COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 26 Nov 2015

Bord na gCon Financial Statements 2014

Chairman

We are dealing with the 2014 Financial Statements of Bord na gCon. I welcome the witnesses.

Before we begin, I remind members and witnesses and those in the Visitors Gallery to turn off their mobile phones because they interfere with the sound quality and transmission of the meeting.

I advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed to cease giving evidence in relation to a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They 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 nor 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.

Members are reminded 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 Mr. Phil Meaney, chairman, and Ms Geraldine Larkin, chief executive officer, of Bord na gCon. I ask Ms Larkin to introduce her officials.

Mr. Phil Meaney (Chairman, Bord na gCon) and Ms Geraldine Larkin (Chief Executive Officer, Bord na gCon) called and examined.

Ms Geraldine Larkin

I am joined by Mr. Michael Murnane, chief financial officer, Mr. Colin Walsh, director of commercial operations, and Joe Lewins, head of Tote, of the Irish Greyhound Board.

Chairman

We are also joined by officials from the Department of Agriculture, Food and the Marine, Mr. Brendan Gleeson and Mr. Gerry Greally.

I invite Mr. McCarthy to make his opening statement.

Mr. Seamus McCarthy

Bord na gCon was established to provide a statutory basis for the control, regulation and development of the greyhound industry in Ireland. It operates racing activities through 11 subsidiary companies, and licenses greyhound racing at other, privately owned tracks.

Bord na gCon received Oireachtas grants totalling €10.8 million in 2014. Income arising from other sources includes proceeds from the operation of totaliser betting, gate receipts at tracks, bookmaker fees, and contributions from dog owners and sponsors towards racing prize money. Its expenditure includes amounts paid out in respect of totaliser betting wins, racing prize money and Bord na gCon’s administration and running costs.

The downturn in the economy has had a significant impact on Bord na gCon’s operations, and on its bottom line. The board incurred a loss of €1 million in 2014 and has recorded losses in four out of the last five years. As a result, the accumulated surplus of €5.1 million carried in at the beginning of 2010 has been wiped out, and Bord na gCon had an accumulated deficit of €0.4 million at the end of 2014.

I have previously reported on the acquisition of land and development of the racetrack and corporate headquarters at Greenpark in Limerick, which was completed in October 2010. Related to that development, and investment in other tracks, Bord na gCon has been carrying a high level of borrowing. The 2014 financial statements disclose bank borrowings at year end of €22.7 million, which is little changed year on year.

The 2014 financial statements were certified on 31 August 2015 and received an unqualified opinion. However, the audit report drew attention to the deficit, and to note 25, in which the board outlines the basis on which it considers that it is appropriate to prepare the accounts on a going concern basis.

Disposal of surplus property is a key element in Bord na gCon’s plans to improve its financial position and the level of State funding was anticipated to increase substantially in 2015. In addition, the audit report draws attention to non-compliance with public procurement rules, which has been referred to in Bord na gCon’s statement on internal financial control. I should point out the incidence of non-competitive procurement has declined and we will continue to keep that matter under review.

Chairman

I thank Mr. McCarthy and invite Mr. Meaney to make his opening statement.

Mr. Phil Meaney

I thank the Chairman and members of the committee for inviting us here today. Since we last met this committee, much of the focus of the Irish Greyhound Board, IGB, has been on the implementation of the Indecon report. The progress on that project has been detailed in the briefing document submitted last week. Indecon critiqued serious structural issues within the industry and raised questions about the validity of strategic decisions taken at the beginning of the recession. These conclusions were further elaborated in the review by the Comptroller and Auditor General of the Limerick project in particular. It is important to state that Indecon also felt strongly that if the appropriate actions were taken, as laid out in its review, the industry then would have a viable future.

Realising that future will be challenging. The enormous impact of the recession on discretionary consumer spending is obvious. Members of the committee, more than most, are aware of the effects of reductions in income on behaviour and on the spending choices people have been obliged to make. The notion that the greyhound industry could sail unaffected through those waters simply is not tenable. The recession has both caused attendances to plummet and led to many trainers and owners exiting the industry. The period also saw very significant reductions in the Horse and Greyhound Fund, which ran at more than 30% at one point. The capacity of the IGB even to sustain levels of incentive and prize money simply did not exist, partly because of the business hit but also because of the drain on our resources to pay down significant legacy debt. That is the reality and there is no sugar-coating it.

We should not discount how the cumulative consequences of deep cost-cutting within the organisation has affected investment in our facilities and the marketing of our product. The board in 2014 took significant actions to step up commercial performance through a new strategy and more appropriate levels of funding. These will not make an immediate impact as there will be a time lag, but the benefits of the new strategy are beginning to show clearly for 2015. Stadium branding and all marketing materials have been developed and updated. The Tote brand has been updated to fit with the design of the stadium branding. There is a strong digital marketing dimension to all our commercial work. All stadia now have their own web presence, which is linked to www.gogreyhoundracing.ie. The IGB has taken over all the food and beverage operations within its stadia. These operations are now fully integrated in terms of planning and consistency of business objectives. Food and beverage is now a key driver of future attendance and income growth. The profits generated through the new food and beverage arrangements will be retained within the industry. Significant progress has been made on another major issue, namely, the pension deficit, the details of which are to go for member consultation early in the new year. There also has been much work done on the development of new income streams, based largely on significant investment in technological infrastructure, which was hopelessly outdated in terms of market requirements. There are some positives in terms of outturns for the year and the general economic canvass on which this industry operates. A lot has been happening at board level, the benefits of which may not be immediately apparent but which will have significant impact in the medium and long term.

Chairman

I thank Mr. Meaney and invite Ms Larkin to make her opening statement.

Ms Geraldine Larkin

I thank the Chairman and members of the committee. At our presentation 12 months ago, I stated that if this industry was to survive and prosper, it would require tough decisions, ongoing assessment of the business model, the development of new income streams and an openness to new approaches right across the sector. During the past year, the Irish Greyhound Board has not shied away from any hard decision, including the decision to sell the Harold's Cross site, the calibration of racing and the development and introduction of key performance indicators, KPIs, for all tracks. Commercially, the Irish Greyhound Board has introduced a new digital and marketing strategy. As already mentioned, we have taken over our food and beverage operations and entered into commercially important drinks pouring rights arrangements. We have established appropriate technology platforms to generate new income streams and have signed contracts with some of the most iconic global wagering names. Increased marketing spend has enabled investment in marketing to the tour operator and incentive markets. We have increased our presence at a number of United Kingdom and European trade fairs and all this activity should yield dividends, based on the booking cycles of these companies, from next year onwards.

Despite these measures, the results for 2014 reinforce the fact that improvement following years of underinvestment in the commercial infrastructure of the Irish Greyhound Board will take time to deliver. All the initiatives are important and overdue and will position the Irish Greyhound Board to maximise opportunities arising from improvements in the macroeconomy. Critical actions must be taken to regenerate the industry, key among these being the need to increase of the number of owners, breeders and trainers involved in the sport. This group must be increased and renewed as otherwise, the industry will continue to contract. We are working with all stakeholders to develop ways to incentivise ownership and in that respect, the additional allocation in the budget is most welcome. We have concluded a full consultation with industry stakeholders and the challenge is to ensure the maximum return on investment. The additional €1.2 million announced in the budget for the Horse and Greyhound Fund is going to prize money and additional industry supports at grassroots level.

At last year’s meeting, the issue of regulation and integrity was brought up. Regulation always has been a fraught area for all sports governing bodies and for greyhound industries worldwide. It must be stated that only a very small number of those involved in the greyhound industry are non-compliant. This being the case, the board has championed and introduced the use of new statutory instruments to strengthen our regulatory control. Those who breach the regulations now know they will be faced with publication of adverse findings from test results of their greyhounds, which, in turn, will be banned from racing. This is a major step forward and is but one to be followed. The Irish Greyhound Board supports mandatory penalties for a range of offences but this will require amending primary legislation. I realise I am not saying anything new in stating the past few years have been very difficult for all those involved in the greyhound industry. There is a serious attempt to put the industry on a sound footing within the resources available to us and to create an industry model that is fit for purpose and is sustainable.

Chairman

I thank Ms Larkin. Can we publish both statements please?

Ms Geraldine Larkin

Yes.

Deputy Sean Fleming

I welcome Mr. Meaney, Ms Larkin and their colleagues before the committee today. I wish to take up one comment made by Ms Larkin in her opening statement on which she might provide members with a little information. I believe I heard two years ago the news the Irish Greyhound Board was signing contracts "with some of the most iconic global wagering names" to increase revenue. How much revenue will that source produce in 2015?

Ms Geraldine Larkin

The Irish Greyhound Board has established new income streams on three levels. We have new markets in America, which are co-mingling our betting into the Irish Tote market. In addition, there are markets operating in Europe, together with a trial at present with major bookmakers through the use of television product. To set that out first, we have three different avenues for income streams. In May 2015, we commenced live betting from America with five different companies and on current predictions, this will achieve an estimated turnover to the end of 2015 of €600,000.

Deputy Sean Fleming

I thank Ms Larkin. That is good to hear.

Ms Geraldine Larkin

That is the first element of it. Obviously, the retention for the IGB is somewhat less. In addition to that, we have just completed a successful trial involving television product into Irish and UK bookmaker shops. Negotiations on a long-term contract in this regard have also commenced. I hope these negotiations will conclude before the end of this year. Again, this is a real ongoing contract in the industry.

The third area I mentioned was that of co-mingling from bookmakers in the UK and wider Europe. Those development works are ongoing and are part of an international technological upgrade with our various bookmaking partners. That work is scheduled to go live in 2016. The contracts are signed but live betting has not yet started. There is considerable international investment from both our partners and their third parties in building the infrastructure necessary to facilitate that co-mingling.

Deputy Sean Fleming

Note 24, page 42, of the Bord na gCon annual report 2014 states under the heading, commitments and contingencies:

The board is involved in legal cases, the outcome of which are not possible to predict. No provision has been made in the financial statements for the year ended 31 December 2014.

Have any major cases been settled recently? What were the costs that were not possible to predict when the accounts were being signed off?

Ms Geraldine Larkin

I can confirm to the Deputy that three High Court cases have been settled. The legal advice, of which I am in receipt, is that the settlements are confidential and, as such, I cannot disclose the nature of the settlements themselves. The reason for that is that there is a risk that any further public comment could undermine the settlement terms. That being said, I can ask my chief financial officer to account for our own costs in those cases.

Deputy Sean Fleming

No. I am not a bit interested in the IGB’s costs. That would be a small element of it. I am sure the settlement and compensation, which might have been paid, is where the main money lies. I am sure the costs the IGB incurred to date were approved for in the 2014 accounts. Did it involve a payment by the IGB to settle the three cases?

Ms Geraldine Larkin

There is a payment involved.

Deputy Sean Fleming

That would indicate the IGB will pay its own costs, the settlement and probably pay the other party’s costs.

Mr. Phil Meaney

The settlement included costs and damages. There were obviously costs included in the settlement.

Deputy Sean Fleming

We are in a difficult situation because a large proportion of the IGB’s income is taxpayers’ money. There was a time some years ago when the taxpayers’ contribution was 20% or 30% of the board’s income. It is now heading towards 50%. The IGB is not a commercial organisation and could not exist without a taxpayer subvention of €14 million next year. We will take it that it is taxpayers’ money that is being paid out in these cases.

Whatever confidential agreement the IGB has entered into, it will not overcome the need to record this and have it disclosed so that the readers of the 2015 accounts will know. The Committee of Public Accounts will not tolerate a large six-figure sum being buried in the accounts without it being disclosed. While on the one hand the board might have a legal agreement on confidentiality, the board members have a separate legal and fiduciary duty when signing off on the accounts next year to ensure they are in compliance with the law. The legal agreement is one issue, while the fiduciary duty as a director is another. The board members will not be able to get away from including major settlement figures in the accounts. The reason I am raising this is because it is referred to in the 2014 accounts. This is germane to the accounts in front of us today. The issue involved predates 2014. It has been rumbling along for five years and relates to a race in 2010. Do the witnesses get the point I am making?

Mr. Phil Meaney

Absolutely.

Ms Geraldine Larkin

Absolutely.

Deputy Sean Fleming

In other words, there will have to be some disclosure when the board members come to sign off on the accounts for next year. Will the witnesses square that circle for me in the context of the confidentiality agreement?

Ms Geraldine Larkin

My difficulty is that the settlement agreement has not concluded.

Deputy Sean Fleming

I thought the IGB settled something and it was just the final details that had to be signed off.

Ms Geraldine Larkin

Yes.

Deputy Sean Fleming

Okay. Three cases were mentioned. Who were the defendants in each case? Was it Bord na gCon or individual board members? To whom is the taxpayer paying money? I will cut to the chase. If these cases were before the High Court, then they would have been listed. I can google the High Court website to find the names in the cases.

Ms Geraldine Larkin

The first case was taken by a trainer against the IGB and Shelbourne Park Greyhound Stadium. The second case was taken by an owner, again against the IGB and Shelbourne Park Greyhound Stadium. The third case was taken by the trainer against a board member.

Deputy Sean Fleming

Are the trainer and the owner two different people?

Ms Geraldine Larkin

Yes.

Deputy Sean Fleming

Was the third case against the chairman, Mr. Meaney?

Mr. Phil Meaney

No.

Deputy Sean Fleming

Why would the taxpayer be indemnifying an individual board member for something he may have done wrong? Why did the board feel the taxpayer should hand out substantial money? Why would it indemnify a board member if he was before the High Court for a case the board felt it had to settle? Who approved the use of taxpayers’ money for that purpose?

Mr. Phil Meaney

There were several issues. The legal advice we received was to indemnify the board member for several reasons. First, it came to light that we did not have directors’ and officers’ insurance. I have been involved in both the private and public sectors, prior to coming to the IGB. I have seen no operation where there was not a directors’ and officers’ insurance in place. Second, the legal advice was that the board member's legal team would co-join Bord na gCon's because the board member on the night in question was there representing the board as an invited guest. They were the two main reasons.

Deputy Sean Fleming

Did Mr Meaney say that the not having insurance for directors was the exception or the norm from his experience?

Mr. Phil Meaney

It is absolutely the norm. In private industry, we had directors’ and officers’ insurance. Later on, when I became involved in the Irish Coursing Club, I would like to feel I was instrumental in putting directors’ and officers’ insurance in place there. I feel strongly that one cannot leave people without some kind of cover.

Deputy Sean Fleming

When was this put in place if the settlement was only made recently?

Mr. Phil Meaney

I cannot say but Mr. Michael Murnane, chief financial officer, could do so.

Mr. Michael Murnane

It was put in place in July 2013.

Deputy Sean Fleming

When did the board become aware of the problem of the director who had no insurance? Was it prior to that and it was decided to insure from thereon?

Mr. Phil Meaney

The director in question vehemently denies-----

Deputy Sean Fleming

Yet, Mr. Meaney said the case was concluded.

Mr. Phil Meaney

We concluded all three cases. The other two cases date back to the derby of 2010.

Deputy Sean Fleming

2010.

Mr. Phil Meaney

The other two cases date back to that date. We concluded all three cases.

Deputy Sean Fleming

Is it correct that the settlement or compensation relates to the 2010 event and that perhaps the most recent issue of the director could have been settled by way of an apology or something like that?

Mr. Phil Meaney

Yes, I-----

Deputy Sean Fleming

Can Mr. Meaney provide a breakdown? He may not disclose it now but we will be asking-----

Mr. Phil Meaney

I am very conscious-----

Deputy Sean Fleming

Can he provide a breakdown of the three cases?

Mr. Phil Meaney

Probably not.

Deputy Sean Fleming

Was it a global settlement?

Mr. Phil Meaney

It is not as simple as that. I do not want the Chairman or Deputy to think that we are holding back information. We are not and we fully understand that in our accounts for 2015, which will be audited by the Comptroller and Auditor General, there will have to be disclosure. To add to what the CEO said, an agreement in principle is drawn up, for example, on when the payment is made. That has not happened yet and we got further legal advice yesterday to hold off on commenting on the case until everything is done and dusted. As chairman of the board, I am quite prepared to confirm here today that when everything is done and dusted we will certainly make the Department and Comptroller and Auditor General aware of the full case. At that stage, I will have no problem making the details available to the Committee of Public Accounts.

Deputy Sean Fleming

Will the payment be made in this calendar year? Will it be in the 2015 accounts?

Mr. Phil Meaney

It will be in the 2015 accounts because the proposed settlement is in 2015. Obviously, there is a time difference between when the case is settled and when the payment is made.

Deputy Sean Fleming

Is it a six-figure sum?

Mr. Phil Meaney

Yes, it is a six-figure sum.

Deputy Sean Fleming

It is a serious figure in terms of the scale. There was a loss in 2014 of €1 million, and a smaller amount in 2013. The figure is in the hundreds of thousands. Mr. Meaney has said that Bord na gCon received legal advice but it is difficult for the Committee of Public Accounts - this is taxpayers' money. It was August 2015 when the 2014 accounts were signed. We will not wait until August 2016 to hear this information. Arising from today's meeting, we will ask for it as soon as it is concluded and that a briefing be sent to us.

Mr. Meaney mentioned the Department. Is there a Department representative on the board?

Mr. Phil Meaney

No, but as our sponsoring Department, we have a good working relationship and we keep them informed.

Deputy Sean Fleming

I am curious about this issue. Bord na gCon has been very successful in negotiating an improvement in its income for 2016. It had €13.6 million for 2015, from the taxpayer, and that will increase to €14.8 million in 2016. That is an increase of €1.2 million. Will the settlement of that outstanding legal case take a large proportion of that €1.2 million?

Mr. Phil Meaney

No. That €1.2 million, in addition to other moneys that we have set aside, will go into prize money and other industry support for 2016. There is absolutely no way that that money-----

Deputy Sean Fleming

In other words, this payment will just increase Bord na gCon's bank overdraft and interest payments.

Mr. Phil Meaney

I do not expect that to happen. Our bank overdraft - in the most difficult of times - has not increased in the last four years. I do not expect it to increase. The industry has been starved of cash. I am quite prepared to say that at the moment the greyhound industry is dependent on support from the State. There is no doubt about that. I did a small exercise last night - in the past six years, the reduction in State support has amounted to almost €22 million. The industry has been-----

Deputy Sean Fleming

Is that cumulatively over those years?

Mr. Phil Meaney

Yes. The industry has been starved of cash. Added to that was the worst depression any of us has witnessed so we did not have money to invest in marketing and promotion. We did not even have money to invest in an executive. In 2011, when I came on board, we had a CEO but no CFO or executive. The business was cash starved and in that context, the CEO was mistress, mother and wife. Now we have an executive in place and have extra funding. There has been a pick-up in the economy and there is a very different outlook. That is not to ignore the fact that we have to pay a settlement and the court costs. We have legal reports that back up the decision. Most of us are not legal people so we employed the best legal support we could to advise the board on the best way to deal with this. In 2010, when this happened, none of the current board or executive was in place. That is not the dead man's excuse; it is the reality.

Deputy Sean Fleming

Returning to the 2010 issue of the derby, that particular dog was under the control of Bord na gCon at that stage and for that period on the track. The dog was got at in some way and the board must accept that because it would not be paying otherwise. It must accept that some substance was given to the dog to make sure he came in last. Something happened to the dog while it was under the board's control.

Mr. Phil Meaney

The dog got some substance because when his sample was subsequently analysed that was the outcome.

Deputy Sean Fleming

We mentioned regulation before and it ties into doping in the industry. There have been some changes in AI rules but it has been brought to my attention that Bord na gCon is still allowing illegal dogs to compete under the new regulations. Is that correct? Mr. Meaney will say that the coursing club looks after the registration but it is subject to the general control and direction of Bord na gCon. I am reading from the legislation. I have been told that the board knows there are illegal dogs competing as we speak. How does Mr. Meaney handle that?

Mr. Phil Meaney

In 2005, legislation was introduced which legalised AI. A dog's semen could be used for two years after the dog expired. As the Deputy points out, the stud book is within the remit of the Irish Coursing Club.

Deputy Sean Fleming

What is Bord na gCon's relationship with it?

Mr. Phil Meaney

The working relationship is quite-----

Deputy Sean Fleming

What is it and who pays for it?

Mr. Phil Meaney

The Irish Coursing Club is based in Clonmel, looks after the sport of coursing and owns the stud book.

Deputy Sean Fleming

It registers the dogs.

Mr. Phil Meaney

Yes. On a positive note, the legislation has been amended while a study is being carried out. The study on whether AI has an effect on the gene pool of greyhounds and inbreeding is almost complete. It will be completed in 2016. We put an SI in place that legitimised the dogs that are now being bred but I acknowledge that there are a number of dogs that were bred prior to that SI being put place-----

Deputy Sean Fleming

Inbreeds.

Mr. Phil Meaney

-----and there is a question mark over those dogs.

Deputy Sean Fleming

Will it require more legislation or a statutory instrument to rule those dogs out of order?

Mr. Phil Meaney

I do not know. We have received a senior counsel opinion which suggests that once a dog is registered it has a legitimate expectation to be allowed to run. I accept it is a thorny issue.

Deputy Sean Fleming

Given that Bord na gCon will receive €14 million, can Mr. Meaney provide the committee with a copy of - in layman's language - the service level agreement between Bord na gCon and the Department on the receipt of those funds? In the HSE there are service level agreements when taxpayers' money is being used. Mr. Meaney is in the sporting business.

If any sports club around the country was drawing down a national lottery grant of €50,000, there would be rules and conditions and papers. What is in that service level agreement? Would Mr. Meaney be able to forward us a copy?

Mr. Phil Meaney

I will hand it over to Ms Larkin or Mr. Murnane. We get the money. Obviously, there are terms and conditions. The Department does not forward us €14.8 million and say, "Good luck." There are terms and conditions.

Deputy Sean Fleming

Is there a formal signed-off service level agreement between Bord na gCon and the Department? Are the officials here from the Department of Agriculture, Food and the Marine or the Department of Public Expenditure and Reform?

Mr. Brendan Gleeson

The Department of Agriculture, Food and the Marine.

Deputy Sean Fleming

Mr. Gleeson will be able to help in this discussion about the service level agreement.

Ms Geraldine Larkin

There is not a formal service level agreement in the context that I would understand one. However, before any moneys are advanced to the Irish Greyhound Board, there is an annual submission to the Department as to what we intend to use those funds for and how we used and disbursed the previous year's funds.

In addition to that, the Department has sought updates from us on how we were to manage the original strategy statement of the Irish Greyhound Board, which was then updated and effectively replaced by the Indecon report last year. In advance of getting any moneys, those documents had to be provided to the Department. The Department then requires the greyhound board to submit six-monthly accounts together with six-monthly reports as to our progress. Those reports must be signed off by the chairman of the board. On top of that, the Department meets us twice a year to review on a one-to-one or face-to-face basis the commitments made at the start of the year in advance of the moneys being forwarded to us and, obviously, any ongoing issues throughout the year, together with how we are achieving budget targets, as we would have submitted to the Department.

As the chairman, Mr. Meaney, mentioned to the Deputy, in addition to that, the Government arrangements extend such that we are also required to report on an interim basis any unscheduled matters that arise during the course of the year if they are material, either to the financial business or to our regulatory business. That is what is there in place of a formal service level agreement.

Deputy Sean Fleming

I want to ask the officials from the Department about this because I am disturbed to hear the taxpayer will be handing out €14.8 million for the coming year without a formal service level agreement, letters, plans and whatever. The Chairman will be issuing a recommendation that a formal service level agreement be in place. I am shocked to hear one does not exist.

I cannot understand how an Accounting Officer in the Department has not learned lessons. I will not go back to what happened in Punchestown years ago, with money handed out without proper agreements. There were reports done at length. Here we are with the same Department handing out €14 million a year for the next number of years and no service level agreement. The Committee of Public Accounts will not stand over that and will be saying it is not acceptable. It is not acceptable in any Department to hand out that amount of taxpayers' money.

I will ask two or three questions on this. In relation to the discussion on the subvention - it is called the horse and greyhound fund but I will call it taxpayers' money in case people think it is coming from somewhere else - of €14.8 million the Department is handing out next year and the €13.6 million it handed over this year, would the Department be aware approximately of the settlement that has been referred to in the High Court? That had to come into its reckoning in some way as needing to be met from the funding.

I had a quick look at the amount of taxpayers' money going into the sector ten years ago. It is in one of the charts we got. In 2006, the State was putting in €14 million. I know the funding dropped down to €11 million, €10 million and whatever. Total income on those occasions was approximately €50 million, including the taxpayers' amount. Therefore, the taxpayer was subventing the industry to the tune of approximately 28% of its income. The chairman, Mr. Meaney, states the income has gone down and there has been an cumulative drop but the amount of the board's income coming from the taxpayer is increasing as a percentage of its income each year. In 2014, the accounts show total turnover from racing activities as €25 million and the taxpayer put in €11 million. That was a significant proportional increase in the Department's costs. Next year, the Department proposes to give €14.8 million. Mr. Gleeson should be able to tell us whether the Department has a ballpark figure of what is a right amount for the taxpayer to be putting into the industry as a percentage of its total income. As I said, it seems to be increasing.

In view of that, I would look at the governance of this. The organisation, as Mr. Nealon recommended, could not exist without taxpayers' money. We accept that is the case. There is not a representative of the Department on the board. Given that such a large proportion of the expenditure and income involved in Bord na gCon is taxpayers' money, the structure needs to change so that there is somebody there monitoring this and representing the Accounting Officer in the Department. Essentially, the Department is handing it over to an independent company. Not finding any fault with it, I am merely saying to protect the taxpayers' interest, the Minister should have a representative there to watch that.

Has Mr. Gleeson any observations on what was taken into account in how the Department arrived at the €14.8 million figure? Approximately, how many are employed in the greyhound sector because there has to be some connection between how much the taxpayer is putting into a sector and how many people are benefiting? The following is a simplistic and probably unfair figure but the only one I can get from looking at the figures today is that there are 110 full-time staff in the organisation, although the organisation hires extra staff for catering for race meetings. I do not even like to say it but that amounts to approximately €124,000 per annum for those employed in the organisation but the staff in the organisation is only a fraction of the number in the industry. Can Mr. Gleeson tell me the basis on which the Department arrived at this €14 million, how many people in the industry is the Department supporting with this grant and how much per person in the sector is the taxpayer subventing it?

Chairman

Before Mr. Gleeson answers those questions, I will ask Deputy Sean Fleming to chair the meeting for a few minutes.

Deputy Sean Fleming took the Chair.

Acting Chairman (Deputy Sean Fleming)

They are the same questions but I have a different view of matters from up here.

Mr. Brendan Gleeson

There are a few questions there but I will try to answer them as best I can. In the context of the settlement, it is not true to say that we knew what the settlement was, even in ballpark terms, when the Estimate was agreed. That is not the case. Obviously, we have had a report on it and there is a ballpark figure there now which we assume will have to be accrued in the 2015 accounts in the normal way.

Second, in terms of the overall financial position of the industry, clearly we have a concern. We know the chairman, the board and the chief executive have a concern about the financial status of the industry. When one looks at the subvention that has been given in the past, the grant to the board went from €15.2 million in 2008 to €10.8 million in 2014 and that came at a time when attendances were falling, when tote income collapsed and when all the impacts of the economic downturn came as well. The board found itself in a very difficult position.

There has always been support for this sector from the State and successive Governments have felt it was worthwhile. Our figures, in terms of employment, are approximately 10,000 people in employment and-----

Acting Chairman (Deputy Sean Fleming)

Is that in greyhounds?

Mr. Brendan Gleeson

In greyhounds. I am sure that is the widest possible definition but it is 10,000 people. Our figures show €0.5 billion of turnover in the rural economy. That is the figure we have. That is the basis for justifying any State intervention in the sector. The chairman has already said, and it is true to say, that if the sector did not need State support, it would not be given it. That is a given.

Against the background of concerns about income dropping and other concerns, the Minister commissioned Indecon to produce a report on the sector. It was published in 2013. There was a range of recommendations in it, including on governance, regulation and the financing of the industry. There was recognition that something had to change in terms of financing the industry. It was a long report. There were three main pillars to the recommendations on improving finances. One was that the board would have to dispose of assets because it was burdened with a significant debt that was eating up resources that might otherwise have been put into the sector. To an extent, this is something of a self-fulfilling prophecy because, in order to develop the sector, one needs to be putting money into prize money, stadiums and developing new products. However, if one's sources of funding, from the State or commercial revenue, dry up, it has a negative impact on that.

The first part of the Indecon report suggested something really had to be done about bringing down the debt. The only realistic way of making a really significant impact on that was the sale of assets. There were a few proposals in the report. They were not necessarily prescriptive but there were suggestions as to what assets might be sold. The second recommendation concerned the development of new streams of income and new products. The chairman and chief executive will know more about that than I do. They have already described progress in that regard. The third point was that there was a significant number of non-performing stadiums. It was recommended that something be done to calibrate the cost of those stadiums to the income deriving from them. That probably meant reducing the number of races and making sure the expenditure in non-performing racecourses did not exceed the income derived from them. Those are the three strands of that income piece.

The chief executive has described the kind of governance arrangement within the Department. Obviously, the board and chairman have their own responsibilities, and we have responsibilities also.

Reference was made to the presence of a departmental person on the board. That is an arguable point. It is not in the legislation. We will be drafting a Bill. We have begun to draft the heads of a Bill to respond to some elements of the Indecon report. The Bill will deal with some aspects of governance and deal with regulation. It might introduce mandatory penalties for offences such as doping. The board composition is a policy decision and I cannot elaborate on it. However, if the committee has a view on the composition of the board, we would all have to take it into account in the context of redrafting the legislation.

Acting Chairman (Deputy Sean Fleming)

That is fine. It is probably a personal opinion. What about the fact that there is no service level agreement in place?

Mr. Brendan Gleeson

We do not have a formalised service level agreement. We do have corporate governance structures that are quite formalised. We meet twice per year on the performance. The board submits a strategic plan to us, which we examine. Recently, we have developed a letter of shareholder expectation. We have done it for another State agency as a preliminary draft. Our intention is to draft a similar document for all our State agencies, including Bord na gCon. I accept it might be better if the agreement had been in place long ago but, in any event, we have embarked on that kind of road with another agency. Our intention is to use that vehicle across all the agencies. That will fulfil the requirements the Acting Chairman is talking about.

Acting Chairman (Deputy Sean Fleming)

I will conclude in one moment and then call on Deputy McFadden.

If there is €14.8 million and 10,000 recipients, the taxpayer is giving approximately €1,480 to everybody who is broadly involved in the industry as a subsidy to keep it going. It is good to put that figure on the record. That is how I translate the €14.8 million. It is divided among 10,000 people, with approximately €1,500 going to everybody who has a dog and who goes to the races. The taxpayer is essentially giving money to everybody involved. Mr. Phil Meaney might state whether this is a fair analysis. He can understand the global picture.

Mr. Phil Meaney

Absolutely. A point I would like to add is that most of the jobs are in rural areas. If they were to go, they would not be easily replaced at the moment. The economists tell us that every 1,000 people who move from employment to being dependent on State subsidies cost approximately €20 million. The economist Jim Power came up with that figure in 2011. The number in the industry may have contracted a little since 2011. However, even if 7,000 or 8,000 were to go on the dole as a result of State funding not being in place and the greyhound industry going out of existence, it would have a disastrous effect.

Acting Chairman (Deputy Sean Fleming)

The final question I wanted to ask is on the Indecon report and the response to the recommendations. There was a chart in the Indecon report on the profitability of the tracks. It refers to them all and claims there was a loss of €4.296 million in the track income. I acknowledge there is other income. I am referring to recommendation No. 8, on the calibration of the number of race meetings in poorly performing stadiums. Are the delegates saying they have implemented all the key recommendations? One is currently subject to the levy process.

With regard to recommendation No. 8, on the preparation of key performance indicators for track performance and the review of the racing programme, the delegates have said it has been implemented. Are they in a position to forward us a copy of the key performance indicators in respect of which they have said the recommendation has been implemented? That probably threw up what I would call a break-even figure for attendance at a race meeting. Is it 300 or 400? I realise it depends on the location but there must be some tracks where the figures speak for themselves. Do the delegates believe we have the right number of tracks? I am from Laois and there is no track in my area so I am probably not the most informed. The delegates have probably worked that out.

Could I have a brief outline on the work on recommendation No. 8? The delegates might send us some of the documentation that has been prepared consequent to the implementation of that recommendation. It can be sent to us subsequent to the meeting.

Ms Geraldine Larkin

On recommendation No. 8, we have done two things. First, as the Acting Chairman pointed out, we have calibrated the number of races. We have reduced the number of least profitable races at tracks to the effect that we have taken out 89 races from the tracks in the year to date. Obviously, there are prize money savings in respect of those events. In addition, because of the way we have targeted and picked the races, we have managed to maintain a performance as close as possible to last year's full performance. With the additional digital market, we have managed to maintain the level of commerciality. While we have taken out 8%-----

Acting Chairman (Deputy Sean Fleming)

Eighty five this year?

Ms Geraldine Larkin

Race meetings this year.

Acting Chairman (Deputy Sean Fleming)

Races or race meetings?

Ms Geraldine Larkin

Race meetings. That equates to approximately 8% of all race meetings. Despite taking out 8%, we are currently tracking, at the end of November, a reduction of only 0.8%. That metric is clearly working in terms of the meetings that we selected to take out. They were the least profitable.

Acting Chairman (Deputy Sean Fleming)

Was having fewer races a problem or was it accepted as the reality within the industry? They probably could see the reality on the ground.

Ms Geraldine Larkin

There was a tradition quite some years ago of reducing activity levels during the winter period. There was an historical tradition of that happening. Nobody likes reducing the number of race meetings but, at the same time, there is a level of co-operation among industry stakeholders to improve and better the industry performance. That is the answer to the first part of the Deputy's question.

The second part of the Deputy's question related to key performance indicators. The key performance indicators have been built to analyse the profitability of the tracks, the subvention we are paying per meeting and per spectator, the level of sponsorship generated at track level, and the amount of Tote and commercial profits being made. Those key performance indicators have been running for 12 months now.

The analysis arising from them has been very useful in identifying different aspects of performance and what is good and bad on the various tracks. Different issues arise in respect of the ten IGB tracks and seven privately run tracks and it gives us an opportunity to investigate them.

My priority for the next 12 months will be to see how much we can lift the KPIs. By targeting specific areas of weakness we hope to bolster the entire industry. Obviously, this is taxpayers' money and there is no guarantee that funding to tracks will continue in the long term. My priority is to address the weaknesses. On pulling the tracks up, every time one takes a track out there are repercussions for local industry and, while it might solve commercial issues, it might also severely undermine the dog population in an area. It is better to see if we can solve the non-performance of tracks and other issues. A key challenge, given that we are dependent on tracks, is the fact that the tracks are only open for some 16 hours per week.

We will go back to the Indecon recommendations and look at what else we can do in terms of alternative sources of income to support what happens on the tracks. We have completed a joint horse jumping event with Horse Sport Ireland under the Jumping in the City initiative, which was launched in Limerick and also takes in Cork and Shelbourne Park and was very successful. We are exploring other such options to help bring a completely different audience into greyhound stadia because it is a State resource which is available in key urban locations and which we should be utilising.

Deputy Gabrielle McFadden

I have two racetracks in my constituency, one privately owned and one not. My family raised greyhounds when I was growing up so I have a grá for it. I felt a little bit annoyed listening to the opening statements of Ms Larkin and Mr. Meaney. Those who run the racetracks, who train and own dogs, work very hard to keep the industry going, to keep it competitive and preserve it as a form of entertainment for others but the opening statements we heard today were a little vague and there was nothing in them. As the Acting Chairman said, some €14.8 million of taxpayers' money has been allocated but Ms Larkin said a key thing to regenerate the industry was to increase the number of dog owners, breeders and trainers. She said the extra money that had been allocated would go into prize money and additional industry support at grassroots levels and that there would be a serious attempt to put the industry on a sound footing within the resources available. She also said she would strive to create an industry model which was fit for purpose and sustainable. She said she was looking at exploring other options but that is all very hazy and fluffy and there is nothing concrete in it. Can Ms Larkin give me some examples of what she means by "additional industry supports at grassroots levels"?

Mr. Meaney said a lot was happening at board level, the benefits of which may not be immediately apparent but which will have a significant impact in the medium and long term. What does that mean? They are just words and there is nothing concrete in that statement. I do not mean to be hard but I would like the people listening to be able to know what it means.

Ms Geraldine Larkin

My intention is to grow the number of owners and trainers. During 2015 the Irish Greyhound Board conducted an extensive consultation at grassroots level. We started with our own front-facing staff, the people referenced by the Deputy in her opening remarks, and we asked them how we could bolster the industry. We extended the discussion to the directors of all tracks and this culminated in the circulation of a document for public consultation. The document posed a number of options as to how we might grow ownership and invest in the industry. It discussed bolstering syndication, the leasing of greyhounds to new and upcoming syndicates and targeting prize money. It put out a number of options to industry stakeholders but the money available to the Irish Greyhound Board was quite limited at the time, it being mid-2015. Nevertheless, we received a number of comments from stakeholders. The comments differed widely, as one might expect. Some felt we should support syndication while others felt that doing so should not be at the expense of the owner, who supports the industry on an ongoing basis, and that one group should not get preferential treatment over another. Others felt the current funding arrangements could be broadened and made more equitable. That is just a flavour of the comments we received.

The announcement in the budget of an additional €1.2 million is a significant game changer for us in terms of what we can do. In the past 12 months the Irish Greyhound Board ran over 16,000 races, which will give members an idea of the population involved in dog racing. Of that 16,000, half of the dogs were in the mid-grades - between A2 and A6 - and one of the considerations for us is whether to target one such group with additional funding or whether to provide an increase in funding across the board. Another alternative would be to replace earlier cuts to prize money. We are working through these three very different concepts and there are other possibilities, such as paying run money to placed dogs to directly subvent the costs associated with bringing a dog to racing. There are possibilities around racing clubs and around various breeding incentive schemes. There are myriad options and we have prepared initial costings on all of them. Our intention is for the entire board to consult, in the middle of December, with the various industry representatives who have engaged in the process in the past months, either by written submission or personal representation. The objective will be to increase pools and attendance because if we can increase ownership those owners will also attend stadia, which will have a knock-on effect on the Tote and our food and beverage offerings. We have €1.2 million and we need to spend it wisely to ensure that, with the industry input, we get the best return for our money.

I was conscious of keeping my opening statement brief but this is the thinking behind my remarks.

Mr. Phil Meaney

Like Ms Larkin, I was conscious of keeping my statement as short as possible. We live in the industry every day, and I can see how what we said could seem to be vague, but we did not mean to be vague in any shape or form. A number of major issues have been dealt with in 2015. The two main High Court cases predated the executive and the present board members. A huge amount of time over recent years has gone on dealing with them and getting them behind us. I accept what Deputy Fleming said. While there is a cost, I am delighted they have been dealt with.

The deficit in the defined benefit pension scheme has used up a lot of time. We are at the consultative stage and having it dealt with is very important to me. The executive, with the support of the board, has put in place a deal with our bankers which is very important for any organisation. Disposal of core or non-core assets is a big issue and we accept Indecon's recommendation. During 2015, we have disposed of the old head offices of the IGB on Henry Street in Limerick. This, along with other income we generated, will allow us pay down debt to the bank in 2015 for the first year since I got involved.

As I alluded to earlier, most of the executive, including the CEO, only came on board in 2014. All board members, with the exception of one, are new and none of the executive was in place when I came on board in 2011. The point I am making is that we now have a good executive with new blood on the board. We have a bit of cash we did not have before. This is a platform to kick on, which we did not have over the past four years in which I have been involved in the industry.

Deputy Gabrielle McFadden

Mr. Meaney mentioned the assets and the loan. There is a loan for €18.5 million.

Mr. Phil Meaney

We have two loans. I will ask Mr. Murnane to speak about this.

Mr. Michael Murnane

We have two loans to the value of €18.5 million.

Deputy Gabrielle McFadden

The loan agreements for €12.5 million and €6 million are due to expire in 2016 and 2017.

Mr. Michael Murnane

Correct.

Deputy Gabrielle McFadden

The money the organisation recently received for the assets which were sold will come off this.

Mr. Michael Murnane

Correct.

Deputy Gabrielle McFadden

It is to come off the €18 million.

Mr. Michael Murnane

Correct.

Deputy Gabrielle McFadden

Can we know how much this is?

Mr. Michael Murnane

Is that the proceeds?

Deputy Gabrielle McFadden

Yes.

Mr. Michael Murnane

The proceeds we got for Henry Street were €700,000.

Deputy Gabrielle McFadden

How much?

Mr. Michael Murnane

It was €700,000.

Deputy Gabrielle McFadden

What was it valued at prior to the sale?

Mr. Michael Murnane

It was valued below €700,000.

Deputy Gabrielle McFadden

Was it?

Mr. Michael Murnane

It was, yes.

Deputy Gabrielle McFadden

Does the organisation have other assets it could sell, has it sold other assets and have assets been acquired over the past eight or ten years about which somebody like me might not know?

Mr. Phil Meaney

We acquired no assets that I am aware of, other than that in Limerick. The Comptroller and Auditor General looked into this. We have a piece of land on the Ennis Road in Meelick which we have up for sale at present. We also have a piece of land in Cork. These are the only non-core assets and we are pushing ahead with preparing Harold's Cross for sale.

Deputy Gabrielle McFadden

Were the two pieces mentioned in Cork and Clare bought over the past ten years? How were they acquired and why are they being sold?

Mr. Michael Murnane

Meelick was bought in 2005 and the last Comptroller and Auditor General report clearly looked into it. It is being sold because it is effectively landlocked and we will not be able to develop it without getting access from another land owner.

Deputy Gabrielle McFadden

I will ask a stupid question. Why was it bought in the first place?

Mr. Michael Murnane

I cannot answer that. There is a detailed report on the subject.

Deputy Gabrielle McFadden

It was discussed at the last meeting obviously.

Mr. Michael Murnane

It is a long story. I do not want to open the book on that one.

The piece of land bought in Cork was 20 acres around the stadium. The way Cork has been split between various developments means there is a two or three acre strip of land which is not of benefit to the stadium. There is another piece of property there.

Deputy Gabrielle McFadden

Is it up for sale?

Mr. Michael Murnane

It is not because a number of CPOs with regard to the bit of ground must be resolved before we can deal with the sale.

Deputy Gabrielle McFadden

Is there a valuation on it?

Mr. Michael Murnane

Not really because the CPOs could impinge so much on the site that it might not necessarily be available for sale. It does not indicate this but we must go through the process.

Deputy Gabrielle McFadden

The property in Meelick is up for sale.

Mr. Michael Murnane

It is.

Deputy Gabrielle McFadden

What is it valued at?

Mr. Michael Murnane

It has agricultural value. It is 15 acres, so perhaps in the region of between €150,000 to €180,000.

Deputy Gabrielle McFadden

I presume this will come off the €18 million loan.

Mr. Michael Murnane

It will come straight off the loan.

Deputy Gabrielle McFadden

Given the debt the organisation is in, the deficit of €1 million and the fact very little has changed since 2010, do the witnesses believe their plans are justified and realistic? Do they think they can work this? How many of the stadia, as someone said earlier, wash their face? How many are viable?

Mr. Phil Meaney

I will leave that to the executive. On the first point, I am satisfied, as is the board, that if we can sell, or when we sell, Harold's Cross, it will generate enough cash to ease the debt burden and, I hope, to reinvest in the rest of the industry.

Deputy Gabrielle McFadden

The average attendance is 371. It seems to be declining all the time. What is being done to address the lack of people going through the gates in various stadia?

Mr. Colin Walsh

What stadia are close to the Deputy?

Deputy Gabrielle McFadden

Mullingar and Longford. Longford is privately owned.

Mr. Colin Walsh

The decline in attendance has been a trend since 2007. It has declined at varying rates each year since then. We have changed completely the commercial strategy and the commercial operations with regard to how we approach this. When I first started in mid-2013, commercial operations as they were and the commercial strategy were not fit for purpose. We had a homogenous approach to the market in that we sold the product and racing on the back of the Irish Greyhound Board brand. What we have done since, following research, is have a local market-based strategy to promote the stadia in each of their local markets, within a drive time of 45 to 50 minutes, assuming this is the maximum distance anybody will drive for a night out with regard to cost and time. We have also launched www.gogreyhoundracing.ie and put in place a consumer facing racing brand rather than the IGB brand. We separated IGB as a corporate entity and put in place a consumer infrastructure.

We have completely changed our digital infrastructure and we have upskilled our digital expertise. All of our activities are dovetailed between advertising, digital activity, social media and social platforms. We are trying to expose the industry and sport to the widest possible audience because the biggest opportunities with regard to getting leisure and racing consumers back to the tracks are with people aged between 18 and 35 years. In the year to date, the average attendance per meeting in the IGB tracks increased by between 6% and 8%.

The position with Christmas bookings, in terms of the sales cycle this year compared to the sales cycle for the same period last year, is that we are up 18%. Our digital strategy is part of the overall strategy. It is about acquisition of customers and retention. The next phase, having put in place that infrastructure, is to put in place loyalty technology and loyalty marketing.

Let us consider the journey we have come from. We had a situation where we had a database of 100,000 customers. It was non-compliant, in multiple formats and was effectively unusable. The marketing department and our outside digital people have now worked through that. We now have a functioning database of over 60,000 people. To that database we have sent over 400,000 promotional e-mails so far this year. That part of the journey involved putting in place the jigsaw to get to the point where we can actually put in place loyalty marketing, which is a speciality in its own right. A tender document has gone out. There is a two-piece approach. The first is to ensure we have the correct strategic direction for it. The last thing we want to do is pick a model or infrastructure that does not work, does not deliver or does not give us a return on investment. We are taking a two-phase approach. The first phase is to establish the strategic direction and the second relates to how that implementation is going to work in terms of technology and from a marketing point of view in light of the technology that is in the tracks.

We have come quite a way in terms of our marketing strategy, commercial operations, processes and strategies. We are getting to the point where we have the most up-to-date contemporary tools in place to promote the leisure and racing markets. We are also using food and beverage promotions as tools to drive attendance.

Deputy Gabrielle McFadden

It makes for a good night out.

Mr. Colin Walsh

We do our best.

Deputy Gabrielle McFadden

It is good fun. I am conscious of my time. My last question relates to procurement. We keep coming back to the €14.8 million of taxpayers' money. It is our job to ensure it is wisely spent. A procurement officer was appointed. According to our briefing, a procurement officer was appointed in 2013. My briefing suggests the value of contracts identified by the audit has not been compliant in 2014. Indeed, it has increased significantly compared to the total number of contracts identified in 2013. If we now have a procurement officer in place, why has there been no improvement? Correct me if I am wrong on this aspect.

Ms Geraldine Larkin

In fact there has been significant improvement over the period, to the point where the value of the contracts that were at issue amounts to €388,000 in the year.

Deputy Gabrielle McFadden

In what year?

Ms Geraldine Larkin

That is for 2014.

Deputy Gabrielle McFadden

What year is that compared to?

Ms Geraldine Larkin

I do not have the figure for the previous year, but I have the relative figure for tenders conducted since 2014. That is a figure of-----

Mr. Seamus McCarthy

I would like to interject. There may be a little confusion. The value of the sample looked at in 2013 was smaller. Proportionately, there was more non-compliance relative to that sample than there was in 2014. When we looked at Bord na gCon in detail some years ago what we found was almost universal non-competitive tendering for goods and services. Certainly, that has significantly improved progressively as we have come away from that situation.

Deputy Gabrielle McFadden

What kind of steps has the board taken to do that and improve the situation? Can the deputation give me any instances of how many non-compliance cases there have been so far in 2015?

Mr. Michael Murnane

The principal item of procurement in 2014 related to pension services. It related to defined benefit pension services. The chief executive has advised a figure of €388,000. That item was €149,000 on its own. The chairman referred to the advancement made on the defined benefit proposal to address the deficit. We took a decision at the time to maintain that service provider, which provided information in respect of staff levels and years of service, etc. Now that the process has reached a conclusion, one part of the defined benefit service has been procured and is going through a deliberative process as we speak. The second part will be going through procurement post member communication, which will be early in the new year and tender documents are ready to go. We are simply waiting on member communication to sign off. From that point of view, the largest portion of the outstanding procurement would be dealt with at that stage. Our procurement officer has stringent controls. He approves all invoices. One of his checks is whether invoices are procurement compliant. From that point of view he is on top of everything that happens. It is a commercial, fluid organisation and we endeavour as much as possible to try to get value for money.

Deputy John McGuinness resumed the Chair.

Ms Geraldine Larkin

My priority is to tackle the highest value contracts that are non-compliant and to work our way down through it. To that effect I have now put arrangements in place such that I can get monthly reports of the overall procurement position and I keep them under review.

Deputy Gabrielle McFadden

I wish Ms Larkin well. She has an uphill battle.

Deputy Paul J. Connaughton

I will keep this brief because much of this has been discussed already. I welcome the members of the deputation. My questions relate to the Indecon report. The last time the deputation from Bord na gCon was before the committee certain positions were unfilled. Have they been filled since?

Mr. Phil Meaney

Are these positions on the board?

Deputy Paul J. Connaughton

The Indecon report recommended certain positions would give the board more expertise. Have those positions now been filled?

Mr. Phil Meaney

Some have, some have not and some require legislation.

Deputy Paul J. Connaughton

Which positions require legislation?

Mr. Phil Meaney

For example, the recommendation was that the size of the board would be increased to get a broader level of expertise. That requires primary legislation.

Deputy Paul J. Connaughton

What sort of expertise?

Mr. Phil Meaney

We have six board members and a chairman at the moment. We have a number of new board appointees recently. All the major functions are covered. However, Indecon recommended that the board should be broader to allow more expertise on board. The report did not specify. We have veterinary, legal and financial expertise. We have all the usual skills covered at this stage.

Deputy Paul J. Connaughton

Perhaps the Department can comment. What other expertise does the Department believe should be added?

Mr. Brendan Gleeson

I can clarify the position. There was an advertisement for board appointments put through the Public Appointments Service system recently. There have been five appointments and they are in the system at the moment. Warrants still have to be signed. Within that group we have legal expertise, financial expertise and experts in the dog sector.

Indecon recommended desirable board expertise in marketing. I am unsure whether we have a person in marketing yet. The point the chairman was making was that if we wanted to expand the size of the board we would need primary legislation. We are drafting heads of a Bill at the moment. We will be reflecting on the appropriate size of the board in the context of that legislation.

Deputy Paul J. Connaughton

What positions were filled in the past year? What positions has the organisation been able to fill?

Mr. Phil Meaney

Five new board appointments out of seven are in the process of being put through. Some are existing board members being reappointed and some are new board members.

Deputy Paul J. Connaughton

My next question relates to asset disposal. I realise the organisation has gone through some disposals already. Are there any other assets to be disposed of in the coming years that the organisation has not informed the committee of yet? Is there anything in the pipeline? Is that it for asset disposal at the moment?

Mr. Michael Murnane

There are no plans in the pipeline. There are no plans outside of what is included in the Indecon report.

Deputy Paul J. Connaughton

The Bord na gCon deputation made the point that in recent months the board has gone through a consultation period to try to get the grass roots involved. Has the organisation gone back to the people who have left the industry to ask them why they have left the industry?

Mr. Phil Meaney

If I was asked whether we have gone back formally, the answer is that I do not know. However, most of us are out racing on a regular basis and we meet people.

In the difficult times when people did not have disposable income, having the couple of dogs was no longer possible. They just did not have the income to support them. I also think we were forced to cut prize money for a number of reasons. That is what we are working on. Again we are meeting all stakeholders in the early part of December with a view to seeing exactly where we should spend the money to get those people back and to get new people through syndication, ownership and encouraging young people to go into training. It is very hard to pin down and say the reason people left the industry was X, Y or Z. There are myriad reasons people left the industry, the same as maybe left horse-racing. There is a broad spectrum of reasons.

Deputy Paul J. Connaughton

When going to Galway track, for instance, it is very apparent that there are two different kinds of people there. There are those very much into the dogs and the racing side of things, and there are those who are there for the night out. Are there two separate strategies or is it one for everybody?

Mr. Phil Meaney

Mr. Walsh might take that.

Mr. Colin Walsh

As the Deputy says, there is a distinct racing audience and there is the leisure audience. Over the course of the recession the number of owners has halved effectively. That then has a knock-on effect in terms of the economic performance of the tracks because they are the people who come more frequently. Earlier the CEO alluded to the fact that she has had a consultative document in terms of how the organisation is going to increase the number of owners. Through that there will be the direct engagement on strategy to people in terms of increasing ownership and also then endeavouring to bring those who have moved out of the industry back into it.

I suppose in terms of those who have moved out, one has those who may have an older age profile. One also has people who have been affected by the recession and who have emigrated. So it is quite a mix of people who will have left. As part of that process there would be direct engagement in terms of how one expands the base of owners which in turn pump-primes the supply chain. It would help the trainers, help the breeding because one has more owners, more demand for dogs. That is a critical part of it which is being worked on at the moment.

Deputy Paul J. Connaughton

Regarding the betting on tracks, there is the Tote and the other lads outside. Are they leaving it as well? What is the breakdown between the Tote and-----

Mr. Joe Lewins

On the on-course bookmakers, there are probably 34 or 35 at the moment, but it is endemic even in horse-racing at the moment. Bookmakers are not getting any younger. If one looks at the bookmakers at the track, they would probably be there for ten, 20 or 30 years. Trying to get new guys in is very difficult and it is also part of the split - I call it upstairs-downstairs. The downstairs is the traditional greyhound man - the owners and trainers. They really are with the bookmakers. Upstairs are those with corporate groups or on a night out etc. They bet with the Tote. They are there for a good night out and they are going to bet with the Tote.

In essence there are two tracks that are working very well in terms of 50:50 with the Tote. Shelbourne Park would be stronger from the bookmaker point of view. Kilkenny would be very strong with bookmakers as opposed to the Tote.

Attracting new bookmakers in is very difficult, but one of the things we have seen is the new television trial we are doing at the moment with Turf TV. We are using bookmakers in the UK, and betting shops in the UK and Ireland. The bookmakers at those tracks which are offering very competitive odds, which is in line with the UK and Ireland, are seeing an upturn in turnover from the on-course traditional bookmaker. It would be very difficult to get traditional bookmakers and I do not see any growth in that area. As I said, the age profile of a traditional bookmaker must be late 50s or early 60s, similar to the UK. The UK has the same problem. One has 2.7 bookmakers per BAGS, Bookmakers Afternoon Greyhound Service, and they are struggling to get bookmakers. One needs three bookmakers at the track to form an SP for the UK. I do not know how one resolves that bit of it. One of the ways of resolving it, I suppose, is getting more people into tracks. Take Galway, Johnny Morris would have been a good bookmaker at Galway track. More people come downstairs. One gets that type of bookmaker back.

Deputy Paul J. Connaughton

Since the new board and new chair came in, there has been a lot of firefighting over previous issues. Mr. Meaney said things are beginning to change a little bit regarding the €1.2 million. How does he envisage this in five years? Is the board thinking that far ahead or is it on a year-on-year basis? Does Mr. Meaney believe that less taxpayers' money will be going in in five years? Is there a plan along those lines or are we still firefighting on a day-to-day basis?

Mr. Phil Meaney

It is an excellent question in so far as the first two and a half or three years that I was involved with Bord na gCon were firefighting. As with many other industries, now is the first time the board has had an opportunity to be strategic and to look where we are going. Things are not going to improve overnight. If the Chairman decides to bring us back in here next year, it is not going to be all bells and whistles from where I am sitting. There is going to be a gradual improvement over the next five years by getting people back into the industry. I am old enough to have seen this before where the greyhound industry takes a dip and then it comes back up again. There is no doubt we have taken a dip, a hammering, but slowly it is going to build back up.

Do I see the industry being able to survive without State support in five years? Honestly, no. I would not at this stage be able to state the number of people involved for the kind of industry it is. For example, it has not been mentioned today that a huge number of clubs and organisations up and down the country through the medium of greyhound racing raise a huge amount of money annually. It is very hard to put a figure on that, but I would say it could be anything between €4 million and €5 million.

For example, Kerry county board's main fundraising in the year is a big night at the dogs in Tralee. In Kilkenny, where I live, there is an organisation, BEAM, for people who need support. It is their biggest fund-raiser. Even though it is a very small track, annually they raise €35,000 and they have done that for the past 20 years. To look at the greyhound industry purely in the context of the taxpayer putting in €14.5 million or €14.9 million is unfair. One needs to look at it in the context of the employment it gives, of the social side of it for community and for older people, and also for the amount of money it allows people to raise for very worthy causes. It may be not always very worthy; I think sometimes political parties might even use it. However, in general it is for very worthy needs.

Chairman

Why is that not so worthy? As someone who would know political parties-----

(Interruptions).

Mr. Phil Meaney

I say that with tongue in cheek.

Chairman

Is Mr. Meaney speaking about one political party - one that he knows?

Mr. Phil Meaney

I say it with tongue in cheek.

Deputy John Deasy

I wish to raise just one issue. What is Enterprise Target Solutions? I seek an explanation of the sponsorship deal Bord na gCon entered into with Enterprise Target Solutions for it to sponsor the derby. What kind of due diligence did Bord na gCon carry out before it signed that deal? What is the status of moneys owed?

Mr. Michael Murnane

ETS was a company that was engaged with the former CEO of the IGB-----

Deputy John Deasy

I ask Mr. Murnane to repeat that.

Mr. Michael Murnane

----- in 2013 for the derby of 2013 for a three-year arrangement, 2013, 2014 and 2015. There was no reason at the start of the arrangement with ETS to indicate it would have turned out as it turned out. There were various stages of payments, deposits, second deposits-----

Deputy John Deasy

We need to start with that.

Did Bord na gCon check out this company, if it was a company? My information is that it had registered only a month before this deal was signed with the UK Companies Office. Did the board check this company out at all before the deal was signed?

Mr. Michael Murnane

This company was not checked out before the deal was signed. We were aware that it was a new company setting up and we understood at that stage that ETS was involved in investment in an alternative energy supply for Ireland. That is what we believed.

Deputy John Deasy

Is that what it told Bord na gCon?

Mr. Michael Murnane

That is what it told us. That was its business plan and that is what it made the presentation on.

Deputy John Deasy

I am not here to beat up the witness about this but it needs to be explained because it has been covered in the media and it seems to me that no due diligence was performed. Mr. Murnane has said it was not checked out, which is fair enough. Is it fair to say that there was an element of being conned?

Mr. Michael Murnane

That is fair enough.

Deputy John Deasy

How much is owed?

Mr. Michael Murnane

A sum of €71,000.

Deputy John Deasy

Only €71,000?

Mr. Michael Murnane

Yes, and it is not owed. It has been fully provided for and written off in the 2013 accounts.

Deputy John Deasy

If it is written off, does Bord na gCon not have any plans for legal action regarding the €71,000 owed?

Mr. Michael Murnane

We have checked out the possibility of pursuing that debt, but it appears that the organisations involved around ETS no longer exist.

Deputy John Deasy

There is no entity to sue and Bord na gCon has checked that out.

Mr. Michael Murnane

There does not appear to be.

Deputy John Deasy

How much has been handed over in the past two years from ETS? If the deal was €750,000, which was the initial figure, how much was recouped?

Mr. Michael Murnane

The initial fund due from ETS was €120,000. It was a three-year arrangement. That value was over the three years of the timeframe. The initial sponsorship was €120,000. We received up to the value of €71,000 in various deposits as they fell due and the balance was due at or post derby time and it was not paid. We reviewed the sponsorship with ETS and we terminated the arrangement at that stage.

Deputy John Deasy

From a governance point of view there are lessons to be learned here. Does Mr. Murnane accept that?

Mr. Michael Murnane

Absolutely, we would accept that.

Deputy Joe Costello

The witnesses are all very welcome again. Many of the issues have been dealt with pretty thoroughly, but it is still a very bleak picture that a debt of €21 million was incurred in respect of the Limerick Greyhound Stadium project and that there were net borrowing levels of between €10 million and €11 million from 2006 to 2008, which are now double that sum. Revenue has reduced from €63.5 million in 2006 to €28.2 million in 2013, a fall of 56%. There is a huge job to be done to restore it, and Mr. Murnane is predicting an increase of 34% in total receipts and an overall 28% increase in income by 2017. Is that realistic or is it a fairy tale?

Mr. Michael Murnane

Indecon predicts a net operating surplus for 2016 and 2017-----

Deputy Joe Costello

The entire trend so far has been downwards. There has been a very sharp decline.

Mr. Michael Murnane

The entire trend up to 2014 has been very challenging. There is no doubt about that. However, significant progress has been achieved in 2015. The Chairman has alluded to the resolution of the three legal cases. They were a draw on resources for the past five years while that matter was progressing.

Deputy Joe Costello

In respect of those three cases, Deputy Fleming asked whether they were in the six-figure bracket. Can Mr. Murnane give me a closer estimation? Is it in excess of €1 million and less than €2 million?

Mr. Michael Murnane

The legal advice we have received-----

Deputy Joe Costello

I know the legal advice. I am talking about a ballpark figure.

Mr. Michael Murnane

It is not in the seven-figure bracket.

Deputy Joe Costello

It is in excess of €1 million.

Mr. Michael Murnane

It is not in excess of €1 million. It is less. It is six figures.

Deputy Joe Costello

A six-figure sum that is less than €1 million. Is that for the three cases?

Mr. Michael Murnane

For all three, yes.

Deputy Joe Costello

Are there any other cases in the pipeline?

Mr. Michael Murnane

There are two other cases in the pipeline, but they are at a very early stage, and any comment on them could prejudice the outcome. One is a property related case. The second is a personnel matter. I do not think it would be appropriate to comment at this stage.

Deputy Joe Costello

Are these cases related to non-compliance or to issues involving inadequate supervision or drug testing?

Mr. Michael Murnane

No, they are not regulatory racing cases in any manner whatsoever.

Deputy Joe Costello

Why does Bord na gCon have so many cases? Is there a tradition of court cases in respect of the operation of Bord na gCon and its activities? Has there been a constant draw from the board’s funding in respect of these matters or is this a once-off event? It is finalising three cases and there are two in the pipeline. What is the picture looking back?

Mr. Michael Murnane

I cannot answer that question directly. I can say that one of the cases relates to a property transaction that dated back to 1996 which came to light in the very recent past. The other is a personnel matter that I would prefer not to deal with here. The legal fees over recent years, which is all I can comment on, have been dominated by the three High Court cases settled a few weeks ago. The legal fees are very much orientated towards those three cases. The resolution of those cases will significantly reduce what we have been paying in legal fees over recent years.

Deputy Joe Costello

Has Bord na gCon been bedevilled with court cases in the past?

Mr. Michael Murnane

I am aware of settlements that Bord na gCon has made in the past. There was one settled in the late part of the 2000s, but apart from that I am not aware of any other cases that were settled for a material figure.

Deputy Joe Costello

Any extra money provided by the State could be eaten away by settlements, court cases and compensation where the board is found to be liable and money has to be paid out. That is the danger of which this committee must take cognisance. For example, in the report there is an indication that no drug testing is taking place off track. Is that correct?

Ms Geraldine Larkin

There is drug testing at sales meetings.

Deputy Joe Costello

It is done at sale point but not other than that. That is just the sale of the animal but during the course of the training and the operation there is no drug testing, is that correct?

Ms Geraldine Larkin

Currently, there is no out of competition testing.

Deputy Joe Costello

Am I right that an animal can be purchased at a sale and there is absolutely no testing until that animal runs in the stadium?

Ms Geraldine Larkin

No, the animal can be and is tested at sales. Where we are not testing because we are drafting a statutory instrument to provide for that is prior to that point, back in the kennels during training. That is the point where we cannot test at the moment. I cannot send a testing team to a trainer’s kennels to test.

Deputy Joe Costello

Is that not a huge gap in doping testing, the total absence in the training process before it appears in the stadium?

Ms Geraldine Larkin

Absolutely. A draft text is being prepared that will facilitate that level of testing at that point.

Deputy Joe Costello

What is the timescale for that? Is this being done for the Department of Agriculture, Food and the Marine for the Minister to provide a statutory instrument?

Ms Geraldine Larkin

There is a mix of statutory instruments we can make, some in conjunction with the Minister and some of which the IGB can make of its own accord.

Deputy Joe Costello

Does it have the authority to make a statutory instrument?

Ms Geraldine Larkin

Yes.

Deputy Joe Costello

That seems strange. Is that the correct procedure? I thought all statutory instruments had to come under the authority of the Minister or the Oireachtas.

Mr. Brendan Gleeson

The Act is from 1958 and there are provisions which give authority to the board to make its own statutory instruments and-----

Deputy Joe Costello

If that is the case then why does the Bord na gCon not get on with it? What is the reason for the delay?

Ms Geraldine Larkin

We have been undertaking a number of statutory instruments and that is the next one. The most recent statutory instruments that we concluded were instruments to allow us to publish adverse analytical findings once an animal has tested positive. Heretofore, we could not publish the fact that we had got an adverse finding from the laboratory until the entire disciplinary matter had concluded. With effect, from 1 October, the board is now in the position to be able to publish that at the same time as it notifies the owner or trainer of the adverse finding. This brings much greater transparency into our regulation. On top of that, the statutory instrument is constructed in such a way as to ensure that the dog that has had an adverse finding is suspended from racing until such time as that dog returns a clear test again. That is a very significant advancement in terms of racing greyhounds and ensuring a level playing pitch for all racing greyhounds.

Deputy Joe Costello

That is very desirable but the explanation does not answer my question. How come Bord na gCon has not dealt with this huge hiatus or gap that exists? Athletes expect to be tested during their training session. I imagine that the same should apply to animals that will contest races. The public will bet on them and there will be prize money. If there is no testing during the period in which the animal trains then there is no off-track testing, effectively. That means that we just do not know what type of animal is coming into the kennels for racing. When does Bord na gCon expect to deal with the matter?

Ms Geraldine Larkin

That is on the table being dealt with at present. Again, just to say to the Deputy, we have a very strict regime of testing at racetracks. The publication of adverse findings is going to bolster that.

Deputy Joe Costello

A case has been processed through the courts where an animal was got at in the kennels, under Bord na gCon's control, that was described earlier. Even though there is strict testing at courses, clearly gaps exist. I am only interested in knowing why we cannot get off-track testing in place because it is necessary.

Ms Geraldine Larkin

Absolutely.

Deputy Joe Costello

When can we expect it?

Ms Geraldine Larkin

I would see that coming to fruition in the very near future, within a matter of months, once we make sure that the text is legally sound and robust.

Deputy Joe Costello

I ask Bord na gCon to keep us updated on the matter.

My second point is on the Harold's Cross stadium. It has been outlined already that the board is in the process of putting it up for sale. What is the justification for the sale? It is the second stadium in Dublin and is more a local than a national stadium. It is a stadium where a night out at the dogs takes place on a regular basis. On my side of the city it is treated as virtually a northside stadium. I cannot understand, considering that the stadium is profitable, why Bord na gCon should sell it to defray debts incurred in Limerick. This is Dublin and that is Limerick. Surely a reasonable analysis of the situation would not require the elimination of a second stadium in Dublin which is profitable, local and availed of by the ordinary punter. I know the financial problems that Bord na gCon faces but selling a profitable stadium is not the answer to a financial problem.

Mr. Phil Meaney

Through the Chair, Indecon recommended, I suppose in order to deal with our debt, that we sell off Harold's Cross. Both Ministers accepted its recommendation and subsequently the board. Personally, I do not like to see tracks closed but it does not make sense to have two tracks, a mile and a half from each other, operating.

Deputy Joe Costello

They are both profitable at the moment and certainly Harold's Cross stadium is profitable.

Mr. Phil Meaney

Yet we turn off the lights in one go.

Deputy Joe Costello

Harold's Cross stadium is a northside stadium. Dublin is not that big a city.

Mr. Phil Meaney

Okay.

Deputy Joe Costello

It is not as if we are talking about a big area of land down the country where a mile and a half is a lot. In Dublin, a mile and a half is fine and the stadium serves the city.

Mr. Phil Meaney

Yes. It does not make sense to have two management teams and two sets of grounds staff. In terms of the people in Harold's Cross and the people of Dublin, whether they are northside or southside, the greyhound enthusiasts have to be looked after. I would very much be one of the people who would suggest that when we rationalise by bringing the whole business together in Shelbourne Park, the people that go to Harold's Cross are looked after. It is very hard to justify the two tracks. Traditionally, and let me make this point, Harold's Cross was the Dublin man's track and maybe Shelbourne Park was the Croke Park of greyhound racing. The greyhound population in Dublin is much smaller than it was. They have to be looked after and they should be looked after but it can all be done in the context of one super stadium.

Deputy Joe Costello

Nobody ever put that argument forward until Indecon said that Bord na gCon had to do something to reduce its costs. This is a post facto argument that has been put forward to me. How does Bord na gCon propose to effect the sale? Has it sought planning permission in advance? Will it maximise the value of the site? Please give us an idea of where we are at.

Ms Geraldine Larkin

Clearly, we intend to maximise the value of the asset. In that regard, earlier this year, as part of the Dublin City Development Plan, we made a submission to the Dublin City Council for a change in zoning of the Harold's Cross lands. That submission was considered by the executive and members of Dublin City Council in October. While there was support from the executive, the public representatives sought further information in terms of the proposals. Indeed, some other public representatives were of the view that the lands should remain on a leisure basis. From our perspective, we are now in the process of preparing a further and additional information to submit both to the Dublin City Council and, indeed, to all the local representatives outlining how we see this site might be used alternatively were it to get the zoning.

Deputy Joe Costello

Bord na gCon might include public representatives and Deputies as well and not just local representatives.

Ms Geraldine Larkin

Yes.

Deputy Joe Costello

What happens if the board is refused?

Ms Geraldine Larkin

In the event that we are refused there are still a number of options open to us. We could still dispose of the land with its current zoning and current valuation. In the event that we do that, as the Deputy rightly pointed out at the start, there remains a significant amount of debt to be addressed. In those circumstances, the IGB would be forced to look at other assets that it holds. That would become a very difficult decision because the sale of any assets in our ownership and control, outside of Dublin, will impact on the local greyhound industry and will have a detrimental effect on the greyhound pool in that area. The priority for the present is to continue to engage with Dublin City Council, local representatives and local Deputies.

Deputy Joe Costello

Bord na gCon is providing additional resources, which may or may not be accepted. Whether accepted or rejected, one way or another, the matter is likely to go to An Bord Pleanála and I presume Bord na gCon would pursue the issue. However, if the submission is refused, the land will have very little value in the long term, unless it is rezoned or planning permission is granted for its development. In that case, it would make a very small contribution to reducing the organisation's debts in that area. Bord na gCon is facing plan B in that respect. Would it withdraw Harold's Cross stadium from sale if planning permission is not granted? Has the organisation thought that far ahead?

Ms Geraldine Larkin

As the Chairman alluded to earlier, we are closing Shelbourne Park to open Harold's Cross throughout the year, bar the four-week run-in to Christmas when we can facilitate both stadiums running together. There is not enough of an attendance in Dublin to simultaneously run Shelbourne Park and Harold's Cross.

Deputy Joe Costello

Ms Larkin is making these remarks separate from all the good work she indicated Bord na gCon will do in future, for example, in the area of branding, the fact that the organisation will control activity to a much greater degree, and the advertising on buses, which I have seen recently. Ms Larkin referred to there not being enough interest in Dublin. There is not enough interest anywhere. Attendance figures have been in decline at every single stadium. This is an ex-post facto justification for the sale of Harold's Cross stadium. It may well be the case that Bord na gCon will get little or nothing for the stadium, leaving the organisation with its debt of almost €21 million. I presume the recommendations in the Indecon report were made in the context of planning permission being granted.

Mr. Phil Meaney

Certainly, we will not give Harold's Cross away at a knockdown price and I know I am speaking on behalf of the board when I say that. If it does not realise a certain level, we will not sell it off at what would be regarded as a green belt price.

Deputy Shane Ross

I thank the witnesses for coming before us. One of previous Deputies addressed the issue of board appointments and how they were being made. Will Mr. Meaney outline the procedure for appointing board members?

Mr. Phil Meaney

The five board members have been appointed recently and it was done through the Public Appointments Service process. The positions were advertised through the Department of Agriculture, Food and the Marine and anybody who was interested had an opportunity to apply for the positions.

Deputy Shane Ross

What happened then?

Mr. Phil Meaney

There were a certain number of applicants and a board was set aside to go through the applicants. Ten applicants were then referred to the Minister who selected five.

Deputy Shane Ross

Does the current board have any input into that process?

Mr. Phil Meaney

We had one place out of five.

Deputy Shane Ross

Is the board consulted by the Minister on appointments to the board?

Mr. Phil Meaney

No, the Minister might talk about certain individuals but it was his prerogative.

Deputy Shane Ross

The Minister makes a decision based on the panel.

Mr. Phil Meaney

Yes. He may talk in the context of skill sets or in a general or generic way, rather than specifically about anybody.

Deputy Shane Ross

The current board is not consulted about the appointments.

Mr. Phil Meaney

No.

Deputy Shane Ross

Will Mr. Meaney explain the reason the accounts, which Bord na gCon kindly sent to the committee, do not have biographies or any other information that I can find about the board members?

Mr. Phil Meaney

Sorry, they do not have what?

Deputy Shane Ross

They do not have any information about the board members.

Mr. Phil Meaney

Does the Deputy mean a profile of the board members?

Deputy Shane Ross

Yes, I am referring to information on who the board members are. They may as well be men on the moon, as far as I can see.

Mr. Phil Meaney

The five new board members who have been reappointed and all board members would have had to submit a curriculum vitae and background information, which is available and on record.

Deputy Shane Ross

Where?

Mr. Phil Meaney

Information on the five more recent appointments would be with the Public Appointments Service.

Deputy Shane Ross

Yes, but why is it not in the accounts? It is normal, in the accounts of a large organisation, to give us some information.

Mr. Phil Meaney

Personally, I would not have a problem with that. This is the first time the question has been asked.

Deputy Shane Ross

It is good governance.

Ms Geraldine Larkin

It is an excellent idea, an excellent suggestion, and I-----

Deputy Shane Ross

It is not a new idea and I cannot claim credit for it.

Ms Geraldine Larkin

I will ensure that information is in this year's annual report.

Deputy Shane Ross

Will Mr. Meaney tell me about the drinks contract Bord na gCon has with C&C? Is there a contract in place with C&C for drinks?

Mr. Phil Meaney

Yes.

Deputy Shane Ross

Will one of the witnesses please tell me about the terms of the contract?

Mr. Phil Meaney

Mr. Walsh, who negotiated the contract, will answer the Deputy's question.

Mr. Colin Walsh

We have a three-year agreement with C&C Gleeson. It covers draught lagers, wines, soft drinks and waters.

Deputy Shane Ross

It covers draught lagers and what else?

Mr. Colin Walsh

Wines, soft drinks and waters.

Deputy Shane Ross

What are the terms of the contract?

Mr. Colin Walsh

The company pays us an amount of money and it has exclusivity of supply in our ten stadiums.

Deputy Shane Ross

Does it have exclusive rights to supply?

Mr. Colin Walsh

It supplies the draught lager, waters, wines and soft drinks.

Deputy Shane Ross

Exclusively.

Mr. Colin Walsh

Yes.

Deputy Shane Ross

It is a very valuable contract for the company. Are any of the board members connected with C&C?

Mr. Colin Walsh

Riona Heffernan is an employee of C&C.

Deputy Shane Ross

What?

Mr. Colin Walsh

She is an employee of C&C Gleeson.

Deputy Shane Ross

What is her title in the company?

Mr. Phil Meaney

She is acting head of finance with C&C.

Deputy Shane Ross

Obviously, that fact will have been declared to the board when the contract was negotiated. Is that the case?

Mr. Phil Meaney

From a board point of view, Ms Heffernan took absolutely no part in the decision to go with C&C or anybody else. The minutes will clearly show that she excluded herself once this came up for discussion. She made it quite clear to me, as chairman, that she did not want any discussions with her about the drinks contract because it might be taken as being conflicted.

Deputy Shane Ross

She was absent from the board. She absented herself.

Mr. Phil Meaney

Absolutely.

Deputy Shane Ross

That is fine. Will Mr. Meaney outline the circumstances of his appointment?

Mr. Phil Meaney

I brought a lot of paperwork the last time we were before the Committee of Public Accounts because I thought this issue might come up but it did not come up. I was appointed in 2011 and, as part of my appointment, I was to go before the Joint Committee on Agriculture, Food and the Marine for the appointment to be ratified. I wrote shortly after that to the present Chairman of that committee informing him of my availability. After six months, I had not been brought before the committee and I again informed the Chairman of my availability. After our first appearance before the Committee of Public Accounts, I again wrote to the Joint Committee on Agriculture, Food and the Marine indicating my availability to go before it. I am still prepared to do so at any stage. I have no problem whatsoever going before the joint committee. In many ways, I am disappointed that it did not call me in.

Deputy Shane Ross

Will Mr. Meaney tell me the circumstances of his appointment, please? How was he appointed?

Mr. Phil Meaney

Sorry, I understood the Deputy was referring to going before the agriculture committee.

I had read that was a concern of the Deputy's. I was interviewed by the Minister for Agriculture, Food and the Marine.

Deputy Shane Ross

That is Deputy Simon Coveney.

Mr. Phil Meaney

Yes. I presented him with my CV and what I had done in my working career and in the greyhound industry.

Deputy Shane Ross

Mr. Meaney knows from where I am coming. What I am worried about is this. Mr. Meaney is a very prominent member of Fine Gael. He knows that.

Mr. Phil Meaney

I am a member of Fine Gael, yes.

Deputy Shane Ross

He was involved in the previous general election campaign for Fine Gael, which is true.

Mr. Phil Meaney

Yes.

Deputy Shane Ross

Mr. Meaney is very astute and seems to have been responsible for winning three seats in Carlow-Kilkenny, for which I congratulate him.

Mr. Phil Meaney

The Deputy may be giving me more credit than I am entitled to.

Deputy Shane Ross

I do not think so. It was a great achievement.

Mr. Phil Meaney

I am not sure the Chairman would agree.

Deputy Shane Ross

There was lobbying on Mr. Meaney's behalf for this job. Is that correct?

Mr. Phil Meaney

I never lobbied.

Deputy Shane Ross

I did not say Mr. Meaney lobbied.

Mr. Phil Meaney

I want to make it clear that I never lobbied any political person of any political persuasion for the job.

Deputy Shane Ross

A Deputy lobbied on Mr. Meaney's behalf.

Mr. Phil Meaney

He did not. If he did, it was not at my request.

Deputy Shane Ross

That is a different matter.

Mr. Phil Meaney

No. The accusation is that I either lobbied for the position or lobbied through a Deputy. I never lobbied for the position. I make that quite clear and put it on the record. That is part of the reason I am disappointed the Joint Committee on Agriculture, Food and the Marine did not take me in. I am prepared to stand by my record prior to coming into Bord na gCon.

Deputy Shane Ross

I am not questioning Mr. Meaney's record prior to coming into Bord na gCon. I am saying that it is a great pity that a prominent member of Fine Gael was interviewed by a Fine Gael Minister and given the job without any vetting procedure whatsoever. The Government-dominated Joint Committee on Agriculture, Food and the Marine does not want to interview Mr. Meaney. He is sitting here not subject to the procedures to which other members of the board, which we have gone through, were subjected.

Mr. Phil Meaney

Let me answer that. Before the Minister or both Ministers decided that all board appointments to the Irish Greyhound Board should be through PAS, I recommended that. I am wholeheartedly in favour - and I can only talk about Bord na gCon - of the process being through PAS. While the Deputy points out that I am a member of a certain political party, my answer to that is that I would rather see anyone being something than being nothing. I have not brought politics to the greyhound board and politics did not enter it when the five people were being appointed recently. We want the best people we can get on the board. That is my position. What colour they are is something somebody else has to deal with.

Deputy Shane Ross

Does Mr. Meaney not think that the fact that he was so successful in delivering three seats to Fine Gael in Carlow-Kilkenny and the fact that there was a vacancy and that his appointment was not vetted raises questions about political appointments to boards of this sort? Does he not think it had anything to do with his appointment?

Mr. Phil Meaney

I do not know. Deputy Ross might ask the people who appointed me. Financially and in every other way, my appointment to Bord na gCon has been a limiting factor to me. Deputy Ross seems to be of the opinion that this was a big scalp for somebody. It was not for me. The past four years in Bord na gCon have been very difficult. I came into a situation where there was no executive. I had come from an organisation that was very well organised and was working in a very functional way. There was no executive in place. To get things done through a public company is not like a private company. We had to put a strategy in place. What I am trying to say is that it took a while to put an executive in place. All board members have been changed since I came in except one.

Deputy Shane Ross

Is that Mr. Meaney? Mr. Meaney has not been changed.

Mr. Phil Meaney

I could not have been changed since I came in or I would not be here but all other board members have been changed except one. I do not know where Deputy Ross is coming from. I did not lobby for the job. I have taken it on. I put approximately 30 hours a week into it and I have tried to make an industry that was struggling in a difficult time work along with what I regard as a very good board. I fail to see what point the Deputy is trying to prove.

Deputy Shane Ross

I will answer Mr. Meaney's question. I am saying it is a political appointment. I am saying that the fact Mr. Meaney is such a prominent member of Fine Gael was a material factor in it. I am saying that Mr. Meaney has not gone through the normal vetting process that everybody else has to go through and that it is an unacceptable procedure. I am not saying Mr. Meaney is incompetent, I am just saying the procedures are utterly incompetent and wrong and that he is a political appointee and a member of the political party in power. That is what happens regularly. Mr. Meaney is just one of many but he is one and he is in a very strong position as a result. It is a pity that happened. That is what I am saying.

Mr. Phil Meaney

I do not want to sound impudent but what more does the Deputy want me to do? Would he like me to get him a copy of the letters I sent to the joint committee?

Deputy Shane Ross

No, not at all.

Mr. Phil Meaney

By the way, the letters did not state that I was not being brought before the joint committee because I was of a political persuasion. The last letter I got stated clearly that the agriculture committee had decided that it was not going to meet people in the case of any appointments made prior to its establishment.

Deputy Shane Ross

Let me pay Mr. Meaney a compliment then and say that Fianna Fáil would never have appointed him. Let me put it that way.

Mr. Phil Meaney

Again, that is hypothetical.

Deputy Shane Ross

Of course, it is.

Mr. Phil Meaney

I do not know whether Fianna Fáil would. I believe that the person who put my name forward for chairman of Bord na gCon is a member of Fianna Fáil.

Deputy Shane Ross

Could Mr. Meaney provide us with some evidence for that?

Mr. Phil Meaney

I could bring the man to the committee but I will not give his name here today.

Deputy Shane Ross

He would be crucified by the party. He would be executed.

Mr. Phil Meaney

I am really disappointed. We came here today to talk about Bord na gCon, the 2014 accounts, the setting up of a new executive and where we stand. It is of no significance what is my political persuasion. The Deputy has my permission to ask any board member or executive member whether I have ever brought politics into the IGB. While I may have had a joke with the Chairman earlier about political parties raising finances at greyhound stadia, I presume he realises that was with tongue in cheek. I do not bring politics to the greyhound board and when I say I do not allow anybody else to do it, that is not quite accurate. Nobody brings politics. Our remit is to try to turn this industry around. It is not about who put us there or how we got there. I will say it again in conclusion: I was willing - at every stage and I still am - to go through any process that I am asked to.

Deputy Shane Ross

That is another issue because Mr. Meaney's appointment cannot be vetoed by the joint committee in any event. Never mind that, however, it is another issue. It is just another interview. What happened in Mr. Meaney's interview with the Minister, Deputy Coveney? Was it face to face?

Mr. Phil Meaney

Yes.

Deputy Shane Ross

What happened? What did the Minister say to Mr. Meaney?

Mr. Phil Meaney

I presented my CV and he interviewed me as I would have been interviewed for any other position. First, he went through my commercial background, where I had worked and the different positions I had held. The track in Kilkenny had been in a very difficult position and while I really did not have the time, I got involved with it. With a very good board, we saved Kilkenny. Politics was not discussed that night.

Deputy Shane Ross

It did not need to be. I want to ask a couple of things about board meetings. The board seemed to have approximately 16 meetings last year.

Mr. Phil Meaney

We have a board meeting every month.

That would not change unless an exceptional issue arose that needed ratification. I assume that, if the number is as the Deputy stated-----

Deputy Shane Ross

It is included in the annual report. There are expenses of approximately €48,000 for board members. For what were they paid?

Mr. Phil Meaney

When I became involved with Bord na gCon, board members' expenses were different from what they are today. The expenses board members receive are vouched. They are to cover out-of-pocket expenditure and travel expenses - no more, no less.

Deputy Shane Ross

It is €3,000 per meeting if the figure for board members' travel and subsistence comes to €47,700.

Mr. Phil Meaney

There is much more involved than attending board meetings. I have told the Deputy that, on average, I spend approximately 30 hours a week in the industry. Obviously, not all of that is spent at board meetings. We meet sponsors. I will refer to the point raised about ETS. At the time, we found it difficult to secure a sponsor for the Irish Derby. The largest offer was approximately €50,000. As a board, we decided to go with ETS on the understanding it would pay €50,000 before the race commenced. It was as good as any other offer. Luckily enough, we found a good sponsor after that, who is in it for the long haul.

Deputy Shane Ross

I am sure that is correct. I have a couple of questions about the C&C contract that I forgot to ask. Was it advertised?

Mr. Colin Walsh

No. It went through the procurement process. There was no requirement to advertise a contract or tender. There is a provision in Directive 2004/18/EC on the use of a negotiated procedure without publication of a contract notice. A multiplicity of companies, including most, if not all, of the major players in the market, were approached.

Deputy Shane Ross

Were they all approached?

Mr. Colin Walsh

They were approached to express an interest and it was a fair, open and transparent process. They all received the same set of information and all made their pitches on what they could contribute to us. The decision was made on a range of factors, including economic and other soft factors.

Deputy Shane Ross

I thank Mr. Walsh.

There was nothing personal in what I said to Mr. Meaney, but his appointment is one of many throughout the system that, unfortunately, land people whose loyalty is to the party in power - not just Fine Gael and the Labour Party - in key positions. Taking key positions in State bodies such as his is regarded by many, in particular by me, as being a reward for showing loyalty to a party in power. The fact that he did not go through the procedure, despite the fact that he had made applications, is a reflection more on the party than him, his membership thereof or his behaviour therein. It should have asked him to appear for vetting and approval. I am ready to admit that I am not qualified to question what he has done in IGB, but I am unhappy about the method through which he was appointed. His membership of and loyalty and service to Fine Gael were material factors in that regard.

Mr. Phil Meaney

I would like to ask the Deputy a question. Is he saying my membership of any party makes me unsuitable to hold the position?

Deputy Shane Ross

No. I am saying the fact that Mr. Meaney had done so much for the party in power was obviously material in his appointment, given the circumstances surrounding it.

Chairman

I will pick up on Deputy Ross's claim about Mr. Meaney's appointment, namely, that had Fianna Fáil been in power, he would not have been appointed. Is that what the Deputy stated?

Deputy Shane Ross

Correct.

Chairman

Let us comment on that claim. It is probably true that, had Fianna Fáil in its old construction been in power, Mr. Meaney would not have been appointed, but that is a reflection more on Fianna Fáil than on anyone else. What it did in appointments left much to be desired. Let me be clear on that point. During its long period in government it set in train the practice of awarding or rewarding its own, which is not the way to construct a board or appoint someone to a position such the one Mr. Meaney occupies.

I also say with some regret that, despite the announcement made by the Government that it would depart from this practice, it has not done so to any great extent. The day people are appointed because of their willingness to serve and commit to a board on the basis of their abilities must be reached soon. That is the ideal. Civil servants in Departments observing the dynamic or tension there should be between Ministers and the Civil Service should have this as their value. We should be reaching beyond the political system and the norm in appointing people. Unfortunately, we have not distanced ourselves from the culture of appointing insiders. We need only consider some of the committees in the Houses and who is advising them to know that, generally, it is the usual suspects.

I will say something about Mr. Meaney's case, not because he is from Carlow-Kilkenny but because I knew him as a businessman previously. He has a track record, not only in terms of his membership of Fine Gael but of running a successful business. He is an individual with integrity. I have no doubt that he is attempting to make a contribution to the organisation in question that is in the best interests of transparency, accountability and so on, which is welcome. The only thing that would have held me back from appointing him was the fact that he was from Carlow-Kilkenny and I might have been accused of supporting one of my own. I might have been willing to appoint him because of his credentials. Deputy Shane Ross's point is about an individual's credentials. Unfortunately, that process for selecting various State appointees was not in place when Mr. Meaney was appointed, although it is now. That is regrettable, as Mr. Meaney displayed in his correspondence to the committee in question that he would have liked to have appeared before it for no other reason than to explain his qualifications. This committee spent four and a half hours one day discussing the issues of office accommodation and toilet rolls. I was happy to appear before it at that meeting and account for myself. It might be no harm if other Chairmen or Ministers did likewise. Deputy Shane Ross gave his opinion and I am giving mine. I respect the job being done. As he stated, this is not personal.

I wish to ask a number of questions about IGB. Its revenue decreased from €63 million in 2006 to €28 million in 2013. What are the figures for 2014 and 2015? Has the decline been halted?

Mr. Michael Murnane

In 2014 the figure was €25 million. That is included in the annual report.

Chairman

It is down further.

Mr. Michael Murnane

From €26.6 million to €25 million.

Chairman

It continues to decline.

Mr. Michael Murnane

The decline is due to the fall in attendance figures. The average attendance per meeting has decreased from 390 people to 370.

Chairman

We have seen a decrease from €63.5 million in 2006 to €25 million this year.

Mr. Michael Murnane

The figure was €25 million in 2014.

Chairman

We do not yet know what the figure for 2015 is.

Mr. Michael Murnane

It is trending.

There are indications of growth. I will hand over to Mr. Walsh because he has the figures, but 2015 is trending gross.

Chairman

All I am interested in really is that the board has halted the downward rush.

Mr. Michael Murnane

I am on the board three years and this is the first time I do not have red brackets coming behind sales figures.

Chairman

It is stated that two of the board members resigned. Was that a resignation or was it just an end of term? Did they resign and, if so, why?

Mr. Phil Meaney

There were two board members, one of whom decided not to reapply for personal reasons. I thought the Chairman was talking about the latest changes.

Chairman

No, the board.

Mr. Phil Meaney

Ms Teresa Wall had served her time and was not replaced. Mr. Brendan Moore resigned of his own-----

Chairman

Was there an issue?

Mr. Phil Meaney

There were a number of issues he brought forward at the time, including Limerick and the debt associated with that. He just decided to leave the board.

Chairman

Is it fair to say that he was unhappy with the direction of the board or its decisions?

Mr. Phil Meaney

That is fair to say in his opinion, yes. He submitted a letter of resignation. I presume it is with the Department or in Limerick. I am not sure where it is.

Chairman

Is the Department of Agriculture, Food and the Marine aware of this?

Mr. Brendan Gleeson

Yes, we are aware of the resignation of this individual and the concerns around it.

Chairman

The Department is aware of the reasons and the concerns.

Mr. Brendan Gleeson

Yes.

Chairman

Did the Department react to that?

Mr. Brendan Gleeson

No, but they have been well ventilated.

Chairman

Okay. I turn to the committees of Bord na gCon. There is a control committee and an independent control appeals committee.

Mr. Phil Meaney

Prior to 2007, the control committee was selected from the board and the appeals committee was selected from the part of the board that was not on the control committee. Legislation was put in place in order that an independent committee had to be established. At the moment that is a committee of the board, but Indecon recommended further that it be appointed by the Minister of the day rather than the board. I think that is a very good idea.

Chairman

I move then to technology and the new platform that was described. Bord na gCon has set out its business plan for that and is presumably following it. Is there confidence so far in the plan absolutely succeeding or is there a need for a plan B?

Mr. Joe Lewins

The technology has moved on and changed dramatically. The best way I could describe the old technology would be to say that we used satellite to distribute pictures. We have moved into the IP space. IP is probably the future in terms of the distribution of pictures. Most companies have moved into that. On that platform, we are in a good space. We have tested the IP in the States.

Chairman

As such, Bord na gCon is following the developments in the industry.

Mr. Joe Lewins

We are indeed. We are going to leverage efficiencies from broadband as well. That will help us. IT in 2013 would not have been fit for purpose as it was five to eight years old. We have to replace it. We have a choice point as to whether we spend capital to replace all the servers or go with a hosted, managed service. After a tender process, the latter was awarded to Eircom. Again, although it hits the profit and loss account as opposed to being a capital expenditure, it was the right decision. It gives us a great deal of security. One hears about hacking and we have third parties to manage all of that for us. It has more flexibility and we are able to expand as and when we can and everything is now in the cloud. I hope to leverage savings from this going forward as the market catches up and competitiveness increases.

Chairman

What kind of costs are involved in embarking on something like that?

Mr. Joe Lewins

In terms of the cloud and so on, it is probably about €350,000 per year. That is €250,000 in the cloud plus software and hardware licences and the managed host. In terms of broadband-----

Chairman

Roughly and taking in all those figures, what is it?

Mr. Joe Lewins

It is approximately €500,000 in total.

Chairman

Is that to do this?

Mr. Joe Lewins

It is not just to do this.

Chairman

Is that to be there and then it is €350,000 a year thereafter?

Mr. Joe Lewins

Yes, because it is a managed service.

Chairman

I move on to costs. Again, this is the 2014 accounts. How was the figure for goodwill arrived at?

Mr. Michael Murnane

Goodwill relates to a transaction that was completed by the board in 2008.

Chairman

The figure is €17,200.

Mr. Michael Murnane

Yes, for the purchase of a publication called Talking Dogs.

Chairman

Is it an income? Is it a real figure?

Mr. Michael Murnane

It is an expense. It is a purchase that has been depreciated over a number of years.

Chairman

Okay.

Mr. Michael Murnane

That is effectively what that means.

Chairman

I move to the tangible assets. Has the board had them valued recently? How was the figure arrived at? It is €62,890.

Mr. Michael Murnane

It is €62,000. We had them independently valued in 2011 as part of the audit process. Those assets are subject to an accounting impairment test under financial reporting standard 11 each and every year. We went through the test in detail with the Comptroller and Auditor General in 2014 and a write-down was not required. The same test will be performed during this year's audit also.

Chairman

As such, it is tested year on year.

Mr. Michael Murnane

Yes, absolutely.

Chairman

The bank advances are €620,000 for 2014 and €577,000 for 2015. What is that?

Mr. Michael Murnane

Those are overdrafts. They are various operational overdrafts. Each subsidiary has its own overdraft.

Chairman

Is that two overdraft facilities?

Mr. Michael Murnane

There is one overdraft facility that covers the whole group. We have a €6.5 million overdraft facility that takes account of the-----

Chairman

What are those two figures on page 35? It refers to bank advances of €620,475.

Mr. Michael Murnane

Bank advances of €620,475 is the overdraft in the various subsidiaries. The other figure was the €22 million.

Chairman

I am coming to that, yes.

Mr. Michael Murnane

The €22 million is the combined value of the loans in Bord na gCon.

Chairman

The board has a loan of €22 million and an overdraft facility that sometimes runs at €577,000 and in 2014 was €620,000.

Mr. Michael Murnane

The other side of it is that there is a back-to-back of the balance sheet on page 26 where the Chairman will see that there is cash at bank of €880,000.

Chairman

This is back to back with the overdrafts.

Mr. Michael Murnane

That is back to back with the overdrafts.

Chairman

There was €1 million of a deficit in 2015. How is the board dealing with that? Is there a €1 million deficit?

Mr. Michael Murnane

Yes, in the accounts.

Chairman

Yes.

Mr. Michael Murnane

We are not satisfied with it.

Chairman

How is the board going to deal with it? What is its plan?

Mr. Michael Murnane

The €1 million deficit is not a cash loss. Half of it relates to depreciation and the other half relates to a write-down in the pension liabilities or increasing pension liabilities over pension assets. From a cash perspective, it has not disimproved. That materially is what the €1 million is. However, it is not a position------

Chairman

It is still a deficit of €1 million.

Mr. Michael Murnane

It is. It is not a comfortable position, no.

Chairman

What will be done to correct it?

Mr. Michael Murnane

A bit of work has been done to address it. We have put together a funding proposal on the pension which has been accepted by the board and submitted to the Department. It is now going into member communication. The adoption of that funding proposal should assist to deal with the growth of that pension liability which increased by €3 million between 2013 and 2014.

Chairman

Let us address that. The deficit in the pension in 2013 was €6.8 million and in 2014 it was €10.4 million.

Mr. Michael Murnane

It was €10.8 million.

Chairman

Why?

Mr. Michael Murnane

It is predominantly to do with the FRS. It is the assumption made by the actuary about the future value of the scheme - what the scheme will return or what the scheme liabilities are. Scheme returns have been affected by external policy decisions. Our-----

Chairman

We understand that. How do you address it?

Mr. Michael Murnane

We have addressed it. We have a funding proposal put together that is going to need additional funds for the scheme over an eight-year timeframe.

Chairman

Where are you getting the funds from?

Mr. Michael Murnane

It would not have been possible without the extra allocation from the Horse and Greyhound Fund.

Chairman

Part of this €10 million to €14 million increase in funding will go directly to the pension fund.

Mr. Michael Murnane

Part of it will go to the pension fund.

Chairman

How much will go to the pension fund?

Mr. Michael Murnane

As I said, it is subject to member communication.

Chairman

How much is going to the pension fund?

Mr. Michael Murnane

An extra €400,000 to €500,000.

Chairman

Can I ask the Comptroller and Auditor General whether that is an adequate amount to put in to address this gap?

Mr. Seamus McCarthy

The gap is €10.8 million. It is a long-term liability.

Chairman

Are you satisfied with that as an accounting strategy?

Mr. Seamus McCarthy

It is not really an accounting strategy, it is more a policy decision as to whether to fund the liability.

Chairman

If you had a liability of €10.8 million and you decided to put €500,000 into it this year, is that enough?

Mr. Seamus McCarthy

The liability stands. The liability is still there.

Chairman

I think he is saying it is not enough.

Mr. Michael Murnane

When it comes to pensions, there are two methods of valuing liabilities. I am not an actuary, so you will have to forgive me.

Chairman

You have an actuary-----

Mr. Michael Murnane

We have the work done. The funding proposal has been prepared by our actuarial firm since the start of this year. It has estimated that to be sufficient to go into the future. We have also allowed it to have contingency in the figure just in case there are overruns. That proposal has to go to member communication and then it has to go to the Pensions Board, but as I said previously, it has received trustee approval. The trustee is supportive of it and he-----

Chairman

What is the projection for 2015 on this figure?

Mr. Michael Murnane

For the pension?

Chairman

Yes.

Mr. Michael Murnane

I would be expecting a drop of €3 million to €4 million in that liability.

Chairman

How did that occur?

Mr. Michael Murnane

With that funding you are adding that extra element of certainty in regard to the-----

Chairman

That causes-----

Mr. Michael Murnane

It offsets that. The other thing about it is that with the proposals there are adjustments to the scheme, which I would prefer to leave for member communication, that will affect the future liabilities of the scheme as well.

Chairman

You reckon €500,000 from the allocation will go to that.

Mr. Michael Murnane

At a minimum. There is another process that has to be dealt with. A section 50 application and a section 49 application have to be done as well.

Chairman

On page 37 of the accounts there are details of the shareholding of Bord na gCon, the sub-companies. Mullingar is 51% minority interest. Who owns the other share?

Mr. Michael Murnane

I believe it is two local families, but I do not have their names at present.

Chairman

I know you have a lot to do and you are rebuilding and so on but surely you have to know who the shareholders are.

Mr. Michael Murnane

I would know but I just cannot remember them today, that is all. I would know them. Those records are available to me. I can-----

Chairman

Can you send that in to us?

Mr. Michael Murnane

Absolutely.

Chairman

Is there anyone on the board or the control committee who is connected to or benefitting from any of these sub-companies? Are they all very different companies or is there a crossover in any way?

Mr. Michael Murnane

There is no director on any of these. You can see from the shareholding that outside Mullingar all companies are effectively owned fully by Bord na gCon. There is no shareholding held outside that.

Chairman

All I want to know is that you are happy with the construction of all of these different entities, that there is not a crossover of directors here, there and everywhere.

Mr. Michael Murnane

No director of any of the subsidiaries is sitting on the board.

Chairman

You will confirm that to us in writing.

Mr. Michael Murnane

Yes.

Chairman

To go back to the court cases, I do not want to get involved in the settlement in each of the three cases, but I want to say to the Department of Agriculture, Food and the Marine that some of these arrangements that are reached out of court have this confidentiality clause and it is a bit of a nonsense because the Comptroller and Auditor General is going to see the figures at some stage. They will go into the public domain, they will be debated here and they will be known here. You know them already. Why should Bord na gCon, or any other agency of that kind, be allowed to use that confidentiality agreement to hide what is going on? Do you intend to change that? We have come across this before.

Mr. Brendan Gleeson

I do not want to say anything that might prejudice what is going on at the moment with the conclusion of this case-----

Chairman

Stop. That does not come into this. I am talking about-----

Mr. Brendan Gleeson

You have asked me a question.

Chairman

I am talking about the general approach to this. It does not have anything to do with that case. It is done and dusted, it is sorted. There is confidentiality; he will not even tell us, he is standing by the courts. Great. Are you satisfied with that and the nonsense that 12 months down the line, when a little time has gone by, all the figures become known anyway?

Mr. Brendan Gleeson

I think you make a very good point. You are right; the figures will become known because they will be fully accounted for. I cannot predict what circumstances might arise in the context of a particular settlement that might require a confidentiality agreement or any other aspect of it to be put in place, but I accept that you make a reasonable point.

Chairman

It is a farce that you enter into a confidentiality agreement knowing that within 12 months the information will be in the public domain. How can you enter into a confidentiality agreement when you know you cannot have confidentiality? You are breaking the law and telling them lies, because in 12 months' time it will be in the public domain. Not you, but whoever gets involved in it. Something has to change around that in terms of the State and its approach to all of this. It happens with different Departments and agencies and it is not acceptable. It has to change. Perhaps it is a recommendation the committee might consider in due course. That is the first point.

Second, can Mr. Meaney not tell us, in terms of the three cases, at the end of all of this, without breaching confidentiality on any one case, how much it sets you back and how you deal with it? What arrangement are you making in your accounts to deal with this figure and can you give us the overall figure?

Mr. Phil Meaney

I cannot.

Chairman

That is fine. Can you give us the overall legal figure in any of the last three years, a global figure of how much you paid on legal fees in the last three years?

Mr. Phil Meaney

Before we go down that road - Mr. Murnane can look that up - in my four years on the board, these are the first cases we have had to deal with that went to court. I said earlier that these cases go back to 2010. They have been ongoing and we have had legal costs, but it was not that we settled five others in the last three years. Two out of the three were from 2010 and yes, there were legal cases because, for example, a judicial review was taken at one stage that we had to defend. Mr. Murnane can give you the figures. I would like to put the whole thing out, I fully appreciate it-----

Chairman

I accept that you cannot do that, but can you give us the legal fees for the last three years?

Mr. Phil Meaney

Mr. Murnane will give you that.

Mr. Michael Murnane

In 2012 it was €143,000, in 2013 it was €159,000 and in 2014 it was €163,000. Until mid-2015 we had spent €88,000 on legal fees.

Chairman

There is no provision in your financial statements for these settlements, is there?

Mr. Michael Murnane

Not for 2014, no.

Chairman

To keep us in the dark until you finally report.

Mr. Phil Meaney

From early 2015 we have been providing some money in case the case went wrong.

Chairman

Where do you take that money from? Is there money set aside or will it come out of-----

Mr. Michael Murnane

It is all to do with the cashflow projections and they way they are put together. Some money would be set aside within the cashflow and one would ask, when trying to get to the year end position, if that was going to be enough. With prudent management, and care for what could come out at some future point in time, we have never breached a bank balance, nor have we even gone near it. That is the way we try to work it.

Chairman

How much did the Indecon report cost?

Mr. Phil Meaney

It did not cost us anything. It was commissioned and paid for by-----

Chairman

By the Department? How much did it cost?

Mr. Brendan Gleeson

I am told it cost €60,000 or thereabouts.

Chairman

I am going to interpret and I want the opinion of the witness, that is all. If one looks at the Indecon report it reads like something that should be done in business anyway and there is nothing in it if you had a company that acknowledged how business should be done, how one would want to do it and was open and transparent and so on. The Indecon report sets that out. What was it within Bord na gCon that did not allow the organisation to comply with best practice with the result that we are at this hearing before this committee? Why did sensible people in the industry not understand, even before they went to Indecon, that something had to be done?

Mr. Phil Meaney

They did, Chairman. I believe the most important thing to come out of the Indecon report is that every stakeholder, whether it was the Minister, the Department officials or the board at the time, all had their own interpretation. We all knew something had to be done and most of us knew exactly what had to be done. Since Indecon put it in a report we are now all working in the one direction. That is very important.

Chairman

Who are Bord na gCon's internal auditors?

Mr. Phil Meaney

There are new internal auditors.

Chairman

Who were the auditors back then?

Mr. Michael Murnane

In 2013 we were in a transition period. We had a full-time auditor, a full-time employee who was out sick, and we then had a firm in Ennis called AMQ Financial Services. The service has now gone to tender and Mazars have been appointed as our new internal auditor.

Chairman

And during those years when Bord na gCon had an internal auditor and a full-time employee, did they not raise these issues at the end of year, every year?

Mr. Michael Murnane

The internal audit was mostly focused on financial controls more than industry controls.

Chairman

And they did not get into governance in any way?

Mr. Michael Murnane

Not particularly. That was my experience during 2012 with that internal auditor.

Chairman

All right.

Mr. Phil Meaney

Chairman, I wish to make one other point on an item which was discussed earlier. The reduction in State support, during that critical period, was almost €22 million. That certainly added to our woes at a time when attendances were plummeting and business was difficult in general.

Chairman

Bord na gCon put up its seven subsidiaries as security regarding its €24.7 million loan facility. If the loan was called in today how would that security stack up?

Mr. Michael Murnane

Does the Chairman mean is there enough in the assets with which to pay? We could, from the point of view of the Dublin assets. The principal asset of Shelburne Park and the 12 acres has a substantial value that can support the loan.

Chairman

Can Bord na gCon give this committee a note in regard to that?

Mr. Michael Murnane

Yes.

Chairman

The witness can send it to the clerk to the committee.

Mr. Michael Murnane

That will be no problem.

Chairman

Reference was made to board fees of €48,650 in 2013 and €50,000 in 2014. Is that correct?

Mr. Michael Murnane

That is correct, yes.

Chairman

What other fees or expenses are paid to people or officials for travelling around?

Mr. Michael Murnane

Some people have a fuel card and they do not claim expenses at all, which is a better way to control it. They would get normal travel expenses.

Chairman

On the fuel card?

Mr. Michael Murnane

On the fuel card.

Chairman

I understand how the fuel card works.

Mr. Michael Murnane

We all pay and whoever benefits pays the benefit.

Chairman

Are there people within the organisation who travel around regularly to make inspections?

Mr. Michael Murnane

Yes.

Chairman

What are their job titles?

Mr. Michael Murnane

They are the control stewards and stipendiary stewards. They are the stewards at meetings and stewards who perform the tests. They travel the most.

Chairman

Is the organisation satisfied with the controls in place for those expenses?

Mr. Michael Murnane

There are expense sheets which must be vouched for. They follow the normal travel and subsistence claims and the mileage expenses that are paid are guided very much by Revenue approved milage rates.

Chairman

Bord na gCon has appointed a new full time procurement officer.

Mr. Michael Murnane

Yes.

Chairman

Is that person still in place?

Mr. Michael Murnane

Yes.

Chairman

Was that in August 2013?

Mr. Michael Murnane

Yes.

Chairman

Has there been an improvement in Bord na gCon's procurement process?

Mr. Michael Murnane

Yes.

Chairman

I have one last query regarding the export of dogs and the number of breeders. Has Bord na gCon conducted an assessment on how the breeders are affected by the Dog Breeding Establishments Act 2010, including the 15 week control before a pup can be exported, the microchipping and everything else? Has an impact analysis been done in regard to that? Is that what is driving breeders out, along with everything else? Are they getting value for the dogs that they export or is the export market still there?

Mr. Phil Meaney

Certainly all the extra regulations, whether it is Balai certs, tattooing or microchipping, are making it more difficult but we must concede that where animal transport is concerned, whether it is horses or cattle, there is tight control. I believe that is best in the long term.

Chairman

The question I am asking of Mr. Meaney is about the breeders. Is there a need for Bord na gCon to engage with the breeders to bring them along in matters of compliance and in understanding this new regulatory framework within which they now find themselves?

Mr. Phil Meaney

Absolutely. Bord na gCon is meeting with breeders on 15 December to establish where supports can be best placed - directly to breeders, to owners or through prize money. I said earlier that this is the first year that Bord na gCon has a bit of money going into the new year to invest in the grassroots but we want to be absolutely sure that we put it in the right place or places.

Chairman

So Bord na gCon has not started that engagement with the breeders yet?

Mr. Phil Meaney

Invitations are for 15 December.

Ms Geraldine Larkin

The consultation has been ongoing throughout the year. It has been a layered consultation with the various stakeholders. The announcement in the budget of the extra €1.2 million necessitates further consultation and further exchange based on the findings from earlier in the year.

With regard to the additional costs associated with microchipping and the requirements for vaccinations, Bord na gCon organised a number of clinics in 2014 and 2015 to facilitate dog owners who wished to have their greyhounds vaccinated and microchipped and ready for export. Those sessions were arranged to minimise costs for owners and breeders. There is recognition that the extra legislative requirements are putting costs onto the industry as a whole, not just on breeders.

Chairman

Bord na gCon is to invest in what Mr. Meaney calls the grassroots. He probably gets this from his political background. He will invest in a system to move them along and they need this kind of support.

Ms Geraldine Larkin

No decision has been taken on where the money will be targeted. It is very much about balancing expenditure and ensuring there is responsible breeding.

Chairman

There was a bad debt of €71,000. Is there any other outstanding debt?

Mr. Michael Murnane

At the end of 2014 there was a debt of €2 million. This year it will be close to €1 million. There might be something over €2,500, but we are not finished.

Chairman

There is nothing major.

Mr. Michael Murnane

No.

Chairman

The Department of Agriculture, Food and the Marine has regular engagement with Bord na gCon. Is the Department satisfied that, out of the difficulties it had, with the structures in place, it can follow the business plan?

Mr. Brendan Gleeson

We are still in a very difficult position and have noted the Comptroller and Auditor General's Note 25 in the accounts. A road map is in place in the Indecon report. As the Chairman said, they are the normal business arrangements that should be in place. However, the report has galvanised the industry. We are satisfied that Bord na gCon is implementing it. In order to move itself away from this very difficult financial position, something must be done about reducing the debt. There are various strands to the work, of which the sale of assets is a very significant strand. We cannot see a mechanism to reduce the debt through the normal business processes without significant asset sales.

Chairman

The last time Mr. Meaney was here I mentioned the different views being expressed about the industry, some contrary and some contrarian. Has he ever thought about having more of them on the board, to keep the sharp edge sharp?

Deputy John Deasy

It sounds like the chairman in Fianna Fáil.

Chairman

Or the Deputy in Fine Gael. It is the pot calling the kettle black. It works. On a serious level, there are people who get very annoyed about some of the things Bord na gCon does. They want to contribute to the industry but believe they have no platform on which to do so. When Mr. Meaney talks about engaging with breeders generally to see what they want, at times it is worthwhile listening to outsiders.

Mr. Phil Meaney

Several weeks ago there was an opportunity for those who felt they should be on the board to throw their hats in the ring. A small number continually call for the chairman, board members, the CEO and the executive to be fired, despite the fact that the people in all of these posts have changed in recent years. The irony is that there was the same fallback position in the time of previous chairmen.

Chairman

Are they just unhappy in life?

Mr. Phil Meaney

I would not like to say that. No matter what one does, there are a small number of people who will always find difficulty. I will give an example of a contentious issue which arose when I became involved in the board and which proved to me what we were dealing with. The board was faced with a decision on whether we should race on Good Friday and decided to do so. I was born in the 1950s and would find it difficult to say whether we should have raced. However, I always believe in going with the combined wisdom. We raced at four of our major venues on Good Friday. We received letters of congratulations saying it was right to give people the opportunity, while on the other side, a small number of people preached hell fire. No matter what we do, we will please some people and displease others. Such is the industry we are in and we must try to work with the majority.

Deputy Sean Fleming

I was listening to a conversation about Bord na gCon's properties. What is the annual commercial rates bill for all stadia?

Mr. Michael Murnane

It is €434,000, but it is to decrease to €365,000.

Deputy Sean Fleming

Why is the rates bill to decrease?

Mr. Michael Murnane

The rates in Limerick for a smaller stadium were higher than those at Shelbourne Park. There was a revaluation at county level. The stadia in counties Kildare and Westmeath are due to be revalued this year.

Deputy Sean Fleming

What has the experience been in counties where revaluations have occurred? Have rates decreased across the board or have any increased?

Mr. Michael Murnane

Most of them have decreased. There have been revaluations in Waterford, Limerick and two in Dublin and most have decreased.

Deputy Sean Fleming

If Bord na gCon's rates bills have decreased in these counties, other people's have increased to compensate.

Mr. Michael Murnane

I cannot argue the point.

Deputy Sean Fleming

Recommendation No. 9 in the Indecon report is "Priority focus on co-mingling and fixed odds betting opportunities". What does co-mingling mean?

Mr. Joe Lewins

Co-mingling involves people outside the jurisdiction backing into our pools here.

Deputy Sean Fleming

I understand. The response Bord na gCon published on 10 October 2014 detailed the action point "Developing co-mingling contracts and income streams" and stated, "William Hill and other similar agreements secured, contracts ongoing". Another action point is "Conclude negotiations with TV providers" and the completion date is "quarter 4 2014 and ongoing". That was at the end of last year. The chart on page 11 of the document indicated the projected financial improvement from the review of tote operations would be €608,000 in 2015, €461,000 in 2016 and €92,000 in 2017. The projected income from international co-mingling, television sales and other related wagering opportunities was €600,000 in 2015, to drop off to €30,000 in 2017. Will Mr. Lewins explain this? Is it a one-off, up-front payment? Why is so much income coming in from it? How much of the €600,000 has been received so far and what is expected to be received by the end of the year? Why is the figure to drop off from €600,000 to €30,000 in two years?

Mr. Joe Lewins

It is a cumulative effect as opposed to a one-off payment. According to the initial Indecon report, the majority of the €600,000 was to come from television sales through being able to sell our product to the United Kingdom and Ireland through the betting shops, the retail estate. There has been a significant lag, given that we did not reach the trial basis until 1 September this year. They wanted to trial it for a number of reasons. They wanted to establish whether we could deliver what we said we could and whether we could offer the retail industry the margins it was used to in the United Kingdom, which was the biggest market. The major players did not want to buy the product until they saw it. We have just concluded the 12-week trial, albeit much later than anticipated. We had anticipated that it would be finished earlier in the year. We are in negotiations to conclude contracts with the hope the revenue we first thought we would get in 2015 will materialise in 2016. In effect, we are one year behind.

Deputy Sean Fleming

That is fine. When we get these lovely reports, I get worried. This is an Indecon report and this is the Bord na gCon response. We were given dates. We have one month to go in 2015 and there is this €600,000. It was mentioned earlier that much of that €600,000 would come through this year but now Mr. Lewins is saying it is not happening this year.

Mr. Joe Lewins

The €600,000 from co-mingling will come through this year. The Americans began to bed into our system in May 2015. As was alluded to by the chairman, the American customers are bedding into our pool for which we get a revenue share. They get a share of our pool.

Deputy Sean Fleming

So in a full year, say, 2017, how much would one expect that heading to bring in? Would it be €1.5 million or-----

Mr. Joe Lewins

I would anticipate close to €3 million if the major players get revenue share.

Deputy Sean Fleming

That is the gross figure.

Mr. Joe Lewins

That would not be the retention rate; that would be turnover. That would not be-----

Deputy Sean Fleming

What is the retention rate?

Mr. Joe Lewins

It varies between 5% to 7%, depending on which company we are dealing with. We retain between 5% to 7%.

Deputy Sean Fleming

So out of €1 million, one will only get €70,000.

Mr. Joe Lewins

Yes.

Deputy Sean Fleming

So out the €2 million, one will only get €150,000.

Mr. Joe Lewins

Depending on the rate.

Deputy Sean Fleming

From our perspective, when I look at figures of €600,000 and another €460,000-----

Mr. Joe Lewins

Regarding that €600,000, I said it was hoped to get the majority of that from television.

Deputy Sean Fleming

So Mr. Lewins is telling me that €600,000 will end at €42,000, 7%.

Mr. Joe Lewins

This year, yes.

Deputy Sean Fleming

Mr. Lewins can understand how the figures presented here gave a completely different complexion to-----

Mr. Michael Murnane

Sorry, Deputy, Mr. Joe Lewins is right. What Mr. Lewins is talking about has to come in. What has to come in is €3 million-€4 million gross turnover. One gets a margin of between 5% and 6%.

Deputy Sean Fleming

Is that commission paid to Bord na gCon?

Mr. Michael Murnane

The Deputy is 100% right on that. There is a second part of the product which is the sale of the television pictures. That could turn out to be a fee per meeting or a fee per race, so that is gross income.

Deputy Sean Fleming

Is it like At the Races-----

Mr. Michael Murnane

Correct. So one will get X per race and there is no other cut.

Deputy Sean Fleming

Leaving aside At the Races or selling the races, this co-mingling bit is built up here as being a big source of income for the next couple of years but it transpires that it is quite small.

Mr. Michael Murnane

The co-mingling has damped down through Indecon but it is------

Deputy Sean Fleming

I do not get that from reading the report. I have not read it all but I read all about this income, tote operations and €400,000 next year but nobody is telling me it is only 7% in reality to Bord na gCon. There appears to be a big gap for a person who is not an insider reading that documentation. That is all I am saying. I refer to the document the witnesses gave us on the IGB response to recommendations made within the Indecon report. When I go to section 9, development of Bord na gCon information technology, I see that it is been implemented and that development of co-mingling has been implemented. One would think this was all done and dusted but the witnesses are now telling me that when we probe this, Bord na gCon is completing a trial stage.

Mr. Joe Lewins

As Mr. Murnane said, there are two elements to it. The development of co-mingling has been built. We built the platform and the IT infrastructure to allow us to co-mingle with different parts of the world. That, in effect, has been built but the difficulty with co-mingling is that one has to depend on third parties within the overall system. We have agreed a contract, as the chairman alluded to, with some iconic companies 12 or 13 months ago. They had to build their infrastructure and they are not in a position to bed into our system yet so they are holding us up as opposed to the other way around.

Deputy Sean Fleming

We got a report today on the 27 recommendations from Indecon and the Bord na gCon response last year stating that it has all been implemented. We got a response last night on these recommendations stating that the vast majority have been implemented. When we tease it out, it appears we are a long way from it being fully operational. As a committee, we have to be more judicious in accepting the word "implemented". When I saw the word "implemented", I thought it was up and running but the witnesses are saying they have a bit to go yet.

Chairman

If that report were to be looked at again and if we were to be given more specifics on where Bord na gCon is at, it would help. I call Deputy Deasy.

Deputy John Deasy

On an issue I asked about earlier, for the sake of completeness, were the circumstances surrounding Enterprise Target Solutions reported to the Garda and, if so, has the Garda investigated it?

Mr. Michael Murnane

I understand the Garda has not contacted us.

Deputy John Deasy

Has Bord na gCon contacted the gardaí regarding the issue? Is not there an element of fraud?

Mr. Michael Murnane

No, I do not think we have.

Deputy John Deasy

Is there not an element of fraud involved in this. Does Mr. Murnane think so?

Mr. Michael Murnane

We will take the Deputy's advice.

Deputy John Deasy

I am surprised Bord na gCon has not done so. If Mr. Murnane was to admit to me to me it was, effectively, a con job, I am surprised he has not done so.

Chairman

He has not sought legal advice on it. Does the committee agree to dispose of the 2014 financial statements of Bord na gCon?

Deputy Sean Fleming

I want to hold off not on a big issue but there is a large figure in regard to that legal settlement, which is fundamental. It is a six figure sum. I do not know how close it is to a seven figure sum but it is a large sum.

Mr. Phil Meaney

Sorry Deputy, through the Chair, that issue is for the 2015 accounts.

Chairman

These accounts are for 2014.

Deputy Sean Fleming

I will let-----

Chairman

We will let 2014 go and deal with 2015.

Deputy Sean Fleming

We will pick it up again.

Chairman

We do not know whether we will or not.

Deputy Sean Fleming

If we are here, Chairman, we will.

Chairman

Does Deputy Deasy wish to raise something?

Deputy John Deasy

The pigeon came back from the Department of Public Expenditure and Reform. The answer is as vague as the previous responses we have got from the Department of Public Expenditure and Reform.

Chairman

At least it is consistent.

Deputy John Deasy

Yes, I agree, especially with regard to the IBRC investigation. The last line is interesting that in order to complete its work by the end of 2016, a request has been made for funding of €3 million. Yesterday, the Taoiseach mentioned that this investigation could possibly take eight years. Let us do the maths. If that is the case, or even close to it, given that by 2016 an additional €3 million will be involved, then one is talking about serious money if it runs into another seven years beyond that. It is clear to me that a proper analysis, based on the estimates with regard to how long this could take, has not been conducted. To be honest, the answer we received from the Department of Public Expenditure and Reform indicates that.

Chairman

If the Deputy wants to raise specific queries relevant to this, we can ask for further information. I think that is what we should do and take it up next week.

Deputy John Deasy

That is fine.

Deputy John Deasy

I think Bord na gCon should contact the Garda. There is a bad debt here of €71,000. I request that Bord na gCon look into the issue legally.

Mr. Michael Murnane

I take the advice.

Chairman

In regard to next week's meeting, Department of Finance officials will appear before the committee. Serious issues have arisen in relation to the sale of loans to Cerberus and how it is treating the customer at the other end, causing serious difficulties to local economies and businesses and, in particular, a business in Kilkenny. I intend to raise the issue with the officials next week as to what controls are in place once a bank sells its loan into Cerberus. What is the attitude of the Department of Finance and the State to protecting businesses that are working with the banks but are unable to work with Cerberus because it is demanding full payment of a loan upfront, when in fact it is a distressed business? It will close businesses. In one case, there are 40 jobs involved. I am expressing my deep concern about its attitude and will raise the issue next week.

The witnesses withdrew.

The committee adjourned at 2 p.m. until 10 a.m. on Thursday, 3 December 2015.