be a question of looking back at what was actually presented to the board. Various organisations engage in information technology development in many different ways. In some cases, it is completely centralised in accordance with a coherent strategy. Things tend to be dispersed in other organisations. In my experience, one tends to run into problems in the latter case. I suspect that happened in this case. As a board, we were happy that we were putting in place a resilient system and strategy, driven by a very competent head of information technology within FÁS.

Deputy Róisín Shortall

Does Mr. Geoghegan accept that the system and strategy to which he refers did not suffice?

Mr. Brian Geoghegan

I have to accept the finding in the Comptroller and Auditor General's report, which was that value for money issues arose in this area.

Deputy Róisín Shortall

Could I ask Mr. Geoghegan about the action that was taken by the board on foot of the anonymous letter? I accept that he had left his position as chairman of the board before this process was completed. He has mentioned that he discussed what was happening in FÁS with the director general on a number of occasions. Was he aware of the disagreement between the director general and the audit committee on the presentation of the report arising from that investigation?

Mr. Brian Geoghegan

No, other than to the extent that the man or woman on the street was aware of it. I do not believe that issue arose during my chairmanship. I am pretty certain of that.

Deputy Róisín Shortall

What was the nature of the discussions Mr. Geoghegan had with the director general?

Mr. Brian Geoghegan

The discussions mainly related to where this issue was going and the amount of progress that was being made with it. I also had discussions with the chairperson of the audit sub-committee about the same kind of thing. I was anxious that this would be brought to a speedy conclusion for a number of reasons which I dealt with in response to Deputy O'Keeffe.

Deputy Róisín Shortall

It was making very slow progress.

Mr. Brian Geoghegan

It was. I understand some of the reasons for that, perhaps all of them. There were legal issues and a question of the individual's rights. All of that was dealt with but it took time. There were questions of dealing with outside suppliers of services and so on. I am speaking mainly from my reading of the transcripts of this committee's proceedings. I have not seen INV. 137. It did not come to me as chairman and I have not seen it since.

Deputy Róisín Shortall

I accept that. I would prefer if Mr. Geoghegan did not speak from what he read of the proceedings of this committee. I am asking for his own recollection of events at the time. He was aware this investigation was under way. He was speaking to the chairman of the audit committee who had a very different view to the director general.

Mr. Brian Geoghegan

The chairperson of the audit committee in my time was not in front of this committee.

Deputy Róisín Shortall

Who was the person dealing with it during Mr. Geoghegan's time?

Mr. Brian Geoghegan

The chairperson of the audit committee in my period as chairman was Ms Cathy Crowley. While I stand to be corrected, I am pretty certain that issue about the format of the presentation arose at a later stage in the process. It certainly was not an issue I discussed with him or with her.

Deputy Róisín Shortall

When did Mr. Saul become chairman of the audit committee?

Mr. Brian Geoghegan

The board which I chaired ceased to exist at the end of December 2005 and a new board was appointed in January 2006. Ms Cathy Crowley had been a very active and, in my view, effective chairperson of the audit committee up to then. She was an IBEC nominee. Niall Saul was also an IBEC nominee to the board and, on the formation of the board, became chairperson of the audit committee.

Deputy Róisín Shortall

Had he been a member of the board prior to that?

Mr. Brian Geoghegan

No.

Deputy Róisín Shortall

When Mr. Geoghegan was leaving the board, how did matters stand in regard to INV. 137?

Mr. Brian Geoghegan

It was still in progress. If I may summarise what the director general reported to me at that time, an issue had arisen which had been referred to the Garda, as the committee is aware. I am no more aware of the detail of that than what people have read. That was proceeding and the gardaí were proceeding. In regard to the other matters, the allegations in the letter were still being investigated but in the course of that, issues around procedures had been raised and that was going to be a major part of the investigation, which was nearing completion. As the Deputy knows, it took some time after that to complete it.

Deputy Róisín Shortall

I wish to ask Mr. Geoghegan about the issue of foreign travel, although I do not expect him to know the detail of who was going where. The total figures involved were very substantial. During Mr. Geoghegan's period as chair, in 2003 it was just under €400,000, in 2004 it was €336,000 and in 2005 it was over €400,000. Given that the board had responsibility for overseeing the accounts, did that figure not jump out at him? A very substantial figure was being spent on travel.

Mr. Brian Geoghegan

I do not believe the figure for foreign travel as such would have been presented to the board. That can be verified. Obviously, the total figure for travel and subsistence, if I recall correctly, is published in the annual accounts, so the question of the total figure for travel and subsistence does arise. There would certainly have been commentary from the board in terms of the overall management of travel but foreign travel as such did not appear on the agenda of the——

Deputy Róisín Shortall

What was the comment by the board in regard to travel and subsistence?

Mr. Brian Geoghegan

The board constantly urged the executive to respect value for money, to look at cost and ways of dealing——

Deputy Róisín Shortall

Does that mean it was the view of the board that this figure was excessive?

Mr. Brian Geoghegan

Again, I go back to a response I made to an earlier question. At this stage to give an opinion that it was excessive would need to be qualified by reference to what it was spent on. Clearly there were——

Deputy Róisín Shortall

No, Mr. Geoghegan said the board constantly urged——

Mr. Brian Geoghegan

There were programmes set up or being conducted abroad, which was relatively new, including jobs fairs and the Discover Science programme. That would automatically have pushed up the cost of foreign travel.

Deputy Róisín Shortall

I accept that. However, Mr. Geoghegan is saying that the board constantly urged the executive to get value for money in that. Was this because there was concern about the figure Mr. Geoghegan saw for travel and subsistence on an annual basis?

Mr. Brian Geoghegan

It would have been a general commentary rather a specific one. I do not have in front of me the total travel and subsistence figure for, say, 2005 compared to 2004 and so on.

Deputy Róisín Shortall

Was there regular comment on the scale of that figure? Presumably, the board asked whether the guidelines set down by the Department of Finance were being adhered to.

Mr. Brian Geoghegan

The board would have assumed that those guidelines were being followed, which is my honest answer. The board——

Deputy Róisín Shortall

That is quite an assumption to make if concern was raised about the scale of the expenditure in that area.

Mr. Brian Geoghegan

Not necessarily. If the volume of travel increased, that would explain the increase. For example, if the number of people travelling increased because of the institutional expansion of programmes abroad, that could well be the case.

Deputy Róisin Shortall

Would Mr. Geoghegan, as chair during that period, ever have had concerns about a culture that existed within FÁS in regard to the spending of public money and ensuring value for money?

Mr. Brian Geoghegan

Honestly, no. Again, if we go back to the start of my period as chairman, we engaged in a very detailed interaction with staff at all levels in the context of a new strategy. Part of that was, as I said in my opening statement, a focus on achieving better productivity which implied better application of public funds.

Deputy Róisín Shortall

Mr. Geoghegan must have been aware that senior executives were away an awful lot.

Mr. Brian Geoghegan

As I said, I read the transcript of the committee's previous interactions. In respect of the chief executive, I understand from FÁS it has given the committee the details of travel. I have asked the question. I think he travelled six or seven times in the three years from 2003 to 2005. Those were years during which the Florida programme was in place. Prior to that I do not think he travelled very much.

Deputy Róisín Shortall

We did not actually get figures for the period prior to 2003. From 2003 to 2007 he would have travelled 16 times.

Mr. Brian Geoghegan

I do not know them off the top of my head. I would be surprised if the chief executive travelled much in those years. Again, we can look at that. In respect of the period for which the committee has figures, he was abroad six or seven times, at least two or three of those times being to Europe, including Brussels. I would regularly meet him in advance or around either board meetings or sub-committee meetings or to discuss FÁS in general. I never had a difficulty meeting him at his desk. I would not have been conscious that he was a chief executive who was away all the time, although he was frequently down the country in Cork, Galway, at training centres and so on.

Deputy Róisín Shortall

There is a view that, certainly over the past ten or 12 years, there was a culture in FÁS where senior executives played fast and loose with taxpayers' money. Was Mr. Geoghegan aware of that or did he have concerns in that regard?

Mr. Brian Geoghegan

I was not aware that senior executives were, as Deputy Shortall suggested, "playing fast and loose" with public money. That was not my perception.

Deputy Róisín Shortall

Did Mr. Geoghegan have any concerns in that regard?

Mr. Brian Geoghegan

No. I am being very honest in this. We had many interactions with the senior executives from FÁS, formally and informally, and I found they were dedicated and on top of their job. It is a complex organisation to manage. I would not have seen that as the culture. Personally, I did not travel much so that was not an issue for me.

Deputy Róisín Shortall

I have one final question about the competency development programme. A total of €42 million was spent on it last year and substantial amounts in recent years. Was Mr. Geoghegan satisfied there was proper and transparent oversight of the allocation of those funds?

Mr. Brian Geoghegan

I do not think I can answer in respect of last year.

Deputy Róisín Shortall

During Mr. Geoghegan's period.

Mr. Brian Geoghegan

Yes, I believe the whole approach to that was done in accordance with procurement rules and there was competitive tendering, as far as I am aware. I think there were competitions.

Deputy Róisín Shortall

As chairman of the board, was Mr. Geoghegan satisfied that was the case?

Mr. Brian Geoghegan

Yes.

Chairman

To return to an issue I raised earlier, I have since checked my notes and in regard to the memo from the director of ICT expressing concern about the setting up of the second website. The letter went to Mr. Donal Sands and he asked that the internal audit section would get involved in an investigation of it. Was Mr. Geoghegan, as chairman of the board, made aware of the reservations of the ICT manager and his request for the involvement of the internal audit section? Did the auditor to whom Mr. Geoghegan referred earlier inform him or did Mr. Molloy inform him of the request for an internal audit?

Mr. Brian Geoghegan

At this remove, I do not have recall of that.

Chairman

Does Mr. Rowan have any records of informing the board?

Mr. Denis Rowan

I do not have. Mr. Sands is not present, as we only brought along people appropriate to the matters we thought would be raised. I will have to refer back to him and his knowledge of the matter.

Mr. Con Shanahan

I was not there at the time either. I came to the finance section last year but my understanding was that following receipt of that letter a group was formed to review the concerns, and following that review and in consultation with the director general——

Chairman

I cannot hear Mr. Shanahan. Was it as a result of the——

Mr. Con Shanahan

——a group was formed to consider the concerns raised and as a result of that, in consultation with the director general a decision was taken to close down the new website.

Chairman

What was the line of communication between the director general, the finance unit——

Mr. Con Shanahan

I have no personal knowledge of the board but from memory I know the incoming director general would have been consulted in terms of the issues that were raised and that the matter would have been resolved some months after that. I hope that is helpful.

Mr. Denis Rowan

I was chair of that group. I only recalled that in the past week. I was asked to chair the group of the people concerned. I am not an expert in the area but I was probably the most appropriate person to do so. We recommended the group to the DG and the board. We said to the board that the website should be closed down. I do not know the specific time that was done.

Chairman

Is Mr. Geoghegan trying to tell the committee that all of that was going on under his watch and that he was kept totally in the dark?

Mr. Brian Geoghegan

No, I am not saying that. What I am saying is that at this point I do not have recall of that. Many issues came before the board in early 2001. Reference to the minutes could help but I do not recall the specific case the Chairman asked me about.

Chairman

It seems very strange to me that such a major project could be scrapped and Mr. Geoghegan does not remember it.

Mr. Brian Geoghegan

The Chairman asked me a specific question and in order to give him a true and accurate answer I would need to look at the minutes.

Chairman

Mr. Geoghegan can do that and get back to us.

Mr. Brian Geoghegan

Yes.

Deputy Darragh O’Brien

In regard to the internal investigation and the anonymous letter and how that was dealt with, certain allegations were made in the letter and it was dealt with correctly within FÁS. The letter was passed on and an investigation took place. Mr. Geoghegan alluded to it earlier. I agree that the investigation took far too long. That is the committee's view also. While there is a presumption of innocence for anyone under investigation, was it not considered appropriate that further checks and balances were put in place around the corporate affairs division? I will ask Mr. Pyke about this more specifically later. From Mr. Geoghegan's perspective as chairman, did he or the board make any type of decision to keep an eye on that person, as was alluded to in previous meetings? A lot of expenditure took place after the letter was received. As I indicated, the matter was dealt with correctly, in so far as the allegation was taken seriously and investigated. In that time, were any additional checks and balances put in, even in the background? They may not have been overt. Can Mr. Geoghegan comment on that?

Mr. Brian Geoghegan

Referring back to an earlier answer, the matter was obviously taken seriously. It was taken seriously by me and by the director general. Part of that discussion would have been around the kind of issue that Deputy O'Brien raised. I would have believed that, in itself, the fact that internal audit was investigating those issues would have ensured that procurement rules would have been followed from that point on.

Deputy Darragh O’Brien

It would be fair to say that they were not, even while internal audit was involved. Were any specific decisions taken by the board to look at the dealings of the corporate affairs department more closely on a regular basis while the investigation was ongoing?

Mr. Brian Geoghegan

It is my understanding that was happening while the investigation was ongoing but I do not have the detail of the report and I am commenting by reference to my state of knowledge at that time.

Deputy Darragh O’Brien

I appreciate that but it is clear from the evidence we have — I know Mr. Geoghegan is not privy to all of it — that a lot of expenditure took place. Perhaps Mr. Pyke will deal with that later, as it may be a more appropriate question for him. What Mr. Geoghegan is telling me is that the board did not make any decision at the time to more closely monitor the dealings of the corporate affairs department when the allegation was made and when the investigation was ongoing.

Mr. Brian Geoghegan

The matter was not referred formally to the board. It was in the hands of the internal audit function. I understand the question Deputy O'Brien has asked but the short answer I suppose is "No", in the sense that the board did not involve itself. One of the complications is the one Deputy O'Brien alluded to at the outset, namely, that we were anxious not to do anything that would, in effect——

Deputy Darragh O’Brien

Affect due process.

Mr. Brian Geoghegan

Or prejudice the outcome, which might have given rise to claims against the board or against the organisation.

Deputy Darragh O’Brien

That is fully appreciated but would it not have been a better course of action to more closely monitor that department, not just the individual but the financial controls and the dealing within the department? Did Mr. Geoghegan believe that was being done anyway?

Mr. Brian Geoghegan

I believed that was part of the internal audit investigation.

Deputy Darragh O’Brien

But it was not.

Mr. Brian Geoghegan

If Deputy O'Brien says so, but I have not seen the outcome.

Deputy Darragh O’Brien

To clarify, there was no specific decision by the board to monitor such matters.

Mr. Brian Geoghegan

No, because the matter did not formally come to the board in that sense. It was being dealt with by the internal audit committee.

Chairman

On several questions raised, Mr. Geoghegan claims his memory does not allow him to give full explanations. In preparation for today's meeting, did Mr. Geoghegan consult with FÁS to know if the proceedings of the board under his stewardship could be made available to him to refresh his memory?

Mr. Brian Geoghegan

I spoke to FÁS about several matters. I did not go back to the minutes of board meetings. There were quite a few minutes of meetings during the course of five years.

Chairman

Would Mr. Geoghegan have the right to ask for copies of the minutes?

Mr. Brian Geoghegan

Yes, of course. There was only one matter concerning my memory. It was if I recalled the letter from IT to Mr. Sands and whether it was formally brought to the notice of the board.

Chairman

There are other matters regarding recall.

Mr. Brian Geoghegan

No. I did say on a number of occasions that certain matters would not have been the responsibility of the board and, therefore, would not have come to the attention of the board. The question asked by the Chairman was a specific one relating to a particular letter. It can be verified quickly as to what happened to it, if it did come to the board, and what was its action.

Chairman

We have established that Mr. Geoghegan has the right if he wants to consult the minutes regarding board meetings.

Mr. Brian Geoghegan

Yes.

Chairman

I thank Mr. Geoghegan for his attendance and his help to the committee. The committee will be awaiting the answers to some of the questions that have been raised and not been responded to fully.

I welcome Dr. John Lynch, former director general of FÁS. He did not give the committee an opening statement, so we will begin with questions from Deputy Shortall.

Dr. John Lynch

Before we begin, it was not due to any lack of respect to the committee that I did not send an opening statement. I received a telephone call yesterday at 2.55 p.m. asking me to submit a soft copy of a statement. I was not aware I was required to send one. Given some of the problems I have currently, at 2.55 p.m. yesterday I did not have the time to write an opening statement.

Chairman

It is not a requirement but Dr. Lynch had been invited to the committee since last Friday.

Dr. John Lynch

The invitation did not state an opening statement was an option.

Chairman

That is okay. It is not a big deal.

Deputy Róisín Shortall

I welcome Dr. Lynch to the committee. Given the absence of an opening statement, could Dr. Lynch outline briefly his involvement with FÁS since 1988.

Dr. John Lynch

It started off with my appointment as chairman of AnCO by the then Minister for Labour, Deputy Quinn. The legislation changing AnCO's position did not get through the Dáil because of the fall of the then coalition Government. I was asked to remain on as chairman of the new organisation FÁS, an amalgamation of the Youth Employment Agency, the National Manpower Service and AnCO.

I was chairman for two years and when the chief executive officer left, I took up the reins as director general for several years. Subsequently, my tenure was renewed for another five years. In 2000, I resigned because I feel in any job, any less than five years or any more than ten years is more than sufficient.

Deputy Róisín Shortall

It is unusual to move from being chairman of a board to a director general. How did that come about?

Dr. John Lynch

The board asked me would I consider the position and I went for interview.

Deputy Róisín Shortall

Was the job advertised?

Dr. John Lynch

Yes. On being appointed chairman, I introduced several corporate governance measures which were termed in those days as "good policies". The first was an internal audit committee of the board.

Deputy Róisín Shortall

Perhaps we will go into that later.

Dr. John Lynch

It is very relevant.

Deputy Róisín Shortall

We will go into it later. Was the board responsible for recruiting the director general?

Dr. John Lynch

Yes. Under the Act establishing FÁS it was the relevant Minister who appointed the first director general. After that, it was the board.

Deputy Róisín Shortall

Was that then endorsed by the Minister?

Dr. John Lynch

Yes.

Deputy Róisín Shortall

At the time that would have been the Minister for Labour. It was Deputy Bertie Ahern as far as I can recall.

Did Dr. Lynch retire in 2000 on a full pension?

Dr. John Lynch

I did.

Deputy Róisín Shortall

Was it payable from retirement?

Dr. John Lynch

It is deducted from my present salary. I get a choice of either the pension plus the salary or the salary less the pension.

Deputy Róisín Shortall

Recently, a statutory instrument was introduced changing some public pension schemes and in it I saw a reference to Dr. Lynch's scheme. Was there a special pension scheme set up for him by the Government?

Dr. John Lynch

No, I was entitled to the normal Civil Service pension scheme.

Deputy Róisín Shortall

Was a separate scheme established for Dr. Lynch?

Dr. John Lynch

No, not to my knowledge.

Deputy Róisín Shortall

It was listed as a special scheme with his name on it in the statutory instrument. It was not part of a group scheme.

Dr. John Lynch

All I can say is that I know what I get paid is whatever is recommended by the Higher Education Authority.

Deputy Róisín Shortall

Okay but in documentation I saw, there was a reference to the John Lynch pension scheme, which I thought was rather unusual.

Dr. John Lynch

I did not know that.

Deputy Róisín Shortall

Was it a full pension that was payable from Dr. Lynch's retirement after nine years with the body?

Dr. John Lynch

I had previous years as well in other organisations. It is not a full pension that is payable from the particular year because it is deducted from my salary. I do get the pension but I also do not get the full salary for my job in CIE.

Deputy Róisín Shortall

I accept that. Prior to taking on the job of director general in FÁS, Dr. Lynch was chief executive officer of Bord Gáis.

Dr. John Lynch

Yes.

Deputy Róisín Shortall

Does that mean the pensions are combined?

Dr. John Lynch

Yes.

Deputy Róisín Shortall

Concerning Dr. Lynch's involvement with Mr. Greg Craig, at what point was Greg Craig employed by FÁS?

Dr. John Lynch

I do not know the exact year he was employed. I would say it was half way during my period at the organisation. There was a person in his position before Greg Craig was employed. He wanted an assistant, the job was advertised, there were interviews and Greg Craig got the job.

Deputy Róisín Shortall

Had Dr. Lynch known him prior to his joining FÁS?

Dr. John Lynch

No.

Deputy Róisín Shortall

Did he report directly to Dr. Lynch?

Dr. John Lynch

It depends when. In 2000 he would have been reporting directly to me.

Deputy Róisín Shortall

When did he start reporting directly to Dr. Lynch?

Dr. John Lynch

The head of that department was Mr. Pat O'Shea and he employed Mr. Greg Craig. Then, Mr. Pat O'Shea died — I am not sure whether he had retired by that time. We had to get a replacement. Mr. Gregory Craig applied and he was interviewed and appointed.

Deputy Róisín Shortall

Was it unusual that he was reporting directly to Dr. Lynch?

Dr. John Lynch

Back in 1991 the person in charge of public affairs reported to Mr. Gerry Pyke here. No disrespect to Mr. Pyke, who was a superb executive, but I found that the system being employed was not satisfactory in the years from 1991 because the biggest area we were involved in then was community employment. At one stage there were 50,000 people on community employment schemes. I would get regular requests to the effect that the Minister or a community wanted to launch something and I needed somebody to liaise with the regional directors. As a result, it was better that I controlled it then. The system prevailed under Mr. Gerry Pyke for about a year or two and then I decided that Mr. Pat O'Shea, the person who got the job, would then report to me and that system carried on with Mr. Gregory Craig.

Deputy Róisín Shortall

Will Dr. Lynch outline for the committee his involvement in the Jobs Ireland website?

Dr. John Lynch

To my knowledge we had a website that was developed in the first half of 1999. I knew nothing about a second website. I was never told about a second website. If I had been, I should certainly have queried it because it is my nature to do that. This website was being developed. I was surprised, too, because the system that kept me out of trouble for ten years was such that the finance department, if there was a problem, would make it known to me, and we would sort it out. However, the finance department did not come to me. I have now assumed, from listening to the discussions this morning and I suspect — although I do not know — that no invoices were coming into the accounts department of which it could be aware. The IT department was aware of it and went to the director general at the time. It did not come to me, however, so I knew nothing about a second website. The first time I knew about it was from reading the documentation here.

Deputy Róisín Shortall

Reading the documentation here?

Dr. John Lynch

Yes, the documentation the committee had during the course of its discussions with Mr. Molloy, when he said he had discovered there was a second website and then he closed one down. I did not know about a second website.

I knew there was a problem with the website the IT people had developed in the first half of 1999. However, I was not aware that anybody had been hired and that money was being spent or that a second website was being developed.

Deputy Róisín Shortall

When was that expenditure incurred?

Dr. John Lynch

I do not know.

Deputy Róisín Shortall

Does Mr. Pyke know?

Mr. Gerry Pyke

I have no involvement with the website. It was not part of my responsibility at the time.

Deputy Róisín Shortall

Can anyone from FÁS tell me when that expenditure was incurred?

Mr. Con Shanahan

It was closed down some time early in 2001, 3 January I believe, so I presume it must have been in the preceding 12 months of the period in question.

Deputy Róisín Shortall

It was in operation for 12 months.

Mr. Con Shanahan

I believe so, or thereabouts. I am not sure how active or effective it was during that period, as I had no involvement in it, whatsoever.

Mr. Patrick Kivlehan

In July 2001 a batch of 20 invoices was submitted by the company that was developing and maintaining the website.

Deputy Róisín Shortall

That was the first expenditure incurred.

Mr. Patrick Kivlehan

That was the first expenditure.

Chairman

When was this?

Mr. Patrick Kivlehan

It was July 2001.

Chairman

To what period does that relate? There was €3.55 million paid by FÁS between August 2000 and August 2001.

Mr. Patrick Kivlehan

That would have related to a number of contracts. There was the website development and maintenance and perhaps an opportunities and events account as well. The expenditure would not have related to the website alone.

Chairman

Some 20 invoices came in together.

Mr. Patrick Kivlehan

Yes, that is correct. In July 2001 20 invoices were submitted for website development, maintenance and various monthly costs associated with the leasing of the website.

Chairman

How much was the total bill?

Mr. Patrick Kivlehan

It was €687,000.

Chairman

How much more was paid subsequently?

Mr. Patrick Kivlehan

That would be part of the total figure of €1.7 million — in relation to development and maintenance.

Chairman

Let us get this straight. On what dates were the payments made?

Mr. Patrick Kivlehan

There was a block group of 20 invoices on July 2001, which would indicate some work had been done prior to that date.

Chairman

For the period starting when?

Mr. Patrick Kivlehan

It is not saying that, I am afraid. Can the Chairman give me a few moments and I shall see whether I can find out more.

Chairman

Our information is that this is from August 2000, when the contract was given. Is that correct?

Mr. Patrick Kivlehan

Yes, that is correct, to manage the Jobs Ireland website. However, that was to manage the Jobs Ireland programme. There are two elements to that, the employment fares that were done abroad and the website development as well. If the Chairman gives me a moment I shall see whether I can cross-reference to the website.

Chairman

That was in 2000 and the company was set up ten days beforehand. Is that correct?

Mr. Patrick Kivlehan

That is correct, that was the finding.

Deputy Róisín Shortall

At that stage, in 2000, what was Mr. Craig's title?

Dr. John Lynch

I believe he was head of corporate affairs, although I was assuming it was public affairs.

Deputy Róisín Shortall

What was his actual title?

Dr. John Lynch

I believe it could have been head of corporate affairs.

Deputy Róisín Shortall

Up to the point when Dr. Lynch resigned as director general, he was reporting directly to him throughout that period. Even though the second website was developed during 2000, Dr. Lynch is saying he was not aware of it at any stage.

Dr. John Lynch

I was not aware of it. Under the system that I had, first of all I should have been aware of it — somebody should have told me. The system I had throughout all those years was such that the head of finance, if there was a problem, would come to me. Nobody came to me. I am pleased to say that eventually the internal audit caught it, which was its function, in accordance with how it was set up. The sad thing was that when it was originally set up in 1990, it was decided that the internal auditors should report directly to a board sub-committee, which reported to the board and bypassed the chief executive.

Deputy Róisín Shortall

What was the threshold that applied in relation to the expenditure Mr. Craig was allowed to engage in?

Dr. John Lynch

I have no recollection, but I am sure it was quite small.

Deputy Róisín Shortall

Is there any way of establishing that?

Mr. Con Shanahan

I cannot recall, since I was not there at the time, but I believe we can be sure it was a procurement that should have gone to the board — if that is the nature of the Deputy's question.

Deputy Róisín Shortall

I just asked what the threshold applying to Mr. Craig was.

Mr. Patrick Kivlehan

The threshold was revised in April 2005, so there was a previous level, which would have been lower. We shall have to go back and reference that.

Mr. Denis Rowan

If the Deputy wants, we can give the figures now and we can——

Deputy Róisín Shortall

No, I am talking about the situation then, in 2000. Dr. Lynch cannot recall that.

Dr. John Lynch

I have no recollection.

Deputy Róisín Shortall

Had Dr. Lynch concerns at any stage in relation to Mr. Craig's activities?

Dr. John Lynch

At that time I did not know he was doing a website.

Deputy Róisín Shortall

Had you any concerns?

Dr. John Lynch

Generally no, he was a good executive, bearing in mind his job when he was appointed and also forwarding to this particular period when eventually shortages appeared in the economy. His job was basically to look after projects that were being organised predominantly for community employment.

Deputy Róisín Shortall

I find it hard to understand why the situation was allowed to continue over a number of years — where Mr. Craig was reporting directly to Dr. Lynch why there was not someone in between supervising.

Dr. John Lynch

That is fairly normal in most corporations. The head of public relations would report in to the chief executive on a regular basis. It just happens to be very important.

Deputy Róisín Shortall

Given the staff structure in FÁS, with the various directors and assistant director generals, is it normal?

Dr. John Lynch

That is a point, but this is a very important function. Most major organisations' public relations sections report directly to the chief executive. This is not unusual in corporations. I had four assistant director generals, and 11 or 12 directors. The directors were specific to regions.

Deputy Róisín Shortall

What were Mr. Craig's qualifications for the job in FÁS?

Dr. John Lynch

I do not know. I do not remember seeing his CV. He went through the normal interview process. It would have been up to somebody from the area in personnel to decide that he or she was happy enough with hiring Mr. Craig.

Deputy Róisín Shortall

Where had he been beforehand?

Dr. John Lynch

I do not know.

Deputy Róisín Shortall

Can Mr. Kivlehan tell us that? Does he know where Mr. Craig was before he joined FÁS?

Mr. Patrick Kivlehan

I am afraid that I do not know.

Deputy Róisín Shortall

I would like to ask Dr. Lynch about the FÁS policy on foreign travel. Can he outline that to us?

Dr. John Lynch

I always assumed that foreign flights at the most were business class, and generally coach class. The only reason business class would be chosen would be for flexibility of tickets. If a FÁS employee was in Brussels and he or she wanted to get home earlier, he could do that. That was my view of the situation.

Deputy Róisín Shortall

What about adherence to the guidelines of the Department of Finance?

Dr. John Lynch

I understood the Department of Finance guidelines were that business class was the maximum allowed, and that coach class was generally used.

Deputy Róisín Shortall

Business class was to be used only if it was absolutely necessary.

Dr. John Lynch

Yes.

Deputy Róisín Shortall

However, business class was used much more widely than that in FÁS.

Dr. John Lynch

I do not know if that was the case in my time, but I cannot contradict the Deputy.

Deputy Róisín Shortall

Did Dr. Lynch ever have any concerns about the extent of foreign travel?

Dr. John Lynch

I did not mind foreign travel if it was being paid for by Brussels. If it was being paid for the taxpayer, I was certainly concerned. When I say "paid for by Brussels", I mean that they could get a refund for the foreign travel. To my knowledge, there was not that much travel.

Deputy Róisín Shortall

We are at a disadvantage as we have not been provided with the details of foreign travel for that period. We are still awaiting that, even though we requested it three or four weeks ago.

Dr. John Lynch

I am sorry about that. I am not being deliberately awkward about it, because I do not remember it. It goes back many years.

Deputy Róisín Shortall

The purchase of corporate seats in Croke Park by FÁS was covered by the media in recent days. Can anybody from FÁS tell me when they were purchased?

Mr. Con Shanahan

Two were purchased in 2005 and two were purchased in 2007.

Deputy Róisín Shortall

Was that approved by the director general at the time?

Mr. Con Shanahan

Yes.

Deputy Pádraic McCormack

Was any proposal approved by the executive board on the expenditure on the website?

Dr. John Lynch

I do not know. I was the chief executive and it did not come to me. Given the figures trotted out now, it is almost certain that it would have had to go for tender and would then go for formal board approval. That never happened. I was never asked and I did not know there was a second website being prepared. It is a pity that Mr. Craig is not here, because I expect that he would confirm that I did not know. I have no evidence of that, but——

Deputy Pádraic McCormack

When did Dr. Lynch first become aware that the company that got the contract to manage the Jobs Ireland programme was only incorporated ten days before it got the contract? When did he become aware that between August 2000 and August 2001, the company was paid €3.55 million? Is that not a staggering amount? Nobody seems to know how this arose.

Dr. John Lynch

It is a staggering amount. I became aware of it this week when reading the committee's documents.

Deputy Pádraic McCormack

Yet that happened between 2000 and 2001.

Dr. John Lynch

Yes, and I left in August 2000.

Deputy Pádraic McCormack

Was Dr. Lynch aware of this when he left in August 2000?

Dr. John Lynch

No.

Deputy Pádraic McCormack

Who would be responsible for that?

Dr. John Lynch

I presume the man who incurred——

Chairman

You said you left in August 2000.

Dr. John Lynch

Yes.

Chairman

I thought it was October 2000.

Dr. John Lynch

No.

Chairman

This is information we got from FÁS.

Dr. John Lynch

As far as I am concerned, I could stand corrected. Maybe it was the end of September rather than the beginning of September.

Chairman

You said August.

Dr. John Lynch

No, I left at the end of August. If I left at the end of September——

Chairman

We have October here.

Deputy Darragh O’Brien

It was 1 October 2000.

Dr. John Lynch

In which case, it would have been the end of September.

Deputy Pádraic McCormack

Was Dr. Lynch ever concerned that contracts relating to Jobs Ireland needed the board's approval?

Dr. John Lynch

Of course, I was. However, the Deputy must understand that I did not know some of——

Deputy Pádraic McCormack

I am a bit slow.

Chairman

Please do not patronise the Deputy.

Dr. John Lynch

I was not trying to patronise him.

Chairman

You were. Please answer the questions.

Dr. John Lynch

If that is the case, I apologise. I did not know that this site was being developed.

Deputy Pádraic McCormack

Who knew?

Dr. John Lynch

I presume it was the man who gave out the contracts.

Deputy Pádraic McCormack

Was the board aware of the €3.55 million cost of this?

Dr. John Lynch

I was not aware of it before I left, and from what I have heard today, it only came to the notice of the board when the director general went in and discovered what was happening. I presume the figures were then coming through the finance department, which would have raised the issue with the IT department and would have then brought it to the director general. The site would then have been closed down and the board was obviously told.

Deputy Pádraic McCormack

Was any proposal ever put to the board about this expenditure?

Dr. John Lynch

It was not put to me, so it would not have been put to the board.

Deputy Pádraic McCormack

All right. We touched on the issue of foreign travel with Mr. Geoghegan, although I am still confused about it. He felt that the board should not take any responsibility for it, as it was an executive matter. Who does Dr. Lynch feel should have been responsible for signing off on foreign travel?

Dr. John Lynch

The director general should have been responsible for it. Apart from his own foreign travel, he should sign off on the foreign travel of everybody else. If there is to be a significant amount to spent on foreign travel, he may go to the board over it.

Deputy Pádraic McCormack

FÁS has a director general and 13 or 14 assistant directors. What do they all do? It is like our Lord and the 12 apostles.

Dr. John Lynch

I can only comment on the structure in my day. There was a director general and five assistant director generals who had various functions, including an assistant director general for finance and one for regions — I cannot think of the other two or three. After that there were ten regional directors, such as for Cork, Galway and Limerick, and they looked after——

Deputy Pádraic McCormack

Are they all assistant directors?

Dr. John Lynch

No.

Deputy Pádraic McCormack

In addition to all the assistant directors, there were all of the regional directors.

Dr. John Lynch

The regionals report to the assistants.

Deputy Pádraic McCormack

How many regional directors are there?

Dr. John Lynch

Ten.

Deputy Pádraic McCormack

That makes 24.

Dr. John Lynch

No. There is the director general, five assistant director generals and ten directors.

Deputy Pádraic McCormack

When an assistant director retires or resigns, is somebody appointed in that person's place?

Dr. John Lynch

It did not occur in my time but it would have been my view that I would not replace that particular post.

Deputy Jim O’Keeffe

I wish to refer to the FÁS website because what is emerging is quite extraordinary. When was Mr. Craig recruited?

Dr. John Lynch

I do not remember the particular time but it was probably halfway through my period, in which case it would have been about 1995 or 1996.

Deputy Jim O’Keeffe

He would not have been an assistant director general. He would have been at a lower level.

Dr. John Lynch

He was not head of corporate affairs. He was just a person who worked in corporate affairs. The head of corporate affairs was a man called Pat O'Shea.

Deputy Jim O’Keeffe

He would have been at the fourth level of governance.

Dr. John Lynch

He would have been down a bit, yes.

Deputy Jim O’Keeffe

How could somebody of that relatively junior status spend millions on a website and nobody seemed to notice?

Dr. John Lynch

Let me put it this way. I have found that in any organisation, one can have the best of procedures and policies but if somebody breaks them, one does not discover it until one's internal audit people start to descend on the situation.

Deputy Jim O’Keeffe

At some stage, it was discovered that this man was involved in this process which resulted in a loss of at least €1 million to the taxpayer. Was he called to account?

Dr. John Lynch

I was not there at the time. As I said, I did not know a second website was being developed. I left and when I did so — I only heard it this morning — the head of IT was very concerned and a committee was set up, as I understand it, chaired by Denis Rowan. It was then decided to drop it. I was not privy to that at all.

Deputy Jim O’Keeffe

Was Dr. Lynch concerned? I am told that following this enormous expenditure and huge loss to the organisation, there was concern and a committee was set up. Did anything else happen in regard to the issue or the individual involved at that time? He subsequently seems to have been promoted to the organisation. Perhaps Mr. Rowan will comment. He was appointed to lead the recovery charge but nothing seems to have happened.

Mr. Denis Rowan

I was appointed to chair a small group inside FÁS examining the fact there were two websites, which I did as a broker between the people concerned. Very quickly, that group prepared a report stating that the second website should be closed down. That was the end of that group's work.

Deputy Jim O’Keeffe

Does Dr. Lynch, who has long experience at semi-State level, understand how extraordinary I find it that somebody in a relatively junior position would effectively waste over €1 million of taxpayers' money and nothing was done about it?

Dr. John Lynch

I do find it extraordinary. Then again, as I said, one can have all the systems in the world. The only hope is that if someone is less than honest, one's internal audit and finance systems would catch it. In this case, they did — maybe a bit late, but they certainly caught it. The question is what one does after that. I am constrained by the Chairman's first statement as to not having privilege as to what I think happened after that. Would I have been concerned if I was there? Yes. Would all hell have broken loose? Yes.

Deputy Jim O’Keeffe

Does Dr. Lynch understand that I find it more extraordinary that the individual in question seems to have been promoted in the organisation rather than dealt with otherwise?

Dr. John Lynch

He was not promoted to his current level by me.

Deputy Jim O’Keeffe

I take that point because Dr. Lynch had left but he was promoted.

Dr. John Lynch

So I am told. Since I left, which was in the year 2000 or thereabouts, I have never darkened the door of FÁS and I have never spoken to the particular man in question. That is eight and a half or nine years ago.

Chairman

With all due respect, on your watch he came in as a relatively junior employee. He was promoted by you under your stewardship to a situation where he was able to spend whatever sum he spent. He seemed to be a high flyer and then seemed subsequently to be untouchable.

Dr. John Lynch

He applied for the job and got it through the system. Of course, I had to give my imprimatur in that particular system. One could say he was promoted by me but he was promoted by the system itself and, therefore, I accepted it. He was good, there is no doubt about it. I do not understand what has happened in this case because it seems to have gone totally off the Richter scale, frankly.

Deputy Pádraic McCormack

In view of the statement that all hell would have broken loose, does Dr. Lynch regret he retired from FÁS so early in his active life and was not there to let all hell break loose, to quote his own words?

Dr. John Lynch

No. I feel that one should not be in any job less than five years or more than ten. After that——

Deputy Pádraic McCormack

He should not say that to Dáil Deputies.

Dr. John Lynch

They have to go every five years to get elected, which is more difficult than my job. The reason is that if one is at chief executive level, it is very difficult to bring any more to the party after that.

Deputy Pádraic McCormack

From what he says now, he would have brought a lot more to the party by making all hell break loose if he was still there at the——

Dr. John Lynch

Regrettably, I——

Deputy Jim O’Keeffe

What is emerging to us following the past couple of months is that it is becoming increasingly evident that there has been, as I described at our last meeting, a culture of squandermania in FÁS. Would Dr. Lynch accept this in regard to the website and the evidence that has emerged regarding foreign travel, first class travel, trading down tickets and the other issues highlighted by the Comptroller and Auditor General? Would he accept there is huge evidence to support my view that there was, and perhaps still is, a culture of squandermania?

Dr. John Lynch

I can only comment on my time there. Most of the things we did, we did not always have all the money we needed. Certainly, the budget it currently has is one I would have dreamed about. Most of my job was going around the country attending many community projects.

I think 50,000 people were occupied in community projects as we tried to get young apprentices to finish their time, because this was during the recession. We kept up as many apprenticeships as we could and subsequently they benefited when the upturn came about. Frankly, this was a tough job because there was not much money available. The job we were looking at was community employment for the unemployed——

Deputy Jim O’Keeffe

I accept all that. I was referring more to the evidence that has been pouring out of the woodwork before the committee in the last series of meetings here, which do not appear to relate greatly to helping the unemployed. Does Dr. Lynch understand members' reaction of a degree of horror to such revelations or the view I expressed at the last meeting that this appears to indicate a culture of squandermania in FÁS? Does Dr. Lynch accept there is much evidence of this?

Dr. John Lynch

On looking in, most of the information I get is from the media and from the committee's documents. There appears to be a great deal of money floating around. However, I do not wish to comment on the time after I left. I can only give members details of my time. I do not wish to cause too much trouble for myself.

Deputy Jim O’Keeffe

It sounds as though Dr. Lynch is glad not to be involved.

Dr. John Lynch

Yes, I am.

Mr. Denis Rowan

I wish to respond to the point Deputy Jim O'Keeffe made. Of course the matters that have been discussed at this committee in recent months are of great concern. Remarks have been made by people on this side of the table in response to particular matters. However, I am aware of the substantial number of staff who are on the ground in community employment schemes and a range of other initiatives who are doing great work. The matters concerned are confined to a small number of people.

Deputy Róisín Shortall

No one disputes that. Members are aware of the work that is done.

Deputy Darragh O’Brien

Week after week, as the Chairman restated today, there is no question but that this committee entirely supports the work of the vast bulk of the staff of FÁS.

Deputy Róisín Shortall

At a local level.

Deputy Darragh O’Brien

It is not the fault of the committee that a cloud hangs over the organisation. Members are doing their job on behalf of the taxpayer, as they must.

Deputy Pádraic McCormack

If morale in FÁS is damaged or low, it certainly has not been damaged by anything this committee is doing. It has been damaged by the internal workings of FÁS the members are trying to investigate and get answers to.

Mr. Denis Rowan

I am not suggesting that. I am simply trying to create a context. I am not taking away from the concerns, the issues or the size thereof.

Deputy Róisín Shortall

Perhaps Mr. Rowan should refrain from commenting in that regard.

Mr. Denis Rowan

Okay.

Deputy Jim O’Keeffe

Members accept, as part of the background, that many good people in FÁS are doing an excellent job. While they accept that, members are focusing on the issues.

Mr. Denis Rowan

Absolutely.

Deputy Jim O’Keeffe

In light of this, does Mr. Rohan accept there appears to be evidence of a culture of squandermania within the organisation at some levels?

Mr. Denis Rowan

I can accept that mistakes have been made. People from FÁS have come before the committee and have stated this. Obviously, this still is of great concern to us at FÁS. I fully accept this and I have no problem whatsoever with it. I was not trying to reflect in any way on the committee's work.

Chairman

We will revert to Dr. Lynch. I had thought that Mr. Rohan had something to contribute in respect of the evidence being given by Dr. Lynch. Does any other member of the committee wish to contribute?

Deputy Darragh O’Brien

I wish to wait until the next round of questions.

Deputy Róisín Shortall

I wish to ask Dr. Lynch one further question. Dr. Lynch should clarify the information he gave me earlier in respect of the recruitment process when he moved from being chairman of the board to being director general. Was that process straightforward?

Dr. John Lynch

It was a straightforward process. There was an interview, which was chaired by Chris Kirwan, who subsequently became chairman of the board, and a set of board members.

Deputy Róisín Shortall

Did Dr. Lynch's vice chairman interview him for the job?

Dr. John Lynch

No, he was a board member. He was elected by the board to chair my interview for and on behalf of the board.

Deputy Róisín Shortall

Did he become vice chair subsequently?

Dr. John Lynch

I believe he was appointed by the Taoiseach of the day, Mr. Haughey.

Deputy Róisín Shortall

To what position was he appointed after Dr. Lynch vacated?

Dr. John Lynch

To the position of chairman.

Deputy Róisín Shortall

He became chairman. Before that, what was his position?

Dr. John Lynch

He was a board member appointed by ICTU.

Deputy Róisín Shortall

Very well. He was on the interview board.

Dr. John Lynch

He chaired the interview board.

Deputy Róisín Shortall

Who were the other people on the interview board?

Dr. John Lynch

I cannot remember off the top of my head.

Deputy Róisín Shortall

Were they internal people?

Dr. John Lynch

They were board members.

Deputy Róisín Shortall

They were all board members. This appears to be a highly unusual situation to say the least. Was this on the first round of recruitment or was a second round carried out?

Dr. John Lynch

I do not know. I cannot remember whether there was one round or two.

Deputy Róisín Shortall

My information is there was a recruitment process, a number of people applied for the job and that it was indicated to a person that the person in question had the job.

Dr. John Lynch

What was indicated?

Deputy Róisín Shortall

It was indicated that one person had been given the job and that the position was re-advertised subsequently at which point Dr. John Lynch applied for it.

Dr. John Lynch

The Deputy has me, as I cannot remember. However, I can check it out.

Deputy Róisín Shortall

Perhaps Dr. Lynch should try to recall it now. He should think back to the period when he secured that highly significant job.

Dr. John Lynch

This was 20 years ago.

Deputy Róisín Shortall

Not quite.

Dr. John Lynch

It is close to 20 years ago.

Deputy Róisín Shortall

Okay.

Dr. John Lynch

All I can remember is that the chief executive at the time, the director general, retired because he wished to go to another job. We had a problem, an advertisement was placed and interviews were carried out. I do not think I chaired any of those interview boards. Thereafter I was interviewed, because I put my hat in the ring, and I got the job.

Deputy Róisín Shortall

Is Dr. Lynch confirming he did not apply for the job in the first round?

Dr. John Lynch

I really cannot remember. However, I will check it out for the Deputy.

Deputy Róisín Shortall

Dr. Lynch has just stated he cannot recall whether he chaired the interview board.

Dr. John Lynch

That is true. I cannot recall.

Deputy Róisín Shortall

If there was a possibility of Dr. Lynch chairing the interview board, clearly he was not a candidate.

Dr. John Lynch

That is true. However, I am telling the Deputy I cannot remember. I will check it out and will revert to the Chairman.

Deputy Róisín Shortall

Does Dr. Lynch then accept there was a first round of interviews?

Dr. John Lynch

I am not accepting anything in this regard because I cannot remember.

Deputy Róisín Shortall

Were any of the other witnesses around at the time?

Mr. Denis Rowan

While I was around at the time, I was not involved in the appointment of the director general by the board of FÁS.

Dr. John Lynch

I am not trying to give a smart answer to the Deputy. I simply do not remember. However, I will check it out.

Deputy Róisín Shortall

Earlier, Dr. Lynch stated he was asked by the board to stand.

Dr. John Lynch

No, a few people asked me whether I would stand. Thereafter, however, I was obliged to apply formally, the same as everyone else.

Deputy Róisín Shortall

It is my information that while the post was advertised and interviews took place, Dr. Lynch did not apply for that post. Subsequently, it was re-advertised.

Dr. John Lynch

Perhaps the Deputy is correct. I cannot remember.

Deputy Róisín Shortall

It is strange that Dr. Lynch cannot remember the circumstances surrounding his own recruitment.

Dr. John Lynch

A long time has passed since then. However, if the Deputy will accept that I will check it out and revert to the Deputy, I have no problems with that.

Deputy Róisín Shortall

That is very strange. Can Dr. Lynch tell members by whom he was interviewed?

Dr. John Lynch

The only person I can recall, who chaired the interview board, was Chris Kirwan.

Deputy Róisín Shortall

This sounds like a very cosy relationship. The person who gave the chairman of the board the job as director general subsequently succeeded him in becoming chairman of the board.

Dr. John Lynch

I would not call Chris Kirwan a man of cosy relationships. He was a very strict man.

Deputy Róisín Shortall

It sounds to me like a very cosy relationship.

Dr. John Lynch

Fair enough. However, I am simply saying that Chris Kirwan is not a man one could take lightly or could say was cosy.

Deputy Róisín Shortall

Okay. Prior to Dr. Lynch's retirement, he received a significant increase from the then Minister for Enterprise, Trade and Employment. According to newspaper reports, the reason was to enhance Dr. Lynch's pension. Did he raise the issue of his salary with the board?

Dr. John Lynch

No, my salary was governed by the Department and the Minister.

Deputy Róisín Shortall

Did Dr. Lynch receive a significant increase just before he retired?

Dr. John Lynch

The only increase that I would have received was the one normally applied to all public servants, not specifically to John Lynch.

Deputy Róisín Shortall

According to newspaper reports, that was not the case. It seemed to be a significant increase.

Dr. John Lynch

With due respect to colleagues, newspaper reports are not always accurate. Anything that I would have received went through the normal Civil Service process.

Deputy Róisín Shortall

I will check that in a moment. Perhaps Dr. Lynch will answer another aspect. It would have been unusual for him to be awarded a full pension, given his length of service. With whom did he negotiate his pension?

Dr. John Lynch

Initially, I negotiated with Deputy Quinn and, subsequently, the former Taoiseach, Deputy Bertie Ahern. I was requested to go to CIE. I had formally retired before the announcement of my retirement. I was then asked to go to CIE, at which time I negotiated the pension. I already had an arrangement with Deputy Quinn.

Deputy Róisín Shortall

How did Dr. Lynch have an arrangement with Deputy Quinn? Did the latter appoint the former as chairman of the board?

Dr. John Lynch

Yes.

Deputy Róisín Shortall

Was there a pension with that?

Dr. John Lynch

No.

Deputy Róisín Shortall

How did Dr. Lynch negotiate his pension with Deputy Quinn?

Dr. John Lynch

He was the Minister for Industry and Commerce at the time.

Deputy Róisín Shortall

However, Dr. Lynch was appointed as director general in 1991. When did he negotiate with Deputy Quinn?

Dr. John Lynch

It was when he was a Minister. Perhaps someone will refresh my memory as to when that was.

Chairman

The period was 1992-94.

Dr. John Lynch

During that period.

Deputy Róisín Shortall

Why did Dr. Lynch need to negotiate later?

Dr. John Lynch

The conditions were exactly the same. It was a matter of clarification.

Deputy Róisín Shortall

On the basis of how many years of service was Dr. Lynch awarded a full pension?

Dr. John Lynch

Do I need to answer this question?

Chairman

It is relevant.

Dr. John Lynch

Ten years.

Deputy Róisín Shortall

The information I have from a newspaper article is that, shortly before Dr. Lynch's retirement, his salary was increased from £77,000 to £93,220. Is that correct?

Dr. John Lynch

I would not have received any special consideration in respect of my salary other than what prevailed in the public sector.

Deputy Róisín Shortall

Is Dr. Lynch saying that the newspaper report is not accurate?

Dr. John Lynch

I am not saying that. I do not have the newspaper and I do not know the date.

Deputy Róisín Shortall

I am sure he is aware of the newspaper reports of the time.

Dr. John Lynch

Excuse me, but I am not. I am sorry, but I am not aware of the newspaper report.

Deputy Róisín Shortall

May I cite the Irish Independent report? It stated that the then Minister, Deputy Harney, who oversaw FÁS, the training and employment agency, increased the pay of its director general, Dr. Lynch, from £77,000 to £93,220, including a 15% bonus so that he would get a bigger pension upon leaving to become the chairman of CIE. Is this report accurate?

Dr. John Lynch

I do not think that is accurate.

Deputy Róisín Shortall

Is Dr. Lynch saying that it is not accurate?

Dr. John Lynch

If I got anything from the Minister, Deputy Harney, it would have been due to a review of the State bodies and the various categories. FÁS changed from category two to category one on the basis of a particular report. This is why I would have got a salary increase.

Deputy Róisín Shortall

Is Dr. Lynch saying that he got an increase?

Dr. John Lynch

I am saying that, if I had got an increase, that is how——

Deputy Róisín Shortall

He does not know whether he got an increase.

Dr. John Lynch

——it would have come about.

Deputy Róisín Shortall

Does Dr. Lynch know whether he got an increase prior to his retirement?

Dr. John Lynch

I do not know about the increase, but I was changed from category two to category one, which included the IDA and various such places. On foot of a report it was decided that I would be changed to category one. This would have been the only reason for an increase.

Deputy Róisín Shortall

I asked Mr. Geoghegan earlier whether he had concerns that there was a certain culture within FÁS of senior executives seemingly using public money as a slush fund. Did Dr. Lynch have any concerns in that regard?

Dr. John Lynch

Not in my day. There was no slush fund.

Chairman

I thank Dr. Lynch for attending. His lack of knowledge about some of the serious things that happened in FÁS during his time there amazes me. He attended under pressure, given what is occurring in CIE, but I hope for all of our sakes that he has his hand more on the till there than he had in FÁS and that it is more under control.

Deputy Róisín Shortall

May I receive clarification on when the committee will receive the information on the recruitment process?

Chairman

Who is to provide it?

Mr. Denis Rowan

We will provide it reasonably soon. As a date-based matter, it is straightforward enough.

Dr. John Lynch

I apologise to Deputy McCormack. May I now leave?

Chairman

Yes, and all the best for the Christmas season. We will take a sos until 1.30 p.m.

The witness withdrew.

Sitting suspended at 1.05 p.m. and resumed at 1.35 p.m.

Chairman

We shall resume in public session to put questions to Mr. Gerry Pyke. I call Deputy O'Brien.

Deputy Darragh O’Brien

Go raibh maith agat. I refer to Mr. Pyke's opening statement, which we received already and which he covered in summary. His second point states: "Mr. Craig was one of my six direct reports, and my riding instructions from Mr. Molloy were to encourage innovation and to ensure proper processes." With regard to encouraging innovation, can Mr. Pyke enlighten me on the instructions given to him by the former director general? We can address ensuring proper processes afterwards.

Mr. Gerry Pyke

This is from memory and is based on a conversation between Mr. Molloy and me. Before Mr. Molloy became director general in FÁS, he was an assistant secretary in the Department of Enterprise, Trade and Employment. At one stage he was involved with, and had responsibility for, liaising with the organisation. He knew the organisation well and knew that Mr. Craig had a track record of innovation. There were a number of items he was aware of, such as the annual opportunities fair, the programme to attract Irish emigrants home and to attract other people to work in Ireland through the Jobs Ireland campaign. Mr. Molloy was anxious that the organisation should be into innovation, bringing new initiatives and responses to situations and thought that Mr. Craig had displayed these talents. It would be important in a new situation, where he would be part of my division, that he be given head room to continue to innovate.

Deputy Darragh O’Brien

What degree of responsibility did he have within the remit of his job? Were his powers and areas of influence extended following the conversation with Mr. Molloy?

Mr. Gerry Pyke

No, there was no extension of his powers but it was open to him to bring forward proposals and ideas, which he did. A number of them are listed in the statement I provided the committee, such as the "Know Before You Go" campaign.

Deputy Darragh O’Brien

Yes.

Mr. Gerry Pyke

He was not given autonomy to launch initiatives. It was his job to develop proposals, put them forward, have them examined and, if approved, get on with them.

Deputy Darragh O’Brien

I know Mr. Pyke has followed transcripts of previous meetings. I will try not to go over too much old ground. We appreciate Mr. Pyke's appearance to add clarity. It looks to me that he was told to go and do a job. It is clear from written and witness evidence since 2 October that he did not adhere to the proper processes, the second part of the sentence to which I referred. Was Mr. Pyke comfortable that Mr. Craig was allowed to manage a budget, effectively over three years, of €48 million that he spent on behalf of FÁS? What dealings did Mr. Pyke have with Mr. Craig in respect of expenditure and the awarding of jobs and contracts?

Mr. Gerry Pyke

In terms of the expenditure, Mr. Craig did not set the advertising and publicity expenditure. He was one of many directors who had to get involved in a bid process. Every year directors would make bids for expenditure in their areas or responsibility.

Deputy Darragh O’Brien

I refer to the actual moneys awarded to private companies by Mr. Craig. I will provide a few examples. Numerous jobs were awarded to OSK, without contract, without tender and with money paid up-front before the job was done. This involved €15,000 for a financial review that was six pages long. Regarding FÁS Opportunities, I refer to the contract awarded to Ms Deirdre Lynham for €250,000 — double the amount of any previous or subsequent contract. The famous website was covered by Deputy McCormack. With regard to the €3.55 million, no contract existed and then we were told it was a 36 month verbal contract. This all came through corporate affairs. These are the examples. Was Mr. Pyke comfortable that Mr. Craig had as much head-room to go and act like this?

Mr. Gerry Pyke

The things mentioned in the investigation report were wrong. There were serious breaches of procurement and they were wrong. However, I would point out that these came to light after a forensic examination by our internal audit department following on the anonymous allegations. It took a number of years to complete this study. In the meantime, it was my understanding that when the budget for advertising and publicity was decided upon by the executive board, as with any other director, Mr. Craig would take responsibility for this budget and the associated activities and get on with the job of implementing the approved budget. It was my expectation and understanding that he would do so as he was obliged in accordance with the procedures laid down. He was also subject to the controls. When requests for payments went forward from him they went to the finance department for approval. He was subject to the normal checks and balances in the organisation.

Deputy Darragh O’Brien

I appreciate what Mr. Pyke is saying. We all know what is wrong. What I am trying to get a picture of is in a normal week in FÁS when Mr. Craig was reporting to Mr. Pyke, what interaction did he have with him and did he have any dealings with him on OSK, FÁS Opportunities or the Jobs Ireland website?

Mr. Gerry Pyke

Mr. Craig was one of six people in head office who reported to me. Each of them had budgets and responsibilities to deal with. I had regular interaction with him as did the DG on the business of the day including media queries or planned programmes and activities. Unless a matter required a higher level of authorisation it was his responsibility. He was a very senior officer. He was a director of the organisation which equates to principal officer in the Civil Service. He had associated authority and responsibility levels.

Deputy Darragh O’Brien

Mr. Pyke will agree that very few principal officers would be able to spend €50 million without anyone checking it or having to report the specifics of a number of these contracts to his or her head of function. Mr. Pyke was Mr. Craig's head of function.

Mr. Gerry Pyke

I cannot comment on the Civil Service in general but I have to presume that if the payments were made they were in line with authority levels.

Deputy Darragh O’Brien

Mr. Pyke mentioned proper processes and that he was asked by Mr. Molloy to encourage innovation and ensure proper processes. Is it fair to state that Mr. Pyke failed with regard to proper processes in corporate affairs?

Mr. Gerry Pyke

In terms of proper processes, Mr. Craig was advised by me of the director general's anxieties and suggestions.

Deputy Darragh O’Brien

Advised with regard to what?

Mr. Gerry Pyke

That this was the director general's wish. He spoke to many people throughout the organisation and his constant refrain was that he wanted best practice throughout the organisation. I conveyed this and the innovation message to Mr. Craig. I stated that the director general's wishes were the same as my own. He assured me that he understood them and had no problem with undertaking them. As I stated, he is a senior officer with authority and responsibility. He is subject to financial controls within the organisation. We discussed major activities and programmes.

Deputy Darragh O’Brien

Getting back to the question, is it fair to state that with regard to adherence to proper process within the corporate affairs division that Mr. Pyke, the director general and in particular Mr. Craig failed in this regard?

Mr. Gerry Pyke

Mr. Craig interfered with the procurement process, yes. The determination of this fact took a considerable effort by our internal audit department to determine. This effort was led by the director of audit and his manager. It was not manifest in the normal course.

Deputy Darragh O’Brien

This is my point. I understand internal audit carried out a detailed forensic investigation on this. We know this is a given. I mentioned a number of examples and I could go through far more of them. On a day to day basis did Mr. Pyke know about any of the contracts or payments made out without tendering such as the sales contract 2003 which Donna O'Connor won, even though she never submitted a tender for it? What about up-front payments? Mr. Pyke stated they went to finance and were paid. I worked in the private sector before I came here and I managed teams. While I appreciate Mr. Pyke has six heads of function reporting to him, is he stating that he did not know about any of these payments, contracts or jobs?

Mr. Gerry Pyke

I had no hand, act or part in any of these contracts.

Deputy Darragh O’Brien

I am not——

Mr. Gerry Pyke

May I continue? I have been in the public service for 40 years and I have never been involved in a situation such as this. Had I known of the practices involved I would not have sat on my hands.

Deputy Darragh O’Brien

I am not trying to infer anything with regard to Mr. Pyke. I am stating that he was responsible for this area. While he stated he had no hand, act or part in it, it was his responsibility. Somebody working for him rode roughshod over all agreed practices that are set down in the public service. He wasted money and gave contracts and jobs to people without tendering and Mr. Pyke did not know anything about it.

Mr. Gerry Pyke

These are facts.

Deputy Darragh O’Brien

I am merely asking whether this is the case. Did Mr. Pyke know anything about it?

Mr. Gerry Pyke

I certainly did not know that this man was interfering with proper procurement procedures. The findings of the report came as a shock to me.

Deputy Darragh O’Brien

If we take one of the bigger contracts, the Ultimate Communications contract for €3.55 million, which is a verbal contract, €500,000 a month was paid for 36 months. I do not understand how large payments such as this can be paid out via Mr. Pyke's department through finance to private firms which are supposed to be providing services for FÁS and we did not know about it.

Mr. Gerry Pyke

Please remind me, was the Ultimate Communications contract with regard to the website?

Deputy Darragh O’Brien

It was.

Mr. Gerry Pyke

I had no responsibility for Mr. Craig with regard to the website. With absolute certainty, the other payments did not pass my desk and I had no knowledge of the improper practices which were going on. I presumed, as I did with the five other reports, that they were managing their affairs properly and that there were checks and balances within the organisation. We received monthly reports on expenditure but at an aggregate level and not down to OSK level.

Deputy Darragh O’Brien

Was Mr. Pyke asked by Mr. Molloy to keep an eye on Mr. Craig specifically?

Mr. Gerry Pyke

Absolutely not. Not in the sense that——

Deputy Darragh O’Brien

Not at all or in any sense?

Mr. Gerry Pyke

As I mentioned, Mr. Molloy met the internal audit department which also reported to me and he stated he wanted best practice. He wanted it to be robust and tough. He stated to me that the corporate affairs area had delivered innovation and that we should try to promote this and give it room for innovation. Like me, he was in the public service for a long time and he was conscious of the fact that press offices and corporate affairs departments can often be under severe pressure with regard to deadlines and turnarounds. He stated that the job had to be done within public service norms.

Deputy Darragh O’Brien

Mr. Pyke was never asked to keep a specific eye on Mr. Craig.

Mr. Gerry Pyke

Not in the sense of——

Deputy Darragh O’Brien

After the letter was received in October 2004 and the investigation had begun, within the Department no one paid particular attention to any further contracts or moneys going through Mr. Craig and Mr. Pyke was not asked to do so.

Mr. Gerry Pyke

A set of anonymous allegations were received and the situation was extremely complex. It involved criminal allegations against one of my officers.

I had a duty of care to him, as did Mr. Molloy. I also received strong legal advice to the effect that no action should be taken by anyone which would prejudice Mr. Craig or the outcome of the investigation. If we did anything that appeared prejudicial, the organisation could have ended up in other difficulties.

Deputy Darragh O’Brien

I fully appreciate that. Mr. Pyke is correct in that regard. However, there were no additional controls. I am not speaking specifically about Mr. Craig because, of course, the proper process must be followed. I am not suggesting Mr. Craig should have been shackled but was Mr. Pyke not prompted to investigate more closely day-to-day spending as well as capital and other large expenditure? This might have prevented many of the events which occurred subsequently. Were any additional controls put in place in respect of corporate affairs?

Mr. Gerry Pyke

I had informal conversations with the director of finance in which I asked him to maintain a discreet vigilance while the investigation was ongoing to ensure requests for payment were in order. As I noted in my statement, prior to our receipt of the anonymous allegations, I directed Mr. Craig to make the fullest possible use of the procurement department of FÁS. Through our contract with the advertising agency, it was possible to source material quickly. This had nothing to do with irregularities but was simply because the director of finance and I were studying these areas. There was a mark-up on the services provided by the agency and we could achieve better value for money by providing them ourselves. When the allegations were made, I continued to press Mr. Craig to reduce significantly the volume of services delivered through the advertising agency rather than our procurement department, and the figures are available to show that is what happened.

I was conscious of not being fair to Mr. Craig, who was a senior employee with a long service record and a history of enjoying the trust of the organisation, however misplaced this may have been. I kept putting myself in his shoes. Someone could say something about me and I would hate for one moment to think that people would accept the allegation.

Deputy Darragh O’Brien

I understand that completely. However, the allegation and subsequent investigation did not prompt Mr. Pyke to study expenditure within corporate affairs more closely.

Mr. Gerry Pyke

Leaving aside the wrongdoing, my major concern in terms of supervising Mr. Craig was the outcome for the organisation, which I argue was successful. However, we can all have an opinion on advertising. As we found out over the course of the two-year investigation, the means to these outcomes were wrong. The argument turns on how he secured the services.

Deputy Darragh O’Brien

It also relates to overpayments made after that date. In 2005, the event management contract for the Bravo Group paid €41,000 above the tendered fee. The FÁS opportunities building exhibition stands cost €386,000. Leaving that aside, why was Mr. Craig paid a special merit bonus in June 2005 and who approved it?

Mr. Gerry Pyke

It is amazing how much I have forgotten after just a year out of the organisation. My colleagues can correct me if I am wrong but I understand these payments are made at the discretion of the director general.

Deputy Darragh O’Brien

Did Mr. Pyke have any input into the assessment of a bonus application? I would hope the payment is made on an assessment basis. Would the bonus not have been considered when Mr. Pyke was conducting Mr. Craig's annual review before being sent to the finance department for payment? Perhaps Mr. Pyke can explain the process.

Mr. Gerry Pyke

I had no responsibility for it.

Deputy Darragh O’Brien

Did Mr. Pyke recommend a bonus for Mr. Craig?

Mr. Gerry Pyke

No, I did not recommend a bonus for Mr. Craig. To be fair to the former director general, he had constant interaction with Mr. Craig. As Dr. Lynch pointed out, it is inevitable that someone who is in charge of public affairs would have access to the director general. The latter was conscious of the major events with which Mr. Craig was involved.

Deputy Darragh O’Brien

What about the bonus?

Mr. Gerry Pyke

The bonus was not based on any written recommendation from me. It was paid at the discretion of the director general based on his knowledge of Mr. Craig's performance.

Deputy Darragh O’Brien

Can anyone else clarify that? Did the payment arise in the course of the investigation and, if so, what sum was paid?

Mr. Patrick Kivlehan

It did not arise during the investigation. We would have come across it in the context of a normal payroll audit. A Department of Finance circular allows the payment of a special award based on additional hours worked over and above normal expectations. I will have to revert to the Deputy on the exact wording of the circular. I do not know the amount of the bonus payment.

Mr. Con Shanahan

I could not hazard a guess.

Deputy Darragh O’Brien

We need to find out.

Mr. Patrick Kivlehan

I will get the information now if the Deputy so wishes.

Deputy Darragh O’Brien

That would be welcome. The payment was made at the discretion of the director general.

Mr. Patrick Kivlehan

The circular states that heads of department can make recommendations on whether a person should receive a merit award.

Deputy Darragh O’Brien

Am I correct in thinking the recommendation should be in writing?

Mr. Patrick Kivlehan

It would have to be in writing.

Deputy Darragh O’Brien

Should the reasons for making the bonus payment also be set out in writing?

Mr. Patrick Kivlehan

I presume so. It should be accompanied by some form of paperwork. The circular does not set out the procedure for documenting this payment but we did come across paperwork, which we copied, in the audit or payroll files.

Deputy Darragh O’Brien

We would be interested in learning the sum paid, the process involved and whether other special merit bonuses were paid. We are specifically discussing Mr. Craig at present but I am interested also in information on directors or assistant directors.

Mr. Pyke explained clearly that as a senior employee in the organisation, Mr. Craig awarded the contracts and the payments were made through the finance department. In regard to Mr. Craig's day-to-day expenditure, we received from FÁS an analysis of credit card payments. In fairness to Mr. Pyke, he is bottom of the league in this regard. I understand that people in all corporations will incur valid expenses in the course of their duties but during the period 2003 to 2007, Mr. Craig spent €223,838 on his credit card. That is the equivalent of a salary of €450,000. He was far ahead of anyone else in his expenditure. While I accept that he had to be allowed due process in the investigation, in 2006, or two years after the allegations were made, he spent €105,000 on his credit card. The total expenditure in this area was €500,000. Who approved this expenditure?

Mr. Gerry Pyke

I did. May I outline the background to the matter?

Deputy Darragh O’Brien

Sure.

Mr. Gerry Pyke

I ask the Deputy to bear with me as I am relying on memory. We used Mr. Craig's credit card to meet hotel expenses when we were developing the project in the United States. Given that we were finding our way and starting a new programme, we did not want to set up accounting systems for something that might not grow. The bulk of those expenses would be accounted for by flights, hotels or whatever. My colleagues might correct me if I am wrong, but I think 2006 was the year we held a special fair in New York. That was a time when the undocumented or illegal Irish in the United States were unlikely to get permission to stay there. Mr. Craig and others had the idea that we are short of labour in Ireland, there are illegal Irish in America and maybe we can put the two together. We organised this fair that brought some employers to New York. We also brought people from the Department of Education and Science and the Revenue so people could discuss whether their children would be able to go to school or whatever. As far as I recollect, in 2006 much of the hotel, the hire of the hall and the rooms and the advertising was put through a credit card as a device for paying. That would need to be confirmed.

Deputy Darragh O’Brien

How successful was that initiative?

Mr. Gerry Pyke

We got the front page of The New York Times. We met the Irish consul in New York, who was very gracious in looking after and promoting it. He thought it was one of the best things that had happened to lift the Irish profile in New York. We had queues outside the door. We had to stop and close the place down for safety reasons. We had articles in The Economist and got a blaze of publicity and we think we helped many people in a practical sense. We tried to track whether they came home but it was impossible. If one has an Irish passport, one comes into the country and that is the end of it. We did on-the-spot surveys of people attending and the reaction was enormously positive. We were also lucky enough to have the support of Mr. Niall O’Dowd and his newspaper in New York.

Deputy Darragh O’Brien

The Irish Voice.

Mr. Gerry Pyke

He was involved and thought it was uniquely successful at the level of trying to help people who needed help. I talked to one man there who was afraid to come home because he left 20 years ago owing £200 to Revenue. We were able to bring him to the Revenue stand. Others were worried about their children. It was useful. As far as I remember many of those expenses would have gone through the credit card. It is a vehicle for payment.

Deputy Darragh O’Brien

I am glad to hear it was successful but it seems there was a cloud over an individual at the time and it has been proven that things happened that should not have, procedures were thrown out the window and money was wasted. Yet he headed up this major event in America and there is expenditure of over €200,000 in a four year period on his credit card. It seems an incredible amount of trust to give somebody where a very serious allegation has been made and an internal investigation is ongoing. I know he cannot be shifted aside but it has been shown that this trust was not warranted. That has been a grave disappointment to the members of FÁS who worked with him. I do not understand why no further checks and balances were put in, even without his knowing about it. It could have been done in a broad, catch-all manner. He could still have been allowed to drive this event in New York and other matters and be able to sign for his credit card. I assume there were no co-signatories on the credit card. In a four-year period, from 2004 to 2007, on top of everything else, he had €220,000 for which he was able to sign. Hindsight is great, but would Mr. Pyke change anything about that?

Mr. Gerry Pyke

The Deputy has asked me the question once; I have asked myself the question 100 times. A very unhappy and unsatisfactory situation has evolved. It has damaged the organisation and the staff, and has not helped the people we try to serve.

Deputy Darragh O’Brien

I know that.

Mr. Gerry Pyke

What I could have done more is a recurring theme in my head. I do not want to offer an excuse but an explanation. Here was a senior man who was successful. There was no reason to suspect he was up to anything. The most serious allegations were made against him anonymously.

Deputy Darragh O’Brien

They were serious enough that the board acted on it and the letter was sent across. They were serious enough that FÁS started an internal investigation. Somebody thought the allegation might stand up. Anonymous letters are received all the time and many go into the bin because there is no foundation. The board must have made a decision that these were serious enough allegations to warrant a detailed internal investigation, yet it changed nothing to turn the tap off.

Mr. Gerry Pyke

I think I was present when the chairman handed the allegations to the director general, and the director general and I had a discussion. I do not have much mass on anonymous allegations, but there was a lot of technical information and we said it looked serious. We took very quick advice on whether it is appropriate to launch a full-blown investigation on foot of an anonymous allegation. The advice was that, given the nature of it, we should. When we launched the investigation, we were told we must allow due process to continue and not to prejudice the outcome.

Deputy Darragh O’Brien

I understand all that but it does not stop Mr. Pyke from changing the controls in the Department. It does not have to be specific to Mr. Craig. It has come out in the report that during the internal investigation he changed his story with the internal audit a number of times while still having access to sign whatever he liked on his credit card.

Mr. Gerry Pyke

That became known to us when the investigation concluded. Although the internal audit department reported to me, I was not party to the ongoing details. This was appropriate; I gave these people their head, as people generally do. The length of time it took to conclude the report was frustrating for everybody. I would get progress reports of a very general nature. The final version did not come until the end.

Deputy Darragh O’Brien

But FÁS did not do anything to try to reduce the risk to the organisation in that time. I do not understand why nothing was done in the intervening period, even at a general level. Mr. Pyke could not lock him into a room and forbid him to do anything but by changing the procedures there we could have stopped much of the further expenditure that happened.

Mr. Gerry Pyke

Mr. Craig's authorities were derived from his rank as director and it applied across the board. Every director had the same level of authority, responsibility, powers and privileges. I take the Deputy's point that, with hindsight, perhaps I should have insisted that different accounting systems were put in. Maybe it is a measure of my naivety, but while I could not discuss the investigation report with Mr. Craig, when we met regularly during the week it was the elephant in the room. When the allegations came in, he dismissed them out of hand and said there was nothing to them and everything would be all right. Even during the investigation I would occasionally say I hoped it would be wrapped up soon and he would say there was nothing in it and that it was a ball of smoke. It was a difficult situation. Perhaps with hindsight the Deputy's suggestion about insisting on more formalised accounting arrangement, particularly around the credit card——

Chairman

One issue which was not a ball of smoke was the €687,000 invoiced that came in out of the blue in July 2001, which had to be dealt with by FÁS. There was also the report of the IT manager, which went to internal audit. They were not a ball of smoke; they were facts.

Mr. Gerry Pyke

I accept what the Chairman is saying. They relate to the website. At the time Mr. Craig was dealing with that website, he reported directly to the director general.

Chairman

You were all aware of that. The fact could not have been forgotten about. How, under those circumstances, did everything else happen? If this had been a private company, he would have been out the door the next day. How was it allowed to roll on? These were facts rather than what has been described a ball of smoke. The facts seemed to be either forgotten or ignored.

Mr. Gerry Pyke

At the time of the website issue, Mr. Craig reported to the director general.

Chairman

We know that.

Mr. Gerry Pyke

The questionable and improper way in which the website was sourced became evident at the end of the investigation, as that was the first time a value was put on the loss of money.

Deputy Darragh O’Brien

That is understood but there were still payments of €500,000 per month being made through the finance department to that firm for the website. That is a sizable amount of money for any organisation. Mr. Shanahan was not head of finance at the time. The money was running through his hands, going straight out of FÁS and nobody seemed to bat an eyelid. What concerns me even more, and what the Chairman has alluded to, is that it was clear that procedures needed to be changed if one took into account the invoices, verbal contracts, overpayments etc., even if the internal investigation report was not allowed for.

Mr. Gerry Pyke

My recollection is that the verbal contracts and overpayments came to light through the investigation.

Deputy Darragh O’Brien

Why in God's name did the finance department, when paying out hundreds of thousands of euro, not check back to see if an invoice was received or if the work was done? The money was paid up front. Did this not strike anybody as strange?

Mr. Gerry Pyke

The invoices went to the finance department and I assume that was within Mr. Craig's authority.

Deputy Darragh O’Brien

We will be drawing our own conclusions on this and writing a report. I know the credit card limits have been changed already.

Mr. Gerry Pyke

Yes. They are down to €5,000 in that department.

Mr. Con Shanahan

The minimum is seven so they have been revised since.

Deputy Darragh O’Brien

We asked this question earlier of other witnesses. Where did Mr. Craig come from, what was his background and what qualifications did he have?

Mr. Gerry Pyke

It is a long time ago. I cannot recall the CV he presented. From memory I believe he was involved in some local newspapers. We are going back to the mid 1990s at this time.

Deputy Darragh O’Brien

The witness does not know his background or any qualifications.

Mr. Gerry Pyke

I do not know his background.

Deputy Darragh O’Brien

When did he start? Was it the mid 1990s?

Mr. Gerry Pyke

Dr. Lynch stated today it was the mid 1990s. His memory is better than mine and I could not be more precise.

Deputy Darragh O’Brien

We have seen it in a couple of other organisations and State bodies where people have been appointed to posts that are above them. Their qualifications did not stack up or exist. It seems this man dropped out of the sky and nobody recalls when he joined or who he was.

Mr. Gerry Pyke

That information must be available.

Deputy Darragh O’Brien

It should be.

Mr. Gerry Pyke

I presume he went on the payroll so it should be there.

Deputy Darragh O’Brien

We should also know whether he is qualified to do the job he held. As the person he is reporting to, the witness should surely be happy that in the very serious and responsible role which he had, he was qualified to do the job.

Mr. Gerry Pyke

I inherited Mr. Craig and to be fair to the man, in my opinion he did a very good job.

Deputy Darragh O’Brien

Apart from everything else.

Mr. Gerry Pyke

In the cases identified in the investigation, the means by which he operated were wrong. If we look back, how do we measure the area of media relations? Totting up positive column inches versus negative column inches, we would come out winning. We could consider the initiatives and events he organised. In those days there was good coverage of FÁS, he had good relations with the media and he organised a number of initiatives and events, some of which are——

Deputy Róisín Shortall

Is the witness serious that at this stage——

Chairman

Is Mr. Pyke serious?

Deputy Róisín Shortall

——he is saying he did a very good job?

Mr. Gerry Pyke

Not at all. I am speaking about in the past. Deputy O'Brien asked me if he was successful or competent.

Deputy Darragh O’Brien

We do not even know in what was he competent or if he was qualified.

Mr. Gerry Pyke

To be fair to the man, if we look before the current difficulties to when he was responsible for media relations, there was a reasonable degree of coverage.

Chairman

The organisation thought he was doing such a great job, it gave him a bonus. We do not know the details of it. The witness does not know where he came from. We have asked the witnesses present and it annoys me that nobody knew where he came from. It is incredible, it is like as if he dropped from the sky.

Deputy Pádraic McCormack

As someone recommended him.

Chairman

We do not know where he came from. I find it incredible that the witnesses are saying they do not know where he came from.

Deputy Darragh O’Brien

Mr. Pyke inherited him.

Mr. Gerry Pyke

Yes.

Deputy Darragh O’Brien

Did Mr. Kivlehan get details on that bonus?

Mr. Patrick Kivlehan

The recommendation was made by the director general and the chairman at the time was informed verbally that the payment was being made. There was paperwork behind it. The director of human resources is off-site at the moment so he has not sourced it but there would have been a written recommendation signed by the director general. Human resources raised some concern in giving details of the amount based on data protection.

Deputy Darragh O’Brien

How much was it?

Mr. Patrick Kivlehan

I have been asked not to disclose it and that it would be sent on in writing.

Deputy Darragh O’Brien

Why?

Mr. Patrick Kivlehan

It is a data protection issue and it is consistent with the approach so far.

Chairman

That is unacceptable. The committee is demanding to know the figure. I have had enough double-talk today and I am quite annoyed about many things. We have asked the witness a question so will he please answer it?

Mr. Patrick Kivlehan

The bonus payment was €10,000.

Deputy Róisín Shortall

When was that paid?

Mr. Patrick Kivlehan

In 2005.

Deputy Róisín Shortall

When in 2005?

Mr. Patrick Kivlehan

July.

Deputy Darragh O’Brien

I thank the witness.

Mr. Patrick Kivlehan

With regard to the other merit awards, the data will be prepared on his return to head office and we will pass that on.

Deputy Darragh O’Brien

Okay. We could go on with this for months. My sincere hope is that FÁS and any other organisations learn a serious lesson on how not to manage a company. Perhaps there is a trust issue but in dealing with this amount of money, trust is one matter but there must be certainty. There was no certainty in what this man was doing, even at that time on a daily basis. Nobody really knew what he was doing. I find it remarkable that with all the incidents mentioned today where moneys were paid out, he was able to do that on his own with nobody else to know about it. Did he ever discuss OSK or the financial review it did? It ended up getting every other financial job after that.

Mr. Gerry Pyke

I remember him discussing the meeting. OSK was used to try to chart a way forward with the science project.

Deputy Darragh O’Brien

It dealt with Jobs Ireland. It is essentially a firm of accountants that did a financial review in FÁS. The witness had no knowledge of any of the specific jobs awarded to OSK.

Mr. Gerry Pyke

Not that I can recollect.

Deputy Darragh O’Brien

On the FÁS Opportunities side, the witness has no knowledge of any of the contracts awarded at the time.

Mr. Gerry Pyke

I do not remember them coming across the desk.

Deputy Darragh O’Brien

The witness had no idea who was running it. It was all left to Mr. Craig.

Mr. Gerry Pyke

It was within the overall corporate controls. He knew the rules of procurement and that he had to send documents to the finance department for payment. It is not that he had carte blanche.

Deputy Darragh O’Brien

I understand that and if somebody wants to be dishonest he or she will try to find ways around process. That is fully understood. The witness mentioned the finance department but Mr. Shanahan did not have that range of power at that time.

Mr. Con Shanahan

I did not. In fairness to my predecessor and colleagues——

Chairman

Who was in charge at the time?

Mr. Con Shanahan

Mr. Gerard Gasparro would have been the director of finance and Mr. Donal Sands would have been his boss, the assistant director general in charge of finance.

Deputy Darragh O’Brien

Mr. Gasparro sent the e-mail——

Mr. Con Shanahan

I think the record will have shown that some concerns were raised about this matter.

Deputy Darragh O’Brien

Mr. Gasparro was the person in the finance department who signed off the payments. Am I right in saying that?

Mr. Con Shanahan

No. The authorisation approval process for the payments would come from outside the division. The job of the finance department is to effect the payment and to ensure those processes were followed as far as they could be from the signatures, documents and so on. Issues were raised by the finance section — these are on the record — regarding concerns about work in that unit. Clearly they did not have the desired effect. Nonetheless, the record should show that they were raised.

Deputy Darragh O’Brien

I do not want to go back over the foreign travel aspect but I have one simple question. I looked through much of this and there are mentions of film and TV all over the place. People were coming in from Los Angeles and going back to Los Angeles. How extensive is FÁS's film and TV project and what is it?

Mr. Con Shanahan

Perhaps I can explain. We have a small film and TV unit consisting of a manager and five staff. The section is being stood down, as I understand it, at the end of the year, because the funding for that work comes from the Irish Film Board, which will engage in training in its own sector from 2009. The work of that unit is essentially to provide training in the film and TV area, principally of a technical nature. Most of their clients are employed people and much of that training would have been provided outside regular office hours. Much training would have been provided at evenings and weekends. Due to the nature of the industry there are very few, if any, professional trainers in lighting, sound, acting, script-writing — the whole range of activities in which the film and TV sector engages. This meant that the unit tended to use subject matter experts who were not professional trainers but gave of their time, in the main, free of charge. The people who are looked up to in the industry are those who have been the most successful, and many of those are in London and the USA. Because of the contacts between that unit and the industry it was able to procure the services of those people without cost. In return, FÁS funded their travel costs to and from Hollywood, London or wherever.

Deputy Darragh O’Brien

Have many FÁS trainees have gone through that programme?

Mr. Con Shanahan

FÁS participants——

Deputy Darragh O’Brien

FÁS participants.

Mr. Con Shanahan

There would have been hundreds over the years, but they would not have received training allowances because they were in employment at that time.

Deputy Darragh O’Brien

To clarify, many of the people who would be on this list——

Mr. Con Shanahan

Many of them come in as mentors on a programme.

Deputy Darragh O’Brien

Their expenses were covered and that was it.

Mr. Con Shanahan

Exactly.

Deputy Darragh O’Brien

All right.

Mr. Con Shanahan

In terms of cost, the trainer fee element was very small. Most of them provided their services through goodwill and through the industry networks. It was their experience that was respected by the young people coming through rather than their qualifications. Many of them are well known people in the industry.

Deputy Darragh O’Brien

That is no problem. I thank Mr. Shanahan and Mr. Pyke.

Deputy Pádraic McCormack

Many of the questions asked over this session and previous sessions have been directed back to the director general, who is, unfortunately, no longer with us. Mr. Pyke retired in August 2008, a couple of months ago. Why did he retire at that time? We are losing many young, articulate people from FÁS now. Did he not consider, in the interests of FÁS, waiting there until this sorry mess was cleared up?

Mr. Gerry Pyke

My daughter has cancer. I had 40 years' service and it was open to me to retire at 60, which is my age. I thank the Deputy for using the adjective "young". I had enough service to leave and my unfortunate family circumstances focused my mind on what was important so I left in March.

Deputy Pádraic McCormack

I am sorry to hear about Mr. Pyke's personal circumstances. Without knowing anything about those, I had thought it was a Roy Keane job — going in a time of trouble.

Mr. Gerry Pyke

I would give everything I have to agree with the Deputy.

Deputy Pádraic McCormack

I did not know that. I am sorry to have asked the question in that manner.

Mr. Gerry Pyke

That is no problem.

Deputy Pádraic McCormack

I would like to ask a question on travel. Mr. Pyke was the company's secretary. Was the Government policy on first-class travel known to him during his period there?

Mr. Gerry Pyke

It was my genuine understanding, in good faith, that that was available. On the few occasions I used it, I did so in an open, documented manner. Obviously, in light of Mr. Molloy's comments and Mr. McLoone's comments it was wrong, and Deputy O'Keeffe also pointed out the clarification from the Department of Finance. I do not think there were too many of those flights, although I do not have the records in front of me. It was based on a genuine belief that that was the appropriate arrangement.

Deputy Pádraic McCormack

Was Mr. Pyke not aware that it was in breach of Government policy?

Mr. Gerry Pyke

No. Any time I used that to trade down or whatever, I wrote an application in memo form seeking approval and had it authorised. If I had known it was in breach of policy — I am genetically a civil servant at this stage after 40 years — I would not have written for approval of something that was wrong. It was based on a genuine belief that this was the arrangement. Manifestly, my understanding was incorrect.

Deputy Pádraic McCormack

I was trying to establish with Mr. Geoghegan as to who signed off the expenses. Were they at any time brought to the attention of the board? Did nobody point out that it was the responsibility of the board to be aware of and sign off on expenses?

Mr. Gerry Pyke

Does the Deputy mean expenses of executives?

Deputy Pádraic McCormack

No, I am talking about travelling expenses and all the other expenses.

Mr. Gerry Pyke

The individual travel expenses of senior executives were never submitted to the board.

Deputy Pádraic McCormack

They were what?

Mr. Gerry Pyke

They were not approved by the board. My expenses would be, for example, approved——

Deputy Pádraic McCormack

Did nobody ever inform the board or bother to find out that the board should have signed off on those?

Mr. Gerry Pyke

I am not sure it is a requirement that boards should sign the expenses of individual officers. I think that would be burdensome on the board.

Deputy Pádraic McCormack

I quoted the Act earlier today. I am clear that the board had that responsibility, which was passed on by the Minister. That is why boards are appointed by Ministers.

Mr. Gerry Pyke

It is not so much that the board has an obligation to ensure there are proper arrangements in place for travel and subsistence expenses but that it would delegate that responsibility to the director general, who has statutory responsibility for the administration of the organisation.

Deputy Pádraic McCormack

Was it not Mr. Pyke's responsibility, as secretary, to bring those matters to the attention of the board?

Mr. Gerry Pyke

Each year, as Mr. Geoghegan explained, we did a comprehensive analysis of the code of practice for the governance of State bodies. As I recall, it has 43 separate obligations and we would go through each of those. As Deputy O'Keeffe pointed out, there is a lot about financial controls, bonus systems, disposal of property and so on, and we would go through each of them and offer information to the audit committee, which would then approve it to the board. On the basis of my recollection, I cannot remember whether it specifically deals with travel and subsistence arrangements. I do not recollect ever going to the board, specifically on an individual basis, and saying it was obliged to put in place appropriate travel and subsistence regulations for the organisation.

Deputy Pádraic McCormack

The board was never made aware of the breach in Government policy.

Mr. Gerry Pyke

Its members have become aware, through recent events, that we were using a wrong interpretation of travel arrangements, yes.

Deputy Pádraic McCormack

Mr. Pyke was there up to August 2008. Has there been a change in——

Mr. Gerry Pyke

Sorry, Deputy; it was March.

Deputy Pádraic McCormack

Sorry, March 2008.

Mr. Gerry Pyke

It was March.

Deputy Pádraic McCormack

I shall direct my question at some of the FÁS representatives. Has there been a change in signing off and expenses procedures? Is the board aware of its duties and responsibilities in this regard?

Mr. Con Shanahan

Under the procedure governing approval of travel subsistence expenditure, it is up to the superior officer of each individual staff member——

Deputy Pádraic McCormack

Has the procedure for signing off been changed since the investigations began?

Mr. Con Shanahan

The nature of entitlements has changed since the investigations began. For example, there is a ban on foreign travel until such time as we are very clear on what the policy is. The Department has written to us——

Deputy Pádraic McCormack

What did it state?

Mr. Con Shanahan

All Departments and Government agencies received copies of an up-to-date set of procedures and were asked to confirm compliance. We have done this. With regard to the approval process, no matter what grade an officer is, his or her travel subsistence claim is approved by his or her superior officer. The only question that arises is at director general level, as to who approves his expenses. His personal expenses would have been approved by the chairman. The Deputy's concern is that the cost of flights which would have been booked using a credit card or through a travel agency would not necessarily have been signed off on because it would not have involved a payment directly to the director general. His personal expenses would have been approved by the chairman, in the same way as Mr. Pyke's expenses would have been approved by the director general. In the main, approval was correct. The Deputy drew attention to the fact that flight costs for the director general might not have been approved by the chairman. That was because of the fact that they were not payable directly to him as an individual.

Deputy Pádraic McCormack

In the recent circular received from the Department who was stated to be responsible for signing off? Did it point out that the board should be responsible or did it state anything about its position?

Mr. Con Shanahan

There has been no change in authorisation and approval procedures. The authorisation procedures are very clear — it would be signed by a higher officer. The responsibility——

Deputy Pádraic McCormack

Is that what the recent circular stated?

Mr. Con Shanahan

No, the recent circular reminded us of what the rules were with regard to who was and was not entitled to foreign travel and the class of travel to which they were entitled. Authorisation has never really been an issue. The board would devolve this responsibility to the executive, in accordance with the legislation.

Deputy Pádraic McCormack

Has it given that responsibility to the executive?

Mr. Con Shanahan

It would be an executive function to properly approve the expenses of staff. The expenses of each staff member are approved by his or her higher officer, right up to director general level. That is the way it happens.

Deputy Pádraic McCormack

I have asked all my questions.

Deputy Jim O’Keeffe

When did Mr. Pyke become secretary of FÁS?

Mr. Gerry Pyke

It was in 1989 or 1990. I was there a long time.

Deputy Jim O’Keeffe

The full title of the position is assistant director general — secretary?

Mr. Gerry Pyke

It is.

Deputy Jim O’Keeffe

It covers internal audit, corporate governance and corporate affairs.

Mr. Gerry Pyke

Yes.

Deputy Jim O’Keeffe

From 1990 Mr. Pyke was secretary and also in charge of the relevant portfolios germane to our discussion — corporate affairs, corporate governance and internal audit. Were all of these units Mr. Pyke's direct responsibility?

Mr. Gerry Pyke

No. The corporate affairs function was given to me after Mr. Molloy's appointment in 2000 or 2001.

Deputy Jim O’Keeffe

For the past eight years.

Mr. Gerry Pyke

Yes.

Deputy Jim O’Keeffe

With regard to foreign travel, I assume that, initially, because he was secretary to the board major documentation from the Department or the Government would come to Mr. Pyke's office and be addressed to him as secretary.

Mr. Gerry Pyke

Some would; others would come to the director general and the chairman.

Deputy Jim O’Keeffe

Mr. Pyke has mentioned that he was unaware of the Department's guidelines on foreign travel. Mr. Hurley, the official in charge in the Department of Finance, wrote to us giving evidence that the current principles covering foreign travel had been set out in guidelines issued to Departments in 1998 when Mr. Pyke was secretary to the board. Departments had been asked to pass the guidelines to the bodies and agencies within their remit. I take it that the Department in question for Mr. Pyke would have been the Department of Enterprise, Trade and Employment, or Industry or Labour, whatever its name was at the time. Were the guidelines not passed on to him as secretary to the body or agency within the remit of the Department?

Mr. Gerry Pyke

I do not recollect getting the guidelines. They might have come to the director general who would then pass them on to the appropriate division responsible for travel and subsistence matters.

Deputy Jim O’Keeffe

There was some relevance for Mr. Pyke in that it appears that the Department guidelines set out in 1998 have been totally flouted since.

Mr. Gerry Pyke

As I said, the guidelines that I used occasionally were based, I understand, on a 1971 document. Both the chairman and the previous director general said we were in error in that regard.

Deputy Jim O’Keeffe

The 1998 guidelines from the Department of Finance clearly established the rules governing foreign travel for departmental officials and officials of agencies and bodies. The rules were very clear — economy class was to be used, where possible, and occasionally business class. There was no provision for first class travel. Is Mr. Pyke saying these guidelines were not brought to his attention in 1998?

Mr. Gerry Pyke

I have no recollection of them.

Deputy Jim O’Keeffe

Somebody sent them from the Department. To whom were they sent?

Mr. Gerry Pyke

I honestly do not know.

Deputy Jim O’Keeffe

Would the normal procedure not be to send them to the secretary?

Mr. Gerry Pyke

That would depend on the issue involved. Certainly, not all communications come to the secretary. There would be some sent to the chairman, if it was a strategic or policy issue, or the director general. Occasionally it might be sent to me. Not everything came through my office.

Deputy Jim O’Keeffe

The Department of Finance official, Mr. Hurley, has said the guidelines were again drawn to the attention of Departments in 2002 with the instruction that they be drawn to the attention of agencies and bodies within their remit. Did this not cause any reaction within FÁS?

Mr. Gerry Pyke

I do not know. I did not have responsibility for making travel and subsistence arrangements.

Deputy Jim O’Keeffe

The evidence is that the same happened in 2006. Guidelines were issued once again.

Mr. Gerry Pyke

All I can say is I was acting under a misunderstanding; it was a genuine bona fide misunderstanding; it was documented clearly and approved. As I say, I was not responsible for policing travel and subsistence regulations in the organisation.

Deputy Jim O’Keeffe

Is it possible to ascertain to whom the guidelines were sent in 1998, 2002 and 2006?

Mr. Denis Rowan

We can try.

Deputy Jim O’Keeffe

Nobody seems to accept responsibility.

Mr. Denis Rowan

I have no answer to that question. There is no answer to it at this time. We must look and see when and where the guidelines were actually received. That is all I can say at this stage.

Deputy Darragh O’Brien

What about finding out to whom they were sent by the Department?

Mr. Denis Rowan

That would be a good starting point.

Chairman

Were there management meetings at which matters would have been discussed across departments?

Mr. Gerry Pyke

We had regular meetings of what we called the executive board. There were seven assistant directors general.

Chairman

Would each of them report to the director general at these meetings?

Mr. Gerry Pyke

Issues of common concern would be discussed. There would be preparations for upcoming FÁS board meetings and debriefing on their outcome to ensure that whatever decisions had been made would be acted upon. Issues within the organisation would be discussed. I am trying to remember their frequency. We ensured whatever decisions were made would be acted on and organisational issues were also discussed. I am trying to recall the frequency of those meetings.

Mr. Denis Rowan

It is once a month.

Mr. Gerry Pyke

Yes.

Deputy Jim O’Keeffe

Perhaps the delegation could arrange to ensure the committee is briefed on the matter, because it is relevant. I refer again to the issue of travel. Mr Pyke's name appears a good deal on the list with which we are furnished. He says he was not aware at the time of the guidelines issued by the Department of Finance. Does he accept in retrospect that many of the trips taken were totally out of order as far as the Department of Finance guidelines are concerned?

Mr. Gerry Pyke

I would need to see the record. I am not sure there were very many trips made using the first class arrangement, but I do not have the record to hand. In my note to the committee I tried to indicate the reasons for the frequency of these trips. I understand there were 13 such trips during a four-year period. I referred to certain international responsibilities of mine, including programmes run on an North-South basis which operated out of the United States of America.

Deputy Jim O’Keeffe

We have that information, but it is the manner of travel and so-called trading down which is at issue. That practice involved claiming two seats where there was an entitlement to one. Does Mr. Pyke accept that was totally out of order?

Mr. Gerry Pyke

I think the Deputy will find in the statement I left with the committee that I used the words "wrong" and "inappropriate".

Deputy Jim O’Keeffe

Is it the case that Mr. Pyke became directly responsible for Mr. Craig in 2001?

Mr. Gerry Pyke

Yes.

Deputy Jim O’Keeffe

Most of the issues under discussion arose about that time or subsequently. Did Mr. Pyke have a friendly relationship with Mr. Craig?

Mr. Gerry Pyke

I had a working relationship with Mr. Craig, but I was not a personal friend.

Deputy Jim O’Keeffe

His background seems to be a total blank as far as everyone is concerned. Is Mr. Pyke aware of any positions he held or any work he undertook before joining FÁS?

Mr. Gerry Pyke

If I was told, I cannot remember. As I have already stated, I inherited him in 2001 and he was already an established officer for six years at that stage.

Deputy Jim O’Keeffe

Has the Chairman arranged to get a copy of Mr. Craig's CV?

Chairman

Yes. It seems he will be known as the man from God knows where.

Deputy Jim O’Keeffe

We will find out. He reported directly to Mr. Pyke. How often did this occur?

Mr. Gerry Pyke

Several times a week. We were in contact regularly throughout the week. Similarly he was in regular contact with the director general concerning whatever was on the agenda at the time whether media queries, upcoming events, major exhibitions or whatever.

Deputy Jim O’Keeffe

Did he spend a lot of time out of office?

Mr. Gerry Pyke

Does the Deputy mean within Ireland or abroad?

Deputy Jim O’Keeffe

My question relates to both.

Mr. Gerry Pyke

If he was organising a big event at Croke Park, he would spend time there. Our annual Opportunities event takes place there over the course of a weekend and usually attracts between 80,000 and 100,000 people.

Deputy Jim O’Keeffe

We know all about that event.

Mr. Gerry Pyke

He had to be there. Similarly when we ran the——

Deputy Jim O’Keeffe

Apart from the occasions where he was on-site working on a project, did he spend much time holding court and dealing with advertising agents and other people in places other than his office?

Mr. Gerry Pyke

As part of his media relations responsibilities, he would meet journalists for coffee, lunch or whatever. That would be normal practice.

Deputy Jim O’Keeffe

Was that quite a regular occurrence?

Mr. Gerry Pyke

Yes, that would have been regularly.

Deputy Jim O’Keeffe

Apart from the time he spent away from the office in Ireland, or holding court elsewhere in the country, he seems to have spent a good deal of time abroad, is that the case?

Mr. Gerry Pyke

He was the person responsible for the development of the Science Challenge project in Florida, USA. The early days of the development of the project involved many meetings with our colleagues in NASA and other agencies.

Deputy Jim O’Keeffe

I note that in a six-month period in between February and August 2003 he made several trips. According to the list of trips outside the country, on 1 February Mr. Craig travelled to Orlando at cost of €1,195. There was a break in travel until 1 July, and he then returned to Orlando at a cost of €17,282. On 1 August he again travelled to Orlando at a cost of approximately €9,000. On 11 August he travelled to a different part of the world, namely, Melbourne, at a cost of €5,377. Was Mr. Pyke aware of these outings?

Mr. Gerry Pyke

I think Mr. Shanahan clarified that some of those fares involved more than one individual. Some of those costs referred to group travel.

Deputy Jim O’Keeffe

He was certainly involved in those trips.

Mr. Gerry Pyke

Yes. The Melbourne referred to is in the United States of America; it is in Florida if I recall correctly.

Deputy Jim O’Keeffe

The last time I heard, Melbourne was in a different continent.

Mr. Gerry Pyke

I understand there is an airport of that name in America.

Chairman

Yes.

Deputy Jim O’Keeffe

That trip involved returning to America again. He travelled to America on 1 August. Mr. Pyke maintains the Melbourne under discussion is an airport in the United States of America. What was he doing back there again on 11 August?

Mr. Gerry Pyke

I cannot recollect at this stage. That was in August 2003. I wish to paint the overall context. In the initial stages of the development of the science project, there was a good deal of toing and froing with the United States authorities. Meetings took place to set up possible arrangements for the students who would travel there. There were discussions with colleges who would host the students and so on. Perhaps it is the American way, but if they launch a programme, they have a formal launch ceremony at which they want people to attend, and similarly they have a formal closing ceremony. Over time we managed to persuade them that it was not necessary for us to attend all of these events. However, in the initial stages we were developing the relationships, and at that stage the door was slightly ajar for Ireland. As an organisation we could have walked away, because it could be argued that it was not central to our remit. However, we saw the opportunity. All Departments and agencies were asked if anything could be done to promote interest and an excitement in science and maths. Very serious projections were made concerning the number of people taking science and maths.

We were also conscious that the Government way trying to develop fourth level education and to produce high-powered graduates in positions of excellence. As as organisation, FÁS could have taken the view that it was someone else's responsibility. However, we developed the relationships which lead to the door of NASA being slightly opened and we put energy into prizing it further with, I would argue, the beneficial results that are in place today.

Deputy Jim O’Keeffe

When did Mr. Craig become director of corporate affairs?

Mr. Gerry Pyke

I cannot remember. Following his appointment Mr. Molloy made several changes in head office, including the strengthening of certain functions. My colleagues may be able to help me on this matter.

Deputy Jim O’Keeffe

Was Mr. Craig in that position when he was put in Mr. Pyke's bailiwick and under his charge?

Mr. Gerry Pyke

My recollection is that he was not. However, shortly afterwards he was promoted to one of several director posts. He was successful in obtaining the corporate affairs post. My colleagues may be able to offer some guidance in this area, but I understand it was in 2001 or 2002.

Mr. Patrick Kivlehan

I believe it was in 2002.

Mr. Denis Rowan

It was either in 2002 or 2003.

Deputy Jim O’Keeffe

What position did Mr. Craig hold when Mr. Pyke retired?

Mr. Gerry Pyke

I retired in March and he was director of corporate affairs at that stage.

Deputy Jim O’Keeffe

On the Department's website Mr. Craig was referred to as director of public affairs and innovation. It was suggested to me that the inspectorate of corporate affairs had been merged into some other portfolio directly under the jurisdiction of Mr. Cooney. A further element of mystery arises in that we have received correspondence from Mr. Craig, including one item dated Monday 15 December signed, "Yours faithfully, Gregory Craig, director of corporate affairs". What is going on? Was he moved sideways or not?

Mr. Denis Rowan

Absolutely not. He went on sick leave in June but his title was director of corporate affairs.

Mr. Patrick Kivlehan

It was public affairs.

Mr. Denis Rowan

Yes, director of public affairs.

Deputy Jim O’Keeffe

Why were we not told that he had been moved from his position as director of corporate affairs?

Mr. Con Shanahan

The confusion arises because he went out on sick leave as director of corporate affairs.

Deputy Jim O’Keeffe

When was that?

Mr. Patrick Kivlehan

It was in June.

Deputy Jim O’Keeffe

What followed the disciplinary hearing?

Mr. Con Shanahan

May I finish? Regarding the title, someone took over his position in an acting role. It is not true there were two directors as one was out sick and was entitled to hold the title while he was out sick. He would have signed letters as he was suspended and not formally transferred. I understand the director general suggested at a previous hearing he would not continue to hold that position. Therefore that position was not accepted by Mr. Craig, who will continue to use his title.

Deputy Jim O’Keeffe

On the current FÁS website, he is referred to as director of public affairs and innovation.

Mr. Con Shanahan

From the time he left, as I understand it, there was a change in work arrangements within the unit and that is the title given to the post. I hope that is helpful.

Mr. Patrick Kivlehan

The website has not been updated

Mr. Con Shanahan

The website has not been updated.

Deputy Jim O’Keeffe

That seems somewhat strange. When did Mr. Pyke first become aware that Mr. Craig was taking shortcuts in his FÁS activities?

Mr. Gerry Pyke

I was unaware of any inappropriate action until the report of the investigation came in, which came as quite a shock.

Deputy Jim O’Keeffe

When might that have been?

Mr. Gerry Pyke

I do not have the time line.

Deputy Jim O’Keeffe

Was that the internal one?

Mr. Gerry Pyke

It was the internal investigation. It was the first inkling I had that there were serious, improper arrangements put in place.

Deputy Jim O’Keeffe

Was Mr. Pyke ever briefed on the fact that the report was under way, the basis of it and what and who was being investigated?

Mr. Gerry Pyke

I knew it was under way. The internal audit staff reported to me. Obviously, I could not intrude on the investigation.

Deputy Jim O’Keeffe

Was Mr. Pyke aware of the general thrust of the investigation?

Mr. Gerry Pyke

I was aware that initially the investigation dealt with charges of a criminal nature. It took considerable time to deal with them. I was then advised that the auditors wished to extend their inquiries because while investigating the anonymous allegations they became aware of what appeared to be procedural wrongdoing and wished to investigate them in more detail.

Deputy Jim O’Keeffe

If Mr. Pyke was aware of the investigation in 2004, and its thrust, which included Mr. Craig, why did his sense of shock that something was amiss not surface until a couple of years later?

Mr. Gerry Pyke

As I have explained to Deputy Darragh O'Brien, when allegations are made and investigated, one must assume that the person at the centre of the investigation is innocent.

Deputy Jim O’Keeffe

I am not talking about sitting in judgment on them. I am talking about being aware that questions were raised.

Mr. Gerry Pyke

There were no conclusions reached until the end of the investigation. I was also told nothing should be done which would prejudice the investigation or Mr. Craig's position.

Deputy Jim O’Keeffe

It was not a question of Mr. Pyke being asked to take a decision. It was a question of using his knowledge that something was amiss to be more careful, have a tighter rein, closer supervision and eyes open wide to such activities.

Mr. Gerry Pyke

I had a very strong legal injunction to be very careful which actions I took. I put it down as a marker. With the benefit of hindsight, perhaps things might have been done outside specific actions which might have prejudiced the investigation, as Deputy O'Brien suggested. Throughout the entire process I continued to be assured by Mr. Craig that there was nothing in this and everything would be sorted out.

Deputy Jim O’Keeffe

Did Mr. Pyke fully accept it?

Mr. Gerry Pyke

No, I did not. I could not accept or reject it because the investigation was——

Deputy Jim O’Keeffe

Did Mr. Pyke discuss it with Mr. Craig?

Mr. Gerry Pyke

I did not discuss the detail with him. Obviously we could not pretend it was not going on.

Chairman

Where did the legal injunction some from?

Mr. Gerry Pyke

It was not a legal injunction, it was legal advice. Mr. Molloy and I were very cautious.

Chairman

Where did the advice come from?

Mr. Gerry Pyke

It came from the FÁS legal advisers, who were minding us on this serious issue. It was a serious investigation.

Deputy Jim O’Keeffe

Did Mr. Pyke have some discussion at the time, and had assurances and reassurances from Mr. Craig during that period?

Mr. Gerry Pyke

It was impossible for us to discuss the investigation. It would be wrong for me to discuss it. Mr. Craig told me he was frustrated at the duration of it and would complain to me occasionally about it, and would say, "There is nothing in it. It will all be sorted out. There is nothing there".

Deputy Jim O’Keeffe

Mr. Pyke said in his statement that some years ago he directed Mr. Craig to minimise the extent to which he was procuring services to the FÁS advertising agency and have such procurement sourced via its own procurement department. At that stage he arranged with the director of finance to monitor progress and over time it produced a major reduction in agency procurement activity. When did that happen?

Mr. Gerry Pyke

It was nothing to do with any suspicion of irregularities. It was a question of value for money. From what I remember, the contract enabled the advertising agency to provide services over and above straightforward advertising in procurement of printing and so on. The then director of finance drew my attention to the fact that while that was acceptable, he thought we could do it more cheaply in-house.

Deputy Jim O’Keeffe

When did that happen?

Mr. Gerry Pyke

I think it might have been in 2003.

Deputy Jim O’Keeffe

Before this whole matter blew up.

Mr. Gerry Pyke

I emphasise that this was based on saving money and was nothing to do with impropriety.

Deputy Jim O’Keeffe

What we are doing here is trying to save money.

Mr. Gerry Pyke

My motivation had nothing to do with fears of inappropriate behaviour. The director of finance and I wondered if the mark-up for arranging printing could be eliminated and have printing done in-house. I directed Mr. Craig——

Deputy Jim O’Keeffe

Was it felt the mark-up was totally out of order?

Mr. Gerry Pyke

I would not think it was out of order. There was a charge. If one is buying a service, there is a charge.

Deputy Jim O’Keeffe

What services were in-house?

Mr. Gerry Pyke

We had some services in-house. If there was an exhibition, if a seamless arrangement can be agreed with the advertising agency in all aspects of it, including printing, it can make things easier but costs money. We increasingly insisted on Mr. Craig going through the FÁS procurement department and effected some savings.

Deputy Jim O’Keeffe

Were they considerable?

Mr. Gerry Pyke

Off the top of my head I could not quantify them.

Deputy Jim O’Keeffe

Another issue intrigued me. I do not know if I could get an answer to it at this stage. One of the issues raised with Mr. Craig arising from the earlier investigation concerned a car that was supposed to be raffled but the raffle was cancelled. What happened to the car? Does anyone know?

Mr. Patrick Kivlehan

After my appointment I was asked to look at this incident. The arrangement was that a car was to be procured and raffled and the names to be entered in the raffle would be those who would attend the Opportunities event and complete an application form. During the event Toyota had a car on display. My understanding is that it was a Toyota Yaris, and it was taken away at the end of the event. When the opportunities event finished, it was determined that a gaming licence should have been obtained to run a raffle and one could not be obtained retrospectively. On that basis the raffle did not take place.

From the point of view of my audit work, I initially sought to determine whether we had taken delivery of a car. The invoice that was submitted through the advertising agency made reference only to the purchase of a car. It did not indicate the make, model, registration or VIN number and, therefore, I was not able to pursue a particular model of car. I determined that the invoice was paid and that we did not receive a credit note.

I then made an attempt to trawl our records to determine whether a vehicle had been added to our asset register around that period, but we did not find one. The last port of call was to determine if we could get what we call a third party invoice on the basis that the agency had passed on a cost to us from a third party. We sought to determine what was on that third party invoice and if that would identify the type of car and whether we could track it through either the Garda or the Department of the Environment, Heritage and Local Government.

The agency in question had been subsequently taken over and the company dissolved. As a result we were unable to obtain the third party invoice or determine whether a car was delivered, but we know it was paid for and we did not receive a credit note.

Deputy Jim O’Keeffe

It was paid for by FÁS.

Mr. Patrick Kivlehan

Yes. The invoice was passed through the agency to us.

Deputy Jim O’Keeffe

It then disappeared.

Mr. Patrick Kivlehan

I did not determine that a car was delivered because we did not find anything on the asset register and we cannot track anything because there is no identification of a vehicle.

Deputy Jim O’Keeffe

It was an issue Mr. Craig was asked about during the course of the internal audit procedure. Was there any satisfactory response to that?

Mr. Patrick Kivlehan

He was asked about it through the HR investigation and he claimed that a car was not delivered and that if it was incorrectly invoiced, we should have received a credit note, but he was not aware if we had or had not received one.

Deputy Jim O’Keeffe

It is the mystery of the missing car.

Mr. Patrick Kivlehan

All I can confirm to the committee is that it was invoiced for but I have no evidence of and was unable to track any car having been delivered.

Deputy Jim O’Keeffe

How much was paid for it?

Mr. Patrick Kivlehan

My memory is that it was approximately £7,000.

Deputy Pádraic McCormack

Did anybody ever see the car?

Mr. Patrick Kivlehan

No. What may cause some concern is that a vehicle that was on display at the Opportunities event is not linked to any invoice.

Deputy Pádraic McCormack

That is a different——

Mr. Patrick Kivlehan

No. We have no evidence of the make or model of car it was and that has given rise to an issue. Also, the invoice did not provide us with any identification, be it a registration number or vehicle identification number.

Deputy Pádraic McCormack

Is it a car on paper?

(Interruptions).

Mr. Patrick Kivlehan

No, Deputy.

Deputy Pádraic McCormack

That is where I would have gone.

Deputy Jim O’Keeffe

An gluastáin dofheicthe, the invisible car.

Mr. Patrick Kivlehan

I have not found any evidence of anybody taking ownership of a car.

Deputy Jim O’Keeffe

It was paid for.

Mr. Patrick Kivlehan

It was paid for and no credit note was received.

Deputy Pádraic McCormack

How much was paid for it?

Mr. Patrick Kivlehan

I understand it was £7,000, if memory serves me correctly.

Deputy Pádraic McCormack

Was it second hand?

Mr. Patrick Kivlehan

No. My understanding of the arrangement is that it was to be at cost price. Therefore, it would have been a small model car.

Deputy Jim O’Keeffe

I suppose that is some reassurance.

Mr. Patrick Kivlehan

I was given a contact name in Toyota but that individual had moved from the company and I was unable to pursue anything at that end.

Chairman

One aspect raised by Mr. Pyke intrigues me. Mr. Kivlehan said that he could not jump to conclusions and he could not affect Mr. Craig's activities while an investigation was taking place and so matters carried on. How did that suddenly change? Perhaps that is not a question for Mr. Kivlehan. How did that suddenly change this autumn when he was suspended on foot of a second investigation? How did you have the power to suspend him on this occasion when he was allowed to carry on previously?

Mr. Denis Rowan

As we explained to the Chairman and the members the week before last, he was suspended with pay by FÁS. There are further issues about which we need to talk to him. That meeting has not yet taken place and we are anxious for it to take place. He was suspended with pay at that stage. We are awaiting such a meeting at which matters can be discussed.

Deputy Róisín Shortall

Who suspended him?

Mr. Denis Rowan

FÁS suspended him.

Deputy Róisín Shortall

Who suspended him?

Mr. Denis Rowan

The director.

Mr. Patrick Kivlehan

The HR director.

Mr. Denis Rowan

The HR director at the time.

Deputy Róisín Shortall

It is an important distinction to make——

Chairman

Why did that not happen before then?

Deputy Róisín Shortall

——because Mr. Cooney disowned any responsibility.

Chairman

Why was he not suspended during the first investigation? What is the difference between then and now?

Mr. Denis Rowan

I cannot comment on that. I was not involved in any way in that at that stage.

Mr. Patrick Kivlehan

No, I cannot comment. That was a decision made by HR.

Chairman

Surely the delegates have a reason for that. I am sure HR can give us a reason.

Mr. Patrick Kivlehan

In the context of my work in internal audit, I communicated certain issues that I would like to discuss with Mr. Craig and I asked that a meeting be arranged. Arising from that, the suspension decision was taken by HR. As a rule, I do not like to cross into HR matters.

Chairman

That is all right. I understand that. During the first investigation why was the same sanction not invoked?

Mr. Patrick Kivlehan

I do not know.

Deputy Darragh O’Brien

Was the current HR director in office in 2004?

Mr. Patrick Kivlehan

No, a different director was in place then.

Deputy Darragh O’Brien

The HR director in office now was not in office while INV. 137 was being carried out over that three year period. When did the new HR director take over?

Mr. Denis Rowan

In early 2007.

Chairman

What are the names of the different HR directors?

Mr. Patrick Kivlehan

The current director is Mr. Liam Treacy and the previous director was Mr. Oliver Egan.

Chairman

Have the delegates asked Mr. Oliver Egan why no sanction was taken during the first investigation?

Mr. Patrick Kivlehan

In the context of the internal audit process, we do not cross that line; this is a judge, jury and executioner approach.

Chairman

I will put the question to Mr. Rowan.

Mr. Denis Rowan

I do not know.

Chairman

One of the problems is that we have moving targets here. On the first day, the Accounting Officer, Mr. Molloy was in here and on the next occasion Mr. Cooney was in here. Mr. Cooney is disappearing from the scene now; I was told he is leaving the organisation tomorrow. We have a difficulty in that when we ask questions, nobody seems to know the position. There is no continuity.

Deputy Darragh O’Brien

I understand that Mr. Oliver Egan is still in the organisation?

Mr. Denis Rowan

Yes.

Deputy Darragh O’Brien

What is his role?

Mr. Denis Rowan

In fairness to those of us here today, if we were aware that the committee was going to go back over the HR issues, we would have brought the appropriate people along.

Chairman

We are going into all issues because we have people in——

Mr. Denis Rowan

I am aware of that.

Chairman

——who we were questioning on all aspects of the investigation.

Mr. Denis Rowan

We certainly would have brought along someone. It would be wrong of any of us here today who do not know the detail to even attempt to address some of the points that have been raised by the members.

Deputy Darragh O’Brien

This is a serious and valid point that goes back to Mr. Pyke. I understand the reason an intervention could not be made at that stage was that an investigation was ongoing. Another investigation is ongoing now and Mr. Craig has been suspended. Why was he not suspended at the time of the first investigation? It would have made life much easier for the delegates.

Mr. Con Shanahan

The answer to that question must be that the view was that the issues concerned did not merit a suspension at that time. That has to be the conclusion.

Chairman

As we do not know the circumstances at present, we cannot make a judgment on that. That is our problem. Can we get a report from Mr. Egan as to why he did not take action?

Mr. Denis Rowan

Yes. I want to emphasise the point if we thought the committee would cover HR issues today, we would have brought somebody along. There was no problem in our doing that.

Mr. Kivlehan

On a point of clarity, the work that is ongoing is an audit rather than an investigation. We make a distinction between the two.

Deputy Darragh O’Brien

That makes the point even clearer. During the earlier investigation he was not suspended, but during the current internal audit he was suspended. That decision seems disproportionate even at this stage. That proves the point.

Chairman

The difficulty for us is that because he is suspended — he gives a reason today in his letter — he cannot talk to us.

Mr. Denis Rowan

Let us be clear on that, as was said on the last occasion we were here, he is not barred from coming in here to discuss any matters in regard to INV. 137.

Deputy Pádraic McCormack

Will the chairman clarify one aspect? This gentleman was on sick leave since June and because he was on sick leave for six months, he would have been entitled to only half pay now — pending being certified fit to return to work by his doctor — but now that he has been suspended, what pay is he on now?

Mr. Denis Rowan

As I understand it, he is on full pay at this stage.

Deputy Pádraic McCormack

Therefore, it was beneficial for him that he was suspended as regards his pay?

Mr. Denis Rowan

Money wise, probably yes, but the issue of he having been suspended and that being made public by the media certainly has——

Deputy Pádraic McCormack

I do know why he was suspended because we are not privy to that information, but it is financially beneficial to him that he has been suspended because he is now on full pay.

Mr. Denis Rowan

Financially, at this point in time, the Deputy is correct, but suspending somebody is a strong step to take. From an individual's point of view, one must balance the financial so-called gain with the fact that suspension is available. He has been invited in to be——

Deputy Pádraic McCormack

I am trying to establish the facts.

Mr. Denis Rowan

The Deputy is correct on that point.

Deputy Róisín Shortall

Is there any news on the European Commission's report?

Chairman

We have asked the Department to make copies of both reports available to us. I received a note from it which states the early 2002 report that raised the weak and inadequate controls related to the Department, not FÁS. With regard to the second report in October 2002, both the Department and FÁS received a clean bill of health and there was no loss of public funds. That is what we are told, but we have formally requested the Department to provide copies of both reports for the committee. I will ask the secretariat to do this in the course of the meeting.

Deputy Róisín Shortall

Can Mr. Shanahan say who was responsible for buying the four corporate tickets in Croke Park?

Mr. Con Shanahan

The director general.

Deputy Róisín Shortall

Was it the director general on both occasions?

Mr. Con Shanahan

Yes.

Deputy Róisín Shortall

Can Mr. Pyke clarify when he retired? The information we have states it was August this year but Mr. Pyke said it was March.

Mr. Gerry Pyke

I had a good deal of leave to take. I had held it over. I stopped working in March.

Deputy Róisín Shortall

There was over four months leave to take.

Mr. Gerry Pyke

Yes. It had accumulated for a number of reasons.

Deputy Róisín Shortall

Mr. Pyke said he did not have the details of foreign travel. We have the list of trips made. Between mid-2003 and November 2007, Mr. Pyke took 20 trips, 13 of which involved first class travel. Does Mr. Pyke think that was excessive?

Mr. Gerry Pyke

I tried to explain in my note that part of my responsibilities in FÁS had an international dimension. The trips were necessary and useful. They were approved and authorised in the normal manner. The statement I gave to the committee sets out that, as a result of my job, I had responsibility for some international programmes. The Walsh visa programme, for example, was introduced by Congressman Walsh which enabled people to travel——

Deputy Róisín Shortall

Mr. Pyke has told us that. Is 20 trips in just over four years excessive in his view?

Mr. Gerry Pyke

I would have to look at them. Some of them were unavoidable and necessary to do the job. I do not recollect taking a trip that was unnecessary. I would have to review——

Deputy Róisín Shortall

It seems excessive. Mr. Pyke cannot have been around much, given that he was missing for much of the time. Deputy O'Keeffe asked Mr. Pyke about his role as secretary of the board and whether he had given any advice on the guidelines on foreign travel. It was Mr. Pyke's responsibility as secretary to the board to know the guidelines to which he was supposed to be operating.

Mr. Gerry Pyke

I take that point. To be honest, I relied on the specialist unit within the organisation to keep things right.

Deputy Róisín Shortall

As secretary to the board, it was Mr. Pyke's responsibility to know the rules to which he had to adhere.

Mr. Gerry Pyke

I take that point in hindsight. However, if there was a question of people travelling, I relied on those with specialist knowledge to make the arrangements——

Deputy Róisín Shortall

Did Mr. Pyke play any role in overseeing this?

Mr. Gerry Pyke

In ensuring the board——

Deputy Róisín Shortall

In ensuring the Department's guidelines were adhered to.

Mr. Gerry Pyke

No, I did not. I relied on the specialist department.

Deputy Róisín Shortall

Therefore, Mr. Pyke did not take any action, despite the fact that it was his responsibility as secretary to the board to be aware of the guidelines.

Mr. Gerry Pyke

I wonder how far this responsibility goes. Is it A to Z, that I must tell members of the board everything about their responsibilities? We try to do this. A huge effort is put in when a new board is appointed in terms of briefing documents and so forth. In fact, the amount is almost intimidating, in the documentation members receive about their responsibilities, roles and obligations under various Government injunctions. No, to be honest, I did not include information on travel and subsistence in that pack which was five or six inches thick on other obligations. It did not appear on my radar but, with hindsight, the Deputy is correct that perhaps it should have been included.

Deputy Róisín Shortall

Okay. However, preparing a pack was not a one-off. Mr. Pyke was secretary to the board for a long period of eight or nine years.

Mr. Gerry Pyke

Yes, more than that.

Deputy Róisín Shortall

Throughout that period, when a vast amount of foreign travel was being undertaken, did he never wonder whether the organisation was in compliance with Government guidelines?

Mr. Gerry Pyke

As I said, I worked on a certain understanding which I thought was in conformity with the guidelines. It was up-front, transparent and in good faith, and dealt with by the appropriate authorities, whom I thought would have specialist knowledge of these matters.

Deputy Róisín Shortall

I will move on to Discover Science. Was there an overlap with Science Foundation Ireland?

Mr. Gerry Pyke

I do not believe there was. As the programme developed and the opportunities arose, we kept the Department advised. We also kept Science Foundation Ireland advised of what we were doing. It was informal consultation but I recall from the contact I had that the chief executive spoke to the chief executive of SFI about it. I spoke to the secretary of SFI about what we were doing. There was a recognition that this was new and innovative and could lead to other things. There was no problem. We also kept the Department advised as the programme developed.

Deputy Róisín Shortall

Was there ever concern that there was duplication?

Mr. Gerry Pyke

There were different approaches between the two organisations on how to promote science and technology in Ireland. The issue of conflict or duplication did not arise.

Deputy Róisín Shortall

We have documentation which shows that in 2004 and 2005 over half of the budget provided for Discover Science was spent on advertising. Is that correct?

Mr. Gerry Pyke

I have said I do not have access to the papers but when I read the report on the proceedings of the committee, that figure jumped out at me. It sounds a little excessive. I know there were advertising and publicity because there were a number of dimensions to the programme. One was to make science, engineering and technology interesting. There was real fear expressed by Departments and Forfás reports about the number of young people who were walking away from those subjects; therefore, we had to publicise it. I am relying on memory but the campaigns were directed at graduates and there was a primary schools competition.

Deputy Róisín Shortall

At this remove, would Mr. Pyke regard it as excessive?

Mr. Gerry Pyke

If it is accurate, it sounds excessive.

Deputy Róisín Shortall

I presume it is accurate, as the figure is supplied by FÁS. Is it excessive?

Mr. Gerry Pyke

It seems somewhat excessive but——

Deputy Róisín Shortall

Was it not Mr. Pyke's responsibility to be aware of this, given that it came within his remit?

Mr. Gerry Pyke

From memory, I thought it was less than the amount quoted. However, there was a big drive to promote——

Deputy Róisín Shortall

Does Mr. Pyke accept the figures provided by FÁS?

Mr. Gerry Pyke

If they are the figures, they are the figures.

Deputy Róisín Shortall

Should Mr. Pyke not have been aware of it and taken action to deal with it?

Mr. Gerry Pyke

With hindsight, yes.

Deputy Róisín Shortall

This happened under Mr. Pyke's watch; he was responsible.

Mr. Gerry Pyke

Yes, I accept that. However, in terms of the innovative nature of the programme, we were breaking new ground. There was the effort at promotion and raising the excitement level of science in primary schools and so forth. Perhaps I should have——

Deputy Róisín Shortall

Perhaps there was also a culture of not being too bothered about how taxpayers' money was spent.

Mr. Gerry Pyke

The programme has proved itself over time. I understand the board of FÁS is conducting a cost-benefit analysis. I hope the programme will come out with a clean pair of heels. It matched Government priorities and has grown from a very small base into a very interesting programme. There is endless potential.

Deputy Róisín Shortall

I am not talking about that but about the fact that over half of the budget in one year was spent on advertising. That happened under Mr. Pyke's watch, but he is saying now that it was excessive. How was it allowed to happen at the time, given that it was Mr. Pyke's responsibility to ensure such things did not happen?

Mr. Gerry Pyke

At this remove, I would like to be able to review the nature of that advertising. Part of the programme was promotion as well as getting participants. I would need to review that. At first glance, it looks that way but in terms of trying to develop an awareness and appreciation — all of that stuff — perhaps it was not. I would need to revisit the area.

Deputy Róisín Shortall

Perhaps Mr. Craig should have been more closely supervised.

Mr. Gerry Pyke

I think we have had that discussion already. There were unfortunate breaches of procedure with Mr. Craig. As I said to Deputy O'Brien, with hindsight perhaps, it is a question I ask myself regularly.

Deputy Róisín Shortall

What if?

Mr. Gerry Pyke

With the benefit of hindsight, maybe things should have been done that were not done in terms of supervision.

Deputy Róisín Shortall

Mr. Pyke said the first inkling he got that anything was wrong came when he saw the report, INV. 137. In January 2003, Gerard Gasparro wrote to Mr. Craig drawing attention to his serious concerns about expenditure. He said that between November 2001 and December 2002, Euro RSCG was paid an estimated €5.5 million. This equated to €0.5 million, which was spent per month. Mr. Gasparro said they had analysed the payments to this company and noted that:

a significant portion relates to activities which, in our opinion, falls outside the broad heading of advertising event management. [He continued] Of particular concern to me is an invoice in respect of our 2001 annual report amounting to €40,000 for 2,500 copies of the annual report. This works out at €16 per copy, whereas previously the cost was €6.80 per copy.

He expressed serious concern and said the matter needed to be reined in. Mr. Gasparro wrote that memo to Mr. Craig and sent Mr. Pyke a copy of it. What did Mr. Pyke do with that?

Mr. Gerry Pyke

We are going back to one memo in 2003 and God knows how many thousand memos I got in that year, but from memory and having listened to Deputy Shortall's description of the memo, it was a concern that Mr. Craig, within the terms of the advertising contract, was using the advertising agency to source materials and basically do the sub-contracting procurement arrangements. I met with Mr. Craig and told him that this was uneconomic. It was not a question of anything irregular. As I explained to Deputy O'Brien, it was a question of getting a fast service from the private company, but it had a cost and we should get out.

Deputy Róisín Shortall

Mr. Pyke said it was not that it was uneconomic.

Mr. Gerry Pyke

If I said that, I meant to say it was not that it was improper. It was just that a charge was being levied on the organisation by the advertising agency for supplying these services. I told Mr. Craig that he should reduce his reliance on this arrangement and direct himself to the FÁS procurement department, which could probably procure these services at a cheaper rate. He undertook to do so. With the director of finance, we tracked expenditure over time and there was a reduction in agency procurement of facilities.

Deputy Róisín Shortall

No alarm bells rang for Mr. Pyke at all because of that?

Mr. Gerry Pyke

I saw that as a matter of Mr. Craig using it as an instrument of convenience, speed and efficiency rather than anything else.

Deputy Róisín Shortall

But the costs were completely out of line with any expenditure that had been incurred previously for the same work. The cost of producing the annual report was more than two and a half times the normal cost. Did Mr. Pyke not think that was strange?

Mr. Gerry Pyke

This was because he was using the advertising agency to do work that could have been done in-house. Obviously, there was a significant charge for that.

Deputy Róisín Shortall

What happened to the annual report the following year?

Mr. Gerry Pyke

Over the years, there was a reduction. As far as I remember — I think there are figures to show this — there was a significant increase in the amount of materials going from his department through the procurement department of FÁS.

Deputy Róisín Shortall

It is very hard to accept that Mr. Pyke was not aware of any carry on at all, given the extent of the activities that Mr. Craig was involved in and that Mr. Pyke was his immediate boss. At this point, how does Mr. Pyke think it happened that Mr. Craig was engaged in so much of this stuff that cost the taxpayer so heavily? How did that all happen when Mr. Pyke was supposed to be supervising him?

Mr. Gerry Pyke

I really do not know why he engaged in these practices.

Deputy Róisín Shortall

I did not ask Mr. Pyke that. I asked him how it happened, when Mr. Pyke was supposed to be supervising him.

Mr. Gerry Pyke

At the risk of repeating myself, Mr. Craig was a senior officer with the rank of principal. As a result of that he had authority and responsibility. The processes we had were that the executive board would determine the allocation for advertising and publicity on the basis of a bid from Mr. Craig, as they would with bids from other directors. The bid would contain indicative actions and in common with other directors it was his job to get in action the various activities, and do so within the corporate controls that existed. There was nothing obvious to me to suggest that he was doing anything other than that.

Deputy Róisín Shortall

Mr. Pyke had already had the experience of the Jobs Ireland website. Was Mr. Pyke responsible for ICT at that point?

Mr. Gerry Pyke

No, I was not.

Deputy Róisín Shortall

When did he take on responsibility for that?

Mr. Gerry Pyke

I think, from memory, it was in early 2000. The experience of the website was fully documented when the investigation was concluded and showed that the proper procedures had not been adopted. Whatever about duplication of effort, the investigation report showed that Mr. Craig had not used proper procedures.

Deputy Róisín Shortall

It is not just a matter of duplication, although that was a serious error. A second website was set up, which cost the taxpayer dearly and Mr. Pyke was aware of that.

Mr. Gerry Pyke

I had no direct involvement. As I mentioned earlier, Mr. Craig was somebody else's responsibility at that stage. I was aware that a website had been developed.

Deputy Róisín Shortall

Mr. Pyke was aware of what happened with Mr. Craig's involvement in the Jobs Ireland website. We were also told by Mr. Molloy that he had asked Mr. Pyke to re-emphasise to Mr. Craig the importance of following proper procedures. He had done that over a number of years. We also know that the director of finance, Mr. Gasparro, had expressed serious concern. Mr. Pyke is saying that the first inkling there was anything amiss was when he got the final report on INV. 137.

Mr. Gerry Pyke

When he was talking to me about Mr. Craig, Mr. Molloy never implied any suggestion of impropriety or irregularity.

Deputy Róisín Shortall

To paraphrase Mr. Molloy, he said he had put Mr. Pyke in to supervise Mr. Craig who previously had been unsupervised under the previous director general. In a speaking note, he said that he emphasised and re-emphasised the importance of Mr. Craig adhering to the rules. Yet, Mr. Pyke says he was shocked in 2007 when he discovered there was something wrong.

Mr. Gerry Pyke

Mr. Molloy did not indicate any sense of irregularity or impropriety. He reiterated his comments about public sector norms across the organisation.

Deputy Róisín Shortall

That is not what he said to the board in 2006.

Mr. Gerry Pyke

My recollection is as I have stated.

Deputy Róisín Shortall

Thank you, Chairman.

Chairman

Thank you, Deputy. Does Deputy O'Brien have any other questions?

Deputy Darragh O’Brien

No.

Chairman

Are there any other questions related to FÁS in general?

Deputy Róisín Shortall

There are questions relating to the level of expenditure in the CDP. At the previous public meeting, I had asked that we would be given assurances that this was not being used as some kind of slush fund. There are vast amounts of money involved. I asked what were the criteria for allocating this to different training agencies and what controls were in place to ensure that it is properly allocated.

Chairman

Before we continue, is it agreed that Mr. Pyke may leave? Agreed. I thank Mr. Pyke for attending.

Mr. Gerry Pyke

I thank the committee for the courteous way in which I have been received. I appreciate it. I also thank the secretariat who advised me on how to attend.

If I may be allowed a personal comment before I leave, it is no great comfort to me to have the last year of my 42-year career under a cloud of controversy. It is very sad for me. It is perhaps something that will be a continuing regret for me. I will always ask myself was there something I could have done and should have done that could have mitigated the damage that these events have caused to the organisation, the staff and the people we try to serve. I thank the committee.

Is it acceptable to wish all the committee members a happy Christmas?

Chairman

Many happy returns.

Mr. Gerry Pyke

Thank you, Chairman. God bless.

The witness withdrew.

Chairman

I am sorry, Mr. Rowan. You were about to respond to Deputy Shortall.

Mr. Denis Rowan

The amount of spend in 2004 was €9 million. FÁS was asked at that stage to increase the level of spend——

Deputy Róisín Shortall

Was that the first year of it?

Mr. Denis Rowan

No.

Deputy Róisín Shortall

When did it start?

Mr. Denis Rowan

Training of employed persons had been going on for a good few years before that.

Mr. Con Shanahan

It was called the training support scheme.

Mr. Denis Rowan

FÁS was then asked, around about that time, to increase the level of training of employed people. This was the result of various reports published at the time such as "Ahead of the Curve" and "One Step Up", and the need to up-skill people, particularly the low skilled.

Deputy Róisín Shortall

Who asked FÁS?

Mr. Denis Rowan

The O'Driscoll report emphasised the issue of increasing the level of training of employed people.

Deputy Róisín Shortall

Was FÁS asked to set up this one?

Mr. Denis Rowan

The Department approached us and asked us to increase our spend on training for employed people, which we did.

Deputy Róisín Shortall

When did the Department do that?

Mr. Denis Rowan

Sometime in 2004. Then our expenditure increased from €9 million to approximately €25 million in 2005, approximately €35 million in 2006 and €42 million last year. I would emphasise a couple of points.

Deputy Róisín Shortall

What is the expenditure this year?

Mr. Denis Rowan

This year the outturn will be roughly €32 million or €33 million. Mr. Shanahan, am I right in saying that?

Mr. Patrick Kivlehan

Yes.

Mr. Denis Rowan

What we did is what we always did. FÁS does not do the training itself. Because of the range, the nature, the locations and the once-off part of it, we contract it out or grant aid others to do it. That is the basis or framework in which it was done.

At the time we expanded our number of staff because, obviously, the level of funding had increased. A while back the committee was given a copy of the procedures surrounding it. We grant aid up to 70% or 75% of the cost of a course and the person or their employer pays the rest. To attract the grant aid from FÁS, the trainers must be approved by FÁS. We have a separate team of people, away from those who award the work, who carry out that role. The trainers are approved as trainers and they are approved for particular course types, and their staff are also approved for particular course types.

Deputy Róisín Shortall

Therefore, there is no outside involvement of any other agency.

Mr. Denis Rowan

In what?

Deputy Róisín Shortall

FÁS approves the trainers and then makes the allocations.

Mr. Denis Rowan

Sorry. There is an approval board made up of a number of outside people.

Deputy Róisín Shortall

Who are they?

Mr. Denis Rowan

ICTU, IBEC, EI, Department of Education and Science and FÁS are on an approval board.

Deputy Róisín Shortall

They are hardly outside people, are they?

Mr. Denis Rowan

We would deem them to be in the sense of——

Deputy Róisín Shortall

Are they all not bodies represented on the board?

Mr. Denis Rowan

Yes, but it would not be the same people. The function of this group is to approve a trainer for course type and the particular staff members for those courses. That is their prime role. They are not involved in awarding work and contracts. That is why I made the point that it is separate and independent of those parts of FÁS that award the work or grant aid the courses.

Once a trainer is approved by FÁS, or by the committee which does that for FÁS, the trainer is approved. That does not mean, at that stage, that it automatically gets work or is invited to tender. There is a database of those approved. Many firms like being approved by FÁS as a marketing tool for themselves in their own right.

After that, there are detailed tendering rules which the staff must apply. These are detailed in the documentation that we gave the committee. For example, there have been national calls done in 2005 and 2007, the details of which I understand the committee has as well. There were two in 2007, where there was a call for training for the low-skilled. We are particularly interested in the training of the low-skilled who we would deem to be up to level five on the framework. I understand we have given the committee all of that stuff. It is very detailed, robust, clear and transparent. It went to the board of FÁS as well for approval.

Deputy Róisín Shortall

How does FÁS ensure that there are not conflicts of interest given that some of those bodies represented on the board and on this committee are in receipt of funds from this programme?

Mr. Denis Rowan

At the board meeting for the low-skilled people, any representatives who had any involvement in those firms going for approval left the board meeting when these matters were being discussed.

Deputy Róisín Shortall

Does the board approve the allocation?

Mr. Denis Rowan

It approves the contracts that we wish to award. In this case the level of the funding required us to go to the board of FÁS. I am particularly talking about a national call we made last year. I am just explaining the tendering process that we use, one of which is a national call. There are other ones I have detailed which local staff or central staff can use as well, depending on the level of funding we want to grant aid.

Deputy Róisín Shortall

We have details here of the breakdown of the allocation of the €42 million last year and the bodies to which that funding went.

Mr. Denis Rowan

Yes.

Deputy Róisín Shortall

A number of those bodies that benefited from the allocation of those funds are what one might call insiders. They are people represented on the board and on the committee that makes the decision on the allocations. I asked how does FÁS ensure that there are not vested interests at play in making those decisions.

Mr. Denis Rowan

The committee's job is the approval of trainers. The trainers then approved do not have an automatic right to be tendered or to be awarded work. It is a separate matter.

On the issue of a representative whose employer was being awarded, I am particularly taking the case of the low skills area, which is a contract worth up to €10 million. It had to go to the board of FÁS eventually, after approximately a year of internal panels on criteria about valuations and so on. The appropriate members of the board withdrew from the board when we brought these matters in to the board for approval. That is just one case of when it gets to that level of board approval, but many cases do not.

Deputy Róisín Shortall

This list shows that, for example, last year IBEC got more than €2 million.

Mr. Denis Rowan

That contract went to the board of FÁS.

Deputy Róisín Shortall

Was that already approved by a sub-committee of FÁS?

Mr. Denis Rowan

No.

Deputy Róisín Shortall

Who approved that before it went to the board?

Mr. Denis Rowan

As a result of the level of funding being approved or the amount of funding involved, it had to go to the board of FÁS itself. No other line function or committees——

Deputy Róisín Shortall

Who is responsible for deciding on the proposal that goes to the board?

Mr. Denis Rowan

The staff of FÁS would have been directly involved in managing the process from the call for proposals — which took the form of a national advertisement — to evaluating the returns relating thereto, to inviting a list of firms to tender and on to evaluating what these firms put forward and drawing up a final list. The criteria involved would be decided upon by FÁS staff.

Deputy Róisín Shortall

Who are the people charged with making the decision in that regard?

Mr. Denis Rowan

The FÁS staff directly involved would be determining the evaluation criteria, the specification of the work, etc. There would be no other outsiders involved.

Deputy Róisín Shortall

Is there a particular unit which has responsibility in this regard?

Mr. Denis Rowan

The services to business unit.

Deputy Róisín Shortall

Is Mr. Rowan responsible for that unit?

Mr. Denis Rowan

I was last year.

Deputy Róisín Shortall

Who has responsibility for it now?

Mr. Denis Rowan

Jim Buggle, Joe McGuinness and Martin Lynch. Mr. Lynch is head of the unit.

Deputy Róisín Shortall

Mr. Lynch is head of the unit. What is his title?

Mr. Denis Rowan

Assistant DG.

Mr. Con Shanahan

The reason that particular route was taken — in order to deal with the perceived issues relating to the requirement for a major investment in training people at work — was because FÁS, where all this work is essentially outsourced under contract, did not possess the capacity to deal with the expansion. A decision was made to put out a national call for proposals for other people to assist with that process. Hence the involvement of major bodies which, it was felt, would have access to large numbers of people and which would provide ready access to customers.

Deputy Róisín Shortall

The spend over the past five years was almost €150 million. It is not clear that there are transparent procedures in place in respect of the allocation of the moneys from that substantial fund. A person could reach the conclusion that there are vested interests at play, particularly because so much of the funding goes to people who are represented at board level.

Mr. Con Shanahan

First, one must draw a distinction with regard to the work done directly by our services to business unit staff in the regions. A significant proportion of the total budget would have been managed and delivered by them. All of the training courses relating to the funding would be subject to tender. As the Deputy stated, it was deemed that a significant sum of money could not be spent and this was given to national bodies — whose capacity was assessed as part of the process — which it was felt would be capable of delivering training, not necessarily directly but certainly indirectly, to large numbers of people within the limited timeframes involved. It was on this basis that the decision was made to spend a significant proportion of the budget along those lines.

The procurement rules should broadly be the same. Those bodies would be obliged to use trainers who are professionally qualified and accredited. The national register of trainers is going to be overtaken by FETAC and HETAC, which are the awarding bodies.

Deputy Róisín Shortall

Is it not FÁS that has been accrediting those trainers?

Mr. Con Shanahan

It is a committee that is chaired by an external person in FÁS that has no association whatsoever with FÁS. That is the reality. The committee is serviced and administered by FÁS.

Deputy Róisín Shortall

I thought Mr. Rowan stated it is comprised of representatives of the constituent bodies that make up the board.

Mr. Con Shanahan

And more.

Mr. Denis Rowan

The DES and ICTU are involved. However, the board members themselves would not be involved. Other members of staff of those bodies would represent them on the committee. As Mr. Shanahan stated, it is chaired by an independent person and is independent of FÁS. The staff who service, manage and supply the paperwork for approval to that committee are from FÁS. However, those staff are independent of the staff who award the work.

Deputy Róisín Shortall

In light of the scale of the funding relating to this programme and the fact that it has grown considerably in recent years, has an examination taken place with regard to the procedures in place to allocate that funding?

Mr. Denis Rowan

I apologise, I did not quite get the final part of the Deputy's point.

Deputy Róisín Shortall

Has an examination been carried out into the adequacy of the procedures in place in respect of the allocation of the funding to which I refer?

Mr. Denis Rowan

Yes, every year during my time. Even this year the procedures were reviewed and updated.

Deputy Róisín Shortall

Who reviewed them?

Mr. Denis Rowan

The staff of the division.

Deputy Róisín Shortall

Surely there should be some outside involvement in such a review.

Mr. Denis Rowan

As far as I know, certainly this year and last year——

Deputy Róisín Shortall

People cannot review themselves adequately.

Mr. Patrick Kivlehan

We carried out a number of internal audits at regional level in respect of the operation of the procedures. At the start, there were some teething problems with regard to tendering. They, however, became more bedded in as staff became more aware of the procurement process. We continue to make recommendations which can feed forward into the central——

Deputy Róisín Shortall

When did internal audit last examine the position?

Mr. Patrick Kivlehan

We completed two audits this year. I think the process, which is ongoing, possibly started three years ago. Each region is covered over a period.

Deputy Róisín Shortall

Will our guests indicate what the organisation Optimum Results does?

Mr. Denis Rowan

It is a private training company.

Deputy Róisín Shortall

A private training company.

Mr. Denis Rowan

Yes.

Deputy Róisín Shortall

Is there any connection between it and FÁS?

Mr. Denis Rowan

Not as far as I am aware. It may be the case that the person who runs it is a former member of FÁS.

Deputy Róisín Shortall

May be a former member.

Mr. Denis Rowan

She may have been involved with FÁS or its predecessors.

Chairman

What is the name of the individual in question?

Mr. Denis Rowan

Mary Harrison. At the time of the merger — 1988 — she left the organisation.

Deputy Róisín Shortall

How much business did Optimum Results attract from FÁS in recent years?

Mr. Denis Rowan

In 2007, Optimum received €969,000.

Deputy Róisín Shortall

Does Mr. Rowan have any information in respect of previous years?

Mr. Denis Rowan

I do not have it with me. However, I can obtain it for the Deputy.

Deputy Róisín Shortall

Okay. It would be of assistance if FÁS could provide an analysis similar to that we received in respect of 2007 for each year since 2000.

Mr. Denis Rowan

That would be no problem.

Deputy Darragh O’Brien

On the information relating to the direct losses in value for money arising out of INV. 137, is it correct that the figure is approximately €1.6 million or €1.7 million? Will Mr. Kivlehan indicate either how much of that money FÁS is seeking to recover or how much is recoverable? I note that the services of the outdoor media and poster company listed in the document, which were last used by FÁS in March of this year, have been dispensed with.

Mr. Patrick Kivlehan

That is correct.

Deputy Darragh O’Brien

Is FÁS seeking to recover any moneys?

Mr. Patrick Kivlehan

The Garda investigation is ongoing. A briefing is taking place with the detective responsible for the investigation later today. We will have a better picture in respect of the position later this week. Until the investigation is completed or until the Garda decides not to pursue the matter further, we cannot initiate civil action. However, the latter is an option we will seek to pursue when the Garda has finished its work or terminated the investigation.

Deputy Darragh O’Brien

Does Mr. Kivlehan agree that the financial loss to the Exchequer in this case is approximately €1.7 million?

Mr. Patrick Kivlehan

I would estimate it at just short of €1.7 million. As discussed last week with Deputy Clune, the largest loss arises from the verbal agreement relating to the maintenance of the website under which monthly payments were made to Ultimate Communications. The only benefit that emerged from that process was that the lease terminated and the extent of expenditure was somewhat reduced. That would actually make up the largest part of that €1.68 million.

Deputy Darragh O’Brien

Has FÁS had any dealings with the other companies involved?

Mr. Patrick Kivlehan

There were some in 2006 and one in 2007. I have not picked up on anything in the current work we are doing in respect of 2008.

Deputy Darragh O’Brien

With which company?

Mr. Patrick Kivlehan

OSK.

Deputy Darragh O’Brien

FÁS is still using the services of OSK.

Mr. Patrick Kivlehan

It was but is not doing so currently.

Chairman

Was FÁS using its services until this year?

Mr. Patrick Kivlehan

I found a contract in 2006 and there is something in 2007. There has been nothing since.

Deputy Darragh O’Brien

Has OSK tendered?

Mr. Patrick Kivlehan

I will have to check the file. I have been accessing so much information recently I could not be sure.

Deputy Darragh O’Brien

The committee will certainly be investigating this matter in the context of its report. Both FÁS and the companies that dealt with it have a case to answer. Was there a contract with OSK in 2007?

Mr. Patrick Kivlehan

There might have been something in early 2007 but not since then. I will have to check the file.

Deputy Darragh O’Brien

I would also like clarification on whether procurement procedures were followed and contracts awarded and confirmation as to whether FÁS is still availing of the company's services.

Mr. Patrick Kivlehan

I can confirm there is absolutely nothing in place in 2008.

Deputy Róisín Shortall

I refer to FÁS's relationship with Ultimate Communications Limited.

Mr. Denis Rowan

I am not aware of any connection between Ultimate Communications Limited and FÁS, except it has done work for us somewhere in the past.

Deputy Róisín Shortall

But not in recent times?

Mr. Denis Rowan

I will have to check, as I am not 100% certain, but I was certainly aware it was a trainer a number of years ago. I will have to check if the company has been used in the last while.

Deputy Róisín Shortall

Perhaps Mr. Rowan will come back to us with that information.

Chairman

I would like to return to the Spollen report and external courses. We were given a heavily censored version of the report when we requested a copy of it. A number of varying responses were given to different parties regarding the existence of the report. One party who looked for it under the Freedom of Information Act was told it no longer existed in FÁS or in the Department. Eventually, when we requested a copy, we were given a heavily censored version. Why was it so heavily censored? What is in it that we should not see?

Mr. Denis Rowan

I was not involved in any way at the time. The Spollen report was finished by the time I was in that part of the division.

Chairman

We asked about this during one of the earlier meetings.

Mr. Patrick Kivlehan

The redaction in regard to the Spollen report related to either staff names or the names of companies involved in the investigation, which subsequently led to, for example, the establishment of the NRT. This was a data protection issue, on which we were given legal advice.

Deputy Róisín Shortall

Were there two Spollen reports?

Mr. Patrick Kivlehan

No, there was only one Spollen report.

Chairman

Was there not a follow-up report?

Mr. Patrick Kivlehan

Not that I am aware of. My understanding is the Spollen report as provided to the committee is the only one that was ever drawn up.

Chairman

A very censored version was provided.

Mr. Patrick Kivlehan

There were data protection issues around the investigatory side of the work.

Chairman

That is again very unsatisfactory because we cannot make a judgment. Mr. Kivlehan says the report could not be given for legal reasons. We do not know that and we would like to see it. I am making a formal request again for an undoctored version of it because it is too serious. It is about safety in the workplace. Would Mr. Kivlehan agree there were massive abuses in this regard?

Mr. Patrick Kivlehan

Yes, certainly in the findings. That is why in regard to the current process where the NRT is established, that is a huge improvement because there is an independent body that can check the accreditation of any trainer who wishes to make an application, their training staff and their credentials.

Chairman

I refer to the transcripts of the evidence given by Mr. Molloy. At the first meeting, he said the Spollen report had given the organisation a clean bill of health. Does Mr. Kivlehan agree with that?

Mr. Patrick Kivlehan

I have only read the report once. I am not too sure in that context what "a clean bill of health" means. With regard to the findings, it gave clear indications as to how the organisation should move forward and they were implemented. The biggest achievement is the fact that the NRT is in place.

Chairman

Who was responsible at the time for the awarding of the contracts under the Safe Pass programme?

Mr. Patrick Kivlehan

I do not know that. We would have to investigate that for the committee.

Mr. Denis Rowan

Contracts are not awarded for the Safe Pass programme. We approve tutors to run it in the private sector.

Chairman

Who was responsible for the parameters and standards set down for external trainers to award safe passes?

Mr. Denis Rowan

The Spollen report was done in 2004. Mr. Byrne and Mr. Pearson were the two direct staff members involved in Safe Pass.

Chairman

Was there gross wastage in the way taxpayers' money was given to subcontractors to provide the courses? Does Mr. Rowan think FÁS achieved value for money?

Mr. Denis Rowan

FÁS does not fund tutors to run Safe Pass courses. It is the private sector at work. We approve them as tutors to deliver Safe Pass. They go into the marketplace themselves and they sell their own wares.

Chairman

Did they deliver good safety standards to the recipients of the courses?

Mr. Denis Rowan

Yes, in the majority of cases. I know many Safe Pass tutors are approved now. The last count when I was involved was 290 people approved as a tutor and the critical mass of those delivered the Safe Pass course as designed by FÁS and delivered at the standard we expect. There have been cases where that did not take place and when they were found, we took the appropriate steps.

Chairman

Is Mr. Rowan saying no other report was done to follow up the Spollen report in regard to the same area by FÁS or the Department?

Mr. Denis Rowan

Not that I am aware of but now that the Chairman has raised it, we will double check. However, my understanding is the Spollen report was the final report in that area.

Mr. Patrick Kivlehan

As a separate issue, we are doing an audit of the Safe Pass programme. That work is ongoing and should be finished in the new year.

Deputy Róisín Shortall

The audit function is keeping people very busy.

Mr. Patrick Kivlehan

Very much so.

Deputy Róisín Shortall

How many audits are under way?

Mr. Patrick Kivlehan

The number at any point in time is approximately five. However, where work is in progress, there may be items to which we must return or on which we await responses. One always keeps balls in the air and there could be anything from ten to 12 audits. It is a busy function and important work.

Deputy Róisín Shortall

Mr. Saul stated he was given enhanced resources for that. What did they entail?

Mr. Patrick Kivlehan

With regard to the board request, we are doing a comprehensive review of corporate services. We have currently specked out four main pieces of work. We presented these to the audit committee yesterday evening and in regard to two of those, we looked at bringing in additional resources to complete elements of the audit but we will complete the audit with our own staff. There will be discrete sections of work that we can subcontract.

Chairman

Deputy Shortall sought a breakdown of travel claims prior to 2003. Will Mr. Kivlehan provide us with details of a visit made by FÁS management to South Africa? What was the purpose of the visit?

Mr. Denis Rowan

It concerned a jobs fair we were running in Johannesburg.

Chairman

Was there a musical element to it? The claim involved the hiring of a classical pianist. There were a number of issues.

Mr. Denis Rowan

I am not aware of that. I read it in the media.

Chairman

Could Mr. Rowan provide us with the details on that?

Mr. Denis Rowan

Okay.

Mr. John Buckley

The committee has had a number of hearings and, as the Chairman said at the beginning of the session, it will proceed to produce its own report. In parallel, we will begin our audit and I intend that we will begin on 4 January 2009. The committee will take account of any matters that have been brought to my attention, some of which have been included in the minutes of the committee today and others will follow from the report. It will also take account of the concerns expressed by the Department in regard to internal control and governance and so on and we will also factor those into the scope of our audit. The field work will begin on 4 January.

Chairman

I thank the members and staff of the committee as well as the staff of the Comptroller and Auditor General's office for their work in preparation for these hearings. I also thank the staff of FÁS and other witnesses. It has been difficult at times but I thank everybody for their work in carrying out this examination.

Mr. John Buckley

I should explain that 4 January is a Sunday; therefore, in view of the season we are in, we will not begin on that day.

Mr. Denis Rowan

I thank our staff who are here. I also thank previous FÁS staff who are present. I thank the Chairman and members of the committee for their time. We appreciate that it has been a long day for them and us. We need the committee to provide us with a list of what we have agreed to supply. We welcome the remarks made, not just today but on previous occasions also, about the good work done by FÁS members. With staff, we have noted these comments. We are concerned about morale in FÁS. Mr. Christy Cooney, who is not present, has asked me to raise the fact that it is mentioned in the newspapers that he was invited to attend today. He would have come if he had been invited. No disrespect is intended by his not being here. He did not understand he had been invited. He is having a well earned rest before he begins a new life in a new post. We wish him well, as does FÁS. We also wish the committee well in its work and thank it for its time.

Chairman

There is one item to which I would like to refer, namely, the letter we received from Mr. Gregory Craig, in which he said he would shortly send us a review of matters that were inaccurate in order to correct mistakes of fact and "misstatements relating to him" and his work in FÁS raised during the committee's proceedings. We will be writing to him tomorrow to ask him to let us have his submission in order that we can take its contents into consideration before we finalise our report. We expect to finalise it soon and to have an interim report by the end of January. We are looking forward to the examination by the Comptroller and Auditor General. We will not note chapter 2 of special report No. 10 and the 2007 annual accounts of FÁS. We will leave them open until such time as we have our report completed and see what the Comptroller and Auditor General does.

I wish everybody — the staff of the Comptroller and Auditor General, our own staff, members and the media who have been so patient and diligent in their work in covering this committee in recent weeks and months — a happy Christmas.

The witnesses withdrew.

The committee went into private session at 4.03 p.m. and adjourned at 4.06 p.m. until 10 a.m. on Wednesday, 14 January 2009.