Committee Reports > List of Committees > Dáil > 1971 > Committee of Public Accounts > Final Report - Northern Ireland Relief Expenditure

MIONTUAIRISC NA FIANAISE

(Minutes of Evidence)

Déardaoin, 7 Eanáir, 1971

Thursday, 7th January, 1971

The Committee met at 2.30 p.m.

DEPUTY P. HOGAN in the chair.

Mr. E. F. Suttle (An tÁrd-Reachtaire Cuntas agus Ciste) was in attendance in an advisory capacity.

Chairman: I call Mr. Murray.

Mr. C. H. Murray (Secretary, Department of Finance), Sworn and examined.

ORDER OF DÁIL OF 1st DECEMBER, 1970.

Chairman.—Now, gentlemen, the Government at a meeting on 16th August, 1969, decided inter alia that a sum of money, the amount and channels of disbursement of which would be determined by the Minister for Finance, should be made available from the Exchequer to provide aid for the victims of the current unrest in the Six Counties. Further to that on the same day, 16th August, 1969, the Government Information Bureau announced as follows, and I quote: “The Minister for Finance will make funds available for the relief of the victims of disturbances in the Six Counties and he will have early consultations with the Chairman of the Irish Red Cross Society”.

On 21st August, 1969, the Government Information Bureau announced: “The Minister for Finance has announced that the Government are making available adequate funds for the relief of victims of disturbances in the Six Counties. These funds will be administered mainly by the Irish Red Cross Society and are sufficient to cater for any eventuality that is likely to arise. The Government are aware that groups and organisations who are concerned about distress among their fellow Irishmen and Irish women are anxious to collect funds for Northern Relief. The Red Cross is the body designated by the Government to co-ordinate the collection of funds for the relief supplies and comforts for refugees. The Government are concerned that persons and groups wishing to provide these for refugees should channel them to the Irish Red Cross Society. No useful purpose would be served by unco-ordinated, individual efforts. In this regard the Government are anxious that all funds which are con-contributed for Northern Relief should be sent to the Irish Red Cross.”

Again, on the 21st August the Government Information Bureau announced as follows: “(1) Refugees arriving in the State are being catered for officially by the Army authorities at Army refugee centres at Gormanston and Finner Camps. Other centres will be opened if necessary.” Then some matters relating to refugees: “(2) The Irish Red Cross Society is the body designated by the Government to co-ordinate the collection of funds, relief supplies and comforts et cetera for refugees. Persons and groups wishing to provide these for refugees at Army centres are advised, therefore, to channel them to the Irish Red Cross Society”.

Our terms of reference as a committee— these terms of reference for the committee were determined on foot of the following resolution of the Dáil:

That the Committee of Public Accounts shall examine specially the expenditure of the Grant-in-Aid of Northern Ireland Relief issued from Subhead J, Vote 16 (Miscellaneous Expenses) for 1969-70 and any moneys transferred by the Irish Red Cross Society to a bank account into which the moneys from this Vote were, or may have been lodged and shall furnish a separate report on this expenditure as soon as possible.

The original Notice of Motion was submitted to the Dáil by the Parliamentary Secretary to the Taoiseach on December 1st, 1970 and an Amendment in the name of Deputy Garret FitzGerald was accepted by the Dáil.

Now, the Committee of Public Accounts does not ordinarily examine the financial affairs of semi-State bodies, commercial or non-commercial, nor ordinarily does this Committee consider Grant-in-Aid expenditure which now amounts to about £54 million per year.

The Report of the Comptroller and Auditor General has already been submitted to us on this matter and in a general fashion as outlined in paragraph XXIX, on page 13 of the 1969-70 Appropriation Accounts.

On August 16th, 1970, as I have mentioned, the Government decided and the Government Information Bureau announced the setting up of a fund of an unspecified amount to provide aid or relief for the victims of current unrest or disturbances in the Six Counties. On March 18th, 1970, the Dáil voted £100,000 as a Grant-in-Aid for Northern Ireland relief expenditure. This Supplementary Vote covered payments made during the interim period to the Red Cross and other persons and charged during this period to a suspense account in the Department of Finance.

For this purpose and for this investigation solely, the Dáil has, at the request of this Committee, clarified our position in respect of privilege and immunity of members, advisers, agents or witnesses of the Committee and power to summon witnesses is set out in the Committee of Public Accounts of Dáil Éireann (Privilege and Procedure) Act, 1970. In this Committee under Standing Orders there is no chairman’s casting vote but the Minister for Finance assured us in the Dáil on December 1st that the publication of our report would not be frustrated for party political reasons.

Through the good offices of Mr. Tobin we have had made available to us selected scripts from recordings of the recent Arms Trial at the Four Courts. The notice of motion by Dáil Éireann is set out in a simple manner. As I interpret it, we are charged by the specific terms of this motion to determine the details of this Grant-in-Aid, Subhead J, and such other moneys as may have been lodged in a bank account. This much at least is obligatory and it would appear to be all we need concern ourselves about for the present. The opinion of the Committee as to whether the method of distribution or ultimate application of the fund was in conformity with the intention of Dáil Éireann when they voted this Grant-in-Aid is a matter for discussion and agreement at the final report stage.

1. Now, we have here today to help us as our first witness, Mr. Murray. Mr. Murray, you are the Secretary of the Department of Finance?

—Yes.

2. You are also Accounting Officer for that Department?

—That is so.

3. And you are Accounting Officer for other Departments? For other Votes?

—Yes, not for other Departments.

4. What other Votes?

—I cannot recall them all. For example, the Vote for Miscellaneous Expenditure. I could furnish a list. There are about a dozen or 16.

5. You are also Accounting Officer for the Taoiseach’s Department?

—That is so.

6. In your capacity as Secretary of the Department, your Department supervises Government expenditure to a large measure?

—That is so.

7. And when various Departments are preparing their Estimates in the fall of the year these Estimates are sent to your Department for scrutiny?

—Yes.

8. And ultimately some kind of agreement or sanction has to be got from your Department as to whether these Estimates are reasonable?

—That is so.

9. Again, during the course of the year various payments have to be made from various Departments and apart from routine payments there are many payments which have to be for special consideration submitted to your Department for, shall we say, sanction? Is that correct?

—Yes.

10. The first paragraph I read out there in respect of the Government decision of August 16th, that Government decision was conveyed to you?

—Yes. I was on leave at that period. I came in for a day or two around about the time of the Government decision and it may have been that I did not see it at the time. In the normal course I see all Government decisions. I certainly saw this but possibly not in or about the time it was issued. Perhaps, Mr. Chairman, I could clarify that by looking up the papers. Could I ask the indulgence of the Committee to have an officer of the Department sitting near me so that I can refer to the files? There are quite a number of files. It would assist me if I could have them readily to hand.

11. Yes, of course. I wish to digress for a moment, Mr. Murray. Evidence here is ordinarily being taken in public. This is for general information. But we have agreed to take evidence in private where national security matters may be concerned or where the publication of evidence may be prejudicial to further inquiries and we have also agreed in general to take evidence in private where witnesses from outside the jurisdiction might be put at risk if their identity could be established from their evidence. You have told us in general that Government decisions are conveyed to you and that this was the substance of the decision conveyed to your Department about that time?

—I have confirmed from the papers that I did see that Government decision as others, a couple of days after it was issued.

12. I intend to ask you some general questions about Grants-in-Aid and their relationship to the Red Cross in the matter of this £100,000 expenditure. Now, we have in our Book of Estimates about 51 Votes and we have a number of Grants-in-Aid, covering, I understand, about 150 bodies. Perhaps, Mr. Murray, you could give us some simple definition of what a Grant-in-Aid is?

—I can give you a simple definition which distinguishes it from ordinary grants.

13. That would meet the case?

—If we start from there, a Grant-in-Aid differs from an ordinary supply grant in that once it is issued any part remaining unspent at the end of the financial year remains in the hands of the grantee for future use. A Grant-in-Aid is also sometimes subject to special audit or less rigid audit than ordinary grants. So that in these two respects a Grant-in-Aid differs from the normal supply grant. I can elaborate on that if you wish.

14. The two essential features are that the residue remaining, if there is a residue, remains in the hand of the recipient?

—Provided an amount has been issued to the recipient out of the Exchequer.

15. Are Grants-in-Aid issued in bulk or by instalments?

—This would depend on the circumstances of the case and on the size of the Grant-in-Aid.

16. And are they subject to any form of inspection or follow-up or certification by the Department which issues them, in this case in your Department?

—Generally not. Here we come to the second aspect of the difference between a Grant-in-Aid and an ordinary grant of supply. As I said earlier, the normal procedure under which supply grants are audited in detail by the Comptroller and Auditor General does not necessarily apply to Grants-in-Aid. In fact, one cannot say that Grants-in-Aid are not audited by the Comptroller and Auditor General nor can one say that they are audited in all cases by the Comptroller and Auditor General. There is a practice which has grown up which depends on a variety of particular circumstances. But so far as the Department of Finance are concerned the general rule is that our responsibility ends when we have a valid voucher for the issue of amounts out of the Grant-in-Aid to the recipient.

17. Where payments are made by instalments has the person or body to whom the Grant-in-Aid is made to justify each request for a new payment, for a new instalment?

—I am in a little difficulty here, Chairman, because the great variety of the Grants-in-Aid are not administered by my Department. It is only in comparatively recent years, in my experience, that we have had some Grants-in-Aid in the normal course of our administrative departmental business so I cannot speak for the general practice in regard to the point you put. Certainly, the obvious check is applied that payments on account, so to speak during the course of the year must not exceed the total that is voted.

18. Is the management of a Grant-in-Aid ordinarily left to the discretion of the body which gets the Grant-in-Aid?

—Yes, that is the essence of the grant-in-aid system.

19. Is there ordinarily no directive of even a general nature issued by the Department in respect of the Grants-in-Aid?

—Well, the purpose for which the grant-in-aid is required must be approved. The body which receives the Grant-in-Aid cannot apply it for purposes other than those for which the Grant-in-Aid was intended.

20. But detailed instructions are not given to the Grant-in-Aid recipients as to how they are to spend the money?

—Again, I am in the difficulty that I cannot speak generally for Departments in this.

21. If a Grant-in-Aid is made to a particular body on an instalment basis how do you determine whether you should give out each instalment?

—Do you mean how do we determine whether each particular request should be acceded to?

22. Yes.

—Well, as I said, the basic test and the obvious one is whether the particular instalment exceeds or does not exceed, having regard to previous instalments, the total amount granted. Subject to that, it is left to the discretion of the grantee as to when it will apply for money—in other words, the rate at which it will draw on the amount made available to it.

23. But the point I am trying to get after is, is the person getting the grant questioned at each stage as to why he is asking for more money?

—I can only repeat the previous point I made that I am not familiar with the practice of the Departments which administer the great bulk of Grants-in-Aid but in the case of those which we have administered ourselves we would wish to be assured, as a general understanding with the grantee, that they only ask for money when they require it. In other words, they would not ask for money when they had sufficient balance in hand to meet the commitments they are seeking the new instalment for.

24. In the case of the particular grant-in-aid we are discussing various demands were made at different stages by Captain Kelly. Was he asked to justify these demands at any stage, or for any particulars?

—Perhaps I might refer you to the statement that we put in to supplement our original submission of 9th December. I refer you to paragraph 5 of that statement.

25. Is it the second submission?

—The document is headed “Addendum to Submission (9th December, 1970) by the Department of Finance to the Committee of Public Accounts.”

26. It reads as follows:

Mr. Fagan, in a statement to the Gardaí on 14th May, 1970, said that the then Minister did not always readily authorise payment.

Is that the one?

—Yes.

27. There is a further paragraph in your second submission in which I understand it was stated that Captain Kelly was not asked to explain his various demands for money on different occasions?

—He was not asked at official level.

28. You stated that Grants-in-Aid are not subject to the same detailed accountability by the Comptroller and Auditor General as ordinary Votes. Is that correct?

—No. What I was trying to make clear was that they need not be. One could not make a general statement that all Grants-in-Aid are subject to audit by the Comptroller and Auditor General, nor can one say that, in practice, none of the Grants-in-Aid are subject to such audit. Quite a number of Grants-in-Aid are audited by the Comptroller and Auditor General but there are quite a number that are not audited.

29. Can you tell us off-hand the number that are not audited?

—I can give an indication of the order of magnitude as between grants that are audited and those that are not audited by the Comptroller and Auditor General. It is only an approximation because we did not make a comprehensive count. On our reckoning in the current year there are over 100 Grants-in-Aid. We made an account of 80 of these and of those 50 were not audited by the Comptroller and Auditor General.

30. Apart from the ones that you may or may not audit, are there any types of Grants-in-Aid which, by their nature, are not subject to the same detailed accountability as the ordinary Grant-in-Aid?

—I think it is true to say that all Grants-in-Aid that are not audited by the Comptroller and Auditor General are not subject to detailed accountability.

31. But if so audited they could be audited in detail?

—Yes, but I think it is true to say as a generalisation that the cases which are audited by the Comptroller and Auditor General are exceptions to the general rule that Grants-in-Aid are not audited in detail. The audit in these cases is a result of, shall we say, the particular facts of the case, the convenience or the particular appropriateness of their being audited by the Comptroller and Auditor General. I think the distinction might be clearer if you looked at some of the bodies that get grants and are audited by the Comptroller and Auditor General and compare those with bodies that get Grants-in-Aid and are not audited. By and large where all, or a substantial part of the income of the body is received through a Grant-in-Aid it has been the practice to have them audited by the Comptroller and Auditor General, although even there there are exceptions to that rule. On the other hand, where the Grant-in-Aid forms an incidental or not significant element in the income of the grantee the accounts of that body are not normally audited by the Comptroller and Auditor General.

32. Does a Grant-in-Aid, where the grantee or recipient is not named, lead to a lesser degree of direct accountability by the Comptroller and Auditor General than where the recipient is named?

—No, I think that here again there are cases where the Comptroller and Auditor General audits the accounts in the case of bodies which are not named in the Grant-in-Aid but, on the other hand, there are cases where the grantee is not named and the Comptroller and Auditor General does not audit the accounts.

33. Are there many Votes where the recipient is not named?

—Yes. In this instance we did a complete count and of the 105 Grants-in-Aid we identified in the 1970-71 Accounts in about 20 of these cases the grantee was not specified.

34. In this particular Vote we are dealing with, you will agree that the recipient was not specified?

—Yes, with this qualification, that the recipients were not specified.

35. In this particular Vote the money was channelled largely through the Red Cross?

—Yes.

36. Through the No. 2 Account in the Bank of Ireland of the Red Cross?

—Yes.

37. Did this channelling of the pool or fund through the Red Cross tend to circumvent the probe of the Comptroller and Auditor General?

—I am afraid I did not get the gist of the question. There is the question of whether the grantee is named in the Grant-in-Aid. I am sorry, I did not follow the question.

38. I will endeavour to put it more clearly. This money was paid in the first remove, shall we say, into the Red Cross account in the Bank of Ireland in Dublin. It was then removed by direction, sometimes within a day or so, to other places. Did that operation tend to limit the probing of the Comptroller and Auditor General? Might he be inclined to feel: “We are disposed to leave it at that”, and say, “It has been paid into the Red Cross account, it is finished”?

—Apart from the fact that I am not in a position to think of what the Comptroller and Auditor General might be inclined to do in one situation as against another, subject to that qualification I would answer your question briefly in the negative because if there had not been the rerouting of the moneys through the Red Cross to the ultimate recipients, as far as I can see it would not necessarily follow that the Grant-in-Aid would be audited by the Comptroller and Auditor General. The whole practice in regard to Grants-in-Aid has grown up during a long period of time and it is nowhere laid down clearly or unambiguously, either in a code or practice, and even less so in legislation—the clear words in the various statutes relating to audits are nowhere qualified in regard to Grants-in-Aid. Nevertheless, during 100 years or so the practice of making an exception in respect of Grants-in-Aid has grown up. By and large, I think it is true to say—I am subject to correction on this rather obscure problem—that Grants-in-Aid are not audited by the Comptroller and Auditor General except where this is done by agreement.

39. I have asked you whether you thought that the channelling of this fund in this fashion, through the Red Cross account here in Dublin and thence transferred immediately or in a very short time to other places —might not militate against a more detailed investigation by the Office of the Comptroller and Auditor General, and you said you did not think so. Could you explain to me then why is it that in effect the Comptroller and Auditor General has already made his report on this point? He has a paragraph in his report in the Appropriation Accounts for 1969-70, and there, apparently he did not see anything wrong with this expenditure. Yet we are now sitting around this table in a special inquiry?

—Again with great respect, it has yet to be shown that within the framework of governmental account there is anything wrong with this. Might I elaborate my previous reply and make a further comment? I should like to check this and perhaps come back to the Committee on it later on. It is to emphasise the point that the convention has grown up in 100 years or more that Grants-in-Aid are not audited by the Comptroller and Auditor General except where this is done by agreement, so that the existence of a Grant-in-Aid means that in the absence of such agreement the Comptroller and Auditor General would not audit the payment. Therefore, the mere fact that this expenditure was channelled in the manner in which you mentioned does not mean that that alone inhibited the Comptroller and Auditor General from auditing the payments. Of course, the Comptroller and Auditor General satisfies himself in the normal way that payments have issued up to the amounts in the Appropriation Account.

40. You say there were 20 cases of unnamed recipients in the Grant-in-Aid. You adhere to that statement?

—I said about 20. The precise figure, as I recall it, is 18—18 out of 105. The ratio I would say is about correct.

41. May I ask you again the number of Grants-in-Aid in the 1969-70 accounts?

—References have been to the 1970-71 account but I can get the figures for 1969-70.

42. I take it you have done the number of Grants-in-Aid here?

—It is 105.

43. And how many does the Comptroller and Auditor General audit?

—Here I have some difficulty. A separate account was needed in this respect and the account does not go beyond 80, and of those 80, 50 were audited by the Comptroller and Auditor General.

44. Under the Red Cross Act of 1938, the Minister for Finance may provide a Grant-in-Aid or a loan to the Red Cross. The practice has been for the Minister for Defence to administer the grant made to the Irish Red Cross?

—That is my understanding.

45. Was this the first occasion on which the Department of Finance purported to administer the Grant-in-Aid to the Red Cross?

—This was not a Grant-in-Aid to the Red Cross.

46. Or for Northern Ireland relief which was largely to be administered through the Red Cross?

—That is so.

47. And the ordinary Grant-in-Aid annually to the Red Cross under Vote 43 was still administered by the Department of Defence?

—That is so.

48. This perhaps does not come within your ambit but I will ask the question nevertheless because, being in the position of Secretary of a Department and being an experienced administrator, you may be able to help us. If extra money were made available and it was to be administered by the Red Cross, would it not have been simpler to have increased the Vote administered by the Department of Defence, or would it have made any difference?

—This is possibly so but I think one would need to take account of a number of factors here. First of all, it was intended from the very beginning that this matter would be administered mainly through the Red Cross, but not entirely. In or about the time the public notice was being issued that it was intended to administer this relief mainly through the Red Cross, payments were being made to private individuals in the North and in some of the areas that were particularly subject to unrest and disturbance. Therefore it was clear right from the beginning that payments would be made other than through the Red Cross. That was point number one. Secondly, it is clear that the very terms of the Government decision envisaged that this would be a provision that would be administered by the Minister for Finance. If the Government had intended to proceed by increasing the amount available to the ordinary Grant-in-Aid for the Red Cross they would no doubt have said so.

49. Was your Department asked for its views as to the best method of administering this fund?

—No, were were not. As far as I can trace I was on holidays at the time and came back a day or two after this particular decision, but there is no indication within the Department that our views were asked for. I should emphasise that the decision which the Government took on 16th August in this particular respect was not the only decision they took on that day in regard to the Northern Ireland disturbances.

50. I have gathered already from you that it is not ordinary practice for a Department or a Minister to issue direct day-to-day instructions as regards the deposition of Grants-in-Aid?

—That is so. Such detailed instructions would, in the case of the normal grantee defeat the whole purpose of the Grant-in-Aid.

51. When moneys are issued from your Department, apart from ordinary routine payments of which you must have a huge number, are such moneys issued on verbal instructions?

—This would depend again on the particular circumstances. In this instance, provided that the purpose of the payment had been authorised by the Government, verbal instructions, particularly those given by the ministerial head of the Department, would clearly have been accepted.

52. It does not require any written authorisation at a latter stage?

—Not in that particular case.

53. I am putting this matter to you now from the point of view of a person who is not familiar with the inner workings of a Department. We have photostatic copies here of directions by the Minister for Finance, Deputy Haughey. A request comes from one of the officers: “Kelly’s people want £2,000. Is that OK?” “Minister” is at the top and then nothing but “OK” on it. To me and perhaps to most people this would seem a very casual way of operating. Is that, in your experience, a customary method of issuing funds?

—No, but then this was not a usual type of operation. In very few cases would we have to go to the Minister for his specific authority to make specific payments. This would normally be dealt with within the scope of delegated authority by officers of the Department. This particular series of payments were unusual in that, because of their nature and because of the form of the Government’s decision which left the manner of payment and the method of distribution within the discretion of the Minister. In those circumstances all payments went to the Minister for approval.

54. Would you not consider that the very documentation attending it seemed, on the face of it, casual?

—I think this reflected again the way in which these things came up, particularly in the early days, the rather confused background to the whole events. Certainly those of us in the Department recognised the Minister’s signature. I do not know whether you wish me to comment on the capital letters he used, but we certainly recognised it as a valid form of authorisation.

55. Are you in a position to tell us—you may not be because it is not your Department, but I would put the question to you— whether issues from the Department of Defence Grant-in-Aid to the Red Cross are made without detailed covering instructions or suggestions as to their distribution?

—I am sorry, I am not in a position to answer that. I shall get the information for you if you wish.

56. Are the various subheads of a departmental vote, supplementary or otherwise ordinarily prepared for the Minister by his Department?

—This is in respect of votes?

57. Votes.

—Or supplementaries for which he is responsible? Yes, they are prepared and in introducing the Estimate or the Supplementary Estimate into the Dáil the Minister would have a brief which would indicate in detail the nature of the payments that are to receive approval.

58. I take it that in August, 1969 or shortly thereafter the Department, in placing this supplementary vote before the House, prepared a supplementary vote?

—Yes, that is, prepared the briefing material for the Minister?

59. Yes?

—And prepared the formal Supplementary Estimate.

60. And in such cases is a ministerial statement also prepared by the Department?

—Generally. One must distinguish here between the statement relating to the original Estimate and the Supplementary Estimate. In the case of the original Estimate our practice is to supply a series of background notes. We rarely supply a formal brief as such, unlike the practice in other Departments. This is largely because a formal statement usually relates to departmental policy at large, and this, in the case of the Department of Finance, is usually fully ventilated on other occasions. Therefore we proceed by way of preparing explanatory notes for the Minister.

61. Was any such statement prepared in respect of the Supplementary Vote of March 18th?

—I should like to check on that. If a note had been prepared it would have been a very brief one.

62. In view of the fact there were two new subheads being introduced, would you expect that there would have been a statement?

—I would distinguish between a statement intended for automatic use by the Minister and an explanatory note in case he was asked questions about it. I am almost sure the second was prepared but I would like to check on it.

63. I am speaking about a statement made by a Minister when introducing an Estimate or a Supplementary Estimate. In view of the fact that it has been stated and is pretty well-known that the Irish Red Cross Society had administrative difficulties in respect of Northern Ireland, did the Department, in these circumstances, consider the question of distributing money by direct Vote?

—The decision to use the Red Cross as the main channel for distribution of funds was taken by the Minister and/or the Government—I am not in a position to say which. It was not a decision at official level.

64. From your administrative experience, would you be able to help us in this respect or let us have your opinion: could the Department issue directly funds to any reputable relief agency in Northern Ireland without risk to the recipients?

—This would not have been impossible. In fact, it was done in one or two instances but I think it would have been possibly prejudicial to the recipients if done on a wide scale apart altogether from the problem which it would have posed for the Department in identifying the recipients and in vouching for their standing. We would have experienced great difficulty in establishing the bona fides of individuals in the North.

65. Would you agree, as I gather from your submissions and from the submissions of your Department of the 9th of the 12th, that it appears that of this £100,000 which was distributed between the 20/8/69 and the 25/3/70, £10,000 was distributed directly in ten payments to seven persons and that after the 8th or 9th of October, 1969, £89,000 was distributed in 12 payments to the Irish Red Cross Society with directions from the Minister for Finance or from Mr. Fagan as to where and to whom it was to go in every case?

—To comment on one point of detail, I think that some of the payments to individuals took place after the date in October which you have mentioned. In other words, the £10,000 was not paid out in full before payments to the Red Cross had commenced. However, that is a relatively minor point. Regarding your statement relating to the £90,000 paid out through the Red Cross, I should like to emphasise that in all cases the decision to pay and the method by which the payment was to be made was a Ministerial matter. Mr. Fagan was the agent, shall we say. It was he who conveyed the Minister’s instructions.

66. As head of the Department, were you aware of this method of distribution?

—No, not at the time.

67. When did you become so aware?

—It was certainly after the end of the year. To amplify that, naturally, when I became aware of this I looked at the matter fairly fully and formed a view regarding the transactions. The Accounting Officer is charged specifically with satisfying himself regarding the correctness and propriety of the payments within his ambit. I formed the view that the procedures adopted in dealing with these particular payments were procedures which took account of a number of factors. In the first instance, there were the unusually wide terms of the Government’s decision. In my experience, I have never seen a Government decision that was drafted in such wide terms. While we were not consulted about this, it seemed fairly clear to me that the terms of the decision reflected the fluid and, indeed, very uncertain conditions resulting from disturbances in the North. The second factor which became evident to me was that the main channel of distribution of these payments was the Irish Red Cross Society—a statutory long-established and experienced body which was already in receipt of State funds. As regards the decision to re-route moneys through this society to the Belfast Committee, this decision was certainly not inconsistent with the Minister’s powers under the Red Cross Act of 1938. What was more significant, it reflected the limitations on the Society’s freedom to act directly in Northern Ireland. It also followed a pattern set by one payment from their own funds to the committee and a payment made to the Society out of State funds to another— a refugee resettlement Committee—which was quite distinct from the Belfast Committee. Indeed, the Belfast Committee, as we found out, was established following a meeting between the Minister and representatives from Northern Ireland. The final point which we have made in our submissions was that each payment in all cases was approved either orally or in writing by the Minister. On the basis of the information available to the officers concerned, these were intended for Northern Ireland relief. In those circumstances and having regard to the information that was available to the people at the time, I was satisfied, from the point of view of my responsibility as Accounting Officer, both in regard to the appropriateness and propriety of these payments.

68. Could you say what was the approximate date on which you discovered this rerouting method of distribution, as you call it?

—It was some time about the middle of May, 1970, onwards. The papers are voluminous and I did not go through them in detail until some time about that period.

69. How did it come to your notice?

—Certain other events outside the Department caused me to look at the papers.

70. Did you institute an inquiry then into the details?

—Not immediately. I went into them fairly fully some time afterwards.

71. As a very experienced administrator would you agree or disagree with me as to whether it could be claimed that the Red Cross was allowed to exercise an effective administrative function in the disposal of these funds?

—You mean whether it was given the opportunity?

72. Was the Red Cross in effect an administrator?

—No, it was not but I should explain as I think was made clear in our submission of the 9th of December in the Appendix, Appendix 6, which deals with the part of the Red Cross in this activity, that we were aware on the 20th of August that they had endeavoured to secure the co-operation of their counterpart in Britain for sending combined teams of Irish and British personnel into the North and they were told a week later, in the words we use here that “the British Society had sufficient supplies and personnel to meet the situation.” So in effect we knew that the Red Cross could not administer these funds directly in the North.

73. Then you would agree that the Red Cross were only, shall we say, nominal agents in the distribution of this money?

—That is how it seems to me, yes.

74. Was there any special reason why the Red Cross should be used then?

—I could not say. The decision to use this particular device was not one that was taken at official level nor were our views sought. It may well have been that the public announcement regarding the intention to use the Red Cross as the main agent of distribution was taken before the Red Cross saw their British counterpart in the hope of easing the international restriction and before the Red Cross heard from the British that they did not intend to waive this restriction. So I would imagine—this is only surmise on my part—that it may have been hoped that, despite that limitation, the Red Cross could play a more direct part in the administration of the funds.

75. Are you able to tell me whether the Red Cross administered any of its own funds in Northern Ireland?

—I am not familiar with the details of its operations. We do know, as we have stated in Appendix 6 to our submission of 9th December, that they certainly spent moneys for Northern Ireland Relief from their own sources and from the subscriptions they received direct. How they did this I am not in a position to state but I would be surprised if following the decision they received from the British, they administered it directly.

76. Would you agree then that the information from the Government Information Bureau setting out the Government’s intention that this matter should be largely administered by the Red Cross did not in effect take place?

—Yes, I would agree with that.

77. We have been discussing Grants-in-aid here and we have been discussing direct Votes. Would you agree with me that the method of distribution adopted here does not fit neatly into either category?

—Yes, but then I am sure that any short answer to that question would not adequately take account of the particular circumstances in which the payment was made which I have already outlined.

78. Mr. Murray, is it correct that of the 12 payments totalling £89,000 made from the Grant-in-Aid to the Irish Red Cross No. 2 Account in the Bank of Ireland here in Dublin and with the exception of the first payment of £5,000 which was sent to Clones to open the account there on October 15th, 1969 on the direction and initiative of the Minister for Finance, all other issues from the Department to the Red Cross No. 2 Account were made at the request of Captain Kelly from November the 4th, 1969 to March, 1970?

—I would like to check up on that. I think that is right but may I just look at the papers to refresh my memory? Yes, I understand your question to be that the first payment from the Grant-in-Aid to Clones did not involve Captain Kelly but that all other subsequent payments to Clones and to Baggot Street did involve Captain Kelly.

79. Yes?

—Yes, that is so.

80. Again on the administrative level, these payments began first as direct payments from your Department to individuals. We will call them A, B, C, D and E, as you did in your submission. These are direct payments. Thereafter, £20,000 was sent, if my memory serves me right, through the Irish Red Cross to a Belfast Relief Committee. Then thereafter an account in Clones, I shall not say transferred, but a new account was opened in the Munster and Leinster Bank in Baggot Street as distinct from the Bank of Ireland and one in Clones and moneys now began to pass from your Department to the Red Cross with instructions to send that money first to Clones and then later on to Baggot Street to the accounts of persons whose names were fictitious. At a later stage two subsidiary accounts were opened. Now, would you agree that the method of distribution starting off in a relatively simple fashion became progressively more and more complex and more and more cumbersome?

—I would just like to comment on one aspect of that. You have in effect said that this Department, the Department of Finance, made payments through the Red Cross for transfer to an account in Baggot Street in the names of fictitious persons but we did not do that. We did not know they were fictitious persons. Our understanding was, and we were told this expressly by Captain Kelly, that the account holders in Baggot Street were the same as the named individuals in Clones. Two of them were people known to us; at least, when I say “known”, known by name, not personally and, in fact, the emphasis in the change from Clones to Baggot Street was that the people who had the account in Clones wished to transfer for a number of reasons to Baggot Street so, in arranging to continue— in agreeing to continue the system of payments to the Red Cross to a bank account in Baggot Street we saw no distinction in essence between Baggot Street and Clones. As far as the subsidiary accounts are concerned we knew nothing of these while the payments were being made. This is information that came out subsequently.

81. Why was it necessary to send the money to Baggot Street, even accepting for discussion purposes, that the Baggot Street account was an acceptable one? Why was it necessary to use this unusual method of sending money first to the Red Cross with instructions that it be sent to Baggot Street? Why not send it directly to Baggot Street? I mean, would that not be a more simple administrative method of doing it?

—Yes, but, you see, the decision to adopt this particular method was not an official decision. It was a ministerial decision and, as far as the officials were concerned, any conclusion they would draw from that would be that this was part and parcel of the general security arrangements relating to the protection of the identity of the people involved.

82. Now I understand, Mr. Murray, that when money was required to be put into the Baggot Street account Captain Kelly either called on or phoned Mr. Fagan?

—Yes.

83. Requesting a certain amount—varying amounts at different times?

—Yes.

84. Is it correct as stated, as I understand, in your second submission that Captain Kelly never gave any reasons for varying financial requests for money to be sent either to the bank at Clones or Baggot Street?

—Well, we see here in paragraph 3 of the addendum to our submission of 9th December that he never gave any specific reason on any occasion as to the reason for his request other than that it was for Northern Ireland relief.

85. All he did was mention Northern Ireland aid, state an amount and that was given?

—No, that was not the procedure. The matter was mentioned to the Minister. I mean a decision was not taken by an official on Captain Kelly’s request.

86. He was not asked to justify any particular demand on any occasion other than stating it was required for Northern Ireland relief. He was asked for no details?

—He was not asked by officials. On a few occasions, as I have already mentioned, the Minister did not authorise payments. He saw Captain Kelly on some occasions and we did not know what transpired between him and Captain Kelly.

87. Were any steps taken at any stage at official level to verify that the requests made by Captain Kelly were properly formulated?

—No. This was not done because this was regarded at official level as a matter for decision by the Minister who had been in contact with Captain Kelly. The official merely acted as his—what would I call it? —a method of contact with the Minister.

88. What particular official issues money in the Department of Finance?

—Well, there are quite a number of people involved in this. In general, this is the responsibility of our accountant but, of course, he will not be personally involved in the actual making of the payments, but we have a fairly elaborate machinery for checking the payments that are made.

89. What unspent moneys or refunds of this £100,000 were made to the Department?

—Excuse me just one moment. There are only two definite repayments to date; that is, £350 from Colonel Hefferon in part repayment of one sum that was given to him and we have got a sum of £732 17s. being the balance of the Grant-in-Aid unspent by the Red Cross. In addition to that, we have been pursuing the question of the recovery of the balance in the bank accounts. There are four such balances, one in Clones, one in the main Baggot Street account and one in each of the two subsidiary accounts in Baggot Street. There were a number of legal and other problems involved in securing recovery of these balances but, in one case, the bank has agreed now to pay over the money to my Department and I should imagine that will come along in a matter of days. In another case we have agreed with the people concerned, who were in a position to operate the bank account, that they will make the money available to us and I gather, in fact, that that repayment may well have been made today. The man in question was looking for me when I was not available in the early afternoon. This would leave outstanding then the balances in the two subsidiary accounts and we are in touch with one person who may be able to secure the recovery of that amount. Leaving these two amounts aside, we are hopeful, and fairly certain, that we will secure recovery of an amount close to £4,000.

90. Would it be true to say that neither you, your Department, nor the Red Cross would be in a position to know the details of the final withdrawal arrangements in respect of the bank at Clones or Baggot Street?

—Subject to this point, that I am fairly sure that we knew that withdrawals on the Clones accounts would have to be on foot of cheques that bore the signature of any two of the three people in whose names the account was held and we assumed that the same arrangement would apply with regard to withdrawals from the main Baggot Street account which was the only account in Baggot Street that we knew of but, of course, the exact details and circumstances on which there were drawings on these accounts were not our concern.

91. Were you aware that an officer of the Department, Mr. Fagan, was, as I understand from your submission, instrumental in arranging the transfer—at least the opening of the account in Baggot Street on his own initiative?

—I was not aware at the time. Of course, I became subsequently aware of this. When you say “on his own initiative” I take it you mean as far as the Department is concerned. I understand he did this in response to a request from Captain Kelly.

—I now call on Deputy Barrett.

Mr. Murray.—May I just say a few words here because there are one or two small points of detail which I want to mention in case they come up in questions. The first point is that there were two very small mistakes in regard to dates in one of the subsidiary accounts. I do not think this is of any significance: We shall communicate with the Secretary of the Committee. The second point is that, as regards the references to people living outside the State, in one case, at least, the person concerned was living outside the State during the time of these transactions and we continued to regard him as resident outside the State although he has changed his residence since then. Secondly, in one case we could not establish definitely whether the person was resident inside or outside the State: we thought it safer to assume that he was resident outside the State—this is individual K. The third point is that I met Captain Kelly a few days ago and got certain further information from him. I got a reply this morning regarding the transactions involving the air fares and the gentleman in question confirmed in writing that the payment made to him was used for discharging a liability in respect of air fares. We touch on this in our submission; I just wanted to bring the Committee up to date on that. A further point is that, in sending on the documentation to the Committee, we did not send copies of the payable orders or of the Red Cross receipts but these copies are available if the Committee should wish to have them. We thought they did not add anything to our statement but they are available if the Committee requires them. In the final paragraph of our original submission to the Committee we referred to a statement made by the account-holders of the Clones account that they received directly or indirectly a certain sum of money from the Grant-in-Aid and that they used this for relief purposes, we mentioned in our subsequent statement that we have got an account from this in respect of this money. Much of our subsequent investigations and inquiries, both with these people and with other people, have been geared towards forming a view on that statement and to reconcile the apparent discrepancy between the statement that a sum of £74,000 odd was spent on Northern Ireland relief, which approximates closely to the amounts distributed to the Bank accounts with the evidence in the recent Arms Trial that substantial amounts of moneys were diverted through the bank accounts for arms purchases. We have formed certain provisional views regarding what I call this hypothesis. We would gladly make these available to the Committee. They incorporate the fruits, for what they are worth, of our inquiries and, if the Committee wishes, I can have copies distributed. You will see that we propose a certain line of action as more or less a final step towards forming a view on this hypothesis but, subject to that particular step, it is my Department’s view that these inquiries which we have instituted in recent months would best be held in abeyance while this Committee is conducting this investigation but, of course, we would be happy to undertake any particular investigations that the Committee wishes. I will arrange for copies to be distributed.

92. Deputy Barrett.—Was this the first occasion on which the Red Cross were used for the distribution of a Grant-in-Aid of this kind? You mention 105 Grants-in-Aid?

—The first time—yes—in relation to a Grant-in-Aid of this particular type but I think in a sense this was the first Grant-in-Aid of its type.

93. When they agreed to distribute this Grant-in-Aid they must surely have known they were not entitled to operate in this part of the country—under their own?

—Yes.

94. They gave no indication of this to your Department?

—The arrangement to operate through the Red Cross, to channel moneys from the Grant-in-Aid to the Red Cross for transfer to a bank account, was made following discussions between the Minister and senior people in the Red Cross. In fact, the first action taken on foot of that did not involve the Grant-in-Aid money: it was made from the Red Cross’s own resources.

95. With regard to the two subsidiary accounts in the Munster and Leinster Bank, Baggot Street, Dublin, you mention in your submission to us that further handwriting evidence is being sought to identify the two people concerned—George Dixon and Anne O’Brien. Have you any further information for us on that?

—My only information on this is, as I stated in our submission that a Garda report had been received dealing with the views of the handwriting experts. I am not aware of any further action taken by the guards in relation to that.

96. These two people have not yet been identified by the gardaí?

—If they have, the gardaí have not told us.

97. In the Garda report before us, which we got today, it mentions that Captain Kelly had not yet been interviewed. Does this not appear peculiar at this stage of the inquiry?

—I am in some difficulty in answering questions in relation to the Garda report. I would suggest that, if you wish to pursue these questions, you should put them to a more appropriate person. Perhaps I could say—maybe I am out of order in saying this—that I am told that the gardaí did approach Captain Kelly; and, of course, as I have just said, we saw him the other day.

98. Deputy Briscoe.—We have received a lot of information from you and particularly today some further information which we have not had a chance to study because we only received it this morning. Is there anything you could tell us that you have not already been asked about or any more disclosures?

—No. I think that I interrupted Deputy Barrett to bring the Committee up to date. I do not think there is anything else. Oh yes, just this one point. We say in regard to Mr. A. who got two separate payments of £1,000, that he has given us some information regarding the manner in which he spent that money and in fact this involved further inquiries on our part because he said he had handed over a certain sum of it to another individual resident in the north. Again, this was another case where if I had been available this afternoon, I would have got information about the way this money was spent. The individual is in fact making it available this afternoon to my Department. Subject to that we have now received replies from all the people with whom we got in touch and who had received payments from the Grant-in-Aid.

99. This includes Mr. Murnane?

—Yes, that relates to the air fares.

100. In paragraph 10 page 4 of your submission you relate about Col. Hefferon receiving payable order passed to Capt. Kelly. He stated that he understood that the payment related to a meeting or meetings to be held soon afterwards?

—Yes.

100(a). Which would be attended by representatives from Northern Defence Committees. A photostat copy of a receipt from Capt. Kelly for the £500 has been forwarded. Did you get receipts from where these meetings took place, were they held in hotels? Have you any receipts for this £500 at all other than the receipt for £500? Have you any information as to how this £100 was actually spent?

—£500.

100(b). This particular one referred to here?

—Yes. No, we have not.

101. No hotel receipts or receipts of payments made in respect of electricity or light or anything like that?

—No. But I should say that we have some idea that the £500 was not used in merely meeting the expenses of the meeting in question.

102. I see. Would you care to elaborate on that?

—It is just a hunch on our part having regard to the nature of the meeting.

103. I was just going to come back with one more question. We had mention of the fictitious names John Loughlin and Roger Murphy. Had you any co-operation from a particular person in identifying these people at all?

—The gardaí said they were satisfied they were fictitious persons and in fact the people who operated the Clones account had told us they were fictitious. In the statement I am circulating today you will see that we endeavour to draw certain conclusions from that or rather to assess the significance of that in regard to the actual operation of the account.

104. Other people used these names to stop identification of themselves?

—Yes.

105. Deputy R. Burke.—In paragraphs 5 and 7 of the Department’s submission of 9th December it is stated that payments were made on the recommendation of the former Minister for Agriculture. Can we have the terms used by the Minister in making the recommendations?

—These were oral approaches.

106. Is it normal for Ministers other than the Minister for Finance to make such approaches for payments out of Grants-in-Aid?

—I could not say. We have not much experience in our Department of the operation of Grants-in-Aid but in the circumstances of this particular Grant-in-Aid, if I were asked for comment, I would not find this particularly unusual.

107. Who paid out these amounts? Who paid out the two payments of £1,000 each?

—My Department. All payments out of the Grant-in-Aid were made by my Department.

108. By the Accountant?

—No, not by him personally but in accordance with our established procedure for making payments.

109. A person who was named as Mr. A. has furnished some particulars of the purposes for which he spent the £2,000?

—That is right.

110. And further inquiries are proceeding. Have they proceeded to any extent?

—This is the matter I was mentioning to Deputy Briscoe. We know that a substantial amount went to a clergyman and another substantial amount went to a private individual and this private individual is, I understand, this afternoon giving information to my Department in regard to how he spent the money.

111. Deputy Collins.—The £100,000 was expended between 20th August, 1969 and 25th March, 1970. This expenditure was not sanctioned in the Dáil until 18th March, 1970. I feel this was an undue delay and unnecessary. Have you any explanation for it?

—Certainly, there was delay. I think that it is difficult at this stage to recall the uncertainty of the position, certainly in the opening months of this Grant-in-Aid. There was general uncertainty and there was also the particular uncertainty of trying to form an idea of the total amount that would be required. In fact, as is clear from the details of the actual payments, if a Supplementary Estimate was taken earlier we would have found ourselves in the position of having to take a further supplementary estimate. There is a further point that this transaction had been fully publicised. There was no question of making payments in respect of Northern Ireland relief and not doing it in a public manner. There have been a number of Press announcements on it and there was no question of concealment.

112. I accept the peculiar nature of the expenditure. Nevertheless, would you not agree that it was only right and proper that the Dáil should pass any such Grant-in-Aid earlier rather than later in the event?

—I would certainly agree to that as a general proposition but I respectfully suggest there were circumstances in this case which made that course rather difficult to pursue.

113. Surely a figure could have been agreed on in August or September, 1969 and the Dáil could pass that figure?

—If the Government had thought that, they would have specified a figure. Again, I am coming back to the rather unusual nature of the Government’s decision. It is very rare for a Government to decide to approve expenditure and leave the amount open. That reflected the uncertainty.

114. Did anyone confer with you on this matter beforehand?

—I think I have already indicated that this was a Government decision and it was reached without prior consultation with officials.

115. Did you make any representations to the Minister at any stage?

—No. I was satisfied as an official and as an individual, a private citizen, that it was appropriate that assistance should be provided for Northern Ireland relief by the State.

116. You mentioned earlier that 18 out of 105 Grants-in-Aid were not audited by the Comptroller and Auditor General?

—Could I interrupt the Deputy? There are so many figures in this that one could easily get confused. The 18 out of the 105 related to cases where the grantee was not specified. What I said was that a more detailed analysis of 80 of them shows that 50 were not audited by the Comptroller and Auditor General.

117. Would the grantees in these cases be recurring every year rather than special grantees?

—Of the 50 not audited? Yes. They would be recurring.

118. Every year?

—Perhaps I should qualify that by saying that the examples I have relate mainly to recurring grants. I have not analysed the full 50 to see whether there were any nonrecurring grants.

119. Will you agree that in reference to this particular Grant-in-Aid which is not a recurring Grant-in-Aid it would be more proper to specify the recipients?

—You mean to quote the Red Cross and the 12 individuals? They were the proximate recipients so far as the Department were concerned. Leaving that aside, what I had in mind was, was it envisaged that we should specify on the face of the Supplementary Estimate the names of the people outside the State who received payments?

120. My own opinion is certainly that there should have been further investigations as to who actually received money. The point I want to make here is that the recipients should have been specified in the Grant-in-Aid and that the Minister should not have interfered afterwards in the passing of the moneys?

—I have stated already that, in so far as most of this money went into a Grant-in-Aid and was re-transferred to another source, that was a decision taken by the Minister and I do not wish to comment any further on that. I am not quite clear how one could have indicated the grantees in this case, the immediate grantees, the Red Cross. Then there were up to a dozen. There were 10 or 12 names of individuals.

121. Let me put it this way. In your opinion do you think that the Red Cross Society would have been able to administer the fund properly in the North of Ireland if they had been given the money to administer fully?

—I am not quite sure how they could have done this consistent with the restrictions on their activities under the 1921 Convention.

122. As the money was being expended did you form any reservations as to the method of expending it and re-transferring it and did you make any representations to anyone in the matter, as the Accounting Officer?

—I think I have already made it clear that I was not aware of the procedure adopted until the money had been spent. Earlier I gave my views on the correctness and appropriateness of the procedure. If you wish I can repeat the comments I made in that connection. I would summarize by saying that having regard to a number of points I would have had no reservations about the correctness and propriety of this procedure on the basis of the information available at the time to the Department.

123. When did it come to your notice that the subsidiary accounts in the names of George Dixon and Anne O’Brien came in use?

—So far as I personally am concerned it was about the middle of 1970 or later. So far as the person directly concerned with the Grant-in-Aid was concerned I think we mentioned in our submission that in a casual way he got some indication about this in or about the end of March, 1970, and knew nothing about the second subsidiary account until some time later.

124. That was after the money had been spent?

—That is so. There was no particular reason why we should have known about it.

125. Would you explain?

—Because in accordance with the normal approach in Grants-in-Aid the money was paid out and the administration of the money thereafter was a matter for the person getting the money. It was not as if this was being administered by a Department or even more by our own Department. By “administered” I mean spent.

126. I am somewhat perplexed now. The Government Information Bureau announcement on 21st August stated that the money would be administered mainly by the Red Cross Society. In fact this was not so?

—I have already explained that at that stage we knew that the Red Cross were getting in touch with their British counterparts to see whether they could join in operating a team in the North of Ireland. It was not until some time after the announcement on 16th or 18th August that it was known that British co-operation was not forthcoming.

127. As the Accounting Officer you were aware of the account opened in the Baggot Street Branch of the Munster and Leinster Bank?

—I was aware of it some time after the end of the financial year.

128. Was there any inquiry made as to the expenditure from that account?

—No, there was not. Again I would emphasise that an inquiry would not have been consistent with our treatment of Grants-in-Aid.

129. In regard to the cheque books, have you got the counterfoils or where are they?

—Our detailed information regarding the accounts comes from the Garda report and the photostats which the Garda took of such documents as were available. We have asked the banks concerned not alone to let us have the balances but also to let us have all documents relating to the accounts. We have not yet got them because of some legal difficulties but we are seeking to get them.

130. Are you aware of who in the first instance took the cheque books at the Clones Bank and at Baggot St.?

—No, we are not.

131. You have no idea?

—We have been told that the Belfast Committee for the relief of distress have destroyed a number of documents relating to these transactions, destroyed them for security reasons. My recollection is that they told us that such cheque books as they had had been destroyed.

132. Are you aware of the publication called “Voice of the North”?

—I have heard of it.

133. Are you aware of any decision to support it financially?

—From public sources?

134. Yes?

—No, I am not aware that there was any such decision.

135. Chairman.—Might I intervene for a moment? There are a couple of points I wish to put to Mr. Murray. The Committee proposes to publish some of the submissions which you have given to it. One is your submission of the 9th December, 1970, the second is your submission of the 23rd December, and the addendum to the submission of the 9th December and fourthly the documents by reference to which the submissions were prepared. Have you any comment to make on any aspect of the matter?

—Just on one point of clarification, you mentioned the document of 3rd December?

136. I beg your pardon, 23rd of December.

—Perhaps I might take advantage of this opportunity to say generally, that the Department is anxious to facilitate the Committee to the maximum extent in its power. In regard to publication, as we see it this would require an authorisation under the Official Secrets Act, 1963. This is what we are advised. However, I anticipated such a request from the Committee and I have sought my Minister’s approval for the publication of the material that we have given to the Committee and he has approved that course. I take it in regard to the publication of the material on which our statements were based that, in so far as these refer to individuals not resident in the State, that publication will be by alphabetical reference rather than by naming the people?

137. Yes?

—On that understanding I may convey my Minister’s approval to the publication of this material.

138. You have no objection to their publication in the form in which you have submitted them to us?

—No.

139. What about the Garda report? We have not made any decision on that ourselves. We will leave that aside. You have also made available further documents relating to persons residing outside the State. Have you any comment to make on the publication of these documents in their present form?

—No, in fact, I had asked you in so far as you were publishing material on which we based our documents, would you publish it, in so far as it related to people outside the State, in the form we had sent it to you, which did not disclose identities.

Chairman.—Yes.

Mr. Murray.—We have no reservation or objection to publication of that material. Could I just mention one point which I forgot to mention? We said in one of our statements that in relation to the statement furnished by representatives of the Clones account holders of the way in which they say they spent the £70,000 odd, copies could be made available to the Committee and I have copies with me if you wish to have them made available.

140. Thank you very much. We have agreed to adjourn for half an hour. You have given us further documents, Mr. Murray, which we have not even looked at yet? What about the publication of these last ones? Have you any objection to the publication of these, have you any qualifications?

—I am glad you raised that point because I should have made it clear—in fact I am not sure if I did not already make it clear— that the statement regarding the hypothesis, that is, in relation to the hypothesis that moneys diverted from the Grant-in-Aid into the subsidiary accounts and spent certainly not on Northern Ireland relief were in fact made good to the Belfast Committee. The papers relating to the hypothesis that I have distributed reflect our provisional, interim views on that. These raise a number of questions and I would suggest, I would prefer if the Committee did not publish it at this stage, later on perhaps, when there has been some further inquiries and the Committee may have formed its own views, but I would suggest it might suit the Committee’s purpose not to publish it as of now.

141. Chairman.—Is the Committee agreed?

Deputies.—Yes.

The Committee adjourned at 4.40 p.m. until 5.15 p.m.

Examination of Mr. C. H. Murray continued.

142. Deputy E. Collins.—I asked you before we recessed about your further submission dated 23rd December, 1970. Séamus Brady’s name was mentioned and it was stated that he was of the opinion that the publication was launched at the request of the committee in late September 1969. Further information by the Government Information Bureau was promised. This £1,900 was paid from one of the subsidiary accounts, the O’Brien Account, on 11th December, 1969, on 2nd January, 1970 and 16th January, 1970. Have you any information from the Government Information Bureau as to this expenditure or as to the promise of financial support?

—The only information we have is that contained in paragraph 4 of the further submission, to which you refer, and the documentation from the Department of the Taoiseach and the Government Information Bureau, on which that statement was based. This has been made available to the Committee.

143. You had no intimation at that time of the alleged financial support?

—None whatsoever.

144. The requests from the then Minister for Agriculture and Fisheries, Deputy Blaney, were oral requests for moneys on certain dates. Have you any notes as to the reason given by Deputy Blaney?

—No. I did not handle the transaction myself. No notes are available in the Department.

145. In the matter of these requests?

—Quite so. Perhaps I should say, Deputy, as you know that of the three people to whom money went in this way, two were clergymen.

146. I am not disputing that. I merely ask if there were any notes kept as to the reasons given by Mr. Blaney. The account in Baggot Street was opened with the authority of Mr. Fagan. I would like to ask you why no statements came to you, Mr. Fagan or to the Department about these accounts?

—I think that I would like to comment first of all on the words you used that the account in Baggot Street was used, I think you said, “on the authority” or “with the authority” of Mr. Fagan.

146a. Was opened.

—That was really not so. Mr. Fagan, in effect, introduced on the telephone Captain Kelly to the, I think he was, the assistant branch manager but that in itself did not mean that statements in regard to these accounts would have come to the Department. It was only subsequently on inspection through the Garda reports, of the copies they took of the bank statements, that we found that the bank account was headed with the instruction that correspondence should be addressed to Mr. Fagan. Mr. Fagan stated, and we recorded in our submission, that he did not give any instruction to the bank to that effect, nor was he aware that there was such an alleged instruction.

147. Mr. Fagan introduced Captain Kelly to the manager as a person known to him?

—Yes.

148. It is possibly splitting hairs, then, as to who possibly authorised the opening of the account?

—With respect, I would not regard that as splitting hairs.

149. You did say that Captain Kelly was afterwards working in an official capacity?

—Can the Deputy state where that statement is made?

150. I think it was in the telephone conversation with the manager.

—In other words, that is the bank manager’s statement. It certainly was not Mr. Fagan’s statement and we have already drawn attention to another more significant and serious matter in which the recollection of the bank and that of Mr. Fagan do not agree and that is in regard to the opening of subsidiary accounts.

151. I was referring to the main account. On the ledger card of the accounts it is mentioned that any queries be sent to Mr. Fagan. Again, was this the bank manager’s recollection or was it Mr. Fagan’s direction, or Captain Kelly’s direction?

—It was certainly not Mr. Fagan’s direction. He performed what I would call in shorthand an introductory service, a service of introducing Captain Kelly to the bank manager, but no other function.

152. The money paid to R. Murnane for the visit by a number of people to London to discuss the raising of funds—did anything come of this—do you know officially were any moneys collected and paid into the Northern Ireland Relief Fund as a result of the visit or visits?

—We have no reason to think that any moneys were paid into the bank accounts in the name of the fictitious persons in Baggot Street as a result of that visit, or indeed to Clones. We can say definitely that no moneys went into Clones as a result. We know that one payment, other than through the Grant-in-Aid, went into Baggot Street but this came from an American source and I think the connection between that and the journey to Britain was very slim.

153. Deputy FitzGerald.—I should like to ask first some general questions in connection with Grants-in-Aid. You mentioned that about 18 of 105 Grants-in-Aid at present are of such a character that the sums are not payable to specific organisations. Could you say when this procedure of providing money in this way, without having a specific body to which it should be paid, was started? You may have to check on this matter but I should like to know when this practice began.

—I think it was not so much a question of not being paid to specific organisations but that the name of the grantee was not specified in the grant. In many of these cases they were, in fact, paid to specified organisations.

154. I accept your correction; it was what I intended to ask.

—The Deputy has stated that he would like to know when this practice first arose and I shall see if I can obtain this information.

155. I am not clear regarding the method of accounting for such Votes. Clearly there must be come document, signed by somebody, which enables the Comptroller and Auditor General to say that the money was properly expended. If you have a Vote of money which is not specified to be directed to a particular body or person, on what authority does the Comptroller and Auditor General accept that the money was properly expended?

—In this case, the payable orders that were issued out of the Grant-in-Aid were made available to the Comptroller and Auditor General.

156. Who authorised the payable orders?

—The Department authorised them, following specific authority from the Minister.

157. Yes, in this case. However, in the case of the 18 other Votes where there are not particular bodies named in the Vote, is it necessary for the Minister in each transaction to authorise the sum or is some other practice adopted?

—It would be unusual, certainly in regard to the Grants-in-Aid for which the Department of Finance are responsible, to have specific ministerial direction in each case.

158. How is the authority given?

—It is given under the general delegation of authority from the Minister to senior officers of the Department.

159. You mean that in the case of a Grant-in-Aid where no organisation is named, and without the intervention of the Minister at any stage, a decision as to which body gets the money is made by a civil servant?

—No, in answering your previous question I was thinking of the more usual case where there is just one recipient of the Grant-in-Aid, one body.

160. You are talking about Grants-in-Aid where there is no body named?

—Whether or not the body is named is not significant in this respect from our point of view although it may have significance in other respects. In so far as the question relates to the distinction between ministerial directions in this case in regard to payments out of the Grant-in-Aid, and non-ministerial directions in other cases, I explained that in two ways: (1) that this particular Grant-in-Aid was regarded as a matter for ministerial decision in so far as payments therefrom were concerned.

161. Regarded by whom?

—By the Department, having regard to the Government’s decision, and regarded by the Minister.

162. What are the criteria by which the Department decide whether in a case of this kind they need the Minister’s decision for each payment or whether they are entitled of their own accord, without such authority, to pay the money to a particular body?

—The Minister himself took the initiative at a very early stage in regard to these particular payments. Following that and having regard to the nature of the payments and to the contacts which the Minister had already established in regard to payment of the funds, the original manner of paying out moneys was continued in regard to subsequent payments. It was an unusual type of case as far as the Department was concerned.

163. If the Minister had not intervened and the question had arisen of the disbursement of this money, would you have regarded it as appropriate to adopt what apparently is the procedure for the other 17 votes, of a civil servant simply disbursing the money to whom he thought fit?

—I would make two comments on that: First, I cannot speak with authority regarding the practice adopted by other Departments, and many of the 17 other cases mentioned related to other Departments. Secondly, I am at loss to answer a hypothetical question.

164. Could we, perhaps, get information on the other votes as to whether in these cases the decision in regard to the body or persons to whom the money is being granted is a purely Civil Service decision and that it does not arise either from general criteria laid down by the Minister or specific individual decisions by the Minister?

—I can answer that insofar as it relates to Grants-in-Aid administered by my own Department where the grantee is not specified. I can say that, provided, of course, the payments in question are within the overall constraint of the amount voted and have been authorised by the Minister at the time of the framing of the Estimate, and its general approval by the Minister that the normal course would be that payments to these grantees would be made within the general delegation given by the Minister to officials.

165. I am still not clear as to the meaning of the words you use about the Minister’s general direction.

—Such general direction would not be specifically related to Grants-in-Aid. It would cover other payments as well. It is part of the normal relationship, working arrangements, between senior officials and Ministers.

166. I am still somewhat puzzled. You have a Grant-in-Aid for a purpose, no more. No body is named, and you are suggesting that civil servants, interpreting the general mind of their Minister in relation to a broad range of matters including a Grant-in-Aid, but not specifically related to the Grant-in-Aid itself, would as normal practice, use their discretion in allocating these moneys to individuals or bodies?

—One must distinguish between the fact that the grantee may not have been named on the face of the Estimate and the reality that in agreeing to make money available, in deciding to make a provision in the Estimate, the name of the grantee may well have been known.

167. Perhaps it would help if you gave one or two examples?

—Yes. The National Science Council is a clear example. There is a subhead in our Finance Estimate for Science and Technology. Many of the payments out of that subhead go to the National Science Council although the body is not named in the subhead.

168. It is not named anywhere in the context of the Supplementary Estimate?

—Yes, that is so. But not all payments go to that body but insofar as they do the payments to that body are made on the decision of senior officers of the Department.

169. And the Minister is not involved in deciding how much money goes to the National Science Council?

—Beyond the general view he might take in framing the Estimate as to the total amount that would be in this subhead and some indication of the order of magnitude of the amount therefrom that would go to the National Science Council.

170. That could be varied by the civil servants concerned without referring back to the Minister?

—Yes, if they were satisfied that the variation did not raise any major issues of policy.

171. You seem to be suggesting that in submitting the data for the Supplementary Estimate to the Minister he would be told: “We need this much money for Science and Technology because we need so much for the National Science Council and so much for other purposes.” Therefore, in submitting it in that way to the Minister you have, in fact, formally and in writing identified the body to which the money is going, although that identification does not appear on the face of the Supplementary Estimate?

—In this particular instance it is because the moneys are not going solely to the National Science Council. Therefore it would be wrong to describe the grantee as the National Science Council.

172. But in the submission to the Minister which puts him in the position to decide on the amount to submit to the Dáil, it would be proposed that part of this money would go to the National Science Council?

—But the important point is that all payments out of the subhead would relate to Science and Technology.

173. That may be an important point, but there is also the point that although the National Science Council may not be mentioned in the Supplementary Estimate, there is a document in the Department which specifies the amount of money it is intended to pay out of that vote to the National Science Council?

—Yes, that is so. Again, having spoken so much on this I should like possibly at a later stage to come back and verify some of the details here. I am just taking this as an example. The point I was emphasising was that in this particular instance what would be regarded as of major importance would be not necessarily the exact split between the National Science Council and other payments out of the Vote but the global provision that would be made for Science and Technology. The National Science Council was one important element in that, but it might well be that circumstances during the year would indicate that the National Science Council might, for some particular reasons, not be in a position to spend all the money and that there were other equally valid purposes on which the money could be spent.

174. These purposes could include giving a Grant-in-Aid to some other body not specified whose name had never been communicated to the Minister and who would have no need to go back to the Minister?

—I do not see that. It has not arisen.

175. Are you suggesting that if money is to be paid to a body for the first time under such general subhead, Ministerial authority would be secured?

—I am not aware of that type of case having arisen. I cannot say what the practice would be in such event.

176. Are you suggesting that there is no analogy to the case we are investigating?

—There is no analogy on many grounds to the case you are investigating. I should like to emphasise that the circumstances in this case were—I shall not use the word “peculiar” lest it might be misunderstood— were certainly sui generis.

177. I meant no analogy in relation to procedure rather than to purpose?

—Even on procedure there was no precedent.

178. You gave us an account of your own examination of this when it came to your attention and you formed a view about the procedure adopted. You took account of many factors. You concluded that you were satisfied with the method adopted despite its unique character. On hindsight, is that still your view?

—This view was formed on hindsight.

179. I understood it was formed early in the year—in January or February?

—To make one small qualification, apart from the first payment which was not made through the Red Cross Society I did not see any of the papers relating to the Grant-in-Aid until after the end of the financial year to which it related.

180. Until after the events had become public.

—I do not know exactly what is meant by that.

181. My question is when did you form this view. I took it that you formed it early last year?

—No. It was, in fact, in the autumn of last year.

182. So that in the light of hindsight you still feel that the procedure adopted was the proper one although it failed to prevent apparently the use of these moneys for purposes other than those that the Oireachtas intended? I can understand that view being held in advance as a reasonable view even if it turned out to be wrong because of extraordinary circumstances but I am puzzled that it should be held after the event?

—I was going to enter a caveat in regard to the final clause of your preceding remark that it did not prevent the use of these moneys for a purpose other than that which the Oireachtas had intended. I think that my view on that might be qualified by the outcome of our further investigation of the hypothesis to which I referred earlier. However, leaving that aside, I think that one must distinguish between the steps that one would have taken had one known what the course of events was going to be and the steps which one would have taken by reference to the information as it became available during the year and all I was saying is that by reference to the second situation, that is, the situation as it emerged, as it became available to officials, I am fully satisfied that the procedures adopted here by officials on the basis of ministerial decisions satisfied the tests that I have got to apply in relation to appropriation accounts, in other words, the test of correctness and propriety but if one had known all the various aspects of what happened in fact then, clearly, one would have certainly raised questions regarding whether the procedure adopted was the best one. But that, I would suggest, is to exercise in jobbing backwards.

183. I am asking for a view on hindsight. You have told us that last autumn, in the light of hindsight, you were satisfied with the procedures that had been adopted. In the light of further information are you suggesting now that you are revising that opinion?

—No, apparently I have not made my views clear. I am satisfied that the steps taken in regard to payments out of this subhead were correct and proper at the time in question and by reference to the information people had.

184. Are you making a distinction here between whether officials acted properly within an existing system and whether that system is a good system? I am concerned as a member of the Committee of Public Accounts, as to whether the system is one having defects which need to be remedied. I am quite prepared to be told that given the system that was there all the officials concerned operated properly within it but nevertheless something happened that should not. I am really concerned with whether the system is adequate?

—We have given some thought to that in the Department and we think that whatever problems or issues arise in relation to this Grant-in-Aid do not arise because of a deficiency in the system having regard to the very specific—at least not so much specific —but to the particular terms of the Government decision and to the Minister’s position in regard to that decision and in regard to payments made as a result of that decision.

185. I am not quite clear on that. What is at fault then?

—I do not know.

186. The purpose of any system of public accounts is to ensure that money is spent for the purposes for which the Oireachtas intends it. Whether the system breaks down because of a weakness in the system or because of a malpractice by a public servant or a Minister—these are different causes —we are concerned to establish has there been a breakdown, what has been the cause and what steps need to be taken to remedy that. If the system is defective then we would need to remedy the system. If, on the other hand, there is a malpractice by a Minister or a public servant we would need to introduce perhaps some check to prevent such a malpractice defeating the purposes of the Oireachtas. That is what I am concerned to get at. I am not clear from your replies as to how you feel something might be done about this if a defect is shown to exist?

—At an earlier stage in that statement the Deputy questioned whether existing procedures were sufficient to ensure that in this case moneys were spent on the objectives intended by the Dáil and the burden of my point is that at the time in question when the payments were being made—and this is the important time, this is the crucial time, not 12 months afterwards—at that particular time the officials concerned had no reason to question that the payments being made were not intended for the purposes that the Government had in mind.

187. That may well be so and may exonerate them from blame in operating an existing system. It does not prove that the system is without defect. Our concern is to eliminate defects in the system rather than particularly to blame individuals. We might be on different tracks here?

—Certainly, my purpose is not to go through a handwashing exercise in this. The officials concerned, senior officials in the Department, find it difficult to see what procedures would have avoided this particular outcome. I should say that we have not come to a definite view on that. We are examining it at the moment. But there is one way in which one can avoid any mistakes and that is to erect a very elaborate system of checks and counterchecks and, in fact, a fully comprehensive one because if it is not comprehensive you risk the danger of missing out cases like this and it is fairly clear that you have to strike the best balance between the reasonable discharge of public business and the operation of a system of checks and balances. As a general matter we reviewed our procedures in this respect about two or three years ago in the Department and the time has come now to reconsider that particular newly introduced system. What we decided to do was to have a hard look at what happened in regard to this Grant-in-Aid to see whether the newly introduced system required any changes but I should say that this new system introduced was primarily concerned with ensuring that at the paying-out end there were checks. You can imagine the issues which arise when in effect the authority to pay out derived from the Ministerial head of the Department.

188. Yes. You talk about having introduced a very comprehensive system of checks and you have to balance that against administrative simplicity and with that I entirely agree but we are only talking of a defect that arises in relation to a small number of Grants-in-Aid where the body to whom the money is to be given is not specified. Any checks that would seem to be needed arising out of this event would seem to apply only in these few cases and might require some special procedure in these few cases?

—I do not agree. I think that the problem in this area is not that the grantee was not specified. In fact I do not regard this necessarily as deriving from the Grant-in-Aid procedure.

189. But if the grantee had been specified money could not have been paid by the Department of Finance through a public body like the Irish Red Cross into an account in three false names?

—I do not want to indulge in hypotheses on this but it could well be argued that if no payments had been made to individuals and all payments had been made to the Red Cross that the accounting procedures might have been satisfied if the Red Cross had been specified as the grantee.

190. Yes but, of course, the Red Cross was used here merely as a vehicle.

—That is another matter. You introduce a qualification immediately.

191. Well this is a separate issue we will have to take up then and we will come to that later. Could I move on to another point? You mentioned that the Government decision on this matter of 16th August was not the only one. I do not know whether you intended any significance in that. Are there other Government decisions of that date that are relevant to our consideration and of which we should have knowledge?

—No, I think not. All I meant to imply by that was that the Government took a number of decisions relating to the Northern Ireland problem and that this was taken within days after the major outbreak and it was not as if this was the only matter they decided. They were deciding a number of key policy decisions.

192. I accept that. I just thought there might be some significance in it. In reply to another question you said something about notes given to the Minister for the debate on the Supplementary Estimate. It would be helpful perhaps to have copies of these notes particularly as the Minister did not in fact make any statement? One of our difficulties in knowing whether this money was properly applied is in knowing what it was intended to be for because apart from the title of Northern Ireland Aid Fund nothing else was told to the Dáil. We have nothing else to go on. These notes could be useful in indicating the intentions?

—I do not know how definite I was in saying that notes were prepared for the Minister but if they were we will see whether they are of a nature that could be made available to the Committee.

193. I take it that it would be your view —remember that all the information we have is the title of the Vote—that the title Northern Ireland Aid Fund would preclude the use of the money for the purchase of arms?

—Most definitely, yes.

194. It may seem an obvious or even a stupid question but it is of some importance that we should be clear on that, that that is precluded?

—Certainly. As you are attaching importance to that, I think the correct title is Northern Ireland Relief Expenditure. Perhaps I could check on that. Yes, Northern Ireland Relief Expenditure.

195. In order to take out money legally for the purchase of arms whether legal or illegal it would be necessary to have exchange control permission I take it?

—This depends on what countries were involved.

196. Germany?

—Yes.

197. Or Austria?

—Yes.

198. I take it that no application was made for exchange control permission in this case?

—I think not but perhaps I could check up on that. No, our information is that certainly permission was not sought.

199. If a civil servant is instructed by his Minister to do something improper—if I may use that rather vague term—what is his proper course of action or what course of action is open to him in those circumstances?

—I should imagine—my hesitation is that I have not come across such an occasion myself nor am I aware of any official who has been faced with this position—I should imagine that his first course of action would be to bring the matter to the notice of the Civil Service head of the Department in question and that it would then be a matter and responsibility for that individual to take the matter up with the Minister.

200. And if necessary with the Taoiseach?

—I should imagine so. You are aware that there is a well defined procedure in regard to the question of payments which the accounting officer of a Department considers not to be correct and proper.

201. Yes, it might be useful if you told us something on that at this point?

—Again, while this is well known I am possibly not being as clearcut about it as I might be as I have not been faced with this position myself either but an accounting officer who is directed by his Minister to make a payment which the accounting officer considers not to be correct and proper is expected to point this out to the Minister. If the Minister persists in directing him to make the payment, he is expected to repeat his reservations and objections in writing and if the Minister then continues to persist in directing him to make the payment he can make the payment but he is expected to bring the matter to the notice of the Department of Finance and the Comptroller and Auditor General.

202-3. Could I come now to the question of the investigation carried out last May, the results of which were reported by the Taoiseach in the Dáil on 14th May? I have not got a copy of the debates for 14th May but my recollection is that the Taoiseach said that an inquiry had been carried out into the question of whether public funds were or could have been used for this purpose and that he had been assured that no public funds had been or could have been used for the purchase of arms. I think I am quoting almost verbatim and correctly. In relation to this an investigation was obviously carried out and in reply to a question of mine in the Dáil on 18th November the Minister for Finance said:

The assurance given to the Taoiseach that no public funds had been used for arms purchases followed discussions with the official described in the question—

6 o’clock.

He was the principal private secretary to the Minister—

and an examination of the relevant departmental papers. These papers give no indication that the Northern Ireland Relief Expenditure (Grant-in-Aid) had been used to purchase arms. The payees listed in the papers were reputable persons and bodies.

First of all, I wonder could we have the terms of the assurance the Taoiseach was given?

—I would have to seek the Taoiseach’s approval for giving that. Any matter relating to a communication of that nature between a civil servant or his Minister and a fortiori the Taoiseach would have to be cleared with the Minister or the Taoiseach.

204. I understand that. I would be grateful if you would seek that authority. In relation to this investigation could you describe more fully the nature of the investigation as to exactly what inquiries were made? You will appreciate that one of the difficulties is that, in relation to that assurance, not alone is that assurance stated to have been that money had not come from any public funds, which is something that might be due to the investigation not being thorough enough, but an assurance of that character is one which when it turns out to be incorrect raises the question of the adequacy of the investigation providing the basis of such an assurance?

—It also raises the issue that I raised in my reply to the Deputy’s previous question.

205. Perhaps, Mr. Chairman, we could leave that then and come back to it more satisfactorily at a later stage if we have this information.

—I am happy enough to tell you—I am sorry for interrupting—the nature of the steps that were taken before the Taoiseach was advised.

206. Fair enough?

—It was an inspection of the official papers that were then available and which showed payments, as I said, to a reputable organisation and to the Red Cross Society and through them to a committee which, on our information at that stage, was composed of two well-known public figures in the North of standing and therefore the clear inference being that the Committee itself was of some standing and that our then information was that the payments to these individuals and this reputable committee were used for the purpose of Northern Ireland relief.

207. But you have said that Mr. Fagan knew at the end of March of at least one of the two subsidiary accounts opened in a false name. Would that not have given rise to suspicions that would make it difficult to give a firm assurance without further study?

—I am giving the information that was available to me at that time.

208. Perhaps we could come back to it again later. In regard to the Irish Red Cross, the Irish Red Cross made a statement on this matter, a public statement, at a certain stage. I think it would be helpful for us to have a copy of this. I think we would need to have their statement.

Chairman.—This was a public letter. I have a recollection of it.

209. Deputy FitzGerald.—If I may speak from recollection, my recollection is that in this letter they referred to a written directive from the Department of Finance, or the Minister for Finance—I am not sure which —in relation to the disposal of these moneys. If I am correct in my recollection, I do not think amongst the papers furnished to us there is something that could be described as such a written directive and, if such directive exists, could we have it?

—I can confirm that all the papers at our disposal regarding these payments have been made available—copies of them have been made available to the Committee and in particular any records we have relating to the Red Cross in this connection.

210. If my recollection were correct and this written directive was received could it have been received from the Minister and could it just not be available to you?

—I would not discount that possibility, but I can only speak by reference to the official records that are available to us.

211. Yes. We will have to pursue this further with the Irish Red Cross then. On the question of the authority of the Minister to direct the Irish Red Cross, the Minister for Finance in a reply in the Dáil on 18th May quoted from section 2 of the Red Cross Act, 1938, which provides:

the Minister for Finance may, out of moneys provided by the Oireachtas, afford assistance to the Society by way of grant or loan on such terms and conditions as he shall think proper.

Now the Irish Red Cross operates as part of the International Red Cross and, as we know from the information before us, there are certain agreements as to how it shall operate between the International Red Cross and its constituent bodies. Would it be your view that this Act of the Oireachtas entitles the Minister to ask the Irish Red Cross to act in a manner which is improper, ultra vires, in relation to its constitution and its relationship to the International Red Cross?

—I would not like to give an immediate answer to that. The issue has not arisen as far as my Department is concerned until this particular series of transactions arose so I could not give you an answer to that.

212. That, in a sense, answers my next question, which is whether the Department of Finance satisfied itself that the procedure adopted in this case was compatible with the international obligations of the Irish Red Cross, of which it was aware?

—It was not the Department which recommended this particular procedure to the Minister.

213. But the Department was aware of the procedure and if it had been dissatisfied with it as being incompatible with the Irish Red Cross Society’s functions would it not have been proper for officials of the Department to draw the attention of the Minister to this fact?

—Yes, we would have done that had we been satisfied that the procedure was contrary to the Act.

214. And is it, therefore, your view that the procedure adopted——

—Yes—contrary to the Act.

215. I was not asking whether it was contrary to the Act, but whether it was contrary to the obligations of the Irish Red Cross Society in relation to the International Red Cross?

—The direction as such did not necessarily involve any contradiction or any breach of the society’s international obligations because once we knew that the British would not co-operate it was not envisaged that the Red Cross would operate in the North with these moneys.

216. You regard it as within the Irish Red Cross’s obligations or as compatible with them that it should furnish money in this way for the purpose of relief in Northern Ireland?

—You know, this would be primarily a matter for the Red Cross to satisfy itself. It was the body that, if your contention is correct, would be at risk or in jeopardy.

217. There is nothing in what was done in any event that makes you feel there was any obligation on the Department to draw the Minister’s attention to a possible incompatibility?

—He was very much aware of the restrictions in question.

218. And the fact that he apparently was seeking to evade them to a certain extent in relation to a body for which the Department of Finance had some responsibility?

—I would not care to comment on that in the terms in which it was raised. I do not want to convey in any way that we regarded the Minister as attempting to evade any particular obligation or condition of operation of the Red Cross Society.

219. But the reasons given for proceeding in this way were because the Irish Red Cross could not proceed directly?

—Yes, that is so.

220. But the method adopted was one which you do not regard as being incompatible with the Irish Red Cross Society’s international obligations?

—I do not, no.

221. Could we have your view as to who in fact is responsible for seeing that the money provided was supplied for genuine aid? Does the responsibility for ensuring that lie with the Department, with the Irish Red Cross or with neither?

—We have never taken the line in our examination of this matter that there was a responsibility on the Red Cross in this respect. I just want to refresh my mind on one point, if I may: Our understanding of the position—it can only be an understanding because these matters were dealt with by the Minister and the Red Cross directly initially—is that there is no indication from the information at our disposal that the initiative was taken by the Red Cross in this respect. Our understanding—it can only be that—is that the Red Cross acted in response to an initiative by the Minister. To that extent, they would be regarded as just making available a facility. That, on our approach, would rule out any responsibility on the part of the Red Cross. One then turns as to whether, in this particular area—looking at the Department of Finance as a whole— whether the responsibility for ensuring the correctness of the payments was a matter for the Minister or for the officials. All I can repeat there is that the officials concerned with the payment had no reason to suspect that the payments were not intended for Northern Ireland relief.

222. That would exonerate them from blame but not from responsibility. On the question of responsibility rather than of blame, there is a very clear distinction. Somebody ought to be responsible for money being misused. We want to establish who, if anybody, is responsible. If no one is responsible, the system must be changed.

—You are distinguishing between a responsibility and the discharge of that responsibility?

223. We want to establish where the responsibility lies and whether failure to discharge it is culpable. It could be that it is not culpable in certain circumstances. Nevertheless, responsibility must be pinned on someone?

—I would not attempt to deny that I, as Accounting Officer, am responsible for ensuring that the arrangements within the Department are such as to enable me to be satisfied regarding the correctness and propriety of the payments made by the Department and that this is, in one sense, a personal responsibility but it has been accepted, down the years, that it is not a responsibility that can be discharged personally and, in that sense, the responsibility lies on the Department.

224. I want to take some points about repayments. Was there any reason for the delay in getting the residue back from the Irish Red Cross? Some months elapsed: I think there was a Dáil Question.

—Although there was no connection between the two, the delay related primarily to our decision not to proceed until the Arms Trial had been finished.

225. You mentioned that one bank has agreed to repay. Is there any reason why we should not know which one?

—No reason at all. It is the Bank of Ireland in Clones. May I make it clear, lest this be misinterpreted, this does not mean that one bank is co-operating and that the other is not. It just so happens that the process involved and the resolution of the legal problems has come to a head in one case rather than in the other.

226. I understand that. You mention then, that there is a person who may be able to secure the recovery of money in the accounts held in individual names. I do not want to press the question of who the person is, if that is going to be disadvantageous at this point of time?

—Purely on the basis of securing repayment of the moneys. I am not saying anything that might hamper that, I would prefer not to reply. At a later stage, or privately, I could disclose this. There is nothing secret, as between the Department and the Committee in this respect.

227. On the question of repayments, have any steps been taken to get back the moneys which appear to have been paid for arms that, I understand, have not been delivered?

—We have taken up with the Attorney General our powers in this respect. Certainly, the advice we got did not encourage us to go ahead at this stage. We would not say that we have finally abandoned this but our reading of the legal position, in the light of the Attorney General’s advice, was that we might well spend more money trying to get the money than we would in recovering the particular amount.

228. That relates to a process of recovery directly. Has the question of seeking the cooperation of the people concerned in the transaction of recovering the money been considered?

—The first step towards that has been taken towards that end. Perhaps that is overstating it. It relates to the previous question you asked. If we get the balances on the accounts in question we might then be in a better position to take the next step.

229. Coming to the accounts chronologically, as set out in the documents here, could you tell us when Mr. A. withdrew the £2,000 lodged at different points?

—I am not sure if we have precisely that information although we were told by the bank definitely that he did draw the money. Could I come back to that?

230. I understand he has given some particulars of how it was spent?

—No, because I think, as I explained, in reply to a previous question, about half the amount was given to an eminent clergyman and the other half was given to a professional man—clearly, to account for it—and that gentleman in question called at the Department today and has given some information and I will make this available to the Committee.

230(a). And Mr. A.’s account is simply who he gave the money to then?

—That is all, yes.

231. Five thousand pounds was paid to Mr. B. Was this on the basis of any recommendation made by anybody? Or did he simply write in for it?

—No. Could I just check? I am not sure if the records show this: if they do not what I would expect was that this would have been a direct contact with a Minister or Ministers. Mr. B. is a clergyman too as quite a number of these are and it was fairly clear from the approach and the particulars subsequently furnished that these were genuine relief operations.

232. I was just going to ask whether in the case of Mr. B you are satisfied that this is the case—I understand you have a lot of information on your files on what he spent the money on?

—As we say here, Mr. B has furnished on request particulars of the purposes for which the money was spent. These include housing and food and clothes for refugees as well as return fares to Belfast.

233. You have a good deal of detailed information on this?

—Oh, we have.

234. And you are satisfied that it was spent on genuine relief purposes?

—I do not want to hesitate on this but knowing the organisation concerned, the religious organisation concerned, I would not propose to press the matter any further.

235. Are you satisfied that the sums paid to Messrs. C. and D. were properly spent?

—C and D more or less fall into the same category. They were clergymen.

236. In respect of the amount for the office in the particulars supplied by Colonel Hefferon, can you say who was responsible for running this office? Was it purely a relief organisation or was there something political attached to it?

—You will understand, Sir, that we hesitated to give its full title for fear of possible repercussions. May I just say it was connected with a northern organisation— Northern Ireland. If you had the correct title, you would not be surprised that it was running this type of operation.

237. It was not then purely a relief organisation?

—No, it was not——

238. Not like the others?

—No, it was not although it was useful as a source of intelligence about refugees.

239. And it was also engaged in genuine relief work as well?

—Not primarily although it had a function in regard to re-routing refugees.

240. We are talking about the case made for providing money for providing intelligence rather than providing relief?

—That is so.

240(a). In your view would this justify money from this fund being applied for that purpose?

—Well the case that was made—and this was in response to questions that I put 12 months afterwards—was that the Army found that the money spent in helping to keep this office open was well spent in the sense that it provided information that was of use to it in screening refugees, in testing the bona fides of refugees, for which the Army was providing assistance.

241. I see. You feel in those circumstances that the money was not necessarily improperly spent from this Vote?

—No, I think that——

242. Would it have been more properly spent if it came from the Defence Vote?

—It might well have but I think the fact that it would have come from the Defence Vote would not have made it as any less proper to be classified as relief expenditure.

243. Is Colonel Hefferon providing some information on the use to which the £100 was put?

—Yes.

244. And we can have this information?

—I think you have it. I think it is in the letter he sent on 3rd December.

245. I appreciate that we got so much stuff this morning that we have not been able to absorb it?

—But I can tell you it was to pay current operating expenses of the office.

246. In regard to the £166 12s. spent on air fares, I am still not quite clear—it may have been repaid—whether the group for which fares were paid was a relief group or one which has other political angles attached to it? Can we be told?

—There is a letter on this which came in today—at least we received it today.

247. The letter does not tell me anything about the group?

—We do not know who the group are. If the Committee wish we can follow that up.

248. We do.

—You would like to obtain the names?

248(a). Yes?

—They are subject again to this problem of possibly jeopardising the position.

248(b). These are people from Northern Ireland. We can be given the names privately in further submissions?

—Quite so, yes.

249. I take it from what was said earlier that you have not yet got an account from Captain Kelly of the expenditure of the £500 he received at Mr. Haughey’s house?

—That is so. To be fair to Captain Kelly I should say we have not asked him for it.

250. What, if any, recommendation was made to the Minister in respect of Mr. E. who received £1,000, or did he just apply direct?

—Could I just check up that? By the way, while we are looking that up, in regard to the payments to A, may I say that these differed from the other payments that were made by bank drafts. While we know the dates they were paid to the bank, we do not know the dates he drew the money out. In fact I now find that the bank did not give us those dates. As far as Mr. E is concerned. he wrote into the Department direct.

251. There was no question of a recommendation?

—Oh, there was a ministerial recommendation. That was put to the Minister.

252. At least at that point of time the Minister authorised the payment?

—That is right.

253. There was no question of somebody recommending Mr. E to the Minister?

—Our papers do not show that. I find it rather strange that this should have come out of the blue. There well may have been some sort of prior contact.

254. We can ask the Minister that. Are you satisfied in this case that the money was properly spent?

—Yes. We got, not a detailed statement in this case, but again this was a clergyman, I think. Yes, and we got some idea of the unit with which he was connected.

255. I had that impression. I think there is some reference to detailed reports submitted by the refugees committee?

—That is right.

256. Could we have these reports?

—They give a lot of names to Northern Ireland people. There is no hesitation at all in making them available if you wish. We are fully satisfied. In fact, this organisation got relief through the Red Cross in the normal way.

257. I shall leave that for the moment then. Do we know on what £150 which Colonel Hefferon used out of the £500 he got was expended?

—Yes, in general in a general way, in contrast to the earlier payment which was intended to meet running expenses of the office in question this payment was intended to provide some office equipment and this in part explains, I think, why so little was spent because the office folded up shortly afterwards and Colonel Hefferon told us that he made what discreet and suitable attempts were possible to recover some of the equipment on which the money was spent.

258. I see. He adopted the procedure of lodging the money into a separate account in his own name. Would you regard that as appropriate procedure?

—Well it was appropriate first of all in that he did not lodge it into his own bank account. I would not regard the procedure as surprising in that it was more or less an imprest on which he was to draw as occasion required. In fact in retrospect it was a very prudent step. He could have given the £500 to the organisation concerned.

259. I appreciate that. Is there any reason why the residue was not returned until nine months after he retired? Was he asked for it?

—Oh, he was not asked for it because our investigation did not start until after the Arms Trial. He could have given us a cheque for it, of course. I think one of the reasons he mentioned was that during the bank strike he did not know what the exact balance was.

260. I see. We can all understand that. I do not think we have the letter of 19th November from the Department to him looking for information?

—We can make that available. It is a relatively routine one. Would you wish to have it.

261. I think in order to understand his reply fully it may be necessary to see the terms of the letter?

—I can make that available.

262. My recollection is that on the Clones account cheques were signed for £2,500 and £4,250. It is not clear where the money went to. Perhaps the documents we received this morning may answer my question?

—We draw attention in the footnotes to the summary of the Clones account. We draw attention to the fact that we assumed that these two payments were fed into the two subsidiary accounts.

263. You have not asked the people who signed these cheques what they did with the money, for confirmation?

—You mean the people who signed the cheques drawing out the moneys?

264. Yes?

—We asked them and they could not explain it. They could not explain the transfer of these sums to the subsidiary accounts.

265. But it was accepted that the money had been transferred?

—No, no, no. They did not know until we told them.

266. Did they tell you who they gave the cheques to?

—I think in part this becomes tied up with the general questions relating to the transfer of sums from the main Baggot Street account to the subsidiary accounts. Many of the same types of questions arise in regard to these two payments.

267. In this case you are talking about people who signed the cheque and must know who they gave the cheques to. Did you not ask them that?

—We did.

268. Did they tell you?

—They could not tell us.

269. I can quite understand their not knowing what happened to the cheques later but they must know who they gave them to?

—Perhaps I am not doing justice to them. They could not explain the two particular transactions.

270. I see. We can pursue that further. Can we have the Garda handwriting evidence concerning the main account? I do not think we have that?

—I think I would have to seek authority for that. In glancing over the previous report it was made clear that this was being made available to the committee with the consent of the Minister for Justice.

271. I think you should seek that consent because we do not even know in relation to it whose handwriting was compared with the signatures. I think this would be useful. Have any of these fictitious names been identified or has the handwriting of the signatures been identified in any case?

—I would prefer not to answer that. I think it is a question of whether the report can be made available.

272. We will press for that report?

—You can draw your own conclusions from it.

273. There is one transaction I cannot understand in your report. It is stated in the text that on 24th March £4,000 was transferred to the George Dixon account— or the 25th March. It is stated that on 25th March a sum of £4,000 was paid to the George Dixon account (document read) and that £1,000 was paid to Mr. F. I cannot reconcile those two sentences. It is on page 12, paragraph 24 the last of the items listed?

—I am sorry I was looking at the account itself. I did not catch it. This is one of the cases where we put an incorrect date into the George Dixon account. I do not know whether that would help you.

274. It is stated that the sum was paid into the George Dixon account and an analysis of the payments made shows that it was paid to Mr. F who lodged £1,000 in each of the George Dixon and Anne O’Brien accounts. Either it was paid to George Dixon account or it was paid to Mr. F. I do not see how it could be both. I am probably being stupid and there is a simple explanation. Who was it paid to?

—I am getting mixed up myself.

275. The last item?

—I apologise to the Committee. The explanation is that this is a summary. These references here in paragraph 34 are taken from the Garda Report. You can draw your own conclusion that the Garda Report is incorrect.

276. Could we have clarification?

—The clarification is that this is only— I would not say it is an assumption—our reading of the report—of the accounts— it is that £2,000 of the amount in question was withdrawn in cash and £1,000 was lodged to each of the two accounts. We are merely making that conclusion if you like, partly by reference to the bank documents but partly by reference to the dates in question.

277. The point is that there is a payment—?

—I am sorry to interrupt but the man in question, I will not say he has confirmed this, but when this point was put to him he accepted it.

278. There is in fact a £4,000 lodgment by J. J. Kelly on March 25th into the George Dixon account. One possible explanation is that the money was taken out of one account and put into the other?

—The lodgment on March 25th in the George Dixon account should read March 13th. That is why I said the dates might be confusing.

279. The first statement is incorrect?

—Yes. It is taken from the Garda Report.

280. We are left with the second half of that paragraph. Can we have the full text of the statement James Brady furnished?

—We have made available his letter.

281. I see. Has he made a statement?

—No.

282. Again that is something we got this morning and we have not had time to absorb it yet?

—I think you got that earlier.

283. I thought there was some statement he made. I am incorrect. Can we have the information furnished by Mr. J. on 21st December. I do not think we have that?

—No. We did not proceed in these cases on the basis of formal statements.

284. I see?

—In so far as we are drawing conclusions from these discussions or raising questions on them we have incorporated them in what I call the hypothesis statement we circulated.

Deputy FitzGerald.—I see. That is all I want to ask.

285. Deputy H. Gibbons.—The question of a suspense account, could you let us know the size of it? What is the object of it?

—A suspense account is defined, very loosely, as a technical book-keeping procedure just to record transactions pending the voting of moneys and the creation of a formal subhead—merely an internal recording device.

286. I think you already stated, Mr. Murray, that there was no analogy between this Grant-in-Aid and any other in your experience and I think you also made the point that the Minister was directly responsible for the administration of it. Going back to paragraph 1 of your submission you stated (Quoted).

—I would like to avoid giving a short answer to that. Could I start off by commenting on what you said? You said I already stated that the Minister was responsible for the administration of this Grant-in-Aid. I would like to qualify that. He was responsible for the decisions to make payments. It was he who decided, in regard to the payments to the Red Cross, that they should be re-routed to the Belfast Committee, but the other aspects of the administration were handled at official level and they were consequential. Coming to your main point, you are asking, in effect, whether the officials regarded their responsibility as discharged if the Minister made a certain decision or if they acted on the basis of a ministerial decision. Could I just confirm that that is your question?

287. My question was the contrast—I think you pointed out earlier that in some cases a senior official paid out Grants-in-Aid without reference to higher officials and in this case the Government gave the Minister responsibility for administering them?

—Yes, well, in fact, all payments in this case were made on the basis of decisions made by the Minister. I am not quite sure if I am catching your point.

288. This is the thing that interests me. Was there any previous case of any investigation being made of a Grant-in-Aid, of the initial amount the accounting officer gave at any time in the past?

—You mean over and above those cases where Grants-in-Aid are audited by the C and AG?

289. Was there any case in the past where a suggestion arose that the funds did not go to the grantee?

—Not to my knowledge.

290. There is another thing which I should like to get clear. I understand that the Clones account is in the names of F, G and H. At the time the Baggot Street account was opened was it represented to your Deparment that this account was going to be opened in the names of F, G and H?

—That is so.

291. And, in fact, it was opened in the names of Murphy——?

—I think it was White, Murphy and Lonergan.

292. This is what happened?

—That is what happened. We only found out that much later.

293. Much later. Is there any record in the Belfast Relief Committee of moneys received from the Dixon and O’Brien accounts? Did they at any time submit accounts since this investigation started?

—They have given to us, and I circulated it today, a statement of how they claimed they spent the £70,000 odd which they claimed they got from the Grant-in-Aid. They did not indicate the precise sources of these moneys as between the main and the other accounts but I think you will see I have raised a number of issues in that respect in the hypothesis statement that I circulated today.

294. There is another aspect of this and that is that the situation in the north at this particular time in August could be regarded, broadly speaking, as a disaster situation. I think we would all agree on that. I take it that in your experience even though your Department may not be dealing directly with it that it is the usual thing that grants for such disasters are made through the Red Cross? I think this is the situation?

—That is so.

295. And that of all the organisations available to the Government at that particular time this was the most likely to suggest itself at first thinking?

—Yes.

296. When the difficulties of distributing the money at the time were unknown. These are all the questions I have to ask.

297. Deputy Keating.—I intend to be more than ten minutes. I think the Committee desire to have a little time afterwards to discuss the procedure on the next occasion. I wonder if we might leave over the questions at this stage. We have no possibility of finishing tonight anyway.

298. Chairman.—I wish to ask one question, Mr. Murray. It arose from a matter raised by Deputy FitzGerald in respect of the issue of money to the Red Cross. Section 2 of the Red Cross Act, 1938, states that the Minister for Finance may out of moneys provided by the Oireachtas afford assistance to the society by way of grant or loan on such terms and conditions as he shall deem proper. The operative words are “afford assistance to the society”. Now, Mr. Murray, in the event do you agree that it would appear that the payments which were made and channelled through the Red Cross did not in effect afford assistance to that society and so this provision in the Red Cross Act would not apply to them?

—I can see the force of that point of view but one could argue that, in so far as the Red Cross would be to that extent relieved of making payments out of its own funds for this purpose, that it was affording assistance to the society.

299. Deputy FitzGerald.—Had they any such intention?

300. Chairman.—Mr. Murray, you agreed with me earlier, I think, that the Red Cross did not in the ordinary concept of a layman, in effect, administer this fund, the bulk of which was put through its account?

—That is so.

301. Can it be argued then that the money put through in that fashion afforded assistance to the society except by the roundabout twist you have put on it?

—The interpretation, perhaps, that I put on it.

Mr. Murray withdrew.

The Committee deliberated.

The Committee adjourned at 7.30 p.m. until 2.30 p.m. on Wednesday, 13th January, 1971.