JOINT COMMITTEE ON ENTERPRISE, TRADE AND EMPLOYMENT díospóireacht -
Wednesday, 2 Jul 2008

Apprenticeship System: Discussion with FÁS.

Chairman

The joint committee is to consider a presentation by FÁS on the issue of apprenticeships in the light of the current state of the economy. While another issue also will be addressed by Mr. Molloy and members, we should deal with the apprenticeship issue first. I welcome from FÁS, Mr. Rody Molloy, director general; Mr. Christy Cooney, assistant director general, who will be taking up another important job on which I congratulate him; Mr. Roger Fox, director, and Mr. Denis Rowan, assistant director general. I thank them for their attendance.

As is customary, before we begin, I draw attention to the fact that members of the joint committee have absolute privilege but the same privilege does not apply to witnesses appearing before the committee. While it generally is accepted that witnesses have qualified privilege, the committee cannot guarantee any level of privilege to witnesses appearing before it. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. People should make careful note of these remarks which comprise the usual caveat or warning in this regard.

I invite Mr. Molloy to make his presentation.

Mr. Rody Molloy

I am pleased to have the opportunity to meet the Joint Committee on Enterprise, Trade and Employment and respond to members' questions. I would like to provide a brief overview of the apprenticeship system, the current and future challenges facing both the system and FÁS, as well as the series of steps that we propose to take to address these challenges.

In June 2007 the board of FÁS identified the changing employment patterns and future prospects in the construction and contracting sector as a key area in the external environment that could affect the achievement of our strategic objectives. It established a sub-committee to oversee the development of a FÁS contingency plan to meet these changes. The sub-committee, which comprised employer and union interests, as well as other stakeholders, consulted a wide range of stakeholders, including Departments, State agencies and the social partners. Its report was endorsed at the April 2008 FÁS board meeting.

The analysis conducted by the sub-committee identified three key challenges for FÁS emerging from the significant process of restructuring under way in the construction industry and recommended that FÁS adopt a series of measures to meet three key challenges. The first was to assist those workers made redundant to secure alternative employment, either in the expanding sectors of the industry or elsewhere in the economy. The second was to manage effectively the reduction in the apprenticeship system and to ensure there was a sufficient number of apprentices to meet the needs of the industry in the medium term. The third was to ensure the competences and qualifications of Irish skilled manual workers, both craft and skilled non-craft, were acknowledged in important overseas markets and that there was a procedure in place for assessing the competences and qualifications of skilled workers in the Irish construction industry.

I wish to discuss the second of these challenges first, namely, the management of the apprenticeship system, the numbers therein and FÁS's proposal in respect of same and thereafter to refer to the other two challenges. The apprenticeship programme is a demand-driven alternate education and training programme for employed people, aimed at developing the knowledge, skill and competence of apprentices to meet the needs of industry and the labour market. The number of registrations by employers in recent years was at a very high level, with 8,306 registrations in 2006 and 6,763 in 2007. More detailed figures are available in the note I have circulated to members. The registration levels in the construction-related trades have been reducing significantly since the last quarter in 2007 and this trend has continued this year. Overall, the level of registrations by employers for apprentice training in the eight months to the end of May is 36% below that of the same period in 2007. Members will appreciate this constitutes a highly significant reduction. In the main, the reduction in registrations by employers has taken place in the construction-related trades, as one would expect, with a reduction of 55% in registrations to the end of May, compared to May 2007, and a reduction of 34% in the electrical trade. The reduction in the level of registrations in the construction-related trades clearly is due to the slowdown in new housing development which has resulted in reduced levels of registrations, primarily in the trades of brick and stonelaying, carpentry and joinery, plastering, plumbing and electrical.

Due to the slowdown in the construction industry, there has been an increase in the number of notified apprentice redundancies in the period to 20 June. The number notified is 1,264. The main trades in which redundancies were notified to FÁS were carpentry and joinery, electrical, plumbing, bricklaying and plastering, with redundancies of 327, 308, 284, 147 and 44, respectively. The number of apprentices in training across all phases of the system is 26,246 as of 20 June who are supported by 11,568 employers. The FÁS annual apprenticeship budget for direct costs, including allowances, for phases 2, 4 and 6 is €128.6 million for 2008. The Higher Education Authority's current expenditure is €55 million per year.

A number of key proposals made by the sub-committee in respect of the management of the apprenticeship system have commenced. For example, I have met the director general of the Construction Industry Federation, CIF, Mr. Tom Parlon, to discuss the challenges facing us in view of the downturn, particularly in the housing sector of the construction and contracting sector, as well as its impact on existing apprentices and the level of new apprentice registrations in 2008 and beyond. The CIF agreed to consult its members and is engaged in so doing. It is to come back to us with its views and proposals on how this situation might be handled.

FÁS has put in place a register of redundant apprentices by trade to identify such persons at the earliest possible time and prioritised the need to locate an employer to sponsor the completion of the apprentices' on-the-job training. As a temporary measure to get through this difficult time, FÁS now allows redundant apprentices to progress to the next phase of off-the-job tuition without completing the intervening on-the job-training component. It has opened discussions with the relevant bodies to explore the most practical way for recognising on-the-job training and assessment when a redundant apprentice secures employment abroad.

FÁS is closely monitoring and will not allow instances in which employers make an apprentice redundant and subsequently attempt to recruit an apprentice in the same trade before the apprenticeship duration of the redundant apprentice has expired. In other words, we seek to avoid situations where more expensive apprentices with a number of years of experience are replaced by someone coming in at the beginning. We will explore the feasibility of creating apprenticeships in trades that have become more extensively applied in the construction industry such as glazing and insulation, as a result of technological and legislative developments within the industry.

The sub-committee report made a number of key proposals in respect of upskilling redundant craftspeople and FÁS instructors. In addition to the range of energy programmes it delivers, FÁS has commenced the identification of a possible range of "green agenda" training programmes to provide skills in, for example, the installation of sustainable heating systems and resident insulation programmes. While there may be a demand for such installations, unless craftspeople are available to do so properly, the entire process will become damaged. FÁS is trying to address this issue.

FÁS has expanded and will continue to expand its range of construction skills certification scheme, CSCS, programmes. For example, we recently have developed and received FETAC validation for a steel fixing and mobile access tower programme. FÁS shortly will announce a specific fund to support the upskilling of redundant craftspeople and workers. This fund is an extension of the existing technical employment support grant and provides a grant of up to €1,270 per individual to acquire relevant upskilling programmes not provided by FÁS. We also have developed a BSc programme for wood craftspersons which will commence in early 2009 in Cork Institute of Technology. Further FÁS-funded upskilling courses in enterprise development and project management will commence later this year.

Through its European employment services, EURES, FÁS recently has organised in Dublin a European construction jobs fair, with employers from the United Kingdom, Poland and Norway who had many vacancies for skilled craftspersons. Up to 2,000 people attended the event at D'Olier Street on 13 and 14 June. FÁS is engaged in discussions with the Department of Enterprise, Trade and Employment on the critical issue of recognition of qualifications of our craftspeople seeking employment in other labour markets, in the United Kingdom in particular. Later in the year it will open a construction centre of excellence in Mount Lucas, County Offaly, where many of the CSCS, environmental and energy, Safepass and other construction-related programmes will be delivered.

In summary, the management and promotion of the apprenticeship system which gives excellent career opportunities to thousands present FÁS a challenge in the foreseeable future, a challenge which we are ready to meet and which, with the co-operation and involvement of a wide range of other organisations, including employers and union representatives, I am confident we will meet successfully.

Deputy Dara Calleary

I welcome the FÁS delegation and wish Mr. Cooney well in his new position. He appears to like taking on challenges.

I thank Mr. Molloy for the presentation. While members had been concerned that this area was not being addressed, it appears a lot is going on in this regard. Is there a deadline on the discussions with the CIF? In the current climate it will be very difficult to locate an employer to sponsor the completion of the register of redundant apprentices. I cannot see apprentices being let go and other employers then taking them on. Could we not look at some of the sponsors FÁS has on CE schemes and the various excellent community development schemes, which are a credit to FÁS? Many of those sponsors are at a stage of development where they might be able to take on apprentices. Some of the trades involved, such as carpentry, bricklaying, joinery or plumbing, have as much of a role in communities and building facilities for them as they have in construction. Could we do some work to see what sponsors might be in place, with some hand-holding from FÁS, to complete the apprenticeship?

The provision regarding off-the-job tuition is welcome. In respect of securing employment abroad, I do not know the equivalent body to FÁS in the UK but is there any way in which we could look at engaging in a partnership with it, possibly around the Olympic Games in London, which is probably the largest construction project in Europe for the next few years, and in the process move some people with talents over there?

The current buzz phrase seems to be centred on the green agenda, sustainable heating systems and installation programmes. What is the current position in this area? Is it a new area of apprenticeships or will there need to be adjustments made to training already done to move people into this?

In respect of the technical employment support grant, one concern I have, which is separate from apprentices, concerns the large proportion of young people who in recent years left school before completing their leaving certificate in response to the lure of considerable cash from building sites. I am particularly concerned about where they are now. They will probably be the first to go. While they have practical skills, they do not have a qualification and a formal apprenticeship. Have we any idea of the figures and has FÁS given any thought as to how we are going to deal with them? Will this grant apply to them and is there any chance of getting a bigger grant for them because they do not have resources?

What is the feedback from the jobs fair? A total of 2,000 attended the recent fair, which is a great initiative but how many people have been placed or it is too early to say? I have one criticism. FÁS started this work in June 2007 and it was only cleared in April 2008. This is a long lead-in time. While there is a need for consultation, we do not have that luxury in the current climate. Is there any way that the response time can be a quicker in future? I again congratulate the delegation on the presentation.

Chairman

A number of people are offering to speak, so there could be a crossover.

Deputy Mary Alexandra White

I also welcome the delegation. I wish to expand on the green agenda which Deputy Calleary mentioned. How does FÁS identify these training programmes? Is it working closely with Sustainable Energy Ireland which already has a list of people who will install one's geothermal heating or pellet boilers? In Ireland, job creation in the renewable energy sector is running at a rate of 4% to 5% compared to parts of Germany which are up to 48%. In the current economic climate, it is not a buzz word but it is an area where we can create good green-collar long-term jobs because of the global situation regarding peak oil and climate change. We can create a new job dynamic in this renewable energy sector. How far along with the green agenda are the training programmes?

In respect of FÁS's construction centre of excellence in Mount Lucas in County Offaly, Mr. Molloy mentioned environmental and energy-related programmes. Is this linking into the green agenda or is it a separate stream of programmes?

Deputy Arthur Morgan

I thank Mr. Molloy and the delegation for attending the meeting and for their presentation. Page 5 of the presentation states that FÁS has opened discussions with the relevant bodies to explore the most practical way for recognising on-the-job training and assessment when a redundant apprentice secures employment abroad. Does this link in with Deputy Calleary's point in respect of the Olympic Games project in London? Has FÁS spoken with its opposite number in Great Britain? While we do not seek to commence wholesale emigration, it is very important that apprentices have an opportunity to complete their training. I am also aware that Canada advertised internationally for apprentices 12 months ago. Again, we need to put in the caveat that we are not looking for people to emigrate but if it is necessary for people to go for perhaps a year or less to complete their apprenticeship, would FÁS be in a position, or does its remit permit it to assist apprentices in some way with travel or accommodation costs in those circumstances?

Upskilling redundant craftspeople and FÁS instructors is a very welcome move. When can it start? Does FÁS have funding to provide for that currently? What type of upskilling is it concerned with? Is it in the area of enhanced skilling in its own field or diversification into areas like IT?

Green agenda training is discussed halfway down page 6. Could Mr. Molloy elaborate briefly on that? The two previous speakers have alluded to it, so I will not labour that point.

Has FÁS been in contact with the Office of Public Works or relevant Departments in respect of major Government infrastructural projects? They are carried out on a contractual basis that is somewhat at arm's length from FÁS and others. Is there a possibility of providing a clause in the contract to give preferential treatment to apprentices who are perhaps in their second or third years and who have already commenced the process and shown good faith in terms of sticking with their programme to get them upskilled?

Does FÁS have guidelines on the ratio of apprentices to a skilled person? If it does not, could Mr. Molloy come back to us in respect of it?

Deputy Deirdre Clune

Some of the points I wanted to see addressed have been covered. The most important cohort at the moment consists of those who are halfway through or have almost completed an apprenticeship programme. Mr. Molloy alluded to that in his presentation. They are a priority and we should intervene in some way. Mr. Molloy mentioned a myriad of avenues here, including the use of the CIF and possibly moving abroad. It is extremely important that FÁS focuses on this cohort and ensures they get the necessary trade because it would be a shameful waste otherwise.

Could Mr. Molloy expand on recognition across the EU? He mentioned UK craftspeople in particular. It is probably very worthwhile doing this and I am sure they have the capacity there to do it. What obstacles would FÁS face? I know from other sectors that in terms of education and training, there is probably a considerable amount of co-ordination across the EU. Could Mr. Molloy expand on that?

The recent jobs fair attracted a considerable amount of interest. Has there been any response? If so, I hope none of it was negative.

Chairman

Since there is significant crossover in respect of questions, I will allow everyone to speak.

Senator Brendan Ryan

The presentation dealt with the emerging crisis in apprenticeships, with which many of the questions dealt. How many people have taken up the adult apprenticeship scheme so far and what steps have been taken to encourage them into that area? In 2002, it was mooted in respect of master craft courses and there was talk of an opportunity for craftspeople to get additional qualifications to take them into that area. What progress has been made in that regard?

In respect of early school leavers who did not take up an apprenticeship but went into labouring on building sites, what efforts have been made to encourage those people into early school leavers' programmes?

Deputy Damien English

It has been stated that a concern about this matter was first raised in June 2007, after which a group was formed. It is disappointing that a report was not produced until April 2008. The June 2007 date is a source of interest. Were there previous concerns? I tried to raise a number of them in the House, but no feedback was given. Whenever we tried to raise concerns during the past nine months, they were put to one side and we were told that, because they were not a significant issue, we should not worry about them. However, a high-powered FÁS group has been concerned about it since last June, a message that was not conveyed in the Houses.

Was the issue dealt with at a high level in the Department? I presume it knew. For a long time, we have been trying to get people to admit to and address the problems, but we have not been able to do so. In the past month, however, the problems have suddenly been admitted to. It is a pity that we may have lost a great deal of time in which something could have been done.

The registration figures decreased in the 2006-07 period, but what were the 2005 figures? I could not locate them in the appendices. The 2006-07 trend is obvious. What are the 2008 figures, which should also be obvious?

Currently, there are 1,264 redundant apprentices, but how high will that number go? While it is fine to give the current figure, "Black Friday" and other important dates that have been referred to are on their way. I do not want to be negative, but our guests are the people who know whether the situation will worsen. The figure of 1,264 is manageable, but a further 1,000 apprentices would be a different story.

For years, many apprentices have been able to get additional weekend or evening work and to have it certified. While some might still get such work, it cannot be certified or held to be part of their training. Can anything be done in this regard? If they can source their own work, can it be acknowledged? It would be a shame for those who can find work not to have it certified. Has any imagination been applied to this situation? The community schemes mentioned by Deputy Calleary could do more work. For example, much work needs to be done in respect of local authorities' housing stock, but it has been difficult to find people to help in recent years. The DPG-ERG area is experiencing a shortage of money. This is an opportunity to co-ordinate work on community facilities, schools and the local authority housing stock, which is ideal work for apprentices. Irrespective of whether a person or group organises the project, imagination must be applied and several problems must be solved simultaneously. Do our guests have any opinions in this regard?

When was the meeting with Tom Parlon? It appears as if that body's members will be consulted before it will revert to FÁS, an awkward and concerning situation. I am sure that the body has answers now as to its predictions and how it intends to proceed.

I am interested in the green issues, but they have already been mentioned. Regarding the construction centre that FÁS hopes to open in County Offaly, are private companies building similar centres to provide courses or is FÁS leading the way in building the centres and bringing groups to teach courses? Many courses are provided by private companies on behalf of FÁS and I am concerned by the prospect of duplication.

Deputy Cyprian Brady

I thank the director general and his delegation for their presentation. My brief questions will be forensic. Apprenticeship phases 1, 3 and 5 are on the job whereas phase 2, 4 and 6 are off the job. In my constituency, significant problems have been encountered in terms of local community training workshops sourcing young people who have just completed their leaving certificate examinations. If an apprentice is suddenly let go during phase 2 or phase 3, he or she may have nowhere to go. Moves are being made to try to ensure that people can finish the off-the-job elements of their apprenticeships. What are the numbers involved? Do our guests have statistics in this respect?

The delegation stated that it has met the CIF for discussions. While major developments are occurring in my area, have smaller jobs been discussed in terms of small contractors taking on young apprentices?

The discussion with employers was mentioned. Has FÁS approached, for example, the OPW or local authorities, particularly Dublin City Council, to determine whether their resources can be tapped in terms of taking on apprentices? The OPW employs two experienced and talented men in Leinster House. An apprentice would benefit from their experience. My question relates to State and semi-State bodies in particular.

In terms of the green agenda, has FÁS sourced environmentally friendly models from abroad? Recently, the committee sent a delegation to Güssing in Austria. Members saw how a town created considerable employment via various waste management and water treatment methods.

Deputy Edward O’Keeffe

I welcome the delegation and congratulate Mr. Cooney on his appointment as honorary president of the GAA. Perhaps this is the reason Cork has not been in this year's All-Ireland. Not all of us can be winners.

I wish our guests well. I understand their difficult job and their organisation's frustration, given an unemployment level of 5.8% that, according to economists, will increase by a further 7% or 8% by the end of the year. I have been in Leinster House for a long time. The situation in the mid-1980s is similar to this one in that many jobs have been partly completed and youngsters of up to 25 years of age are losing their apprenticeships.

In recent weeks, I requested that the Tánaiste attend a meeting of the committee. Apprentices who have only served a part of their time have approached me. In this light, I have been working with Mr. Donal Kelleher of the Cork FÁS office. I believed that he would be in attendance, as he has been helpful. I wish him well in his difficult task, which was previously undertaken by Mr. Cooney.

At what point will the losses stop and how can FÁS find places for the apprentices? It is intriguing that Tom Parlon will help, as his group built 90,000 houses last year, whereas the target this year is approximately 45,000. Given that this figure will probably plateau, Mr. Parlon has a considerable surplus to get rid of before he can help.

I do not want the people in question to emigrate as they did in the 1980s. We should be in a position to place them and to have them qualify in their desired fields. Had people qualified in the 1980s, they would have been available to work for the five, six or seven years of the boom when there was a shortage of skilled people. It is necessary that FÁS accommodate this situation. I welcome that FÁS will organise a degree course in carpentry, an important trade, but plasterers and blocklayers will also be necessary. There will be brighter days, as the slump in the global economy will not last — rather, it will contract.

A surplus of people are being threatened with redundancy, many of whom are calling into my clinics. This situation obtains in the building sector primarily. There is no point in me telling people that the CIF will accommodate them, as I cannot be sure. The CIF is screaming itself.

A large number of people are on the dole. As many of us around the table will remember, the call for jobs during the 1980s was for gardaí, nurses and teachers. Those were the only positions available. I do not want such a situation to recur. We will need skilled people for the better days ahead. In conjunction with the Government, it is for FÁS to try to accommodate this requirement. The situation is reaching crisis point. We should not try to hide from it. Large numbers of people are being threatened with redundancy. Their option is emigration or the dole queue.

Deputy Leo Varadkar

I welcome the delegates to the committee and thank them for agreeing to take questions on recent matters of concern regarding financial irregularities and mismanagement in FÁS.

I would be interested to hear the answers to other questions. More or less 80% of apprenticeships in FÁS relate to the construction industry. It is intended to maintain this level on the basis of an anticipated return to significant construction activity in the near future. Is that still the view of FÁS? Does it see us returning to a point where 50,000 houses will be built each year in a few years' time? Do the delegates see the proposed level of investment in the NDP and Transport 21 being delivered on time? Do they agree that the projections of a return to significant house building and for new structural development in a short timeframe are wrong and must be reassessed? Should apprenticeships be moved from construction towards other areas such as new economy training?

Chairman

Has FÁS ever given consideration to the introduction of an apprentice assurance scheme? This would mean that where an apprentice's employer went out of existence, rather than FÁS scrambling around to secure an alternative, there would be a seamless flow to a similar employer. This could be seen as a pre-emptive strike and I would like to see it happen.

We are under pressure but Bord na Móna was a source of supply of nearly every fitter in the country, as was the ESB for electricians. Those traditional routes are not available to the same extent. We need plasterers, blocklayers, carpenters, electricians, plumbers and fitters. While there might be a downturn in the economy, we must work in anticipation that economic growth will return to reasonably good levels and that the people concerned will fulfil this important role.

Mr. Molloy is well aware of what is an old chestnut for me. Some young people are excellent on the job as apprentice electricians but when they come to do the exam, there are mind blocks. All I remember about electricity is ohms but people may run into difficulty and fail the theoretical exam, even if, in practice, they are excellent. FÁS cannot allow people to move around the system but is it a case of two or three strikes before one is out?

Mr. Rody Molloy

Three.

Chairman

Many attend college and have a particular difficulty. It is a little like the driving test which people find difficult at times, but in that case there is no limit of three attempts. I know it is a different system. I appeal to FÁS to help people who find themselves in that situation. It is not easy and I am asking a difficult question. It has caused me angst to see the best people run into difficulties in the theory exam. In my 16 years here I have seen three or four examples of this. One could allow them to go out, even though they do not have qualifications and would be excellent electricians.

We referred to the 500,000 people in the upskilling programme until 2020. Does FÁS have the capacity to deliver such a significant number? It will be fundamental to the continued vitality of the economy. What role will FÁS have?

Mr. Rody Molloy

I hope I can deal with these questions. As Deputy O'Keeffe stated, it is important to remember that we have 5.5% unemployment, forecast to increase to 7%. That is the worst forecast we have seen. When I became involved in dealing with the unemployment problem, we were looking at rates of 16% or 17% and would have rejoiced at rates of 7% or under 5%, to which we got them down at one stage. Notwithstanding the hype, we are in a solid position. The problem we are discussing is particular to that industry.

A number of questions were asked about when we became involved in this issue. We have an in-house construction industry monitoring group and have been monitoring the position continuously. Some 12 months ago there were as many views on what would happen in the construction industry, particularly the house building industry, as there were economists. There was talk of soft and hard landings. In that context, we set up a new sub-committee of the board to get a handle on matters to come to a response on the matters that would emerge. We could not foresee how the problems would emerge.

Deputies Calleary and English referred to the delay between the committee being asked to do a job and coming back to the board. When the people concerned took a snapshot of the industry at a particular time, it had moved on by the time they met again. It was happening at a fast pace. Forecasts that seemed valid on one day had gone out the window the next. We were trying to respond and restructure forecasts in order that we would be in a position to deal with whatever issues were coming down the track. The dates used were part of an ongoing process to identify issues and be ready for them when they happened rather than respond on the hoof. We hope we have done so as best we can.

The apprenticeship system is not in our ownership. It is owned by employers, unions, the education system and FÁS. It is a shared process with a legislative background, in terms of how the system is structured. We are dependent on others to be part of the response. The major issue is that apprentices who are made redundant are not capable of being placed in alternative employment. The Chairman referred to an apprentice assurance scheme to ensure a seamless passage. I am trying to think how we could structure it in a way that it would work. It would work easily when the construction industry was booming but it would become more difficult when there were no employers to take people on.

We are examining every possible means, including allowing people to undertake off-the-job training outside the country. We have spoken to the UK authorities about this issue. Last Tuesday I spent the day in Belfast at the Department for Employment and Learning, considering the issues each of us is facing to see if any interaction was possible between FÁS, the Department for Employment and Learning and the British authorities. We have ongoing contact with the construction industry in the United Kingdom, sharing information on standards to ensure ours are acceptable to it and theirs to us. It will be difficult for us to find on-the-job training opportunities. I would not understate the problem because if employers are not available, we have an issue. This issue was addressed in a programme known as CYTP but it was extraordinarily expensive. We want to see if we can get the same ends without incurring that expense. There were also other difficulties into which I do not need to go.

Regarding the community employment scheme, we must remember that this is a training programme. Even in an off-the-job phase people undergo training. In these circumstances, we must ensure that qualified craftspersons are also on the programme. Not many of our community employment programmes have qualified craftspersons on site delivering work. I do not have figures to hand but in recent years the CE programmes have drifted away from construction type activity to service delivery. We will examine this to see whether we can do something but it is not as simple as it might look on the surface.

Deputy Damien English

Other people who are qualified have also lost their jobs. If someone could step in to co-ordinate all of this it might be possible. I do not believe it is all Mr. Molloy's job. Various Departments must lock heads to solve a combination of problems and it will need imagination.

Mr. Rody Molloy

This is why we are——

Chairman

Would whoever has the mobile phone please turn it off and allow Mr. Molloy to address the issue?

Deputy Edward O’Keeffe

Can Mr. Molloy put an in-house system in place in co-operation with the unions and employers' organisations for people who are almost qualified? A six to 12-month job would get them through this patch. I appreciate what FÁS does and I understand the difficulties it faces. I am trying to be helpful rather than attacking Mr. Molloy.

Mr. Rody Molloy

I understand the difficulty and we are scratching around anywhere we can to find a mechanism. Our problem is that we have 1,200 redundant apprentices. We are confident we will be able to deal with the vast majority of them and get them through the system so they have a card stating they are qualified bricklayers or carpenters. This is our priority.

This leads me to the involvement of the CIF. Deputy Varadkar referred to 80% of apprentices in the construction industry which is approximately correct. CIF is a representative body of the industry. It is as aware as we are of the difficulties. We spent a couple of hours with it and made available to it any figures we had internally which might help it in its interaction with its member companies. We discussed two specific issues, one of which was the matter of redundant apprentices. We asked it to put pressure on its members to take on apprentices rather than general labourers.

The nature of the industry has changed substantially during the past 30 or 40 years. We no longer have a small number of large companies with apprentice systems. Most of the employers taking on apprentices are small subcontractors to the large contractors. It is difficult to obtain a co-ordinated response from them. I was in communication with Mr. Tom Parlon the week before last. He stated that the CIF was raising the awareness of its members of this issue and seeking a response.

We are now in a downturn with regard to housing and we do not have a demand for apprentices. When the demand returns, and this can happen quickly as happened previously, the industry will be crying out for electricians, carpenters and plumbers. The point I made strongly is that unless they are taken on as apprentices I cannot produce them in three years' time. A consequence of this is that they compete with each other and push up wage rates in the sector. They will then complain that qualified craftspersons are not available.

This is not a tap we turn on and off. A standard apprenticeship programme takes approximately four years. If we have a shortage of carpenters in four years' time I will not be able to provide an instant response. We have made this clear to the construction industry and in fairness it accepts this reality. It is fine to accept the reality at industry level. However, it is a different matter for individual contractors and employers. In many cases it is a matter of survival at this stage and we must recognise this.

With regard to the green agenda, we work with Sustainable Energy Ireland and have met it on a number of occasions to receive help with regard to the type of courses we need to run. A plumber who has gone through our normal system is a qualified plumber but may never have been involved in installing a system based on renewable or solar energy. It has become clear to us that if energy systems are installed badly they perform badly and this creates a view that they are not viable systems. We are anxious to have a cohort of people properly qualified to install the systems so they work to the optimum level.

As part of this process, we have developed a relationship with a community college in central Florida which is a lead researcher in the installation of solar power. During the past six months, a number of qualified people have gone to work with the people there to learn how to deliver these products to the population. We hope that out of this we will build a cohort of people suitably qualified to install the various green agenda systems.

The Chairman raised a matter which I know from much correspondence is close to his heart, namely, the system of "three strikes and out". Following his representations we went through a major process with our internal advisory committees. A legislative issue is raised as it is legislation which tells us what we can and cannot do. We have appeals systems in place and we are about to establish a revised appeals committee which will come into being during the coming months.

The people who failed to get through the system are on a list and we will contact all of them to see whether we can find a mechanism to get them through the system. It is in our interest that everyone who enters the system comes through it. We regard ourselves as failing if people drop out of the system. I suspect our success rates are higher than many third level institutions. It is a standards-based system and if we give somebody a card as an electrician we must be happy that he or she is capable of delivering.

With regard to early school leavers, we have in place an arrangement with most community training workshops which deal with those who drop out of school or have difficulties after they leave school in one form or another. It is mostly lads and if they are interested in developing a trade but have not come through the education system with the necessary qualifications we run pre-apprenticeship training programmes. Essentially, these are programmes designed to get them to the level where they can do an apprenticeship in the normal way. This is reasonably successful in that it gets people who one would not have expected to have many opportunities to become qualified craftspersons.

A major issue with regard to apprenticeships is ensuring the people we take in have the ability to come out the other end. In recent years we have rewritten the curricula for most apprenticeships and standards are being driven up all of the time. A major issue is the mathematical ability of those coming out of second level education. Mathematics is an important part of virtually every apprenticeship programme. Those who do not have the capability of understanding basic mathematics have a problem. We address this as best we can and this is what the pre-apprenticeship programme is about. There is no point in creating false expectations for people. The saddest thing I have to do in my job is tell some young fellow that he is just not capable of being an electrician and that he should do something else. It is not easy to disappoint someone who might actually enjoy doing the job, as an assistant or whatever.

Senator Brendan Ryan

How many get through the pre-apprenticeship stage?

Mr. Rody Molloy

I do not have the numbers but I can forward them to the Senator or to the committee. There is a range of CTC programmes aimed at rescuing kids who have been failed by the education system. Such programmes attempt to either find a way to get them back into the system or give them other outlets, including apprenticeships, as a means of getting into full-time employment.

Adult apprenticeships were also raised by several members. We have been trying to move on that issue and have had some pilot schemes that worked well. I recall one in particular with the ESB several years ago, whereby many people who were operatives in the ESB went on to became qualified electricians. However, there are problematic issues concerning rates of pay for apprentices and rates of pay for people with family commitments. We are working through those issues as best we can with the qualifications authorities, including FETAC. We are trying to find mechanisms to allow recognition of prior qualifications to come into play. We are conscious of the issue but it is complex because it involves the recognition of education and qualifications.

The issue of master craftsmen was raised, which is a German concept. We are working with the German authorities, with whom we have a close relationship. To be more specific, the German apprenticeship authority in Cologne has a working relationship with the FÁS training centre in Cork. Out of that, we have developed a pilot project and persuaded the educational system to run a degree programme in the area. If that works, we will be able to extend it into other areas.

Deputy Damien English

Can any incentives be given to companies to keep on apprentices, while not displacing other jobs? In some companies, there is probably no work, but in others it might simply be a question of money. Are there any policy changes that could be made in that regard?

If all else fails and an apprentice does not retain his or her place or does not get work elsewhere, can FÁS make a case for him or her to do another course or go into another part of the education system, while still obtaining financial assistance? Many of those who become apprentices have financial commitments and cannot go back into full-time education, unless they are given financial help. What would Mr. Molloy recommend we do in such situations?

Mr. Rody Molloy

We are getting into an area of subsidising jobs and the danger when one starts to do that is that it will spread widely through the system.

Deputy Damien English

I accept that.

Mr. Rody Molloy

We must find a mechanism whereby we can deal with genuine cases without engaging in widespread job subsidisation, which can be very expensive for the Exchequer. Whatever mechanisms we put in place, we must always be conscious that we do not have bottomless resources.

Our response to date has been that we do not allow employers to register new apprentices if they have let people go who were in the system for two or three years. We are analysing how that is working at present. Another response is to try to source alternative jobs in the industry, although as Deputy Edward O'Keeffe said, that may not be an option in many cases. We are also trying to source jobs for apprentices overseas, particularly in the United Kingdom and in those circumstances we recognise the on-the-job training gleaned outside the country, which would be an unusual departure for us. Such apprentices do phases 2, 4 and 6 of their training, which are the off-the-job modules, in our training centres or the institutes of technology.

Deputy Dara Calleary

The CE schemes have changed in recent years because it was becoming impossible to get people to sign up to the old-style schemes such as tidy towns or community development projects because they were getting very well paid on building sites and in construction in general. However, there will be a role for the traditional CE schemes again, and a need for them. That is something that should be examined further.

Apart from the apprenticeship sector, are other areas of training, for example, in-company training under pressure? I have some evidence that companies are not in a position to pay the 15% or 25% levy and are stepping back from sending their staff on training courses as a result.

CE schemes and local authority housing projects could yield much employment and it seems a shame to waste the talent that is there.

Mr. Rody Molloy

On an ongoing basis, we have relationships with all of the local authorities. We consider them to be employers and encourage them to take on apprentices in the normal way. On the general skills issue — the Chairman touched on this when he talked about general upskilling — in recent years we have been given a substantial increase in resources to try to access low-skilled people in employment to determine if there is some mechanism by which we could provide them with skills so that if they lose their jobs, they will find alternative employment. We all know that the most vulnerable people in the workforce are those with low or no skills. Our aim is to provide them with skills to make it easier for them to get alternative employment.

Research has shown, however, that this is an extremely difficult process. While most employers are prepared to invest in training, they tend to put that investment into people who are already well qualified. They are very slow to invest in training for those at the lower end of the skills chain. Equally, low-skilled people are not strongly motivated to look for upskilling. It is our job to break into that area, try to cancel those two negatives and start upskilling those in employment. We are trying all kinds of mechanisms to do this, very few of which are being delivered through FÁS itself, but through other suppliers and trade organisations. Last week, with IBEC and the trade unions, we launched a series of programmes. The unions are working with employees who are union members to generate a demand from them for upskilling. The employers are putting a great deal of energy into getting small companies in particular to understand the need for and value of training, through management training programmes, delivered through the Small Firms Association and ISME. We have also done work with the chambers of commerce and other organisations that we feel can interact in a reasonable way with people to make them come to the trough. We will provide the training but we must get people to come to us.

What we have done so far has been reasonably successful but the challenges set out in the national skills strategy, published approximately 18 months ago, are quite daunting in terms of the number of people to be upskilled and the costs involved. If we are to meet those challenges the costs will be substantial. I have been arguing with some success that we must focus on upskilling and training in the same way as we did on research and development some years ago. We must make a real leap, rather than just gradual progress. That is a challenge. Another challenge, not just an issue for FÁS but for the whole education and training sector, is time. If all of the money we wanted was given to us today, we would not be able to deliver because time is needed for us to develop the competence to deliver. That applies to the whole system, not just FÁS. In a sense, we face several challenges, including the resources needed to provide the training, getting people to avail of that training and developing our own in-house competence to deliver. It is an area we are working hard on and while we have made much progress, we still have a long way to go.

Deputy Edward O’Keeffe

Maths is very important and most people have reached leaving certificate standard in the subject. Why are more people not pursuing maths further, including at third level? The system seems to be failing in that regard. Does Mr. Molloy see any way of correcting that? Maths is very important in the context of the chemical and pharmaceutical industries.

Mr. Molloy has placed a great deal of emphasis on the construction industry but daily newspaper reports would indicate that the Construction Industry Federation, under Mr. Tom Parlon, is in real trouble. There is no point denying that. Mr. Parlon got out of a job here and got into another one. I have seen him lobbying hard but if one believes the newspaper reports, there is a crisis in construction, which commonly occurs in every ten or 15-year cycle. Mr. Parlon will not pick up the slack in terms of the people we are discussing. In-house training will be needed to rescue them, through agreement with the unions, the Government and, perhaps, other agencies because they will otherwise be thrown on the waste heap without qualifications. I appeal for the issue to be addressed. In five or seven years' time, when this recession is behind us, these people can have a future, as can the economy.

In regard to motor mechanic apprenticeships, FÁS is rationalising a number of colleges. What is the policy on that? I speak in particular about Mallow.

Mr. Rody Molloy

I know exactly what the Deputy is speaking about.

Deputy Edward O’Keeffe

Mallow is in my backyard and I am conscious of my people. We have lost the motor mechanic course and I understand the carpentry courses are also to be discontinued. What other courses will be undermined or taken away from this rural area? It is not a wise move to transfer courses to growth areas or large population centres.

Mr. Rody Molloy

I am happy to answer this question because we are not involved in the rationalisation. The Higher Education Authority is carrying it out because it is responsible for institutes of technology.

Deputy Edward O’Keeffe

They are trying to spread the load.

Mr. Rody Molloy

I know they are.

Deputy Edward O’Keeffe

FÁS will not get away from the HEA easily.

Mr. Rody Molloy

We have made strong representations to the HEA on that issue. In regard to the Deputy's question on the maths problem, I do not have a magic answer other than to say that apprentices are only a part of the problem. I understand that only 12% of the 2007 leaving certificate cohort received a C or higher in honours maths. That is a small pool of people from which to fish for high technology jobs. Considerable work is being done in the education sector, including the launch this year of pilot junior and leaving certificate curricula in 26 schools. The delivery of teaching is being changed in these pilot projects to ensure better outcomes in maths.

Chairman

I thank Mr. Molloy and his colleagues. We invited them here to discuss the issue of apprenticeships and to respond to questions raised by members. However, my colleagues wish to raise a matter which arose in the public domain in the past week. Mr. Molloy has indicated that he has no problem in addressing the matter.

Deputy Damien English

I ask Mr. Molloy to update us.

Mr. Rody Molloy

I can set out my side of the matter. I am conscious that I do not have parliamentary privilege, so I may have to be circumspect in what I say. I want to be as frank as possible with the committee.

Chairman

We understand that. I ask members to take cognisance of the parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. It is important we acknowledge those constraints.

Mr. Rody Molloy

I am putting that down as a marker because legal issues and individuals are involved. Our internal audit report laid out in considerable detail the issues which have been the subject of public comment. This report was released by FÁS last Friday under the Freedom of Information Act. Some of the issues identified in the report have been referred by FÁS to the Garda and are now the subject of an investigation. As a consequence, I cannot discuss them in detail. However, our report comprehensively addresses the issues and is available to anyone who requests it.

I can outline for the committee how FÁS responded to these issues. In late September 2004, the office of the then Minister for Enterprise, Trade and Employment, Deputy Harney, received an anonymous letter which made various allegations of a criminal nature. In early October 2004, her office gave that letter to the chairman of FÁS, who in turn passed the letter to me. I immediately obtained legal advice because of the nature of the allegations. I should note that our normal approach with anonymous letters is not to take them seriously but because of the nature of the allegations, we decided to depart from that practice.

I directed our internal auditors to conduct an investigation into these allegations and to submit a report to me. In doing so, I had the following priorities: I needed a full investigation of the allegations; I had to ensure these allegations were investigated in a timely manner; and I had to ensure that no individual was deprived of his or her right to natural justice.

The audit I ordered was very extensive, covering the period from 2000 to 2004, and it began in November 2004. Due to the seriousness of the allegations, the investigation was conducted by the head of internal audit and an audit manager, who initially investigated the list of allegations of criminal behaviour made in the anonymous letter. The audit found no evidence to substantiate any of those criminal allegations. However, in the process of investigation, the auditors found possible breaches of procedure which warranted further investigation, so we asked the auditors to conduct that investigation. In June 2005, during the course of the audit, we passed certain information to the Garda for investigation. The audit was completed in December 2005 and a draft report was issued to the assistant director general, corporate services, and me in January 2006. As a result of a legal issue raised by the assistant director general, FÁS was advised that individuals named in the report, both internally and externally, should be given an opportunity to comment on sections relevant to them. This process of consultation lasted until May 2006 and a final report was then issued.

In dealing with these allegations and deciding whether disciplinary action was warranted, we were conscious of the need to afford due process to the individual at the centre of the matter and to proceed in a legally correct manner. We underwent a number of internal procedures to ensure the matter was handled correctly. If we had not followed the correct procedure, we might have faced legal challenges. Following the receipt of legal and audit advice and after observing the usual internal procedures of presenting the report to the appropriate people, the final report was issued to the Comptroller and Auditor General in February 2007.

At that time, I directed the human resources director to conduct a disciplinary investigation into matters arising from the audit report. This investigation began in February 2007 and was completed in June 2007. Disciplinary action was taken against the individual involved. In accordance with normal practice, we cannot divulge the details of the disciplinary action.

The internal audit report deals with issues pertaining to the relationship between FÁS and various outside contractors. FÁS does not at present have contracts with any of these companies, although members should not infer any criticism from this fact. Once we became aware of the allegations, we began to change management procedures around the operation of the procurement process within the organisation. We have implemented most of the recommendations of the internal audit report and those which we have not implemented are under active consideration. This has involved various management changes. All the units of the organisation have been instructed to follow best procurement procedures at all times and new financial controls have been developed.

In summary, FÁS management instigated an internal investigation as soon as these allegations were brought to our attention. We passed information to the Garda as it became available to us. We took disciplinary action against the individual at the centre of the issue and none of the contractors covered in this report currently has a contractual relationship with FÁS.

We have sought to operate to the highest standards of governance throughout this period but, unfortunately, operating to these standards takes time. For example, the internal audit investigation was lengthy because of the ever expanding breadth of the inquiry, the number of people we had to interview, the fact that some of those involved were external parties over which FÁS had no control and the need for each stage of the process to be vetted by our legal advisers to ensure we were not exposed to legal challenges. FÁS has a culture of treating our 2,200 employees with respect and that includes allowing due process to anyone whose behaviour is being examined. Under our value system, each and every employee is due the highest regard and respect. Until such a time as wrong doing is proven, that will happen. We have 2,200 employees who are all doing a good job around this country, often in difficult circumstances. We know from this morning's discussion that circumstances will become more difficult. I compliment them on the fact that, even through this difficult time they read about in newspapers involving them, they continue to do that and will continue to do so. I pay tribute to them for that.

Deputy Leo Varadkar

The importance of this cannot be underestimated. After the HSE, FÁS has the largest budget of any State agency at €1 billion per year. Some of it is spent well and some is clearly not, as we can see from the internal audit. A considerable number of anonymous letters are floating around and the number of non-anonymous contacts is also considerable. The more I look into this the more I get the impression that this is just the tip of the iceberg about what goes on in FÁS. I agree with Mr. Molloy's comments on the general work done by the general body of the 2,000 employees of FÁS. I do not necessarily have such confidence in the organisation's management.

I will give people a taste of the issues uncovered by the internal audit we are discussing. We should bear in mind that this person controlled a budget of €70 million over seven years, a very considerable budget. At a time of cutbacks the public needs to know money is being well spent. People who have to face cutbacks in health and education need to know that State agencies do not tolerate misappropriation or corruption in their ranks. One contract was given to an agency on a temporary basis and the FÁS person involved was able, more or less, to determine who should be hired and fired by that agency. The agency was more or less informed that if it wanted to get the contract on a permanent basis, this FÁS official would decide who that outside agency would employ.

In another instance a conflict of interest was uncovered where one of the accountancy firms that got a contract from FÁS had a role in providing private financial advice to the FÁS official involved. The FÁS internal audit report identifies that as a conflict of interest. Of particular concern to me is a situation in which major expenditure occurred without being approved by the FÁS board, which is part of FÁS's requirements. There was a tendering process whereby a company was given the tender more or less in advance and it was suggested it identify two potential shadow companies to compete for the tender it knew it would get anyway. There was a situation whereby a Jobs Ireland website was developed in tandem with a pre-existing website, costing €1.7 million, without ICT and FÁS being informed of this duplicate website. Potentially €100,000 was spent buying the web domain alone and this website no longer exists as it was a duplicate for one that already existed. I could go on and on. It is unbelievable stuff.

There is a conflict of evidence between Mr. Molloy and somebody on the €100,000 contract for placing advertisements aimed at business people in a local newspaper. It is unbelievable. There was an overpayment of €32,000 to a company and an overpayment incurred by the FÁS official involved. A contract was given to a company that had been incorporated only ten days before it won the contract. It is really unbelievable stuff.

Three questions arise for me. Mr. Molloy says he cannot tell us what disciplinary action was taken. It began in 2000 and went on until 2004 and this person was still in this job until he went on sick leave a week or two ago. Why was this person not dismissed? It is extraordinary that one would have somebody in a major State agency managing a budget of €70 million who was found to have taken all these actions, according to the internal report, and was not dismissed. Why was he given a bonus of €10,000 in 2005? This is extraordinary stuff. I need to know the answer to that. I cannot understand why that person was not dismissed.

Did the board members individually receive copies of the internal audit report? Whose responsibility is it to ensure major financial decisions, such as the development of a website costing €1.7 million, are made by the board? This is a crucial question for Mr. Molloy. Is it not Mr. Molloy's role as director general to ensure people under him do not go off signing contracts for hundreds of thousands of euro without the required board approval?

Mr. Rody Molloy

The reason we are in this position is some people did not carry out procedures. The language in the internal audit report and in the public reporting of it is slightly different. The audit report has many "mays", "mights" and suggestions rather than definite findings. Deputy Varadkar asked why the officer was not dismissed. When I got that internal audit report we carried out an investigation into what was proved against the officer in question. I will not take action on the basis of supposition but on the basis of proof.

Deputy Leo Varadkar

These are findings, not suppositions.

Mr. Rody Molloy

The findings in that report are all of a procedural nature. I cannot go into details regarding the relationship with companies because that is part of the Garda investigation. I will not prejudice that investigation or leave myself open to legal defamation claims. As soon as that report was finalised we sent it to the Comptroller and Auditor General. We have satisfied him that the procedures we have in place will ensure there is never a recurrence of that kind of activity. In any organisation people do things they should not. The important point is to have systems in place to capture those issues and make the appropriate responses. The Comptroller and Auditor General's office worked with us and was happy with the controls we have in place. It had no problem signing off on our accounts through all these years, including 2006 and 2007, in the last few days. I am happy that our procedures are as robust, if not more robust, as those in any other organisation.

Regardless of the public perception, and because of the nature of this, we were very conscious that it had the potential to damage us, we were meticulous in taking advice at all stages from senior legal advisers outside the organisation. We took advice from external risk management and audit experts along the way. At every stage we ensured we followed the precisely correct procedures. If the Garda investigation turns up proof of other activities that should not happen, the necessary actions will be taken.

Deputy Leo Varadkar

The Garda investigations relate to the contractors, not to this individual. The evidence about this individual is already here and he should have been dismissed. Mr. Molloy cannot have somebody like this controlling budgets of tens of millions of euro.

Mr. Rody Molloy

I cannot dismiss people willy-nilly. I have to go through due process and ensure their rights are protected. Every move we made on this, from the day the letter was handed to me in early October 2004, has been guided by senior legal advice.

Deputy Leo Varadkar

Does that include giving him a bonus a year afterwards?

Mr. Rody Molloy

The bonus was a completely separate issue. Every year we give bonuses to a number of people who have done something exceptional to enhance the organisation's success.

Deputy Leo Varadkar

Yes, it certainly was exceptional.

Mr. Rody Molloy

I ask the Deputy not to be too clever. I could not presume this man's guilt when I was deciding who would receive bonuses. He had performed an exceptional service for the organisation that year. While the investigation was going on we knew at that stage, from very early on, and this is in the internal audit report, that no evidence could be found to substantiate the criminal allegations.

Regarding Deputy Varadkar's concern about a cover up, he and anybody from his organisation or this committee who wants to come and examine our papers is more than welcome to do so. We have nothing to hide. We were very careful. It was the only internal audit report on which we took so much legal advice because of the concerns we had around the damage to the organisation, to an individual's rights and even to companies' rights. Whatever the Garda investigation turns up, the vast majority of companies we do business with are honest and upright and go through the normal and proper procedures.

Deputy Leo Varadkar

Regarding the questions that were not answered, I am not talking about the criminal investigation, I am talking about things found in the internal report, which are different from the criminal investigation. We should not confuse the two. The question on whether individual members of the board were given a copy of the internal report was not answered.

Mr. Rody Molloy

The normal process in our organisation, and any organisation, when an internal audit investigation is completed is to send the findings to the internal audit committee of the board, which is chaired by a member of the board. Two other board members are also on that committee. Normally the committee gets a summary of the internal audit report and sees the recommendations for improvements to help address issues that were raised. As in any organisation, we have a number of internal audit reports on various aspects of the organisation. We had discussions with the internal audit committee of the board, as opposed to the people who conducted the investigation, who were internal staff. In this case, because of its seriousness, we made the full report available to members of the internal audit committee.

Deputy Leo Varadkar

But not to all the members of the board.

Mr. Rody Molloy

We did not make it available to all the members of the board because that is not normal practice. We were advised by our legal representatives at the time that to protect ourselves from defamation we should restrict the circulation of the report. It is not normal practice in the organisation for full audit reports to be circulated to all board members; I do not know that it is normal practice in any organisation. We do not do this with any audit report and we did not do it with this one. In this case we had the additional cover of legal advice that said we must limit the circulation of the report as much as possible.

Deputy Leo Varadkar

In terms of ensuring that major procurement decisions and financial outlays went through the board, as was required, who was ultimately responsible? Who failed to see that this happened?

Mr. Rody Molloy

We have a set of approval levels; people at different levels in the organisation can approve different levels of expenditure and this varies depending on the type of approval. In this case something that possibly should have gone to the board did not.

The Deputy is specifically referring to the major website. That goes back to before my time in the organisation but I sense that part of the reason behind the decision to put in an external website was that the in-house IT section was already stretched fully delivering on our normal day-to-day activities. There was a demand to respond quickly to the then difficult task of attracting people to come to work in Ireland.

Deputy Leo Varadkar

The internal audit report says the error was compounded by the fact that corporate affairs did not approach the IT department to ascertain whether Jobs Ireland's requirements could be met but, rather, contracted out the website development work without informing the IT department. According to FÁS's own report, the second website, which was more or less identical to the existing job bank website, was set up without the IT department being informed. This is extraordinary.

Mr. Rody Molloy

The website that was set up was not identical.

Deputy Leo Varadkar

It was more or less identical.

Mr. Rody Molloy

I am not defending the website that was set up and I am the person that sought to close it. However, in terms of setting it up, there was a legitimate reason for taking that route at the time.

Deputy Leo Varadkar

Is Mr. Molloy accepting that the FÁS IT department was not informed or consulted about the website?

Mr. Rody Molloy

I have to accept what is in the report, though I was not involved in the decision.

Deputy Leo Varadkar

That is different from what Mr. Molloy said a moment ago.

Mr. Rody Molloy

I said a moment ago that I was not involved in the decision.

Deputy Edward O’Keeffe

How many meetings of the internal audit committee take place annually and who from the organisation is on it? Are executive directors present at meetings of the internal audit committee? Who does the internal audit committee report to? Does FÁS have external auditors or is it subject to the Comptroller and Auditor General?

Mr. Rody Molloy

The Office of the Comptroller and Auditor General is our external auditor.

Deputy Edward O’Keeffe

This relates to issues of corporate governance, as far as I can see.

Mr. Rody Molloy

Like any organisation of our size, we must have a robust internal audit staff who can conduct investigations when issues arise. They report to a sub-committee of the board that consists of members of the board and is chaired by a member of the board. They do not interact with me on what goes before the internal audit committee to ensure the division of functions and that I remain answerable to the board.

Deputy Edward O’Keeffe

They also have a role to play with the Comptroller and Auditor General regarding ensuring that he is satisfied with procedures. This relates to corporate governance and I am an expert in that field.

Mr. Rody Molloy

As I said, when the internal audit report was completed we forwarded it to the Comptroller and Auditor General. It is clear from the report he published five or six weeks ago that the Comptroller and Auditor General satisfied himself in subsequent discussions with us that our procedures, and the revised procedures we have put in place and are working on, will ensure there will not be a recurrence of these events.

Deputy Edward O’Keeffe

How many internal audit meetings took place in the 12-month period? I understand a statutory requirement, under corporate governance, is that three such meetings must take place. We are hearing much about corporate governance these days and are getting very pure in this world.

Mr. Rody Molloy

In normal circumstances our internal audit committee meets four times per year. During the year in question it met more than this, though I do not know the exact number.

Deputy Edward O’Keeffe

Was any staff member called in to be made accountable?

Mr. Rody Molloy

The only staff members who would normally attend an internal audit committee meeting would be members of the committee.

Deputy Edward O’Keeffe

The committee has the right to call people before it. Did it do so to investigate what happened?

Mr. Rody Molloy

The internal audit staff do the questioning and report to the internal audit committee.

Deputy Edward O’Keeffe

My question is, did the internal audit committee invite members of staff to come before it and question them on procedures with which it was not happy?

Mr. Rody Molloy

Other than internal audit staff, no.

Senator Brendan Ryan

I have a related question on the internal audit. This all stemmed from an anonymous letter that led to the internal audit investigation. Would this matter have been detected without the anonymous letter? If not, does this call into question the competence of the internal audit team? Mr. Molloy might confirm whether the audit team members have received performance-related bonuses for the period preceding this matter. If so, were they deserving of such awards? This issue highlights the need for legislation on whistleblowers.

Mr. Rody Molloy

The nature of the type of matter we are discussing is that it will always depend on a person drawing attention to it. The important thing is that action is taken once attention has been drawn to it. Internal audit staff conducted themselves professionally throughout this issue and carried out an investigation independent of anyone in the organisation, including myself, as is the normal procedure. I have no complaints about the internal audit section.

Deputy Varadkar spoke of the size of our budget and it is just over €1 billion this year, until next week anyway.

Deputy Leo Varadkar

It was €1 billion at a time of full employment, so whether the organisation deserves more now will be a matter for debate.

Mr. Rody Molloy

We have a staff of 2,200 people. No procedures in the world will guarantee against something going wrong. At all times we depend on issues being brought to our attention, then qualified staff, such as those in the internal audit section, investigate them. If issues of a procedural nature arise, which require disciplinary action, we use our HR processes to respond. If the issues were of a criminal nature we would not hesitate to refer them to the Garda.

Senator Brendan Ryan

Is Mr. Molloy satisfied that nothing that is contained in this internal report should have been detected in the internal audit process?

Mr. Rody Molloy

I am not saying that but the internal audit section cannot always be on everyone's backs in an organisation. Internal audit staff go from section to section, over time, examining major expenditure that has occurred and looking at the procedures in operation. This is part of their normal work and if a person makes a complaint they will investigate it.

I regret that these things happened but there is not an organisation in the world that does not have people who make mistakes and do things wrong. All I can do is ensure, as best I can, that we have procedures in place to address these issues and we have satisfied the Comptroller and Auditor General in this regard. I have no doubt other issues will occur in future and I hope our procedures will be robust enough to deal with them and bring them to public attention.

Deputy Damien English

I accept that the internal audit section cannot find everything but have its procedures been changed? This goes for FÁS and other agencies in the wake of this report because things were obviously missed. We need to keep changing to catch what we are missing. Will this change?

The discovery of the issue under discussion was sparked by an anonymous letter, without which we would probably never have found out. Were letters sent to others before it got to the Minister? Mr. Molloy mentioned an FOI request at the beginning of his presentation. Who made that request? We could not obtain the information last week under the Freedom of Information Act. I wonder to whom it was released because we could not obtain it.

I understand a person is innocent until proved guilty. There is no problem in that regard and I accept it. However, in some organisations the person would be transferred or moved to another section. Did that happen? I accept the person could not be sacked until his guilt was proved. We live in a democracy. However, it is sometimes normal practice to transfer a person to another section. If this did not happen, why not?

Am I correct in stating the company at the centre of the investigation has done work for FÁS in 2008, either directly or indirectly? My understanding is that it has. This concerns me. If the representatives do not have the answer today, they can come back with it some other time.

Does the Minister for Finance have a representative on the audit committee?

Mr. Rody Molloy

Yes. The Department of Finance representative on the board of FÁS is a member of the internal audit committee.

Deputy Damien English

Has the board ever seen an internal report as bad as the one under discussion in other practices?

Mr. Rody Molloy

It depends on what the Deputy means by "as bad as". We have had dismissals as a result of other investigations where there was clear proof of activity that allowed us to do so. That is not——

Deputy Damien English

Therefore, Mr. Molloy has seen more conclusive reports.

Mr. Rody Molloy

We have seen more conclusive ones. That is not in doubt. This may well become conclusive if the Garda uncovers something but I cannot comment until such time as the process has been carried out.

The Deputy asked about changes in internal audit functions. As it happens, we have a process in-house in which we review our internal audit procedures every couple of years. It was due for review. We have had an external review, which is just coming to completion and will probably lead to changes in internal audit procedures. However, this is not a criticism of the internal audit function and how it was performed in this case.

Deputy Damien English

Has the person been transferred?

Mr. Rody Molloy

The person was not transferred out of the area immediately. That is as far as I can go.

Deputy Leo Varadkar

Does Mr. Molloy mean that the person has been transferred?

Mr. Rody Molloy

I did not say that.

Deputy Leo Varadkar

Therefore, he has not been transferred.

Mr. Rody Molloy

I said he has not yet been transferred.

Deputy Leo Varadkar

It is now four years later.

Deputy Damien English

What about the FOI request?

Mr. Rody Molloy

As members know, the procedures are very precise. The request was made by a journalist from The Irish Times and we were due to respond to it in about two weeks, but because of the issues raised in the Dáil last week, we decided to speed up the process and get our legal people involved. Again, we had to go through a process in which they decided what we could and should release. The information was released to the journalist last Friday evening and subsequently to others.

Deputy Edward O’Keeffe

May we have a copy of the internal report? I accept Mr. Molloy's honesty and open-mindedness in putting his side of the case, while awaiting the outcome of the Garda investigation. Who is the chairman of FÁS and what role did he or she play?

Mr. Rody Molloy

The chairman of FÁS is Mr. Peter McLoone.

Deputy Edward O’Keeffe

For how long has he been in the position?

Mr. Rody Molloy

He has been in the position——

Deputy Edward O’Keeffe

Too long.

Mr. Rody Molloy

——for about three and a half years — certainly more than three years.

Deputy Edward O’Keeffe

Did he play a role?

Mr. Rody Molloy

The chairman——

Chairman

In fairness——

Deputy Edward O’Keeffe

I ask the Chairman to hold on.

Mr. Rody Molloy

The chairman of FÁS was kept informed about the process at all stages and what was going on. He too——

Deputy Edward O’Keeffe

There is no point in blaming management for all this. The board has a role to play too.

Mr. Rody Molloy

No, this is not a question of blame. We took legal advice throughout. We kept the chairman of the board informed of what was happening and had ongoing interaction with the chairman of the internal audit committee. This has not been a simple issue for us but a very complex one, in respect of which we had to tread very carefully.

Deputy Edward O’Keeffe

As chairman of the board, he could be a member of the internal audit committee without being its chairman.

Mr. Rody Molloy

He is not a member of the internal audit committee.

Deputy Edward O’Keeffe

But he could be.

Mr. Rody Molloy

That is——

Deputy Edward O’Keeffe

Who elects the committee?

Mr. Rody Molloy

We have a series of sub-committees of the board, of which the most important is the internal audit committee. It is usually the first one appointed by a new board.

Deputy Edward O’Keeffe

I thank Mr. Molloy.

Chairman

I dissociate myself from the comment about Mr. McLoone being there too long. It is unfair and certainly not a matter for us to decide.

Deputy Damien English

The Chairman is right. I asked whether the contractor had done work in 2008. Mr. Molloy might not have the answer now.

Mr. Rody Molloy

I do not have the answer to that question. As I said in my statement, none of the bodies mentioned in the report has a contractual relationship with us. We checked for fear the question would be asked. That is not to say a company will not have in the future.

Deputy Leo Varadkar

Will Mr. Molloy confirm that the Jobs Ireland domain name for the duplicate website was purchased at a cost of €100,000? From whom was it purchased? Is he aware of any political connections that the person may have that might result in him being protected or not disciplined in the way he should have been?

Mr. Rody Molloy

Which person?

Deputy Leo Varadkar

The person at the centre of these allegations. I ask all the representatives whether they have received tickets to football matches, parties or any other events from the bodies awarded contracts organised by this gentleman.

Mr. Rody Molloy

I have my own tickets to Croke Park, my principal interest in life. I may have——

Mr. Christy Cooney

I assure the Deputy I have as well.

Mr. Rody Molloy

Other than that, I have been invited to functions in the normal way and attended.

Deputy Leo Varadkar

The normal ways in FÁS are odd.

Mr. Rody Molloy

I ask the Deputy not to try to imply something that is not the case

Deputy Leo Varadkar

I am just asking a question.

Mr. Rody Molloy

I have accepted invitations to corporate entertainment, as virtually anybody in my position would. I do not have anything to hide. If somebody wishes to look at what I have attended, he or she is more than welcome to do so. I will not go any further. I am sorry; I have lost the next question.

Deputy Leo Varadkar

It was about political connections.

Mr. Rody Molloy

I do not know what political connections the individual has; nor, frankly, do I care. A number of people around this table will know that when representations are made to me, politically, from any side of the House, they are dealt with fairly. If we can respond, we do and if we cannot, we explain to the political representative why we cannot do so.

With regard to the Jobs Ireland domain name, because there was a contract with the people involved, there was a process to get ourselves out of it. I do not have the figures to show how we extracted ourselves from it but I can get them for the committee. The Deputy asked from whom we bought it. We own the title which was dreamed up as part of this process. We thought it was an attractive title in promoting our employment service activity. We use Jobs Ireland in-house as a mechanism for advertising.

Deputy Leo Varadkar

Is Mr. Molloy saying the domain name was not purchased from somebody else?

Mr. Rody Molloy

No, it was not.

Deputy Dara Calleary

What is the position in FÁS after all this? I know there is a criminal investigation under way, but have procurement procedures been changed, or has anything been tightened after a recommendation by the internal audit committee? Has the committee reviewed its own operations due to the fact that this would have been missed were it not for the anonymous letter? Has FÁS taken on board the lessons?

Mr. Rody Molloy

We have taken on board virtually all of the recommendations. Many procedures were changed before the final report when we became aware of issues. We did not wait for the final report and recommendations to make changes. We have been making changes all along the way. Virtually all of the recommendations made in the report have been implemented. The last aspect involves detailed financial recommendations, about which we are engaged in an iterative process with the internal audit committee. That is ongoing. I understand from the head of internal audit that it will be finalised later this week or early next week.

Deputy Cyprian Brady

Mr. Molloy has mentioned that the Comptroller and Auditor General is the external auditor and that his office signed off on the accounts last year. Did it make any comments or express any concerns?

Mr. Rody Molloy

Not in respect of the accounts. The Comptroller and Auditor General, in a publication concerning FÁS and a number of other agencies five or six weeks ago, commented in a very measured way on the internal audit report which had been given to him, in keeping with our normal practice. He had some discussions with us to satisfy himself or, rather, his office that we had put appropriate procedures in place to address the breaches made.

Deputy Damien English

I realise there is no contract but is it possible it could it be indirectly contracted?

Mr. Rody Molloy

I can check that for the Deputy.

Chairman

Mr. Molloy said there were various layers within the organisation to which approval might be given with a view to dealing with a particular contract, whether this be for €100,000 or €500,000. Has that procedure been changed to ensure that virtually all contracts, of any nature, are approved in full by the board? What changes have been made within procurement procedures to ensure that something like this will not recur? The organisation is dealing with public money and it is extremely important that significant amounts of money are under control. The board should be privy to all contracts and should have the final yea or nay.

Mr. Rody Molloy

It would not be feasible for every contract signed by FÁS to go before the board because of the nature of our work and the amount of it done for us by other people. At some stage we must trust people. Let us be very clear about this because 99% of people justify that trust and there is no problem with them. We have levels of procedure which are part of the normal public sector procedures regarding which grades are entitled to sign off on what. The only change specific to our corporate affairs or public affairs department to arise from this issue is that I have set down that any departure from normal procedure be reported. Sometimes we must depart from normal procedure if a thing must be done quickly. The notion of sending out three tenders and waiting just does not happen. Anything of that nature, regardless of the amount concerned, will be brought to my attention. Clearly, if the amount is such that it requires the board's approval it will go before the board.

Chairman

At this juncture I thank Mr. Molloy, Mr. Cooney, Mr. Rowan and Mr. Fox——

Senator Donie Cassidy

I apologise. There was a clash with the Order of Business in the Seanad.

Chairman

In fairness, members have been here since 10.a.m. The Senator may pose one brief question.

Senator Donie Cassidy

I do not have a question. I merely wished to apologise for being late because the time of the Order of Business clashed with the committee. I like to think this committee might be a conduit to Government and to the Minister to assist FÁS. The organisation will have a serious challenge in the next four years in our area, as the Chairman will appreciate, and in every other constituency also. This is a serious responsibility and we look to FÁS to assist in a significant way. Anything that interferes with regulations will not help the unemployed. Committee members want to assist the Chairman and the people from FÁS in any way we can in the next two or three years.

Chairman

I again thank the delegates, especially Mr. Molloy, for coming before the committee today to deal with the issue of apprenticeships and all the other issues as well. They were most forthcoming and helpful to the committee. We had a useful and informative exchange as is clear from the level of attention paid by the members to various points and to the frank exchanges that were made in this regard.

Mr. Rody Molloy

I thank the Chairman and the members of the committee for the courtesy shown to me this morning. The second part of the discussion was a difficult issue for us, as I am the first to acknowledge.

Chairman

The committee must go into private session because of a matter that took up some time earlier. I believe it is now resolved. Mr. Molloy will be very glad that it does not involve FÁS.

The joint committee went into private session at 12.05 p.m. and adjourned at 12.15 p.m. until noon on Thursday, 17 July 2008.