National Treasury Management Agency: Financial Statements 2017 (Resumed)

Mr. Conor O'Kelly (Chief Executive Officer, National Treasury Management Agency) and Mr. Ciarán Breen (Director, State Claims Agency) called and examined.

We will return to the National Treasury Management Agency. Did Mr. Breen want to comment?

Mr. Ciarán Breen

I wanted to provide clarification for the committee. I know Deputy Jonathan O'Brien is not here but I want to put on record for the committee that I was informed over the lunch break about the case we were referring to. Although the file that I examined had no indication that the person had any contact with CervicalCheck, since her claim was made against a general practitioner, GP, and a hospital, arising from a colposcopy issue, I can clarify that she is one of the 221 women. She had been to CervicalCheck to get her smear tests done but her claim did not relate to that at all.

The original claim?

Mr. Ciarán Breen

Yes. That is to clarify the matter for Deputy O'Brien.

I appreciate that. When the meeting is over, I will ask the secretariat to convey that directly to Deputy O'Brien in the event that he does not hear it, so that he is aware of that. Deputy Kelly asked a question. Mr. Breen knows not to mention any names in public. I do not have to remind him of that.

Mr. Ciarán Breen

Of course. Deputy Kelly kindly gave me the name so I made inquiries over the lunch period. Although the title of the letter which looked for the record indicated the name of the person, when we carried out a search, having received that letter, we had no record whatsoever of anything about cervical cancer with regard to the particular person. We did not retain any record about that and there is no notification of an incident or a claim.

I understand that in an item of Mr. Breen's correspondence, he says he has a record.

Mr. Ciarán Breen

Not relating to cervical cancer. It was a record about a completely unrelated issue.

The point still stands. Why is Mr. Breen not giving this information to the family?

Mr. Ciarán Breen

It was not relevant to the particular inquiry in the letter, which was simply an inquiry about cervical cancer.

Mr. Breen is wrong. I have it here in front of me. I also have all of Mr. Breen's correspondence which he signed himself. It refers to the immediate release of all documents of any nature whatsoever held by the State Claims Agency, its servants and agents regarding the late individual. It does not say CervicalCheck.

Mr. Ciarán Breen

There were two pieces of correspondence.

Mr. Breen wrote back to the family solicitor on 22 May.

Mr. Ciarán Breen

Yes. The other record was not even a record relating to-----

It states that having undertaken searches, one record was located.

Mr. Ciarán Breen

Yes. That is the record I am talking about. It was a trivial incident, unrelated to cervical cancer.

Okay. Can I get back to the principal point? This causes concern and worry. Why is Mr. Breen not releasing the information to the family? The family of the deceased woman looking for information are entitled to it. Why is Mr. Breen not giving it to them?

Mr. Ciarán Breen

We will release the particular record-----

The State Claims Agency is going to charge them €30 to appeal it.

Mr. Ciarán Breen

We will release the record. It is a trivial record.

Why did the State Claims Agency not provide it? Why did I have to raise this in the Committee of Public Accounts to force the State Claims Agency to release a record tomorrow when the decision maker, who I will not name, said that the agency will not release the record? Why was this information-----

Mr. Ciarán Breen

We sometimes take a line on things like this because we get parties who are not, for example, families or affected parties-----

This is obviously the whole family.

Mr. Ciarán Breen

I understand that. We assumed at the time that it related to a cervical cancer issue. We did not retain any record relating to that.

Mr. Breen is telling me that the agency will release the information.

Mr. Ciarán Breen

We will release the record to the family or to the solicitor.

I suggest that Mr. Breen looks at the agency's freedom of information processes. It should not take a family contacting me through their solicitor to raise it in the Committee of Public Accounts for the State Claims Agency to release documents which it should have released in the first place.

The point is well made and Mr. Breen is going to release it. Deputies Catherine Murphy, Catherine Connolly and Kate O'Connell had indicated. I will have some questions myself. I will let members in for a second round and I will be working with a set of financial statements.

I will come back to something I touched on this morning relating to contingent liability. There was a Supreme Court case in 2017. The court ruled, with regard to the 1%, that claims for future loss should be calculated at a real rate of return of 1.5%. This results in a higher net percentage value being placed on projected future cashflows. There has been an increase as a consequence of that. Is that a real cash increase? Does it have an immediate impact? How does it play out into the future?

Mr. Conor O'Kelly

There is a real increase. I will let Mr. Breen take the question. It is a fundamental question about the rate of return that is assumed and used with regard to lump sum payments, in particular, and to calculate what that lump sum should be, one has to have an implied future rate of return that could be earned on what is called a risk free or low risk rate. That rate has been set higher and therefore any lump sum payment would be made higher. Even in retrospect, as I know Mr. Breen will refer to, there were many cases which were settled with potential adjustment to any future change in the rate of return.

If somebody was made a ward of court and a payment went into a fund for investment, is this in addition to that or is it how amounts are projected into the future?

Mr. Ciarán Breen

It is how one projects the amounts into the future. It had immediate effect. When that case was decided, pending the case going to the Court of Appeal, we agreed with families that we would pay them the difference between the old rate of 3% and the 1% and 1.5% in the event that the Court of Appeal decided that was the appropriate rate.

In 2017, therefore, we paid out €25 million in what we refer to as "catch-up payments". That was the difference between what we settled at, 3%, and the new rate of 1% and 1.5%.

Is there a further catch-up or is that it, following which the projection involves new claims on the 2.7% estimated to be contingent?

Mr. Ciarán Breen

We had 45 catch-up cases. At this stage approximately 70% of catch-up cases are agreed with plaintiffs' lawyers. There are some ongoing negotiations between actuaries for some of the plaintiffs and us to decide the balance.

Does it have an impact on the projected contingent liability? I presume that is why it has gone up.

Mr. Ciarán Breen

It does.

I turn to a particular aspect of the investment in housing. A reason has been given, but we had been expecting €400 million of the proceeds of the sale of Bord Gáis to be placed in an off-balance sheet entity and applied to housing. However, that did not happen. We were told that it did not prove possible to devise a model which would be capable of utilising the €400 million on an off-balance sheet basis. I understand it probably had to be used in that way. It was a very small amount, given the amount realised. It was almost a political sweetener to indicate that some money would be used in that way. Why was it not possible to make that off-balance sheet arrangement, given that we have tier 3 housing associations? There are mechanisms which do not directly involve local authority housing whereby guarantor arrangements could have been made, for example. Why did it not prove possible to do this?

Mr. Conor O'Kelly

I do not know the answer. I am guessing it is a matter for the Department of Housing, Planning and Local Government.

The NTMA was not managing it.

Mr. Conor O'Kelly

No.

Irish Water features in the loans. There is a loan of €450 million. Initially, it was €300 million and then €150 million. The only income Irish Water has apart from commercial water charges is from the Exchequer. Is it really a loan facility in that case? It does not appear that Irish Water has an income from which it can discharge loan repayments. It has been extended for one year. What, if anything, is the intention for the loan?

Mr. Eoin Dorgan

I am not sure of the exact time involved. Following on from the Oireachtas committee on the future of water policy, the Government decided that the commercial loans would be refinanced through Exchequer debt. The ISIF is one element of it and there is a further €800 million in commercial loans, on which work is ongoing. Within the coming six to nine months we are working on refinancing it through State debt for which the NTMA will provide. Irish Water will then be borrowing from State sources, rather than from commercial lenders and the ISIF.

I presume it will be at a favourable rate.

Mr. Eoin Dorgan

Yes.

Responsibility for an additional 17 section 38 organisations and others was taken over by the State Claims Agency. There was an 18% increase in settlements in 2017, resulting in a figure of €218 million. Was that exclusively because of the additional agencies or was the profile of claims different?

Mr. Ciarán Breen

No. The portfolio is growing all the time, depending on the number of cases we settle in any one year and the higher values associated with some of them. For example, every year our projections for what we will spend normally go up because we settle a greater number of cases and cases of greater complexity. It is related to value, the number of cases and their maturity.

We know that there is a difference in the cost of settling cases when there is a clinical issue involved. How do we compare with other countries where the agency's counterparts settle claims in terms of the profile and extent of claims?

Mr. Ciarán Breen

The nearest comparator in a common law jurisdiction is NH Resolution which used to be known as the NHS Litigation Authority. Its volumes of clinical claims and claims generally are so much higher that it is not a perfect comparator. On the non-clinical side, the level of damages in the United Kingdom is lower than here. The personal injuries commission is looking at this issue as a result of the work of the working group on the cost of insurance. Non-clinical claims for whiplash are being looked at, for example, because damages in the United Kingdom are so much lower than here.

Does the agency have a way to measure clinical cases?

Mr. Ciarán Breen

Clinical cases tend to be very serious. In the United Kingdom damages for catastrophic injuries are, in fact, somewhat higher than here. For example, I had a meeting yesterday with a reinsurer who told me that he had seen £30 million paid out on a catastrophic injuries claim in the United Kingdon, while in another case the figure was £35 million. The highest we have paid out in a catastrophic injuries case is approximately €19 million.

I am not talking about individual cases but numbers. I am trying to get to a question I asked Mr. Breen earlier about looking at causes and which he answered.

Mr. Ciarán Breen

Perhaps I might help the Deputy by saying the following. We have asked our actuaries, for the purposes of our strategy committee in the agency, to carry out the kind of examination for which the Deputy has just asked, to look at the cost of claims here relative to the cost in the United Kingdom in both clinical and non-clinical cases. Certainly, the value is lower here for clinical claims than in the United Kingdom. The rate of claims is proportionate both here and there.

I wish to follow on from what Deputy Catherine Connolly asked this morning about the investment in housing within the private sector. There is ethical investment in other areas. Would the NTMA fund the construction of developments wholly run by REITS? They may well be foreign investors that are subject only to withholding tax. Does the NTMA look at for whom buildings are likely to be built?

Mr. Conor O'Kelly

We would be happy to look at them. We would look at any proposal in the REITS space if it made sense.

That is what I am worried about. Not only are they able to achieve very high rents, they also pay very little tax. To understate it, it would be very undesirable to invest public funds to build where such an advantage would accrue to the investors.

Mr. Conor O'Kelly

We would be happy to invest in that kind of structure, but we have not, as yet, seen a proposal with which we would be happy.

The pensions reserve fund stands at €8.9 billion.

Mr. Conor O'Kelly

The Ireland Strategic Investment Fund, yes.

The one which was not called the pensions reserve fund. We used most of it, around €19 billion to bail out the banks at the time, or it was not quite a bailout. That was initiated a long time back and was building up. There is a real pensions time bomb. The fund is now a portion of what it was almost eight or ten years ago. Has the NTMA done projections about what the requirements will be? I presume that fund is being invested to try to get the maximum return. Is that something for the NTMA or is it at policy level?

Mr. Conor O'Kelly

It would be a policy issue in respect of pensions. I know there is a lot of discussion around pension reform, auto-enrolment and areas like that. As of now, no policy has been finalised that would come to us for potential participation or assistance in terms of execution. To go back to the Deputy's earlier point, if we put back in the value of the shareholdings in the banks plus the €8.9 billion, we are getting back up to €23 billion or €24 billion, close to where it was at its height, notwithstanding that it could have been invested in the meantime.

Considering that there was €5 billion to invest and it is now €8.9 billion, that is potentially a sizeable difference if things had remained as they were and there was no further money invested into it. When we talk about the pensions time bomb and the adequacy of the provisions, is that something the NTMA projects or is it done at departmental level?

Mr. Conor O'Kelly

That is done by the Departments.

Mr. Eoin Dorgan

It is between the Departments of Finance, Public Expenditure and Reform, and Employment Affairs and Social Protection. They are involved in those projections.

Is this money there to be used for that sole purpose?

Mr. Eoin Dorgan

The Government's decision in 2011 was to refocus the remainder of what at the time was the National Pensions Reserve Fund into the ISIF to be invested in Ireland, in adherence with the double bottom line in terms of commercial return and economic impact. At present, the entirety of the National Pensions Reserve Fund is either in the directed portfolio, which is effectively the bank shares, or the discretionary portfolio, which is the €8.9 billion that is being transitioned into investment in Ireland.

Right. On the pensions time bomb and the ageing population, while I wish we could hold the time back, when are we getting into serious trouble in terms of funding pensions?

Mr. Seamus McCarthy

The Department of Public Expenditure and Reform is best placed to answer that and it will be before the committee in October. Separately, the Department of Employment Affairs and Social Protection just last year completed a projection of what State pension costs will be into the future. The figures certainly are very concerning. When it presents the Social Insurance Fund accounts for 2017, it will be referencing that and the document will be available to the committee for examination.

I thank the Comptroller and Auditor General. The NTMA said it would issue so-called green bonds. I believe Poland and Belgium have done so. How does that work? Is it separate money and a separate process? Does it require a policy initiative or can the NTMA itself initiate it?

Mr. Conor O'Kelly

It is something we are talking to the Department about right now. Essentially, it is fungible with the other debt so it is segregated. Investors will invest in so-called green bonds, provided the money is being used for sustainable investment processes. It could be new electric trains, water upgrading systems or any environmentally friendly projects the Government has on its books, and the Government has many. Once the projects are earmarked and it is decided the money will be spent and is ring-fenced for that purpose, a different pool of capital can be accessed, which is quite good news for us. Whatever money we then raise is used to finance those programmes. They get reported on every year. Investors will look for an independent report every year to see that money is being spent on that basis so it has been very successful. It is a growing pool of capital and, for Ireland diversifying, from a selfish NTMA point of view in terms of debt, getting access to new pools of capital is very attractive. It also provides a dedicated pool for investment in green projects that has to be fulfilled.

Is this all private money or is there some Government money associated with it?

Mr. Conor O'Kelly

No, this is all Government money. We are borrowing on behalf of the Government and the Government commits to invest in €4 billion of green projects, which we pre-identify to investors.

How does that work with the general government debt?

Mr. Conor O'Kelly

It is totally fungible. It is essentially the same but whatever-----

It is just using the money differently.

Mr. Conor O'Kelly

Correct, and whatever is committed to, I suppose the sovereign has some reputational risk. Ultimately, if it tells investors it will invest in those projects, it has some reputational risk in respect making sure that commitment is fulfilled.

Am I right that about €19 billion of the national debt is savings?

Mr. Conor O'Kelly

Retail savings, correct.

Is the figure for savings rising over the years?

Mr. Conor O'Kelly

It has risen, but interestingly, it has remained at about 10% of total debt. Our debt has gone up fourfold from €47 billion to more than €200 billion. The figure for retail savings was €4.7 billion or 10% back in 2007. It has stayed very steady at about 10% of the total national debt. Retail savings comprise State savings, prize bonds, and the post office savings, all done through An Post.

What was the national debt just before the crisis started?

Mr. Conor O'Kelly

It was €47 billion.

Is it €200 billion now?

Mr. Conor O'Kelly

It is €214 billion.

I am not going to dwell on this but I am right that there is an investment committee that advises on investments?

Mr. Conor O'Kelly

For the Ireland Strategic Investment Fund?

Mr. Conor O'Kelly

We have a portfolio management committee internally which proposes investments to an investment committee-----

Does that investment committee have external members?

Mr. Conor O'Kelly

Yes, it has two non-executives of the board plus three additional external members.

I am reading in the document that one of them is Ms Julie Sinnamon, CEO of Enterprise Ireland. Then we have Mr. Mark Ryan, company director and former manager-----

To what page are you referring?

It is on page 56 of the annual report. Mr. Ryan is former managing director of Accenture Ireland. That is not the same company - perhaps the Chair can correct me - that came up in respect of IT, is it? I do not want to get a company's name wrong. I may have mixed this company up with the company for the IT for the Garda station. It is a different company, is it?

Mr. Conor O'Kelly

The person the Deputy mentioned who is a member of the investment committee is a non-executive member and the former managing partner of Accenture.

Is that spelled A-C-C-E-N-T-U-R-E?

Mr. Conor O'Kelly

Yes.

Is that one and the same company about which questions have been raised in respect of IT and the Garda Síochána?

Mr. Seamus McCarthy

Yes, it was about the procurement process. It was about how they were procuring in An Garda Síochána.

That was the responsibility of the Garda Síochána in respect of procurement, but did it happen to be the company that benefited and got the roll-on contracts without procurement?

The contract was not renewed in accordance with compliance. That is the company.

Mr. Seamus McCarthy

Exactly.

That is the same company. Okay. I just wanted to clarify that. Then we have a member of the investment committee connected with Grant Thornton. Who chooses the external members?

Mr. Conor O'Kelly

They are approved by the Department, by the board and by the-----

Who chooses them initially?

Mr. Conor O'Kelly

I think the-----

Who comes up with the names to send to the Minister?

Mr. Eoin Dorgan

I think it is a combination between the agency and ourselves and the Minister is consulted on the appointment. The agency, I think, proposes. If I am wrong, I will correct that. The agency proposes and the Minister is consulted and agrees on appointments to the investment committee.

I got distracted because I am due to speak in the Dáil. I apologise. Will the Chair allow me to defer the rest of my time until after I come back?

I am sure we will be here for at least half an hour. I said "at least".

Following on from that, in the context of borrowing money to invest in sustainable projects on behalf of the State, we have historically low interest rates at present. Perhaps this question was asked in my absence earlier. I would expect an increase in interest rates. I assume there is contingency built in to deal with that so that these projects can continue if we get a rapid rise in interest rates. Has that been factored in?

Mr. Conor O'Kelly

If one raises the money, one is locked in at the rate attaching so we would only go to the market and raise the money if the rates were attractive versus a conventional bond. Once one has raised the money at that rate, then it is a fixed rate.

What happens if more money is needed in order to continue a project? Does the NTMA borrow all the money to see the project to the end?

Mr. Conor O'Kelly

Yes.

Okay, it does. What would happen if extra money was needed unexpectedly because something happened?

Mr. Conor O'Kelly

We would have to go back to the market and do it again or we could probably fund it through the normal borrowing process.

On the NAMA surplus, is the approach to crystalise it and to have a once-off gain?

Mr. Seamus McCarthy

Is Deputy O'Connell talking about the eventual NAMA surplus?

Could the witness from the Department of Finance respond because it is not part of the NTMA?

Mr. Eoin Dorgan

To be honest, that would be a decision for the Minister and the Government.

Is Mr. Dorgan allowed to have a view on whether it is a good idea to crystallise it in a once-off move or to split it and hedge one's bets?

Mr. Eoin Dorgan

The division that deals with NAMA is a separate division and it will be talking to the Minister and the Government on that.

We will have representatives from the Department of Finance before the committee in September.

For the benefit of the Deputy, when we had the Department of Finance in some time ago, we asked that specific question on the ultimate surplus. The representatives from the Department stated it had not made any decision or proposals on the matter. We asked then what were the EU rules in respect of this because the Government's general position is that any money recovered from financial assets goes towards the reduction of debt. That is the general position on the sale of bank shares, for example. Some people in the Department of Finance indicate that the surplus might be used to reduce the national debt.

It is €200 billion. Would we pay down some of that?

Yes. The next question we asked is whether the use of the NAMA surplus would require EU clearance because it would have to be done within EUROSTAT rules and we were told that no discussions had taken place with Europe yet. We asked what Europe's position was expected to be. The Department said that there is no other NAMA or anything like it in Europe so it does not believe Europe has even addressed the issue yet. I suppose the bottom line is that discussion has yet to take place. I am giving the Deputy the benefit of information obtained at a previous meeting.

I thank the Chairman very much.

Mr. Seamus McCarthy

The committee will also have NAMA in to discuss the section 226 report.

NAMA will be before the committee on the first occasion on which we meet after the recess.

Does Mr. Dorgan have a view on the disposal of bank shares? Does he think it is a good or a bad idea at this point? Although it was necessary at the time, I do not think it ideal for the State to have any involvement.

Mr. Eoin Dorgan

The programme for Government commitment is that the maximum sale of shares in any institution is 25% and that has been reached with the AIB transaction. The Department, the Irish Fiscal Advisory Council, IFAC, the European Commission and the NTMA in particular have all highlighted the high debt levels. Share sales will very much have to be a decision for the Minister in due course.

With regard to the previous session of questions, do any of the witnesses know if the State has purchased any buildings recently? I was told before lunch that it is not Government policy to buy buildings. Perhaps it is not appropriate for me to ask it here and we can get the answers somewhere else. I was trying to look into that but I cannot see such information.

Mr. Seamus McCarthy

It is an OPW policy area. The OPW is scheduled to come before the committee at the beginning of October. I am aware that it has taken leases on a significant number of buildings. It would be reasonable to expect that there is a value for money evaluation underpinning that policy. That is a question for the OPW.

Before lunch, I was trying to ask a question about the €1 million per floor per year. The fee for facility management and maintenance is more than €500,000. It just seems like a great deal of money per year to service a building. Is it the job of Mr. McCarthy to respond about value for money?

Mr. Seamus McCarthy

No, the obligation is on the Department that owns the policy and that takes out the leases to be able to demonstrate that it is delivering value for money.

So is it the Department of Finance again?

Mr. Seamus McCarthy

It is the OPW. It takes leases on buildings for most Departments and many State agencies. It drives the policy and it owns the obligation to answer for value for money in respect of that.

Has the Department of Finance been in contact or has the Comptroller and Auditor General spoken to the OPW to see about the €1 million per floor plus the maintenance fee? Do we know if that was ever considered?

Mr. Eoin Dorgan

This is a decision for the agency. However, in order to be of assistance, in terms of the purchase of buildings, people must remember that, under EU fiscal rules, this would impact on one's expenditure benchmark so it does have a very sizeable impact if one is looking at one-off expenditure in terms of how much is available for ongoing current day-to-day expenditure. That may have informed that policy decision in terms of purchasing. In terms of the NTMA premises, that would be a decision for it.

Mr. Seamus McCarthy

Going back to Deputy O'Connell's point about why we are buying in the centre of Dublin as opposed to more low-cost locations, they are policy questions that are and should be amenable to analysis. It should be possible for the OPW to demonstrate that there is something underpinning its decision.

Financial logic.

Mr. Seamus McCarthy

Yes, the economic logic.

I look forward to meeting representatives from the OPW after the recess.

I will ask a few questions myself. I use the word "few" lightly.

I will start with the national debt. I have the report in front of me. I will ask Mr. McCarthy to confirm some information that is out there and we can comment on it. I want to give the people who are watching a full and clear picture. They get bits and pieces from different questions but I like to give the overall view.

The gross national debt at the end of 2017 was €198.7 billion, almost €200 billion. That is on page 7 of the accounts. I thank Mr. O'Kelly for the extra briefing information supplied. Essentially, we have one big problem when one looks at the chart on page 12 of the accounts where it is indicated that the percentage of our debt to GNP is quite low, at 68%, which is moving towards the EU fiscal rules target of 60%. However, everybody knows - and we have discussed it with the Department of Finance - that this is not a real measure of what happens in Ireland at all because it is totally distorted by the presence of multinationals. It is not really income to the country. We have moved on to gross national income, GNI, and now we have GNI*, which Mr. O'Kelly referenced. The gross Government debt to GNI* ratio is probably a far better indication in reality. Mr. McCarthy mentions that in the document and he shows that chart. From that perspective, there is still a worryingly high level of debt.

Even allowing for the fact that the agency uses GNI* as a measure, although it is helpful to use both such measures, the national debt is still at a very worrying level. Is that a fair comment?

Mr. Conor O'Kelly

Yes, it is a fair comment.

Moving on to page 13, the debt, cash balances and gross debt are shown. I note the cash balances the agency is holding seem to have declined in recent years. In 2012, there was €50 billion in cash balances. All the figures are not given on that page, but I note from the chart the cash balances now held are only half of that amount. It would probably cost the agency to hold cash reserves but it would give a little more flexibility. Why have the agency's cash reserves declined in recent years?

Mr. Conor O'Kelly

During the crisis there was a question mark over our access to the markets and now we are talking about the price we pay when we access the markets. They are two different things. If we have a question mark over our access to the markets and are not able to fund such moneys, we would need to have very high cash buffers because we would need to be able to fund the State. Given Ireland's improving credit rating, we are now talking about the price of the credit we can access. There is not an issue about Ireland's capabilities of accessing the markets. Thankfully, that is behind us. The question now is about the price. When we decide what cash buffers to have, we make an implied view on interest rates also and whether this is a good time to lock in those rates, and that determines it. We have some very big maturities coming up.

I will come to those.

Mr. Conor O'Kelly

That is one of the reasons we have the levels of cash we currently have. The figure of €10 billion is probably the more normalised level of cash we would like to have and right now we have-----

That is 5% of the agency's debt?

Mr. Conor O'Kelly

We have about €23 billion at the moment.

When we had a difficulty accessing the market, essentially during the three years when the troika were here, 2011 to 2013, we were sitting on in excess of €50 billion in cash reserves. The agency thought we needed to have that because we might not have been able to raise such funds down the road. The troika came for a three-year period. Mr. O'Kelly might tell me if I am right in my reading of that.

Mr. Conor O'Kelly

The cash balances-----

Mr. Seamus McCarthy

The cash balances were never €50 billion.

Cash balances or other assets.

Mr. Seamus McCarthy

They were never €50 billion.

What are the "other assets" referenced in page 13? The light green segment of the chart states "cash balances or other assets". Does that refer to bank shares?

Mr. Eoin Dorgan

Banks shares-----

This is an NTMA document. The witnesses must be able to tell me to what that chart is referring.

Mr. Conor O'Kelly

Banks shares and additional other liquid assets are included-----

The bank shares would have been worth very little. What does Mr. O'Kelly mean by liquid assets other than cash? This is the agency's chart. There seems to quite an amount shown in the green segment of it during 2012 and 2013.

Mr. Seamus McCarthy

It may have had something to do with the promissory notes and the categorisation of them.

The agency needs to come back to us on this. This is its annual report. The witnesses should know these charts off by heart given that they have inserted them in it. I ask that they send us a detailed note explaining that. If a member of the public's reading of this report was similar to my reading of it, they would take from that chart that we were awash with cash all during the troika period.

Mr. Seamus McCarthy

From my recollection of chapters we produced over the years, the maximum cash and other liquid assets would have been around €22 billion to €23 billion. I have no recollection of a figure of-----

I am reading-----

Mr. Seamus McCarthy

Certainly the graphic is showing that.

From 2012 the figures go from €150 billion up to €200 billion. There is at least €50 billion in debt in that. We had the National Pensions Reserve Fund, NPRF, at that time. Will Mr. O'Kelly come back to us on this and explain that? On the face of it, it looks as if we had far more cash when we all thought we were broke.

Mr. Conor O'Kelly

No. I am sure that includes the NPRF but I will come back to the Chairman on that.

I have turned over the page and in respect of funding and maturities, it looks as if approximately €50 billion in funds are due to mature in the period from 2018 to 2020 and €10 billion has been included there. Is Mr. O'Kelly comfortable the agency can meet that? There is quite an amount in maturities coming up in 2019 and 2020.

Mr. Conor O'Kelly

Yes.

Mr. O'Kelly spoke about rising interest rates.

Mr. Conor O'Kelly

We are comfortable and that is the reason we have those significant cash balances. We have €24 billion. We have a big maturity coming up in October we have a big number of big maturities coming up in 2019 and 2020, and we are very comfortable with that position.

Okay. Is that the current cash balance? I know this annual report covers up to the end of December last year. Has the agency's cash balance gone up a lot this year?

Mr. Conor O'Kelly

Yes.

Mr. O'Kelly needs to send us a chart in respect of the period of the chart on page 13 of the annual report showing us the cash balances then and the current cash balances.

Mr. Conor O'Kelly

Yes.

Mr. O'Kelly said the agency's cash balance has increased quite an amount in the past six months.

Mr. Conor O'Kelly

It has.

Mr. O'Kelly might send us that information in order that we would have a reasonable understanding of it.

I read an article carrying the headline "Gordon MRM keeps €480k PR deal with NTMA". It states "Gordon MRM has beaten away competition to retain the prestigious public relations account with the National Treasury Management Agency". What does it do for that €480,000? That probably covers a five-year period. The journalist who wrote that article probably indicated that amount covers a number of years.

Mr. Conor O'Kelly

The contract is nothing like that amount. That firm has a contract with the NTMA and it has an additional contract it won with the National Asset Management Agency, NAMA. It could be the two of those combined, but we will come back to the Chairman with the value of that contract.

I saw that newspaper article written by a reputable journalist recently. I note it states "The contract represents a impressive double win ... earlier this year the firm retained ... [the NAMA] ... contract". It probably covers a few years.

Mr. Conor O'Kelly

Perhaps a three-year period.

Probably. Mr. O'Kelly might forward us the information on that.

Mr. Conor O'Kelly

I will forward that.

I am not suggesting it is the annual fee. That is the headline. I want a breakdown of that. The firm is doing a good job for the agency. The witnesses appear before this committee every year and every time they do or they talk or give a press conference, they give the a good impression of the agency to most people in terms of how much it is has refinanced and that the interest it has on new loans it is taking out, that is replacing old debt, is less than 1%. If people were to listen to the agency, they would assume it had most of this under control, but it transpires this morning that Mr. O'Kelly said that in the past three and a half years the agency has only replaced €50 billion, which is 25% of the debt, a quarter of it. If only €50 billion was replaced during those years, that amounts to €15 billion per annum, which is only about 7% of the agency's total debt. The agency does a good deal of selling information on how much it is replacing the old debt, but when we examine what the agency does and break it down, that accounts for only 7% of the agency's debt in any one year, on average. We only hear about 7% of its debt. The witnesses never tell us about the other 93% of it. They sell a good story. If one were to believe the information they put out, one would think we nearly had all the financing of our debt down at 1% or 2% at this stage. That is the only story we hear from them, but it transpires it is only 7% of the debt that benefits from such announcements. Does Mr. O'Kelly get my point?

Mr. Conor O'Kelly

I am not sure that I do. We do not sell anything. We tell the story; we do not sell the story, with all due respect. Also, in refinancing debt, we have to refinance it as it comes due, as it matures. None of the debt that Ireland has is callable.

Is there any mechanism, internationally, to offer some incentive to bring forward debt that is not due to mature for some time?

Mr. Conor O'Kelly

We would have to pay for it. The economics would be such it would offset the difference between debt-----

Does the agency look at that?

Mr. Conor O'Kelly

Of course, we do.

Every day?

Mr. Conor O'Kelly

Yes, of course. We make savings where we can. That is why we refinanced the IMF debt, which was callable and refinanceable, but most of the debt is fixed-term debt that is locked-in.

That is the chart I would have loved to have seen in the annual report. Will Mr. O'Kelly give us the €200 billion debt broken down in terms of how much of it is being financed at under 1%, now that some of it is under 1%, how much of it is being financed at between 1% and 2%, how much of it is being financed at between 2% and 3%, and all the way up? Is there much of the older debt on which we are paying interest at over 6%?

Mr. Conor O'Kelly

No.

So there is nothing out there that is more than 6%.

Mr. Conor O'Kelly

I believe that 5.9% is the largest coupon coming due in 2019-2020.

In 2019-2020. Will you send us on that chart because-----

Mr. Seamus McCarthy

Further down that page, the table shows some of the coupons.

Many of them are at 4% and 5%, and then they drop down to 1.7% and 2%. Perhaps Mr. O'Kelly could give us the full breakdown of the 200. That is a good indicator. That is the only information I am looking for in that regard.

I will move on to the Ireland Strategic Investment Fund. A figure of €526 million for residential housing is referred to on page 17 of the financial statement. The statement says that at the end of 2017 the Ireland Strategic Investment Fund had committed €526 million to residential housing investments in response to the national housing crisis. Can Mr. O'Kelly tell the committee how many houses were built by the fund at the end of 2017? I note all the commitments and so on but how many houses were actually built with the €526 million? How many actual houses can be counted, that is, there are 50 there or 300 there? At 31 December 2017, how many houses were built from that €526 million?

Mr. Conor O'Kelly

I cannot give the exact figure for that date, but as of today, it is 1,400 houses.

That is for units built. Will Mr. O'Kelly try to get us the figure for the end of December 2017 to which that €526 million relates? We hear the big figure and for €526 million, we have 1,000 houses so far, and I know there are a lot to come. We are here to talk about delivery but has not happened in spite of the amount of money provided. Perhaps Mr. O'Kelly could give the committee an estimate for how many houses it expects to complete this year, next year and the following year from that €526 million. This is a reasonable question. People are now talking about delivery.

I will go through the annual report systematically. In regard to the global portfolio managers, was there a change of those managers during 2017 and what criteria are there for rolling over the contracts? What are the procurement arrangements? Do they get the contract for a two year or three year period? Talk to me about the general nature of the contract for companies such as Goldman Sachs Asset Management, J.P. Morgan Asset Management, Irish Life Investment Managers, Amundi Asset Management, Blackrock Investment Management, Deutsche Asset Management and so on? What is the typical arrangement the NTMA has with these companies and how does it procure the services?

Mr. Conor O'Kelly

We have a panel of investment managers that we can use. We have the panel system and then we tender as we need them. We monitor their performance. No fund manager has been removed or changed in 2017, but sometimes we may add or subtract to the number of fund managers and between different managers, depending on the performance of the manager and on the strategy that may be pursued at the time.

If one has 20 fund managers on the panel, inevitably there would be five, six, seven or eight who are very good while some of them are okay. There must be some managers who are not as good as others. What does the NTMA do about dropping those? Why would one use the bottom third performers if one knew there were others who are consistently doing better? I am aware that the NTMA can probably reduce the amounts that are placed with them.

Mr. Conor O'Kelly

That is generally what we would do.

Is there much movement in that regard? Consider the market value of the investment of the six. Perhaps the witness can take the market value figure under the management of each of those companies for 2017, which is on page eight of the financial statement, and take it back two years to the same figure for 2015, with an explanation for why there is a significant change. We want to get a feel for this because these people are looking after the investment portfolio of taxpayers' money worth €6.5 billion. Will the NTMA give the committee an indication of why those figures moved, rather than going back just one year?

In one of the documents supplied to us by the NTMA it shows there are some 146 public bodies - correct me if I am wrong-----

Mr. Conor O'Kelly

Is that under State Claims Agency remit?

Yes, under the State Claims Agency; not under the NTMA. Will Mr. Breen from the State Claims Agency please forward to the committee a list of the 146 bodies, and what significant bodies do not come under the remit of the State Claims Agency? Do the local authorities come under the State Claims Agency?

Mr. Ciarán Breen

No.

Okay, that is one. What other big organisations are covered? Are third level colleges included?

Mr. Ciarán Breen

The larger bodies are the HSE - with regard to its clinical and non-clinical exposures - and after that the main bodies are those such as the Irish Prison Service, the Department of Defence, An Garda Síochána and so on.

Does the State Claims Agency deal with the section 38 agencies?

Mr. Ciarán Breen

Yes, some of those-----

Have they all agreed?

Mr. Ciarán Breen

Yes. Most of the agencies that have come into the scheme are from the disability sector.

Will Mr. Breen explain why this is and why some of the services are in the scheme and not others?

Mr. Ciarán Breen

Most of them were originally covered under conventional insurance policies and their premiums were going up, as members will be aware through the costs of insurance working group, which had been dealing with the issue. Many of the agencies transferred to the pay-as-you-go system for their public and employer liability exposures.

Did the section 38s transfer to pay-as-you-go?

Mr. Ciarán Breen

Yes, the State----

Was the HSE happy that these organisations were paying out €4 billion per annum because they did not have insurance and were on a pay-as-you-go system?

Mr. Ciarán Breen

A value for money exercise was carried out on premiums versus a pay-as-you-go system. It was very clear that the insurance profile of the premiums was going on an upwards trajectory.

Who carried that out exercise?

Mr. Ciarán Breen

The State Claims Agency and the HSE, with its procurement section.

How long ago was this?

Mr. Ciarán Breen

It was about two years ago.

I ask that this report is forwarded to the committee. I am aware that some of it might be confidential but please forward what is possible.

Mr. Ciarán Breen

I will look at our documentation and see what I can send.

It is news to me, but obviously not news to others, that these organisations did not have insurance and were in a pay-as-you-go situation-----

Mr. Ciarán Breen

I am sorry, Chairman, the organisations did have insurance, and they have come into the pay-as-you-go system now. They were conventionally insured.

That issue has never crossed the desk of the Committee of Public Accounts before now. It is interesting.

Mr. Seamus McCarthy

I recall that there was some discussion on the issue with regard to local authorities, and some hospitals were also involved in the same insurance system.

The local authorities have a separate insurance system, the name of which escapes me just now. I believe it is mutual insurance under the Irish Public Bodies, IPB, insurance company. Has the State Claims Agency ever thought of doing an exercise for it on the same basis or is it on a pay-as-you-go basis also?

Mr. Ciarán Breen

They are conventionally insured now with IPB mutual insurance. Some have more complex arrangements with some having layers of self insurance and a layer of insurance over that with IPB.

If the section 38 agencies, which get at least €3 billion per annum, believed it was better to come into a scheme with the State Claims Agency on a pay-as-you-go basis, and if the entire budget for the local authority is also in that bracket of €4 million - and one could include capital expenditure of €5 billion or €6 billion - they would be a similar sized group of organisations in terms of turnover. If it is valid for section 38 agencies to come into the State insurance scheme, then somebody should run the numbers to see if it would be valid for local authorities to come in on the same basis. Maybe the claim profile of the local authorities is completely different but it would be interesting to see. There appears to be two agencies handling insurance claims - one for local authorities and one for all the organisations under the State Claims Agency. Can we talk with the Department of Public Expenditure and Reform about this? Somebody needs to look at it. I am not suggesting there should be a change but if it has worked with others, and the State Claims Agency has come to this conclusion regarding section 38 agencies, then the same exercise could be examined for local authorities, given that it is all taxpayers' money and savings could be made.

Mr. Seamus McCarthy

Going in that direction, from insurance companies to State cover in the form of pay-as-you-go, does give an immediate cash benefit because one is not meeting claims for a number of years. This distortion and impact is evident immediately but it is-----

As a result of today's meeting, the committee will write to the Department of Public Expenditure and Reform separately.

I am not asking that an investigation be done but that the matter be considered and the Department's thoughts given to us. We will come back to it because at €2.6 billion on the SCA's balance sheet for claims, or closer to €3 billion, I have no idea what is out there against the local authority.

I am moving on to page 36 and NewERA. Why did the VHI come in? I can understand NewERA started in the energy market and now some new organisations have come in. Is this the full list of the new organisations - An Post, Córas Iompair Éireann, CIÉ, the Irish Aviation Authority, IAA, the Dublin Airport Authority, DAA, and the VHI?

Mr. Conor O'Kelly

They are assignments. We act like a corporate finance adviser and get asked to do assignments but they are not necessarily designated bodies.

That is fine.

Mr. Conor O'Kelly

An Post and the transport assets are the new designated bodies. That was only confirmed in 2018.

The NTMA might send us a note on the new designated bodies under its wing and how that came about.

Mr. Conor O'Kelly

Yes, we will do that. We get asked to do ad hoc advisory work on behalf of the Department as well.

It might be helpful for us to have a list of those organisations done in the last 18 months so that we know what is happening. I am moving on to those on page 38. These are the portfolio companies.

Mr. Conor O'Kelly

That is correct.

I have to note the contrast between the two debates happening in the Oireachtas today. The Fossil Fuel Divestment Bill passing in the Chamber is asking the NTMA's Ireland Strategic Investment Fund not to hold any shares in fossil fuel companies while the NTMA is also the principal adviser to the Minister who has shares in the ESB. Moneypoint must be the biggest CO2 emitter in Europe perhaps but certainly in Ireland. How do the two sides of the house sit together in the NTMA? One arm is saying let us keep bringing in millions of tonnes of coal from Colombia on each ship that comes in every month. The other arm then is saying that we should not be investing or holding shares in fossil fuel companies. There is a dichotomy that Mr. O'Kelly might explain to me or perhaps we created that?

Mr. Conor O'Kelly

There is a dichotomy in Irish life and society. It is more for the committee's side of the house than it is for mine.

I could not avoid noting the contrast between the two debates.

Mr. Eoin Dorgan

We should say that all State-owned assets are engaged in a transition to the low carbon economy which is in line now with the amendment being put in the House by Deputy Thomas Pringle.

Is Moneypoint safe?

Mr. Eoin Dorgan

The ESB is transitioning to-----

We will let someone else talk to Mr. Dorgan about that. I am moving on to the State Claims Agency legal costs on page 41. I have often raised this before. This is the "good public relations" that is done. On legal costs, "in 2017, the SCA settled 440 bills of costs received from third parties for €55.2 million - a reduction of 48% on the €106.9 million claimed". One would be forgiven for thinking that great work had been done in reducing the payments on legal fees but when we turn over the page we see that is an artificial figure being compared. It is comparable to saying someone sent in a bill but I did not pay it and so saved money. We will look at the details on page 44 of what actually happened beyond that headline.

I am looking on page 44 where the cost of claims resolved from 2013 to 2017 are detailed on a chart. I refer to the average cost per claim. The clinical claims are dealt with first. I am referring to the legal fees for the State Claims Agency and the plaintiff, to the average cost per claim set out in the second column down. The average cost per claim for the SCA for clinical claims is stated to be €23,000 and the legal fees for the plaintiff were €41,000. That means that €62,000 on average was paid per claim. Mr. Breen is reading the same chart. The award was €130,000. In other words, legal costs in respect of awards in 2017 were 49% of the legal awards. For every €100 of settlement to the individual there was an additional 49% in legal costs. Is that correct? That is correct.

I will go back to 2004 and I could go back to other years. In 2004, €48 million was paid out in legal fees on settlements. A sum of €48,000 was the average legal fee on the average settlement of €93,000, which is 48%. There has been no real reduction in legal fees. The SCA's percentage of legal fees, as long as I am sitting here, is running at approximately 50% of the settlements. If I look at the previous page of the report, it is stated that there was a 48% reduction in legal fees. Misleading is the most generous word I would put on that. The SCA has not reduced anything. These are the SCA's own figures.

I will go down then to the general claims, the column below the previous one. It is the same situation. I will not read the figures out loud. I have looked at the money for 2017. The legal fees paid out were €13.6 million which is 55% of the award of €24.7 million. That is 55% and that was the rate the previous year and in 2014. In respect of the payments, and we have been told about the payments increasing, the percentage of the legal fees is fairly static at in or around 50% for years. Yet the SCA is telling us, and the public would believe it if the details were not looked into, that legal costs have been reduced by 48%. That is the SCA's big chart on page 41. It does not gel. Does Mr. Breen get what I am saying? That is not a real headline, it is a public relations job.

Mr. Ciarán Breen

No, with respect, those are two different things. We have a legal costs unit which was established in 2013 within the State Claims Agency. It handles tribunals' bills of costs arising from third parties appearing before those tribunals. What we are showing on page 41, and the big figure we are indicating we are saving, are actual bills of costs sent in by third parties that we examined. In order that the Chair will know, we go out to the solicitor firms. The Comptroller and Auditor General might comment on this as well. If it is one of the big firms representing a third party, we go out and we look at all of their boxed files. We examine them and then we begin to negotiate by saying we are not allowing this, that and so on and that we are reducing them. It can be seen that we have had really good reductions in the order of more than 40% over the years. That is on one side and those are actual savings made on the bills of costs.

Then if we look at what is happening on the tables the Chair has just been through, which is the other part of our business-----

Which is the bigger end of it?

Mr. Ciarán Breen

The tribunals are much higher in respect of the numbers. The only part of what we are looking at that we can control is our own costs. The taxation of costs system controls what plaintiff's lawyers can charge and that is ultimately where we go with these.

Then perhaps a page or a chart on the tribunals could be put in the report.

Mr. Seamus McCarthy

It is there at the end of page 46.

It is on page 46.

Mr. Seamus McCarthy

The table has SCA clinical, SCA general and then the various tribunals.

That is fine and good for the tribunals but the main point I was raising was on the settlements and compensation, where the legal fees are consistently running above 50%.

Mr. Ciarán Breen

That profile is slightly lower for us than a conventional insurer dealing with these types of claims. We actually do better and the reason for that is because we control our own costs better. We procured, for example, our barristers and solicitors and we imposed caps on them. We do all that we possibly can.

I appreciate that but the public will find it a little hard to take that for €1,000 paid out the solicitors are getting €500 on top of that, yet the SCA is saying it is doing great internationally. That is what I am being told. It does not feel great.

Mr. Ciarán Breen

There is a significant litigation cost in our society here in Ireland.

We do everything to bring that cost down to the lowest.

The State Claims Agency has no control over it.

Mr. Ciarán Breen

Yes.

We understand that.

The next page deals with mass actions. According to the annual report at the end of 2017 there were 34 active thalidomide related cases, 70 narcolepsy related cases and 92 active Shine abuse cases, none of them settled during the year. There are also 1,636 active in-cell sanitation cases relating to the prisons at the end of the year, only one of which was settled.

Mr. Ciarán Breen

Yes.

Without disclosing the agency's hand, why is the process so slow?

Mr. Ciarán Breen

There are groups of cases where there are significant liability of causation at law type issues or statute of limitation issues involved, for example, with the exception of the in-cell sanitation which the Chairman spoke about. In regard to in-cell sanitation, there was a lead case. The lead case went to the High Court. The High Court did not award any damages, as it happened. It did find that there was a breach of privacy and that is now on a leapfrog appeal, which was only recently accepted by the Supreme Court. Until such time as we get a determination in that particular case, the other cases simply back up and wait their place.

Is the appeal in respect of the breach of privacy?

Mr. Ciarán Breen

No, the appeal is in respect of everything.

The whole case.

Mr. Ciarán Breen

Yes.

There are effectively 1,635 cases waiting to be dealt with.

Mr. Ciarán Breen

They are awaiting a determination of the Supreme Court.

Mr. Breen has no idea what the outcome will be. I take it the State Claims Agency has made provision in its accounts in this regard.

Mr. Ciarán Breen

Yes.

We will not ask Mr. Breen to disclose that for obvious reasons.

I will move on now to page 52. There are nine staff in the organisation on salaries of over €300,000. Are the witnesses worth it?

Mr. Conor O'Kelly

I hope the Chairman does not expect me to answer that question.

I do not want to get prurient on the issue but it was important to make the point.

I am moving on now to the NTMA's financial statement, page 92 which deals with the income and expenditure for the National Treasury Management Agency. Staff cost is €94 million and operating expenses is €21 million, which means the organisation costs about €116 million per annum.

Mr. Ian Black

To be clear, that is on a gross basis because it also includes the staff cost for the National Asset Management Agency, NAMA, and the Strategic Banking Corporation of Ireland, SBCI.

What is the level of expenditure for the NTMA and is it set out in the accounts?

Mr. Ian Black

It is.

On what page?

Mr. Ian Black

Operating income is at the top of page 92. We recover €58 million from NAMA and SBCI and others. It is in note 5.

Mr. Black is saying that the NTMA's operating cost is approximately €50 million.

Mr. Conor O'Kelly

It is a little bit higher at €55 million.

Mr. Ian Black

The breakdown is at the top of page 100. It is broken down by what we call business units. It shows the breakdown for the State Claims Agency-----

-----the National Development Finance Agency, the Ireland Strategic Investment Fund and the NewERA. That is good.

I am moving on now to page 147. Perhaps Mr. Black would explain the difference between the discretionary portfolio and the directed portfolio. I think the directed portfolio are investments directed by the Minister, which are related in the main to bank shares. I ask Mr. Black to explain it for the viewers.

Mr. Ian Black

These are investments where we act under the direction of the Minister for Finance. There are only two investments, the State's shareholding in Allied Irish Banks, plc, and its shareholding in Bank of Ireland. Directed investment is made under the instruction or direction of the Minister.

The NTMA sold the 25% of the State's shareholding in AIB.

Mr. Ian Black

Under instruction.

That is fine. The Minister for Finance is the shareholder. Page 211 sets out the breakdown of the State's shareholding. The AIB shareholding is valued at €10.4 billion and the Bank of Ireland shareholding is valued at just over €1 billion. What is the percentage shareholding in each of those institutions?

Mr. Conor O'Kelly

It is 14% in Bank of Ireland and just over 70% in AIB.

Given that the job of the NTMA is to manage the debt and part of the debt has been incurred by acquiring those shares, from Mr. O'Kelly's point of view - I am not talking about policy - is it economically advantageous to continue to sell those shares? I am not talking about the politics of doing so. People will have views on that. I agree with Deputy Kate O'Connell that the State should not be in this business any more but Deputy Catherine Connolly might have a different view. We will stay out of the politics. The job of the NTMA is to advise on the management of the debt. We have incurred a debt in acquiring the bank shares. From a professional financial advice point of view, should we continue to hold those shares or should we continue to sell them?

Mr. Conor O'Kelly

We have made our position clear. It is less our position than the position of investors who lend us the money. Our debt is very substantial. Their preference is that the State would, within the right timeframe, sell the shares and use the proceeds to pay down the debt which is still very substantial. We do not have very many opportunities to pay down the actual amount of debt. Our debt is four times what it was in 2007. That is a legacy of the crisis. There are very few opportunities to reduce that debt. Selling any liquid assets such as bank shares is one such opportunity.

What is the value of the AIB shares today versus the per share price when they were sold last year?

Mr. Conor O'Kelly

It was a little bit higher. There was probably about a 12% difference from where it was originally.

It was a little bit better, even if the NTMA was to sell some more this year.

Mr. Conor O'Kelly

No. It was a little bit better then where they were sold as compared with the original IPO.

Mr. O'Kelly is saying in retrospect we did well to get what we got at the time compared to current value.

Mr. Conor O'Kelly

I think so.

Mr. O'Kelly should say that because some people probably think we sold short. Would Deputy O'Connell like to comment?

I have a few wrap-up questions to ask but I can ask them later if there are members who would like to come in at this point.

I am fascinated by Mr. O'Kelly's answer in regard to the shares, which I was not afforded to the same extent as the Chairman has been.

The Chairman got a far more comprehensive answer on the view on the sale of the bank shares than I did when I asked the question but perhaps I am just-----

We will have to leave the questions to the Chairman.

Yes, if we want answers.

I waited to ask my questions when everyone else had had an opportunity to speak.

The Chairman asked the same question but the approach to the answer was quite different. Maybe I just got out of the wrong side of the bed this morning.

There appears to be a difference in how the witnesses are answering the Chairman's questions.

Does Deputy Connolly want to come in?

I was in the middle of-----

I thought the Chairman was not finished.

I am not finished but I will pull back and allow in anyone who wants to speak. I will allow Deputy O'Connell now followed by Deputy Connolly.

Page 101 deals with wages and records Mr. O'Kelly's salary at €480,000. Table 7.3, sets out his performance-related pay. Is Mr. O'Kelly afforded performance-related pay in addition to his net salary?

Mr. Conor O'Kelly

There is a note at the bottom of the page which shows that I do not receive any performance-related pay.

That is okay. By the looks of things, the NTMA does a good job in terms of returns on investments. Arguably, it is handy enough to do a good job when everything is in upward trajectory, the challenge being when things are in a downward trajectory. Earlier, Mr. O'Kelly mentioned 500 staff. Will he briefly outline the portion of staff in employment in the NTMA that are on the average industrial wage? Is there anybody in the NTMA earning €37,500 per annum?

Mr. Conor O'Kelly

Yes.

Mr. Conor O'Kelly

I cannot give the Deputy the exact number.

Can Mr. O'Kelly tell me the number of people on more than €200,000 per annum?

Mr. Conor O'Kelly

There is a table on salary categories on page 52.

There is no breakdown for those earning under €50,000.

Mr. Conor O'Kelly

We only included those earning in excess of €50,000.

How many women in the NTMA's operations are earning in excess of €100,000?

Mr. Conor O'Kelly

I will have to come back to the Deputy on that. The female-male breakdown is 50:50 at the bottom of the pyramid. As we go up, there are fewer women in each management category which is quite traditional, unfortunately.

At the top in the management team of nine, we have four women. Three of them are currently in place and the other, the new head of the NDFA will join us in the middle of August. We are working hard to address imbalances when they occur. We will go public with our pay gaps in next year's accounts.

Can the NTMA show us its plan to address this imbalance?

Mr. Conor O'Kelly

We will do a full review of our gender pay gaps and we will publish it.

Will the NTMA do it in the next year?

Mr. Conor O'Kelly

Our 2018 annual report will include disclosure on gender pay.

When a position becomes vacant in the organisation, are there any issues with filling posts? There are issues in the HSE, for example, with hiring staff. Are there positions which the NTMA cannot fill for long periods?

Mr. Conor O'Kelly

Not necessarily. The labour market has tightened considerably, as one might expect in line with economic strengthening. It can be more difficult for certain specialist personnel. In general, however, we have not found it difficult to attract staff.

That is not surprising when the wages are quite generous.

Is the reason the NTMA is moving its headquarters from Dublin 2 to Dublin 1 due to the fact the Dublin 2 building is not energy efficient? Is there another reason?

Mr. Conor O'Kelly

The lease was up. We would have had to recommit for another 15 to 25 years. We assessed whether we should stay or move. We got an independent assessment done.

Mr. Conor O'Kelly

It came up with four or five different alternatives.

Who did the assessment?

Mr. Conor O'Kelly

Savills did the original assessment for us and gave us several different options. A public tender process was undertaken. Our current landlord also retendered to get us to stay. Economically, it was a neutral play for us to move.

That was mentioned earlier on. How long has the NTMA been in the building in Dublin 2?

Mr. Conor O'Kelly

We have been there for 25 years. We have been there since 1991, as long as the NTMA has been around.

Has it been refitted a few times?

Mr. Conor O'Kelly

Energy efficiency is a big factor.

I am not saying it is not but it is a factor.

Mr. Conor O'Kelly

Yes, it is a factor.

What is the figure for the fit-out cost for the new building?

Mr. Ian Black

We took a credit for the category A fit-out from the landlord and we are doing it ourselves. Again, it was done through a public procurement. The total value of the contract is €24 million.

Is this for 500 staff?

Mr. Ian Black

We took the building to allow for flexibility if agencies go up or down. We can sublet the additional space if it becomes available. We did not want the building to be full on day one. It has approximately 145,000 sq. ft.

Was the NTMA paying €1 million per 20,000 sq. ft. in the old building?

Mr. Ian Black

Yes. We had two floors in the Treasury Building.

That comes to 40,000 sq. ft.

Mr. Ian Black

We are operating on a third floor which is partly occupied by NAMA. It is a shared floor but it is physically divided.

Why does the NTMA need so much more space?

Mr. Ian Black

We took a decision to lease the full building on the basis we can sublet it to third parties or to other Government bodies.

Mr. Conor O'Kelly

It is about capacity. We will sign a lease for 25 years. We probably only need half of that space while another 20% of it will be made available to NAMA, the Strategic Banking Corporation of Ireland, SBCI, and other agencies. There is talk about the NTMA being given different mandates. Accordingly, we left ourselves some flexibility. We can sublet those other floors and get some rent back to offset the costs.

The NTMA is getting into the business itself. I do not see the logic in this. I can understand having flexibility but not to that degree. Is the NTMA sure it will be able to sublet this additional space?

Mr. Conor O'Kelly

We are sure.

Has somebody done their sums on this?

Mr. Conor O'Kelly

It is a very attractive space. We are confident we will be able to sublet the space.

Would Thurles have done?

(Interruptions).

I am deadly serious. After looking over it at lunchtime, the site in Dublin 1 appears to be the most expensive place in Ireland.

Mr. Conor O'Kelly

That part of the docklands, the north docks which we are trying to rejuvenate, is one of the cheapest parts of Dublin right now. The State owns much of the property around there. Hopefully, the value might improve.

Can we have the specification that was put out for the tender?

Mr. Ian Black

The tender documents are publicly available. We are happy to send them to the Deputy.

The committee should visit the new headquarters sometime.

Mr. Conor O'Kelly

The committee would be welcome to do so.

I refer back to the State Claims Agency. I raised the issue of rents this morning and I asked for a note on it. I am not blaming the witnesses as it is Government policy.

Mr. Eoin Dorgan

To clarify, there are two appointed members from the agency board. They are appointed by the Minister.

I will come back to that. I want to stick to the rent first, then the investment committee and then the SCA.

Is it Government policy that the NTMA must rent its headquarters?

Mr. Conor O'Kelly

The Government's policy is to discourage State agencies from buying their own property because of the fact that it is immediately added to the Government's balance sheet. It also eats into expenditure targets which could be used elsewhere.

I am failing to grasp this. I do not blame the witnesses. However, every week I sit here looking at rents for, say, Caranua at the Department of Education and Skills. Foras na Gaeilge did a business case which pointed out it was cheaper to buy a building and have a mortgage. There is something seriously wrong with the Government's policy in this regard. It is actively colluding in keeping market rents at the deep end. It is now put in language where it is adding to the new financial area in the city. Language is being used in a way to conceal. I do not expect the witnesses to answer this. However, I despair of the Government's policy on this at a time Galway city has a major housing crisis. Galway has been waiting since 2002 for a public housing programme. I agree with Deputy O'Connell. There is no reason other areas in the country cannot be looked at for locating headquarters.

On the investment committee-----

Mr. Eoin Dorgan

Under the 2014 Act-----

Yes, up to five external people can be appointed. Only three external people have been appointed. Who appoints them? I was interrupted.

Mr. Conor O'Kelly

The board appoints them.

They are appointed by the board of the NTMA.

Mr. Conor O'Kelly

Yes.

Those appointments are subject to approval by the Minister.

Mr. Conor O'Kelly

That is correct.

What criteria are used for appointments?

Mr. Conor O'Kelly

It depends on what we are looking for, on the pipeline of investments and on the skill set that is already there. We look to have a blend of different experiences from different types of sectors on the investment committee based on the investment portfolio we have.

I do not see a range of experience. I immediately think of the map of regional economic impact on page 24 of the annual report. Mr. O'Kelly had a reason for that. If we look at Connacht, 4% of the jobs created by ISIF were there, 6% of ISIF capital was deployed there and 4% of gross value added was in the region. It stands out as being very low in comparison with the other regions. Dublin's percentages for the same values were 50%, 56% and 43%, respectively. I look at this with my limited knowledge of finance and ask who is advising and what is going on. Údarás na Gaeltachta is not represented on this advisory board, nor is the co-operative movement. There is no range of people outside the same people who were there at the time of the crisis. There is the same type of skill set and the same type of consensus mentality. Why are the co-operative movement and Údarás na Gaeltachta not represented on this committee given their key roles in investment in the Gaeltacht? Is that a question for Mr. O'Kelly? I do not mean to put him on the spot. Should it be a question for the Minister or for the board of the NTMA?

Mr. Conor O'Kelly

It is a reasonable question. There is only a certain number of people one can have around any one table making investment decisions so one must cut one's cloth to a certain degree. Julie Sinnamon has wide experience as CEO of Enterprise Ireland. To categorise her in that way is not really fair to her. Richard Leonard of Grant Thornton is from Limerick and his regional expertise has been extremely valuable.

I will take my comment back if I was personalising anything. I will stick with Údarás na Gaeltachta. It has a serious remit, among others, in respect of the Irish language and economic development of the Gaeltacht areas. It is nowhere to be seen.

Mr. Conor O'Kelly

I encourage the Deputy and Údarás na Gaeltachta to share any proposals for which they seek the investment of ISIF funds. We are very anxious to invest in the regions. In his recent ISIF review the Minister asked us to renew our focus on the regions and we are happy to do so, but we need investment opportunities to be brought to us in order to invest. We do have the capability to invest in the regions.

The NTMA has the capability, the capacity and the money.

Mr. Conor O'Kelly

We also have the desire.

In the meantime, the Gaeltachts are seriously under pressure. There is serious unemployment and serious black spots which are creating major problems and has serious implications for Galway because people are moving to the city. This is because of an unbalanced approach to investment. Mr. O'Kelly is saying he is wide open to change on that.

Mr. Conor O'Kelly

I would be delighted to see proposals from the region.

Okay, that is lovely. On the State Claims Agency, the SCA - and I want to stay general on this matter - I thank the witnesses for the information. With regard to the cervical smear testing, the lessons the SCA learned, when it became aware of the issue and how it will avoid similar issues in the future, how did it happen that the matter did not go on the risk register sooner?

Mr. Ciarán Breen

We only take the cases as they arise. That is really a matter for the HSE. It is the owner of the problem, so to speak. We are, it is to be hoped, part of the solution to the problem.

The SCA has a role in feeding information back, however. It has a serious role in pointing out risky areas. That is the role on which I want to focus. Let me say that I found Mr. Breen very open. He gave the facts and I welcome that. I am not interested in personalising it. He has come forward, bona fide, and given us as much information as we have asked for.

Mr. Ciarán Breen

I thank the Deputy. She is right, the SCA has a clinical risk management role with all of the services and hospitals. This issue was not known to us. How could we have found out about it? We did visit the CervicalCheck screening service at the time. I indicated that it was in March 2017. The problem with notifying women did not come up. We only got to know about this for the first time after the Vicky Phelan case, as I told the committee previously. To give the Deputy some reassurance, in the meantime we have visited all of the screening services to pick up all of these topics about disclosure and about notifying matters to us and making sure that these things are being put up on the national incident management system, NIMS. That was one of the issues we had with CervicalCheck. It was not putting the incidents up at the time. I assure the Deputy that we have addressed these issues with the screening services, most recently in the last two months, and we will continue to do so. That is one of the lessons learned.

NIMS is being rolled out. What is its full name again?

Mr. Ciarán Breen

The national incident management system.

That is still being rolled out. Is that not right? It has not been rolled out completely.

Mr. Ciarán Breen

It is pretty much rolled out at this stage. The phase we are at right now is about making sure that everybody is notifying in real time and not doing it retrospectively.

Page 45 of the annual report is most interesting to read. It lists the range of abuse cases and other cases which reflect failures of governance and systems failures. These are the mass actions. We have the in-cell sanitation cases. There are 1,635 active claims under that heading. Is that right?

Mr. Ciarán Breen

Yes.

There are 146 claims relating to school abuse following the Louise O'Keeffe judgment.

Mr. Ciarán Breen

Yes.

I will come back to ask about the status of that. We then have the cases relating the abuse by Michael Shine at Our Lady of Lourdes Hospital, of which there are 92. I presume they are all women, are they?

Mr. Ciarán Breen

No.

Is there a mixture.

Mr. Ciarán Breen

No. In fact I am pretty sure that the claims were made by males.

They were made by males.

Mr. Ciarán Breen

Yes.

There are 92 such cases.

Mr. Ciarán Breen

Yes.

We have the narcolepsy-----

Mr. Ciarán Breen

I am sorry; I do not mean to interrupt the Deputy but on the Shine abuse cases, I have to tell the committee that there is an insurer that was the insurer of the Medical Missionaries of Mary, which had ownership of that hospital at the time. Therefore, the State is not the only actor in that regard.

Liability will be somewhat shared.

Mr. Ciarán Breen

Perhaps not shared. We might say that it is the insurer's liability and not the State's. One of the reasons we exist is to make sure that we do not take on liabilities which should fall on someone else.

I will not go through them all. There are 47 cases relating to Lariam and 35 relating to symphysiotomy. There are also the thalidomide cases. The thalidomide cases are still ongoing.

Mr. Ciarán Breen

They are. There has been ongoing mediation in that regard. In fact, the mediation is very unusual in that it has gone on for a number of years.

Mr. Ciarán Breen

They are complex cases. The thalidomide survivors also have complex needs. As part of the mediation process, the State paid for experts to examine the thalidomide survivors. For example, they were looked at by cardiologists, orthopaedic surgeons and vocational rehabilitation consultants. It takes a long time to get all of these reports together.

In what age group are these people now?

Mr. Ciarán Breen

They were all born between 1958 and 1962, so they are in their-----

They are no older than 60.

Mr. Ciarán Breen

Yes.

It has taken all this time. Is there any statute of limitations involved in this?

Mr. Ciarán Breen

There is a statute of limitations issue.

We have to wait until people are 65 to tell them that. Are many of the claims not proceeding due to all these medical assessments saying that it cannot be proved that thalidomide is the cause?

Mr. Ciarán Breen

I do not know if the Chair is aware of this but, following a report I did a number of years on the thalidomide issue, there was a scheme whereby the State offered all of the survivors a sum of approximately €62,500. A number of the thalidomide survivors took that. Other thalidomide survivors decided that was not what they wanted to do. They wanted to go to court with their cases.

Have those involved the 34 active cases already received some payments?

Mr. Ciarán Breen

No.

They have received nothing.

Mr. Ciarán Breen

Sorry. The State makes payments to them under a scheme that it has-----

That is separate. In the context of the case they are bringing-----

Mr. Ciarán Breen

-----and Grünenthal, which is the original manufacturer. The Deputy is probably aware that Grünenthal and that particular scheme in Germany brought in a particular proviso whereby it increased the amount of money it was paying on a monthly basis but in order to join it up with every other place, it had a similar arrangement. It said that for a country making payments to it, those payments would be offset against any payments Grünenthal would pay at the much higher rate. That was a German law that came in, I believe, a couple of years ago.

What about the 34 cases that are still active ? Under those proceedings, those involved have received no payment. Those proceedings have not come to fruition.

Mr. Ciarán Breen

As I said, they get other payments from the State-----

Under a separate scheme, yes.

Mr. Ciarán Breen

-----but in terms of the litigation, no. They had a choice to opt for the payment. Some did and some did not.

When will the 34 cases that are active be resolved?

Mr. Ciarán Breen

I would guess that they will certainly not be resolved this year. It will definitely be into next year.

Does Mr. Breen envisage that they will be resolved?

Mr. Ciarán Breen

I think there will be a preliminary issue on the Statute of Limitations, which is being brought by Grünenthal, in any event. That will be a preliminary issue to be tried.

The NTMA is not covered by that.

Mr. Ciarán Breen

No.

An action by a German company should not decide-----

Mr. Ciarán Breen

No. Obviously, in a statutory defence like the Statute of Limitations, we will have to plead as well.

Is it in the NTMA's interest-----

It seems to be brought against the German company that produced the drug and the State.

Mr. Ciarán Breen

Yes.

Mr. Breen is telling us that the German company will be walking off the pitch quite soon.

Mr. Ciarán Breen

It has brought a motion in respect of the Statute of Limitations.

If the NTMA does not get it solved soon, we will end up paying it all rather than getting a share of the-----

Mr. Ciarán Breen

No-----

If both are tried together-----

Mr. Ciarán Breen

-----not necessarily. As I said, we have a Statute of Limitations defence also.

That they brought their cases too late.

Mr. Ciarán Breen

Yes.

Where is that case in the courts? Is it before the High Court or the Supreme Court?

Mr. Ciarán Breen

It is before the High Court. It is being case managed by a judge of the High Court.

It could possibly go to the Supreme Court.

Mr. Ciarán Breen

Possibly, yes.

While the Deputy was out, we asked about the cases relating to in-cell sanitation in prisons. Mr. Breen indicated that there is one case before the Supreme Court and that this will be a key element. When that is dealt with by the Supreme Court, the 1,635 can then be dealt with one way or the other.

Mr. Ciarán Breen

Yes.

Sometimes we have to wait for just one case to come through the system.

I refer to the Louise O'Keeffe case.

Mr. Ciarán Breen

Yes.

There are a number of active cases following on specifically from that case. They are interpreting the judgment. Presumably, the State is interpreting it in a different way.

Mr. Ciarán Breen

The Department is probably aware that the Department of Education and Skills has set up an ex gratia scheme which the State Claims Agency is managing. That has a judge of the High Court who sits, effectively, as a point of appeal. There were 49 applications to the scheme. We made determinations in 44 and we are awaiting further information on an additional five. Following our 44 determinations, we understand there are 21 appeals to the retired judge of the High Court.

That is separate from the 146 active cases that are here.

Mr. Ciarán Breen

Yes. The 146 active cases are day school abuse cases that are on the books.

Finally, the contingent liability is astronomical. When I read the Comptroller and Auditor General's chapter, I discovered that the amount for 2016 was €2.2 billion. Mr. O'Kelly said that it is nearly €3 billion now.

Mr. Conor O'Kelly

It is €2.7 billion and-----

Mr. Conor O'Kelly

-----being revised all the time.

Mr. Ciarán Breen

It will probably not come as a surprise to Deputy Connolly that €1.47 billion of that relates to obstetric-maternity related issues. If she wants to identify the problem, so to speak, that is where it lies.

Mr. Ian Black

To be clear, that figure represents the number of claims made. It does not represent those incurred but not reported. In terms of a child born with a catastrophic injury, that case will not be claimed against for quite a number of years. It is an estimate of the liability in respect of claims made, not in respect of claims that have incurred but about which we have not been notified.

I have some final questions. I refer to page 12 of the information notes the witnesses submitted. Representatives from the Department of Finance were before the committee a while ago. People think the country is fine - and it is - but we forget about the debt. It does not cross people's kitchen table, so to speak, and they do not think about it. However, as a person from the Department of Finance stated, people in Ireland are the most heavily indebted people in the world, next to Japan, when the State debt and the personal debt are added. That is nothing to do with the witnesses but to go back to the topic I mentioned earlier, looking at the chart on page 12, which is headed "FUNDING AND DEBT MANAGEMENT", the figure for gross Government debt to gross Government revenue, and Mr. O'Kelly signalled this at the outset, is 264.2%. It is the fourth highest next to Greece, Portugal and Italy. We are the fourth highest in that category, which he said is a worrying figure. He also mentioned the figure on the right of the chart for gross Government interest to gross Government revenue and 7.6% of total revenue goes on paying interest. That figure is only below those for Portugal, Italy and Cyprus.

Mr. Conor O'Kelly

Correct.

Those are four countries we thought we had separated from financially but when we drill into the figures for Government debt to Government revenue, we are not far away from that group. In terms of a percentage of our total income going on interest every year, we are the fourth highest in the European Union on both of those charts. That has to be a worrying trend.

Mr. Conor O'Kelly

Absolutely. That is a concern.

I presume that, from a professional perspective, if there is a sale of bank shares or something like that, Mr. O'Kelly would like us to start reducing that type of figure.

Mr. Conor O'Kelly

Investors are still concerned about our elevated levels of debt. That is a factor. Whatever we can do to assuage those concerns makes it less likely that we will have difficulties borrowing at the price at which we need to borrow in the future.

Finally, I was very pleased to see an advertisement from the State Claims Agency in all the newspapers about two weeks ago. The advertisement in question requests submissions to the expert group to consider alternative mechanisms to the core process of resolving clinical negligence claims. That is fantastic. Item No. B in the advertisement refers to considering whether there may be alternative mechanisms to the court process to resolve clinical negligence claims. Did it take the CervicalCheck issue for the State Claims Agency to come to a position it should have come to years ago?

Mr. Ciarán Breen

That is not our committee. That is the committee established by the Departments of Health and Justice and Equality. A High Court judge is chairing it.

Yes, Mr. Justice Charles Meenan.

Mr. Ciarán Breen

We have been invited to participate on it but it is not our committee.

I was giving the witnesses credit for the advertisement. I see it is the Departments of Health and Justice and Equality, but this is fundamental to the work they do.

Mr. Ciarán Breen

Yes.

They seem to be doing work on alternative mechanisms, mediation and the cervical cancer issue because of the time issues involved in some of the cases, but why have they not moved to deal with more of that on the other cases?

Mr. Ciarán Breen

Our rate of mediation in medical negligence cases has got better every year-----

Okay. Give us the figures so that the public can appreciate what Mr. Breen is saying.

Mr. Ciarán Breen

-----and we are continuing to do it. I have some figures.

It would be helpful for people to hear this.

Mr. Ciarán Breen

For example, between 2014 and now we have had 122 mediations.

Does Mr. Breen have a figure? What was the quantum of money relating to those? Was it a lot or a small amount?

Mr. Ciarán Breen

Most of them are medical negligence cases, which would involve significant sums of money.

Would it have been €1 billion?

Mr. Ciarán Breen

No. I could do some calculation-----

Mr. Breen might send us something on that because the 122 is a small number in respect of the 10,000 but it might be big when it comes to money.

Mr. Ciarán Breen

It would be wrong to leave the public with an impression that we have just done mediation as a reaction to the cervical cancer cases. It is our stated practice in respect of medical negligence cases in particular.

We also do it in other cases. For example, bullying and harassment cases are very amenable to mediation. It is our preferred way to go. Sometimes we find the obstruction comes from plaintiffs' lawyers who do not like the mediation process because of a cost issue.

We mentioned the 50% legal fees already. We all understand that. Who are the mediators the State Claims Agency uses? Are they State Claims Agency staff or is there a group of arbitrators? Tell me about the mediators.

Mr. Ciarán Breen

They are independent mediators. Many of them are retired judges, existing members of the Law Library, solicitors or people independent of that who are mediators and do not necessarily have a law degree. There is a wide range of-----

There is a qualification in mediation.

Mr. Ciarán Breen

Yes.

They are not all qualified mediators.

Mr. Ciarán Breen

All the people we use as mediators are qualified mediators. They are completely independent in their function. When we talked about this very briefly the last day when we talked about confidentiality I said one area where there is confidentially in the process is within mediation. It is a confidentiality imposed by the mediator. The reason for that is he wants people to be able to freely put things through the mediation and in the event the mediation fails, people will not be faced with a situation where things can be relied on in a later trial or whatever. They follow a very definite process.

How many mediators does the State Claims Agency have? Does it have a panel? Will Mr. Breen explain the process? How does one become a mediator? Is the position advertised?

Mr. Ciarán Breen

The Chairman or I could become a mediator by doing any of the recognised mediator courses. One gets certified. One body that certifies a lot of mediators in Ireland is a group from England called CEDR. A lot of people qualify as mediators and then become known by virtue of that qualification and how good they are.

I have two very small questions. If Mr. Breen does not know the answer off the top of his head, he can come back with a note. It is an unusual question. A number of years ago, a number of raised bogs in natural heritage areas were designated. As a result, people could not cut turf and lost turf-cutting rights. They asked the State to buy them out. Some people did not get through that system. I have a parliamentary question from 26 September 2017. There are 14,061 ha of land now being de-designated out of that process. The people are now being told they can cut their turf again. There was a buy-out scheme when the designation was first made and people were not able to cut their turf during that period. People who lost money during the period of designation are being told the designation has been lifted and they can cut turf again. They have lost quite a bit of money. Has the State Claims Agency had any claim from any of those concerned?

Mr. Ciarán Breen

No, our mandate is very particular. It is with regard to personal-----

This is the Minister for Culture, Heritage and the Gaeltacht.

Mr. Ciarán Breen

-----injury or property damage. We only handle cases involving personal injury or property damage arising out of negligence. We would never have those claims if they were made.

What types of claims does the State Claims Agency handle? The cases I mentioned would involve compensation claims against the State.

Mr. Ciarán Breen

Sure.

I thought the State Claims Agency would handle those. What does the State Claims Agency handle then?

Mr. Ciarán Breen

We handle any case-----

I thought the State Claims Agency did everything.

Mr. Ciarán Breen

We handle any case where, for example, someone suffers a personal injury. We handle cases where there is property damage. For example, if a Garda Síochána car collided with something or someone collided with it, we would look after the property damage elements of it.

If somebody falls on a State property or State land.

Mr. Ciarán Breen

Yes, or medical negligence.

Mr. Breen mentioned bullying. That means there is injury-----

Mr. Ciarán Breen

Mental trauma.

That is how bullying cases get to the State Claims Agency.

Mr. Ciarán Breen

Exactly.

In a case like the one I mentioned, a person would have to sue the Minister directly.

Mr. Ciarán Breen

Yes.

Mr. O'Kelly mentioned Carillion. We have reported here regularly on the total number of PPPs and the commitments under all of them. Some of the projects are under construction and some are well into operation. With regard to the key companies involved, is there an overexposure to any one organisation? Maybe nobody thought of doing the sums. If somebody has too much on hand, maybe the State is increasing its risk. Mr. O'Kelly flagged that issue, which I was conscious of. In the schools sector, I can list two or three companies that seem to build every school in Ireland. It seems to be a very limited market. Even Sammon, which was the subcontractor for Carillion, is a major school builder in its own right and it was working on its own projects. As a result of Carillion going bust, Sammon had to go into liquidation and not just on the sites it was working on for Carillion. Its liquidation affected myriad other schools. The pool is too small. What are Mr. O'Kelly's thoughts on who will look at this? The National Development Finance Agency should examine the issue.

Mr. Conor O'Kelly

We will take a lead and we will work with the Department of Public Expenditure and Reform in particular to try to do some sort of an aggregation of exposures and see how we might be able to be a bit more transparent and careful about it.

We will raise the matter with the Department of Public Expenditure and Reform again in the autumn to make sure somebody works on it. We do not want the ripple effect. I have given an example. Mr. O'Kelly understands the issue as much as I do. I thank the witnesses for their time. It has been a long day. The NTMA is a very important organisation which is why we wanted to go through all of those issues. Some of them are very topical and current. Aside from that, there is important business to be dealt with by the witnesses every time we see their financial statements.

I thank the representatives of the NTMA, the officials from the Department of Finance and the Comptroller and Auditor General. I thank the secretariat and the committee members for all their work during the course of the year.

The witnesses withdrew.
The committee adjourned at 4.37 p.m. sine die.