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AN COISTE UM CHUNTAIS PHOIBLÍ
COMMITTEE OF PUBLIC ACCOUNTS
Déardaoin, 24 Mean Fómhair 2015.
Thursday, 24 September 2015.
The Committee met at 10:00
MEMBERS PRESENT:
  Deputy Áine Collins, |
Deputy Robert Dowds, |
| Deputy Paul J. Connaughton, |
Deputy Patrick O'Donovan, |
| Deputy Joe Costello, |
Deputy John Perry, |
| Deputy John Deasy, |
Deputy Shane Ross. |
DEPUTY JOHN MCGUINNESS IN THE CHAIR.
Mr. Seamus McCarthy (An tArd Reachtaire Cuntas agus Ciste) called and examined.
Business of Committee
Chairman: The minutes of the meeting of 9 July 2015 have been circulated. Are the minutes agreed? Agreed. Are there any matters arising from the minutes? No.
We will now deal with correspondence from Accounting Officers and Ministers. No. 3A.1 is correspondence dated 10 July 2015, received from Mr. John McCarthy, Secretary General of the Department of Environment, Community and Local Government. It is a follow-up from our meeting of 25 June 2015 and is to be noted and published. No. 3A.2 is correspondence dated 14 July 2015, received from the HSE. Again, it is a follow-up from our meeting on 23 April 2015 and is to be noted and published. No. 3A.3 is correspondence dated 15 July 2015, received from the HSE. It is a follow-up to our meeting on 23 April 2015 and is to be noted and published.
Item No. 3A.4 is correspondence dated 20 July 2015, received from NAMA. It is a follow-up from our meeting of 9 July 2015 and is to be noted and published. We can deal with this issue next week. No. 3A.5 is correspondence dated 20 July 2015, received from Mr. Daithí McKay MLA, Chairperson of the Committee for Finance and Personnel of the Northern Ireland Assembly, regarding a letter to the Minister for Finance, Deputy Michael Noonan, about the sale of NAMA assets in Northern Ireland. This is to be noted and published. The financial statements of NAMA will be examined next week and this issue can be raised then.
Item No. 3A.6 is correspondence dated 27 July 2015, received from Mr. Niall Cody, Chairman of the Revenue Commissioners, which is a follow-up to our meeting of 2 July 2015. It is to be noted and published. No. 3A.7 is correspondence dated 28 July 2015, received from Mr. John McCarthy, Secretary General of the Department of Environment, Community and Local Government. It is a follow-up to our meeting on 25 June 2015 in regard to Irish Water and is to be noted and published. No. 3A.8 is correspondence dated 1 September 2015, received from Mr. Ted Owens, CEO of Cork Education and Training Board, with further information from our meeting on 9 July 2015, and is to be noted and published.
Item No. 3A.9 is correspondence dated 4 September 2015, received from NAMA. It is a follow-up from our meeting on 9 July 2015 and is to be noted and published. Again, this can be dealt with at our meeting next week. No. 3A10 is correspondence dated 10 September 2015, received from Mr. Aidan O’Driscoll, Secretary General of the Department of Agriculture, Food and the Marine. It is a follow-up from our meeting on 18 June 2015 and is to be noted and published. We will correspond with the individuals concerned. The committee is still awaiting extensive information in respect of the untruths we were told by the seven members of the delegation that we met in May this year. We asked at our meeting with the Secretary General that he provide us with a line-by-line rebuttal of what he sees as the inaccuracies or untruths in those statements, but we have not received that to date. That is disappointing, because we emphasised that leaving what he said on the public record is unsatisfactory. I suggest we write again to remind the Secretary General that this information is required urgently.
Deputy John Deasy: Specifically, we discussed with the Secretary General the case of Tom Galvin. The Secretary General gave an undertaking at the committee hearing that Tom Galvin's case would be reviewed by the new steering group. That has occurred. About six weeks ago, Tom Galvin met the new steering group and spoke to its members for an hour or two. The only issue arising from that is what the process will be from here. I have contacted the Secretary General's office since then to find out the timeframe with regard to a decision in this case. It would be useful if this committee could follow up on that also. With regard to the follow-up from our committee hearing, the Department has taken some steps. I believe is taking that specific case seriously and has acted on it. The Secretary General has honoured the commitment he gave at this committee's hearing.
Chairman: Okay. However, in regard to the overall thrust of that meeting and the evidence given by the various individuals who came before us, he has not come back to us with the reply we requested. Therefore, in writing to the Secretary General on that, we will include the request to set down a timeframe in regard to the particular case Deputy Deasy has mentioned.
No. 3A.11 is correspondence dated 16 September 2015, received from Mr. Seán Ó Foghlú, Secretary General of the Department of Education and Skills. It is a follow-up to our meeting on 9 July 2015 and is to be noted and published. No. 3A.12 is correspondence dated 22 September 2015, received from the Comptroller and Auditor General. It is a follow-up from our meeting on 2 July 2015 regarding the amount of money collected by families who had availed of the Fair Deal scheme and it is to be noted and published. Deputy Perry raised this particular issue.
We move on now to individual correspondence. No. 3B.1 is correspondence dated 6 June 2015 from Mr. Gerard O’Leary, director of the Office of Environmental Enforcement, regarding a reply regarding correspondence from Mr. Philip Cantwell. This correspondence is to be noted and published and forwarded to Mr. Philip Cantwell. No. 3B.2 is correspondence dated 15 July 2015 from Councillor Kenneth O’Flynn regarding chairmanships of strategic policy councils. This is to be noted and forwarded to the Department of the Environment, Community and Local Government for a note on the issues raised. This is a matter for the local authorities to deal with, but in sending on the correspondence I will ask them to provide us with a detailed response to the queries raised so that we can communicate that to Councillor Flynn.
No. 3B.3 is correspondence received from an anonymous source regarding the lack of governance and management at Institute of Technology Tallaght. This is to be noted and forwarded to the HEA for a note. That matter can be raised today, can it?
Clerk to the Committee: Yes, absolutely.
Chairman: No. 3B.4 is correspondence dated 20 July 2015 from Mr. Colum Browne regarding fishing rights. It is to be noted and forwarded to the Department of Agriculture, Food and the Marine for a note on the issue. No. 3B.5 is correspondence dated 7 August 2015 from Mr. Thomas McKeon, Dublin North Business and Cultural Community, concerning objections to Swiftway Bus rapid transit proposals. This is to be noted and forwarded to the National Transport Authority for a note on the issues raised. No. 3B.6 is correspondence dated 28 August 2015 from Ms. Clare McGrath, chairman of the Office of Public Works. This regards lease acquisition processes by the OPW and is to be noted and forwarded to Mr. John Corcoran, who raised the issue.
No. 3B.7 is correspondence dated 18 August 2015 from Mr. Ronnie Owens regarding the lease of premises at Climber Hall, Kells, by the North Meath Community Development Association. This is to be forwarded to the HSE for a note on the matter. The clerk has circulated a note on this case, given its complexity. It relates to the application of a discount on a property leased by the HSE. We will ask for further details and the matter can be raised with the HSE when it next comes before the committee.
No. 3B.8 is correspondence dated 1 September 2015 from Mr. Michael Donnellan, director general of the Irish Prison Service, regarding compensation payments in the Irish Prison Service, and is to be noted and published. The matter arose from an anonymous allegation. How are we going to deal with it?
Clerk to the Committee: The Irish Prison Service will come before the committee in a few weeks' time.
Chairman: Can we forward the correspondence to the Irish Prison Service?
Clerk to the Committee: It has come from the Irish Prison Service.
Chairman: The issue arose following an anonymous allegation, so we can deal with it in more detail when the Irish Prison Service comes before us.
Clerk to the Committee: Yes, absolutely.
Chairman: Have we received other anonymous information or letters in regard to similar information?
Clerk to the Committee: Yes; further information came in after that.
Chairman: No. 3B.9 is correspondence dated 14 September 2015 from Mr. Seán Ó Foghlú, Secretary General of the Department of Education and Skills, regarding Cork Institute of Technology. It is to be noted, and the matter can be taken up at today’s meeting. Is this the report?
Clerk to the Committee: No, just a general letter.
Chairman: We will move now to documents related to today's meeting. Nos. 3C.1 to 3C.5 are briefing documents and all of them are to be noted and published. They concern reports, statements and accounts received since our meeting of 9 July 2015. There are 60 accounts to be noted today. Some of these have notes raising concerns about the accounts. They are listed in the documents and are numbered from 4.1 to 4.60.
The National Paediatric Hospital Development Board is coming in on 8 October. The remainder of the bodies listed on that page down to No. 4.8 are clear audits. No. 4.9 is a procurement issue relating to the Road Safety Authority. The next one is Dublin City University. Perhaps Mr. McCarthy would explain that one?
Mr. Seamus McCarthy: Yes. The audit certificate draws attention to non-consolidation of the financial statements of Dublin City University Education Trust. I point out that the trust had accumulated reserves of €15.4 million that are not recognised in the financial position of the university.
Chairman: Is that similar to other university cases?
Mr. Seamus McCarthy: Yes, Galway was another case and St. Patrick's.
Chairman: No. 4.13 relates to the Financial Services Ombudsman Bureau.
Mr. Seamus McCarthy: Yes. It is not applying the pension liability recognition because there is a question over implementing the legislation in relation to the pension and who would be carrying the pension liability.
Chairman: We have a number of accounts from Inland Fisheries Ireland. We have accounts for four years, from 2010.
Mr. Seamus McCarthy: That is right.
Chairman: Why has it taken it so long to submit accounts?
Mr. Seamus McCarthy: Inland Fisheries Ireland was established in 2010. That was its first year of operation, amalgamating the regional fisheries boards. The first year's financial statements using the old accounting system were certified in December 2011 but for some reason they were not presented to the Oireachtas. In 2011, there was considerable difficulty in Inland Fisheries Ireland presenting a set of financial statements for audit. When the difficulties were eventually resolved, we were then able to proceed with the accounts for 2012 and 2013. The 2014 audit is ongoing.
Chairman: We have agreed to bring in Inland Fisheries Ireland.
Mr. Seamus McCarthy: That is right. It is on the schedule.
Chairman: I will move on to No. 4.22 then, which is Fáilte Ireland.
Mr. Seamus McCarthy: It is Fáilte Ireland. The financial statements recognise the pension liabilities that arise in relation to the staff of Fáilte Ireland. They also recognise a deferred funding asset, a matching asset, in relation to two of the schemes - the closed schemes - which were previously funded schemes. If the Chairman recalls, around 2009 there was legislation to transfer the funds in the funded schemes to the Exchequer. As a result, there is a statutory guarantee that the liabilities in relation to those schemes will be met. They are recognising a matching asset in relation to that, but those schemes are closed. More recent staff are in what one calls a pay-as-you-go pension scheme. There is not a similar statutory guarantee in relation to the payment of pensions in that case. With most public sector bodies, where they are accounting for pension liabilities, there is a practice that they recognise a matching asset in the expectation that the State will honour the liabilities as they arise in the future. Fáilte Ireland has chosen not to do that, notwithstanding the general practice, so I am just drawing attention to the fact.
Deputy Shane Ross: Why has it chosen not to do that?
Mr. Seamus McCarthy: Its argument is because it does not have a cast-iron guarantee that the pensions will be paid and therefore it would be incorrect for it to recognise a pension asset.
Deputy Shane Ross: Is that out of line with what the others do?
Mr. Seamus McCarthy: Yes, it is.
Deputy Shane Ross: It is quite a difference, is it not?
Mr. Seamus McCarthy: It is, yes. We are into a question of interpretation of the accounting standards in relation to a contingent asset.
Deputy Shane Ross: Okay.
Chairman: No. 4.25 is Waterford Institute of Technology.
Mr. Seamus McCarthy: These are the financial statements for the academic year 2012 to 2013. Again, there have been delays. There were difficulties in getting the audit completed and in presenting the opinion I have drawn attention to a number of matters. The first is that deficits have been incurred by the institute for a number of consecutive years so there is a funding difficulty there. Second, there were a number of governance issues. The review of the effectiveness of the system of controls was not carried out in respect of the year ended 31 August 2013, and also the institute's audit committee did not issue an annual report, which would normally be expected in respect of the 2012 to 2013 year. It was unable to do that until September 2014 because of concerns it had about the timely provision of key information to allow the institute to present the report.
There was also a question of expenditure to a value of €524,000, which was identified, where procurement rules were not complied with. The final point relates to the restructuring and consolidation of the results of the companies that were established to provide campus services. That resulted in the financial statements for 2012 to 2013 being based on draft financial results only for those companies. The audits had not been completed. I understand now that the companies have become part of the Waterford Institute of Technology group and that for the year 2013 to 2014 they will be consolidating the results, so that will allow us to get a clearer picture of what is the financial situation in relation to Waterford Institute of Technology.
Chairman: All right.
Deputy John Deasy: Representatives of the HEA are in today. Michael Kelly will be in but he will be talking about happens now with regard to WIT. The obvious question based on what the Comptroller and Auditor General has just read out is what role the HEA has with regard to governance when it comes to Waterford Institute of Technology. When he continually points out those things and reports on them, does he register and communicate that to the HEA and does he ask for a response with regard to the governance issues? Very basic and fundamental financial auditing issues continually arise. Is that something the office does on a continual basis with the HEA because it seems to be a recurring theme?
Mr. Seamus McCarthy: Obviously the audits are difficult.
Deputy Joe Costello: I wish to add to the point. At one of our previous meetings we decided we would have an overview of all of those bodies in which significant issues relating to governance and compliance arose with the auditing codes and that we would look at the broad range of public bodies to see if there is a pattern and how it could be addressed. Mr. McCarthy's office was to do some background work to examine the matter because it is a recurring item all the time.
Mr. Seamus McCarthy: I will deal with Deputy Deasy's points first. The issues to which we have drawn attention in the audit certificate are effectively given to the college and it must present them to the HEA. This is a way of communicating with the HEA. Separately from that, we have quarterly meetings now with the HEA, so if there is a recurring issue or specific issues in relation to an individual institution we raise them with the HEA and ask what it can do to assist in resolving the matter. If anything specifically arose on an audit that was of urgent concern, we would also phone the HEA and discuss the matter with it immediately. We have contact and discussions with the HEA on matters relating to individual institutions as we bring an audit to a conclusion in order that we are satisfied. If there are matters in the financial statements on which the HEA should have provided a sanction there is a discussion around that and it can choose to sanction the institution, as the case may be. If there is expenditure without sanction we would draw attention to that. There is regular contact with the HEA on both specific matters and sectoral issues that arise.
Deputy Robert Dowds: The Comptroller and Auditor General referred to sanction. What type of sanction would be applied?
Mr. Seamus McCarthy: When we talk about sanction, we are talking about approval. It is not a sanction in the sense of being a penalty. The Department of Public Expenditure and Reform has to sanction all expenditure or give a delegated sanction to Departments to allow them to spend moneys. The same applies to the HEA in respect of certain transactions of colleges.
Going back to the more general issue, when the committee met with the HEA previously, there was a series of issues that were of concern to the committee. I indicated at that stage that we would carry out a review of the governance practice of the HEA relating to the colleges - looking at the scope of the codes, compliance with the codes and what their response would be to any infringements of the codes. That examination is under way and a report will be prepared shortly. We will go through the usual round and it will be published as a special report in due course.
Deputy Joe Costello: Did we not discuss on a broader basis the fact that the code of practice is not being complied with not only by many State bodies related to education but also in the health area, including by the HSE, that these are recurring items, and how we can address the broader issue of infringement of procurement rules that seems to be the recurring matter in all of these cases?
Mr. Seamus McCarthy: We discussed drawing the picture together in respect of public procurement. The liaison officer prepared a note and presented it at one of the last meetings of the previous session.
Deputy Joe Costello: Could the Comptroller and Auditor General circulate it?
Mr. Seamus McCarthy: Yes, we can circulate it. That looked specifically at procurement.
Deputy Robert Dowds: Will the issues relating to the National College of Art and Design be included? There are quite a number of issues to be sorted out.
Mr. Seamus McCarthy: The focus should be on the HEA's role when difficulties arise rather on the difficulties that arise relating to individual colleges. It becomes more complex if one is trying to get detail from 30 institutions. The detail muddies the water in that situation. The focus of the report we are preparing concerns the framework the HEA put in place in respect of the governance and oversight of colleges. The audit certification and reporting by my office is the system for monitoring the implementation of it. The question then arises as to how the HEA follows up on issues brought to its attention or how it routinely takes the financial statements and analyses them.
In the case of Waterford Institute of Technology, I have referred to deficits being incurred in a number of years. That is not the only institute of technology where there is a deficit problem at the moment. The question arises as to what the response is when one sees a trend in a particular sector.
Deputy John Deasy: When does the Comptroller and Auditor General think that report will be finalised?
Mr. Seamus McCarthy: I expect to have a draft report towards the end of the year. Obviously, we then have a clearance process, so it will be early in the new year.
Deputy John Deasy: Will the Comptroller and Auditor General deal with the legacy and historical issues that have arisen over the past three or four years specifically relating to Waterford? Will he scrutinise the different issues that have arisen and that have been aired at this committee? I will explain why I am asking him this. I met with Kieran Byrne, the former president of Waterford Institute of Technology. The blame for a lot of these issues landed on his doorstep. Having looked at it, I am not so sure this is fair. I am beginning to think, and the committee has discussed it as well, that the governance side of things in respect of the HEA needs to be looked at historically as well. How it performed in those years and the kind of scrutiny and oversight it gave Waterford Institute of Technology needs to be looked at very carefully. I believe there may be an unfairness with regard to how Kieran Byrne was dealt with ultimately, but I think those legacy issues should be looked at by the Office of the Comptroller and Auditor General.
Mr. Seamus McCarthy: I will certainly consider that in the context of the report. I was concerned with looking at how it operates now and what systems and procedures it has in place looking back on the 2013 and 2014 years of account.
Deputy John Deasy: I think he deserves that. The reputational damage he suffered because of what happened in Waterford Institute of Technology was immense. I ask the Comptroller and Auditor General to look at those issues and the role played by the HEA, its responsibilities at the time and whether it carried those out.
Mr. Seamus McCarthy: Much of that relationship would have been considered by the Quigley report, if my memory serves me.
Deputy John Deasy: It was, but it would be helpful if the Comptroller and Auditor General took a look at it.
Mr. Seamus McCarthy: I will certainly have a look at the Quigley report and see if he has covered the ground. I would be reluctant to go into examining the same ground.
Deputy John Deasy: I am not so sure the Quigley report looked at some of that material in a sufficiently in-depth fashion.
Chairman: I support what Deputy Deasy said, particularly in respect of Professor Byrne and the Quigley report. While it may be worth the Comptroller and Auditor General's while to look at it, it is also something the committee needs to look at, because it was at a public hearing of this committee that, if one wants to measure the reputational damage to Professor Byrne, many of the comments came about - not so much from members but the fact that it may now appear that we did not get the full information. In respect of today's meeting, it might be no harm to ask the HEA about its role in it, if members wish to do so. It is open to members, if they wish, to query any aspect of it with the HEA, and today is an ideal day to do so in some respects.
Deputy Patrick O'Donovan: I will follow on from what Deputy Dowds said about governance, specifically the National College of Art and Design, from the time its representatives were here. The response from the HEA at that stage was wholly inadequate. I know this issue may have been raised directly with the Chairman over the summer, but serious allegations were raised locally in Limerick about the University of Limerick during the summer. I know the HEA will probably not have the answers that we are requesting today, but is there some mechanism we can use as a committee to deal with the allegations raised in the media about the University of Limerick? Staff were allegedly offered upwards of €60,000 to leave the university on foot of allegations that were being made. Regardless of whether they are true, those allegations have caused a lot of concern in respect of the University of Limerick. It goes back to what Deputy Dowds said. The HEA came in here to talk about the National College of Art and Design and gave an appalling performance in respect of its so-called oversight. Will there be any remedy for individual issues such as this, or is it up to us to invite the individual institution to come before the committee and answer questions?
Chairman: In respect of the University of Limerick, the HEA will appear before us today. These matters are relevant and can be raised. I suggest that the Deputy seek the answers there first. After that, I agree with him that there is a need to follow through on some of the issues that have been raised with the agencies about which he speaks to determine what action has been taken, what remedies have been put in place and so on. Perhaps we need to have a general review of some of the issues that were raised and the recommendations we made, see what progress was made on each of them and then report back to the committee.
We will move on to St. James's Hospital. Before the Comptroller and Auditor General comments, the last time this matter came to light through the Comptroller and Auditor General's audit was in respect of the HSE itself, where €9 million had to be set aside to deal with compensation arising from late payment of accounts.
It appears that in this case, which is to do with St. James's Hospital, an additional €389,000 was charged to the income account to recognise the expected cost of compensation due to suppliers since the introduction of the legislation in 2013. In the Beaumont accounts, there is a further €200,000 in interest and compensation. Someone needs to get to grips with the management of the Health Service Executive, HSE, because the level of incompetence I see at these committee hearings is such that no private business could be conducted in the manner in which the executive conducts its business. This has nothing to do with the front-line services but pertains to middle management up to the senior levels. Action must be taken regarding the HSE and some structure must be put in place to transform it into a meaningful organisation that recognises the legislation Members pass in this House. My understanding of the €9 million that had to be set aside by the HSE for compensation with regard to late payments to small businesses that supplied it was it was necessary for the Comptroller and Auditor General to prove to the HSE that it was in breach of legislation. If the executive does not understand legislation, I wonder what kind of management team it has. Members can now see the same issues arising in St. James's and Beaumont Hospitals and this goes back to the concerns expressed regarding the educational sector. What sanctions can be taken against organisations like that, which appear to disregard legislation or, even worse, have no knowledge of the legislation? Private businesses are expected to have that knowledge and in this case, the suppliers to the HSE, which presumably are small businesses, all are being penalised by the late payments being made by the HSE and now by the hospitals.
Mr. Seamus McCarthy: I might just inform the committee that next week, in the report on the accounts of the public services for 2014, I will have a chapter which deals with this issue across the HSE and in the two hospitals that I audit. It does deal with the background to it and the response to the legislation.
Chairman: To put it in context, each member present can think of projects in his or her constituency - I can think of one in County Carlow that would cost €320,000 to deliver - which are being refused the capital support to do that, yet compensation in one hospital was €389,000, in a second hospital it was €200,000, and for the HSE it was €9 million. How many projects nationwide, which could benefit service users or patients, could be put in place were that money not spent in the way it is being spent? It simply is so wrong, and while this committee does not have a role in policy matters, I venture to state the Minister should take note of this because it is an organisation that simply is not capable of providing the efficiency in the expenditure of public money that I seek.
Deputy Patrick O'Donovan: In support of the Chairman's remarks, two reports were issued in the summer while the Dáil was in recess on consumables within the HSE. I refer to consumable products within a scheduled list of hospitals that had spiralled out of control with no proper tendering or proper procurement. Another issue was raised, again in the summer, on the maintenance of prescription charges. Allegedly, there was neither governance nor oversight, as well as a massive black hole of wasted money. If the HSE is to appear before the committee in the near future, the Comptroller and Auditor General may be able to tell members whether the two issues raised in the summer are included in the report he is examining.
Mr. Seamus McCarthy: While I am not familiar with the first issue mentioned by the Deputy, I do recall the second one. As it happens, we have a report on the control over the supply of high-tech drugs and medicines, which is through community pharmacies. Consequently, there will be an opportunity to discuss that and certainly to raise that second issue. More generally over the years, we have repeatedly raised concerns in respect of procurement in the HSE. It is constant. There is a significant systemic problem and last year we produced a report on that, which was discussed. It raised issues about not tendering and other matters related to procurement. There is a limit to what we can do. The only option we have is to keep reporting it until change happens.
Chairman: Mr. McCarthy, you suggest it is systemic issue. That is a system failure but behind a system failure, is there not a person, an individual or a manager? Therefore, it is not a system failure but a failure of management. I refer to when one has a manager who understands the procurement process - and Mr. Watt constantly explains to the committee through his Department how significant it is and how much in savings can be made from the new procurement processes - yet it oversees an agency such as the HSE that is squandering money and is ignoring procurement processes and nobody appears to take action to stop it. In this collection of accounts before the committee this morning, because there are so many of them, members can see poor value for taxpayers' money, systems being abandoned and procurement by and large being abandoned. They can see a huge amount of money being wasted in the education sector. They see agencies that now are providing the committee with accounts over a four-year period. Another agency that is providing accounts over a four-year period is, I believe, the one responsible for the development of a technical university in Dublin. How competent are they or what is going wrong that those who are in charge are not doing their jobs to ensure there is value for money and the systems that are in place work? The question for the Committee of Public Accounts and for Mr. McCarthy's own office is, having highlighted these issues, how far we can go to ensure proper governance of the State's expenditure is put in place and is properly policed. Incidentally, it should be stated that in all those cases, no one will lose his or her job. No sanction will be taken against any individual who has breached any of this stuff and we never hear of a case in which it was Mr. or Mrs. so-and-so who bypassed the regulations, did not do it properly and who has been sanctioned. They would be, were this in the private sector, but the only sanction I have ever seen here is one gets promoted when something happens or one is sidelined into the grey area but no sanction is taken against one. Until that happens, nothing else will change.
Mr. Seamus McCarthy: Could I make a point in general? When I say something is systemic, I do not mean to diminish it or to make it sound like it is not important or significant. When I say it is a systemic problem, it is a huge problem in an organisation. It is different to when an individual manager makes a mistake or chooses to go around the rules and, let us say, on an exceptional basis does not apply the procurement rules. To me, that can occur in any organisation and in most cases in which I would draw attention to non-compliance with procurement rules, it perhaps is more the exception than the systemic practice in the organisation. I did draw attention and we refer to in the report to systemic non-procurement in the case of the National College of Art and Design, NCAD, since we have mentioned it already. There was a similar issue in Bord na gCon where practically nothing was tendered in particular years that we examined. That is the distinction.
Chairman: Is that not shocking?
Mr. Seamus McCarthy: That is why I draw it to the committee's attention but I am limited in what I can do.
Chairman: Does no one else feel the shock in the system? For example, in Volkswagen, Mr. so-and-so who is on a huge salary now has a huge problem. As this huge problem has hit his company, he resigns. Here we are in the public sector with this huge problem and systemic failure and the person who is on the huge salary will not resign.
Perhaps that is what it has come to but that is a policy matter.
Deputy Joe Costello: The point the Chairman is making is very relevant because the issue of procurement and compliance is really the bane of our lives at the Committee of Public Accounts. While I am a relatively new member of the committee, I am aware that it continually raises its head. It is an issue of how public money is spent and that is the main requirement. Public officials should be held to account if they are in breach of the code of practice or the rules of compliance. In the case of the 1930 legislation, they are now compulsorily bound in respect of compensation. There is €9 million from the HSE in silent compensation alone, not to mention the individual amounts paid by hospitals and so on. That issue of no sanction arises again and again. On the other side of the equation is the impact on suppliers. They are the lifeblood of the economy and if they are not paid, how will they remain in existence? There is a double whammy: the fact that public money is being misspent and that there is an adverse effect on the economy. It is something we have to get to grips with and have some direct mechanism for stamping it out. The sooner we get that report on procurement and develop an overall policy that has teeth in terms of sanctions, the better. I am aware one was circulated but also require one on compliance in the context of what the Chairman mentioned earlier. Otherwise, this will keep coming up and we will keep addressing it and be frustrated. There must be something of a showdown at this committee-----
Deputy John Deasy: A showdown?
Deputy Joe Costello: Yes, exactly, with public procurement, right across the board. When we carry out that analysis of the public sector where there are individual failures - and they have been identified at virtually every meeting we have held - some policy has to be recommended to the Government to adopt on this matter.
Chairman: There is a triple whammy because there is another one here, Tusla, where, in the context of procurement, not only did it have to spend €210,000 in compensation for late payment in respect of 2013 but there was also a €1.6 million error in the procurement process. The organisation got it wrong and it cost €1.6 million so that is €1.6 million straight down the drain. No value for money whatsoever.
Mr. Seamus McCarthy: That is actually different. That is where it spent €1.6 million on goods and services but did not procure them in line with guidelines.
Chairman: So it does not know whether it got the same thing again, so it is a third.
Deputy John Deasy: I do not think anyone can contradict or disagree with the Chairman’s point because we deal with it so often at this committee and have done so for the past few years. It is incontrovertible, a recurring theme, etc. There is an issue that has arisen which we should consider. Deputy Costello asked what we should do about it. Beyond the procurement issue, some of these organisations - and the HSE is definitely one of them - commission reports that never see the light of day. In many cases the reports deal with management issues and decisions that were taken by the very people who commission those reports. They redact them and bury them. In the interests of the public good, somebody needs to examine the policy of these reports and whether an independent pair of eyes should be allowed to make the decision as to whether they are published and what material should or should not be redacted. Then we will have accountability.
Some of these Government agencies and entities do it as a matter of course when a really hard-hitting and serious issue arises with regard to bad decisions at management level. They commission these reports and satisfy themselves that they have done their job and considered it after the fact and these reports never see the light of day. I do not know if the Minister for Health, the Secretary General or senior officials in the Department obtain sight of the HSE reports. At this point, it is a step that should be considered because I do not think the public is well served or that there is value for money with regard to the money spent on these reports, particularly when one considers the serious issues with which they deal.
It is a recurring theme. Deputy Costello asked what do we do policy-wise. That is a step we should consider and see what step we can take with regard to the commissioning of these reports and their ultimate publication, and whether the public is getting value for money with regard to what is being spent on these reports. Considering the serious issues we have dealt with here in the past year, it is a reasonable step to take.
Chairman: Is that across every Department?
Deputy John Deasy: We should start with the HSE. The obvious examples arise within the HSE. I have been dealing with this for probably 12 or 13 years. There have been very serious issues dating back that long and reports have never seen the light of day. My suspicion is that in some cases they are not published to protect individuals within those agencies, the decisions they took or the inaction within those organisations. It is an obvious and fundamental step with regard to improving government and accountability when it comes to our system of government and the money the public expects us to have oversight of.
Deputy Robert Dowds: On this issue, I do not want to speak for the Minister for Public Expenditure and Reform but from listening to him talk on many occasions about divvying up money between Departments, my impression is that the health sector is the one where it is most difficult to feel that extra money will go to some useful purpose. It is an area we should focus on. It may seem odd for a Labour Party Deputy to say this but I think if people are not doing their job they should be sacked. That has to become part of the public service as well. It would not be my first port of call but if somebody is not doing his or her job or is covering up something that should not be covered up, that sanction has to be there.
Deputy Joe Costello: Department of Health officials will be here next month. Can we put that matter on the agenda for our meeting with them?
Chairman: We can indeed. Representatives from the Department will be here on 22 October. I asked the question because it also relates to the Department of Education and Skills. We received a report a short time ago about serious allegations against the Cork Institute of Technology, CIT. My understanding was that the report was so heavily redacted that one could not make out any answer to the queries raised by a whistleblower, yet that report cost €98,000, if I am not mistaken. I can check it this morning. No one has had any value out of it and certainly the Committee of Public Accounts has had no value out of it.
Arising from the conversation we have had about the various accounts and procurement and so on, I will ask the clerk to draw together some piece of information so that perhaps we can quickly make a special report on this to the various Ministers and the Department of Public Expenditure and Reform. I welcome Deputy Dowds’ comments about that sanction, which of course is the last port of call but the steps taken leading to that might create a dynamic within an organisation that will make people be a bit more careful.
We have dealt with WIT, St. James’s Hospital, Tusla, Beaumont Hospital, to a degree, and the other accounts. We now move to No. 4.39, the Church of Ireland College of Education.
Mr. Seamus McCarthy: They are fairly minor technical issues that I am drawing to attention.
Chairman: What about Galway VEC?
Mr. Seamus McCarthy: On County Galway VEC, I am drawing attention to vacant premises as a result of amalgamation and movement of the VEC. That is something that has arisen with other VECs.
Chairman: In Cork as well.
Mr. Seamus McCarthy: I think it was Wexford.
Chairman: It was Wexford. We will move on to No. 4.45.
Mr. Seamus McCarthy: I draw attention to the fact that deficits are an issue in a couple of other colleges and deficits have been incurred in Limerick Institute of Technology in each of the past two years. The governing body has considered that it is still appropriate to prepare the financial statements on a going concern basis. Following the amalgamation of Tipperary rural business development institute into Limerick Institute of Technology there are still a number of staff members who are supernumerary and the cumulative salary cost for those staff to date has been €627,000, of which €216,000 was incurred in the year ended 31 August 2014.
Deputy Shane Ross: You describe these staff as "supernumerary". Is that a recognised category or a judgment which you have made?
Mr. Seamus McCarthy: They have an approved level of staffing and these are above that level. In this case they actually have no work.
Deputy Shane Ross: They are doing nothing.
Mr. Seamus McCarthy: They are obviously doing something but they have no formal assignment in the institute.
Deputy Shane Ross: Are they staying at home?
Mr. Seamus McCarthy: To be quite honest, I do not know the detail as I do not have it here.
Deputy Shane Ross: Do you know how many are involved?
Mr. Seamus McCarthy: I think there are three.
Deputy Shane Ross: You speak of the cumulative costs-----
Mr. Seamus McCarthy: It is a small number - three, possibly four.
Deputy Shane Ross: Are they paid an average salary for that?
Mr. Seamus McCarthy: The total salary involved is €216,000.
Deputy Shane Ross: So they are getting €70,000 for doing nothing.
Mr. Seamus McCarthy: I think there are three of them. There could be four.
Deputy Patrick O'Donovan: How long has this been going on?
Mr. Seamus McCarthy: The amalgamation took effect from 1 September 2011 and the aggregate salary for those individuals since then is €620,000.
Deputy Patrick O'Donovan: They have had no jobs since 2011 but are on €72,000 a year and nobody has done anything about it.
Deputy Shane Ross: That is absolutely crackers, is it not? It is just bananas.
Mr. Seamus McCarthy: I do not think they are audit terms, but-----
Deputy Shane Ross: They should be.
Chairman: This fits neatly into the other audits. It is just more of the same.
Deputy Shane Ross: Is this something you have come across elsewhere?
Mr. Seamus McCarthy: I think it is relatively unusual. It does happen where organisations are amalgamated that people become surplus to requirements. Generally, what happens is that they would be transferred to other organisations that could use their skills.
Deputy Patrick O'Donovan: These skills are obviously non-transferable.
Mr. Seamus McCarthy: Generally there would be parameters. One would not require people to move 150 km but it is a policy area you could raise with the Department of Education and Skills.
Deputy Shane Ross: Do you know what age they are?
Mr. Seamus McCarthy: No.
Deputy Shane Ross: Or how long they have to serve until retirement? If these guys are 22 or 23 they could be doing nothing on €70,000 for 40 years.
Mr. Seamus McCarthy: I do not have that level of detail.
Deputy Shane Ross: Could you find out?
Mr. Seamus McCarthy: I am sure we have the information but you could also ask the college. From the point of view of staff confidentiality, I would have to be careful about giving information about the wages of individuals.
Deputy Joe Costello: Would the normal practice not be a redundancy package?
Mr. Seamus McCarthy: That is obviously an option.
Deputy Joe Costello: If somebody has been there for four years now-----
Chairman: We can address it later on.
Mr. Seamus McCarthy: We do have a report in preparation on settlements with staff.
Deputy Robert Dowds: Which institution are we talking about?
Mr. Seamus McCarthy: Limerick Institute of Technology.
Chairman: There might be vacancies after the election for those who are looking. We have now dealt with Limerick.
Mr. Seamus McCarthy: Dundalk Institute of Technology operated deficits in the years ended 2013 and 2014. I also draw attention to a tax settlement with the Revenue Commissioners in the amount of €132,000.
Deputy Shane Ross: What did that relate to?
Mr. Seamus McCarthy: I think they carried out an internal audit of their tax compliance provisions and discovered that they had been underpaying. They approached Revenue, made a declaration and made a settlement.
Deputy Shane Ross: In what area did they underpay? Was it income tax?
Mr. Seamus McCarthy: I do not have that level of detail with me today.
Deputy Joe Costello: Does the first point indicate there is a cloud over the future status of Dundalk IT?
Mr. Seamus McCarthy: In the note to the financial statements they are saying that if this continues at this level then there will be a doubt over its continued existence.
Deputy Joe Costello: There will be a doubt over its ability to continue to operate as an institute.
Mr. Seamus McCarthy: There will be a doubt over its ability to continue to operate as a going concern.
Deputy Joe Costello: That would be a very serious matter.
Chairman: That is another institute that has a question mark over its ability to operate as a going concern.
Mr. Seamus McCarthy: No. Every year the governing body is required to consider its ability to continue to operate as a going concern and it should only present its statements on the basis that it can continue as a going concern, if it believes that to be the case. A number of colleges have raised a concern that, because they have deficit situations, something has to be done to resolve that if they are to continue.
Deputy Joe Costello: We do not know the reasons for the deficit situations. A major reason for companies such as PayPal to locate their substantial workforces there is the graduates from Dundalk IT. It would have a huge impact if there was a question about the future viability of the college and the same would be true of other institutes around the country.
Chairman: The same could be said of Limerick.
Deputy Joe Costello: A lot of our technical and financial institutions and foreign direct investment are located in the vicinity of technological institutions because of the flow of graduates coming through.
Mr. Seamus McCarthy: I am trying to draw attention to the fact that these are in the financial statements and the HEA will be here today. It is for the committee to take up with the HEA.
Deputy John Deasy: There is only so much you can do.
Mr. Seamus McCarthy: I am only here to report.
Chairman: We will move on to the Grangegorman development. Is that a separate agency?
Mr. Seamus McCarthy: It is an agency under the Department of Education and Skills. There seems to have been an oversight, or some confusion, over the submission of financial statements. There are four sets of financial statements, for 2009, 2010, 2012 and 2013. Apparently, the 2011 financial statements were laid yesterday as well. I think what happened is that the financial statements were being sent to the Department but an annual report was also being sent to the Department. The annual reports were laid in the Oireachtas but the financial statements were presumed to be in the annual reports and were not. They have rectified that now and brought it up to date.
Chairman: The last one is No. 4.59-----
Deputy Joe Costello: Grangegorman is the newest of our institutions, our newest campus with the Dublin Institute of Technology being moved there to cater for 24,000 or 25,000 students. Could we put it on the agenda to bring them in to talk about the new location and the operation? Hundreds of millions of euro are being spent on the development and it offers a bright new future but to see where they are going it would be good for the Committee of Public Accounts to have a look at it.
Mr. Seamus McCarthy: It might be useful to bring in DIT as well to get both sides of the story. The DIT agency is a development agency and it is developing estate for the college but the college would have to decant into the premises provided.
Deputy Joe Costello: It was set up under legislation in 2006 so it would come under the Department of Education and Skills.
Chairman: We can do that in the context of our work programme, which is next on our agenda.
Next week we will hear from NAMA. Have we invited members of the Northern Ireland finance committee to attend?
Clerk to the Committee: Yes. They may attend.
Chairman: Can members of this committee receive the transcripts from its meetings in order that they know what went on?
Clerk to the Committee: Yes.
Chairman: We have invited representatives of the Department of Health to attend the following week. Can we agree to have the meeting with NAMA next week and the meeting with the Department of Health the following week? We will look at the schedule after that in terms of what is set.
Deputy Shane Ross: When are we inviting representatives of the Northern Ireland finance committee to attend?
Chairman: We will notify it that the meeting is taking place next week.
Deputy Shane Ross: Are we inviting them to talk to us?
Chairman: We can invite its representatives and meet them afterwards.
Deputy Shane Ross: Next week.
Chairman: We will have a meeting with NAMA next week.
Deputy Shane Ross: That is fine.
Chairman: We can meet them after or before the meeting. I will ask the clerk to make contact with their clerk.
Deputy Shane Ross: Would there be any benefit in asking them to give evidence to us?
Chairman: I am not sure about the protocol, but we can check it.
Deputy Shane Ross: Could we?
Chairman: I will check it out. If what has been proposed can be accommodated, we can do it. Is the work programme agreed to?
Deputy Joe Costello: On the work programme, can we bring in representatives from Grangegorman? Can we manage to fit them in somewhere?
Chairman: Yes. We will perhaps have to move around some of the dates, or have a separate sitting. Is that all right?
Deputy Joe Costello: I thank the Chairman.
Chairman: I have to deal with a bit of farce now, but it is no reflection on the clerk. The Committee on Procedure and Privileges has notified us of an issue that I have been asked to bring to the attention of members. At a meeting on 1 July the Dáil Committee on Procedure and Privileges, CPP, considered the matter of clerks addressing or being asked to address committees during public session. The CPP considered this matter under Standing Order 99(1)(b) as part of its remit to oversee procedures in committees generally. I refer not only to this committee and its clerk but to all committees and clerks. I must inform members that the Dáil CPP decided that clerks should not address or be asked to address committees during public session, apart from in the following circumstances: when taking a vote; in accordance with Standing Order 95; if a quorum is not present 15 minutes after the time appointed for the start of a meeting; and for the election of a Chairman. If members see me tilting a little to the left – I am moving that way politically – it will be to hear what the clerk is saying.
Deputy Joe Costello: Ted can never be a celebrity now.
Chairman: He will not be able to talk to members.
Deputy Shane Ross: Has the Committee on Procedure and Privileges given any reason for the decision?
Chairman: No.
Deputy John Deasy: I would just ignore it and get on with it.
Chairman: That is fair advice. I will hold onto it firmly and hope the clerk will co-operate with us. It is an incredible farce.
We have a draft committee report on the purchase of the Irish Glass Bottle Company site. It will be circulated tomorrow. We have agreed our agenda for the meeting on 1 October 2015. It concerns NAMA's financial statements.
Deputy John Deasy: I was going to raise the issue of senior counsel being appointed in the report on the foster home, an issue we have brought up a number of times. The Chairman has informed me that the appointment has been made.
Chairman: To confirm, a senior counsel has been appointed to look into the matter. However, there is a narrow remit.
Deputy John Deasy: Terms of reference.
Chairman: I understand the remit covers only the issue of procurement, but the committee had asked previously that the remit be expanded to take in other matters. That is still its view which we should reiterate in writing.
Deputy John Deasy: If we could do that, it would be great. We should ask for the timeline involved and how long the senior counsel has.
Chairman: The correspondence that has just come to us refers to a period of four weeks. That has to do with the narrow remit. What we are asking for is a broadening of the remit to take in the issues we addressed. We will ask again that they be addressed.
Deputy John Deasy: The last issue concerns matters arising from a meeting we had in January concerning the air service to the Aran Islands. We dealt with it when the Department's representatives were here. I will not get into the detail too much, but I believe there are issues arising with regard to the construction of the tender that need to be looked at, be it by the Committee of Public Accounts, the Department or the Joint Committee on Transport and Communications. This requires some scrutiny of the competence involved in the Department and the Office of Government Procurement, how those concerned actually constructed the tender and whether they took everything into consideration as they were constructing and engineering the tender process. Serious questions arise from it and we did raise the issue. Deputy Joe Costello raised the issue of landing strips, etc. It is reasonable for us to ask these questions considering what has happened.
Deputy Joe Costello: Regarding our magnum opus on the docklands, the sale of property and the Jeanie Johnston, as raised by Deputy John Deasy, are we any closer to seeing the light of day?
Chairman: There is to be a draft report tomorrow.
Deputy Joe Costello: That is very good. I agree entirely with what Deputy John Deasy said.
Chairman: On the details raised by Deputy John Deasy, we can first seek a note to inform members and receive some background information. We will come back to it next week.
There are three matters on the agenda for today’s hearing. The first concerns GMIT, the second the Kelly report and the third the financial statements of the HEA. If we can structure our meeting to deal with each of these three items in the way outlined, we will get through the business quickly.
Deputy Robert Dowds: Is it the case that the third item will be dealt with at 2 p.m?
Chairman: Or earlier, as the case may be.
Deputy Robert Dowds: I have other demands.
Chairman: As it is now 11 a.m., it will more than likely be that time, or near enough to it.
Deputy Robert Dowds: The Chairman will excuse me if I leave and return.
Chairman: Yes.
Galway-Mayo Institute of Technology: Financial Statements 2013
Mr. Seán Ó Foghlú (Secretary General, Department of Education and Skills) called and examined.
Chairman: I remind members and witnesses to turn off their mobile phones as interference affects the sound quality and transmission of the meeting.
I advise witnesses that they are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the Houses or an official by name or in such a way as to make him or her identifiable. Members are reminded of the provisions within Standing Order 163 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister or the merits or objectives of such policy or policies.
I welcome the Secretary General of the Department of Education and Skills, Mr. Seán Ó Foghlú, and ask him to introduce his officials.
Mr. Seán Ó Foghlú: I am joined by Deirdre McDonnell, principal officer, Christy Mannion, principal officer, and Noreen Bevans, assistant principal officer.
Chairman: Mr. Boland?
Mr. Tom Boland: I am joined by Stewart Roche, who is a management accountant, Andrew Brownlee, who is head of system funding, and Fergal Costello, who is head of system performance and governance.
Chairman: And Mr. Jim Fennell, president of the GMIT?
Mr. Jim Fennell: I am joined by Bríd Prendergast, the acting secretary-financial controller.
Chairman: And we have John Burke from the Department of Public Expenditure and Reform.
Mr. John Burke: It is just me from the Department of Public Expenditure and Reform.
Chairman: Can I ask Mr. McCarthy to make his opening statement please?
Mr. Seamus McCarthy: As the members are aware, the Higher Education Authority is the statutory planning and policy development body for higher education and research in Ireland. It is the primary funding authority for the universities, teacher training colleges, institutes of technology and a number of other designated education bodies. The HEA dispersed over €1.1 billion in grants in 2014. The majority of its income comes directly from Vote 26 - Education and Skills.
I have issued a clear audit opinion in respect of the HEA's 2014 financial statements. However, as in previous years, the audit certificate draws attention to the HEA's practice of funding certain universities for notional employer pension contributions in respect of members of pay-as-you-go pension schemes. As a result, they are funded approximately 15% above the level actually required to pay the related staff members. The HEA allows those universities to retain both the notional employer and actual employee pension contributions and to account for them in what are called pension control accounts. The accumulated funds are recognised in the university accounts as sums due to the HEA. The balances held in the five universities concerned in respect of pay-as-you-go model pension schemes stood at €159 million at 30 September 2014, up from €125 million at end-September 2013.
The universities also record amounts due from the HEA in relation to pension payments already made under separate, closed pension schemes. The result has been net underfunding for pension expenditure in some universities and net overfunding in others. When we raised this matter first in 2012, the HEA stated that the pension control accounts mechanism was a short-term one. I understand that steps are now being taken to bring the pension funding more into line with expenditure.
Apart from providing funding for the third level sector, the HEA carries out an oversight and regulatory role in respect of higher education institutions. My office is currently undertaking an examination of that function. At a high level, the examination is considering the role and responsibilities of the HEA with regard to governance in the sector and the adequacy of systems it has put in place to achieve its objectives. Progress on that examination has been delayed by an unavoidable change in personnel on the examination team but I hope to finalise the report on the examination early in 2016.
I turn now to the Galway-Mayo Institute of Technology financial statements for 2012-2013. The consolidated income and expenditure account for the Galway-Mayo Institute of Technology shows an operating deficit of almost €1.3 million for the year ended 31 August 2013, compared to a deficit of €200,000 in the previous year. The institute’s income for the 2012-13 financial year was €56.2 million, with the largest amount, €25.3 million, coming in the form of grants from the HEA. A further €19.2 million related to tuition fees, including student contributions. Other significant sources of income include research grants of €2.4 million and retained employee pension contributions of €2.2 million. Since institute of technology pensions are paid centrally, the latter is, effectively, a further State grant. The institute incurred expenditure of €57.6 million in the year, with staff pay costs accounting for nearly €42 million, or 72% of the total. The institute’s financial statements for the year ended 31 August 2013 received an unqualified audit opinion. However, the audit certificate draws attention to a disclosure in the accounts concerning the high costs of an investigation into the manner in which the institute dealt with a case of plagiarism that occurred in 2009. At 31 August 2013, the aggregate cost of the investigation stood at €436,000, of which nearly €187,000 had been incurred in the year of account.
Issues around the process for consideration of a proposal to establish a technological university for the south east, through a merger of Waterford Institute of Technology and Carlow Institute of Technology, have arisen at committee meetings on a number of occasions. Progress on the proposed merger is reviewed by my office each year in the context of the audit of the financial statements of the two institutes. I have no observation to make at this time on the report that is before the committee today.
Mr. Seán Ó Foghlú: I thank the Chairman for allowing me to make this opening statement regarding the investigation of plagiarism at Galway-Mayo Institute of Technology, GMIT, the establishment of a technological university for the south east and the 2014 financial statements of the Higher Education Authority. As requested, I have forwarded some advance briefing material to the committee.
The Department first became aware of the investigation of plagiarism at GMIT in November 2013. The detailed response on the investigation of plagiarism at GMIT is more appropriate for Mr. Jim Fennell, acting president of GMIT, to outline. However, the Department’s view is that while there are issues arising with how the investigation was managed during the process, the management response to the issues has, ultimately, been comprehensive. Following consideration of the reports on the investigation of plagiarism in GMIT, the Higher Education Authority issued advice to the presidents of all HEA-funded higher education institutions in May 2015 on the matters to be considered in order to manage the costs of independent investigations. Mr. Boland of the HEA will outline the advice provided.
The National Strategy for Higher Education to 2030, published in January 2011, recommended the consolidation of the institute of technology sector and the creation of a small number of multi-campus technological universities. The technological university, TU, for the south east project was initiated in 2011 and consists of a consortium of two institutes of technology - Carlow Institute of Technology, CIT, and Waterford Institute of Technology, WIT. The process for designation as a technological university consists of four stages and requires the merger of two or more institutes of technology prior to application for designation as a TU. The four stages are set out in more detail in the briefing document supplied to the committee.
The consortium for the technological university for the south east project made good progress initially and submitted a stage one expression of interest in 2012. However, following this promising start, the consortium encountered a series of challenges and difficulties and did not succeed in finalising a stage two plan prior to the decision by WIT to suspend all merger activities in October 2014. Following meetings with both institutes, in early November 2014, the Minister for Education and Skills announced the establishment of a new process of engagement and consultation with the governing bodies, staff and students of both institutes, together with the wider community in the south east, in order to articulate and develop the following: a shared vision for a technological university to serve the south east region and to report to the Minister within ten weeks on the feasibility and steps required to progress an application for technological university status within an acceptable timeframe. This is to be done having regard to the published criteria and process for designation as a technological university which is already in place.
The Minister appointed Mr. Michael Kelly to lead the process of consultation. While a ten-week timeframe was initially set for the process to be completed, the timeframe to completion was extended due to a number of factors. Due to other commitments of Mr. Kelly, a substantive start was not possible until early January 2015. The intention then had been to complete by first quarter 2015 but, in light of progress made and an assessment that some further time would be beneficial to the outcome, the Minister’s agreement to extend the time to completion by a further period was obtained. The detailed response on the process itself and the contents of the report is more appropriate for Mr. Kelly to outline. The Department’s view is that the process has been most beneficial in seeking to reinvigorate the project. It has first and foremost confirmed that the project is viable. In addition, it has also provided an opportunity to articulate for the first time the ambitions of regional stakeholders for a more vibrant regional performance in the future with a technological university as a core feature. It has also set out a set of steps required to successfully reinvigorate the delivery of the project. Mr. Kelly met the Minister for Education and Skills on 2 July 2015 and presented his report at that meeting. The Minister subsequently met with the presidents and chairs of the two institutes on 21 July 2015 following noting of the report by Government. The report was then published on 27 July 2015.
The focus is now on continuing the work progressed by Mr. Kelly and to assist with building mutual trust and respect between the two institutions. In that regard, a preliminary engagement process is now under way between the two institutions, as recommended by Mr. Kelly.
I assure the committee that governance and accountability for the bodies under the remit of the Department of Education and Skills, including the Higher Education Authority, are of paramount importance to the Department and that is why steps have been taken in recent months to strengthen even further the Department’s role in the oversight of all institutions and bodies across the education sector.
Within the Department a committee on sectoral governance and accountability was established earlier this year and two meetings of the committee have been held since then. The Department’s role is to support the development and implementation of best practice governance arrangements across the sector through oversight and regular assessment of its approach to governance. The committee’s focus will include the non-commercial agencies under the Department’s aegis, the higher education institutions as well as the education and training boards. The committee’s membership includes the chief executive of the HEA and an external member who can provide an additional element of insight and experience in the area of governance oversight.
A principal officers sectoral governance and accountability network has also been established. Its role is to support the work of the management advisory committee sub-committee by facilitating discussion regarding compliance requirements, to provide feedback, highlighting issues arising in each sector and to disseminate best practice across the Department’s bodies. It has also been decided, in principle, to establish an internal audit sector forum for personnel with internal audit functions in the Department, its agencies, higher education institutes and ETBs.
In addition, as part of strengthening its role on governance and accountability oversight, the Department is tendering for the supply of services from suitably qualified companies for the purposes of conducting reviews of corporate governance compliance by education sector bodies with their relevant codes of practice which underpin their corporate governance frameworks. The HEA is joining the Department in contracting this service in respect of bodies for which it has responsibility.
The HEA has also introduced a number of measures recently to enhance its role further in the governance and accountability of the higher education institutions under its remit. The HEA is to brief the committee in more detail about these measures. I want to mention in particular the meetings that have taken place in recent months between the HEA, the Comptroller and Auditor General and the institution’s representative bodies which will assist, among other things, in providing an early flagging of any issues in the sector. This new collaborative approach will assist all stakeholders across the sector in delivering a more robust system of governance and accountability in higher education. The Department is committed to working closely with the HEA in achieving this aim.
I am conscious that the Department has been in correspondence in recent times with this committee on a number of issues particular to higher education. In this regard, I assure the committee that the issues raised in the sector are, and continue to be, of great concern to the Department and we are working with the institutions, through the HEA, to seek to have the issues dealt with appropriately and as efficiently as possible. I am happy to answer questions from the committee.
Chairman: I thank Mr. Ó Foghlú. Can his statement be published?
Mr. Seán Ó Foghlú: Yes.
Chairman: I invite Mr. Boland to make his presentation.
Mr. Tom Boland: My statement will cover the following areas as set out in the agenda: the investigation of plagiarism in Galway-Mayo Institute of Technology, the engagement and consultation process for a technological university for the south east, the HEA 2014 financial statements, and the governance and accountability developments in the higher education sector.
On the investigation of plagiarism in Galway, the committee will recall that I wrote to it in May of this year regarding the investigation of plagiarism in GMIT setting out the background and issues arising, particularly on costs. The committee has also been provided with a detailed note setting out the HEA’s interaction with GMIT in the case as well as with Quality and Qualifications Ireland.
On the specific incident of plagiarism I wish to emphasise at the outset that the management of academic affairs, including course curricula, the marking of students and the handling of allegations of plagiarism is first a matter for individual higher education institutions. The report prepared by Professor Bairbre Redmond found that the plagiarism detection, investigation and penalty procedures in place in GMIT at the time, in the main, were fit for purpose. The HEA notes that since then the institute has made improvements in the policies in question. The HEA’s main area of concern relates to the costs incurred in the investigation carried out into the manner in which GMIT responded to and dealt with complaints of plagiarism. Higher education institutions, like all public bodies, have a duty of care in the expenditure of Exchequer funding, especially as it relates to administrative processes. Notwithstanding the importance of an independent investigation that was thorough and comprehensive in its remit, it is clear that there was failure on the part of GMIT in managing the costs and timelines of the investigation. As we have emphasised to GMIT, it is especially unacceptable that such high costs were incurred in the context of a challenging financial situation in the higher education sector.
To avoid such incidents in the future, the HEA expects GMIT and other higher education institutions to inform us, the HEA, of major unexpected expenditure in a much more prompt manner. Clearly the experience from this case in GMIT is salutary for the rest of the higher education sector. Earlier this year the HEA wrote to all institutions under its remit on the subject of independent investigations and in particular the need to protect the independence of such investigations while at the same time having appropriate systems for cost control within the institution. As part of revised governance reporting requirements introduced by the HEA in 2014, institutions are required to report on significant expenditure incurred from such investigations.
On the issue of a technological university for the south east, the HEA welcomes the publication of Mr. Michael Kelly’s report to the Minister for Education and Skills on the engagement and consultation process on a technological university for the south east. I will give the committee some background. The National Strategy for Higher Education to 2030, published in January 2011, recommended the consolidation of the institutes of technology sector and the creation of a small number of multi-campus technological universities. The process for designation as a technological university consists of four stages and requires the merger of two or more institutes of technology prior to application for designation as a TU. The technological university for the south east project was initiated in 2011. It made good progress initially and submitted a stage 1 expression of interest in 2012. However, following this initial promising start, the consortium encountered a series of difficulties and did not succeed in finalising a stage 2 plan prior to the decision by Waterford Institute of Technology to suspend merger activities in October 2014.
In early November 2014, the Minister for Education and Skills, Deputy Jan O’Sullivan, announced the establishment of a process of engagement and consultation with the governing bodies, staff and students of both institutes together with the wider community in the south east. Mr. Michael Kelly was appointed to lead the process of consultation. Mr. Kelly carried out a thorough consultation process in the region. His reports set out the results of this consultation and of particular note are his observations that there is very significant convergence of thinking and approach by both institutions to many aspects of the design of a TU; if sufficient resolve exists within both institutions, the remaining issues should be capable of resolution; external stakeholders emphasised that any TU should support the economic and social development of the south east; and it is likely that the consortium of Waterford and Carlow institutes of technology would meet the quantitative TU designation criteria within a period of three years. Mr Kelly also set out a number of options for the future, including the recommendation that a re-invigorated process to found a TU for the south east be established at the earliest feasible date, as well as the development of a facilitation process. The HEA will continue to assist the two institutions to the greatest extent practicable.
On the matter of our financial statements, I am pleased to note that in his audit certificate accompanying the HEA’s 2014 financial statements, the Comptroller and Auditor General records that the HEA has kept proper books of accounts and that the financial statements are in agreement with the books of accounts. However, I draw attention to one issue. Over recent years the Comptroller and Auditor General has referred to the issue of pension funding to the universities in the HEA’s financial statements. As our briefing paper sets out, the accumulated funds of approximately €159 million referred to in the Comptroller and Auditor General’s notes relate to the model pension schemes in the five older universities. The model scheme membership has a much younger age profile compared with the closed funded schemes in the universities. This means that the amount of employer and employee pension contributions going into the model scheme is much higher than pension and lump sum payments coming from it, resulting in a surplus. The accumulated funds of €159 million in the model scheme must be seen in tandem with a shortfall of approximately €156.5 million that exists in respect of the closed funded schemes in the five older universities. This shortfall has arisen due to an existing and increasing cohort of retirees in receipt of pensions and lump sums coupled with the fact that membership of the scheme itself has been closed to new entrants for some years now. This means that the level of pension payments and lump sums greatly exceed any pension contributions from employer or employee, hence a shortfall in 2013-2014 of €156.5 million. Therefore, the accumulated funds of €159 million in the model scheme must be offset against the accumulated shortfall of €156.5 million in the closed funded schemes. Although these figures represent an almost break-even position, it is anticipated that the accumulated shortfall in the closed funded schemes will continue to grow and will ultimately surpass any surplus on the model scheme.End of Take
The HEA remains in discussions with the Department of Education and Skills and the Department of Public Expenditure and Reform with regard to future funding requirements for the universities.
In addition, I will be happy to update the committee on recent developments in governance and accountability in the higher education sector which includes strengthened and more rigorous requirements expected from institutions in terms of reporting on governance matters to the HEA as well as enhanced engagement and information sharing with the Office of the Comptroller and Auditor General with regard to the audits of financial statements in the higher education sector. I am happy to take any questions from committee members.
Chairman: Thank you Mr. Boland. May we publish your statement?
Mr. Tom Boland: Yes.
Chairman: I invite Mr. Fennell to make his opening statement.
Mr. Jim Fennell: Thank you Chairman. The background to the plagiarism investigation is that an incident of suspected plagiarism by a student on a masters degree programme in the school of business was detected by a lecturer in November 2009. The incident was determined by the school management to be one of minor plagiarism and, accordingly, the incident was considered by a school plagiarism committee in February 2010, which found the student guilty of plagiarism and imposed a penalty relating to the work submitted. The student subsequently went on to graduate later that year. In November and December 2010, reports relating to the incident appeared in the media alleging that a lecturer had assisted the student in the act of plagiarism and implying that the matter had been improperly handled and that the institute was engaging in a cover-up.
Following two internal reviews by the registrar and HR manager and following receipt of legal advice, I, as acting president and in consultation with the chairman, decided that an external investigation was required to safeguard the reputation of the institute and on 31 March 2011 informed the governing body accordingly. On the advice of the institute’s solicitors, Professor Bairbre Redmond, deputy registrar of UCD, was appointed to undertake the investigation. Professor Redmond requested a second investigator be appointed and on the recommendation of Professor Redmond, Mr. Ed Madden, barrister-at-law, was appointed as co-investigator. The terms of reference for the investigation were drawn up by the institute’s legal advisers, agreed with the investigators and issued by the president on 13 June 2011. A fixed fee of €1,500 per day was agreed with each of the two investigators. However, it was not envisaged that the investigation would require the level of input it did, resulting in costs of €436,061 being incurred. As the investigation progressed, concern was mounting at the increasing cost. The president tried on a number of occasions to bring closure to the matter. However, as the matters under investigation related to an alleged cover-up by the institute, it was important to protect the independence of the investigation and it was not appropriate for GMIT to influence the conduct of the investigation or to terminate it.
At a very late stage in the process, a significant disagreement occurred between the investigators regarding the compilation of the report, resulting in Professor Redmond stepping down as investigator. Mr. Madden submitted a document which the president deemed as not satisfying the terms of reference. Acting on legal advice, the president subsequently re-appointed Professor Redmond to provide the final report. Additional legal and investigator costs were incurred in dealing with this aspect.
The Redmond report, which issued in October 2013, concludes that the plagiarism detection, investigation and penalty procedures in place at the time of the incident were, in the main, fit for purpose. The investigation also concludes that the issues associated with the management of the alleged incident of plagiarism under investigation were far less connected to a poorly constructed policy than to how these policies were interpreted and implemented. A key conclusion arising from the investigation is that there was a failure on the part of a senior member of staff to provide relevant and significant information to the president and registrar of GMIT in February 2010 and in the period thereafter up to March 2011, regarding the involvement of a lecturer in procuring restricted material for a student.
A number of important lessons can be learnt from GMIT’s experience of this process. It appears such an investigation will inevitably become more complex and hence more costly than originally envisaged as new witnesses and material emerge during the course of the investigation. Accordingly, particular consideration must be given in the terms of reference to allow provision for review of costs where the original plan cannot be achieved. If appointing more than one investigator, one should be designated as the lead investigator. Investigators should retain a direct reporting line to the president or nominee and be required to consult with the president in advance of taking any significant decisions impacting on the investigation.
I wish to apologise to all our stakeholders and, in particular, to our staff and students that such expenditure was incurred at a time when these costs can only be borne by reducing expenditure in areas which directly impact our staff and students. I wish to assure this committee that the unethical behaviour which was the subject matter of this investigation is not representative of our staff whose commitment to high academic standards and professional integrity has enabled GMIT to contribute so much to the social and economic development of the region over the last five decades.
Chairman: Thank you Mr. Fennell. Can we publish your statement?
Mr. Jim Fennell: Of course.
Deputy Paul J. Connaughton: I welcome the witnesses to the meeting. I wish to concentrate initially on the plagiarism issue, following on from Mr. Fennell's statement. There is considerable concern at the cost involved, particularly given that the final report found that everything was fit for purpose. It does not seem to stack up with the level of expenditure involved. To go back to the beginning, this incident was detected in November 2009 and was brought before a committee. It was seen as a minor plagiarism issue and sanctions were put in place. At that stage, the matter was considered finished.
Mr. Jim Fennell: Yes, the lecturer detected the plagiarism in November 2009 and reported to the school's head of department, as was appropriate. It was then referred to the head of school, where it was determined to be an incident of minor plagiarism. Consequently, it was determined that it should be dealt with by a school plagiarism committee. That committee met in February 2010, the student was found guilty and a sanction was imposed.
Deputy Paul J. Connaughton: Then eight to ten months later, reports on this started to appear in the media. Did this come from a whistleblower within GMIT?
Mr. Jim Fennell: My understanding is that a whistleblower is not somebody who anonymously gives information to the media but reports appeared in the media. There were continuous reports appearing that there was a lecturer involved, that the matter had not been handled properly and that the institution itself was engaged in a cover-up.
Deputy Paul J. Connaughton: Considering how the institute had handled the matter initially, was it not happy enough to say that such reports were wrong, that it had followed the correct procedure and that there was no need to do anything further?
Mr. Jim Fennell: I became very concerned about the reputational damage that the institution was incurring. We asked the registrar and the HR manager to conduct two initial internal reviews. Shortly thereafter, the lecturer who detected the plagiarism asked to see me and advised me of certain matters. I referred these to the HR manager in the course of his review and his report, when it was completed, was sent to the institution's lawyers who advised that there was a need for an independent inquiry.
Deputy Paul J. Connaughton: Who were those lawyers?
Mr. Jim Fennell: The solicitors for the institute at that time were Author Cox and Company.
Deputy Paul J. Connaughton: Through all of this that company received €39,673. Is that correct?
Mr. Jim Fennell: Through to-----
Deputy Paul J. Connaughton: Through the whole length of the process, that is what it received. Did the solicitors for GMIT change during the process?
Mr. Jim Fennell: No, but we did appoint new solicitors. Arthur Cox and Company remained as solicitors for this particular issue but-----
Deputy Paul J. Connaughton: Okay.
Mr. Jim Fennell: I must check back over something, with the Deputy's agreement.
Deputy Paul J. Connaughton: Of course.
Mr. Jim Fennell: There was a procurement process conducted by the educational procurement service and as a result of that process, our solicitors changed. I am afraid that I do not know the exact date. I do not have the date of appointment before me, I am sorry.
Deputy Paul J. Connaughton: Did the board of the college then decide to have an external inquiry?
Mr. Jim Fennell: It did in consultation with the chairman and then in the latter days of March 2011. We then informed the governing body in March 2011 that it was required.
Deputy Paul J. Connaughton: Was everyone in agreement with this?
Mr. Jim Fennell: Nobody objected.
Deputy Paul J. Connaughton: Who then made the decision to employ or recruit Professor Bairbre Redmond?
Mr. Jim Fennell: The advice from our solicitors was that an independent investigation was warranted and that it was necessary to appoint a senior academic from outside the institute of technology sector because of the nature of the allegations being levelled at the institution. That left us looking at one of the seven universities. It was also decided not to approach our colleagues in NUI Galway to ensure it was seen to be independent.
Arthur Cox was requested to recommend an appropriate senior academic. It approached two people but one of them was not available. Arthur Cox came back and recommended Professor Bairbre Redmond, the deputy president and registrar in UCD.
Deputy Paul J. Connaughton: She was the first appointment.
Mr. Jim Fennell: Yes.
Deputy Paul J. Connaughton: Was it on her advice to bring in Mr. Ed Madden at that stage?
Mr. Jim Fennell: Subsequently, Professor Redmond requested that a second investigator be appointed and that it be Mr. Ed Madden.
Deputy Paul J. Connaughton: At this stage two people have been appointed and the investigation is ready to go. How was the fee of €1,500 per day arrived at? It is a staggering figure.
Mr. Jim Fennell: The €1,500 fee was negotiated with Professor Redmond. It was the rate she requested on the basis of similar type work being done by colleagues. It was also consistent with some of the rates we were getting for other investigations which were in the range of €175 to €186 per hour.
Deputy Paul J. Connaughton: This was based on previous work done. Was the Higher Education Authority, HEA, or the Department involved in saying this is the going rate with other issues of plagiarism?
Mr. Jim Fennell: I was not specifically referring to plagiarism. It was other types of work, such as dignity in the workplace issues or other issues like that. This was the only one where we had an issue with plagiarism.
Deputy Paul J. Connaughton: Did anyone in Galway-Mayo Institute of Technology, GMIT, or the board question that €1,500 at the time? Did anyone say this is a significant amount of money?
Mr. Jim Fennell: Yes.
Deputy Paul J. Connaughton: By the way, I imagine the board met Professor Bairbre Redmond at this stage and told her from its process that it did not believe there was a significant issue. She would have thought at the start that the work she would be doing would not involve a huge amount.
Mr. Jim Fennell: Yes, the expectation was that we would have a report by September of that year. It was not foreseen by anybody in the institute that it was going to go on for two years.
Deputy Paul J. Connaughton: Did Professor Redmond say the institute would get a report by September of that year?
Mr. Jim Fennell: The note I have here is that the expectation was and she had indicated to the human resources manager that it would be by September 2011.
Deputy Paul J. Connaughton: The fee was €1,500 per day and the report was due in several weeks. However, this inquiry quickly turned into a runaway train.
Was there a breakdown or a justification given for such a fee of €1,500? What people are zoning in on is the fee of €1,500 per day. It is an extortionate amount of money. As I have no expertise in this area, will the institute explain in greater detail as to how that fee was arrived at?
Mr. Jim Fennell: I cannot add anymore to that other than the rate is not dissimilar to a rate for that type of work. What is astonishing is the time and the level of input-----
Deputy Paul J. Connaughton: How would one categorise that type of work? This is an unusual case. Does the HEA or the Department have any examples over the past ten years of where such a case would have cropped up?
Mr. Tom Boland: No, we have not given any advice of that sort to the sector.
Mr. Seán Ó Foghlú: We were not involved in the decision by GMIT. We did not give any advice to the institute and were not aware of this at the time.
Deputy Paul J. Connaughton: GMIT is making a decision with no advice from the HEA or the Department and arrives at a fee of €1,500 per day. Professor Redmond then brings Mr. Ed Madden, who is on the same deal, into the process. Was there any measure put into the terms of reference to ensure they would report in four to six weeks?
Mr. Jim Fennell: No, it was not included in the terms of reference.
Deputy Paul J. Connaughton: Did anyone insist on a report or an update in six weeks or two months?
Mr. Jim Fennell: That was not in the terms of reference.
Deputy Paul J. Connaughton: They start to do their important work which has to do with the independence of the institution and that it maintains its excellent reputation. Who from the college maintained contact with them to ensure weekly, monthly or bimonthly updates?
Mr. Jim Fennell: They were reporting to the president.
Deputy Paul J. Connaughton: How often did they report?
Mr. Jim Fennell: I do not know the frequency. We were reporting on the costs. There was contact between Professor Redmond and the president on a regular basis. Concern was mounting at the increasing cost.
Deputy Paul J. Connaughton: From where was this concern coming? Was it at board or president level? When was this discussed? Are there minutes of meetings where it was discussed?
Mr. Jim Fennell: As the information was emanating from finance, it was being raised at the governing body on a number of occasions.
Deputy Paul J. Connaughton: What was the conclusion of that? Did someone say the institute needed to have a word with Professor Redmond and Mr. Ed Madden and ask why was it taking so long?
Mr. Jim Fennell: The president was dealing with it. I note that he tried on a number of occasions to bring closure to the matter. However, as the matter under investigation related to an alleged cover-up by the institute, the question was what would be the consequences of the reputational damage that would be suffered by the institute in bringing the investigation to a halt without it being completed.
Deputy Paul J. Connaughton: Number 12 of the terms of reference states the investigation team will furnish the report as soon as practicable with an expected timeframe of four weeks after the investigation team confirms the investigative stage of the process has concluded. They held all the cards on that one.
Mr. Jim Fennell: Correct.
Deputy Paul J. Connaughton: The institute set up this investigation but the two people carrying it out were able to say they will take as long as it takes.
Mr. Jim Fennell: Yes.
Deputy Paul J. Connaughton: While there is nothing wrong with this, we get to the end of the process. From the institute’s notes, an argument takes place between the two investigators. What was the reason for this argument?
Mr. Jim Fennell: I understand a significant disagreement arose between the investigators relating primarily to the inclusion of a chapter on quality assurance which had been written by Professor Redmond and provided for in the terms of reference.
Deputy Paul J. Connaughton: Obviously, this slows the whole process down. For how long was this argument going on when no work was being carried out?
Mr. Jim Fennell: I do not know how long.
Deputy Paul J. Connaughton: Were they still getting paid at this time?
Mr. Jim Fennell: They were getting paid for the work they were doing.
Deputy Paul J. Connaughton: I am trying to get to the nub of this. At this stage, a significant amount of money has been spent. The institute does not have a report. It has taken several years and €1,500 is spent a day on this investigation. The two investigators then fall out.
Mr. Jim Fennell: The information I have is that the president was advised on 2 August 2013 that Professor Redmond had resigned from the investigation team. Mr. Madden provided the president with a sole authored report four days later on 6 August. However, there were a number of matters in that report which were queried by the president and to which Mr. Madden declined to respond. The president concluded the report was not compliant with the terms of reference.
Deputy Paul J. Connaughton: The first report is from Mr. Ed Madden. Professor Bairbre Redmond is gone at this stage after their argument.
Where did Mr. Madden's report fall down in relation to the terms of reference? Can Mr. Fennell point out to me where in any of the 12 of terms of reference? What was the reason? Which one could we pick to show that this is why Mr. Madden's report does not add up? At this stage, Mr. Ed Madden has received €217,890 for his report, which GMIT, its head, has now said it is not accepting.
Mr. Jim Fennell: Correct. The clause was clause 4, under the scope on the terms of reference.
Deputy Paul J. Connaughton: Is Mr. Fennell saying GMIT went back then to Mr. Madden and asked him if he could fix this problem for us?
Mr. Jim Fennell: There was that and, I understand, other queries which the president had in relation to the report.
Deputy Paul J. Connaughton: To what do these queries relate?
Mr. Jim Fennell: There were expressions in the report that he did not understand, for example, reference to senior management. The president wanted to know to whom he was referring.
Deputy Paul J. Connaughton: Mr. Madden has not reported back on some of the queries. Did he ever come back to stand over his report?
Mr. Jim Fennell: It is my understanding that the reply Mr. Madden provided to the president was that he declined to respond and advised that his involvement was at an end.
Deputy Paul J. Connaughton: After €217,000?
Mr. Jim Fennell: That is my understanding.
Deputy Paul J. Connaughton: That is unbelievable. It is remarkable that he provides a report that took a lot longer for the €217,000 and that the institute does not like it. Was there any other issue? Did GMIT not like what was in the report, what was said and what its outcomes were?
Mr. Jim Fennell: Not that I am aware of. To the best of my knowledge, I do not think there was any other substantive difference.
Deputy Paul J. Connaughton: Was there no claim back on this at all? GMIT appointed this man to compile a report for €217,000 and the report is supplied, and we are not going to listen to a word of it.
Mr. Jim Fennell: There were a number of times during the investigation where the president intervened in terms of trying to manage the cost. Professor Redmond, at one point, responded by agreeing to continue working pro bono. Mr. Madden relied on his terms of reference.
There was also significant correspondence between the president and Mr. Madden in relation to the final fees at this juncture, particular correspondence around November 2013. Mr. Madden's concluding remarks were that he requested, once again, that his invoice be paid, and that should he not receive confirmation by 29 November that the invoice would be paid, he would have no alternative but to put the matter in the hands of his solicitors.
Our solicitors are Arthur Cox. I inquired of Arthur Cox in more recent times what the situation was at that time and the information which Arthur Cox provided to me was that the institute would have had to pay the invoice under the terms of reference and to continue to refuse to pay it would have resulted in expensive legal proceedings which, probably, the institute would not win.
Deputy Paul J. Connaughton: The position then was that the report came back, GMIT was not happy with it, Mr. Madden did not respond and €217,000 was gone on this. At this stage, did the institute go back to Professor Bairbre Redmond?
Mr. Jim Fennell: Yes. At that point, the president reappointed Professor Redmond to complete the work or to write a report based on the joint work of the two investigators, and that report issued in November 2013.
Deputy Paul J. Connaughton: Her costs were €63,278. How was there such a difference between her costs and what Mr. Madden was getting?
Mr. Jim Fennell: First of all, the manner in which they allocated the work between them was a matter for them. However, we did try to get some clarity on that. There are a couple of points. First, VAT was applicable on the invoices from Mr. Madden which was not applicable to Professor Redmond. Professor Redmond worked pro bono for a period of time. To the best of Professor Redmond's knowledge, she states, Mr. Madden drafted and distributed all section 10 letters for the investigation and dealt with their replies.
Deputy Paul J. Connaughton: I am sorry to cut across, but what I do not understand is that at the very start of this process Professor Redmond was the first person on board. She then asked for a second person, and that became Mr. Madden. At this stage, who was calling the shots in relation to the pay agreement, terms of reference, etc.? Where was the decision-making process?
Mr. Jim Fennell: When the terms of reference issued in June 2011, they were appointed as joint investigators.
Deputy Paul J. Connaughton: But Professor Redmond has already negotiated a deal with GMIT in relation to payment and pro bono work, etc.
Mr. Jim Fennell: No. It was as the inquiry was progressing through 2011, 2012 and 2013, and as concern was mounting about the costs, that the president approached both parties requesting that they would complete the work on a pro bono basis. Professor Redmond responded positively to that request.
Deputy Paul J. Connaughton: At what stage then does Hayes Solicitors come into this because it gets €85,000 out of this mess?
Mr. Jim Fennell: The terms of reference provided that the inquiry team, the investigation team, would have their own legal representation and they were the legal advisers to the investigators.
Deputy Paul J. Connaughton: To both investigators?
Mr. Jim Fennell: To the investigating team, yes.
Deputy Paul J. Connaughton: But that does not include Mr. Madden now?
Mr. Jim Fennell: No. Those are the two. The two constituted the team.
Deputy Paul J. Connaughton: Could Mr. Fennell give me that date again? When did Hayes Solicitors come in?
Mr. Jim Fennell: That was envisaged from the outset, in June 2011, when the terms of reference were issued.
Deputy Paul J. Connaughton: Does Mr. Fennell know what date they started working on it?
Mr. Jim Fennell: On 13 April 2011.
Deputy Paul J. Connaughton: Did they start working from that point?
Mr. Jim Fennell: Yes. I am looking at the narrative of the work that they were doing and the first date was 13 April.
Deputy Paul J. Connaughton: When GMIT went back to Professor Redmond to say that Mr. Madden was gone and GMIT was not happy with the report, was it merely for her to finish the report or was it to go back over the issues that GMIT was not happy with in Mr. Madden's report?
Mr. Jim Fennell: It was to issue a report based on their joint work in accordance with the original terms of reference issued in June 2011.
Deputy Paul J. Connaughton: I would not say GMIT had "rubbished" Mr. Madden's report at this stage, but it was not fit for purpose.
Mr. Jim Fennell: The president determined it did not comply with the terms of reference.
Deputy Paul J. Connaughton: Just the president?
Mr. Jim Fennell: It would be the president's decision.
Deputy Paul J. Connaughton: Was this discussed with any board members?
Mr. Jim Fennell: In relation to-----
Deputy Paul J. Connaughton: To Mr. Madden's report.
Mr. Jim Fennell: No. That was a decision of the president. However, the president appointed an advisory committee, made up of the chair of the governing body, the chair of the audit committee and the governing body members of the audit committee, to advise him on the process after Professor Bairbre Redmond's report issued.
Deputy Paul J. Connaughton: No. Did those same people see Mr. Madden's report?
Mr. Jim Fennell: It is my belief that they did but I am not 100% sure.
Deputy Paul J. Connaughton: Is there no chance that a report came into the president's office and he was only one who saw it?
Mr. Jim Fennell: Actually, at the time at which he determined that the terms of reference were not being complied with, he was the only one who had seen it, yes.
Deputy Paul J. Connaughton: Had he got second advice from anyone else or had it run by anyone else?
Mr. Jim Fennell: I understood he got legal advice from the institute's solicitors.
Deputy Paul J. Connaughton: But no one else in the institute of technology had seen it at that stage?
Mr. Jim Fennell: Yes, I am actually sure of that. Nobody else had seen it.
Deputy Paul J. Connaughton: Therefore, the president made the decision that it did not comply with the terms of reference and he was sending it back. Some €217,000 later, he was not happy with it. They can come back to him if they want but if they do not, the institute will keep going on.
Mr. Jim Fennell: It-----
Deputy Paul J. Connaughton: After several years, the money involved is very substantial, yet one man saw the report and did not like certain elements of it, although it was probably correct in its terms of reference, and did not consult anyone else on the matter.
Mr. Jim Fennell: He took legal advice from the institute.
Deputy Paul J. Connaughton: He did not consult anyone else in the institution, either the board or the governing body. Was the Higher Education Authority consulted?
Mr. Jim Fennell: No. I am pretty sure that decision was made by the president on the basis of legal advice that he took. I do not believe the document was shared with anybody else in the institute at that point in time. I am not 100% sure but I do not believe it was.
Deputy Paul J. Connaughton: Would that not be considered unusual?
Mr. Jim Fennell: In these particular circumstances, I think probably not. It was adequate to take the legal advice.
Deputy Paul J. Connaughton: After that process, how long did it take Professor Redmond to complete her report?
Mr. Jim Fennell: Professor Redmond provided the report on 28 October 2013.
Deputy Paul J. Connaughton: At this stage, how long had it been since Ed Madden left?
Mr. Jim Fennell: He submitted his sole authored report on 6 August 2013.
Deputy Paul J. Connaughton: It was, therefore, a number of months later.
Mr. Jim Fennell: Yes, there would have been a process of going through the report, reverting to the author, making the determination that it did not comply, and re-engaging Professor Redmond. The report issues on 28 October. My understanding is that she was to write the report based on their joint work in the investigation. There was no new investigation required.
Deputy Paul J. Connaughton: The report was on the joint work.
Mr. Jim Fennell: Yes.
Deputy Paul J. Connaughton: Did Mr. Madden see a copy of Professor Redmond's report based on their joint work?
Mr. Jim Fennell: No, because he had stated in August that his involvement was at an end.
Deputy Paul J. Connaughton: Professor Redmond did more work on the report that Mr. Madden would not have seen.
Mr. Jim Fennell: My understanding was that Professor Redmond wrote the chapter relating to the quality assurance.
Deputy Paul J. Connaughton: The report is then published in Professor Redmond's name only.
Mr. Jim Fennell: The report is issued only in her name.
Deputy Paul J. Connaughton: However, it is considered their joint work.
Mr. Jim Fennell: It is her document based on the joint work they had done.
Deputy Paul J. Connaughton: Mr. Madden had not seen certain parts of the work done in the final report.
Mr. Jim Fennell: It was exclusively Professor Redmond's report but it was based on the joint work that the two of them had done.
Deputy Paul J. Connaughton: What was the cost in that period between Mr. Madden's report and Professor Redmond finalising her report?
Mr. Jim Fennell: It was €22,125.
Deputy Paul J. Connaughton: A cost of €22,000 was incurred in a number of months. Was €1,500 per day being paid again at this stage?
Mr. Jim Fennell: Yes.
Deputy Paul J. Connaughton: That daily rate kicked in again at that stage. Did the president show the board the report before he published it?
Mr. Jim Fennell: That report was not published.
Deputy Paul J. Connaughton: I am referring to Professor Bairbre Redmond's report.
Mr. Jim Fennell: No, Professor Bairbre Redmond's report was not published. The governing body decided to appoint an advisory sub-committee to the president made up of the chair of the governing body, the chair of the audit committee and the governing body members of the audit committee. There were five members in total and I understand the Redmond report was provided to them.
Deputy Paul J. Connaughton: It was provided at that stage.
Mr. Jim Fennell: Yes.
Deputy Paul J. Connaughton: Professor Redmond's report was therefore seen by other people.
Mr. Jim Fennell: By those people, yes.
Deputy Paul J. Connaughton: Mr. Madden's report was never seen by other people. Is that correct?
Mr. Jim Fennell: To the best of my knowledge, that is correct, but I am open to correction on that.
Deputy Paul J. Connaughton: After all of that - a number of years had elapsed and €436,000 had been spent - the report basically states that things are okay and what was done was right.
Mr. Jim Fennell: No; it was anything but okay. One of the key conclusions was that a senior member of staff had failed to provide relevant and significant information to the president and the registrar in February 2010 and in the period thereafter up to March 2011 regarding the involvement of a lecturer in procuring restricted material for a student.
Deputy Paul J. Connaughton: What happened to that person?
Mr. Jim Fennell: I am not sure I am covered by privilege to say that.
Deputy Paul J. Connaughton: Was disciplinary action taken?
Mr. Jim Fennell: Yes, a disciplinary process was undertaken.
Deputy Paul J. Connaughton: Is the person still in the college?
Mr. Jim Fennell: Yes.
Deputy Paul J. Connaughton: That begs the question as to what disciplinary action was taken. This is a very serious outcome. Mr. Fennell stated that disciplinary action was taken, but the person is still in the college. I am unsure as to what that disciplinary action could have been.
Mr. Jim Fennell: I am not sure that I am legally permitted to say.
Deputy Paul J. Connaughton: In that case, I will not go down that road any further. However, without being able to say what it was, one presumes nothing happened. The report stated that this was a big problem and there was an issue, yet nothing happened. I will not push Mr. Fennell any further about what did or did not happen, but the message that comes across is that no heads rolled and nothing changed.
Mr. Jim Fennell: There was disciplinary action taken. I would like to go on but I am not sure I am permitted to do so.
Chairman: The witness is protected by privilege, so I presume he can say what it was.
Deputy Paul J. Connaughton: I do not want names or anything.
Chairman: The Deputy just wants to know what happened.
Deputy Paul J. Connaughton: What was the outcome of the report?
Mr. Jim Fennell: There was disciplinary action taken, which resulted in people being moved to a different position.
Deputy Paul J. Connaughton: Were they moved within the college?
Mr. Jim Fennell: Yes.
Chairman: Did the salary remain the same?
Mr. Jim Fennell: The salary was reduced.
Chairman: Was it reduced significantly?
Mr. Jim Fennell: It was reduced. I am not sure whether I-----
Deputy John Deasy: The witness is uncomfortable with these questions.
Mr. Jim Fennell: I am very concerned that I might breach the Data Protection Act and expose the institute to other-----
Deputy Paul J. Connaughton: I am not pushing for a name, but people have a right to know, after all this money was spent, what changed, what came out of the report and what is different four years later. There is nothing wrong with that.
Mr. Jim Fennell: There was one thing that was very significant that I would see. The allegations that were being made in 2010 went to the very core of what the institute does in terms of the awards that it makes. If allegations are made in the media about an institutional cover-up, it brings into question the very value of the awards that we have given to our graduates and that our students are studying towards. It was extremely important that there was an independent inquiry that confirmed that the institution had not engaged in a cover-up. The actions of one or two individuals do not an institute make.
Deputy Paul J. Connaughton: As a former student of the institute, I have a major issue with-----
Chairman: No one is questioning the Deputy's qualification.
Deputy Paul J. Connaughton: According to a media report, while the amount involved was significant, it should be borne in mind that the institute's annual budget is in the region of €57 million and the cost should be viewed in the context of ensuring public confidence in the academic reputation of the institute. That is a fair point, but after this whole mess, it is one that is hard to explain. After all the money and time-----
Mr. Jim Fennell: I am not justifying the expenditure. In fact, I have apologised to all our stakeholders for the enormous expenditure. However, the reputation of the institute and of the awards that we make is extremely important. It gets to the core of why the institute exists and is funded by the taxpayer.
Deputy Paul J. Connaughton: Given what occurred in GMIT, I ask Mr. Boland to outline what lessons the other institutes of technology have learned from what occurred. What changes have been made in governance? What has come into play since then?
Mr. Tom Boland: We have alerted all of the institutes and the universities to the situation that happened in GMIT, particularly the uncontrolled nature and cost of the inquiry. We have instructed them that they should agree terms of reference of any such inquiries legally and that the terms of reference should specifically contain a provision for the inquiry to be reviewed by the president and, if necessary, wound up by the president at a particular time. We have strongly emphasised the importance of ensuring value for money in any such investigations.
Deputy Paul J. Connaughton: Would the Higher Education Authority have signed off on the terms of reference if it had seen them in 2011?
Mr. Tom Boland: That is a little unfair, because the Deputy is asking me to second-guess the president. I will say, however, that it is an absolutely fundamental mistake, either in the terms of reference or in the appointment letters of the people involved, that there was not a process put in place to control both the length and cost of the inquiry.
I totally accept the position that it is very difficult for an institution which has set up an inquiry to interfere in it. There is a way in which one can interfere properly in an inquiry and there could have been processes in place for interim reports which would allow the president and the governing body to make decisions on how it should go forward. There could also have been fixed or particular terms around the costs and the timing. There are measures in other legal situations where one would set a maximum fee for a piece of work, no matter how long it took. At the very least that can encourage speed in the conclusion of inquiries.
Deputy Paul J. Connaughton: As far as Mr. Boland is concerned, was what happened in this situation a run-away train which could not possibly happen again?
Mr. Tom Boland: It absolutely should not happen again. I will not say that it will not, but it absolutely should not happen again. We have made our position abundantly clear to all of the institutions. I would be very surprised if it did happen again. In fairness, it has not happened in the recent past, that we are aware of, and we have made inquiries. That is the best I could say.
Deputy Paul J. Connaughton: Thank you Chairman.
Chairman: Let me put a question to Mr. Fennell. In his remarks about the fee of €1,500 per day, he said he understood that this level of fee was the going rate for these type of investigations. Were there other investigations in the college before or after this of which we are not aware?
Mr. Jim Fennell: Yes, there is one in respect of a dignity at work issue.
Chairman: Did the GMIT pay the same level of costs?
Mr. Jim Fennell: We put this case out for quotations The quotation was €180 per hour.
Chairman: So the quotation was €180 per hour?
Mr. Jim Fennell: Yes.
Chairman: Was this quotation the guideline for fees?
Mr. Jim Fennell: No. The Chairman asked whether there were subsequent cases. This was a subsequent case which arose in regard to a dignity at work issue with which we had to deal.
Chairman: First, before this investigation arose, were there other investigations in the college?
Mr. Jim Fennell: Yes. There was a previous case of a dignity at work issue, for which we paid fees of €180 per hour.
Chairman: How much did that cost?
Mr. Jim Fennell: I believe the cost was €17,447.
Chairman: There was a second case in respect of a dignity at work.
Mr. Jim Fennell: There was a subsequent case that occurred in 2014.
Chairman: How much did that cost?
Mr. Jim Fennell: That case is ongoing, Chairman.
Chairman: At a cost of €180 per hour?
Mr. Jim Fennell: In that case we sought three quotations.
Chairman: How much has been spent on that case to date?
Mr. Jim Fennell: We have spent €31,000 plus VAT. The case is due to be completed by the end of October.
Chairman: What will it cost by the end of October?
Mr. Jim Fennell: There is a budget cap on that of €45,000 plus VAT.
Chairman: That case will cost €45,000 plus VAT. There have been two cases. How does GMIT resolve other issues?
Mr. Jim Fennell: There are not many occasions where the case has to be heard externally. There are 8,000 adults between staff and students and things happen. In the main, the vast majority of cases can be dealt with internally but sometimes, by their very nature, they have to be dealt with externally and sometimes they move to a certain point of the process where there is an external appeal.
Chairman: In the context of those cases, have any senior executive been lost?
Mr. Jim Fennell: No. The cases would not necessarily all involve senior executives of the college. A dignity at work issue-----
Chairman: I am not speaking of those cases. This is a separate question. Did GMIT lose two senior executives?
Mr. Jim Fennell: They are the only two external cases, besides this, in the past few years.
Chairman: Did the senior executive who left leave with special pay? What happened?
Mr. Jim Fennell: I am sorry, Chairman. We did not lose any senior executive. By virtue of the completion of the disciplinary process, a vacant position arose at executive level.
Chairman: The college lost one person at executive level.
Mr. Jim Fennell: Yes, but the process involved a relocation.
Chairman: The person was put elsewhere. Did that happen once?
Mr. Jim Fennell: Yes.
Chairman: Not twice?
Mr. Jim Fennell: Once, but there was a peculiar situation where two posts were blocked for the duration of the process and then when it ended, by virtue of that, the two posts became vacant.
Deputy Robert Dowds: Chairman, in the plagiarism case, did the individual concerned get a degree, be it a primary or post-primary degree?
Mr. Jim Fennell: The student had graduated before the matter was brought to the attention of the president or the registrar.
Deputy Robert Dowds: Did it affect the standing of the degree after the inquiry?
Mr. Jim Fennell: As it transpired, we did not continue that masters programme the following year.
Chairman: Who set the terms of reference?
Mr. Jim Fennell: lt was done by our legal advisers at the time, Arthur Cox.
Chairman: Did GMIT consult the Higher Education Authority or the Department of Education and Skills on the cost of these investigations so that the figures could be compared?
Mr. Jim Fennell: No, we did not.
Chairman: Did Mr. Fennell consider questioning the HEA or the Department of Education and Skills on their experience?
Mr. Jim Fennell: No, Chairman, we did not. The advice from Arthur Cox was to take on board a senior academic from outside the institute of technology sector. We asked Arthur Cox to find a senior academic. It is a very restricted field from which we could have taken somebody.
Chairman: I understand that Mr. Boland did not know about this until 2013, is that so?
Mr. Tom Boland: That is correct Chairman.
Chairman: Did Mr. Ó Foghlú have any knowledge of it?
Mr. Seán Ó Foghlú: No.
Chairman: There were reports in the media, did Mr. Fennell say there were media reports in 2010?
Mr. Jim Fennell: They were circulated in November and December 2010 and actually continued into the spring of 2011.
Chairman: Were the reports in local newspapers?
Mr. Jim Fennell: By January, February and March the report was circulating in national newspapers.
Chairman: In what year?
Mr. Jim Fennell: In 2011. In the months leading up to the establishment of the investigation.
Chairman: We can take what we have learned from this, that neither Mr. Boland nor Mr. Ó Foghlú read the local or the national newspapers. Is that correct?
Mr. Seán Ó Foghlú: We were not aware of the investigation. However, HETAC, the awarding body, which gives delegated awarding sanction to, which deals with quality assurance issues, which has now become another body after an amalgamation, was aware of the plagiarism issue. The matter was discussed with them because they are the regulator when it comes to quality assurance issues. They are not a regulator in terms of expenditure but they are a regulator in terms of quality assurance issues.
Chairman: With a significant issue such as this and given the fact that the Higher Education Authority, HEA, and the Department of Education and Skills must be answered to, as funding from the Department via the HEA is being received by the institute, would the institute not have asked whether they had a mechanism that cost less than €1,500 per day? They - or someone else - are responsible for quality assurance. For example, would the institute not have engaged with the agency mentioned by Mr. Ó Foghlú to determine the best route to take in this situation? It seems that the institute took this course to protect the college's reputation. It would have been much cheaper to take its own advice, namely, one act of plagiarism does not a bad college make. The institute seems to have spent €400,000 plus only to buy itself bad publicity.
Mr. Jim Fennell: Yes.
Chairman: That is essentially what it has done. For a college and a college president to take that course of action is difficult to understand. Every business with that number of employees experiences some sort of difficulty. Ignoring the issue might have been the best option.
Deputy John Deasy: May I ask a question?
Chairman: I wish to ask Mr. Burke from the Department of Public Expenditure and Reform what he sees in all of this.
Mr. John Burke: The figures are staggering in terms of-----
Chairman: When did Mr. Burke's Department know about them?
Mr. John Burke: We would have been aware of media stories and the ongoing issues in the education sector, given its scale, but we do not have the capacity to delve into these issues.
Chairman: Neither does the HEA. We heard that previously. Mr. Ó Foghlú and his Department say more or less the same. It is incredible that, according to today's opening statements, while everyone was shocked, it was not the speaker's fault, but that of the "man over there". Everyone pointed the finger at everyone else. Mr. Fennell and his college should have taken greater care but, in light of the audits that we have received today, the figure in question as well as the attitude of the HEA, the Department and many colleges towards governance in the education sphere are shocking. We will address those colleges later.
I am being told that people have learned from this situation. If Mr. Boland and Mr. Ó Foghlú had been overseeing the HEA, had the HEA been overseeing the college or had Mr. Burke's Department been involved proactively, this would not have happened. They are telling me that the processes were fit for purpose - that is what the report asserted - yet this happened. The processes are not fit for purpose. Taxpayers' money has been squandered in this and other instances. Mr. Boland and Mr. Ó Foghlú tell me that they have learned lessons. They have bolted the gate but the horse is gone again. That is what I read from the opening statements. They can dress it up in any way they like but that is what happened. I expect greater oversight of taxpayers' money by Departments and agencies than I have seen in the HEA and the Departments of Education and Skills and Public Expenditure and Reform.
Mr. John Burke: There are centralised procurement guidelines.
Chairman: I heard all of that.
Mr. John Burke: Well, they are-----
Chairman: Centralised procurement guidelines? I can point to audits of instances when centralised procurement guidelines by large State agencies have been ignored, costing the State a fortune. Mr. Burke's Department does not seem to have the muscle necessary to ensure that procurement processes are in place and adhered to. This is the issue for each of the witnesses. They might believe that the difficult time they are having this morning will be over when they walk out the door, but it will not be over. Many people are disgusted by the manner in which these processes are policed. The committee has highlighted such instances a number of times and referenced them in special reports, yet they are still happening. Dressing up an opening statement and claiming that someone has learned for the future is not good enough. The authorities before us have not been overseeing the bodies that they are expected to oversee properly. They are at fault as much as the college. I am sure that the public does not disagree much with my view.
I wish to ask about the accounts. One of the college's figures is for room hire at €2,500. Has the college no rooms of its own to use?
Mr. Jim Fennell: I do not have the accounts-----
Chairman: Did anyone question Arthur Cox about the €39,000 charge?
Mr. Jim Fennell: I am sorry. Was the room hire in the context of the investigation?
Chairman: I do not know what it was for.
Mr. Jim Fennell: Is it in the accounts? I do not have it.
Chairman: Yes.
Mr. Jim Fennell: It arose because the investigation insisted on meeting outside the college.
Chairman: Why did the college not tell the investigation that it had a room that could be used?
Mr. Jim Fennell: We did. The investigation was held outside the building to protect its independence.
Chairman: Oh dear. The college paid Arthur Cox €39,673. Did the college question it about value for money, its costs or its time? Did the college push Arthur Cox to the limit to achieve value for money for the taxpayer?
Mr. Jim Fennell: Yes. We have since procured new solicitors through the education procurement service, EPS.
Chairman: Who are they?
Mr. Jim Fennell: We have two: Beauchamps Solicitors for specialist services, although I cannot remember off the top of my head the name of the one for regular work such as conveyancing.
Chairman: Who are the internal auditors?
Mr. Jim Fennell: Beauchamps Solicitors are the institute's main advisers.
Chairman: Who are the internal auditors?
Mr. Jim Fennell: Deloitte.
Mr. Seamus McCarthy: It is a common contract for almost all of the institutes of technology.
Chairman: They must accept it.
Mr. Seamus McCarthy: Deloitte has it.
Deputy John Deasy: As an add-on to what the Chairman stated, it is not overstating the matter to say that it is clear from our work that certain Government agencies and Departments treat the centralised procurement guidelines as a matter of opinion. This is substantiated by the work of the Comptroller and Auditor General. We deal with the issue continually. I believe that this is the committee's view. There is a problem. Citing the centralised procurement guidelines is no longer sufficient, given the regular infractions, particularly by a couple of large agencies.
In hindsight, does Mr. Ó Foghlú agree with the idea that €1,500 per day was the going rate? People ask whether we learn anything from these issues. As Mr. Fennell pointed out, when a body has 8,000 people, such issues arise. They must be investigated. Does Mr. Ó Foghlú agree that €1,500 was a reasonable amount to pay, regardless of the overrun? Does his Department plan to implement set guidelines across the sector in terms of similar investigations?
Mr. Sean Ó Foghlú: Two issues are involved, one of which is the duration of any arrangement and the cost of same. In considering commencing an investigation or tendering process of any sort, an institution should have regard to these issues or have access to a tendering framework.
For example, on harassment and other issues, the ETBs have put in place a framework on the basis of which they can operate and from which they can draw down in terms of the costs involved. Those sorts of frameworks are the arrangements that should be put in place for investigations. Now, every investigation depends on trying to get the right person to do the job. A particular example is one of which this committee will be very aware. I am not talking about costs in this regard. When we carried out the investigation into WIT, we had to find the right individual for the job. We would very lucky in employing Dermot Quigley to do that work. There is an issue about the nature of the investigation and matching the expertise to it. A call was made, which appears to have been an appropriate call, that this would be academically driven, in the first instance, because it was an academic inquiry. Then there is an issue with regard to finding the right cost base for it. A cost of €1,500 a day seems excessive. In that context, a process was not undergone in the context of deciding on the amount.
Deputy John Deasy: Let me ask a different question. Is there a facility to allow the Department to have purview over any investigation and the framework drawn up in respect of it from here on? Would it make sense for the Department to have a second set of eyes on future investigations?
Mr. Seán Ó Foghlú: I do not believe that the Department or, indeed, the HEA, should second-guess agencies.
In relation to the matter of detail, I think we are at a very important stage. I have listened to what the Chairman said. We are concerned about the activities of institutions and agencies. We have endeavoured to put in place much more effective frameworks. We had frameworks in place and we have been seeking to improve them. Within the Department, we are seeking to bring together the three groups we have - namely, the ETBs, the HEIs, with the HEA, and the national agencies - and to look at best practice. The big way we can bring about change is in the context of the culture within the institutions. This is reflected in the work the HEA is doing in organising briefing seminars on procurement and other issues for the finance officers and other people in the institutions entitled to do it. Improved behaviour will not come about by centralised control, it come about through cultural change and an element of increased regulation and that is what we are seeking to put in place. It is about having an improved framework in place; not seeking to control every activity. That is the balance that we have to take because neither the Department nor, indeed, the Department of Public Expenditure and Reform can seek to engage in that level of detail with each institution so we have new early warning mechanisms and improved liaison with the Comptroller and Auditor General.
The list the committee has seen this morning reflects exactly what we do in the Department, the exception being that we are trying to get that list earlier, where there have been breakdowns, in order that we can intervene. The HEA is following up on every matter with the higher education institution to which the Comptroller and Auditor General's report refers. The HEA has quarterly meetings with the Comptroller and Auditor General so that if issues are emerging, it will hear about them. There are different ways of proceeding but having departmental or HEA approval for every action of an institution is not one of them. I just do not think that will work.
Deputy John Deasy: I am not so sure I specifically advised that there should be departmental approval. There is a difference between strict departmental sanction and just having knowledge of particular terms of reference. There is a big difference. I am not saying a matter needs to be referred up the line in the Department before approval is given for the sanction of finances in respect of a particular investigation. At the very least, it should be sent to or communicated to the Department. If, in such circumstances, the Department had an issue with it, then that would be made clear.
Mr. Seán Ó Foghlú: Effectively, that is approval. The framework the Deputy outlined would involve approval. It would mean the Department would have to intervene for something to be effectively approved.
Deputy John Deasy: No. It just means the Department would receive a communication and have knowledge of a particular funding stream with regard to an investigation. I think there is a difference.
Mr. Seán Ó Foghlú: I think it is a case of having best approaches and shared approaches in the sector in the context of the procurement framework.
Deputy John Deasy: That is fine. I accept that explanation.
Mr. Seán Ó Foghlú: I think that is the way to progress it.
Deputy John Deasy: That is fine. The Secretary General has lobbed out my suggestion and I do not disagree with him. It seems like a fairly common-sense measure that someone would at least be aware and cognisant of these issues as they arise and of the kind of money that, potentially, would be spent on each investigation. I am not so sure that is such a crazy idea, to be honest.
Chairman: I wish to return to the point made by Deputy Deasy. I do not want to labour the point because there are other people waiting to join us. The HEA funds Institutes of Technologies Ireland, IOTI, in the context of the audit of the institutes. My understanding is that Deloitte has won the contract in that regard. Is that correct?
Mr. Tom Boland: I think so, Chairman. Yes.
Chairman: But, Mr. Boland, you are the boss.
Mr. Tom Boland: Yes.
Chairman: Either you know or you do not know.
Mr. Tom Boland: There is a shared tender for the audit.
Mr. Seán Ó Foghlú: There is a shared tender for the internal audit.
Chairman: It is paid for by Mr. Boland's organisation.
Mr. Tom Boland: IOTI gets funding from the institutes of technology.
Chairman: Is it for that?
Mr. Tom Boland: Yes, for the running of IOTI.
Chairman: Is that from the HEA?
Mr. Tom Boland: Yes. Ultimately, it comes from the IOT budgets.
Chairman: Sorry?
Mr. Tom Boland: It comes from IOT budgets. Let me confirm that we do not pay directly to IOTI. It is the IOTs who pay IOTI.
Chairman: Who pays Deloitte?
Mr. Jim Fennell: Each individual institution.
Chairman: To where does that money go?
Mr. Jim Fennell: We pay Deloitte for the work that they do but they-----
Chairman: So, Deloitte wins an overall contract, under broad headings-----
Mr. Jim Fennell: Yes.
Chairman: -----and then each institution pays for its services.
Mr. Jim Fennell: We do a sector-wide tender, then they win it for the sector. Rates and the scope of the work involved are then agreed.
Chairman: Is that for each internal audit?
Mr. Jim Fennell: Yes, and the internal audit committee of each individual institution lays out the audit plan for the year and then Deloitte-----
Chairman: Does GMIT pay directly to Deloitte?
Mr. Jim Fennell: We pay directly to Deloitte, yes.
Chairman: Does the money that GMIT pays to Deloitte come from IOTI?
Mr. Jim Fennell: No.
Chairman: Does it come from GMIT's fund?
Mr. Jim Fennell: It comes from our State grants or total revenues.
Chairman: So IOTI pays half in respect of the broad framework.
Mr. Jim Fennell: It handles the process.
Chairman: Is it beyond the remit of the HEA or IOTI at that level - or the Department - to request Deloitte to supply all of the results under the various headings? For example, one could say that, according to the accounts, the amount paid by GMIT in respect of travel and subsistence was €727,000 in 2012 and €723,000 in 2013. Under that arrangement, Deloitte would be able to say, looking at the travel and subsistence for CIT, for example, that it was almost €2 million in 2012 and €2 million in 2013 and an organisation with oversight, such as the HEA or IOTI, would be able to ask why that was the case. This would constitute governance in a very simple fashion by means of auditing the figures of every single institute and it would mean that we could ask GMIT, for example - representatives from which are with us today - why its catering facility lost, if I am correct in my estimation, €33,000.
Mr. Jim Fennell: That was in the 2013 accounts but we made a surplus in 2014.
Chairman: Somebody with oversight of those institutes would be able to ask why something occurred. Out of those audits, as they are compiled and centralised, somebody could also ask why a particular organisation did not lodge details of its accounts with the Comptroller and Auditor General for the past four years. The latter has happened. Someone might be able to ask why an organisation has not kept up with proper procurement practice as laid down by Mr. Burke's Department. Has Mr. Burke no interest in ensuring, for example, that something like that happens? His Department has all the information. It would be easy to just draw down the figures if the Department has that amount of information.
Mr. John Burke: I believe there is a reporting arrangement in place in terms of procurement whereby if things are not procured properly or if the process has not been completed within a certain period, it has to be notified to the OGP.
Chairman: What is the OGP?
Mr. John Burke: It is the Office of Government Procurement, which has been set as an agency within DPER which is my own Department.
Chairman: That is Mr. Burke's Department. Let us just stick with his Department-----
Mr. John Burke: Yes.
Chairman: -----because somebody is overlooking them. They are not doing much. From what I have seen in the audit reports presented this morning, they are not doing much because there are examples here of the procurement process being ignored left, right and centre. I want to stick with this matter and then I shall finish.
The figures indicate that the cost of travel and subsistence for both 2012 and 2013 was in the region of €750,000.
By comparison, CIT is €2 million. Then there is bad debt provision of €287,000, with a loss on catering of €33,000.
Mr. Jim Fennell: The bad debts relate to the student fees, in the main.
Chairman: What does that mean? Does it mean students are not paying their fees?
Mr. Jim Fennell: Yes. The process we have is that we register all students who accept a place and, particularly over the last number of years, we put a payment plan in place for those who struggle to afford the fees. Our policy is that we do not remove the students from the classroom or debar them from attending exams. We allow them to complete the year they are on and then we refuse to admit them to any subsequent year if they have not paid the debt from the previous year.
Chairman: In 2012, GMIT's bad debt provision was €166,000 and in 2013 it had grown to €287,000.
Mr. Jim Fennell: Yes, it would be rising in line with the size of the student contribution because at one stage this was a matter of hundreds of euro whereas now it is €3,000.
Chairman: What does Mr. Boland think of that?
Mr. Tom Boland: Yes, what the Chair suggests is doable. I will come to address some of the elements we do undertake. He must bear in mind that the accountability framework here is that the president is an accountable person, there is a governing body, there are internal auditors and there are external auditors in the form of the Comptroller and Auditor General. In the last year or-----
Chairman: And we have Mr. Boland overseeing it.
Mr. Tom Boland: Absolutely.
Chairman: And Mr. Ó Foghlú behind him.
Mr. Tom Boland: What we are doing in that space is not going nearly as far as the Chair is suggesting, with us doing individual audits of aspects of institutions. There are three things that are relevant here. First, we have for some time been doing what we call a trend analysis of expenditure across the sector, which gives us a sense of the different levels of expenditure in the different institutions, to see how they compare. In response to more recent difficulties, we now also require the institutions to share generic issues that arise in their internal audit, whether that they are not adequately dealing with procurement or that there are issues with travelling and subsistence. We are, therefore, requiring them to inform the sector as a whole of issues that arise in their internal audit so that a degree of learning is going on. Very importantly, we have not done it yet, but we have signalled to the sector our intention to conduct, in co-ordination with the Department, what we describe as rolling reviews of various aspects of expenditure in the sector. We have not officially informed the institutions of this, but I would like to see procurement as one of the first areas where we would do a system review of what is happening in the area and get professional people to take a system view of what is happening, in addition to the various levels of accountability.
Chairman: Who are the auditors?
Mr. Tom Boland: Our auditors are the Comptroller and Auditor General, of course, but our internal auditors are-----
Mr. Stewart Roche: Mazars.
Mr. Tom Boland: Mazars.
Chairman: Who would do the trend analysis? Mazars?
Mr. Tom Boland: Mr. Roche actually does the trend analysis internally.
Chairman: Internally.
Mr. Stewart Roche: Yes.
Chairman: This is where I see the problem. Deloitte is doing all this other work with the institutions. That is where all the information is. It has everything, down to the cost of everything, or it should have, and it does not share that information.
Mr. Stewart Roche: The financial trend analysis is circulated to the sector.
Chairman: Where is the information compiled from?
Mr. Stewart Roche: I compile it from the audited accounts.
Chairman: Of all the institutes.
Mr. Stewart Roche: Yes. Only audited accounts.
Chairman: Mr. Roche, therefore, looks at the Deloitte accounts of every institute.
Mr. Stewart Roche: No, I look at the Comptroller and Auditor General accounts.
Chairman: What I am asking is that Mr. Roche would look at the audited accounts-----
Mr. Stewart Roche: That is what I do.
Chairman: -----from Deloitte. They are the ones involved in the internal audit-----
Mr. Seán Ó Foghlú: There is a slight misunderstanding. The external auditor for the audited accounts of the institutes of technology is the Comptroller and Auditor General.
Chairman: I understand that.
Mr. Seán Ó Foghlú: Deloitte does the internal audit service for them, so they do not prepare the accounts. The HEA goes through the audited accounts in detail, building on the work of the Comptroller and Auditor General.
Chairman: Is Mazars paid separately?
Mr. Seán Ó Foghlú: The internal audit service is a different function, to ensure they sign off on their system of internal financial control.
Chairman: I know that but between Deloitte, Mazars and the Comptroller and Auditor General someone is falling down and there are piles of information there, if I understand audits. That is my view on it. It is seriously remiss of the Department and the HEA if they do not go back over Deloitte's working papers and have a central base to compare figures. The figures I have given the witnesses today are extraordinary. The bad debts written off amount to €287,000, there is a loss of €33,000 on the catering company and issues arise, like the one we are talking about. All we get from all the witnesses is words like, "Yeah, it happened, but listen, we've locked the gates firmly now". Great.
Are there any other questions?
Deputy Patrick O'Donovan: I know we are on the GMIT issue, but I mentioned this at the start of the meeting and the Chairman said it might be appropriate to ask it later on. Can I now ask about the issue I raised regarding the University of Limerick and the Limerick Institute of Technology?
Chairman: We would like the Deputy to do that under the HEA financial accounts.
Deputy Patrick O'Donovan: That is okay. That is fine.
Chairman: We will take Mr. Kelly next. With the permission of everyone here, we will end this segment of the meeting and we will ask Mr. Kelly-----
Deputy John Deasy: Can we take a break?
Chairman: Whatever members want to do. I am just chairing.
Deputy John Deasy: I suggest a half an hour break.
Chairman: Mr. Fennell is free to go.
The witness withdrew.
Sitting suspended at 12.58 p.m. and resumed at 1.30 p.m.
Technological University for the South East: Report
Chairman: We will now discuss the report from Mr. Michael Kelly and thereafter the financial statements of the HSE. I welcome Mr. Kelly to the meeting and invite him to make his opening statement.
Mr. Michael Kelly: I thank the committee for the opportunity to discuss this project. I regard the technological university for the south east, TUSE, project as being of enormous significance for the future economic and social development of the south east region. As such, I appreciate this opportunity.
As referred to by the Secretary General earlier, I was asked by the Minister for Education and Skills to lead this process, engaging with a broad range of stakeholders within the two institutes of technology in Carlow and Waterford and more generally across the south east region. Consistent with the terms of reference, the process focused on the development of a shared vision for the new technological university and identification of the practical steps required to bring it about within an acceptable timeframe. I had the full co-operation, including administrative and logistical support, of both institutes and allocated a large proportion of my own working time to the project over the first half of 2015. I also, of course, had the full support of the Department and the Higher Education Authority, for which I wish to express my thanks.
Through the engagement I had with the many groups and individuals I met during the course of the project I learnt a great deal more about the challenges faced by the south east region and the potential of a new technological university to help address these challenges. I was in a position to bring my experience from the Dublin consortium to bear on the project and my intention was to assess the overall rationale and viability of the TUSE in the first instance and to then map the practical steps I believed necessary to deliver it. History will judge the accuracy of my assessment, but it is a source of some satisfaction that both institutes agreed to enter into the preliminary facilitation process I had recommended as a first step. Based on my knowledge of both institutes, I have every confidence that with strong positive leadership they can surmount the challenges to be faced in agreeing a shared vision for the new institution, in developing a unified implementation plan and in taking the steps necessary to achieve TU designation within a timeframe that is broadly acceptable to the community across the south east.
I am conscious that the report I prepared has been circulated to the committee and I will not dwell on its detailed content. Rather, I believe there would be greater benefit in speaking about some of the issues that hindered progress in earlier phases and some of the critical success factors, as I see them, in ensuring a successful outcome for complex organisational development projects of this nature. Any views I express are entirely my own. The pathway to designation as a technological university is deliberately demanding of applicant institutes. This is justified on the grounds of clearly differentiating the new technological universities from existing institutes of technology and in protecting the Irish university brand internationally. However, it imposes an additional set of pressures on the applicant institutes at every level and I believe there needs to be a greater willingness to support the additional activities involved and to recognise the complexities and additional workloads required. In saying this, I am conscious that the Department and HEA are faced with many competing priorities and that the overall level of investment is of necessity limited.
Beyond this general point, the process of preparing the stage 2 business plan in the south east was complicated by a series of interruptions due to external factors, which made it difficult to develop and maintain momentum. Some of the issues involved, relating to financial governance in Waterford Institute of Technology, WIT, also hardened attitudes around the need for robust due diligence exercises. None of this was helpful in generating a mood of mutual trust, respect and confidence, which is the only foundation on which to build a truly committed collaborative venture. More specifically, in paragraph 3.3 of my report I identify a number of learning points from the earlier phases of the south east project. These should be brought to bear in thinking out the next stages and may also have wider application elsewhere. They can be summarised as follows: the focus must be on an entirely new institution, offering to the region a new level of capability and regional reach rather than any extrapolation of existing institutes and offerings; the partners must find ways to rebuild mutual trust and respect as the basis for equality of esteem; they need to agree a shared vision and a framework which ensures all relevant issues are bottomed out and processed to an agreed conclusion; they need to acknowledge the value of diversity, building on their respective strengths while remaining open to new opportunities across the region; the project will need to be proactively supported financially, starting with the change management processes involved; and the framework adopted should make the needs and expectations of regional stakeholders central to the design and implementation processes.
Later in the report, in chapter 7, I have identified a number of enabling and supportive measures which I believe can improve the prospects of success. The backdrop to this section of the report is the evidence presented in a European University Association report on merger and concentration processes in European countries over the past 15 years. That report is clear on a number of key findings: the wider benefits include increased quality, realisation of economic gains, system consolidation, strengthening of institutional positioning and geographic drivers; the transition period for newly merged institutions requires considerable set-up investment if the expected dividend in quality of outcomes is to be realised; and the pay-back period can be extensive.
Applying these principles in the Irish context, the primary goal must be to achieve a step-change in quality and outcomes, from what could be achieved by institutes of technology at a given level of investment to what should be achieved by technological universities benchmarked against the best internationally. The policy framework rightly places emphasis on the achievement of demanding academic and institutional criteria. The full value of doing so is unlikely to be realised if we do not match our quality aspirations with the level of set-up investment required and adjust the funding model for technological universities, TUs, based on a rigorous evaluation of their funding needs. I would expect that there will be an opportunity for an informed dialogue between the various TU consortia and the HEA on these and related issues in due course.
Of course, the merging of institutions and the synergies from combining resources and capabilities will also present opportunities for efficiency gain and stronger capacity for generating new income streams. These will need to be fully exploited in concentrating resources on the quality of the student experience, research excellence and other aspects of institutional mission in these new institutions. This will also form a natural part of the dialogue on a new funding model for TUs. While this entire discussion goes a little beyond my brief, which concerns the technological university for the south east, TUSE, I have taken the liberty of addressing the issue and have been clear in the report that this is the backdrop against which my recommendations were made.
The enabling and supportive measures I have proposed include: supportive structures, which are concerned with an appropriately constituted, independently chaired steering group; a joint project team combining skill sets from both institutes; and a new feature in the form of a regional stakeholder forum, which reflects the significance of the TUSE in addressing the real needs and expectations of the entire community in the south east. The proposed measures also include support for facilitation and change management. This would build on work already done and should involve a cross-campus, bottom-up engagement process across both institutes on the design of every facet of the new institution. Also included are institution support and acceleration measures. While these are not identified specifically, the case is made that, in a context where both institutes are constructively engaged on the design and execution of TUSE, sympathetic consideration should be given to further measures which would address potential obstacles or accelerate progress towards meeting designation criteria within an acceptable timeframe. Finally, the point has already been made that if we want to realise the full value of developing the TU model in Ireland, we will need to rigorously assess its real funding needs.
If I could summarise, there is a strong policy rationale and business case for proceeding with the TUSE project, based primarily on the needs of the south east region. The project is feasible. With a fair wind, the necessary planning and preparation should be achievable within three years, subject to validation of aggregate data on TU designation metrics and a total commitment by both institutes to get on with it I have outlined the practical steps required. Both institutes are already engaged in the first step recommended, through their ongoing participation in the current facilitation process.
I will be happy to address any questions within the limits of my competence.
Chairman: Thank you, Mr. Kelly. May we publish your statement?
Mr. Michael Kelly: Yes.
Deputy John Deasy: I welcome Mr. Kelly back to the committee. I will start where he left off. The overriding point he makes in his report is that he gives affirmation and validation to the concept. He makes that very clear when it comes to policy and when he looks at the business model. Universally, people who have read the report would say it is a necessary step to restart this process. I think it has worked. That is all positive and good.
I think people in Waterford and the south east would probably expect me to ask what has happened since the report has been published and presented to both institutes. Maybe it is also a question for the HEA and the Department.
Mr. Michael Kelly: I certainly think others can comment on that, but I will provide an initial response to the Deputy. Based on my close contact with both institutes over quite a protracted period earlier in the year, I am confident there is a strong belief in both academic communities, and indeed among the staff more generally, in the concept of a technological university and in the value of doing that in the south east. Both institutes prepared very ambitious and well-informed vision statements setting out their stalls, as it were, as to how the TU might materialise. Alongside that, there were also indications of real stresses in relationships between the two institutes at many levels. There is a very strong rationale, therefore, for recommending a preliminary facilitation process in order to ventilate some of those problems from the past, to try and deal with them, to get them out of the way and to get on with the substantive business. A very strong recommendation in my report was that nothing substantive should commence before going through that preliminary stage in a serious way. My understanding - although the Department may be able to amplify this - is that the process is under way. I have no reason to believe it is not successfully grappling with the issues that should be addressed.
Deputy John Deasy: Would it be helpful and appropriate at this point to ask the Department what has happened with that particular recommendation?
Mr. Seán Ó Foghlú: I thank the Deputy. The Minister met with Mr. Kelly on 2 July and talked through the report with him. Prior to publishing the report she met with the chairs and presidents of the two institutions. That was on 21 July and the report was published on 27 July. As was outlined at the time, it was agreed that a project plan for a process of facilitation would be developed for the consideration of the two governing bodies at the end of August, and that happened and was agreed upon. The facilitation process is now under way. A facilitator has been engaged and the initial meetings have taken place. The feedback we have got has been that there is good engagement at those meetings.
Deputy John Deasy: Can Mr. Ó Foghlú outline the specifics involved? How many meetings are there and who are they with? Mr. Kelly made some very specific recommendations and points with regard to why this failed and what needed to happen.
Mr. Seán Ó Foghlú: Again, there is a facilitation under way to bring the two of them together. There have been meetings at senior level between the two institutions. I happen to know there have been meetings with the chairs and presidents but we are not aware of any more detail other than that those initial meetings have taken place. The aim is to complete an initial phase of that facilitation so that it can move to actual co-operation towards building towards the next stage.
Deputy John Deasy: That is fine. I think Mr. Ó Foghlú will understand where I am coming from when I ask the questions. This stems from the view which Mr. Kelly has in his report, that this could be completed within three years. That is critical for people looking in from the outside because of how long, laborious and painful the process has been up to this point. When I ask these questions, it is important the parties concerned understand that there is keen and constant oversight of this process from day one by the Department.
What we have seen in the past ten, 12 or 14 years in which I have been a Deputy are lapses with regard to governance, not just in Waterford Institute of Technology - we can talk about those - but also in Dublin. It is just critical that there is this kind of constant attention. We will get to the financial side of this in a moment. Will the witness explain to the committee what he perceives to be his role as this process begins? Is it just about receiving the odd telephone call from the people involved saying that everything is grand and that meetings are taking place or is there somebody in the Department constantly checking to see how this process is evolving and whether Mr. Kelly's recommendations are being followed through?
Mr. Seán Ó Foghlú: We have somebody in the Department who is constantly checking this but it is the responsibility of the institutions. We have engaged the facilitator and we engaged Mr. Kelly, so we are the engager of the facilitation. We are taking that role and engaging facilitation. We are getting informal feedback on a constant basis from both parties and the facilitator.
Deputy John Deasy: How long will this initial stage take?
Mr. Seán Ó Foghlú: It will take a number of months.
Deputy John Deasy: A number of months. Okay. Is it possible within the timeframe pointed out by Mr. Kelly of three years?
Mr. Seán Ó Foghlú: That is absolutely the Minister's aim.
Deputy John Deasy: Okay. Then again, Ministers come and go, as the witness knows. Mr. Ó Foghlú will be dealing with this after the current Minister and her successor. I am not trying to be smart but that is the reality.
Mr. Seán Ó Foghlú: It is the Department's aim as well. It is a policy, so it is the Minister's aim that is implemented. I was just trying to make that distinction.
Deputy John Deasy: That is grand.
Mr. Seán Ó Foghlú: I am not trying to separate them.
Deputy John Deasy: That is fair enough. As far as the Higher Education Authority, HEA, is concerned, there are a couple of roles. It adjudicates in the process to a certain extent but it is a facilitator. Does Mr. Boland have any comment with regard to that initial process that has been set up and how he sees the authority's role in this? The Department has explained that it has somebody on point who is facilitating in this instance and reporting back from both institutions. Will Mr. Boland explain the authority's ongoing role in this new process?
Mr. Tom Boland: We welcome the new process. There is a sense in the HEA that, in a way, this project was not given a full chance on its first outing and this is an opportunity to put it back on track, as has been said. As a process, that is very valuable. The building of trust between the institutions at leadership level and more widely is absolutely crucial to a successful outcome and the institutions want the successful outcome of a technological university in due course. For the reasons mentioned by the Deputy, we are the ultimate adjudicator of the process so I do not want to say anything to predict the outcome. Our interest is to see this project progress well in the interests, first, of the region, as the case has been well made for the social and economic benefit that would come from technological university there, but also in the interest of the institutes. As two very strong institutes serving their region, they cannot put resources and time on a very long-term basis into a project that will not succeed. Our wish is that there should be a fair wind behind the project.
We will be supportive, as we have been supportive with the other consortia. The Deputy mentioned that he may want to discuss finance. There is some limited - I stress that word - capacity for the HEA to provide a certain amount of funding to support the institutions as they do their planning. We had made some funding available before but that had to be paused when the process was paused. Overall, we welcome Mr. Kelly's report and, as a very constructive first step, the facilitation process. We are very positively disposed to an early positive outcome. With regard to the Deputy's other question, I assure him that we will keep in regular contact with the institutes at leadership level on what is happening exactly.
Deputy John Deasy: I thank Mr. Boland. Having served as a member of this committee for the past four years or so, I know we have received continual assurances that everything that could be done was being done from the HEA's standpoint, as well as that of the Department of Education and Skills. Nevertheless, the process collapsed and we are back here again. I suppose this is a question for Mr. Kelly. Notwithstanding the fact that everyone agrees with his analysis on cause and his recommendations, is there a utility for a check in the system as it goes along to see if the process is working and those recommendations are being implemented properly? That is where the problem is and has been in the past. This was abruptly ended by an e-mail in October 2014 from WIT which indicated that was it, it was done. My difficulty is I deal with officials in the HEA and the Department of Education and Skills who are trying to do their job but, frankly, the process did not work because they did not know what was going on. Mr. Kelly repeatedly makes the point in his report that while people were collaborating on the face of it, when we scratched the surface there was very little going on in the form of substantive and progressive work towards the ultimate goal. It was almost like a facade, and the process was self-serving. The outcome did not amount to a great deal.
Should there be a process whereby we all sit back after a particular point and ask if we have reached the milestones and recommendations set out? This could be after six months or a year. My fear is that no matter how good the recommendations are, I could be back in a year's time - if I am elected - and see the same situation. The witness can understand that, especially if we consider the historical recurrence of the issue over the past ten or 15 years.
Mr. Michael Kelly: Let me rewind a little. With respect to the motives of the two institutes from the beginning of the process, I have no doubt that both entered this with enthusiasm and got on with what they felt had to be done in a conscientious way from the beginning. The stage one report they prepared bears testament to that. They then ran into difficulties and some of those were occasioned by what I term "external events"; they were external to this process and caused interruptions. I can contrast my experience with the Dublin consortium with what I have observed retrospectively with respect to the south east. In Dublin, from the beginning, the momentum flowed consistently, led very much by the three presidents in the colleges. I chair the steering group, and that is where the dynamic for pushing ahead needs to emerge.
At the end of the day in any of these consortia, the people who decide whether it happens are from the institutes concerned. We cannot make that happen. I am absolutely of a view, based on what I have observed in the south east, that given a chance to ventilate some of the issues from the past and given a proper framework within which they can progress their stage two business plan, this is perfectly achievable. Rather than a whip hand from outside, the incentives need to be of a more positive kind and they need to be around understanding what will support the process, propel it and incentivise people to go the extra mile. That is what is required; we require extra effort in addition to the day job in order to do everything that needs to be done.
Deputy John Deasy: Effectively, by extension, Mr. Kelly is saying he has faith in the people in the leadership positions in both of these institutions to do that.
Does Mr. Kelly believe the leadership is there for that to occur?
Mr. Michael Kelly: Yes. I have made careful recommendations around the construction of the steering group, for example, and the project team that should be in place. The main competency I would seek is enthusiasm. Again, based on the experience in Dublin, enthusiasm from the top and in the project team is what propels something such as this forward. Beyond that, an amount of material support must be provided to make it happen.
Deputy John Deasy: I will pick up on that. In Mr. Kelly's report and opening statement, he referred to the competing demands throughout the education sector. It surprised me, and Mr. Kelly is very strong on it. Mr. Ó Foghlú deals with the entire education sector and has me constantly pestering him about national schools in west Waterford. I understand how busy and demanding the education sector can be. A couple of days ago, I met with the INTO with a list of reasonable issues, as does every Deputy. What popped out of the report was how critical the proper resourcing of the process is. An example to which Mr. Kelly pointed was that when he puts together the steering groups and the key groups of people engaged in the process, they must be taken out of their regular day jobs and there is an issue regarding compensation and funding. Can Mr. Kelly talk about it, where it may have fallen down in the past and what funding and resources we need to make it work?
Mr. Michael Kelly: Let us examine the evidence. The evidence on which I rely comes from the report I mentioned in my statement, which comes from examining the experience of this type of process across the EU during the past 15 years. My interpretation of the evidence is that the rationale for working with the merging and consolidation of institutes is not about knocking things together but building stronger capability. It is through, for example, cross-disciplinarity, multi-disciplinarity, stronger quality processes and so on in the larger institution that we can achieve, not just efficiency gain, which should be part of the agenda, but also a step change in quality of outcomes in terms of the student experience, the quality of graduates, research excellence and the engagement the institutions have with their local communities and in responding to real needs.
When we start from there, the other message that comes through in the evidence is that one pays for this sooner or later, at the start or in lower-than-expected quality outcomes later. When we put a university brand on any Irish institution, we need to do it with great care, and this is reflected in the standard, in the very exacting designation criteria, for example. This also needs to be reflected in the preparation we put in. In the Dublin context, we have taken three years thinking it through and beginning to action some of the pieces of it. It will take much investment, and although finding this investment within the overall higher education budget is challenging, we cannot rely on institutions to find the great majority of what needs to be invested from existing pools, given that they would have to take it out of something that is already happening.
Deputy John Deasy: There are practical issues surrounding WIT regarding managing legacy debt. Major strains still exist. We are talking about funding this critical measure with all those issues still remaining, and it requires support from the Department and the HEA.
Mr. Michael Kelly: It does, and it is beyond my brief.
Deputy John Deasy: I am not saying something Mr. Kelly does not know. It would be useful, and many people working in WIT would ask this question of the Department. They would have a concern about the appropriate funding of the process as it continues.
Mr. Seán Ó Foghlú: One of the helpful aspects of Mr. Kelly's report was that it placed the project in an appropriate regional context and is trying to build up a regional rationale for it. The support in the region as a whole is a very important dimension. Mr. Kelly has outlined his recommendations for a project steering group or team and a regional stakeholder forum. When the facilitation is passed, putting such a structure in place will be very important. There was no question of resourcing in the past impacting on the situation, given that there was no lack of resources. More resources were available that they could have drawn down, but they were not in a position to do so given that they were not working together well enough and did not have the plans in place. We must recognise that there is a challenge for us and a need to resource it appropriately, particularly for the back filling and the change in the nature of institutions that is needed to enable the institutions to grow into an amalgamation. This is part of the challenge we face in considering the future funding of higher education.
Deputy John Deasy: Administratively, where does the funding stream come from? Is it the HEA? Is it both?
Mr. Seán Ó Foghlú: We fund the HEA. The HEA provides a limited budget for these issues and a number of amalgamations and technological university applications are under way. There is an existing limited fund. The question is how we can seek to enhance it. For State funding, it is an Estimates issue.
Deputy John Deasy: Some €381,000 was spent jointly, with €170,000 from the HEA. Ultimately, Mr. Ó Foghlú is saying it is his remit regarding the overall budget.
Mr. Seán Ó Foghlú: The Deputy mentioned the debt overhang. It was unfortunate that we had to loan WIT the money and we have had an investigation about it. Arising from the investigation, the Minister made a decision to invest the money. We recognise that WIT is in a difficult position and WIT has asked us to re-examine the repayment schedule. While we are examining it, we have not agreed a revised repayment schedule.
Deputy John Deasy: When will the Department make a decision about it?
Mr. Seán Ó Foghlú: In the near future, although it is not imminent this week or next week.
Deputy John Deasy: It would be a good idea to deal with it sensitively. It would send a message to everybody who works in WIT that the Department is taking seriously the funding issues in the institute. It would probably be a supportive measure if the Department were to deal with it differently.
Mr. Seán Ó Foghlú: We are aware of that.
Deputy John Deasy: Good.
Chairman: I have read Mr. Kelly's report. Could he give us some background about his work in this area, so we can understand the report?
Mr. Michael Kelly: Specifically regarding technological universities, I was a member of the Hunt groups which prepared the strategy on higher education a number of years ago. During the course of this, the concept of the technological university first emerged. Shortly after that, after leaving the HEA, the consortium forming in Dublin involving DIT, Tallaght and Blanchardstown asked me to take on the role of chairing the steering group, which is made up of the three chairmen and presidents. I have worked with this group since 2011 in working through the various stages of the pre-designation process, namely, stage 1 to stage 3 in the case of the Dublin consortium, which is also the stage reached by the Munster consortium, with which I have had no contact. In Dublin, we have come through the first evaluation by an international panel at stage 3.
That cleared us to move to stage 4, work that is under way. To my mind, the project has gone very well. We would have the same support needs in terms of financing and so on as other consortia and will be talking to the HEA about that issue. That is the background. I was able to bring that experience-----
Chairman: Mr. Kelly has ongoing work experience in this area and is familiar with the different stages.
Mr. Michael Kelly: Yes.
Chairman: He could look in at Carlow IT and Waterford IT to see where they are at and probably be able to judge the mindset of each organisation. Is he an outside consultant?
Mr. Michael Kelly: Outside-----
Chairman: Is Mr. Kelly a consultant?
Mr. Michael Kelly: In my day job, yes, I am part of a consultancy practice.
Chairman: What did it cost to present the report?
Mr. Michael Kelly: What is the cost of the report?
Mr. Seán Ó Foghlú: To be fair to Mr. Kelly, that is a matter for us to answer.
Chairman: That is fine.
Mr. Seán Ó Foghlú: We have not received a full invoice, but we expect the cost to be in the region of €33,000 to €35,000.
Chairman: In terms of the facilitator, again, is it an outside individual?
Mr. Seán Ó Foghlú: It is also an external facilitator.
Chairman: Has the person been appointed?
Mr. Seán Ó Foghlú: Again, we appointed a consultant working for a company.
Chairman: What is the cost involved?
Mr. Seán Ó Foghlú: It will be in the region of €12,000, but it will depend on the number of days facilitation. We have an estimate on which we are engaging, but it may be necessary to have further facilitation.
Chairman: Around €12,000.
Mr. Seán Ó Foghlú: Around €12,000 is our estimate.
Chairman: In the context of the report, one can have a facilitator and I suppose the report helps because it identifies where each college is at, but it appears from their reports that there is not a shared vision. Perhaps it might be described as a rich tapestry of considered ideas and that may be the case, but I am wondering how one merges the rich tapestry to achieve one single tapestry of rich ideas. To get back to what probably happened, I want to see how it relates to this rich tapestry. When Carlow IT asked about due diligence in relation to Waterford IT, that is when the train stopped. Did anyone ask why the train had stopped at that station and never moved from there? Was it that Carlow IT had introduced the question of due diligence too early or was it that there was an issue about due diligence on Waterford IT's side? If that was the case, how does one get over that issue?
Mr. Michael Kelly: On the assumption that the train had stopped owing to a request about due diligence, one may argue that in terms of timing the two things coincided, but, in fact, I would rely very much on the account I heard from other external facilitators involved in this process at earlier stages to interpret what was really happening. My judgment is that in terms of mindsets about real, deep-down collaboration, there were problems on both sides. That has been confirmed to me by other people who were involved externally previously. I would not go with the simple assumption that it was simply about due diligence. Let me deal with that because I have a very strong feeling about this issue. In the context of the Dublin consortium, we have actually left that matter to item Z. It is way down the list. Why? It is because everyone is dealing with one another in the context of trust. Our expectation is that there will be open disclosure of relevant data, information and facts and so on between partners in a trusting relationship and that it should not be necessary to rely on very expensive third party examinations to surface data that should normally be exchanged in an open way between two institutes preparing to work together in a collaborative arrangement.
I would have serious doubts about the value of moving due diligence way up to the top of the queue because it would set off all of the wrong attitudes, questions and so on. As someone who has experience of change management processes, restructuring and mergers in other contexts, I would, in the first instance, be much more in favour of developing the foundations of trust and relying on normal processes of open disclosure, which come for nothing and do not cost the taxpayer anything, rather than relying on expensive third party processes to yield data that really should be exchanged openly.
Chairman: Is that what happened in the other colleges-----
Mr. Michael Kelly: Yes-----
Chairman: -----where they had trust and shared the information willingly?
Mr. Michael Kelly: I can only talk about Dublin. There is no difficulty. As a matter of course, that is what people who are working together and planning to unify in a single integrated institution do.
Chairman: That is why I asked the question because in both statements they talk about the need for this structure in the south east. I understand it. I should declare an interest, being a representative of Carlow-Kilkenny. I am sure Deputy John Deasy, being a representative of Waterford, has the same interest. I wonder why, in the course of building that trust, it did not get to the stage where they trusted each other enough to share information openly.
Mr. Michael Kelly: I cannot offer any more on the issue than what I have in the report. In the case of my own exercise, the terms of reference are much more about looking forward than looking back. I did look back in trying to see if there were learning points from what had happened previously that we could harvest and put on the table in order that we would not repeat the same mistakes again. I have done that in the report. What they all pointed me towards was not to try to assume that we just move on with this in some conventional sense. Actually, we needed, for the very reason the Chairman mentioned, to allow a period, which I argued in answer to Deputy John Deasy's earlier point about about moving on with this, in order that it would not be rushed. We should be sure when coming out of that period that we have the foundations of trust and mutual respect that will be required to build a solid institution concerned with preparing young minds for the future. We need to be very careful about getting that environment right. We should spend the time and the trouble getting this stuff up on the table and out of the way and then move on. If we do that, I am confident that we will have a much more open attitude towards the sharing of data, information and so on to the point where-----
Chairman: By "this stuff" Mr. Kelly means the general approach on both sides in order that trust is built, other issues are got out of the way-----
Mr. Michael Kelly: Yes, exactly.
Chairman: -----and that one then moves on to Z.
Mr. Michael Kelly: On the Chairman's point about different vision statements, when one analyses them, the language is a little different, but the foundations are very common. There is about 80% commonality in what they have described. Where there are differences, I know what they are about. They are about how research is organised throughout the institute and about governance and management structures. In both cases I have suggested that, in the first instance, there are two principles that should apply. Rather than dealing with it as some kind of football to be kicked around by either of them, there should be an external, expert-led, evidence-based, rational and objective examination to have some options.
The discussion should take place around those rather than have a ping-pong battle where anything could happen.
Chairman: I do not want to misquote Mr. Kelly, but at some stage in his report he said he was to deal with the stakeholders and he did not get a chance to deal with them all. Is that right?
Mr. Michael Kelly: No, it was all stakeholders.
Chairman: I remember reading it somewhere.
Mr. Michael Kelly: No, I had no reservations.
Chairman: What about the trade unions and their approach to this? Was that separate?
Mr. Michael Kelly: In general, I found their attitude very constructive. I have summarised the attitudes that came through and, in all cases, I have actually grouped them as TUI on the one hand and everybody else as part of a group view. If I can deal with the latter first, I found in general a very strong commitment to the ideal of a technological university for the south east, some natural anxieties about the usual range of rationalisation things and also some levels of frustration with what had gone on already. One expects trade unions in a process like this to stand up and defend the rights of their members. That is why they are there and, as such, one expects in the normal course a certain amount of fire in that context. I found the predominant attitude was not so much concerned with personal interest, but was much more about getting on with this. It was mission focused. In relation to TUI, it has fairly well expressed its public attitude about the technological university. In summary, it is that it is not opposed to it but would like to understand a lot more about how it would work and how it would impact on its members in various ways. My response to that has been that the academic community will actually be at the heart of any bottom-up process around the design and implementation of technological university, so they will have every opportunity to participate, as is the case in Dublin now. The heart of these new institutions will actually be designed by the academic staff in them. They are right in there from the beginning and, in relation to industrial relations issues, there are formal processes to take care of them.
Chairman: The remark I made was in relation to the terms of reference in paragraphs 1 and 2 envisaging engagement and consultation with stakeholders taking place around the vision for TUSE. I quote: "This did not prove possible in the context of this process".
Mr. Michael Kelly: No, that was around the idea of a shared vision.
Chairman: What has emerged is that Mr. Kelly got two different presentations.
Mr. Michael Kelly: Yes. My ideal conversation would have been to have been able to organise a round table at the start of this and to say, "Let us force the broad brushstrokes of a shared vision out of this". That did not prove possible because the initial attitude of WIT had been that it was not prepared to participate in this process at all. Then, it brought itself around to a position where it would, but it did not extend to developing a shared vision.
Chairman: As such, Mr. Kelly sees it then as some professional from the outside working with a steering group to press this agenda ahead and to provide the supports necessary based on the building of trust before he gets anywhere else.
Mr. Michael Kelly: Yes, that is the first stage. Then, I set out my thoughts on what a fairly disciplined steering group would do, what a fairly disciplined project team would do and on a project structure.
Chairman: My only comment on "Z" is that I have often seen arrangements or deals falling asunder because of due diligence. This is not for Mr. Kelly but for Mr. Ó Foghlú or Mr. Boland, but I note that it would be a pity to invest heavily in the beginning if one was not to deal with the really serious issues we know exist on the Waterford side from the reports we receive in terms of its audit. A resolution in relation to that needs to be considered by the Department because there is a serious amount of money there and issues which have to be resolved.
Mr. Seán Ó Foghlú: I have a comment on that. Clearly, Waterford Institute of Technology went through a process with the investigation and we have had a hearing about it. The most important thing for us is that Waterford Institute of Technology welcomed the investigation and engaged with it openly. It found a range of issues, gave rise to us having to lend the institution some capital funding and resulted in a wide range of recommendations. WIT is working through the implementation of those recommendations and those issues are coming up to a certain extent in the audit report which the Chairman is noting today. We plan, as we always do, to review the implementation by WIT of the recommendations in the Quigley report and we have agreed with Dermot Quigley that he will go back in and review the implementation in WIT of his recommendations. We have not agreed the timeframe for that, but envisage it will happen later in the year. As such, we are very conscious arising from the investigation and the Comptroller and Auditor General's report on Waterford that there is a need to ensure that the recommendations are implemented and that the governance structures are working appropriately in WIT. From that point of view, one can understand why Institute of Technology, Carlow would have had some concerns given that this was happening as the process was under way. Mr. Kelly addressed that in his report. Waterford IT has been open about the fact that it had issues and that it wants, and is seeking, to address them. We always planned that this would take place but are now planning to do it by the end of the year. By asking Mr. Quigley to go in, it means it will not be someone who has to learn the ropes again. It is somebody who was there, knows what changes he wanted and can see in person what changes have been made.
Chairman: There is the Quigley report and then there are the accounts which are here now for 2013 and which have raised five different issues. There was a tax settlement issue. What year was that for?
Mr. Seán Ó Foghlú: I do not have the details. Does Mr. Boland have the tax settlement?
Mr. Tom Boland: I think that was LIT.
Chairman: I do not think so. These are the various issues that should be worked on in parallel to what Mr. Kelly has suggested, at least for now.
Deputy John Deasy: We know where we are with this. We have been down this road before to a certain extent. It is fair to say, and it should be acknowledged, that there are people with differences of opinion on any relationship between both institutions and there are those opinions that exist and dwell in both institutions. However, the important point is that the report stresses that this is feasible, necessary and makes sense. That is why we are going to continue with this and move on. That is the overriding and overarching issue.
As a commentary, and this is not pointed towards anyone in this room, I have noticed that this became very fractious and emotive. It became very political. It became an issue everybody had a comment about. It would be naive of me to expect or try to prevent political representatives from commenting on this as the process is rolled out and develops, but it is worthwhile expressing the view that we should allow this process to grow without the political commentary that has existed and been harmful and damaging to this venture over the last ten years. That makes me suggest that it is incumbent on the Department of Education and Skills and the HEA to have a more committed role with regard to oversight of this process. We will be relying on them to do that. I will not get into the historical stuff with regard to what I think has not happened when it comes to oversight, in terms of dealing with this, over the past ten years.
We have dealt with that sufficiently in this committee. It is incumbent on both organisations to provide that oversight. More keenly, that has occurred in the past to make this work. I thank Mr. Kelly. I appreciate his assistance.
Mr. Michael Kelly: I thank the Deputy.
Mr. Seán Ó Foghlú: I have the tax settlement information if the committee would like an update on it.
Chairman: I refer again to what Deputy Deasy said because it is true. The question I asked relates to a report in The Sunday Business Post of 22 February 2015 on WIT. It seems that a voluntary disclosure amounting to €371,667 relating to tax owed by contractors for 2010, 2011 and 2012 is in the accounts. According to the report, the accounts for 2012, which were not signed until 2014, show that WIT recorded an operational deficit of €563,000. I think these issues concern people generally when there is discussion of mergers and everything else. All of us want to see that happen. It is a priority to get these matters dealt with.
Mr. Seamus McCarthy: Could I make a point that might relate to due diligence and so on? Waterford Institute of Technology deviated from a template issued by the HEA for the format of accounts for institutes of technology. It had a different structure for the provision of campus services by companies. The results were not consolidated. Once the 2014 financial statements have incorporated all that in a standard format, certain issues may come to the surface but a line should be drawn under some of these issues to a certain extent. This may make the due diligence process a little easier.
Chairman: We will deal with other issues relating to Waterford Institute of Technology in the next segment of the meeting. It is better not to confuse them with Mr. Kelly's report or with the process that surrounds Carlow and Waterford institutes of technology. It would be better to separate them. If members are agreeable, we can thank Mr. Kelly for coming along and move to the next part of the meeting.
Mr. Michael Kelly: Thank you.
The witness withdrew.
Higher Education Authority: Financial Statements 2014
Mr. Tom Boland (Chief Executive Officer, Higher Education Authority) called and examined.
Chairman: This part of the meeting involves the financial statements of the Higher Education Authority. I call Deputy Dowds.
Deputy Robert Dowds: I welcome everybody here. I am sorry that they are still here at 2.30 p.m. I will try to be as quick as I can. I would like to ask a general question about how the HSE-----
Chairman: The HEA.
Deputy Robert Dowds: Sorry, the HEA. My apologies. We were talking about the HSE earlier on. My question relates to how the HEA disburses funds to the traditional universities, the institutes of technology and other institutions.
Mr. Tom Boland: It is done on the basis of a funding model. The allocation is done on the basis of a combination of the number of students and the disciplines they are studying, with different disciplines weighted according to what the estimated cost of the course would be. A programme that does not involve a laboratory would get a weighting of one, and then there are varying gradations up to the maximum weighting, which I think is four and would apply to a course like medicine. It is done on a purely formulaic basis.
Deputy Robert Dowds: Do those funds go into a central pot in each university or institute of technology to be disbursed within the relevant institution?
Mr. Tom Boland: Yes. I suppose a fairly high core element of the funding of the higher education institutions is that the institutions get a block grant. It is therefore a matter for each institution to decide how to allocate that grant internally.
Deputy Robert Dowds: Does that include staff wages as well?
Mr. Tom Boland: It includes the entirety of the activities of the institution.
Deputy Robert Dowds: Okay. Does it include funding for research as well, or does that come from other sources? Perhaps it is a mixture of the two.
Mr. Tom Boland: It is a mixture of the two. In the case of universities, in particular the block grant goes to pay the salaries of most, if not all in some cases, of the people who carry out the research. Universities, and to a lesser extent institutes of technology, draw down research funding from the likes of the Irish Research Council, the Health Research Board, Science Foundation Ireland and internationally from the EU funding mechanisms.
Deputy Robert Dowds: Would that relate to the point that non-State grant income increased by €3.8 million between 2013 and 2014? It increased from just over €19.5 million to almost €23.5 million. Does what Mr. Boland is talking about relate to that as well?
Mr. Tom Boland: The non-State funding could come from a variety of sources, including European grants.
Deputy Robert Dowds: So it could be European.
Mr. Tom Boland: The funding-----
Deputy Robert Dowds: Could it be from private companies as well?
Mr. Tom Boland: It could.
Deputy Robert Dowds: Okay. Can I show Mr. Boland an article by Professor Ciarán Ó Catháin of Athlone Institute of Technology that has been presented to me? It suggests that the Government cares more about seagulls than students. I really think it is a rather frivolous way to describe it. The point of showing it is that I want to know whether there is a serious lack of funding, or underfunding, in third level institutions. Are third level institutions reasonably satisfied they are getting a fair crack of the whip?
Mr. Tom Boland: There is a serious lack of funding in the higher education system. In part, it is an inevitable consequence of the financial crisis. The level of funding per student has decreased from approximately €11,000 to approximately €9,000 over recent years. I think the institutions are coping well with that situation, by and large. Given the difficulties that this drop in funding causes, in terms of the quality of provision, we need to bear in mind that it has been projected that the number of people entering higher education will grow by between 25% and 30% over the next 15 years or so. That in itself will place huge demands on the system. Of course, this issue is being dealt with by the group that has been established by the Minister under the chairmanship of Peter Cassells.
Deputy Robert Dowds: I was surprised to note that the income dropped a bit from 2013 to 2014. I would have thought it would have been at the stage where it might start increasing again.
Mr. Tom Boland: I think we can have a small degree of optimism on that side. The capacity of the institutions - particularly the universities more than the institutes of technology, in fairness - to earn their own income through commercial activities or through foundations should improve as the economy improves.
Deputy Robert Dowds: Could I ask about the issue of compliance? At an earlier meeting of this committee, it was suggested that the HEA would establish a compliance unit to ensure all colleges were managing their affairs appropriately. Can Mr. Boland give me an update on that?
Mr. Tom Boland: Yes. Maybe I will put it in context and I will come to that as well. I can let the committee have a copy of an outline of the changes the HEA has made to its governance arrangements since it was last here. I guess these changes were prompted to some considerable extent by some of the criticism from this committee and some of the lessons we learned from the Comptroller and Auditor General's reports. We have issued a revised template for the governance statements to the institutions. The governance statement is the key reporting instrument from institutions to the Higher Education Authority. We have added some additional items to that template. We have asked each institution for more explicit confirmation that it is compliant with procurement guidelines. We want a specific assurance on that. We have asked those institutions that are not compliant to set out the actions they have taken in this regard. We want to know how many governing body meetings are taking place. We want to know the level of attendance at those meetings. We want to know the outcomes of the reviews of effectiveness of governing bodies. We also want upfront information on any significant unexpected expenditure that each institution is incurring. This is relevant in the context of the presence of representatives of GMIT this morning.
We have also reminded governing bodies, and the chairs of governing bodies in particular, of their central role in the whole governance and accountability system and the need for them to interrogate the information that is given to them by the management team in the institution, and the responsibility of the management team to give full information to the governing body and the chair.
We have enhanced our arrangements with the Comptroller and Auditor General. We will now meet on a quarterly basis and that is very valuable because we can share lessons that are being learned from the sector. We can also get a sense of what is happening in respect of audits and the submission of financial statements. We will also share information then to identify any early difficulties that are happening in the sector. This arose in the context of the NCAD, the National College of Art and Design, where we simply were not informed - we did not know some of the issues that were happening there.
Deputy Robert Dowds: Is Mr. Boland satisfied that the National College of Art and Design is being sorted out because it seemed to be an unholy mess at the time its representatives appeared before the committee?
Mr. Tom Boland: We would be satisfied that good progress is being made, and that there is a way to go. There is a new governing body in place. There is a new chair. We have very recently met the chair of the governing body and the chair of the audit committee. I would say that the HEA's assessment is that progress is being made but with a good deal of work still to be done.
Deputy Robert Dowds: So basically the HEA is standing behind to see that everything is-----
Mr. Tom Boland: We are. We are getting monthly reports from NCAD. We have also agreed with the college to give it an independent adviser in relation to financial and governance matters.
Deputy Robert Dowds: I thank Mr. Boland.
Mr. Tom Boland: That college is being monitored carefully in terms of the implementation of its agreed governance report with us.
Deputy Robert Dowds: How long will it be before it is fully straightened out?
Mr. Tom Boland: I think there are two issues there. One is dealing with the technical issues of doing appropriate reports. There may well also then be an issue of culture in the organisation because culture takes a bit longer to change. Also, I think we need to work with the governing body on issues to do with capacity in the institution in relation to financial expertise and governance expertise.
Deputy Robert Dowds: Okay.
Mr. Seamus McCarthy: I might just interject there to bring the committee's attention to the situation in relation to the audit, which was one of the things that, if one likes, precipitated the previous report. We are still actually waiting for draft financial statements for 2012-13.
Deputy Robert Dowds: It sounds like there is a bit to go yet.
Mr. Seamus McCarthy: Yes, there is. There are lots of technical difficulties and it will be some time before they will be up to date. I do not think we can underestimate the difficulties on that technical side.
Mr. Tom Boland: I would not like to give a rose-tinted view of this either. It is a difficult problem which will take a bit of time to work out, but we are staying close to the college on it.
Deputy Robert Dowds: Is the Comptroller and Auditor General satisfied that things are moving in the right direction? Is he sufficiently in touch with recent developments there to-----
Mr. Seamus McCarthy: I suppose in a way we do not get involved in fixing the problem-----
Deputy Robert Dowds: Yes.
Mr. Seamus McCarthy: -----but we are sort of sitting outside waiting for financial statements to audit and, if one likes, to keep the process moving and to bring it up to date as quickly as possible. However, it requires the college to be in a position to produce a set of financial statements for us to audit and to be able to substantiate what is in those financial statements. That is the process of audit.
Obviously, we then look at propriety issues and so on. The longer distance it is to the year of account, the more opaque the thing becomes, the more difficult it is to get explanations, and the more difficult it is to do the audit. Also, the findings may be irrelevant by the time they come to the committee. It is a matter of ongoing concern for us, but I appreciate that the HEA is engaged with the college and the pressure needs to be kept up.
Deputy Robert Dowds: How soon was the HEA aware of its difficulties or did the college hide them from the authority for some time as well?
Mr. Tom Boland: I think, rather than probably hiding them from us, we simply were not aware when we should have been. We were not made aware when we should have been.
Deputy Robert Dowds: Was that because the HEA did not have sufficient checks and balances in place?
Mr. Tom Boland: No. I think it had to do with the fact that we were getting misinformation from the college for a period of time in relation to its governance statements.
Deputy Robert Dowds: Does that partly explain why there is a new board and so on there?
Mr. Tom Boland: I think the board was going out of office in the normal course so it is not connected.
Deputy Robert Dowds: Could I just move on to a more general-----
Mr. Tom Boland: Could I ask the advice of the Chair? There were some other issues in relation to how we strengthen governance, but perhaps I can just write to the committee on that rather than taking up the time of the committee.
Chairman: That is okay.
Deputy Robert Dowds: We would be interested to see that report.
I have a more general question about the financial standing of institutes of technology. Is any of them in financial trouble? If so, which ones and what can be done to assist them? In particular, I ask Mr. Boland to comment on one the Comptroller and Auditor General flagged earlier, namely, Dundalk Institute of Technology, which Mr. Boland mentioned earlier.
Mr. Tom Boland: A number of institutions are in what we would describe as a vulnerable position from a financial point of view. They would be Dundalk, Waterford, which has already been mentioned, and Letterkenny. NCAD is another institution and there are also Tralee and a sixth one, GMIT. They are to varying degrees having difficulties in terms of returning deficits to the HEA.
I would not want to give the impression that any of these are in danger of immediate collapse or anything like that. The HEA works very closely with any institution that is in that position. In the first instance, we require them to present to us and agree with us a three-year plan for how they are going to recover from their financial position. Also, in respect of two institutions, Dundalk and Letterkenny, we have sought independent accountancy financial advice on the strength of those plans. Given the vulnerability of the institution, we want to be satisfied that the plans are good. In the case of Dundalk, we are quite satisfied that its plan is a strong one. In the case of Letterkenny IT, there is an ongoing issue to do with the funding of a facility at Killybegs, which continues to be under discussion, particularly to see how its future might be secured through funding from other sources rather than the education Vote.
More generally, we are in a position to say that we have plans from all of the other institutions in terms of how they are dealing with their deficit situation. Those plans look good and they will be monitored carefully by the HEA to ensure they are implemented and that the institutions are brought back into a positive position.
Deputy Robert Dowds: Has the HEA identified reasons the institutions Mr. Boland listed have got into difficulty whereas others he did not mention obviously have not got into difficulty?
Mr. Tom Boland: That is a difficult enough question because I do not think there is any one or even five reasons. It is a combination of issues. In fairness to them also, it is to some extent a reflection of the overall funding situation of the sector that some institutes are less able to manage in that kind of situation than others for reasons perhaps of their organisation, their demographics around where they are located in terms of their attractiveness to students and a range of issues like that. There is no one thing that one could go in and say, "If we fix that, they'll be fine".
Deputy Robert Dowds: In any case Mr. Boland is satisfied that none of them is in danger of collapse or anything like that.
Mr. Tom Boland: I am satisfied of that, but I would say that the HEA, both at executive and indeed strongly at board level, keeps this situation under very careful review. There is a very high level of concern at board level for the viability of some of these institutions.
Deputy Robert Dowds: I am sure some of them tie in considerably with some local economic and industrial development and so on.
Mr. Tom Boland: They are extraordinarily important institutions in their regions - all of them - which is all the more reason to get them into a healthy financial position so that they can do the job they are meant to do.
Deputy Robert Dowds: My last question is on the pension situation.
In simplistic terms it seems there are two different pension schemes, one of which is primarily attached to older people and the other for younger people and one of them is in some difficulty and the other is in surplus. Can Mr. Boland explain how pensions are paid? It strikes me that it is different here from some other areas of education, for example, primary education where the pensions come directly from the State.
Mr. Tom Boland: To assist the committee I will call in the aid of Mr. Stewart Roche, who is an accountant.
The background is that the five older universities had their own pension schemes, not including the University of Limerick, UL, and Dublin City University, DCU, and, as with many pension schemes and for a variety of reasons, they were in deficit. The HEA some time ago set up a working group involving the Department of Education and Skills, HEA, the universities and the Department of Finance. That concluded that the pension schemes were not viable in the long term, should be wound up and their assets transferred to the State. The pension schemes closed. Something over €1.2 billion was transferred to the State. Is that right?
Mr. Stewart Roche: Yes, €1.4 billion.
Mr. Tom Boland: The State then takes over the liability for paying pensions. For a variety of technical and accounting reasons, that pension scheme was closed and a new one was opened and all new staff entered into the new scheme, so there are two schemes running at the same time. Since the closed scheme has older staff members who are retiring there is a draw-down on that and because staff in the new scheme are younger there is no draw down on that. The two schemes to a very great extent cancel each other out. There is no sense of a pot of money sitting in a bank account someplace and a huge deficit sitting some place else. It is more of an accounting issue.
Deputy Robert Dowds: Is the intention that the whole thing goes back to the State in the same way as primary and secondary teachers are paid when they take their pensions?
Mr. Tom Boland: Yes. We are in discussions with the Department of Education and Skills and, most importantly, the Department of Public Expenditure and Reform as to how pensions should be accounted for in this situation. It is not very satisfactory from our point of view to have what gives the impression of a huge deficit and a huge surplus. It is an accounting exercise to a great extent and we would like to see it resolved. Ultimately, as matters now stand the State has responsibility for pensions in the universities in the same way as it has across various parts of the public sector. Would Mr. Roche like to comment on how pensions are paid?
Mr. Stewart Roche: Yes. Could I correct the record? I mistakenly said that LIT made a tax settlement, instead of DKIT.
With regard to the pensions, those in payment are paid out of the closed pension scheme, which is the older one, and lump sum payments on retirement are paid out of that particular scheme whereas the model scheme is a pay-as-you-go scheme. The difficulty, as Mr. Boland has outlined, is that the excess of the payments over the income has meant that there is a cash outflow but it is all coming out of the same accounts. There is general cash. In the model scheme there is a surplus because of the newer members and that is a pay-as-you-go scheme. The funding of the pensions that are creating the major deficit would be in the closed scheme.
Deputy Patrick O'Donovan: Would the Comptroller and Auditor General remind the committee of what he said this morning in respect of the TRBDI and the transfer of personnel to LIT? I think he referred to them as “supernumerary positions”.
Mr. Seamus McCarthy: Yes. I drew attention in the audit certificate on its financial statements to several supernumerary staff, surplus staff in the institute, following on from the amalgamation and said that since that amalgamation, the total amount of salaries paid to those supernumerary staff was €627,000. In the year 2013-14 the amount paid to those staff, which is included in the overall figure, was €216,000.
Deputy Patrick O'Donovan: How many staff did that equate to?
Mr. Seamus McCarthy: I said I do not have the detail of it with me but my recollection is that it is three or four, certainly a small number.
Deputy Patrick O'Donovan: What is Mr. Boland’s reaction to the fact that for a number of years supernumerary positions continued to operate in an institute of technology funded through his agency at a cost of €627,000 and it appears that very little or nothing was done to try to address the issue?
Mr. Seán Ó Foghlú: I will answer that question, if that is all right. In the closure of TRBDI, the issue of redeploying the members of staff arose and that is organised by the Public Appointments Service, in the main. A wide range of successful redeployments was successfully entered into and there were three remaining staff. It was actually a great success in terms of moving the institution along. Those members of staff remained in the payment of LIT and remained working for LIT. They were supernumerary and could not be redeployed.
Deputy Patrick O'Donovan: What do they actually do on a day-to-day basis?
Mr. Seán Ó Foghlú: They undertake appropriate work associated with their role. They are supernumerary. I do not have a piece of paper because I got information by e-mail during lunch when I asked for an update having heard what the Deputy said this morning. Two of the three are now engaged in the general manner as lecturers in LIT so there is only one supernumerary remaining. This is what happens with redeployment. Under the public sector arrangements a person can be redeployed up to 45 km. If it is not possible to redeploy the person, he or she remains on a supernumerary basis but the people are working.
Deputy Patrick O'Donovan: For three years?
Mr. Seán Ó Foghlú: Yes, but people are working. It is about the opportunity for a specific skill set to be redeployed. They are working. We have saved money by reducing the numbers but we have not saved as much as we wanted to. That is the position.
Deputy Patrick O'Donovan: Is this a widespread practice in the Department? How many supernumeraries do we have today?
Mr. Seán Ó Foghlú: I can check that for the Deputy but I am not aware that it is widespread. We have not closed down many institutions. In fact, the position is the opposite, as the Deputy knows. We were operating within employment control frameworks, ECFs. We are only returning to recruitment now generally and we are now moving to having a bit more freedom on employment but within particular budgets. It is not that we have supernumeraries sitting around the place. These were engaged in work but they were above the numbers allocated to the institution.
Deputy Patrick O'Donovan: We do not know how widespread the practice is.
Mr. Seán Ó Foghlú: I do not have the information with me here. I understand that it is not a practice that is widespread. We were closing an institution and amalgamating it into LIT. They were above the numbers needed and we had to redeploy. We successfully redeployed a wide range of people but we were not able to redeploy everyone.
Deputy Patrick O'Donovan: On another issue I raised this morning with the Chairman, which is of huge concern, UL is funded through the HEA and recently there was a huge amount of media reporting about an allegation that staff of the university were offered over €60,000 to keep their concerns under wraps or move along. Is the HEA aware of those allegations?
Mr. Tom Boland: Yes.
Deputy Patrick O'Donovan: Are they being investigated?
Mr. Tom Boland: I will try to be as helpful as possible on this one. This matter was referred to me by the Department of Education and Skills because two people wished to make a protected disclosure. I met with them in June or July. I do not have the precise date. They set out a range of concerns, particularly to do with what they saw as a bullying treatment of them in the university. They attributed that bullying treatment to the fact that they were not co-operating with what they saw as inappropriate practices in the finance department. The three of us agreed a minute of the meeting which I sent to the president of the university and asked for a reply which he duly did. Out of that, it is clear that there is a mix of disciplinary issues in relation to the two people concerned.
I have been trying to find out the details of the allegations because the HEA is very anxious that any allegations are fully and completely investigated. In fairness to the university, that is its wish as well and it has put the internal auditors in touch with me to establish what the allegations are. The two people concerned do not feel in a position at the moment to set out what the allegations are. However, in my most recent e-mail with them I have agreed to their request to meet again. A date was arranged but unfortunately I had to change it to next week. I am very happy to meet with them again to see how their concerns can be met because I would like to see the matter put beyond doubt, one way or another, as quickly as possible. Any allegation of improper conduct in the university should be investigated and this is a view which I strongly believe is shared by the university. A great deal of damage can be done to the university by allegations not being fully dealt with as soon as possible. That is the latest position.
Deputy Patrick O'Donovan: When do you expect to have an update on this? Apart from anything else, there is the potential for reputational damage to an institution which is of huge regional importance and that is something I am sure they are as anxious as anybody to clear. This has been left hanging out in the media for the past six weeks or two months. When will we have a full and final result on this? It is of concern across the region, across the mid-west and across the country because, if it is true, it could not possibly be condoned.
Mr. Tom Boland: Absolutely. I could not agree more with that. My hope is that, when next I meet with the people concerned, I will be able to agree some kind of a process whereby they can feel comfortable in setting out what their allegations are. I would expect the university to respond very quickly with a thorough and objective assessment of the allegations.
Deputy Patrick O'Donovan: Is it Mr. Boland's belief that there is a role for the Garda in the investigation?
Mr. Tom Boland: I do not think fraud or anything of a criminal nature has been alleged in relation to the university. There is a related issue to do with the concern people have that they were threatened by a colleague, which is a separate issue to the allegations of malpractice in the finance department.
Deputy Patrick O'Donovan: During the summer another story arose affecting the HEA. You referred in your answers to Deputy Dowds to how university and third level institutions are funded. A very disturbing report came out during the summer when there was, to paraphrase, an attempt to "cook the books" to ensure points were inflated in some of our third level institutions to keep them in the attractive zone for students. Some students are being deprived of college places because universities and third level institutions, which we are funding, are inflating points to keep them attractive and give them a reputation they do not necessarily deserve.
Mr. Tom Boland: The practice has ended but I will talk about the practice a bit. There are two aspects to this. Some institutions were excessively fragmenting their courses so, rather than a common entry to science, they would have biology and French and a range of different programmes like that. There was a huge increase in the number of programmes that the institutions were putting on and apparently that can elevate the points that are needed for entry to a particular course.
Deputy Patrick O'Donovan: Surely the HEA knew that all along.
Mr. Tom Boland: No, actually, we did not. Sorry, I beg your pardon, we did know that and indeed-----
Deputy Patrick O'Donovan: The HEA would have known how many students take on biology and French, for argument's sake, in whatever institute. It would know the number of places because it funds the places. Surely at some stage somebody should have asked how many students were in a place.
Mr. Tom Boland: A group was set up by the then Minister for Education which sat for three years to look at the issue of transition from second level to higher education and that was one of the issues that has been dealt with. It has now been dealt with by agreement across all the institutions.
Deputy Patrick O'Donovan: Why was there a need for agreement? You are funding these institutions to provide education to third level students but they are inflating points, which is leaving some people out.
Mr. Tom Boland: That is a strong way of putting it. Anyway, as a matter of law, the-----
Deputy Patrick O'Donovan: Were the institutions leaving places unfilled to keep points at a certain threshold?
Mr. Tom Boland: I do not know if there is any strong evidence of that.
Deputy Patrick O'Donovan: Did you investigate it?
Mr. Tom Boland: Can I go back to the other point? The point is that in law, under the Universities Act it is the universities which decide on access requirements, not the HEA.
Deputy Patrick O'Donovan: But it is you that funds the universities and funds the courses.
Mr. Tom Boland: Agreed.
Deputy Patrick O'Donovan: So if a course is left unfilled there could be a student with their heart set on a course but who will miss out by five points because university X decides it needs to be in the 450-500 points range because its competitors are. It does not want to come below the threshold so it forgoes five or ten places but the HEA is still funding it.
Mr. Tom Boland: That is a separate issue which arose precisely as you describe it, namely, that where there are places available on a course, a university would not take students on the basis that their points were not high enough. That practice is there so one could have a situation where there are places available but the places would not be filled.
Deputy Patrick O'Donovan: Paid for by the taxpayer.
Mr. Tom Boland: No. The places are only paid for in so far as they are taken up. The money follows the student in all situations. There is no circumstance where a university would get payment for non-existent students.
Deputy Patrick O'Donovan: Apart from the money element, did you not feel at any stage that there was something wrong with the practice of universities and colleges doing that under the noses of the HEA and that it stank a bit?
Mr. Tom Boland: It was very much a minority practice.
Deputy Patrick O'Donovan: How do we know that? Was it investigated?
Mr. Tom Boland: No.
Deputy Patrick O'Donovan: Is it the HEA's intention to look at it?
Mr. Tom Boland: No, I do not think so.
Deputy Patrick O'Donovan: Why not?
Mr. Tom Boland: Because I believe it was very much a minority practice and I also believe it has now ceased.
Deputy Patrick O'Donovan: We do not know that it has ceased and we do not know it was a minority practice if it has not been investigated. Are there any plans to look at this? I think it is an absolute scandal.
Mr. Tom Boland: As I sit here today there are no plans to further look at it.
Deputy Patrick O'Donovan: I think there should be plans and I think there is an onus on the Department of Education and Skills to check.
Mr. Seán Ó Foghlú: I chair the transitions group which is looking at improving the transition from second level to third level and we have, with agreement, made a range of changes to the leaving certificate, the points system and the broadening of entry into courses, especially in the universities. We will be monitoring and evaluating whether there are peaks in points levels. Where one would expect a curve and there are peaks where institutions fix on certain transition points this will be monitored. If peaks emerge we will seek to address that with the universities. However, the universities, other than in the health care sciences, are not funded on the basis of the number of places per course. They have choices about the number of courses they have and the number of cases on each course. It is only in a small number of courses, such as medicine, that there is a number of funded cases but yes, we will be evaluating the information.
Deputy Patrick O'Donovan: Do you accept that by inflating points to a certain level it makes universities more attractive? If a person is out there flogging a university to get money into a trust fund, which can be kept at arm's length from the university, is it not in the university's best interest not to have points at a depressed level, even if it actually fits the course? Is it not in the college's or the university's best interest to inflate them to make it look better and leave the student outside the gate?
Mr. Seán Ó Foghlú: I do not think it is in its best interest, no.
Deputy Patrick O'Donovan: I am surprised that the Department of Education and Skills and the HEA take the attitude that we will just move on from here. I think the practice of colleges knowingly making sure that somebody who may be very capable of doing an assigned course is left out-----
Mr. Seán Ó Foghlú: We have exactly the same-----
Deputy Patrick O'Donovan: -----because the college wants to inflate them.
Mr. Seán Ó Foghlú: We have the same-----
Deputy Patrick O'Donovan: That is not their role.
Mr. Seán Ó Foghlú: No, sorry, we have the exact-----
Deputy Patrick O'Donovan: Their role is as an educator.
Mr. Seán Ó Foghlú: Deputy, we have the exact same concern as you. That is one of the reasons we put the group in place.
Deputy Patrick O'Donovan: Do you accept then that the HEA has no intention of investigating it?
Mr. Seán Ó Foghlú: I indicated to the Deputy the research that will be done to ensure that the implementation works-----
Deputy Patrick O'Donovan: Because-----
Mr. Seán Ó Foghlú: -----and it will include looking at whether there are peaks on levels of points which are artificially created-----
Deputy Patrick O'Donovan: The one thing that is-----
Mr. Seán Ó Foghlú: -----which is-----
Deputy Patrick O'Donovan: -----missed from this is that the college's role is as an educator. It is to provide education. It is not there to be some sort of self-gratification, going around with inflated points and egos.
Mr. Seán Ó Foghlú: There is no disagreement on our side.
Deputy Patrick O'Donovan: I am surprised that the Department of Education and Skills has taken this kind of arm's length attitude-----
Mr. Seán Ó Foghlú: We have not.
Deputy Patrick O'Donovan: -----to-----
Mr. Seán Ó Foghlú: We have not taken an arm's length attitude.
Deputy Patrick O'Donovan: You have heard the-----
Mr. Seán Ó Foghlú: I am chair of a group-----
Deputy Patrick O'Donovan: You have heard the head of the HEA just say it.
Mr. Seán Ó Foghlú: -----to change the system and we will monitor the changes.
Deputy Patrick O'Donovan: With respect, Chairman, Mr. Ó Foghlú heard the head of the HEA tell me he has no intention of investigating this or doing anything with it.
Mr. Seán Ó Foghlú: No, I clarified that-----
Deputy Patrick O'Donovan: That is not acceptable.
Mr. Seán Ó Foghlú: The implementation will be evaluated.
Deputy Patrick O'Donovan: I will move on to another issue which comes up perennially here, which is trusts within universities and colleges, and money winding up funding academic and administrative staff and research outside of the ambit of the Comptroller and Auditor General. Where does the HEA stand on this?
Mr. Tom Boland: Foundations or trusts are extraordinarily important, as I think the Deputy will appreciate, in order to raise private funding for the institutions. We have had an ongoing issue with the consolidation of the foundations into the accounts of the universities so there is full transparency. This matter is now at an end because we have directed the universities that all foundations must be consolidated into the accounts. One university was already doing this in any case.
Deputy Patrick O'Donovan: Will this be done across the board?
Mr. Tom Boland: It will be done from the next accounts.
Deputy Patrick O'Donovan: So all of the financial statements from now on-----
Mr. Tom Boland: They will be required to consolidate.
Deputy Patrick O'Donovan: To go back to a previous point on the financial statements, the last time the witnesses were here we had a big argy-bargy on audit committees. Do all of our third level institutions now have functioning audit committees? The last time we were here and we went down this road we did not know whether they were meeting, we did not know who was on them and we had no records of them. They might or might not meet. Does every institute funded through the taxpayer by the HEA have an audit committee which is meeting?
Mr. Tom Boland: Yes, I can say with confidence.
Deputy Patrick O'Donovan: Can we get details on all of the third level institutes with regard to who is on their audit committees, when they met last and how many times they have met?
Mr. Tom Boland: Fine.
Chairman: How many people are employed in the HEA?
Mr. Tom Boland: I think our number is 62, but there are probably only 58 at the moment.
Chairman: What you mean by that?
Mr. Tom Boland: There are some vacancies.
Chairman: What is the number?
Mr. Tom Boland: It is 62.
Chairman: It is 62 but you have how many vacancies?
Mr. Tom Boland: I think it is about four. I can provide the precise figure for the Chairman, but it is certainly of that order.
Chairman: Do you employ consultants?
Mr. Tom Boland: Yes. Do you mean on a regular basis or permanently?
Chairman: Well, how often? What do you call regular?
Mr. Tom Boland: We engage consultants on a needs basis.
Chairman: For what purpose?
Mr. Tom Boland: For instance, at the moment we are conducting strategic dialogue with institutions to look at the performance of institutions vis-à-vis their compacts with us, so we would engage-----
Chairman: When did that start?
Mr. Tom Boland: We would engage outside expertise for that. A good example would be several years ago we did a significant review of initial teacher education and we engaged consultants for it. It is that kind of work.
Chairman: When did your review of the institutions and your dialogue with them start?
Mr. Tom Boland: Do you mean the-----
Chairman: The one you mentioned.
Mr. Tom Boland: The process started two years ago but the actual current work started about two weeks ago.
Chairman: What is the cost of that?
Mr. Tom Boland: I do not have a precise cost. I can get it for the Chairman-----
Chairman: Yes.
Mr. Tom Boland: -----but I do not have the precise costs of the top of my head, but it is modest.
Chairman: Did that go out to procurement?
Mr. Tom Boland: Yes. It went through the normal procurement rules.
Chairman: Who is conducting that process?
Mr. Tom Boland: We are, in the HEA.
Chairman: No, after the procurement process what consultant was appointed?
Mr. Tom Boland: I beg your pardon. We have engaged a former Provost of Trinity College, someone with expertise of the Hong Kong system of higher education and a former senior person in the European University Association.
Chairman: I see. How much would you spend on consultants in any one year?
Mr. Tom Boland: The Chairman is looking at our accounts I assume.
Chairman: That is what you are here for today.
Mr. Tom Boland: I understand that. I will ask Mr. Roche to comment on this.
Mr. Stewart Roche: The figures the Chairman is looking at in the accounts encompass quite a number of different areas. It is not just consultants.
Chairman: What are those figures?
Mr. Stewart Roche: The figure for 2014 was just under €760,000 and-----
Chairman: Sorry, this is the figure for consultants.
Mr. Stewart Roche: This is the overall figure for research and survey, which includes consultants.
Chairman: Okay, so was this broken down into consultants?
Mr. Stewart Roche: Of the total of €759,000, we outsourced our internal audit and we also did quite extensive checking under the European Regional Development Fund, ERDF, and the European Social Fund, ESF, and this was procured through Mazars. That programme has recovered just under €100 million for the State for 2012, 2013 and 2014. This cost was just under €110,000. We also contribute €80,000 to the Marie Curie postgraduate award. We did an alumni destination report for the Irish Research Council, IRC, and that came to just under €40,000. We have our own legal costs, which came to just about €35,000. We did an employers survey through the ESRI and that came to approximately €20,000. As Mr. Boland mentioned, we had panel fees and various reviews and previous strategic dialogue which came to approximately €80,000. We have used the ESRI on occasion for statistical research on eurostudent surveys and socio-economic coding, which came to approximately €77,000. The strategic dialogue process and consultancy in this regard came to approximately €230,000, of which a major element was a procured consultant. That accounts for most of it and there are miscellaneous other bits and pieces.
Chairman: What about 2013? That was significantly higher.
Mr. Stewart Roche: With regard to the ERDF and ESF, 2013 was a particularly high period of article 13 checks. We are part of a cascade to claim money back from Europe under the ERDF and ESF and, as I mentioned, the recoverable amount for the Exchequer is just under €100 million. This came to just under €200,000 in 2013 and was payable to Mazars. It is not all with regard to article 13 checks as Mazars is also our outsourced internal auditor. We also have the Marie Curie award which I mentioned, which was also €80,000 in 2013. Our legal costs were just under €40,000. We did other surveys which came to approximately €25,000. We had other panel members which amounted to approximately €50,000. We sponsored undergraduate awards, which amounted to just under €70,000. We had further statistical research, eurostudent surveys and socio-economic coding which amounted to just under €110,000. We also had a strategic dialogue process, which amounted to just under €90,000. We had the UCC medicine study which amounted to approximately €20,000 or €25,000. We had the access programme which cost €31,000. There was the ESF programme which cost €20,000. There were other various amounts, which came to quite a substantial amount of money.
Chairman: Will the HEA provide us with a list of the various consultants used for 2013 and 2014, for what purpose and how much?
Mr. Tom Boland: We will do that.
Chairman: It is a significant sum of money to pay on the basis of consultants' fees.
Mr. Stewart Roche: It is not all consultants.
Mr. Tom Boland: The Chairman is referring specifically to the consultants.
Mr. Stewart Roche: Is it just the consultants?
Chairman: Mr. Roche might give us the details of the list he read out. It is basically the two figures in the accounts. I ask him to give us a complete breakdown of them with regard to who was used and for what purpose so that at least we can understand what is going on.
Travel and subsistence expenses were significant.
Mr. Tom Boland: Again, Chairman, many of the same issues arise in the travel and subsistence area, in particular to do with travel and subsistence around the engagement of international people to assist us with the strategic dialogue process, which was a major reform of the higher education system. Again, we can provide the committee with a full breakdown.
Chairman: Yes. We will come back to it again if necessary. Some other issues arise. There are 62 staff and four vacancies in the HEA.
Mr. Tom Boland: I would have to check that precisely, but the vacancies are of that order. There may be more.
Chairman: Deputy Dowds referred to the National College of Art and Design and the fact that the last set of accounts was from 2011 and 2012. Before it becomes an issue, I am anxious to determine if there is a progress report. Arising from the meeting we had with the National College of Art and Design, could Mr. Boland indicate what progress has been made to date on the issues that were raised and how they have been dealt with? A transcript of the meeting might help. We will see what progress has been made and measure what is going on in terms of the work to be undertaken.
Part of the duties of the 62 staff is to oversee the various universities and third level institutions. Because today's meeting is the first one of the session, a significant number of accounts are available that have been put before the Comptroller and Auditor General. Dublin City University was dealt with in terms of the trust and the accumulated reserves of €15.4 million. The other issue of putting money off-balance-sheet has been dealt with previously. I understand from Mr. Boland's reply that the HEA has instructed the institutes and universities that that is not to happen and the HEA will oversee it.
Mr. Tom Boland: That is correct, Chairman.
Chairman: The next matter relates to Waterford Institute of Technology. Is Mr. Nevin the president?
Mr. Tom Boland: No, it is Dr. Donnelly. Willie Donnelly.
Chairman: Where is Mr. Nevin?
Mr. Tom Boland: Mr. Nevin, having left Waterford Institute of Technology, was engaged by the Department of Education and Skills and assigned to the HEA to do work jointly with us on a range of issues to do with-----
Chairman: So Mr. Nevin is now working with the HEA.
Mr. Tom Boland: Yes, he is.
Chairman: And he is paid for by the Department of Education and Skills.
Mr. Tom Boland: That is correct.
Chairman: What is the wide range of issues he is dealing with?
Mr. Tom Boland: There are a number of them. First, as a former president of an institute of technology, Dr. Nevin advises us generally on the development of the IOT sector, but he has a particularly significant role in our enterprise engagement function in the HEA. We have a new enterprise engagement strategy and Dr. Nevin is playing a very important part in rolling out that strategy.
Chairman: He is heading up that strategy.
Mr. Tom Boland: He is not heading it up. There is a principal officer in charge of enterprise engagement, although the position is vacant at the moment. He acts more in an advisory role and he has taken on some specific tasks. In addition, he is very valuable to us in terms of advising on skills needs in the economy and he is working with the Department on the development of a skills strategy for the country. What we are doing is engaging him in the areas of his expertise in the past. Another significant area where his advice and support and expertise is very valuable is in the rolling out of the new apprenticeship programmes-----
Chairman: Is that as a consultant or is he employed by the Department?
Mr. Seán Ó Foghlú: To be clear, he is currently working on our behalf in the HEA, but he remains on the WIT payroll, and that is one of the issues WIT is seeking to change with us. We have agreed that we will pay him but we have not made that arrangement with WIT yet.
Chairman: So Mr. Nevin is being paid by Waterford IT but is working for the HEA, and the Department at some stage will pick up the tab-----
Mr. Seán Ó Foghlú: We will.
Chairman: -----for his payments dating back to the time that he left the college.
Mr. Seán Ó Foghlú: We have to work that out with WIT, but we will certainly-----
Chairman: But why would the Department not work it out if he left the college and went into the employment of the HEA?
Mr. Seán Ó Foghlú: We have to agree that yet with WIT. We have not done that yet.
Chairman: What agreement is to be made? If he left the college and went to work for the HEA-----
Mr. Seán Ó Foghlú: He is still legally in the employ of the college.
Chairman: So he has not left the college.
Mr. Seán Ó Foghlú: No, he is legally employed by the college. He is seconded to us.
Chairman: I see. That is interesting. I wish to return to a matter that was raised earlier by Deputy Deasy about Dr. Byrne, the previous president. The HEA received a report back in 2011 in relation to the expenditure at the college. Is that correct?
Mr. Tom Boland: I am not sure.
Chairman: I am trying to explore-----
Mr. Tom Boland: I cannot say absolutely, but let us say yes. I do not know. I cannot recall precisely.
Mr. Seamus McCarthy: I think the Chairman may be referring to the Deloitte investigation of expenses.
Mr. Tom Boland: Right. That is fine. Yes, I do recall that.
Chairman: WIT did a report to the HEA on 3 June 2011, and in that report it set out to address various matters at that time, particularly to do with what was described then as the cost centre for Dr. Byrne. Reading the report that the HEA was given, it would appear that much of what we were talking about back then did not relate to Dr. Byrne at all. It was a cost centre that was used generally and was not necessarily spent by him. Mr. Costello is nodding.
Mr. Fergal Costello: I can recall the report. There would have been issues where, let us say, the institute would have had a subscription to IBEC, or to Institutes of Technology Ireland, that would have gone through that cost centre. That is just from memory.
Chairman: I will not speak for him, but Deputy Deasy was trying to redress the balance in terms of that issue at the time and the fact that it was perhaps not appropriate to refer to it as Dr. Byrne's expenditure, which I think is fair, because it was said at the meeting.
Mr. Seán Ó Foghlú: Dr. Byrne-----
Chairman: One moment. I will allow Mr. Ó Foghlú to comment in a moment. The HEA had that report.
Mr. Seán Ó Foghlú: Could I just clarify something? The HEA had the report and the Comptroller and Auditor General did a review of it, which was considered by the committee a number of years ago. As Mr. Costello has shown, the review showed there was a range of expenditures that were not necessarily personal. Notwithstanding that, there is a range of other expenditures which WIT is seeking to have repaid by Professor Byrne at the moment.
Chairman: Yes, but I am not going into that. I am just trying to work out our understanding of what happened, because a lot was said at the public hearing. We did not go back to specifically address the issues, and it is only fair that I refer to this particular report, which is in existence and went to the HEA.
One of the other clarifications I am anxious to get relates to the sports centre. That was terminated, or the completion of the construction of the centre was stopped. Someone made a decision on that, knowing that it would cost €4 million.
Who made that decision?
Mr. Seán Ó Foghlú: This was also covered in the Quigley report. Arising from the Quigley report, the Minister agreed to a Department contribution of €2.9 million towards that. We have not paid over that €2.9 million yet but we are in discussions with WIT and WIT would like that funding to be increased somewhat. We are in discussions with WIT about that at the moment. No decision has been made that the project will not advance. WIT has not made that decision. Those issues were covered in the Quigley report.
Chairman: I understand that. Mr. Ó Foghlú refers to the Quigley report as if I am asking questions that I should know the answer to. All I know from the Quigley report is it said €2.9 million. I know that when the decision was being made that people were told it would cost €4 million to terminate the contract at that time. I am asking whether that is true or false and, on the €2.9 million, what will it now cost to complete that in the way that it was planned originally? I am asking for clarification on the current status.
Mr. Seán Ó Foghlú: WIT has not decided to advance with it but it is in discussions with us about advancing it. I am not aware of what the cost will be but WIT is of the view that it will be more than €2.9 million.
Chairman: Mr. Ó Foghlú does not know what the cost is.
Mr. Seán Ó Foghlú: I do not know-----
Chairman: What is happening down there with it at the moment?
Mr. Seán Ó Foghlú: WIT is in discussions with us about having some extra funding for that.
Chairman: Are the buildings empty? It is used or not used?
Mr. Seán Ó Foghlú: My understanding is that perhaps part of it may be used but a lot of it is empty. It is not useable.
Chairman: How long has it been empty?
Mr. Seán Ó Foghlú: As far as I recall, two years or so.
Chairman: Two years. Does the Department find that acceptable?
Mr. Seán Ó Foghlú: WIT-----
Chairman: How much has the taxpayer spent on that up to now? Then the Department closed it; at least it did not do what the Department of Justice did and tear it down.
Mr. Seán Ó Foghlú: No.
Chairman: At least there is a building there.
Mr. Seán Ó Foghlú: I have referred to the Quigley report. This is covered in the Quigley report. They over committed about this and they needed additional funding for it and that is one of the reasons why we had to have the investigation. The Minister made a call that she was willing to fund additional funding for it. That additional funding is available but now WIT is seeking an extra element to it and that is available as a loan.
Chairman: What concerns me is that the buildings are there, the project is completed to a particular stage. It is two years since anyone revisited that project. Buildings, by their nature, if they are not used tend to suffer from some kind of dilapidation. It will cost much more than €2.9 million. When will the decision be made to deal with this issue once and for all? There was a Diverse Campus Services manager or CEO. Who was that?
Mr. Seán Ó Foghlú: Can I answer the first question?
Chairman: Yes.
Mr. Seán Ó Foghlú: The Department has made a commitment to make the €2.9 million available. WIT can engage that to complete the project. It has informed us, which was not the case at the time, that it will cost more to do that. They will have to talk to us and agree if there will be a change in the amount of money. We committed, under the implementation of the Quigley report, to do enough to complete the project, as we understood at the time. It has tendered. There has been work done by WIT.
Chairman: When did it tender?
Mr. Seán Ó Foghlú: It tendered in the last year, as far as I understand.
Chairman: What does that tender show? Does it show that €2.9 million will complete it?
Mr. Seán Ó Foghlú: I understand that will not be sufficient to complete it in its view.
Chairman: What is the gap?
Mr. Seán Ó Foghlú: I am not sure.
Chairman: I find that extraordinary. Mr. Boland is here to oversee all these colleges and Mr Ó Foghlú is here to oversee the spending of taxpayers' money but nobody has a clear view of what exactly is happening to those buildings now and what the exact cost of completing it will be. Whether they want to do it or not is another question. Mr Ó Foghlú is talking about €2.9 million and he is waiting for WIT to come back to him.
Mr. Seán Ó Foghlú: WIT is of a view about how much it will cost but I am not sure that is what it will cost. There are different issues. We are often approached by higher education institutions and told what they need to spend. We do not necessarily always agree that this is the level we can talk to them about.
Chairman: When does Mr. Ó Foghlú think he will find out? Could he not ring the CEO of Diverse Campus Services? That was a title that we came across.
Mr. Seán Ó Foghlú: No. We are dealing with the institution. We are dealing with WIT. The president has been talking to us and the HEA about this.
Chairman: The president.
Mr. Seán Ó Foghlú: The president of WIT.
Chairman: That president had a CEO of Diverse Campus Services involved during the process. Is that right, Mr. Boland?
Mr. Tom Boland: The intention is that Diverse Campus Services will now be fully-----
Chairman: Where is he now?
Mr. Tom Boland: I think he is a staff member of the institute. He certainly was at the time. He always was.
Chairman: Where is he now?
Mr. Tom Boland: He is in the institute. As I understand it, the company is to be fully consolidated into the institute.
Chairman: Will Mr. Boland undertake to check with the CEO, who was the CEO but who is now in the institute, Mr. Boland has said-----
Mr. Tom Boland: I believe so. Go on.
Chairman: I thank Mr. Boland for his permission. I will move on. Can Mr. Boland check with him to get the background to this and provide the Committee of Public Accounts with a report?
Mr. Tom Boland: I can certainly check with him but I will also check with the president of the institute to get a full picture of the whole situation. Of course I will.
Chairman: Mr. Boland will?
Mr. Tom Boland: Yes.
Chairman: Mr. Boland is very helpful. If he will ascertain that we might then be able to determine where exactly this project is at.
Mr. Tom Boland: As I understand it, it is, effectively, in mothballs at the moment. I understand that it is secured against weather but otherwise we are waiting to see how or whether it progresses.
Mr. Seán Ó Foghlú: The thing to remember about this project is that this is one entered into by WIT of its own volition which the Minister agreed to provide additional funding for following the completion of the Quigley report. It is not a project that was approved for capital funding by the Department initially. This is the institute advancing its own building programme, which is a legitimate thing for it to do but it overstretched in doing so at the time.
Chairman: Out of its own resources?
Mr. Seán Ó Foghlú: Yes.
Mr. Tom Boland: From its resources from this company - DCS - to which we are referring.
Chairman: All the more reason why we should find out from the previous CEO of that company or the president exactly what happened.
Mr. Tom Boland: Sure.
Chairman: I will not rest until I find out because something has to be done about that, Mr. Ó Foghlú. It may not have been the Department's funding, but it had to come from somewhere.
Mr. Seán Ó Foghlú: Yes.
Chairman: It did go into that building.
Mr. Seán Ó Foghlú: That is why the Minister committed to fund completion.
Chairman: Fine. That is okay, but the Department is not funding for completion because it has not agreed to it.
Mr. Seán Ó Foghlú: We funded for completion and WIT came back and said it would cost more. We went through this in detail with it two years ago on the completion of the Quigley report. We made a call, which was not typical of us, to fund where an institution had landed itself in a bit of difficulty. We made that call to support it. Now, it has come back seeking a bit more. That is a more difficult call for us to make a second time around. That is what the challenge is.
Chairman: I will ask the clerk to write to the president and the CEO of Diverse Campus Services, whom Mr. Boland says is still with WIT, and ask for a comprehensive explanation as to where this project is at and then to determine what money is left in their funds to complete it and what is their expectation of funding from the Department of Education. I will ask the clerk to do that with the permission of the Committee of Public Accounts, we will get that information and then we can pursue the matter in much more detail.
Mr. Tom Boland: Just for clarification, is the Chairman taking over that role now? He had asked us to do a report.
Chairman: You are too busy looking after all the other matters.
Mr. Tom Boland: We are happy to do it.
Chairman: I will ask the clerk to do it.
Mr. Tom Boland: I would also clarify that the then CEO of DCS is no longer CEO of that company but, as I understand it, he is a staff member of the-----
Chairman: He is still employed. He is a staff member. Is that right?
Mr. Tom Boland: Yes. Just so the Chairman knows that.
Chairman: Mr. Boland told me that. He is a staff member of WIT.
Mr. Tom Boland: Yes, but he is no longer CEO of DCS.
Chairman: When he became a staff member and was no longer CEO, he hardly forgot everything he did.
Mr. Tom Boland: I only wanted to assist, and let the Chairman know that he is no longer CEO.
Chairman: Mr. Boland is very helpful. That is what we will do.
In terms of the use of consultants and whatever might happen in colleges, this report that you gave the committee, Mr. Ó Foghlú, was into Cork Institute of Technology. In all honesty, how do you expect us decipher all of this redacted information, page after page of it? We get complete blow-by-blow information from a whistleblower. It does not read very well. How much was spent on this?
I assure the committee that governance and accountability for the bodies under the remit of the Department of Education and Skills, including the Higher Education Authority, are of paramount importance to the Department and that is why steps have been taken in recent months to strengthen even further the Department’s role in the oversight of all institutions and bodies across the education sector.
Within the Department a committee on sectoral governance and accountability was established earlier this year and two meetings of the committee have been held since then. The Department’s role is to support the development and implementation of best practice governance arrangements across the sector through oversight and regular assessment of its approach to governance. The committee’s focus will include the non-commercial agencies under the Department’s aegis, the higher education institutions as well as the education and training boards. The committee’s membership includes the chief executive of the HEA and an external member who can provide an additional element of insight and experience in the area of governance oversight.
A principal officers sectoral governance and accountability network has also been established. Its role is to support the work of the management advisory committee sub-committee by facilitating discussion regarding compliance requirements, to provide feedback, highlighting issues arising in each sector and to disseminate best practice across the Department’s bodies. It has also been decided, in principle, to establish an internal audit sector forum for personnel with internal audit functions in the Department, its agencies, higher education institutes and ETBs.
In addition, as part of strengthening its role on governance and accountability oversight, the Department is tendering for the supply of services from suitably qualified companies for the purposes of conducting reviews of corporate governance compliance by education sector bodies with their relevant codes of practice which underpin their corporate governance frameworks. The HEA is joining the Department in contracting this service in respect of bodies for which it has responsibility.
The HEA has also introduced a number of measures recently to enhance its role further in the governance and accountability of the higher education institutions under its remit. The HEA is to brief the committee in more detail about these measures. I want to mention in particular the meetings that have taken place in recent months between the HEA, the Comptroller and Auditor General and the institution’s representative bodies which will assist, among other things, in providing an early flagging of any issues in the sector. This new collaborative approach will assist all stakeholders across the sector in delivering a more robust system of governance and accountability in higher education. The Department is committed to working closely with the HEA in achieving this aim.
I am conscious that the Department has been in correspondence in recent times with this committee on a number of issues particular to higher education. In this regard, I assure the committee that the issues raised in the sector are, and continue to be, of great concern to the Department and we are working with the institutions, through the HEA, to seek to have the issues dealt with appropriately and as efficiently as possible. I am happy to answer questions from the committee.
Mr. Seán Ó Foghlú: CIT went through a process whereby anonymous allegations were made.
Chairman: I thank Mr. Ó Foghlú. Can his statement be published?
Chairman: How much was spent on this?
Mr. Seán Ó Foghlú: Yes.
Mr. Seán Ó Foghlú: The cost of the KPMG report was €64,800.
Chairman: I invite Mr. Boland to make his presentation.
Chairman: The Committee of Public Accounts gave you a completely unredacted version of the accusations and you then gave us this. Is that correct?
Mr. Tom Boland: My statement will cover the following areas as set out in the agenda: the investigation of plagiarism in Galway-Mayo Institute of Technology, the engagement and consultation process for a technological university for the south east, the HEA 2014 financial statements, and the governance and accountability developments in the higher education sector.
On the investigation of plagiarism in Galway, the committee will recall that I wrote to it in May of this year regarding the investigation of plagiarism in GMIT setting out the background and issues arising, particularly on costs. The committee has also been provided with a detailed note setting out the HEA’s interaction with GMIT in the case as well as with Quality and Qualifications Ireland.
On the specific incident of plagiarism I wish to emphasise at the outset that the management of academic affairs, including course curricula, the marking of students and the handling of allegations of plagiarism is first a matter for individual higher education institutions. The report prepared by Professor Bairbre Redmond found that the plagiarism detection, investigation and penalty procedures in place in GMIT at the time, in the main, were fit for purpose. The HEA notes that since then the institute has made improvements in the policies in question. The HEA’s main area of concern relates to the costs incurred in the investigation carried out into the manner in which GMIT responded to and dealt with complaints of plagiarism. Higher education institutions, like all public bodies, have a duty of care in the expenditure of Exchequer funding, especially as it relates to administrative processes. Notwithstanding the importance of an independent investigation that was thorough and comprehensive in its remit, it is clear that there was failure on the part of GMIT in managing the costs and timelines of the investigation. As we have emphasised to GMIT, it is especially unacceptable that such high costs were incurred in the context of a challenging financial situation in the higher education sector.
To avoid such incidents in the future, the HEA expects GMIT and other higher education institutions to inform us, the HEA, of major unexpected expenditure in a much more prompt manner. Clearly the experience from this case in GMIT is salutary for the rest of the higher education sector. Earlier this year the HEA wrote to all institutions under its remit on the subject of independent investigations and, in particular, the need to protect the independence of such investigations while at the same time having appropriate systems for cost control within the institution. As part of revised governance reporting requirements introduced by the HEA in 2014, institutions are required to report on significant expenditure incurred from such investigations.
On the issue of a technological university for the south east, the HEA welcomes the publication of Mr. Michael Kelly’s report to the Minister for Education and Skills on the engagement and consultation process on a technological university for the south east. I will give the committee some background. The National Strategy for Higher Education to 2030, published in January 2011, recommended the consolidation of the institutes of technology sector and the creation of a small number of multi-campus technological universities. The process for designation as a technological university consists of four stages and requires the merger of two or more institutes of technology prior to application for designation as a TU. The technological university for the south east project was initiated in 2011. It made good progress initially and submitted a stage 1 expression of interest in 2012. However, following this initial promising start, the consortium encountered a series of difficulties and did not succeed in finalising a stage 2 plan prior to the decision by Waterford Institute of Technology to suspend merger activities in October 2014.
In early November 2014, the Minister for Education and Skills, Deputy Jan O’Sullivan, announced the establishment of a process of engagement and consultation with the governing bodies, staff and students of both institutes together with the wider community in the south east. Mr. Michael Kelly was appointed to lead the process of consultation. Mr. Kelly carried out a thorough consultation process in the region. His reports set out the results of this consultation and of particular note are his observations that there is very significant convergence of thinking and approach by both institutions to many aspects of the design of a TU; if sufficient resolve exists within both institutions, the remaining issues should be capable of resolution; external stakeholders emphasised that any TU should support the economic and social development of the south east; and it is likely that the consortium of Waterford and Carlow institutes of technology would meet the quantitative TU designation criteria within a period of three years. Mr. Kelly also set out a number of options for the future, including the recommendation that a re-invigorated process to found a TU for the south east be established at the earliest feasible date, as well as the development of a facilitation process. The HEA will continue to assist the two institutions to the greatest extent practicable.
On the matter of our financial statements, I am pleased to note that in his audit certificate accompanying the HEA’s 2014 financial statements, the Comptroller and Auditor General records that the HEA has kept proper books of accounts and that the financial statements are in agreement with the books of accounts. However, I draw attention to one issue. Over recent years the Comptroller and Auditor General has referred to the issue of pension funding to the universities in the HEA’s financial statements. As our briefing paper sets out, the accumulated funds of approximately €159 million referred to in the Comptroller and Auditor General’s notes relate to the model pension schemes in the five older universities. The model scheme membership has a much younger age profile compared with the closed funded schemes in the universities. This means that the amount of employer and employee pension contributions going into the model scheme is much higher than pension and lump sum payments coming from it, resulting in a surplus. The accumulated funds of €159 million in the model scheme must be seen in tandem with a shortfall of approximately €156.5 million that exists in respect of the closed funded schemes in the five older universities. This shortfall has arisen due to an existing and increasing cohort of retirees in receipt of pensions and lump sums coupled with the fact that membership of the scheme itself has been closed to new entrants for some years now. This means that the level of pension payments and lump sums greatly exceed any pension contributions from employer or employee, hence a shortfall in 2013-2014 of €156.5 million. Therefore, the accumulated funds of €159 million in the model scheme must be offset against the accumulated shortfall of €156.5 million in the closed funded schemes. Although these figures represent an almost break-even position, it is anticipated that the accumulated shortfall in the closed funded schemes will continue to grow and will ultimately surpass any surplus on the model scheme.
Mr. Seán Ó Foghlú: That is what CIT provided to us. Those involved have legal advice to the effect that they cannot give any more information.
Chairman: It has been suggested that we bring in CIT and the Department again in respect of the accusations to go through them, because they have not been explained in that report. I could go through the report with you, but it is too late now and we will have to set another date for it. Anyway, I can tell you that there are more questions arising from that report than there were before the report was commissioned and the information given to us.
Mr. Seán Ó Foghlú: Two sets of anonymous allegations were made to CIT. Following consultation with the Department the Higher Education Authority requested that those responsible in CIT investigate the matters. They did. They investigated them genuinely, but they were anonymous allegations so they had no one to check with about the allegations. Those responsible went through them. They were very wide-ranging. They reported that they have worked through all of them and that there is nothing of any major consequence.
We met jointly with the institute president and a senior member of staff. They reported to us on their work. We challenged them and they came back to us with further clarification. They have worked through, in what appears to us to be a genuine way, the allegations that have been made to them, which are anonymous and which they cannot seek to verify with anyone. Furthermore, they have a procedure in place whereby someone may make a disclosure on a confidential basis. They have a mechanism in place if someone within the institute wishes to make a confidential disclosure. Such a confidential disclosure, as far as we know, has not been made. Therefore, they have no way to verify or challenge the evidence underpinning the range of allegations.
They have gone about this in a genuine way. A considerable amount of their senior management time has gone into it and they have had to engage external people to undertake the investigation. That is the position as we see it.
Chairman: I do not accept that report and the manner in which it has been given. It is an insult to the Committee of Public Accounts. While you may not have given - Mr. Mannion, have you something to say?
Mr. Christy Mannion: Yes. The legal advice said we could not actually give any more than that. That is all we can do. CIT has legal advice. Those involved tell us they have legal advice and we have to produce it on the basis of that.
Chairman: I do not accept it. It is so heavily redacted that it insults the Committee of Public Accounts and the work we are doing.
Mr. Seán Ó Foghlú: We do not-----
Chairman: I am just saying this, Mr. Ó Foghlú. I am going to ask - it has been agreed already anyway, although we could not do it today - representatives of CIT to come before us and explain this.
I have one last question for you, Mr. Boland, and I am going to conclude the meeting then. It relates to the process with Dr. Byrne at the time. Was he invited to the HEA? What was the engagement between the HEA and Dr. Byrne in terms of the issues at the time?
Mr. Tom Boland: I have two disadvantages here. One is that I have not briefed myself on this. More important, I have some concern that we are getting into areas that are sub judice.
Chairman: He is taking a case. Is he?
Mr. Tom Boland: As I understand it, Dr. Byrne is suing Waterford Institute of Technology in what I believe is a constructive dismissal case. It is a High Court action and therefore I am reluctant to comment on anything that might be material to that case. Certainly, I know, because I have been asked to provide information, that the issue of when I met Dr. Byrne and the content of that meeting are issues in those proceedings.
Chairman: All right. That is okay. We will not press you on that. I am going to leave it at that, gentleman. Thank you all for coming along today.
The witness withdrew.
The committee adjourned at 3.45 p.m. until 10 a.m. on Thursday, 1 October 2015.
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