JOINT COMMITTEE ON EUROPEAN UNION AFFAIRS debate -
Thursday, 24 Nov 2011

Annual Report 2010: Discussion with European Court of Auditors

Chairman

Apologies have been received from Deputies Paschal Donohoe and Joe O'Reilly and Senator Healy Eames. The first item on our agenda is a discussion on the work of the European Court of Auditors and its annual report on the EU budget for 2010. On behalf of the joint committee, I welcome the current Irish member of the court, Mr. Eoin O'Shea, who is accompanied by his colleagues, Mr. John Sweeney and Ms Marie-Claire Walsh.

I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they give to the committee. If they are directed by it to cease giving evidence in respect of a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they do not criticise or make charges against any person, persons or an entity by name or in such a way as to make him, her or it identifiable.

I invite Mr. O'Shea to make his presentation.

Mr. Eoin O’Shea

I thank the Chairman and members for inviting me to come before the joint committee. It is an honour for me, both personally and on behalf of the European Court of Auditors, to formally present the annual report of the court. Last year was the first occasion on which a member of the court came to the national Parliament of Ireland to present the court's work on a formal basis. I am delighted to be in a position to perform that exercise on this occasion, listen to the views of members and reply to any questions they may wish to pose.

Co-operation between national parliaments and the European Court of Auditors is important. Almost 100% of the money the European Union spends comes from member states which spend over 80% of the Union's money. I propose, therefore, to outline from where the Union obtains its money and how it spends it. The European Union's budget is approximately €125 billion per year. This is due to increase to €129 billion in 2012. The Union is financed almost entirely by member states. A total of one eighth of the money comes from customs duties. When someone imports goods into the European Union, a tax is collected by the revenue commissioners in each member state. A total of 75% of this tax is transferred into the Union's budget, with the remaining 25% being retained to cover collection costs. A further one eighth of EU funding comes from value added tax, VAT. Each member state submits a small proportion of its VAT returns to the European Exchequer.

The remainder of the European Union's funding - over 70% - comes via a balancing mechanism. The Union must balance its income with its expenditure every year and the 70% plus to which I refer is provided by member states in proportion to their national incomes. For example, a country with a national income twice that of Ireland's contributes double the amount Ireland contributes under this heading. There are proposals to change this mechanism in the next financial framework and the European Commission has proposed a financial transactions tax in this regard. The Commission made other proposals last year in respect of a European VAT rate or a gasoline tax. However, it has now chosen to propose a financial transactions tax in the next seven year framework.

Any proposals for change would require an alteration of the European Union's own resources directive. Any such amendment would have to be carried unanimously. Members will be aware that as a number of member states have made their reservations known on that, therefore, it remains to be seen whether the funding structure of the European Union will change appreciably over the next seven years.

With regard to the spending of European Union money, just under half of it relates to agriculture and fisheries and about one third relates to cohesion. Ireland does not receive a significant amount under cohesion because the bulk of that funding goes to member states which have less then 90% of the average income of the European Union. Another 7% goes to research, 5% goes to external aid and 8% is spent on administration which runs all the institutions and all the programmes. There has been very little change in that respect during the past year and from the proposals the Commission has put forward for the next multi-annual financial framework, there does not seem to be much change in the spending mix proposed. The new framework for 2014 to 2021 caps the budget at 2013 levels and there is not a significant change in the spending proportions.

With regard to how the European Court of Auditors fits into this, we are the European Union's external auditor. We produce an audit opinion on the European Union's accounts, just like any auditor of a private company or the Comptroller and Auditor General, but we also produce special reports on how the European Union's money is spent and how effective European Union policies have been. For example, last year we produced a report on the reform of the European Union sugar market, which had a particular relevance to Ireland at the time. In terms of work into the future, we expect to begin work on a formal opinion on the Commission's proposals in regard to the Common Agricultural Policy, spending in respect of which relates to approximately half of the European Union's budget. The proposals the Commission has put forward stretch to 650 pages of regulations and it is important that the European Court of Auditors brings its experience of auditing European agricultural funds during the past 35 years to bear on the discussions and the deliberations that will take place on the CAP in the next number of years.

Our real role institutionally is to reassure the European taxpayer that his or her money is being controlled properly The European Union is a unique entity, with some members being net recipients and some being net contributors. France and Germany combined are net contributors to the tune of €18 billion. Members will realise that public confidence in that system is important and the European Union has an institution that it places at a high level to ensure confidence is maintained and built.

Last year Ireland was a net beneficiary in the amount of €676 million. That is not the sole criterion or the sole reason for Ireland's involvement in the European Union. There are many other benefits which translate into financial terms for Ireland, including the benefit of being in the Single Market, which does not appear in any of those figures. There is a good deal of work the European Union performs centrally that would have to be replicated in each member state at a cost to the taxpayer in each member state if that work was not done centrally. I am talking in terms of the licensing of medicines, airplanes, chemicals, food additives, etc.

The indications are that Ireland's position as a net beneficiary will continue. The next financial framework does not put forward an appreciative growth in the European Union budget. Therefore, Ireland's contribution would not be expected to rise significantly and on the receipts side in regard to agriculture, which accounts for 83% of Ireland's receipts from the European Union, the indications are that matters will continue at least an equivalent level, taking into account all the proposals that have been put forward and recognising that there is still a long way to go before the final CAP proposals are put in place.

I believe that this year Ireland has overcome a threat to its position as a net beneficiary. When Ireland applied for funding under the EU-IMF programme this time last year, part of that money - some €22.5 million - was coming directly from the European Union Initially the proposal was that the European Union would borrow and then lend on to Ireland at a marginal rate. The European Union was borrowing at 3% and lending on to Ireland at 6%. That would have produced a net additional contribution from Ireland directly to the European exchequer in the amount of €675 million or just under €5 billion over the seven and half years of the programme. The 21 July deal that was arranged and has been implemented knocked off the margin in that respect and extended the deal to 12 and half years. That will mean a benefit to Ireland from the European Union, compared with the initial plans, of about €8.22 billion over the next 12 and a half years.

In terms of the European Court of Auditors annual report and Ireland, it is again a very good situation for Ireland. We have listed many examples of inappropriate spending. None of those examples relates to Ireland. Ireland was audited this year in regard to agriculture on the normal sampling basis. Last year, the court had some negative comments on the revenue side related to Ireland's customs regime, but those comments do not appear again this year. The matter last year needed a fix on a computer system and I understand that is now working and performing adequately.

Ireland has a very good reputation for financial control in agriculture and I am very proud of that in my current position. There is a long control system in place in the European Union. For example, the controls in agriculture start with the Department of Agriculture, Food and the Marine which has its own external auditor and a audit committee and which is controlled by the Comptroller and Auditor General and the Committee of Public Accounts in Ireland and, at European level, by the European Commission, the European Court of Auditors and, ultimately, the Committee on Budgetary Control of the European Parliament.

The Irish agriculture error rates are close to zero. In some countries they are over 10%. Because of the system we apply in Ireland, it is fair to say that agriculture funds go to real farmers farming real land. That is not the case in other countries which operate a different system and we have seen cases where football fields, parklands and dumps have been declared for the purposes of the receipt of agricultural subsidies.

In regard to the accounts, the European Court of Auditors produces two opinions. One is an opinion on the reliability of the accounts, which is the same kind of opinion any auditor gives to millions of companies across the European Union. On the question of whether the books, accounts and records make sense, we have found that in this case they do and they have done consistently for the last four years. The second opinion we give is on the legality and regularity of the transactions underlying the accounts. On the question of whether the spending rules were kept, we have found that 3.7% of the money was not spent according to the European rules in terms of value. That is up slightly on last year when it was 3.3%. As to how that breaks down across the spending areas, 7.7% of the Cohesion budget in terms of quantity was affected by error, 2.3% of agriculture was affected by error but in Ireland it is close to zero, and the rest of the expenditure is below the materiality level of 2%. Overall, there is adverse opinion on the legality and regularity side of things.

In terms of what happens to our report, it goes to the Committee on Budgetary Control of the European Parliament, which is equivalent to the Committee of Public Accounts. It calls in individually all the Commissioners responsible for the spending areas, there is extensive written and oral questioning and the committee may have one meeting, a follow-up meeting and another follow-up meeting. It may grant what it calls a discharge straight away or it may postpone that or even deny that. Discharge is a political process the Parliament goes through to indicate its support or assent for the work of the Commission in managing the money that is given by European taxpayers.

Chairman

I thank Mr. O'Shea for attending again this year to present his annual report and to accept comments and questions from members of the committee. In the first instance, the committee is anxious to see how this country performed in terms of compliance and the audit that took place. It is reassuring to note that in spite of the questions that arose on the customs regime last year, no questions arise this year about the materiality of this country's performance. However, in the broader sphere in terms of overall compliance and the entire payments from the European Union, which are substantial - €122 million last year - it is worrying that overall the margin is 3.7%, which is almost double the acceptable level of 2%. While it is contained to 2.3% on agriculture it is way out of kilter entirely on cohesion funds where it is 7.7%, which is nearly quadruple the acceptable margin of error that is allowable. I invite Mr. O'Shea to elaborate on that because the amount that is due to be spent in the multi-annual financial framework is in the region of €376 billion, which by my calculations would mean that if the same level of error was to continue the loss to the European Union would be almost €29 billion. That is a €29 billion loss to the taxpayer.

Some of the examples that were given in the comprehensive report, which I looked through, indicate how the errors came about. By and large, it appears to be through abuse in the spending of the funds by various personnel that were responsible. The fact that the situation has deteriorated since last year is a further worrying trend because if the deterioration was to continue on an annual basis, substantial funds would be lost to the European Union. I note the point which is the key area of concern with the audit. What measures have already been taken on the matter since last year by the members of the European Court of Auditors? Now that the situation has worsened, what further measures are being proposed to deal with it in order that we can ensure that the taxpayer in the European Union is protected?

Deputy Bernard J. Durkan

I join in the welcome to Mr. O'Shea and his colleagues and congratulate them on their report. Their presence before the committee demonstrates that due process is taking place in that the committee gets the report for which we are very grateful, in particular given the time in which we live when there are many calls for accountability and reports.

I would like to hear more elaboration on the financial transactions tax and the extent to which it will impact on trading in the financial markets. I would also like elaboration on the extent to which it might encourage a more considered and less reckless approach to some of what we have seen in the past, having particular regard to the urgent need to restore stability in the entire European arena, at every level, because the lack of stability generates a lack of confidence, which leads to indecision which generates more of the same. We are inheriting the whirlwind in that regard.

I would also like more elaboration on national income relativity and the degree to which member states contribute. I have not had an opportunity to read the report because unfortunately the degree to which the system can spew out reports in the House at the moment is beyond the ability of most people to be able to do anything other than give a cursory examination to them.

I note from last year the sugar report which was very important. Unfortunately, it was late in so far as decision making was concerned in a member state. We all mentioned that at the time. It was a very important intervention. Like other members of the committee, having spent some time on the Committee of Public Accounts, one of the faults we always found was that we were examining issues retrospectively and the degree to which one can determine the future by reference to the past is always a moot point. To what extent can the influence of the European Court of Auditors impact on the European Union institutions themselves in terms of addressing policy issues in a manner which is to the benefit of a cohesive Union? By cohesive I do not mean a federal Union or anything like that, I mean a cohesive progress that will be to the benefit of the member states and every citizen in those states, without exception.

In recent times we have seen a development that is apparent to many of us as not being useful or helpful in encouraging cohesion or unity within the Union where some member states feel, perhaps with some justification, that they have responsibility to take a lead, perhaps to the exclusion of the institutions that are already in place, such as the President of the Commission, the President of the Council and all others involved. At what stage will someone make decisions arising from the experiences in the past ten years when it was not just this country that benefitted greatly in terms of increased family income and improvement in quality of life, and some can say, irresponsible economic policies, but also other European countries? To what extent can the European Court of Auditors impact on that type of issue in the future?

We have heard in the past ten years about the lack of vision in terms of the thrust of all European policies - the Chairman and all of us have spoken about it. There are those who say we need a European minister for finance but I do not agree. If the institutions work properly, there is no reason each member state could not be accountable to a central body that could, in turn, determine what is well founded. We do not need a prime minister for the European Union. In the United States, there may be a federal government but the individual states have a great deal of independence.

Does the European Court of Auditors feel it has a role to play having regard to what it has found out in the course of its various audits? Do the delegates believe there are necessary changes that might concentrate the minds of Europe's leaders as we proceed in a way that may be beneficial to the future of the Union? If these are not determined in the not-too-distant future, Europe will wander. If it wanders in the way I suspect it might, there will be severe economic consequences for all of us.

Mr. Eoin O’Shea

The point on cohesion is absolutely correct. It represents the area of EU spending that requires the most work. The error rate in 2008 was 11%. In 2009, it was 5%, and this year it has increased to 7.7%. Colleagues will have to be aware that cohesion funding is cyclical. Therefore, at the beginning of the programme the Union pre-funds money. Then, as the programme period continues, it provides money on the basis of cost reimbursement. One quarter of the error rate relates to the breaching of public procurement spending rules. Approximately half relates to ineligible projects, an example of which would involve re-submission in respect of a project from the previous funding period. I refer, in effect, to the funding of a project that is already completed. The court discovered examples of projects that generate revenue. These are not eligible for funding. We refer to the funding of something that would fund itself as "dead weight". The remaining 25% of errors relate to submitting ineligible costs, or the charging of more to a project than the cost.

The Chairman asked what is planned to fix this problem. This is a very good question. The European Union is currently considering the introduction of a new financial regulation. The proposal is to put in place the same controls for cohesion as exist for agriculture. Every year, a Department responsible for agriculture must put forward a report, audited by independent accountants, showing that the member state is satisfied with the work that has been done. A system with an externally audited dedicated payment agency should be in place. These are the more concrete structural controls envisaged in regard to cohesion funding.

As I stated, the error rate fluctuates. Some of the fluctuation relates to the given year of the programme. The programme runs for seven years. Coming towards the end, the payments relate to actual spending and cost statements entered by the project promoters. Earlier in the year the money is pre-funded. Naturally, the pre-funded money is subject to a lower error rate than the post-funded money given the nature of the facility to audit and the amount of paperwork available to be audited.

Chairman

Should the procedure be the same as that for agriculture? Some money would be available in advance and there would be direct payments. Why is the cohesion system not the same? Why are we now only catching up with the successful system that obtains in agriculture?

Mr. Eoin O’Shea

That is a very good point. Agriculture expenditure is slightly different from cohesion expenditure in that the former has followed a pattern. Expenditure may be related to the area of land being farmed, which would generally be the same every year. Cohesion funding, however, typically pertains to very large projects, such as the building of a road or railway infrastructure. Agriculture funding is spread throughout the European Union, among some very advanced economies and some not very advanced economies, whereas cohesion funding is typically targeted at areas that are already underdeveloped infrastructurally. These may be newer economies that are slower to develop controls.

After the publication of our annual report, the Commission identified that two thirds of the cohesion error rate is associated with three countries. There is, therefore, a possibility to focus the court's work on those countries and the controls that exist. If Ireland were in that mix - it is not - I would be paying far more attention to the sets of controls it would need to develop.

Chairman

What are the three countries?

Mr. Eoin O’Shea

The Czech Republic, Spain and Italy. Those countries' identities were released by the Commission. Although two thirds of the error rate identified by the court in its sample is attributable to them, that is not to say there are not other countries that require similar intervention by the court.

With regard to Deputy Durkan's point, the court has a role to play. I am in charge of all the European Union's 36 agencies. Three new agencies deal with the financial crisis, namely, the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority.

One risk that has built up in the European Union which was not managed over many years was the cross-border risk relating to financial transactions. Risks were being transferred from abroad into Ireland and this was not being monitored. Foreign banks were lending to Irish banks, setting up subsidiaries in Ireland and lending directly to the Irish market. The associated risks were not being watched at EU level. This year, 2011, three new financial agencies were established alongside the European Systemic Risk Board and the ECB.

The European Court of Auditors has a role in regard to the agencies, including in respect of their operational effectiveness, value for money and the simple question of whether they can do their job. I take my responsibility in respect of the agencies seriously. When I meet the directors, the first question I ask is whether, if they had a problem the next morning, they would be able to resolve it. I ask whether they have sufficient controls and plans in place to deal with an issue. This is essentially a very important unseen role of the European Court of Auditors because we have the possibility to determine whether the agencies are doing their job. If they are not, we can publish a report. By showing we are very interested in the set of controls, we can have a very positive impact for the EU exchequer.

The European Securities and Markets Authority is based in Paris and is responsible for regulating directly the credit rating agencies. This is an area that has proven to require some work over recent years. The European Court of Auditors has a role in this regard. We have very definite powers and also what I would call soft powers that can be turned into hard powers at a moment's notice. It is up to us to use those tools and mechanisms that have been given to us under the treaty as a powerful instrument to help the citizens. I believe that if another financial crisis of the type we have at the moment arises in respect of the financial industry, it will be because one of those agencies and the people who control them will not have done their jobs. I hope this gives an indication of the kind of involvement we can have.

Deputy Durkan raised the issue of the sugar report that the European Court of Auditors produced last year. That is a very good indication of how an external auditor, reporting to parliamentarians both at European level and to the Oireachtas when I appeared here last year, can have an impact. I recall the day we published the report. The Dáil was suspended the following day. Deputies, including Members present today, called for debates on the matter. A debate was held and the Irish Farmers Association called for the sugar industry to be restarted. I believe approximately 2,000 farmers met around the country to discuss the matter and a series of meetings was held by the Oireachtas Joint Committee on Agriculture, Fisheries and Food.

Two reports on the feasibility of restarting the industry have been commissioned. The Irish Minister for Agriculture, Food and the Marine is on record as stating that if the industry can be restarted, he is in favour of it. This is not what the European Court of Auditors foresees when it publishes reports. We cannot know their impact either on a Europe-wide level or in individual countries. However, the kind of independent role and independent evidence we can provide can be used by interested individuals and politicians to move things forward for their people. I believe we played an important role in that regard last year. I hope I have answered members' questions.

Chairman

As a vote has been called in the Dáil, we will suspend the hearing for a few minutes and then return, if that is acceptable to Mr. O'Shea.

Sitting suspended at 12.10 p.m. and resumed at 12.30 p.m.

Deputy Colm Keaveney

I thank Mr. O'Shea for his comprehensive report. It was fair, objective and representative of the office and prestige of the role of auditor. In fairness, objectivity and independence were the subtext and undercurrent.

I note, in particular, Mr. O'Shea's good work on the sugar report. I come from a town that has been devastated by the impact of ending sugar production. As Mr. O'Shea probably will be aware, Tuam was highly dependent on sugar for employment, both urban and rural, and many fine jobs were committed to the working people of my community for years. I thank Mr. O'Shea for giving us that window of opportunity into the future to have that discussion under the difficult circumstances.

I am sure he will agree there is an epic struggle for this country to restore its reputation across the European institutions. We are making fantastic progress in that regard. The role of the Court of Auditors has come across the radar in recent weeks and months due to some helpful commentary. It has been suggested by certain elements of the commentariat that it is a position of patronage and it is for party grandees. Mr. O'Shea's report today has done a great service to us in that regard.

I refer Mr. O'Shea to a comment made on 6 October and confirmed in the national news broadcast by RTE. It was confirmed that the President of the European Court of Auditors supported the retention of the Fianna Fáil nomination to the Court of Auditors for the second full term and that, in fact, the President of the court, Mr. Vítor Caldeira, wrote to the Government seeking support for his retention of a second full term in office. Further to that, I refer Mr. O'Shea to a comment in The Irish Times on 12 July by Mr. Arthur Beesley, that the court’s president, Mr. Vítor Caldeira, had asked the governments concerned to make their nominations within the next few months, and that the nomination must be approved by the budgetary control committee of the European Parliament, and to give careful consideration for Mr. O’Shea’s re-nomination.

Co-incidentally, on 6 October also, Mr. O'Shea corresponded to a Mr. Geier. I would be grateful if Mr. O'Shea could tell me who is Mr. Geier. In that correspondence, Mr. O'Shea wrote to Mr. Geier:

I just wanted to let you know the Irish Govt have decided to replace me at the Court. Their suggestion is an Irish civil servant who was responsible for financial supervision during the period of the collapse of the Irish banks.

Mr. Eoin O’Shea

Chairman,-----

Chairman

Just a moment, Deputy Keaveney.

Mr. Eoin O’Shea

If there was any correspondence like that, it would be person to person. I would like, if possible, that Deputy Keaveney would not proceed with his question. Could I respect the Chair and respect the position of the Court of Auditors in regard to that?

Deputy Colm Keaveney

I ask the Chairman to give me direction on correspondence-----

Mr. Eoin O’Shea

This is private e-mail correspondence.

Chairman

It is. It has been passed to me during the break. I was not aware of this until we took a break to vote. An e-mail has come into my possession as well. I have some questions to ask about this e-mail because it is relevant to a matter of considerable importance that it being debated. It is a matter that was raised in the Dáil this morning in relation to the appointment of Mr. Cardiff and the vote that took place yesterday in Parliament.

The e-mail being read out is relevant to it. I have it here. I propose to read the e-mail and to ask Mr. O'Shea a question about it because it is very much relevant to a public appointment. I will read it to now. It was sent on 6 October 2011, obviously, when the matter of the appointment became very much live. It states:

Dear Mr Geier

I just wanted to let you know the Irish Govt have decided to replace me at the Court. Their suggestion is an Irish civil servant who was responsible for financial supervision during the period of the collapse of the Irish banks. I believe there will be further details in respect of this appointment which will be of interest to the Parliament because of the Irish prosecutorial interest in whether or not the State condoned in the window-dressing of the financial accounts of Irish financial institutions in respect of 7 Billion Euro.

In the meantime, I will work hard ....

My very best wishes

Eoin

It is appropriate, in the context of what has happened, that we get clarification as to who Mr. Geier is, why this e-mail was sent, its purpose and what Mr. O'Shea might have to say to clarify the matter.

Deputy Colm Keaveney

Can I finish my contribution also?

Specifically, I do not refer to the e-mail. I refer to the intention set out in the correspondence and communication. In that respect, I want Mr. O'Shea to clarify whether is in a position to name the Irish civil servant who he stated was responsible for the financial supervision during the collapse of the Irish banking system. Will he be in a position to speak of what he describes as "window-dressing of the financial accounts of Irish financial institutions in respect of" €7 billion, and to what specific €7 billion does he refer?

In my opening comment, I stated strongly that it was my view-----

Chairman

The questions have been put.

Deputy Colm Keaveney

-----that the role of the auditor was to be fair, objective and transparent. It is critically important that we get absolute clarification and positive affirmation that there is no dynamic taking place within the European institutions to undermine the role of the Government in appointing an independent civil servant of no political affiliation.

Chairman

Before Deputy Keaveney proceeds any further in that respect, let us ask for answers to the issues that have been raised in this e-mail.

Mr. Eoin O’Shea

The matter was a private matter.

Chairman

Who is Mr. Geier?

Mr. Eoin O’Shea

Mr. Geier is a member of the European Parliament. He is a member of the budgetary control committee. As members of the European Court of Auditors, we have regular contact with Members of the European Parliament. Does that-----

Chairman

No, it does not quite clarify it. Explain to us what the Budgetary Control Committee's function is and what role Mr. Geier had in that committee.

Mr. Eoin O’Shea

He is a member of that committee.

Deputy Colm Keaveney

Would that be the committee that met yesterday morning in relation to the Government nominated appointment of Mr. Cardiff?

Mr. Eoin O’Shea

Correct.

Deputy Colm Keaveney

Has Mr. O'Shea been influencing or communicating with members of that board as a member of the Court of Auditors?

Mr. Eoin O’Shea

My intention in communicating that was to let the member in question know. I should not have sent that e-mail. I recognised that as soon as I had sent it. It has not become public before now. I had not pursued the matter since. I will propose to leave it at that unless the Chairman has any further questions.

Chairman

I do. Can Mr. O'Shea identify the Irish civil servant to whom he referred?

Mr. Eoin O’Shea

I did not identify anyone in the e-mail.

Chairman

We are speaking about the Irish Government, which is entitled to make an extremely important appointment. Mr. O'Shea stated that the Government's "suggestion is an Irish civil servant who was responsible for financial supervision during the period of the collapse of the Irish banks." He owes it to the committee to tell us to whom he referred and why he referred to that person in derogatory terms.

Mr. Eoin O’Shea

I believe the committee is aware of the person to whom I referred, but at this stage -----

Chairman

This committee asks Mr. O'Shea to put it on the record.

Mr. Eoin O’Shea

The person who will be my successor at the court.

Chairman

The name.

Mr. Eoin O’Shea

Before I say the name, I would like to say that I have met Mr. Cardiff. I had not met him at that stage. At that stage I may have been a little angry about the matter. I have subsequently revised my opinion having met the gentleman twice and having understood his interest in the position. I would apologise to him for sending that e-mail. I did it in a moment of heat. If one reads the e-mail, I believe one could deduce my sorrow in respect of it.

Chairman

Is Mr. O'Shea, in that, also seeking to undermine his position by representing that he was responsible for the collapse of the Irish banks and suggesting that there would be further details of an "Irish prosecutorial interest"? To what was Mr. O'Shea referring?

Mr. Eoin O’Shea

I am obviously sorry for sending the e-mail at the time that I did. It was sent on the date on which I received initial notification. Mr. Geier was somebody with whom I had been in contact.

Chairman

Was it the intention to influence Mr. Geier and other members of the committee?

Mr. Eoin O’Shea

Absolutely not. I would have received no benefit from that. I understand the committee does its work diligently. That was the case with my appointment. I was not seeking to influence anybody. I was letting off steam. I believe that would probably be the closest one would get to that. I reiterate my apology. I do not believe this should have been in the public domain. It was a private e-mail between two people, one of whom was communicating with the other. This should not be brought into the public domain. It does Mr. Cardiff a disservice. That is not my intention. I revised my opinion of Mr. Cardiff after meeting him. As I said in the media already, I believe he is a credible appointment by the Irish Government to the European Court of Auditors.

Chairman

Mr. O'Shea went further and reflected on whether the "State condoned in the window-dressing of the financial accounts of Irish financial institutions in respect of 7 Billion Euro." He was reflecting negatively on the State. Does he think that is the role of a public servant?

Mr. Eoin O’Shea

I believe my role is to be frank.

Chairman

That is a serious allegation. The State condoned.

Mr. Eoin O’Shea

It is, yes. I am not happy with what I did when I sent that e-mail. It was an expression of a private matter which I should not have communicated to another person. I am sorry for it and I do not believe it is the type of thing that one should expect from somebody like me. The Chairman is absolutely correct in that regard.

Deputy Colm Keaveney

I thank Mr. O'Shea for his comments and clarification. The correspondence was written on 6 October. In light of the acknowledgement that Mr. O'Shea was wrong to do what he did, has he communicated further with Mr. Geier, who was party to the decision taken yesterday to reject an Irish nomination to the European Court of Auditors in which Mr. O'Shea currently holds office? Has Mr. O'Shea communicated by e-mail to Mr. Geier that he accepts Mr. Cardiff is in fact an appropriate appointment?

Mr. Eoin O’Shea

I have met Mr. Geier on a number of occasions since then in the course of my duties. We have not referred to the matter in any way because, apart from that moment of madness, I have not been involved in the appointment of my successor.

Deputy Colm Keaveney

In my opening comment I said the country is involved in an epic campaign to restore its international credibility. Irish civil servants who wear the green jersey on our behalf in the European institutions play a critical role in that regard. I am concerned that correspondence on this matter and with this impact was sent to individuals on a decision making forum without affirming that the position set out on 6 October was formally rectified. This country is in the midst of a great struggle to restore its credibility. I ask Mr. O'Shea to confirm that there is not a co-ordinated campaign by individuals attached to the auditor's office in Brussels to undermine the Irish Government's initiative to appoint an independent civil servant to the European Court of Auditors on behalf of this sovereign State. I ask for clarification in this regard.

Mr. Eoin O’Shea

I am happy to give that assurance. This matter should not have come to the public's attention. It was sent in a moment of haste, revealing to somebody else a matter that should not have been revealed. I have tried my best to assist Mr. Cardiff with his work by arranging seminars at the court, assisting him with questions where necessary and advising him on the processes of the committee. I stated publicly last week to The Irish Times, the IrishIndependent, the Irish Examiner and RTE that he is a credible appointment to the European Court of Auditors. No such activity is being undertaken. I have undertaken not to associate with potential voters on that committee since then. I have taken that decision consciously. I do not believe that I have been involved in influencing anybody. That was done in a moment of haste and I am sorry that it has come into the public domain. I apologise to all concerned for what I did in respect of it. I did not do anything after that. It was done in a moment of haste just after I learned that I would not be reappointed. It was sent to a person with whom I had contacts and dealings previously.

Chairman

Mr. O'Shea has made a fulsome apology. What he did was done in a moment of haste but it was done and damage may have been caused. It may be the case that an injustice was done to the Government's proposed appointee, Mr. Cardiff.

Mr. Eoin O’Shea

I do not believe any issues raised in the e-mail were subsequently borne out. Colleagues will recall that a number of weeks later an issue came into the public domain in respect of an accounting error that was revealed to the Department of Finance. That seemed to have been the issue that captured the public's attention. Nothing I did went into the public domain except today.

Chairman

Sorry, nothing Mr. Cardiff did was put into the public domain by him.

Mr. Eoin O’Shea

By me.

Chairman

However, he has no idea whether this e-mail, through rumour and allegation or on purpose, could have ended up in the public domain. Can he clarify Mr. Geier's standing as an MEP?

Mr. Eoin O’Shea

He is a member of the budgetary control committee.

Chairman

Is he of long standing?

Mr. Eoin O’Shea

I am not aware of that.

Chairman

What nationality is Mr. Geier?

Mr. Eoin O’Shea

I do not know. He is a member of the social democratic group in the European Parliament.

Chairman

Having issued such an inappropriate and potentially damaging e-mail, will Mr. O'Shea take steps to rectify the situation, even at this late stage? Will he indicate what steps he might be able to take in regard, first, to the budgetary committee, which has already made a decision in a negative fashion? We do not know to what extent other members were affected but given that there was only one vote in it, Mr. Geier's vote could have been the determining one. What mechanism can Mr. O'Shea use to rectify the situation in regard to the Parliament, which will soon have a plenary hearing on the matter?

Deputy Colm Keaveney

It is incumbent on the Chairman to write to the budgetary committee-----

Chairman

We can move further along that line but, first, I would like to know what Mr. O'Shea can do to rectify the situation.

Mr. Eoin O’Shea

As suggested by Deputy Keaveney, I shall contact Mr. Geier and ask him whether he was involved in passing the e-mail on to somebody else before yesterday. I will ascertain what happened and discuss with him what further steps I can take in light of any subsequent information I receive, in order to assist the Chairman in what he has just proposed.

Deputy Colm Keaveney

What is critical here is the reference to a financial transaction of €7 billion. My memory does not serve me well at the best of times. I would like to be clear as to what specific financial transaction is referred to in that correspondence before I make my next comment. In the context of what has been published in regard to double entry errors, will Mr. O'Shea indicate who was in command in respect of the sum mentioned, what it refers to and the sequence of information? It seems Mr. O'Shea was aware of that on and prior to 6 October.

Mr. Eoin O’Shea

It does not relate to the Department of Finance matter. It related to, if I am correct in what I was referring to, a financial transaction between Anglo Irish Bank and the Irish Permanent Building Society.

Deputy Colm Keaveney

I am not at liberty to comment on an issue of which I have no knowledge.

Chairman

Mr. O'Shea seemed to be very clear in the manner in which he referred to whether or not "the State condoned in the window-dressing of the financial accounts of Irish financial institutions in respect of 7 Billion Euro". The reference is to "institutions", plural.

Mr. Eoin O’Shea

I believe there is a way of working in the House whereby one does not speak about individuals outside of the Chamber who are not present. If I continue on this line-----

Chairman

I am asking Mr. O'Shea to clarify what is referred to there, as distinct from naming the person concerned.

Mr. Eoin O’Shea

It was a transaction that was talked about in a book called Anglo Republic, which I had read the previous week.

Chairman

Mr. O'Shea included an allegation that he read in a book.

Mr. Eoin O’Shea

I was not stating this as gospel truth for public information. It is unfortunate that this has happened. I understand that it makes good reading.

Chairman

It is something we were not aware of and became aware of very suddenly. We would have thought that somebody in Mr. O'Shea's position - a public servant with responsibility, having been appointed by the previous Government to conduct business as the Irish member of the Court of Auditors - would not involve himself in seeking to influence the outcome of a future Government appointment. Clearly the terms of this e-mail indicate that his anger spilled over and that he took steps to influence that outcome by writing to a Member of not just the European Parliament but a member of the actual budgetary committee that makes the recommendation on the appointment. It is highly irregular, Mr. O'Shea.

Mr. Eoin O’Shea

I have already expressed that and echo the Chairman's view on that. It should not have been done. It was done in haste; I regretted it almost instantly; I regret it now. However, it was not done to seek to influence the outcome.

Chairman

Mr. O'Shea may be saying that now, but a reading would certainly suggest otherwise. He suggested that he would take steps to contact Mr. Geier and would seek to find out whether or not Mr. Geier has communicated that further. What does Mr. O'Shea propose to do then?

Mr. Eoin O’Shea

I would propose to discuss the matter with Mr. Geier. He is probably in the best position to advise me on the matter.

Chairman

We would have to go a bit beyond that.

Deputy Colm Keaveney

It is very difficult to quantify in any objective manner the consequence of correspondence that was written and prepared, in Mr. O'Shea's own words, in a somewhat distressed state. He wrote it in anger. We are dealing with something that has possibly had serious consequences in regard to a decision that was arrived at yesterday morning. I ask the Chairman to take it upon himself to investigate and establish, on behalf of this committee and by direct engagement with Mr. Geier, whether any consequence of this flippant commentary has done a great disservice to this country with regard to our standing and, as Mr. O'Shea said at the outset, our epic struggle to restore our credibility within the European institutions. I am not in a position to give the committee the country of origin of Mr. Geier.

Ms Phil Prendergast, MEP

He is German.

Deputy Colm Keaveney

I am concerned, as a consequence of this type of flippant communication, that the important work we have to do to restore our economic credibility and fortunes as a consequence of the problems we face will be undermined. It is incumbent on the Chairman to investigate this issue independently, on behalf of the committee, in light of the very prejudicial commentary in this correspondence. It may be the Chairman's responsibility to write to the Commission and to all Members of the European Parliament to outline what has possibly happened as a consequence of this commentary.

Chairman

Is Mr. O'Shea prepared to co-operate with us in getting to the bottom of this?

Mr. Eoin O’Shea

Of course.

Chairman

If I were to contact Mr. Geier and ask him to clarify how he used this e-mail, whether he took any steps to contact anybody else and so on, that would be much more relevant than Mr. O'Shea doing so. However, I would certainly like to be able to speak to Mr. O'Shea in regard to the matter. I am not sure to what extent the rules of the committee allow the Chairman to operate in that fashion. A matter has come to the attention of the committee that is highly relevant and important to the business we are conducting. I propose that the best approach is to have a private discussion among ourselves at the end of this meeting to decide on the logistics. However, I take on board what Deputy Keaveney has proposed, which is that this joint committee or I as its Chairman endeavour to make contact with Mr. Geier and endeavour to determine whether there has been an adverse effect arising from this particular e-mail in respect of the deliberations of the budgetary committee that might well have influenced the outcome of the decision made yesterday.

Deputy Colm Keaveney

For the benefit of this joint committee and Mr. O'Shea's obligation to this country, can he confirm there are no other comparable e-mails in existence to other members of the committee that met yesterday morning? Can Mr. O'Shea confirm that was the only type of damaging e-mail and that there is only one e-mail? If this is the case, why has he singled out Mr. Geier? Why would Mr. O'Shea personally communicate with him individually, if he had not sent out a blanket communication to a number of people? I also wish to confirm that Mr. O'Shea corresponded with Mr. Geier on a Europa.eu domain. He should confirm whether there are other e-mails of damaging consequences for the credibility of this country.

Mr. Eoin O’Shea

On that particular day, I sent one other e-mail to a lady named Ingeborg Gråssle. It was, I believe, an exactly similar e-mail.

Chairman

And who is she?

Mr. Eoin O’Shea

She is a colleague of Mr. Geier on the committee.

Chairman

On the budgetary committee of the European Parliament?

Mr. Eoin O’Shea

Yes.

Chairman

So, two members of the budgetary committee-----

Mr. Eoin O’Shea

Two members and two members only.

Chairman

----- were contacted in exactly the same terms.

Mr. Eoin O’Shea

Yes.

Chairman

On the budgetary committee.

Mr. Eoin O’Shea

Yes.

Chairman

On the same day.

Mr. Eoin O’Shea

Yes.

Chairman

That obviously extends the problem a lot further than members had contemplated it to be.

Mr. Eoin O’Shea

Yes. I had understood that.

Chairman

Is Mr. O'Shea available for further deliberations? Members need to discuss this as a committee in private to some extent but before so doing, Deputy Durkan wishes to come in.

Deputy Bernard J. Durkan

There is a role for the Chairman of the joint committee in a matter of this nature. In the past, there have been instances in which the attention of the committee was drawn to utterances and communications by officials at various levels within the European Union, which would have had a negative impact, as our colleague already has pointed out, on this country's image and standing within the European arena. This is a serious matter and it should not go unchallenged. It needs to be addressed in full. While I appreciate fully that it may have been done in anger, there are consequences arising from actions taken in anger. Quite an amount of anger and impatience was expressed towards this country, a great deal of which was of a retaliatory and recriminatory nature, in recent months.

As my colleague already has noted, we need to address this erosion of confidence in our own institutions and our ability to deal with issues that must be dealt with. It also is important that all people who represent this country at a European level recognise the importance of ensuring that Ireland adopts a cohesive approach to the issues facing it and that one does not in any way damage Ireland's cause in the course of what one has to say. Finally, Mr. O'Shea should indicate what were his previous appointments prior to taking up the appointment in the European Court of Auditors.

Mr. Eoin O’Shea

Previous to my appointment to the Court of Auditors, I was a member of an audit committee of a public body in Ireland. I also was involved in reviewing the North-South bodies established under the Good Friday Agreement as a member of a group of four. Prior to that, I had no public appointments. I believe I was appointed for my financial qualifications and the work I had done previously.

Deputy Bernard J. Durkan

As an auditor.

Mr. Eoin O’Shea

As an auditor.

Chairman

I must state that Mr. O'Shea has been very candid with members in respect of all the issues that have come up with regard to the e-mail and we certainly greatly appreciate that. Obviously, however, there is huge potential for damage to have been done by his actions in respect of those e-mails and we do not know the parameters of that damage at present. This joint committee has the authority to consider and report on matters within its general remit. It also has the authority to make inquiries on matters on which it deliberates. It also has the authority to make a report to the Houses with regard to any matter of that nature and can make recommendations to the relevant Minister as well.

Unless there are any other specific questions, I suggest, although we have a lot of business in hand and a number of groups are waiting outside, that the joint committee should go into private session for a while. I ask Mr. O'Shea to wait for a few minutes until members have completed their deliberations.

Ms Phil Prendergast, MEP

I wish to ask one question first. While I thank Mr. O'Shea for his candid admissions today, what made him so angry as to take such imprudent action in the form of sending e-mails that would have the potential and now obviously did have the potential to influence, as has been stated, the budgetary committee at its meeting yesterday? I note the vote was very tight and that when Mr. Cardiff appeared before a committee of this House, his contribution that day led to much disquiet, which was in the public arena. However, this changes the state of play again. What angered Mr. O'Shea to such an extent that he lost the ability for coherent thought and action?

Mr. Eoin O’Shea

As stated, my original intention was simply to let two people with whom I had been dealing know what was the situation. While I believe it was okay to see who was my successor, it was wrong of me to describe him in such terms. I hope that answers Ms Prendergast's question.

Ms Phil Prendergast, MEP

Why just those two particular members of the committee?

Mr. Eoin O’Shea

Because they were the ones with whom I would have been dealing the most. Both of them are significant members on the committee.

Ms Phil Prendergast, MEP

So there is not an equality among the membership of the group of 29 MEPs who make up the European Parliament's budgetary committee.

Mr. Eoin O’Shea

When I went to the Parliament, those are the two who would be present most often and with whom I would most often deal.

Deputy Colm Keaveney

Can it be confirmed whether Mr. Geier or the other named person who received e-mails are in fact group leaders in their respective political groupings? Within the committee that met yesterday regarding the appointment of the Irish nominee, Mr. Cardiff, can Mr. O'Shea confirm whether Mr. Jens Geier or the second named person are in fact political group leaders?

Mr. Eoin O’Shea

I believe that is the case, yes.

Deputy Colm Keaveney

I thank Mr. O'Shea.

Chairman

One or both?

Mr. Eoin O’Shea

Both of them are co-ordinators, as they are called.

Chairman

They are co-ordinators of their respective groups. To which groups do they belong? Mr. O'Shea stated that Mr. Geier was the co-ordinator of-----

Mr. Eoin O’Shea

The S & D group.

Chairman

The socialist group.

Mr. Eoin O’Shea

Yes.

Chairman

What about the other lady?

Mr. Eoin O’Shea

She is with the EPP.

Deputy Bernard J. Durkan

Did anybody contact any other members of the audit committee on the issue?

Chairman

That is something we want to determine. We have a vote coming up. I propose that we suspend until the vote is over and we will resume here afterwards. Mr. O'Shea, I would be very much obliged if you can wait until we resume. We will probably meet for five or ten minutes in private session and we will call you in after that. Are you agreeable to that?

Mr. Eoin O’Shea

Yes.

Chairman

Thank you.

Sitting suspended at 1.10 p.m. The joint committee resumed in private session at 1.35 p.m. and went into public session at 2.05 p.m.

Chairman

We had a long discussion on Mr. O'Shea's fine report of the proceedings of the European Court of Auditors over the past 12 months. For the benefit of those members who were not present at the time, an e-mail came to our attention in the middle of the meeting. I will read out the text of it so that people can know precisely the nature of this matter. It is addressed to Mr. Geier, a German Member of Parliament who is the co-ordinator on the budgetary committee of the Progressive Alliance of Socialists and Democrats in the European Parliament. The e-mail was sent by Mr. O'Shea on 6 October 2011 and it reads as follows:

Dear Mr Geier

I just wanted to let you know the Irish Govt have decided to replace me at the Court. Their suggestion is an Irish civil servant who was responsible for financial supervision during the period of the collapse of the Irish banks. I believe there will be further details in respect of this appointment which will be of interest to the Parliament because of the Irish prosecutorial interest in whether or not the State condoned in the window-dressing of the financial accounts of Irish financial institutions in respect of 7 Billion Euro.

That was signed by Mr. Eoin O'Shea.

It subsequently transpired that the same or a similar e-mail was sent to another member of the budgetary committee, a German lady who is the co-ordinator of the European People's Party group on the committee. Thus, e-mails were sent to two members of the budgetary committee who are the co-ordinators of their groups, the largest two groups in the European Parliament. There are serious allegations in that e-mail that reflect negatively on the Government's proposed appointment of the person to succeed Mr. O'Shea and on the Government in its mention of "window-dressing" of financial accounts. It is a matter of considerable concern.

Mr. O'Shea has admitted quite candidly that he sent this e-mail and said that he sent it in a moment of anger when he realised that he would not be continuing as the Irish member of the European Court of Auditors. He says that he regrets very much that he sent it and that he spoke subsequently to Mr. Cardiff, who was to be his replacement, and acknowledges that he is a fine person for the appointment. However, the content of the e-mail, which was of course a private e-mail, could have a substantial public impact, particularly for the people to whom it was sent, who are not ordinary members of the budgetary committee but the co-ordinators of their respective groups. This is a matter of serious concern to the committee.

The committee has discussed this at length and has expressed its concern that this could have materially influenced the outcome of yesterday's vote on Mr. Cardiff's nomination by the Irish Government to the position of Irish member to succeed Mr. O'Shea on the European Court of Auditors for a five-year period, a serious and responsible position. This is especially the case in view of the personnel to whom it was sent, the terms in which it was expressed and the fact that the vote was so close.

Arising from this, our committee has considered in detail how best to proceed. Mr. O'Shea quite openly admitted that he sent this e-mail and has apologised for doing so, but because of the potential public impact of the e-mail, we do not believe this committee can leave it at that after having had this hearing. We must endeavour to determine what impact the e-mails had. In addition, because the e-mail reflects negatively on the way in which the Irish Government conducts its business, the Government should be informed. My proposal - I spoke in private to the members already and they were agreeable to this - is that immediately after this meeting I should seek to contact the chairman of the European Parliament Committee on Budgetary Control, speak to him and inform him of the deliberations that occurred here, and I should request that a delegation from this committee should meet the budgetary committee to determine various matters relating to these e-mails and whether any impact on the voting arrangements occurred. In addition, the transcripts of the proceedings should be forwarded to the Government, the Taoiseach, the Tánaiste and the Minister of State with responsibility for European affairs to inform them whether these matters had a bearing on any outcome.

We should remember that Mr. O'Shea is a public servant appointed by the Government to an important post in the European Union and that Mr. Cardiff, who is to be his replacement, is also a public servant. I further request that given that Mr. O'Shea has so candidly reflected on these matters, openly discussed them with us and that he has admitted to what happened, he should write a letter to the Government, since he was appointed by the Government, explaining what he did, that he should write to the European Parliament Committee on Budgetary Control and to the President of the European Parliament, Mr. Buzek, because the next stage of these proceedings will be in the plenary session of the European Parliament. Anyway, in the first instance the committee has determined that we should meet the budgetary committee to determine what can be resolved. This committee should speak with the members of the budgetary committee before the matter of Mr. Cardiff's appointment goes to the plenary session.

We should consider the wider context as well, that is, the good name of this country. We have been in a serious financial crisis. Several matters relating to our good name and reputation have gone abroad in a negative fashion and we should be concerned that our public servants, appointed by us to deal with matters of great importance, conduct their business to the highest standards. This is the general context in which the Joint Committee on European Affairs should ensure that where our remit extends we conduct our business as thoroughly and as comprehensively as possible. These are my proposals as the Chairman of the committee. I will call on Mr. O'Shea to respond first and then if other members wish to come in at that stage, they may do so.

Deputy Timmy Dooley

I wish to make a comment before Mr. O'Shea comes in. Unfortunately, I could not be here for the earlier session. As transport spokesperson, I had to respond to a Bill in the House and I have just been made aware of the position. I thank the Chairman for his comprehensive summation of what has happened here today. I have a difficulty with the direction in which this appears to have gone for several reasons. Mr. O'Shea has been invited here today for a particular purpose. Information has become available to us and that is fine. It is appropriate that we should address the matter with Mr. O'Shea. However, to move towards some kind of summary conviction of Mr. O'Shea for whatever we accuse him of-----

Chairman

Sorry Deputy Dooley, we are not moving towards any summary conviction. I have outlined clearly the process with which we are proceeding. We have a document before us that we have discussed in detail. You were not here when the deliberations took place, nor were you here when the decision was made by the committee.

Deputy Timmy Dooley

With respect, I am still a member of the committee and if the Chairman would listen to me for one second-----

Chairman

Please Deputy Dooley, you may not make an allegation that there is some form of summary justice taking place here. There is not. This matter was discussed at length by all members of the committee who were present. We started at 11.30 a.m. and it is now almost 2.30 p.m. Those remarks should be withdrawn and should not be used in that fashion.

Deputy Timmy Dooley

I do not mean to offer any disrespect to the Chairman but I had a commitment in the House, I am a member of this committee and I am entitled to address what I see. I thank the Chairman for his clarification. Clearly, I was not here so I am not in a position to call into question some of the decisions the committee has made. Let us put this in context. There are seven lines of information in the e-mail sent by Mr. O'Shea to several individuals. I have no wish to refer to Mr. Cardiff in any derogatory fashion and I will not do so but there has been a great deal more written about Mr. Cardiff's performance in the course of the past 12 or 18 months in various other media outlets and reports and to suggest somehow at this committee that Mr. O'Shea's actions are the cause of what occurred yesterday is ludicrous and it does not show this committee in any great light.

Certain ex officio members of this committee - they are not here and I will not name them but the Chairman knows who they are - publically expressed their disquiet about the appointment of Mr. Cardiff. I believe there is an element of summary justice being handed out to Mr. O’Shea today. With respect, he is being hijacked here. What he did was wrong and he has been candid in his reflections on that-----

Chairman

Deputy Dooley-----

Deputy Timmy Dooley

If I could finish Chairman, please.

Chairman

No. You may not continue down that line. You are making allegations.

Deputy Timmy Dooley

I am not making allegations.

Chairman

Yes, you are. You said straightforwardly that he had been hijacked. He has not been hijacked.

Deputy Timmy Dooley

Did the Chairman give him notice before he came in that the committee would raise this information? Did the Chairman provide him with that document?

Chairman

I made it clear that this information came to my attention.

Deputy Timmy Dooley

Did the Chairman provide him with the document?

Chairman

Deputy Dooley, you were not here. If you had attended the meeting you would have known about it.

Deputy Timmy Dooley

I am asking a question and I call on the Chairman to answer me.

Chairman

Deputy Dooley has already made the allegation that this committee was hijacked. I made it clear. This happened at a time when there was a vote in the House. After the vote an e-mail was given to me or I received an e-mail to that effect and I read the e-mail to him but it had only appeared at that time. I knew nothing whether good, bad or indifferent about this matter prior to that.

Deputy Timmy Dooley

Did the Chairman provide it to him privately before raising the matter at the committee? I was not here so I am asking the question. I am asking two questions.

Chairman

I read the e-mail to him and he admitted that the e-mail had been written by him to Mr. Geier.

Deputy Timmy Dooley

It happened after a vote. Did the Chairman approach Mr. O'Shea and give him the benefit of notice that he would raise this matter?

Chairman

We discussed all of this already.

Deputy Timmy Dooley

The meeting is still in session and it is fair that I ask-----

Chairman

The meeting is still in session but please keep to the matters with which we are dealing.

Deputy Timmy Dooley

I will try to but I call for some forbearance on the basis that I was not here.

Chairman

Do not make unfounded allegations against the committee.

Deputy Timmy Dooley

I am not making allegations against the committee.

Chairman

Yes, you did.

Deputy Timmy Dooley

I am stating a fact. The Chairman produced a document in the course of the discussions of the committee which Mr. O'Shea had not been provided with and which is negative towards him and he has accepted as much. I am not a lawyer but my understanding of the principles of natural justice lead me to believe that, at least, the Chairman should offer someone the opportunity to have knowledge of a document that will be produced. It is fine if the Chairman does not do it and if that is the way the Chairman has decided to do it, I cannot change it, but that is what has happened.

Chairman

Proceed.

Deputy Timmy Dooley

There are some other matters. We are now suggesting that this has had such a profound impact on the membership of the committee although members of the European Parliament from the Chairman's party have expressed grave reservations about the appointment of Mr. Cardiff. I understand that, either yesterday or the day before, the Taoiseach contacted the head of the European People's Party, EPP, and made a strong case for the appointment of Mr. Cardiff. It is clear that Mr. O'Shea was unhappy that he would lose his job. If the gentleman who received the e-mail was unable to see that there was some disappointment in it and read it in that context then it is fair to believe it would have had less of a bearing on the outcome of yesterday's meeting than the public utterances of members of the European Parliament from the Chairman's party and the Fine Gael party. What if they cannot convince their colleagues, although I suspect that they did? The public utterances of members of the European Parliament from members of the respective Government parties made a strong case publically that Mr. Cardiff was unfit for the job. Why are they not brought before this committee to answer these charges or questions? If we are to have an investigation into what took place with regard to Mr. Cardiff then let us have all the actors and facts brought out. This is why I made the suggestion that Mr. O'Shea has been hijacked. I have always defended public servants in this House. I did so recently in regard to Mr. Cardiff and the Secretary General of the Department of the Taoiseach regarding his remuneration and retirement package, and will continue to do it for others.

On the Order of Business in the Dáil the Tánaiste set out a very strong defence of Mr. Cardiff. As far as I am concerned, Mr. O'Shea is no different and deserves the same respect. I will put the charge that he has not been given due respect or treated in a fair and equitable manner. It is up to him to challenge whether he believes he received adequate warning from the point of view of natural justice. We have set out a timetable for an investigation. We are now-----

Chairman

We are not going to begin an investigation. I will speak to the chairman of the budgetary control committee and ask him to organise a meeting for this committee to meet it to discuss the matters that came to light in the deliberations which took place when the Deputy was absent. It is not an investigation, rather it is bringing to the attention of the relevant people the matters that transpired here.

Deputy Timmy Dooley

If the Chairman is going to do that-----

Chairman

I do not want to spend too long on this. We have been here-----

Deputy Colm Keaveney

It is critically unfair to Mr. O'Shea that we would go back into a discussion that took place. With all due respect, I know Deputy Dooley has been incredibly busy today but it is not in the interests of fair procedure or natural justice that this form of discussion takes place in the absence of absolute clarification being provided on what procedure we agree to follow as a committee. It would be inappropriate to have a discussion in front of Mr. O'Shea to that effect and does a great disservice to him. He has co-operated very well and honestly with the committee.

The notion that politicians who may or may not be present have a view or comment in respect of the situation or other commentary regarding the appointment to the Court of Auditors from the media or other fora are not matters that are central to this issue. To be very clear, no allegation has been made privately or publicly in this forum. We have agreed to establish as much fact as possible in light of concerns that emerged in public fora.

Deputy Timmy Dooley

We are carrying out an investigation if we seek to establish facts. You are a trade unionist and know how this works.

Deputy Colm Keaveney

I am.

Chairman

Through the Chair.

Deputy Colm Keaveney

To be very clear, it is implied in every Civil Service or public service contract that interference, canvassing or decanvassing in the process of an appointment is a disciplinary issue. I am quite happy to have a conversation with Deputy Dooley in the absence of Mr. O'Shea, but it would be inappropriate in light of his commitment here today to be honest and transparent. We want to assist this committee to get to the bottom of a concern that has emerged today. I am quite happy to have this discussion but it would be inappropriate to have it in front of Mr O'Shea.

Deputy Timmy Dooley

With respect, I want to make one point and I will finish. The terms of reference-----

Chairman

Sorry-----

Deputy Timmy Dooley

On a point of order-----

Chairman

Deputy Durkan has asked to speak. I do not propose that this will go on, and that we will reopen the discussion and decision already made by the committee. I wish to proceed with this and finish in the next couple of minutes.

Deputy Timmy Dooley

If I could take up that point, with respect I am the only member of Fianna Fáil on this committee. Our party has a right to be represented here. Unfortunately, because of the ordering of business in the Dáil I could not be. The meeting has gone on for a significant period of time and another half an hour to clarify the matter and give everybody a fair opportunity to have an input would be appropriate.

Chairman

The debate is taking a certain angle which was not present in the previous debate, which Deputy Dooley has introduced. It is not fair-----

Deputy Timmy Dooley

I am in Opposition. The same would happen in the Dáil if there was no Opposition.

Chairman

-----that it continues.

Deputy Colm Keaveney

That would suggest there is degree of patronage in the apportioning of the role.

Deputy Bernard J. Durkan

We should bring the debate to a conclusion. The sequence of events were as set out by the Chairman. Yesterday the budgetary control committee of the Court of Auditors met in session to make a determination in respect of a nomination. As we now know there was no overwhelming majority in either direction.

It then came to light that a memo was circulated to members of the Court of Auditors which could in some way have influenced one or more - which is the precise detail in question - and in turn perverted due process and the natural course of justice. In those circumstances it is entirely within the remit of the Chairman of the committee and, if necessary, a delegation to seek a meeting with members of the Court of Auditors and those who may have been in receipt of a document or e-mail, and determine to what extent other members of the budgetary control committee were influenced in any way or an attempt was made to influence them.

As Deputy Dooley has said, the Government made an appointment and is entitled to do so. If it is wrong, so be it. If it should transpire, it is hugely important, in the course of natural justice in this instance, that it is determined whether undue influence was used on anybody to determine what the outcome of the examination by the budgetary control committee would be. I suggest the Chairman arrange the meeting as quickly as possible in order to be fair to Mr. O'Shea, Mr. Cardiff or anybody else who might be eligible for the post.

Whatever Government is in power, it appoints a person to fill a post. That is its job. People may not like the person or he or she may not come from the background they thought he or she should have come from, but it is the prerogative of Government to appoint people. We cannot have a rí rá in a situation like this where the Government will be second-guessed by somebody on whatever grounds.

It is in the interests of this committee and the good name of this country, at home and abroad, that due process is followed and is seen to be followed. I was the person on this committee who in the past brought its attention to communications circulating throughout the European Union which seemed to denigrate the position and good name of this country and sneer at it as an entity. It is hugely important that those issues are addressed as a matter of urgency. I am not suggesting that Mr. O'Shea was in anyway sneering but for whatever reason there may be people in the institutions concerned who may seek advantage from availing of an opportunity to do this. It could have serious consequences for this country and its independence and sovereignty.

Chairman

I propose to bring matters to a conclusion. I reiterate once again what the committee has decided. I will contact the chair of the budgetary control committee and we will bring to its attention the information that has been discussed and provided in this committee. I will also bring to the attention of the Government the matters that took place in the committee. That is not an investigation.

Does Mr O'Shea wish to make some final remarks on whether he is prepared to proceed with the suggestions I made in terms of writing to various bodies? Does he wish to communicate with the committee on the matter?

Mr. Eoin O’Shea

I thank the Chairman. I will co-operate as the committee has suggested. I have nothing further to add except to reiterate the fact that the communication was sent in haste at an inopportune moment for me. I apologise to Mr Cardiff for it. I do not believe it influenced the outcome, given the rest of the material in the public domain until yesterday. However, that does not excuse the mistake and inappropriate conduct I undertook in relation to that. I do not want to be seen as backsliding or excusing myself in any way. It was a wrong thing to do and I will co-operate as suggested.

Chairman

I thank Mr. O'Shea for his attendance, for his very frank and candid statements and his agreement to co-operate with the committee in whatever way he can.

The joint committee adjourned at 2.30 p.m. until 3.30 p.m. on Tuesday, 29 November 2011.