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COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 21 Nov 2013

Vote 34 - National Gallery of Ireland

Dr. Olive Braiden (Chairman, Board of Governors and Guardians of the National Gallery of Ireland) and Mr. Sean Rainbird (Director, National Gallery of Ireland) called and examined.

Before we begin, I remind members, witnesses and those in the public gallery to turn off their mobile telephones, as the interference from them affects the sound quality and transmission of the meeting. I wish to advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give the committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence.

Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the House or an official by name or in such a way as to make him or her identifiable. I remind Members of the provisions within Standing Order 163 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policies.

I welcome Dr. Olive Braiden, Chair of the Board of Governor and Guardians of the National Gallery of Ireland. I also welcome Mr. Sean Rainbird, Director of the National Gallery of Ireland. I ask Dr. Braiden to introduce her officials.

Dr. Olive Braiden

I am accompanied by the head of administration, Mr. Gerry D'Arcy.

Mr. Niall Ó Donnchú

I am an assistant secretary general at the Department of Arts, Heritage and the Gaeltacht.

Mr. Dermot Quigley

I am a principal officer at the Department of Public Expenditure and Reform, and my colleague Mr. Peter Brazel is also from the Department.

I invite the Comptroller and Auditor General to introduce the accounts.

Mr. Seamus McCarthy

The appropriation account for Vote 34 shows that the National Gallery spent €8.4 million in 2012 on voted services. The most significant element of expenditure was pay, which accounted for €5.2 million, while non-pay costs were €2.2 million. Grant-in-aid funding of just over €1 million was provided in 2012. This was paid into two grant-in-aid fund accounts. Transactions on the grant-in-aid fund accounts are set out in note 7 to the appropriation account. The National Gallery's gross expenditure fell by around €1 million between 2011 and 2012. Almost all of the reduction related to cut of 50% in the grant-in-aid provision under subhead A.3. Up to 2011, that grant-in-aid funding was allocated for the acquisition and conservation of artworks. Accumulated reserves of €3 million were held at the end of 2011 for those purposes. In 2012 the bulk of the €1 million grant was allocated to building refurbishment work. This change in scope of the subhead is in the context of the National Gallery's master development plan, which aims to complete the renovation of the two oldest wings by spring 2016.

Members may also wish to note that the statement on internal financial control in the introduction to the account discloses that the National Gallery undertook a review of its security procedures following an incident in June 2012 in which a visitor to the National Gallery caused substantial damage to a painting on public display.

In examining the appropriation account, the committee should be aware that the National Gallery's income from retail and fundraising activities is not treated as appropriations in aid of the Vote. Those activities and the related expenditure are accounted for in consolidated financial statements which are prepared on an accruals basis. They are separately audited by me.

Following the 2010 audit, we proposed changes to improve the format of the consolidated statements. The National Gallery agreed and substantially revised the format of the consolidated statements for the 2011 year of account. The process of preparing and auditing the revised-format accounts has been protracted, but I expect the files on the audits of both the 2011 and 2012 financial statements to be submitted to me shortly for my review.

Chapter 15 of my report on the accounts for public services 2012 deals with two matters relating to staff appointments at the National Gallery. The chapter outlines the circumstances surrounding a payment made in 2012 to the newly appointed director of the National Gallery. The audit found that, in addition to salary, an amount of €40,000 was paid to the director. The Department of Public Expenditure and Reform had sanctioned the pay and conditions and specified that no additional benefits in cash or in kind were payable apart from reasonable vouched removal expenses. Of the €40,000 paid, supporting vouchers to the value of some €3,700 had been received by the National Gallery. For tax compliance purposes, the National Gallery grossed the unvouched element of the expenses payment to around €87,000 and paid the related tax.

The full amount of this expenditure was met from the National Gallery's non-Exchequer resources.
The other matter dealt with in the Chapter concerns the costs related to the outcome of a Labour Court case. During 2012, the National Gallery reinstated six security attendants who had been made redundant in September 2011. The attendants had originally been hired in 2002 on fixed-term contracts. Following legal proceedings by some of the attendants, the Labour Court found that they were entitled to contracts of indefinite duration. The National Gallery incurred expenditure in the region of €420,000 as a result, including arrears of salary for the 15-month period between redundancy and reinstatement. Further legal costs of approximately €7,500 were in dispute.
The legal provision underpinning contracts of indefinite duration is the Protection of Employees (Fixed-Term Work) Act 2003. That Act prohibits the use of successive fixed-term contracts and provides that an employee is entitled to a contract of indefinite duration once he or she has been on fixed-term contracts for more than four years, unless there is objective justification for keeping the employee on fixed-term contracts. Entitlement to contracts of indefinite duration is an issue that also arises in other public bodies, especially in the education sector.

We have two distinct issues to deal with today: the appointment of the director and the issue of the reinstatement of staff who are deemed to be on contracts of indefinite duration. Dr. Braiden asked that Mr. Rainbird be excused for part of this meeting. However, because he is now the Accounting Officer, I ask that he remain for the full meeting. I invite Dr. Braiden to make her opening statement.

Dr. Olive Braiden

Sean Rainbird took up the position as director of the National Gallery of Ireland in April 2012. His appointment was the culmination of a successful global search and selection process extending over 16 months.

The National Gallery ranks among the leading galleries in the world, as is evidenced by the fact that collection exchange and partnership arrangements exist with leading galleries including the Louvre, the Prado and National Gallery of Washington. It is a resource for Irish people and one of the principal attractions for overseas visitors. In making the first appointment to the position of director in a quarter of a century, the board recognised that it needed to secure an appointment which inspired confidence in us among our international partners. It also required a person who could lead the largest refurbishment in the National Gallery's history and achieve efficiencies in a period of stringency, while inspiring the public with the approach to and the range of exhibitions. In Sean Rainbird, the board believes it has found a director of this calibre.

From the outset, the National Gallery was guided in its approach to the search and selection of a director by the advice of the Department of Arts, Heritage and the Gaeltacht. The Public Appointments Service, PAS, was used to manage the selection process. The procedures overseen by PAS included the appointment of an independent person as chair of the selection board, the inclusion of a senior official from the Department on the interview panel and the clearance approval of the candidate information with the Department of Public Expenditure and Reform. The selection process concluded in July 2011.

The sanction letter mentioned in the report of the Comptroller and Auditor General, which authorised the terms of offer of the appointment, was issued by the Department of Arts, Heritage and the Gaeltacht in November 2011. This sanctioned the appointment of Mr. Rainbird at the fifth point of the principal officer salary scale. I confirm that Mr. Rainbird took up the position in April 2012 and was paid the salary sanctioned in the November 2011 letter. I also confirm that Mr. Rainbird's salary was adjusted downwards in July 2013 in line with the terms of the Haddington Road agreement. Mr. Rainbird is not in receipt of any additional salary from any source in connection with his appointment as director of the National Gallery.

The sanction letter of November 2011 provided for the payment of "reasonable vouched removal expenses" to enable Mr. Rainbird to take up the position of director. The board sought guidance from the Department on the approach to determining, setting and paying these removal expenses and was advised that the board ought itself to interpret the wording in the sanction letter. The board's determination, which was considered and approved by the board, was that a candidate taking up the position and based abroad prior to appointment should be no worse off than if the candidate had been based in Ireland.

The appointment of Mr. Rainbird is for a fixed term of five years. Given that his family resides overseas and the brevity of the contract period, Mr. Rainbird was not in a position to relocate his family to Ireland. In these circumstances, the approach to removal was that Mr. Rainbird be enabled to make 40 trips per annum to visit his family over the period of the contract. Each trip was estimated to cost €200. For administrative convenience and to avoid any possible confusion with the reimbursement of business travel, the determined amount was paid up-front to Mr. Rainbird. Provision was made for clawback in the event of Mr. Rainbird's departing prior to the end of his contract. The National Gallery is conducting an annual review to ensure there is vouching of the travel that is being undertaken in visiting his family.

May we publish that statement?

Dr. Olive Braiden

Yes.

I invite Mr. Rainbird to make his opening statement.

Mr. Sean Rainbird

I refer to the matter raised by the Comptroller and Auditor General in Chapter 15 of his report for 2012, entitled Award of Contracts of Indefinite Duration to Gallery Staff.

In 2002, the National Gallery recruited an additional 30 attendant staff to provide security and cleaning services in its new Millennium Wing. In accordance with the sanction obtained by the Department of Finance, all of these staff were employed on fixed-term or special-purpose contracts, related to the then impending commencement of the master development plan, MDP, a major refurbishment of the National Gallery’s historic buildings. By 2011, when the MDP commenced, there were 14 staff on fixed-term or special-purpose contracts, which expired in accordance with their terms and conditions of employment on 30 September 2011. Of those, six staff made claims for contracts of indefinite duration - in effect, permanent contracts. After three claims were lost in the Labour Court in late 2012, it was agreed that the National Gallery should concede the other three cases, as they were almost identical. This decision was approved by the Department of Public Expenditure and Reform.

It is important to note that the National Gallery sought approval for 30 permanent attendant staff in 2002, but was only given approval to recruit on a fixed-term or special-purpose basis because of the impending MDP. At that time, it was anticipated that the MDP would commence within 18 months. In writing the contracts of employment for these staff, the National Gallery sought legal advice to ensure, as far as was possible, that they complied with the Protection of Employees (Fixed-Term Work) Act 2003 and did not confer permanent tenure rights on these employees. The MDP eventually commenced in March 2011 and, in accordance with the special-purpose contracts, their term expired in September 2011 and the staff were let go at that time. Six staff appealed their termination and began the process of appeal to the rights commissioner service of the Labour Relations Commission. Rights commissioner decisions were appealed to the Labour Court.

In late 2012, the Labour Court found in favour of the claimants in the first three cases. The gallery's defence failed because the Labour Court concluded that the grounds used in the contracts did not amount to "objective grounds" within the meaning of the Act, because details of the MDP were "unknown and unknowable" at the time when the contracts would otherwise become CIDs. There was no firm approval, contract, funding or commencement date for the MDP, and the gallery also had a permanent need for these staff at that time.

Following the Labour Court decisions, it was decided not to appeal to the High Court and, therefore, the six staff were reinstated in accordance with the Labour Court decisions made in the first three cases. This decision was approved by the Department of Public Expenditure and Reform. The gallery incurred expenditure of approximately €428,000 on the claims brought by the six staff for contracts of indefinite duration. This includes €281,000 for reinstatement costs, being the gross cost of salary arrears up to reinstatement, €132,000 for legal costs and €15,000 for compensation set by the Labour Court. Redundancy costs previously paid to staff were recouped in full. Due to subsequent staff departures, the employees who were taken back are required by the gallery and are productively employed.

In conclusion, the gallery was aware at all times of the consequences of employing these staff on fixed-term contracts. The contract terms were imposed by the Department of Finance in 2002 and the fact that the MDP was inordinately delayed until 2011, which delay invalidated the specific purpose grounds relied upon in the contracts, was totally outside the control of the gallery. The gallery managed the fixed-term special purpose contracts as competently as possible, and even with the benefit of hindsight, could not have done anything differently in order to protect the integrity of the contracts issued. The gallery will continue to ensure that all contracts issued will stand up to scrutiny in accordance with the legislation, but cannot prevent the possibility of a recurrence of what happened in these cases, because of matters outside its control.

Thank you Mr. Rainbird. May we publish your statement?

Mr. Sean Rainbird

Yes.

I remind members that the examination is not about Mr. Rainbird, but about the board and the agreements received from the various Departments, so everybody should bear that in mind when asking questions. I call on Deputy Ross.

Thank you, Chairman, and I thank the witnesses for coming in today. Can the chairperson tell us what is the problem with the accounts for 2011 and 2012? They have not been published for those years because they have not been audited. Is that right?

Dr. Olive Braiden

They have been audited.

I thought the Comptroller and Auditor General said they had not been audited.

Mr. Seamus McCarthy

The audit review is not complete. The audit work has been carried out in the gallery, both for 2011 and 2012. We are still considering a number of accounting issues and we will be coming back to the gallery on them.

So that work has not been completed yet.

Mr. Seamus McCarthy

No.

When will it be completed?

Mr. Seamus McCarthy

I am expecting the files on both accounts to come to me in the next number of weeks. I understand that there is a meeting required between my staff and the gallery, and when the results of that are available, the file will be sent to me for review.

So there are still outstanding issues.

Mr. Seamus McCarthy

Accounting issues, yes. There was a very fundamental change in the format of the accounts, and there are some accounting issues that we must still resolve. The accounts in their current format are substantially improved and the gallery has done much work in that respect, but there are still several items to be teased out.

Is that unusual?

Mr. Seamus McCarthy

To have that extent of a re-formatting of accounts is certainly unusual.

It has happened two years in a row.

Mr. Seamus McCarthy

I suppose 2011 has to be completed before 2012 can be completed.

How many were on the interview panel for the selection of the director?

Dr. Olive Braiden

I think five people were on it. There was an independent chair, the assistant secretary of the Department of Arts, Culture and Gaeltacht, myself as chairperson of the board, and two board members.

Who was the independent chairperson?

Dr. Olive Braiden

I have forgotten her name. She was appointed by the Public Appointments Service.

Who are the other two board members?

Dr. Olive Braiden

Tom McCarthy and James Hanley.

There was an initial process and then the board found that there was nobody suitable. Is that right?

Dr. Olive Braiden

Yes. We had a very long process, which took about a year and a half. It was an international search and I must say that the salary offered was a problem for people coming from abroad. However, we were very happy with two people on our list, and the board approved those. The first candidate changed her mind when she considered the difficulty of moving to Ireland and the salary being paid. We were very happy to move to the second candidate, who absolutely suited what we needed.

That is the current director. Can Dr. Braiden take us through this procedure whereby this €40,000 payment was agreed? How did that come up?

Dr. Olive Braiden

The first thing we thought was that a candidate coming from abroad should not in any way suffer because of having to travel to Ireland. In the case where they were not relocating their family and children to Ireland, we believed it was fair and important that they visit their family as often as they could, possibly every weekend. We wanted to ensure that they did not suffer because of that. If a candidate was in Ireland, they would have been living in Ireland and would be better off. That was our first thought. We wanted to enable the director to travel to visit his family every weekend if possible.

Where does he go?

Dr. Olive Braiden

The UK.

Is it London?

Dr. Olive Braiden

Yes.

How did the board come up with the €40,000 figure?

Dr. Olive Braiden

We came up with a figure of €200 per round trip at 40 trips per year. It is a fixed-term contract of five years.

Two hundred euro per round trip is quite a lot, especially when booking in advance.

Dr. Olive Braiden

I think it is a very fair price for two days on the weekend.

The gallery is only paying for the air trip. Is it paying for anything else?

Dr. Olive Braiden

I presume it includes the air trip, bus fares and transport to and from the airport on both sides. I certainly would not make a round trip to London for €200.

Dr. Braiden might not, but she probably does not fly with Ryanair. I just looked on the website this morning, and booking in advance could certainly be done for a lot less than €100 each way, and sometimes less than half of that.

Dr. Olive Braiden

We considered it fair. We determined that €200 per round trip was fair. It is vouched and we have a process in place for vouching that.

Why did the gallery pay for it up front? He got a cheque for €40,000, is that right?

Dr. Olive Braiden

More or less. We did it for ease of administration, quite frankly. We had already determined that that is what it would cost.

We decided it was better to do it that way and that it would be clear to us when accepting other expenses for other travel concerned with work. We have a claw-back position whereby if the director left before the five years for any reason we would get the remaining money back.

What if he does not use the money for that purpose? Is there a claw-back for that?

Dr. Olive Braiden

If he overspends, he certainly will not get any more. It is a once-off payment.

What happens if he underspends it?

Dr. Olive Braiden

We do not expect that he will.

No, this is a serious question. What happens if he underspends?

Dr. Olive Braiden

The gallery will not seek to recover it.

The gallery will not seek to recover it.

Dr. Olive Braiden

No.

He might only go home once.

Mr. D'Arcy, feel free to answer the questions if you wish.

In other words, it is cash into his hand if he does not spend it on air tickets. The gallery will not seek to recover it.

Dr. Olive Braiden

We expect him to visit his family and I believe it is fair that someone be allowed to do that. Every Deputy in the House visits their families regularly. They are allowed to do that and this is the same.

The point I am trying to make is that I am not disputing the travelling backwards and forwards. I think what the gallery is doing is over-generous and we might come back to that. The point I am trying to make is that if he does not have to give back the money that he does not spend on travel then it is an extra salary to him.

Dr. Olive Braiden

I do not agree.

What is it, then?

Dr. Olive Braiden

We expect and trust that he will travel over and back and we will have vouched expenses.

Regardless, the gallery will not look for the money back.

Dr. Olive Braiden

That is not in our plan at the moment. If, for example, we heard that he never travelled, then we might consider talking with him.

What is the point in having vouched expenses if the vouching has no effect whatsoever, because the money is cash?

Dr. Olive Braiden

Yes, we did consider that, seeing that we had already agreed that we would allow this sum for travel to visit his family.

It is a top-up, in effect.

Dr. Olive Braiden

No, it is funds for visiting the family at the weekend.

He can keep the change.

Dr. Olive Braiden

I do not expect there will be change. We took a good deal of advice on this. This was the simplest way to ensure that a candidate from abroad - we very much welcomed having someone of his calibre - would not be any worse off than a candidate who got the job in Ireland.

How has it been working in practice up to now? This has been going on for a year and a half.

Dr. Olive Braiden

We will be accounting for that at the end of the year. It is working well and we are fortunate to have someone who is willing to make those trips over and back to visit the family and, at the same time, carry out an important job for the people.

I agree with Dr. Braiden about that. I have not doubt he is well-qualified and a very good choice. However, the Committee of Public Accounts is interested in how the arrangement is working. The board has had 18 months to consider it. How is it working? All we know is that over those 18 months, approximately €15,000 of the spend should have been vouched by now whereas the board has €3,700 that we know of.

Dr. Olive Braiden

That was for the first months of 2012. It is important for us to have a system in place to account for it. We have that and it will be accounted for at the end of the year.

Will Mr. Rainbird tell us whether he is basically keeping to the once-a-week amounts? Could he give us a rough idea of whether this system is working for him on its original terms?

Mr. Sean Rainbird

I am happy to confirm to the committee that I am visiting my family regularly, probably more like 45 or 50 times a year rather than 40 times as anticipated or estimated. Sometimes there needs to be last minute changes. Late bookings on flights make the costs higher. At other times I am able to book them a little in advance. There are substantial costs in getting to and from airports. It is roughly working out.

Will Mr. Rainbird be able to return anything to the State if it is under the amount?

Mr. Sean Rainbird

I am sure that I will be abiding by the terms of my agreement with the board.

Is it in the agreement that anything not spent is returned?

Mr. Sean Rainbird

The chair of the gallery has already answered that question, with respect.

Then the answer is that it is not. I take that to mean the money will not be returned if there is an underspend.

Dr. Olive Braiden

No. We will not be paying more if he spends more money. Who knows if the cost of air fares will go up in the years to come? There are still four years of the contract to run and we have no agreement to pay more if the expenses are more.

That is fine. I am afraid from what the witnesses have said that my interpretation is that it is a top-up. I am unsure how much, but there is scope for a top-up. It may or may not happen but if the board is not going to look to get back what is not spent on air fares then it is a top-up.

The amount the board paid over to Mr. Rainbird was €40,000 by cheque. Is that what happened?

Dr. Olive Braiden

Yes.

That was a tax-free payment for relocation. It was under a relocation heading although the Comptroller and Auditor General has already found that not to be the case. The amount was then raised to €87,000 later. Will Dr. Braiden give us the chronology of what unfolded?

Dr. Olive Braiden

We got advice and we decided to pay the tax upfront and to claim back from the Revenue if there was tax to be claimed back. We need not have done that but we took the view it was the cleanest way to do it.

The gallery need not have done that. Is that the case?

Dr. Olive Braiden

No, we need not have paid the tax upfront but the advice was that it was the way to do it and we did so.

When did the gallery pay him the €40,000?

Dr. Olive Braiden

I do not know. I will ask my colleague.

Mr. Gerry D'Arcy

In July last year.

When did the gallery get the tax advice?

Mr. Gerry D'Arcy

We got the tax advice at the same time.

Was it on the same date?

Mr. Gerry D'Arcy

It was in or around the same time. As the employer or payer we were obliged to discharge whatever income tax obligations we had. We took advice in respect of the entire scheme and the expenses we would be allowed to deduct. We grossed up the net payment and paid over to the Revenue the amount due in income tax.

There was an income tax payment. Is that correct?

Mr. Gerry D'Arcy

Yes.

Therefore, according to the Revenue, his income was double that year.

Mr. Gerry D'Arcy

No, not his income.

If there was income tax, then it was on his income.

Mr. Gerry D'Arcy

All we were doing was discharging our obligations. There are many expenses that may or may not be allowable for tax or that may be tax exempt. We were advised that this particular expense was not allowable for tax and that the tax had to be accounted for and on that basis we discharged our responsibilities.

The Revenue has adjudged it to be income.

Mr. Gerry D'Arcy

No.

Mr. D'Arcy said it was income tax.

Mr. Gerry D'Arcy

This is a reimbursement. It is an estimate of the reimbursement of expenses which the director must pay because he has decided he is not in a position to relocate to Ireland. His permanent private residence is in the United Kingdom. On that basis the board decided that it had no wish to discriminate in any way against a person from abroad taking up a position compared to an Irish resident.

I know all that. What category was this under? The gallery grossed it up and gave Mr. Rainbird a cheque for €40,000 and simultaneously went to the Revenue Commissioners, or was it an accountant?

Mr. Gerry D'Arcy

I do not know that it is appropriate for me to mention a particular firm of accountants. It is not a major firm. It is a mid-sized firm.

Can Mr. D’Arcy tell us who they are?

Dr. Olive Braiden

I think that information is privileged.

I do not see why the name of the accountants the National Gallery used should be privileged.

I think Mr. D’Arcy can give the name.

Mr. Gerry D'Arcy

Baker Tilly.

What advice did they give about this payment of €40,000? Did they advise that there was tax due?

Mr. Gerry D'Arcy

They advised us that approximately €3,500 of expenses included in the total figure of €40,000 did not attract income tax but the reimbursement of expenses from the director’s permanent private residence to his place of work in Ireland is not in principle allowable for tax and we cannot reimburse without in effect paying the income tax on that amount.

The Revenue Commissioners judge it as income.

Mr. Gerry D'Arcy

No.

There is income tax payable on it.

Mr. Gerry D'Arcy

It is judged by the Revenue Commissioners as not being allowable as a reimbursement of expenses which were incurred.

I disagree. I would say that the Revenue Commissioners judge it as income and that is why they are levying the tax. If it was not income the National Gallery would not have to pay the tax. If it was a legitimate expense the gallery would not have to pay any tax on it.

Mr. Gerry D'Arcy

That would be so if it was allowable for tax purposes but there are plenty of expenses that are not allowable for tax purposes.

Correct. That is why the gallery is paying the tax on it. This looks to me to be undoubtedly a top-up payment under another guise. Whether that is right or wrong, it is probably better to be up-front about it.

Mr. Gerry D'Arcy

May I make an observation?

Yes, certainly.

Mr. Gerry D'Arcy

In circular 6, 1989, about removal expenses, there is a reference to the particular arrangement that we have come to with the director. It refers to circumstances where the individual in question is not, for whatever reason, able to relocate his family to his place of work and in those circumstances it allows, albeit under certain restrictions, in principle, the reimbursement of expenses incurred for weekly trips in order for the incumbent to return to his family. It is not as if this has been picked out of the air. That particular circular gives scope for it. That is another reason for the board’s view that these expenses are not top-up income and there is provision for them in that circular.

Thank you, Mr. D'Arcy. That is absolutely fine. This money comes from what the board calls its non-Exchequer income is that right?

Dr. Olive Braiden

Yes.

How does the board divide its non-Exchequer and Exchequer income?

Dr. Olive Braiden

It is divided into restricted and non-restricted funds. We receive funds from benefactors that are restricted because they advise us to spend them on buying art or whatever they decide. The unrestricted funds are spent for the benefit of the gallery and the board of governors and guardians have control over those funds.

The board acts all the time on behalf of the Irish people and the taxpayer, whether the funds are restricted or unrestricted.

Dr. Olive Braiden

Yes, except where we have the authority as a board to spend those funds.

What does the board spend unrestricted funds on? Is that the income from the café and the shop?

Dr. Olive Braiden

Some of it perhaps but most of it comes from royalties-----

Bernard Shaw?

Dr. Olive Braiden

Yes.

I am sure Bernard Shaw would not like to think that he is paying for flights from Britain to Ireland.

Dr. Olive Braiden

I think Bernard Shaw would be very happy to pay for the director of the gallery, who is an exceptional person, to return to visit his family.

The board has the same duty of care to each fund.

Dr. Olive Braiden

Yes and they are audited in the same way.

Is it in order for me to ask a few slightly unrelated questions or should I leave them until later?

To what extent are they unrelated? That is my worry.

They will be very short. Could Ms Braiden help me with information about the collection? The board is the owner, guardian and trustee of the collection. Is there pressure from the Department of Arts, Heritage and Gaeltacht Affairs to take ownership of that for the State?

Dr. Olive Braiden

First, as chairperson of the board, I would say the Department does not apply any pressure to take any of our art.

Is there any pressure to take ownership of the assets of any sort at all?

Dr. Olive Braiden

Of course not. We certainly would not agree to any of that.

That is fine. I have two more very brief questions. Is there any question of charging people to go into the gallery? It is in a very small minority of galleries around Europe that do not charge people to see the paintings. Is there any question of that happening?

Dr. Olive Braiden

The board certainly would not agree with that, as it stands now. There is no question of that now. Occasionally in the past when there was a particular very costly exhibition a small sum was charged to view that exhibition. The gallery receives many visitors and it is important that our paintings are available for the people of Ireland to view. That is what our benefactors, who gave us paintings, requested.

Finally, much of the gallery is closed for refurbishment. Is that right?

Dr. Olive Braiden

That is correct.

Is any of the collection going on tour?

Dr. Olive Braiden

I will let the director answer that.

Mr. Sean Rainbird

Very likely the Evans of Eton exhibition that we have just closed will go west to Galway. The Chester Beatty group of 36 paintings that were on show at the Chester Beatty Library in Dublin Castle is going to Limerick for the City of Culture celebrations next year. We have a very lively temporary loan programme through which individual works are sent across the world to well-conceived exhibitions by partner museums. We have a very good exchange of works with other institutions, whether for a whole exhibition going from our collection or individual works going to other exhibitions in other venues.

That is me finished. Will Dr. Braiden ask the board if it would consider please insisting - because this is not exceptional - that if money is given for a specific purpose to one of its employees, it be used for that purpose and if it is not used for that purpose that the gallery would claw back the money? I refer to the €40,000 that it has given. If that is not used for the purpose for which it has been given it should then be reclaimed for the benefit of the gallery. Is that a reasonable thing to ask?

Dr. Olive Braiden

I think at the end of five years that can be considered.

No. I mean current, every year, annually, not at the end of five years.

Dr. Olive Braiden

It runs for the full term.

I know but does the board have an internal audit every year?

Dr. Olive Braiden

We do, yes.

Could the chairperson please ask the board to claw back any money which in this particular case is not used for the purpose for which it was intended?

Dr. Olive Braiden

I will certainly mention the Deputy’s comments to the board at the next board meeting.

Otherwise the money would be a top-up on income.

Dr. Olive Braiden

Yes but it is not that.

I assume in that case the board will get it back if it arises.

I thank the witnesses for attending. I will concentrate on the contracts issue raised in the Comptroller and Auditor General’s report.

I refer to the background information as why 30 people were taken on board in 2002. I ask for a brief outline as to the reason they were taken on.

Dr. Olive Braiden

I was not there at that time but Mr. D'Arcy was there at that time.

Mr. Gerry D'Arcy

I ask the Deputy to repeat the question, please.

I am asking for a very brief outline of why they were taken on board in 2002 and what were their duties.

Mr. Gerry D'Arcy

The new millennium wing opened in 2002 and we required an additional 30 attendant and cleaning services staff to man that wing. At the same time, it was recognised by all parties that what has come to be known as the master development plan - the major refurbishment plan which has just commenced - was imminent. This meant a closure of those two wings with the result that staff were not needed to man those closed wings. The Department of Public Expenditure and Reform decided we could take on the additional staff for the millennium wing on the basis that they could work until such time as the other two wings were closed, at which time we would not need those staff. That is the reason there was a need for a fixed term, specified purpose contract.

Mr. D'Arcy referred to the master development plan and that it was thought in 2002 that it would begin fairly soon but it did not commence until 2011. What was the reason for the delay?

Mr. Gerry D'Arcy

I am afraid I am not in a position to answer that question except to say it was something stated by the board at the time - even before 2002 it was a requirement of the gallery - but for reasons of which I am not aware, it just did not happen. Eventually it came to pass in 2011.

Surely there must be a specific reason.

Mr. Gerry D'Arcy

The reason it did not start was that it did not get approval. It requires approval, funding and a tendering process in advance of any reconstruction.

Was the gallery given any reason the approval was not given?

Mr. Gerry D'Arcy

It was the subject of continued discussions and negotiations at the time with the Department of Finance and the Department of Public Expenditure and Reform.

Over a period of nine years?

Mr. Gerry D'Arcy

Yes.

That is some negotiation.

Mr. Gerry D'Arcy

I am not aware precisely why it never got the go-ahead, except from the point of view of the gallery, it was an important requirement. We are not masters of our own destiny in that respect; we require the approval from the Department of Finance and the Department of Public Expenditure and Reform. We did not get that approval until probably 2010 when it was agreed in principle.

Did that come out of the blue?

Mr. Gerry D'Arcy

No. It came out of continued negotiations between our parent Department, the Department of Public Expenditure and Reform and ourselves and eventually the agreement was that there would be a shared contribution towards the cost of the project because of lack of finances in 2010.

The gallery was having these negotiations over and back with the Department but Mr. D'Arcy cannot tell me specifically why the approval did not happen within those nine years.

Mr. Gerry D'Arcy

That is because I am not aware of precisely why it was not approved.

Was Mr. D'Arcy involved in these meetings?

Mr. Gerry D'Arcy

At the time the director was more involved than I was. Obviously correspondence and communications took place over the period. In 2007, for example, architects for the project were appointed. This is a multi-million euro project. It is a very difficult project because the buildings were first constructed in 1864 and 1903. It is a difficult, complex and expensive project involving a lot of planning and preparation. However, I cannot say precisely why the project was not approved at the time.

I understand that it would take a lot of planning. How much money was spent in the nine years on a project that was not moving anywhere?

Mr. Gerry D'Arcy

No money was spent by the gallery. The Office of Public Works is project-managing the project. The OPW appointed the architects and the design team. The architects were appointed in 2007 and subsequently the other professionals involved in the team. That account was borne by the OPW.

The decision to take on 30 attendants was based on the intention that the project would be approved in 2002. These contracts were designed at that time.

Mr. Gerry D'Arcy

Yes.

What was the period of time contracted?

Mr. Gerry D'Arcy

The contract was defined in terms of the commencement of the master development plan. That was the objective ground and the specific purpose of the contract so that when the master development plan commenced, the contract would automatically expire.

What was the period of time contracted?

Mr. Gerry D'Arcy

Initially the contract period was expressed in terms of 30 June 2005 or the commencement of the master development plan, whichever came first.

Were the contracts then renewed because nothing had commenced?

Mr. Gerry D'Arcy

We extended that contract by reference only to the specific purpose which was the commencement of the master development plan in June 2005.

At that stage was there any correspondence with the relevant Departments to inquire as to when a decision would be made about approval?

Mr. Gerry D'Arcy

There were communications all through the period but, quite frankly, nothing material came about until such time in 2010 when the board decided that the buildings in question were not fit for purpose and would have to be closed. Communications were then commenced and funding was agreed on a shared basis between the three organisations, our parent Department, OPW and the gallery.

Were the other Departments' hands forced?

Mr. Gerry D'Arcy

One would have to ask them that question. I am relating what happened.

These extra staff members are on these contracts.

Mr. Gerry D'Arcy

Yes. They were required because the wings were not closed.

Considering that no one was telling the gallery when the project would be approved, the gallery could not tell the staff how long their contracts would last.

Mr. Gerry D'Arcy

That is correct. It was expressed in terms of the commencement of the project.

For what length of time were those people working in the gallery?

Mr. Gerry D'Arcy

Some people were working for nine years.

One would expect them to presume they had a job for life almost.

Mr. Gerry D'Arcy

The employment legislation for the protection of fixed-term employees was enacted in 2003. The industrial relations machinery was enacted and decisions were made by the Labour Court on the basis of that legislation.

On that basis, the contracts were renewed while awaiting a decision on the master development plan.

Mr. Gerry D'Arcy

Yes.

The staff were not being informed on the status of the project because the gallery was not being informed.

Mr. Gerry D'Arcy

They were being informed as soon as any meaningful information became available about the likely start date of the master development plan. Obviously the staff were kept fully informed but it was a work in progress right through that period.

Did the gallery receive legal advice during this process that when this master development plan commences, the gallery is within its rights to bring these contracts to an end and let the staff go?

Mr. Gerry D'Arcy

Yes. We took legal advice from the very beginning, from the time the initial contracts were issued in 2002. It must be borne in mind that the legislation is relatively new and relatively untested. It is therefore very difficult to be certain.

It is impossible to be certain as to which way decisions might go and what the compelling reasons and justifications might be for a decision by the Labour Court. The court took the view that in 2007, which was the approximate time when these contracts would, without the objective grounds, become contracts of indefinite duration or permanent contracts, there was no immediate prospect or firm commitment on the part of the public sector to commence the project. The objective grounds fell on that basis at that time.

What was the cost of that project?

Mr. Gerry D'Arcy

I can give only an indicative cost of somewhere between €25 and €35 million.

It was announced in 2010 and work is ongoing?

Mr. Gerry D'Arcy

It is a staged project. Stage one was commenced in 2011 and is now completed. Stages two and three will commence shortly.

Is it true, therefore, that between 2002 and 2010, there was no word on when the project would commence?

Mr. Gerry D'Arcy

That is correct.

For the majority of that time there was no financial crisis; in fact, the country was awash with money. By 2010, on the other hand, the crisis had happened and funding was in short supply, yet the money was suddenly forthcoming for this project. That seems unusual.

Dr. Olive Braiden

To clarify, we are paying one third of the costs out of our own resources, as agreed. The project will start again in the very near future.

Mr. Niall Ó Donnchú

It is important to note that the complexion of the master development plan has changed very significantly since 2000. The original plan was for a significantly larger footprint, involving more than the refurbishment of the historic wings. For instance, a significant property purchase was envisaged at one point, with a new building connecting the millennium wing to the historic wings. There was never an infusion of significant capital to arts infrastructure at any point. The prioritisation of capital developments within the arts sector was a policy prioritisation beginning with the millennium wing in 2000, moving through the Collins Barracks development in 2002 and on to the National Gallery development in 2010. Over that period, the complexion of the plan had to change very significantly.

The prioritisation now is to address the fabric of the historic wings, to in-fill between those wings and restore them to their 1860 and 1903 state, respectively. It is a very significant project. Overhanging all of this was significant uncertainty as to when resources could be secured for the development plan. It is a tripartite funding arrangement involving the gallery's own resources and the Exchequer.

Mr. Ó Donnchú is saying the plan changed.

Mr. Niall Ó Donnchú

It evolved very significantly.

When was that change initiated?

Mr. Niall Ó Donnchú

The plan on which we were working began to crystallise in 2007 or thereabouts when Heneghan Peng was brought on board by the Office of Public Works.

Mr. Niall Ó Donnchú

To clarify, the notion that a cultural institution would not be engaged, involved and up to date in regard to a development project of this scale is simply untenable. Of course the director would have been involved and, to varying degrees, the board. The Office of Public Works, as Mr. D'Arcy explained, is the project director on all of this. It was an evolving story in the context of the availability of capital for arts and culture infrastructural development. That situation is still evolving slightly in the context of when the third phase will commence, although it should be very shortly. That is the overhanging context in which the gallery was seeking to work with these contracts.

What is the total contribution to the project from the gallery?

Mr. Niall Ó Donnchú

As Mr. D'Arcy indicated, we are currently finalising contracts, through the OPW, for the second phase of the contract. The costs are subject to commercial considerations at this juncture, but the ballpark figure is €25 to €35 million.

Mr. Sean Rainbird

I came to this project relatively recently. We have heard a little about financing, the reshaping of the finances, the various contributions that were made over the period and the struggle to retain financing for the project. Ultimately, there has been a very a successful negotiation between ourselves in the gallery, our parent Department and the OPW. The project has been examined, reviewed, reshaped and rescoped very frequently and very robustly road tested. The first phase, involving the roof replacement, has concluded. The next phases are really about introducing modern, 21st technologies into 19th century buildings. This is absolutely necessary for the successful running of museum collections and in order to reach international standards. I applaud the various contributions that have been made over many months and years across many branches of government, including our parent Department, and the governors and guardians' contribution from own resources, which is unprecedented, to make this happen in very challenging circumstances.

The further works and developments Mr. Ó Donnchú mentioned - this is, after all, a master development plan - are for the future. However, we already have the shape of how these current phases will flow into the future. The development plan seeks to integrate all of the technologies within four currently very disparate wings of the National Gallery and to improve visitor flows and the various experiences and facilities available to both visitors and staff working in the institution. The ongoing improvements are part of a broader set of refurbishments and redevelopments that will go beyond the current phase of redevelopment. It is a project of enormous complexity taking place at a time of great challenges.

Going back to the staff contracts issue, Mr. D'Arcy indicated that the National Gallery received legal advice to the effect that it would be able to defend the contracts given. The Labour Court found otherwise. Did the same legal team which gave that advice represent the gallery in court?

Mr. Gerry D'Arcy

Yes.

And that legal team lost the case?

Mr. Gerry D'Arcy

I would not put it in those terms. The case was lost on the basis that the master development plan was not in any concrete state of development at the time the contracts would otherwise have been made permanent under the legislation. Time was of the essence. The court concluded at that point in time that the master development plan was not substantially commenced.

The same firm gave the National Gallery legal advice and then defended it in court and lost. Does the gallery still use that firm?

Mr. Gerry D'Arcy

Yes.

Dr. Olive Braiden

However, we are putting all services out to tender.

Is that being done at this point in time?

Dr. Olive Braiden

It is something about which the board has been talking for a very long time. It will be done during my term.

In other words, it was not previously done. Who selected this legal firm?

Dr. Olive Braiden

I understand it was involved in the gallery for a very long time and provided an excellent service in every way other than in respect of this particular item of work, which did not work out.

At a cost €124,000, it is fair to say it did not work out at all.

Dr. Olive Braiden

Yes, the fees were very high.

Absolutely. Have those fees been paid in full?

Mr. Gerry D'Arcy

Yes.

Are there any outstanding legal issues to be dealt with by the courts?

Dr. Olive Braiden

No.

We can conclude, therefore, that the €124,000 represents a complete figure for the costs in this matter.

How many staff are there in the National Gallery?

Mr. Sean Rainbird

It has 95 full-time equivalents, and there are obviously some part-time staff.

Outside of those 30 staff, have there been any other HR issues in the past number of years?

Mr. Gerry D'Arcy

We always have HR issues. It is the nature of any organisation, but this particular issue was obviously a long-running and complex one. The gallery believes it could not have risk-managed this issue any more competently or differently, even with the benefit of hindsight.

Outside of it, are there any other ongoing HR issues, or have there been any, in the past few years?

Mr. Gerry D'Arcy

Yes, there have been.

Have there been many?

Mr. Gerry D'Arcy

I would not say it is in excess of what one would find in any normal working environment.

How would that be defined? There is a staff of 95 and there were 30 staff involved in this issue. Are HR issues arising all the time? Is there an issue within the gallery that causes HR issues to arise frequently?

Mr. Gerry D'Arcy

On the question of whether there are there any particular problems within the National Gallery-----

From a HR perspective.

Mr. Gerry D'Arcy

I would not say they are any more substantial than one would find in any public sector organisation.

Okay. What kind of HR issues are coming up?

Mr. Gerry D'Arcy

Obviously, in the current climate in which funds are being reduced, the gallery is having to look at issues that perhaps it did not look at before. With the assistance of the Department of Public Expenditure and Reform, we have to look at areas and terms and conditions of employment that perhaps might have been tenable in former years but now require examination and restructuring and, obviously, that requires sensitivity, patience and management.

Is the gallery receiving legal advice on those issues?

Mr. Gerry D'Arcy

We are in some instances.

From the same people who gave the legal advice previously?

Mr. Gerry D'Arcy

We have used that particular legal firm for quite some time and continuity was important in the particular issue that is before the committee. We found it useful and beneficial to continue to use it for this issue, but obviously we are not confined to using it and we use other legal advice for other matters.

How much of the €420,935 involved is taxpayers' money?

Mr. Gerry D'Arcy

All of it.

Those same legal people are being used by the gallery all the time?

Mr. Gerry D'Arcy

I refer the Deputy to the director's opening statement, which states that the total cost of this matter was €428,000, of which €281,000 represented reinstatement costs - that is, the retrospective salaries we paid to the staff concerned on their reinstatement - and €132,000 was for legal costs. That represents a period of approximately three years. The Deputy should bear in mind that the gallery is exempt from value added tax and therefore it has to incur the 23% value added tax that is charged by all legal firms. Of course, the amount represents all of the preparation and research on the part of our legal advisers for the various submissions. All of the cases had to be dealt with separately and individually. That is the way it happens both in the Labour Relations Commission and in the Labour Court. There are no class actions, as such. There was quite an amount of work that we required our legal advisers to carry out on this project over the last three years. I am not saying that it is inexpensive; it is expensive. The outcome was not to the benefit of the gallery, although that is something one obviously cannot control, but we acted as competently as we could have. The legal advice we got was as good as was available, in my view.

Did Mr. D'Arcy get the board's view on that?

Mr. Gerry D'Arcy

We did not go to the board specifically in 2002 to ask whether we could take legal advice from this particular firm.

The board was not involved in that decision.

Mr. Gerry D'Arcy

The board was not involved in the decision to select this particular firm for this particular work.

How was that decision arrived at, then, if the board was not involved?

Mr. Gerry D'Arcy

The executive did that.

Who was on the executive?

Mr. Gerry D'Arcy

I suppose one could say that I made the selection.

Mr. Gerry D'Arcy

Yes.

What criteria did you use to pick them?

Mr. Gerry D'Arcy

Their profile, their expertise-----

How transparently was that done?

Mr. Gerry D'Arcy

We are talking about the period from 2000 to 2002. We had used this particular firm for some previous assignments and it came to be used for all our employment law work.

Does Mr. D'Arcy not see an issue with the fact that he, on behalf of the National Gallery, selected this legal firm with no consultation with the board?

Mr. Gerry D'Arcy

It was an executive matter. It would not have been a matter for the board in any event.

We can use the word "executive", but it was Mr. D'Arcy who made the decision - he was the executive.

Mr. Gerry D'Arcy

The decision was made by me to take on this firm to do this particular work.

Who signed off on it?

Mr. Gerry D'Arcy

I did.

Mr. D'Arcy made the decision and he signed off on it.

Mr. Gerry D'Arcy

Yes.

Dr. Olive Braiden

I expect the director at the time was also aware of it.

That is not the impression I am getting.

Mr. Gerry D'Arcy

As head of administration, I have responsibility for trying to manage these issues. The particular firm is well known. It is a high-profile firm and it is well known for the quality of its work.

Not on this job, though.

Mr. Gerry D'Arcy

I would not necessarily agree with the Department in that regard. The case was lost but the circumstances were outside the control of the gallery. In 2002, we expected a massive development plan to commence within 18 months. That did not happen, and then we had to try to manage that situation all the way through from 2002 to 2011.

Was Mr. D'Arcy in sole charge of the process throughout that time?

Mr. Gerry D'Arcy

The Deputy asked whether I was in sole charge, but if he were to ask whether I was leading the particular issues around making sure that we complied with legislation and that we did everything we could in the interests of the gallery and in the interests of ensuring that money was not wasted, the answer to that question would be "Yes."

Is Mr. D'Arcy still in charge of it today?

Mr. Gerry D'Arcy

Pardon?

As we speak now, if another legal issue arose in the National Gallery, has Mr. D'Arcy the power to make a decision in that respect without bringing it to the board?

Mr. Gerry D'Arcy

The board has, in effect, delegated responsibility. This is a management issue, an executive issue; it is not an issue for the board to determine who should represent the gallery's legal services for any particular issue.

We should not get lost in words, in that when Mr. D'Arcy refers to the executive, it is just him. In the case of an executive, one could argue it comprises five or ten people, but in this instance the executive is him.

Mr. Gerry D'Arcy

Obviously, I discussed this particular issue with the director. This would not be done to the exclusion of anyone else; it would be done in communication and co-operation with the director.

Does Mr. D'Arcy not understand my concern, or that of the taxpayers of this country, that €420,000 was spent on a case that was lost, that the firm involved continues to work for the gallery, that a decision was taken by Mr. D'Arcy - the executive - to bring that firm on board and that the decision remains within Mr. D'Arcy's power without going back to the board?

Mr. Sean Rainbird

I wish to comment on that and reinforce the point made by chairperson of the gallery, namely, that we are obviously talking about a previous director. As the chairperson said, I would imagine Mr. Gerry D'Arcy had conversations with senior management at the time and with the director.

We would today. We would approach those questions perhaps somewhat differently after the intervening ten years. The way of dealing with internal audit and internal risks has shifted and governance has changed as traditions and legislation around compliance have also advanced. We approach those questions somewhat differently. I reinforce what Gerry D’Arcy, as head of administration and finance, has said: this is really a management issue. We would expect to report regular progress to the board but the board is not involved in the day-to-day running of the institution. The board has a separate governance function.

I accept the point, but I imagine those figures would have been reported to the board in the sense that matters had not gone too well and a lot of taxpayers’ money had been lost.

Mr. Sean Rainbird

This is a long and complex case involving a number of individuals. Based on the legal advice, the prospects were looking good, and up to rights commissioner level it was decided in favour of the gallery, although the situation changed when the case got to the Labour Court. As the documentation before the committee confirms, when the first three cases were taken they were all handled individually, which added to the costs. If it was a class action it would probably be rather less expensive as it would have involved arguing in one court at one time with one legal representation. In one sense the way in which the legal process has occurred has added to the cost. The longevity of this case over several years has meant that the costs are rather high because of the time and the number of people involved. Deputy Connaughton’s point is absolutely valid. It is very costly to do this but it is part of the gallery’s duty of responsibility in its disbursing of public funds to take as much care as possible. Sometimes that care involves taking outside advice from the specialists - in this case, the lawyers.

I find it remarkable that the decision to take on the legal firm was left to one individual within the National Gallery. A significant amount of money was spent yet nothing has changed. The firm has remained in situ even though the advice given at the start was incorrect. I accept that not all the circumstances were known at that point. The loss was incurred but nothing has changed. The board was not made aware of the situation at the time. I am trying to find out what has changed.

Mr. Seamus McCarthy

I would like to add some context with regard to the respective roles of the board and the executive. The gallery is very unusual in that it has an Accounting Officer and a Vote and it also has a board. In most cases, there is an Accounting Officer and there is not a supervisory board to oversee the day-to-day running of the organisation. It would be typical in a Department where there is a Vote that the Accounting Officer and his or her team take responsibility for day-to-day decisions. That may add a little to what has been said about the responsibility of the head of administration in consultation with the Accounting Officer to make the kinds of spending decision we are talking about.

One thing that has been said is that the gallery is seeking to tender.

Dr. Olive Braiden

The board is interested in looking at all of our outside services to see how long people have contracts in a public body and to put out tenders again. Perhaps the same people will come back, but we consider it fair to have tenders.

Does Dr. Braiden expect that to happen soon?

Dr. Olive Braiden

Yes.

Mr. Gerry D'Arcy

I would not like the impression to go out that this particular legal firm has exclusivity in all of our legal services. It does not. The gallery is under no obligation on any issue, even on the continuation of a particular issue, to deal with this particular firm. Any time an issue arises or a matter requires legal advice we are fully flexible and we have the discretion to have our legal services provided by any legal firm. We have not made a commitment to any particular legal firm for legal services or any range of legal services.

I thank Mr. D’Arcy.

Could I ask Mr. Ó Donnchú about the workings of the gallery board and what is expected in terms of procurement of legal or other services by the Department? Does the gallery have a responsibility to the Department and does the Department oversee it in terms of compliance? Is the Department happy with the compliance, or does Mr. Ó Donnchú have a comment to make on it?

Mr. Niall Ó Donnchú

The overarching comment is that the gallery has to comply with the full rigour of public procurement procedures. It is subject to that without equivocation. We believe it to be good practice to tender for those types of specialist service on a regular basis.

The question is whether the gallery has complied with its requirements.

Mr. Niall Ó Donnchú

The chair has explained to the committee that the board is about to embark on a tender for the outsourcing of those services.

I know it is about to embark on a tender process, but reflecting on recent years and what has been said in the exchange with Deputy Connaughton, what has been the practice over those years? Has the board sought competitive tenders for the provision of services generally to the gallery? Is Mr. Ó Donnchú happy that the gallery followed or is following the procurement rules?

Mr. Niall Ó Donnchú

That is a very broad question. If you are asking me, Chairman, about the legal services-----

Could Mr. Ó Donnchú respond with "Yes" or "No"? Is the gallery operating in line with procurement regulations? Would Mr. Ó Donnchú expect the gallery to have procured services in that way over the years? If the gallery is not following regulations, surely Mr. Ó Donnchú should have a chat with the chair or the director?

Mr. Niall Ó Donnchú

Absolutely. To echo what the Comptroller and Auditor General has just said, the National Gallery is atypical in that it has its own Vote within the Minister’s Vote group. It has its own Accounting Officer and it has a board of governors. None the less, it is subject to the full rigour of public procurement procedures. Yes, we would expect the gallery to adhere to those in full. We would also expect, as a matter of course, that legal and other services would be subject to appropriate tendering processes.

How much public money does the gallery get each year?

Mr. Niall Ó Donnchú

It has been roughly between €8 million and €10 million in recent years. The amount has been decreasing because of the cutbacks in public expenditure.

Is there a member of the Department on the board?

Mr. Niall Ó Donnchú

No.

What arrangements are in place for the board to oversee the expenditure of those millions of euro?

Mr. Niall Ó Donnchú

The Department has liaison meetings on a quarterly basis with the senior management team in the National Gallery. There is also liaison from time to time with the chair of the board, as appropriate. The gallery is subject to the various circulars. We conduct routine trawls of adherence to public procurement from time to time, as we do with all of the national cultural institutions. The gallery responds in that respect.

In terms of the gallery’s response to the trawl, is the Department happy that procurement rules have been followed in the past? Mr. Ó Donnchú said the gallery and other cultural institutions are asked to comment on their procurement of various services. On foot of the meetings and the questions asked, is the Department satisfied that to date the gallery has followed good procurement practice?

Mr. Niall Ó Donnchú

It is clear that the issues that have surfaced in the context of the discussion today-----

Is this the only one?

Mr. Niall Ó Donnchú

I am sorry. I do not understand.

Is this the only issue?

Mr. Niall Ó Donnchú

To my knowledge, yes. On the issues raised by Deputy Connaughton, such as that of removal expenses, we agree with the findings.

No. Deputy Connaughton questioned the gallery about the legal fees that were paid. The simple question I asked is whether, in general, good procurement practice is being followed by the gallery to the satisfaction of the Department.

Mr. Niall Ó Donnchú

On balance, yes.

Clearly, in light of what Deputy Connaughton has asked today, questions have been raised in regard to the regularity with which legal services are procured and the specialisms around those legal services.

Mr. Seamus McCarthy

Again, given the unusual nature of the gallery having a Vote, it is required to follow the requirements of Circular 40/02, one of which is reporting to my office if contracts have been procured without a competitive process. Moreover, it submits the return to us. I believe that in previous years, in our overall review of procurement without a competitive process, we have reported that the gallery had not been procuring certain contracts. According to my notes to hand, legal, internal audit and IT consultancy had not been tendered and may have been reported to us but then there were some other contracts that we have raised with the gallery. Obviously, the chairman has stated it is now moving towards putting those contracts out to tender and I certainly welcome that.

However, the concern really is that this was not the case. Mr. Ó Donnchú now has the answer from the Comptroller and Auditor General and I would have expected the Department to have had oversight, not on every single detail, but to the extent that in general, it was happy with the procurement process or that the gallery had signed up to a code of governance and so on, as would have been expected of it. However, this does not appear to be the case. I am not introducing another issue but I wish to explain my concern to Mr. Ó Donnchú. Is it correct that the Department of Arts, Heritage and Gaeltacht allocated €6 million to the Limerick City of Culture project?

Mr. Niall Ó Donnchú

Yes.

Relative to that €6 million, what will the Department expect from the entity that will spend it? Has the Department put in place the appropriate guidelines and rules with that entity in order that it will follow procurement procedures and best practice in governance? For example, has the Department spoken to that board in order that the regulations are pursued and followed to the letter of the law?

Mr. Niall Ó Donnchú

That announcement was made in the budget in October by the Minister, Deputy Noonan, and yes, we have spoken to Limerick City Council, with which the Department's relationship is in respect of this matter. In turn, it has a relationship with the special-purpose company formed to manage and oversee the city of culture. We would expect full adherence to the full code of public service procurement.

Will that special company report to the Department, to the Comptroller and Auditor General or to the local authority?

Mr. Niall Ó Donnchú

It will report to Limerick city and county councils and will be subject to their audit and oversight procedures.

That is my concern and I am afraid I must raise it with Mr. Ó Donnchú. The central Exchequer allocate the funds of €6 million and Mr. Ó Donnchú's Department is the responsible Department in this particular instance. As a taxpayer or as someone whose job it is to look at public accounts, I would expect that the aforementioned €6 million would be accounted for to that Department, because it should be subject to the oversight of the Comptroller and Auditor General and that Department. If it is looked at by the local government audit team, we do not get a full picture of that expenditure.

Mr. Niall Ó Donnchú

The expenditure of that €6 million by the Department of Arts, Heritage and the Gaeltacht will be subject to full review and oversight by the Comptroller and Auditor General, by our internal audit systems, our financial management systems and so on. Consequently, there will be a cascade of oversight beginning with our Department, our management systems, our internal audit systems, the Comptroller and Auditor General and moving down through the system to the point where it exits out into activities in Limerick in 2014.

And the procurement regulations and so on will follow.

Mr. Niall Ó Donnchú

It will follow.

In asking that question, I am not picking on Limerick and I wish the project well-----

Mr. Niall Ó Donnchú

No, I appreciate that.

----- but there always is an issue at meetings of this committee in respect of local government and audit and central expenditure and audit. I am glad to hear this particular expenditure will be accounted for through the Department.

As for the non-Exchequer funding, if I could address this to Dr. Braiden, what oversight role, if any, does the Department have in this regard?

Dr. Olive Braiden

The Comptroller and Auditor General audits that fund as well.

Is the manner in which the fund is spent also audited by the Comptroller and Auditor General?

Dr. Olive Braiden

Yes, and at present we are giving a large chunk of that, millions, to the new refurbishment of the gallery.

I am just interested in how it is accounted for because it relates to other issues of today with other agencies and Departments. It is interesting to learn that such non-Exchequer funding also is audited by the Comptroller and Auditor General. The committee will be taking up that matter in a different context next week.

As for the earlier question of the €40,000, does Mr. Ó Donnchú have knowledge of people in other institutions being paid in this way with regard to their removal expenses?

Mr. Niall Ó Donnchú

Not to my knowledge. I have responsibility for the national cultural institutions and not to my knowledge. Moreover, we verified this with the national cultural institutions.

The Department has verified it.

Mr. Niall Ó Donnchú

Yes.

In respect of Circular 6/1989, which was mentioned earlier, Mr. Dermot Quigley should outline what is the view of the Department of Public Expenditure and Reform on this payment, top-up or however one wishes to describe it.

Mr. Dermot Quigley

We fully accept the opinion of the Comptroller and Auditor General that the terms of the sanction were exceeded. We have no argument against the opinion of the Comptroller and Auditor General.

Mr. Quigley should explain that. Does the Department agree it should not have been paid?

Mr. Dermot Quigley

Our sanction allowed for the payment to the director of a salary equivalent to point five on the principal officer pay-scale. The only additional items were to be reasonable travelling expenses. There were not to be performance bonuses or anything of that nature. The terms of our sanction, which I believe are referred to in the documentation, made that quite clear.

What then is the Department's view on the €40,000 or the principle of paying it? Is it excessive? In Mr. Quigley's view, is it a top-up?

Mr. Dermot Quigley

For starters, I should make clear it is beyond the sanction that was given. In that sense, the payment of anything over the limits that are in a section is incorrect in our view. Removal expenses normally are paid after the event. The circumstances for which they are paid are laid out quite clearly in Circular 6/1989. The grounds on which the €40,000 are being paid certainly are outside the normal scope of removal expenses.

Is Mr. Quigley of the opinion that it is not something that was envisaged in terms of 6/1989?

Mr. Dermot Quigley

It is not something that was envisaged in terms of 6/1989. Moreover, we specified in the sanction that travel expenses were to be reasonable. Certainly, in the normal way, we would have expected that to cover once-off expenses incurred by a person moving to Ireland.

Is Mr. Quigley saying the arrangement that has been made in this case does not fit into 6/89-----

Mr. Dermot Quigley

Yes.

----- and that the Department of Public Expenditure and Reform's normal interpretation of expenses does not extend to the interpretation put on that by the galley?

Mr. Dermot Quigley

Yes.

Would Mr. Quigley then consider this payment to be a top-up?

Mr. Dermot Quigley

I could not venture an opinion on that because I am not familiar enough with-----

Why not? If it is a removal expense, it is a removal expense-----

Mr. Dermot Quigley

Yes.

-----and one would not be paying income tax on it.

Mr. Dermot Quigley

I am not familiar enough with the laws of taxation to make any comment on the tax aspect of it. That would be a matter for the Revenue Commissioners and the people involved. Certainly, we would not regard the expenditure involved as coming within a normal regime of removal expenses.

Has the Department made its position clear to the gallery on this? Has the Department written to it explaining its determination of removal expenses and what the Department might consider to be a reasonable ceiling on those expenses? Has the Department expressed that opinion in detail in writing to them so as to give them some guideline?

Mr. Dermot Quigley

I understand that the gallery has been asked by the Department of Arts, Heritage and the Gaeltacht for a report on the recommendation by the Comptroller and Auditor General. The report, when it is received, will then be examined by the Department of Arts, Heritage and the Gaeltacht and will be examined by my Department too. We are awaiting that report.

When will that report be available?

Mr. Niall Ó Donnchú

We are awaiting the gallery's response. Clearly, in preparing for today, it deferred it a little bit.

Dr. Olive Braiden, when is it likely?

Dr. Olive Braiden

I would like to say that we did ask for guidance at the time as to what were considered reasonable moving expenses and there was not any guidance. We asked other organisations who employed people who came from abroad how they paid moving expenses and, certainly, there were very different interpretations.

The interpretation of our board was that a candidate coming from abroad should not be worse off than a candidate from Ireland. In that case, a candidate coming from abroad would be a lot worse off in that an Irish candidate's family would be here and he or she could visit at will. In the case of a candidate coming from abroad, they need to return to visit their family and, Chair, I would think that is a reasonable expectation and I think it is fair. If we think of other organs of the State and other Departments who have executives abroad, they certainly-----

Did Dr. Braiden seek advice from the Department of Public Expenditure and Reform?

Dr. Olive Braiden

We sought it from our own Department.

How would Mr. Quigley and Mr. Ó Donnchú expect the board to comply when the Department did not respond with the comprehensive detail that was necessary to define their position? It has been stated here that there was a willingness to try to comply, there was a request for information, there was advice sought in terms of the taxation on that amount and the Department did not set down the guidelines.

Mr. Niall Ó Donnchú

The first this Department was aware of this arrangement in relation to the removal expenses was last July when the draft audit query was made known to us. There is a circular, which has been referred to a number of times here today, governing removal expenses and the National Gallery, as is a statutory agency, a long-standing statutory organisation with officers who are here today, is well aware of the contents of that circular. I have no recollection of being consulted - nor do colleagues - on or looking for guidance in relation to that matter.

Has Mr. Quigley any such recollection?

Mr. Dermot Quigley

I have no recollection or any awareness of any guidance sought by the National Gallery from my Department. I would also add that Circular 6/89 starts off by saying, "Where an established officer or unestablished officer is permanently transferred on duty from one station to another ..., or is permanently transferred on appointment to a higher post ..., removal expenses will be allowed in accordance with the following instructions.", so that the removal expenses government by Circular 6/89 are not applicable to a completely different set of circumstances than are being discussed here. I want to reiterate no request was received by my Department on this particular issue and, as with Mr. Ó Donnchú, the first we knew about it was when it was the subject of material prepared by the Comptroller and Auditor General.

It is strange that it is only now that this question is being addressed by the two Departments. No one challenged Dr. Braiden on her opening remarks, in which she states, "The board sought guidance from [Mr. Ó Donnchú's Department] on the approach to determining, setting and paying these removal expenses and was advised that the board ought itself interpret the wording in the sanction letter." It would appear, if this statement is correct, that advice was asked for and the response from the Department was that the board itself interpret it. When it is now raised as a specific point - it is not that it has nothing to do with Mr. Rainbird but he happens to be here - it is the issue of the Department giving guidelines to boards to ensure their compliance. For the Department to say the board itself should interpret the matter is at least a little odd in view of the fact that Dr. Braiden was attempting to get advice from Revenue, from, I presume, some accountancy firm and from the Department on the payment of this removal expense. Is it any wonder what we are reading in the newspapers today and in the special reports from the HSE, if the Department and DPER do not engage with these agencies to set down the thinking from the Department to which they are responsible?

I doubt if we will resolve it because there seems to be something of a dash for cover here. Dr. Braiden has one position. I understand that Mr. Quigley's Department was not consulted and Mr. Ó Donnchú states his Department was not consulted. I would ask the Departments, between themselves, to clarify it because guidance is needed on such issues. People ask for guidance from Revenue. They ask for guidance from the Department to which they report. It is a nonsense to come here this morning to state that this was not clarified for the gallery. I would merely ask that the Departments would clarify these matters for every other board and agency. I would ask Mr. Quigley for a copy of the advice that his Department gave on the interpretation of the removal, if it was in writing.

Mr. Dermot Quigley

Just to make it clear, we were not asked for advice so we did not give any advice.

Was anyone in either Department asked for advice? Maybe the two officials present were not.

Mr. Dermot Quigley

No.

Mr. Dermot Quigley

No.

Would Mr. Ó Donnchú agree with that?

I do. Nor am I aware of anybody in our Department being asked for specific advice on the interpretation of the removal expenses component of the sanction.

Could the chairperson of the National Gallery tell us who she contacted?

Dr. Olive Braiden

I would need to look again, perhaps, at the paperwork in connection with this. This appointment-----

Is there a paper chain? Is it in writing?

Dr. Olive Braiden

-----went on for a year and a half. We had to get agreement on many issues on this appointment and we were going over and back all the time, and a lot of it was done on the phone. We were very happy with the sanction letter. We considered that we complied exactly with the sanction letter. We discussed it. Mr. Ó Donnchú was on the interview panel.

There is a difficulty when bringing in somebody from abroad for a position on a short contract of five years.

We believed it was very important to get a candidate with international experience for the National Gallery of Ireland. We were very pleased to have found somebody but, of course, we had to see that that person was not worse off than an Irish person would be.

I am not taking issue with that or with Mr. Rainbird. My point concerns the process of selection and the authority given to pay and so on. To facilitate its work, the Committee of Public Accounts would like to see the letter of sanction and some of the associated correspondence so it can understand exactly the extent to which the gallery has to go to receive clarification or sanction.

Will Mr. Quigley state whether there is a figure in the minds of officials in the Department as to what should be paid or what maximum should be paid regarding the general removal arrangements of a body or agency making payments?

Mr. Peter Brazel

Payments of removal expenses are not covered by Circular 6/1989. They are dealt with on a very individual and very exceptional basis. Each is dealt with on its merits. Therefore, there is no standard procedure. Obviously, if somebody had to come from Canada, there would be one set of circumstances, and if somebody had to come from Germany or the United Kingdom, there would be a different set of circumstances. However, in terms of any particular situation, advice can be given based on the case's merits or demerits. As my colleague said, other than the sanction that was issued, we have no record of any advice or guidelines having been sought, or anything of that nature.

If there is a paper trail, we should see it. There is an extraordinary conflict of evidence. It is really very stark. Mr. Ó Donnchú and Mr. Quigley state nobody in the Department knew anything about the matter, that there is absolutely no question of any communication on this issue and that there was no sanction. Is that not correct? The chairman of the National Gallery, said there was plenty of evidence and consultation, and that the Department gave the go-ahead and knew about it. That is pretty easy to sort out, I would have thought, because someone is badly mistaken. This is a bit of a shambles and the payment should never have been made, irrespective of whether it was understood to have been sanctioned or not. It is a top-up and there is absolutely no doubt whatsoever about that. The idea that payments of this nature should be given is utterly wrong because it is in breach of the guidelines, be it intentional or not. Paying the €40,000 up-front is a completely and utterly wrong way of doing these things if it is right to do so at all. It should have been done on the basis of bills coming in and being paid, and not on the basis of giving €40,000 and saying the change could be kept if not spent. The latter is an extraordinary, extravagant and loose way of dealing with public money. I cannot believe that anybody in the Department would have formally agreed to that. Would Mr. Ó Donnchú and Mr. Quigley have agreed to the payment if they had known about it?

Mr. Niall Ó Donnchú

No.

Mr. Dermot Quigley

No.

I thank the witnesses.

Dr. Olive Braiden

Section 21 of Circular 6/1989 alludes to inexact coverage. It states:

An officer who is unable to find suitable unfurnished accommodation for the family at the new station may be allowed travelling expenses for one return journey once a week, to visit family members or dependants normally resident with the officer, at the old station, or the place to which the family has been moved (within the cost of travel between the new station and the old), for so long as [the] allowance is payable ...

What section is that?

Dr. Olive Braiden

Section 21.

Mr. Gerry D'Arcy

Section 21 of Circular 6/1989.

Dr. Olive Braiden

We went to a lot of trouble to try to find a solution to this. We did ask for advice from many quarters and from the Department. The board determined that it was fair and reasonable to allow the director to travel on a weekly basis to visit his family. We all know that other organs of the State do the same.

The circular states, "provided the officer satisfies the Department concerned". An issue arises here for the Department. I would like to know the details because, without reading this, it was being made clear that Circular 6/1989 did not apply in this case. Now that one reads it, one realises further clarification for this committee is absolutely necessary. I ask, on behalf of the members, that we have the paper trail and a report from both the Department of Arts, Heritage and the Gaeltacht and the Department of Public Expenditure and Reform on Circular 6/1989. We want that response as soon as possible.

We want the paper trail on both sides and any correspondence between the two. Would that be okay?

Yes. This goes to the heart of the other problems being debated today. May we have a commitment from Mr. Ó Donnchú that his Department will consult the Department of Public Expenditure and Reform and the gallery to clarify, in respect of the circular, the action taken on the matter by the gallery with his Department? He should provide us with the appropriate paper trail so we can understand exactly how this occurred and what action will be taken.

Mr. Niall Ó Donnchú

You may.

We will not deal with the question on whether the committee agrees to dispose of Chapter 15, Vote 34, of the 2012 annual report and appropriation accounts of the Comptroller and Auditor General until we get the full report and paper trail from the Departments and the gallery. It remains open so we can return to it. I thank the witnesses for attending, particularly Mr. Rainbird. He had to sit through the questions but he has not been called into question in any way. It is a matter of procedure and interpretation by the Departments. I wish Mr. Rainbird well in his work in the gallery. We look forward to receiving the desired information.

The witnesses withdrew.
The committee adjourned at 12.50 p.m. until 3 p.m. on Wednesday, 27 November 2013.
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