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Dáil Éireann díospóireacht -
Thursday, 18 Feb 2010

Vol. 702 No. 4

George Mitchell Scholarship Fund (Amendment) Bill 2010: Committee Stage.

Sections 1 and 2 agreed to.

I move amendment No. 1:

In page 4, line 10, to delete "fund manager" and substitute "Minister".

This refers to some of the concerns expressed by Deputy Perry, although I did not anticipate them. This concerns transparency and accountability. The Minister of State has informed me there were protracted negotiations between the Department and the US-Ireland Alliance. The effect of my amendment would be that the auditor monitoring the accounts would be appointed or nominated by the Minister and not the fund manager. If this unravels arrangements made, my third amendment would meet the requirement as far as I am concerned. I am interested in the attitude of the Minister of State to my proposal.

I congratulate Deputy Quinn for tabling this amendment. At this juncture, the difficulty is understanding and accepting what has been said privately or in e-mails. Given that we are moving to a much larger investment compared to the €2 million in 1999, we have an opportunity to do this right. The suggestion made by Deputy Quinn, that the auditor be appointed by the Government or the Department of Education and Science, is good and it would give another layer of authority to the books when they are produced. There are examples in other areas where this has happened. Rather than giving the power to the third party to make a decision, it would be good if we allowed the Department to nominate. It is a worthwhile suggestion.

The George Mitchell scholarship fund is held, controlled and managed in the United States by a fund manager, currently the US-Ireland Alliance, on behalf of the Minister for Education and Science. The current arrangement, whereby the fund manager appoints the auditor, has operated since 1999. Copies of the Irish accounts are conveyed each year to the Office of the Comptroller and Auditor General before being laid before the Houses of the Oireachtas. Given that the fund is managed in the United States, it is considered more appropriate that a US based audit firm conducts the annual audit of the fund. It is also considered more practical for the fund manager to select the firm to conduct the annual audit in the ordinary course of events. Under the existing agreement, the fund manager is required to provide the Minister with a copy of the audited accounts of the fund on an annual basis. Under both the existing and the draft new agreements, the Minister can request to examine the records relating to all matters in the agreement. However, I am happy to consider the suggestion of Deputy Quinn further during the debate in the Seanad next week.

I do not mean to make an issue about this. Our interests are shared on this matter. I can see the practicalities if all of these operations are on the other side of the Atlantic. One would not necessarily expect the Minister or the Department to have the expertise. I suggest this after the financial turbulence we have had and the difficulties we have had with very reputable firms. This is no reflection on the US-Ireland Alliance; I am talking about the financial sector and its credibility across the world. The Minister of State could consider my amendment and may decide that the auditors should be appointed by the fund manager with the agreement of the Minister. This legislation has taken long enough and the Minister of State is big enough to work out what I am trying to get at. A rose by any other name would smell as sweet. I will outline my concern about this provision in order that the Minister of State may realise my motivation for tabling this amendment. The work will start now for the alliance to seek matching funds. Those matching funds will be donated by people who will seek these types of safeguards in one shape, size or form, particularly if they take up Deputy Perry's suggestion to pursue Irish-based companies operating in the United States. Those people may very well want that level of comfort. I offer this amendment as a constructive suggestion, but I will not press it.

I am grateful to the Deputy for explaining his reasoning for tabling this amendment and I appreciate that he will withdraw it. We will certainly give the issue more consideration in advance of the debate on the Bill in the Seanad next week.

Amendment, by leave, withdrawn.

I move amendment No. 2:

In page 4, line 30, to delete "or Northern Ireland".

I must take responsibility for having misread this provision. We thought that it should not be for us to decide what will happen to Northern Irish public moneys. I appreciate, from a proper reading of the section, that this measure is to protect the separation of the two accounts. Therefore, on that basis, my amendment is redundant and I withdraw it.

Amendment, by leave, withdrawn.
Question proposed: "That section 3 stand part of the Bill."

The Minister said in his reply to the Second Stage debate that €1.5 million exists currently in matching funds — funds that have been obtained by the alliance. Admittedly, it is difficult internationally to obtain funds for philanthropic purposes such as this. Am I right in assuming that if that €1.5 remains in place for the duration of this year, the only sum of money that could be drawn down from the State's perspective is simply €1.5 million on our side? In other words, I take it that the maximum objective of €4 million a year could not be realised were the matching funds of €4 million not provided this year.

It is €1.5 million plus the interest this year.

What does that mean?

It is not the figure of €4 million, it is a figure of less than €2 million.

In other words, as the Minister of State indicated in his opening remarks, we cannot deliver €4 million this year because the matching funds are not there. Is that not a fact?

That is a fact.

This is all predicated on the matching funds becoming available in the United States in an international climate where, for all kinds of reasons, it will be much more difficult to obtain such funds. At the end of a five year period where it would have been expected that €4 million would have been spent a year, only €10 million might have been spent.

The aims and objectives of the fund are set out and it is the intention of all parties concerned to achieve those.

Were matching funds not to become available and there was a deficit of €8 million, €9 million or €10 million, is there provision in the Bill, not in the context of this amendment to the principal Act but in the context of the original Bill of 1999, that those funds can be used for purposes other than those of the alliance? In other words, could they become available to other programmes in the United States of America which are not successful in obtaining the original agreement with the State? Furthermore, to where would that money revert?

The answer to the Deputy's question is "No". They can be used only in the context of the George Mitchell fund, the original fund.

Question put and agreed to.
Question proposed: "That section 4 stand part of the Bill."

I wish to follow up on the question posed by Deputy Hayes. I assume that the commitment of €20 million is over a period of five years and it would be €4 million per year.

The period can extend beyond five years.

The commitment is to spend €20 million over a period of five years but it is not to spend €4 million per annum and the matching funds. In other words, if the funds raised on the private sector side fall short of the target, would that pull the gross amount down for that year? Is the commitment to have 12 scholars per year ring-fenced and secure irrespective of the flow of cash in any particular year?

The maximum amount we can pay out in any one year is €4 million, but the period can extend beyond five years. I am not sure if that answers the Deputy's question.

If the alliance commits to a programme of 12 scholars and the funding is in place on our side, and it is subject to matching funds being raised on the private sector side, if for whatever reason in this difficult fund-raising climate the alliance cannot raise as much money as the target for, say, 2012, is the commitment in expenditure limited ultimately to how much the alliance side can raise?

If it raises only €1.5 instead of €4 million, could we spend only €3 million as distinct from €8 million? That is the essential question I am asking.

I understand the question the Deputy is asking. We only give it what it raises.

There could be a significant deficit over a number of years. If the private side has raised only €1.5 million this year——

It was spending money that it had raised in previous years.

That is a good question. Can that money be spent this year? The House is giving the Government permission under section 4 not to exceed €20 million, although admittedly not over a time period. There would be a concern if we asked that the money be spent in such a way but that over a number of years it was not spent because of the inability of the alliance or anybody else to obtain matching funding for that purpose.

I might put the question another way. The Minister of State said that the original €2 million was given by the State and that for a period of time money was not coming from our side. Is that correct?

Can the alliance retrospectively get credit for money that it raised in the past towards matching funds in the future?

No. That would be provided for in the legislation. The Government is currently funding only two scholarships. The alliance has been funding the balance.

Question put and agreed to.

I move amendment No. 3:

In page 5, between lines 23 and 24, to insert the following:

"(3) The Comptroller and Auditor General may, without prejudice to the arrangements for auditing of accounts under this Act, carry out an audit of the accounts of the Fund.".".

I briefly discussed this amendment informally with the Minister for Education and Science. It is a belt and braces proposal. The Minister of State has indicated that the accounts are already being sent to the Comptroller and Auditor General. That is information of which I was not necessarily aware. This amendment gives explicit overt recognition to a practice that is currently happening in any event. I recommend the Minister of State accepts it.

The amendment states: "The Comptroller and Auditor General may, without prejudice to the arrangements for auditing of accounts under this Act, [in other words, it is not challenging anything that we are about to enact] carry out an audit of the accounts of the Fund." That is to protect everybody. If someone in the United States intended to mount a challenge of wrongdoing — we all have some degree of opposition about some sector — and someone was mischievous and did not have the best interests of the alliance at heart, the easiest way to cause mischief would be to query the spending or raising of money or the accounts or expenses. This amendment would be a safeguard to limit and undermine such mischief making by providing that the Oireachtas, on behalf of the Irish taxpayer, could request the Comptroller and Auditor General to put this safeguard and oversight in place to ensure there is no misappropriation or reckless spending of the money and to dampen down or remove the temptation for such mischief making. That is the intent of the amendment.

As I explained, the Bill provides a broad, enabling legal framework and this is to be complemented by a detailed agreement dealing with financial management and accountability arrangements. Both the existing and draft new funding and management agreement between the fund manager and my Department provides that where the Minister so requests, the fund manager will permit additional independent auditors to examine the records related to all matters of the agreement. This provision would allow the Minister to request the Comptroller and Auditor General to carry out an audit if considered necessary. The new draft agreement also provides that the fund manager must supply an annual written statement declaring that payments from the investment and matching funding accounts are being used for the purposes of the fund as specified in the agreement and are not being used to cross-subsidise any of the fund manager's other activities.

I accept Deputy Quinn's intention but I cannot accept the amendment. I appreciate the Deputy's underlying concerns and I could consider the matter further in the context of the Seanad debate next week.

The Minister of State is being open in stating that he wants the agreement of the House in how to achieve proper oversight, which I welcome. Am I correct in assuming the detailed agreement between the alliance and the Department has not yet been reached?

There has been a draft agreement but it is subject to legislation being passed in the House.

Once it is passed, will there be a statutory instrument or will it be laid before the House as an agreement? What is its legal standing?

They do not do that on Marlborough Street.

It is a legally binding agreement between two parties.

Will it be published?

We can ensure it is published.

I thank the Minister of State for being honest and open about this. It would be useful for the agreement to be published, given the scale of the funding involved and the new sections to be added. I welcome the fact the Minister of State has given a commitment to publish the agreement and it might be laid in the Library.

To return to Deputy Quinn's point, my understanding is that with any funding in the Department of Education and Science Vote which goes through either a statutory body, a college or a body with which we have an agreement, such as the alliance, those audited accounts come to the attention of the Oireachtas Committee on Education and Science. We regularly peruse accounts coming from institutes of technology or a board like the National Council for Special Education etc. Will the Minister of State give some consideration to the legislation between now and its passage through the Seanad to see if he can include the right of the committee to peruse the accounts? It would be an important oversight function should the committee decide to do it.

There is probably no difficulty in the committee doing this at the moment. Under the normal framework we operate, these matters come to our table on a regular basis. It would be useful, particularly for voices in America who are sceptical of all kinds of issues I am unaware of, for an Oireachtas committee to question the accounts when they become available on a yearly basis.

They are laid before the Houses of the Oireachtas so there is no difficulty in the Oireachtas committee examining them.

I suspect if the Department of Enterprise, Trade and Employment was drafting this legislation instead of the Department of Education and Science the culture of transparency and modern standards of accountability which permeates the Department of Enterprise, Trade and Employment would be different to the culture in the Minister of State's Department. It was used to administering education in this country in circular form until 1998. It is no reflection on the Minister of State or the people beside him.

It is an historical issue.

It is a clash of administrative culture, with one emanating from the Anglo-Saxon world of accountability and the other emanating from Rome, where accountability is rather opaque. We have seen some evidence of that in the past few days.

The Minister of State said the accounts will be laid before the House. Deputy Brian Hayes and I might consider asking the chairperson of the committee, if he is in a receptive mood, to get a resolution passed at our committee formally requesting that the Department of Education and Science sends a copy of those accounts to the committee rather than just lay them before the Houses. That might get over all the problems and not ruffle the clerical feathers on Marlborough Street.

I thank the Deputy for the history lesson.

Amendment, by leave, withdrawn.
Sections 5 and 6 agreed to.
Title agreed to.
Bill reported without amendment, received for final consideration and passed.

The Bill will be sent to the Seanad.