Garda Commissioner Noirin O’Sullivan and Sinn Fein TD David Cullinan in the Public Accounts Committee
At the Public Accounts Committee.
Garda Commissioner Nóiriín O’Sullivan is continuing to be questioned in relation to the financial irregularities at the Garda College.
Readers will recall how Ms O’Sullivan has maintained that she first became aware of these issues on July 27, 2015.
And that the Comptroller and Auditor General Seamus McCarthy was not told until May 31, 2016 – by head of Internal Audit Niall Kelly.
Mr McCarthy told the PAC previously, and this morning, that the matters should have been referred to him immediately.
It has now emerged Garda Commissioner Nóirín O’Sullivan sent a letter to the Comptroller and Auditor General Seamus McCarthy on July 31, 2015.
From this morning’s PAC…
David Cullinane: “I just want to get to a letter that you did send Mr McCarthy and he furnished this committee with the letter. The 31st of July, 2015. Was that before or after you were made aware of the irregularities at the Garda Training College?”
Noirin O’Sullivan: “It was four days after.”
Cullinane: “And was this a letter of representation or understanding, Mr McCarthy?”
Seamus McCarthy: “A letter of representation.”
Cullinane: “And what is a letter of representation?”
McCarthy: “It’s a letter that we seek from an Accounting Officer at the end of the aduit to basically confirm to us that all accounting records have been made available and that all information that should be brought to our attention has been.”
Cullinane: “And I’m reading from it her, Commissioner. It says:
‘I can confirm to the best of my knowledge and believe, and having made appropriate enquiries of my officials at An Garda Siochana, the following representations, which are given to you in connection with your audit of the Appropriation Account for Vote 20 (An Garda Siochana) for the year…
‘I am satisfied that the expenditures and receipts enclosed in the Appropriation Account for the Vote have been applied only to the extent and the purposes indicated…
‘All the accounting records have been provided to you for the purpose of your audit and all the transactions undertaken by An Garda Siochana have been properly reflected and recorded…
‘I have disclosed to you all the instances of loss, fraud or irregularity are known to have occurred or have been reported in the year.’
“So irregularities were reported to you and here you are on the 31st of July, 2015, sending a letter to the Comptroller and Auditor General saying that you have disclosed all instances of irregularities. You did not, Commissioner, disclose all instances of irregularities.”
O’Sullivan: “Well, deputy, what I had been informed on the 27th, on the evening of the 27th. What I was informed was, in the report from Mr Ruane that basically Mr Barrett had identified a number of issues. The nature of…”
Cullinane: “No, no, sorry Commissioner, that’s not the case, I asked you earlier on and you were very clear to this committee that the first time you became aware of irregularities in the Garda Training College in July 2015. You were briefed on the issues, you had a meeting with Mr Barrett and others I take it aswell. But you were most certainly aware of the issues involved
O’Sullivan: “Deputy, can I be very clear on what I knew. What I knew was that Mr Barrett had raised certain matters with Mr Ruane, our Head of Legal Affairs. Mr Ruane had reported those matters to the Deputy Commissioner Strategy Governance. That was on the 27th. On the 28th I got a report – so three days before this letters was issued – I got a report from the Deputy Commissioner. I caused enquiries to be made in my office…”
Cullinane: “With respect, you’re counting down the clock..”
The Comptroller and Auditor General Seamus McCarthy spoke about the procurement and management of contracts for direct provision centres.
In his opening statement, he explained that €57million was spent on accommodation for asylum seekers in 2015. He then went on to criticise how direct provision management contracts were procured for the 28 commercially run centres across Ireland.
He also stated: “Contracts did not set performance measures and there was limited provision for penalties for under-performance by suppliers.”
The General Secretary of the Department of Justice Noel Waters was also present at PAC and, in his opening statement, said if direct provision had not been established in 2000, there “simply would not have been even the most basic shelter available” for people seeking asylum in Ireland.
He also said “there are no cheaper alternatives to direct provision”.
From Mr McCarthy’s opening statement:
“At December 2015, there was a total of 35 direct provision centres in operation — seven State-owned centres, and 28 centres provided by 22 commercial suppliers. Almost 4,700 individuals were being accommodated in the centres at the year end. The Department also operates two emergency reception and orientation centres to cater for persons who already have refugee status.
“The total cost to the Department in 2015 of providing accommodation and related services to asylum seekers and refugees was €57 million. The level of accommodation required is demand-led and difficult to predict. It is influenced by the number of asylum seekers, their length of stay in direct provision and, because there is no obligation to avail of direct provision, the number who opt to do so.
“The report notes that in mid-2016, the average length of stay was 38 months with 450 residents, or 10% of the total, living in direct provision for more than seven years. 23% of residents or 950 people, continued to reside in direct provision even though their cases had been finalised. This included 667 people or 16% who had been granted a status permitting them to remain in Ireland; and 283 or 7% who were subject to deportation orders.
“Two commercial companies were contracted to provide services such as catering, cleaning and maintenance at the seven State-owned centres. We found that competitive processes had been used to procure those services.
“In contrast, the Department had not used competitive processes as set out in public procurement procedures to procure the 28 commercially-owned and run centres. Instead, it seeks ‘expressions of interest’, evaluates the responses and then agrees contract terms with selected providers.
“The Department’s view is that this equates to the ‘negotiated procedure’ provided for in EU procurement rules. However, use of that procedure is only permitted in certain limited circumstances that we could not see existed in relation to direct provision. The Department stated that it discussed the matter with the Office of Government Procurement but hadn’t identified a procurement method to replace the current procedure.
“The examination also found that effective management of contracts was made more difficult because not all contract deliverables had been expressed in a way that could be quantified or measured.This increased the risk that standards of accommodation and services would not meet asylum seekers’ needs or would be inconsistent between centres.
“In addition, contracts did not set performance measures and there was limited provision for penalties for under-performance by suppliers. The Department agreed to the report’s recommendation to review the standard contract, and the Accounting Officer will be able to update the Committee in that regard. Service delivery in the centres is monitored by physical inspections of premises, information clinics for residents of centres and review of complaints by residents.
“However, the findings from this monitoring are not collated and used to assess service delivery performance. The Department committed to introduce procedures to formally record such inspection findings and complaints, which should inform discussions with centre managers and owners. Even though there was a low level of complaints by residents, information from other sources suggests that there is a significant level of dissatisfaction among residents about the quality of the accommodation and/or services provided.
“A revised complaints procedure introduced in 2015 provided for an appeal to an independent appeals officer where a person was not satisfied with how their complaint was dealt with. However, at the time of the examination, an independent appeals officer had yet to be appointed.
“The report recommended that the Department review the complaints process to identify reasons why residents may not be raising issues. The Department noted that the revised complaints procedure largely addressed this issue but undertook to examine ways to make the complaints process more open and transparent.
“Members may also be aware that, from early April this year, residents of direct provision can now bring a complaint to the Ombudsman, or to the Ombudsman for Children, if they are unhappy with how their original complaint was dealt with.”
From the Secretary General at the Department of Justice Noel Waters’ opening statement:
“From 2000 to date some 60,000 people have been accommodated in direct provision. Equally they have been provided with full access to the State’s medical and education services. The system is not perfect by any means and we are continually seeking to improve it.”
“The reality is that had the State not adopted the direct provision system, there simply would not have been even the most basic shelter available for this group of people who arrived and continue to arrive to our country.”
“At the start of this year there were 4,465 persons living in this accommodation. However, I am glad to say – and this is a significant change – that, of those, 72% have been there for three years or less since the date of their application. This compares to 36% who were there for 3 years or less when the data was compiled for the Working Group on Direct Provision and related matters in 2015.”
“To put it another way, there has been a complete reversal in the length of stay figures since the Working Group examined the matter.”
“Full board accommodation in keeping with the policy of nationwide dispersal is offered to
residents while their application for protection is being processed. It is important to note that not every person who seeks international protection in Ireland choses to accept the offer of full board accommodation and many choose to live with family or friends in communities across the country, as they are entitled to do.”
“But if this system was not in place, already vulnerable people who have sought protection in the State would join the lengthy waiting lists for social housing or enter the private rental market with little hope of finding affordable and secure accommodation.”
“That is the very situation that obtained which gave rise to the direct provision system being put in place in the first place. The offer of State-provided accommodation is a guarantee that every person who walks into the International Protection Office today will, tonight, have a bed, full board and access to medical care.”
“Moreover, their children will have access to our first and second level education system on
the same basis as anyone else.”
“Of course no system is without room for improvement and our challenge is to continually
enhance and develop the entire system so that the best possible set of facilities and services can be provided to those in our care.”
“…There are no cheaper alternatives to direct provision – we have explored the options in this respect; in fact they are much more expensive – and in any event given the critical shortage of housing in the State they are not realistic.”
Nama chairman Frank Daly Minister for Finance Michael Noonan
The Irish Independent reports:
Nama has shrugged off criticism from the State’s most powerful spending watchdog by launching a €3bn loan sale, the Irish Independent has learned.
The State agency pulled the trigger on the massive sale yesterday, just 24 hours after the publication of a highly critical report by the the Comptroller & Auditor General (C&AG) into the agency’s handling of the controversial Project Eagle sale of Northern Ireland loans.
A Nama insider said the sale had been in the works but indicated the timing would signal ‘business as usual’ at the agency which still has a vast portfolio of loans to sell off or work out over its remaining three years.
NAMA launches sale of new portfolio of loans,Project Gem,38 borrowers,€3bn loans linked to 392 properties.It’s as if there was no CAG report
During Leader’s Questions on Tuesday, led by Richard Bruton, top, Mr Bruton insisted several times – in an exchange with Fianna Fáil leader Mícheál Martin – that there is a member of the Comptroller and Auditor General office ’embedded’ in NAMA.
Micheál Martin: “I am sure the Minister, Deputy Bruton, will agree at this stage there has been enormous concern about the sale of NAMA’s Northern Ireland loan book to Cerberus Capital Management. This was raised in the Dáil last week by Deputy Mick Wallace, who raised serious concerns and made serious allegations. We know BBC Northern Ireland has carried out an extensive investigation in a programme yet to be aired, but some of its people have already spoken about it. Many statements have been publicly made by key stakeholders involved, and various leading politicians have denied any involvement whatsoever. I am minded of the remarks made by the Minister, Deputy Michael Noonan, to the Joint Oireachtas Committee on Finance, Public Expenditure and Reform in April 2014. He asked the agency to conduct a review with a view to accelerating the sale of its loan book and bundling properties together. He stated: “I have asked [NAMA] if they have any suggestions on how we could work that and would it be possible to use it as a brake on the market.” By this, he was asking what would be the consequences at the end of 2015 of taking the residual NAMA book and doing what IBRC did to its residual book in selling it off in a six-month period. One might now argue that one of the consequences was the kind of deal done with Project Eagle, where the entire Northern Ireland property portfolio of NAMA was put into one bundle and sold at a loss of around €200 million to NAMA and a discount of approximately 72%. We now know that, essentially, £7 million ended up in an Isle of Man bank account. That is not contested. We know the money was in an account controlled by a former managing partner of Belfast law firm Tughans, which acted indirectly for Cerberus, the US investment firm that bought the loan book. We know Pimco, another large US firm, withdrew from a tender process for the same loan book, citing concerns about an unsolicited approach from a number of individuals.”
Ceann Comhairle: “A question, please.”
Martin: “It notified NAMA about the unsolicited attention and, as part of its due diligence process, pulled out because of concerns that it had. NAMA has confirmed that Pimco’s compliance staff discovered that its proposed fee arrangement with US law firm Brown Rudnick also included the payment of fees to Tughans and a former external member of NAMA’s Northern Ireland advisory committee. This is in the public domain and I am not naming any names. Tughans has now stated that a former partner diverted the professional fees into an account without the knowledge of other partners. Suffice it to say that this is very serious and profound stuff that goes to the very heart of whether a proper deal was done on behalf of the taxpayer. I acknowledge that we have had many different commissions of investigation established but, given the gravity of what has been alleged and what we already know publicly or NAMA has confirmed, a commission of investigation is urgently required to investigate this entire episode involving the sale of the Northern Ireland loan book to the company concerned. Has the Government made a decision to set up such a commission of investigation?”
Richard Bruton: “I thank the Deputy for his question. First, it is important to say that NAMA has a very clear public mandate to deliver best value and in that role it is very actively overseen by the Oireachtas. There is an embedded member of the Comptroller and Auditor General’s office working with NAMA, it conducts regular audits and representatives come to the Committee of Public Accounts on a quarterly basis with information. I understand NAMA representatives will be before the Committee of Public Accounts this Thursday, and there will be an opportunity for members of that important committee of the House to question those representatives on the way NAMA manages its affairs.”
“The issues raised and which are a cause of public concern regarding the destination of a fee are an entirely different matter. It is important to understand the way in which NAMA dealt with this. When it heard there was interest in the loan book, NAMA insisted there would be a competitive process and one of the companies involved, as the Deputy knows, was Pimco. It indicated that its compliance staff had uncovered a proposed fee arrangement and when this came to the attention of NAMA, it decided that if Pimco did not withdraw from the sale, NAMA could not permit it to remain in the sales process. On foot of that, Pimco withdrew from the sale. NAMA also sought assurances, I understand, in respect of the successful bidder in this project that there was no such arrangement in place. It received such assurances.”
“NAMA has discharged its business in a very thorough way. The issues raised by the Deputy in respect of the decisions made by the NAMA board on whether to sell loans individually or in a bundle are a legitimate matter for questioning at the Committee of Public Accounts. The representative of the Comptroller and Auditor General would have been across that decision at all stages and would have been involved with the auditing of the decision as it was made. This information on how the business was conducted is available to the Comptroller and Auditor General and it would be available to the Committee of Public Accounts. NAMA’s representatives will be before the committee on Thursday.”
Martin: “That is not a satisfactory answer in any shape or form. This is not about a routine appearance before the Committee of Public Accounts and it is not the subject of a routine audit. The timeline is very important. The fee arrangement mentioned by the Minister necessitated the withdrawal of Pimco was brought to the attention of NAMA by Pimco, by the way. No auditor or anybody else discovered that. Representatives of Pimco went to NAMA and indicated that its compliance personnel were very concerned about the unsolicited approaches, the nature of those approaches and the fee arrangements. Within a month, NAMA sold the package to another major investment company, Cerberus, apparently with a similar fee arrangement process in place and with the diversion of up to £7 million into an Isle of Man bank account.”
“It is glaringly obvious that this demands a very serious, independent and objective inquiry, with compellability, into the specifics of this issue. Very serious allegations have been made about what transpired and there are many unanswered questions. This is entirely unsatisfactory. This concerns the largest property sale ever on the island of Ireland, with 850 properties being bundled together and many intermediaries involved. A person was allegedly operating in a discrete office within the Tughans building and people who served on the Northern Ireland advisory committee of NAMA were involved with this issue. That is very serious and I do not buy the line that NAMA just accepted assurances, with that being the end of the matter. It is not the end of the matter. Just as with previous occasions, the Government has been slow to come to the mark on issues like this. I put it to the Minister that the Government must review its response to the issue and establish a commission of investigation to get to the truth.”
Bruton: “It is important to point out to the Deputy that the fee arrangement to which he refers did not involve NAMA in any way.”
Martin: “I did not say it did. Nobody is saying that.”
Bruton: “These fee arrangements were on the side of the buyer and not the seller of the loans. NAMA was not involved in any way and no payment was made by NAMA in any respect of these fees. That was not the case.”
Martin: “Do not look to answer questions that were not asked.”
Bruton: “The issue of how NAMA conducted its business is very clear. That has been overseen and supervised by the Committee of Public Accounts and the Comptroller and Auditor General has somebody embedded in NAMA. NAMA’s board is appointed by the Oireachtas to get best value and to have this level of Oireachtas oversight. We have a unique level of Oireachtas oversight with respect to this body and the opportunities are there for Members to raise issues at the Committee of Public Accounts, where they have the support of the Comptroller and Auditor General, an expert in forensic accounting advice who is the auditor to NAMA and who will have gone through these issues. Thursday’s meeting offers an opportunity to deal with the NAMA involvement. There are clearly other issues regarding fees paid on the other side of the trade and they are of public concern. I understand the Northern Ireland Assembly is investigating those, as is the Law Society, with respect to the solicitor involved. There are investigations of those matters under way.”