COMMITTEE of PUBLIC ACCOUNTS díospóireacht -
Thursday, 4 Apr 2002

Vol. 4 No. 13

2000 Annual Report of the Comptroller and Auditor General and Appropriation Accounts:

Vote 35 - Department of Tourism, Sport and Recreation.

Vote 3 - Department of the Taoiseach.

Vote 10 - Office of Public Works (Resumed).

Ms M. Hayes (Secretary General, Department of Tourism, Sport and Recreation), Mr. D. McCarthy (Secretary General, Department of the Taoiseach), Mr. B. Murphy (Chairman, Office of Public Works) and Mr. P. Teahon (Executive Chairman, Campus and Stadium Ireland Development Limited) called and examined.

Chairman

Witnesses should be aware that they do not enjoy absolute privilege and should be appraised as follows: Members' and witnesses' attention is drawn to the fact that, as and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997, grants certain rights to persons who are identified in the course of the committee's proceedings. Notwithstanding this provision in the legislation, I remind members of the long standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

Members are also reminded of the provisions within Standing Order 149 which state that the committee should also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policies.

Members should note that the committee is concerned with the accounts specifically listed for examination and the administrative and operational control aspects related to same which are within the knowledge and competence of the witness being examined.

I invite Mr. Teahon to introduce the personnel accompanying him.

Mr. Teahon

I am accompanied by Mr. Donagh Morgan, Ms Laura Magahy and Mr. Fergus Finlay.

Chairman

Thank you.

Ms Hayes

I am accompanied by Mr. Con Haugh and Ms Eugenie Deegan.

Chairman

And the Office of Public Works?

Mr. Murphy

I am accompanied by Mr. Kevin Connolly and Mr. William McIntosh.

Chairman

The Department of Finance?

Mr. O’Brien

I am accompanied by Mr. Pól Ó Duibhir.

Chairman

The Department of the Taoiseach?

Mr. McCarthy

I am accompanied by Mr. Peter Ryan and Mr. Martin Fraser.

Chairman

The committee is resuming its deliberations on Campus and Stadium Ireland Development Limited, Financial Statement 10 December 1991 to 31 December 2000. Before resuming I invite the Comptroller and Auditor General to contribute.

Mr. Purcell

At an earlier hearing I described the provision of executive services by way of contracting out as a novel approach to the administration of a large public capital project. There was not necessarily an implied criticism in that statement. There is always a place for innovation and novelty in the delivery of any services but my concern related to the way we went about it in this case. Normally, if one is going to commit up to €12 million of taxpayers' money to a particular approach prudence demands that the approach be costed against alternative forms of service delivery. That did not happen in this case. When you add on the fact that cost was not a factor in the assessment of proposals to provide a service, it is difficult to see how the most economically advantageous solution is being achieved. Moreover, when the contract eventually signed is based on a percentage of an unknown final cost of the project and does not provide for periodic review during the five year course of the contract, it is difficult to come to any other conclusion but that the public purse is not being properly protected. We now have a situation where the company in question which is providing the executive services is being paid €127,000 per month, even though the scale of the work must have been reduced as a result of the main project being in abeyance for a number of months. A number of questions arise. How do we know we have been getting the quantum of executive services which would justify the ongoing payment of €127,000 per month? How do we know the time allocations and the charge out rates were reasonable in the first place? To look forward, how can the contract be renegotiated or even terminated to take account of the new scenario in which an interim chief executive has been appointed? Certainly there has been mention of the possible engagement of a full-time financial director. These are the kinds of issues that have to be addressed satisfactorily if value for money is to be achieved on this front from here on in.

Chairman

I thank Ms Laura Magahy for attending the meeting. Do you wish to make an opening statement?

Ms Magahy

No, Chairman, I am here to take questions from the committee.

Chairman

Thank you. I proceed to questions and call Deputy Bell.

Deputy Bell

I wish to address my first question to Mr. Murphy which is a follow-up to the questions I posed at the last two meetings. Why was the Office of Public Works not selected to carry out this contract in its entirety given that it had charge of many very large State projects, the present one being for €200 million on behalf of the Department of Agriculture, Food and Rural Development? From what was said I understood the Office of Public Works was not capable of carrying out this major project. In view of the developments since the last meeting and the fact that the Office of Public Works has been given charge of the project, how did the change of mind come about? Did you suddenly change from a "Mr. Badman" to a "Mr. Goodman" and you are now fully equipped, fully financed and fully capable of doing a project which the Government of the day did not think you were capable of doing some 12 months ago? Are you confident you are capable of completing that project on time and in accordance with the contracts laid down? How do you propose to take over the contacts which have been assigned to other people and other companies? What are the financial implications for taxpayers?

Mr. Murphy

We were always capable, always fully financed and almost reasonably staffed for it. It was a Government choice to set up CSID and to have executive services, as I understand it. The fact that things have panned out in the way they have and that we may have more control of the project than we had previously comes back to a situation where the Office of Public Works is still capable of carrying out this project, and all the major projects we have, on time and on budget. I cannot offer reasons.

Deputy Bell

In regard to the second part of that question, what financial implications has this for the taxpayer and what changes is Office of Public Works considering in relation to existing contracts for people already on site and already under contact for the payment of State funds?

Mr. Murphy

We would be concerned to get value for money. We are subject to the Committee of Public Accounts and to the examinations of the Comptroller and Auditor General in the normal way. It is too early to say what will happen next. Our interim chief executive of the outfit only happened on Thursday of last week and it is far too early for us to say what changes we might yet put into effect.

Deputy Bell

Apart from what we have read in the national media over the past 48 hours or so, neither this committee nor Dáil Éireann would be aware of the conditions under which this important change was made by the Government - I am sure the reasons will be spelled out eventually - but it would be interesting if Mr. Murphy indicated the conditions under which he has now been appointed as the controlling organisation of this major project.

Chairman

Mr. Murphy, you might clarify first whether Mr. Benton has been appointed as an interim chief executive and perhaps you would define the role of the board of works in that context. Deputy Bell is on the right track but we want to find out what your role is now.

Mr. Murphy

There was a decision by Government on Tuesday of last week, if I have that correctly. I do not have the text in front of me and I am not sure if Mr. McCarthy has it but if I recall the wording affecting the Office of Public Works, the Government simply said it would facilitate CSID in employing an interim chief executive officer through the Office of Public Works. Those are the exact words as I remember them.

Chairman

And you would nominate Mr. Benton?

Mr. Murphy

Yes.

Deputy Bell

What does Mr. Murphy propose to do about the CSID situation in terms of the contract and the relationship between the Office of Public Works and the consultants, headed by Laura Magahy, whom we have not met previously but who is very welcome? Will he propose to pay off the company headed by Ms Magahy and terminate the contract or continue it under the circumstances in which it was negotiated?

Mr. Murphy

I have a completely open mind on that. I have no view on it yet because it is only a couple of days since we took over the project and we will take account of the terms of the contract and everything that has been said here, so we have a fair amount of examination to do before we even begin to form a view on it.

Mr. Teahon

I want to put a number of points on the record, Chairman. First, the Office of Public Works was involved in the project as project managers right through to the beginning of the year 2001, so it is not true to say that the Office of Public Works was not involved. Second, I want to again put on the record what I said at the last meeting, namely, that at every stage of the Office of Public Works's involvement I, as executive chairman, wanted it to be involved. The decision that was ultimately made centred on whether there was an acceptance that the Office of Public Works people would report to CSID. This arose at a board meeting of Campus and Stadium Ireland Development recently and Seán Benton was very clear that he was now reporting, in so far as the project was concerned, to the board of Campus and Stadium Ireland Development. I just want to put those points on the record for the sake of balance in terms of what was said.

Deputy Bell

I was not talking about involvement, as Mr. Teahon will remember from the last two meetings. I was talking about control by the Office of Public Works, not its involvement. We all know it has an involvement but I thought, as one member of this committee, that it should have had control. There is a difference between an involvement and having control.

Mr. Teahon

The point I was making, with respect, is that the control of the project is and continues to be with the board of Campus and Stadium Ireland Development.

Deputy Bell

Perhaps that can be changed too. What is Ms Hayes's opinion on her Department and the changes that have now been decided? What difference will they make to her, as the major player in the operation?

Ms Hayes

My understanding is that our responsibilities remain exactly the same as they were on transfer of responsibility for this project from the Department of the Taoiseach over a year ago. The main impact of the Government's decision was to separate the role of chief executive and chair, to appoint a new interim chairperson, Mr. Con Haugh, and that the board, on recommendation from Office of Public Works of a nominee, appointed an interim chief executive. The interim nature of these appointments is contingent on final Government decision following consideration of the High Point Rendell review of the future shape, structure and scale of this project and the Government will then put in place permanent arrangements to take this project forward but as Mr. Teahon said, the company remains in place, the board retains its role for the overall control of the project and it has a new chief executive in place, reporting for the interim, and a new chairman.

Deputy Bell

Would Ms Hayes be happy with the changes that have been made?

Ms Hayes

I will implement Government policy as they state it. I have no reason to be unhappy with it.

Deputy Bell

Is Ms Hayes opposed to it?

Ms Hayes

No, I am not.

Deputy Bell

I put my final question to Ms Magahy. What is the situation as far as her company is concerned now that a major change has been made which means, effectively, that the controlling interest will be held by the Office of Public Works? Is Ms Magahy happy with that and what effect will that change have on the contract she had with the company, with which we are not au fait because we have not seen it? Why would it cost the taxpayer €1 million plus if the contract was terminated?

Chairman

The contract was circulated to the members but if the Deputy does not have a copy, we will issue one to him.

Deputy Bell

I have not seen it.

Chairman

We have copies.

Ms Magahy

I look forward to working with the Office of Public Works. We had good working relations with the Office of Public Works when it acted as project manager on the project and I look forward to working with Seán Benton as the interim chief executive.

Deputy Bell

The media created the impression that Ms Magahy would have difficulty working with the Office of Public Works in view of the enormous amount of taxpayers' money involved. Would Ms Magahy like to expand on that so that the media can report what she has to say, as the chief executive?

Ms Magahy

I say again that I have no problem whatsoever working with the Office of Public Works. I respect its work. We got on well as colleagues when we were on the job together and I would be more than happy to work to Seán Benton as chief executive.

Chairman

Before you leave that point, in the context of the Office of Public Works involvement now, to what degree would there be duplication vis-à-vis its role and your role in terms of your executive services?

Ms Magahy

Mr. Murphy has said that it is not yet clear what will be the involvement of the Office of Public Works as an organisation going forward. It is clear that Mr. Benton is the interim chief executive, but in regard to how wide the involvement of the Office of Public Works will be, I simply do not know at this point. I have started a discussion with Mr. Benton about our contract and I hope to conclude that by the end of next week.

Chairman

Mr. Murphy, do you see a duplication of the role of the Office of Public Works and your role or is its role as providing exclusive executive services complementary to what you do? Do you have a view on that?

Mr. Murphy

I do not have a view on it yet. As of now there is no duplication of work. As Laura Magahy has just said, all that has happened so far is that we have supplied an interim chief executive and it will take the coming week for us to work out the practical implications of that in terms of services.

Chairman

Looking ahead, do you see it as a duplication of some of the services that you, in your new capacity, can provide because your objective is to get involved in the project? In the context of what is being provided now, do you see yourself providing something different?

Mr. Murphy

Again, I am slow to answer that question. I undertake that there will not be duplication of services, but beyond that I cannot give an outline of how the services will be organised. I would prefer to let Commissioner Benton and Laura Magahy work through this.

Deputy C. Lenihan

Some of the replies confuse me. We had better get something right on governance. Let us get this clear, am I right in saying the Office of Public Works is not involved in providing executive services for Campus Stadium Ireland?

Mr. Murphy

That is what I said. As of this moment we do not provide them, but we have provided the interim chief executive.

Deputy C. Lenihan

That is correct. He is a Government appointee to the board. I imagine the job of chief executive is full-time. Will he cease his activities as a commissioner? That is the key issue from a personnel management point of view for which you would be responsible.

Mr. Murphy

I am not sure if it is appreciated that Commissioner Benton has had 431 projects with clients of all shapes and sizes and that this is his 432nd. He will remain a commissioner of public works and provide the interim chief executive services. To the extent that the service in this case will require full-time application by him, it will get it, but I cannot assess at this moment how much time will be needed. I do not think it was ever regarded as a full-time job.

Deputy C. Lenihan

That is precisely the point with which I want to deal. Given that you have made certain criticisms of the way the decision on the awarding of the executive services contract was made, that you would have liked to have been there if circumstances had been slightly different and the human cry about Mr. Teahon's stewardship of the role, from a taxpayer's point of view, do you not think it would be a good idea to have a full-time chief executive seconded from the Office of Public Works working full-time on the project, having regard to its financial implications for the State and the taxpayer?

Mr. Murphy

I do not think I have made any criticism of the executive services. I absolutely have not. On the full-time nature of the job, I hark back to what Margaret Hayes said, that the main project is in a state of suspension until the Government addresses the High Point Rendell report and decides, in a policy way, what is the best way forward. There is that gap in the whole process.

Deputy C. Lenihan

I understand there is a gap in the process. Given that there has been considerable brouhaha about taxpayer's money and interest in regard to the overall stewardship of this strategically and long-term financially important taxpayer's project, is it the intention of the Office of Public Works to supply a full-time chief executive fairly quickly?

Mr. Murphy

We will provide the full service that is required. As of now, as I have made clear, we have not measured it yet.

Deputy C. Lenihan

Let me put it another way. The Government has appointed somebody to head up and be chief executive of a project which has caused significant controversy in terms of the allocation of and the potential downside risk to taxpayer's money, but we still do not know whether this person will be fully seconded to the project to work directly to the CSID board. Significant issues have arisen regarding the management of the project. It is important to have clarity going forward on the issue.

Mr. Murphy

The main thing at the present moment is to bring the pool project in on time and budget. That is central thing.

Deputy C. Lenihan

From my experience of having been in the private sector, I would imagine that even the pool project on its own, costing £876 million - perhaps I am being naive in this respect - would require a full-time chief executive.

Mr. Murphy

In fact, we have a company working full-time on project management or rather it is being done through CSID.

Deputy C. Lenihan

That is precisely what I want to get to grips with. Significant criticisms of Ms Magahy's company have been aired in the public media. You are saying that as of now you would be quite comfortable with a part-time chief executive overseeing a project in which Ms Magahy's company is providing the substance of the project management through her executive services team. That seems to indicate confidence in Ms Magahy.

Mr. Murphy

I have not said we are happy to provide a part-time chief executive officer. I said our interim chief executive officer will provide as much of his time, up to 100%, as is required by the project.

Deputy C. Lenihan

I do not want to accuse you of being Sir Humphrey, but we need clarity on whether the interim chief executive officer will work full-time or part-time on the project. There are only two choices. He will either check in for work on the project on a full-time or part-time basis. That is how I define it. That may be putting it simply, but I think it is fairly clear.

Mr. Murphy

My clear answer to the Deputy is that if it requires this, it will get it.

Deputy C. Lenihan

What is the situation? Perhaps I am asking the wrong person.

Chairman

Mr. Murphy just said that if it requires it, he will give it.

Deputy C. Lenihan

I do not know of how many civil servants here I have to ask that question. Will there be a full-time chief executive officer for the project? I do not want to know about an interim chief executive officer or otherwise. Will there be a chief executive assigned full-time to the project? When was Mr. Benton appointed?

Mr. Murphy

On Thursday last. Can I say——

Deputy C. Lenihan

Is Mr. Benton clear on what his working arrangements will be?

Mr. Murphy

Absolutely.

Deputy C. Lenihan

What are those working arrangements and does his job specification specify that he should work 100% or part-time on the project?

Mr. Murphy

He is a commissioner of public works. One of his jobs is as interim chief executive of the company. Whether there will a full-time chief executive in time will depend on the outcome of the Government's review of the High Point Rendell report. As we now stand——

Deputy C. Lenihan

I am still worried about project management issues that arise in the day-to-day running of the project and the stewardship of Ms Magahy's executive services team. Irrespective of whether major projects are being reviewed or analysed, they still need strong executive leadership. Perhaps I am being naive and misunderstanding something, but I would have thought that a project such as this with its financial implications would have required somebody working full-time on it as of now or as of yesterday. Is that the situation?

Ms Hayes

Maybe I can help. The first thing to remember is that the Government has already separated the role of chairman and chief executive. It now has a completely separate chairman and chief executive.

Deputy C. Lenihan

I am aware of that, but that is not the question I am asking.

Ms Hayes

The board has accepted the interim arrangement facilitated by the Office of Public Works. It will be a matter for it to determine the level of input it requires from the chief executive, even on an interim basis.

Deputy C. Lenihan

If it is okay, I will switch my question to Mr. Haugh, the chairman. We are thankful to you for being here. Do you feel it is appropriate to have a full-time chief executive for the project and that it requires de nova, today or yesterday, a full-time chief executive - I believe Mr. Benton is very good at his job, of which I have experience from my earlier working life - given the controversy there has been about it?

Mr. Haugh

The board met on Thursday last and appointed me as chairman and Mr. Benton as interim chief executive. What is to happen now is that Mr. Benton, as chief executive, has to assess what is the role, the workload etc. of the chief executive. I am heartened by Mr. Murphy's comment that if this requires Mr. Benton to be available on a full-time basis, he will be available. Obviously, the board is anxious that the work which CSID is undertaking is managed in an efficient and effective manner. If Mr. Benton is required on a full-time basis, I am given to understand he will be available.

Deputy C. Lenihan

As of now, he is not working 100% on the job. He has been in the job one week, but is not 100% involved in it.

Mr. Haugh

He was appointed to the job on Thursday afternoon. Taking into account the Easter break——

Deputy C. Lenihan

That is fair enough. I agree.

Mr. Haugh

——it is not unreasonable that he might have a few more days——

Deputy C. Lenihan

Great. What time do you envisage us having a decision in relation to whether he will be full-time or part-time? Do you have an estimate of the length of time he will be required?

Mr. Haugh

As I say, the next board meeting is on 18 April so by that time we will be in a position to give a firm judgment on that.

Deputy C. Lenihan

But you have no instinct, as chairman, as to whether your requirements are full-time or part-time?

Mr. Haugh

Again, I would be loath to make any judgment on that at the moment until such time as we have assessed the implications.

Deputy C. Lenihan

You have no particular view as to whether it is necessary to have a chief executive officer?

Mr. Haugh

I am not prepared to make any public comment on that at this time.

Deputy C. Lenihan

Ms Magahy, you heard the commentary of the Comptroller and Auditor General in relation to the approach that was taken to the structuring of your contract. It was indicated by Mr. Teahon at the meeting before last that there has been a substantive review of that contract. Have you any information to impart in relation to the current position of the contract for executive services with CSID? Where does that stand now? Has it been agreed or is it still under negotiation?

Ms Magahy

As I understand it, it was agreed at the last board meeting that Mr. Benton would be mandated to discuss the proposal that we put to the board on 4 March this year with me as director of executive services.

Chairman

Can you just clarify if it was 4 March? You mentioned proposals to the board of Campus Stadium Ireland Development agency on 28 June.

Ms Magahy

That was June 2001, but, on foot of some correspondence from the Department of Tourism, Sport and Recreation in February, which basically indicated that the project was being scaled down and was effectively being put on hold, we were asked to consider what level of revised service might be appropriate.

Chairman

Have we got a copy of the revised proposals of February this year?

Ms Magahy

4 March. Yes, I sent it through last week.

Deputy C. Lenihan

It might be useful to have them.

Chairman

It would. We have several proposals at this stage and we would like to know what is the up to date one.

Mr. Teahon

Can I clarify that? You have, effectively, three documents. You have the original contract, you have a second proposal which was made voluntarily by Ms Magahy and then you have a third proposal which was one for a lesser contribution based on the fact that, as somebody said already, the main business was not going ahead.

Deputy C. Lenihan

Right. I am clear to that extent. The main contract has been formally agreed. That, as far as your company is concerned, would be considered a legal contract.

Ms Magahy

It is a legal contract.

Deputy C. Lenihan

And binding?

Ms Magahy

Yes.

Deputy C. Lenihan

So the second proposal represents an attempt by you to revise your contract with CSID in the light of public clamour about the 1.8% issue going forward. Is that the case?

Ms Magahy

It was on foot of the fact that the project seemed to be larger than was originally envisaged and that there was more certainty about the size of the project. It was in an effort to have more transparency which, I think, Mr. Purcell had indicated he would like and we were perfectly happy to row in with it.

Deputy C. Lenihan

When was that second proposal?

Ms Magahy

The proposal was made in June 2001 by our team.

Deputy C. Lenihan

I am trying to get the chronology right. Was agreement ever finalised on revising that contract?

Ms Magahy

No, it was not.

Deputy C. Lenihan

You are saying, therefore, that although you initiated that in June 2001, you still have not heard any substantive response as to whether that was the way CSID or the Department was going to go in terms of revising your contract?

Ms Magahy

I understood that they welcomed and accepted the principle of a capped fee and it was down to discussing then the level or nature of that capped fee.

Deputy C. Lenihan

So from June to now you are still looking at the nature of the capped fee?

Ms Magahy

Correct.

Deputy C. Lenihan

Has there been substantial documentation passing from the State side or the board to you to explain how that happens?

Ms Magahy

Not directly with me, backwards and forwards, but I think the HPR report intervened in the meantime and therefore the scale of the project, which was envisaged as being larger, then suddenly got put in the spotlight, if you like, and it was to be debated as to how big or otherwise the project would be. I would understand that is why it was not actually——

Deputy C. Lenihan

Who was negotiating? When you indicated in 2001 your desire to have the contract amended and, presumably, tightened up from the Exchequer point of view, who negotiated with you about either lowering or controlling that fee?

Ms Magahy

I put the proposal to the board and the board mandated the finance and audit committee to negotiate.

Deputy C. Lenihan

Who is the principal person who would have had discussions with you about it?

Ms Magahy

I would have had discussions with Mr. Teahon.

Deputy C. Lenihan

As chairman?

Ms Magahy

As chairman and chief executive.

Chairman

I ask the Deputy to conclude with his next question.

Deputy C. Lenihan

Yes. The other issue is the third proposal. How soon do you think this will be resolved? In the next week or two will there be a new contract?

Ms Magahy

Yes, I would hope so. I discussed it with Mr. Benton very briefly yesterday and we agreed that what we would try to do is to have the situation resolved by tomorrow week.

Deputy C. Lenihan

What is being discussed here is a review of your contract, not the termination of the contract.

Ms Magahy

Absolutely, yes.

Deputy C. Lenihan

As you understand it, termination has not been put to you.

Ms Magahy

No, it has not.

Deputy C. Lenihan

It has not been put to you.

Ms Magahy

No.

Chairman

Since the word "termination" has been used, Ms Magahy, in the original contract there is a termination clause. What are the terms of that termination clause, should it be terminated? The termination aspect has been much in the media in recent times.

Ms Magahy

I have to check the documentation. I think you have it.

Chairman

We have, but I prefer you to say it yourself.

Ms Magahy

No problem.

Deputy C. Lenihan

Is the termination of contract an issue in the review?

Ms Magahy

I am presuming that when the overall discussion about the level and nature of the service is being discussed with Mr. Benton, in the context of the project being on hold, that what we will get, effectively, is a new contract.

Deputy C. Lenihan

You are saying that the termination fee is, as you would regard it, an academic issue?

Ms Magahy

Yes.

Deputy C. Lenihan

As you see it, it will not arise.

Ms Magahy

If we can come to an agreement, which I fully expect we can, then it will not be an issue.

Deputy C. Lenihan

You do not see it as an issue, in terms of the transparency mentioned earlier, that needed to be resolved as well?

Ms Magahy

I do not see it as an issue. Let me be clear. I wanted as much transparency as possible as well. It was not something——

Deputy C. Lenihan

That was forced upon you.

Ms Magahy

We actually volunteered it; we wanted it and we are more keen than anyone to get a resolution to this issue.

Deputy C. Lenihan

The £1 million figure seems to have attracted a lot of attention. Do you think that is a fair fee, given the amounts you are being paid on a monthly basis?

Ms Magahy

I do not know where the £1 million figure came from, to be frank.

Deputy C. Lenihan

You are saying it is not accurate?

Chairman

I am publishing the details of the contract. As I said earlier, the £1 million is regularly mentioned in the media. Perhaps Ms Magahy would expand on the terms of the exit contract, if the contract was terminated. It is important that we should know.

Ms Magahy

Under clause 10, CSID has the right to terminate the engagement under the agreement by notice in writing to Magahy and Company. Fees will be paid for services rendered during the period of notice in accordance with the fee proposal of 30 June. In the event that CSID were obliged to so terminate the engagement prior to the expiry of five years from the effective date, other than for reasons set out in paragraph 9 and 1.2 of paragraph 11 which follows, then compensation will be payable on the following basis - where at least six months notice is provided, compensation of a sum equivalent to one month's fee per year for each of the unexpired years of the five year period and, where less that six months notice is provided, additional compensation of a sum equivalent to one month's fee per month by which the period of notice actually provided is less than six months. Where a relevant period is part of a year or month, as appropriate, the compensation relative to that part shall be calculated on a pro rata basis. No other compensation, fees, costs, losses, expenses, etc. shall be paid on termination.

Mr. Purcell

There is some basis for the £1 million. Clearly, at the time the contract was signed, we were envisaging a five year contract. If, let us say, it was terminated and there were four years still to run, that would be £400,000. If no notice was given, £600,000 would be added on to that. That is where the £1 million figure comes from. In the circumstances, it could be up to £1 million.

Deputy C. Lenihan

Does that mean no notice was given and that there were four years of the contract left? In other words, I am talking about a situation where termination occurred in the first year of the contract.

Mr. Purcell

If termination occurred in the first year and no notice was given, Magahy and Company would be due compensation of approximately £1 million.

Mr. Teahon

I want to clarify why six months is mentioned. Six months was put in because I judged that in any normal circumstance one would expect a significant period of notice to be given. If one goes into a contract such as this, one assumes that one will be able to give a reasonable period of notice. The normal situation one would consider would be where six months' notice would be provided. The figure of £1 million is generated to give the highest possible number in circumstances which no reasonable person would believe would apply.

Chairman

What is the lowest possible number in that situation?

Mr. Teahon

Zero.

Chairman

Do you, Mr. Purcell, have any comment to make?

Mr. Purcell

It goes down to zero towards the end of the five years. Ultimately, if one gives six months' notice——

Mr. Teahon

The other point which needs to be made is that this contract was signed in a situation where we were talking about an executive services team. We were talking about a team of people who would be brought on board for a period of time. In the normal circumstance, the company which put that contract in place in terms of providing the team would have to have arrangements with a significant number of people. Those people had to have some comfort to get them to come on board. We cannot ask a person to do an important job and then tell them we can let them go without any notice. I am sure the committee would not like to think we took people on board in this project and then dispensed with them at a moment's notice. The reason there is such a provision is that people see themselves as being on board for a five year period.

The project was approved by the Government. It was always clear there was some question mark. I always hoped it was a question mark which would have been relatively insignificant. However, it proved to be more significant. In order to get good people on board on the basis that they would be there for a five year period, we had to provide a termination clause. A termination clause in those circumstances is perfectly reasonable. The type of termination clause provided was that if the contract was terminated, a reasonable judgment would be that the person would have six months' notice. One would hope that such a termination would not arise. The termination clause was reasonable in the circumstances.

Chairman

The project was envisaged to be for five years. People in any large construction project are employed by the company to do a job. Are you saying it was better value for the taxpayer to have an executive services team, with a projected figure of £9.625 million over the five year period? Was that cheaper than employing skilled people and giving them £100,000 or £150,000?

Mr. Teahon

If the people were provided with normal employment contracts - the Comptroller and Auditor General used the word "innovative" - and let go in the circumstances now being talked about, it would have been more costly. If all the people were employed on normal employment contracts - in other words, if we told them we would employ them on a five year contract - no one would sign up to a five year normal employment contract. They would then have a five year contract. If, in those circumstances, a person had to be let go, he or she would have to be paid the full cost of that contract. It goes back to something Deputy Bell said at the outset.

The judgment made in relation to having an executive services team rather than normal employment contracts was made on two bases by me. Basis one was that we needed a significant number of good people in place relatively quickly, particularly because the Government had asked for the pool to be put in place for the Special Olympics. That was a clear and short-time deadline. If we wanted to get good people on board on that basis, undoubtedly the fastest way to do it was through an executive services team. We then had to ask if there was any significant downside relative to employing all the people on normal employment contracts in a longer period of time, but for a five year term. One would not get good people on board for shorter than a five year term because everyone knew we were talking about a five year term. In those circumstances, the executive services team which was put in place represented better value for the State than if we had employed people on the basis of normal employment contracts, leaving aside the time issue. Given that we were faced with a deadline, the judgment is significantly reinforced.

Deputy McCormack

Talking about terminating five year contracts makes me nervous in the present climate.

Deputy Dennehy

That does not show much confidence.

Deputy McCormack

Mr. Teahon stresses every day he is here that he wanted the Office of Public Works to be involved in the process. What factor decided that the Office of Public Works would not be involved in managing the project from the beginning?

Mr. Teahon

The papers provided by the Office of Public Works and the meeting chaired by the Minister for Finance answer that question. At a particular moment in time the Minister for Finance said a judgment had to be made by the Office of Public Works relative to the issue which arose on the day. In other words, were the Office of Public Works satisfied that the Office of Public Works people would report to the company and specifically to me as executive chair? Mr. Murphy and the Minister of State at the Department of Finance, Deputy Cullen, decided - I do not have a problem with the decision - that in their judgment they did not want to proceed on that basis. The decision was then made that the Office of Public Works would provide technical services for the Department of Tourism, Sport and Recreation in connection with the project and we, in Campus Stadium Ireland, would proceed by way of normal tender to recruit a company, which we did, to provide the project management services. That company was then put in place.

Mr. Murphy

I do not want to enter into an argument or dialogue on this issue, but that is not the case. We were prepared to work for CSID, provided we had a formal legal agreement with it. We could not get it and did not work for it.

Chairman

Did you sign a contract in February 2000?

Mr. Murphy

I did.

Mr. Teahon

I do not want to enter into a dispute with Mr. Barry Murphy, but what he says is untrue. If anyone wants to clarify the situation, they should ask the person who chaired the meeting which reached the agreement.

Chairman

Who chaired it?

Mr. Teahon

The Minister for Finance.

Deputy McCormack

We cannot ask him today. I do not want to enter into a dispute between Mr. Murphy and Mr. Teahon, but want to continue with my questioning. Does the interim appointment of the chief executive allow the Office of Public Works to report to the company? I want to get clarification on that matter. That was not allowed in what was offered in the beginning.

Mr. Murphy

I am not absolutely sure of your question, Deputy. We are facilitating the company and providing and interim chief executive for it. What further services we might provide, or what different arrangements there might be, simply have not been worked out yet. We will work it out over the coming week.

Deputy McCormack

Will the general public know in advance of the expected May election that this will all be worked out?

Mr. Murphy

I am not sure.

Deputy McCormack

These are the questions we, as members of the Committee of Public Accounts, are being asked by members of the public in our constituencies and elsewhere.

Mr. Murphy

I would hope, Deputy, yes, that we will have some answers by then. I am not sure if I know the date of the May election but whatever the date is, I would hope that we would have some of the answers then.

Deputy McCormack

Yes. I want to get a bit more clarification on this. On 4 March, Ms Magahy, they proposed some new contract arrangements. Has there been any response to that yet? The 4 March is a month ago today.

Ms Magahy

Yes. As I said, I met with Mr. Benton last week - or yesterday, I am losing track of time - and we agreed that we would finalise the discussions on that by tomorrow week.

Deputy McCormack

Is this all being arrived at on a voluntary basis, despite the fact that you say you have a legally binding contract the way you are? Why is there a necessity for re-negotiation at this stage?

Ms Magahy

Well yes, first of all, the answer is that it is all being done on a voluntary basis. It is being done in the interests of more transparency which was called for by the C&AG, which I welcomed and which Mr. Teahon and the board wanted. We all wanted it so that is why it is being done.

Deputy McCormack

Perhaps, Chairman, your committee could take some credit for arriving at this situation. Could we?

Chairman

I am sure the fact is that the committee has made the quote sequence very familiar to people.

Deputy McCormack

To get back again to what the C&AG said at the beginning, I think he used words such as "the public purse was not properly protected in the 1.8% of an unknown cost of the project". How was that 1.8% of the cost of the project arrived at? Who came up with that figure, or how was it arrived at?

Chairman

Two per cent was suggested, Mr. Teahon, and I think you modified it to 1.8% in some documents we got.

Mr. Teahon

That is right. In fact, it was modified to 1.75% in a negotiation between Ms Magahy and myself. The percentage arose by reference to the percentage that professional people, who would be paid on a professional basis, would expect to get paid. The fact that the number was also reasonable in a more transparent way is provided for, if you look at the first voluntary proposal from Ms Magahy, which shows that, on the basis of a time input multiplied by a charge-out rate, the figure is not significantly different.

Deputy McCormack

Yes, but is it normal that there would be a percentage of an unknown cost?

Mr. Teahon

Professional people in construction projects, like architects, are always paid on that basis. Everybody believes in their estimate of the cost but the percentage applies to a cost.

Chairman

Mr. Murphy, is there a scale with regard to contracts you have been involved with, or do you negotiate?

Mr. Murphy

For the European contracts, part of the criteria is the amount bid so there is an actual bidding process for the fee. But it is not quite so straightforward, as has been said. Our estimating processes are quite refined and I am glad to say that your own committee has only hauled me over the coals once in the last ten years for having a cost overrun on a project. So, our mechanisms for getting a price on which fees are based is well established. Then the fee is paid for specific work done so that at each stage only a portion is paid. I have the exact amounts here. We pay a certain amount of the fee at outline proposal stage, a certain amount more at the scheme design stage, and so on. At construction stage, when we get into that area, where you might have a cost overrun if you had not prepared properly for it, there is only 15% of the overall fee left to be paid. It is a segmented fee, as you go along. There are controls at each point. It is not simply a single fee on an outcome.

Chairman

Can you tell us whether Mr. Benton, who was originally in the three-member panel who assessed the tenders - I will not use the word "competitive" tender because I think it was a range of services that was offered originally - and awarded the contract to Laura Magahy's company, expressed any reservations to you that there was no financial consideration attached to the actual tenders themselves? As we know, the percentage was negotiated afterwards.

Mr. Murphy

Can I hark back to our meeting, I think it was the last day, where I explained to you that the assessment panel was involved only at looking at a set of written submissions? That was their job. There was no involvement by them in establishing the bona fides of the various bidders, that was a matter for CSID, nor was there any way that the assessment panel could guarantee the extent to which the personnel and companies being offered in the consortium would be the actual personnel and companies that would ultimately take up the particular job.

Chairman

The question is, with your expertise in the Board of Works, and Mr. Benton being a senior commissioner, did he think it unusual in a bidding process that if people gave a range of services they would provide, there was no financial quantification of those services? I believe there were three applications in the final assessment. There was only an assessment on a range of services, so I do not think it could be used as a competitive tendering process because, to me, tendering has a financial linkage.

Mr. Murphy

I accept that fully, Chairman. All that the assessment panel was asked to look at was, I think, seven tenders, finally. They were not tenders in that sense, they were statements of services that could be provided. The assessment panel only looked at these services, they did not look at the cost of them.

Chairman

But they did select Laura Magahy's company for the executive services contract, based on the suite of services that were going to be provided.

Mr. Murphy

Yes. What they said was that for the personnel and companies offered, the service being offered through them was one that would meet the technical requirements of an executive services package.

Chairman

But there was no financial quantification of the other two tenders?

Mr. Murphy

No, none, nor was any offered.

Mr. Teahon

As a matter of clarification, Chairman, since I made the statement the last day, I checked and what I said is correct - that we asked if the approach should be the one that was adopted. We were told that under the Department of Finance's so-called "green book" the way in which you should approach these contacts was, in the first instance, to select one preferred team, in this instance, and then to negotiate a fee with that team. It may have changed since then and I agree wholeheartedly with the Comptroller and Auditor General when he said it would make far more sense if you negotiated the team, the people and the fee as part of the process. But I did check and that is what we were informed at the time - that this was the way in which you should go about doing it.

Chairman

Does the Department of Finance wish to comment?

Mr. O’Brien

I am not an expert on procurement but I have the green booklet here. Appendix 2 of this booklet, which is on page 40, sets out Department of Finance circular 24 of 1993. It is dated 3 November 1993. It revises circular 11 of 1987. Circular 11 of 1987 must be read in conjunction with this and it is in appendix 1. They refer to the professional fees for construction contracts. In reading those, you have to have regard to what a consultancy contract is in that context as, I think, was referred to in the legal advice provided by McCann Fitzgerald of which the committee has a copy. It refers to a different part of the green booklet which is chapter 3, page 11 and, particularly, page 12 which talks about the engagement of management and other consultants. When you get into what is covered by procedures, you are into matters of EU law and whether EU directives apply. McCann Fitzgerald provided advice to CSID on that matter and it came to the view that the EU directives do not apply.

In the context of what the actual services were, you have to form an opinion as to whether it falls under the engagement of consultants or circular 11 of 1987 which deals with construction. When you deal with circular 11 of 1987 and if you read paragraph 3.1 of page 11, it refers to particular types of services which include design, architects and quantity surveying types of ones whereas paragraph 3.3 refers to other consultancies. It is quite a confusing picture in terms of what applies in particular instances here.

Certainly, if we are talking about consultancy work, I would regard paragraphs 11 and 12 as applying. In paragraph 12, there are requirements for consultancy engagements, the principal steps to be taken, and I would regard those as applying in those types of consultancies. So, it is quite a complex one and I am not familiar with the detail - I am not a legal expert. I was just trying to be helpful to the committee in explaining that I think it depends on what you look at. If you look at construction and at services in that context, like design, quantity surveying and so on, circular 11 of 1987 applies and if it is at other ones, the relevant part of the green booklet that applies is pages 11 and 12.

Deputy C. Lenihan

Mr. O'Brien, in your view, into which one does executive services fall?

Mr. O’Brien

I am not a legal expert and this is where the advice from McCann Fitzgerald is quite important as to where it sees it falling and on which it advises CSID. It concludes that it is not covered by the EU directive. I am not a legal expert and I cannot give an opinion on that.

Chairman

If the whole principle of executive services is accepted and if services contracts embrace such things as advertising, property management, architecture, engineering, surveying, management consultancy and so on, if the contract is in excess of €166,000 - we are talking about contracts of £1.2 million in 2001 - and if you are not an expert, do you think the Department of Finance should get clarification for the future? Otherwise we might have a situation where the words "executive services" are used rather than "consultancy services" because if you use the words "consultancy services", you would have to advertise in the European Union journal in the 15 member states? You may not be an expert. However, if you have the procurement guidelines, as you have here, you would want to get clarification on that because a company in the future may say it is providing executive services rather than consultancy services because it would cover what it is doing.

Mr. O’Brien

One of the lessons arising from the consideration by the committee here will be that we will have to look at the green booklet to give greater clarity in this area. I stress that the responsibility of implementing EU directives, which are legally binding, is on the contracting authority. Your point, Chairman, is well taken. We will have to look at the green booklet to give greater clarity in terms of——

Chairman

I will ask the Comptroller and Auditor General to make an observation.

Mr. Purcell

What you said, Chairman, and what the Department of Finance representative said in response was the point I was going to make. The green booklet is totally inadequate for the type of services which have developed over the years since 1994. The negotiated procedure envisaged in the green booklet, public procurement, was one which applied to things like architectural and engineering services. You had, on the other hand, quite brief references to the engagement of consultants. Something which fell in between was in never-never land. That needs to be addressed because we were all in agreement - the executive chairman agreed with me on that - that it was totally inadequate to go into this particular provision of executive services without cost being a factor.

What we are all trying to achieve here is the most economically advantageous tender. The green booklet refers to using various criteria such as price, period for completion, running costs, profitability and technical merit. These are mentioned in it but price is number one. We may have had legal advice to go a particular way but the principles underlying public procurement certainly were not followed in order to gain the most advantageous economic solution.

Mr. Teahon

To make one point which is, if you like, in addition to that, you made the point the last day, Chairman, and you asked me if, in fact, any people had applied internationally. We advertised this, even though there was no requirement to do so, in the Financial Times. We got three applications of substance which were part of the final assessment. There was a requirement for people to indicate an outline fee. I checked on those and, in fact, they were significantly above in terms of the basic amounts that would apply to the people who came from Ireland. Who knows what would have happened if - I agree with the Comptroller and Auditor General on this - we had had a hard negotiation? On the basis of the information that became available, the people who applied from abroad were quoting higher fees than the people who applied from Ireland.

Chairman

We will leave that point. We appreciate the fact the Department of Finance is going to look at the whole public procurement policy——

Deputy C. Lenihan

Chairman——

Chairman

We will come back to questions later.

Deputy C. Lenihan

This is very important. If the fees of the other bidders were all higher, we need a read-out on that because of the significance being made of the cost of the executive services contract. The other bidders were all higher.

Chairman

According to Mr. Murphy, who Mr. Benton was——

Deputy Rabbitte

We should reserve drawing any conclusions until we have heard all the evidence.

Deputy C. Lenihan

But we need the documentation, Chairman.

Deputy McCormack

I will try to keep my questions short because my last one led to a long discussion. There seems to be a conflict of opinion. Our job concerns value for money and the expenditure of State money. The Comptroller and Auditor General said that the public purse was not properly protected and Mr. Teahon said he got the best value for money. Who is right?

Chairman

The jury is still out on that. The Comptroller and Auditor General may like to comment on that.

Mr. Purcell

I am sorry for hogging the debate, Chairman, but I said that there were three different factors which, for me, would pose a risk to the achievement of value for money. The achievement of value for money can be difficult and the relationship between the procedures you follow and the end result are not always unequivocal. Certainly, there were risks and I outlined three particular steps at which those risks existed.

Mr. Teahon

I will make one final brief point because there now appears to be a big difference of opinion between me and the Comptroller and Auditor General which is not the case. I agree completely with the Comptroller and Auditor General that we would have been in a far better situation if we negotiated the people and the fee as part of the one system. Between us, we are completely agreed on that. I happen to believe that the contract that was negotiated provides value for money. I accept the point the Comptroller and Auditor General makes about risks and I still believe the contract provides value for money.

Deputy McCormack

I will not press the matter further, although I am still unclear on it. The Comptroller and Auditor General mentioned a figure of €127,000. To what does it refer?

Mr. Purcell

It is the flat fee per month being paid to the executive services company.

Deputy McCormack

Is that on top of 1.75%——

Mr. Purcell

No. The figure of 1.75% or 1.8% was put into abeyance——

Mr. Teahon

This is very important. I am of the view that people believe that, somehow, this figure of 1.8% applied at some point in time. It has never applied. Based on the voluntary proposal made by Ms Magahy, it never will apply. It is important that people out there, who I accept have a legitimate concern, understand that. It never applied and probably never will.

Deputy McCormack

I am not so concerned with the people out there, but with our duty here. If there is a figure of 1.5%, 1.7% or 1.8% off the total cost, that concerns us.

Chairman

I accept that.

Mr. Purcell

The figure of 1.8%, as it applied to the executive services team's fees, £100,000 per month, was based on 1.8% of a particular contract amount - I think £320 million. From that point of view, the figure of 1.8% formed the basis for the flat monthly fee. The original contract envisaged that if the figure of 1.8% was ultimately greater, more would be paid to the executive services team.

Chairman

The figures are 1.75%, 1.8% and £100,000 per month. Ms Magahy, what services are you providing for €127,000 per month?

Ms Magahy

I am delighted to take the opportunity to respond to that question. First, the executive services team has a team approach. It comprises PricewaterhouseCoopers, McHugh Consultants, SIAS Ireland, transport consultants, WHPR and Magahy and Company. For a period of time it also included Seamus Monahan and Partners, project management services. The difference between the figures of 1.8% and 1.75% is that Seamus Monahan and Partners withdrew at a point in time when the Office of Public Works retired from being project managers and when CSID had to advertise for one. Seamus Monahan and Partners decided it would like to apply as project manager, hence it withdrew from our team. That explains the difference.

The figure of £100,000 was based originally on an estimated project cost of £330 million which, as I understand it, arose from the PricewaterhouseCoopers original stadium price estimate, plus the cost of the pool. The cost of the stadium and others was £270 million and the pool, £48.4 million, which arrive at a figure of £330 million. That was the estimated cost of the project at the time.

Deputy McCormack

Does it still exist, despite the fact that the main project will not now go ahead? It will not proceed before the general election because it is political dynamite, in one way. Perhaps that is not the cause of its deferral. Does the fee of €127,000 still exist?

Ms Magahy

Perhaps I could explain the service we have been providing for that sum.

Chairman

Deputy McCormack points out that on 1 January 2001, £100,000 per month was paid to you while on 1 January 2002, £100,000 was paid. It has been known for some time that the overall development has been stalled and you are proceeding with the aquatic stadium. The Deputy is pointing out that the level of service is static and wants to know what you are providing now and the reason you are still getting the same fee each month.

Ms Magahy

We were notified of the scaling down in the middle of February. Until that point we were providing the full suite of services and all the people were working on the project. We had three objectives to achieve within a very short space of time. We were appointed just a year and a half ago, in September 2000. The three objectives we were set to achieve were, first, to get the aquatic centre up and running on time, on site and on budget - that has been achieved; second, to bring the overall sports campus Ireland idea up to the point where it was ready to submit for a planning scheme to Fingal County Council - that is what we have here. All the documents are here. It is the work on which we have all been engaged. That is what we were required to do.

Deputy McCormack

All along there was a serious doubt that the main project would ever proceed.

Ms Magahy

May I continue?

Deputy McCormack

All right.

Ms Magahy

The third thing we were required to do was to bring all the sports facilities, which include the stadium, the arena, the multi-purpose hall, the sports, science and medical centre and the pitches, and the commercial facilities up to the point where we would have some kind of price outline for them. We did this and brought them into the right price by receipt of private sector bids in June last year. We have brought the scheme, as required and requested by the board of Sports Campus Ireland, to that point, including from the point of view of master planning, the demand for and feasibility of the various sports facilities, transportation and infrastructure planning, commercial and community uses, examining the financial feasibility and funding scenarios to deliver the uses within the budget set, programming the whole project to meet the five year delivery expectation, examining the property and getting the planning structure in place and consulting on the details with all the different stakeholders. That was the task we were set. We were not being paid £100,000 per month to do nothing. We had six full teams working on the project.

Deputy McCormack

Despite the fact that there was a doubt about it going ahead for a long period of time.

Ms Magahy

With respect, we were not told there was a doubt about the project. As far as we were concerned, the Government had——

Deputy McCormack

There was a public debate taking place that created a doubt about the project ever going ahead and there was a debate taking place within the Government which also created doubt about it going ahead.

Ms Magahy

As I say, we were working away to try to get this scheme in place, as we had been briefed.

Deputy McCormack

Mr. Murphy said the Office of Public Works was still capable of overseeing the project, although I am not sure in what capacity. How long will this interim arrangement last until that becomes a definite arrangement?

Mr. Murphy

We do not have a time on it. I am assuming it is whatever length of time it takes for the Government to come to a decision on the future of the project as a whole.

Deputy McCormack

Can you give an assurance that if the Office of Public Works is in an overseeing capacity - I am not sure about Mr. Benton's position - the Swimworld part of the project will be finished on time?

Mr. Murphy

As we have heard, that project is on time, as I understand it. It is being project managed by PKS, a private sector firm.

Deputy McCormack

Why was there a necessity for interim management of a project that is not going ahead?

Mr. Murphy

I understand the interim chief executive's role is to sort matters out in advance of a Government examination of the High Point Rendell report. I presume that is what will happen.

Deputy McCormack

Expand on what you mean by "sort matters out".

Mr. Murphy

Proposals will have to be put to the Cabinet, presumably, through the Minister for Tourism, Sport and Recreation. They will have to be based on the views of the board of CSID. That is the job that has got to be done now, as I understand it.

Ms Hayes

To revisit some of the points Deputy McCormack and Ms Magahy discussed, the project was proceeding as planned from early 2000 right up until May 2001, when the Government decided to have a major cost overview carried out by independent consultants. At the same time the Government allowed the outline bid process for the major project to go the end of that phase of the bidding process, which was due to run to mid June. At the same time the consultants were put in place and CSID was asked to give full co-operation to the consultants to help them carry out their review.

CSID was also given specific Government permission to go ahead with a number of technical and scientific surveys relating to the site which would contribute to the overall planning preparation for the project. That would deal with working out the quality of soil surveys. There was a heritage survey to be carried out; a number of requirements in relation to a planned submission of a planning application at some time in the future. Therefore all those surveys had to be overseen as well by the executive services team.

The High Point Rendell cost overview was published at the end of January with a Government decision, which requested the Minister for Tourism, Sport and Recreation to do the following: to report back to it on the implications of the High Point Rendell recommendations and options, and in particular to evaluate the viability of the existing tendering strategy, which is, as we discussed last week at some length, a design, build, operate, finance and maintain strategy, as a basis for any modifications of the stadium design and operation; to also evaluate the implications for the Exchequer of the options and recommendations identified in High Point Rendell report; and to look at the issues raised in paragraph 1.7 of the report which is about the overall management structure for the project.

The Government stated at the time that it remained convinced that a stadium project at Abbotstown was both desirable and feasible and that the Abbotstown campus can and will be developed into a vital infrastructural asset for the achievement of national aims in the field of sports, recreation and related tourism, and it is against that background that CSID has continued its work. Contemporaneous with all that work that I have outlined, which was ongoing in the latter half of last year at the planning stage, CSID was also completing the detailed contract negotiations on the pool.

Deputy McCormack

That clarifies a great deal for me but was there somebody talking out of both sides of their mouth? If, in May 2001, there was an independent review ordered by the Government, was there somebody saying, "Continue on with the work, this is only a minor part of the Government that is looking for that and we will get over that obstacle. We will get on, keep going."? Why did somebody at that stage say, "Now let us cease planning, work and expenditure on this project" because at that stage if one was looking for an independent review, it was likely it would have to take into account the opinion of the independent review when it was eventually presented in January 2002? I cannot understand why work continued and expenditure was allowed to continue in the period after the Government set up an independent review to look at the project.

Mr. Teahon

It is worth recalling the terms of reference, which unfortunately I do not have before me. My recollection of the terms of reference of the High Point Rendell report is that the objective of the review was to assist the Government in deciding on the amount of money that was appropriate to put the entire project in place.

I can read it out now; Mr. Donagh Morgan has just provided it for me. The terms of reference for the overview were "to assist Government in determining final Exchequer allocations for Stadium and Sports Campus Ireland and the sensitivity of such allocations to the variations in the scale of each element of the project". It seems to me that anybody reading those terms of reference, which were approved by the Government, would assume that what was in question was the amount of money one should spend, not whether the project would go ahead or not.

Deputy McCormack

I know I cannot ask about Cabinet confidentiality, but was Mr. Teahon present at that Cabinet meeting when those matters were approved by the Government?

Mr. Teahon

No, I was not.

Deputy Rabbitte

Chairman, who drafted those terms of reference?

Chairman

Who drafted the terms of reference? Was it the Department of Tourism, Sport and Recreation?

Ms Hayes

I am trying to recall. I think they were——

Deputy Rabbitte

If Mr. Teahon could lay his hand on that paragraph again, it is worth reading.

Ms Hayes

Does the Deputy mean the terms of reference?

Deputy Rabbitte

Yes.

Mr. Teahon

If the Deputy wishes, I will read it again. If I could clarify one matter, lest that question is hanging in the air, I had no hand, act or part in the drafting of those terms of reference.

Chairman

We would not dream of thinking that.

Mr. Teahon

I had no hand, act or part in that. What I read out was, "to assist Government in determining final Exchequer allocations for Stadium and Sports Campus Ireland and the sensitivity of such allocations to the variations in the scale of each element of the project". Then it goes on to say that the consultants will, etc.

Deputy Rabbitte

It is a masterpiece anyway - that is all I wanted to record, not to suggest that Mr. Teahon wrote it. He can be very happy that his successors in the State service are——

Chairman

Ms Hayes, have you confirmed about the drafting?

Ms Hayes

The drafting involved a team of Ministers, led by my own Minister, Deputy McDaid.

Chairman

Was it the Ministers who drafted it?

Ms Hayes

Yes.

Deputy Rabbitte

Chairman, I have a couple of disjointed questions to ask. Can I ask Ms Magahy about the Attorney General's report, on page 19, where he records her as saying that the contracting entity has no substance? What did she mean by that?

Ms Magahy

Sorry, I just want to get it out, if I may. I believe it refers to the PricewaterhouseCoopers memo, which is——

Deputy Rabbitte

The full sentence reads:

This meeting between Laura Magahy, Aidan Walsh and Kevin Kelly is detailed in a PwC memo which goes on to indicate that Laura Magahy commented on the situation whereby they were now faced with a "contracting entity that has no substance."

Ms Magahy

I believe that refers to the memo that is published in full——

Chairman

It is published so that the people on the other side of the table can see it.

Ms Magahy

——in Annex J of the Attorney's report. I was basically looking for clarification as to what the next step should be now that the preferred bidder had been selected and what the appropriate steps would be. The memo goes on to state that Kevin Kelly, who is from McCann Fitzgerald solicitors:

. . . commented that it would be normal to enter into contractual arrangements with a special purpose vehicle set up for the purposes of this particular contract and that these would be backed [up] by necessary parent company guarantees and an adequate amount of equity in the company. This needed to be resolved with the consortium members.

Deputy Rabbitte

Yes, but what did Ms Magahy mean by this statement?

Ms Magahy

I was concerned to see that whatever contracting entity we had chosen would have the required backing.

Deputy Rabbitte

What Ms Magahy said was that we are now faced with a "contracting entity that has no substance". Was that her view?

Ms Magahy

I do not actually recall saying that. I take it that I was concerned, after the meeting of the assessment panel, to make sure that the right contracting structures were put in place and that we had adequate backing.

Deputy Rabbitte

But it says here that Ms Magahy is recorded in the PwC memo as saying that.

Ms Magahy

Yes.

Deputy Rabbitte

Was that your view?

Ms Magahy

I do not recall the exact circumstances of the day. I am not avoiding the question.

Deputy Rabbitte

Was it your view that you were now faced with a contracting entity that had no substance?

Ms Magahy

No, it was not. One of the parties of the consortium had shown up in Pricewaterhouse's search as saying that it was dormant but certainly the consortium was not a contracting entity with no substance.

Deputy Rabbitte

But these paragraphs in the Attorney General's report seem to be set against a background of having found that the successful contractor or bidder had no financial capacity and it seems to be recording Ms Magahy in a PwC memo as concluding in these discussions that it was an "entity that has no substance".

Ms Magahy

That is certainly not the case. First of all, CSID had not contracted with anybody at that stage.

Deputy Rabbitte

"Contracting" is the word.

Ms Magahy

The intention was to contract with the selected preferred bidder, subject to their assuring CSID that they had the requisite financial backing. The job of that meeting after the assessment was to make sure that whatever required financial backing that had to be demonstrated would be put in place and could be put in place.

Deputy Rabbitte

All right. Did you think that the entity with which you were about to contract did have substance?

Ms Magahy

They were selected as the preferred bidder.

Deputy Rabbitte

No. I am asking what you thought, Ms Magahy. You are the one who is recorded in the PwC memo. As I understand it, the Attorney General is doing no more than recording it from the PwC memo - presumably a contemporaneous note. Was it your view that it had no substance?

Ms Magahy

To be quite frank, until I saw the memo I had no memory of it at all because things were moving very quickly at that time. What I do know is that we wrote, on foot of that meeting, to the consortium to make sure they had the required financial and levels of guarantees that we——

Deputy Rabbitte

But would it not be a terrible shock to be confronted with? If it is as presented in the Attorney General's report and in the contemporaneous record made by PwC, it would be a terrible shock to discover that one was contracting with an entity that had no substance.

Ms Magahy

I am sorry to repeat myself, but it was not an entity that had no substance so it was not my view.

Deputy Rabbitte

Are you denying you said it?

Chairman

You were probably correct in what you said, Ms Magahy.

Ms Magahy

You see it was not an entity that had no substance because it was a consortium. My concern was to make sure that the consortium with which we contracted would have the required financial backing and that CSID should not enter into any contract with anybody that did not have the required kind of backing. That meeting went on to draft a letter, as between Pricewaterhouse and Kevin Kelly of McCann Fitzgerald. . . to write to the consortium members asking them to set out their relevant financial backing to show us that they had it.

Deputy Rabbitte

I know all that. If you want to take the opportunity to comment on it once more, Ms Magahy, that is fine. I understand that would have been very prudent indeed. All I am saying is that the Attorney General has concluded, from a PwC memo - presumably contemporaneous of the meetings - that you reached that conclusion. Are you saying to the committee that you did not reach that conclusion?

Ms Magahy

I am saying that I have no memory of saying those words. It does not even sound like the way I talk to be quite frank.

Deputy Rabbitte

And what do you think now, with the benefit of hindsight? If you had said it, would you have been correct?

Ms Magahy

I do not think that is a fair question.

Chairman

It is probably a very fair question.

Ms Magahy

I do not think it is really. What happened was that the preferred bidder was selected. It was the best bid by a long shot. What needed to happen after the meeting was that whatever contracting——

Deputy Rabbitte

We have heard Mr. Teahon make a very stout defence of the bidder that was selected, etc. I was not asking you about that, I was merely asking you about an apparent direct quote attributed to you.

Ms Magahy

I was concerned, Deputy——

Deputy Rabbitte

Chairman, would it be possible to place on screen the contract of 18 August for executive services?

Chairman

Mr. Teahon wants to comment on what you have just said, Deputy.

Mr. Teahon

Deputy, lest you are moving away from it, can I make a very clear statement? If Laura Magahy had said that the contracting entity had no substance, she would have been wrong because the contracting entity was the consortium. If you look at the consortium, Ascon Rohcon clearly had substance. What was at issue - to the extent that it was at issue - was the substance of the company that was Waterworld UK.

Deputy Rabbitte

I hear what you are saying, Mr. Teahon, but you will note I was asking Ms Magahy. I hear your view on it. Is it possible to put up the first page of the contract of 18 August 2000, Chairman?

Chairman

What page, Deputy Rabbitte?

Deputy Rabbitte

The first page. Mr. Teahon, I am puzzled by one small aspect of this. This is a letter from you to Ms Magahy of 18 August, is that correct?

Mr Teahon

That is correct.

Deputy Rabbitte

This is the critical contract, is that right?

Mr. Teahon

Yes.

Deputy Rabbitte

The thing that puzzles me is why it ended up as a joint effort? If we look at page five, Chairman, why did a document that started out as a letter from Mr. Teahon end up as——

Mr. Teahon

Because the advice we received from our legal advisers was that to form a contract it had to be a letter from me to Ms Magahy which Ms Magahy accepted. That was the form of the contract that evolved. We were told "The way to do it is for Ms Magahy to accept the contract".

Deputy Rabbitte

Was that advice also received from McCann Fitzgerald?

Mr. Teahon

Correct.

Deputy Rabbitte

Is it not a bit odd that you started out writing a letter to Ms Magahy - it is addressed "Dear Ms Magahy" - on what was a hugely significant matter which she ended up signing as well?

Mr. Teahon

Perhaps it would have been clearer if Ms Magahy had said "I accept the terms of the offer you have made to me", but other than that——

Deputy Rabbitte

Would that not be normal practice? She did that on 18 October 2000. Would it not be normal practice for her to receive the letter and reply to it?

Mr. Teahon

Yes, I agree.

Deputy Rabbitte

Why should it metamorphose into contract in this fashion? Who is the person who witnessed the letter?

Ms Magahy

It is Eve-Anne Cullinan, who is a director in my company.

Deputy Rabbitte

This was dated 18 August. It seems not then to have been dispatched to your office and it seems to have been retained in the offices of CSID. Is that the case?

Ms Magahy

It is a duplicate letter, Deputy. It was a letter that was signed in duplicate.

Deputy Rabbitte

When Mr. Teahon wrote to you on Sports Campus Ireland paper, was the letter dispatched to your office at Lombard Street West or did you meet at one or other of your offices to sign it with this fellow director of yours as the guarantor, with the company seal?

Ms Magahy

Where did we sign it?

Deputy Rabbitte

Where did you go to sign it?

Ms Magahy

I do not recall.

Mr. Teahon

And I do not recollect either. You will notice, I had not noticed this until then, but it is dated a different day. In other words, the letter is dated the 18th but the accepting signature is dated the 21st.

Deputy Rabbitte

That is my point. I wonder if it was posted, retained in your office or did you go on 21 August to Ms Magahy's office to convert what was a letter into a contract and sign it, witnessed by this fellow director of Ms Magahy? You cannot recall that, Mr. Teahon?

Mr. Teahon

No, I am afraid not.

Deputy Rabbitte

That is somewhat unusual, is it not?

Mr. Teahon

With the benefit of hindsight, it would be better if there were, as you suggest, a letter from Ms Magahy saying "I accept what you have put to me". However, in terms of substance I do not think it makes any difference. I am not sure if you are making a particular point relative to the substance of what took place.

Deputy Rabbitte

One of points I am making is that which appears so much in the public press. Ms Magahy, are you in a position to provide any insight into the secret whereby you seem to land more than your fair share of contracts, on the face of it, where Mr. Teahon happens to be the chairman or the presiding person?

Ms Magahy

Are you suggesting I did not get contracts on merit?

Deputy Rabbitte

I am asking you a question, Ms Magahy.

Ms Magahy

I do not understand what the secret is.

Deputy Rabbitte

I am just asking if you can give any insight. The same system, as I understand it, is applicable in the MediaLab contract. Does the percentage basis apply there?

Ms Magahy

No, it does not apply there. If you would like to know the process, we applied . . . we responded to a publicly advertised contract, we put a proposal to the company, Sports Campus Ireland, and we negotiated a contract. I do not see that Mr. Teahon's presence is relevant to us landing two contracts.

Deputy Rabbitte

You must be as conscious as I am, Ms Magahy, that there has been much comment in the public media about the fact that, whether it is Temple Bar, the stadium or the media hub, the same personalities are involved in what must be a competitive arena, with weighty applicants from the homeland of the Financial Times applying. Do you wish to comment on that?

Ms Magahy

Only to say that we won all contracts on merit and that I was not part of the panel that assessed our applications, and that I resent any implications that we landed contracts as a result of knowing Mr. Teahon. I have no further comment to make.

Mr. Teahon

I was not the only person that made the decisions involved. I believe that the people who made them were highly reputable. I also believe that there is a kind of implication that because Laura Magahy and I happen to know each other through our work together, even if her company was the best, that, to avoid what the people to whom Deputy Rabbitte refers might be suggesting, she should not have been awarded the contract. That would have been totally and completely wrong.

Deputy Rabbitte

What is the point of Mr. Teahon's stressing that the percentage never applied? As the Comptroller and Auditor General commented, the flat rate is based on the percentage and, presumably, when Mr. Teahon entered into the contract for a percentage, the intention was that a percentage would apply.

Mr. Teahon

Correct.

Deputy Rabbitte

Therefore, what is the point in making a virtue of the fact that it never applied?

Mr. Teahon

I was not making a virtue of it, but making the point, in relation to people, who now believe that Laura Magahy was being paid 1.8% of £1 billion, that this was not so. It was never my intention and I have always stressed that £350 million, €444 million, was the figure that would apply. I also said that——

Deputy Rabbitte

That is not what High Point Rendell says.

Mr. Teahon

Actually, it says that the estimate of €444 million is a reasonable one, contrary to speculation in the media.

Deputy Rabbitte

It also says that to deliver the project would be approximately twice the advised cost, which Mr. Teahon challenges.

Will Ms Magahy clarify the following? Was the percentage contract, which was entered into, to the consortium and were its elements paid on a charge-out basis of an hourly, daily or weekly rate? The figures we have show that they were paid a flat rate.

Ms Magahy

No. Is that the figure that people were due?

Deputy Rabbitte

It is not clear from this document which contains the daily charge-out rates. Was the intention of the contract that the 1.8% would apply to each of the elements of the consortium, or was Ms Magahy, as the lead player, to pay out to the consortium's elements on an agreed weekly, daily or hourly charge of rates?

Ms Magahy

The agreed fee is split between the five parties that form our team and is a commercial arrangement between the team members.

Deputy Rabbitte

Did Ms Magahy agree with each of the elements an appropriate rate in each case?

Ms Magahy

Yes. I stress again - and also in reference to the Deputy's former question - that this contract was awarded to a consortium of reputable firms with track records in all of their areas relevant to performing their tasks which they have performed exceptionally well. PricewaterhouseCoopers, McHugh planning consultants, SIAS transport consultants, WHPR, Seamus Monahan & Partners and our own company are all part the consortium. We have delivered the three things that we were expected to deliver in one and a half years.

Deputy Rabbitte

I made no adverse comment on any element of the consortium. Did Ms Magahy agree with each of these reputable companies a charge-out basis for their services?

Ms Magahy

We agreed between ourselves a commercial arrangement as to how we would organise our business.

Deputy Rabbitte

Let me express it this way. If Mr. Teahon is wrong and High Point Rendell is right, and the cost of the project doubles, would the fees to the other elements of the consortia also double?

Ms Magahy

No, nor would mine because we had proposed in June 2001 that a capped fee would be agreed for the services. The percentage, therefore, no longer applied to ourselves or to the rest of the team.

Deputy Rabbitte

I understand that, but that is not the contract before us on the screen, which is on the basis that a percentage would apply.

Ms Magahy

Correct.

Deputy Rabbitte

If that had maintained, what would have happened to the elements of the consortium?

Ms Magahy

We would have——

Chairman

Ms Magahy cannot see what is on the screen as we felt that the information was commercially sensitive regarding the different companies involved. However, I am sure that she understands that the Deputy is referring to the daily charge-out rates.

Deputy Rabbitte

What would have happened if the original contract applied?

Ms Magahy

If the original contract applied and if the project was larger and if more resources were required to be put in as a result of the larger project——

Deputy Rabbitte

I do not mean if the project were larger, but if it were more expensive.

Ms Magahy

Then the 1.8% would have applied to the rest of the project, which is why, in fairness, we proposed a capped fee approach to allow for more transparency and to make sure that there was not the perception that we would benefit - as was suggested in the press - from deliberately making the project more expensive.

Deputy Rabbitte

I take it that Mr. Finlay is Wilson Hartnell, another element of the consortium. If the original contract had applied and the cost was twice for the same size project, would Wilson Hartnell's fees have increased proportionately, or was the 1.8% a block payment to the consortium to be paid out by Ms Magahy? I would like an answer to that.

Chairman

Mr. Finlay may be called before the committee but Ms Magahy may volunteer an answer if she wishes.

Ms Magahy

I can answer.

Chairman

We will let Ms Magahy answer.

Ms Magahy

If more services had been required, then the fee would have gone up proportionately.

Chairman

As a matter of interest, what is being paid for PR today?

Ms Magahy

It is being paid at the commercial rate and is an arrangement between the consortium partners. There is a team of six——

Chairman

I just wish to know if it is £1 million or £0.5 million or——

Ms Magahy

No, not at all.

Deputy Rabbitte

If the cost went up——

Ms Magahy

There are two corollaries to the percentage. If the cost went down, the percentage would also go down, and if——

Deputy Rabbitte

On a scale of one to ten, how likely would Ms Magahy consider that possibility?

Ms Magahy

As of today, anybody's guess is as good as mine as to whether this project will see the light of day——

Deputy Rabbitte

However, that will not be because it is reduced in cost.

Ms Magahy

There are many reasons why things happen or do not happen. The other point is that if a project took twice as long, that is ten years instead of five, the same rate would apply and we would have people working for those ten years. That is the counter argument and that is why in the construction development business very often percentage rates are used, because projects can take twice as long. It is a cost benefit to the client on a percentage basis.

Deputy Rabbitte

I do not know these other companies well, but can Ms Magahy tell us from her experience, if it is normal to pay a public relations company on a percentage basis.

Ms Magahy

I am not saying that it would be normal to put any particular people on a percentage basis. The contract that we negotiated was on a percentage basis and the team involved are members of an entire team and, furthermore, as I said already, we proposed that the contract be capped and that it would take place on a charge-out time basis.

Deputy Rabbitte

Did that proposal come from you?

Ms Magahy

Yes, it did.

Deputy Rabbitte

Ms Magahy had a written contract in her pocket. Why did she alter its structure?

Ms Magahy

I did so for several reasons. First, because the project seemed to have grown larger and there was public comment regarding the fact that it was larger than originally envisaged.

Deputy Rabbitte

I am sorry. Ms Magahy is present to have a full opportunity to answer questions in her own time and to take as long as she wishes. However, she should not continue to refer to the project getting larger. It is still 80,000 seats or whatever. It may be getting more expensive, but it is not getting larger.

Ms Magahy

The project that we were hired to carry out was Sports Campus Ireland, not Stadium Ireland.

Deputy Rabbitte

I mean Sports Campus Ireland. How does it get larger? It might get more expensive.

Ms Magahy

Can I pass this document to the Deputy?

Chairman

To answer Deputy Rabbitte, Ms Magahy said in the first part of her reply that in light of recent media speculation about the executive services fee she would be grateful, etc. She then suggested a new scale of fees. However, she attributed this to recent media speculation.

Ms Magahy

That is what I was saying, Chairman, but you interrupted me.

Mr. Teahon

May I, with respect, tell the Deputy why the project became larger? When the Comptroller explained how the £100,000 came about, the figure to which it applied was the figure for the stadium and the pool. When the stage to which Ms Magahy is referring came about, we had a campus which had a stadium and an indoor arena. I am sure she will explain this. As a matter of fact, the figure which would have applied at that time was the total cost to which I keep referring - the £350 million cost to the Exchequer - which is about £550 million. One would have gone from a figure of £330 million to £550 million in that interim period.

Ms Magahy

That is my point.

Deputy Rabbitte

Chairman, you anticipated what I was asking about. I was unaware that this had anything to do with larger or smaller. I thought this was about perception. I thought that Ms Magahy was responding to media criticism and that is what we, indirectly, understood from her. She is now saying that she came forward with this proposal because the project was getting larger.

Ms Magahy

I started to say that there were three reasons, but the Deputy cut across me. The first reason was genuinely because the project had become larger. I will go through that issue first.

We started with a greenfield site at Abbotstown around which the line is drawn. Our brief on being appointed was to develop Sports Campus Ireland. At that point a feasibility study had been carried out for the stadium and a wider campus had been mooted, but was not clearly defined or costed.

The other project discussed or agreed at Government was that the aquatic and leisure centre should be undertaken. In discussions and consultations with the board and a range of others, the definition of the campus, and what it could be for the sporting and non-sporting public, translated more into what appears on page two. That is a much more developed idea of what Sports Campus Ireland would be. It would include a stadium, an arena, the multi-purpose hall, the velodrome, outdoor pitches, the aquatic and leisure centre - one can see how small the pool is in relation to the overall project even though it is enormous in its own right - a tennis centre and a range of activities which the local community——

Deputy Rabbitte

At whose request did it grow larger?

Ms Magahy

In consultation with the board and the chief executive, the project was developed further to turn into this vision.

Deputy Rabbitte

So the original instructions were somewhat unclear and the project evolved as the board began to focus on it.

Ms Magahy

That is correct. What had been costed originally at about £330 million was now looking more like £550 million gross. However, it was also envisaged that commercial income would come in and that is why we get back to the net cost of £350 million. We negotiated a percentage in good faith about which there was media comment and we did not wish to be seen to be enlarging the project so that our fees would increase. That seemed to be the kind of implication being made. We were not interested in that as we were interested in delivering public sector projects which have a wider public benefit. In that interest, and in the interest of greater transparency regarding the fee - the Comptroller and Auditor General commented that this was a percentage-based fee and that to get greater transparency——

Deputy Rabbitte

When did Ms Magahy first put that proposal?

Ms Magahy

I discussed it with Mr. Teahon in January and I wrote to the board putting the proposal on 7 May 2001.

Deputy Rabbitte

Did anyone in the Taoiseach's office, in the Department of Tourism, Sport and Recreation, the Office of Public Works or any State Department make that suggestion to Ms Magahy?

Ms Magahy

Does the Deputy mean that I would cap it?

Deputy Rabbitte

Yes.

Ms Magahy

The only person to do so initially was the Comptroller. The Tánaiste remarked on it at a meeting with Government in March. Mr. Teahon said at that meeting that the fee was being discussed as a capped fee.

Deputy Rabbitte

My understanding is that there was concern in the Department of Tourism, Sport and Recreation at the stage at which it took over the project. Is that correct?

Ms Magahy

There may well have been.

Ms Hayes

We asked for a copy of the contract which we did not have on 26 January. Mr. Teahon forwarded it to us on 2 February. At a meeting with Ms Magahy on 8 March, having looked at the contract I asked her to provide a full schedule of the current level of resources provided under the contract and what the future planned executive services resource commitment was going to be. On 21 June I received the direct response to that request which was described as a revised fee proposal being presented to the board of CSID for discussion on 28 June 2001.

Deputy Rabbitte

Ms Hayes never suggested a flat fee.

Ms Hayes

I suggested that we needed to know what exactly we were getting under this contract. We needed to know what resources were being offered for the fee being charged so we could establish the value for money we were getting.

Deputy Rabbitte

When did the proposal first reach Ms Hayes?

Ms Hayes

On 21 June. I understood - and I think this is what happened - it was put down for discussion at the board meeting on 28 June.

Deputy Rabbitte

What happened in the intervening six months since Ms Magahy mentioned this to Mr. Teahon in January? Was there toing and froing?

Ms Magahy

Yes.

Deputy Rabbitte

Between who?

Ms Magahy

I was volunteering to do the proposal and I needed to discuss it with different consortia members. I wrote to the board on 7 May. I believe it went to the finance and audit committee on 13 June and I met Ms Hayes on 27 June.

Deputy Rabbitte

What is the practical effect of the proposal and how should the committee assess it? Other than the fact that one is a flat fee and the other is a percentage, does it have much meaning? How was the figure of £100,000 per month settled on?

Ms Magahy

It was a percentage of what was then a £330 million project.

Deputy Rabbitte

So it was equivalent to 1.8%.

Ms Magahy

That is correct.

Deputy Rabbitte

So we have altered the perception, but not the cost. It is important that we are clear on that.

Mr. Teahon

That is not true.

Deputy Rabbitte

Ms Magahy thinks it is true.

Ms Magahy

No, I missed what the Deputy said.

Deputy Rabbitte

I am sorry.

Mr. Teahon

The 1.8% at the time we are speaking about would have been applied to £550 million and not £330 million. Arguably, there should have been a higher figure had we maintained the same approach. In other words, £100,000 was 1.8% of £330 million. If we had followed through in the approach, it should have been increased from three to five.

Deputy Rabbitte

The £100,000 is based on the £350 million project? As a successful business woman, and with a watertight contract in her pocket, why would Ms Magahy volunteer to take £100,000 on a project which had now increased to £550,000?

Ms Magahy

What I put was a resources chart which showed on charge-out rates how the resources might increase if the board wanted them to increase. I did this in the interests of transparency. I do not do public projects for the money. I am interested in procuring and managing public projects. It is not simply about the money. I did not want the perception to be that it was in my interest to increase the project such that I should get a larger fee. It is as simple as that. I am aware that in this day and age people are cynical but actually it is that simple.

Mr. Purcell

Just to clarify for Deputy Rabbitte, we are not talking about a situation where, under the June 2001 proposal, the cost per month would have continued at £100,000. In fact, it was envisaged that it would increase to £150,000 for the remainder of 2001 and to £175,000 per month from 2002 to 2005 on the allocation of resources on the basis that the final project cost would be £550 million. That was how I came up with the cap of £9.625 million, which I roughly translated as €12 million. Perhaps that will clarify the matter for the Deputy.

Chairman

Will the Deputy move on?

Deputy Rabbitte

I just want to note that £150,000 or £175,000 is not £100,000.

Ms Magahy

It was a complete proposal which was open to be negotiated. If the board did not want the level of resources or if it wanted to change resources or take a different approach that was fine. I was proposing a transparent and open system which was open to the board if it did not want the percentage basis, and that stands.

Chairman

Is it correct that the board accepted it, even though the Department of Tourism, Sport and Recreation had reservations about the charge-out rates?

Ms Magahy

The board accepted the principle.

Chairman

According to the minutes here, the Department of Tourism, Sport and Recreation had reservations about the call-out rates.

Deputy Rabbitte

What were the reservations Mr. Haugh recorded?

Mr. Haugh

When this matter was tabled at the board meeting in June, I raised the issue of the call-out charges being quite high. That was basically it.

Deputy Rabbitte

You were talking collectively and individually?

Mr. Haugh

Looking through the fee proposals that came to the board, I felt they were quite high in a number of categories. I raised that issue at the board meeting.

Deputy Rabbitte

Had you previously received such a breakdown? Is that the first time a detailed document came to the board itemising the actual tasks for which the charge-out was being applied?

Mr. Haugh

I cannot say for definite but I think so. I was on the board since February 2001.

Deputy Rabbitte

You joined it after the Department of Tourism, Sport and Recreation got the job?

Deputy Dennehy

To go back to the change in the structure, Mr. Benton's appointment and considering the earlier comments about the possible conflict of interest or the incompatibility between being adviser to the Minister and a member of the board CSID and so on, are there any difficulties now about that or are they all washed aside? Will a new format be used or how will the difficulties that existed be reconciled?

Mr. Murphy

I am not absolutely sure to what conflict of interest the Deputy is referring. We raised a question at one stage about having a member of the Office of Public Works on the board of CSID and the conflict that might arise. However, that was resolved and I see no problem now.

Deputy Dennehy

If the Chairman wishes, I can dip into it. It was also raised in the Minister of State, Deputy Cullen's letter. These are now all gone by the board.

Mr. Murphy

They are.

Deputy Dennehy

I was concerned about that matter because I did not want us to dig a second hole for ourselves given that we are coming out of one. However, it appears we have been able to reconcile matters that I thought were not reconcilable.

Can I ask Ms Magahy to bring those of us who do not have back-up into the picture? Approximately how many people were involved in the executive team? I know it would vary.

Ms Magahy

It would vary depending on what was going on at the time.

Deputy Dennehy

I appreciate that. Were there approximately eight or ten people involved or were they getting massive money?

Ms Magahy

No, they were not getting massive money. They were all salaried.

Deputy Dennehy

On the one hand, we are just getting an executive team and, on the other, a financial figure. Therefore, it is impossible to break it down. I have not got all the data, but approximately how many professionals were operating from the six consortia?

Ms Magahy

I am not avoiding the question, but it varied depending on the amount of work being done at a particular time. We had to focus on delivering the three different job elements we had to do. Depending on whether we were heavily involved in, say, the environmental impact side of things, there would have been a whole lot of people involved from the environmental side. If we were putting together the outline bid documentation, there would have been much heavier involvement over a long period from, say, PricewaterhouseCoopers. It really depended on what the particular jobs were at a particular moment in time.

Deputy Dennehy

Would Ms Magahy accept that to give the members an idea of whether it was value for money we would need some kind of figure? I appreciate there is a call-out rate given but I would not be in a position to say what an architect or someone else should be paid. I would not have the figures Mr. Haugh might have. Is it possible to put hours on these or to get the number of personnel and give a picture of the numbers involved?

Ms Magahy

As I said, there were two bases. The first was that we negotiated the percentage basis which was against providing the particular service, which service we provided. The second on the charge-out rates is done. You can see the level of charge-out rates which actually fall within quite a reasonable estimate as between different people. They would be on a par with other professional services.

Deputy Dennehy

At some stage, Ms Magahy might give us an approximate idea of how many bodies were involved over a few quarterly stages - not their exact jobs but the number of people involved. We seem to be getting ourselves into a knot in regard to the legal fees and so on. People are getting astronomical amounts of money for doing work. I accept we have already advised the Department of Finance. However, we must review the green book and so on. However, we need to know whether we are in favour of a fixed fee or a percentage rate which was the old system by which architects and so on were paid. We would need some comment on that issue.

I do not have many questions. However, I have an observation in regard to the number of people who were potentially disqualified through conflict of interest, including legal firms and so on. When will it be possible to do business in this city without the conflict of interest question eliminating everyone? We seem to have gone down through the pile. Will it come to the point when only the Office of Public Works will be in a position to say it has no conflict of interest, it is clean and wholesome? I am not being smart or cynical, I am just asking the question because it appears that even the slightest contact with companies is sufficient to prohibit one from carrying out work. I appreciate Mr. Murphy has commented throughout his statements on potential conflicts of interest. I am asking the question in a wide sense. Will only State bodies or the Office of Public Works be able to do business in these instances?

Mr. Murphy

We actually manage without conflicts of interest. It simply means the awarding authority in the Office of Public Works's case has an extremely strict ethical code. We have an extremely strict ethical code and it is based on a Department of Finance circular on ethics. That is aimed at ensuring that no one on my staff has contact with firms outside, or receives favours from them or gets paid or anything like that. I am glad you say you are neither being smart nor cynical, because I personally regard this as being extremely serious and we make a really tremendous effort to ensure that, as far as the Office of Public Works staff are concerned, these conflicts do not arise. We have an extremely strict code on this, which I have circulated to the committee in the past.

Deputy Dennehy

I will rephrase that because Mr. Murphy may have picked me up incorrectly there. As you know I continually praise your organisation and the great work it does. You are above reproach, obviously. I am concerned about the private sector. I am concerned about the State getting projects done and how we are going to work. Are we going to get to a point where the only people we can do business with is the Office of Public Works? I am concerned about this because we are in a very small place. As we have become more affluent in the past couple of years, huge money is going around. There are very big projects and very big contracts and I am concerned that we are getting into a bit of quagmire. For obvious reasons I am not suggesting the Office of Public Works would have a problem. Will everyone else be eliminated from doing, managing and dealing with certain issues and will this lead us into difficulty in public private partnership projects and issues of that nature? That is what I am concerned about for the future.

Mr. Murphy

Public projects will certainly not be limited to the Office of Public Works. The ethics code which the Department of Finance has circulated affects all public bodies, all semi-State bodies and so on. Provided that code is observed, there is no doubt that there will be a core of bodies, any one of which will be able to take on public sector contracts. That is the issue, simply that the public bodies would follow what is a reasonable code of ethics in dealing with contracting bodies.

Deputy Dennehy

To spell this out more and following Deputy Rabbitte's question, we have seen with various accountancy firms and other companies that, while they are the best in the field or something else, the same people seem to crop up. I wonder if we need to look at this and to know what the difficulties are. Why are the same people in front? Are they simply better? I am concerned that we might make the pool smaller and eliminate certain people, groups or companies because they happen to have worked with somebody five, ten or whatever number of years ago. This is a very small country, particularly when one works in a specific discipline, let it be accountancy, architecture or whatever.

In reading the report I noticed once or twice the suggestion that Mr. Teahon had employed or worked with someone in the past and these companies were being eliminated. As a member of this group I am concerned that we might prevent very good Irish companies from doing business here, because there would be no suggestion of a conflict of interest in a company which came from abroad; apparently we would just take them on. I am concerned that we would make the pool smaller and then, in turn, leave all of the cake for a very small number of people. That is not your concern, Mr. Murphy. That is for us to look at.

I said earlier today that this was very much a locally based issue. It is not, obviously. Campus Ireland is very important but this is first time we have got a clear layout of what is involved and I think people will be surprised at its scale. A fair point has been made about the size of the pool as against the rest of the project. It is fairly massive. If we have done nothing else we have brought this to light and some of us are beginning to realise exactly what we are talking about.

Chairman

Before I hand over to Deputy Durkan I just want to ask Ms Magahy a question. Ms Magahy, you are synonymous with the Temple Bar development. For what period of time were you involved with that development?

Ms Magahy

Ten years.

Chairman

When you started there initially what was your position and who appointed you?

Ms Magahy

When I started off initially I was financial and cultural director.

Chairman

Who appointed you?

Ms Magahy

The board of Temple Bar Properties.

Chairman

Who were you answerable to at the time?

Ms Magahy

I was answerable to Mr. Teahon at the time.

Chairman

How long ago was that?

Ms Magahy

1991.

Chairman

And how long were you answerable to Mr. Teahon?

Ms Magahy

For two and a half years.

Chairman

And your position at that time was, as you said earlier——

Ms Magahy

Cultural and financial director.

Chairman

Cultural and financial director.

Ms Magahy

Yes.

Chairman

I assume Mr. Teahon was seconded from the Department at that stage. Is that correct, or was he within the Taoiseach's office?

Ms Magahy

I am not sure what the arrangement was.

Mr. Teahon

I was not seconded. I was doing both jobs.

Chairman

He was doing both jobs. Mr. Teahon phased out of that project then, did he not?

Ms Magahy

That is correct.

Chairman

Did your responsibility increase then?

Ms Magahy

Yes. I became managing director in 1993.

Chairman

You became managing director. So, you remained as managing director for what length of time?

Ms Magahy

About seven years.

Chairman

So, obviously, the expertise you got in your position of art director etcetera served you in good stead to become managing director of that project.

Ms Magahy

I think more the financial directorship.

Chairman

Yes. Now, when you actually became director of that project who were you answerable to? Was it direct to the Taoiseach's Department?

Ms Magahy

No, I was answerable to the board in the first instance and to the Department of the Environment.

Chairman

When did you finish up in that project?

Ms Magahy

August of 2000.

Chairman

When you were on that project were you paid a salary on a yearly basis?

Ms Magahy

Yes, I was.

Chairman

Where did the coining of executive services flow from subsequently?

Ms Magahy

I beg your pardon.

Chairman

Where did the executive services idea flow from? You were an employee at that stage. In other words, you were getting a fixed salary. The big contract you got after that would have been Campus Stadium Ireland, would that be right? I think Mr. Finlay is giving you a bit of advice there.

Ms Magahy

I cannot hear him, actually. Excuse me.

Chairman

When you finished up with that company you were paid a salary. Your first big contract as a company was Campus Stadium Ireland. Is that not correct?

Ms Magahy

Well, I had actually been doing some work prior to that for another development, which was the Mater Hospital and Temple Street Children's Hospital.

Chairman

Is that a Government contract again?

Ms Magahy

Yes, it is.

Chairman

Is that through the Department of Health and Children?

Ms Magahy

It is.

Chairman

And that was the first executive services contract you got?

Ms Magahy

Well, in fact, I was doing it in a consultancy capacity for the sisters.

Chairman

You were doing it in a consultancy capacity.

Ms Magahy

Yes.

Chairman

Does it still remain in a consultancy capacity?

Ms Magahy

We have since been awarded an executive services contract.

Chairman

So you have an executive services contract for that as well.

Ms Magahy

Yes.

Chairman

Is that on the same type of level, of base fees etcetera?

Ms Magahy

No, it is on a capped fee basis.

Chairman

What is the capped fee, as a matter of interest?

Ms Magahy

Well, it is commercially sensitive.

Chairman

Okay.

Ms Magahy

I mean, I thought I was here to discuss Campus Stadium Ireland.

Chairman

It is fine, actually. I am just wondering where the title of executive services came from, first day.

Ms Magahy

I do not know.

Chairman

If one were tendering for a contract, it would appear to me there would be very little difference between consultancy services and executive services.

Ms Magahy

Well as I say, I responded to advertisements in the——

Chairman

For executive services?

Ms Magahy

Exactly.

Chairman

Okay. And that was your next involvement. Obviously, in the suite of service you provided your Temple Bar experience counted a lot in selecting you. Would I be right in that?

Ms Magahy

I would presume so. It was a huge development. We had 30 design teams, it was a whole mix of direct construction work, public private work, joint venture work, all the range of construction but also very much a mixed development in terms of different types of uses and public realm. It was a large scale public sector project.

Chairman

So, you had three executive service contracts ongoing at this stage?

Ms Magahy

Correct.

Deputy Rabbitte

The term "executive services" appears in the advertisement that was put into the newspaper - "a team to provide executive services". It presumably was not created by Ms Magahy. Mr. Teahon could probably tell the Chairman where it came from.

Mr. Teahon

Just for the sake of information, executive services is actually enshrined in the relevant European procedures. I think someone used the word "unique". There is nothing unique about executive services. It is a well used idea at European level. In other words, if you want to recruit a number of people as a team you use executive services. Case law exists to do so. I agree with the Comptroller and Auditor General that judgments have to be made from time to time as to whether to use more normal employment contracts. Certainly, at European level, the idea of executive services is used and is well understood.

Chairman

I am just commenting on the Comptroller and Auditor General's original statement where he said he thought it was novel and indicated that this was the first time he encountered this category of executive services in the composition of an audit he was reviewing. That is the point I am making and you have not denied that.

Deputy Durkan

Can we have a definition of "executive services" and how are they used in this country? Does anybody know how many companies provide executive services here?

Mr. Purcell

I never referred to it as unique and I know Mr. Teahon did not. I spoke about it being novel. Companies, particularly the big five accounting firms, provide some executive services like providing pay roll services and some provide narrow administrative services. IT services can also be contracted out. What I said was that this was the first time I came across it in a public sector context. It may well be prevalent in the private sector or elsewhere in Europe and I have no reason to disbelieve Mr. Teahon on that. I want to make it clear that I am not against the concept per se and there was no implied criticism in what I said.

Deputy Durkan

That is not the issue. The issue was whether such services are eligible to be advertised in the European journals and open to competition from that arena. We have already sought and received legal advice on that issue but it was not entirely clear. For instance, when awarding a contract of this nature, is it in order here to exclude advertising in the European journals? Is that the presumption on the basis of the legal advice given to CSID?

Mr. Teahon

I can answer that, Chairman. There is no lack of clarity in terms of what the legal advice was or what issues arise. In the directive, there is a series of categories identified. The legal advice is very clear that if the significant majority of the services are in a particular category there is no requirement to advertise. That is basically the position.

Deputy Durkan

Right. Can I move quickly to a few simple questions on correspondence although I do not want to go over ground Deputy Rabbitte has covered? The first letter to Mr. Paddy Teahon, of 18 October 2000 mentions three items.

Chairman

Publish.

Deputy Durkan

It says the relevant fee shall be 1.8%, "on the basis set down in our fee proposal to include project procurement programme, advices etc. . . . but not including specialist project management and other specialist services which can be provided by agreement as a direct expense or which are required to be procured separately in accordance with EU public procurement law as outlined in your letter". I know from replies to earlier questions that the subject matter of some aspects of the contract may have to be advertised through EU procurement procedures. However, it seems odd that a major contract in relation to the operation of the proposal is going to a particular firm. I have no criticism of the firm but I am interested in the procedure. My concern is that having got to that position they then have to advertise in Europe in accordance with European law and directives.

Deputy Rabbitte also covered the letter of 7 May 2001 very effectively.

Chairman

Publish.

Deputy Durkan

In the first paragraph the letter states that "in the light of media speculation the signed executive services contracted for 1.8% of the development was to be carried out on the Abbotstown site. It does not cover external infrastructure, relocation of land values of any kind. The fee was negotiated on the basis of and in the absence of knowing the full extent . . . " etc. It continues into the following paragraph.

In the last paragraph it states:

Given that CSID is now recruiting for project managers to deliver the technical side of the project we would like to propose that our fee, which is 1.8%, to include 0.5% for technicians, will reduce to 1.75%. The proposed cap of the Magahy & Company fee is therefore €9.652 million, ie 1.75% of €550 million.

The Comptroller and Auditor General and others referred to the movement of costs and the total value of the contract as time goes by and there has been speculation about that. In the project so far reference was made to the land and the relocation but that is excluded from the project costs so that the total project costs at this stage are the actual provision of facilities on the land at Abbotstown. What was the cost of the land to CSID?

Mr. Teahon

There has been no cost to CSID. The land has not yet transferred to it but is still owned by the Minister for Agriculture, Food and Rural Development.

Deputy Durkan

Does the Minister still own the property at Abbotstown?

Mr. Teahon

Yes. He has transferred such interest in order for the pool to be built.

Deputy Durkan

I am not satisfied with answers I got previously on this matter. Is this normal procedure? On the Order of Business, the Tánaiste referred to the cost of the Abbotstown project as €775 million for the works on the site, excluding the cost of the site. Given the dangers of pursuing with a multi-million project of this nature if all legal transactions in relation to transfer of lands have not been undergone, surely somebody has thought about the possibility of transferring the land in an up-front and realistic way. Has no valuation been put on this property which I presume has increased considerably in value since the first post was driven into the ground?

Mr. Teahon

There was never an intention to transfer the land from public ownership. Nobody said "We are going to transfer the land to the private sector". That was never the intention. In that sense, if we had valued the land we would, I think, at this stage have three different valuations for it. We would have a basic cost before the sports campus development got under way. People in the PricewaterhouseCoopers feasibility study raised the issue of some of the land being sold, effectively to the private sector, to fund part of the cost of the development. There is a figure in the PricewaterhouseCoopers study which could be extended to the entire cost and multiplied by the proportion that they suggested should be used for other purposes. That figure is there. The value of the land would depend then critically upon whether you were prepared to put housing on the land or not. In other words——

Deputy Durkan

Once the first post is put in the ground, it becomes potentially housing land in any event.

Mr. Teahon

It does not. In fact, under the Fingal development plan, you would not be allowed to have housing on it. As I recall it, the issue actually came up in the Dáil at one stage and a number of Deputies said there should be a specific provision that it would not be used for housing.

Deputy Durkan

Can you give some indication as to how the Department of Agriculture, Food and Rural Development will be compensated for its loss of 500 acres of land, the relocation of its facilities to another site in another area and how that is deemed to be excluded from the overall proposal? This has come up repeatedly. I would like an answer once and for all.

Mr. Teahon

There is a Government decision that says that the land will be transferred to the authority that will be established under legislation as Campus and Stadium Ireland - the company. In other words, there is a piece of draft legislation which has been approved by the Government which provides that the land will be transferred to the authority. At a point in time the land will be transferred to the authority. It will be in public ownership and it will remain in public ownership.

Deputy Durkan

Yes, but that still does not answer my question. The question is that facilities must be transferred from one area to another area necessitating fairly considerable expense and also recompense to a Government Department. A Government Department still owns the property concerned; this is not the private sector. CSID is building a structure on the property still owned by the Department of Agriculture, Food and Rural Development. No transfer has been made to anybody yet and there is a process now in hand to relocate the facilities which were previously provided at Abbotstown in another location, necessitating fairly considerable expense.

Mr. Teahon

Yes. In fairness, given that the HPR report is widely quoted, it says that the costs of relocation should not be considered as part of the cost of the project. Therefore, I would think, HPR might be used to argue that one should not take account of this relocation cost.

Deputy Durkan

Why not?

Mr. Teahon

I am only saying if people want to have HPR, it says that you should not take account of the relocation costs in the cost of the project.

Deputy Durkan

I did not quote HPR at all. I was not using HPR criteria at all. I was using the simple query that the taxpayer raises from time to time. I want to go to the third last page in the same document and look at the daily rates.

Chairman

It is commercial information which Ms Magahy has.

Deputy Durkan

I am looking at the executive services team and there is a set of fees. I presume, Chairman, that I cannot quote the fees.

Chairman

You may, providing that you do not identify the company.

Deputy Durkan

I do not intend to identify the company. The highest amount is £2,000 per day. That is not too bad. There is a range of fees from £184 to £2,000 and there are particular fees set out in respect of particular services. One of the advices referred to considerably in evidence comes from a firm of advisers who would be fairly reliable and who would be on a very high fee rate. I wonder why at all times its advice was not strictly adhered to? It refers to the shelf company. It strikes me as odd that a highly qualified firm of advisers on a justifiably very high fee give advice and the advice is not necessarily taken on board.

Mr. Teahon

With respect, Deputy, the advice was followed. The business advice, the financial advice and the legal advice were followed and they participated in the drafting of the letter which went to the consortium on 19 December.

Deputy Durkan

The Attorney General does not seem to agree.

Chairman

Does Ms Magahy wish to contribute? I see her nodding her head.

Deputy Durkan

On page 30 of his report, he says that requirements specified - this is the whole area to which I referred - in the advertisement for tenders were for financial and economic standing, etc. Persons tendering were required to demonstrate that they had financial and economic standing and that technical knowledge and ability to design, build, finance, operate and maintain the aquatic and leisure centre. Participants had to show a track record for similar projects. Participants were required to provide financial and other documentation as set out in Council Directive 93/37/EC. I do not think that the Attorney General was in agreement and fully accepts that the procedures were followed as he would have wished. Is that correct?

Mr. Teahon

I do not know the answer to that question. The only answer I can give - I am not sure what it has to do with the earlier point - but the only answer——

Deputy Durkan

It does not necessarily have to. It will all emerge in due course.

Chairman

I ask the Deputy to make his point.

Mr. Teahon

The one point I would make, and which some people miss, is that the participant in this case is a consortium. When we talk about participants, we are talking about consortia; we are not talking about individual members of consortia even though when it came to the issue of the individual members, we in CSID followed a procedure which led to our making a judgment that all the elements in the consortium were in fact able to show a track record of the kind suggested.

Deputy Durkan

There is something peculiar. At the bottom of that page——

Chairman

In fairness, Deputy, many of those points are coming up.

Deputy Durkan

I assure you that question was not answered before.

Chairman

In fairness, the issue of the dormant company was dealt with exhaustively before.

Mr. Teahon

The Attorney General has made the argument that, in relation to some comments, he draws a distinction between opinion and fact. It seems to me that the statement being referred to is not a fact but an opinion.

Deputy Durkan

His opinion, with which you disagree.

Mr. Teahon

I neither agree nor disagree.

Deputy Durkan

Right.

Mr. Teahon

I am simply saying it is an opinion which we have no way of clarifying at this stage.

Deputy Durkan

One second, Chairman. Let us leave the circuitous route. Let us cut out the nonsense and talk straight from here on. The reality is this: it is his opinion. Whether you like it or not, that is his opinion and it stands. Whether you like it or not, he is the legal adviser to the Government. That is a fact of life. It does not matter——

Mr. Teahon

The words the Deputy is using are not fair. It is not fair to say, "whether you like it or not."

Chairman

That is true. I ask the Deputy to rephrase it.

Mr. Teahon

I made no issue about whether it was fair or not. I made a statement——

Deputy Durkan

Just a second, Chairman. A moment ago Mr. Teahon attempted to dismiss——

Mr. Teahon

I am sorry, I did not attempt to dismiss it.

Deputy Durkan

He said it was an opinion.

Chairman

I call the Deputy to order. Will you come to the point, please?

Deputy Durkan

If you let me continue, I will come to the point. I have not spoken all day but have been sitting here patiently.

Chairman

I know, and I am giving you plenty of latitude. I do not want us to go over old ground again.

Deputy Durkan

I am not going over old ground. I just want an answer to the question.

Chairman

I have given you 30 minutes on this, in case you do not think I am giving you latitude.

Deputy Durkan

I am not finished.

Chairman

All right, 18 then.

Deputy Durkan

I can come back to it another day if you wish.

Chairman

No, if you come to the point, I will be happy.

Deputy Durkan

My problem is that I asked a simple question, which was then referred to as an opinion. It may well be an opinion but it is one that has been put before us. It is on that basis I am asking the question. I presume that the opinion is not being dismissed and that I can continue on that basis. Is that correct?

Chairman

Yes, but I think Mr. Teahon has made his point.

Deputy Durkan

He can make the point all right, but——

Mr. Teahon

If the Deputy wishes, I will make a statement of fact. As a statement of fact, Waterworld (UK) Limited never attempted to suggest that it was a leading water park operator with approximately 20 years of experience. That is a statement of fact.

Deputy Durkan

It is.

Mr. Teahon

It is. It never suggested that.

Deputy Durkan

Could you repeat that?

Mr. Teahon

Waterworld (UK) Limited never attempted to suggest that the company was a leading water park operator with approximately 20 years of experience.

Deputy Durkan

The opinion was clearly created in the minds of those in CSID——

Mr. Teahon

No.

Deputy Durkan

——that it had considerable experience in that area.

Mr. Teahon

That is a different issue. I am simply reading the words of the paragraph to which the Deputy refers.

Deputy Durkan

It is stated there that from these assertions it is clear that an attempt was made to foster in the minds of those in CSID the impression, during the early stages of the process, that Waterworld (UK) Limited was a leading water park operator with approximately 20 years of experience. Do you not accept that?

Mr. Teahon

I do not. It is not factually correct. Waterworld (UK) Limited, at all stages, suggested that it was associated with companies in the USA that were, in fact, leading water park operators with approximately 20 years of experience.

Deputy Durkan

All right. I did not intend to spend so much time on that issue and digressed. I may need to return to it again. I want to ask Mr. McCarthy a couple of questions but before doing so will ask Mr. Teahon one last question. Mr. Teahon disagreed strongly with Mr. Barry Murphy at an earlier stage of today's proceedings in relation to an issue raised by Deputy McCormack.

Mr. Teahon

I disagreed on the basis of what happened at a meeting chaired by the Minister for Finance on a particular day which was referred to in the file.

Deputy Durkan

Obviously, Mr. Murphy and Mr. Teahon hold opposing views. Is that correct?

Mr. Murphy

The only point I will make is that my views on that day are in the context of the earlier papers in the file which you have.

Deputy Durkan

When did Mr. McCarthy first become aware of the kind of public concerns currently being expressed in the outside world in relation to the tendering process and the initial stages of the project, before the full details relating to the project were made available to him? When were they first made available to him, for example?

Mr. McCarthy

Just to clarify matters, Chairman, is this in relation to the aquatic centre?

Chairman

Yes.

Mr. McCarthy

The first set of concerns were made known by the Department of Tourism, Sport and Recreation in relation to the form of contract submitted by CSID for approval towards the middle of 2001, as I recall. That is the first suggestion that came to my notice of concerns about the form of contract. I was aware of subsequent discussions between the Department and CSID.

Deputy Durkan

Did you obtain all the information required for your Department? How did it come to you? For example, did you read about it in the newspapers first or was a folder delivered to you with the information that would normally be available to you?

Mr. McCarthy

The issues involved were matters for the Department of Tourism, Sport and Recreation. Clearly, it was the lead Department at that stage.

Deputy Durkan

Did they know about it before you got involved, before you were familiar with the project?

Mr. McCarthy

They had. These issues came to my notice in an informal sense because it was expected that the form of contract would come to Government for ultimate approval before it was signed. I was aware from some point in the middle of 2001 that there were some concerns about the form of contract on the part of the lead Department, namely the Department of Tourism, Sport and Recreation.

Deputy Durkan

Were you aware of the concerns expressed by the Office of Public Works and the Department?

Mr. McCarthy

Yes.

Deputy Durkan

Did you bring them to the attention of the Government, the Minister or the Taoiseach or all three?

Mr. McCarthy

The concerns were primarily matters for the Department of Tourism, Sport and Recreation and its Minister, who was, as I understood, aware of them. It was for him to bring the matter to the Government at the appropriate time.

Deputy Durkan

I refer to the Office of Public Works document, page 42, headed Monday, 5 February 2001. It states:

Arrangements for a meeting between Seán Benton and Paddy Teahon to discuss the contract sent to Campus Ireland on 2 February, 2001, were made for Wednesday, 7 February, 2001. With Seán Benton I met the Minister at 5.30 p.m. and briefed him on the above. I expressed complete incredulity about the versions of conflicts of interest now being proffered by Paddy Teahon. The Minister suggested that the three of us should meet Paddy Teahon.

Reference was made to that meeting in the earlier exchanges. That is a true version of what happened, I presume.

Mr. Teahon

If the Deputy is looking at me, that is a note made by Mr. Barry Murphy. I take strong exception to the sentence, "I expressed complete incredulity about the versions of conflicts of interest now being proffered by Paddy Teahon." I am amazed that anybody could write a sentence such as this.

Deputy Durkan

It appears, however, that he did have some concerns. Would that be correct?

Mr. Teahon

Concerns are one thing; complete incredulity, in my view, is a completely different matter.

Deputy Durkan

Perhaps Mr. Murphy would like to elaborate on that.

Mr. Murphy

The point of the note is that I was told one thing on one day and another contrary thing on another day, with something added. At that point, I did not know what I was being told. To say that I was incredulous is a reasonable summation of how I felt. It is a contemporary, diary record of what was happening. It is reasonable to say that was what we expressed on that day.

Deputy Durkan

Is it possible to publish the legal advice? I notice on page 59 of the Office of Public Works document the concerns expressed by the Office of Public Works about the emerging project.

Mr. Murphy

These papers are becoming available under freedom of information legislation today. However, the legal opinions are not being made available.

Deputy Durkan

Where does that leave us?

Chairman

We discussed issues like this the last day and we subsequently deleted the companies mentioned. I do not think that we referred to this legal advice at the time. It would be dangerous to publish it because there are companies mentioned in it and there may be conflicts of interest, etc. Perhaps the Deputy could make a general point.

Deputy Durkan

The opinion would be that the appointment of the Office of Public Works was made at this stage in a somewhat informal manner.

Mr. Murphy

I do not follow the Deputy.

Deputy Durkan

The appointment of the Office of Public Works as project manager was made in a somewhat informal manner on foot of statements made by the Taoiseach and one or two letters between the Department of the Taoiseach and the Office of Public Works. The net point with regard to this appointment is that the exact role of the Office of Public Works is unclear and the exact scope of its duties has not been clarified. The point I am making is that genuine concern was expressed by the Office of Public Works previously. I suggest that the legal advice underlines that.

Mr. Murphy

I accept that.

Mr. Teahon

Without naming the company, I would like to read one sentence of legal advice provided to the Office of Public Works, not to CSID. About half way down page 60, it states that: "Based on the information available it would be our view that it would be difficult to exclude. . . " - two companies are mentioned - ". . . from the competition on the basis of Mr. Teahon's statement." That was one of the concerns raised.

Deputy Durkan

Yes, I also noted that. The question of the conflict of interest has been referred to on a couple of occasions. I refer to page 68 in the same document. Perhaps Mr. Teahon would comment on, for instance, section 9 on significant developments which says that in the view of the Office of Public Works, this would be sufficient to remove some companies from consideration, if Office of Public Works procedures were applied.

Mr. Teahon

That is difficult to understand in the light of the sentence in the legal advice that the Office of Public Works received. That legal advice said that, on the basis of the statements, the companies could not be excluded. I cannot understand why that statement was made.

Deputy Durkan

All right. On page 69 concerning matters of trust——

Mr. Murphy

The difference in this case is something that we spoke about on day one and day two and that is the gap between what is strictly legal and what is best practice. We have moved to ensure that, in future, if there is any legal doubt about this from our point of view, we will close it. If there was contact with any firm by any member of staff or anyone involved during a bidding process, they would be eliminated straight away.

Deputy Durkan

Would that be in accordance with the Office of Public Works's best practice?

Mr. Murphy

Yes.

Deputy Durkan

For safety reasons.

Mr. Murphy

Absolutely.

Mr. Teahon

There was no contact with the company in question.

Deputy Durkan

That information came out later. Is that still accepted by the Office of Public Works?

Mr. Murphy

Is what accepted?

Deputy Durkan

Mr. Teahon has indicated that there was no conflict of interest in the first instance.

Mr. Murphy

The Office of Public Works would reserve comment on that. There are two different versions of events.

Deputy Durkan

Mr. Teahon has just said that it emerged that there was no conflict of interest. The situation stands and the Office of Public Works reserves judgment on that at this stage. I have a number of other questions but I realise that I cannot ask them all at this stage. I will come back to them again.

Deputy C. Lenihan

A fuss was made earlier about the contract which was apparently signed by two people on 18 August 2000. I have been involved in such contracts between the commercial sector and the public sector. It seems to be pro forma and there is nothing unusual about it. Deputy Rabbitte made a point earlier that Ms Magahy's company seemed to pop up all the time. Is it correct that Ms Magahy is involved full-time as a self-employed person pitching for public sector contracts? Is that her background?

Ms Magahy

Yes.

Deputy C. Lenihan

Ms Magahy is employed in Digital Hub, Temple Street, the Mater and Campus and Stadium Ireland and she was previously involved as an employee in a public sector project called Temple Bar Properties. Is that correct?

Ms Magahy

Yes.

Deputy C. Lenihan

So all her working life has been spent, albeit as a private rather than a public service person, in a public sector setting. Is that correct?

Ms Magahy

That is correct.

Deputy C. Lenihan

She has no other background. I am not suggesting that we are in the business of making background checks on people but Ms Magahy has worked entirely in the public setting.

Ms Magahy

I have.

Deputy C. Lenihan

She has never worked in a private company other than her own private company for the purpose of providing services of one kind or another, or project management services. Would Ms Magahy be one of a few people in Ireland with that kind of background? When Mr. Teahon said earlier that there were foreign versus domestic people who tendered for the contract which Ms Magahy's company won in a tender process - obviously that did not involve price but it did involve the type of service being offered - how many of the bidders——

Mr. Teahon

Seven, that we created in the decision-making——

Deputy C. Lenihan

Seven companies, including Ms Magahy's, were shortlisted.

Mr. Teahon

Yes.

Deputy C. Lenihan

Have the names of the unsuccessful companies been published?

Chairman

I am not sure it is relevant to publish that. What is more relevant is whether Ms Magahy's company was the best, as it was according to the assessment team. However, we cannot presume that the other six were deficient in relation to a job like this.

Deputy C. Lenihan

Mr. Teahon said, and I took note of it, that it would be borne out that Ms Magahy's company was still the best value.

Mr. Teahon

I was making the point——

Deputy C. Lenihan

When Mr. Teahon made the assessment, did it turn out that, despite the fact that price was not the issue, her figures were lower than those of the other six?

Mr. Teahon

In so far as you could make any judgment at that stage, given that you were not able to ask questions about the suggested outline fees, the ones that came in from the overseas companies were higher, in general, than the ones that came in from the Irish ones. I was only making the point that in terms of value for money there might be——

Deputy C. Lenihan

The Irish companies were better value than the overseas ones.

Mr. Teahon

If you were judging both people and the fee proposed by the outside companies - which we might now argue is the correct procedure - there is no reason to suggest that those fees would have led to a different decision, even if you had been making both. During a hard negotiation, who can say to what extent companies will adjust their fees when they know they are in the running? That is the way companies will proceed. They will suggest a fee and after you tell them they are in the running, you ask them to give you the bottom line in terms of the fee. I do not know how much leeway the overseas companies had, but on the face of it there was no reason to believe they were proposing a lower fee than the one we negotiated.

Deputy C. Lenihan

The effect of what Mr. Teahon is saying is that from an evaluation of the foreign versus the domestic, the fees suggested by the foreign companies were clearly on a par or in the same range.

Mr. Teahon

They were above in most cases.

Deputy C. Lenihan

There were three domestic players, including Ms Magahy's company.

Mr. Teahon

There were four.

Deputy C. Lenihan

There were four versus three. Of the four domestically incorporated companies, where did Mr. Teahon rate Ms Magahy's company in terms of the criteria he used to evaluate her versus the——

Mr. Teahon

My recollection was that it was in the middle.

Deputy C. Lenihan

It was in the middle of the range.

Mr. Teahon

Yes.

Deputy C. Lenihan

That is important because there was a hint in Deputy Rabbitte's question that there was a grace and favour process, whereas Mr. Teahon points out that there was a tendered process.

Chairman

Deputy Rabbitte was in agreement.

Deputy C. Lenihan

I meant that his question might have the implication, but of course the Deputy would not imply that.

Chairman

In fairness to Deputy Rabbitte, he was trying to probe questions at the time.

Deputy C. Lenihan

I accept that.

I am very keen that the issue of the conflict of interest in the role of chief executive is resolved. It was suggested that the chief executive role on this project become full-time because of the implications and I will be asking that the committee endorses that suggestion when it comes to make its recommendations. Given the level of heat that this issue has generated, it is crazy that there is not a full-time chief executive in charge of this project. I hope that comment is not lost on Mr. Murphy.

Can Mr. Benton's role going forward be clarified? I am still unclear as to what it is and I am frustrated by that. Mr. Benton was appointed by the Government to be the chief executive of this company.

Mr. Murphy

That is not so. The Government asked the Office of Public Works to facilitate the company in procuring the services of an interim chief executive. The company chose Seán Benton as its interim chief executive——

Deputy C. Lenihan

Exactly, that is very good.

Mr. Murphy

——and we were happy to facilitate that.

Deputy C. Lenihan

That is excellent and the least we would expect for a large public project. His reporting relationship, as chief executive, is not to Mr. Murphy, I presume, given that the company is properly incorporated, but to its chairman and board.

Mr. Murphy

Yes, of course it is to the board of the company.

Deputy C. Lenihan

He will not be reporting to Mr. Murphy in future.

Mr. Murphy

As we speak now, no. He is a chief executive with responsibilities to the board of the company.

Deputy C. Lenihan

Perhaps Mr. Haugh has a view on this. Going forward, Mr. Benton will be reporting as chief executive to the board and its chairman and the next reporting line beyond that will be to the sponsoring Department, which is Ms Hayes's Department. Is that correct?

Mr. Murphy

This is not unusual.

Deputy C. Lenihan

I am not suggesting it is.

Mr. Murphy

The Office of Public Works has many, many clients which are independent companies or independent State bodies. The National Gallery, for instance, is an independent State body and we do work for it. We have a similar relationship in this case. We act as agents for the board and we are under its direction.

Deputy C. Lenihan

Does the Office of Public Works lend personnel to become chief executives of the National Gallery? That is not my perception.

Mr. Murphy

No, but we provide it with a full team. We have formulae agreements with it. Commissioner Benton was, for instance, the head of the gallery's extension project, reporting directly to the National Gallery's board.

Deputy C. Lenihan

That is right. That is what I mean. I am not suggesting there is anything unusual in this; I am trying to clarify the lines of reporting. Does the Office of Public Works charge for Mr. Benton's services? What is the relationship?

Mr. Murphy

No, it is a Government project.

Deputy C. Lenihan

Given that this project is important, it is an honour to be asked to facilitate the board by providing a suitable person to run this company.

Mr. Murphy

The Government has asked us to facilitate the board and we are pleased to do that.

Deputy C. Lenihan

There will be normal reporting lines to the board and, upwards, to the Department.

Mr. Murphy

Absolutely.

Deputy C. Lenihan

There has been a conflict between Mr. Murphy and Mr. Teahon at this committee over the last few weeks regarding who is in charge of this project and this committee needs to be clear about who that is and to know if they are working on it full-time. Given all the paper and political heat generated by this issue, it is imperative that Mr. Benton is not sent out to Abbotstown without clear riding instructions, to use racing parlance. He needs to know who he is reporting to and I want that clarified now. Will he be reporting to Mr. Murphy as well as to Ms Margaret Hayes? Is there an understanding that he will report to Mr. Murphy from time to time about progress on the project?

Mr. Murphy

The Minister for Tourism, Sport and Recreation is in charge and CSID reports to him through the Secretary General of his Department. Seán Benton is interim chief executive for that company and his reporting relationship is that he carries out the instructions of the company's board. The company board is instructed by the Minister for Tourism, Sport and Recreation - through his Department - for whose policies Government approval is sought, where necessary.

Deputy C. Lenihan

Some of the coverage seems to indicate that the Office of Public Works was going to run the project. That is what I was trying to clarify. In fact, it will be a person on loan to the company from the Office of Public Works.

Mr. Murphy

Seán Benton is bringing his experience and knowledge as a commissioner of public works to the board.

Deputy C. Lenihan

Absolutely. Conflicts of interest have been mentioned and I do not suggest that there is one here. I hope there is not one between the various roles, which is why I asked those questions.

In relation to this project, the Office of Public Works is currently employed as an adviser to the Government. In effect, it is an adviser to the Minister. A groundbreaking meeting was referred to earlier at which the Minister for Finance, Deputy McCreevy, decided that the Office of Public Works would not provide the project management in this case, despite Mr. Teahon's desire that it would be part of the set up. As a result, the Office of Public Works became adviser to the Minister and his Department, in effect becoming a monitor of the company's performance. In light of the reporting relationship, is Mr. Murphy happy that there cannot be any conflict of interest between Mr. Benton's commissionership role in the Office of Public Works and his role as chief executive? This is very important because if he is not working full-time in the role of chief executive of CSID, even on an interim basis, on the Campus Stadium Ireland project and the delivery of the aquatic centre and he has other duties to perform in an Office of Public Works context, he would be open, in some people's minds, to the accusation - I do not believe this to be the case with him as a person and I am trying to remove him, as a person, from this - that there is a conflict of interest. This is why I raise the issue of it being desirable from a public point of view to have a full-time chief executive not just from the monitoring point of view, but also from the governance point of view.

Mr. Murphy

I think we have been over this ground. I dislike the phrase "conflict of interest" because it does not arise here.

Deputy C. Lenihan

A crossing of the lines of reporting.

Mr. Murphy

Yes, I accept that.

Deputy C. Lenihan

Whether it is a conflict of interest is another matter.

Mr. Murphy

No, the conflict of interest is a very particular thing.

Deputy C. Lenihan

There is no corporate governance.

Mr. Murphy

The point here is——

Deputy Dennehy

"Incompatibility" was the word used earlier and it is what I asked about.

Mr. Murphy

Yes, and I fully accept that word. However, the Government's decision on this requires the Office of Public Works to facilitate the CSID board and it will have our full facilitation.

Deputy C. Lenihan

Therefore, the preference is, I hope, for a full-time chief executive. Ms Magahy, you stated that all three of the criteria laid down for you had been achieved. Can I assume from this that the second item you mentioned, the planning application for the full-scale enlarged Campus Stadium Ireland project, is now ready for the planning stage? In other words, if, for instance, after the election, the Government was to give you or the board the go ahead to proceed to build a full-scale project of this kind, a planning application could be lodged the next day with Fingal County Council outlining what exactly has been proposed.

Ms Magahy

Not exactly the next day. There would be about a month's work to do to bring it to completion.

Deputy C. Lenihan

To finesse it. You mean finessing a full-scale planning application.

Ms Magahy

Correct.

Deputy C. Lenihan

Does this include the EIS?

Ms Magahy

The environmental impact statement is, by and large, finished. There is some tweaking of the documentation by the architectural team which needs to be done in order to finesse it. It is, however, by and large ready as a planning scheme.

Deputy C. Lenihan

The sports facilities, the price outline, the planning preparation - was the other one the aquatic centre?

Ms Magahy

Yes.

Deputy C. Lenihan

When you said the aquatic centre was achieved, I was a little surprised. Do you mean it is on its way to being achieved? What target was set for you?

Ms Magahy

May I——

Deputy C. Lenihan

I am not taking——

Chairman

The whole project would be ruined if it was not under way at this stage.

Deputy C. Lenihan

There were doubts expressed that it might not be.

Ms Magahy

The pool will be finished on 9 December. It is on time and on budget.

Deputy C. Lenihan

It is on time and on budget as far as you are concerned.

Ms Magahy

Yes.

Deputy C. Lenihan

The other issue that really struck me——

Deputy Rabbitte

Was it upside down?

Deputy C. Lenihan

——was your comment during a somewhat heated discussion between yourself and Deputy Durkan about the Attorney General's insistence that this company had, during the early stages of the bidding process, tried to foster in the minds of CSID the impression that Waterworld UK was itself a leading water park operator with approximately 20 years experience. We are all aware from our private sector and job application days that we enhance our CVs from time to time - even very famous people do it from time to time.

Chairman

Is that how the Deputy got in here?

Deputy C. Lenihan

Mr. Teahon, you say that at no point did the consortium behind Waterworld UK inform you that it had been operating because it is self-evident that the company is a special purpose vehicle that would hardly be involved in operating. Is that correct?

Mr. Teahon

If you go to Annex F of the Attorney General's report, the second paragraph of the letter spells it out. It makes a distinction, which I think is a very important distinction. It says in relation to operators:

WaterWorld UK Ltd

The UK company of one of the world's leading Waterpark operators. . . .

In fairness to the Chairman, he and I have been through this two or three times.

Deputy C. Lenihan

Yes, this is the website issue which I remember - "with specialist waterpark experience".

Mr. Teahon

"The UK company of one of the world's leading Waterpark operators". The people who had 20 years——

Deputy C. Lenihan

The people who are investors or consortia in that company are——

Mr. Teahon

——experience were and are the people in the US.

Deputy C. Lenihan

Therefore, they mean the people rather than the body corporate. Is that where the misunderstanding lies?

Mr. Teahon

No, I think it is clear that the companies in the US were the companies which had approximately 20 years experience and they were the companies about which we spent a good deal of time deciding whether they could give us an acceptable parent company guarantee for Waterworld UK. Therefore, there was no issue that this possibility existed. In the event, it did not work out and when the alternative proposal was put to us about the people who had the experience in Tralee, we proceeded to assess that experience. In fairness to Waterworld UK, it never tried to pass itself off as the company which had 20 years experience. It said, as in the letter, that it was the UK company of one of the world's leading water park operators. I think that is an important distinction.

Deputy C. Lenihan

Did you believe, as the Attorney General seems to be suggesting, that it was almost actively fostering this impression, perhaps by saying to board members that the company has been 20 years in the business as opposed to——

Mr. Teahon

I genuinely do not because, in fairness to Waterworld UK, it was trying to convince us that the fact that it was the UK company of the US companies was of significance for us. In my view that was fair as it was the UK company. They did have common directors and the US company went through a significant period in which it said it would provide a parent company guarantee.

Chairman

I ask the Deputy not to read out the figures.

Deputy C. Lenihan

I have them.

Chairman

You equalled Deputy Rabbitte with 39 minutes each so I was very fair to both of you.

Deputy C. Lenihan

Yes.

Deputy Dennehy

I can see you are about to wrap this meeting up, Chairman. I have one question in the light of what Ms Magahy said about the timing. I think Mr. Teahon also made this clear the other day. We had a headline in at least one of the newspapers about the Special Olympics. May I presume that there is no doubt about finishing on target and that we will be prepared for them?

Ms Magahy

Yes, we will.

Deputy Dennehy

The message seemed to have gone out that the whole thing might implode. You are quite happy this will not be the case.

Ms Magahy

It will be ready.

Deputy Dennehy

Mr. Teahon, I believe, was adamant that it would be ready, but then we read a couple of days later that there might be problems.

Mr. Teahon

There was a statement from the board of CSID the other day after Con Haugh and Seán Benton were appointed that they were satisfied it would be ready for the Special Olympics.

Deputy Dennehy

This is critical and we will have to look through everything we have said. It is important because the Special Olympics were the catalyst for the timing and many of the other things in hand. It is critically important that we release people from any pressure because people were starting to ask us questions about this. I want to have this made clear.

Chairman

On that point, Mr. Murphy, you may have heard an assertion made on "Morning Ireland" by a representative of Dublin Waterworld to the effect that the work of the Office of Public Works was too slow. Now that you are involved in this project in a hands on manner, will you also give the necessary assurance that everything will be on time?

Mr. Murphy

I think my reply to Deputy Dennehy on a number of occasions has been "steady, but not slow".

Deputy Durkan

I refer again to the point raised by Deputy Conor Lenihan. I noticed the comment made by the Attorney General on the CSID response. I presume it is in order to refer to that. It is at the end of the Attorney General's report. He makes the reference to not commenting on compliance with the EU procedures. He then says:

The comments on the adequacy of the pre-qualification and assessment process in my report stand. No adequate consideration was given to the financial standing or capacity, actual or potential, of the proposed operator company at any time prior to the decision by the Government to accept Waterworld as the preferred bidder.

When I referred to that earlier, coming from a different angle, sufficient relevance was not given to the importance placed by the Attorney General on his views on that subject. One should note paragraphs (a) to (g) in this respect.

Mr. Teahon

If one reads paragraph (b), it looks as if one is talking about the same thing when referring to the proposed operator company and, then, Waterworld as the preferred bidder. In fact, they are different. The proposed operator company at that time was Waterworld (UK) Limited and Waterworld, as the preferred bidder, was the consortium. There is an important distinction.

Deputy Durkan

What was the Attorney General commenting on there? Was he not commenting on the possible perception in the open market of the procedures followed and the ability of various people to compete in the open market for State-funded projects instigated by the State and his knowledge of the need to adhere to certain procedures?

Mr. Teahon

I do not know, but if he believes that the proposed operator company and Waterworld, as the preferred bidder are one and the same thing, he is wrong.

Deputy Durkan

No, he does not say that at all. He merely says exactly what I quoted. He emphasises "at any time prior to the decision by the Government to accept Waterworld as the preferred bidder". My interpretation, which is subject to clarification, is that the Attorney General is saying a considerable doubt was created by the methodology used at that particular time, given the information that was available to CSID and, eventually, to Government, which had to make a decision.

Mr. Teahon

Let me make a different point. If the sentence had read "No adequate consideration was given to the financial standing or capacity, actual and potential, of Waterworld as the preferred bidder.", that statement would have been incorrect.

Deputy Durkan

The Attorney General did not say that.

Mr. Teahon

I accept that the words are different.

Deputy Durkan

He did not say that at all. I presume he deliberately put on paper what he was thinking. We should always bear in mind in this committee that we have seen, over the years, numerous instances where certain procedures were not followed and where we had to visit the scenes afterwards with much annoyance, trauma and hurt. The Attorney General is saying that there are certain procedures that need to be put in place, operated and adhered to at all times. He is not saying he is satisfied that that was the case. What does Mr. Teahon think?

Mr. Teahon

I believe that adequate consideration was given to the financial standing or capacity in accepting Waterworld as the preferred bidder. That was the issue. It was an issue of accepting a consortium as a preferred bidder.

Deputy Durkan

I do not want to quote again what was said in the House, but does Mr. Teahon understand that the Attorney General seems to have difficulties with the explanation? This is obvious and hence the comments made at the end of the report. Apparently, the Tánaiste has had some considerable difficulty as well. She indicated this in the House. She said in the House that if certain information was available, different decisions might have been made. Given the point I made earlier on the duty of this committee and the fact that we have visited so many difficult scenes over the years, does Mr. Teahon feel, in light of his own knowledge of the way the system works in respect of procurement, etc, and the need to observe checks and balances, that the Tánaiste is justified in her remarks?

Mr. Teahon

I have said before that I am not setting myself up as agreeing or disagreeing with the Tánaiste. I am simply saying that I had the information that I had. If I had to decide all over again, I would reach the same decision based on that information and I believe it would be a valid decision. I recognise that the Tánaiste is making a valid point, which is that the Government should have had the opportunity to make the decision on the basis of the same information.

Deputy Durkan

All the information.

Mr. Teahon

Exactly. I accepted in my statement that I had not made that information available. In my judgment, if all the information had been available, the Government would have reached the same decision that was made.

Deputy Durkan

That is not what she said. She said that, if all the information had been made available that is now available, a different decision might have been made.

Mr. Teahon

I accept that the Government should have had that opportunity. I should have made more information available and the Government should have had the opportunity - and rightfully so - to make the decision in the light of all the information. If it had had all the information, I honestly believe it would have reached the same decision that was made.

Deputy Durkan

Would the Attorney General have advised the Government to do so in view of his comments and advice and given his role in Government?

Mr. Teahon

I believe he would have done so because, if one reads the Government memorandum, Annex D, it is clear that the Attorney General raised doubts in the context of the Government making the decision. The additional information, essentially stating that it was a once dormant company, is not significant in respect of the issues the Attorney General raised at that time. In fairness, the Tánaiste's views are set down there too.

Deputy Durkan

How does Mr. Teahon arrive at the conclusion that the additional information is "not significant"? Given that the Attorney General, the Tánaiste and, for all I know, half the Cabinet expressed concerns, it would appear that there is considerable room for concern based on the points they raised in reply to questions.

Mr. Teahon

Yes, but the points made are not significantly different from those made by the Attorney General and the Tánaiste in the context of the Government making a decision on that memorandum.

Deputy Durkan

Why not?

Mr. Teahon

The memorandum raises issues in respect of Waterworld (UK) Limited.

Deputy Durkan

We will not agree on that anyway.

Chairman

I do not think there will be a meeting of minds on the issue.

Deputy Durkan

My point stands. The Attorney General apparently had serious concerns, as had the Tánaiste. Apparently Mr. Teahon does not share those concerns. Only time will tell who is correct.

Chairman

In fairness to Mr. Teahon, his interpretation of 20 years is different from what the Comptroller and Auditor General said in his report. We have already covered this ground and I am anxious to conclude the meeting. It would be remiss of me not to ask Ms Magahy a final question. Reference was made at several junctures to the documentation we got regarding Mr. Teahon's consultancy project. Has Mr. Teahon's company offered consultancy advice to either of your other two projects?

Ms Magahy

No, nor on Sports Campus Ireland.

Chairman

The budgeted price was £48 million. That was the lowest tender for the aquatic centre project.

Ms Magahy

Yes.

Chairman

Are you totally confident that it will come in on budget?

Ms Magahy

There is no reason to believe otherwise at this point in time.

Chairman

I thank those who attended the meeting. The committee will now meet in private session to consider what further steps, if any, we will take on the matters under consideration.

The witnesses withdrew.

The committee went into private session at5.52 p.m. and adjourned at 6.05 p.m.