COMMITTEE OF PUBLIC ACCOUNTS díospóireacht -
Thursday, 24 Sep 2015

Business of Committee

Chairman

The minutes of the meeting of 9 July 2015 have been circulated. Are the minutes agreed? Agreed. Are there any matters arising from the minutes? No.

We will now deal with correspondence from Accounting Officers and Ministers. No. 3A.1 is correspondence dated 10 July 2015, received from Mr. John McCarthy, Secretary General of the Department of Environment, Community and Local Government. It is a follow-up from our meeting of 25 June 2015 and is to be noted and published. No. 3A.2 is correspondence dated 14 July 2015, received from the HSE. Again, it is a follow-up from our meeting on 23 April 2015 and is to be noted and published. No. 3A.3 is correspondence dated 15 July 2015, received from the HSE. It is a follow-up to our meeting on 23 April 2015 and is to be noted and published.

Item No. 3A.4 is correspondence dated 20 July 2015, received from NAMA. It is a follow-up from our meeting of 9 July 2015 and is to be noted and published. We can deal with this issue next week. No. 3A.5 is correspondence dated 20 July 2015, received from Mr. Daithí McKay MLA, Chairperson of the Committee for Finance and Personnel of the Northern Ireland Assembly, regarding a letter to the Minister for Finance, Deputy Michael Noonan, about the sale of NAMA assets in Northern Ireland. This is to be noted and published. The financial statements of NAMA will be examined next week and this issue can be raised then.

Item No. 3A.6 is correspondence dated 27 July 2015, received from Mr. Niall Cody, Chairman of the Revenue Commissioners, which is a follow-up to our meeting of 2 July 2015. It is to be noted and published. No. 3A.7 is correspondence dated 28 July 2015, received from Mr. John McCarthy, Secretary General of the Department of Environment, Community and Local Government. It is a follow-up to our meeting on 25 June 2015 in regard to Irish Water and is to be noted and published. No. 3A.8 is correspondence dated 1 September 2015, received from Mr. Ted Owens, CEO of Cork Education and Training Board, with further information from our meeting on 9 July 2015, and is to be noted and published.

Item No. 3A.9 is correspondence dated 4 September 2015, received from NAMA. It is a follow-up from our meeting on 9 July 2015 and is to be noted and published. Again, this can be dealt with at our meeting next week. No. 3A10 is correspondence dated 10 September 2015, received from Mr. Aidan O’Driscoll, Secretary General of the Department of Agriculture, Food and the Marine. It is a follow-up from our meeting on 18 June 2015 and is to be noted and published. We will correspond with the individuals concerned. The committee is still awaiting extensive information in respect of the untruths we were told by the seven members of the delegation that we met in May this year. We asked at our meeting with the Secretary General that he provide us with a line-by-line rebuttal of what he sees as the inaccuracies or untruths in those statements, but we have not received that to date. That is disappointing, because we emphasised that leaving what he said on the public record is unsatisfactory. I suggest we write again to remind the Secretary General that this information is required urgently.

Deputy John Deasy

Specifically, we discussed with the Secretary General the case of Tom Galvin. The Secretary General gave an undertaking at the committee hearing that Tom Galvin's case would be reviewed by the new steering group. That has occurred. About six weeks ago, Tom Galvin met the new steering group and spoke to its members for an hour or two. The only issue arising from that is what the process will be from here. I have contacted the Secretary General's office since then to find out the timeframe with regard to a decision in this case. It would be useful if this committee could follow up on that also. With regard to the follow-up from our committee hearing, the Department has taken some steps. I believe is taking that specific case seriously and has acted on it. The Secretary General has honoured the commitment he gave at this committee's hearing.

Chairman

Okay. However, in regard to the overall thrust of that meeting and the evidence given by the various individuals who came before us, he has not come back to us with the reply we requested. Therefore, in writing to the Secretary General on that, we will include the request to set down a timeframe in regard to the particular case Deputy Deasy has mentioned.

No. 3A.11 is correspondence dated 16 September 2015, received from Mr. Seán Ó Foghlú, Secretary General of the Department of Education and Skills. It is a follow-up to our meeting on 9 July 2015 and is to be noted and published. No. 3A.12 is correspondence dated 22 September 2015, received from the Comptroller and Auditor General. It is a follow-up from our meeting on 2 July 2015 regarding the amount of money collected by families who had availed of the Fair Deal scheme and it is to be noted and published. Deputy Perry raised this particular issue.

We move on now to individual correspondence. No. 3B.1 is correspondence dated 6 June 2015 from Mr. Gerard O’Leary, director of the Office of Environmental Enforcement, regarding a reply regarding correspondence from Mr. Philip Cantwell. This correspondence is to be noted and published and forwarded to Mr. Philip Cantwell. No. 3B.2 is correspondence dated 15 July 2015 from Councillor Kenneth O’Flynn regarding chairmanships of strategic policy councils. This is to be noted and forwarded to the Department of the Environment, Community and Local Government for a note on the issues raised. This is a matter for the local authorities to deal with, but in sending on the correspondence I will ask them to provide us with a detailed response to the queries raised so that we can communicate that to Councillor Flynn.

No. 3B.3 is correspondence received from an anonymous source regarding the lack of governance and management at Institute of Technology Tallaght. This is to be noted and forwarded to the HEA for a note. That matter can be raised today, can it?

Clerk to the Committee

Yes, absolutely.

Chairman

No. 3B.4 is correspondence dated 20 July 2015 from Mr. Colum Browne regarding fishing rights. It is to be noted and forwarded to the Department of Agriculture, Food and the Marine for a note on the issue. No. 3B.5 is correspondence dated 7 August 2015 from Mr. Thomas McKeon, Dublin North Business and Cultural Community, concerning objections to Swiftway Bus rapid transit proposals. This is to be noted and forwarded to the National Transport Authority for a note on the issues raised. No. 3B.6 is correspondence dated 28 August 2015 from Ms. Clare McGrath, chairman of the Office of Public Works. This regards lease acquisition processes by the OPW and is to be noted and forwarded to Mr. John Corcoran, who raised the issue.

No. 3B.7 is correspondence dated 18 August 2015 from Mr. Ronnie Owens regarding the lease of premises at Climber Hall, Kells, by the North Meath Community Development Association. This is to be forwarded to the HSE for a note on the matter. The clerk has circulated a note on this case, given its complexity. It relates to the application of a discount on a property leased by the HSE. We will ask for further details and the matter can be raised with the HSE when it next comes before the committee.

No. 3B.8 is correspondence dated 1 September 2015 from Mr. Michael Donnellan, director general of the Irish Prison Service, regarding compensation payments in the Irish Prison Service, and is to be noted and published. The matter arose from an anonymous allegation. How are we going to deal with it?

Clerk to the Committee

The Irish Prison Service will come before the committee in a few weeks' time.

Chairman

Can we forward the correspondence to the Irish Prison Service?

Clerk to the Committee

It has come from the Irish Prison Service.

Chairman

The issue arose following an anonymous allegation, so we can deal with it in more detail when the Irish Prison Service comes before us.

Clerk to the Committee

Yes, absolutely.

Chairman

Have we received other anonymous information or letters in regard to similar information?

Clerk to the Committee

Yes; further information came in after that.

Chairman

No. 3B.9 is correspondence dated 14 September 2015 from Mr. Seán Ó Foghlú, Secretary General of the Department of Education and Skills, regarding Cork Institute of Technology. It is to be noted, and the matter can be taken up at today’s meeting. Is this the report?

Clerk to the Committee

No, just a general letter.

Chairman

We will move now to documents related to today's meeting. Nos. 3C.1 to 3C.5 are briefing documents and all of them are to be noted and published. They concern reports, statements and accounts received since our meeting of 9 July 2015. There are 60 accounts to be noted today. Some of these have notes raising concerns about the accounts. They are listed in the documents and are numbered from 4.1 to 4.60.

The National Paediatric Hospital Development Board is coming in on 8 October. The remainder of the bodies listed on that page down to No. 4.8 are clear audits. No. 4.9 is a procurement issue relating to the Road Safety Authority. The next one is Dublin City University. Perhaps Mr. McCarthy would explain that one?

Mr. Seamus McCarthy

Yes. The audit certificate draws attention to non-consolidation of the financial statements of Dublin City University Education Trust. I point out that the trust had accumulated reserves of €15.4 million that are not recognised in the financial position of the university.

Chairman

Is that similar to other university cases?

Mr. Seamus McCarthy

Yes, Galway was another case and St. Patrick's.

Chairman

No. 4.13 relates to the Financial Services Ombudsman Bureau.

Mr. Seamus McCarthy

Yes. It is not applying the pension liability recognition because there is a question over implementing the legislation in relation to the pension and who would be carrying the pension liability.

Chairman

We have a number of accounts from Inland Fisheries Ireland. We have accounts for four years, from 2010.

Mr. Seamus McCarthy

That is right.

Chairman

Why has it taken it so long to submit accounts?

Mr. Seamus McCarthy

Inland Fisheries Ireland was established in 2010. That was its first year of operation, amalgamating the regional fisheries boards. The first year's financial statements using the old accounting system were certified in December 2011 but for some reason they were not presented to the Oireachtas. In 2011, there was considerable difficulty in Inland Fisheries Ireland presenting a set of financial statements for audit. When the difficulties were eventually resolved, we were then able to proceed with the accounts for 2012 and 2013. The 2014 audit is ongoing.

Chairman

We have agreed to bring in Inland Fisheries Ireland.

Mr. Seamus McCarthy

That is right. It is on the schedule.

Chairman

I will move on to No. 4.22 then, which is Fáilte Ireland.

Mr. Seamus McCarthy

It is Fáilte Ireland. The financial statements recognise the pension liabilities that arise in relation to the staff of Fáilte Ireland. They also recognise a deferred funding asset, a matching asset, in relation to two of the schemes - the closed schemes - which were previously funded schemes. If the Chairman recalls, around 2009 there was legislation to transfer the funds in the funded schemes to the Exchequer. As a result, there is a statutory guarantee that the liabilities in relation to those schemes will be met. They are recognising a matching asset in relation to that, but those schemes are closed. More recent staff are in what one calls a pay-as-you-go pension scheme. There is not a similar statutory guarantee in relation to the payment of pensions in that case. With most public sector bodies, where they are accounting for pension liabilities, there is a practice that they recognise a matching asset in the expectation that the State will honour the liabilities as they arise in the future. Fáilte Ireland has chosen not to do that, notwithstanding the general practice, so I am just drawing attention to the fact.

Deputy Shane Ross

Why has it chosen not to do that?

Mr. Seamus McCarthy

Its argument is because it does not have a cast-iron guarantee that the pensions will be paid and therefore it would be incorrect for it to recognise a pension asset.

Deputy Shane Ross

Is that out of line with what the others do?

Mr. Seamus McCarthy

Yes, it is.

Deputy Shane Ross

It is quite a difference, is it not?

Mr. Seamus McCarthy

It is, yes. We are into a question of interpretation of the accounting standards in relation to a contingent asset.

Deputy Shane Ross

Okay.

Chairman

No. 4.25 is Waterford Institute of Technology.

Mr. Seamus McCarthy

These are the financial statements for the academic year 2012 to 2013. Again, there have been delays. There were difficulties in getting the audit completed and in presenting the opinion I have drawn attention to a number of matters. The first is that deficits have been incurred by the institute for a number of consecutive years so there is a funding difficulty there. Second, there were a number of governance issues. The review of the effectiveness of the system of controls was not carried out in respect of the year ended 31 August 2013, and also the institute's audit committee did not issue an annual report, which would normally be expected in respect of the 2012 to 2013 year. It was unable to do that until September 2014 because of concerns it had about the timely provision of key information to allow the institute to present the report.

There was also a question of expenditure to a value of €524,000, which was identified, where procurement rules were not complied with. The final point relates to the restructuring and consolidation of the results of the companies that were established to provide campus services. That resulted in the financial statements for 2012 to 2013 being based on draft financial results only for those companies. The audits had not been completed. I understand now that the companies have become part of the Waterford Institute of Technology group and that for the year 2013 to 2014 they will be consolidating the results, so that will allow us to get a clearer picture of what is the financial situation in relation to Waterford Institute of Technology.

Chairman

All right.

Deputy John Deasy

Representatives of the HEA are in today. Michael Kelly will be in but he will be talking about happens now with regard to WIT. The obvious question based on what the Comptroller and Auditor General has just read out is what role the HEA has with regard to governance when it comes to Waterford Institute of Technology. When he continually points out those things and reports on them, does he register and communicate that to the HEA and does he ask for a response with regard to the governance issues? Very basic and fundamental financial auditing issues continually arise. Is that something the office does on a continual basis with the HEA because it seems to be a recurring theme?

Mr. Seamus McCarthy

Obviously the audits are difficult.

Deputy Joe Costello

I wish to add to the point. At one of our previous meetings we decided we would have an overview of all of those bodies in which significant issues relating to governance and compliance arose with the auditing codes and that we would look at the broad range of public bodies to see if there is a pattern and how it could be addressed. Mr. McCarthy's office was to do some background work to examine the matter because it is a recurring item all the time.

Mr. Seamus McCarthy

I will deal with Deputy Deasy's points first. The issues to which we have drawn attention in the audit certificate are effectively given to the college and it must present them to the HEA. This is a way of communicating with the HEA. Separately from that, we have quarterly meetings now with the HEA, so if there is a recurring issue or specific issues in relation to an individual institution we raise them with the HEA and ask what it can do to assist in resolving the matter. If anything specifically arose on an audit that was of urgent concern, we would also phone the HEA and discuss the matter with it immediately. We have contact and discussions with the HEA on matters relating to individual institutions as we bring an audit to a conclusion in order that we are satisfied. If there are matters in the financial statements on which the HEA should have provided a sanction there is a discussion around that and it can choose to sanction the institution, as the case may be. If there is expenditure without sanction we would draw attention to that. There is regular contact with the HEA on both specific matters and sectoral issues that arise.

Deputy Robert Dowds

The Comptroller and Auditor General referred to sanction. What type of sanction would be applied?

Mr. Seamus McCarthy

When we talk about sanction, we are talking about approval. It is not a sanction in the sense of being a penalty. The Department of Public Expenditure and Reform has to sanction all expenditure or give a delegated sanction to Departments to allow them to spend moneys. The same applies to the HEA in respect of certain transactions of colleges.

Going back to the more general issue, when the committee met with the HEA previously, there was a series of issues that were of concern to the committee. I indicated at that stage that we would carry out a review of the governance practice of the HEA relating to the colleges - looking at the scope of the codes, compliance with the codes and what their response would be to any infringements of the codes. That examination is under way and a report will be prepared shortly. We will go through the usual round and it will be published as a special report in due course.

Deputy Joe Costello

Did we not discuss on a broader basis the fact that the code of practice is not being complied with not only by many State bodies related to education but also in the health area, including by the HSE, that these are recurring items, and how we can address the broader issue of infringement of procurement rules that seems to be the recurring matter in all of these cases?

Mr. Seamus McCarthy

We discussed drawing the picture together in respect of public procurement. The liaison officer prepared a note and presented it at one of the last meetings of the previous session.

Deputy Joe Costello

Could the Comptroller and Auditor General circulate it?

Mr. Seamus McCarthy

Yes, we can circulate it. That looked specifically at procurement.

Deputy Robert Dowds

Will the issues relating to the National College of Art and Design be included? There are quite a number of issues to be sorted out.

Mr. Seamus McCarthy

The focus should be on the HEA's role when difficulties arise rather on the difficulties that arise relating to individual colleges. It becomes more complex if one is trying to get detail from 30 institutions. The detail muddies the water in that situation. The focus of the report we are preparing concerns the framework the HEA put in place in respect of the governance and oversight of colleges. The audit certification and reporting by my office is the system for monitoring the implementation of it. The question then arises as to how the HEA follows up on issues brought to its attention or how it routinely takes the financial statements and analyses them.

In the case of Waterford Institute of Technology, I have referred to deficits being incurred in a number of years. That is not the only institute of technology where there is a deficit problem at the moment. The question arises as to what the response is when one sees a trend in a particular sector.

Deputy John Deasy

When does the Comptroller and Auditor General think that report will be finalised?

Mr. Seamus McCarthy

I expect to have a draft report towards the end of the year. Obviously, we then have a clearance process, so it will be early in the new year.

Deputy John Deasy

Will the Comptroller and Auditor General deal with the legacy and historical issues that have arisen over the past three or four years specifically relating to Waterford? Will he scrutinise the different issues that have arisen and that have been aired at this committee? I will explain why I am asking him this. I met with Kieran Byrne, the former president of Waterford Institute of Technology. The blame for a lot of these issues landed on his doorstep. Having looked at it, I am not so sure this is fair. I am beginning to think, and the committee has discussed it as well, that the governance side of things in respect of the HEA needs to be looked at historically as well. How it performed in those years and the kind of scrutiny and oversight it gave Waterford Institute of Technology needs to be looked at very carefully. I believe there may be an unfairness with regard to how Kieran Byrne was dealt with ultimately, but I think those legacy issues should be looked at by the Office of the Comptroller and Auditor General.

Mr. Seamus McCarthy

I will certainly consider that in the context of the report. I was concerned with looking at how it operates now and what systems and procedures it has in place looking back on the 2013 and 2014 years of account.

Deputy John Deasy

I think he deserves that. The reputational damage he suffered because of what happened in Waterford Institute of Technology was immense. I ask the Comptroller and Auditor General to look at those issues and the role played by the HEA, its responsibilities at the time and whether it carried those out.

Mr. Seamus McCarthy

Much of that relationship would have been considered by the Quigley report, if my memory serves me.

Deputy John Deasy

It was, but it would be helpful if the Comptroller and Auditor General took a look at it.

Mr. Seamus McCarthy

I will certainly have a look at the Quigley report and see if he has covered the ground. I would be reluctant to go into examining the same ground.

Deputy John Deasy

I am not so sure the Quigley report looked at some of that material in a sufficiently in-depth fashion.

Chairman

I support what Deputy Deasy said, particularly in respect of Professor Byrne and the Quigley report. While it may be worth the Comptroller and Auditor General's while to look at it, it is also something the committee needs to look at, because it was at a public hearing of this committee that, if one wants to measure the reputational damage to Professor Byrne, many of the comments came about - not so much from members but the fact that it may now appear that we did not get the full information. In respect of today's meeting, it might be no harm to ask the HEA about its role in it, if members wish to do so. It is open to members, if they wish, to query any aspect of it with the HEA, and today is an ideal day to do so in some respects.

Deputy Patrick O'Donovan

I will follow on from what Deputy Dowds said about governance, specifically the National College of Art and Design, from the time its representatives were here. The response from the HEA at that stage was wholly inadequate. I know this issue may have been raised directly with the Chairman over the summer, but serious allegations were raised locally in Limerick about the University of Limerick during the summer. I know the HEA will probably not have the answers that we are requesting today, but is there some mechanism we can use as a committee to deal with the allegations raised in the media about the University of Limerick? Staff were allegedly offered upwards of €60,000 to leave the university on foot of allegations that were being made. Regardless of whether they are true, those allegations have caused a lot of concern in respect of the University of Limerick. It goes back to what Deputy Dowds said. The HEA came in here to talk about the National College of Art and Design and gave an appalling performance in respect of its so-called oversight. Will there be any remedy for individual issues such as this, or is it up to us to invite the individual institution to come before the committee and answer questions?

Chairman

In respect of the University of Limerick, the HEA will appear before us today. These matters are relevant and can be raised. I suggest that the Deputy seek the answers there first. After that, I agree with him that there is a need to follow through on some of the issues that have been raised with the agencies about which he speaks to determine what action has been taken, what remedies have been put in place and so on. Perhaps we need to have a general review of some of the issues that were raised and the recommendations we made, see what progress was made on each of them and then report back to the committee.

We will move on to St. James's Hospital. Before the Comptroller and Auditor General comments, the last time this matter came to light through the Comptroller and Auditor General's audit was in respect of the HSE itself, where €9 million had to be set aside to deal with compensation arising from late payment of accounts.

It appears that in this case, which is to do with St. James's Hospital, an additional €389,000 was charged to the income account to recognise the expected cost of compensation due to suppliers since the introduction of the legislation in 2013. In the Beaumont accounts, there is a further €200,000 in interest and compensation. Someone needs to get to grips with the management of the Health Service Executive, HSE, because the level of incompetence I see at these committee hearings is such that no private business could be conducted in the manner in which the executive conducts its business. This has nothing to do with the front-line services but pertains to middle management up to the senior levels. Action must be taken regarding the HSE and some structure must be put in place to transform it into a meaningful organisation that recognises the legislation Members pass in this House. My understanding of the €9 million that had to be set aside by the HSE for compensation with regard to late payments to small businesses that supplied it was it was necessary for the Comptroller and Auditor General to prove to the HSE that it was in breach of legislation. If the executive does not understand legislation, I wonder what kind of management team it has. Members can now see the same issues arising in St. James's and Beaumont Hospitals and this goes back to the concerns expressed regarding the educational sector. What sanctions can be taken against organisations like that, which appear to disregard legislation or, even worse, have no knowledge of the legislation? Private businesses are expected to have that knowledge and in this case, the suppliers to the HSE, which presumably are small businesses, all are being penalised by the late payments being made by the HSE and now by the hospitals.

Mr. Seamus McCarthy

I might just inform the committee that next week, in the report on the accounts of the public services for 2014, I will have a chapter which deals with this issue across the HSE and in the two hospitals that I audit. It does deal with the background to it and the response to the legislation.

Chairman

To put it in context, each member present can think of projects in his or her constituency - I can think of one in County Carlow that would cost €320,000 to deliver - which are being refused the capital support to do that, yet compensation in one hospital was €389,000, in a second hospital it was €200,000, and for the HSE it was €9 million. How many projects nationwide, which could benefit service users or patients, could be put in place were that money not spent in the way it is being spent? It simply is so wrong, and while this committee does not have a role in policy matters, I venture to state the Minister should take note of this because it is an organisation that simply is not capable of providing the efficiency in the expenditure of public money that I seek.

Deputy Patrick O'Donovan

In support of the Chairman's remarks, two reports were issued in the summer while the Dáil was in recess on consumables within the HSE. I refer to consumable products within a scheduled list of hospitals that had spiralled out of control with no proper tendering or proper procurement. Another issue was raised, again in the summer, on the maintenance of prescription charges. Allegedly, there was neither governance nor oversight, as well as a massive black hole of wasted money. If the HSE is to appear before the committee in the near future, the Comptroller and Auditor General may be able to tell members whether the two issues raised in the summer are included in the report he is examining.

Mr. Seamus McCarthy

While I am not familiar with the first issue mentioned by the Deputy, I do recall the second one. As it happens, we have a report on the control over the supply of high-tech drugs and medicines, which is through community pharmacies. Consequently, there will be an opportunity to discuss that and certainly to raise that second issue. More generally over the years, we have repeatedly raised concerns in respect of procurement in the HSE. It is constant. There is a significant systemic problem and last year we produced a report on that, which was discussed. It raised issues about not tendering and other matters related to procurement. There is a limit to what we can do. The only option we have is to keep reporting it until change happens.

Chairman

Mr. McCarthy, you suggest it is systemic issue. That is a system failure but behind a system failure, is there not a person, an individual or a manager? Therefore, it is not a system failure but a failure of management. I refer to when one has a manager who understands the procurement process - and Mr. Watt constantly explains to the committee through his Department how significant it is and how much in savings can be made from the new procurement processes - yet it oversees an agency such as the HSE that is squandering money and is ignoring procurement processes and nobody appears to take action to stop it. In this collection of accounts before the committee this morning, because there are so many of them, members can see poor value for taxpayers' money, systems being abandoned and procurement by and large being abandoned. They can see a huge amount of money being wasted in the education sector. They see agencies that now are providing the committee with accounts over a four-year period. Another agency that is providing accounts over a four-year period is, I believe, the one responsible for the development of a technical university in Dublin. How competent are they or what is going wrong that those who are in charge are not doing their jobs to ensure there is value for money and the systems that are in place work? The question for the Committee of Public Accounts and for Mr. McCarthy's own office is, having highlighted these issues, how far we can go to ensure proper governance of the State's expenditure is put in place and is properly policed. Incidentally, it should be stated that in all those cases, no one will lose his or her job. No sanction will be taken against any individual who has breached any of this stuff and we never hear of a case in which it was Mr. or Mrs. so-and-so who bypassed the regulations, did not do it properly and who has been sanctioned. They would be, were this in the private sector, but the only sanction I have ever seen here is one gets promoted when something happens or one is sidelined into the grey area but no sanction is taken against one. Until that happens, nothing else will change.

Mr. Seamus McCarthy

Could I make a point in general? When I say something is systemic, I do not mean to diminish it or to make it sound like it is not important or significant. When I say it is a systemic problem, it is a huge problem in an organisation. It is different to when an individual manager makes a mistake or chooses to go around the rules and, let us say, on an exceptional basis does not apply the procurement rules. To me, that can occur in any organisation and in most cases in which I would draw attention to non-compliance with procurement rules, it perhaps is more the exception than the systemic practice in the organisation. I did draw attention and we refer to in the report to systemic non-procurement in the case of the National College of Art and Design, NCAD, since we have mentioned it already. There was a similar issue in Bord na gCon where practically nothing was tendered in particular years that we examined. That is the distinction.

Chairman

Is that not shocking?

Mr. Seamus McCarthy

That is why I draw it to the committee's attention but I am limited in what I can do.

Chairman

Does no one else feel the shock in the system? For example, in Volkswagen, Mr. so-and-so who is on a huge salary now has a huge problem. As this huge problem has hit his company, he resigns. Here we are in the public sector with this huge problem and systemic failure and the person who is on the huge salary will not resign.

Perhaps that is what it has come to but that is a policy matter.

Deputy Joe Costello

The point the Chairman is making is very relevant because the issue of procurement and compliance is really the bane of our lives at the Committee of Public Accounts. While I am a relatively new member of the committee, I am aware that it continually raises its head. It is an issue of how public money is spent and that is the main requirement. Public officials should be held to account if they are in breach of the code of practice or the rules of compliance. In the case of the 1930 legislation, they are now compulsorily bound in respect of compensation. There is €9 million from the HSE in silent compensation alone, not to mention the individual amounts paid by hospitals and so on. That issue of no sanction arises again and again. On the other side of the equation is the impact on suppliers. They are the lifeblood of the economy and if they are not paid, how will they remain in existence? There is a double whammy: the fact that public money is being misspent and that there is an adverse effect on the economy. It is something we have to get to grips with and have some direct mechanism for stamping it out. The sooner we get that report on procurement and develop an overall policy that has teeth in terms of sanctions, the better. I am aware one was circulated but also require one on compliance in the context of what the Chairman mentioned earlier. Otherwise, this will keep coming up and we will keep addressing it and be frustrated. There must be something of a showdown at this committee-----

Deputy John Deasy

A showdown?

Deputy Joe Costello

Yes, exactly, with public procurement, right across the board. When we carry out that analysis of the public sector where there are individual failures - and they have been identified at virtually every meeting we have held - some policy has to be recommended to the Government to adopt on this matter.

Chairman

There is a triple whammy because there is another one here, Tusla, where, in the context of procurement, not only did it have to spend €210,000 in compensation for late payment in respect of 2013 but there was also a €1.6 million error in the procurement process. The organisation got it wrong and it cost €1.6 million so that is €1.6 million straight down the drain. No value for money whatsoever.

Mr. Seamus McCarthy

That is actually different. That is where it spent €1.6 million on goods and services but did not procure them in line with guidelines.

Chairman

So it does not know whether it got the same thing again, so it is a third.

Deputy John Deasy

I do not think anyone can contradict or disagree with the Chairman’s point because we deal with it so often at this committee and have done so for the past few years. It is incontrovertible, a recurring theme, etc. There is an issue that has arisen which we should consider. Deputy Costello asked what we should do about it. Beyond the procurement issue, some of these organisations - and the HSE is definitely one of them - commission reports that never see the light of day. In many cases the reports deal with management issues and decisions that were taken by the very people who commission those reports. They redact them and bury them. In the interests of the public good, somebody needs to examine the policy of these reports and whether an independent pair of eyes should be allowed to make the decision as to whether they are published and what material should or should not be redacted. Then we will have accountability.

Some of these Government agencies and entities do it as a matter of course when a really hard-hitting and serious issue arises with regard to bad decisions at management level. They commission these reports and satisfy themselves that they have done their job and considered it after the fact and these reports never see the light of day. I do not know if the Minister for Health, the Secretary General or senior officials in the Department obtain sight of the HSE reports. At this point, it is a step that should be considered because I do not think the public is well served or that there is value for money with regard to the money spent on these reports, particularly when one considers the serious issues with which they deal.

It is a recurring theme. Deputy Costello asked what do we do policy-wise. That is a step we should consider and see what step we can take with regard to the commissioning of these reports and their ultimate publication, and whether the public is getting value for money with regard to what is being spent on these reports. Considering the serious issues we have dealt with here in the past year, it is a reasonable step to take.

Chairman

Is that across every Department?

Deputy John Deasy

We should start with the HSE. The obvious examples arise within the HSE. I have been dealing with this for probably 12 or 13 years. There have been very serious issues dating back that long and reports have never seen the light of day. My suspicion is that in some cases they are not published to protect individuals within those agencies, the decisions they took or the inaction within those organisations. It is an obvious and fundamental step with regard to improving government and accountability when it comes to our system of government and the money the public expects us to have oversight of.

Deputy Robert Dowds

On this issue, I do not want to speak for the Minister for Public Expenditure and Reform but from listening to him talk on many occasions about divvying up money between Departments, my impression is that the health sector is the one where it is most difficult to feel that extra money will go to some useful purpose. It is an area we should focus on. It may seem odd for a Labour Party Deputy to say this but I think if people are not doing their job they should be sacked. That has to become part of the public service as well. It would not be my first port of call but if somebody is not doing his or her job or is covering up something that should not be covered up, that sanction has to be there.

Deputy Joe Costello

Department of Health officials will be here next month. Can we put that matter on the agenda for our meeting with them?

Chairman

We can indeed. Representatives from the Department will be here on 22 October. I asked the question because it also relates to the Department of Education and Skills. We received a report a short time ago about serious allegations against the Cork Institute of Technology, CIT. My understanding was that the report was so heavily redacted that one could not make out any answer to the queries raised by a whistleblower, yet that report cost €98,000, if I am not mistaken. I can check it this morning. No one has had any value out of it and certainly the Committee of Public Accounts has had no value out of it.

Arising from the conversation we have had about the various accounts and procurement and so on, I will ask the clerk to draw together some piece of information so that perhaps we can quickly make a special report on this to the various Ministers and the Department of Public Expenditure and Reform. I welcome Deputy Dowds’ comments about that sanction, which of course is the last port of call but the steps taken leading to that might create a dynamic within an organisation that will make people be a bit more careful.

We have dealt with WIT, St. James’s Hospital, Tusla, Beaumont Hospital, to a degree, and the other accounts. We now move to No. 4.39, the Church of Ireland College of Education.

Mr. Seamus McCarthy

They are fairly minor technical issues that I am drawing to attention.

Chairman

What about Galway VEC?

Mr. Seamus McCarthy

On County Galway VEC, I am drawing attention to vacant premises as a result of amalgamation and movement of the VEC. That is something that has arisen with other VECs.

Chairman

In Cork as well.

Mr. Seamus McCarthy

I think it was Wexford.

Chairman

It was Wexford. We will move on to No. 4.45.

Mr. Seamus McCarthy

I draw attention to the fact that deficits are an issue in a couple of other colleges and deficits have been incurred in Limerick Institute of Technology in each of the past two years. The governing body has considered that it is still appropriate to prepare the financial statements on a going concern basis. Following the amalgamation of Tipperary rural business development institute into Limerick Institute of Technology there are still a number of staff members who are supernumerary and the cumulative salary cost for those staff to date has been €627,000, of which €216,000 was incurred in the year ended 31 August 2014.

Deputy Shane Ross

You describe these staff as "supernumerary". Is that a recognised category or a judgment which you have made?

Mr. Seamus McCarthy

They have an approved level of staffing and these are above that level. In this case they actually have no work.

Deputy Shane Ross

They are doing nothing.

Mr. Seamus McCarthy

They are obviously doing something but they have no formal assignment in the institute.

Deputy Shane Ross

Are they staying at home?

Mr. Seamus McCarthy

To be quite honest, I do not know the detail as I do not have it here.

Deputy Shane Ross

Do you know how many are involved?

Mr. Seamus McCarthy

I think there are three.

Deputy Shane Ross

You speak of the cumulative costs-----

Mr. Seamus McCarthy

It is a small number - three, possibly four.

Deputy Shane Ross

Are they paid an average salary for that?

Mr. Seamus McCarthy

The total salary involved is €216,000.

Deputy Shane Ross

So they are getting €70,000 for doing nothing.

Mr. Seamus McCarthy

I think there are three of them. There could be four.

Deputy Patrick O'Donovan

How long has this been going on?

Mr. Seamus McCarthy

The amalgamation took effect from 1 September 2011 and the aggregate salary for those individuals since then is €620,000.

Deputy Patrick O'Donovan

They have had no jobs since 2011 but are on €72,000 a year and nobody has done anything about it.

Deputy Shane Ross

That is absolutely crackers, is it not? It is just bananas.

Mr. Seamus McCarthy

I do not think they are audit terms, but-----

Deputy Shane Ross

They should be.

Chairman

This fits neatly into the other audits. It is just more of the same.

Deputy Shane Ross

Is this something you have come across elsewhere?

Mr. Seamus McCarthy

I think it is relatively unusual. It does happen where organisations are amalgamated that people become surplus to requirements. Generally, what happens is that they would be transferred to other organisations that could use their skills.

Deputy Patrick O'Donovan

These skills are obviously non-transferable.

Mr. Seamus McCarthy

Generally there would be parameters. One would not require people to move 150 km but it is a policy area you could raise with the Department of Education and Skills.

Deputy Shane Ross

Do you know what age they are?

Mr. Seamus McCarthy

No.

Deputy Shane Ross

Or how long they have to serve until retirement? If these guys are 22 or 23 they could be doing nothing on €70,000 for 40 years.

Mr. Seamus McCarthy

I do not have that level of detail.

Deputy Shane Ross

Could you find out?

Mr. Seamus McCarthy

I am sure we have the information but you could also ask the college. From the point of view of staff confidentiality, I would have to be careful about giving information about the wages of individuals.

Deputy Joe Costello

Would the normal practice not be a redundancy package?

Mr. Seamus McCarthy

That is obviously an option.

Deputy Joe Costello

If somebody has been there for four years now-----

Chairman

We can address it later on.

Mr. Seamus McCarthy

We do have a report in preparation on settlements with staff.

Deputy Robert Dowds

Which institution are we talking about?

Mr. Seamus McCarthy

Limerick Institute of Technology.

Chairman

There might be vacancies after the election for those who are looking. We have now dealt with Limerick.

Mr. Seamus McCarthy

Dundalk Institute of Technology operated deficits in the years ended 2013 and 2014. I also draw attention to a tax settlement with the Revenue Commissioners in the amount of €132,000.

Deputy Shane Ross

What did that relate to?

Mr. Seamus McCarthy

I think they carried out an internal audit of their tax compliance provisions and discovered that they had been underpaying. They approached Revenue, made a declaration and made a settlement.

Deputy Shane Ross

In what area did they underpay? Was it income tax?

Mr. Seamus McCarthy

I do not have that level of detail with me today.

Deputy Joe Costello

Does the first point indicate there is a cloud over the future status of Dundalk IT?

Mr. Seamus McCarthy

In the note to the financial statements they are saying that if this continues at this level then there will be a doubt over its continued existence.

Deputy Joe Costello

There will be a doubt over its ability to continue to operate as an institute.

Mr. Seamus McCarthy

There will be a doubt over its ability to continue to operate as a going concern.

Deputy Joe Costello

That would be a very serious matter.

Chairman

That is another institute that has a question mark over its ability to operate as a going concern.

Mr. Seamus McCarthy

No. Every year the governing body is required to consider its ability to continue to operate as a going concern and it should only present its statements on the basis that it can continue as a going concern, if it believes that to be the case. A number of colleges have raised a concern that, because they have deficit situations, something has to be done to resolve that if they are to continue.

Deputy Joe Costello

We do not know the reasons for the deficit situations. A major reason for companies such as PayPal to locate their substantial workforces there is the graduates from Dundalk IT. It would have a huge impact if there was a question about the future viability of the college and the same would be true of other institutes around the country.

Chairman

The same could be said of Limerick.

Deputy Joe Costello

A lot of our technical and financial institutions and foreign direct investment are located in the vicinity of technological institutions because of the flow of graduates coming through.

Mr. Seamus McCarthy

I am trying to draw attention to the fact that these are in the financial statements and the HEA will be here today. It is for the committee to take up with the HEA.

Deputy John Deasy

There is only so much you can do.

Mr. Seamus McCarthy

I am only here to report.

Chairman

We will move on to the Grangegorman development. Is that a separate agency?

Mr. Seamus McCarthy

It is an agency under the Department of Education and Skills. There seems to have been an oversight, or some confusion, over the submission of financial statements. There are four sets of financial statements, for 2009, 2010, 2012 and 2013. Apparently, the 2011 financial statements were laid yesterday as well. I think what happened is that the financial statements were being sent to the Department but an annual report was also being sent to the Department. The annual reports were laid in the Oireachtas but the financial statements were presumed to be in the annual reports and were not. They have rectified that now and brought it up to date.

Chairman

The last one is No. 4.59-----

Deputy Joe Costello

Grangegorman is the newest of our institutions, our newest campus with the Dublin Institute of Technology being moved there to cater for 24,000 or 25,000 students. Could we put it on the agenda to bring them in to talk about the new location and the operation? Hundreds of millions of euro are being spent on the development and it offers a bright new future but to see where they are going it would be good for the Committee of Public Accounts to have a look at it.

Mr. Seamus McCarthy

It might be useful to bring in DIT as well to get both sides of the story. The DIT agency is a development agency and it is developing estate for the college but the college would have to decant into the premises provided.

Deputy Joe Costello

It was set up under legislation in 2006 so it would come under the Department of Education and Skills.

Chairman

We can do that in the context of our work programme, which is next on our agenda.

Next week we will hear from NAMA. Have we invited members of the Northern Ireland finance committee to attend?

Clerk to the Committee

Yes. They may attend.

Chairman

Can members of this committee receive the transcripts from its meetings in order that they know what went on?

Clerk to the Committee

Yes.

Chairman

We have invited representatives of the Department of Health to attend the following week. Can we agree to have the meeting with NAMA next week and the meeting with the Department of Health the following week? We will look at the schedule after that in terms of what is set.

Deputy Shane Ross

When are we inviting representatives of the Northern Ireland finance committee to attend?

Chairman

We will notify it that the meeting is taking place next week.

Deputy Shane Ross

Are we inviting them to talk to us?

Chairman

We can invite its representatives and meet them afterwards.

Deputy Shane Ross

Next week.

Chairman

We will have a meeting with NAMA next week.

Deputy Shane Ross

That is fine.

Chairman

We can meet them after or before the meeting. I will ask the clerk to make contact with their clerk.

Deputy Shane Ross

Would there be any benefit in asking them to give evidence to us?

Chairman

I am not sure about the protocol, but we can check it.

Deputy Shane Ross

Could we?

Chairman

I will check it out. If what has been proposed can be accommodated, we can do it. Is the work programme agreed to?

Deputy Joe Costello

On the work programme, can we bring in representatives from Grangegorman? Can we manage to fit them in somewhere?

Chairman

Yes. We will perhaps have to move around some of the dates, or have a separate sitting. Is that all right?

Deputy Joe Costello

I thank the Chairman.

Chairman

I have to deal with a bit of farce now, but it is no reflection on the clerk. The Committee on Procedure and Privileges has notified us of an issue that I have been asked to bring to the attention of members. At a meeting on 1 July the Dáil Committee on Procedure and Privileges, CPP, considered the matter of clerks addressing or being asked to address committees during public session. The CPP considered this matter under Standing Order 99(1)(b) as part of its remit to oversee procedures in committees generally. I refer not only to this committee and its clerk but to all committees and clerks. I must inform members that the Dáil CPP decided that clerks should not address or be asked to address committees during public session, apart from in the following circumstances: when taking a vote; in accordance with Standing Order 95; if a quorum is not present 15 minutes after the time appointed for the start of a meeting; and for the election of a Chairman. If members see me tilting a little to the left – I am moving that way politically – it will be to hear what the clerk is saying.

Deputy Joe Costello

Ted can never be a celebrity now.

Chairman

He will not be able to talk to members.

Deputy Shane Ross

Has the Committee on Procedure and Privileges given any reason for the decision?

Chairman

No.

Deputy John Deasy

I would just ignore it and get on with it.

Chairman

That is fair advice. I will hold onto it firmly and hope the clerk will co-operate with us. It is an incredible farce.

We have a draft committee report on the purchase of the Irish Glass Bottle Company site. It will be circulated tomorrow. We have agreed our agenda for the meeting on 1 October 2015. It concerns NAMA's financial statements.

Deputy John Deasy

I was going to raise the issue of senior counsel being appointed in the report on the foster home, an issue we have brought up a number of times. The Chairman has informed me that the appointment has been made.

Chairman

To confirm, a senior counsel has been appointed to look into the matter. However, there is a narrow remit.

Deputy John Deasy

Terms of reference.

Chairman

I understand the remit covers only the issue of procurement, but the committee had asked previously that the remit be expanded to take in other matters. That is still its view which we should reiterate in writing.

Deputy John Deasy

If we could do that, it would be great. We should ask for the timeline involved and how long the senior counsel has.

Chairman

The correspondence that has just come to us refers to a period of four weeks. That has to do with the narrow remit. What we are asking for is a broadening of the remit to take in the issues we addressed. We will ask again that they be addressed.

Deputy John Deasy

The last issue concerns matters arising from a meeting we had in January concerning the air service to the Aran Islands. We dealt with it when the Department's representatives were here. I will not get into the detail too much, but I believe there are issues arising with regard to the construction of the tender that need to be looked at, be it by the Committee of Public Accounts, the Department or the Joint Committee on Transport and Communications. This requires some scrutiny of the competence involved in the Department and the Office of Government Procurement, how those concerned actually constructed the tender and whether they took everything into consideration as they were constructing and engineering the tender process. Serious questions arise from it and we did raise the issue. Deputy Joe Costello raised the issue of landing strips, etc. It is reasonable for us to ask these questions considering what has happened.

Deputy Joe Costello

Regarding our magnum opus on the docklands, the sale of property and the Jeanie Johnston, as raised by Deputy John Deasy, are we any closer to seeing the light of day?

Chairman

There is to be a draft report tomorrow.

Deputy Joe Costello

That is very good. I agree entirely with what Deputy John Deasy said.

Chairman

On the details raised by Deputy John Deasy, we can first seek a note to inform members and receive some background information. We will come back to it next week.

There are three matters on the agenda for today’s hearing. The first concerns GMIT, the second the Kelly report and the third the financial statements of the HEA. If we can structure our meeting to deal with each of these three items in the way outlined, we will get through the business quickly.

Deputy Robert Dowds

Is it the case that the third item will be dealt with at 2 p.m?

Chairman

Or earlier, as the case may be.

Deputy Robert Dowds

I have other demands.

Chairman

As it is now 11 a.m., it will more than likely be that time, or near enough to it.

Deputy Robert Dowds

The Chairman will excuse me if I leave and return.

Chairman

Yes.