Funding Granted by Sport Ireland to the Football Association of Ireland and Related Matters: Discussion

I welcome from Sport Ireland Mr. John Treacy, chief executive officer, CEO; Mr. Kieran Mulvey, chairman; and Mr. Colm McGinty, director of strategic programmes. Tá fáilte roimh. Caithfidh mé é seo a léamh i gcónaí.

Before we commence and for the purpose of the witnesses attending, in accordance with procedure, I am required to read the following. By virtue of section 17(2)(l) of the Defamation Act 2009 witnesses are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official, either by name or in such a way as to make him or her identifiable.

I invite Mr. John Treacy, CEO of Sports Ireland, to make his opening presentation.

Mr. John Treacy

On behalf of Sport Ireland, I thank the members for giving us this opportunity to speak to the committee this afternoon. I will give an overview of Sport Ireland’s funding relationship with the Football Association of Ireland, FAI, including the control mechanisms and management arrangements relating to its grant funding.

At the outset it is important to state that Sport Ireland was established in 2015 under the Sport Ireland Act and is the statutory body with responsibility for the development of sport in Ireland. The functions of Sport Ireland are prescribed in section 8 of the Irish Sports Council Act and include powers to develop participation in sport and high performance sport; eliminate doping in sport; develop coaching; develop guidelines on the protection of children in sport; and the development of the national sports campus.

The Sport Ireland Act confers considerable authority in Sport Ireland and this is reinforced by our responsibility in investing substantial amounts of public funding into sport. As a statutory agency we seek to develop strong sporting organisations and recognise the considerable public interest in a successful Irish sports sector. That said, we must be mindful of the limits of Sport Ireland’s legal powers. Sport Ireland is not a regulatory body and, notwithstanding our focus on good governance and financial management in funded bodies, we respect the autonomy of the national governing bodies, NGBs, of sport.

Sport Ireland is responsible for the investment of public funds in sport and the subsequent oversight and accountability of this investment. All procedures and interactions with NGBs reflect this responsibility.

NGBs are independent autonomous organisations. In accordance with the key corporate governance principles, the board of any NGB is collectively responsible for leading and directing the organisation’s activities. Good governance recommends that the board cannot avoid its ultimate responsibility for actions undertaken in the name of the organisation.

Sport Ireland places a high premium on good governance and encourages high standards in governance from all funded bodies. As the development agency, it is our aim to provide leadership in this area, empowering sport organisations to take responsibility for their own governance and meet the challenges they face.

Sport Ireland assists all funded bodies to achieve excellence in all areas of their work and provides a number of interventions in the area of governance. This is broken down into a series of meaningful pieces of work, ensuring both growth and sustainability moving forward.

In 2018, representatives of the FAI attended a number of governance seminars and governance code workshops provided by Sport Ireland. The FAI was also one of the 50 sporting organisations to utilise the governance elearning services which assist organisations on the journey to compliance with the governance code.

As the body tasked with the development of sport in Ireland, Sport Ireland’s primary aim and responsibility is the security of, and return on investment for, the approximately €2.9 million in Exchequer funding invested in the FAI on an annual basis. To that end, Sport Ireland is satisfied that effective control mechanisms and frameworks are in place with regard to our investment in the FAI. Sport Ireland is satisfied that our funding invested in the FAI is fully accounted for and expended on the purpose for which it was intended. This is verified on an annual basis by our financial controller based on reviews of the FAI’s financial statements and signed auditor statements stating that all our grants were expended for the purposes for which they were intended.

As a further control mechanism, Sport Ireland also commissions additional external independent audits approximately every three years. These audits independently review the FAI’s compliance with Sport Ireland’s grant terms and conditions and its overall management arrangements as they relate to our grant funding.

I will now outline in more detail the full oversight procedures and control frameworks within Sport Ireland with regard to our grant funding to the FAI.

Sport Ireland invests in the long-term sustainability of NGBs. Since 1999, the Irish Sports Council, now Sport Ireland, primarily invests in the FAI through the youth field sport programme. This grant of €2.5 million is directed towards participation and technical development programmes. While funding is allocated to the FAI on an annual basis, Sport Ireland’s strategy clearly demonstrates a commitment that extends beyond the one-year period.

In 2018, for every €1 of Sport Ireland investment, the FAI invested €4 from its own resources.

These Sport Ireland funds are spent on grassroots, education, player development, and central and regional development staff. It is important to note that Sport Ireland’s youth field sport grant goes towards technical department staff costs only, that is, development officers, national co-ordinators and programme-specific administrators. It is explicitly stipulated that Sport Ireland’s funding does not include any other salaries, such as high-performance salaries or salaries for those working in the professional game. During 2017, this equated to the part-funding of 57 members of staff, of an annual average of 193 employed by the FAI. All other staff costs, including the role of chief executive, are funded by the normal business and other commercial operations of the FAI and are not financially supported by Sport Ireland. This is explicitly agreed with the FAI in writing and is subject to audit verification. The youth field sport investment is broadly aimed at encouraging and creating more opportunities for young people throughout Ireland to participate in soccer. Programmes are based on a shared ethos of developing the grassroots of the games, growing participation numbers, improving standards and embracing communities outside of the traditional base of the sport. Sport Ireland’s youth field sport investment supports detailed action plans which are implemented by a team of development officers and volunteers.

As well as a number of initiatives specifically aimed at bringing young people into sport, there are programmes that develop clubs and build links with communities. Also, with Sport Ireland’s support, the FAI builds on the expertise of teachers, coaches, referees and volunteers in order that it can provide a quality experience for children and young people who become involved in sport. There is a strong emphasis within FAI programmes on disadvantaged areas, social inclusion, people with ethnic minority backgrounds and opportunities for players with a disability. Sport Ireland also invests €142,000 in the FAI through the women in sport programme, which aims to raise overall physical activity levels among women and girls and support women’s roles within sporting organisations. In 2018, Sport Ireland also invested €195,000 in the women’s national team. The core objective of the fund is to raise standards and improve the standard of playing and training environments. A full breakdown of all funding allocated to the FAI since 2008 has been provided to the committee as part of Sport Ireland’s submission. The committee should note that in 2017, our investment in the FAI represented approximately 5% of its total annual income, with the other 95% coming from the FAI’s commercial activity, including sponsorship deals, broadcasting and gate receipts.

On control and management arrangements, specifically for the funding invested by Sport Ireland in the FAI, there are six layers of control in place. The first is that there is strategic alignment between Sport Ireland’s commitment to increasing sports participation and the development of sport in Ireland, and the FAI's aim to develop participation and volunteer-led local clubs, educate coaches and referees, and promote women's and girls' football. The aims are outlined in our respective strategies.

Second, Sport Ireland operates a detailed grant application process for the FAI. Once received, detailed grant applications are assessed by the senior management team, including me. The FAI’s application for funding is underpinned by an annual programme for action that must assist the achievement of Sport Ireland’s aims and objectives. The board of Sport Ireland is presented with a comprehensive paper outlining the funding recommendations and the board makes the final decisions on the allocation of funds to the FAI.

Third, Sport Ireland has in place detailed terms and conditions of grant approval, which are reviewed on an annual basis for effectiveness and relevance. These terms and conditions are signed by the FAI’s president and chief executive annually, and are returned to Sport Ireland and retained on file. Among other things, the terms and conditions include a requirement to notify Sport Ireland in writing without delay in the event of any material deterioration in the FAI’s financial position, or of any other matter which may jeopardise the organisation’s overall financial viability.

Fourth, Sport Ireland operates ongoing performance monitoring of the FAI programmes in which we invest throughout the year. There is regular and ongoing liaison between Sport Ireland and the FAI at various levels. Sport Ireland periodically meets the FAI to discuss performance, progress and any other issues that may arise. Sport Ireland staff also perform periodic verification visits to observe courses, seminars, grassroots programmes and other work undertaken within the scope of the funding. The FAI provides comprehensive information to Sport Ireland on its funded programmes, events and levels of participation throughout the year, which includes submitting an interim report and an end-of-year report which show the FAI's performance against targets.

Fifth, the FAI is required to submit its financial statements and a note from its annual general meeting to Sport Ireland in a timely fashion. The financial statements must include an auditor’s statement confirming that the Sport Ireland grant was expended for the purposes for which it was intended. Sport Ireland’s financial controller analyses the financial statements submitted by the FAI and highlights any concerns or questions that may arise. Any queries must be satisfactorily addressed prior to the release of the FAI’s final grant payment for the year.

Sixth, at the direction of Sport Ireland’s audit and risk committee, this entire system as it relates to the FAI is also audited by an independent external auditor every three years.

Turning to Sport Ireland's audits of the FAI, Sport Ireland has an audit and risk committee, which commissions audits of Sport Ireland’s grantee organisations. Over the past decade, the FAI has been audited by Sport Ireland’s independent auditors on more occasions than has any other sporting organisation. Independent audits of the FAI have been completed on Sport Ireland’s behalf in 2010, 2014 and 2016, with all findings reported to Sport Ireland’s audit and risk committee. The scope of the most recent audit, completed in 2016, included a review of compliance with the Sport Ireland grant terms and conditions. The scope of this audit also included consideration of overall FAI governance and management arrangements as they related to the grant funding of €2.7 million received from Sport Ireland. This included a high level review in the following areas: board or committee structure and oversight, with reporting and minutes maintained; risk management practices, including formal risk identification, monitoring and reporting; financial management, controls and procedures; whistleblowing policies; and, code of conduct policies and related procedures. The overall audit opinion concluded that reasonable assurance can be placed on the effectiveness and operation of internal controls. It should be noted that reasonable assurance was the highest level of classification available. No high-priority item was identified, while one medium-priority and two low-priority items were identified.

The 2014 audit did not identify any significant or important items and concluded that it was apparent that the FAI had put in place processes designed to comply with the terms and conditions as set out by Sport Ireland with regard to grant aided expenditure programmes. The 2010 audit concluded that the system in place provided substantial assurance over the establishment, management and monitoring of contractual arrangements by way of the funding process between Sport Ireland and the FAI. Three separate independent audit firms, therefore, have provided Sport Ireland with the highest level of assurance that all funding is fully accounted for and expended for the purposes for which it was intended, and that the terms and conditions of funding are being complied with. The committee should be aware that in November 2018, Sport Ireland’s audit and risk committee approved our 2019 audit plan, which includes a provision for an audit of the FAI, as per our normal procedures. The internal audit plan was presented to the board of Sport Ireland at its meeting in February 2019 and agreed to.

On the conditions of funding, a copy of Sport Ireland’s terms and conditions of grant approval was provided to the committee for reference. With specific reference to the FAI, in accordance with Sport Ireland’s terms and conditions of grant approval, all grant funding made available by Sport Ireland must be expended in accordance with the organisation’s funding submission as approved by Sport Ireland. The FAI must submit to Sport Ireland a copy of its financial statement to the end of the accounting year for the mid-year review process. All grants received from Sport Ireland must be separately identified as income in the organisation’s annual financial statements. The FAI, and all organisations in receipt of more than €200,000, must present its financial statements with accounts fully audited by a registered auditor in accordance with Irish generally accepted accounting principles, including a signed audit opinion specifying the auditor’s name and address, and a statement from the auditor that each grant was expended in accordance with the approved submission.

The committee should note that, as part of the mid-year financial review of the FAI’s 2017 financial statements and in advance of the final tranche of 2018 funding being released to the FAI, Sport Ireland’s financial controller raised a query with the FAI regarding its 2017 liquidity position, specifically the introduction of a bank overdraft facility of €1.3 million and the increased net debt position in 2017. The query was responded to by the FAI's director of finance, who stated:

The Net Current Liabilities position is a common annual position mainly driven by Deferred Income balances where advance funds from grants, sponsorship & commercial agreements are being released over the life of the respective agreement. The overdraft position at Dec 2017 was within our Overdraft Facility with our Banking partners and was a matter of timing rather than a liquidity concern – the balance has been in credit for the majority of 2018 to date. The Balance Sheet position was reviewed by the audit team as part of going concern procedures, including reviewing future budgets, and no concerns were raised.

The committee should also note that the €100,000 loan from the chief executive to the FAI was not disclosed as a separate note in the 2017 financial statements and this information was not made available to Sport Ireland at any stage.

With respect to the release of grant payments to the FAI, in line with Sport Ireland’s code of governance and business conduct, the chief executive has the authority to pay to funded bodies that operate on an ongoing basis up to 50% of their previous year's allocation in advance of the formal approval by the board. The board of Sport Ireland is informed of payment at the next opportunity. In recent years the FAI has written to Sport Ireland requesting an early drawdown of a portion of funding. Sport Ireland has always demonstrated a flexibility and willingness to facilitate the FAI, as we have with other national governing bodies, NGBs, with early drawdowns of portions of funding where possible and feasible to do so. In assessing an early drawdown request, the following are considered: procedures within Sport Ireland’s code of governance and business conduct; the cyclical nature of funding and Sport Ireland’s commitment to funding a programme beyond any one-year period; the NGBs' programme of action and programme delivery timelines; and, the risk appetite and achievement of Sport Ireland’s strategic objectives.

The committee should note there are a number of reasons a funded body may request early drawdown of a portion of funding, including but not limited to the scheduling of home fixtures; financial cycles for the funded body and Sport Ireland; the hosting of major events; the timing and delivery of the funded programme and costs already incurred; and, the schedule of the Sport Ireland grant process and board decisions. Sport Ireland pays the majority of NGBs 75% of their annual funds in January and February for the year in question. However, board decisions on the award of funding to the FAI under the youth field sports programme is typically reached later, during quarter 2 or quarter 3. Sport Ireland has brought forward the dates for board decision on the youth field sports programme to April, in 2018, and March, in 2019.

It is important to note that final payment to funded bodies in any given year, following formal approval by the board of Sport Ireland, is only released following the annual general meeting of the organisation, the provision of an interim report, the provision of financial statements for the preceding year, which must be reviewed and approved by Sport Ireland’s financial controller, and the funded body meeting other compliance obligations.

Regarding current ongoing matters in the FAI, following media reports concerning a loan of €100,000 to the organisation by its now former chief executive, and at the request of the Minister for Transport, Tourism and Sport, Deputy Shane Ross, Sport Ireland wrote to the president of the FAI on 19 March seeking urgent clarification from the board of the FAI on the circustanmces of the loan and its repayment. Sport Ireland also sought an explanation on why we were not notified at any stage in 2017 about any apparent deterioration in the FAI’s financial position, which is a requirement of the terms and conditions of grant approval. Sport Ireland received a response from the president of the FAI, which acknowledged the loan of €100,000 to the FAI by its then chief executive. However, the contents of the FAI letter did not sufficiently explain the circumstances of this loan and its repayment, nor fully address the matter of compliance with Sport Ireland’s terms and conditions of grant approval.

On Monday, 25 March, Sport Ireland again wrote to the president of the FAI re-seeking clarification on the circumstances of this loan. More detail was also requested by Sport Ireland in order to assess compliance with the terms and conditions of grant approval. Sport Ireland also sought reconfirmation that all State funding provided to the FAI had been spent for the purposes intended and in accordance with approved submissions. We also asked the FAI to fully apprise us of any other significant issues that had arisen or were likely to arise, including key risks and actions proposed and how it proposed to manage them. That was the letter. At the time of this submission, I stated a second letter had not been received but a second letter was received last evening in the office of Sport Ireland by email and was handed delivered to Sport Ireland today at 10.45 a.m.

I will read the letter into the record, if that is okay.

Absolutely.

Mr. John Treacy

It is dated 2 April 2019. It states:

Dear Mr. Treacy,

Thank you for your letter of 25 March 2019. I apologise for the delay in responding to your letter.

I note the concerns expressed by the Minister Ross with regards to media reports and your wish for clarification as to the circumstances of the short-term loan by the then chief executive to the association.

The association has engaged Mazars to carry out an independent review of all matters in this regard. When that review is complete I will write to you in more detail in relation to the circumstances involved, as requested. In the meantime the association will be happy to meet with you or your officials to review the association's financial records in relation to the use of State funding.

The terms and conditions of grant approval require us to satisfy certain conditions. I can confirm my understanding that the association has utilised all State funding in compliance with the terms and conditions of grant approval.

As you are aware from our statement of March 30 2019, the association has engaged with the Office of the Director of Corporate Enforcement and its dealings with their inquiries. The association has established a committee, which I am chairing, to work with our external advisers to urgently address the matter of concern.

Yours sincerely,

Donal Conway,

President of the FAI.

We will be writing to the FAI probably in the next day or so. We will be expressing our disappointment, particularly at the timing of the letter which was received yesterday evening and then hand delivered this morning. We will be raising the context of the letter, which falls far short of what was expected from both requests by Sport Ireland. The letter does not provide any explanation on the circumstances surrounding the loan and it repayment. The board of the FAI has not provided any legitimate reason it cannot provide the information requested. In the absence of information, we cannot make any adjudication on whether the terms and conditions of grant approval have been complied with. We still await an explanation of the circumstances surrounding the loan and its repayment. We will ask for the terms of reference of Mazars' review and an assurance that we will be consulted as part of it and that the full final report will be provided on a timely basis to Sport Ireland. We will ask for that. We have asked for a response by close of business on Monday next.

I will continue now with my opening statement.

Yes, please do.

Mr. John Treacy

Sport Ireland is also aware of media reports relating to rental payments made by the FAI on behalf of its former chief executive. Sport Ireland has no knowledge of any rental payments which may have been made. As with any NGB for sport, staffing and contractual arrangements are entirely a matter for the board of the FAI.

With respect to structural changes within the FAI, following the prior release of the FAI’s statement on the senior management structure and on 25 March, Sport Ireland received a letter from the new FAI interim chief executive, Rea Walshe, outlining structural changes within the organisation on the back of a review of its senior management structure.

The letter outlined that the board of the FAI had commissioned a review by independent consultant, Jonathan Hall & Associates, and had adopted its recommendations. It stated that the chief executive officer, Mr. John Delaney, had moved to a new position of executive vice president with immediate effect, giving an overview of this specific defined role. The letter also confirmed that Ms Walshe had been appointed as interim chief executive with immediate effect. Notwithstanding a media release from the FAI on Saturday, 23 March, the letter of 25 March was the first occasion on which Sport Ireland was formally notified of the review of the organisation's senior management structure and the creation of the new role of executive vice president. Sport Ireland was not consulted on the commissioning or preparation of the report. Sport Ireland has not received a copy of the report.

The code of practice for good governance of community, voluntary and charitable organisations in Ireland is a resource to assist community, voluntary and charitable organisations to develop their overall capacity in terms of how they run their organisations. It is a voluntary code provided free to all boards, committees and executives of not-for-profit groups to encourage them to check themselves against best practice in the management of their affairs. The Government's national sports policy, published in July 2018, tasks Sport Ireland with overseeing a process whereby all national governing bodies, NGBs, and local sports partnerships adopt the code by the end of 2021. As part of this process Sport Ireland will also identify and put in place the training and supports needed by the different organisations to assist with the adoption process. Notwithstanding the fact that NGBs, such as the FAI, are independent, autonomous organisations and are responsible for their own governance procedures, Sport Ireland provides a number of governance supports to all sporting organisations to assist in their adoption of the code.

In 2018, representatives of the FAI attended a number of governance seminars and governance code workshops provided by Sport Ireland. The FAI was one of the 50 sporting bodies to utilise the governance e-learning service which assists organisations on the journey to compliance with the governance code. According to the governance code website, the FAI is on the governance code adoption journey. Sport Ireland understands that the FAI has established a governance committee, the remit of which is to ensure the FAI is compliant with the code.

With regard to the term limits of boards, while Sport Ireland does not set term limits, it does support the adoption of the governance code among all funded bodies. While the governance code does not stipulate mandatory terms for board directors, the director term of office guidance note states that the most common practice is that directors are appointed for a three-year term and that it is considered good practice to put a limit of two or three terms on a director's service to ensure a cycle of board renewal.

Sport Ireland's primary aim and responsibility is the security of and return on investment for the circa €2.9 million in Exchequer funding invested by Sport Ireland in the FAI on annually. Sport Ireland is satisfied that there are effective control mechanisms and frameworks in place with regard to its investment in the FAI and that its grant funding is used for the purposes for which it was intended. This is verified annually by signed auditor statements and approximately every three years by Sport Ireland independent auditors. The control mechanisms and frameworks deployed by Sport Ireland with regard to its funding to the FAI can provide strong assurance to the committee. I have described Sport Ireland's functions as per its establishing legislation, the Sport Ireland Act 2015, and its philosophy towards working with funded bodies to develop sport. Sport Ireland is mindful of the limits of its legal powers. Sport Ireland is not a regulatory body and, notwithstanding its focus on good governance and financial management in funded bodies, we respect the autonomy of the NGBs and the collective responsibility of their boards. We aim to develop strong sporting organisations and identify and put in place the training and supports needed by the different organisations to assist with the adoption of better governance practices. As per the Minister's request, Sport Ireland will continue to correspond with the president of the FAI to seek clarification as outlined earlier.

I thank the committee for its time and I welcome any questions.

I thank Mr. Treacy for his comprehensive opening statement and his update on the latest correspondence received by Sport Ireland. It would be remiss of me not to acknowledge Mr. Treacy's commitment and lifelong dedication to sport and the recent Irish successes in the Special Olympics in Abu Dhabi. I also acknowledge the presence of the Special Olympics team in the Visitors Gallery, who were welcomed to the Houses earlier by Members of the Oireachtas. Sport is very important to them and to all of us.

It was agreed earlier that each member will have ten minutes for questions and answers. As Chairman, I recognise Deputy Catherine Murphy has raised this issue long before any of these controversies arose in December. We have had a number of communications with the FAI in respect of meeting date changes and so on. Deputy Murphy will take the first ten minute slot, followed by Deputy Rock, who has agreed to share his time with Senator O'Mahony. The sequence is as follows: Deputy Catherine Murphy, Deputy Rock, Deputy Troy, Deputy Munster, Senator O'Mahony, Deputy Coppinger, Deputy O'Keeffe, Senator Ó Céidigh and Senator Feighan. We will have a second round of questions and answers. I will be sticking strictly to time limits and I will indicate to members when they have one minute remaining.

Given the deeply disappointing and, frankly, insulting second letter that was received-----

I am sorry, Deputy-----

I have a question-----

I am chairing this meeting. We have already agreed a process.

My question is about correspondence received.

I propose to stick to that process.

The Chairman pre-empted my question.

I will adjourn the meeting if the Deputy continues. He was allocated ten minutes for questions and answers, but as he agreed to share his time with Senator O'Mahony, he will have only five minutes for questions and answers.

I have a procedural question to ask of the Chairman.

I am calling-----

This is extraordinary.

I am Chairman of this committee. If the Deputy does not like that, he can protest elsewhere. I am proceeding with the meeting. We spent an hour earlier getting this right. It is important that we are seen to act as a team.

Arising from that statement, I have a question for the Chairman.

Deputy Rock will have the opportunity to ask questions. I call Deputy Catherine Murphy.

This is extraordinary.

I welcome the witnesses. In light of the time constraints, I will try to be brief in my questions and I would appreciate it if the witnesses could give me succinct responses. Mr. Treacy used the word "disappointment" in regard to the letter from the FAI regarding its non-compliance with the Sport Ireland request. Sport Ireland operates specific terms and conditions in respect of grant approval, section 4.2 of which provides that Sport Ireland may request at any time, during or after a period to which grant funding relates, such information and documentation as it may reasonably require to be satisfied as to the viability and sustainability of an organisation's overall financial position. Section 1.1 deals with sanctions and section 10.2 reiterates those sanctions. As such, it is within the gift of Sport Ireland to not pay grants or to seek repayment of grants. If Sport Ireland does not receive a satisfactory response by next week, what action will it take?

Mr. John Treacy

We have already provided 50% of the funding for the FAI this year. We have asked for this information and we will ask for it again tomorrow. If we do not get a response, it will be discussed at the upcoming board meeting on Tuesday. It is a matter for the board to decide what action needs to be taken. If the FAI is found to be non-compliant with the terms and conditions of funding, it will require the board to consider what actions it can take.

I accept that this is a portion of the funding of the FAI, but it is the most played sport so it is an incredibly big and important organisation. With regard to the viability of the organisation, we were told the bridging loan was to bridge a short-term problem. Does Mr. Mulvey understand what that was? What was the first letter he received that gave him any indication of what that loan was for?

Mr. Kieran Mulvey

We have no idea why it required the loan. Incidentally, if the FAI had come to us we would have looked at it and if we could have assisted it we would have, as we have done in the past with other sporting organisations.

There was a story in today's newspapers about the prize money that came from UEFA through the organisation, which would be quite normal, in the same year. It took a long time for that amount to be paid. Do the witnesses have concerns about the organisation's ability in 2017 and its sustainability as a going concern given that this most unusual situation arose?

Mr. John Treacy

We would be well aware that cashflow is an issue for it. That would be well known within sport. We gave the FAI 50% of the funding this year; the second payment of 25% was given at the end of March. We have no idea why that loan was given to the FAI or why it needed a loan. That is why we are asking the question. We put an investment in the NGB within the FAI and it is sustained investment over a long period of time. Taxpayers' money is going into it and we have very good programmes in place. The viability of those programmes is critically important to us. We want to have strong organisations that do not have cashflow problems, but we also know it has debts with Aviva Stadium and it is meeting those debt requirements. We know that is not easy either.

I understand and appreciate the work that is done, in many cases by volunteers who make a big investment of time in this sport. If we could multiply it by ten, I would support as much spent on sport as possible. We are not at cross purposes on that. However, we are examining the sustainability of an important and big organisation, and there is a doubt about that. Will Sport Ireland do an audit in respect of that year given the things that have been unusual about it?

Mr. John Treacy

We are limited in our powers. Our investment in the FAI is 50% of its total turnover. We audit that funding and compliance with that funding. In the case of boxing, for example, we are investing perhaps 70% or 80% of the funding so we examine that 70% or 80%. We are examining the entire organisation in that case, but we are limited in our audit power within organisations where we are giving a relatively small level of funding-----

Mr. Treacy is saying Sport Ireland is limited in what it can do.

Mr. John Treacy

Yes.

Are there initiatives Sport Ireland can take that are over and above what it has done already in respect of that year?

Mr. Kieran Mulvey

Even before this broke we had already decided that the FAI would be audited as part of our auditing cycle this year. From our point of view, it is getting reassurance that the €2.7 million we give it is going to the programmes that are funded by us. Over the years we are happy overall that the money has gone towards those programmes, which are important ones. All its other commercial activities are not within our authority or remit. That is the problem and I do not know how we will resolve it.

I will not press this point because my time is limited. Mr. Treacy drew attention to the change in the role from CEO to executive vice president and said Sport Ireland has not been informed about that. Sport Ireland has a document about its investment criteria and one of the criteria it will insist on is that jobs are advertised. According to the statement, he has moved and it happened with the unanimous approval of the board. It is highly unusual. It is not in compliance with Sport Ireland's investment criteria. What can Sport Ireland do about that?

Mr. John Treacy

Again, it is not a position we are funding so we are limited in what we can do with regard to that position.

However, one expects a different standard when public money is going into an organisation. One cannot segment something off to a corner and say the rest of the organisation does not matter. Those investment criteria insist on a particular set of behaviours, and advertising jobs would be one of them. I am speaking about Sport Ireland's rules.

Mr. John Treacy

Yes, and if we are funding a position on a governing body one of the things we insist on is that the position is advertised. We only found out after the fact that it had a new chief executive and that the former chief executive had been moved to one side. We are coming to this not knowing the facts behind it. We have not seen the report, but normal procedure is that those positions would be advertised.

The Deputy has one minute remaining.

The witness appears to take a very soft approach with the FAI, to work with it, as it were. I am sure that is the case with other organisations. However, it does not appear to be reciprocated. Certainly this response gives us the impression that this is one-way traffic. There has to be some sanction that Sport Ireland will impose or else this behaviour will continue.

Mr. John Treacy

We were extremely disappointed with the letter. We have the right to ask about terms and conditions of funding and this letter provides no information for us. As I said, we will write to the FAI tomorrow and it will be a matter for the board to decide what the next steps will be, but it is generally very disappointing to receive a letter such as this on such an important issue.

Mazars is not a way of avoiding this.

Mr. John Treacy

No. It can do its own review regarding what happened and the circumstances, but we think we should be able to get an answer more quickly. It should not be too difficult to explain the circumstances of the loan, how it is paid back and the need for it.

Deputy Rock has agreed to share time with Senator O'Mahony. His five minutes start now.

I welcome the witnesses. My questions are brief and require a "yes" or "no" answer. First, did the FAI draw down funding early in 2019?

Mr. John Treacy

Yes.

Did it draw down funding early in 2018?

Mr. John Treacy

Yes.

Did it draw down funding early in 2017?

Mr. John Treacy

Yes.

Did it draw down funding early in 2016?

Mr. John Treacy

Yes, I believe so.

Does this not point to serious cashflow issues in the organisation?

Mr. John Treacy

Yes, it does.

Did it raise flags in Sport Ireland?

Mr. John Treacy

We are aware that it is carrying large debt and that cashflow is always an issue for it. Again, however, the sustainability of the organisation is still moving forward. Its debt has decreased in recent times, but it is a concern. We monitor these organisations on an ongoing basis. Obviously, we want to maintain the programmes and when much of the funding is going to people who work within the sport our concern is to maintain those programmes as best we can. We fund on a staggered basis, which protects the funding we give. It is only when we have all the compliance pieces ticked off that we follow through with the second 50% of the funding.

There are checks and balances and we monitor the situation all the time.

Did Sport Ireland seek to meet the FAI about cash flow being a serious issue?

Mr. John Treacy

The association seemed to be able to get by.

Did Sport Ireland seek to meet the FAI?

Mr. John Treacy

Yes, we regularly meet the FAI. Mr. McGinty is our liaison person and he regularly meets the association.

When was the last time Mr. McGinty met the association?

Mr. Colm McGinty

I met the FAI in December regarding our programmes, investment and how the programmes are delivering against the targets for the year.

Regarding the query about financial statements and early drawdowns, it is important to note that the accounts are signed off by the FAI's auditors on a going concern basis, which indicated that there are no short-term solvency issues. That is something that we paid very close attention to as part of the mid-year review process. Queries were raised in regard to the financial position and our chief executive has outlined those in his statement.

Is it correct that Sport Ireland did not the FAI this year?

Mr. Colm McGinty

Not in relation to its grant application process or youth field sports programmes.

Has Sport Ireland sought meetings with the FAI and been declined?

Mr. Colm McGinty

No. Normally Q1 would be a review of the grant application that is received at the end of January and presented to our board on 5 March. The normal course of action is to meet the FAI after the board decision and the confirmation of the funding, and the distribution and allocation of the funding during the year. The events over the past couple of weeks have overtaken the process this year. It is our intention in relation the youth field sports programme, as in the normal course, to meet the association to discuss progress, targets, etc.

My time is short so I need to keep things a little tighter, if the witnesses do not mind.

Mr. John Treacy

There are regular meetings with the FAI on an ongoing basis.

The Deputy has one minute left.

I wish I had more time and I will come back to the witnesses later.

The Deputy decided to share his time but he can come back in later.

My colleagues deserve time as well. Is it correct that, on 15 June 2017, Sport Ireland approved a grant for the FAI?

Mr. John Treacy

That is correct.

Is it correct that, on 16 June 2017, the FAI requested a drawdown of 25% of the grant?

Mr. John Treacy

That is correct, yes.

On 16 June 2017, John Delaney's loan was repaid by the FAI. Does that not strike Sport Ireland as peculiar, and as some kind of serious cash flow issue within the organisation?

Mr. John Treacy

That is exactly why we have asked those questions.

Was Sport Ireland aware of those dates?

Mr. John Treacy

Yes.

Mr. Kieran Mulvey

But we were not aware of the loan of €100,000.

No, indeed. That is a serious issue.

Mr. Kieran Mulvey

I think we all found out about that at the same time.

Has Sport Ireland asked if such further undisclosed loans took place?

Mr. John Treacy

We asked, in my latest letter, whether there is any other issue that the association needs to identify that has taken place or is likely to take place, and asked whether there is anything that we should know with regards to any risk to the association. We have asked that, in a previous letter, and that was not responded to by the FAI.

The response by the association was insulting to Mr. Treacy's organisation.

Mr. John Treacy

Yes.

Does the more recent disclosure undermine Sport Ireland satisfaction with the affairs and audits of previous years?

Mr. John Treacy

We can only stand by independent auditors that we send in ourselves. As I have said, we sent in three independent auditors from three separate companies, and they all came back. We are satisfied, in terms of the funding that we put in, with the compliance with our terms and conditions. We certainly believe that we get value for money. The auditors have come back every time and said the money that was given to the FAI was expended for the purposes for which it was given. We cannot go much further than that.

I have a question based on the letter Sport Ireland received this morning, and the email on it last night. It has been mentioned that the board will meet next week. What sanctions are available to Sport Ireland when it meets the association to response to not getting the information?

Mr. John Treacy

I would like to give the FAI one more opportunity to respond. We will write to the association, probably tomorrow, and give it until Monday to respond. We have a board meeting on Tuesday and then it is over to the board to decide what action needs to be taken.

I have a question for the chairman of the board. Can Sport Ireland decide next week to stall on all funding that it gives to the FAI? What other action can it take?

Mr. Kieran Mulvey

In accordance with good corporate governance, the CEO and myself will have to present to the board our assessment of whatever reply we do receive and I hope that the FAI is more forthcoming next Monday. We then have to take our fiduciary duties seriously. If we are not satisfied with the governance of the organisation then we have to engage in a robust, direct conversation with it because we have to get absolute reassurance that the moneys that we provide to the FAI are spent for the purpose intended. We have every reassurance at the moment on that.

I want to tie down what exactly can be done by Sport Ireland.

Mr. Kieran Mulvey

We would have to take that under advisement because there are two strands. First, we must not penalise the programmes by non-funding them. We had this with boxing previously. We separated the corporate issues from the funding issue in the sense that these are for development officers, programmes, summer programmes, social inclusion programmes and women in sport programmes. It is not our intention that those who participate in the programmes lose momentum or funding for those programmes. The board of the FAI has a corporate responsibility for this. If we do not get the answers and, indeed, if the committee does not get the answers following its meeting with the association, then we have to revisit this issue with the association. In the meantime, I do not want to get into a situation where those who need the money do not get it or there is any threat over it.

I am deducting from Mr. Mulvey's comments that Sport Ireland does not have many levers to get this information from the association but I will move on from that.

I refer to the timing of the letter that Sport Ireland received this morning, the review of governance at the FAI instituted in February and the fact that the association made an appointment and gave a new role to the CEO within 48 hours of the FAI receiving the review report. Can the delegation comment on the haste of the new appointment made by the FAI?

Mr. John Treacy

I am surprised we were not consulted as part of the process. We do not know when that exercise started, what process was used or how conclusions were reached. There can only be one chief executive in the organisation going forward. There can only be one person who reports to the board. In terms of responsibility, it is the chief executive. They are the types of questions that the press release raised with us. We also have questions about the appointment.

Is Sport Ireland happy with the level of scrutiny it has over all of the governing bodies? I have been a member of this committee for some time and I have seen how frustrated Sport Ireland was with the appointments made by the Irish Athletic Boxing Association, IABA. I witnessed the relationship with the Olympic Council of Ireland and how that blew up in everybody's face. Each time that happened the response was this will never happen again. There has been a plethora of issues in the FAI over the years so has it happened again?

Mr. John Treacy

We deal with more than 100 organisations. I always say to the board that at any given time we are dealing with corporate governance issues in three or four organisations. We deal with volunteers who get on boards and that is the space we are in. We do an awful lot of training in corporate governance with volunteers and executive staff.

Sometimes there is a very good board in place and there could be change, there might be an election and there is a new board which might not have the skills required and it is back to square one again. That happens quite often. It is constant and one must be on the case all the time. We do not like it when sport is in the public light as it is today. It is not good for it. We need to get on with our business. Last summer was one of the most exciting sporting eras of all time in terms of the organisations we fund. It is like sport, there are good days and bad days. To be here talking about governance within the FAI is not a good day for sport. We are deeply disappointed to be here talking about this issue with the committee because we should not be here talking about governance. We expect all of our organisations which are on a journey in applying the governance code to have the highest standards. That is what we expect from any organisation, including the FAI.

I welcome our visitors. Why did the Sport Ireland delegation not bring with it the chairperson of the audit and risk committee?

Mr. John Treacy

There was no particular reason. We would be quite happy for Ms Mary Dorgan to come and talk to the committee if it so wishes.

Given that we are talking about the auditing of grant aid, I would have thought she would be the best placed to present to the committee.

Mr. John Treacy

That is fine.

Mr. Treacy has said Sport Ireland places a high premium on governance and encourages high standards of governance. All of us around the table encourage people to vote for us everyday, but there is no guarantee that they will do so. Surely Sport Ireland must do much more than encourage? Surely there must be a requirement that there be high standards of governance, as the 2016 code of practice stipulates. Does Sport Ireland consistently apply the same standards across all of the governing bodies of sport? I am looking for a "Yes" or "No" answer.

Mr. John Treacy

Yes, we do.

Mr. John Treacy

May I answer the question?

Let Mr. Treacy answer the question.

As I received the answer I wanted, I will ask a supplementary question.

We should recognise that Mr. Treacy is here to help us.

Mr. John Treacy

It is not a case of one size fits all. We are dealing with different organisations. In bigger organisations the bar is a little higher. We are on a journey. Government policy is that all organisations adopt a community and voluntary code by 2021. It will then be a condition in receiving funding that that standard be maintained.

I am aware of that. However, let us look at the standards Sport Ireland imposed on the Irish Athletic Boxing Association, IABA, in 2017. At the beginning of June Mr. Treacy and the Minister of State, Deputy O'Donovan, warned the IABA that funding risked being suspended over a governance issue and a one-month deadline was set. The IABA receives €1.3 million annually from Sport Ireland. The FAI receives €2.7 million which is a smaller percentage of its overall pot but a substantial amount of Sport Ireland's funding. Mr. Treacy has said Sport Ireland applies a different standard to bigger organisations than smaller ones.

Mr. John Treacy

The bar is set higher for bigger organisations.

Bigger organisations have much greater capacity to have better standards of governance than smaller organisations.

Mr. John Treacy

I agree.

According to Mr. Treacy's opening statement, "In 2018 representatives of the FAI attended a number of governance seminars and governance code workshops provided by Sport Ireland". What board members attended those workshops?

Mr. John Treacy

I do not have the names, but I know that the President of the FAI attended them.

Mr. Treacy might supply the information. Ultimately, the board members are responsible. It was also said the FAI utilised governance e-learning. Can we have the history of how it utilised it?

Mr. John Treacy

Yes, absolutely.

On effective controls measures, it was indicated in the opening statement that "Sport Ireland is satisfied that our funding invested in the FAI is fully accounted for". How was this conclusion arrived at? Was it though internal or external audits?

Mr. John Treacy

I am sorry, but will the Deputy ask the question again?

It was indicated in the opening statement that "Sport Ireland is satisfied that our funding invested in the FAI is fully accounted for and expended on the purpose for which it was intended." How did Sport Ireland satisfy itself in that regard? Was it by way of internal or external audits?

Mr. John Treacy

There are two parts to it. Every year the auditors of the FAI send us a note indicating that funding was expended for the purposes it had been given. We verify it by auditing the three main field sports. In 2019 there will be an external audit by an independent auditor.

The last audit that was carried out in 2016. Is that correct?

Mr. John Treacy

Yes.

It was the only audit undertaken by Sport Ireland. The previous two were undertaken by its previous incarnation. How was the auditor selected? Was it put out to tender?

Mr. John Treacy

Yes.

How many firms tendered?

Mr. Colm McGinty

We will have to come back to the committee with that level of detail, as it happened some time ago, but it was done following a competitive procurement process.

How were the findings of the audit delivered? Were they delivered to the full board of Sport Ireland or the audit committee?

Mr. Colm McGinty

They were delivered in detail to the audit committee. The board was given a report in due course.

Was any special report produced on that audit?

Mr. John Treacy

I am not sure. They audited for us and came back with a report which we shared with the FAI. Obviously, it was given to the audit committee. It contained no major findings. At the end of the year a report is given to the board of Sport Ireland on all reports received.

The opening statement notes that the audit report "included a high level review in the following areas". It identifies five areas which I will not list. However, there was no reference whatsoever in that audit to corporate governance.

Mr. Colm McGinty

The scope of the audit extended to the grant funding of €2.7 million received from Sport Ireland. The high level review included a review of committee structures, oversight and controls which are the elements of governance. I contend that the audit was broader than simply following the money; it also looked at governance, oversight and controls in the management of that sum on behalf of Sport Ireland.

However, it did not look at corporate governance on a broader scale.

Mr. Colm McGinty

Not of the entire organisation.

Mr. John Treacy

There are limits to our powers.

Mr. Colm McGinty

The review was focused very much on the grant funding of €2.7 million.

Mr. John Treacy

I think we need to go back. When we are talking about corporate governance, the board of every organisation is responsible for its corporate governance. It has its duties and responsibilities. We need to bear that in mind. We can provide guidance, as we do, on an ongoing basis on corporate governance issues, but we are not responsible for and do not have powers under the Act in respect of corporate governance. Ours is not a regulatory agency.

Sport Ireland does have a responsibility to ensure adequate corporate governance. Does it have the power to suspend funding, albeit at varying levels, depending on the organisation involved?

Mr. John Treacy

Under the Act, we have the power to cease or suspend funding at any time.

At any time during Mr. Mulvey's time as chairman of Sport Ireland has any board member raised with him questions or expressed misgivings or concerns about issues in the FAI?

Mr. Kieran Mulvey

No, not during my term as chairman of Sport Ireland.

And during its previous iteration.

Mr. Kieran Mulvey

In the Irish Sports Council, no.

Is Mr. Mulvey sure?

Mr. Kieran Mulvey

Yes.

Mr. Kieran Mulvey

I know what the Deputy is referring to. Other issues were raised, but they were not related to the funding of the FAI.

I am only asking a question.

Mr. Kieran Mulvey

I think I might know the reason the Deputy is asking, but that is all I am saying.

We know that Mr. John Delaney, as CEO, was a full board member of the FAI until two days ago when he handed in his resignation.

Does Mr. Mulvey believe this is in breach of the 2016 code of practice which indicates that a CEO should be an ex officio member of the board rather than a full board member?

Mr. Kieran Mulvey

We should be clear that all of the bodies we fund have different histories, structures and arrangements between full-time and elected officials. That is also true of charities, trade unions and most other organisations. We do not lay down and have never been asked to lay down that a chief executive may not be a member of the board of an organisation. However, if it were to be laid down by Government policy as a condition of funding, we would impose it.

Mr. Mulvey does not consider it to be in breach of the code of practice of 2016.

Mr. Kieran Mulvey

The code of practice is a voluntary code, as are the charities code and the Dóchas code. We have until 2021 to implement it. According to the implementation timescale, 2019 is a year of learning; we expect the code to be implemented in 2020 and to achieve compliance in 2021. Everybody will then know what is required. Whether a CEO is a member of a board is a matter for the constitution of the organisation concerned. I do not believe it is good practice for a CEO to be a member of the board. Our CEO is not a member of the board.

I am aware of that. I am also aware that the CEO of Sport Ireland earns substantially less than the CEO of the FAI.

Mr. Kieran Mulvey

When I was chief executive of the Labour Relations Commission, I earned substantially less than the CEO of the FAI.

The Deputy's time is up, but I will allow him to finish his question.

I have one last question and appreciate the latitude afforded by the Chairman. Towards the end of the written submission of Sport Ireland there is a reference to term limits. It states "while Sport Ireland does not set term limits, it does support the adoption of the Governance Code". The most common practice is for directors to be appointed for a three-year term. How many members of the board of Sport Ireland fail to meet common best practice?

Mr. John Treacy

Our board is appointed by the Minister. My fellow delegates from Sport Ireland and I have nothing to do with appointments to the board. They are made by the Minister.

How many board members of Sport Ireland have sat on the board for longer than is considered to be good practice, namely, two to three three-year terms? In other words, has any board member of Sport Ireland served on the board for more than nine years, bearing in mind that the board is a reconstituted version of two previous boards?

Mr. John Treacy

It is a new board. Sport Ireland was established in 2015.

A majority of the members of the board came from the two bodies that were merged to form Sport Ireland.

Mr. Kieran Mulvey

There is a replacement schedule in the Act for directors.

The submission of Sport Ireland sets out the most common practice and supports the adoption of the governance code. Has any board member of Sport Ireland served on the board for more than nine years?

Mr. John Treacy

Not to my knowledge.

We must move to Deputy Munster.

Mr. Kieran Mulvey

Is the Deputy is referring to me?

Mr. Mulvey is a member of the board.

Mr. Kieran Mulvey

I am chairman of the board.

For how long has Mr. Mulvey been on the board?

Mr. Kieran Mulvey

I have been on the board of Sport Ireland since 2015. Before that, I was chairman of the Irish Sports Council.

Mr. Kieran Mulvey

Since 2008 or 2009.

Mr. Mulvey is the only member who has been on the board for longer than nine years.

Mr. Kieran Mulvey

Yes. There is a time limit on my appointment by the Government.

I wish to intervene. The record will show for how long Mr. Mulvey has been in place. It should not be and is not a personal matter for the committee.

Is Mr. Treacy concerned that the auditing process of Sport Ireland is lacking? Does he agree that its independent audits every three years are insufficient?

Mr. John Treacy

As I stated, there are two pieces to it. Every year the auditors of the FAI give us a letter confirming that moneys from the Exchequer were expended for the purposes for which they had been given. As I stated, we have used three auditors to audit the FAI, all of which have reported that the money we gave to the FAI was expended for the purposes for which it had been given. We are satisfied with the audits we have undertaken and their findings. We are also satisfied that the investment made by the Government in the FAI is good value for money and that we get a very good return. We have also verified that our terms and conditions of funding are met. We are asking the FAI about the terms and conditions and the circumstances surrounding the loan. We have acted when there is an issue and are acting now. We are satisfied about what happened previously. As I stated, we will be auditing the FAI in 2019.

I am asking on the basis that the matter has developed in the way it has. It appears that some organisations may believe an independent external audit will only be carried out by Sport Ireland every three years and that that fact might be part of the explanation for what happened. As matters stand, the FAI has breached the terms and conditions of its grant approval, unless it can prove otherwise to Mr. Treacy.

Mr. John Treacy

That is the question we are asking: what are the relevant circumstances?

Does Mr. Treacy believe Sport Ireland needs additional powers and functions to possibly carry out an independent audit on an annual basis? Does he think it would be more diligent to do that with all organisation in receipt of substantial State funding?

Mr. John Treacy

I will let Mr. Mulvey come in.

Mr. Kieran Mulvey

In the light of the sizeable amount of money granted to Sport Ireland every year by the Government on behalf of the taxpayer and the level of funding provided for sports organisations, we would have no difficulty with having annual audits. Audits are carried out only every two or three years owing to a lack of available resources. One of the issues is we want to expend as much of the resources on sport as possible. Some 85% or 87% of the funds we receive------

Has Sport Ireland formally requested additional resources to carry out annual audits?

Mr. Kieran Mulvey

Not specifically for that purpose. We have made annual submissions on administration and oversight but not auditing.

Not to have annual audits.

Mr. Kieran Mulvey

If the Oireachtas were to grant us that power, we would use it, but it is not provided for in the Act.

Has Sport Ireland formally requested additional resources to carry out annual audits?

Mr. Kieran Mulvey

Not specifically to carry out audits on the basis that we cycle audits.

I understand the importance of the question, but Mr. Mulvey is entitled to complete his answers-----

------after which the Deputy may come back in.

Mr. Kieran Mulvey

What we try to do in the context of funding is to get to as many sports organisations as we can on a cyclical basis every two or three years. Almost the entire funding of many sport organisations comes from Sport Ireland, including for the payment of officers of the organisation. In the case of the more popular field sports and others which have large commercial contracts - that is another issue - we only have authority and power in regard to the money that comes from us. We rely, perhaps foolishly, given past evidence in the areas of sport and elsewhere, on professional auditors from well known international companies to audit organisations and their audits------

Okay. I am satisfied by Mr. Mulvey's response.

Mr. Kieran Mulvey

The people we procure to carry out independent audits are from reputable companies.

My point was that------

I think Mr. Treacy wishes to contribute on this point.

Mr. John Treacy

A point I wish to verify is that the audit committee this year decided that we will carry out more audits of national governing bodies of sport in 2019.

That was a decision made previously. We also asked the Institute of Public Administration, IPA, to review our internal audit process. It came back to us this year with a satisfactory finding.

Mr. Colm McGinty

That was a piece of work we commissioned from the IPA last year to review the effectiveness of our internal audit function to make sure it was delivering for Sport Ireland. The IPA produced a report that went to our audit and risk committee. It is a very positive report. It made some recommendations, which are minor in nature, to strengthen and bolster the effectiveness of our internal audit function. As our chief executive said, this year we are expanding the number of audits we are doing.

Speaking primarily about the larger organisations in receipt of the most funding, will it allow for annual audit to be carried out? I ask for a "Yes" or "No" answer.

Mr. Colm McGinty

We are not in the position of having annual audits done on our behalf. We seek signed auditor opinions on an annual basis from each governing body, depending on the funding threshold.

Perhaps in light of what has happened, Sport Ireland could look at this more seriously.

Mr. Colm McGinty

As our chairman has mentioned, our primary goal is to invest as much as possible in sport. We could further increase the number of internal audits but it would take money from sport. Our internal audit programme-----

I am speaking about governance.

Mr. Colm McGinty

-----is reasonable.

It is about good governance and adhering to the terms and conditions of State grant approvals. It is from this aspect that I ask.

Other committee members have asked about sanctions. I was going to ask what specific sanction Sport Ireland will impose. It was stated earlier that it will be a matter for the board to decide and that those who need the money are the ones who risk being deprived of it. Nobody wants to see this happen but, at the same time, I got the distinct impression that if Sport Ireland is not satisfied and it goes to the board meeting next Tuesday, there will be no sanctions.

Mr. Kieran Mulvey

As chairman of the board, I feel that next Tuesday is too early for us. To a large degree, apart from seeking an appropriate, adequate and comprehensive reply to the correspondence we have had with the FAI, to be honest we would like to see the outcome of the committee's hearing next Wednesday, when the FAI and its officers and board will be before it. We will have to make an assessment on that basis. Tuesday's board meeting will take stock of the situation and we will receive a report from the executive on this. It may be a later board meeting. We will have to be reassured that everything is okay. We have to be reassured before providing any further tranche of funding, of which 25% is left, that when we expend it the issues that have now arisen are answered to the satisfaction of the committee, as representatives of the Oireachtas in this matter, and that the Minister, given that this is a policy matter under the Act, also has engagement on it with the board of Sport Ireland.

I take it that an issue of this nature has not arisen with the GAA or IRFU. Why do the witnesses think the FAI has this problem? The FAI has stated it was a bridging loan. Do the witnesses find it credible that an organisation such as the FAI would be in such a dire financial situation that it would have to resort to getting a loan of €100,000 from its CEO's personal bank account?

Mr. John Treacy

We find it extraordinary, to be quite honest. This is why we have asked the questions we have asked. We are waiting for an answer. As the committee can see from today, we did not get an answer. We have had experience of this down through the years. Generally, if an organisation is in financial trouble, it comes in and speaks to us. It might be a timing issue, such as dues or affiliation fees not being due until a month later. We work with the organisations to oversee and make sure they meet that cashflow issue. Many of them are very tight on funding. This is generally the way it is done. There is dialogue with us and we are there to help and support the organisations. The organisations have continued and prospered. Occasionally, they run into trouble but there is dialogue. There was no dialogue on this.

Given the recent decisions taken by the FAI board and given the facts that, as Mr. Treacy has touched on, it did not inform Sport Ireland that it was in financial difficulties, this was not accounted for in its accounts, the board changed the rules to allow long-serving members to remain in situ for a further four years despite many of them having exceeded the recommended term under the governance code and also created a job for John Delaney that allows him to attend board meetings without being a member, and given everything else that has come to light in recent weeks, does Sport Ireland have confidence in the FAI board?

Before the witnesses answer that excellent question, I want to let them know one minute remains before I move on to the next committee member.

Mr. John Treacy

When we ask questions of the FAI we would like, as we would expect from every organisation, it to answer them post haste as quickly as possible.

As it stands, does Sport Ireland have confidence in the FAI board?

Mr. John Treacy

As it stands right now, we have many questions.

Does Sport Ireland have confidence in the board?

Mr. John Treacy

Let us put it this way, where we are at the moment is that we have asked questions and we have not got answers, and this raises serious concerns in the executive and Sport Ireland.

We all know it raises serious concerns but my specific question is whether Sport Ireland has confidence in the FAI board? It is a "Yes" or "No" answer.

Mr. John Treacy

I am not saying "Yes".

I welcome the witnesses to the meeting. My first question relates to Sport Ireland's regulatory role. There is a slight contradiction in the opening statement, in which Sport Ireland is at pains to stress it is not a regulatory body yet the Sport Ireland Act confers considerable authority on it and, according to the opening statement, this is reinforced by responsibility for investing substantial amounts of public funding. Sport Ireland states it is there to empower sports organisations to take responsibility for their own performance and to have best practice. Do the witnesses agree this amounts to light touch or hands-off regulation?

Mr. John Treacy

We are there to help and support and we have a supportive role. Our relationship with governing bodies is a good one. We work with them and support them. This is the way the vast majority of organisations carry out their business. On an ongoing basis, there are frequent meetings with all of the organisations. We are in tune with what some of the issues are and what they deal with on an ongoing basis.

It is self-regulation.

Mr. John Treacy

As I said previously, the boards of all of the organisations are responsible for the corporate governance of those organisations.

If Sport Ireland does not regulate the FAI, who does?

Mr. John Treacy

We would need the powers to do so. We do not have the powers in our Act to do so.

Members of the public and the fans who pay the money that, generally speaking, funds most of the FAI's activities would be entitled to ask who protects the investment they make. It seems to be that Sport Ireland does not-----

Mr. John Treacy

We protect the-----

We have also been told it is completely voluntary for the FAI to come before the committee next week. Who regulates it?

Mr. John Treacy

We protect the investment we make in the FAI. I have outlined the verification of this countless times. That is the piece we do. The board of the FAI regulates and oversees the corporate governance of the FAI.

On that, Sport Ireland has power if an organisation does not tell it that it is in shortfall or has liquidity problems.

Mr. John Treacy

Yes.

At this stage, it seems the FAI has not informed Sport Ireland of shortfalls or about a very strange loan. It has not informed it about the changes it made to its board.

Why has Sport Ireland not used the leverage it has at any point in the last number of years?

Mr. John Treacy

We use our leverage very infrequently because we do not like to do that. As the Chairman said, doing so puts jobs in jeopardy and places much work and many programmes that have been built up over years at risk. These issues have only come to light in the last two or three weeks. We acted immediately in writing a letter to the FAI. The sequence of events is as outlined. We are acting on it as quickly as we can and we responded immediately.

Did Mr. Treacy ever think it strange that the CEO of a sporting body would earn more than the Taoiseach?

Mr. John Treacy

Yes, I did think it was strange.

Did he ever raise it with him?

Mr. John Treacy

That is a matter for the board of the FAI but certainly it is-----

In terms of sporting bodies, we are not talking about a particularly successful body, certainly in more recent years. We are talking about quite a mediocre national team performance when compared with other sports. Did Sport Ireland think it strange that the CEO was earning that amount of money?

Mr. John Treacy

Yes, we did.

Although Sport Ireland does not have control over the board of the FAI, it does have views on best practice. As has been alluded to previously, best practice holds that people would not serve more than two or possibly three three-year terms on a board. However, even after the recent reforms on the back of a review by independent consultants which Sport Ireland was not told about, the FAI directors have been in place for more than ten years and a number of them will be staying for at least another four years. Some of the directors will have served 14 years by the time they leave the organisation. Will Sport Ireland be saying anything to the FAI about that?

Mr. John Treacy

The community and voluntary code stipulates the terms. If the FAI was in keeping with the spirit of that code, it might have made other decisions.

Funding provided by Sport Ireland to the FAI amounts to approximately 5% of the organisation's budget. That allows for the funding of 57 staff.

Mr. Colm McGinty

The posts are part funded.

It is nearly 30%, in a sense. It is significant, even though the overall funding level is low. Sport Ireland has said that it satisfied that the FAI has spent that funding in the way it should. At the same time, Sport Ireland says that the FAI has been audited by Sport Ireland on more occasions than any other sporting organisation. Why was that the case? Did Sporting Ireland have concerns in the past?

Mr. John Treacy

It is just the cyclical nature of things. Approximately €2.3 million of our funding goes to paid staff positions within the FAI. We audit the three main field sports on a three-year basis. That has been the norm.

In terms of the level of funding that Sport Ireland gave to the FAI, it amounted to approximately €35 million in a decade. The sum provided in 2017 was just under €3 million. That was the same year in which the organisation had cash flow difficulties and got a loan from the CEO. While €3 million sounds like a lot, it is only 5% of the total budget. Why was it lower than it was in 2008, for example?

Mr. John Treacy

Our funding was reduced by between 25% and 27% in that time.

In terms of popularity in society, soccer would be higher than the GAA in Sport Ireland's monitor but the FAI gets less money than the GAA. Could the FAI argue that it has been hit with austerity?

Mr. Kieran Mulvey

In 2008, which was my first year as Chairman of what was then the Irish Sports Council, now Sport Ireland, I had to meet the three field sport organisations and cut their budget in one year by 30%. The funding has never been restored to 2008 levels. The FAI at that time was in receipt of approximately €4 million. Its funding is now at €2.565 million. In a sense, over the past ten years, the FAI has been in a steady state. The first year we had an increase in our budget was this year. Previously, there was designated funding for sport, for organisations like the GPA or the women's GPA, for example. Last year, funding was made available for the women's international soccer team, in the context of promoting women in sport. We gave it the biggest grant, for the reason just outlined by the Deputy. The second reason is that the sport is heavily involved in areas of urban and rural deprivation. It has a high level of inclusion and significant funding requirements for clubs that would not be in salubrious areas of our cities, towns and rural areas. We are conscious of that fact. Many of the programmes that are specified in the documentation we receive from the FAI are focused on that so-----

Can I just ask-----

Mr. Kieran Mulvey

The FAI would have a very strong argument that Sport Ireland is underfunding soccer in Ireland at that level and I would have to agree. Irrespective of the corporate issues that we are discussing today, the FAI makes extraordinarily good use of the money we give it. It also puts in a lot of matching funding, above and beyond that. It invests three or four times the amount of funding that we provide. I must say that in defence of the organisation.

The money that Sport Ireland gives to the FAI is for youth grassroots participation. Would Sport Ireland agree that it is totally unsatisfactory that it channels its focus into that when the dogs on the street can see that the CEO is extremely well paid? The CEO's expenses are unknown and we will ask about them next week. Sport Ireland is aware of all this. It is investing money but perhaps some money should be taken from some of these other areas. Does Sport Ireland have the right to say anything to the FAI?

Notwithstanding what Deputy Coppinger has said, the witnesses will have to disregard that question for now.

We can discuss it in private, should the Deputy wish to.

It should be registered that this shows how tame the Oireachtas is in terms of us having to watch what we are saying here.

In fairness to everyone here, we agreed the procedures before we began. We agreed a process and the process is that I must say when a question is not allowed for legal reasons.

Yes, but we should let people know that.

That is part of the process we agreed. If Deputy Coppinger wants to challenge it, that is fine but, as Chairman, I must say what I have just said and ask the witnesses not to answer that question at this point in time. We will move on to Deputy O'Keeffe now.

We agreed the process but I am just saying that the public should know how limited that process is.

Yes, but it is based on legal issues and court cases going as far as the Supreme Court regarding the remit of committees and due process in this House. I would love to hear the answer to the Deputy's questions too but we are not in a legal position to get the answer today. That is the advice I have been given. Deputy O'Keeffe is next.

I thank the members of Sport Ireland for their attendance today. When the FAI sought to draw down grant funding early, what reason did it give for seeking to do so?

Mr. Colm McGinty

The FAI's letter requested that Sport Ireland consider facilitating the early drawdown request. There would have been previous discussions around the grant process, the financial cycles, the likely time for board decisions and so on. We would have obtained information on the programme delivery timelines and it is fair to say that our preference would be to wait. However, as our chief executive has outlined, we work with organisations and want to maintain the stability of their programmes. We want to make sure that we get good outcomes from a participation and development point of view. If we can be flexible, we will be and it is entirely within our procedures to pay grants early. Certainly we were given suitable assurances that there were no impending financial issues or anything of that nature.

Obviously, they carry a big debt and they have to pay down the Aviva Stadium loan. The dogs in the street said they had cash flow problems. If that is the case, did Sport Ireland, given its remit, ask if they had cash flow problems when it was being asked for the early drawdown of the funding?

Mr. John Treacy

I did not catch what the Deputy said.

It has been said that the dogs in the street knew there were cash flow problems. Sport Ireland had conversations with them. Was it aware there were cash flow problems?

Mr. John Treacy

It would be discussed that they need money now because they have no match coming up, or things like that, as I explained in my opening statement. Generally, the three main field sports funding comes later in the year. While all the other NGBs have got their funding in January or February, the decisions for the three main field sports are not made until April, May or June, and that is why we have a degree of flexibility with them to give them an early 25% drawdown.

Mr. Treacy mentioned in regard to the last audit in 2018 that for every €1 the State, through Sport Ireland, gives to the FAI, the FAI contributes approximately €4. How does that compare with the other organisations in the country? Is that a good commitment from the FAI?

Mr. John Treacy

It is good commitment from the FAI. With the other smaller NGBs, the percentage investment would be a lot smaller. It is definitely on a par with the GAA and IRFU.

On the last audit, in regard to reasonable assurance Mr. Treacy mentioned he had one medium priority and two low priority items. Given one of the reasons we are here is the €100,000 loan that was given, is that a high, low or medium priority item? How would Mr. Treacy rate it?

Mr. John Treacy

On this loan situation, we have asked questions on that loan, given the circumstances. This is obviously a very high priority question for us and for the FAI, and we await their response.

Given the current format of governance and audit procedures, and given what has come out, if I walked out onto Kildare Street, walked across the street and got knocked down, I would be wrong because I did not look left or right, but it is not illegal to walk across the street. This €100,000 looks incorrect but is what happened illegal?

Mr. John Treacy

We have asked the circumstances in regard to the loan because we did not know anything about it. If there was a material deterioration in their finances, we needed to know about it, and if we were not told about it and there was a material deterioration, it is a breach of our terms and conditions of funding.

Obviously, the audits go through three-year cycles and 2019 is the FAI's turn. When is Sport Ireland proposing to go in and do the audit in 2019? Has it a date set?

Mr. John Treacy

We have no date set yet but I imagine it will probably be in the next couple of months.

I propose that after the next set of questions, we will break for 20 minutes, and we will then come back and members will have a second round of questions. I call Senator Feighan.

I welcome the witnesses. Many of the questions I wanted to ask have been answered. I will come at this from a different point of view and broaden the discussion. I was involved in association football 30 years ago and it certainly was not well organised at a national level. I was one of those who was delighted when the Genesis report was brought in to radically overhaul the FAI governance structures. I recall that the then Minister, John O'Donoghue, was quite right to withdraw funding until the FAI implemented many of the key recommendations. Is Sport Ireland satisfied that the Genesis report has been implemented in full over the past 18 years?

Mr. John Treacy

The Genesis report called for independent board members and that is something we in Sport Ireland strongly advocated for. Any time I have the experience of meeting boards and seeing independent people on boards, they are bringing expertise and it adds real value to boards. It is something we strongly advocate for. We like to see that implemented throughout the entire sports sector because it adds value and it means we have strong boards and good skills, whether legal, financial or otherwise, and they bring skills that these sporting organisations do not have. That was a strong recommendation in the Genesis report and we continue to strongly advocate for that.

Mr. Treacy said that over the past decade the FAI has been audited by Sport Ireland's independent auditors on more occasions than any other sporting organisation. Is there a reason for that?

Mr. John Treacy

There was no particular reason; it just has been just because of the circumstances.

Sport Ireland is involved with different organisations, such as Sport New Zealand and Sport Scotland. When these problems happen, does Mr. Treacy lift the telephone to one of his counterparts to say there is a problem and ask it should be approached?

Mr. John Treacy

I read a lot of international magazines and so on. InsideSport is an international website which deals with these types of corporate governance issues and covers them extensively, and that is something I follow. What I would say, and I mean this in all sincerity, is that in the past five years, the corporate governance of our sports sector has moved on considerably. What I have found and seen is that the corporate governance in the sports sector in Ireland is far superior to the corporate governance of sports sectors in other countries. Corporate governance in some of our national federations is far superior to the international corporate governance in international bodies. While we are talking about a corporate governance issue here today and rightly highlighting it, we take it extremely seriously, which is a good thing.

We have always looked at FIFA and UEFA and corporate governance was not at the top of their agenda over the years. Is the FAI a symptom of that? Is it a kind of like a Goodfellas club around the world and is it the same with every organisation? Are there the same issues with world rugby? Perhaps Mr. Treacy could comment on UEFA and FIFA. Obviously, the new and emerging states in Europe and the Caucasus do not have the same structures. Is the FAI part of that gang?

Mr. John Treacy

Some international sports have good corporate governance, and rugby is certainly one of them.

Some of these international bodies are also advocating for good corporate governance and have laid down structures for their national federations. It is well known that FIFA is not a leading light in this area. That is safe to say.

Mr. Kieran Mulvey

Or boxing.

Mr. John Treacy

Or the international boxing organisation either. I was at an international workshop at which an ethics committee for a particular organisation was being discussed. It was as if someone had raised something terrible in suggesting the putting in place of an ethics committee. There is a long way to go in corporate governance terms for some of these international sporting organisations.

I thank Mr. Treacy. It is shocking that 17 or 18 years after the publication of the Genesis report, independent board members have not been appointed. There is a story behind that which we should investigate.

I want to get a couple of questions in.

Will we get an opportunity to speak when we come back?

Of course. We will come back a third time. There is no barrier to anybody. When I called Senator Feighan, I gave him ten minutes. I was not aware that Senator O'Mahony wanted to come in during those ten minutes.

There was an arrangement.

It was not mentioned to me. Senator O'Mahony will be first to come in if he wishes after the break. I am trying to ensure everyone gets a fair hearing. Some very constructive ideas have emerged here. Senator Feighan's commentary and Mr. Treacy's answers suggest the way forward. Whatever happens with this, we need a master plan for change in sport.

Sorry. For just five minutes, can-----

I am speaking now. If Senator O'Mahony wants to have a row, we can have one. I do not want a row; I want this to go well. I want to make a few summarising points before we come back in. My point is that Sport Ireland does not have the power to insist on a plan for proper corporate governance for all of these bodies. According to the terms and conditions for grant approval as set out on its application form, Sport Ireland must be satisfied that appropriate arrangements are in place for the overall governance and management of an organisation before it can approve funding. However, Sport Ireland does not have the power to address the issue. It can audit the funding it provides, but it cannot look at the other issues from the perspective of its legislative role. The issue is how we ensure Sport Ireland or another body has that power.

In regard to that question, I was interested in what Senator Feighan said about best practice in other countries. I do not know if it is true, but I have been told that in other countries where an application for a grant is made to the national equivalent of Sport Ireland, those other issues are vetted by the charities regulator. That regulator has statutory powers to examine the matter and refuse certification if certain conditions are not being met. Sport Ireland might have a view on that at our next meeting. People want certainty that these issues can never arise again or, if they do arise, that a statutory agency is able to sort them out immediately. That is the core issue. I do not know if the witnesses have a view on it. If the law needs to change, we should change it. We will suspend while we think about that. The key is to provide an answer to whatever weaknesses exist in the law or in respect of Sport Ireland's powers or those of the committee.

Sitting suspended at 5.25 p.m. and resumed at 5.49 p.m.

We are in public session. If anybody is concerned about judgments I made earlier, or if I upset anybody, that was not my intention. We have had a very constructive meeting thus far. We will shortly commence our second round of questioning, sticking to the same rotation in terms of speakers. Before calling the first speaker, I would like to make a point to Sport Ireland, which may be helpful to the meeting. The Sport Ireland Act 2015, page 11, sets out the criteria, terms and conditions of assistance.

Section 11 of the Sport Ireland 2015, which deals with criteria, terms and conditions of assistance, states:

(1) Sport Ireland—

(a) shall establish such criteria, terms and conditions for the provision of assistance (including financial assistance) under section 8(4)(a) as, having regard to its functions, it considers appropriate, and

(b) may establish different criteria, terms and conditions in relation to different classes of applicants and recipients.

(2) Where, in Sport Ireland’s opinion, any person or body that has applied for or received assistance under section 8(4)(a) fails to meet any of the applicable criteria, terms or conditions established under subsection (1), Sport Ireland may do one or more of the following:

(a) withhold assistance from, or refuse to provide assistance to, that person or body;

(b) demand a refund of any financial assistance provided under that paragraph to that person or body.

(3) Sport Ireland may—

(a) request any person or body applying for or receiving assistance under section 8(4) (a) to supply Sport Ireland with information in such form and at such time as it may require, and

(b) withhold or refuse such assistance if satisfied that any information so requested is not forthcoming.

It strengthens the statutory power of Sport Ireland apart from its own terms and conditions with respect to approval. There is a stronger base in law for the actions being taken.

I refer to the document sent to the committee by the delegation last week in respect of governance issues, strategies and challenges. It states that members of the FAI ratified the introduction of an eight-year term limit for board members, which is at variance with the three-year terms. The submission indicates that as part of rule changes and to avoid immediate loss of experience and expertise from the board, it was agreed that any board member who was the chairperson of a standing committee or the national league executive committee, and who had served more than ten years on the board, may be re-elected for up to four years. That is what has been agreed with the FAI.

To what document is the Deputy referring?

I presumed we got it from Sport Ireland last week.

I believe the Deputy is referring to a Department briefing.

That is what it is.

Mr. John Treacy

It was agreed with the Minister, not us.

That is what was agreed. The Genesis report was referred to earlier and there was mention of the need for independence on the board, with which I agree. It is interesting that at the time of the Genesis report publication, the then FAI treasurer, Mr. John Delaney, said he was quite furious that it would take five years to implement some of the recommendations. He made a strong commitment at the time and wanted that change to happen quickly.

We can then look at the people on the board and every one of them chairs a standing committee. There was an extra four years on top of the ten years, and, in some cases, the period is way beyond ten years. Some people are on the board since 2004 and 2005. That is a significant issue. I have no doubt they bring an expertise and I do not dispute that. Turnover and independence on the board are important nonetheless. Does the witness have a concern that one of the ingredients in that kind of arrangement is loyalty? There may be groupthink in that kind of environment. We were told the loss of expertise was a concern but it is interesting that it is not just at board level that one gets expertise, as it is evident in staffing as well. The turnover of staffing at the FAI is quite high. Six of ten senior staff have left and four finance directors have left in the past eight or nine years. Two commercial directors have left and there have been four different heads of communications. Others who have left include a lawyer and deputy chief executive. That is the profile of what is happening in an organisation. Does the witness see that as an organisation that is functioning well with such a profile?

Mr. John Treacy

I had not seen the board or governance element raised by the Deputy. I agree that there must be expertise and rotation in a board. There are some critical pieces needed on every board, whether it is legal, accounting, human resources or whatever. The spirit of the community and voluntary code is about board rotation. People serve the time and move on after a period so someone else can come in and take that place. That is the proper way for a board to function. It paves the way for new members to come in with bright and new ideas to keep the place regenerated with ideas, etc. It is good corporate governance. People can stay on boards for far too long and the Deputy used the word "loyalty". There is a clear role for the board, which is to challenge the executive and the management, making them accountable for the actions to be taken. The boards approves and the management executes, which is the way it should be in every organisation. If there are people on a board for too long, it can lead to a fudging of that process with respect to the balance of power. Every board needs to challenge and set a high standard. That is good corporate governance.

Mr. Treacy has said it is the board's responsibility with respect to corporate governance. He said earlier that today is not a good day and it is never a good day when sport is on the front pages of newspapers for something other than winning something big. That has been the profile over the past number of weeks.

Mr. Treacy said earlier there is one CEO. This split position was unanimously adopted by that board over a short period, when it had recent sight of the report done by Jonathan Hall Associates. Has Mr. Treacy seen the report?

Mr. John Treacy

No.

Has he asked for it?

Mr. John Treacy

Yes.

We are probably going to come back to it when we have sight of the report. That was approved seamlessly. The FAI has a president and vice president. The vice president is elected by the council but this executive vice president role happened as a consequence of this report. It was approved unanimously by the board at a time there was a difficulty for the chief executive officer. Does it strike Mr. Treacy that there is a connection between those elements and loyalty may well have played a part?

Mr. John Treacy

We do not know the circumstances behind the report and we were not informed about it. We were informed about what was happening when it was announced and we read it in the press release. As I said earlier, there can only be one CEO of an organisation.

I want to press Mr. Treacy on that point.

Mr. John Treacy

If the FAI is to recruit a new CEO, the expertise in the role will depend on the job description. The job description for a CEO means he or she would have responsibility for all paid staff within the FAI. It is the only way that will work.

I am trying to get my head around how it would work if there is an executive vice president sitting on the board when the board has unanimously put that person in that position. Where does the balance of power fall in respect of the CEO if a new person is to stamp some authority on the organisation?

Would that be an issue in terms of governance?

Mr. Kieran Mulvey

Yes, I would feel that. It is hard to find an example where one would have a joint CEO. My experience in the past is that where trade unions amalgamated one would have for a period a joint general secretary or general president until the integration of the organisation. In some business organisations, one would have an executive chairman and a chief executive officer etc. but largely, in business management theory and practice, there is one CEO, chief executive officer, who has a reporting function to the board and, as Mr. Treacy indicated, has responsibility for the operation of the organisation. It is hard to see it.

Our information is - it is as much information as the committee or the public has because we have not seen the Jonathan Hall report - that this post was identified in that report. We are reading this at third hand, we have asked for the report, we need to obtain it and we have not obtained it to date. If that report stated there needed to be a separation out of the functions, the chief executive had too great a workload, Mr. Delaney had been elected to the UEFA executive and then seemed to have been undertaken in this role, it appears, from what we read, he would be using his position within UEFA and within the FAI to attract to the country international competitions. In common with Northern Ireland and with the football associations, FAs, of England, Scotland and Wales, he would be using his position within UEFA and with what used to be called the home countries to attract international competition. We do not know. I can only surmise he does not have a role in the national game or the national organisation beyond that. However, I am at sea, the same as the committee.

Would Mr. Mulvey need to see the work specification-----

Mr. Kieran Mulvey

Yes, certainly.

-----or does Mr. Mulvey have an involvement in advance of the recruitment for the next CEO?

Mr. Kieran Mulvey

We do not have legal authority to achieve it. Good practice and good governance would suggest that Sport Ireland would be informed of two matters: the specification, and whether we had any commentary to make on it given our experience and expertise in the area; and whether we had any role on the interview board or any other arrangement. Sometimes we have had that role. Sometimes there is a conundrum as to whether it is a good idea to be on a selection board. Certainly, our view here would be the appointment should conform to what obtains in public appointments systems or proper board companies. That would follow the code of practice for the appointment of chief executive. Largely, that is a British code on corporate governance. There are ways of doing this right and it should be done right.

We have 11 minutes on this section. Mr. Treacy wishes to say something. Then I will call Deputy Rock.

Mr. John Treacy

I want to make two quick points on the point because it is important. We have come across this on a number of occasions where one has a high-performance director wanting to bypass the chief executive and report directly to the board. Essentially, the boards of those national governing bodies, NGB, would come to us and look for advice. There is a clear message here - there is only one chief executive.

Second, we have many NGBs that are hiring chief executives on an ongoing basis and it is normal practice that Sport Ireland nominates someone to that process. We have an organisation development unit that gives advice in terms of job descriptions and guidance in terms of the recruitment process. That is all there for organisations that want to avail of those services. We have people with vast experience, not from the board or from the executive, who we nominate to sit on interview boards.

I want to go back to the question I was asking earlier on with regard to meetings with the FAI. When did Mr. Treacy last meet the former CEO of the FAI?

Mr. John Treacy

I met the former chief executive in December 2017.

When did Mr. Treacy last request a meeting?

Mr. John Treacy

That was the last time. It was 2018, I apologise.

Was it the meeting Mr. McGinty referenced earlier, in December? No, it was different, just also in December.

Mr. Colm McGinty

I would have met my counterpart on the youth field sports programme and related matters solely.

With regard to the opening statement that Mr. Treacy made, he wrote to the FAI on 19 March, some days after the report appeared in The Sunday Times. Why such a delay in correspondence and why did it have to come at the Minister's urging?

Mr. John Treacy

It was a bank holiday weekend. The story broke on the Sunday and the letter issued on the Tuesday. To be quite honest, we worked on it during the bank holiday weekend. There was a great deal of urgency in terms of Sport Ireland reacting to that.

Mr. Kieran Mulvey

Mr. Treacy called me about it because I had not seen it. I said we needed to talk to the Minister before we acted on it. My view was we needed to apprise the Minister of the situation, if he had not been aware of it.

Second, my view was we needed to act in consort with the Minister. I have good reasons for that. Where we acted unilaterally previously, some Ministers took exception to it. I merely wanted to ensure we were all on the same hymn sheet.

In the opening statement, Mr. Treacy also states that the FAI is audited more than any other operation.

Mr. John Treacy

They have been.

Mr. John Treacy

It is just the circumstances. As I stated previously, they have been audited. It goes around in threes for the three main field sports and they come around more often.

Why did the audit of 2016 have a broader scope? Was there an operational reason for that?

Mr. John Treacy

We wanted to push the parameters out a little further in terms of our funding and we did that on that particular occasion.

Will that be a regular occurrence going forward?

Mr. John Treacy

Yes. Clearly, we have set parameters. We wanted the widest scope possible that we could look at in terms of our funding. We have done that and we will continue to do that.

I am conscious I am sharing my time with my colleague, Senator O'Mahony. Where am I on time here?

There are two minutes left.

I presume it is two minutes of my own time and then I can pass over to Senator O'Mahony.

Mr. Kieran Mulvey

The 2015 Act gave us wider parameters - the Chairman alluded to them earlier - than the original Irish Sports Council Act 1999.

Accordingly, the broader audit reflects that.

Mr. Kieran Mulvey

Yes, on the wider.

That makes sense.

In terms of the creation of the new role and corporate governance, this might have been asked already but I want to ask it in a straight way. Does the creation of this new role for Mr. Delaney reflect best corporate governance practice?

Mr. John Treacy

I have not seen any of the detail of this new role. I have not seen the job description. I have not seen the process in terms of how they came up with it.

He has three jobs.

Mr. John Treacy

I heard that this morning. I have not seen any detail on this at all and it is difficult for me to comment.

Naturally. I thank Mr. Treacy.

There are six minutes left.

I have a few quick questions. The three Sport Ireland representatives emphasised the importance of independence on the board, fresh thinking etc. Does present legislation allow for Sport Ireland to have a place on the board of any governing bodies? Is that precluded?

Mr. John Treacy

It would not be an area that we would go to. If the governing bodies have independent people on the board, that is fine. That is enough.

I am not asking would Sport Ireland want to. I am asking would it be allowed under the present legislation.

Mr. Kieran Mulvey

Not under the 2015 Act. We are quite restricted there in regards to what our role would be.

Second, Mr. Treacy states in his statement that staffing and contractual arrangements are entirely a matter for the board of the FAI. On the other hand, he states that Sport Ireland part-funded 57 posts within the FAI.

Does that mean that Sport Ireland has no governance over that funding, even though it provides the funding, or that it has no say in the salaries of those people who are employed as a result of its part-funding of the posts?

Mr. John Treacy

The posts are very much at ground level and relate to implementing programmes, as I understand it. We do not get into that type of detail with the FAI.

In the context of what has arisen in recent weeks, where the unions became involved with some of the staff at the lower levels whose salaries had been cut, was Sport Ireland's funding for that programme cut during those years?

Mr. John Treacy

Funding was cut after 2008-----

I refer to the particular programme of part-funding salaries of coaches and so on.

Mr. John Treacy

Some of the coaching and technical staff were let go at that time.

The cut was not just a matter of the FAI making the cuts. The funding that Sport Ireland provided was also cut.

Mr. John Treacy

Yes.

Is Sport Ireland supplied with information on the overall level of salaries, such as the number earning more than €30,000 or €40,000 or under €100,000?

Mr. John Treacy

No.

On the protocol for the relationship that Sport Ireland has with any of the governing bodies, including the FAI, is a representative from Sport Ireland invited to all the international matches? For instance, when the UEFA European Championship took place two years ago, did any representatives from Sport Ireland attend the tournament, and if so, was it paid for by the FAI or Sport Ireland? I ask because there was speculation in the past week about members of this committee being invited to an FAI function. I wish to put on the record that I did not accept the invitation to attend the draw for whatever under-17 FIFA event is taking place next week, and that I did not seek or receive any tickets at any stage. What is the protocol for such events? When the Olympics are held, for example, I can understand that a representative from Sport Ireland would attend and I do not mean to point a finger. My question is whether such an arrangement could cause any subsequent difficulty with governance.

Mr. John Treacy

The general procedure is that we attend home matches with an FAI complimentary ticket. That is the standard procedure, as it is for all sports. If the Irish football team was playing away in a European Championship qualifier, we would certainly not attend. If it qualified for a European Championship, Mr. Mulvey and I would usually attend. Sport Ireland would pay for the trip, although the FAI would provide a complimentary ticket. We would pay for our own hotel and so on. That is the extent of the arrangement.

Would it be the same in the case of rugby and other sports?

Mr. John Treacy

It is the same in the case of rugby and the Irish Rugby Football Union also provides tickets for home matches. If one wants to attend an event in England, for example, as I did last year, one will pay for one's own ticket and enjoy the day.

Mr. Colm McGinty

To clarify, our code of governance and business conduct outlines the procedure for attending events and recognises that doing so is reasonable. I am happy to supply the committee with a copy of it.

I understand that the FAI is on a journey of adopting the governance code, which I checked. Some 570 organisations, such as schools and organisations that are much smaller than the FAI, are able to secure accreditation and be compliant with the governance code. I find it hard to believe that a major organisation such as the FAI is still on that journey 17 years later. Is there a reason for that?

Mr. John Treacy

There are different standards for different-sized organisations. For the larger organisations, the bar for compliance with the code is much higher than for smaller organisations that have fewer employees.

I return to one of my previous questions. I asked about the board membership of Sport Ireland and the length of service of each member because I would expect Sport Ireland, as the overarching governing body, to lead by example. Given that Sport Ireland stipulates that the term that people can serve is limited to three years for a maximum of two or three terms, or a total of nine years, I would expect it to lead by example. Whether the Department or Sport Ireland makes the exemption, it is not right. While Mr. Treacy did not state he did not have confidence in the board of the FAI, he refused quite pointedly to express confidence in it. Is Sport Ireland not taking financial sanctions against the board purely because it fears that any financial cuts will hurt athletes, rather than the people we might want to affect?

Mr. John Treacy

Financial sanctions are always the last resort and we do not like to use them. We will undergo a process. We are certainly very disappointed with the letter that we received before this meeting, which was reflected in my comment. One would not expect such a reply. I had written an important letter but the response was disappointing. If we decided to cut funding for the FAI tomorrow morning, we would have already given 50% of the funding this year and we would give the rest of the funding by August or September. There would be a little time, therefore, but if we cut funding, people would ultimately be let go, while programmes that had been invested in throughout the communities would cease to exist. That is the tricky aspect that we must balance, but we have not yet struck that balance. In general, if we intend to cut funding, we send our auditors, and if they return with verified critical issues, we enter that territory and the board decides.

Nobody wants to see grassroots or development positions cut, as I am sure we will all agree. On what actions Sport Ireland can take, Mr. Treacy stated its powers are restricted. As part of the Government's national sports policy of 2018, did Sport Ireland request any additional powers in order that it could have greater oversight of the governance of sporting bodies?

Mr. John Treacy

I always say one does not impose governance; rather, the organisations must buy into it. That is our approach and it is why Sport Ireland has an organisation and development unit, which proclaims and discusses governance and sets standards. That is the only way it can work. It is the spirit within a sporting organisation. The principles of governance, whether leadership, exercising control of the organisation, accountability or transparency, come from the top of the organisation, not from Sport Ireland, and the top of the organisation needs to buy into the principles. If the leadership does not apply the principles of the code, it is futile.

Mr. Treacy stated governance cannot be enforced, but the fact is that a loan was made without being reported or declared, a position was created within 48 hours, and a former CEO was a member of the board yet Mr. Treacy stated one of the board's jobs is to challenge the management. It is hard to challenge somebody, however, who sits around the table day in, day out, and is part of the decision-making process.

Governance is an issue. There is no leadership there. What can we do to ensure we have greater influence and control regarding this area?

It was stated that the 2015 Act allowed Sport Ireland to conduct a wider audit in 2016 because it widened the scope. I still come back to the fact that in the high-level review, the following areas were looked into and the statement from Sport Ireland failed to explicitly state that corporate governance was looked into as part of the 2015 Act. I think that is wrong. I think it should have been looked into.

When someone asked about more frequent audits, Mr. Mulvey said Sport Ireland wishes the money to be spent on sports - sports participation and promotion. That is very important. I looked at the 2017 annual report published by Sport Ireland. It showed that at 31 December 2017, almost €700,000 was spent on legal fees and conciliatory and arbitration payments. In the year ending 31 December 2016, almost €2 million of Sport Ireland's funding went on legal fees and arbitration payments. Sport Ireland may not be able to supply that today-----

Mr. Kieran Mulvey

I can. This is a legacy issue. The legal expenses incurred by Sport Ireland constitute a legacy issue from a previous organisation called the National Campus Development Authority in a legal case involving the National Aquatic Centre. That is still ongoing. In fact, it was heard again in the High Court after the plaintiff appealed again. It has been ongoing since 2003 and accounts for the vast bulk of that expenditure. It is an inherited legal case that the new body took over regarding the National Sports Campus. It goes back to 2003. I brought my concerns to the attention of four successive Ministers. My concerns were about the continuation of this case and what it was costing and my concern that Sport Ireland should not be obliged to fund this and that it should be funded by the Exchequer directly from the Department because we never authored or brought this case. It is one of these legacy cases. I must be careful as it is still being heard in the High Court but that is where that arises.

That accounts for all of that.

Mr. Kieran Mulvey

Yes.

There is no litigation of any other nature.

Mr. Kieran Mulvey

I would have to look but I do not think so.

That is why I asked.

Mr. Kieran Mulvey

If I am wrong, I will correct the record but we will supply the committee with that information. I have no problem in doing so.

Regarding the second issue relating to corporate governance, we need to be clear. The chief executive said that we are not a regulatory authority. We are not the Charities Regulator, which lays down and will expect a code. The Companies Act 2014 lays down criteria for governance for companies regarding how they should be run. If there is a problem with the corporate governance of a company, and some sporting organisations are companies, it is the Office of the Director of Corporate Enforcement that has the regulatory and investigative function. It is not in the Act. Policy may change on this and it might be a matter for the committee or Minister to change this. What I do not want to do is get into a situation where Sport Ireland spends all of its money that is supposedly devoted to the promotion of sports nationally and internationally on legal matters and is in and out of the courts regarding the enforcement of bodies where other bodies have the regulatory authority to enforce but may not be doing so. One of the things that has amazed me in all of this concerns where the auditors were. If the auditors did not spot this and it was not reported to them, is the appellate body or investigative body of Chartered Accountants Ireland, which has regulatory powers, going to call in the auditors? We have seen this in corporate Ireland for an awful long time. I read an article the other day in the Irish Independent from somebody who sat on the Anglo Irish Bank board telling us we had light regulation. He happened to be chairman of the audit and risk committee in Anglo Irish Bank in 2008. We are paying €29 billion for that lack of oversight and he has the absolute cheek to write in a national newspaper-----

We cannot identify individuals outside the Houses.

Mr. Kieran Mulvey

I know but I am just saying-----

It is just a rule. I would appreciate Mr. Mulvey's forbearance.

Mr. Kieran Mulvey

There are other corporate bodies that have this authority and they should be asked what they are doing. We do not have that authority but if the Oireachtas wishes to give it to us, fine and well-----

I just asked a question-----

Mr. Kieran Mulvey

That is okay but-----

I was unaware of the legal fees. I thank Mr. Mulvey for clarifying matters.

Mr. Kieran Mulvey

We will give the Deputy-----

I appreciate that he will further-----

Mr. Kieran Mulvey

It is of concern to us.

Deputy Coppinger is next.

Mr. Kieran Mulvey

Sorry for-----

Do not worry-----

Mr. Kieran Mulvey

-----but there are times when one's patience runs out.

Mr. John Treacy

It might be worth noting that the Department provided the funding for that legal case. It did not come from Sport Ireland. It is worth saying that it did not come from the sports budget.

Mr. Mulvey has spent many a night in the Labour Court and has been able to exercise a lot of patience. He is only here for three hours so I ask him to forgive us if we are trying his patience in three hours.

Mr. Kieran Mulvey

The members are not doing so. I was not referring to-----

We are going on all night by the way.

Mr. Kieran Mulvey

It is just that sometimes one reads things and says "what cloud are they living on?"

We appreciate that.

I asked earlier how if Sport Ireland does not regulate the FAI, who does regulate it. It probably suits some of the politicians here to blame Sport Ireland when questions could have been asked by politicians over the years along with successive Ministers for sport. The witnesses from Sport Ireland state that it does not impose governance and that it must be bought into but it has not been bought into in the case of the FAI. The witnesses would agree with that. The only sanction Sport Ireland has is the withholding or withdrawal of grant.

Mr. John Treacy

Yes.

However, the witnesses say Sport Ireland will not use it because staff and the grass roots would suffer. Is it not the case that while they might suffer in the short term, they are already suffering over the long term because of the conduct or governance of the FAI board?

Mr. John Treacy

We are not there yet. We have a process to go through. All of these things need to be discussed by the board itself so there is a process. The Deputy rightly identified the major issue here, which is around the staff employed by the FAI in terms of the funding. It is a critical issue but it is also the investment in those programmes over a long period of time because we have invested significantly in these programmes, which are very effective. That is the difficulty.

Could Sport Ireland not give the FAI board a warning that if they do not do "X, Y and Z", it would use the ultimate sanction it has?

Mr. John Treacy

As the Deputy rightly identified, there are two powers there that are very substantial. We are reluctant to use them but we have used them in the past.

We spoke earlier about the CEO of the FAI and what would seem to be an extraordinarily generous wage given the international status or position of the national team plus unknown expenses. What does Mr. Treacy think about the salary of the manager of the national team?

That is disproportionately high in comparison with managers of national teams of a similar-size. It was part-funded, as Mr. Treacy knows, by a very wealthy person to the tune of €10 million for the FAI over years, at a time when the pay of other staff was cut. Mr. Treacy may not have the power to do anything but does he not think he should have asked questions about those issues over the years?

Mr. John Treacy

International soccer managers are paid a lot of money. That is the market they are in at any given time. The team that was in place was very expensive. I am not quite sure about the team in place now but it is not as expensive. That is a matter for the FAI. We do not ever get into that territory with it. It has to respond to the marketplace and that is what it does. If we want a quality manager, we have to pay for a quality manager. The Deputy would be better off putting that question directly to the FAI next week.

We certainly will but Sport Ireland has a certain role in governance of sporting bodies and these anomalies are obvious to everybody.

Mr. John Treacy

We do not get into that space. That is not our expertise. International managers - soccer managers, rugby managers or whatever - are a matter for the governing body.

The funding Sport Ireland gives is for young people and grassroots. I am aware that several councils such as Fingal County Council, which is my local council, have introduced pitch fees which are crippling for many local grassroots teams. Sport Ireland is pumping a certain amount of money in but there is a big hole at the other end of the boat. Would Mr. Treacy not have thought of at least asking some questions about that?

Mr. John Treacy

We fund positions. Programmes are run by all the organisations. In every sport, parents pay affiliation fees and pay for time in swimming pools, on pitches and so forth. It is the normal course of sporting organisations running their business. Sports do that an ongoing basis. We have all had children playing rugby or soccer or whatever and paying their fees weekly. That is just the way sport is organised.

Participation and grassroots are the focal point. As Mr. Treacy knows, the women's soccer team had to threaten strike action because of the treatment it was suffering, with shoddy tracksuits, equipment, etc., and lack of status. In 2017, Sport Ireland paid €1.6 million to the Gaelic Players Association, GPA, men and €500,000 to the GPA, women, but it gave only €145,000 to women in soccer that year, which is a lot less than it gave the Gaelic players. It then gave the team special funding of €195,000 following protests by the players. Should Sport Ireland have been monitoring that situation more? Participation of women in sport should be one of its goals.

Mr. Kieran Mulvey

In recent years, it has been a running issue between us, to some degree, and the Government, where decisions are made as part of the sports budget that certain organisations get designated funding. Our view in Sport Ireland is that is not really the best mechanism because either particular sports or individual organisations within sports are singled out. In that context, our view has been, and we have put this to successive Ministers, that we would prefer, particularly in the area of women in sport, that a fund is given to Sport Ireland and we make the decisions when and where it is appropriate to do so. We have continued to make that point. I agree with the Deputy that it is important that we know on the ground. The GAA is sometimes different in this regard. When we have international teams in cricket, rugby, the FAI, basketball or hockey, the women have an equal right with the male team to participate. We felt that singling out women's participation in particular sports was discriminatory, that the fund should be given to Sport Ireland and that we would receive applications from the national governing bodies, NGBs, in the context largely of the international representation, apart from our indigenous games, and decide that there was a case there. That is our view still. This year, the Government took a step in that direction by giving us €2 million for women and we have allocated that in response to the applications we got from the NGBs. That is the way forward, rather than specifically in a one or two year budget giving it to a particular programme.

When the dispute broke out on the women's FAI international team I was very conscious of dispute resolution. We appointed Peter McLoone, the former president of congress and the general secretary of IMPACT at the time, as a mediator. He mediated a settlement but from my discussions, I do not believe all commitments made arising from that mediation have been fulfilled to date. It is something we still have to address.

Is Sport Ireland asking the FAI about that?

Mr. Kieran Mulvey

We will have to ask the FAI about it. I talked only this morning to Peter McLoone about where he feels it is and I have to meet him to talk about it. My view throughout my career has been that if people make a deal and a settlement, they should honour it because otherwise their word will not be accepted the next time they come to it. I assure the Deputy that we are actively considering this to ensure that all our women's teams, in all sporting disciplines, who have an international commitment are adequately funded, as best they can, with their funds.

Mr. Mulvey says the Office of the Director of Corporate Enforcement is the only regulatory body for companies such as the FAI. Is that appropriate?

Mr. Kieran Mulvey

If it is a company limited by guarantee and has big commercial operations, it is the role of the auditors body to audit it properly and appropriately. No questions may arise but there are also investigative authorities. If there is corporate malfeasance - I am not suggesting there is as I do not know - the Office of the Director of Corporate Enforcement is the office the State has funded and assigned and given a lot of resources to undertake that duty.

I get that there is a big difference between regulation and governance. It is a totally different mindset and way. I know this from different matters, including aviation and the Commission for Aviation Regulation and so on. The witnesses are right. I fully accept that and it is important to make that distinction or draw that line in the sand. That is not the role of Sport Ireland, nor do I think it should be.

From my perspective, there is a significant level of integrity, openness and calling it as it is in Sport Ireland and the people involved in it. It is important to state that and I appreciate that. Overall, the organisation is doing a very fine job, it is very genuine and committed. There is a separation between Sport Ireland and the governing bodies. The latter have a particular role, particularly when they are companies limited by guarantee, as is the case with the FAI. From memory, the FAI got a clean audit from a very reputable firm in 2017, which was the year for which accounts were most recently lodged in the Companies Office.

My understanding is that that loan was provided in May and was repaid in July or August. If that was the situation, a person looking at the accounts at year end will ask two questions. He or she would wonder whether the loan was repaid, meaning that it may not be a factor from an auditor's perspective, and would also wonder about the materiality of it. The FAI's turnover for the year in question was just north of €50 million. Some 6% of that approximately €51 million came from Sport Ireland. It is a significant amount of money, but is not huge when compared with the overall. Sport Ireland made a profit of approximately €2.7 million, and had net total assets of around €22.5 million. If a sanction was created, perhaps by withholding the second part of the payment from the FAI, it seems that its finances are in a good enough position that it would still be well able to look after the grassroots. I am aware that there is a process in place to deal with that, but it is ultimately a factor that makes people sit up and think, and reflect. It is not the style of Sport Ireland, nor should it be.

I had to leave for a meeting earlier, so perhaps my next question has already been answered. Were any red flags raised around the FAI over the last couple of years? Was there anything that gave Sport Ireland pause or reason to believe that it should look at the FAI? Was there any sense of a domino effect?

Bodies in receipt of reasonably significant State funding, from Sport Ireland or otherwise, should be compelled to have an independent board governance audit carried out. The Institute of Directors can do that, and others do it as well. It is not very expensive, and in my view it should be done at least once every five years. A body which grants funds has fixed criteria when it comes to decisions to grant, but there is much more involved for organisations such as the FAI which can have a material effect on the overall benefits of the process. I suggest there should be a wider governance code in place, not a regulatory code. I was surprised, like Senator Feighan, that there are 575 companies listed on governance.ie in class A, class B or class C. The FAI is in class C on that website, but is not included. That would be a flag for me. What is Mr. Treacy's opinion on that?

Mr. John Treacy

We covered much of what the Senator asked about earlier.

I am sorry to have missed it.

Mr. John Treacy

The FAI has its own independent auditors which audit it every year. It writes a statement to Sport Ireland to say that the money that we provided to it was expended for the purposes for which it was given. Sport Ireland in turn sends our own independent auditors. We have used three different companies to audit the FAI over the last number of years, all of which have come back with a clean audit and essentially confirmed that the money we provided to it was expended for the purposes for which it was given. This is how we audit the funding we provide.

In terms of red flags, we had a long discussion here around salaries and the recent report. These are serious issues which have only recently arisen. We have written to the FAI about these things, and received another reply today which was not comprehensive.

There were no red flags before the recent issues?

Mr. John Treacy

We know that the FAI was regularly short of cash and dealing with liquidity issues. It was always making sure that it had enough funding in place and looking for funding for early draw downs. We dealt with all of those issues on an ongoing basis. We kept an eye on those flags.

What is Mr. Mulvey's view about the idea of considering asking particular organisations with grant aid of over €1.5 million to have an independent board governance audit once every five years?

Mr. Kieran Mulvey

We undertake that kind of assessment at the moment in our learning and development programmes. One of the issues about sporting organisations at the moment, given the proliferation in size, income stream and participation is that it is a wide church. However, there are principles that should apply irrespective of size. The Senator is quite right to say that there should be good, robust internal governance, meaning that people who have nothing to do with the organisation who have legal financial, marketing or commercial expertise should be brought on board. The problem with some sporting organisations is that they are transitioning from self-regulated volunteer organisations made up of people who have participated in the sport over a long period of time or who are parents with children involved with the sport. We must now move beyond that approach. We are moving into bigger financial and participation spaces. We also have to consider not just issues of good governance but child safety, child protection, health and safety and vetting. We have undertaken and discharged all of these functions. We also have to maintain professional input at executive and high-performance level, without leaving out volunteers, who we need in sports every day of the week, or tell them that they are not good enough to be on a board. The Special Olympics, Paralympics and the Community Games cannot survive without volunteers, and we have to be careful not to exclude them from the centre of policy decision making. They are vitally important, and they should be allied with the experts in terms of governance.

Ireland is struggling with corporate governance generally. The charity sector has had very bad experiences in that area. The sports sector has not, thankfully, had many problems with corporate governance, but other areas where State agencies have had to come into the private sector. We are moving on and are grappling with the issue of corporate governance. We are not the only country in the world having difficulties with this. This is a moving part here, and we have to get to the stage where we are confident that the rules, laws, regulations and statutory instruments and the voluntary codes are adhered to, not just in spirit but in reality. That is an educational and supervisory exercise. One size does not fit all, but Sport Ireland calls different organisations in to make presentations about their policies and plans. It is incumbent on Mr. Treacy, myself and other members of the board that we meet the chief executives, the high performance directors and the volunteers and go to their functions and events. It is not all about attending at international competitions. We have to be there in order to talk to them, to present their awards, to assist them in giving the kind of policy direction they require, and to thank and congratulate them for what they do and on their great achievements. The story of Irish sport is extraordinary. As Mr. Treacy said earlier, last year we won more medals internationally than ever before in a multiplicity of sports. We are not just talking about boxing any more, but sports that many of us have never heard of. Our Special Olympians acquit themselves extraordinarily well. They are ambassadors, as are the Paralympians.

We will have Olympians going to Tokyo. We hope to have the biggest team ever but we have to make sure they are nurtured, minded, supported and funded. Behind all of those teams are boards, high performance people and development officers. We have a series of local sports partnerships the length and breadth of the country. I refer to the amount of work they do. We also do dormant funding, which the members, as a committee, and the Government have gladly given to us. In that regard, because of my work in Dublin's inner city I saw women playing soccer last night under floodlights in Sheriff Street. That is what we need to do. We have to make sure that happens across the country, that they have the best of facilities and that they can get as much as we can provide.

We have had ten lean years of funding for sport. Thankfully, that changed last year, and I hope it will change further. Our athletes need it. I refer to what Deputy Coppinger said. I do not believe people who use pitches should be asked for fees. They are supplied by the State and councils.

Councils have been doing that for years. You should have known about that.

Mr. Kieran Mulvey

I must say to Deputy Coppinger that Fingal County Council and its chief executive have been very good to Sport Ireland. It has been very co-operative in providing assistance to us because our campus is based within its planning area. It has been very helpful to us, and I hope that continues. The only way we will bring sport to the level to which it should be brought is to move on all fronts, and incidents like this set us back.

We can learn from them too, and that is what we have to do now.

Prior to the past couple of weeks, did Sport Ireland receive complaints from associates of the FAI about issues in the FAI?

Mr. John Treacy

No.

With regard to spending and getting good value for money, everybody waits to see what their allocation will be in the budget each year. For example, Sport Ireland would want to know what will be its pot of funding. When the likes of the FAI makes a submission for the coming year on grant aid funding, how far above or below the amount requested would it be allocated? Before the budget each year, everybody has their hands open looking for millions of euro. For example, the health service would be hoping to get more money than what is announced on budget day. Are organisations fairly good in regard to their requests for funding to keep the show going? For example, last year Sport Ireland gave them €2.7 million, give or take. Did they look for €3.5 million? Do they go way above the figure they believe they will get in their requests or are they understanding of the position on funding?

Mr. Kieran Mulvey

I can assure the Deputy that all the sporting organisations, big and large, look for more money than they get. They are very strong in their advocacy around that. They do it through their submissions to Sport Ireland, and our submission to the Government, but they also go in and meet the Ministers. That is the way things are done. When Sport Ireland went to meet the Ministers on this issue we also had a good hearing with the Minister for Finance and the Taoiseach, as a former Minister for sport. We also met members of the Opposition who gave us a good hearing. I felt for the first time that we were beginning to make substantive inroads in increasing funds for sports all round. Sports organisations, particularly those involved in the main field sports, are great advocates for their sport but they have a lot of clout outside Sport Ireland as well.

Mr. John Treacy

If I could add to that, it is very important to state that we now have a new policy for sport but with that we have funding and a commitment from Government to double the budget for sport. I want to pay tribute to the colleagues in the Department because civil servants have worked hard to ensure they made the case for sports funding across the various Departments, along with the Ministers. Everyone has bought into this and everyone is aligned in terms of the need for and importance of funding for sport. It is important to state that we are all aligned in terms of the requirement to increase the budget for sport and I pay tribute to Ministers, Members of the Oireachtas and civil servants who have worked hard to make that happen.

The FAI had a special allocation for women in sport. Why does that arise? Should the FAI not include that in its overall application? Why do they have to get separate extraordinary funding? Does the FAI not have its finger on the pulse regarding funding for women's soccer?

Mr. Kieran Mulvey

I dealt with that earlier but it did advocate to us and we included it in our submission to the Minister. The Minister made a special allocation in that regard last year. Our view is that we would prefer women in sport would come through our programmes and that we would deal directly with the sporting organisations but sometimes there is a realpolitik around these issues. I am always conscious that there are women's teams participating in different sports internationally which do not have the same clout and we need to advocate on their behalf.

I think we are approaching the end of the meeting. What would the members like to do now?

Ask more questions.

That is fair enough. Before we move on to that, we have correspondence to deal with at the end of the meeting. I propose that we deal with it tomorrow. Is that agreed? Agreed. We will start another round of questions. Would the witnesses like a break?

Mr. John Treacy

No.

How much time do members need? Will five minutes be enough?

Ten minutes, if the Chairman does not mind. There is very little time.

I have no problem with that.

To come back to the corporate governance issue and what I read out from the Department, I did not realise that is where it came from but does Mr. Treacy agree that that is what has been agreed with the FAI regarding the terms for the rotation of the board? It states that it was agreed that any board member who was chairperson of a standing committee of the national league executive committee or who has served more than ten years may be re-elected for up to four years. Has Sport Ireland agreed that?

Mr. John Treacy

We have not agreed it.

That is fine. When we had the Minister before this committee in 2017, I asked him about the independent people on the board and he said he would consider doing something about that at that point. Clearly, that has not happened up to now but does Sport Ireland have ongoing engagement with the FAI on the rotation of the board?

Mr. John Treacy

The FAI set up its own group to look at corporate governance. Boards of federations are responsible for the governance. They have gone about their business in terms of compliance with the code. With regard to our plan of action, we will do some audits, when everyone is across the line, in respect of compliance with the code but there is a long way to go yet in that regard.

Mr. Kieran Mulvey

We were not involved in that process at all-----

Mr. Kieran Mulvey

-----and we were not asked.

It may well be in our interest to have the Minister come in at some point because he has given a commitment on that. That might be something we would come back to, possibly tomorrow.

Regarding the loan, one of the issues I would ask Sport Ireland to examine is that the loan was given at a particular time of the year and we were then told it was paid following the submission of an invoice. An invoice is for a service as opposed to a loan. When it is considering its response Sport Ireland might consider that particular issue, which stood out to me as being fairly strange.

The other aspect I want to cover is included in Mr. Treacy's opening statement. The 2016 audit identified a number of things, including the board and committee structure, financial management, whistleblowing and a code of conduct. I refer, in particular, to whistleblowing or the lack of it. Many people have spoken to me in recent months about the FAI and one recurring issue is that people believe they might suffer consequences if they raise issues. An individual club might lose out on a grant or people who are or were employed in the FAI might be affected. Does Sport Ireland engage with the FAI on such issues? Can people in any sports organisation make whistleblowing complaints to Sport Ireland? I am talking about people who work in an organisation.

Mr. John Treacy

No, it is up to every organisation to have its own whistleblowing policy in place. It should be set out clearly in order that people with a complaint know exactly where to go. Ours is not a central body for sports organisations. That is not our role.

Mr. Colm McGinty

I will add to what Mr. Treacy said. Our internal auditors look for the existence of whistleblowing policies when they audit governing bodies of sport or a local sports partnership as part of our internal audit programme. It will occasionally be found that a whistleblowing policy is not in place. The audit will then recommend that one be instituted. Implementation of that recommendation will be monitored by the Sport Ireland executive.

Can Mr. McGinty recall if there was such a recommendation made in 2016 when it was one of the headings?

Mr. Colm McGinty

The scope of the review included a review of the whistleblowing policies and incident management procedures. Nothing of significance arose or was reported to us by the auditors on that occasion.

It might be that people in some organisations are fearful, particularly in smaller organisations where people with concerns have to continue working. I may address that issue with the FAI next week. Would Sport Ireland be made aware of any abnormal pay-out for things such as court activity in respect of harassment or such issues? Would it be brought to the attention of Sport Ireland? Should it be something that should be brought to its attention? I am referring to the FAI or any other organisation.

Mr. John Treacy

No, that would not normally be the case. Those issues would not be brought to our attention, unless the organisation had substantial financial issues.

Is it only financial issues that are brought to the attention of Sport Ireland?

Mr. John Treacy

Yes, generally.

Mr. Kieran Mulvey

I am not sure, but when I was head of the Workplace Relations Commission, it might have occurred with one or two sports organisations. I know that some claims came through the adjudication service that involved sports organisations. I cannot recall the incidents, but there may have been two or three from different organisations. I would not, however, have adjudicated on them. One or two sports organisations may have had issues.

It would tell us something about the health of an organisation also. If substantial financial implications were involved and an organisation was going to end up in court, would it need to tell Sport Ireland? There is a reputational risk involved.

Mr. John Treacy

Yes, it would in that instance. Generally, where an organisation is in court, it will tell us. It will come and talk to us about it.

Has Sport Ireland's attention been drawn to any such issue within the FAI?

Mr. John Treacy

No, not in recent times.

I am nearly finished. I will move back to the issue of staff turnover at a high level and the impact on an organisation's functioning. I read a newspaper article in which it was mentioned that people were complaining about things like internal relationships, not being able to talk to the same person repeatedly, the lack of continuity, etc. Would Sport Ireland enter into dialogue with an organisation on a high staff turnover and its impact on the health of the association? The turnover in the FAI does seem to be extraordinarily high, among senior people in particular.

Mr. John Treacy

Again, that is a matter for the board and the chief executive of the organisation.

Mr. Kieran Mulvey

The way it has been outlined shows that there has been a high rate of staff churn. Some of the staff we know of would have ended up in key posts with other sports organisations. There might be a mix between people who are dissatisfied with the way they were treated or with their pay and others who are seeking promotion. However, it is a high turnover.

That is fine. I thank the delegates.

I go back to the issue of how Sport Ireland has dealt with the FAI. There have been issues in other sports organisations in the past. They include most recently the Olympic Council of Ireland, the Irish Amateur Boxing Association, Basketball Ireland and Swim Ireland, all of which have had their funding cut at some stage. It might be better to say funding was suspended or that there was at least a threat that it would happen. I may be wrong, but a consistent approach is not taken in dealing with different sports bodies. If that is the case, is it not sending the wrong message? Let us examine the manner in which the FAI has treated Sport Ireland in the last fortnight. I am referring to the letters sent, the decision made without consultation on the new position created, the original letter which did not answer the question posed by Sport Ireland and the most recent letter which arrived at the eleventh hour. The FAI is not responding satisfactorily to the concerns of Sport Ireland and the requests made. That has been confirmed by Sport Ireland today. There is an inconsistency in the approach being taken.

Mr. John Treacy

That is a little unfair. There is a process to be gone through when we get to the point of pulling the trigger on suspending or withholding funding. We have asked questions and not received answers. I agree with the Deputy. What we have received today is totally inadequate and we will be writing to the FAI along those lines tomorrow. The board of Sport Ireland makes those decisions. We are due to meet next week when all of these things will be considered. However, we need to go through a process and it is only fair that we do so.

In his opening statement Mr. Treacy rightly indicates that contractual arrangements are not the responsibility of Sport Ireland. He also refers to recent commentary on rental payments. It may not be Sports Ireland's responsibility per se, but there is great concern when we read stories about our international women's football team having to change in airport toilets and share tracksuits. Sport Ireland made a special once-off payment of €195,000 in 2018 for the women's international team. It might not have direct responsibility for rental and contractual arrangements, but there is concern that such allocations are diverting necessary funding. I refer to the FAI relying more on Sport Ireland rather than ensuring its funding is put to better use.

Mr. John Treacy

There is an issue around transparency, as I would see it. There should be transparency around all of those issues. In regard to the funding of organisations, Sport Ireland contributes €1 and the FAI contributes €4. Transparency in respect of CEO salary, rental agreements and so on, such that everybody can see it, is good corporate governance.

Mr. Mulvey mentioned the notable sporting achievements over the past 12 months. We all acknowledge those achievements but we are here today to try to get to the bottom of issues and to consider how we can improve further. It was stated that the sporting organisations have come a long way. However, there have been many scandals and issues arising in our sporting bodies over the last number of years. Despite that, there are still governance issues in some bodies. It appears that even when one body is caught, others fail to take note that they are being watched or to take action to get their act together.

Sport Ireland has an audit and risk committee which, according to the report, comprises two board members and two independent members. The role of the audit and risk committee is to support the board in its responsibilities around risk, control, governance and associated assurance. According to the report, the committee also has a role in respect of governance. In regard to the two independent members, am I correct that one is a former board member of Sport Ireland and the other is an official of the Department of Justice and Equality?

Mr. John Treacy

Yes.

Does Mr. Treacy believe that a former member of the board of Sport Ireland meets the definition "independent"?

Mr. John Treacy

There are very good people on the committee.

I do not know any of them personally.

Mr. John Treacy

The committee is made up of board members in the main. Oversight of governance is a function of Sport Ireland as well. We have rigorous processes around all of our funding. We deal with risk at a very high level within all of the different units and senior managers report to the audit committee on a regular basis, providing their risk profile across the various programmes that they operate. They also handle issues highlighted by the Comptroller and Auditor General. Financial statements are approved by them. The right expertise is on that audit committee. It is a very good committee.

I imagine an official of the Department of Justice and Equality internal audit section would have the relevant expertise. In regard to the requirement that two members of the committee should be independent, does Mr. Treacy believe that a former member of the board of Sports Ireland taking up a position on a sub-committee of that board meets the "independent" requirement?

Mr. John Treacy

Yes, because the person would no longer be a member of the board.

Mr. Colm McGinty

There also has been rotation on the audit and risk committee. Two new members were added in the last year or so. An external member was added the year before that from the Department of Justice and Equality. As well as that, the audit and risk committee reviews its effectiveness on an annual basis. Previous reviews would have identified gaps and those gaps have been filled, as appropriate. In terms of additional expertise, last year a former board member with specific experience in financial matters and auditing was appointed to the audit and risk committee.

Before Deputy Troy comes back in, as the witnesses have been here now for a long time I propose that we conclude the meeting at 7.30 p.m. Is that agreed? Agreed.

In an earlier question to Mr. Mulvey, I asked him if during his involvement with the Irish Sports Council anyone had ever raised with him at board level his or her concerns around irregularities in the FAI, to which he responded that he understood my thinking but the answer was "No". I had no specific reason to ask that question. I was merely asking about his experience of the board of the Irish Sports Council versus the board of Sports Ireland. Perhaps Mr. Mulvey would outline what he understood to be my thinking on the issue.

Mr. Kieran Mulvey

I do not think I would be able to do that for the Deputy. I can state I have had no issue raised with me regarding the FAI exclusively.

No issue was raised with Mr. Mulvey during his involvement with the board of either the Irish Sports Council or of Sports Ireland?

Mr. Kieran Mulvey

No.

In regard to governance and oversight of governance, each of the witnesses said that it is a lot easier when there is buy-in from the governing body. The good example of that that we have seen in recent years is the Olympic Federation of Ireland. There was a lot wrong within that organisation until Sport Ireland cleaned it out. Would the witnesses agree that it is now working extremely well and would it be a good model for other governing bodies that are difficulties?

Mr. John Treacy

Without a shadow of a doubt the leadership of the Olympic Federation of Ireland has been excellent. It appeared at this committee with Sport Ireland some time ago. The organisation is unrecognisable. It has a very good chief executive and some very good people have been appointed to lead the team in Tokyo. There is a real alignment between Sport Ireland, the institute of sport, and the Olympic Federation of Ireland. We are all on the same team now. We are all wearing the same jersey, which is really good news. There is real leadership coming from the Olympic Federation of Ireland. Importantly for us, it is now making inroads with the corporate sector and getting sponsors on board. It is very good news. As I said earlier, it is about leadership and the federation is showing great leadership.

Mr. Kieran Mulvey

We have a service level agreement with the Olympic Federation of Ireland, which incorporates the services of Sport Ireland and the institute of sport within Sport Ireland. We have co-operated around the arrangements for Tokyo, the camp and the joint engagement on that. Things are looking well. Last week, the federation announced its kit sponsor, Adidas. Things are moving in the right direction. We now have to make sure we have the athletes.

There is some good news around sport.

Mr. Kieran Mulvey

There is. The Mayo team won at the weekend too.

I have a couple of questions. Sport Ireland was not informed of the loan by the FAI. Mr. Treacy said in his opening statement that Sport Ireland's financial controller raised a query with the FAI in regard to its liquidity in 2017 as part of the mid-year review. Not only did the FAI not inform Sport Ireland of the extraordinary loan, it actively concealed it. Would Mr. Treacy agree?

Mr. John Treacy

We asked a specific question and the FAI came back with a specific answer. Deputy Coppinger is right regarding transparency but we asked a specific question and they came back with a specific reply.

It is one thing if an organisation does not tell Sport Ireland something but quite another if an organisation is specifically asked about something and does not tell Sport Ireland. What does Mr. Treacy mean by his answer?

Mr. John Treacy

I mean that we asked a specific question and the FAI came back with a specific reply. One might look at it differently now with hindsight.

May I ask something about that?

No, the Deputy cannot use my time.

Deputy O'Keeffe might wait in fairness to the person asking the questions.

I am talking about governance. Are we talking about something criminal? Was something concealed from Sport Ireland? What Mr. Treacy is saying is vague.

The Deputy should be careful in her use of the word "criminal".

Yes, I am sorry.

Mr. John Treacy

I am also being careful in the reply I gave to Deputy Coppinger. We need a proper reply from the FAI before we pass judgment.

This is about something sometime earlier.

Mr. John Treacy

We will go back to the terms of reference.

Mr. Treacy said that Sport Ireland forwarded the matter of the €100,000 loan to the ODCE.

Mr. John Treacy

The FAI has done that.

According to The Sunday Business Post, there has been one other complaint relating to the FAI forwarded to the ODCE. Does Mr. Treacy know anything about that?

Mr. John Treacy

No.

Mr. Treacy knows nothing about that.

Mr. John Treacy

I know nothing about that.

These would seem to be quite serious breaches of governance. Does Mr. Treacy agree, in line with earlier questions he has been asked, that the board should resign at this point?

Mr. John Treacy

What we know about at the moment is the loan. We have asked questions. The FAI will be before the committee next week and those questions can be put to the witnesses from the association. I strongly suggest the committee does that. We have put questions to the FAI this week and will, hopefully, get an answer by Monday evening. That is the timeline we put on it. That might shed further light.

Will Mr. Treacy share that with the committee?

Mr. John Treacy

We will share whatever reply we get with the committee.

That is fair enough.

I want to clear the air now. The last audit that Sport Ireland conducted was in 2018. It is on foot of the accounts that the FAI submitted to Sport Ireland that the audit team raised the issue of liquidity.

Mr. John Treacy

Yes.

In other words, the FAI was not hiding it.

Mr. John Treacy

Our financial director looks at the accounts when they are sent in.

Mr. John Treacy

He raised the query when he saw those.

The FAI accounts were presented in such a way that Sport Ireland could see there was a problem.

Mr. John Treacy

We had a question to ask-----

Mr. John Treacy

-----and we asked it.

It was not that Sport Ireland went in and found something wrong.

Mr. John Treacy

No.

The FAI gave Sport Ireland the accounts.

Mr. John Treacy

Yes.

Sport Ireland then found the flaw. Were those accounts qualified when they were submitted?

Mr. John Treacy

Were they qualified?

An auditor qualifies the accounts if-----

Mr. John Treacy

They were audited and signed off on a going concern basis.

It was open to public display then.

Mr. John Treacy

It was.

Mr. Colm McGinty

They had not been released at that stage, if I recall correctly. They had not been released to the annual general meeting, AGM, at that stage.

Mr. Colm McGinty

It was just produced-----

What Sport Ireland got from them was audited.

Mr. Colm McGinty

We got the full financial statements for 2017 around the middle of last year.

Those raised concerns which Sport Ireland's accountants picked up.

Mr. John Treacy

They raised a question.

Mr. Colm McGinty

They raised a question and were responded to.

On a lighter note, it is great that we heard of the Olympic Council of Ireland for the first time in a year and a half.

Mr. Kieran Mulvey

The Olympic Federation of Ireland.

I apologise - the Olympic Federation of Ireland. Any time we heard the organisation's name in the past was in controversial circumstances so it is nice to hear that things are going well for it.

The FAI had a liquidity problem and occasional problems with finances. Is it the same in other federations, say, the Football Association of Wales or the Football Association in England? I know the FAI had a big building project and I understand the national team did not qualify for major tournaments but that should not have been an issue because of sponsorship and given that Ireland had been qualifying for tournaments for nearly 30 years. Is it an issue for most football associations?

Mr. John Treacy

The FAI has a cash flow issue. It has debt relating to the Aviva Stadium on which it must make repayments, which is a big issue. The FAI can run into cash flow problems and issues if they have no matches or do not qualify for a tournament and things like that. It is on occasions like that it arises.

Many of our governing bodies work on a tight budget. They do not have commercial incomes or gate receipts and, to a large degree, depend heavily on funding. They are always tight on funding. We have been encouraging all of them, if they have a debt in a given year, to start reducing it because one does not want it building up and, in fact, we try to encourage the NGBs to have a little bit in reserve going into every year. That is the model for the future.

It is strange that the FAI had turnover in excess of €50 million, profits of €2.7 million, and net total assets of more than €22 million, yet it had cash flow problems and could not talk to its bank about an overdraft or restructuring its finance in some way. It is astounding after the association was so financially successful. I cannot get it, as an accountant.

I thank Mr. Treacy, Mr. McGinty and Mr. Mulvey for their honesty. The integrity of their work and commitment to sport is clear to everybody. The weakness of the law is also exceptionally clear. As a State, a Government and an Oireachtas, we must ensure greater accountability from bodies such as the FAI if the legislation is not strong enough to provide the answers we want.

The committee will meet again tomorrow morning and should meet the representatives of Sport Ireland again soon. Perhaps they could reflect on, in the meantime, and advise us what best practice is on the issues that have been raised. We need to address that to have greater power and authority, whether that will lie with Sport Ireland, the charity regulator or whatever body is appropriate. We need to ensure all these issues can be fully and properly addressed.

I thank the committee members. I know people might have been unhappy with some of my timelines but, as an Oireachtas committee, we conducted this debate fairly, objectively, appropriately and within all the rules and regulations by which we must abide. The truth and facts that have come out here today are important and will influence policymakers, politicians and, most of all, the court of public opinion. The public is interested in all of these issues and I look forward to continuing our discussion with Sport Ireland in the future.

The joint committee adjourned at 7.30 p.m. until 11 a.m. on Thursday, 4 April 2019.