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(Speaker Continuing)
[Mr. David Cooney:] It is clear that, in common with the other donors involved, our risk assessments, based in part on the very strong international assessments of Uganda's public financial management systems, result in a stronger focus on tracking results on the ground than on the movement of funds once they were received by the Bank of Uganda.
Following receipt of the report from the evaluation and audit unit I initiated a full review of all management systems across the bilateral programme to ensure that risks are being identified and managed appropriately. I directed the ambassadors, who are the sub-accounting officers for the country programmes, to carry out a full review of their management and risk assessment systems. I have already received their responses and I have asked the evaluation and audit unit to examine them and identify matters in need of attention. I am arranging to meet the ambassadors to review our systems and to underline the critical importance of managing risks effectively in all programmes supported by Irish public funds. This forms part of a further general strengthening of the Department's risk management arrangements, which I have appointed a chief risks officer to lead and direct. I am also seeking sanction for the recruitment of a professionally qualified chief financial officer to oversee financial controls across the entire Department, including the development programme.
I am ready to answer any questions the committee may have on this matter, on its visit to Mozambique or on the wider Irish Aid programme managed by the Department of Foreign Affairs and Trade. I am also happy to address any of the diverse range of policy, administrative, programme management and public service functions that the Department conducts through its headquarters staff and network of 73 diplomatic and consular missions abroad.
In the period covered by the 2011 report and more recently, the Department has continued to contribute actively to the drive to rebuild Ireland's international standing. The historic back-to-back visits of Queen Elizabeth II and President Obama were successfully organised in 2011. Each visit in its own way represented a major milestone in the consolidation and development of these key relationships and appreciably enhanced Ireland's overall image and profile in Britain and the United States. Ireland is concluding a successful year of chairmanship-in-office of the OSCE, which culminated in the recent ministerial council meeting in Dublin, the largest intergovernmental conference ever held in the State. External feedback on the organisation and management of the complex logistics and agenda surrounding the meeting has been very positive and Ireland's general performance in the chair will contribute valuably to the external perception of our country.
Ireland's recent election to the United Nations Human Rights Council for a three-year term, commencing next month, achieved in the teeth of very strong competition, was a further morale-boosting reminder of the standing Ireland has earned and continues to enjoy in the international community. We are also about to assume the Presidency of the Council of the European Union for the seventh time. My Department is committed to making its full contribution to a successful Presidency performance, delivered with maximum cost efficiency.
The Department continues to reduce its cost base and to make economies. Like all public service organisations we are absorbing substantial reductions in resources, both human and financial. However, despite a drop of 12% in our staffing complement I believe we have managed to maintain the range, quality and geographic reach of the various services we provide. We have achieved significant efficiency gains through ambitious internal organisational restructuring, consolidation of functions and streamlining of our business processes. Regrettably, at the end of 2011 it was found necessary to close three resident diplomatic missions, in East Timor, Iran and the Holy See. The committee may recall that the matter was discussed when I last appeared before this committee in April of this year. Overall, the annual administrative cost of the delivery of the Department's functions has been reduced by over 20% over the past four years. I thank the Chairman for the opportunity to make this short statement. I will do my best to assist him and his colleagues in their considerations.
Chairman:   I thank Mr. Cooney. May we publish the statement?
Mr. David Cooney: Certainly.
Deputy John Deasy: I welcome Mr. Cooney and his officials here this morning. I will go straight into the interim report on Uganda and the €4 million that was misappropriated. I understand that the money will be in our account within the next couple of days, which is good news. I do understand that this affair has had a profound impact politically and otherwise in Uganda. It is fair to say that the auditor general there did his job. Civil society played its part in uncovering this and there has been a significant fallout, not just here and not just in Uganda but with the other donors. They followed our lead in the aftermath of the situation. The individuals responsible for implementing the controls bypassed key controls and there was massive collusion, not just in political circles but with the Bank of Uganda. On the donor side, controls were not applied, which made the fraud easier.
Section 4 of the report states that in cases of payment made to the Ugandan Government in 2010 and 2011, in some instances receipts were not on file. Irish Aid financial regulations require that a receipt be retained but are not adequately specific on the level of detail required. Ideally a receipt should detail any subsequent transfer of funds to specific accounts. The obvious question for this committee is how that happened. How is it that receipts were not on file? How is it that receipts did not detail subsequent transfers of funds? Has Irish Aid checked the other programme countries to see whether that was standard practice or whether it was isolated in Uganda since the situation there came to light?
Mr. David Cooney: In general terms, this fraud has created an extraordinary storm in Uganda and has convulsed the political system there. I am sorry to say that this €4 million may have had the greatest impact on Uganda, not for the reasons we would have wished but because the exposure of this fraud perpetrated by the Ugandan system has forced the whole country to face up to the existence of corruption in high places there. It has also been extremely traumatic for the Irish Aid programme and for my Department and most particularly for the embassy in Uganda. The extent of collusion at the highest levels of the public service and the exposure of the fraud was unprecedented in our experience for an aid programme. We have been asking ourselves how this could happen. Obviously the evaluation and audit report has identified some weaknesses in our system. I believe it happened primarily because we were focused on the delivery end, where fraud is most likely to take place. When the money reaches the ground it is most vulnerable to misappropriation. The World Bank and the British Department for International Development, DFID, had made some quite detailed examinations of the Ugandan public financial management system and had expressed themselves satisfied with the procedures in the Bank of Uganda.
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