Are the minutes of 5 February 2015 agreed to? Agreed. Are there matters arising from the minutes?
Business of Committee
I wish to raise one issue. In other business, I see the committee sought a note in respect of accommodation for a Probation Service project, which is fine, as well as a note on the causes of cases initiated by the special investigations unit of the Department of Agriculture, Food and the Marine. I am unsure what this is about.
It was a question that was raised regarding cases taken by the Department of Agriculture, Food and the Marine and the special investigations unit was part of that. The committee was then told that the costs of those cases were being dealt with by the Chief State Solicitor's office. We have sent a request to the Chief State Solicitor's office to provide us with a breakdown of those costs and, in particular, for those cases that went nowhere but which were terminated for one reason or another. We then agreed to hear from a number of individuals who had the experience of dealing with the Department in a number of these cases that have been dealt with. While we have not yet set a date, we have been in contact with quite a number of them and as soon as they are available, on a date that is suitable to the committee, we will invite them in.
Have they written to the committee?
Yes. Item 3 is correspondence received since our meeting on Thursday, 5 January 2015. There is correspondence from Mr. Brian Fitzgerald, CEO of St. James’s Hospital, regarding allowances paid to senior hospital staff. It is to be noted and published.
There is correspondence dated 12 December 2014 from Mr. Harry Lawlor regarding Shannon Development, units 6 and 7, County Limerick. It is to be noted that there is clearly contradictory evidence being given to the committee. At this stage, the Department of Jobs, Enterprise and Innovation should be asked to review the complaints made by HL Commodity Foods and provide a note to the committee on the matter. I had understood when we raised this at the previous meeting, with Shannon Development, that it was to come back to us with a complete breakdown of exactly what transpired between all the parties concerned. We asked those concerned for a response to the issues raised, particularly the very worrying issues raised by HL Commodity Foods.
Clerk to the Committee
I will have to check the reply. I will get a note for next week setting out the exact position.
Mr. Seamus McCarthy
I think Shannon Development did write back and the correspondence was sent on to the committee.
Clerk to the Committee
That is right. This is the response, basically.
The response from Shannon Development has raised the questions that are now being asked by HL Commodity Foods. That is the issue so I believe we have to get a response and, if necessary, talk to both parties again.
There is correspondence from Mr. Paul Clegg, acting interim CEO of Dublin Docklands Development Authority, giving us an update on the authority. This is to be noted and published.
That is fine. The delegates are due to attend in March anyway.
We have written to the previous CEO requesting a report or, if necessary, a comment on the hearings held so far so we can include it in the report we are preparing.
There is correspondence dated 6 February 2015 from Mr. Noel Waters, acting Secretary General in the Department of Justice and Equality, regarding Thornton Hall. This is to be noted and published.
I will comment on that. We have had a fairly thorough response from Mr. Waters on the new prison project proposed for Thornton Hall. Clearly, a very large amount of money - over €50 million - was spent on the project, which never went ahead. The reason for the project in the first place was that the Department had come to the conclusion that it could not provide in-cell accommodation in Mountjoy Prison. In the meantime, over the past ten years, the in-cell accommodation has been provided. The reason for the purchase in the first place was because the Department had come to a conclusion that it could not be provided. Maybe necessity is the mother of invention. That in-cell accommodation that could have been provided decades ago had not been provided must be borne in mind. Now we have a white elephant that cost the State over €50 million. The reply from the Department is that it is now going to consider the matter and produce a report at some time, maybe in the summer. It is very unsatisfactory in terms of the quantity of the taxpayers' money that has been spent, to absolutely no purpose. The committee should reflect that in its response to the Department in relation to how it conducts its business. There may be similar activities in which it has engaged that we are not aware of. I put this down as a marker. I am sure that is what the Comptroller and Auditor General has been doing all this time anyway. Nevertheless, here is a very major project that really has been a waste of taxpayers' money. A strong reply should come from the committee on Mr. Waters' statement to us.
What is the Deputy requesting?
It has been clearly pointed out that, irrespective of the basis for the initiative, it was not progressed effectively to any stage over a ten-year period. All that was provided was road access, resulting in extra expenditure. The total expenditure is probably a lot more than €50 million. It is incredible, bearing in mind the purpose for which the site was purchased in the first instance, that it has now been shown that it was not necessary to engage in the process at all, because the in-cell accommodation has been provided. Is anybody's hand going to be slapped over this matter? How do we highlight something like this to a Department and embarrass it into not doing something of this nature again?
One cannot embarrass it; I found that out myself.
The Chairman does it pretty well. I ask the Comptroller and Auditor General for his views.
Mr. Seamus McCarthy
My predecessor produced a report on the initial acquisition of the land. This is probably the most complete description of the expenses incurred since the purchase, including purchases of additional land to provide a dedicated access road from the main road, as I understand it, and expenditure on development of the site. It is something I intend to come back to at some point but I have no plan immediately to report on it. It strikes me that if the Accounting Officer were before the committee, the matter could be probed by the committee. That would be the standard operational procedure in relation to an expenditure line the committee is concerned about.
In the meantime, would it not be possible for the committee to write back to Mr. Waters to point out the contradictions in the activities that the Department has engaged in, and the total lack of justification for the expenditure of taxpayers' money?
The total sum is €50.14 million. Maybe we should go back to the Department as an exercise and ascertain how the decision was arrived at, who took the decisions and how the matter was analysed. The Deputy asked whether someone will be sanctioned over this. It is a reasonable question and the Department should be asked how this happened. We should ask whether it was politically driven. We know why what was being suggested was suggested but we should ask whether it occurred to no one in the Department that this might be the result. That is the least we could do.
I agree with that. I do not know whether I took up the Comptroller and Auditor General correctly but he said he intends to return to this matter. I presume there is nothing stopping this committee inviting people to discuss this subject in advance. In fact, it might be a good contribution to the Comptroller and Auditor General's investigation.
Mr. Seamus McCarthy
That is correct, and it might obviate the need for me to investigate.
We now have a white elephant, as people have said. The Department is obviously figuring out what it will do with the land. I would like to know the position in this regard. The land is an asset acquired by the State and it is not being used for anything. It is serviced land and has cost a fortune. What is the process in this regard? Can something or anything be salvaged from the situation? Who is part of the group? What kinds of options are they looking at? The committee could have quite a productive hearing on these points in order to take the matter further from where the Comptroller and Auditor General's predecessor left it by way of his report, and it could establish the extent of further costs and expenditure since that report's publication and the plan from here on out.
Perhaps we will invite the parties that were involved in this from the start to this point and perhaps the inter-departmental group, because they might be able to answer some of the questions both you and Deputy Costello have put this morning. We will try to set an early date for that.
At the end of the report there is an indication that they will be producing a report in the summer, so presumably they are doing some research or background examination on the issue.
We can discuss the progress of that report when they appear before the committee, and perhaps have an input into it.
Good.
That would be important.
It might help us-----
In other words, and I do not know if Deputy Costello is suggesting this, we should not wait for them to produce the report. It would be preferable to have them appear before the committee in advance so we can establish what they are doing, the methodology of what they are doing, who is doing it and how they are proceeding. That is a better approach, rather than waiting for a fait accompli.
They might help us to cope with the other white elephants that are stomping around and give us an indication as to how we deal with them.
We can herd them in the room together.
There are 150 hectares at Thornton.
We could put them all out there.
It would be use of the €200,000 per acre.
No. 3B.5 is correspondence dated 9 February 2015 from an anonymous source re regrading of staff in the HSE. It is to be noted and published. We will ask the HSE to include this matter in the review it has commenced of the regrading of staff. We might ask the HSE for a note on the issues that were raised publicly about the over-payments in respect of staffing.
No. 3C is documents and opening statements relating to today's meeting from IDA Ireland and Enterprise Ireland. They are to be noted and published.
No. 4 is reports and statements received since our last meeting. All have a clear audit, although in No. 4.6, Royal Irish Academy, attention is drawn to the recognition of a deferred pension funding asset, while in No. 4.3, the Pre-Hospital Emergency Care Council, there is reference to costs and liabilities. This again relates to pensions.
Mr. Seamus McCarthy
Yes. They are two different treatments of pension liabilities, but they are standard procedures in the education and health sectors.
Turning to the work programme, Deputy McDonald has raised a question regarding the Revenue Commissioners and the recent controversy.
I spoke to you, Chairman, and the Clerk of the Committee, about the revelations regarding HSBC and 350 deposit holders with deposits of in excess of €3 billion. We understand that the Revenue Commissioners have recovered €4.55 million by way of tax settlement. I am anxious that we contact the Revenue Commissioners to ask them for a detailed briefing on these matters and that we then invite them to appear before the committee so we can examine the matters with them. I wish to make that formal proposal.
I support what Deputy McDonald has proposed. It is a major scandal that over €3 billion in the accounts of over 350 Irish citizens would be in a bank of this nature, which is very questionable in the manner in which it operates. A similar situation has transpired in Britain, where over 1,000 British citizens were in the same situation. HM Revenue and Customs have collected approximately £135 million in that country. The small amount that appears to have been collected is causing major issues.
The Revenue Commissioners would have had access to the information almost five years ago and have operated in private in all the investigations that have taken place. We do not know the extent of the investigations. We know the extent of the findings, which is that 22 account holders produced €4.5 million. That is from 350 clients and over €3 billion in cash. One is the subject of a criminal investigation. I understand there is also only one criminal investigation in the United Kingdom. In addition, this bank, HSBC, has over 500 subsidiaries which are largely in tax havens. Has that been chased up?
There are major questions to be answered. I agree that we should get a full and frank report on the matter and that we invite the Revenue Commissioners to appear before the committee on this issue.
First, I do not believe there is anything wrong with having an account in HSBC. Second, before we ask the Revenue Commissioners to appear before the committee we should ask them for the report and then make our decision. The Revenue Commissioners have proven to be quite adept at dealing with tax evasion and tax avoidance over the past 20 years. At least we should give them the opportunity to explain the issues. It might not be the case that there is tax avoidance or evasion in some of these cases or that criminality is involved. At the very least we should allow them to put together a briefing note for the committee before we make a decision about a public hearing.
That is the proposal, that we seek the information and make a decision arising from that. They have to make clear to us the number of account holders, the number investigated by the Revenue Commissioners for suspicion of tax evasion, the number who have been prosecuted, the settlements and the amount involved, including penalties, the resources that were dedicated to examine HSBC and include a note on the way in which the information was obtained in the first place. All of that is relevant information that should be sought by the committee, because there is a need to clarify matters for the general public who have simply read the reports in the newspapers. It says something about the work of public accounts that the Public Accounts Committee in the UK is meeting to discuss this issue and it has staff from HM Revenue and Customs appearing before it.
I agree with seeking the report. However, when the news broke initially there might have been a letter from this committee or, perhaps, it should have been a proactive approach by the Revenue Commissioners to say, "This is what we have done. We know you might be concerned about it", and to set the case out before us. When the Clerk of the Committee writes to the Revenue Commissioners he should say that we need this information as soon as possible. The information has been compiled over the last number of years, although it has only become public now, so it should be to hand. They should send us a comprehensive report on the matter as soon as possible. If it could be done within a week, which I believe it can, we could deal with it at our meeting next Thursday and decide after that.
Do members wish to raise any other business?
I wish to raise another matter relating to the work programme. On a previous occasion I raised the issue of economic and social rights and building them into the budgetary and forecasting procedures and value-for-money assessments. It is something Amnesty International and other organisations are pressing for and it increasingly has currency internationally. In fact, the Constitutional Convention considered the matter of economic and social rights in the Constitution and looked favourably on the proposal, so it is a matter that is very much in the political mix in this State as well.
It is not on the work programme to have a hearing on these issues but I wish to press the issue again. The reason is that when we scrutinise spending we do so on the basis of value-for-money considerations and judgments, transparency and so forth. However, there is another layer of considerations in the spending and allocation of resources and they are binding on a Government in this State.
They concern economic and social rights and, as a committee, we need to develop an understanding of them. I reiterate to the Chairman and to the committee that I believe it would be a worthwhile exercise to invite in, for example, Amnesty International and other organisations to familiarise ourselves with those concepts and that approach. I appreciate that is not on the clár and that it will not happen this side of Easter.
I will ask the clerk to note the Deputy's suggestion.
It would be a good exercise for us.
For the purposes of clarification, we had a discussion last week about a trust in regard to a particular college.
Mr. Seamus McCarthy
Yes. St. Patrick's College foundation.
It has said that it is not taxpayers' money that was put into the foundation.
Mr. Seamus McCarthy
The point I was making was that it was college resources that were being put into a foundation that the college regards as being a separate entity. The concern I would have would be that the resources of a body that is accountable here would be alienated from the body. That is the concern to which I wanted to draw attention. I believe I pointed out that it gets a substantial part of its funding from the Higher Education Authority, HEA, but that it also has other sources of income. As I said, the point in question was the transfer of college resources into a foundation.
The Comptroller and Auditor General is effectively saying the college's resources that are put into the foundation are not auditable in that respect.
Mr. Seamus McCarthy
Not auditable by me.
By the Comptroller and Auditor General.
Mr. Seamus McCarthy
Yes. It obviously would be audited as a company perhaps or as a trust.
It would largely come down to the nature and the context of that funding in the first place and whether it was college resources.
Mr. Seamus McCarthy
The point of a set of financial statements is that it gives one a full and precise view of the state of the affairs of the college at a point in time. If resources are diverted into another fund and do not form part of the balance sheet, how is anybody using the balance sheet to know what is the true financial position?
Therefore, it is the definition of public funding and-----
Mr. Seamus McCarthy
And the control of resources.
-----when does it not become public funding-----
Mr. Seamus McCarthy
Yes.
-----and therefore is it auditable by the Comptroller and Auditor General's office then?
Mr. Seamus McCarthy
Yes.
Okay.
How widespread is this issue concerning foundations among the other universities and third level colleges that come under the remit of the Comptroller and Auditor General's office?
Mr. Seamus McCarthy
Most of the universities would have a foundation.
Therefore, the potential problem that is being unearthed here could be an issue in other third level institutions as well.
Mr. Seamus McCarthy
Yes.
Is it the Comptroller and Auditor General's intention to look into that?
Mr. Seamus McCarthy
The exception I would make in regard to other colleges and what was different in St. Patrick's is that resources of the college were put into the foundation. Normally there might be donations that come to a foundation, which could alternatively have come directly into the university. One normally expects the flows to come from donors into a foundation and then into the college. What is different here is that the resources of the college were put outside the college into a foundation.
In the general thrust of looking at foundations the Comptroller and Auditor General has no way of knowing that money that is given by benevolent sources to a foundation does not find its way in the reverse direction back into the university in terms of current expenditure or, God forbid, top-ups or anything like that.
Mr. Seamus McCarthy
No. If a donation comes from a foundation into a college, it should be brought to account just as that, as a form of income and accounted for appropriately. Once it comes into the college it then forms parts of the funds available to it. As to whether one can say that if there are top-ups, it was the donation that funded the top-up, to me, that is splitting hairs. If one has moneys in one's general account and expenditures out of that general account, it forms one fund effectively. All sources of funds effectively then are applied pro rata in the same way.
With regard to fiduciary funding within the universities that come under the National University of Ireland where people would give funds to different faculties, the Comptroller and Auditor General spoke about money moving in the reverse direction where people take funds from the budgetary fund of the university and put it into funds. Many people would give generously to different research facilities and they would prefer not to have the source of such funding made available. The heads of faculties would be engaged in research and development and would earmark funding from high-tech companies and so on. Is it the Comptroller and Auditor General's intention to audit those as well?
Mr. Seamus McCarthy
No. My concern is that there would be a clear view in the financial statements of the financial status of a university. Very often donations are given for a specific purpose. It could be that they are ring-fenced for the construction of a particular building. Sometimes that comes with a requirement that it be acknowledged in the name of the building and or it may be that the donation is anonymous and the donor does not want to be acknowledged. All that can be catered for in proper sets of financial statements. One can have restricted reserves when they come in from a donor. The concern I would have would be that if the members, as legislators, are looking at the financial statements, they should understand what resources the college has available to it. If it controls the foundation, under the standard accounting procedures, the expectation would be that it would consolidate the resources into the other resources of the university. If a foundation is not controlled by the university and is independently raising funds to apply or donate to the university at a time of their choosing, then there may be a case for holding them separately. We look at the situation as it exists in law and we try to ensure that where consolidation is appropriate that consolidation is done and we see the full picture.
On the Comptroller and Auditor General's last point, is a code of conduct issued by his office to the universities that come under the National University of Ireland with regard to the financial requirements pertaining to a fiduciary fund and to non-taxpayers' funds that could be ring-fenced and would be outside the taxpayers' remit and separate from the overall budget?
Mr. Seamus McCarthy
No. These are standard accounting principles. It is accounting standards that require this treatment.
Would it be advisable to send them a revised note on what would be expected in light of the fact that there could be ambiguity with regard to the exact requirements?
Mr. Seamus McCarthy
We have been pushing with all the universities to ensure that there is consolidation where consolidation is appropriate. My predecessor reported on that matter. It was discussed at this committee. The Department and the HEA have made the point that they regard foundations as being something that is very important and we do not disagree with that. What we are concerned about is that the accounting for it is consistent with standard accounting practice and that is what we push on an individual basis with colleges and in general with the HEA.
The work programme is on the screen. Our next meeting will be 26 February and we will deal with Vote 13 - Office of Public Works and chapter 4. Are these agreed? Agreed. We will ask the witnesses to attend.