Special Report No. 104 of the Comptroller and Auditor General: Waterford Institute of Technology - Development and Disposal of Intellectual Property in FeedHenry

Mr. William Beausang (Assistant Secretary, Department of Education and Skills), Mr. Paul O'Toole (Chief Executive Officer, Higher Education Authority) and Professor Willie Donnelly (President, Waterford Institute of Technology) called and examined.

We will now deal with item No. 8 on today's agenda, which is the Comptroller and Auditor General's Special Report 104, which deals with Waterford Institute of Technology in respect of the development and disposal of intellectual property in FeedHenry. The Comptroller and Auditor General is joined by Shane Carton, deputy director of audit.

We are joined from the Department of Education and Skills by William Beausang, assistant secretary; Tony Gaynor, principal officer; and Stephanie Goode, acting principal officer. From the Higher Education Authority we are joined by Paul O’Toole, chief executive officer; Mary Farrelly, head of finance and system governance; and Orla Christle, senior manager, system governance. From Waterford Institute of Technology we are joined by Professor Willie Donnelly, president; Elaine Sheridan, vice president, corporate affairs and finance; Dr. Mark White, vice president, research, innovation and graduate studies; and Dr. James O'Sullivan, technology transfer manager.

I remind members, witnesses and those in the Public Gallery that all mobile phones must be turned off, and that means putting them on airplane mode. Merely putting them on silent mode will mean they will still interfere with the recording system.

I wish to advise the witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise nor make charges against any person(s) or entity, by name or in such a way as to make him, her or it identifiable.

While we expect witnesses to answer questions put by the committee clearly and with candour, witnesses can and should expect to be treated fairly and with respect at all times, in accordance with the witness protocol.

We will take the Comptroller and Auditor General's opening statement first.

Mr. Seamus McCarthy

I thank the Chairman. As he mentioned, the report before the committee this afternoon examines issues relating to the development and disposal by Waterford Institute of Technology of its equity interest in a company called FeedHenry Limited.

The Telecommunication Systems and Software Group, TSSG, is an internal research unit within Waterford Institute of Technology. Arising from an EU-funded project on mobile telecommunications systems undertaken from 2002 to 2004, researchers in the unit developed a technology with commercial potential that became known as FeedHenry. The institute applied for and received support from Enterprise Ireland for the development and commercialisation of the technology. In all, Enterprise Ireland provided funding of nearly €1 million to the institute for FeedHenry-related projects.

In June 2008, a number of staff employed in the TSSG, together with other individuals, registered a company called FeedHenry Limited. Later in 2008, the institute awarded the company a trial licence to use the FeedHenry technology. In December 2010, the institute transferred full ownership of the intellectual property, or IP, to FeedHenry Limited, in exchange for an equity stake in the company. At the same time, investors, including one of the existing shareholders, put approximately €500,000 into the company. Subsequent investment rounds had the effect of diluting the institute’s percentage shareholding, and other shareholders in the company were affected proportionately.

In 2014, FeedHenry Limited was sold to a multinational company for a gross consideration of €63.5 million. The institute received €1.6 million from the net proceeds of the sale. A national code of practice on research commercialisation was published in 2004. This recommended that research-performing organisations should adopt formal policies to deal with commercialisation of IP, and the management of associated conflicts of interest. In the event, Waterford Institute of Technology’s governing body adopted a policy statement in February 2010.

Significant agreements and decisions in respect of the assignment of the FeedHenry IP were made subsequent to the adoption by the governing body of the IP policy, but in conflict with its provisions. For example, an internal commercialisation committee established under the February 2010 policy to review and approve all agreements on commercialisation of IP held its first meeting only on 6 December 2010. The minutes of the committee’s first meeting do not record any discussion of the assignment of IP to FeedHenry Limited, which occurred on 15 December 2010. Also, the institute’s IP policy indicates that a 15% equity stake in a spin-out company would usually be appropriate in exchange for transferring IP owned by the institute. In the case of FeedHenry Limited, the institute agreed in July 2010 that it would accept a 15% equity stake in the company on condition investors put €500,000 into the company. In December 2010, the institute accepted a stake of 10.8% when it assigned its IP to the company. The basis for agreeing to accept the reduced equity share was not documented by the institute. The reason for variation from the indicative 15% shareholding was not considered either by the governing body or by the commercialisation committee.

The examination found that neither institute nor national policies deal with situations where staff members have significant personal interests in companies acquiring IP from their employer organisation. In the case of FeedHenry Limited, there was no service level agreement or cost-sharing arrangements with the institute in place prior to November 2010, even though the company’s registered address had been on the institute campus since 2008.

Enterprise Ireland’s development funding agreements with the institute from around 2005 included an arrangement whereby Enterprise Ireland would be entitled for a nominal sum to a 5% equity share in any campus spin-out company. However, Enterprise Ireland did not exercise this option. From 2007, Enterprise Ireland dropped this kind of provision from its commercialisation funding agreements.

After the institute transferred the FeedHenry IP to the company, Enterprise Ireland invested a further €800,000 in FeedHenry limited under its programme for supporting start-up companies with high growth potential. Following the sale of FeedHenry limited in 2014, Enterprise Ireland received €4.5 million for its interest in the company.

The institute received €1.6 million from the net proceeds of the sale of the company. Around €639,000, or 40% of the amount received by the institute, was distributed to other beneficiaries under pre-existing arrangements. The institute paid €147,000 to a financial institution under the terms of a 2005 profit-sharing agreement, but was unable to locate a signed copy of that agreement when requested to do so by the examination team. A further €492,000, including employers’ PRSI, was applied to pay bonuses to 80 TSSG staff as part of an incentive scheme under the February 2010 IP policy. Some of the TSSG staff who received payments under the incentive scheme had separately benefitted financially from the sale of shares they held in FeedHenry limited.

Following a previous committee meeting, the HEA and Knowledge Transfer Ireland commissioned a review of IP commercialisation policies and practices generally in the third level sector. The report of the review, which was issued in February 2018, found some common areas of weakness in the sector, including in relation to systems for managing conflicts of interest and the decision-making process for relative equity stakes in spin-out companies. The HEA will be able to brief the committee on subsequent developments in that regard and on the implementation of sector-related recommendations presented in the special report.

I thank Mr. McCarthy. I call Mr. Beausang to make the Department's opening statement.

Mr. William Beausang

With the committee's agreement, I will summarise some of the key points in the more lengthy opening statement circulated to the committee by the Department.

We welcome the opportunity to discuss the Comptroller and Auditor General's special report on the development and disposal of intellectual property in FeedHenry by the Waterford Institute of Technology, WIT. As the committee will know, the Secretary General of the Department has assigned responsibility for this matter to me under the Public Service Management Act because he is subject to a conflict of interest. I am joined by my colleagues, Mr. Tony Gaynor, principal officer, and Ms Stephanie Goode, assistant principal officer, from the funding and governance unit of the Department.

Commercialisation of IP from public investment in higher education and research is a long-established Government priority. While lead policy responsibility resides with colleagues in the Department of Business, Enterprise and Innovation, the Department of Education and Skills and the Higher Education Authority, HEA, work closely with the Department of Business, Enterprise and Innovation and Knowledge Transfer Ireland to support the delivery of Government policy objectives to enhance the innovative capacity of the Irish economy to create employment and generate economic growth. It is essential that IP commercialisation by higher education institutes, HEIs, is undertaken in such a way that the interests of the Exchequer and the institution are appropriately safeguarded. This requires the existence and effective operation of a detailed governance framework that can respond to the complex issues that may arise during the commercialisation process, such as the management of conflicts of interest that may arise in the context of the spinning-out of a company with a HEI's intellectual property.

A detailed and comprehensive governance framework continues to be developed for the purpose of overseeing the operation of IP commercialisation in HEIs, and it has evolved considerably since 2004, when, as the Comptroller and Auditor General referenced, the first national code of practice for managing intellectual property from publicly funded research was published. A number of key milestones are mentioned in my written statement, including the various national IP protocols, the first of which, entitled Putting Public Research to Work, was published in 2012 and replaced, revised and updated in 2016. A further version, currently in the Department of Business, Enterprise and Innovation, will be subject to ministerial and Government approval in due course. These policy initiatives that focus on IP commercialisation have been complemented and reinforced in the overall broader governance framework in HEIs by the implementation of the various codes of practice for the governance of institutes of technology and the university sector, as well as the broader governance arrangements that have been introduced by the HEA to strengthen oversight and accountability within the sector.

Most recently, Knowledge Transfer Ireland and the HEA commissioned an expert international review of IP policies across the higher education sector, carried out by the consultancy firm, IP Pragmatics. The review concluded that all the HEIs examined have policies in place for IP management and employ experienced technology transfer and other dedicated professionals to carry out these important activities. The review made a number of recommendations, however, to improve the consistency of approach across the higher education sector, including highlighting the need to define a framework setting out the minimum components of good IP management in areas such as spin-out approval and conflict of interest management. Ten recommendations were made in the review to strengthen IP policies, management procedures and the management of conflicts of interest relating to the commercialisation of IP from HEIs in Ireland, and they are being implemented. The chief executive officer of the HEA updated the committee on progress made in his statement. The recommendations of the review have also informed the development of the new national IP protocol that I referenced a few moments ago and that is scheduled to be presented to Government for approval soon.

The Comptroller and Auditor General's report makes 11 recommendations, of which seven are the primary responsibility of WIT while four are the responsibility of the HEA. Having examined the report, the Department is of the view that there are significant issues raised relating to institutional governance and oversight in connection with the process for the commercialisation of IP in FeedHenry by WIT, as well as issues with the existence and effective operation of relevant policies, procedures and guidelines by the institute. The Department regards these issues seriously and, subsequent to the publication of the report, it engaged directly with the chair of the governing body of the institute. We have written formally to the chair requesting further information on a number of issues arising from the Comptroller and Auditor General's report. In total, the governing body has been asked by the Department to respond to a set of 16 questions, which were appended to the statement we circulated to the committee in advance of the meeting.

The Department's letter to the chair in WIT seeks to establish from the governing body whether the IP framework in place in the institute operates effectively and is sufficiently robust to prevent recurrence of the events set out in the Comptroller and Auditor General's report. Our assessment of that report is ongoing and we are seeking to identify any lessons learned from it that may be beneficial to the sector more generally through a further strengthening of the policy framework for safeguarding the interests of the Exchequer and institutions during the IP commercialisation process.

The responses to these questions and the further information received from WIT will inform the Department's advice and recommendations to the Minister on any further steps or actions arising from the findings and recommendations of the Comptroller and Auditor General's report. The governing body of the institute has acknowledged receipt of that letter and the Department expects a response from the governing body following its next meeting, which, I believe, will be at the end of January. The Department will assess the response from the governing body when it is received in preparing its advice to the Minister on the next steps for the issues set out in the Comptroller and Auditor General's report. The Department will also take into account any advice from the board of the HEA on foot of its consideration of the issues that we discussed earlier.

My colleagues and I are happy to answer any questions from the committee arising from its examination of the Comptroller and Auditor General's report.

I thank Mr. Beausang. Mr. O'Toole gave his statement as part of the earlier session and we examined it then. As it is getting late, I ask Professor Donnelly to summarise his opening statement if possible and focus on the Comptroller and Auditor General's report.

Professor Willie Donnelly

I have given a detailed submission and this is just a short summary of that. As the Accounting Officer of Waterford Institute of Technology, WIT, I welcome the opportunity to appear before the Committee of Public Accounts to discuss the Comptroller and Auditor General's special report on the development and disposal of intellectual property in FeedHenry. WIT was established in 1970 to address the needs of industry in the city and the wider region.

As the basis on which the economy had been built began to crumble in the 1990s, the community in the city turned to WIT for solutions. It is now ten years since Waterford Crystal closed in Waterford. Its closure had a devastating effect, not only on the workforce, but also on the wider community. The economy of the city had been based on manufacturing, the port and associated heavy industries. By the time of the Waterford Crystal closure, this economic base had been decimated. Moreover, the demise of Waterford Crystal, a prestigious brand that made the city known all over the world, was a symbol of the demise of the city in the minds of the people of Waterford.

With the needs of that community in mind, our focus as an institute has been on rebuilding the economy of the region for the 21st century through cutting-edge research and by being leaders in technology and innovation. Starting with the establishment of the Telecommunications Software and Systems Group, TSSG, and the subsequent establishment of two centres of excellence in biopharma and advanced manufacturing, we have worked hard to bring about a transformation of the industrial landscape in Waterford and the wider region. This has required WIT to go outside its traditional role as a teaching college and necessitated major investment in resources and structures that were supported by our own central funding, unlike in universities.

In 2004, WIT created the ArcLabs Research and Innovation Centre where researchers, entrepreneurs, business support and high potential start-ups are co-located. At the time, this was a radical concept and required the development of new governance and management structures. Now it is widely replicated and considered best practice. The success of this model was highlighted by Enterprise Ireland at the Committee of Public Accounts in 2013, when it stated: "Waterford is a shining example of how co-locating the incubation centre with the institute has led to the establishment of a software industry that probably should not have existed in Waterford." The creation of this software industry in Waterford was driven by the success of the TSSG. Since 1998, the TSSG, which is widely recognised as a global leader, has brought more than €90 million in competitive research funding to the region and completed over 600 research and innovation projects. It has 90 staff members of more than 20 nationalities. Over 300 former employees of the TSSG have moved into alternative employment in the ICT sector in the region. Between 2013 and early 2017, the TSSG technology gateway completed more than 260 projects for Irish companies. The TSSG has been a vehicle for foreign direct investment and, with its spin-out, FeedHenry, has attracted major venture capital investment in Waterford. FeedHenry was established at the height of the economic downturn, but still achieved venture capital investment when there was virtually no investment of this type nationally. We recently saw the establishment of a dedicated venture capital platform in the south east and a high potential start-up accelerator programme that is driving the next generation of employment.

From nothing, today the region has over 100 high technology companies. The software industry in the region employs more than 3,000 highly qualified professionals. There is no question that this industry at this scale would not exist but for the TSSG and the efforts of the institute. This level of success is almost unprecedented in Irish higher education. Our efforts have paid off and we are well on course to replace all the jobs lost in Waterford Crystal. The institute is proud of its success, and it continues to be ambitious for the city and region and anticipates a bright future for high technology industry in the area.

It is worth noting that, in research, innovation and commercialisation, Ireland continues to develop and evolve. As with all third level institutions, the governance and management infrastructure has matured since 2010. The organisational design, processes, procedures and systems in WIT have evolved over the past decade to reflect the evolution of the Higher Education Authority knowledge transfer system. The review of intellectual property management and conflicts of interest, commissioned by Knowledge Transfer Ireland and the Higher Education Authority, HEA, performed a deep analysis of the intellectual property management and conflict of interest system as exists in WIT. We were one of the five reference sites. The report indicates that the system implemented in WIT is consistent with established international practice.

Regarding the specific matters under consideration today, the institute welcomes the Comptroller and Auditor General's special report. WIT has worked closely with the Comptroller and Auditor General to ensure that all information relating to the development and disposal of intellectual property in FeedHenry was made available in a timely manner and, where sought, we provided contextual and supporting information. Importantly, the institute has fully reviewed its internal policies and practices in light of the report's recommendations and is satisfied that the majority of recommendations have been fully implemented.

I thank Professor Donnelly. I wish to raise an issue that I mentioned the last time he appeared before us. Unfortunately, I have to mention it again. WIT's financial statements from 1 September 2015 to 31 August 2016 are the last set of financial statements publicly available. Has WIT signed off on any set of financial statements in the two and a half years since?

Professor Willie Donnelly

I might ask our financial controller to reply.

Ms Elaine Sheridan

Both sets of accounts since then have been submitted to the Comptroller and Auditor General in line with the timelines he laid down, namely, 30 November. The 2016-17 accounts have been audited and are currently with the Comptroller and Auditor General, who is conducting his review. We are ready for the audit of 2017-18 accounts.

Are there outstanding queries from the Comptroller and Auditor General?

Ms Elaine Sheridan

I am not aware of any query that we have not answered.

When will the Comptroller and Auditor General sign off on them, or has the institute not formally signed off on them yet?

Ms Elaine Sheridan

They were approved by our governing body for submission to the Comptroller and Auditor General.

Ms Elaine Sheridan

Before 30 November in each of those years. They were submitted on 30 November.

They have not yet been signed off on internally.

Ms Elaine Sheridan

The final one has not come back from the Comptroller and Auditor General for our sign-off.

When will the final sign-off be?

Mr. Seamus McCarthy

The file is being reviewed by senior management at the moment. I would hope to be able to move fairly quickly to clearance if all of the issues have been addressed. We will move with expedition.

Within weeks.

Mr. Seamus McCarthy

As I mentioned, there was an issue generally for the sector around pension accounting, which was not resolved until approximately October of last year. We have had an ongoing delay with WIT, and one delay inevitably has a consequence for the subsequent set of financial statements.

That sounds as if the 2017-18 accounts-----

Mr. Seamus McCarthy

We have the draft.

The Comptroller and Auditor will be able to work on them.

Mr. Seamus McCarthy

When we finish the 2016-17 accounts.

The Comptroller and Auditor General has to sign off the 2016-17 accounts before he can start on the 2017-18 accounts.

Mr. Seamus McCarthy

Yes.

I understand that entirely. We ask that the institute make every effort. The Department of Education and Skills should also examine the financial statements soon. They are two and a half years old, but it should not even take three months. We would like to see them before us as soon as possible.

I welcome the witnesses and thank Professor Donnelly for his opening statement, which painted a picture of the Waterford economy and the wonderful legacy of WIT. I did not disagree with any of it, but he did not deal to any great degree with the Comptroller and Auditor General's report. In fact, it is the last paragraph that makes reference to it. Why was there not more of a response to the report?

Professor Willie Donnelly

I have provided a more detailed submission. This was a five-minute opening statement. My role at this meeting is to answer questions on the Comptroller and Auditor General's report, and I did not believe I could answer questions in that time.

I understand, but an Accounting Officer would normally make a more substantial response in his or her opening statement. However, that is a matter for Professor Donnelly.

I thank Mr. McCarthy and his office for their work and report. I will turn to page 20, which covers the review of intellectual property management and conflicts of interest. Paragraph 2.17 discusses the review by the HEA and Knowledge Transfer Ireland of intellectual property policies. That review came as a result of work done and questions asked by this committee on a number of issues, mainly relating to WIT but also other institutes of technology.

Our work was in two areas. We were focused on management of conflicts of interest as well as whether the institutes were being fully and properly protected in their share in equity. These were essentially the issues we were concerned with.

Mr. Seamus McCarthy

Yes, they were the concerns.

Paragraph 2.18 refers to how the review highlighted some common areas of weakness, including in respect of systems for managing conflicts of interest and the decision-making process around relative equity stakes in spin-out companies. These were the two areas that the committee and I focused on. We highlighted potential deficiencies. That has been agreed by the Higher Education Authority and Knowledge Transfer Ireland. These were the areas where there were weaknesses.

Mr. Seamus McCarthy

Yes, but I suppose the conclusion is broader. It goes across the sector in general. This was not only an issue relating to Waterford Institute of Technology.

Let us consider Waterford Institute of Technology given that this report focuses on the institute from the perspective of the Comptroller and Auditor General. The report refers to failures in the systems for managing conflicts of interest. I gather "weaknesses" is the word used. Were there weaknesses in the decision-making process around relative equity stakes in spin-out companies?

Mr. Seamus McCarthy

Yes, overall I would conclude that those weaknesses are evident in the facts, as outlined.

From his perspective as the State's chief auditor, having produced this report, Mr. McCarthy has concluded that in these two areas, that is to say, the protection of the institute in respect of its equity and management of conflicts of interest, there were weaknesses in respect of Waterford Institute of Technology and this company. Is that accurate?

Mr. Seamus McCarthy

That is certainly the case in respect of the decision-making. There was a lack of evidence in respect of decision-making and the documentation of reasoning for certain matters. The percentage share of equity is very much a commercial decision at a given point in time. I am not making an evaluation of that per se, but in terms of documenting it-----

I am referring to decision-making.

Mr. Seamus McCarthy

The decision-making process is definitely underdocumented and lacking in evidence.

Does Professor Donnelly agree with that?

Professor Willie Donnelly

I have to agree that there was a lack of documentation. However, we have to be aware of the fact that we are talking about eight years ago. Does the Deputy know how many companies keep documentation for eight years? Does the Deputy know the number of years that legally one is expected to keep documentation for?

I do not but, first of all, the person who sought the documentation was not me. The organisation that sought the documentation is the Office of the Comptroller and Auditor General. That is the job of the Comptroller and Auditor General as the auditor. The Comptroller and Auditor General concluded that there were weaknesses in supporting documentation. It was not me. I would go further. We will go through the report now and we will see what I believe the weaknesses to have been.

Professor Willie Donnelly

I think he said that there was a lack of documentation from eight years ago, and I accept that.

I want Professor Donnelly to know that, as we progress through this meeting, we are not dealing with my report or some report of the members of this committee.

Professor Willie Donnelly

I understand that, but I would like to give the committee the context. It was eight years ago. If Deputy Cullinane looks it up, he will find out that companies are expected to keep documentation-----

Does the Comptroller and Auditor General accept that as a response?

Mr. Seamus McCarthy

No, I do not think I would. I know the guideline that the president is referring to, which is of the order of six years, but that really relates to things like invoices and so on. For a major strategic initiative on the part of a public sector organisation, I would expect permanent retention of critical documents.

Maybe that could have been one of the recommendations. Given that it was not in the document, perhaps the institute can accept that for these types of strategic big sales or initiatives, it should keep better records.

I will move on to conclusions and recommendations on page 21 of the report. Paragraph 2.20 states: "The Governing Body of Waterford Institute of Technology adopted a local policy to deal with commercialising IP and managing conflicts of interest in February 2010 — almost six years after this was recommended in the 2004 national code of practice." Who was the vice president for research from 2004 to 2010?

Professor Willie Donnelly

I was.

So it would have been the responsibility of Professor Donnelly, along with the president and the governing body, I imagine, to formulate policy. In fact, the 2010 policy states that the officeholder is the office of the vice president of research. Why did it take six years to develop the policy?

Professor Willie Donnelly

If Deputy Cullinane looked at the document and read the report he would understand why.

I did read the report. My question is why it took six years.

Professor Willie Donnelly

I will explain it to the Deputy. First and foremost, the intellectual property policy that was from 2004 was a recommendation. If the Deputy reads the IP policy, he can see that it says that the policy, which is a recommendation, should not be taken in isolation. It needs to be taken in the context of the structures and infrastructure being in place to support the development of the IP policy.

Two other dates are important. In 2006, the Institutes of Technology Act 2006 gave institutes of technology authority to be engaged in spin-out companies. Second, the tech transfer, or technology transfer strengthening initiative, in 2007 was the first investment nationally in developing the IP management infrastructure to support the 2004 recommendations. WIT was the only institute of technology along with the Dublin Institute of Technology, DIT, to receive funding for a tech transfer office. The tech transfer manager was hired in 2008.

I would like to short-circuit Professor Donnelly's response. Essentially, Professor Donnelly is saying that there was good reason it took six years. It was not because there was-----

Professor Willie Donnelly

We did not have the investment infrastructure to support the development. I am keen to say one thing that is important. The 2010 IP policy is the codification of practice that was established in the institute since 2004. It is not that we did not have established practices. It is simply that the 2010 policy is the codification of those practices.

Yes, but there is a difference between established practices and an actual policy.

Professor Willie Donnelly

I have just explained the reason.

We have dealt with that. The Comptroller and Auditor General states at paragraph 2.22: "There is no record that the assignment of the Institute's IP to FeedHenry Ltd in December 2010 was considered or approved by the Governing Body." Essentially, a decision was made to transfer the IP. That would have been a fairly big decision to make. I gather the person or the office overseeing it was the financial controller at the time. Is that correct?

Professor Willie Donnelly

Yes.

I gather that decision was never approved by the president or the governing body or the tech transfer office. Is that accurate?

Mr. Seamus McCarthy

We did not find evidence of those approvals.

Is that what happened?

Professor Willie Donnelly

It would appear so, yes.

Does Professor Donnelly think that is acceptable?

Professor Willie Donnelly

I think it was surprising.

Was it surprising to Professor Donnelly? Was he not aware of that before publication of the report?

Professor Willie Donnelly

No. If Deputy Cullinane looks in the report, he will see. It says that in June 2011 I make a presentation to the governing body where I presented FeedHenry and the spin-out of FeedHenry. It must be noted that the vice president of research only made a presentation to the governing body once a year. That was the only time I made a presentation.

In my judgment, and it is only my judgment, it would not be good practice for one individual, for example, the financial controller, to sign off on the transfer of IP without getting any authorisation or approval from the governing body. Mr. McCarthy's point is that the governing body is the ultimate body that should be responsible for disposal of assets.

Mr. Seamus McCarthy

It is responsible for the protection of the assets.

Professor Willie Donnelly

I fully recognise that. That is common practice today.

That is great, but it did not happen then.

Dr. James O'Sullivan

I would like to comment. Under the new policy we have, it is clear that any transfer of asset is in line with-----

The new policy is wonderful.

Dr. James O'Sullivan

Absolutely.

Let us hope that any failures or weaknesses will not arise again.

Dr. James O'Sullivan

They are addressed in the new policy.

I am talking about at that time. I am only looking in real time at that time. The financial controller signed off on the transfer of IP alone as an individual rather than getting any consent or approval from the board. That was the finding of the Comptroller and Auditor General, or at least he could not find any documentation to that effect. Is that correct?

Mr. Seamus McCarthy

We asked whether it was considered by the governing body. There was no evidence that it was.

Paragraph 3.4 relates to the timeline of events. It refers to the establishment of Aceno Mobile Services Limited and eventually FeedHenry Limited. My understanding, from reading national policy and the policy of Waterford IT in respect of spin-out companies and so on, is that it seems the policy is written from the viewpoint that these companies would be established within the institute. It seems from this perspective that the company was established outside of the institute privately and it then came to the institute and sought the IP. Is my reading of that right?

Mr. Seamus McCarthy

That broadly summarises my understanding of it as well.

Would it be unusual for a private company to be established in that manner and then come to the institute and state------

Mr. Seamus McCarthy

I do not wish to over-generalise. We looked at one specific matter. The HEA may wish to give its view on the emergence of spin-outs from third level institutions.

Mr. Paul O'Toole

I am not sure I can give a fully informed view. The process in which we have been involved since last year on foot of many of the matters raised by the committee is to begin putting in place key performance indicators and new regimes, policies and oversight mechanisms in this area. That process encompasses spin-out companies. Within it, the institute introduced a set of additional reporting criteria for higher education institutes-----

I have read all of that. The process is in place.

Mr. Paul O'Toole

Yes.

We are happy with that. I am referring to the period when this took place. A private company was established and went to the institute to seek the intellectual property. However, my understanding which may be incorrect and which seems to be similar to that of the Comptroller and Auditor General is that the policy was geared towards companies coming organically from within the institute. Does Dr. O'Sullivan wish to comment?

Dr. James O'Sullivan

It was and is national and international practice for the promoters to establish the spin-out company and then engage with the institute to licence the technology.

I have some important questions about the review of the commercialisation process. I ask the witnesses to bear with me as I am working through the report which I want to give the scrutiny it deserves. Paragraph 3.25 states that in late 2009 the institute's research office undertook a review of the commercialisation process. In January 2010 a memorandum was sent to the vice president of research. Did Professor Donnelly hold that position at the time?

Professor Willie Donnelly

I did.

The memorandum raised several concerns. Is Professor Donnelly aware of it?

Professor Willie Donnelly

I am.

I ask that the committee be provided with a copy of it.

Professor Willie Donnelly

I am sure that will be possible.

I ask that it be provided as soon as possible and Professor Donnelly to synopsise the matters raised in it.

Professor Willie Donnelly

From memory, I asked the technology transfer officer to look at Aceno in order that we could establish protocols for managing the relationship with it.

The report states the research office undertook a review. Is Professor Donnelly saying he prompted that review?

Professor Willie Donnelly

Yes. It was the first time we had a technology transfer office and I thought it advisable to establish good practice in our engagement with campus companies. I subsequently received a memo from the person who had carried out the review raising certain issues about the relationship between Aceno and the institute. In the light of my having requested a review, I asked for documentary evidence in support of the issues to be provided.

I wish to be fair to the institute and its staff, including Professor Donnelly who received the memo and the person who sent it, as well as to the Comptroller and Auditor General who prepared the report. My understanding of his report is that it states a memorandum raising concerns was sent to Professor Donnelly. However, the report seems to suggest a copy of the memorandum ought to have been sent to the secretary or financial controller, the president and the governing body, but that this was not done.

Professor Willie Donnelly

The report states the memorandum should have been sent to the people responsible for governance.

The report states:

During the course of this examination, we asked the Institute whether the memorandum had been copied to any other parties, and in particular whether it had been copied to the Secretary/Financial Controller, the Institute President, or the Governing Body, and if so, when was this done. The Institute responded that the (then) Secretary/Financial Controller was not included in the circulation list for the memorandum. The Institute has provided no evidence of the memorandum being circulated to either the President or Governing Body.

Does the report indicate that Mr. McCarthy would have expected the report to be sent to those persons?

Mr. Seamus McCarthy

Yes. It also notes a suggestion in the document that it be circulated to senior people.

Yes. That was my point. There was a suggestion in the document that that should be done, but it was not. Professor Donnelly received the memo which raised concerns and should have have gone further up the line, but it did not. As far as I can see, he went back to the person who wrote the memo to ask for supporting documentation.

Professor Willie Donnelly

It recommended that it be sent to the person responsible for conflicts of interest. I asked for supporting documentation to be provided in order to------

Was that an oral request or was it made by email or letter?

Professor Willie Donnelly

I cannot remember. As I had asked for a review to be carried out, I requested documentary evidence related to the claims. It is quite common to receive communications from persons making particular statements. It is normal to thank the person for raising the issue, point out that one understands the point being made and is concerned by it and then ask for supporting evidence to be provided in order that it can be forwarded to the appropriate person.

As the person who wrote the report, does Mr. McCarthy consider that to be a fair response? I want to be fair to all involved. My reading of the report is that the memo raising concerns was sent to the vice president of research. It was requested that it be sent up the line, but that did not happen; rather, the person received a request for more evidence or supporting documentation.

Mr. Seamus McCarthy

That is my understanding of the sequence involved.

Does Mr. McCarthy consider that to be the appropriate way to deal with the memo?

Mr. Seamus McCarthy

No. Given the recommendation that the memo be circulated to other staff members charged with dealing with matters related to conflicts of interest, it should have gone to a higher level.

There were two subsequent meetings, one on 4 October and another which Professor Donnelly attended. According to Mr. McCarthy, there was no supporting documentation related to these meetings.

Mr. Seamus McCarthy

We did not receive any supporting documentation from the institute.

Were there notes for any of the meetings?

Mr. Seamus McCarthy

We did not receive minutes or notes for the meetings.

Professor Willie Donnelly

The point is that in the first instance I requested supporting documentation, which was a reasonable request. If one is sent an email with a list of headings and responds that the issue is being taken very seriously and asks for supporting documents to be provided-----

Professor Donnelly has gone back to the email. We are now dealing with the meetings.

Professor Willie Donnelly

Let us get this straight. I think it was very reasonable for me to say to the person that I had a serious concern about the matter and ask to be provided with the supporting information which allowed the particular conclusions to be reached, which I would then forward on. When the supporting information did not arrive, I forwarded the matter to the person responsible for the management of conflicts of interest, namely, the financial controller. I did what was appropriate, which was to ask for the supporting evidence and then pass on the matter to the person responsible for the management of conflicts of interest.

In Professor Donnelly's analysis, he handled the matter appropriately, which is fine. However, the Comptroller and Auditor General prepared the report and seems to have a different view of how it should have been handled. In fact, there seems to be no record of notes having been taken at the two formal meetings between very senior people in the institute. At paragraph 3.28, the report states, "Furthermore, the Institute stated that a review of consultancy work [was] undertaken by Aceno Ltd". Was Professor Donnelly a shareholder of the company in that year?

Professor Willie Donnelly

In which year?

Professor Willie Donnelly

I was a shareholder at one stage.

Consultancy work was undertaken by Aceno using institute staff and no issues were found.

Professor Willie Donnelly

Yes.

Professor Donnelly referenced that when he appeared before the committee previously. The report continues: "However, the Institute was unable to provide any documentation related to that review when requested".

Professor Willie Donnelly

The point is that the review was carried out by a more senior independent person.

The review means that one should do certain things. Records must be kept of meetings or telephone calls. Is that the view of Mr. McCarthy?

Mr. Seamus McCarthy

If there is a question of a conflict of interest, it is very important to keep clear documentation.

A review is a review. However, the report states there is no documentary evidence to support the fact that there was a review.

Professor Willie Donnelly

That is not the case. We should not become confused. I accept what the Comptroller and Auditor General stated, namely, that no documents were available at the time. That should not be confused with the fact that the institute tasked an independent person with carrying out a full review and found that any outstanding issue had been addressed.

I hope Professor Donnelly is clear that I am fully aware of that.

Professor Willie Donnelly

Good.

It is not for me to make a judgment on whether the review took place.

I am saying that the Comptroller and Auditor General can only work on the basis of supporting documentation. He did not find any documentation and so cannot comment when no documents whatsoever exist. Would that be fair?

Mr. Seamus McCarthy

I cannot conclude that nothing exists. I can say we did not get any documentation.

Can Mr. McCarthy even conclude that a review took place?

Mr. Seamus McCarthy

I do not know, one way or the other. I can only report what has been represented to me.

So that Mr. Donnelly is clear, I am not saying that, the Comptroller and Auditor General is saying that.

Professor Willie Donnelly

It is important, to be fair, to note that this is eight years ago. Clarity is important here. The documentation was not available to the Comptroller and Auditor General. I accept that. The point is that the review was conducted and everything was fully investigated.

I am willing to accept that the review took place. I am not disputing that and I want to be fair to the individual who carried out the review. One thing we are trying to achieve in this process is that any review is properly documented in the future. We are not in dispute. I am not accusing anybody of saying they did a review that was not done but unfortunately the Comptroller and Auditor General cannot report that a review actually took place, or what that review did or did not, because there are no documents. Lessons can be learned and that is the important thing in all of this.

I will move on to the assignment agreement. This is the second important issue in the report. Paragraph 3.36 states: "After the July 2010 licence agreement was signed, FeedHenry Ltd endeavoured to attract the level of investment that would help trigger the assignment of the IP." Policy can change depending on a whole range of factors, but here the policy was that the equity to be received by the institute should be reduced by 15%. The paragraph continues: "In November 2010, the company proposed changes to the terms of the July agreement."

Mr. McCarthy might be able to confirm my understanding that the company contacted Waterford IT in order to change its equity.

Mr. Seamus McCarthy

That is my understanding.

Was Mr. Donnelly a shareholder and director in that company?

Professor Willie Donnelly

Exactly.

Was he also the vice president for research at that time?

Professor Willie Donnelly

Precisely.

The report goes on, at paragraph 3.37: "On 29 November 2010, an official from the Research Office emailed FeedHenry Ltd outlining his concerns at the changes sought." Somebody from the research office obviously had a concern and contacted the company to communicate that. Is that correct?

Mr. Seamus McCarthy

That is my understanding.

The paragraph continues: "The official's view was that the institute should receive the previously agreed 15% share of the equity." Was that all done? Is there documentation to support that?

Mr. Seamus McCarthy

Yes.

Can I ask Mr. Donnelly if the committee can see that documentation? I will let him answer in a second but I just want to know first because I am not yet finished with Mr. McCarthy. Can the committee receive that documentation?

Professor Willie Donnelly

Yes, certainly, that is no problem.

The paragraph continues: "The official also signalled that the Commercialisation Committee would commence an oversight role from 1 December 2010." Can Mr. McCarthy tell me was that ever done?

Mr. Seamus McCarthy

Was what ever done?

In paragraph 3.37: "The official also signalled that the Commercialisation Committee would commence an oversight role."

Mr. Seamus McCarthy

Yes, there was a reference in the documentation to be aware that, as and from the beginning of December-----

That was the first time the commercialisation committee would have-----

Mr. Seamus McCarthy

The commercialisation committee first met on 6 December. It was imminent or impending.

Paragraph 3.38 refers to the vice president for research and that refers to Mr. Donnelly, does it not? Yes. The paragraph reads: "Although the Vice President for Research was not included in the correspondence concerning the proposed change of terms, he [Mr. Donnelly] emailed the Secretary/Financial Controller, later on 29 November 2010, in support of the company's proposal for the Institute's share of equity to be reduced [and also] recommended that the required level of investment to be raised by FeedHenry to be reduced from €500,000 to €400,000." That means the institute would have lost out on the double in this instance.

Was the email from Mr. Donnelly to the secretary and financial controller sent in his capacity as vice president for research?

Professor Willie Donnelly

It was, indeed.

Mr. Donnelly is the vice president for research of the institute and a shareholder in the company and he emails the institute to say he is in favour of the reduction in equity of the institute.

Professor Willie Donnelly

I gave-----

Would Mr. Donnelly let me make my point? I will then ask for the opinions of others. Would Mr. Donnelly not see that as a blatant conflict of interest?

Professor Willie Donnelly

Put it this way, the financial controller knew I had a conflict of interest because I declared it. It is important I am given time to say the following. Consider the situation we were in. This was 2010 and the economy had collapsed. The State had given us €800,000 of investment in research and innovation in intellectual property, IP, that was generated. We had gone through two phases of attempting to commercialise that IP with two separate, external companies and both had failed because of the economic situation. We had a situation whereby, contrary to the national situation, venture capital companies were willing to put €400,000 on the table. The IP policy said for assignment-----

Sorry, I want to stop Mr. Donnelly there.

Professor Willie Donnelly

I am sorry, I need to finish this.

Mr. Donnelly does not need to finish.

Professor Willie Donnelly

I do.

He does not. I agree that, in these situations, there are factors which could determine that decisions have to be made quickly. That is not in question.

Professor Willie Donnelly

It is not a question of quickly.

The question is whether Mr. Donnelly is the appropriate person to send an email as both vice president for research and a shareholder in the company to request that the equity be reduced. That is my concern.

Professor Willie Donnelly

Maybe Deputy Cullinane will understand if he lets me finish. The IP policy said that the requirement for assignment was €140,000. Uniquely, this company, maybe because I was a shareholder, was required to meet more stringent conditions. We had €400,000 on the table from a set of venture capital companies in November. Anyone who knows how the system works for venture capital companies will say that, if that deal was not closed by December, the venture capital companies would have walked away for tax reasons. As the vice president for research, and not as a shareholder, and with the financial controller knowing I had a conflict, I said that, from my perspective, the institute needed to accept what was on the table because it was well beyond what was in our intellectual property policy.

I thank Mr. Donnelly for that. I want Mr. McCarthy's professional opinion. Here we have a vice president of an institute for research who was also a shareholder in a company and, notwithstanding his declaration of a conflict of interest, as a shareholder of a company, he stood to gain financially if that company was sold. He then, as vice president, wrote to the financial controller advocating for a reduction in the equity of the institute. It could be argued that would be financially beneficial to Mr. Donnelly, although I am not saying that was his motivation. Would Mr. McCarthy see that as a conflict of interest, or something that could or should have been avoided?

Mr. Seamus McCarthy

It would certainly seem to be a situation with a conflict of interest.

Would Mr. Beausang see it as a conflict of interest, or at least something that should have been avoided? In other words, and notwithstanding everything that Mr. Donnelly said, it was not appropriate to lobby the institute or write to the institute when he had an interest in the company?

Mr. William Beausang

As I mentioned earlier, we are engaging with the institute on these issues. Some of the questions we posed for the institute go to these issues.

I am asking for Mr. Beausang's opinion now.

Mr. William Beausang

I would be prejudging the process we are engaged in with the institute if I give an opinion now. When, in due course, we discuss and advise the Minister-----

Maybe Mr. Beausang will answer when he has finished his process. I do not need a process to give a short answer to that because it seems obvious to most people in the room. People can speak for themselves, but we will wait until Mr. Beausang can answer.

Would Mr. O'Toole see that as a conflict of interest or at least something that could or should have been avoided?

Mr. Paul O'Toole

The conflict is there but the fact that there is a conflict is not the issue. Conflicts occur in these situations, maybe particularly in these situations, because of the merger of individual, institutional and commercial interests. It is broadly recognised that conflicts of interest occur. There is a conflict of interest but the issue is how it was handled. As Mr. Beausang said, to conclude from the information available that the conflict was handled inappropriately is something that we have to explore. I would distinguish between the clear fact of the conflict of interest and how it was handled.

I have one more question, although I might come back in the second round of questioning. The intellectual property policy was developed in 2010 and it references the commercialisation committee but, in fact, it was a technology transfer office. It says that someone has a conflict of interest if they, or someone known to them, or somebody with whom they are in a business relationship, or somebody to whom they report has an interest in the company and they must absolve themselves of any decision making.

If the policy was in place from 2004 to 2010, most of the people in the commercialisation office would have reported to Professor Donnelly. In fact, as President, they now all do. Does Professor Donnelly have shareholdings in any existing companies in WIT?

Professor Willie Donnelly

No, but can I make a point on what the Deputy just said?

Professor Donnelly does not-----

Professor Willie Donnelly

No.

He did have. On the previous occasion he was before the committee he said he had a shareholding in a number of companies.

Professor Willie Donnelly

I did.

Are they all disposed of?

Professor Willie Donnelly

Yes.

Professor Willie Donnelly

Can I make a point? One cannot avoid conflict of interest in any organisation-----

Professor Willie Donnelly

The people in the technology transfer office who were reporting me declared that conflict and the financial controller was the decision-maker. This is important. They were not decision-makers. The financial controller, who was the decision-maker, was present at all the negotiations and was aware of that conflict. The people were there to support him in the process, not as decision-makers.

I thank Professor Donnelly and the institute for accepting the recommendations in the report. I will not deal with this in detail but there was a great deal of public commentary about issues that were raised in this committee, which was unhelpful. Professor Donnelly might have a view on that. We focused on two areas: management of conflicts of interest and protecting the institute. In fact, we are examining these across a number of institutions. Our role is to ensure that happens. Nobody is disputing the fact that Waterford IT is one of the leading drivers of cutting edge research and development. A substantial amount of positive work was done, but that does not mean that we cannot examine these issues. We have done that, and I believe we have done it fairly. We ask questions without fear or favour. That is our job. There are a couple of other issues I will raise later, but I thank the witnesses.

I welcome the witnesses. Mr. Beausang sent a letter with a number of questions. Is that right?

Mr. William Beausang

Yes. We wrote to the chair of the governing body in WIT on 19 December.

Mr. Beausang is waiting for the body to meet and to refer back to him.

Mr. William Beausang

Yes.

What were the significant concerns?

Mr. William Beausang

They are following up on the issues that were raised in the Comptroller and Auditor General's report.

Prior to that, the HEA had not identified significant concerns.

Mr. William Beausang

Pardon?

Significant concerns were not identified by the Higher Education authority or the Department prior to the Comptroller and Auditor General's report.

Mr. William Beausang

That speaks to the follow-up from the committee hearings on this issue which culminated in the IP Pragmatics report, what we call the KTI-HEA report. It was an important piece of work looking across all the policies on IP commercialisation in higher education institutions, HEIs, and identifying, to be fair, many shortfalls and weaknesses. Obviously, there was a significant response to that subsequently.

When was that report released?

Mr. William Beausang

It was commissioned in June 2017 and published in February 2018. Much of the work, and the CEO of the HEA reported on it in the opening statement, is the implementation of the recommendations arising from the KTI-HEA review.

The issues had been raised at the Committee of Public Accounts.

Mr. William Beausang

That is correct.

There was no proactive work by the Department or the HEA on this.

Mr. William Beausang

As set out in the Comptroller and Auditor General's report, at figure 2.1, there was a framework in place for oversight of commercialisation activity over the first decade of the century.

Will the witness come back to my question? It was about the fact that there was no proactive recognition of possible problems on the ground. The feeling I get, and this has arisen with different institutions, is that development is good, spin-off companies and commercialisation are very good, but there is no oversight. One questions that at one's peril. It arose again today with Professor Donnelly, that this is excellent and it was particularly good at that time, but that it should not be questioned too much. Am I wrong?

Mr. William Beausang

The code of governance for the institutes of technology that was promulgated in 2009 makes it clear that there are important requirements for governing bodies of ITs with regard to the protection of assets, putting in place codes of conduct for employees, and managing conflicts of interest. However, I take the Deputy's point that in the specific area of IP commercialisation-----

And conflicts of interest.

Mr. William Beausang

-----and the conflicts of interest that arise in that respect, there was no proactive engagement over the period the Comptroller and Auditor General's report relates to in the same way as there is now. All one can do is compare how matters are now with how they were then. It is significantly strengthened since then.

Was the code of governance in 2009 robust enough at that time?

Mr. William Beausang

It was based on the Department of Finance code of governance published in 2001.

Was one of the aims to communicate to each staff member the institute's policies on dealing with conflicts of interest? Am I right? I refer to the 2009 code of governance for institutes.

Mr. William Beausang

Is the Deputy referring to the Comptroller and Auditor General's report?

Mr. William Beausang

The ITs would be subject to the comprehensive requirements signalled in the code.

That was not brought in at Waterford Institute of Technology until 2014. Am I right that there was a delay?

Mr. William Beausang

No. The code of governance for the institutes of technology was issued by the HEA in 2009 and came into effect in that year, if I am correct.

There was an obligation on Waterford IT at that point in 2009.

Mr. William Beausang

Yes.

What is the process when the Department gets the replies back?

Mr. William Beausang

There are a number of elements to it. We will have to examine any recommendations or advice arising from the consideration of the current position as outlined by the CEO of the HEA on the HEA review which the HEA board might wish to communicate to the Minister. We will look carefully at the responses we get from the institute and whether they provide us with the assurance and information that allow us to understand fully how issues played out as reflected in the facts, findings and recommendations in the Comptroller and Auditor General's report. That is something we will engage in when we receive the responses. The key piece is the response from the institute's governing body. We put a detailed set of questions to the governing body.

There are two things here, therefore. One is to explore further what happened in Waterford and the other is to be in a position to put in place a very robust framework of governance for the future.

Mr. William Beausang

There has been a significant strengthening but obviously we want to ensure we are extracting the learning from how things played out. The issue is that nobody will claim that the framework in place during that decade was detailed and comprehensive, and while the Comptroller and Auditor General's report has identified areas where there were requirements, they were not implemented. We can hold that we have a detailed and comprehensive framework in place now, but we must understand and be assured that it is being properly executed by the institutes and the universities.

Professor Donnelly said it was many years ago. I do not accept that answer as a member of this committee. It is unacceptable to give that answer. Serious issues have been identified. My colleague has gone through them as he is far more familiar with the matter. I have read the report. The equity was reduced from 15% to 10% but there is no documentation. Does Professor Donnelly accept that there should be documentation?

Dr. James O'Sullivan

Can I comment?

Dr. O'Sullivan can comment but I want an answer from Professor Donnelly.

Professor Willie Donnelly

If documentation is missing, it is missing, but there is a difference between a conversation about documentation not being available and issues around the way the institute conducted itself. That is my point. In terms of it being in the past, this is an area which is evolving and maturing over time.

I am not going into that this time. I am looking at the chapter here. Dr. O'Sullivan wished to comment.

Dr. James O'Sullivan

The reduction in equity from 15% to 12% was sought through Enterprise Ireland. We advised Enterprise Ireland of the reduction and it approved it. That documentation is available.

Enterprise Ireland said it had no role.

Dr. James O'Sullivan

Exactly. It said it had no role in it. However, it was highlighted to Enterprise Ireland at the time.

Professor Willie Donnelly

It is important to understand something, and it is in the committee's report.

The KTI report states there is no clear number for what the particular intellectual property is worth. It is a process of negotiation which is dependent-----

I have no difficulty with any of that, but the process must be open and accountable.

Professor Willie Donnelly

Exactly.

No. That is where the gaps are when we look at the chapter, but I will not waste time talking about it having to be negotiation. This meeting is about governance issues and the gaps that led to a company being sold in 2014 for €63.4 million that came from a public institution and all of the work in it. That is from where I am coming in terms of accountability. As such, I want to go back and ask Professor Donnelly a question about the original agreement with a credit institution on borrowing or investing the sum of €100,000. What was that about?

Professor Willie Donnelly

That is another issue.

A financial institution gave €100,000 at the time.

Professor Willie Donnelly

In my opening statement I mentioned ArcLabs, which is an incubation centre. We received funding for an incubation centre on campus.

Professor Willie Donnelly

Yes. However, it was a requirement of the funding agency that 10% of the cost be raised elsewhere. As we could not raise it from our core funding, it had to be raised externally. As such, we sought a partner that would make a contribution of 10% of the cost. Again - this is what I understand as I was not involved - it was agreed as part of the negotiations that it would receive 1% of the equity the institution received from any company established within the incubation centre.

Arising from that, we had Feedhenry Limited a few years later. The 1% is transferred to it. Is that what Professor Donnelly is saying?

Professor Willie Donnelly

Yes.

Is there a copy of that agreement anywhere?

Mr. Seamus McCarthy

There is no copy of the signed agreement available. There was a draft of the agreement, but there is a question mark over whether it is actionable or represents the sum agreement.

Is there a copy of the signed agreement available?

Ms Elaine Sheridan

No.

Professor Willie Donnelly

We could not find one.

Ms Elaine Sheridan

We were not able to find one when we searched for it with all parties.

Was it available when the money was paid back?

Ms Elaine Sheridan

I cannot answer that question.

Professor Willie Donnelly

I cannot say whether it was, but the agreement was in place and we were obliged to provide 1% based on it.

It became €147,000.

Professor Willie Donnelly

Yes.

When was it paid back?

Professor Willie Donnelly

When we received the percentage from the sale of Feedhenry Limited.

How did WIT pay back €147,000 if there was no agreement? It does not have a copy of it.

Professor Willie Donnelly

We have a letter. As the Deputy knows, the fact that one does not have a signed agreement does not mean in law that there is no agreement.

I do not know anything about law. I am here as a member of the Committee of Public Accounts.

Professor Willie Donnelly

There is a letter signed by the appropriate person in the institute which commits to the allocation of 1% of Feedhenry Limited to the company in question.

What date is on that letter?

Professor Willie Donnelly

It is dated 13 June 2011.

Has the Office of the Comptroller and Auditor General seen it?

Mr. Seamus McCarthy

I am not sure. I will check the records and come back to the Deputy.

Was a cost-benefit analysis carried out before the sum of €100,000 was-----

Professor Willie Donnelly

Well-----

Professor Willie Donnelly

I might be a little confused, but the issue was that we wanted to build the incubation centre and had funding of over €2 million.

Professor Willie Donnelly

Enterprise Ireland. There was a requirement to raise 10% or the project would fail. We received a contribution. If the Deputy is asking me whether we believed that at some stage down the road one of our spin-outs would sell for this amount, the answer is we absolutely did not.

But it actually did and it happened on the basis of research on a public facility in Waterford.

Professor Willie Donnelly

The company spun out. We need to be careful. There was huge investment in the company between the time it spun out and the time it was sold. In ordere that people do not become confused, it was not the case that IP produced in the college was worth €63 million; not in the least. The actual valuation of the IP spun out from the institute at the time was determined by auditors to be €240,000.

In 1996 an internal research group was set up. Between 2002 and 2004 it is called TSSG. What did the letters stand for again?

Professor Willie Donnelly

Telecommunications, Software and Systems Group.

From that experience on public ground in public facilities using public moneys, we lead into Feedhenry Limited which was formed in 2008. Is that correct?

Professor Willie Donnelly

Yes.

A number of staff, including Professor Donnelly, were part of it.

Professor Willie Donnelly

Yes.

How many other staff members were involved.

Professor Willie Donnelly

I cannot remember. There were four main members of staff and another eight or so.

At the time Professor Donnelly was a vice president.

Professor Willie Donnelly

Yes.

Did the others have such status?

Professor Willie Donnelly

No. They were part of the research group.

They were researchers. Professor Donnelly was part of the company and still a public servant. It was a private company.

Professor Willie Donnelly

This is perhaps an unfortunate position for me to be in, but as a person with many hats, I was a VP of research and also the principal investigator and founder of TSSG. In fact, I held two positions. In terms of research, the position was principal investigator for the Telecommunications, Software and Systems Group.

It is key that Professor Donnelly had many roles. That is the whole point. We need proper governance of conflicts of interest. We are on public grounds using public funding and there is public research which led to the development of a private company. Is that correct?

Professor Willie Donnelly

That is standard practice. I am sorry, but I do not-----

It may well be standard practice, but what I see is that there are no standard governance arrangements or if there are in theory, they are not implemented. That is what I have seen in lots of institutions.

Professor Willie Donnelly

While I agree that there were some errors in the process, if the Deputy is asking whether governance arrangements were in place, they were. If she asks me whether the governance arrangements in place were consistent with what was in place in the rest of the third level sector, they were. Reviews carried out by international reviewers over a number of years have shown this. I would not like the Committee of Public Accounts to gain an understanding that what was happening in Waterford was-----

The research is great, but was the body of governors aware of it?

Professor Willie Donnelly

Yes.

It was monitoring the whole time?

Professor Willie Donnelly

I reported to it on what was going on in the research and its success and outcomes. Not only was there governance internally, there was oversight in this period by the funding agencies that were funding the research.

I am talking about the governance body.

Professor Willie Donnelly

Yes, it was aware.

Do not use the word "aware".

Professor Willie Donnelly

The governing body had received reports.

I thank Professor Donnelly.

Professor Willie Donnelly

I accept, albeit I do not understand it, that there is no record to show that it was brought for sign-off to the governing body.

Was Professor Donnelly a member of the governing body?

Professor Willie Donnelly

No, but I am now as president. At that stage as a VP of research, I was not. I was a member of the executive and only reported to the governing body once a year to inform it of what was happening in the area of research.

Professor Donnelly accepts that there is no record of the governance body-----

Professor Willie Donnelly

I have to accept it since we have not found it.

Feedhenry Limited was formed in 2008 and a licence was provided for it. Who made that decision?

Professor Willie Donnelly

The financial controller who was the negotiator. That was standard practice. We had 15 licences signed off on. It was not unusual to give a licence to a company.

In 2010 full ownership was granted by the institute.

Professor Willie Donnelly

That is national policy.

I did not ask Professor Donnelly. I only want him to confirm if I am right or wrong.

Professor Willie Donnelly

When €500,000 as was agreed through the negotiation was raised, the IP was assigned to the company.

In 2010, Waterford Institute of Technology divested itself of ownership in return for an equity share.

Professor Willie Donnelly

Yes. That is standard practice.

What was that equity share?

Professor Willie Donnelly

The equity share was 12% and was then diluted through shareholders' options.

It was 10.8%, having started at 15%. Ownership has gone, the public institution has an equity share less than what was anticipated, and four years later, it sold for €62.5 million. In return, money comes back. The bank or credit institution is paid off. Is Professor Donnelly in a position to say what he got?

Professor Willie Donnelly

No.

Professor Willie Donnelly

I am a private citizen and it is not the function-----

That is okay. I asked Professor Donnelly the question and got the answer. It sold for over €52 million. What came back to the public body after all the years?

Professor Willie Donnelly

Some €1.6 million.

And Enterprise Ireland-----

Professor Willie Donnelly

Enterprise Ireland got €4.6 million.

Enterprise Ireland did better than the institute.

Professor Willie Donnelly

Yes. It continued to invest in the company whereas one would not expect an institute of technology to continue to invest.

That was the gross. The net was €900,000.

Professor Willie Donnelly

The net was €1.6 million but there is an IP policy which is consistent with everything that happens in third level institutions where the inventors are rewarded.

I accept that. I am saying that €1.6 million went to the institute, which had to make a number of payments, including €130,000 to some company.

Mr. Seamus McCarthy

Some €147,000 went to AIB and €492,000 to staff.

The institute got €951,000.

Professor Willie Donnelly

Why would one strip that out? The institute had a shareholding which returned €1.6 million and an IP policy which said that certain members are rewarded. At the end of the day, the institute got €1.6 million.

Sometimes there is a sharpness in Professor Donnelly's responses which really should not be and does not need to be there.

Professor Willie Donnelly

It is just my personality. I apologise.

Maybe Professor Donnelly could examine that. The €1.6 million was not broken down by the committee but by the Comptroller and Auditor General.

Will Deputy Cullinane do me a favour and let Deputy O'Connell in for a minute? I think she has to leave.

Deputy Cullinane might finish his train of thought.

Nobody disagrees that it got €1.6 million but we are stating these as facts.

Professor Willie Donnelly

The Deputy is not stating facts. The fact is that the institute got €1.6 million.

We will come back to that.

Professor Willie Donnelly

This is being recorded and the right number has to be in there, which is €1.6 million.

We have the right number, which the Comptroller and Auditor General gives to us.

Bear with me and let Deputy O'Connell in because she has to leave.

I thank the witnesses for coming in. Following on from Deputy Cullinane, with regard to the €1.6 million that came back, was the outstanding debt that went to the banks all carried by the university or did anyone else carry it?

Professor Willie Donnelly

It was not a debt. The institute in question invested in the innovation centre. Part of the investment agreement was that it would get 1% of equity share. I keep forgetting what the number for the 1% is.

Ms Elaine Sheridan

Some €148,000, €100,000 of which has been paid.

After listening today, whether it is Professor Donnelly's personality or not, he has referred to members being confused or lacking understanding on numerous occasions. I am sure we can count them. I have not seen any evidence of a lack of understanding and the report of the Comptroller and Auditor General is clear. As somebody who has many businesses, I agree that there can be conflicts, but I think many of us who are shareholders try to protect ourselves from any such accusations. It would be my considered opinion that Professor Donnelly's position, his multiple hats, his transition through University of Limerick and his various roles-----

Waterford Institute of Technology.

I apologise, through the institute and his subsequent disposal of shares in other companies just was not a clean way to go about business. I have a significant issue with the vice president of an institute of technology standing to personally gain from shareholding. If one is employed by the State and getting a salary, one's focus should be on that job, not on making money out of the seed companies one sees coming down the tracks. I am uncomfortable with it and I think, from my colleagues' contributions today, that we are uncomfortable with that position. I am not suggesting that there is anything untoward, necessarily, but it does not seem to be the right way to go about the important role that Professor Donnelly has there. No record of that has been signed off by the governing body and questions have been asked of other Deputies as to how long they keep records for. Any of us who keep accounts know how long we have to keep records for. We did not just fall out of the sky. Professor Donnelly must have known questions would be asked. Would that not be the file he would keep? Would he not have thought that the file relating to the company in which he was a shareholder would be asked about in the future? I would keep that file specially.

Professor Willie Donnelly

That is fair enough. I am only trying to put the record straight. It was not my function to keep those records. I was vice president of research. When we talk about records being missing, they were not my records. Maybe looking back, I was a bit of a fool-----

Professor Donnelly cannot have been that foolish with that significant return on an investment.

Professor Willie Donnelly

Thanks. I could have been just a vice president of research but I was also the founder and principal investigator of a large research group. I worked on that in parallel with my job as vice president of research. I had multiple hats. Maybe when one is sitting here and looks back at things one did, one might ask if it would have been easier to take the job as vice president of research, give up all the rest, and just do that job. I chose not to do that.

It was Professor Donnelly's choice but it would have been good housekeeping to have seen this coming down the tracks. I do not think it is acceptable. I understand the standard practice relating to spin-off companies is done everywhere. Is it common practice and ethical in other institutes in other jurisdictions for somebody in a position such as Professor Donnelly's to invest personally in companies into which he or she had more insight than someone on the street? Are there examples of that?

Professor Willie Donnelly

I do not know how to answer the Deputy's question. With regard to national policy and my role as an academic researcher and principal investigator, was I entitled to support a spin-out of companies?

Entitled and ethical are two totally different things.

Professor Willie Donnelly

I dispute totally the Deputy's point that anything that was done was unethical.

I am questioning whether it was ethical. I am not saying the professor was unethical.

Professor Willie Donnelly

I think it is inappropriate to use that term.

There was oversight, for instance, in any company in which I was a shareholder and I spun out. An application was made to the funding agencies and my name was on it. An application was made to the institute and my name on was on it. It was all in the public domain. It is very nice to come now-----

I understand that it was all in the public domain. I understand Professor Donnelly’s name was on the letters and all that. It is so clear, however, that it is just not appropriate that it goes to-----

Professor Willie Donnelly

If the Deputy thinks it is not appropriate, then she is going to have to redefine the way research is conducted, not only in Waterford Institute of Technology but in all of the universities. What we are seeing here is not unusual.

Is Professor Donnelly saying that it is not unusual for somebody in a position like his to be investing in seedling companies?

Professor Willie Donnelly

It is encouraged.

Have we any examples of-----

Professor Willie Donnelly

And it is consistent.

I would appreciate if Professor Donnelly would not interrupt me.

Professor Willie Donnelly

Sorry.

Have we any other examples of people in decision-making roles in other institutes, such as Athlone, getting shareholding windfalls?

Dr. Mark White

It is unfair to ask Waterford Institute of Technology that question. Maybe somebody from a higher authority should be asked.

Maybe the Higher Education Authority could answer it?

Is this standard practice?

What is standard practice?

Is this widespread?

Mr. Paul O'Toole

Standard practice is that there are revenue and equity sharing arrangements across the board in Ireland and internationally. The issue is where a conflict arises, how it is managed.

It is accepted there would be conflict. Management of the conflict is the issue here.

Is it the case that people are not precluded from this?

They are encouraged by the Department of Business, Enterprise and Innovation.

Mr. Paul O'Toole

It is Government policy.

The issue is the governance of such shareholdings.

There are several examples. The Department of Business, Enterprise and Innovation invests heavily in these, along with the Department of Education and Skills. There are joint protocols between the respective Departments. It has been Government policy for a long time.

One would imagine there would be a substantial paper trail attached to everything with no missing letters.

The management of the conflict of interest is the issue. The issue is not that it happens. It does. The issue is how it is managed.

Can we forward these questions to other institutes of technology? When the Department was in, there were few vice presidents at that level. I cannot make any judgments on it.

I am not judging, Deputy Cullinane. The point I am making is that it is obvious in companies that there are shareholdings for employees. However, it is concerning that they are there for people in decision-making roles.

Professor Willie Donnelly

I was trying to make an important point. In terms of the negotiations of spin-outs and equity by the institute, I was not in a decision-making position.

Mr. Seamus McCarthy

On the document referred to by the president earlier, we have a copy of it. Following the disposal of the interest in the intellectual property to the company from the then acting president, it informs AIB that, in line with the agreement in place, we will hold 1% of the 10.8% of shares for the benefit of AIB. It specifically refers to being in line with the term of the institute’s agreement with AIB. However, there is no signed version of that agreement. We do have the heads of an agreement which has space for signatures. From a legal point of view, however, it is a draft agreement.

I do not think there is a dispute necessarily between WIT and AIB as to what the terms are. A dispute has not arisen but one could arise. It would be better practice that there would be clear registered documents that have legal commitments on the part of the institute.

I thank Mr. McCarthy for that clarification.

On the moneys which came back to the institute, which came to approximately €900,000 net, was there a cost analysis of the facilities made available to the company for the time it was on the campus?

Professor Willie Donnelly

Yes.

Ms Elaine Sheridan

When the company was on campus, it actually paid rent. There was a licence agreement and it paid rent like any other company in the incubator.

Will Ms Sheridan provide details of this because it is not clear to me?

Professor Willie Donnelly

It is in the report.

It is not in any report.

Dr. Mark White

It is worth noting that Knowledge Transfer Ireland, KTI, and international practice states it is not the purpose to recover-----

Mr. White, I did not ask that.

Dr. Mark White

It is Dr. White.

It is late and it is difficult to keep one’s train of thought. We have had a long day and so have many of the other people here.

Dr. Mark White

It is not the purpose-----

I am after getting two answers. I am getting your answer on policy and Ms Sheridan told me they did pay. Can I have an answer, please? Who paid what? Where were they located? What was the name? I am getting confused at this point with FeedHenry Limited. Prior to that there was something else and it was using the ArcLabs address. Is it correct that it was using that as its registered address?

Ms Elaine Sheridan

Yes.

Please clarify that for me, one, two, and three.

Ms Elaine Sheridan

Section 4.11 of the report deals with where FeedHenry reimbursed the institute for the salary of one staff member who was seconded to FeedHenry. Section 4.13 outlines how €225,000 was reimbursed to the institute associated with consultancy agreements.

Ms Sheridan is reading from the Comptroller and Auditor General’s report. What evaluation was done of FeedHenry using the public facilities?

Dr. James O'Sullivan

The company paid a lease agreement.

A lease agreement?

Dr. James O’Sullivan

Correct. It paid for it to be in those public facilities.

Very good. How much did it pay?

Ms Elaine Sheridan

I would have to bring that back to the committee.

Is it the case that it paid a lease for so many years?

Ms Elaine Sheridan

Yes, it did.

How much did it pay and for how many years?

Ms Elaine Sheridan

I would have to bring that back to the Deputy. I do not have the details here.

These are important items. What I see is a company that is sold at a phenomenal price. All that is very good. However, it was based primarily on public research and the use of public facilities. I want to see what was given back, in addition to the sum which came back of €1.6 million but net was only €900,000. Mr. White jumped in to say it is not the policy to recover the costs, which is interesting. I see that from the documentation. On the other hand, I am being told they paid.

Dr. James O’Sullivan

We have to charge a lease agreement for companies as a third party. That is to apply state aid rules.

Dr. Mark White

For example, a company would currently pay €22 per sq. m.

I want to ask the HEA about this.

Over the past two years, more by default, information has come out such as the absence of robust policies. Even if they are there, they are not implemented. Mr. Donnelly has pointed out, which is in the Comptroller and Auditor General’s report, that a policy was introduced in 2004 but not implemented until 2010. Subsequently, there was another policy but there was a significant delay in implementing it. Even if policies are in place, they are not actually acted on or implemented.

In addition, we now have a thumbs-up for the commercialisation of research and intellectual property. That is not value for money for the public purse, which is providing the universities and the institutes of technology with funding. Who does the assessment in terms of value for money for the taxpayer? What I am getting here is a thumbs-up for €62.3 million on expenditure with a tiny amount of a return. It also involved years of research. I could go back to 1996, when I look at the literature, up to 2014 when it was sold. Who has valued that for the public purse?

Mr. William Beausang

The experience internationally is that, unless there is much work done through the commercialisation process, many good and promising discoveries never see the light of the day. To be clear, Government policy is to encourage commercialisation of intellectual property but within a proper framework. That is very much the issue we are talking about in the context of the Comptroller and Auditor General’s report with appropriate oversight of that commercialisation process and effective and rigorous management of conflict of interest. The framework to achieve that is work in progress. We have a new intellectual property protocol sitting with the Department of Business, Enterprise and Innovation addressing the specific larger weakness identified in the KTI-HEA report. That was a framework for spin-outs, which relates to the FeedHenry Limited issues and more generally.

Can I identify the governance, which Mr. Beausang mentioned? We all agree on the lack of governance and when the policies are brought in, who will implement them and ensure they are being carried out? There is also an area where commercialisation is regarded as being good and all of the public facilities are used to help to make a massive profit for a private company. Is that Government policy? Even within that policy, there is a grey area where it says to protect public property and the public entity as well.

Mr. William Beausang

The KTI-HEA review and the Department of Business, Enterprise and Innovation have done much work on foot of recommendations by this committee to try to collect better information on the outputs and outcomes achieved.

I want to come in for a minute to help members to recollect that when we looked at this issue last year or the year before, we had a recommendation that the State should collate all expenditure on these companies from Enterprise Ireland, the third level institutions, the HEA, local enterprise offices and the taxpayer in general, including the European taxpayer. Mr. Robert Watt, the Secretary General, wrote back to us saying that it was far too complex and that they could not possibly do that. We wrote back telling him how dare he insult the public service by saying it is not capable of putting the money together because every private organisation that applies for a research grant has to keep a record and the Department came back subsequently with a significant volume of improved information. It was not the lot but it was a decent stab at doing it. That is on the record from our previous efforts and perhaps every member was not tuned into that. We have received information and investment from a variety of other sources which makes Deputy Connolly's point even more serious. Mr. Beausang is saying that as a result of that, a greater effort is being made to at least establish what happened with the money because it was not just what was going in through Waterford IT, it was coming in from-----

It was coming from the EU, Enterprise Ireland and I do not know how many other entities.

I apologise to Mr. Beausang for cutting across him but we both know what I was trying to point out.

Mr. William Beausang

It is exactly as the Chairman said. On foot of the committee's correspondence-----

So we have achieved some progress.

Dr. James O'Sullivan

We are saying that in addition to the financial returns to the institute, we need to look at the wider picture. I know the issue of the number of jobs that are created in the region has been addressed before. It is in excess of 100 high-quality jobs and that needs to be factored into any calculation looking at the outputs. We need to look at the entire picture, not just the money that comes back into the institute.

I have no difficulty with that. That should happen, but the public facilities should also be taken into account and they are not being brought into it at all. They are taken as a given, but we will not disagree on jobs.

Professor Willie Donnelly

For the record, the rent FeedHenry paid while it was in the incubation space was €94,709.

I have a couple of questions that follow on from my previous questions. I just did not get through all of the report. I also have a number of observations on responses that were given.

An Teachta O'Connell made a number of points earlier that I do not agree with, which shows that members have different opinions in this area. I remember when we first examined this, we were told by some in this sector of spin-outs and that we did not understand. We do and I am clear that commercialising IP is good. Others might have a different opinion and the interests of the State and the institute have to be protected but the concept is good. It is not morally or ethically wrong for anybody in an institute to have a shareholding in a company. If someone is a vice president for research, it is probably best not to be a shareholder because I would see that as protecting the individual, the office and the institute. If I was developing policy I would probably have that as a requirement because if one is the office holder of the policy, which Dr. Donnelly is, it is better not to be involved. I do not cast any judgment on Dr. Donnelly but that is my opinion of how it should work. In many respects, the glass is half full because we have had the report from KTI-HEA and recommendations have been made on foot of us and the Comptroller and Auditor General examining this issue and improvements have been made. All of this is not about making sure that we have exchanges such as this; it is about making sure that policies are robust and that they protect the third level institutions and the taxpayer. That is what we want and that is what the Comptroller and Auditor General considers when he examines process.

On the jobs that are created, everybody accepts that jobs were created as a consequence of this spin-out and others. That does not justify any weaknesses in the system. We are not here to make judgments on how many jobs are created. We can accept that. We are here to look at how we can improve weaknesses where they are present and to accept learnings. It is good that WIT has accepted all of the Comptroller and Auditor General's recommendations and that they are being implemented. Let us collectively mark that down as an achievement and then I will go on to some of my other questions.

Dr. Donnelly and I were not having a disagreement but there were questions around what the institute received. There is a breakdown of when the company was sold in section 4.1 of the Comptroller and Auditor General's report. The Comptroller and Auditor General was given this breakdown. Dr. Donnelly's view was that we need to be careful that we do not put inaccurate information into the public domain and I certainly would not want to find myself in that position. The Comptroller and Auditor General is saying that when the company was sold, the institute received €1.59 million. Is that correct?

Mr. Seamus McCarthy

Yes.

Then a number of payments had to be made, one of which was the creators' reward scheme, which went to individuals, not the institute.

Mr. Seamus McCarthy

That is correct.

The institute did not get that €492,000. It received the money but it paid people and, therefore, it was not a net gain.

Mr. Seamus McCarthy

It was a payment made out of the proceeds and related to the quantum of proceeds.

The financial institution received €147,000 because of its equities so my point is that the net gain, if that is appropriate terminology, was €951,000 for the institute. Is that fair?

Mr. Seamus McCarthy

That is the way I see it.

That was my point. Are Dr. Donnelly and I on the same page on that?

Professor Willie Donnelly

That is fine. I was just trying to make the point that when we start talking about equity, we then start talking about how much comes back into the organisation. What an organisation does with the money that comes back in is another subject.

Yes, but it is important.

Professor Willie Donnelly

It is important because people make headlines of certain things. To be fair, it is important that we talked about the percentage of equity that the institute got and then we talked about the return on that equity. The return on the equity was €1.5 million and the fact that the institute had an IP policy that dictated how that was distributed is a different conversation.

Dr. Donnelly is correct that people make headlines out of issues. He said earlier that if he had an opportunity to go back in time, he might make a number of different decisions.

Professor Willie Donnelly

We would all do that.

We would all do that and I am getting to that point because Dr. Donnelly knows that I received more than a dozen protected disclosures in respect of WIT, which were passed onto the HEA and which led to an examination being carried out. We cannot get into that because it is now with the HEA and legal people but that examination was carried out on the basis of concerns that people in the institute have. That is our job and I had this out with the Secretary General of the Department and the former head of the HEA when he was before the committee in Dr. Donnelly's absence as well. We cannot ignore documentation that is given to us. It is not in our gift to ignore protected disclosures. Dr. Donnelly should be aware of that because sometimes I get a sense from him as an individual that he feels that the work of this committee is somehow personal; it is not. We have a job to do, which is to follow up on those protected disclosures and examine process only and we have done so.

Professor Willie Donnelly

I want to answer that. I am a fairly outspoken person and I have a particular style but I fully support the work of this committee.

On protected disclosures, the institute has a structure and a process in place for dealing with same. I want to put on the record that the institute takes them very seriously and when we get protected disclosures, they are fully investigated and they are overseen by an independent board. I can also tell the Deputy, as president of the institute, that where there are protected disclosures, the president never knows what the detail of them is.

They are fully investigated and the institute takes action. What I would like to say to anybody, particularly those associated with the institute, is that if the institute or anybody associated with it has information and wants to use a protected disclosure system, that system is in place in WIT, as it is in all other institutes.

I can accept that. Of course, the institute has its policy and people can make protected disclosures within the institute. They can also make them outside the institute to different bodies, which they have done. In the case of the report that is not yet published, and might not be published, there were 50 people, but there were people from within the institute who had different views.

Mr. Paul O'Toole

Yes.

We will not get into it but-----

Professor Willie Donnelly

No. That is important because I know this. The person who carried out the review interviewed 50 people, which includes people in KTI, the HEA, the Department, and people who work in the institute. To protect the institute, and perhaps Deputy Cullinane can say it, there were not 50 people who made disclosures or statements about the institute. There are 50 people who were interviewed, as would be appropriate. This is how the institute gets a bad name. People say to me, "I hear there are 50 people making disclosures about Waterford Institute of Technology". Fifty people, as appropriate, were interviewed in order to carry out the process. That is what has been communicated to me. I request that we be very careful when we make statements about the number of people who made disclosures. I think the Deputy said it was 15, 12 or whatever.

Twelve or 13, yes.

Professor Willie Donnelly

I do not know the number but, respectfully, and maybe we can say it now since we are all here, there were not 50 people. Fifty people were interviewed.

Professor Donnelly has made that point. In fact, we did make that point when the Department and the HEA representatives were present. We had a discussion this morning during which there was a recognition that people were interviewed. This committee has received an additional protected disclosure that we are now dealing with which might be carried over to whatever will follow from the HEA's work. In any event, that is accepted. I did not mention that there were 50 protected disclosures. I said there were a number, which from memory I believe was 12 or 13, received that had to be acted upon and were acted upon. That is the end of it. The process was put in place to do that.

Professor Willie Donnelly

That is fine.

I refer back to the report, which is more about clarification and not whether ethically they were right or wrong. It is about the reason the decision was made to do this. Paragraph 3.40 states that at the final negotiation, the equity for the institute was reduced from 15% to 12%. I think Mr. O'Sullivan said that was at the request of Enterprise Ireland.

Dr. James O'Sullivan

No. We had to seek permission through the exploitation consent committee within Enterprise Ireland at the time to undertake that deal but to reduce it, we went back to Enterprise Ireland and, as the Deputy correctly pointed out, it said no additional consent was required from it to reduce the equity from 15% to 12%.

Who made the decision to reduce it?

Dr. James O'Sullivan

The negotiator, who was the financial controller at the time.

Was that decision made only by the financial controller or did it go back to the board? Is Mr. McCarthy aware of that?

Mr. Seamus McCarthy

There is no evidence of it going to the governing body.

In future, would it be better if it went to the board?

Professor Willie Donnelly

That happens now. It has happened for a number of years.

That is the point. It would be better for everybody involved if that decision then went to the board. The report also states that the institute approved a pool of 24,000 shares, referred to by the institute as a FeedHenry employee pool, which would reduce it to 10.8%. Who made that decision?

Professor Willie Donnelly

I do not know.

Dr. James O'Sullivan

I think it was agreed with the financial controller.

The financial controller again made that decision. Does Mr. McCarthy know if that was unilateral?

Mr. Seamus McCarthy

I do not know.

Do any of the witnesses know?

Professor Willie Donnelly

I would say from experience that it was not unilateral. What normally happens when a venture capitalist, VC, invests in a company is that they produce what is called a term sheet. As part of the term sheet, they list out all the investors. It is standard practice for the VC to require that a pool is set up for the employees, by its nature-----

Professor Willie Donnelly

I was not there but I would say from experience that when the term sheet was drawn up, it included a pool as standard practice for employees.

I am sorry, but that is Professor Donnelly's experience. He cannot say that with any certainty. He is saying that is possibly how it happened. We might get a note from the institute which details who made the decision to reduce the equity from 15% to 12%, which it seems was the financial controller, who then made the decision to reduce it further to 10.8%. Did that go to the board?

Dr. James O'Sullivan

No. It did not get to the board. We can provide the Deputy with documentary evidence around that.

If Dr. O'Sullivan can, yes. On the employee pool to which the 24,000 additional shares were distributed, does Mr. McCarthy know if any existing shareholders benefitted from those 24,000 shares?

Mr. Seamus McCarthy

I prefer not to comment in respect of individual shareholders.

Does Professor Donnelly know if any shareholders benefitted?

Professor Willie Donnelly

That is what I was trying to explain to the Deputy. The pool is for employees in the company.

I looked at the company records and three of the four main shareholders, if I am right, or a number of them, benefitted from these 24,000 shares. Am I right or wrong in that?

Professor Willie Donnelly

I would be surprised. The 24,000 shares were for-----

Can it be clarified whether any of the four main shareholders benefitted from those 24,000 shares?

Ms Elaine Sheridan

I think that is a matter for the company as opposed to WIT.

It is a matter for WIT if WIT agrees to reduce its shareholding.

Professor Willie Donnelly

That is why I am trying to explain it in a concrete way. When a company is established, these shares are for employees of the company. All we can say is they were distributed among the employees, and a number of WIT staff became employees of the company. They would have benefitted from that based on their terms of service in the company but at that point, they were not employed by WIT.

I have the forms from the Companies Registration Office, CRO. I would rather not put the names into the public domain. The point I made earlier stands but Professor Donnelly might come back with a note on that. I am not asking for names; I am asking about the existing shareholders. He said there were four main shareholders in FeedHenry and then a number of other employees who might have had smaller numbers of shares. Is that correct?

Professor Willie Donnelly

Yes.

Paragraph 3.44 relates to the role of the commercialisation committee. We have dealt with this but I want to go through it again. It states:

Waterford Institute of Technology Commercialisation Committee had its inaugural meeting on 6 December 2010. Although the assignment of the IP was in process at the time, the minutes of the meeting record no mention of FeedHenry, the proposed assignment, or the revision of the terms of agreement. The Institute has stated that the first meeting was focused ...

In terms of my reading of this, Mr. McCarthy might-----

Mr. Seamus McCarthy

I am not with the Deputy.

It is paragraph 3.44. My reading of this from the institute's response was that the committee was only being established. It was busy establishing itself. It is the technology transfer office, not the commercialisation committee. Am I right in that? Was it always the technology transfer office?

Dr. James O'Sullivan

There are two different things. The technology transfer office is charged with the day-to-day operations. The commercialisation committee is charged with the governance.

So the committee is separate from the technology transfer office.

Dr. James O'Sullivan

Correct.

Mr. McCarthy is making the point in the report that it would have been better-----

Mr. Seamus McCarthy

The remit of the commercialisation committee was to review all agreements and assignments of interest in IP. That was set out in the policy in February 2010. I was drawing attention to the fact that the committee had its first meeting prior to the transfer of the IP but it did not consider the transfer at all. It is anomalous.

Paragraph 3.51, which is important, states:

In August 2004, the President of Waterford Institute of Technology [that was not Professor Donnelly but one of his predecessors] informed the Governing Body members of the proposed sale [of FeedHenry Ltd] to a multinational company and requested their consent for the sale. In [September] 2014, the Governing Body gave its consent ...

That would be the appropriate way to deal with it. The difficulty with that is that the governing body was not aware of all of the previous issues.

Mr. Seamus McCarthy

That was correct. My understanding as well is that in a way it was a moot decision at that stage because it was not within their power to stop the sale.

In all the other areas relating to transferring the IP, negotiations around equity being reduced or not, they had no involvement whatsoever, and perhaps even no knowledge. I do not know because-----

Mr. Seamus McCarthy

I do not know what knowledge they had.

Professor Willie Donnelly

I presented, so they had knowledge.

They had knowledge but they were not formally asked. Are there records of that or minutes that show these issues-----

Professor Willie Donnelly

It is the report, which gives the date and the note.

Basically, as vice president, Professor Donnelly was making-----

Professor Willie Donnelly

It was my annual report so I would have included all of the activities.

They were aware of what was happening; they were just not involved in the decision making. Is that fair?

Professor Willie Donnelly

That would appear-----

Mr. Seamus McCarthy

It might be fairer to say they were aware of what had happened. The decision was made at that stage.

Professor Donnelly is saying that, throughout that process, he was making constant reports, or perhaps it was only at that point.

Professor Willie Donnelly

Once a year I made a report. The Deputy asked where they were. I said that in June 2011-----

Maybe I was not clear. I am working from the report of the Comptroller and Auditor General. In a number of critical areas where the IP was transferred and where the equity was reduced, I asked whether the board members were aware or not. Professor Donnelly said they were because he informed them.

Professor Willie Donnelly

What would normally happen is that the final outcome of the negotiations would be brought to the governing body for approval. Dr. O'Sullivan can explain it better as he is responsible.

Before Dr. O'Sullivan comes in, there is a statement in the report that when the equity was transferred, the board were not involved. I am sure the Comptroller and Auditor General would have looked for evidence that the board were being informed.

Mr. Seamus McCarthy

Absolutely. We did not find any. We looked at the minutes of the governing body all through the relevant period and we did not find any record or reference to it.

None whatsoever.

Mr. Seamus McCarthy

We did not, obviously, interview everybody who was on the board at the time.

There are certainly no records.

Mr. Seamus McCarthy

There are no records of them having been advised or having made a decision in regard to it.

Is it the same for reducing the equity?

Mr. Seamus McCarthy

There is no record.

Professor Willie Donnelly

Dr. O'Sullivan can explain in regard to reducing the equity.

Dr. James O'Sullivan

It is typical that the technology transfer office, whether in WIT or any other institute, would go out and negotiate with the company to get a final position with respect to the equity stake in the company. What currently happens is that this would be taken to the governing body for approval.

Thank you. I have two final questions for Mr. McCarthy. Paragraph 4.7 states: "FeedHenry Ltd (established in June 2008) had its registered offices in ArcLabs". Deputy Connolly dealt with this earlier. From 2010 onwards, rent and expenses were incurred by the institute but which were recovered. However, from 2008 to 2010, there was no record of that. The institute said it is because it was not using any of the resources but Mr. McCarthy points out that it seems to be giving an address and telephone number based on ArcLabs. Again, not to get into the rights and wrongs of it because the institute's response is possibly correct, I am just trying to understand this. Did Mr. McCarthy include this because the point is that it cannot now be proven one way or the other?

Mr. Seamus McCarthy

Yes. Our understanding was that there was activity, there was the existence of the company on the campus, but we did not see any evidence of recovery of expenses related to that.

In the course of Mr. McCarthy and his team doing their work, they would have looked at the fact there was an office based in ArcLabs, a telephone number and some activity, and they were looking to find what the activity was. They would have sought to find what the level of activity was.

Mr. Seamus McCarthy

That is what we were trying to get to.

What was the response?

Mr. Seamus McCarthy

That there was little or no activity on the campus. However, that did not gel with the registration of the company and its apparent existence on the campus.

Mr. McCarthy does not form any opinion on that.

Mr. Seamus McCarthy

No. We do not have anything to go on. We do not have information.

The issue of secondment is dealt with in paragraph 4.12, which states: "Waterford Institute of Technology does not have a policy on part-time secondments or how those on part-time secondments have their time monitored to ensure they work the hours specified in their contracts." Paragraph 4.11 states:

FeedHenry Ltd reimbursed Waterford Institute of Technology in respect of the salary of one staff member. The individual was seconded from the Institute to FeedHenry Ltd on a half-time basis from 1 September 2011. ... Total payments of €187,000 were received by the Institute in respect of this staff member.

Is Mr. McCarthy making the point that there is no evidence of what work was done?

Mr. Seamus McCarthy

Yes, there is insufficient evidence of the work and how much of the work time was actually spent on institute-----

How could that be possible? Is this Ms Sheridan's area?

Ms Elaine Sheridan

It is now but not at that time.

Could she help me to understand why that evidence could not be given to the Comptroller and Auditor General?

Professor Willie Donnelly

I want to make a point. No academic member of staff clocks in or clocks out. If I was asked to show any evidence of what the staff are doing, I could not. What I can show is that the particular member of staff was active in supporting students and carrying on his normal work in line with the timetable.

The point being made is that it is difficult to monitor. In fact, the Comptroller and Auditor General said there was no evidence that this was done. Whether that is standard practice-----

Mr. Seamus McCarthy

We did not see any evidence of monitoring of it.

Professor Donnelly is saying it is standard practice and asks who monitors him or any of the staff who work in the institute. Is that correct?

Professor Willie Donnelly

What I am saying is this was no different from any other member of the institute who-----

Does Mr. McCarthy accept that?

Mr. Seamus McCarthy

No, I have a difficulty with that. Certainly, within a research institute where many different research projects are ongoing at a point in time, there is a funding stream that is available for specific purposes. There really should be time logs, even if it is on the basis of somebody self-certifying, but with somebody looking at and discussing it - let us say, a line manager - and signing off on the allocation of time as between projects.

That makes perfect sense to me. Given this was not a recommendation in Mr. McCarthy's report and, as I understand it, it was not dealt with in the KTI-HEA report either, do Mr. Beausang and Mr. O'Toole believe this is something that could be looked at? Would it make sense to them to sharpen up in that area?

Mr. Paul O'Toole

I would have to understand it in a little more depth. One would imagine it should be possible to have some allocation of cost of staff to projects.

Mr. Seamus McCarthy

It could be slightly stronger than, "It would be a good idea". I think it is necessary because one has different streams of funding from different sources for which one has to give an account. There should be a system within an institution which supports the allocation of costs to individual projects.

Dr. Mark White

That is in place now and has been in place in recent years. All the funding agencies now insist on time sheets per project, per project officer or per project manager.

Professor Willie Donnelly

The point I was making was that the individual in question is an academic member of staff. The academic member of staff would be allocated responsibility for the supervision of PhD students and he would also be allocated responsibility because he was seconded to oversee some of the management in TSSG. If anyone wanted, they could go through all the records and pull them together. In the case of a contract researcher, because one is charging their time to the project, all those records are in place. The point I am making is that this person is a whole-time academic member of staff. Their allocation is distributed under areas such as supervision and teaching, which could all be pulled together. I accept the point that we should be more formal so that when we second somebody to a particular project, we should have a formal way of ensuring that the 50:50 split can be measured. I agree with that. It is a very good point.

Can Professor Donnelly provide an update on the application by the Carlow and Waterford institutes for technological university status?

Professor Willie Donnelly

Yes. It takes about 80% of my time at the moment. We have an application ready to go, and we have worked hard on that between the two institutes. We have an issue in the sense that we have an engagement with the TUI, which is the academic union, and we are in negotiation with it to look at how we complete a memorandum of understanding, MoU, which it wants to complete before we move to the next phase. Things are progressing, maybe not as fast as we would all like, but it is extremely important that we engage the staff and that the staff are fully part of the process.

With regard to the earlier discussion, Dr. White said there are time records for people who were fully assigned to the project.

It does not apply to staff who may devote only some of their time to the project.

Dr. Mark White

It has been a requirement of all the funding agencies in latter years to insist on the time allocation and time sheets, as per the funding that has been allocated to the institutions.

Does that apply to the institute's own staff too?

Dr. Mark White

Yes. It applies to both, or rather to everybody.

Ms Elaine Sheridan

Just to be clear, anybody who is working on the project-----

I understand that but it must be possible for somebody who has a lot of responsibility to say that 10% of his or her time is allocated without having to clock in-----

Dr. Mark White

We have in place a very robust-----

Obviously, it is very easy to determine in the case of those working on it full time but some people might have a myriad of other responsibilities. It should be possible to devise some basis for the apportionment of time. We believe it is necessary to do that. The point we have made-----

Ms Elaine Sheridan

Many of the funding agencies require all of one's time so even if one is only spending 10% of one's time working on a funded project, one must time sheet all that time and verify it-----

Hence, our recommendation in an earlier report. This needs to be recorded.

Ms Elaine Sheridan

They are audited.

There must be a step up in that area.

Paragraph 348 of the report refers to the fact that Enterprise Ireland, EI, invested €300,000 plus €500,000, which is €800,000. If one looks at the chart, one sees that EI received €4.5 million for its share. It looks as if an investment of €800,000 yielded a return of €4.5 million. Is that correct?

Mr. William Beausang

EI invested to support the commercialisation process but it also invested post spin-out, which maintained its equity share. It was not diluted to the same extent-----

Mr. Seamus McCarthy

EI bought shares in FeedHenry Ltd. after 2010.

Okay. This committee will write to EI and ask it to outline its full investment. We want to compare the sum invested with the €4.5 million sum. The Comptroller and Auditor General is saying now that it is only part of it.

Mr. Seamus McCarthy

EI put in €800,000 into two specific projects. There were two smaller projects as well between 2005 and 2007. EI did not get a share holding in relation to that. After the transfer of the IP to FeedHenry Limited, there were a number of rounds of investments. EI went in on two different occasions at two different prices. Other investors went in at around the same time, at similar prices. Those rounds would have had the effect of reducing or diluting the share holding.

I understand that. Does Mr. McCarthy have approximate figures for the overall investment?

Mr. Seamus McCarthy

We certainly have further information and can get the share issue documentation for the committee, which are public records.

I would like to know what level of profit EI made for its total investment.

Mr. Seamus McCarthy

Well it went in for €800,000 and came out with €4.5 million.

Yes, but the Comptroller and Auditor General has said that it put more money in after that.

Mr. Seamus McCarthy

No. This is the €800,000 in respect of which it made €4.5 million.

My first comment was right. EI put in €800,000 and-----

Mr. Seamus McCarthy

It got back €4.5 million.

It was highly profitable.

Mr. Seamus McCarthy

There is a time value of money, which would have to be taken into account.

I know that but basically, it was a good return.

Mr. William Beausang

EI had supported and contributed to the commercialisation research. It had spent money in supporting and developing the IP.

The committee will write to EI to ask for a full picture of its investment, including its involvement in that work. We will await its response which we will then compare to the €4.5 million that it actually got out of it. It looks as if it was a very profitable enterprise when all is said and done.

Mr. Seamus McCarthy

Yes, it was a very profitable investment.

Paragraph 410 of the report states that WIT received €520,000 for the use of its facilities and staff between 2010 and 2016. The institute also received €474,000 from third parties for the use of the FeedHenry platform. To some extent, while costs went in, if one pulls it together, that is another €1 million that WIT has received back because of its investment, over and above. We have had a lot of discussion about the €1.59 million but when I look at the subsequent paragraphs, I see that WIT got income of €520,000 and €474,000. That €1 million does not jump out at me-----

Mr. Seamus McCarthy

The expenses associated with it do not jump out either. There would have been expenses incurred, in respect of which these were reimbursements. Salaries and rents and so on-----

Yes. It is easy, with hindsight. Had it charged the expenses as part of its proportion of share capital and not got paid for them, it could have made 500% profit on the costs incurred. It is easy to say, with the benefit of hindsight, particularly when one looks at how well EI did in terms of its share holding. WIT actually got paid but had it carried that and built it in as part of its investment in the company, it would-----

Mr. Seamus McCarthy

Yes-----

That is with the benefit of hindsight. I am sure the witnesses can understand the point I am making with regard to those figures.

It is also important to point out that several staff members were involved in a staff incentive scheme. One of the key recommendations is that the HEA should ensure that higher education policies or award schemes take account of potential situations where the higher education institute staff have a financial interest in the company. That is, to some extent, why we are here today. The HEA has said that it accepts that and has informed all sectors that they must embody this in their recommendations. However, it will be year before we know if that has actually happened. It is to happen in the coming year.

Mr. Paul O'Toole

There is now a set of new reporting requirements on all higher education institutions that kick in for the returns for 2017-2018.

Please explain that.

Mr. Paul O'Toole

Every year the HEA seeks an annual governance statement from each higher education institution. The accounting period is 2017-2018 and those returns are due to be returned to the HEA by 31 March 2019. By 31 March-----

Are they the returns for last September?

Mr. Paul O'Toole

Yes, for last September. The second point is that these requirements are new so the Higher Education Institutions, HEI, and Knowledge Transfer Ireland, KTI, agreed that the HEI would carry out a review in 2019 of the implementation of the various recommendations. This is separate from the annual governance statements. The third component is the revised IP protocol. A protocol was devised in 2012 and there was an evolution of that in 2016 and there will be a further one in 2019, which will deal in more detail with spin-out companies and revenue sharing arrangements. That is a policy matter for the Department of Business, Enterprise and Innovation and, as was referenced earlier, that policy will be considered by the Government.

Under this recommendation, reward schemes are to take account of potential situations where staff have a financial interest in the company acquiring the intellectual property. Their shareholding is a private matter but if they are part of the staff, surely they should be treated in a uniform way. If some of the staff happen to have, in a private capacity, a shareholding, how can one distinguish that from the reward scheme? I ask Mr. O'Toole to explain that to me. Is it any of the HEA's business? I know that some committee members might not like me putting it this way but it is their private business. We have not been told today how much Professor Donnelly made because it is his private business. We might be curious but it is his private business at the end of the day. Is the HEA straying into the private business of individual staff members?

Mr. Paul O'Toole

I do not think so.

That is the way it reads.

Mr. Paul O'Toole

The first point to make is that the initial expectation is that each institution will have a clear policy in place for how these are managed. I go back to the conversation we had earlier. There is a recognition that conflicts will occur and the management of those requires the maximum amount of transparency. I go back to the point that one does not stray into the shareholding of a private individual but one must ensure that whatever that individual does is in accordance with policy and that if there are conflicts arising, they are managed. The thrust of the revised protocol will be about how potential conflicts are managed, such as spin outs and revenue share.

In terms of the reward scheme, the HEA seems to want to differentiate between those staff who have a financial interest in the company and those who do not. At the same time, Mr. O'Toole has said that the HEA does not want to stray into their private financial affairs so how can it make that differentiation if it does not do that? I ask him to explain this conflict. I see that Dr. O'Sullivan has his hand up.

Dr. James O'Sullivan

In our new policy we have made a decision that if individuals have an equity stake in a private company, they forfeit their right to a royalty that we receive on their behalf.

We have made a clear distinction to try to remove that conflict but it is problematic.

So it is one or the other. Is the Department relying on the goodwill of the individual to be upfront or have they any obligation to tell it?

Dr. James O'Sullivan

Under the conflict of interest or external work policy they have to declare their external interest.

So they will make a calculation on whether they are better getting a staff reward or the other.

Mr. William Beausang

Exactly. But we will not provide both.

They have to do the long-term gamble themselves. The witnesses can see why I raise this.

The final point is for Mr. Beausang on the letter he issued to the chairperson of the governing body of the Waterford Institute of Technology, WIT, on 19 December. I have two or three quick questions solely on this letter. Mr. Beausang wrote back to say "I would like to thank you for meeting with Department colleagues and I and Mr. Paul O'Toole on 6th Dec this issue." Who did Mr. Beausang meet with from WIT?

Mr. William Beausang

I met with the chairman of the governing body on 6 December.

Who was with him?

Mr. William Beausang

He attended that meeting on his own.

On his own?

Mr. William Beausang

On his own. He had intended to bring colleagues but for various reasons I believe they were not able to attend with him. We had been told there would be three attendees but in the event there was only one, the other two attendees being other members of the governing body. I believe he may have a sub-committee of the board. I do not know if it is formal or informal, that is engaging with the issues and with the-----

Councillor Jim Moore is just a part-time chairman of the governing body. He is an elected representative. This is a big issue for any elected representative. I would not expect that of an elected person. I am a Teachta Dála and I would not want to deal with this on my own and I would not think a councillor can. From Mr. Beausang's knowledge - and obviously I will exclude Mr. Donnelly from this - on behalf of Waterford Institute of Technology whether it is legal, the Department or other members, who is the competent officer on the board to adequately deal with these matters? They are very serious issues. It would be very difficult for a lay chairman to be able to handle all of these issues without some support. Can someone tell me how the institute is going to deal with this?

Ms Elaine Sheridan

It is my role is to support the governing body or any sub-committee it puts in place. I will be helping them to co-ordinate the sub-committee. The sub-committee and the chairman co-ordinate how this information is gathered. They, however, will have to validate it.

The obvious question then is why Ms Sheridan was not at that meeting.

Ms Elaine Sheridan

I was not invited to that meeting.

Mr. William Beausang

To be fair-----

I know it is a matter for the governing body but if I see a senior official from the Department of Education and Skills, and Mr. O'Toole and other officials invited, and the voluntary chairman of the board is there on his own I would like to have seen a stronger representation. I thank the chairman for attending of course but-----

Mr. Seamus McCarthy

It is a big ask.

I am putting it as politely as I can. It is unfair on any chairman who has a million other jobs to do.

Mr. William Beausang

We are writing to him in his capacity as chairman of the governing body.

Will they get legal and financial advice externally?

Ms Elaine Sheridan

Yes. Within their terms they are entitled to get any independent advice they require.

I expect the chairman cannot answer this off his own bat.

Mr. William Beausang

We are engaging with the chairman because that is the point of contact the Minister has with the institution. The Minister appoints the governing body and he has relationship with the governing body not with the executive. To be clear, the Department's strong expectation and understanding would be that the chairman would be engaging with the executive in the institution to put together this information.

And it would be appropriate.

Mr. William Beausang

It is absolutely essential that he does that because he will not be able to answer the questions otherwise.

Absolutely. I 100% get why the letter was written to the chairman, Mr. Moore. The bit I was curious about was who attended that meeting. I am more concerned to hear that the man was there on his own. I am sure he is a totally competent man and I praise him but-----

Mr. William Beausang

Unforeseen circumstances meant another two members-----

Mr. Beausang can understand why-----

Mr. William Beausang

I absolutely understand.

I understand that Mr. Moore, as the officially appointed person, is the point of contact and that it has to go through him. I would have expected, however, that as the Department arrived in force - and properly so - that there was a similar group there to meet the officials in the interest of the seriousness of the matters. I am concerned that somebody was not taking this too seriously if they felt that the chairman could attend that meeting on his own. I am a little bit concerned. Maybe I am misreading it but it is based on only one person showing up for such an important meeting. I would encourage the chairman to make whoever else offers to be there in future be there in future. That is all I am saying. I do not know the chairman himself but I compliment him. This was an important letter and the Department was waiting for the board's response. I ask that the representatives here convey to the board the important job the board has in dealing with this matter effectively and that it should give it all the attention and resources required to do its job.

Ms Elaine Sheridan

I assure the committee that we have given the chairman Mr. Jim Moore all the support he needs in doing this, and we will continue to do so. It was not just that he attended the meeting by himself; we have had various communications with him since then.

The witnesses withdrew.

At this stage we are done. I thank all the witnesses from the Department of Education and Skills, the Higher Education Authority - some of us have had a long day - and from the Waterford Institute of Technology for their attendance and for the material provided. There were requests for material, which I am sure we will receive in due course. I also thank the Comptroller and Auditor General and his staff.

Our next public meeting will be on Thursday, 31 January 2019. We will meet with the National Paediatric Hospital Development Board with regard to its 2017 financial statements.

The committee adjourned at 5.55 p.m. until 9 a.m. on Thursday, 31 January 2019.