I thank Deputy Molloy for raising two important matters here this evening — first the question of financial controls for State companies and second, the question of what action would be taken in the case of abuse of public funds. The details and information as outlined by Deputy Molloy in regard to travel at CIE are consistent with information provided to my Department by CIE. The Deputy has raised a number of other issues which will be the subject of further questions which I will be happy to answer in due course. In the case of financial controls for State companies, Deputy Molloy will be aware from his time in Government that a set of guidelines on State bodies, prepared by the Department of Finance was issued to all commercial State companies in early 1992. Those guidelines set out the underlying principles which govern the relationship between Departments and commercial State companies. Under the guidelines, the State companies are required to furnish to their parent Departments their audited annual accounts; interim unaudited half-yearly accounts and corporate plans covering a five-year period. These accounts and plans enable the financial state of the companies to be monitored on an ongoing basis.
In addition, as the House will be aware, I established a task force last August to review the controls in the commercial State companies under the aegis of my Department. The task force, which reported recently, made 31 recommendations covering the areas of procurement of goods and services; asset disposal; internal audit and corporate governance. I am consulting with my colleague the Minister for Finance with a view to having the recommendations considered and implemented as soon as possible.
It is very important to recognise that it is the responsibility of the management and boards of State companies to ensure that proper financial controls are in place and the current guidelines are being fully adhered to. In discharging their responsibilities, the State companies must also have regard to the relevant legislation under which they operate and to the Companies Acts, where they apply.
I now turn to the second matter, namely the question of what action would be taken in the case of an abuse of public funds.
Where any abuse, or alleged abuse of public funds comes to my notice, as Minister, my normal course of action would be to draw it to the attention of the chairman of the semi-State body concerned, with a request that the matter be investigated and a report made to me. Such a report should indicate the board's intentions concerning the elimination of any abuse and the steps to be taken to recover any funds which have been misused.
I assume the Deputy's reference to recent disclosures concerns the question of overseas travel undertaken by the former chairman of CIE at CIE's expense, including travel at a time when he had ceased to hold the position of chairman. This latter aspect is a matter which was only recently drawn to my attention and I have raised it with CIE. All of the overseas travel by the former CIE chairman was authorised by either the then acting chief executive of CIE or by the chairman through his secretary. It is the responsibility of the board to decide whether and to what extent it would be appropriate to seek the recovery of any costs incurred by the former chairman on overseas travel.
Membership of the board of any State body is a position of trust and authority. It requires a degree of discretion and judgment on the part of the person appointed. The assumption must be made that such discretion will be exercised in an objective manner and in the best commercial interests of the company concerned. In particular, expenditure on travel, entertainment etc., must only be incurred where it is genuinely necessary and beneficial to the company concerned. The onus must be on the boards and senior management of these companies to ensure that such expenditure is properly and responsibly authorised, monitored and accounted for.
The need to ensure proper controls on the expenditure of public funds, and to ensure that value is obtained for such expenditure was one of the key areas addressed by the task force on commercial State companies. The task force made a number of important recommendations concerning the internal audit function of the semi-State bodies. It recommended that there should be no operational areas or levels within the organisation precluded from internal audit review; the head of the internal audit function should have considerable seniority within the organisation and the content of all internal audit reports should be entirely at his or her discretion; the internal audit unit should have unrestricted access to all senior management, including board members; the internal audit unit should ensure that adequate attention is given to value for money auditing; and board audit committees should only include non-executive board members and should specifically exclude board chairpersons.
I am confident that the implementation of these recommendations will very significantly reduce the potential for abuse and inefficiency in the expenditure of public funds. I am sure the Deputy will agree that the findings and recommendations of the task force represent a very substantial return on the modest investment of public funds in it.
I assure the Deputy and the House that I expect timely and appropriate action by the board of any semi-State body which becomes aware of any abuse of public funds.
The Dáil adjourned at 9.5 p.m. until 10.30 a.m. on Wednesday, 15 November 1995.
