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Thursday, 29 Jan 2015

Business of Committee

Are the minutes of the meeting of 22 January agreed to? Agreed.

We will now deal with correspondence. No. 3A.1 is correspondence, dated 21 January 2015, from the Department of Finance. It is a follow-up to our meeting on 11 December 2014. The correspondence is to be noted and published.

No. 3B.1 is correspondence, dated 16 January 2015, from the HSE regarding the upgrade of staff in HSE South East. The correspondence is to be noted and published.

No. 3B.2 is correspondence, dated 17 January 2015, from Mr. Ken Shortall regarding HSE home care packages. The correspondence is to be noted and forwarded to the HSE for a note on the matters raised.

No. 3B.3 is correspondence, dated 18 January 2015, from Mr. Rodney Gillen of Fleet Marine.

I met Mr. Gillen last week and he has a point. We had representatives of the Department of Agriculture, Food and the Marine here and they talked about the current leases. Mr. Gillen said there were many vacant properties in Howth and that the Department was doing nothing about them because there was no incentive to lease them. He has been seeking to lease one of them but has been unable to do so for unspecified reasons. Much of the business is going to Kilkeel, County Down. I do not suggest we immediately accept his invitation to all pile out to Howth in a bus to see what is going on, for which I suspect there would not be much of an appetite. However, perhaps we might write to the Department to ask which properties are vacant, what is happening, why they are vacant and what approach is being made in order to receive an update and a full account of the issue. Having met Mr. Gillen and heard what he had to say, he is talking a lot of sense.

There are many vacant properties and much unused infrastructure in harbours and fishery ports around the country. Everybody involved in fisheries knows that many fish factories and buildings that were used in the fisheries industry have become vacant. What is the point of the exercise? What is Mr. Gillen asking? I agree with him, but it is an obvious issue that does not affect Howth only.

Regarding leases, representatives of the Department came here and went through properties around the country. They had found a long list of issues with these properties that would not arise in the private sector. There are issues regarding properties that are leased. For example, in the case of John Shine, we were told the State was taking legal action against him. This legal action happened only a number of months after the meeting of the committee and Mr. Shine has a case. It is about property, leases and the management of buildings. In this case, the person was interested in a property which has not materialised, although it is vacant. We have to produce a report on the hearing we had with the Department, which included some of the worst cases. In the light of the hearing, this man has a point. I differ from Deputy Shane Ross. We should go and see the place because it would tell us a lot about what is happening.

I would be happy to go and see it if somebody would come with me.

I am interested in taking up the invitation, as the visit would be informative in the context of the hearing we had.

I, too, would like to go. Would it not be better to try to get an inventory showing exactly what the Department owns around the country on the State books in order that we would know what we were dealing with?

We can do that first.

If we find there is a large number, any meeting we might have in Howth would be far more relevant.

We should write to the Department.

Is it agreed to take up the invitation after we compile the information we need? Agreed.

I, too, would be interested in seeing the facilities in Howth. Have we written to the Department asking it to respond to the serious allegations that any repair work would be undertaken in Kilkeel, County Down? Perhaps in advance we might request a response.

We can ask for one.

No. 3B.4 is correspondence, dated 21 January 2015, from Mr. Seán Ó Foghlú, Secretary General of the Department of Education and Skills, regarding the transfer of properties under the 2002 indemnity agreement. The correspondence is to be noted.

I understood the indemnification figure agreed to in 2002 when the redress issues arose and the legislation was introduced was well over €100 million. The figure for the 64 properties here worked out at €42 million. There are still 17 properties to be determined, but the figure is unlikely to reach another €42 million. Therefore, the total will be well short of the indemnification figure agreed to by the State with the Conference of Religious of Ireland, CORI, which was negotiating on behalf of the religious orders. There was a very considerable loss to the State on a matter which was the subject of agreement.

There was also a cash commitment.

There was, although I am not sure to what extent it was delivered on, but I do not believe it was.

Mr. Seamus McCarthy

I think it was.

Could we seek further clarification? There is no approximate value for the 17 properties mentioned, for which there is full title but that have not been properly transferred to the State. The properties that were transferred to the State were transferred with a valuation at the high end of the market which they do not reflect now. It is unclear how the valuations were made. There is no valuation for the outstanding 17 properties for which there is no clear title or that are otherwise impaired in some way and have not been transferred to the State.

The loss to the State is considerable. We must also remember that it is 12 years since the deal was agreed, which means that interest and other issues arise.

Mr. Seamus McCarthy

It appeared that it would be timely to produce a report on the residential institutions redress scheme. Most of the claims to the redress board have been completed and I believe the board expected to finalise them, either at the back end of 2014 or the beginning of 2015. I have commenced a piece of work to bring a report to the committee which would wrap-up on all of the issues the Deputy has mentioned. I anticipate having something in the annual report in September.

Are there still substantial outstanding matters or is Mr. McCarthy not yet in a position to give a response?

Mr. Seamus McCarthy

I would prefer not to do so. Obviously, the main outstanding matter is the properties. On the issue the Deputy mentioned about the point in time at which the valuation was taken to count towards the commitment, normally, if a legally binding commitment to acquire a piece of property is entered into, the valuation is taken at the date of the legally binding commitment. It is certainly an issue we will seek to examine and report on.

No. 3B.5 is correspondence on the upgrade of HSE staff in the south east. The correspondence is to be noted and published.

No. 3B.6 is correspondence, dated 22 January 2015, from Mr. Noel Waters, Secretary General, Department of Justice and Equality, regarding St. Paul's Medical Aid Society. The correspondence is to be noted and a copy forwarded to Mr. Michael Keane who raised the issue.

No. 3B.7 is correspondence, dated 22 January 2015, from the Office of the Commissioner for An Garda Síochána regarding policing at horse racing events, St. Paul's Medical Aid Society and the cost of the Ian Bailey investigation. The correspondence is to be noted and published. Are the matters arising addressed comprehensively in the correspondence?

Clerk to the Committee

On the cost of the investigation involving Mr. Bailey, the letter indicates that An Garda Síochána does not maintain costs for individual cases and cannot, therefore, provide a cost for the investigation. The matter arising in respect of St. Paul's Medical Aid Society is before the Garda Síochána Ombudsman Commission and the fraud squad. An internal audit is taking place of policing at horse racing events.

On the cost of the investigation into Mr. Bailey, does this refer to the Garda investigation only or is it also part of what the Chief State Solicitor's office was doing?

Mr. Seamus McCarthy

The question referred to the Garda investigation. The Garda correspondence states its recording systems do not cost individual investigations and that it is not, therefore, in a position to provide the information requested.

Is that acceptable in such large cases?

Mr. Seamus McCarthy

In a way, it is probably difficult to know what will become a large investigation until one is into it. Certainly, it would be difficult for the Garda to have a cost system that would record all of the resources engaged or used in the course of an individual investigation. It is certainly something the committee could discuss with the Garda Commissioner when she next appears before it.

We should highlight that in a case such as the Ian Bailey investigation which is complex and has extended over a number of years some indicative costings should be available for everything that has happened. It is important in managing finances to have a graph or an information chart showing how much an investigation has cost. It is not especially difficult to do this and companies will do it for large clients. It should be done in the case in question. Perhaps the committee might reflect that view to the Garda Commissioner and inform her that we will discuss the issue with her when she next comes before us.

No. 3C is correspondence providing documentation related to today’s meeting. Nos. 3C.1 to 3C.6, inclusive, are the opening statements and briefing notes from the Department, the National Library of Ireland and the National Gallery of Ireland, all of which are to be noted and published.

No. 4 is reports, statements and accounts received since the meeting of 22 January. The financial statements from the City of Dublin Vocational Education Committee are accompanied by a lengthy note which I ask Mr. McCarthy to explain.

Mr. Seamus McCarthy

What I was drawing attention to in the audit opinion was the disclosure by the City of Dublin Education and Training Board, CDETB, as it is now known, that there had been an overpayment totalling about €4 million in student grants, including maintenance grants. There are a couple of elements making up this overpayment. Approximately €1.9 million was paid in maintenance grants to students already in receipt of the back to education allowance. Where a student receives the back to education allowance, he or she is not entitled to receive grant payments. In addition, €653,000 was paid in fee grants to postgraduate students to which they were not entitled, while €1.2 million was paid in fees and maintenance grants to students who did not have citizenship eligibility. There was a figure of €310,000 identified which was paid in respect of students who were initially eligible, but the money was an overpayment because they were not attending their course or withdrew from it.

Given the degree of scrutiny to which applicants are subject to obtain a grant from Student Universal Support Ireland, SUSI, and the hassle involved in terms of bureaucracy, it is staggering that this has occurred. It shows a complete lack of proper administration procedures.

Where do oversight and audit start and finish in City of Dublin VEC? What steps need to be taken in any regular audit or accounting of what a VEC does and where it dispenses money? Does it deal with these matters internally and does this subsequently work its way up to the Department of Education and Skills? How does the system work and how should it work?

Mr. Seamus McCarthy

Is the Deputy referring to payments to students?

Yes. How did this issue get so badly out of control?

Mr. Seamus McCarthy

To put it in context, the figure works out at approximately 2.6% of the total amount the VEC paid out. Obviously, it is a complex system of payment. The controls are exclusively within Student Universal Support Ireland and the City of Dublin Education and Training Board and subject to audit by us. The CDETB would also have its own internal audit unit which would check these matters. The payment of €1.9 million to individuals in receipt of the back to education allowance would have come to light when the CDETB received a set of data from the Department of Social Protection which threw up this anomaly when it was matched with its own data set.

That was after the fact.

Mr. Seamus McCarthy


The education and training board had its own internal auditors who waited for the Department of Social Protection to provide a data set. How did the disbursement of this money go so badly wrong when clear rules apply to students who are in receipt of the back to education allowance in receiving a maintenance grant?

Mr. Seamus McCarthy

Somebody who submitted an application may have overlooked to tell the VEC that he or she was already in receipt of the back to education allowance.

Overlooked is a-----

Mr. Seamus McCarthy

I have to be careful in the case of individuals.

We all deal with people who receive payments from the Department of Social Protection, including some who are liberal with the truth when it comes to payments. That is fine because we usually sort out these things with the Department and the individuals in question. However, the rate of overpayment is high.

Mr. Seamus McCarthy

A difficulty also arose because there was a change of policy in this area. Some people who were in receipt of the back to education allowance and already in receipt of grants and who were, for instance, entering their second or third year of a course would have been entitled to retain the allowance and receive grant assistance. This changed with effect, I believe, from the 2012-13 year of account.

One of the issues when the SUSI system was put in place was the potential for it to get that information from the Department of Social Protection in advance of making the awards, but it did not have that system in place. It is in place now. It is unlikely that particular aspect of it would have been repeated.

I should say I have a special report coming out - it is due to be finished this week - in relation to the development of SUSI and the bedding down of it. That will be coming before the committee in due course.

It was €4 million altogether.

Mr. Seamus McCarthy

Some €4 million in total.

What happens now with regard to the moneys that were given out erroneously? In some cases incorrect information was supplied. What are the consequences?

Mr. Seamus McCarthy

I think discussions are still ongoing between the CDETB and the Department in relation to whether or not moneys will have to be recovered from students who were overpaid or in respect of whom overpayments were made. In relation to the payments where students withdrew, I think they are seeking to recover that money.

In the normal course of what I do every day, I deal with many people on issues with the Department of Social Protection. It is par for the course that somebody who is overpaid will be asked to pay the money back. One would expect that to be the case in this situation also.

Mr. Seamus McCarthy

I would expect that in any situation where there is a payment made to which somebody is not entitled, the public body would seek to recover it.

We are just discussing the City of Dublin Educational and Training Board. However, do we know if that practice is widespread with others? Has that been looked at?

Mr. Seamus McCarthy

The point of SUSI was that it centralised the administration of all student grants. I think one of the advantages, perhaps, of SUSI was that by bringing the administration together, it created a database that could be more easily compared with the Department of Social Protection database. This may have happened in the past and the bringing into existence of SUSI may have created a capacity to control it better. That is a possibility, but because we do not have information from previous years we are not going to know that.

So it is probably an established practice.

We are dealing with the first operational year of SUSI, 2012 to 2013. We have nothing to compare before. There were huge operational problems with SUSI. There were major delays. Do we have any indication that they have been ironed out and that what occurred in 2012-13 did not occur in 2013-14?

Mr. Seamus McCarthy

The audit for 2013-14 covers an 18-month period of account after the establishment of the ETB. The audit for that will only take place this year. That will be an opportunity for us to test whether steps taken and controls put in place are working better in the later accounting period, for 2013-14.

Were these discrepancies discovered by SUSI or by the Office of the Comptroller and Auditor General when it was analysing the accounts?

Mr. Seamus McCarthy

I cannot recall offhand, but I think they were mostly identified by SUSI itself.

We will ask for a note from the Department and from the ETB on this matter and bring it to the attention of members when it comes in.

The second issue relates to the Law Reform Commission and the expenditure of €531,000 on rent and associated costs relating to unoccupied offices. Some €103,000 of this expenditure relates to 2013. We will ask the OPW for information on that.

Mr. Seamus McCarthy

It is the same type of problem. I should say in relation to that matter that the Law Reform Commission subsequently entered into a sublease with ReBo, the Credit Union Restructuring Board and that will cover the costs. That problem has been dealt with by the sublease.

Is there an explanation for that?

For what?

The non-effective expenditure of €500,000.

It is an unoccupied building.

Was any reason given?

Mr. Seamus McCarthy

It was partial occupation. It was underutilisation of a building. I cannot remember offhand why - there may have been a retrenchment of numbers that gave rise to the excess space.

There is a letter dated 7 March 2013 that relates to this. We will circulate it to members again. We will note those accounts and take issue with the different bodies on the queries raised.

On the work programme, we are setting a date for the hearing with the SIU. That is in train from the last meeting.

Next week's meeting relates to Vote 25, the Department of the Environment, Community and Local Government, regarding water services. Arising from previous meetings we should ask for all the information relating to the set-up costs of Irish Water because that was paid for by the Department. It is an issue that Mr. Robert Watt from the Department of Public Expenditure and Reform noted as this amount from the Department. We can take that up next week.

Representatives from Bord na gCon appeared before the committee in December. We asked for some additional information. Have we received anything?

Clerk to the Committee

We have not yet received it, but I was in contact with the CEO of Bord na gCon last week. She explained that her chief financial officer was not available for a lot of December, but she is giving it priority now. It should be in with us in the next week.

When representatives from Bord na gCon appeared before the committee, they had proposals to try to deal with the debt it had incurred. Some concern was expressed particularly over the sale of the Harold's Cross stadium. Perhaps we might get an update as to how it intends to deal with that outstanding debt.

We should send it a letter reminding it of the issues outstanding.

Are we happy with the work programme? Are we agreed on next week's meeting? Agreed.

Is there any other business? There is no other business. We will ask the witnesses to take their seats.

I have one more question. Where do we stand on the court case?

Which one?

Where do we stand on the court case being taken by Angela Kerins?

I ask the clerk to respond.

Clerk to the Committee

I will have to correspond with the Deputy. My understanding is that Ms Kerins's solicitors had sought voluntary disclosure of a certain amount of documents. That has now been dealt with by the law team for the respondents. It will be going back to the court now, but I will get actual dates and come back to the Deputy.

It seems to have disappeared into the ether. We are very relaxed about it, but it would be useful to know exactly.

We will get an up-to-date note.

Clerk to the Committee

I will get a note and inform the members.