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COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 24 Sep 2009

Special Report No. 66 of Comptroller and Auditor General: Advertising and Promotion in FÁS.

Mr. John Buckley (An tArd Reachtaire Cúntas agus Ciste) called and examined.

Mr. Seán Gorman (Secretary General, Department of Enterprise, Trade and Employment) and Mr. Paul O’Toole (Director General, FÁS) called and examined.

I draw everyone's attention to the fact that while members of the committee enjoy absolute privilege, the same privilege does not apply to witnesses appearing before the committee. The committee cannot guarantee any level of privilege to witnesses appearing before it. I remind members of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official, either by name or in such a way as to make him or her identifiable. Members are also reminded of the provisions of Standing Order 158, under which the committee must refrain from inquiring into the merits and objectives of a policy or policies of the Government or a Minister.

I welcome Mr. Seán Gorman, Secretary General, Department of Enterprise, Trade and Employment, and invite him to introduce his departmental colleagues.

Mr. Seán Gorman

I am accompanied by Mr. Dermot Mulligan, assistant secretary general with responsibility for the labour force development division, Mr. Padraig Ó Conaill, principal officer with responsibility for labour market policy, and Mr. Niall Monks, assistant principal officer, labour market policy unit.

I welcome Mr. Paul O'Toole, director general of FÁS, and invite him to introduce his officials.

Mr. Paul O’Toole

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

I welcome Mr. Dermot Quigley, principal officer at the Department of Finance, and invite him to introduce his colleagues.

Mr. Dermot Quigley

I am accompanied by Mr. Tony Jordan, principal officer. We both work in the sectoral policy division.

All the delegates are very welcome.

I invite Mr. John Buckley to introduce his special report No. 66, Advertising and Promotion in FÁS.

Mr. John Buckley

The report focuses on the activities managed by the corporate affairs section of FÁS and those services it performed on behalf of other divisions. Overall, €48 million was spent on advertising and promotion in the seven-year period 2002 to 2008. This was €13.2 million more than had been budgeted for and evaluations carried out cast doubt on the effectiveness of some of this spending. In particular, advertising of the Science Challenge programme did not drive applications received from schools, advertising of Opportunities 2007 did not reach the audience targeted, and a survey of employers in 2007 found little awareness of four services targeted at them and heavily promoted by FÁS in the previous two years.

The use of the print medium was high notwithstanding that it is relatively more costly than other media in terms of audience reached. Exhibitions absorbed €20 million of the overall spend, of which €8.3 million was incurred on their promotion. Overall, expenditure on exhibitions ran 45% over budget. Although €2.1 million was spent on advertising Opportunities 2007, a doubling of expenditure in previous years, visitor surveys found that fewer people were aware of it that year than in the previous year. This suggests advertising was not fully effective in this area. In the case of the Science Challenge programme, a high proportion of the total cost, 43%, was spent on advertising, the bulk of which was directed at primary schools. As stated, a survey in 2007 found that this did not seem to drive applications.

Two major instances of non-effective expenditure were the payment of €622,000 for which no goods or services could be identified and an outlay of €612,000 on television advertisements that were never broadcast because no transmission budget was available to the division on whose behalf the advertisements were commissioned. As the committee is aware, €9,200 was paid to an advertising agency for a car that was not delivered and for which no refund was received. The agency involved has ceased trading. The fact that television advertisements were not broadcast suggests a lack of co-ordination between the various divisions and the corporate affairs unit in the commissioning and use of advertising. Disputes over charging of expenditure suggest the overall process was not transparent to the divisions.

In the case of advertising agencies, to which €24 million was paid, the pattern of service provision was inconsistent. Some €5.4 million worth of core advertising services was directly commissioned, mainly in the period 2005 to 2007, despite the fact that the agency had been engaged to carry out this service. On the other hand, by acquiring certain other supplies and services through the agency, FÁS risked breaching public procurement norms.

Overall, special report No. 66 identifies several areas where FÁS could benefit from amending its procedures and practices in order to address shortcomings highlighted and make processing more systematic. Key lessons that might be relevant to the organisation and public sector entities generally include: using a strategy that sets out objectives and goals in order to focus activities such as marketing and promotion; reviewing the outcome of that strategy periodically; centrally controlling all financial commitments and monitoring the related outturns; providing explanations for and, where necessary, securing board ratification of material overruns; ensuring budget holders have final approval of the charge to their accounts; ensuring innovative programmes such as the Science Challenge programme are evaluated and, where found effective, mainlined as soon as possible; managing the risk of information asymmetry in instances where reliance must be placed on subject matter experts; planning exhibitions and major events well in advance in order to allow time for compliance with procurement processes; clearly limiting agents' authority to procure only goods and services incidental to the contract; ensuring an agent, once appointed, carries out the assigned tasks and that the tasks do not revert to the State body; and ensuring the finance function has a gatekeeper role in order to verify that payments accord with valid commitments and authorisation rules.

Before Mr. Gorman makes his opening statement, I wish to make members aware that I have just been informed that Mr. Niall Saul, a member of the board of FÁS, is, as we speak, offering his opinions on certain matters on national radio. It is unacceptable that he should do so at the same time as the chairman of FÁS is giving evidence before the committee. I see Mr. Saul's actions as an attempt to form public opinion ahead of this meeting. If he has anything to say, he should do so before the committee and perhaps he will have an opportunity to do so in the future. As I said, his interview on the radio is an unacceptable attempt to form public opinion. I hope Mr. McLoone will address this issue. Regardless of Mr. Saul's comments outside this room, I intend to adhere to the programme for today's meeting. I invite Mr. Gorman to make his opening address.

Mr. Seán Gorman

I propose to describe the role of the Department of Enterprise, Trade and Employment in monitoring and overseeing the activities of FÁS. The Department carries out this role through two main mechanisms. First, it does so through a series of oversight arrangements which have been put in place to ensure moneys are spent in accordance with the purposes for which they were allocated and that value for money is achieved. The second mechanism is based on a reliance on agency compliance with the code of practice for the governance of State bodies.

The Department seeks to ensure moneys are expended according to the purposes for which they were allocated through an intensive system of monitoring FÁS activities. The budget for FÁS is agreed on the basis of detailed discussions between it, the Department of Enterprise, Trade and Employment and the Department of Finance in the context of the annual Estimates process. FÁS expenditure is monitored by my Department on a weekly and monthly basis in the context of the draw-down of funds from the Department. FÁS programme activity is monitored on a monthly basis. FÁS's draft annual accounts are examined by the Department in the context of publication of the FÁS annual report. The Department also monitors FÁS annual programme activity in the context of the annual output statement which the Minister presents to the Select Committee on Enterprise, Trade and Employment in the context of the annual Estimates process. Meetings are held with senior departmental and senior FÁS staff, normally on a monthly basis and sometimes more frequently, to deal with issues as they arise. The departmental member of the FÁS board attends its monthly meetings and participates in the strategy, upskilling and remuneration sub-committees of the board. We also make a significant input into the development of the FÁS statement of strategy.

This supervision and monitoring of FÁS and other semi-State bodies is, of necessity, at a fairly high level and reflects the fact that, under Department of Finance guidelines, the board and particularly the chief executive officer are responsible for the day-to-day running of the organisation, preparing accounts and responding to the Committee of Public Accounts and others in that regard. It would not be feasible for the Department to involve itself directly in the detailed financial and other day-to-day activities of a large organisation such as FÁS which has an annual budget of more than €1billion and a staff of more than 2,000. That is why, in addition to the Department's monitoring of activities, the second mechanism for ensuring the requirements of the code of practice for the governance of State bodies are adhered to is so important.

To this end, the Department ensures that this is achieved through the assurances in the FÁS annual report each year, confirming that steps have been taken to ensure an appropriate control environment. This is in line with the Department of Finance guidelines which require that Accounting Officers should satisfy themselves that the requirements of the code of practice for the governance of State bodies are being implemented in State bodies under their aegis.

Since the code of practice was issued, it has in fact been confirmed by FÁS each year over the period 2002-07, with the exception of 2006, that steps were taken to ensure an appropriate control environment. It also stated that the audit committee on behalf of the board conducted a review of the effectiveness of the system of internal financial controls and that no weaknesses were found in the system which resulted in any material loss, contingencies or uncertainties being disclosed in the financial statements or the auditor's report on the financial statements. It was not until the 2006 statement on internal financial control, which was dated 27 June 2007, that it was noted that internal audit had pointed to some weaknesses in procurement and that the board had taken steps to address them.

As regards the issues covered in the Comptroller and Auditor General's report on advertising and promotion, the Department was not aware of the full details of the management and promotion spending within FÁS, much of which was contained in more general programme budgets. Specifically the substance of Internal Audit Report 137 was not made known to the Department directly before May 2008.

When the Department did discover what had happened it responded quite specifically. I wrote to the director general of FÁS on 30 June 2008 seeking formal assurances from him that the practices outlined in the FÁS internal and Comptroller and Auditor General audit reports had ceased and that adequate systems and controls were in place to prevent any recurrence; and requesting details of the remedial actions taken by FÁS in respect of the issues raised by the audit reports, with progress reports on the implementation of the audit reports' recommendations. The director general replied on 1 July 2008 confirming that the unacceptable practices referred to in the audit reports had ceased and that adequate systems and controls were now in place to prevent any recurrence. Since then, the Department has been monitoring this on a regular basis. In addition, the Department has insisted on the FÁS advertising and promotion budget being reduced significantly. The budget for 2009 is €1.6 million. This compares to an outturn of €6.3 million in 2008. The Department also chaired an internal review committee that examined the Science Challenge programme and the Tánaiste and Minister for Enterprise, Trade and Employment agreed with its findings that Science Challenge did not represent best value for money and should be closed down and this is now under way.

Since June 2009, the Department has been preparing legislation to amend the Labour Services Act 1987 to provide for a new board structure for FÁS. This legislation will be published in the next few weeks.

In this short statement I have set out the role of the Department in the oversight of FÁS as a semi-State agency under its aegis. I have also outlined the responses of the Department to the issues raised to date. I will be happy to respond to any questions the committee may have.

I thank Mr. Gorman. May we publish his statement?

Mr. Seán Gorman

Yes.

I invite Mr. O'Toole to make his opening statement.

Mr. Paul O’Toole

Chairman and members of the Committee of Public Accounts, on behalf of FÁS, may I first indicate our regret that the serious matters raised by the Comptroller and Auditor General in his report on advertising and promotion for the period 2002-08 necessitate our presence here today. This regret is based on the knowledge that the confidence of the committee, the Oireachtas and the public has been undermined by the continual revelations regarding our stewardship of taxpayers' money. We also regret the impact these matters are having on the staff of FÁS. At a time of significant change in the organisation, occasioned by the necessity of responding to the vastly different economic landscape, they continue to do their best to offer a quality service to the thousands of people who need our support. This effort continues, despite the impact of public opprobrium, falling staff numbers and increased demand.

We appreciate that this expression of regret is, of itself, insufficient. Of greater importance is the manner in which FÁS responds to the criticisms and failings which have occurred. To this end, we have implemented each of the recommendations which were made in the report of this committee in February this year that were the direct responsibility of FÁS and have gone further in some instances. For example, the board has reviewed and approved amendments to our procurement procedures. These have been implemented and communicated through training sessions with all colleagues involved in procurement. The board has approved a set of enhancements to the internal audit function and these are being implemented. FÁS has reduced its advertising expenditure by more than 90% in 2009, pending the completion of a new strategic plan for the organisation, which will include a communications and marketing strategy. Credit cards are no longer issued for the use of members of staff and have been withdrawn from those who previously had such cards. Expenditure on foreign travel has been reduced by more than 60% in 2009. Following a review commissioned by the Tánaiste and Minister for Enterprise, Trade and Employment, the Science Challenge programme has been discontinued. Not all recommendations are complete but all are well progressed.

We have also commenced acting on the recommendations contained in the Comptroller and Auditor General's report on advertising and promotion, which is the subject of today's hearing. Again, specifically, we have improved the reporting to the board of specific variances, ceased the practice whereby one unit could transfer expenditure to a different unit without the approval of the budget holder and cancelled the planned Opportunities Programme for 2009. We are aware that the Comptroller and Auditor General is preparing a further report on FÁS. We commit to implementing any recommendations which emerge from this work when they become available.

We believe, however, that we need to go further in order to restore full confidence in the organisation and in its work. To this end we will undertake a set of additional actions. We will carry out a comprehensive systems review of all our processes in respect of our various expenditure programmes. While most appear sound, we are not complacent in this regard. In tandem with future Government policy on the labour market and the interventions it will put in place that will fall to FÁS, we will develop a corporate plan to implement these interventions in a manner which is customer-focused, underpinned by quality delivery mechanisms and measurable. I intend to introduce a new organisational structure with clear lines of accountability together with an approach to staff engagement and development which will meet our future needs. As a team, we will work to put in a place a culture which fully recognises the importance of the needs of our stakeholders, which is driven by a focus on excellence, which welcomes accountability and embeds compliance with our procedures. I will bring proposals on the above to the board of FÁS at the earliest opportunity.

We will endeavour to address members' questions to the best of our ability. As the newest member of the FÁS team, I would like however to acknowledge the capacity of the organisation to contribute to Irish people, the Irish economy and to our society as a whole. We are not perfect and the many facets of our work, as well as the rapidly changing environment in which this work is carried out, inevitably gives rise to strains and pressure points. Despite this, today and every day, many thousands of people will participate in training programmes, community schemes and interventions for the disadvantaged in our society, while hundreds more will attend our employment services offices. Whether delivered directly by FÁS or with our support, all our programmes are designed to help people realise their own potential and thereby to benefit our economy and our communities.

I thank Mr. O'Toole. May we publish his statement?

Mr. Paul O’Toole

Yes.

Our work programme will consider the different sections of the report prepared by the Comptroller and Auditor General. I will ask Deputies Jim O'Keeffe, O'Brien, Clune, Shortall and McCormack to take specific sections and each member will be allocated 15 minutes in which to put their questions related to those sections. I had intended to address the report drawn up by the committee last February and the 16 recommendations made therein and had intended to question Mr. Gorman and Mr. O'Toole in this regard. While the recommendations of the report were accepted in principle, acceptance does not equate to implementation. However, members this morning heard evidence that our report has been taken seriously and has not gathered dust as some people feared. Nevertheless, I ask Mr. O'Toole to provide within a week specific detail on each recommendation and how it has been implemented. I acknowledge that time constraints did not allow it this morning and that there has been a fair attempt made to address the issues raised in that report.

However, there is an elephant in the room that I would like to address before moving on to the five questioners. It regards Mr. Molloy's pension package. Who negotiated it and who signed off on it? The statements by many people beg a question, although I will try to stay out of the political arena. People are implying that, unless Mr. Molloy got a generous package, he would not have left. Why was such a generous package given to him when he had already tendered his resignation voluntarily the day after the famous Pat Kenny interview? The public is asking why an amount equivalent to winning the lotto transferred to the former director general for his pension when the man spent and oversaw spending on travel that was more suitable to a rock star's lifestyle than that of a public servant.

The message, going by what we have heard so far, is that it was a sweetheart deal and that failure was rewarded, which is not a provision afforded to the average public servant. Why should there be a difference in standards? I would like to hear explanations from the director general of FÁS, the Secretary General of the Department of Enterprise, Trade and Employment and the Department of Finance, which had to rubber stamp the deal. How fair is it to the average FÁS worker, to whom our guests referred, going about his or her daily activities to see this being authorised at the top when he or she is suffering cutbacks? The people whom FÁS is supposed to serve are also suffering daily cutbacks.

Something else that has been stated is that, had a generous package not been given to Mr. Molloy, he would have gone to court, which would have cost more taxpayers' money. I question this assertion, as we should not appease people who make mistakes for fear of litigation. Given the evidence before me, there has been an appeasement because of the threat of court action. I would like the three people involved to address this issue before moving on to the other matters.

Mr. Seán Gorman

I should respond first, since I led the negotiation with the departing director general on the day in question. The severance package granted to him was negotiated in the context of his resignation and was broadly in line with what would have been available to him had his contract been terminated or had he been dismissed. The negotiation occurred during the difficult circumstances prevailing at the time and was conducted on the basis that the situation in FÁS needed a change at that level. He would have acknowledged that his position had become untenable. In the then interests of FÁS and of getting on with the job, we were of the opinion that we needed to deal with the issue quickly.

The package was a negotiated settlement and the terms were not very dissimilar to what he would have got had we terminated his contract. The threat of the courts was hanging over us. From general experience of such cases, I was aware that when they get to court——

May I interrupt Mr. Gorman? How could there have been a threat of court action if the man had voluntarily resigned?

Mr. Seán Gorman

During the negotiations, it was made clear that a part of the terms on which he was prepared to resign was that he should be treated reasonably. It was also made clear that, if the individual believed that he was not being treated reasonably, he would reserve his right to take court action.

Then he did not resign voluntarily.

Mr. Seán Gorman

He resigned voluntarily, but he offered——

The negotiations were conducted before he resigned. How could it have been voluntary?

Mr. Seán McCormack

The resignation was offered, but on the basis that we would negotiate settlement terms.

It was conditional.

Mr. Seán Gorman

The negotiation occurred and conclusions were reached. The outcome saw him get a full pension worth €111,000 or so per year, a lump sum valued at a year and a half's salary and an ex gratia payment equivalent to six months’ pay. Had the contract been terminated, the potential settlement would have been three months’ salary in lieu of notice. In determining the lump sum and pension, pensionable service of up to five years could have been granted. We were not far from the same level of accrued benefit.

We are not clear. The negotiations occurred before the man resigned.

Deputy McCormack, we will take this systematically. We will allow the three parties involved to give their views and then take questions. Was FÁS involved in the negotiations?

Mr. Paul O’Toole

At my level, I was not involved at that stage. I cannot add anything to the discussion.

Mr. Peter McLoone

I met Mr. Molloy early in the morning that led to his resignation. It was before 8 a.m. The negotiation about his position continued until after midnight of that day. What was raised with Mr. Molloy in discussions that morning was, as the Secretary General stated, the question of whether his position was tenable, not simply because of the radio interview conducted on the previous day, but because of a series of events. In the discussion with Mr. Molloy, one was seeking to get him to accept his shortcomings and so on and to recognise that his position was untenable and that his continuing as director general would make the workings of the organisation and the terms of its core task difficult. Members will recall that, at the time, we were involved in sessions with the Committee of Public Accounts.

I could give the committee more detail. It depends on how much members want to delve into the issue. The situation did not commence with Mr. Molloy approaching me or anyone else to say that his position was untenable and to give his resignation. The resignation came at the end of a long and, in my memory, difficult day. I anticipate some of the questions that Deputies will raise but, in the context of the package, it emerged that we were reliant on what Mr. Molloy's contract of employment provided for and on what was provided for in the circulars approved by Departments, including the Department of Finance, in respect of the conditions under which he left.

It was a long day and Mr. Molloy and I met the Secretary General of the Department of Enterprise, Trade and Employment. We were aware that it, in turn, needed to consult senior officials in the Department of Finance. To my knowledge, discussions were being held directly with the Minister and other Ministers. I am not sure that we arrived at a conclusion that people felt was the best one.

Did Mr. McLoone discuss the financial package in his dealings with Mr. Molloy?

Mr. Peter McLoone

He raised a set of terms and conditions with me that he wished to see if we were in negotiation and I was his representative. The reason I make reference to his contract and what was provided for in circulars is that late in the evening, that is what we were reliant on — what his contract of employment provided for and the provisions that existed in respect of someone in his position departing. This is why it required departmental approval, including Departments other than the Department of Enterprise, Trade and Employment.

Mr. Tony Jordan

We were involved in discussions with the Department of Enterprise, Trade and Employment. The package of terms was put to the Department of Finance and against a background where the Tánaiste wanted to effect change. This was made clear at the meeting. She wanted change at the top level of the organisation as a matter of urgency. There was a danger the Tánaiste's objective, having a change of director general, would be frustrated by possible legal action that could be costly to the taxpayer. At the same time, the director general was willing to resign. We were made aware of this. Given these circumstances, the case was exceptional. The Department of Finance did not object to the terms that were being agreed and that the Tánaiste considered appropriate.

Mr. Jordan says that Mr. Molloy was willing to resign. He was willing to resign if he received a golden handshake.

Mr. Tony Jordan

Indeed.

That is appeasement of someone who was responsible for what went on and which we heard at one of our meetings. Would a garda or a teacher who transgressed be given the same type of treatment? Is there one set of conditions for the top echelons and something else for those lower down in the public service? It sends out all the wrong signals, no matter what justification is made.

I do not understand. Either Mr. Molloy offered his resignation or he did not. He seems to have put a gun to the head of the Department of Finance to appease him or he would make it difficult. Was part of the package a condition that he would not speak out publicly again?

Mr. Seán Gorman

There was no confidentiality clause. The director general offered to go but he wanted a discussion about the terms on which he would go. A pragmatic decision was taken in the context of what was happening. It was important, both in my view and that of the Tánaiste, that change be effected and we needed to deal with the issue at the level of the director general. We took a pragmatic approach, taking account of what Mr. Molloy was likely to receive if we terminated or had we chosen to initiate a discussion, which we did not. We also took account of the possibility that we would be injuncted in court and effecting change could have been delayed or frustrated for a long time with the potential inherent costs of fighting legal actions and adding more difficulties to an already difficult situation.

Can we have all papers related to this deal from all sources, including FÁS, the Department of Enterprise, Trade and Employment and the Department of Finance?

I cannot understand what we are hearing. Mr. McLoone said that the position was untenable, Mr. Gorman says that Mr. Molloy wanted to go and if his position was untenable he could not stay after the committee meeting at which he appeared and his subsequent interview on radio. What is the true position? If he wanted to go, why was he not let go? The impression was given that he resigned as a result of the questioning in this committee and the interview on a radio programme. It was considered a wonderful thing that we were taking action with FÁS. If the Tánaiste wanted change at the top, as Mr. Gorman suggests, why did she not sack Mr. Molloy?

I read the rule on this earlier. Unfortunately, we cannot question decisions of Ministers. That is in our terms of reference.

I was not the first to mention the Minister. Mr. Gorman referred to her.

I do not want to stray into policy and ministerial decisions.

Mr. Seán Gorman

The director general came on the basis that he considered his position untenable. He offered to go but on the basis that we conduct a discussion with him on the terms on which he would go. He had spent a career of 34 or 35 years in the public service and none of these departures is straightforward. They often end up in litigation. We took account of the circumstances. We did not have a difficulty even though we could have had. We had some sympathy on a human level for an individual in that situation but we did not have difficulty with his wanting to go. We conducted pragmatic negotiations with a pragmatic outcome. This left us in a situation where he received what he would have received if he had been dismissed. We avoided the downside of protracted court action, potential court injunctions, and on balance this helped us move things forward so that we got the organisation focused and functioning again.

All of us understand that Mr. Molloy's position was untenable. I fully understand that changes needed to happen quickly. Mr. Gorman mentioned that the package he negotiated was broadly similar to what he would have been entitled to. Mr. Gorman referred to a pension of €111,000 per year. How much was the lump sum?

Mr. Seán Gorman

The standard one and a half year's salary based on 40 years service.

How much was that?

Mr. Seán Gorman

A sum of €333,732.

How much was the ex gratia payment?

Mr. Seán Gorman

It was €111,243.50.

That is what I am trying to get to. The lump sum entitlement is an entitlement under pension arrangements and amounts to the maximum tax-free cash lump sum. This is a tax-free payment.

Mr. Seán Gorman

It is the standard, classic lump sum retirement pension.

This sum of €333,732 is a tax-free lump sum to which one would be entitled under pension payments. How is the ex gratia payment treated?

Mr. Seán Gorman

It is taxable and on the basis of termination he would have been entitled to three months in lieu of notice. We negotiated six months.

Mr. Gorman said that he received one and a half times his salary. He spent 35 years in public service.

Mr. Seán Gorman

This was made on the basis that he received 4.5 added years for his pension.

Was this a top-up in addition to the ex gratia payment?

Mr. Seán Gorman

Yes.

What is the value of the 4.5 years added on?

Mr. Seán Gorman

On an actuarial calculation in pension terms, it would have been an additional 4.5 eightieths of his salary in actual cash, but the actuarial value if he lives to draw a pension for 30 years is €1 million.

I have two further questions. The uplift of his pension is the capital sum of approximately €1 million.

Mr. Seán Gorman

That is the actuarial value over 30 years.

I understand that. Court proceedings aside, if his contract had been terminated he would have received 4.5 years less in his pension. The ex gratia payment was obviously made at the whim of both Departments. It was an additional payment above his pension entitlements.

Mr. Seán Gorman

Yes, it was a negotiated payment based on six months' earnings, three of which he would have received if we had terminated.

A further €50,000.

Mr. Seán Gorman

Half the value. The ex gratia payment was €111,000 in cash terms.

The problem which arises for the committee is if one takes Mr. O'Toole's opening statement, advertising, for example, cost €6.3 million last year and €1.6 million this year. We need to make sure people know how to get advice from FÁS but the money being spent this year is less than the package agreed for Mr. Molloy. He is entitled to some of this money but what contribution did he pay to his Rolls Royce pension plan?

Mr. Seán Gorman

I do not have detailed information on his pension contribution but I can supply it to the committee.

Do the witnesses appreciate the impression made on the public by this arrangement, which appears to be among old pals? Do they accept it was an error of judgment? Do they accept that Mr. Molloy's position was clearly untenable at the time? I ask for a figure which does not reflect what he would have received if his position had been terminated because that is not what happened. His capital and pension sums appear to have been upgraded to a level which would have applied if his contract had been terminated, as opposed to what he was entitled to when he resigned. What was the additional cost of the upgrade above what he was entitled to upon walking in Mr. McLoone's door and offering his resignation?

Mr. Seán Gorman

I appreciate the Deputy's point about the public perception in the context of the various issues with which the committee is dealing. We were dealing with an immediate and urgent situation and we believed we had to find a resolution as quickly and pragmatically as possible, having regard to minimising the cost to the State of the severance terms. We made that judgment call on the basis of the terms on which we settled. There is no question of its being an arrangement among pals. This was done entirely on the basis of a formal discussion and approval within our own system in the Department and in consultation with the Department of Finance. I conducted the negotiations on a proper and official basis in my capacity as Secretary General of the Department.

The first area in which we incurred additional costs was the 4.5 years of notional service added to bring the individual's service to 40 years. The actuarial valuation of this over 30 years is €1 million.

Is that the extra amount in pension terms? He was given €111,000 per annum. If he did not get that upgraded, what would his pension have been?

Mr. Seán Gorman

It would be approximately one twentieth of his salary in cash terms.

How much extra is he getting per year?

What was his salary?

Mr. Seán Gorman

His salary was €220,000.

So, it is €11,000 per year plus a top-up of €110,000.

Mr. Seán Gorman

That is roughly correct.

In simple terms, what is the amount of the additional annual pension payments which he will receive for the rest of his life?

Mr. Tony Jordan

On the basis that he is getting a pension of €111,000 as opposed to the actuarially reduced pension of almost €76,000, the difference is approximately €34,000.

Is Mr. Jordan telling me he is getting an extra €34,000 per year?

That is not correct. He was getting the lump sum to which he was entitled of 1.5 times his salary.

Mr. Tony Jordan

I am referring to his pension.

Let me finish. It was based on a topped up salary.

Could we keep to the pension?

That is what I am trying to do. The figure is incorrect.

I am pursuing the question of how much additional pension he is getting per year, in cash terms, as a consequence of this upgrade arrangement. If there was no upgrade, what annual pension would he receive?

Mr. Seán Gorman

I do not have the precise figure but I would estimate it at €10,000 to €11,000 per year.

It was a top-up of €11,000 and a €111,000 one-off handshake in addition to the pension to which he was entitled if he retired that day unconditionally.

Mr. Seán Gorman

Yes.

It is approximately €11,000 per year for the rest of his life, or the equivalent of what someone would receive from the social welfare contributory pension. What is the capital sum?

Mr. Seán Gorman

Does the Deputy refer to the pension lump sum?

No, I refer to the total capital lump sum he received from the upgrade, which he would not have received if he had told Mr. McLoone that he was resigning.

Mr. Seán Gorman

He would have received approximately €11,000 for the pension.

In lump sum terms what was the additional amount paid as a result of the upgrade?

Mr. Seán Gorman

He would have received approximately €50,000 extra through the salary top-up on the basis that he would have been entitled to half of the €111,000 he received on termination. That is approximately €50,000 on that element. He would get approximately €11,000 per year on the pension element, which I will qualify. I will run the numbers as I took an actuarial valuation approach to the top-up in my preparations. There would have been an enhancement to the value of the pension lump sum by reference to the fact that there were four and a half added years.

How much was the lump sum?

Mr. Seán Gorman

It was probably €25,000 or €30,000, subject to qualification. I would have to get those numbers run accurately.

So it was approximately €80,000 extra in a lump sum.

Mr. Seán Gorman

It could be in that ballpark.

There was an additional €80,000 or €90,000.

Mr. Seán Gorman

There would be approximately €50,000 in terms of salary and then approximately €11,000 per annum in the pension itself, and the lump sum would have been enhanced by reference to the four and half years of notional service which he was granted.

What was the total lump sum?

Mr. Seán Gorman

It could be of the order of €80,000 or €90,000, subject to the qualification that I would like the numbers properly run. It can be done quickly.

Does the witness stand over a case where a man whose position is untenable is being given a lump sum addition of almost €90,000, with an additional annual pension of €11,000 per year? How in the name of God can that be justified?

Mr. Seán Gorman

It was done in the context of the position we found ourselves in. It was the collective view of all of us involved that this was a pragmatic settlement in the context in which we dealt with it. That was the decision and the basis on which it was approved.

We should try to move on.

This is an important issue which goes to the heart of what this committee is about, which is the examination of waste of public money. What is emerging now is very different from what we were told at the time. I recall the Taoiseach referring to Mr. Molloy in very glowing terms after he resigned and he indicated that Mr. Molloy had resigned entirely of his own volition. He also indicated that he was very familiar with and had very high regard for Mr. Molloy.

I put down a parliamentary question last February which asked the Tánaiste and Minister for Enterprise, Trade and Employment the basis on which the top-up was made. Her reply was that the severance package recognised the public service given by the former director general of FÁS.

The Chairman has already referred to the kind of message which that sends out. Far from this being a voluntary resignation on the part of Mr. Molloy, it was a very expensive buy-out by the Government in an attempt to get out of a difficult issue regarding accountability. We know this package entailed the Tánaiste, in conjunction with the Minister for Finance, spending almost €1.1 million of taxpayers' money in buying off somebody who had shown little or no regard for proper corporate governance. This person presided over an organisation which allowed massive waste of public money that we are still dealing with now.

It is very hard for the taxpayer to stomach this. How could this level of expenditure, some €1.1 million, be justified having been spent by two senior Ministers in the current climate and where a senior public servant still has much to answer for? This shows complete disregard for any kind of proper standards in financial accountability.

There are strict rules covering public sector pensions and these are set out in a number of legal documents. What is the legal basis for exceeding the terms of a person's contract? Will the witnesses provide the legal reference for that? Is there a paper trail covering the negotiations which took place with Mr. Molloy, and in particular the approval given by the Minister for Finance to this grubby deal, which is infuriating taxpayers so much? I presume the witnesses are not in a position to provide that today but will they give it to us in the next couple of days? It is important to have that.

Mr. Seán Gorman

The Chairman asked for that earlier and we can provide that paper trail. The legal basis for approval of the terms of settlement is section 6(3) of the Labour Services Act 1987, which governs the terms and conditions of the director general and which subjects those terms and conditions to the approval of both the Minister for Enterprise, Trade and Employment — which was then the Minister for Labour — and the Minister for Finance.

Are both Ministers also obliged to adhere to other legal requirements in respect of public sector pensions? The committee dealing with public service pensions set down very clear regulations regarding what is allowed and not allowed in terms of exceeding packages.

Mr. Seán Gorman

Our Department and the Department of Finance have dealt with this under that section of the Labour Services Act 1987, and that is the legal basis on which the matter was dealt with.

Was a separate pension scheme set up for Mr. Molloy?

Mr. Seán Gorman

He was a member of the FÁS pension scheme after he became director general. One of the earlier questions asked what he was paying into that but I do not have those fees. My recollection is that on a standard basis, the director general of the day, whoever he or she happens to be, on joining FÁS joins a FÁS scheme. Perhaps the new chief executive could help me, although he may not know. That would take account of whether the person had been in schemes elsewhere, and that would have been rolled into the process. He would have been a member of the FÁS in-house pension scheme. I can get the chapter and verse details on that.

That was not the case with his predecessor, Dr. John Lynch, as a special scheme was set up for him.

Mr. Seán Gorman

I have been reminded by one of my people that the director general, according to his contract, shall be a member of an Foras main pension scheme and associated spouse and children's scheme. That was my understanding. The terms and conditions would be in accordance with the rules of the scheme.

Was a special scheme set up for the additional €1.1 million?

Mr. Seán Gorman

No, a special scheme was not set up.

I call Deputy McGrath. We will then await the papers from the different sources and consider the matter again.

On the day in question, when these negotiations were taking place on Mr. Molloy's dismissal, departure, or resignation, was legal advice taken by FÁS or by the Department of Enterprise, Trade and Employment regarding ability to defend any case that may be taken in the case of him being dismissed? It seems that the body essentially bowed to a threat from Mr. Molloy where it should have called his bluff and forced him to go to court. He would have required some neck to go to court to try to get an extra €1 million from the taxpayer, given everything that had been exposed at FÁS. Was legal advice taken on the likely success of defending a case relating to the dismissal or departure of Mr. Molloy on the day in question?

Mr. Seán Gorman

We did not, as a Department, take legal advice on that on the day in question.

An extra €1.1 million was paid out without any legal advice as to the State's ability to defend the case he threatened to take.

Mr. Seán Gorman

We did not take formal legal advice on that as we were conscious of what he could potentially get had we terminated anyway. I would have been conscious of the costs associated with legal advice and the uncertainties it would have thrown up. We did not take formal legal advice.

It is an incredible example of appeasement in that the Department did not have the guts to face him down after all we heard. I have one more question before we move on to the other sections. In Mr. McLoone's negotiations with Mr. Molloy, who else was present from FÁS?

Mr. Peter McLoone

I would not describe my discussions with Mr. Molloy as negotiations. The terms on which I——

They were discussions.

Mr. Peter McLoone

They were. I did not go to Mr. Molloy with a request from any source to fire him. I did not have authority. We were not involved in a process in which we were laying specific charges against him. I went to him that morning to talk to him about the situation the organisation was in and the impossibility, as I judged it, of our seeking to continue and work our way forward with yourselves and the general public unless he recognised that his position could not continue. When I got to a point at which he was accepting that analysis, he then sought to engage — which is what was appropriate — the Departments about the conditions under which departure might be facilitated. As I said, that went on until the early hours of the morning, as these things tend to do in my experience. I would not put it down to a 15 or 16-hour continuum, but that was the business we were seeking to conduct that day and achieve an outcome.

In all of these proceedings, who was involved?

Mr. Peter McLoone

I met Mr. Molloy in the morning and discussed it with him. Obviously, I left him to reflect. He may have wanted to consult family or take advice. I came back and spoke to him and when it was evident that there was the possibility of departure, it was then a question of engaging with the Departments to say the man may be prepared to leave the scene quickly.

At this point it was a one-to-one engagement? Nobody else was involved.

Mr. Peter McLoone

No. It was just me as chairman and Mr. Molloy as director general. He may have spoken to colleagues and so on but I did not have anyone with me.

On the question raised by Deputy McGrath, I did not at any stage seek legal advice because I was clear in my own mind and from my own experience that I was not there with authority to say to Mr. Molloy that he was dismissed, fired or sacked. We had no weight. Nobody had initiated a process at this stage. We were facing an incredibly difficult situation, in my judgment, and needed to effect a change at the top in order that we could try to move on. It is a judgment call as to what way Mr. Molloy would have reacted if I had said, "They [whoever they are] are going to fire you." I presume he would have challenged this. However, to be fair, that is not the approach I took.

That is why there is no accountability.

His conduct sacked him.

We will wind up and move on to the other areas we want to explore. However, we expect to receive all the papers related to what we have discussed. We will return to the matter, I have no doubt.

We will consider chapter 2 — Promotion Activities, on which Deputy O'Keeffe will be the lead questioner; chapter 3 — Jobs Exhibitions, on which Deputy O'Brien will be the questioner; chapter 4 — Other Directly Promoted Services, on which Deputy Clune will be the questioner; chapter 5 — Advertising on behalf of FÁS Divisions, on which Deputy Shortall will be the questioner, and chapter 6 — Procurement of Advertising and Related Services, on which Deputy McCormack will be the questioner. I ask Deputy O'Keeffe to deal with the issues that concern him in chapter 2.

I take it we will be returning to the other issue when we receive the documents.

There is one other fact to bear in mind, that all the negotiation about which we are talking took place in the context that Mr. Molloy was to come before the committee that very week to give an account of his activities, which he was avoiding.

If members remember, I commented the week after he resigned about people riding off into the sunset without being accountable to the committee. Certainly, he rode off into the sunset, but he was provided with a very nice horse by the people in the Departments of Finance and Enterprise, Trade and Employment and FÁS. The taxpayer must be astounded and appalled by what has happened.

I note that no legal advice was taken. As somebody who practised law for a number of years, I think the advice the Department would have received, as far as Mr. Molloy was concerned, would have been to tell him bluntly, with regard to any threat expressed or implied, "Sue and be damned."

From the point of view of conducting our business, we will have questions from the five lead questioners. We will then have supplementary questions for a period. However, it seems we will be returning to many issues — including Mr. Saul — at a later stage.

The Comptroller and Auditor General has given a brief outline of the expenditure of more than €48 million on promotion in the period 2002 to 2008. His report amounts to a clear indictment of the practices followed in FÁS during that period. Much of the expenditure appears to have been unnecessary, wasted or unaccounted for. Much of it was spent in what were, to put it mildly, peculiar ways. The Secretary General, Mr. Gorman, tells us the Department has a series of oversight arrangements to ensure moneys are being spent for the purposes for which they have been allocated and that value for money is achieved. Did that happen in this case? Is Mr. Gorman satisfied with the oversight of the Department?

Mr. Seán Gorman

Clearly, there are huge issues around the promotion and advertising spend, as identified by——

I am sorry; I cannot hear Mr. Gorman.

Mr. Seán Gorman

Clearly, there are huge questions about the extent of this advertising promotion expenditure as identified by the Comptroller and Auditor General in his report. At the level at which we oversee expenditure by all agencies — not just FÁS — and particularly in the case of FÁS, we would not have been informed in detail about how advertising budgets were attributed internally. This would have been a day-to-day matter for the agency within the broad spending subheads under which they were allocated funds from the Department. Not all of the funds now quantified and captured as advertising and promotion were immediately obvious as such; a significant amount was associated with individual programmes. For example, the Opportunities fair which was associated with much advertising and promotion had many other areas of expenditure that would have been broadly labelled as promotion and advertising. At the level at which we oversee the expenditure of agencies, the extent to which we were privy to the detailed distribution of these moneys across advertising and promotion within or around programmes or in its own right was that we did not have that level of detail. In fact, seeing the report of the Comptroller and Auditor General was the first time we realised——

Could I go back to the original question? Is Mr. Gorman satisfied that the oversight arrangements were adequate?

Mr. Seán Gorman

It is difficult to say they were adequate, given what we now know.

Would Mr. Gorman accept they were entirely inadequate?

Mr. Seán Gorman

No; I would not say they were entirely inadequate. There is a clear distinction between the role of the Department and my role as Accounting Officer in terms of the oversight of expenditure by agencies and the parallel responsibilities that rest on the accountable officer in an agency and the agency itself in the prudent expenditure of that money. This is why, as I said in my opening statement, we rely so much on the code of practice for the governance of semi-State bodies which put in place and required agencies to put in place formal monitoring and oversight——

Mr. Seán Gorman

——including internal audit and assurances in their annual reports that systems are in place and are working.

Mr. Gorman is telling us his view as Accounting Officer but he had a fair knowledge of FÁS. I find it a little odd that he did not mention having another position with FÁS previously. Is that not correct?

Mr. Seán Gorman

I was on the board of FÁS for about four years between 2001 and 2005.

For a great deal of this period, Mr. Gorman was a member of the board.

Mr. Seán Gorman

Yes, I was, before I came into this position.

I would not have been aware of that if Mr. Keena had not mentioned it in his article in The Irish Times today. Is it not a relevant factor that Mr. Gorman would have had responsibility, as a board member, for much of this activity during this period?

Mr. Seán Gorman

I had responsibility as a board member, certainly, and in that period I had no reason to question the extent of this advertising on the basis of the information available to me.

At any rate, whether it was up to Mr. Gorman or anybody else, all this expenditure was incurred in a situation where there was no communication and marketing strategy, where there had been a commitment by the board in 2002 to put such a strategy in place and a further commitment three years later to put a strategy in place for the following three-year period. All this money, some €48 million, was spent without having any communication or marketing strategy.

Mr. Seán Gorman

That is a fact.

What is the explanation?

Mr. Seán Gorman

I cannot give an explanation for the board not having a marketing strategy in place, other than that the commitments were there to do it. However, a lot of this marketing expenditure would have been associated directly with a whole range of programmes that were being delivered and rolled out to clients. I have no doubt some of it was justified. The scale of it, when we see it all bundled and rolled up together, is questionable. However, I would not have been au fait with the level and the detailed distribution of those moneys across advertising and promotion per se.

Did anybody ever question the need, not merely for all but for any of this advertising by FÁS in a situation of virtually full employment? That was the case at the time, thank God. We were importing labour from outside the country and Mr. Gorman did not question this, at any level. I am not sure when Mr. McLoone joined the board. Was this ever questioned?

Mr. Peter McLoone

The board of the time was established in January 2006. For the record, the board meets once a month and the duration of those meetings is normally three and a half to four hours. That is the board's engagement. Our primary role is policy making and we do not get involved in the detailed day-to-day running of the organisation.

Who takes responsibility for that?

Mr. Peter McLoone

I want to make clear, as I did on the last occasion, that this board accepts it must take responsibility and be fully accountable for the governance of the organisation since we took office at our first meeting in February 2006. Each year we have produced, and can provide to the committee, progress reports on what has been done under the general heading of advertising and marketing. That will demonstrate that in 2007, our second year, we were provided with a paper from the executive to indicate that a three-year marketing communication strategy for the organisation had commenced and that our marketing and communication strategy group would be established. I can set out for the members all the activities that were there to support that. That has not emerged and we can go into more detail.

I ask Mr. McLoone if anybody picked up on the fact that all this money was being spent. Apparently, it was principally the responsibility of the corporate affairs director, who was overspending his budget every year. In 2006, the year Mr. McLoone mentioned, when he came in as chairman of the board, the expenditure was 69% over budget. Did anybody ever pick that up?

Mr. Peter McLoone

We can get into the detail of the overspend, but to answer the Deputy's question directly, namely, whether the board was presented with a set of figures each month that had a budget head or sub-head dealing with advertising and marketing, the answer is "No".

The figure involved is €4 million for that year alone. According to the Comptroller and Auditor General, the budget for advertising and promotion, for 2006 alone, was just over €6 million and the spend was well over €10 million. Did anybody notice that €4 million which had not been budgeted for was being spent by the director of corporate services, whatever may have been the justification for the budget of €6 million? I will come to that shortly.

To follow up on Deputy O'Keeffe's question, in hindsight does Mr. McLoone consider there was a culture of non-disclosure of facts to the board by the executive? He said the board was mainly concerned with policy matters but does he feel that it was left out of the loop?

Mr. Peter McLoone

It is clear when one looks at the detail of spending in Report 66 that there was a culture of non-compliance, at best part-compliance and, in instances, circumvention of financial procedures, chairman procedures, and so on. That is very evident when one goes through, not only this chapter, but each chapter in the report.

Was that by the executive?

Mr. Peter McLoone

Yes, because as I mentioned at the outset, in my experience the board has engaged with matters that were reported to it. In my recall, we did not have any paper or any report that indicated that the spend on promotion was out of control, never mind having a handle on how far back this problem went.

Why did the board not ask for that information?

Mr. Peter McLoone

At every monthly meeting the board interrogates the financial report that is presented to it. I can show the Deputy that we dealt with a presentation of the budget which had 22 headings and I do not know how many sub-headings. We do not get into the sub-sub-sub-headings of activities. As the Chairman's question implies, the board is completely dependent on the executive.

I believe the board should have gone into it. That was its duty.

I am going to resist the temptation to come in from now on, and will lead by example. However, having said that, Deputy O'Keeffe raised the issue and Mr. O'Toole is about to speak. Who were the people who kept the facts from the board? I ask him to deal with that issue and I shall stay out of it.

Mr. Paul O’Toole

I shall attempt to explain, as distinct from justifying. As I have observed, the practice in reporting financial matters to the board is that for each of the board meetings a detailed report would be prepared covering the entire expenditure of the organisation which ranged, over the period, from between €800 million and in excess of €1 billion. The information was divided into an organisational level. There were sub-headings based on the main policy interventions and then there were separate lines of programme activity as each related to a particular scheme, the community employment, CE, scheme, training, apprenticeship, etc. The information was organised and presented to the board in that manner.

As the chairman indicated, there are 22 sub-sub-headings within that, and four to five sub-headings. At the bottom line, the organisation was not over-spending its budget; at the sub-heading line it was not overspending its budget. The level of variance was happening within those smaller programmes. I am not trying to minimise the amount in each case but simply explaining how the information was organised. As a matter of practice, the board did not receive activity budgets. It received a programme budget with all costs attaching to a particular programme, for example, the apprenticeship programme. The fact that a portion was spent on advertising or whatever else was not separately identified. I am simply trying to explain the context in which the board would have received its information.

I will go back to the advertising expenditure on which I asked the delegation to comment. The Comptroller and Auditor General's report confirms that FÁS spent more than any other non-commercial State body. According to the figures in the report, during a three year period it spent more than the entire amount spent by the Department of the Environment, Heritage and Local Government, the Department of Communications, Energy and Natural Resources and the Department of Justice, Equality and Law Reform. The total figure came to €22.7 million for these three Departments. By coincidence the figure for FÁS was actually €22.7 million also. It also spent more than twice the amount spent by the National Safety Council which, because of its job, had a genuine reason to advertise to stop people killing others on the road. I am intrigued how such substantial expenditure seemed to occur without anyone seeming to notice when there did not appear to be a particular need for such advertising by FÁS. That is the first question.

The second question that concerns me is that this very significant expenditure seems to have been channelled through one person, that is, the director of corporate affairs, who appeared to have had total responsibility and, to put it mildly, an unusual way of arranging this expenditure. There was an agency, properly appointed, which was supposed to do this work but increasingly he seemed to do the work directly. In 2007 almost 60% of the spend was undertaken directly by him. There seems to be no logical business explanation for this because we have been assured by the Comptroller and Auditor General that the rates were the same. Has an investigation been undertaken to ascertain whether there is a more suspect reason for such activity? How did this occur without anyone appearing to notice that this man was spending millions of euro without following proper procedures?

Mr. Paul O’Toole

I will attempt to explain based on the understanding I have arrived at to date. The average spend on advertising during that period was approximately €7 million, but it ranged up to €10 million in one particular year. In the context of reporting to the board as part of an overall budget of €900 million to €1 billion, while the sum of money involved is obviously very material, perhaps it was not noticed. I say as much by way of explanation rather than anything else.

I agree with the conclusion of the Comptroller and Auditor General that there was an absence of a formal communications and marketing strategy with the attendant mechanisms for determining annual spend, individual priorities, measures and performance to guide the spending of this money. Its absence contributed to the matters under discussion. Clearly, it contributed and will run right through the report as we go through it. It appears there was a significant level of informality in the way in which campaigns were planned and agreed. There is a good deal of paperwork and discussion between various divisions and departments within FÁS in respect of advertising. However, in bringing these discussions to an orderly conclusion and having properly recorded expenditure monitored in a way that one might expect, there seemed to have been a level of informality.

In terms of the Deputy's question on whethere there was any discussion among executives and senior executives, there was certainly discussion. However, in trying to understand the climate of the time there was a very significant press on the agency to move in different directions. It was ramping up its activities in many areas. There were what was perceived to be many good things happening at the time and a change in the environment of the time and perhaps a certain licence was afforded that resulted in the findings we are discussing. I am attempting to understand from a relatively new perspective what was happening to aid the Deputy in his questions.

Looking back at what occurred and given the damning situation in the light of the Comptroller and Auditor General's analysis, we now have a clear picture of vast sums of money — millions of euro — being spent without proper process or procedures being followed, often achieving no effect and often resulting in no return for FÁS. I find it extraordinary that this does not appear to have been picked up at any level, whether at executive, board or Department level. Can this be left in a situation where it is now referred to merely as "informality"? Does Mr. O'Toole accept that it may have gone far beyond informality and that the expenditure of millions of euro in such a fashion at least left open the question, if not the suspicion, that some of it may have been improperly spent? Does he accept that this requires, if it has not occurred already, a detailed investigation to establish what happened, how it happened and why and whether, with that fast and loose arrangement for the expenditure of State money, a good share of it may have been worse than improperly spent? I will leave it at that for the moment. I wish to see such an investigation and the results which might or might not, but probably should, include referral to the Garda Síochána.

Mr. Peter McLoone

Since February 2006 and throughout its term of office the board's audit committee has continued to work to establish what happened in corporate affairs, how it happened and where culpability rests. I am subject to correction by colleagues but we are awaiting finalisation of 22 further internal audit reports to which we may have made reference the last time we were before the committee. We have been engaged in this work, as well as working with the Comptroller and Auditor General, and recognise the figures to which the Deputy refers. This year the level for marketing and promotion activities has been reduced in budget terms by approximately 90% from its previous level. The committee should note the reference in the Comptroller and Auditor General's report to the board deferring the matter of publication or preparation of a marketing strategy because the belief of the board was the first thing we had to do was eliminate this spend rather than produce a strategy that would have facilitated expenditure at that level.

As a consequence, FÁS is saving €5 million in the current year.

Mr. Paul O’Toole

Yes. A decision was made to cut back advertising expenditure very substantially in the current year. There was no communications and marketing strategy in place and all of these matters were unfolding. I refer to a point alluded to by Deputy O'Brien to the effect that that reduction is, in all probability, too high for the future. The important thing is to fix things, get the track going right and then decide the correct level of expenditure and how it is managed. That is our intention. I confirm Mr. McLoone's point that 22 modules of an audit into a deeper analysis of many of the matters raised by the Comptroller and Auditor General is well under way and we will use it to get behind more of the detail contained in the Comptroller and Auditor General's report.

Is there not the appearance of fraudulent activity arising from the expenditure of enormous sums of money — millions of euro — in such an unorthodox way?

Mr. Paul O’Toole

In regard to that matter and conclusion, I need to await the information which is currently being gathered and the facts on it. It is very important that I do not predetermine a conclusion in respect of that matter because the individuals concerned have a right to ensure that any conclusions drawn are drawn very carefully and clearly in a proper process.

Does Mr. McLoone understand that there is a certain level of frustration for us? We are asked by the Oireachtas to do a job, namely, to investigate these matters. They are now somewhat dated. We are concerned to have a full response and analysis of the issues raised here, which are dealt with so capably in the Comptroller and Auditor General's report, to ensure in our reports to the Oireachtas and taxpayers that proper action is being taken, not just to ensure it does not happen again but to bring to justice those who may have been responsible for inappropriate, and possibly worse, actions.

Mr. Peter McLoone

The remit the audit committee and team have requires that we understand in detail how the individual issues and transactions were dealt with. I accept the Deputy's point that this work has been slow. It has been tortuous and painstaking because we require the committee to separate fact from rumour or innuendo and ensure it follows due process, so that if we arrive at the point of culpability, maybe these matters can be dealt with differently and better than they may have been in the past. We are not in a position today to give the committee a date in respect of the finalisation of the 22 audits which have been referred to, but Mr. Kivlehan may have some more detailed information on that.

Mr. Patrick Kivlehan

We actually identified 23 modules. When planning this process we broke it into separate modules because of the sheer breadth and complexity of the task at hand. To date we have completed ten of those modules. There are seven at an advanced draft stage which have to go through a final review and six are advanced works in progress. We aim to complete our task by the end of October, at which point we will be able to take all the modules and do a summary top-level report. That is the planning date we aim for. I accept it is taking quite an amount of time to get to this level, but it is a very complex task and we are dealing with a large breadth of information across an extended period. Most modules deal with four years, if not a longer period, which is quite long in the context of any internal audit assignment.

I have one last question, linked to the idea of giving some assurance to the public that these matters are being fully and properly dealt with. A report by Colm Keena in The Irish Times on Monday stated that the chairman of a steering committee overseeing a value for money study of a training scheme operated by FÁS resigned because of unhappiness with how its work was being treated. That gives rise to a certain alarm. There did not appear to be much of an explanation from the Department in response to that report.

Mr. Seán Gorman

That is a study the Department initiated. It is a value for money study on the competence development programme. It is a study we wanted to do because we had moved to put significant additional funds into in-company training in recent years as a response to new thinking about the need to upskill people in the workforce, particularly people who are lower-skilled. We decided to embark on a value for money review of the competency development programme. It has taken some time to bring it to where it is at. It is almost finished.

When we got to a point where the investigations we are discussing here were under way by the Office of the Comptroller and Auditor General, I decided that before we finished our study and signed off on it, we should have the benefit of the work done and whatever new information or intelligence emerged from the work now on the table and the work still to be done by the Comptroller and Auditor General. I asked that the study be concluded when we have the benefit of that work so we could factor it in.

When did Mr. Gorman ask that?

Mr. Seán Gorman

About last July.

The report of the Comptroller and Auditor General has been available since it was published last June.

Mr. Seán Gorman

There is further work going on and a further report to be completed by the Comptroller and Auditor General in the next month or two. I am not sure what the timetable is.

Who was the chairman of the group?

Mr. Seán Gorman

The chairman was a principal officer in our Department.

Is it correct that he resigned because of frustration that he was not able to do the job he had been appointed to do?

Mr. Seán Gorman

He felt he had been appointed to take the report to finality and we were not yet bringing it to finality. He decided he did not want to continue participating. I appointed Mr. Mulligan to bring it to finality, taking account of the work that was going on in the Office of the Comptroller and Auditor General.

If Mr. Gorman had the report of the Comptroller and Auditor General in June, surely he had the basic documentation——

Mr. Seán Gorman

There is a further report in hand by the Comptroller and Auditor General, which we understand is due in the next month or so.

That is regarding foreign travel.

Mr. Seán Gorman

Yes. Governance and value for money issues and, in particular, the competency development programme will be examined as part of that work, as I understand it, which was the subject matter of our work. I felt it was not prudent to finish something which was being examined by the Comptroller and Auditor General, who has the capacity and competency to go at something like this very professionally.

Does Mr. Gorman understand the frustration of the committee? I take the point made by Mr. Kivlehan that the delegation must have due process and take great care of all the audits under way, but there is frustration that we have not received the results of the audits. The same considerations do not seem to apply to this report. Apparently there is no individual who might be damned by any such report. It does not seem to be very logical that there would be one delay after another. At face value, the frustration of the principal officer to which Mr. Gorman referred seems to have been fully justified.

Mr. Seán Gorman

I want the work to be very thorough. When we were so close, as I saw it, to having the conclusions of the work of the Comptroller and Auditor General it made no sense to me to finish it and then maybe discover, as part of the work the Comptroller and Auditor General was doing, that we had missed something or that we needed to examine particular angles. My motivation is entirely in the interest of thoroughness. The report is one we are doing under the value for money programme, in agreement with the Department of Finance. The report will come to me, the Minister and the Oireachtas Committee on Enterprise, Trade and Employment. It is a report that is being done for publication and use by an Oireachtas committee.

When will it be available?

Mr. Seán Gorman

Subject to the material being available, I am not quite sure. I have not spoken to the Comptroller and Auditor General about the finer details of his timetable. This report should certainly be available well before the end of the year.

We will move on to chapter 3, jobs exhibitions.

I thank the witnesses for their attendance today. I wish Mr. O'Toole and the incoming board the best of luck in their new role. There is a great deal of work to be done. The committee has already covered many of the issues we are discussing but we are moving into the area again on foot of the Comptroller and Auditor General's report. This committee regrets that this has affected morale among the 2,000 people who work in FÁS, as Mr. McLoone mentioned in previous statements, and Mr. O'Toole also has today. I have met many in my area who feel badly about what has happened. We value the work done daily by the staff in FÁS in a difficult environment. It is not our fault. We have a job to do as everyone realises.

I am glad to hear from Mr. Kivlehan that the internal audit reports are thorough. I agree with Mr. Gorman that thoroughness is key in moving forward because at some stage FÁS will have to move forward and get on with the job it is there to do. That is not easy while this process hangs over the organisation. I would not be too concerned if an extra couple of months was required to do the work properly. I ask the organisation to bring openness into the process. The work of the past 18 months has at some stages been like pulling teeth. Openness must be paramount in everything done from here in, for the good of the organisation and the Departments involved.

The expenditure of €20 million on jobs exhibitions represented a 40% overrun on budgets. That is a phenomenal expenditure. I understand what Mr. McLoone says about oversight on the board and subheadings and that not everything will come forward but can he explain what happened when there was an overrun on a budget? There have been overruns year on year in the exhibitions. What would have happened after the first or second year's overrun? Should the board not have asked why the overrun was incurred? What was the board's interaction on this issue?

Mr. Peter McLoone

The highest overrun identified in the Comptroller and Auditor General's report is €1.7 million in 2006. During that year the Munster exhibition was held in Cork for the first time, as was an exhibition in New York. At the beginning of the year when the budget for job opportunities was presented to the board there was no provision for those exhibitions. They were not mentioned. The board subsequently approved that expenditure in November of that year.

Fast forwarding to today and acknowledging the large sums of money involved, the board decided at the end of 2008 not to hold any more exhibitions. They are not a feature of the organisation's current activities. As the director general has been at pains to point out all we can do in respect of these activities is explain but that is not a justification.

That is understood but this chapter reveals that there is one individual procuring and paying effectively through the finance division for these services regardless of whether they were within the budget. We have covered this time and again. The finance division paid out sizeable sums of money that the corporate affairs division did not correctly procure. Invoices were sent out and paid. The finance division should have been much more proactive in dealing with these six and seven figure sums. What is the situation now for payments made within FÁS?

Mr. Paul O’Toole

I will make an opening comment and my colleague Con Shanahan will come in. In my opening statement there is no hint of a criticism of the committee.

I understand that.

Mr. Paul O’Toole

I am just trying to deal with colleagues who are trying to get on with the job. We will endeavour to be open.

The controls on procurement are duly authorised and handled in the appropriate manner. If something is procured in the correct manner and the activity takes place the liability occurs for the organisation and the finance division will carry out a series of checks and balances to ensure that it is paid properly. One of the essential features of any good stewardship or system is separation of duties. Appropriate levels of signing off and the culture of compliance are equally important.

That was not there before, particularly on the signing off side of business.

Mr. Paul O’Toole

The chairman, Mr. McLoone, has addressed that in his observations on the past. As to how we move forward we have undertaken, through the board, a review of procurement procedures. That is being implemented. As I indicated in my opening remarks I will broaden the review that has taken place and consider our systems and processes more generally across all of our expenditure programmes, not just to ensure compliance but that the systems are fit for purpose as we move forward.

Mr. Con Shanahan

A great deal of attention has been given to the overruns, properly so. The key issue, however, is the amount of expenditure on advertising and promotion because the overruns were a consequence of the budgets allocated by the finance division at what it considered to be an appropriate level for the type of service and operation conducted. Inevitably, when the budget requested by the division in question was not provided, overspending could occur only if savings were found in other areas within that subhead but that is not what happened. Our concern has always been the absolute spending rather than the overspending under that heading because they served to highlight within the organisation the moneys being spent on this area.

I understand Mr. Shanahan's role in the finance division to ensure that expenditure stays with the overall budget. On the amount of money spent on advertising even for the exhibitions with which Deputy Jim O'Keeffe dealt, the more that was overspent the less there was for more important services. Is that not correct?

Mr. Con Shanahan

That speaks for itself. The more spent in one area, the less there is in others. This was tolerated because there were savings in other areas. The savings were not necessarily arrived at to free up resources for this spending. The finance division's view of the correct budget allocation was the budget that was allocated. It was only as a result of savings made in other areas that overspending was tolerated and it is not a measure of the acceptance or otherwise of the scale of that spending. We fully concur with the view of the Comptroller and Auditor General that the spending was excessive.

We had no marketing and advertising plan. Effectively we had no advertising or marketing department. We had one person making decisions on what was required, such as in 2007, where some of the advertising spending for the Opportunities exhibition was apportioned to a FÁS branding exercise. Why would that be even remotely required? Certainly it is not required now. I know Mr. McLoone had to step out for a minute, but at a board level it still beggars belief that, in this area where we had nobody with any expertise, the same person was allowed make decisions on advertising and place that business wherever that person wished and that the finance division simply paid for it. The finance division has more responsibility than that.

We have internal audit reports coming out of our ears at this stage. I mentioned at previous meetings that when we saw there was a risk — on audit everything should be based on risk — extra resources should have been put into the area to minimise future risk and future loss.

The Croke Park issue which we dealt with previously is covered in some detail. It is probably just an example of when we moved the Opportunities exhibition from the RDS to Croke Park. In 2004, according to minutes of the board, there were concerns about Croke Park as a venue, yet FÁS was able to go ahead in 2008, sign up for a contract to the tune of €590,000 and use Croke Park since 2004 with no public procurement whatever and payments were just made. I ask Mr. McLoone, as the representative here and chairman of the board, what happened with Croke Park? The former director general told us he made the decision and that was it and then everyone moved with it because its main exhibition that year was held at Croke Park. Did the board discuss the issue when the contract was signed with Croke Park?

Mr. Peter McLoone

The board discussed Croke Park as a venue as opposed to the RDS. The explanations given about the RDS not being suitable were rehearsed the last time and we got a very strong rebuttal from the committee so I will not challenge the RDS's view of its suitability. There was no tender for the exhibition, and once it was moved to Croke Park a decision was made to continue it there notwithstanding the fact that it was raised as an issue with the director general by board members.

That was minuted as well as the feedback from customers which effectively said — I am not backing Croke Park or the RDS — according to the evidence which the Comptroller and Auditor General has compiled, that exhibitors came back to FÁS and said that Croke Park was not a suitable venue for the exhibition, due to overcrowding and various other things, including the timing. If Croke Park was discussed as a venue, is it the case that it was a done deal before the matter came to the board?

Mr. Peter McLoone

In my recall, yes it was a done deal. To respond to the Deputy's questions, the report of the Comptroller and Auditor General clearly outlines how these contracts were entered into. In September 2008 a paper was put to the board because essentially somebody in the finance department refused to pay Croke Park in the absence of approval by the board. Mr. Con Shanahan was probably the person involved in that decision. That had not happened up to that point.

Croke Park is just an example——

We will have to allow in Mr. Kivlehan.

Sorry, Chairman, these are more payments for which there was no procurement process and the finance section of FÁS just made the payments. How did the audit section allow that to happen?

Mr. Patrick Kivlehan

The audit function comes into play when these events are taking place.

I know that, but it has happened every year. It happened in 2004 and there was an audit in 2005. It happened again in 2005 and 2006 when one had a few years to catch up.

Mr. Patrick Kivlehan

That is the point I want to link into. I take the Deputy's point in regard to assessment of risk when looking to conduct an audit. Our risk assessment model is primarily financially based. Therefore, we get drawn towards larger expenditure items such as community employment schemes and so on. By its nature, because the budget in corporate affairs is a lower value item it does not come out on a risk analysis as high as, say, something like community employment. We are taking steps to address that issue.

Even with INV 137 that was happening and the investigation was ongoing at the time. Corporate affairs, so far as the audit unit within FÁS was concerned, was not seen as a high risk area.

Mr. Patrick Kivlehan

I would not say that in that context, but INV 137 would have covered the period up to 2004.

Mr. Patrick Kivlehan

We made an assessment as to when we should audit that area again and consideration was given to that in 2008. However, because we are still dealing with the implementation of recommendations from that review, the decision was made to hold until 2009. That decision was reversed with the audit committee and we did some work at the end of last year. It was on our radar but we complete audits on a cycle basis. It is not as if every unit is audited every year.

That is understood. FÁS would not have the capacity to do that.

Mr. Patrick Kivlehan

No, we would not but one has to go back over a period.

While the €1 billion budget is talked about on a regular basis, a sizeable proportion of that relates to allowances paid to trainees. When one adds up, year on year, what happened through the corporate affairs division, after INV 137, it should have been a priority because sometimes it is the smaller things, as in the case of FÁS, that trips one up. Bad management has been allowed to tar the whole organisation. What is the position with the Croke Park exhibition? I note that FÁS has cancelled the exhibition this year and took a €25,000 hit on the basis that it could not fulfil the contract. Is there a commitment that any future exhibitions will have to be tendered for properly?

Mr. Paul O’Toole

We are absolutely determined, certainly under my tenure, to work progressively to fix the things that need to be fixed within the organisation. It is 100% clear from the reports — there are no shades of grey — that we need to do things differently. The work has progressed under the direction of the board, with my colleagues. We are absolutely clear that we have to get to the bottom of everything. We have further to go and we know that. We need to find everything. We will to do further systems work. There is the audit work Mr. Patrick Kivlehan is undertaking at present and we have to assess that. In terms of the Deputy's point, many people have been involved here. At this point, I am being very careful not to predetermine the outcome of future audit work in respect of individuals.

I understand that and I am trying to steer away from that. That work is done at this stage. On the expenditure side of things with regard to the exhibition, it is a massive amount of money with massive overruns of 45%. I take Mr. Shanahan's point that you are concerned about the overall budget within a section. It means that other areas that are probably more important are left to suffer.

Mr. Paul O’Toole

Yes.

I will leave it at that for the moment.

We will move to chapter 4 which deals with other directly promoted services.

Deputy Darragh O'Brien took the Chair.

This chapter deals with the science challenge programme, which we now know has been scrapped. On reading the Comptroller and Auditor General's report, I learned that at a meeting in April 2003 the board was informed that relevant authorities in the United States had indicated their agreement to work with FÁS on programmes relating to technology for Irish people based in the science industry. Again, in May 2003, a month later, the director of corporate affairs made a presentation to the board and it asked to be kept advised of any developments yet two months later, in June, the programme was launched. That seems to be a short period. Mr. Gorman was probably on the board at the time. Two months after initially informing the board of the programme, it was launched. Was there much discussion about that at board level?

Mr. Seán Gorman

I do not recall much detailed discussion at board level of the details of the programme except that the context in which the programme arose was a general desire across the system, including FÁS, the Department of Education and Science and ourselves, to raise the issue of the awareness of science and mathematics and to try to get people to take up science and mathematics. We know that challenge has been there and FÁS, as a training agency, thought it could make a useful and significant contribution to raising that awareness through the medium of accessing children in schools and launching a programme like that. I do not recall any great details of the programme beyond those discussions, but I would have to defer to my colleagues regarding discussion of the individual details of the programme ranging from the idea, the concept and its launch a few months later.

Was the Department aware of the proposal to launch the programme?

Mr. Seán Gorman

We would have been very much aware of the concept of launching the programme and at the time, and in its context, would have been quite supportive of the idea that there was something that could usefully be done to help raise that level of awareness and get children interested in the Science Challenge, access through the schools, etc. At one level the involvement of NASA was eye-catching and interesting as a concept, but what transpired in terms of the way expenditure was incurred later was problematic. However, I would not have had a problem with the idea.

We are aware from records that the Discover Science and Engineering programme was launched six months later that same year under the Department of Education and Science. That was a programme that also was aimed at primary students to encourage the uptake of science. Was there any co-ordination between the Department of Education and Science or the Department of Enterprise, Trade and Employment? Was everybody going off on different tangents and literally throwing money at programmes with the objective of encouraging the uptake of science?

Mr. Seán Gorman

We saw the FÁS initiative and the Discover Science and Engineering initiative at that time as complementing what was happening in the wider Discover Science and Engineering programme.

The Discover Science and Engineering programme was not launched until November of that year.

Mr. Seán Gorman

It came on stream later so we——

They were both launched within six months but the FÁS programme was launched first.

Mr. Seán Gorman

Correct, yes.

Was there any correlation between them? We know now that the Department of Enterprise, Trade and Employment is responsible for driving science and technology innovation across a number of Departments.

Mr. Seán Gorman

Correct, yes.

Was that the case at that stage?

Mr. Seán Gorman

Yes. Through our science strategy we would have had the responsibility for driving the Discover Science and Engineering programme, which would have been a part of that. When that was launched we saw what FÁS was doing as very much complementing and adding to, in a high profile way, the broader efforts of the Discover Science and Engineering programme, which came through the Department of Education and Science, with participation by ourselves. We saw them not necessarily as mutually exclusive or giving rise to huge overlap at that stage but very much as being complementary, with the FÁS programme pursuing a particular angle.

Was the programme analysed? We had a witness before this committee in June from Science Foundation Ireland and he was involved in the discover science programme. It has been abandoned now but he said there was a lack of data concerning what the programme was intended to do and the intended deliverables.

Deputy Bernard Allen resumed the Chair.

Mr. Seán Gorman

That is true now.

Were any targets identified at that time in 2003 when this programme was launched?

Mr. Seán Gorman

I do not recall the targets being set specifically in those terms in advance.

Therefore, it was a case that there was a programme in place, somebody said let us spend money on encouraging the take-up of science and engineering and nobody had identified targets or had set out to identify in any way what the programme intended to achieve.

Mr. Seán Gorman

Other than the overall goal of the programme being to raise awareness. This was happening then and, beyond that internally, as part of a suite of programmes that FÁS was running. The value for money exercise we carried out on it later showed that there was a lack of clarity and a lack of setting out clear objectives and outcomes for the programmes. We would acknowledge that. It was not sufficiently addressed at the time.

When the programme was set up, was FÁS left to its own devices, provided it was under the general umbrella of encouraging science?

Mr. Seán Gorman

This became an internal programme within FÁS.

The Department was happy to let it continue along those lines.

Mr. Seán Gorman

We let them continue until——

There were no measurables or no——

Mr. Seán Gorman

Not directly furnished to us. It was an internal programme.

Did the Department have double standards? At one stage Science Foundation Ireland had carefully declared defined targets, objectives and it appears that FÁS just said, "That it is a great idea, we will have a science foundation, we will spend millions on it". Why was there not an examination by Mr. Gorman's Department of it at the time? Why were there no definite yardsticks in regard to it?

Mr. Seán Gorman

There were directions and targets in terms of the numbers of students and participation levels. It started out with what looked like quite a modest programme and was run within the context of a series of programmes within FÁS. It turned out subsequently to have cost much more than any of us would have anticipated but it ran within that suite of programmes within FÁS and it ran to a point where we came in post hoc rather than in advance to take a detailed look at it. That is exactly how it turned out.

A report has been carried out and the programme has been abandoned.

Mr. Seán Gorman

We started a formal review of the programme in December 2008.

Why did the Department start the review? I know the Tánaiste initiated it but on what basis——

Mr. Seán Gorman

She asked us to do it.

Did she have information about which she was concerned?

Mr. Seán Gorman

At that stage there was a considerable deal of questioning of what was happening and the Science Challenge initiative was being talked about a good deal and what it had cost. The Tánaiste became very concerned as to what was going on here and asked us to formally review the Science Challenge initiative, to examine whether it offered value for money and what it was achieving. We set up a working group to examine it. We concluded that it did not represent best value for money and, in the final analysis, we did not believe that it had significantly contributed to the overall goal of raising awareness, particularly of science, technology and innovation. We moved then to shut it down. It will close by the end of this year.

I believe it was Mr. Frank Gannon who said that there was no benefit accruing to Ireland in sending people abroad to do a PhD. It benefited the individual but it did not benefit Ireland Inc.

Mr. Seán Gorman

It is always a dilemma. The person will come back sometimes and the country will get the benefit, but we can lose some of them.

Has there been a look back exercise on any individuals who have benefited from it? There were bursaries and short six-week graduate training programmes and 40 school children went to Florida.

Mr. Seán Gorman

When we examined that aspect of it there was a serious lack of data as to what benefit, if any, accrued from that. We were not in a position to stack up a set of measurables and the view was that some of these people may have pursued their studies in any event.

That is obvious at this stage from some of the information we received and from what Mr. Gorman has said. I am concerned regarding procedures if a similar issue arose again. It has been explained to the committee that the board does not oversee budgetary matters on a daily basis, but it would oversee policy matters. It should question an issue such as this one and that should be particularly by a person such as Mr. Gorman, who is representing the Department of Enterprise, Trade and Employment, which is tied into overseeing the science and technology strategy. Does Mr. Gorman think that those questions on the value of it and the targets should have been asked at board level? Whether it be science or training people in organic food products, those are the things for which the board is responsible. It should ask questions on behalf of those it represents.

Mr. Seán Gorman

I agree. We have constantly refined the extent to which we interrogate and test, both in terms of our board and departmental level programmes. We now have a formal system of output targets being set for programmes which we report on to the Oireachtas through our annual output statements, which govern the large spending areas of various Departments, including ours. We have many indicators in terms of training, targets, apprenticeships and employment programmes. It is still reporting at a relatively high level when one looks at it from the perspective of the Department. If one takes 2008, for example, at the output levels we agree with FÁS under training and employment, the number of apprentices trained was more than 26,000. Some 32,000 employees received upskilling training. In 2008, 8,000 unemployed persons received training in specific skills. Some 12,800 people got basic or foundation skills training. A total of 24,400 people are assisted and retained under employment programmes, such as CE and JI. Under the heading of employment services whereby people are assisted through employment offices, we see how many people are assisted with getting into work and the number of vacancy notifications that are processed coming in from employers. At the broad level of a return on the investment we make in FÁS, we are capturing those significant numbers. There is a significant benefit from much of the spending.

Mr. Seán Gorman

When one gets down to the level of smaller programmes — relatively speaking, as distinct from the community employment scheme where we spend roughly €440 million per year — it is easy to understand how we would focus on what we are getting there. In any event, it is half the agency's budget. When one gets down, within that, to the level of a science challenge or advertising associated with a particular programme, the challenge arises for us. The question arises, both for the board and particularly for the Department and me as the Accounting Officer as to what level of detail one drills down?

I see the point Mr. Gorman is making, but at the same time in dealing with a programme of such high profile, the Department of Education and Science should have been consulted. It should have had an input into the programme. The third-level sector, including universities and institutes of technology, provides technology programmes, yet that was deemed to be acceptable in the case cited. I am not questioning the value of the products the individuals received. I do not know their value or what benefit they were to them. It is mind boggling that something like this existed on its own without any tie-in to the science and technology strategy, which was strong at the time. We were setting out to encourage young people to take up science.

As regards spending on the programme itself, 43% or €3.5 million of the €8.2 million was aimed at advertising for primary schools, including billboards, television and newspaper advertisements. Hindsight is wonderful for Mr. Gorman, but stepping back, we spent €3.5 million on advertising this programme aimed at a little more than 3,000 primary schools. Would it not have been better to focus on these schools, rather than spending millions on television and billboard advertising? Was that question raised at any stage?

Mr. Peter McLoone

No.

Looking back, it is quite obvious that it should have been. I know a little bit about marketing and I know one must target one's audience rather than having general television advertisements.

Why was that question not raised?

Mr. Peter McLoone

The science challenge initiative was not the subject of a paper to the board until 2008, so we did not deal with the issue in detail. As we discussed earlier, the role of corporate affairs in respect of spending on promotion and advertising, rightly or wrongly, did not cross our radar screen in terms of the financial reporting to the board both at head and sub-head level. This was done at a lower level. As is referenced in the Comptroller and Auditor General's report, many decisions were made to spend money that should have been the subject of board approval, and they were not.

I am sorry to interrupt Deputy Clune's questioning, but somebody must have raised some questions about a programme aimed at primary schools by the national training organisation.

Mr. Peter McLoone

All I can do is account for what happened from January 2006.

I know. Mr. O'Toole was not there at the time, but perhaps I can direct the question to Mr. Shanahan.

Mr. Con Shanahan

There is recognition that much of the advertising spending was on corporate advertising, and that the focus — as has been indicated by the Comptroller and Auditor General — was not what it should have been in terms of strategy and so on. That is quite clear. Our financial reports on spending would have highlighted those matters.

It should have been clear then, not now.

Mr. Con Shanahan

It should. I do not disagree with the Chairman for a moment.

Who was responsible?

Mr. Con Shanahan

The executive of FÁS obviously had a major responsibility.

Who were they?

Mr. Paul O’Toole

The line of authority concerning this would have been through the director general, the assistant director general who had overall responsibility for corporate affairs——

Who was that?

Mr. Paul O’Toole

That was Mr. Pyke who has retired. The line of authority would then be to the unit itself, plus any other units, on a more general point, who were involved in it. That would have been the line of responsibility in respect of the matter.

It strikes me, too, that questions should have been asked and that they are quite obvious to anybody looking in from the outside. There are questions about FÁS as a training agency, targeting primary school teachers. In addition, the medium of advertising and marketing that was used does not make any sense. Can anybody explain it?

Mr. Peter McLoone

What has been said would create the impression that the board met monthly and had a possible role on expenditure. It engaged and acted decisively on all the prime issues that were brought to its attention, whether they concerned procurement or the management of resources. Meanwhile, it has to be stressed, we were also dealing with major changes in the economy and the labour market. It was our job to ensure that the appropriate policies, programmes and resources were in place. I accept the Deputy's point that, in hindsight, when one looks at the entirety of the activities in corporate affairs over this period it should have been the subject of deeper interrogation. However, that was not picked up by the board, as has been said, largely through the absence of reporting. Regretfully, there are many examples of decisions being taken where there was non-compliance or decisions were taken to by-pass or circumvent procedures.

Mr. Shanahan might respond to one question, which might be relevant to him given what he has contributed already. On page 27, the Comptroller and Auditor General's report refers to the fact that no budget was set for this science challenge programme in 2003, yet €800,000 was spent on advertising and promotion. From where would that have come if there was no budget set for the programme?

Mr. Con Shanahan

Again, that would be a feature of the overspends that occurred in this area. In many cases, the programmes arose during the year, or were initiated. A budget would not have been set at the outset and expenditure took place. That expenditure would be reported on a monthly basis and the lack of budget would be evident but, as I said earlier, the fact that savings were made in other areas within those subheads would have allowed that to continue with the primary goal of ensuring that we did not overspend overall, either at subhead level or at overall level. That is not to try to justify any of the individual overspends.

Suddenly €800,000 was available for a programme that was not budgeted for at the beginning of the year.

Mr. Con Shanahan

Obviously, savings were found in other areas to balance that. That is the only basis on which it could have been tolerated.

When did it go to the board?

Mr. Con Shanahan

In 2003. I think the chairman has alluded to that. I think the first paper that went to the board on Science Challenge was in 2008. I concur with that.

Mr. Peter McLoone

The first paper went in 2003 and the next paper that came to the board was in 2008.

I wish to ask about one final area, that is, nugatory expenditure, which is the subject of a Garda investigation. We are conscious of that. Is Mr. O'Toole satisfied there are no payments in this area for which goods and services were not received?

Mr. Peter O’Toole

Following the Garda investigation, we are satisfied this is the expenditure attributable to this particular issue that has been identified. I will ask my colleague, Mr. Kivlehan, in case I mislead in any way. It is the portion of it that has been identified after extensive work by our own internal audit section and, indeed, by the gardaí.

Is Mr. O'Toole satisfied this is a once off, or is something that can be ringfenced and identified?

Mr. Peter O’Toole

If the Deputy does not mind, I might defer to my colleague, Mr. Kivlehan, who might give a more exact answer.

Mr. Patrick Kivlehan

We did a piece of work which covered a number of years. We are satisfied that is the extent of what was involved.

Mr. Con Shanahan

We are confident that there will be no loss to the Exchequer in so far as we can be confident at this stage.

What was the nature of the service?

Mr. Con Shanahan

Video production, in the main, and media services.

Mr. Patrick Kivlehan

I spoke with the lead investigator in the Garda Síochána earlier this week and he has asked that we would not go into any detail in relation to this matter, except to say his investigation is complete and he passed the file to the DPP.

We will move on to advertising on behalf of the different FÁS divisions.

Before I ask about chapter 5, I would like to ask Mr. McLoone if he was aware of the fact that Mr. Saul was launching a media offensive in regard to the role of the board? Did Mr. Saul speak to him about that at all? Was he aware he was going on "Today with Pat Kenny"?

Mr. Peter McLoone

No. The board last met on 10 September and I was in touch with board members on the Saturday, which I think was the 12th. Mr. Saul was not in the country so I did not speak to him throughout my contact with some, but not all, board members. We are scheduled to have another board meeting next Thursday.

Was Mr. McLoone surprised when he saw The Irish Times this morning?

Mr. Peter McLoone

I have not seen The Irish Times. I was told about it when I came in.

Was Mr. McLoone surprised when he heard about it?

Mr. Peter McLoone

Yes.

As chairman of the board, is it appropriate that one of Mr. McLoone's board members should go to the media to comment on the performance of the board at the same time as this committee is having hearings?

Mr. Peter McLoone

What I sought to do throughout this very difficult ten months was to ensure the board operated as an entity with the discipline that if anything was to be said it would be said either through the director general or myself. For board members, the last couple of weeks have been particularly difficult. When we last met on 10 September, I updated, as did Dermot Mulligan, the board in relation to progress on the amendments to the Labour Services Act which were to include the changes in the composition and size of the board. The message that I would have given to the board that day was that it was to continue its work with a strong focus on addressing the key challenges of supporting the unemployed into employment.

Mr. Peter McLoone

I ask the Deputy to bear with me. That afternoon that changed and a lot of things happened in the following 24 or 48 hours which have made it difficult for board members. What we had agreed to do was that I would respond to demands made that the board would make some response to what was being said in the media and that we would address this at the board meeting next Thursday. That is the approach that was taken.

Mr. McLoone said a lot of things happened that afternoon. What does he mean by that?

Mr. Peter McLoone

What I mean is that I was contacted on the Thursday afternoon to be informed that the Tánaiste, in the course of a press briefing, responded to a question indicating that if resignations were submitted by board members, they would be accepted. As chairman of the board, and on behalf of board members, I sought to clarify what that meant because it seemed to me to dilute, at a minimum, the support that I felt we had since the committee's report was published last February.

The following morning when I thought I had those clarifications, there was another intervention by the Minister for the Environment, Heritage and Local Government which was followed by more contact between me and the Department. I got a statement which I circulated to board members but that was not released into the public domain.

I did an analysis at that stage which suggested to me that the board no longer enjoyed the support and confidence it had, that the board was being propelled into major controversy and that the very thing we sought to avoid since last February was going to come to pass very quickly.

My final point is — I thank the Deputy for bearing with me — that this report, which we are discussing today, was circulated to board members towards the end of the meeting on 10 September. I know it was in the press that morning but we did not receive hard copies of that and the board collectively has not considered the report since it was published.

Does Mr. McLoone think it is appropriate that one of his board members should be engaging in a media campaign today while he is in here?

Mr. Peter McLoone

What I have said is that I have a very strong preference that the board members act through me as chairman. That is the answer——

Is it appropriate or not?

Mr. Peter McLoone

In the 42 years in which I have been working in the public service and in the 30 years I have served on boards — I cannot remember a year in which I have not served on boards — I cannot remember an incident like this but then again, I have not come across, or lived through, an experience like the one I have over the past two weeks.

I am asking Mr. McLoone for his opinion as chairman of the board of FÁS. Is it appropriate that one of his directors should engage in a media campaign on the same day he is in here answering questions?

Mr. Peter McLoone

As I said, my preference would be that did not happen.

I have asked him three times. He is obviously not going to answer.

Mr. Peter McLoone

I have given the Deputy the answer. I said I would have preferred that had not happened but, in fairness, I tried to explain as well that I recognise——

Does that mean Mr. McLoone believes it is not appropriate?

Mr. Peter McLoone

It is not appropriate that members of the board would go off individually to make a comment. That, in my experience, does not happen in normal circumstances.

It did on this occasion.

Mr. Peter McLoone

These are not normal circumstances.

Before the Deputy goes on to the chapter with which we are dealing, I gave my views on this at the start of the meeting and they have not changed. At this stage in view of what has happened, since you obviously have lost the confidence of your political masters as a board, and the board is fragmenting and taking to the lifeboats and trying to apportion blame elsewhere, rightly or wrongly, is it about time you all handed in your resignations because the Tánaiste and Minister for Enterprise, Trade and Employment has stated she would accept?

Mr. Peter McLoone

For your information, Chairman, and for the information of the committee, I have submitted a letter to the Tánaiste informing her that I am resigning my position as a board member and chairman of FÁS at the conclusion of the board meeting scheduled to take place on 1 October. I am not aware if any other board member has done likewise.

On the specific issues raised in chapter 5, during the period in question there was some €17.5 million spent on advertising, but I want to ask specifically about the advertising element related to the services to business division. The budget for that period in question, 2005 to 2008, for this division was €2.3 million and the spend exceeded the budget by 200% — there was almost €7 million spent on advertising in this particular division.

The worst performance was in 2006 where there was a budget of €0.4 million but the outturn was €3.6 million — a ninefold increase on the budget. It strikes me reading through the Comptroller and Auditor General's report that this trend was signalled at various stages throughout 2006. There was an external review done of the expenditure, but in March 2006 the training for the employed sub-committee of the board was notified about plans to spend on advertising in this area. Can somebody tell me who were the members of the training for the employed sub-committee of the board?

Mr. Paul O’Toole

I do not have them to hand. We will find out and let the committee know. I am sorry about that.

It would seem that this first came up in March 2006. At its next meeting in May, they were told about the plans for the television campaign. In June 2006, the director of corporate affairs wrote to the director with responsibility for the competency development programme. Who was that director?

Mr. Paul O’Toole

Of the competency development programme?

Mr. Con Shanahan

Mr. Denis Rowan.

He was told about plans for the advertising campaign. Then in July of that year the director of corporate affairs informed the director of finance that the estimated cost of the television advertisement would be €3.5 million. At that stage, mid-year in 2006, the advertising budget had already run over by 100% and the director of finance was informed mid-year that there were plans to spend €3.5 million. Who was the director of finance at that point?

Mr. Paul O’Toole

Mr. Gerard Gasparro.

In July, in his monthly financial report to the board, the finance director noted that at the end of June there had been that overspend of €0.9 million and he also stated that there were plans for a further €3.5 million spend on advertising. It seems that from an early stage in the year the information that there would be this level of spend was relayed to the director of finance, to the sub-committee of the board and to the board itself from the finance director. What action, if any, was taken, first, by senior executives in this regard and, second, by the board?

Before Mr. O'Toole responds to Deputy Shortall, it would be appropriate if he could get the names of the members of the sub-committee straightaway because it is important.

Mr. Paul O’Toole

We will do that.

I have examined the matter as closely as I can at this stage and it links back to the point I was trying to make earlier. Planning, execution and budgeting of these areas seemed to be done in a highly informal manner without proper levels of approval and seemed to be on the basis of discussion, which got programmes up and running and got advertising going, and caught up later in terms of budgetary implications. I suppose perhaps the feeling was it will be found somewhere and it will all come out in the wash. That seems to have been what happen in this particular case and in other cases, as described in the report.

What Mr. O'Toole is saying is that at an early stage in 2006 there was a general awareness among senior executives and the board that there was substantial overspend in the area of advertising on employment training.

Mr. Paul O’Toole

Not to the board. The line reporting on activities like advertising were not reported to the board. What would happen is the budgets would be reported onto the programme to which they were attached. Therefore, the relevant area here would have been rolled into the services to business budget and not separately identified for the board, but there would have been an awareness within the executive team that matters like this were there.

The Comptroller and Auditor General's report states that in July 2006 in his monthly financial report to the executive board, the finance director noted that at the end of June there was an overspend of €0.9 million, and that this had occurred on advertising and related costs for the CDP.

Mr. Paul O’Toole

I can clarify that point. When we term "the board", we mean the formal board which is chaired by Mr. Peter McLoone, who is sitting on my left. This term "executive board" is given to the grouping of assistant director generals, ADGs, and the director general who would act as, I suppose, a filtering mechanism before information was sent up towards the board itself.

I thank Mr. O'Toole for that clarification. The Comptroller and Auditor General also noted that the finance director understood that there were plans for spend on advertising of €3.5 million. Is Mr. O'Toole saying that the senior executives, nearly at all points throughout 2006, were aware of the situation on this significant overspend?

Mr. Paul O’Toole

They would have been aware that there was a planned spend. I do not think that €3.5 million actually transpired in that level, but they would have been aware that there was expenditure under discussion, some of which occurred, which was ahead of the budget actually available.

The report states that the finance director noted that he understood there were plans to spend €3.5 million.

Mr. Paul O’Toole

Yes.

So everybody was aware of that——

Mr. Paul O’Toole

Yes.

——and nothing was done about it.

Mr. Paul O’Toole

I do not know what discussions took place. Perhaps the way budgeting worked was that they said that we have original budgets for the year, moneys get paid and we then resolve it in terms of forecast outturns which we approve at a later stage in the year. It looks as if that sort of budgeting process was in place. Mr. Shanahan might be able to shed further light on that.

Was Mr. Shanahan a member of the executive board?

Mr. Con Shanahan

No.

There is nobody here who was a member, is there?

Mr. Paul O’Toole

No.

Was Mr. Molloy a member?

Mr. Con Shanahan

He was chairman of the executive board.

Who were the others on that executive board at that point?

Mr. Paul O’Toole

In 2006, Mr. Pyke, Ms Curtin, Mr. Lynch, Mr. O'Gorman — I am missing several——

Mr. Sands?

Mr. Paul O’Toole

——Mr. Sands, and I am probably missing one or two. We will get those names for the committee.

Was Mr. Cooney on it?

Mr. Paul O’Toole

Yes.

So Mr. O'Toole accepts that there was a general awareness of what was happening in respect of the director of corporate affairs, namely, that he was running way over budget and had ambitious plans for massive additional spending in this area.

Mr. Paul O’Toole

Corporate affairs would have been in discussions with colleagues in the services to business unit. There would appear to have been a general discussion with objectives set in respect of the type of communication in which we needed to engage. However, the formal sign-off of budgets and the formal adjustment to the original budgets in respect of that does not appear to have happened.

Were senior executives kept apprised during much of 2006?

Mr. Paul O’Toole

Yes.

It is stated that an independent review of media expenditure was carried out in respect of the spend in 2006. How did that external review come to be commissioned?

Mr. Paul O’Toole

I am not sure what triggered that external review. I do not know whether it was driven internally within the division or on foot of an external request.

It is extremely unsatisfactory that none of the witnesses was in place at the time and is not in a position to answer our questions. Does Mr. O'Toole know when was the report relating to the review received?

Mr. Paul O’Toole

I do not. I apologise for that.

Will Mr. McLoone indicate whether the report was brought to the board at any stage?

Mr. Peter McLoone

Not that I am aware of.

Does the executive board keep formal minutes of its meetings?

Mr. Paul O’Toole

It has formal minutes of meetings in respect of matters that would be brought forward to the board. The executive board met as a group approximately once a month and considered matters relating to papers that would be delivered to the board. In that context, it would also have considered the financial report from the assistant director general of finance at that time.

Would it be possible to forward all of those papers to the committee?

Mr. Paul O’Toole

We will locate those minutes for the committee.

For 2006.

Mr. Paul O’Toole

For 2006. We will locate those minutes for the committee.

What is Mr. McLoone's general view of the competency development programme, CDP? We discussed this matter at our earlier meetings and concerns were expressed that a huge sum of money was being spent on employment training. Concerns were also expressed about the decision-making process in the context of accountability in respect of where the money would be allocated. Further concerns arose about the fact that a number of directors represented organisations which benefited from the funding provided. I refer here to various trade union and employer groups and the fact that certain training facilities they operated benefited from the funding. Members were concerned in respect of a conflict of interests in this regard. When did Mr. McLoone first become aware that matters were not as they should have been regarding the advertising expenditure relating to the programme and that substantial overspends had occurred?

Mr. Peter McLoone

I do not recall becoming aware of this in 2006 or 2007. I have been raising questions in respect of the review of the competency development programme to which the Secretary General referred, particularly in the context of when it will be made available, at board meetings on an ongoing basis for a number of months.

I am referring to the advertising expenditure relating to that.

Mr. Peter McLoone

I was not aware of the spend, the budgets or the overspend in respect of this. The point is that the executive board's minutes or reports in respect of this matter were not made available to the board. They were not the subject of a report to the board.

Will Mr. O'Toole communicate further with the committee with regard to what exactly happened to the external review?

Mr. Paul O’Toole

Yes, I will. We will report to the committee on that matter.

Mr. Peter McLoone

On the Deputy's point regarding the spend on programmes, I do not know whether it was 2007 or 2008 but the trade union representatives, including me, absented themselves from the discussions in respect of applications from the trade unions. We can obtain the detail relating to that for the Deputy.

Last year, the fund was approximately €42 million.

Mr. Paul O’Toole

It was of that order.

Mr. Peter McLoone

It may have been allocated at €42 million but it now stands at approximately €13 million.

I was referring to the allocation for last year.

Mr. Paul O’Toole

It was €36 million for last year.

Okay. What was the nature of the decision-making process regarding the allocation of that €36 million in the form of supports to employers?

Mr. Paul O’Toole

As I understand the way it operated, providing upskilling opportunities to people who are in employment is a long-term objective of the Government in the context of ensuring people across the spectrum have the opportunity to obtain further training.

I just asked about the decision-making process.

Mr. Paul O’Toole

Fine. A budget would be allocated and agreed with the Department in respect of that. There were components to that. There was an invitation for people to become involved. In other words, companies were asked if they wished to participate. There was then a matching of trainers to those. In addition, there was a component of what was called strategic alliances where there was an invitation to tender. I think this would have taken place in 2007. A variety of organisations would have tendered to participate in that and would have arranged training programmes against agreed criteria.

Who actually took the decisions on the allocations?

Mr. Paul O’Toole

Is the Deputy inquiring about the individual allocations?

Mr. Paul O’Toole

There is a split between delegated responsibility in that area between the executive and the board proper. For amounts in excess of the delegated limit of the executive, they would have gone to the board. Specifically in this case, if I recall it correctly, a detailed paper went to the board in respect of those items and this was considered, I think, in 2007.

What was the position regarding the earlier allocations? Was there a standard allocation procedure?

Mr. Paul O’Toole

A budget was set for the year and this was agreed with the Department of Enterprise, Trade and Employment. There was a call for tender in 2005 and a further one in 2007, where a number of organisations sought to participate and partner with FÁS in the delivery of training services under the competency development programme. Based on those tenders, there would have been an approval mechanism. This, in turn, would have been based on the delegated authority, either at executive level or board level.

Yes, but what was the nature of that approval mechanism?

Mr. Paul O’Toole

The approval mechanism of 2007 rather than 2005 involved a paper listing the organisations, the amounts, the output and the background being sent to the board, which then approved it.

Are our guests stating that anyone with an involvement with any of those organisations absented themselves from that board meeting or the part thereof relating to this matter?

Mr. Peter McLoone

Subject to checking and verifying this, I recall that the board considered separately the employers from the trade unions. They were taken in two different tranches. I recall, because I was affected, that I and others absented ourselves from the discussion that led to the decision on the allocation to trade unions. Mr. Mulligan, who is a member of the board, may have other information.

Were there three separate sections in the report, namely, one part relating to employers, a second relating to the unions and a third part?

Mr. Peter McLoone

No, the report may have been a single report that resulted in the decisions on business being taken at separate meetings. I am not even sure if the paper would have recognised that some of the trade union applications had not been completed. In other words, some proposals were still awaited. I regret that I am trying to recall these matters off the top of my head.

Will Mr. O'Toole provide the committee with a copy of that paper?

Mr. Peter McLoone

Mr. Mulligan may have some information on the matter.

Mr. Dermot Mulligan

My recollection is the same. When the projects that had connections with people who were members of the board, those members absented themselves for the duration of the discussion on such projects.

How much money has been expended on this programme since its inception?

Mr. Paul O’Toole

It might take a few minutes to calculate but we will be able to give the Deputy an estimate.

Mr. Con Shanahan

The spend this year is €15.6 million. In 2008 it was €36.6 million, in 2007 it was €48.7 million and in 2006 it was €37.4 million.

Did all this funding come directly from the Department specifically for this programme?

Mr. Paul O’Toole

Yes.

I refer to the Department's role in this. It is clear that in February 2004 there was an indication that there would be substantial underspending of €60 million in European Social Fund, ESF, money. What was the Department's role in establishing the grant fund for employers? What criteria were set down for allocation of the funding?

Mr. Seán Gorman

The issue arose from a policy context. The initiative was taken to address an issue of upskilling people at work as distinct from people looking for work. This had come out of a series of recommendations from the task force on lifelong learning and the enterprise strategy group and from feedback we had received from the European Commission under the employment strategy. More needed to be done to address the challenges of lower skilled people in the workplace, in particular, and to upskill the workforce as a competitive advantage and to try to help people in the workforce obtain more portable skills for the purposes of their own development and capacity to work in the marketplace.

The connection with the ESF is that we are the national managing authority for the ESF in Ireland and all the funds spent by all Departments are co-ordinated by and disbursed through the Department whether through the Department of Education and Science or whatever. At that point we had two challenges. First, we risked losing the benefit of some social funds unless we had a capacity to draw them down and, second, we had the challenge to do more training of those at work. People have asked why we needed to spend money in this area at a time of almost full employment but the objective was to deliberately reach people in work who required or could benefit from upskilling. There was a wide consensus at the time, not just within the Department and FÁS, but across the various interests we dealt with, including business groups, trade union representative groups, the European Commission and ourselves that this was a worthwhile and necessary policy to pursue. We developed the policy. We gave some money to Enterprise Ireland at one stage, which was in a position to spend some, but not all, of what it got. We had a discussion with FÁS about the capacity of the organisation to help us to achieve the two objectives of reaching out to people in employment in terms of helping them with skills and upskilling and helping us achieve a secondary aim of maximising our draw down of ESF funds.

We asked FÁS officials if they would develop programmes and proposals which they felt they could deliver and, as it turned out, through intermediaries.

When was FÁS asked to do that?

Mr. Seán Gorman

I am not sure of the precise date but it was about 2004. We asked FÁS to see if it could help us with this. The call for proposals went out in 2005 so it probably would have been 2004. I am sure I can get the precise date.

Was it earlier? The report states FÁS made submissions in 2004.

Mr. Seán Gorman

We began the discussions with FÁS as far back as 2002 and the Chairman is correct that the proposals came in. I have confirmation here from FÁS that it would push ahead with developing proposals for this initiative.

Is it not the case that in mid-2004 when the Department realised it would have under spending of €60 million it looked to FÁS to spend that money as quickly as possible? Is that not what happened?

Mr. Seán Gorman

We looked to FÁS to see if the agency could help us to draw down and spend the money.

Why did the Department face underspending of €60 million in 2004?

Mr. Seán Gorman

We had initially attempted to use that money through Enterprise Ireland to work it out that way through companies and it was not working. The uptake was not sufficient and we believed we needed an agency that had a much bigger outreach and almost a core competence in delivering training through both its own networks and others that it was well used to developing and establishing such as working through various business or trade union groups or other organisations. We felt it was the right thing to do to see could we, on the one hand, achieve the objective of getting help and training out to people and, on the other, there was a wish not to lose the benefit of the ESF funds but it was not just a policy of getting the money out at any price or cost.

In mid-2004 the Department faced underspending.

Mr. Seán Gorman

Yes, we did.

It is difficult to understand how a Department could find itself in that position. Had it not planned for spending the ESF money?

Mr. Seán Gorman

We had planned but it is not unusual for programmes to fall behind or to find the uptake on the basis of original thinking was not what was expected. We had initially tried to do this through Enterprise Ireland but it turned out that it was not able to do that though its client base and, therefore, we broadened the programme beyond its client base on the basis that FÁS had the greatest potential outreach to workers.

Was there pressure from the Department to spend that money as quickly as possible? In that context, is it not the case people may not have been as careful as they should have been?

Mr. Seán Gorman

There was certainly a desire to spend the money but addressing the availability of funds and trying to spend money and draw down funds from Europe in this case is not a substitute for doing it properly. There was anxiety to draw the money down and have it spent in an area where we were satisfied from a policy point of view there was a need but it was not a proxy for getting it out there at any price in a loose way. FÁS developed schemes and went through a public tender process. It agreed targets with providers for what they were to provide. It was not the case that we had to get rid of this money.

It looks as if it was.

Mr. Seán Gorman

It was to use the opportunity that the money provided in the interest of an area where we felt there was a need and the prevailing thinking at the time — I do not dispute it — was there was a need to do something for people who were at work in terms of upskilling. We had the one step up concept, which I am sure——

This has all the appearances of a scenario where an organisation under the Department's remit was given a large bundle of money to spend quickly and nobody was too bothered about achieving value for money for the spending or for the advertising element that went with it. If there was substantial overspending in the advertising budget, it was a case of "So what?" That seems to have been the climate of the time and many people benefitted from the spending of those funds. In the past four years more than €140 million was spent in supports to employers and other organisations in providing in-employment training at a time when we had full employment and at a time when generally speaking employers were doing very well out of the economy. It is very hard to understand the justification for that kind of spend. What steps has the Department taken to ensure that we have been getting value for money for that spend?

Mr. Seán Gorman

The most significant step we have taken was to initiate this formal value for money study of the competency review programme, which as I said earlier in the meeting we are on the point of finishing, when we get the out——

When did the Department initiate that review?

Mr. Seán Gorman

We initiated it in 2008.

Mr. Seán Gorman

In February 2008 with a cross-departmental grouping looking at it.

When did you expect the review to be completed?

Mr. Seán Gorman

I would have expected it to take about a year to a year and a half, but it has proved to be a very complex——

In reply to a parliamentary question, the Minister said she expected to have the review completed in the first quarter of this year.

Mr. Seán Gorman

That is right. It has taken longer to do. It is very complex.

Mr. Seán Gorman

The sheer complexity of the area we are looking at.

Come on now, it should not take a year to do a review of spending, in which the Department has been centrally involved. It is very hard to understand why it could possibly take more than a year to do.

Mr. Seán Gorman

It has taken that long and as I mentioned earlier it would have been possible to wrap it up earlier this year but for the fact that I decided that it did not make sense for me to close the file on it until we saw the benefit of the new work that was being done and will be done by the Office of the Comptroller and Auditor General.

That does not make any sense. The Secretary General has a responsibility that is entirely separate from anything that this committee or the Comptroller and Auditor General does. Regardless of any media reports about FÁS or anything else, Mr. Gorman, as the Accounting Officer for his Department, has a responsibility to ensure that the taxpayer is getting value for money. This was a very substantial spend over a four-year period. A review body has been in place now for a year and nine months, but it had been established for a year. It is really not acceptable for Mr. Gorman to tell us it will drag on for perhaps a second year.

Mr. Seán Gorman

No, it will not drag on.

Did Mr. Gorman receive a draft report from the review group?

Mr. Seán Gorman

We have a draft report from the review group, yes.

When did Mr. Gorman get that draft report?

Mr. Seán Gorman

That draft was completed about June of this year.

What is happening to that draft report now?

Mr. Seán Gorman

That draft report is currently being refined, firstly, but the most significant thing that is happening——

By whom is it being refined?

Mr. Seán Gorman

By the steering group, which involves the Department of Finance, Forfás, the Department of Enterprise, Trade and Employment and representatives from FÁS. The final transaction — to use that term — that will take place on that report will be whatever input we decide we need to do or whatever adjustments or adding to or taking from it we need to do on the basis of what we learn from the work of the Comptroller and Auditor General. If it were to turn out that the work of the Comptroller and Auditor General were to potentially raise issues that would significantly further delay the report, I think we would not significantly further delay it in terms of the Deputy talking about another year. We want to get this wrapped up and I believe we can have it wrapped up well before the end of this year.

How does the work of the Comptroller and Auditor General have anything to do with this review of expenditure in the Department of Enterprise, Trade and Employment?

Mr. Seán Gorman

The Comptroller and Auditor General has looked at this area of the competency development programme. It is referred to here. There was further work going on. That expertise, that resource that the office is applying to it——

Aside from that the Department has responsibilities.

Mr. Seán Gorman

We have, indeed, yes, and it is part of fulfilling that responsibility that I felt that it was in everybody's best interest that we had the benefit of whatever else was going on around this area in terms of work.

To clarify is the steering committee the only group working on this?

Mr. Seán Gorman

Yes, that is right.

The steering committee produced a draft report in June. What happened to it at that point?

Mr. Seán Gorman

The draft report is in the Department now, awaiting the further work I referred to. It will go back to the steering group then.

Has Mr. Gorman decided he will not take any action on the draft report and will wait for the further report of the Comptroller and Auditor General?

Mr. Seán Gorman

That is the decision until I see the completion of that.

If that report makes reference to anything further in the future, will the Department delay it for another year?

Mr. Seán Gorman

No, that is not the intention. It was just to ensure we had the benefit of this work. I will talk through the precise process. The report will then go to an external evaluator just for professional vetting, if one likes, in terms of quality. Then it will be presented to——

What does it mean that it will go to a professional evaluator?

Mr. Seán Gorman

This report was done on our initiative under the value for money series of programmes that is run by the Department of Finance, under which it asks different Departments to undertake various studies. We put this one forward. Built into that process to assist Departments is that, at the point where the steering group's Department has signed off, the report goes out to an external evaluator just to stress test it for quality and accuracy. It is part of the process. After that then the report——

Presumably the members of the steering committee are people with expertise and experience in this area. Why does the report need to be sent out to an external evaluator?

Mr. Seán Gorman

It is part of the standard set of procedures and guidelines laid down for this type of report.

Is it a Department of Finance requirement?

Mr. Seán Gorman

It is in the guidelines from the Department of Finance, yes. We did not invent it ourselves, with all due respects. It is in the guidelines. Then it will go to the Minister and to the Oireachtas Joint Committee on Enterprise, Trade and Employment, so it will be a public document.

However, the Department will hold it until after the Comptroller and Auditor General produces his next report and at that point make a decision on whether to finalise it.

Mr. Seán Gorman

Well, at that point finalise it.

At that point the Department will send it to an external person and we will see it at some point in the future.

I ask Mr. Gorman to tell me about the principal officer from the Department of Enterprise, Trade and Employment who is chairing this group. He has resigned now from that position.

Mr. Seán Gorman

Yes, he has.

When did he resign?

Mr. Seán Gorman

July this year.

Did he write to Mr. Gorman?

Mr. Seán Gorman

He did, yes.

Did he set out in the letter his reasons for resigning?

Mr. Seán Gorman

He did. He said he was concerned at the delay. I can read his e-mail. It is addressed to Mr. Dermot Mulligan, who is sitting beside me and to whom he reports in the ordinary course of events. It states:

In the light of your questionable involvement in the role and work of the steering committee charged with overseeing and completing this review, the nature of that involvement and implications for the content and finalisation of the review, I am now no longer prepared to chair this steering committee.

I spoke to him and his main concern here is that he felt he had done the report and brought it effectively to a conclusion. He is concerned at my decision to wait for the further input.

Does Mr. Gorman know the view of the other members of the steering group?

Mr. Seán Gorman

I have not asked them formally, no.

Could I just check what Mr. Mulligan——

I could not hear Mr. Gorman reading out the letter. What did he say about being "questionable"?

Mr. Seán Gorman

Yes, he said: "In the light of your [Mr. Mulligan's] questionable involvement in the role and work of the steering committee". In conversation I had with him, what he expressed to me as the main concern was that he thought it was time this was wrapped up. He did not agree with the decision to wait for the further input.

What is Mr. Mulligan's role regarding FÁS?

Mr. Seán Gorman

Mr. Mulligan is the assistant secretary who heads up the labour force development division of the Department. He would oversee on a day-to-day basis the Estimates for FÁS — the FÁS budgets from a departmental point of view — and he is a member of the board.

Mr. Seán Gorman

Yes.

Mr. Seán Gorman

Since 2005 when I left.

Is it not strange to say the least that a review has been undertaken of this €140 million programme and that review group is reporting to somebody who is a member of the board of the organisation being reviewed?

Mr. Seán Gorman

Not in the way we normally do our business. We work normally——

Is it not unusual in the way the Department does its business?

Mr. Seán Gorman

It is not unusual for somebody who has a desk responsibility for it. Mr. Mulligan has a responsibility for the FÁS estimates.

He is a member of the board of FÁS.

Mr. Seán Gorman

Yes.

If a review is to have any independence or objectivity, surely it is not appropriate that the review group should report to someone who is a director of the organisation being reviewed.

Mr. Seán Gorman

That perhaps might be a problem if the only and final point of reporting was Mr. Mulligan. The report will come to me and will go to the Minister and the Oireachtas committee. It is not——

In the first instance, the group is reporting to a director of FÁS. That is surely not acceptable.

Mr. Seán Gorman

I have absolute confidence that Mr. Mulligan will fulfil his duties in an open and objective way.

This is not a reflection on any particular individual. I am speaking from the point of view of corporate governance and of Mr. Gorman, as Accounting Officer of his Department, doing his job properly. It is not appropriate that Mr. Gorman should arrange a review of substantial spending within FÁS and that the review group would report to one of the directors of FÁS. That is not appropriate and I believe most people would agree. I ask Mr. Gorman to revert to the committee when he has had time to consider my comments. I ask that members receive a copy of the terms of reference of the review group.

Mr. Seán Gorman

I have the terms of reference here.

I ask Mr. Gorman to circulate them.

We will move to chapter 6, procurement of advertising and related services. I hope to wrap up proceedings for today after Deputy McCormack has put questions. The committee will then consider the evidence placed before us and the documentation it will receive in the coming days before reconvening within a short period to discuss this matter further. Does Deputy McCormack wish to address any questions directly to Mr. McLoone who has other business to which he must attend? Am I placing an unfair burden on the Deputy?

Mr. Peter McLoone

I will stay and work to the order of proceedings.

I will not detain proceedings for long. We have established that €24 million was paid in advertising between 2003 and 2008. There appears to have been inconsistency in the management of the contracts because the core advertisement services, valued at approximately €5.5 million, were acquired outside the contract and certain services supplied were procured through contracts that were outside the scope of the contract. Did that breach public procurement processes?

Mr. Paul O’Toole

It would certainly not be the best example of following public procurement processes. The advertising contract that was in place was quite general in nature and had a section within it which said, "Other Relevant Services". However, filtering of a great deal of activity through an advertising contract in that way and expenditure on media directly by the company, having commissioned an agency to do it on one's behalf, would certainly be unusual and would not be practice, as I would see it. We would not permit that practice to continue.

I know it is not continuing. We are discussing what took place at that time. Was this practice not observed? Mr. Gorman informed the committee that the Department's expenditure was monitored on a monthly basis. If that was the case, did the monitoring process not discover irregularities or other matters of this nature?

Mr. Seán Gorman

That monitoring is at a very different level. Individual advertising contracts or the individual cost of advertising associated with a range of individual programmes is not monitored at that level of detail at the level of the Department. The Department monitors at a higher level in terms of programmes and programme budgets to ensure the policy objectives are being achieved, the money is spent in the areas for which it was intended and value for money is being achieved. However, when it gets down to the level of on-the-ground, day-to-day policing and monitoring of the rules of engagement as regards procurement and all of that, we rely on the internal financial controls and role and responsibility of the accounting officer in the organisation.

We are back to the internal financial controller again.

Mr. Seán Gorman

Yes.

That is where the breakdown appeared to occur.

Mr. Seán Gorman

That is part of the difficulty here, yes.

The review of the 2003 operation of the contract with Euro RSCG noted the volume of third party costs charged by the agency and recommended that only the relevant third party expenditure should be routed through the agency. Does FÁS have contracts with other agencies?

Mr. Paul O’Toole

Is the Deputy referring to the time period in question?

Did FÁS have contracts with other agencies at the time and does it have contracts with other agencies now?

Mr. Paul O’Toole

In terms of advertising services, we do not have any contracts or agency service from that time. At that time, I understand that Euro RSCG was the company. FÁS may have had advice on particular aspects of advertising promotion but the channel of services was through Euro RSCG.

Did FÁS make any effort to establish that agents, goods and services procured were within the scope of the contract?

Mr. Paul O’Toole

I cannot answer that definitively. I will have to check that point.

Where does responsibility for this matter lie? Is it the procurement unit?

Mr. Paul O’Toole

The overall responsibility for ensuring that matters operate correctly would operate in a line, if one likes, through the director general, assistant director general and the director of the area. Procurement would have a responsibility to ensure that whatever procedures were to be followed were followed. The line function, right across the board, would have the primary role in ensuring procedures were followed properly and procurement would have a collateral role to check and validate that. Mr. Shanahan or Mr. Kivlehan may wish to add to that.

Mr. Con Shanahan

That is the process. One has the line responsibility in the first instance and where anything comes to procurement obviously it has a responsibility to ensure the rules are followed. That is, of course, if it comes to procurement.

What role did the accounts payable section of the Department of Finance have in this matter?

Mr. Con Shanahan

The accounts payable department eventually pays the bills when they come in.

Mr. Con Shanahan

The accounts payable department will disburse the moneys to the service providers when the service has been completed.

This investigation is diverting the time and energy of the executive and board of FÁS and everyone else from the real work they should be doing in the current circumstances, namely, to help create jobs. It appears from the answers we have received today that the FÁS executive is employed almost full-time in investigating this matter and preparing for meetings with the Committee of Public Accounts. Is that a true reflection of the position in FÁS at present?

Mr. Paul O’Toole

I can address that. Obviously, given the nature and seriousness of this report, we have had to devote attention in recent weeks to this issue to ensure we are preparing as thoroughly as we can to address the committee and answer members' questions. However, I chair a meeting of my senior executive team every week where we examine matters to ensure the programmes we are running through our operations around the country are continuing to operate. We are attempting not to drop any ball while our minds are also focused on that. However, the Deputy is correct to say that it requires a lot of attention by the executive to those matters as we move forward to addressing them to change our systems and processes. It is a necessary investment of time for the future.

I accept Mr. O'Toole is heeding some of the recommendations of the Committee of Public Accounts from when FÁS was previously before the committee, but I cannot get my head around the publicity and advertising costs averaging €7 million a year in one year and €10 million in another. What was the purpose of spending that amount of money on advertising at that time? We are getting FÁS free advertising. It is getting more publicity now than it paid for over the five and six-year period and we are giving it for free, other than for the fact that we are staying to help FÁS with it.

Mr. Paul O’Toole

There is an old adage that there is no such thing as bad publicity but I am not so sure about that. Deputy McCormack is correct to draw attention to the matter. The purpose of the advertising was driven by the statement of strategy produced by the organisation in 2006 and the one prior to that in 2002. It was considered that the organisation needed to make the public aware of the services that were on offer, the work of FÁS and to enhance its image and reputation through the quality of its programmes. That was the high level goal. That drove the expenditure we are examining today. The difficulties arose because the strategy and the management of the functions throughout the organisation did not concentrate enough on the processes, planning and internal checks and balances to ensure things should have proceeded in a better fashion than is evident.

Mr. O'Toole previously informed us that this year advertising costs were reduced by 90%, a colossal amount. What was the purpose of spending 90% extra in the years with which we are concerned?

Mr. Paul O’Toole

As I tried to explain in response to a question from another Deputy, the 90% cut is due to the circumstances we are in. That is too deep a cut. When we begin to promote FÁS again — it is not just about advertising — we will be seeking to make a correct investment and correctly manage and direct it. The 90% reduction illustrates how seriously the organisation is taking those matters. However, we will need to invest appropriately in the future to inform people who need to be aware of what is available.

I take it that the 90% reduction is an admission that the advertising costs in the years concerned were unnecessary or else it is an attempt to show the public that FÁS is now serious about correcting the faults of the past. Which is it?

Mr. Paul O’Toole

It is first an acknowledgement that what was transpiring in terms of the level of the investment and how it was managed could not continue. Second, it allows the organisation to take stock and pick up on the recommendations of this committee and the Comptroller and Auditor General on how we should have proper stewardship of the area in the future.

What is the annual budget of FÁS?

Mr. Paul O’Toole

This year it is €1.07 billion.

It appears that there was some type of collusion or cosy arrangement between the board and the executive to ensure every year the €1.07 billion would be spent to avoid the budget being cut in the following year. Are there any grounds for that suspicion?

Mr. Paul O’Toole

I could not comment on that contention. However, the organisation has a record of working within its budget and not having budget overruns.

It seemed to be the case that in several years the budget was not spent and there was a deliberate attempt to ensure the sum of €1.07 billion was spent in a given year so that the Department would make a full allocation in the next year. Deputy Shortall touched on the matter as well.

Mr. Paul O’Toole

I am not sure I can give the Deputy an informed comment on that.

When FÁS was before the committee on 4 December 2008 I inquired whether, given that the board of FÁS had been negligent in its duty, it should consider its position. I am referring to the minutes of the meeting. I did not get a clear answer to my question. I wish to ask Mr. McLoone what is the present position? Does the board intend to resign as has been publicly indicated?

That question was asked when the Deputy was absent.

That is all right. It is no harm to ask it again.

Mr. Peter McLoone

Does the Chairman wish me to answer the question again?

I would like to hear the answer as I missed it.

Mr. Peter McLoone

I indicated previously to the committee that I have submitted notice to the Tánaiste of my intention to resign as a board member and as chairman of the board with effect from the conclusion of the meeting scheduled for 1 October. In response to other questions I indicated that I was not aware of the actions taken by any other board members to date. We are scheduled to meet this day week and that is the business to be addressed.

Is Mr. McLoone only speaking for himself?

Mr. Peter McLoone

In the Deputy's absence I said that when we met on 10 September the report had not issued and we have not met since the reaction to it became known. I am speaking on my behalf but in the one public utterance I have made I indicated that I had spoken to some but not all board members and I expressed the judgment as to what I felt the board members would do on Thursday next.

When I asked that question of Mr. McLoone previously he gave an extensive reply. My response on that occasion was that I understood from it that he would wait for the report from the committee before considering the question I asked. He replied that the board had to continue in office until it was decided otherwise. Has it now been decided otherwise?

Mr. Peter McLoone

That will be determined when we meet next Thursday. Members will be aware that when the committee's report was published in February it stopped short of calling on the board to resign. We did have conversations at that stage with both the Minister and the Department. We continued in office with very clear direction as to what our focus should be. That included the appointment of a replacement director general. We had an interim director general at the time. We advertised for the post to be permanently filled. We subsequently had discussions with the Department.

I will finish on this point.

Mr. Peter McLoone

I wish it to be clear that all of that was done in the context of a clear indication from the Department that it was intending to act on the recommendation from the Committee of Public Accounts that the Labour Services Act should be amended appropriately to accommodate the changes required.

That was slow progress. The recommendation to restructure the board was made in February.

Mr. Peter McLoone

As the Deputy will appreciate, I am not a legislator.

I would like to clarify Mr. McLoone's statement that the committee stopped short of asking the board to resign. We were working on the basis of legal advice to the effect that we should not call for the board to resign. We said it as clearly as we could legally that it should be reduced in number and reconstituted. Therefore, to a blind man, that would have been as good as saying the board should consider its position at the time. That was in February of this year. I wanted to clarify that because that was said in a radio interview ten days ago.

I was not aware of that or ignored it because I asked my question in September and my position has not changed since. That is my conclusion.

It was asked who were the board members on the sub-committee dealing with training for the employed. The union representatives are Des Geraghty, Sally Anne Kinihan and Owen Wills. The employer nominees are Jenny Hayes, Brian Keogh and Niall Saul. The staff representative is Frank Walsh and the representative from the Department of Enterprise, Trade and Employment is Dermot Mulligan. The services to business representatives are John O'Gorman and Denis Rowan and they attended those meetings. Mr. O'Gorman was succeeded by Mr. Martin Lynch in late 2006 or early 2007. The executive board members in 2006 were Donal Sands, Gerry Pyke, Patricia Curtin, Christy Cooney, Martin Lynch, Eamonn Darcy and John O'Gorman.

Arising from the information we have, let us turn to Mr. Saul and his statement that the board was kept in the dark in relation to many of the issues. He was on the sub-committee dealing with those issues as a member of the board.

Mr. Paul O’Toole

I hope I am not straying into territory into which I should not but, as I understand it, those committees comprise a consultative committee without an executive role in relation to budgets or anything else like that. That is my understanding and I would clarify that point.

He was on the audit sub-committee also.

Mr. Paul O’Toole

I cannot speak to that point.

It is probably more significant to note he was chairman of the audit committee.

The statements we are hearing today suggest the board was kept in the dark but he was representing the board on the audit committee and the sub-committee dealing with training for the employed. That is a matter for another day but it should be mentioned in view of comments made today elsewhere. The statements cannot be reconciled and do not add up.

With regard to what was regarded as the turning of a blind eye or collegiality, or whatever one wants to call it, at senior level, was there a view at the senior levels of FÁS that if somebody raised questions, he or she would be victimised? Was there any reported bullying or intimidation? Was there ever any incident that was referred to external agencies?

Mr. Paul O’Toole

I cannot answer that but I will endeavour to find out.

Okay. We will finish the current round of questions. Does Mr. Buckley wish to say a few words.

Mr. John Buckley

As the Chairman is due to adjourn, I will not comment or reflect on the meeting. I just want to clarify one point on our future report. I hope to finalise it within the next six weeks. Rather than hold up the Department on the segment on the competency development programme, I will send the segment at an early stage for clearance to both the Department and FÁS so they can get on with their work. I was surprised to hear it is holding it up. Other than that, I have nothing else to say.

I hope the Department will not sit on it for as long as it sat on the current report.

Another concern of the committee arises when a report is sent from the Office of the Comptroller and Auditor General to a Department. Lo and behold, we see leaks to the media. I am not pointing fingers at anybody but simply saying these leaks do a great disservice to the people affected by the reports and to the Office of the Comptroller and Auditor General in light of all the work that is done. They almost put pressure on this committee to go in a certain direction. I hope that, in future, when reports are sent to a Department — correct me if I am wrong in assuming there are only two parties involved — there should not be leaks to the media regarding them.

They should be turned around speedily also.

They should be turned around speedily. Bearing in mind the three months allowed to Departments to deal with reports from the Office of the Comptroller and Auditor General, we ask that, in the next instance, the turnaround time be reduced substantially to a matter of weeks. I ask that every step be taken to avoid inspired leaks to the media to try to influence external groups.

Mr. Seán Gorman

I take the point on the fast turnaround but I assure the Chairman that, as an official of the Department, I have not leaked any documents.

I am not suggesting that.

Mr. Seán Gorman

I know that but I am just giving the Chairman that assurance——

It is falling off the back of a lorry somewhere along the line.

Mr. Seán Gorman

——as Accounting Officer and Secretary General.

Has Mr. O'Gorman investigated the cause of leaks?

Mr. Seán Gorman

I have not.

We will defer further consideration until we consider the evidence given today and the documents promised over the coming days. We hope to reconvene within a matter of two weeks. I thank everyone who attended, including the members, witnesses and staff at the top table.

The witnesses withdrew.

The committee adjourned at 2.15 p.m. until 10 a.m. on Thursday, 8 October 2009.
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