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Dáil Éireann debate -
Thursday, 7 Mar 2002

Vol. 550 No. 2

Private Notice Questions. - National Aquatic Centre.

asked the Minister for Tourism, Sport and Recreation the consultations which took place between him and the Campus Ireland company before the contract for the management of the aquatic centre at Abbotstown, Dublin 15, was awarded; and if he will give details of the report he received on 6 March 2002 from CSID – I presume he will also give details of the supplementary report which he sought and has since received.

asked the Minister for Tourism, Sport and Recreation if he will make a statement on the awarding of the contract for the national aquatic centre to the consortium of Rohcon, S&P Architects and UK Waterworld.

asked the Minister for Tourism, Sport and Recreation the way in which a contract was awarded to build an aquatic centre at Abbotstown, Dublin 15, in which the Government is investing more than €62 million and to elaborate on the doubt that now hangs over the completion of that project in time for the Special Olympics.

asked the Minister for Tourism, Sport and Recreation if he will outline the circumstances in which the contract for the national aquatic centre at Abbotstown was apparently awarded to a dormant London-registered shelf company; if he will publish all documentation relating to the awarding of the contract; if he will outline the findings of the report he has received from CSID on this matter; and if he will make a statement on the matter.

I thank the Deputies for raising this matter in the House, especially in light of the various commentaries in the media in recent days. I also welcome this opportunity to explain to the House the position in relation to the Aquatic and Leisure Centre, which is being developed at Abbotstown, to be ready to host the Special Olympics Summer Games in 2003.

As I have explained on a number of previous occasions to the House, funding for the development of this facility has been provided since January 2001 through the Vote of my Department. A year before that, in January 2000, the Government decided that the feasibility of developing an aquatic centre to host the Special Olympics Summer Games in 2003 be actively considered by Campus and Stadium Ireland Limited, CSID, the company set up to oversee the development of the stadium and Sports Campus Ireland project at Abbotstown. CSID subsequently commenced, in July 2000, an international competition by inviting tenders under the EU Public Procurement Directive to participate in a negotiated procedure to design, build, finance, operate and maintain an aquatic and leisure centre on the site at Abbotstown. Tenders were to be assessed by CSID, which was also the designated contract awarding authority for the competition. Eight expressions of interest were received.

An assessment process, under the auspices of CSID, shortlisted five consortia which were invited to submit outline bids, on the basis of which three were selected to proceed to detailed negotiation stage. The consortia selected were Waterworld UK Rohcon with S&P Architects, Dublin International Arena Limited and Prospero. Panels, including members of CSID, the Office of Public Works, the Irish Sports Council, Fingal County Council, the National Coaching and Training Centre, Special Olympics 2003 and an international leisure and sports expert, assessed the bids. Expert legal advice was provided by McCann Fitzgerald Solicitors and PricewaterhouseCoopers also provided a report on the bidding consortium.

The assessment panel recommended to the board of CSID that the Waterworld Rohcon bid, which was also the lowest cost proposal submitted by some €15 million, merited overall top ranking for the award of the contract. The Government, on the basis of the board's recommendation, agreed, in December, that CSID sign heads of agreement with the Waterworld consortium. These were signed by CSID, Rohcon and Waterworld UK on 22 February 2001.

The tender included a requirement to establish a special purpose company to operate the pool. Dublin Waterworld Limited was set up as the company to act as operators of the pool on completion of the construction phase. This is a private company limited by shares with a shareholding of 4% held by Waterworld UK and the balance by three directors who already have an involvement in the operation of swimming pools in Ireland.

Final contract negotiations, on foot of the signed heads of agreement, continued between CSID and the successful consortium through spring into summer 2001. In May 2001, my Department, in consultation with its legal and technical advisers on the project, agreed to CSID's request for approval to issue a letter of intent. The purpose of this was to allow work on the pool to commence pending completion of the final contract negotiations in order to meet the Government's objective of having the pool ready in time for the Special Olympics World Summer Games.

Following the completion of these negotiations, and subsequent consultations with my Department and its legal and technical advisers, CSID late last year submitted final draft contracts as agreed with the consortium for formal approval prior to signature. Last January, the Government, on the basis of a memorandum submitted by me on the negotiations and resulting final draft contracts, approved the conclusion by Campus and Stadium Ireland Development Limited of its negotiations with the consortium, which I am advised signed the contracts on 7 February last.

On Tuesday last, following a media inquiry, I asked CSID for a comprehensive report on certain issues raised in relation to the contract for operating the aquatic and leisure centre, including specific reference to the role and status of a named company in the tendering process and final award scheme. I received a response from CSID late last evening and, following consideration, sought some further clarifications which were supplied by CSID at midday today. In its report to me CSID has again outlined the process which it undertook in giving effect to the Government's decision to procure an aquatic and leisure centre at Abbotstown.

Specifically, in relation to the status of the operating entity, CSID has confirmed that when the detailed proposal from the consortium which included Waterworld UK Limited was received, the assessment panel's recommendation was that this consortium based on all aspects of the bid, including design and price, should be selected as the preferred bidder. CSID insist that notwithstanding that Waterworld UK Limited was a dormant company, it was entitled under EU procurement rules to proceed as part of the bid provided that it was in a position to satisfy CSID that it had available to it the resources from a third party or parties on which it could rely in the performance of the contract, if awarded.

CSID requested that independently verifiable proof of sufficient backing for Waterworld UK be provided. This was provided to CSID on 7 February 2001 by way of a letter of comfort from Anglo Irish Bank, indicating that it was prepared to provide a €3 million guarantee to Waterworld UK Limited in association with the national aquatic centre project.

What does that mean?

Furthermore, the track record of the individuals identified as having responsibility for managing the centre was also considered by CSID to be satisfactory. CSID and its legal advisers are satisfied that the contract has been awarded in full accord with the bid received and in compliance with EU procurement regulations, and that the arrangements entered into between Waterworld UK Limited and Dublin Waterworld Limited are the result of normal business negotiations between the parties.

Nevertheless, there are number of aspects about the handling of this matter which need to be urgently reviewed by the board of CSID. I have, therefore, recommended that the executive chairman call an immediate meeting of the board which has been scheduled for tomorrow evening. I will be asking for a full report on the outcome of the board's review immediately after the meeting before deciding on the further necessary steps which I will need to take in completing the report which my Cabinet colleagues asked for today.

It is most unfortunate that such disquiet has arisen as a result of the manner in which this specific piece of information in relation to the composition of the winning consortium has come to the attention of the public and the Government. Despite the resultant adverse publicity, which could, in my opinion, have been avoided, I assure the House that the aquatic and leisure centre remains on course for completion by the end of December next, well in advance of the Special Olympics Summer Games in June 2003.

Will the Minister confirm the date on which the project commenced and that a €62 million project commenced without a final contract in place? Will he tell us what were the criteria in assessing the project? Can he give assurances that there was no conflict of interest between any of the assessment panel and any company bidding for the contract? Instead of waiting for a board meeting tomorrow, why did he or the Taoiseach not summon the director of CSID to get a full and detailed explanation of what occurred? Could the Minister also confirm that his Department had full knowledge of the details of the contractual negotiations, in light of the fact that he and the Taoiseach must have had a hands on approach to this as it was the Taoiseach's pet project? Had the Minister any reservations about the matter in view of the consultant's report on the capabilities of CSID in dealing with a project of this magnitude? My interpretation of the Minister's response is that the €62 million project commenced before a contract was in place. Will the Minister now seriously consider asking for the resignation of the director of CSID and the board?

The Deputy asked seven questions. With regard to asking for a resignation, the board is ultimately responsible and I have asked it to meet as a matter of urgency to examine the matter. I am examining the High Point Rendel report—

The Minister is examining it for the past three months.

—because I have to meet the various organisations in accordance with that report. The Department had full knowledge of the contract documents. I regret that the matter of the shelf company was not brought to my attention, but I will explain that shortly.

The Minister said he had full knowledge.

Yes, I had full knowledge. Some of the directors of CSID have been summoned to meet me. As far as I am concerned, there is no conflict of interest. The contract to be signed between CSID and the winning consortium was a matter for discussion at Cabinet. It was carried on a letter of intent from period to period and eventually the contract was signed on 7 February.

Some of my questions were not answered. When did the project commence? Is it correct that the contract was only signed some weeks ago?

The project commenced some months ago on the basis of letters of intent that were signed.

When did the Minister become aware that Waterworld UK was only a shelf company? Will he confirm that the PricewaterhouseCoopers recommendation, which was that it was considered essential that the management team of the organisation selected to run the centre has significant experience and a proven track record, was taken into consideration when awarding the contract? Is the Minister aware that Waterworld UK is a subsidiary of an American company, NBES, which will supply flumes and slides to the aquatic centre?

I discovered yesterday that the company was a shelf company, which I have already outlined. I regret that the Government was not informed that it was regarded as a shelf company but I point out to the Deputy that there are many shelf companies with assets of just £4, £5 and £6, particularly in the UK. The Tánaiste has tightened up the situation here but shelf companies are not illegal and according to European Union procurement law, shelf companies can also bid for European contracts. Many American companies set up shelf companies here because contracts here are awarded under EU procurement laws—

The issue is whether they should get the contract.

—so it is not illegal for a shelf company to be set up here.

I am not saying it is illegal.

Even if we wished to kick out this company, we could not do so according to EU procurement law. The application by that shelf company had to be examined, so it is not unusual.

The Minister did not have to accept it.

With regard to Waterworld UK, I am not aware that it is a subsidiary of a US company but I know that American companies set up shelf companies here for the purpose of making contracts under EU procurement law.

My information is that it is a subsidiary company.

First, does the Minister agree it would be wise to have the Campus Stadium Ireland Bill enacted, given the large sums of money that are being discussed and the huge profits to be made by those involved? Second, will the Minister agree that his discovery only yesterday that a shelf company was involved means that he did not have full knowledge of the contract? He might like to revise his previous reply in that light. Third, has the Minister had a discussion with the Tánaiste about this matter given that she is on record as saying that the report did not answer her concerns? Is that a matter which will require a statement from the Taoiseach, given his close involvement with the project? Fourth, can the Minister give any further assurance to those involved in hosting the Special Olympics in 2003 that this matter, and any fallout from it, will not jeopardise that event?

I assure the Deputy that the building of the magnificent aquatic centre at Abbotstown is going ahead and will be ready for the Special Olympics in 2003. This matter involves the operating part of the contract. I am anxious to get the Bill passed as soon as possible. On the question of full knowledge, I was in con tact with the executive director of the company on five or six occasions yesterday and today. As questions arose, I contacted him for further information. He was aware that it was a shelf company but because it had substantial financial backing, he did not think it necessary to inform the Government; I am not sure if the board knew about it. The company had substantial financial backing and, as it was in accordance with EU procurement law, he felt that was not necessary. I told the chairman that the Government should have been informed that it was a shelf company and I have asked for a special meeting of the board which will be held tomorrow night. I will await the report of the board and I am sure the board will raise these issues also.

Is the Minister concerned that, according to reports, shares in Waterworld are held by a company which is registered outside the EU, namely, in the British Virgin Islands? The share capital of the company stands at £98. One individual, John Moriarty, has a shareholding of £59; Kieran Ruttledge has a shareholding of £19; Liam Bohan has shares worth £15; and Waterworld UK has a shareholding of £5. What did each of those shareholders bring to the company?

As the Campus Stadium Ireland Bill has not been passed by this House, Campus Stadium Ireland cannot enter into irrevocable contracts. Has the Government entered into a contract in this situation and if the Campus Stadium Ireland Bill is not passed into law before the general election, where stands this particular deal?

With regard to what the individual shareholders brought to the company, they would argue that they brought their expertise. A number of them were involved in operating aquatic centres and pools in this country. I am aware that one of them also has experience of running such centres in the UK. These questions will be raised by the board, but the report sent to me by CSID indicated that this contract was totally legitimate and legal. I would like the Bill enacted as soon as possible. Parts of it are directly related to this type of situation and perhaps if it had been enacted, it would have avoided a situation such as this. I await the report of the board of CSID before making any further comments.

The Minister did not respond to the question about a company that is apparently registered in the British Virgin Islands.

I have heard different names and that this company is registered in the British Virgin Islands. There are companies registered in the British Virgin Islands. It is legal in some parts of the world to register companies in those islands. All we know about this is that it was done in accordance with EU procurement law. It is not unknown for American companies or other com panies established elsewhere to set up shelf companies on the verge of Europe so they can apply for EU contracts.

The Minister did not do his homework.

What homework?

He did not do it.

I put it to the Minister that what we are experiencing is a classic case of stable door politics. The Minister is asking questions long after the horse has bolted, but they should have been asked well in advance of the signing of the contract.

I want to ask him two specific points. Why did he, as Minister, recommend to the Government that a public contract worth about €57 million should be signed with an unidentifiable paper company? Did he consider that prudent management? Who are the beneficial owners of Waterworld UK?

The only question that must be asked here is as a result of media speculation that indicated this was a shelf company. When I read what was speculated I was also a little alarmed because I did not know whether any other law or rules were being broken. It is not illegal for any shelf company to make an application for a contract such as the aquatic centre. I am answering one question put by the Deputy—

Was it prudent to do that?

Was it prudent?

There is nothing illegal in a shelf company applying for an EU contract. The only question, therefore, has been raised as a result of The Irish Times article. It is only as a result of that article that the Deputy is in a position to sit across from me and ask me questions on this matter.

You are the Minister and you recommended this to the Government.

The Deputy has asked me questions as a result of that article. I was also concerned about that article, but I got out of the bunker and did some research on this matter. It might have taken other people some time had they stayed in the bunker, done their research and found out the facts about this case.

That is pathetic. The Minister left it all to the Taoiseach.

Who were the beneficial owners of the company? The Minister still does not know.

Am I the only Member of the House who is in utter disbelief at what I am hearing? Does the Minister not appreciate the circumstances that he is in and the implications of what he has told the House? We would not have known about this but for what we read in The Irish Times, but that is not the point. The point is why did we read it in The Irish Times?

The Irish Times thought that something illegal was done, but nothing illegal was done.

The Minister is entirely missing the point. It is not a question of illegality. The question is why did the Minister authorise the spending of public money with a shelf company, the provenance of which we do not know? It is now clear as a result of the words out of the Minister's mouth that he did not know.

And still does not know.

The Minister is engaged in asking the most elementary question. Is it not the case that the Minister is now asking the kind of elementary question that any half vigilant Minister would have asked at the time this contract was authorised? Is it not the case, because this project is so politically driven, that the normal checks and balances that would apply in any tendering process did not apply here? Is it not the case that the vigilance that one would normally expect from the Department of Finance has not applied here, again because of the political railroading through of the wider project? Is the Minister seriously telling the House that the only thing that is wrong is the manner of the information coming into the possession of The Irish Times? He has told the House that is what is wrong about this controversy. That is the least important part of it.

I call on the Deputy to briefly put his question as there are other Members offering and we will be returning to the Finance Bill shortly.

I accept that. Am I to understand that the Minister is persisting in his position that it is a question of whether it is legal for a shelf company to be purchased in London and to engage in tendering for a contract under EU procurement rules? Is that his understanding of the problem? I ask the Minister to tell the House if he has confidence after this debacle in the management of CSID?

The assessment panel, as I said, included CSID, the Office of Public Works, the Irish Sports Council, Fingal County Council, the National Coaching and Training Centre, the Special Olympics and international leisure experts, Campbell and associates, in association with McCann Fitzgerald and PricewaterhouseCoopers. The contract was awarded by CSID on the basis of the information and research it received from all these people. They were all satisfied and they satisfied CSID regarding the bona fides of the contract of the consortium involved.

I point out to the Deputy that three consortia were involved, Rohcon, Waterworld UK, and S&P Architects. DIAL was made up of other consortia and Prospero was made up of other consortia. CSID made the decision. They signed the contract. They were the people responsible for signing the contract.

Does the Minister still have confidence in them?

I am coming to that. They signed the contract on the basis of all the information they had. I think the Deputy would agree that personnel in the companies I mentioned are qualified and of high calibre.

The Minister asked no questions.

With regard to having confidence in them, I asked the board of CSID to meet immediately to discuss the contract to see if it is satisfied with the manner in which this was dealt with by it. If it received improper information which it, in turn, relayed to me—

This is unbelievable.

I was completely dependent on the board of CSID in regard to this contract and CSID satisfied the Government that these consortia were the best available to it.

As I pointed out, there is nothing illegal in any shelf company putting forward an application to tender for an EU contract. EU procurement law insists that all applications from a shelf company, dormant or otherwise, must be assessed on its financial viability.

I will take three brief questions from Deputies Belton, Allen and Jim Mitchell and a final reply from the Minister.

I also wish to ask a question.

I understand the Deputy already asked two questions.

I asked only one.

I understand there was a round of questions before I came in.

I asked only one.

The Deputy will be very brief.

We must get back to the Finance Bill.

The Leas-Cheann Comhairle is very worried about the Bill.

I am worried about the Private Notice Question going on much longer than usual.

This is a serious matter.

The board of CSID was appointed by the Government.

All boards set up during the period of the Government were appointed by it.

All members of some boards were not appointed directly by the Government, but all members of this board were appointed by the Government. Is that correct?

In other words, this board has the unique distinction of being a board totally appointed by the Government. The Minister referred to the board review. What will the board review? The board has done its business. It has awarded this contract. The building is going ahead. I want to know what, in the Minister's estimation, is being reviewed? Will he give the answer to that review to the House immediately after receiving it?

In view of the Minister's assurances that nothing illegal has taken place will he agree that something reckless has taken place and that not only did the Government embark on a €1.4 billion white elephant but there was gross negligence in allowing a project worth €62 million to proceed without a contract in place? Will he take his political courage in his hands and not allow the board just to examine its rash decisions but call in the board and ask the hard questions, get the answers and then decide on the future of the director and the board?

Will the Minister outline the cost of the other two consortia tenders?

The whole saga is very disturbing. I am sure the Committee of Public Accounts is not pleased at the gross underestimation of the cost in the first place. What we see here is a breach of all normal procedures in relation to public spending. Will the Minister agree here and now to refer this matter to the Committee of Public Accounts, which should request the Comptroller and Auditor General to review the procedure for granting the contract, and report back to the House within two weeks? Let us have from the Comptroller and Auditor General the truth, the whole truth and nothing but the truth.

To reply to Deputy Belton, what the board has been asked to do is to review whether it has all the information available to it when making the decision.

If the Taoiseach did not have all the information what about—

The Minister, without interruption, please.

Deputy Belton, referring to the calibre of the board, alluded to the fact that, perhaps in some way, they are incompetent.

They are because they could not—

May I raise a point of order?

Deputy Allen, allow the Minister to continue without interruption. There are no points of order.

I assure the Deputy that the board of that company is competent. Deputy Allen said something reckless had taken place and that there was gross negligence. There was no recklessness and no negligence on the part of any party involved here.

The Minister—

I ask Deputy Carey to allow the Minister to continue without interruption.

I regret I was not informed it was a shelf company, but a shelf company could also have applied and won the contract which, apparently, Deputies opposite do not understand.

Would the Minister prefer if it was tucked away?

With regard to the cost of the aquatic centre which was awarded, in punts the cost of the winning contract, from memory, was £48 million, the cost of the next one was £60 million and the third was a whopping £71 million. The bid itself was by far the better bid as regards the entire cost. If I recall correctly there was a difference of between £12 million and £20 million on the costs involved. In reply to Deputy Mitchell, there was no underestimation of costs. The cost was £48 million—

We are talking about the whole project.

This is not about the whole project. Obviously the Deputy does not understand what we are talking about.

The Minister does not understand it.

This is not about the whole project, it is about the aquatic centre. If the costs of the aquatic centre have to be assessed there is no problem whatsoever in getting the Comptroller and Auditor General to examine them.

That concludes the Private Notice Question.

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