Committee Reports > List of Committees > Dáil > 1994 > Committee of Public Accounts > Interim Report No. 02 - Appropriation Accounts 1993

MIONTUAIRISC NA FIANAISE

MINUTES OF EVIDENCE

AN COISTE UM CHUNTAIS PHOIBLÍ

COMMITTEE OF PUBLIC ACCOUNTS

Déardaoin 13 Deireadh Fómhair 1994

Thursday 13 October 1994

The Committee met at 11 a.m.

MEMBERS PRESENT

DEPUTY JIM MITCHELL IN THE CHAIR

Mr. P. L. McDonnell (An tArd Reachtaire Cuntas agus Ciste), called and examined.

The Committee met in private session at 11 a.m.

Public business commenced at 11.15 a.m.

METHOD ADOPTED BY THE DEPARTMENT OF FINANCE AND THE TAXING MASTER FOR DETERMINING LEVELS OF LEGAL FEES

Mr. Patrick Mullarkey, Secretary, Dept. of Finance, called and examined.

Mr. C. Ó hUiginn and Mr. Richard Ryan, called and examined.

Chairman: We will deal first with correspondence and then with the programme for the next year. In relation to a matter raised by Deputy O’Keeffe, we have correspondence from the Secretary of the Department of Education on the RTC in Cork. Have you any further points on that, Deputy, or do you want time to look at the correspondence?

Deputy O’Keeffe: I would like to look at the letter first.

Chairman: That is fine. The next item is a letter from Rúnaí an Roinn Ealaíon, Cultúr agus Gaeltachta, which we note. There is correspondence from the Secretary of the Department of Enterprise and Employment on NÉT and IFI. I propose to postpone consideration of that until next week because there are serious and substantial sums involved and we need to consider it further. Is that agreed? AGREED. We may circulate additional documentation on that matter.

The next letter is from the Secretary of the Department of Agriculture, Food and Forestry and is concerned with Land Commission annuities. I propose we note that. The final correspondence is in relation to comparative costs of public inquiries and the role of the Taxing Master, which we are taking as an agenda item later today with the Secretary of the Department of Finance and an Assistant Secretary from the Department of Justice.

The Department of Finance has sent us circular no. 16 of 1994 which gives details of new guidelines on the application for and processing of National Lottery funds and grants in each Department. The Committee can take satisfaction in having brought about this big improvement in the spending of and accounting for National Lottery funds. The Department has met almost all the points raised by the Committee. We will circulate the correspondence noted today to the press in due course.

Deputy Foley: When does that circular come into effect?

Chairman: It has immediate effect.

Deputy Foley: Does that mean all applications currently in hand must comply with this?

Chairman: That is a good question and I do not know the answer. Perhaps we should ask the Clerk to write to each Accounting Officer, drawing attention to the new guidelines and seeking assurances that all existing grant applications not already processed will be subjected to these new guidelines. Is that agreed? AGREED.

Deputy Upton: Paragraph 7 of the circular says approval should not be issued nor any payment of the grant made until the steps outlined in the circular have been completed.

Chairman: Yes but Deputy Foley is asking about applications submitted before the date of the circular but not yet issued.

Deputy O’Keeffe: I wish to return to the matter of the RTCs. I raised this matter because the contracts are ongoing in Cork RTC and it seems this matter will be resolved. However a fundamental issue arises because when the DITs were removed from the control of the Dublin VEC and the RTCs were similarly transferred, a total of only eight people transferred from the VECs to the RTCs when they gained independence. That is a small number in terms of the budget commanded by each of the RTCs. Has the Comptroller examined this aspect of the matter?

Mr. McDonnell: We have adverted to one aspect of this in our 1993 report, that is the need which appears to have arisen for the VECs and the RTCs to have an accounting service. Because of the problems which were arising, there was an extended use of an accountancy firm at a cost in excess of £1 million for the provision of accountancy services to RTCs and the Dublin Institute of Technology. We are now taking on responsibility for the audit of the VECs and RTCs.

Deputy O’Keeffe: Is this contract, which has cost over £1 million, still in operation? Is this firm still providing this service?

Mr. McDonnell: Only for the DIT and Letterkenny RTC.

Deputy O’Keeffe: They are providing that service?

Mr. McDonnell: Yes. In other words, they are buying in the accounting expertise.

Deputy O’Keeffe: Is it a matter of concern to the Comptroller and Auditor General that the RTCs and the Dublin Institute of Technology have spent £1 million buying in an accountancy service which they should have had already in operation? We are talking about 14 colleges being given independence. In spite of the work load of these colleges, the VECs saw fit to transfer only eight people. Very serious questions will have to be asked on this issue.

Mr. McDonnell: It is, of course, of concern to me and this is an aspect at which I will be looking. The accounting function was the responsibility of the VECs when the RTC came under the aegis of the VECs. When the RTCs became independent, there was an industrial relations problem which led to this. My office will be taking on the audit of the VECs. All that was available to us now was the report of the local government auditors.

Chairman: I think the point raised by Deputy O’Keeffe is a very good one and I thank him for raising it. We ought to reflect further on this matter to see what explanations we can get. The Comptroller and Auditor General and I will discuss the matter to see how we can best proceed and it may be put back on the agenda for next week’s meeting. Item 2 on today’s agenda deals with the draft programme for the examination of the 1993 Comptroller and Auditor General’s report, which was published in the last ten days. According to our work schedule, we commence consideration of this report on the third Thursday after we receive it. The third Thursday is next week. This report has received extensive media coverage, which is indicative of its importance. One aspect of it has given rise to a certain amount of public interest and misunderstanding. The Comptroller and Auditor General has asked my permission to make a statement at the outset of this discussion, which I have granted.

Paragraph 20 of the 1993 Report of the Comptroller and Auditor General reads:

Incentive Amnesty Audit

Section 7 of the Waiver of Certain Tax, Interest and Penalties Act, 1993 provided for the confidentiality of information received by the Chief Special Collector in connection with the Incentive Amnesty. It also provided that information may be given to me to enable me to audit the discharge of special collection functions. In addition, it recognised that those provisions should not prevent me from carrying out my functions, including exercising my reporting duty to Dáil Éireann. This proviso was included in Section 7(5) of the Act at my request to ensure that there would be no legal obstacle to my audit of any part of State revenue.

While the results of my examination of the operation of the Chief Special Collector’s functions are reported in paragraph 19, I also sought to establish, as part of my statutory remit for the audit of all State revenue, if the outcome of the Incentive Amnesty was in any way indicative of a lack of effectiveness in the Revenue Commissioners’ procedures for the assessment and collection of tax generally. I viewed my main responsibilities in this regard as endeavouring to determine, by the use of sampling methods, the extent to which those who availed of the Incentive Amnesty:-

- had in fact complied with the statutory conditions attaching to the Incentive Amnesty e.g. by making a correct income tax return by the due date - bearing in mind that the arrangements made in accordance with the legislation did not impose a duty to establish, a priori, the eligibility of declarants availing of this amnesty;

- had pre-April 1991 arrears which might be expected to have been successfully dealt with through enforcement before the critical date i.e. 25 May 1993 - which might indicate whether there were inadequacies in the Revenue Commissioners’ collection and enforcement procedures;

- had also availed of the 1988 Amnesty which was designed to encourage those who availed of it to bring and keep their tax affairs up to date - which might indicate whether there were deficiencies in the Revenue Commissioners’ procedures for making maximum use of the information at their disposal as a result of the 1988 Amnesty.

By reason of the confidentiality provisions of the legislation, it would not be open to the Revenue Commissioners to carry out and analyse the results of a sampling exercise such as that undertaken by my staff.

The Accounting Officer stated that the Revenue Commissioners are satisfied that adequate procedures are in place in both the Chief Inspector’s Office and the Office of the Collector-General to check that all the relevant conditions have been met where it is made known by the taxpayer to Revenue that the Incentive Amnesty has been availed of. He also informed me that unpaid taxes are referred to enforcement on an ongoing basis, and normally no later than eight weeks after the due date, unless certain cases have been deferred pending further review or examination. The fact that a pre-April 1991 arrear was not at enforcement at 25 May 1993 did not mean that it had not previously been subject to enforcement action which was unsuccessful. A high proportion of the pre-April 1991 arrears would have related to the pre-1987/88 period and had been addressed under the arrears review programme following earlier efforts at enforcement. As to what action was being taken on pre-April 1991 arrears cases which did not avail of the Incentive Amnesty, the Accounting Officer informed me that the position is currently under review.

In regard to the sampling exercise, while always being conscious of the need to be particularly careful not to make any reference which might in any way identify any person availing of the Incentive Amnesty or disclose individual amounts paid, I had intended to report in general terms on the results of that exercise in so far as those results gave an insight into the issues with which I was concerned. However, in recent correspondence with the Revenue Commissioners, they have expressed the opinion that, while the proviso in Section 7(5) recognises that the other provisions of that Section cannot prevent me from carrying out my functions, including exercising my reporting duty to Dáil Éireann, it is clear from the whole context that the essential audit envisaged by Section 7 is an audit of the discharge of the special collection functions by the Chief Special Collector in accordance with the legislation and that the carrying out of any other exercise, even if within the functions of the Comptroller and Auditor General, would seem to go beyond the needs of pure audit as envisaged in Section 7(4)(c) and Section 7(5).

They also stated that, whatever about the formal legal position, it was their view that the publication of the carrying out of such an exercise and of the comments based on it could call into question the fundamental confidentiality arrangements on which the Incentive Amnesty was based.

The Accounting Officer emphasised that he understood that these concerns were shared by the Chief Special Collector who indicated that the access to information that he had provided for audit purposes in accordance with Section 7(4)(c) of the Act was for the purpose of allowing audit of special collection functions. The Accounting Officer stated that he had been advised that the Chief Special Collector had pointed out to the staff engaged on the audit that, notwithstanding the provision in Section 7(5), he was authorised to provide information for this purpose only and not for any wider purposes.

Under Section 2(1) of the Exchequer and Audit Departments Act, 1921 and Section 3(7) of the Comptroller and Auditor General (Amendment) Act, 1993 I am obliged to carry out such examinations as I consider appropriate in order to ascertain whether systems, procedures and practices have been established that are adequate to secure an effective check on the assessment, collection and proper allocation of tax and to satisfy myself as to whether the manner in which the systems, procedures and practices have been employed and applied is adequate. In the light of the Revenue Commissioners’ comments and because I have this wider function, I am seeking the views of the Attorney General on whether, in the exercise of that wider function and by virtue of the proviso in Section 7(5), I am legally entitled to make a report to Dáil Éireann on the adequacy of the Revenue Commissioners’ procedures for the assessment, collection and bringing to account of revenue generally if that report is based on associating and comparing information gleaned from my audit of the Incentive Amnesty with information held in Revenue outside the Office of the Chief Special Collector.

Mr. McDonnell: I am concerned at misconceptions and misunderstandings which appear to have arisen from reference in my 1993 report to the 1993 tax amnesties and specifically to the incentive amnesty. I want to take this opportunity to make a formal statement to clarify a number of points.

First, the matter of granting any amnesty and of prescribing the terms and conditions under which it could be availed of is a matter of policy proposed by the Government and approved by the Dáil in legislation and, therefore, there is no question of my having any function whatsoever in that regard.

Secondly, the operation of the incentive amnesty in accordance with the legislative terms prescribed is a matter for the Chief Special Collector and the Revenue Commissioners and my responsibility is to examine whether adequate procedures to do so have been established and applied by them. I want to make it absolutely clear, therefore, that my interest was not in individuals nor in amounts paid by them. I also want to make it clear that I am not suggesting that the Revenue Commissioners should have done anything or taken any other action vis-a-vis persons fulfilling the qualifying conditions who exercised their statutory entitlement to avail of the amnesty.

Thirdly, it has been suggested that I was denied access to documents relating to the incentive amnesty. This is not so. As emphasised by the Minister for Finance in the Adjournment debate, there is no question of the Revenue Commissioners hampering or refusing to assist me in carrying out my duties and I want to reiterate now that my Office was at all times given full co-operation by the Revenue Commissioners and by the Chief Special Collector and was provided with each and every piece of documentation and audit evidence sought.

The point at issue is what we did with that information and audit evidence which we obtained in the Chief Special Collector’s Office. We associated and compared that information and evidence with information and evidence available to us in other areas of the Revenue Commissioners. In doing so we did more than the Revenue Commissioners themselves could do because the information in the Chief Special Collector’s Office and the operation of that Office are statutorily cocooned from the rest of Revenue. Our motive was to see whether that evidence told us anything about the effectiveness of the normal tax assessment and collection procedures of the Revenue Commissioners, which I also have a statutory duty to examine. In doing so, we relied on the proviso to section 7 (5) of the Waiver of Certain Tax, Interest and Penalties Act, 1993, which stated that the legislative arrangements should not operate in such a way that would prevent me from carrying out my functions, including exercising my reporting duty to Dáil Éireann.

However, it has been suggested by the Revenue Commissioners that to carry out this exercise, and more especially to publish the results of doing so, is not in keeping with the amnesty legislation and, specifically, that the proviso in section 7(5) of the Act is to be read in a restrictive sense. In the light of their misgivings I deemed it prudent to seek independent legal advice.

As to why I sought this advice from the Attorney General, the position is that, when the amnesty legislation was being drafted, I expressed concern to the Department of Finance that the full scope of my function vis-a-vis State revenue should be respected, notwithstanding the fact that special assessment and collection arrangements were being made under the amnesty, and I emphasised that the Act should not operate in a way which would preclude me from using information in the course of the incentive amnesty audit when reporting to Dáil Éireann on the results of my wider examination of the whole area of tax assessment and collection. In response to that concern the proviso to which I already referred was inserted in the legislation. I understood and believed that the Department of Finance and, presumably, the Parliamentary Draughtsman understood this to remove any suggestion that the confidentiality provisions of the legislation would restrict the exercise of my constitutional and statutory functions in regard to State revenue.

Since the proviso to section 7(5) was framed by the legal services of the State at the instigation of the Department of Finance to meet a concern of mine and since I understood that the legal services believed that it did meet that concern, it seems to me perfectly reasonable that the first thing I should do is ask the legal officer of the State if my understanding is correct and I did so on Tuesday last, 11 October.

As to the general question of my seeking the advice of the Attorney General - I being an independent constitutional officer - my understanding is that it has been made clear on a number of occasions, some of them fairly recent, that the Attorney General is not just the legal officer of the Government but that he is also the legal officer of the State, that he has a duty to represent the public interest, and that, in constitutional matters, he has the right and obligation to act independently of the Government and to give advice objectively and without regard to whether it is or is not palatable to the Government.

Chairman: Thank you, Mr. McDonnell. I am sure Members will want to make some preliminary comments on this issue. As usual, the Comptroller and Auditor General in discharging his function has fearlessly stated throughout his report the problems he has encountered in different Departments. In this respect he has highlighted the disagreement between his interpretation and that of the Revenue Commissioners not over access to files, a principle which has long been established in relation to the Comptroller and Auditor General, but about reporting to the Committee on his examinations.

The 1993 Comptroller and Auditor General (Amendment) Act repeals the Exchequer and Audit Departments Act, 1921 in so far as it applies to any public accounts after 1 January, 1994 but the 1921 Act still applies to any accounts prior to 1 January 1994. Section 2 of that Act requires that the result of any examination by the Comptroller and Auditor General be reported to this Committee. The legal position is clear. The Committee has an absolute right to receive a report on any examination by the Comptroller and Auditor General and we must assert that right.

The question is how we proceed. A number of possibilities arise: first, we await the response of the Attorney General to the Comptroller and Auditor General’s query; second, we seek our own legal advice as to what our duties and legal rights are; or, third, we decide to report to the Dáil and allow it debate the issue. I conclude, having taken advice, that they are the avenues open to us. While there are significant principles involved and that it has been made clear to us on many occasions that the Auditor General is not the advisor of parliament, and therefore not the advisor of the Committee, it would be prudent to allow the Attorney General a reasonable amount of time to respond to the Comptroller and Auditor General. I suggest the Committee consider this matter further in a week or two.

Deputy O’Malley: I am glad the Comptroller and Auditor General has made this statement because it has certainly clarified some matters. Clearly misunderstandings arose from the report so far as the press, and perhaps others, were concerned.

I would take issue with some aspects of what the Comptroller has said because I believe he is wrong, in particular, in his references to the Attorney General. He says in the last paragraph “my understanding is that it has been made clear on a number of occasions, some of them fairly recent, that the Attorney General is not just the legal officer of the Government but that he also is the legal officer of the State, that he has a duty to represent the public interest”. There has been an instance, which was fairly recent, where the Attorney General went to great pains to make it clear through his Counsel that he did not represent the public interest and that he would not represent the public interest and that where there was a conflict between the Government’s interest and the public interest, as there was in that instance, he represented the Government’s interest. That was in the Beef Tribunal where the public interest had to be separately represented.

I do not have a copy of the Constitution in front of me but, speaking from recollection, the Attorney General is described as the legal advisor to the Government and not to anybody else. There may have been a theory in the past that he represented the State in the broader sense of the public interest but the present incumbent certainly makes no claim to do that and if there is a conflict between the Government’s interest and the public interest he represents the Government interest. For that reason, I think that - with respect to him for I am sure he is acting in good faith - the Comptroller and Auditor General was wrong to seek to get advice from the Attorney General. This problem has arisen for Committees of the House, for this Committee but certainly for other Committees that I am aware of, where the necessity to get legal advice from some source other than the Attorney General was recognised and I believe that the liaison committee of chairmen have looked at the question of trying to obtain legal advice independently of the State on behalf of Committees of the House. I think the Comptroller and Auditor General is in the same position. He should have access to advice that is independent of the Government advice.

The Comptroller and Auditor General gives a history of how the proviso to Section 7(5) of the Waiver of Certain Tax, Interest and Penalties Act, 1993 came about and I have no doubt that his history of it, as related here, is accurate. He uses that history to justify his going to the Attorney General for advice but I am sure he will be aware, on reflection, that how a section or a subsection came about in the drafting process and why it came about is irrelevant. A court interpreting the section can only interpret it by reference to the words used in the Act. They can not go back and look at the history of how it came about nor can they read the Parliamentary Debates, for example, to ascertain the reasoning for or the genesis of the section. It would be better to take the words as they are rather than to take them simply in the light of the history of their development to this particular point.

It is important for the Committee, and for the Dáil as a whole, and particularly for the Comptroller and Auditor General who is independent of the Government just as the Committee is, that the source of his advice should be one independent of the Government. I say this in particular because of the recent instance where the present Attorney General made it clear that he did not represent the public interest. He instructed his Counsel to say that specifically. He did not represent the public interest, had no intention of representing it and sought only to represent the Government interest and we could go on to develop that by saying it was only a particular part that he chose to represent but that is not relevant to this matter. This matter re-emphasises the great necessity for this and other committees of the House to acquire some system of independent legal advice and I think there should be some standing counsel to the Committees of the House and perhaps the counsel should be available to the Comptroller and Auditor General.

Mr. McDonnell: I appreciate the import of Deputy O’Malley’s remarks. I would just point to the second last line of the second last paragraph where I said, “that the first thing I should do is ask the legal officer of the State”. I did that because we understood that the proviso in the legislation - to which he refers and which I accept of course, that a court would interpret the law in terms of the words used and not have regard to the history of how it came about - was framed to protect my position as I wanted it protected. Therefore it seemed reasonable, without going into the niceties of how a court would interpret it, that I first ask the legal officer of the State if it meant what I understood it to mean and what I believe he understood it to mean, or if it meant what the Revenue Commissioners understood it to mean. If we get that out of the way, then perhaps we have to go further. On the question of the Attorney General being the legal officer of the State or the legal officer of the Government, I accept that he is not the legal adviser to the House. I was going to the Attorney General in my capacity as Comptroller and Auditor General; not in regard to my dealings with the House and the Committee but as an independent officer. I understood, and still understand, that the Attorney General is not necessarily just a servant of the Government. It was stated in a Supreme Court case in 1958 that:

It is quite clear that the Attorney General is in no way the servant of the Government but is put into an independent position. He is a great officer of the State, with grave responsibilities of a quasi-judicial as well as of an executive nature. [It continues:]…. it may be his business to adopt a line antagonistic to the Government…. while he is in office he holds and, if he is to do his duty and discharge his responsibilities, must hold an independent position. He is specifically excluded from being a member of the Government, which again underlines his independent position.

I am informed that the principles enunciated in that case have never been doubted or qualified by the courts in the intervening years, but that the independence of the Attorney General has been emphasised in other instances. There have been some cases recently, as Deputy O’ Malley said, where the references to the independence of the Attorney General have come up. He refers to the Beef Tribunal. There was a question there whether he represented the public interest or not. That was not in a court situation.

It seems to be a perfectly reasonable and pragmatic thing to, in the first instance, ask the Attorney General if this was what was understood by this proviso in the legislation. If it is, then that supports my view and I would then see myself as perfectly entitled, even with the law as it stands, to report on the results of my examination of the revenue. If he says it is not the intention of that proviso, and that it is to be read in a restrictive sense, then that raises another question.

Chairman: It is proper, for the record, to quote the relevant authorities in this respect before we proceed. The Exchequer and Audit Departments Act, 1921, which has only been repealed insofar as it applies to public accounts after 1 January, 1994, is still extant in respect of the 1993 accounts now before us. Section 2 (2) reads as follows:

The Comptroller and Auditor General shall make such examination as he thinks fit with respect to the correctness of the sums brought to account in respect of such revenue as aforesaid, and shall, together with his report on the Appropriation Accounts of the departments concerned, present to the House of Commons a report on the results of any such examination.

It is clear that, once an examination has been made by the Comptroller and Auditor General, he has a duty to report to this Committee, under that legislation. As we know from the Comptroller’s report, he has made an examination, but he has felt circumscribed in reporting to the Committee because of this doubt. That section of the law would seem absolutely clear.

For the record, we should also quote the Waiver of Certain Tax, Interest and Penalties Act, 1993, section 7 (5), the section under which the dispute arises. Section 7 deals with the question of confidentiality, but subsection (4) (c) contains a proviso. Section 7 (5) reads:

Any information acquired by the Comptroller and Auditor General or the Accounting Officer of the Revenue Commissioners by virtue of paragraph (c) of the proviso to subsection (4) shall be used by the Comptroller and Auditor General or that Accounting Officer, as the case may be, only for the purpose of ensuring that any special collection function has been discharged in accordance with this Act:

Provided that the foregoing provisions of this subsection shall not prevent the Comptroller and Auditor General from carrying out his functions, including exercising his reporting duty to Dáil Éireann.

Those are the two sections in question.

Deputy Foley: I welcome the statement from the Comptroller this morning. It is a serious statement and it shows he is concerned at the misconceptions and misunderstandings which appear to have arisen from his 1993 report with regard to the tax amnesties, especially with regard to the incentive amnesty. I want to refer back to his original statement. He sought guidance from the Attorney General on Tuesday last. There should be a response to that before we consider the situation further.

I would endorse what you said at the outset. It is a serious statement and there are a lot of misgivings in it. I welcome the statement by the Comptroller that in no way did the Revenue Commissioners debar him from any information he sought and that they co-operated fully. It is important to make that clear, because in the last couple of days the media suggested that he did not get full co-operation from the Revenue Commissioners. That is not so and that situation should be highlighted.

Deputy Durkan: The crucial factor in relation to this matter was raised by Deputy O’ Malley. It is no reflection on the Attorney General. It is a question of whether the Comptroller and Auditor General interprets him as the legal adviser to the State or the legal adviser to the Government. If it is the latter - again, it is not a reflection on either, but on the fact that the 1993 amnesty was Government policy, not State policy - it will all hinge on whether the Attorney General is the legal adviser to the State or to the Government, or to both.

It has already been pointed out, and is well-documented heretofore, that in another instance the Attorney General cleared that situation by indicating that he was not representing the State. He was representing the Government. The question that needs to be asked here is whether or not the Attorney General’s advice is as legal adviser to the Government or to the State. There is a clear distinction - and I am not a legal expert - between what is Government policy, which can be changed at any time, and State policy.

Deputy Doherty: Taking that the Attorney General is an independent officer and is so described, and if he acts as legal adviser to the Government, one has to take account, as I understand it, that he has acted independently of the Government in other matters. He has initiated other legal exercises that did not necessarily result from advice given by him to the Government and consequently initiated by the Government. We already have evidence of that. The question arises as to what exactly is the true interpretation of the role of the Attorney General. Based on what has happened, there is a reasonable presumption, which the Comptroller and Auditor General is entitled to, that the Attorney General’s function is not only as described in the Constitution, which was quoted by Deputy O’Malley. However, I cannot recall the particular wording. I accept the point that there is a failure to fully interpret the role of the Attorney General, having regard to established practices by that Office. On the other hand, the question arises as to whether such advice should have been sought through the Chief State Solicitor’s Office. I raise the question again because it is an acknowledged procedure that the Chief State Solicitor’s Office is consulted and advice sought from it in certain circumstances. Should that have been the case in these circumstances? Perhaps the Comptroller and Auditor General would like to comment or did he consider it and reject it?

Mr. McDonnell: As I understand it, the Chief State Solicitor’s Office operates under the general aegis of the Attorney General’s function. I am not clear about the point the Deputy is making.

Deputy Doherty: The difficulty is that if the Chief State Solicitor’s Office operates in the context of the Attorney General’s Office, things become clearer in one context, but not in another. If, on the other hand, the Attorney General’s Office is described as an office which gives legal advice to the Government, but, in circumstances which we are aware of, has given advice and has initiated legal action separate from that which may be initiated by the Government, this seems to suggest a written and an unwritten role for the Attorney General. The Comptroller and Auditor General is probably trying to establish which applies to his function.

Mr. McDonnell: It is important to state that this is not an issue between me and the Government, but a question of the interpretation of the legislation, which the Government promoted and the Oireachtas passed, and of how I and the Revenue Commissioners interpret it.

Deputy O’Malley: The Revenue Commissioners are a Department of State.

Mr. McDonnell: Yes, but they are independent. They manage the revenue.

Deputy Rabbitte: I raised this matter on the Adjournment of the Dáil, which the Comptroller and Auditor General refers to in his statement, but I had difficulty understanding the Minister’s reply. On the one hand, he says the Comptroller and Auditor confirmed that there was no obstruction by the Revenue Commissioners. However, he also said that in subsequent correspondence, the Revenue Commissioners expressed concerns about the carrying out of the sampling exercise and the proposed publication of material based on it. .............. They were concerned that sampling of information in the manner envisaged and publication could, directly or indirectly, lead to a breach of the embargo on the communication of data from the Office of the Chief Special Collector to other parts of Revenue or elsewhere. I have difficulty understanding that, on the one hand there seems to be a willingness by the Revenue Commissioners to fully co-operate, while, on the other hand, they seem to put constraints on it and to express the fear that if this exercise is conducted in the manner suggested, it would be a breach of the legislation. I would like to hear the Comptroller and Auditor General’s views on that point. The Comptroller and Auditor General sought to use the outcome of the incentive amnesty to check on the effectiveness of the Revenue Commissioners’ normal procedures for collection of taxes. That is what the Minister said. I presume the Comptroller and Auditor General agrees that this was the purpose of the exercise. Is it possible to check the effectiveness of the Revenue Commissioners’ normal procedures without conducting the exercise he referred to? This is like saying one can buy any car one likes, provided one buys the black car inside the door.

We are experiencing this problem because we are dealing with bad law. In my view - and I do not wish anyone to take this on board if they do not believe it - it was appalling legislation to confer such confidentiality on this type of tax cheat. The Comptroller and Auditor General said this area is cocooned from scrutiny, even within the Revenue Commissioners, so that he now has access to more information than the Revenue Commissioners. Perhaps the Comptroller and Auditor General would like to reply to this point. Are the Revenue Commissioners concerned about carrying out the sampling, or carrying out the sampling and the proposed publication of it? Are they concerned about the publication? Do they mean publication in the Comptroller and Auditor General’s report, or are they happy to permit the sampling exercise which is being sought? This area is a bit woolly. I listened carefully to the Minister’s reply to the questions I raised on the Adjournment, but I am still not clear about this matter.

Mr. McDonnell: The two areas are the Chief Special Collector’s Office, which is cocooned from the rest of the Revenue Commissioners, and the Revenue Commissioners generally, which have a wider function. We carried out a sampling exercise in the Chief Special Collector’s Office. All information was made available to us by the Chief Special Collector. We compared and analysed that information with information available to us in other areas of revenue. We did not tell the Revenue Commissioners we were going to do this. An auditor does not tell the client he will check certain information. The information was made available to us and, having gleaned information from one area of our activities, we saw fit, as an audit exercise, to compare it with information available in another area.

Deputy Rabbitte asked if it was possible to examine the wider area of the Revenue Commissioners. It is possible to do this. However, it was an additional audit tool to get a greater insight into the effectiveness of the normal tax assessment and collection procedures of the Revenue Commissioners. Before there was an amnesty, we would have carried out certain audit tests in relation to the normal collection and assessment process of the Revenue Commissioners. As the Committee knows, we have commented over the years on various aspects of that. If an additional audit tool becomes available to us by the advent of extra information - in this case through the Chief Special Collector’s Office - we see it as a perfectly legitimate audit exercise to use that tool. We did not tell the Revenue Commissioners we were doing it.

The results of doing this caused us concern about issues relating to the normal activities of the Revenue Commissioners, which I stated in a paragraph in the report. These included concerns about how one checks if a person, who availed of the amnesty, complied with one of its main conditions, that is, to make a current return of tax after 1991. What does it tell us about the accumulated arrears at 1991 which were not with the enforcement agencies in 1993 and which, therefore, escaped into the amnesty? What does it tell us about the way the Revenue Commissioners used the information available to them as a result of the 1988 amnesty, which was designed to encourage taxpayers to keep their tax affairs up to date? That did not have confidentiality. The information on the 1988 amnesty was available in the normal revenue area. Doing this gave us additional insight into the normal activities of the Revenue Commissioners. Why were the 1991 arrears not with the enforcement agencies in 1993, whether taxpayers who availed of the 1988 amnesty had not kept their affairs up to date as they would have been expected to do?

Deputy Rabbitte: The 1988 amnesty?

Mr. McDonnell: As the Deputy will recall, the 1988 amnesty was only an interest and penalties amnesty. That was done through the normal Collector General’s process; there was no Special Collector at that time. We were concerned whether the Revenue Commissioners in the intervening years had made the maximum use of the information which they compiled as a result of the 1988 amnesty. Our objective in carrying out this comparison was to see whether the evidence we gleaned in the Chief Special Collector’s office told us anything about the ongoing effectiveness of the Revenue Commissioners over the years.

We carried out a normal audit on the Chief Special Collector’s activities. Other paragraphs of the report refer to aspects of that matter, which have already been commented upon in the media. We referred to the delays in issuing certificates, lodging the proceeds of the amnesty, referred to dishonoured cheques and so on. If one looks at an audit in the Chief Special Collector’s Office as a self-contained exercise - there were certain aspects of it which we were concerned about - the position of the Revenue Commissioners, as I understand it, is that one is perfectly entitled to do that in terms of the amnesty legislation, but it is doubtful whether one is entitled to take that information and then compare it with the other areas of Revenue to tell one more about these areas.

Deputy Rabbitte: To conclude, Chairman - - - - -

Mr. McDonnell: I hope I have made that clear, Deputy Rabbitte.

Deputy Rabbitte: Would it be too simplistic to say that if the Comptroller and Auditor General is allowed to complete the exercise as he would want, that apart from - - - -

Chairman: It is completed but not reported.

Deputy Rabbitte: Apart from this question of the efficacy of the procedures and whether the Revenue Commissioners did make maximum use of what they had previously learned and so on, would we get any idea of quantum - the amnesty is supposed to have brought in £200 million - and have any idea of what this special arrangement cost us in terms of what the normal procedures would have gathered, the number of people that escaped into the 1993 amnesty - to use the Comptroller and Auditor General’s words - and so on?

Also, would it have been the intention of the Comptroller and Auditor General, if permitted to do so, to comment or draw conclusions on matters, like the references in his report, apparently tolerating a facility for people to enter post-dated or dud cheques in discharge of their duties under the Act? We are first referring to cheats and crooks and are then saying that they can stick in a cheque - whether it will be honoured or not is neither here nor there - and it can be sorted out when it comes up nine months later.

Chairman: You are getting into the substance of the Comptroller and Auditor General’s report, which contains serious matters, but we are dealing with an important principle and procedural point today.

Deputy Durkan: I want to get further clarification as to what the Comptroller and Auditor General is saying because it seems significant. If the same people that qualified for the 1988 amnesty also qualified for the 1993 amnesty and after having examined the procedures followed, it transpired that perhaps something should have been learned in the intervening period, publication will obviously be of benefit to everybody. The Comptroller and Auditor General, as an independent officer, would be doing his job much more efficiently and effectively by publication than by saying nothing. Otherwise, what is to stop us having another amnesty in two to three years time?

Chairman: For the same people.

Deputy Durkan: Exactly. The natural knock on effect would be to question why a person would bother to proceed to pay their taxes in the normal fashion. After all, if all a person has to do is wait for four years to get an amnesty and perhaps avail of another one in four to five years time, the whole system will break down. What the Comptroller and Auditor General is saying is correct, but I feel the independent legal advice he can get from the Attorney General can only be advice which is in accordance with Government policy. The Government of the day, for its own good reasons, promoted the legislation, voted it through the House and it was obvious at that time that these pitfalls either were or could be in existence. Can the Attorney General indicate in favour of what the Comptroller and Auditor General is now attempting to do? I do not think so.

Deputy McCormack: Is it possible to get clarification on this matter because there seems to be a conflict here. Should the Attorney General represent the Government interest, as he seems to do some of the time, or, as is indicated in the Comptroller and Auditor General’s statement, should he represent the public interest? There seems to be evidence that this changes from time to time and that each case is taken on its merits. Have we, as a Committee, a possibility of establishing which should be the case and how do we go about it?

Deputy Rabbitte: Would the Comptroller and Auditor General be able to give us a guideline on the question of quantum?

Mr. McDonnell: We did report on certain aspects where the normal activities of the Revenue Commissioners seem to have been affected by the amnesty. For instance, we reported on the fact that random audits have been stopped. I do not know how one could quantify what it might have yielded. However, we did comment on the fact that internal audit which would keep the internal controls of the Revenue Commissioners up to speed had been suspended, and also commented on the pre-1991 arrears collection enforcement being suspended, but I cannot put a quantum on what it would have yielded.

We did it at a stage where the outturn of the amnesty was still not finally determined. What we did was an indicative exercise. We took a relatively small sample. That may well have led to a fuller exercise when the full results of the amnesty would be known and a more representative sample could be analysed, but we were only at the stage of having done an indicative exercise when this question arose. However, while only an indicative exercise, it did suggest areas of concern.

Deputy O’Malley: Before you sum up, Chairman, may I refer to the references to the Attorney General in the Constitution. Article 30 states that “There shall be an Attorney General who shall be the adviser of the Government in matters of law and legal opinion and shall exercise and perform all of the powers, functions and duties conferred and imposed on him by the Constitution and the law.” It says nothing about representing the public interest or anything like that. To show the question of his independence it says that the Taoiseach who appoints or nominates him may, for reasons that to him seem sufficient, request the resignation of the Attorney General. In other words he can fire him at a minute’s notice without giving a reason. By contrast the Comptroller and Auditor General, who is recognised as an independent officer, cannot be fired except after the most ponderous and difficult procedure where a resolution would have to be passed by both Houses.

Deputy Durkan: He can retire.

Deputy O’Malley: He can retire alright. It is unreal and almost naive to think that the Attorney General is independent of the Government in that sense because he can be fired if he is not performing up to standard according to the Government. In this particular instance the Government is embarrassed by all of this and wants to keep it quiet. The Government wants the least amount of publicity given to the way in which criminals have used this amnesty. Therefore, the Government view is that the less said about it the better. The public interest is best served by trying to get as much information as we can about it. One of the important things that should be disclosed is how many people who availed of the 1988 amnesty have also availed of this one. They will be waiting around for the 1997 one if the same parties are in power.

Chairman: I want to thank Deputies and the Comptroller and Auditor General for their contributions. An extremely important principle is involved here by which the Comptroller and Auditor General must have access to all documentation in every Department, no matter how secret, that he feels is necessary to discharge his duties. That is not in question in this case. However, where the Comptroller and Auditor General feels that an examination is necessary, and one is made, it is clear that the law requires him to report to this Committee on that point. Whatever about the Attorney General, the Comptroller and Auditor General is independent, this Committee is independent of the Government, and we are independent of each other. The Comptroller and Auditor General and this Committee work in tandem very well but we do have distinctive roles. The Committee has acknowledged at all times that Mr. McDonnell, in discharging his duties as Comptroller and Auditor General, has always done so fearlessly and tactfully. That is exactly what he is doing on this occasion. So there is no disagreement in my mind between ourselves and the Comptroller and Auditor General even though we, as a Committee, may in the end have to take a different stand to his own.

A number of other points arise. Normally, no legal advice is available to this Committee or indeed to Parliament generally. The question has been repeatedly raised about the need for a parliamentary legal service. I think it is unavoidable that there should be such a service, especially when the proposed legislation on compellability and privilege of witnesses is enacted as promised, as I hope it will be shortly. However, that legal service is not available to us at the moment. If we decide as a Committee to get independent legal advice - because it is clear that we cannot or should not go to the Attorney General - that would involve additional public expenditure, which in the circumstances would be warranted if there is any continuing conflict after a short period has elapsed.

Another question raised with me concerns the very constitutionality of the 1993 Waiver Act or parts thereof. My advice is that this Committee, as a Committee of the House, has to deem that the legislation is constitutional unless and until the courts decide otherwise. I propose to the Committee that we adjourn consideration of this matter and put it in for mention next week. It is important that the matter be resolved quickly.

Our proposed programme lists the Revenue Commissioners for hearing on the 10th and 17th of November. The Accounting Officer for the Revenue Commissioners will appear before us but the Accounting Officer himself has been specifically excluded from the Special Collector’s branch and is not accountable for it. So, we now have to consider whether or not we should send for the Special Collector and that in itself will create a precedent. You can see that there are implications in this legislation which clearly were not examined in great detail when that legislation was enacted. I propose to the Committee that we adjourn consideration of the issue. Because of its potential seriousness and the precedent that might be established by allowing this to go, this Committee has to assert its right of access to all reports and examinations in relation to public finances. I propose that we should consider it further at next week’s meeting.

Deputy Durkan: I second that.

Chairman: Is that agreed? AGREED. I propose that we adopt the draft programme of work on the 1993 Accounts as proposed, starting off with the Central Statistics Office next week which will be taken in conjunction with a further analysis of the trade statistics and other economic indicators on which documentation will be circulated between now and next week. Is that agreed? AGREED.

We have a proposed rota for Members of the Committee starting next week. Is that agreed? AGREED.

We now move on to Item 4 on the agenda: Method adopted by the Department of Finance and the Taxing Master for determining levels of legal fees. We asked that the Accounting Officers of the Departments of Finance and Justice to come before us on this issue and both agreed to do so. Unfortunately, the Accounting Officer of the Department of Justice is ill and rang yesterday to apologise for his inability to attend. He has, however, sent an Assistant Secretary and a Principal Officer. Mr. Mullarkey of the Department of Finance is here also.

Deputy O’Malley: Were documents circulated on this, Chairman? I cannot find any in my papers.

Chairman: With your brief there is the correspondence from Mr. Mullarkey, Secretary of the Department of Finance, and a copy of the Comptroller and Auditor General’s report on comparative costs.

Mr. Mullarkey, you are welcome. This is your first time to appear before the Committee as Accounting Officer of the Department of Finance. We congratulate you on your elevation and wish you every success in that post. We always consider that the Department of Finance, and the Secretary of the Department in particular, has a special role in relation to this Committee. It is for that reason that we particularly welcome you here today. Perhaps you could introduce the officials who have accompanied you from the Department.

Mr. Mullarkey: Thank you for your good wishes, Chairman. By the same token I look forward to being of any assistance I can to the Committee at any stage in my tenure of office. To you personally I would say that I look forward to having the meeting we talked about earlier in the Summer which for some reason you were not able to attend at the time. I am available to meet you at any time if you wish. My colleagues are Mr. Thompson, Mr. Ryan and Mr. Gallagher and, from the Department of Justice, Caoimhín Ó hUiginn and Richard Ryan.

Chairman: Mr. Ó hUiginn is also welcome. We know that Mr. Dalton is ill and could not be here with us. We expect that you will be adequate replacements for your distinguished Secretary.

The purpose of this hearing is to query the role of the Attorney General and the Taxing Master in the setting of legal fees. Also, how in the case of the Tribunal that the Attorney General could settle daily fees which are twice the level pertaining in similar circumstances in the United Kingdom; how the Taxing Master would also agree to fees such as £800 a day which is twice the rate paid in the United Kingdom; why it should not be possible to renegotiate these fees despite contractual agreements when, in fact, there are ample precedents throughout the public sector such as in national pay agreements, TEAM Aer Lingus and Irish Steel recently, and in the Tribunal itself the fees for the economic and PR consultants were negotiated downwards. This is what we want to probe. How do the Taxing Master and the Attorney General fix fees? How can they justify the level of fees which are being fixed? To whom are they responsible for fixing these fees?

Perhaps I could ask the question in relation to the Taxing Master. Who is the Taxing Master? What is his precise role and to whom is he responsible? Could I ask that of Mr. Ó hUiginn?

Mr. Ó hUiginn: To clarify a point which arose, as I noticed from the minutes of the last meeting, the Taxing Master is not appointed by the Minister for Justice but by the Government. The Minister for Justice has no function in relation to the exercise of his functions. I wish to make that clear. Mr. Dalton, who, as you say, is ill and unable to be here today, has no responsibilities as Accounting Officer in relation to the exercise of the Taxing Master’s powers. However, we are here, in deference to the Committee, to be of what assistance we can---

Chairman: Which Accounting Officer is responsible for the Taxing Master?

Mr. Ó hUiginn: The Taxing Master is in the same position as the Master of the High Court or the Probate Officer: he is a quasi judicial officer. The Minister for Justice has no responsibility in relation to the exercise of his functions. His functions are laid down in legislation and in rules of court.

Chairman: However, the Minister for Justice does appoint deputy Taxing Masters and staff in the Taxing Master’s office, is that not right?

Mr. Ó hUiginn: In relation to staff, yes, but not in relation to the appointment of Taxing Masters.

Chairman: But what about deputy Taxing Masters?

Mr. Ó hUiginn: I am not aware of the situation there.

Chairman: And is it not true that the Taxing Master can delegate his functions to members of the staff appointed by the Minister for Justice?

Mr. Ó hUiginn: I am not aware of that. As I understand it, there are two Taxing Masters appointed under Statute. I am not aware that those functions can be delegated.

Chairman: But the salary of the Taxing Master is paid out of the Vote of the Department of Justice, one of the votes for which Mr. Dalton is responsible, is that not right?

Mr. Ó hUiginn: Judges’ salaries are paid out of the Exchequer and not out of the Vote of the Minister for Justice. Although I would have to check this, as far as I am aware, the Taxing Master would be the same. I stand to be corrected on that.

Chairman: I understand that you have come before us at short notice and may not be fully briefed on this question---

Mr. Ó hUiginn: If I could interject, we would like to be as helpful as we can in relation to what the Taxing Master does. Apart from the question of responsibility, we will be of whatever assistance we can.

Chairman: The Taxing Master is appointed by the Government, that is clear from the legislation of the Court Officers Act, 1926. Which Minister would bring the appointment to Government, would circulate a memorandum to Government on a vacancy for Taxing Master and make proposals in relation to the appointment of the Taxing Master?

Mr. Ó hUiginn: The Minister for Justice would do that in the same way that he or she would in relation to the appointment of judges.

Chairman: The salaries of all court officers are paid for out of the Courts Vote for which Mr. Dalton is the Accounting Officer, is that not correct?

Mr. Ó hUiginn: Of court officials. The salaries of judges are paid for out of the Exchequer.

Chairman: Is the Taxing Master deemed to be a judge?

Mr. Ó hUiginn: He is a quasi-judicial officer. He is in the same position as the Master of the High Court.

Chairman: Would you describe to the Committee what precisely are the Taxing Master’s duties?

Mr. Ó hUiginn: I would ask Mr. Ryan to do that as he is more au fait with the actual duties of the Taxing Master.

Mr. Ryan: The duties of the Taxing Master are set out, essentially, in legislation in the Courts Act and, more particularly, in the rules of the Superior Courts made in 1986. These are rules made by a committee consisting of representatives of the Judiciary, the Bar Council and the Incorporated Law Society. The Minister for Justice is not represented on this Committee.

The actual functions are set out in detail in order 99 of the rules made in 1986. While they set out the functions of the Taxing Master in general, they do not set out the criteria which he should apply in determining fees. For example, the rules provide that in exercising his discretion in relation to any item of cost, he can have regard to the complexity of the item, the cause of the matter in which it arises, the skill and knowledge required of and the time expended by a solicitor, the number of reports and documents and various other matters. It sets out in general terms what he may have regard to when he comes to determine whether a bill of costs is fair and reasonable.

A number of decisions of the Taxing Master have been the subject of appeal to the High Court and the Supreme Court. His decisions are reviewable by the courts. He is, as Mr. Ó hUiginn said, an officer of the courts and his decisions are reviewable by them. The courts have laid down in case law certain principles and criteria which the Taxing Master should have regard to when determining costs.

For example, the courts have stated that:

“It is not part of the function of a Taxing Master to examine the nature or quality of the work done by or required of counsel or to assess by measurement of fees the value of counsel’s work. The amount of fees to counsel should be assessed on the basis of what a practising solicitor, who is reasonably careful and reasonably prudent, would consider a proper and reasonable fee to offer to counsel.”

That was a judgment of the High Court in 1974 and there have been subsequent judgments along those lines in relation to the powers to tax counsel’s fees. That case, which is one of the most important in this area, is Dunne v. O’Neill, which is reported in the Irish Reports, 1974, page 180.

A later judgment in 1978, Kelly v. Breen, which is unreported as far as I know, stated:

“The Taxing Master in the exercise of his discretion is only entitled to disallow any or any part of a solicitor’s disbursement, including counsel’s fees, if he is satisfied that no solicitor, acting reasonably carefully and reasonably prudently, based on his experience in the course of his practice would have determined such fees or would have made such disbursements in the course of his practice.”

This particular line of argument was approved and endorsed by the Supreme Court in a case in 1980. I do not have the exact citation but it was a case involving the prosecution of Gallagher and Shatter, and the Taxing Master. Those cases set out the criteria that the Taxing Master must apply. They have circumscribed his discretion.

Chairman: Mr. Ryan, have you seen a copy of the letter of 29 July from the Secretary of the Department, Mr. Mullarkey, to the Clerk of this Committee? For your benefit, I will read the second paragraph of that letter.

“As regards the possibility of renegotiation, the Attorney General is of the opinion that there is no contractual or legal basis for asking the counsel concerned to return fees already paid to them or where the fees have not yet been paid to them, to accept fees of less amount than the fees that have been agreed with them. Those fees were assessed by the Attorney General, and in the case of the fees payable to the counsel for the Tribunal by the sole member of the Tribunal also, as the proper and appropriate amount having regard to the nature of the work. I understand that the Attorney General’s Office has ascertained from the costs accounting section of the Chief State Solicitor’s Office that they have no doubt that those fees would be allowed by the Taxing Master if they were referred to them.”

The Committee is concerned with the question of how the Attorney General and the Taxing Master can justify fees of £1,800 a day when they get £800 a day, plus VAT, a total of £920 a day, for similar work in the UK. What role does your Department have in addressing this huge anomaly whereby those in Ireland using legal services appear to be paying twice the British rate? Does the Department of Justice have a role in this regard? Should the law be amended in relation to the Taxing Master and is this open to the Department of Justice?

Mr. Ryan: I cannot comment on this specific case as I was not involved in it. I have already explained the criteria, as I understand it, that the Taxing Master applies. My Minister is reviewing the powers of the Taxing Master. The question of introducing revised legislation or legislation to amend their powers is being considered. This touches on matters of policy which I cannot go into in detail, other than to say that the powers of the Taxing Master are under review in the Department of Justice. It is a matter for the Government to decide what legislative proposals or changes it wants to make, if any.

Chairman: Is it likely that this review will be incorporated in the court and court officers legislation, which we are told will be brought forward shortly?

Mr. Ryan: I could not comment on that. It is a matter for the Minister and the Government.

Chairman: Mr. Mullarkey, regarding your letter to the Committee of 29 July, are you happy, as Secretary of the Department of Finance, that the Attorney General or the Tribunal or the Taxing Master might allocate fees of £1,800 a day when we have now established through the Comptroller and Auditor General that in a neighbouring jurisdiction the levels paid per day are half that rate?

Mr. Mullarkey: I assure you, Chairman, that the Department of Finance would be no more happy than anybody else on a subjective basis regarding the level of fees which are to be paid in this instance. However, a number of points need to be made. One cannot separate the rate of fee being paid here from the going market rate in this area in Ireland. Our concern would be more that the market itself is not perfect in the sense that there is only a limited number of top quality counsel available. To any layman, the fees appear very high but if the State is to be adequately represented, the Government must contemplate paying something like the going rate.

The system which operates between ourselves and the Attorney General’s Office is more or less one of checks and balances. The Attorney General’s Office, naturally, has a much more informed view of the market than we have but, at the same time, we consistently exert downward pressure whenever we can through the sanctioning process in dealings with the Attorney General’s Office. Without validating the level of fees, we are assured by the Attorney General’s Office that it is well recognised, in the normal course, that they pay significantly less than the going rate. They have considerable evidence to this effect from cases which go to the Taxing Master on the other side.

The cost of fees in this situation are negotiated by the Attorney General and sanctioned by us in the normal course only in relation to the State side. Obviously, the Taxing Master is a safeguard for the Exchequer in situations where costs are awarded against the State. The Taxing Master exists to ensure that the Government does not have to pay over the odds. The experience of the Attorney General’s Office is that the fees paid on the State side are significantly lower.

The C&AG drew attention to the Scott Tribunal fee. I do not want to dismiss that comparison. On the basis of the information I have seen in the C&AG’s report, I am not able to assess its validity. I see a large unexplained factor there. My colleague, Mr. Gallagher, already made the point to the Committee that fees of the order of £1,500 to £1,800 are commonplace in the UK. I see no explanation in the C&AG’s report as to why the Government in the UK in this instance were able to get adequate counsel at a fee of almost half that figure. It begs the question: were there particular circumstances in this case?

There are two other aspects which are not acknowledged in the C&AG’s report. It is well recognised that brief fees play a very different role in the fees equation in the UK than they do in Ireland. This aspect is not analysed in the C&AG’s report. One is not too sure of the extent to which one is comparing like with like. The UK experience, much more than here, appears to be one where fees on a per day basis rise over the duration of a case. I am not dismissing the validity of the comparison. All I am saying is if that comparison is to be utilised, it may need to be examined more closely.

Chairman: Coming from the Secretary of the Department, that sounds like a grand defence of £1,800 per day. It befits you very badly to try to defend it. Even if the comparison with Britain was less dramatic, it is very hard for anyone to defend £1,800 per day when some people are living on not much more than that amount in a year, as provided by your Minister in his budgets.

You are now casting doubt on the validity of the C&AG’s comparative study. I must take you to task for that. This study was requested by this Committee after we queried the level of these fees a year ago and we were pooh-poohed by officials in your Department with “they are higher in the United Kingdom”. Our inquires found quite the contrary. They are not higher in the United Kingdom; they are half the level they are here.

Apart from the legal fees, you suggest that there may be some other remuneration to counsel in the United Kingdom. However, the total cost of the Scott Inquiry will have been little more than £2 million whereas the total cost of the Beef Tribunal could be of the order of £40 million. There is no escaping the fact, well established by the Office of the Comptroller and Auditor General, that somehow legal fees are being set here at a rate extraordinarily higher than would be tolerated in any other jurisdiction. Further, there is not control whatever on the number of counsel employed by individuals. The Scott Inquiry used one senior counsel for the entire Inquiry; in our Inquiry, both the Tribunal and the State had two senior and two junior counsel.

On foot of the enquiries of this Committee and the Comptroller’s report, has your Department done any further checking as to why these disparities arise, what has led to them and how they can be put right? Can you explain what you mean by the market conditions here? Do you mean there are too few lawyers available, whereas many lawyers would argue the opposite? How do we arrive at this distorted position?

Mr. Mullarkey: I said I was unhappy with the level of fees generally. I was trying to make clear there is a market level of fees for quality counsel. Much as the State may dislike paying that, if it is to be properly represented at the Tribunal - which I think would be the wish of everyone in the Oireachtas - it has to work within the context of the market unless and until a wider initiative takes place to reduce the market level. From our experience with the Attorney General’s office, the fees on the State side are normally lower than the level of fees prevailing elsewhere. The experience with the Taxing Master will bear that out. Speaking on behalf of the Department of Finance, in no way do I condone the overall level of fees for senior counsel which prevail in the market.

On the question of the number of counsel, although I am not a legal expert I am aware of the perception that in Ireland both sides carry an unusually large number of counsel and solicitors. The Tribunal took place within that legal convention. I do not feel there is evidence that numbers on the State side were excessive relative to other interested parties. The Oireachtas would have been concerned that the Tribunal and the State would be represented on a par with everyone else involved.

On the issue of the bulk of the fees, it is fair comment that it was open to the Tribunal to decide how many counsel to allow costs against. My understanding is that in a number of cases the Tribunal chairman disallowed costs for the full strength of a number of teams representing individual interests.

Chairman: This Committee has been told there was a total of 116 lawyers involved in the Tribunal to represent different interests - not all were involved for the full period but some were. In the Scott Inquiry, which is an analogous tribunal, there were three lawyers; one hired counsel and two staff lawyers. I am putting it to you as Secretary of the Department of Finance that your Department must devise proposals to bring this under control. This is a flagrant milking of public moneys and it can never be allowed happen again. We must mobilise Departments, pass laws and devise new court practices and rules as necessary. Is your Department taking any initiative in making such proposals?

Mr. Mullarkey: As you know, Chairman, we have introduced certain guidelines which seek to address your concerns, although admittedly that is within the general framework of legal practice in the country. I take your point that the comparison with the numbers on the Scott Inquiry is damning. My understanding is that in Ireland people are constitutionally entitled to defend their interests and to have access to legal representation in order to do so. If one is to pursue the line of inquiry you propose, one would meet such issues. The vast bulk of lawyers represented individual interests at the Tribunal. Unless we are to deal with a person’s legal and constitutional rights to defend oneself and one’s good name and to have access to counsel, we may only make limited headway in reducing the number of counsel.

Chairman: This Committee has acknowledged certain rights have been established under the Constitution, including the right of separate representation. That leads to an inevitable extra cost factor as compared with both the United Kingdom and the United States, where it was recommended but not adopted on cost grounds. Am I innocent or gullible in assuming one lawyer should be enough in each case, rather than three or four? Why should the State be paying for up to five lawyers to represent one interest? These matters should be addressed urgently.

Mr. Mullarkey: I agree that is something we can pursue and we will do so. However, within present legal practice it was open to the Tribunal chairman to curtail the number of legal representatives in respect of which he was prepared to allow costs. In a number of instances he did so and that is a salutary discipline on anyone going before a Tribunal. I take your point, Chairman, and I assure you the Department will seriously examine it in so far as it is in our power to control it. As you have acknowledged, there are constitutional aspects which are difficult to gainsay.

Deputy Foley: Mr. Ryan made reference to a case in 1974 involving the Taxing Master. Who were the parties involved there?

Mr. Ryan: The name of the case was Dunne v. O’Neill, Irish Reports, 1974.

Deputy Foley: Mr. Mullarkey said that less than the going rate was paid based on evidence from the Attorney General’s Office. I do not believe that is correct in view of information from the Comptroller and Auditor General. Mr. Mullarkey stated that guidelines have been drawn up by the Department of Finance with regard to future appointments as a result of the Beef Tribunal.

Mr. Mullarkey: Yes.

Deputy Foley: Would it be possible for the Committee to get a copy of the terms of reference?

Mr. Mullarkey: The Committee should have it.

Chairman: The new guidelines are in the Committee’s possession. Mr. Mullarkey, is it true the Attorney General’s Office must get approval for fee levels from your Department in future?

Mr. Mullarkey: In the normal course, it has to come to us for sanction for fee levels. Unfortunately in this case the sanctions procedure did not work in the normal way for a particular reason. The Attorney General advised the level of fee to the Department of Agriculture, Food and Forestry, it did not fix it. The Department of Agriculture, Food and Forestry had been assigned by the Government as the Department responsible for handling the financial aspects of the Tribunal. It was not through any malicious intent, but through a misunderstanding that it did not come to us on the level of fees. I am not saying that the level of fee would have been lower had it come to us. There are a number of instances where we have negotiated fees downwards, but in only a limited number of cases with the Attorney General. The Attorney General would have been influenced in advising the level of fee by the consistent pressure which we, in the normal course, exercise in our dealings with him.

Deputy Foley: Mr. Mullarkey pre-empted my question. When making appointments in future, will the Attorney General refer them to your Department as regards the clarification of fees?

Mr. Mullarkey: Yes.

Deputy Foley: If the Attorney General recommends a particular fee, does your Department decide what it should be?

Mr. Mullarkey: We will discuss it with him if we are unhappy.

Deputy Foley: Assuming appointments were made and there was another Tribunal - I hope there will not be one - would you fix the fees in anticipation of its length?

Mr. Mullarkey: The guidelines lay down that regard would be given to the estimated length of the Tribunal.

Deputy Foley: If it goes beyond that, would the figure be per day?

Mr. Mullarkey: The intention was that there would be a cap and that if we came up against it, the question of renegotiating the fee would arise.

Deputy McCormack: An earlier response from the Department of Finance quoted two cases, the 1974 case, Dunne v. O’Neill, and a 1978 case. They used them to justify the setting of fees, but in both cases it seemed to be all right if one acted carefully and prudently. That is my interpretation of it. Would the Secretary of the Department of Finance say that Counsel who continued or prolonged a hearing for almost two years acted reasonably, carefully and prudently? How can we be satisfied that they acted in that way?

Mr. Ryan: The point I made was that in assessing party and party costs, that is, the cost which the losing party pays in ordinary litigation, the High Court, endorsed by the Supreme Court, has laid down a principle that the Taxing Master is only entitled to disallow any part of Counsel’s fees if he is satisfied that no solicitor acting reasonably, carefully and prudently based on his experience would have determined such fees would have made such disbursements. In other words, the Taxing Master does not have the discretion to say if he believes fees paid to Counsel are too high. He must ask what would a reasonably prudent and careful solicitor have paid in this particular case to a Counsel. That is the test which he must apply.

Deputy McCormack: Using that criteria, what happens if one comes up with the answer that that is correct?

Mr. Ryan: I cannot comment on the Beef Tribunal costs because my Department was not involved.

Deputy McCormack: Perhaps somebody from the Department involved could answer the question.

Mr. Mullarkey: I understand no large claims have gone to the Taxing Master yet in respect of the Beef Tribunal. The Minister has indicated that he will closely watch claims and will contest the costs with the Taxing Master when it reaches that stage. However, to date, no significant claims have reached the Taxing Master.

Deputy O’Malley: I ask Mr. Mullarkey whether at any time since the establishment of the Tribunal in May 1991 to the time it issued its report in July 1994 did the Department of Finance intervene to try to cut back or make any savings in respect of the fees fixed by the Attorney General for the nine Counsel who appeared for the State and the Tribunal? If so, was it successful in having those fees reduced given that it was initially thought that the Tribunal would last for two or three months but which lasted for more than three years?

Mr. Mullarkey: I am not sure of the role of the Department of Finance, although I know it was involved in the renegotiation of fees for non sitting days early in 1992. Other than that, I do not believe we took any formal initiative to reduce the per diem fees. We were partly aware of the Attorney General’s view that he had no legal or contractual basis for doing so. We are also partly conscious from experience in the UK and a number of other instances that there are circumstances where counsel may look to increase the per diem as cases extend.

On balance, I must acknowledge that we did not take any formal initiative to re-open the per diem fee.

Deputy O’Malley: I find that amazing. When I read your letter of 29 July I thought that perhaps you had made a mistake signing it and that because you were new in the job you did not realise what was involved. However, your evidence bears out precisely the tone of your letter, which is, that you fully defend what has happened.

Mr. Mullarkey: On the question of the level of fees, I do not know whether you are querying the level of fees or the fact that no attempt was made to renegotiate the fee in the course of the Tribunal. As regards the general level of the fee as it was originally fixed, I have sought to explain that in the normal course of our dealings with the Attorney General we would be reasonably satisfied that the fee was set at a level which was related to market rates, but which in the normal course would be somewhat lower, as past experience would show. On the question of the absence of an initiative to renegotiate the fees in the course of the Tribunal, all I can say is that we did not see a legal or contractual basis for being able to do that. We were relatively unhappy with the length of time which the Tribunal was taking and with the mounting costs. I do not say this in any way to dismiss the State costs; it is important to bear in mind that the bulk of the costs are related to interests other than the State. We would have been conscious also of the fact that if one got into renegotiating fees there could be pressures the other way as well.

Deputy O’Malley: You seem to be under the impression, Mr. Mullarkey, that if something goes on for longer than had been anticipated, the daily refresher should go up. In practice it is the other way around. The daily refresher goes down. Your Department intervened to have the daily fee reduced in respect of a spin doctor or PR consultant and also in respect of somebody who described himself as an economic consultant both of whom were employed on behalf of the Taoiseach. Your Department intervened on several occasions, not just once, because the longer the spin doctor and the economist were employed, the lower their fees became, which is the normal practice. Do you not feel that this practice should apply to legal fees also, bearing in mind that when we make the comparison with the Scott Inquiry the Chairman has said that costs here were more than twice the daily cost of the Scott Inquiry? He would be right if only one barrister had been employed for the Beef Tribunal, but nine were employed on behalf of the State for the Tribunal. In England, one Queen’s Counsel was employed, as well as three civil servants who were just paid their salary, they were not paid any fees. It is not a question of the fees being twice as much, the fees are probably 20 times as much per day for the State as they were in England. Did you not feel it incumbent on you to intervene because of the extraordinary length of this Tribunal, given that you did so successfully with the spin doctor and the economist?

Chairman: Answer that point. This is the core. How was it possible to negotiate the economic consultant’s daily fee and the PR consultant’s daily fee downwards, but it was not possible to renegotiate the lawyers’ fees downwards. Why is that the case?

Mr. Mullarkey: I am not that familiar with the case of the other two consultants but my understanding is that there were different contractual arrangements there which gave one a basis for intervening again in the course of the Tribunal. In the case of the legal counsel, the view of the Attorney General was that he did not have a legal and contractual basis for intervening. I am not saying that we were happy with that position but that was the position.

Chairman: You have made much of the legal or contractual basis. You will be familiar with the fact that contracts of agreement and national pay agreements have been renegotiated downwards in the past. Is that not right?

Mr. Mullarkey: Yes.

Chairman: There were no legal or contractual bases for renegotiating the terms and conditions of the workers in TEAM Aer Lingus or in Irish Steel, yet they were renegotiated in the light of events. I do not think you or your Department or the public service in general can hide behind this legal or contractual excuse. It seems from the evidence you are giving so far that no effort whatsoever was made by your Department or any other Department in view of the duration of the Tribunal to endeavour to get fees down to a more appropriate level. Am I wrong in saying that?

Mr. Mullarkey: In relation to national wage agreements or TEAM Aer Lingus, where renegotiation has taken place, negotiations would have taken place in relation to future pay and conditions rather than retrospectively. The discussion on the question of renegotiating fees in the Beef Tribunal came fairly late in the day in the Tribunal, to the best of my knowledge.

Chairman: No, on the contrary, this Committee raised this question and asked the Attorney General to consider renegotiating these things more than a year ago, in June or July of last year if memory serves me correctly. This Committee has been seeking renegotiation for over a year now and nothing was done about it. We got the same response from the Senior Legal Assistant in the Attorney General’s Office as the response we are getting from you now, that there was no legal or contractual basis for renegotiating.

Mr. Mullarkey: As I say, in no way is the Department of Finance happy with the overall question of the cost of legal fees but in regard to the suggestion you are talking about, I think it is correct to say that the request which came from your Committee came at the stage when the public sessions were virtually over.

Chairman: When did the public sessions finish? In March of this year?

Deputy O’Malley: The public sessions finished in July 1993.

Chairman: Even though the public sessions were over, counsel for the State in the Tribunal continued to work and were paid exorbitant daily rates right up to the time the report was published.

Mr. Mullarkey: I think there were reduced fees-----

Chairman: ----- I know there were reduced fees-----

Mr. Mullarkey: ----- in respect of work done in the preparation of the report. I do not think the same level of fees applied there.

Chairman: Mr. Mullarkey, earlier on in your evidence you seemed to cast doubt on the overall validity of the comparative study undertaken by the Comptroller and Auditor General. I hope you will not have cause to eat your words, because I am going to propose to this Committee that we request you to produce evidence to substantiate the point you made earlier, that there are higher fees in the United Kingdom than have been exposed by the Comptroller and Auditor General’s report.

I do not know whether you have heard of a very eminent Queen’s Counsel in the United Kingdom, Michael Mansfield, who appeared on the “Late Late Show” just before the summer. He was asked about the level of fees paid in the Tribunal. He excoriated the level of fees and said they were quite extraordinary by any standards. I forget precisely the words he used but he said they were extraordinarily excessive. Are you aware of that comment by Mr. Mansfield?

Mr. Mullarkey: No, but I remind you, Chairman, that I stressed, all I had in front of me was the material which was already before the Committee, I stressed that I would not dismiss the Scott comparison but that there were a number of aspects I felt should be looked at more closely before one would rely on the comparison. I made the point that my colleague Mr. Gallagher had already submitted to the Committee, that fees of the order of £1,500 to £1,750 were relatively commonplace in the United Kingdom, and that I had difficulty in understanding how the Scott Inquiry had worked with a single counsel at that level. I also made the point that the comparison had not dealt with the brief fee aspect, where there are suggestions that the brief fee plays a different role in the fee equation in the UK than it does here. If one were to rely on the Scott Inquiry comparison, one would need to consider these aspects more closely.

Chairman: It is only reasonable to give you a few weeks to produce evidence to substantiate your remarks.

Deputy Rabbitte: I hope Mr. Mullarkey will not be offended if I ask him if he feels that his Department was at any stage constrained from intervening to get a control on this runaway horse as a result of the sensitive political issues and major politicians involved?

Mr. Mullarkey: No. I was not involved in the case initially, but from the papers I have seen I have no sense at all of any constraint in that regard.

Deputy Broughan: My apologies for my late attendance at the Committee, but having listened to the debate for approximately 30 minutes, it must be said that there are significant policy matters regarding this sorry saga of finances and expenses going totally out of control which concern us as Deputies. We are still dealing with a very archaic, monopolistic, self perpetuating legal elite in the Law Library and our civil servants are always going to have difficulties dealing with that. It was remarked yesterday that it was not that long ago since a Fine Gael Taoiseach did a few hours as Taoiseach and then rambled down to the Four Courts and put in a few hours there. We are dealing with an outfit on the banks of the river Liffey which requires drastic reform and we have responsibilities in this area also.

The Department of Finance obviously finds this affair extremely embarrassing, given the parameters of the market it is dealing with. Has the Department made any estimate of the ultimate net cost to the State regarding the work of the Tribunal, for example on the discoveries it made on intervention beef, and to the new guidelines which the Department of Agriculture put in place in this area? While we are constrained with the situation regarding the tax amnesty, has the Department drawn up figures which illustrate that, despite everything, it is possible to say that, even on a financial basis, the Tribunal may have been good value for money?

Mr. Mullarkey: No, I do not believe so.

Deputy Broughan: Does Mr. Mullarkey propose to undertake any cost benefit analysis of the Tribunal?

Chairman: The Comptroller and Auditor General, Mr. McDonnell wishes to make a comment to the Committee before I sum up, however, Mr. Mullarkey, do you wish to answer the points raised by Deputy Broughan?

Deputy Broughan: Has Mr. Mullarkey any idea of the moneys which we avoided losing or will be recovering on foot of the Tribunal?

Mr. Mullarkey: I am not aware, as yet, of any such calculations, and I will let the Deputy have a note on this matter.

Deputy Durkan: Lest politics creep into the Committee, and hopefully it never would, the Tánaiste is one record in the House as indicating on one occasion that the fees which the Committee is considering were in accord with norms, practises and so on. Given this, I am unsure as to why my friend and colleague, Deputy Broughan, is suddenly concerned about former Taoisigh, because if such activities were to happen today there would be no necessity to go to the Four Courts. The programme managers would have undertaken the job quite as well.

Deputy O’Malley: Perhaps Mr. Mullarkey may be able to obtain the information from the Comptroller and Auditor General, but reference has been made to brief fees which are not mentioned in any of these reports, either in respect of the Beef Tribunal or the Scott Inquiry. All that is referred to is daily refresher fees. It is normal to have a brief fee payable in respect of the first day. Sometimes such fees can be very high. Is Mr. Mullarkey aware of the nature of the brief fees in the case of the Beef Tribunal or in the case of the Scott Inquiry?

Chairman: With regard to the Department of Justice officials I would like Mr. Dalton when he comes before the Committee in two weeks time, to have a brief for the Committee in relation to the role of the Taxing Master and to whom he is accountable. I would also like the observations of the Department of Finance as to how legal fees of this nature appear to be so much higher in this jurisdiction when compared to other jurisdictions. I do not just mean in respect of the moneys paid by the Exchequer - if we are paying higher legal fees than the British public sector there may be a possibility that private citizens here are paying more in legal fees than those in other jurisdictions. If that is the case the Committee will want to know what the Department will do about it.

Mr. Mullarkey: I do not have information in the case of the Scott Inquiry, but there are some suggestions that in the UK, the brief fee is a different part of the equation. It is not calculated on the same basis as in this country, where the brief fee for each of two senior counsel on the State side was 8,000 guineas, with junior counsel receiving two thirds of those sums.

Deputy O’Malley: What about the Tribunal?

Mr. Mullarkey: The Tribunal fixed its own fees and I am not sure if we have that information. I will endeavour to obtain it.

Chairman: Questions were asked, Mr. Mullarkey, about the Scott Inquiry in the House of Commons and replies were provided. The total legal, and other costs were provided, and as of 21 April 1994, these amounted to £994,689 sterling, which is less than £1 million. These total costs included catering, pay for civil servants, bought in services, including legal, security and catering services, legal costs incurred in advising DTI witnesses, and other costs, including office machinery, computer stationery, travel and subsistence. In our case, one senior counsel would receive almost that sum, which also includes brief fees and all other legal fees.

Given this, I am alarmed at the tone of the responses to the Committee today and I therefore propose that the Committee does not rest with this.

Deputy O’Malley: If the Department of Finance is not prepared to fight in an effort to contain costs, who is? This is a spectacle I have never seen before.

Chairman: This puts the Department of Finance, in addition to other Departments, in a very poor light. There appears to be an extraordinary lack of willingness to control the cost and to fight for a reduction of costs which will require further elaboration and explanation to the Committee. I propose that the Committee adjourn consideration of this matter for a date to be fixed sometime after two weeks from now, to allow Mr. Mullarkey to reflect further on the issues about which the Committee is concerned, on the possibility of renegotiation of fees and on what other changes, administrative or otherwise, are proposed to ensure that this kind of exploitation of public moneys can never happen again.

I propose to request Mr. Mullarkey, Mr. Dalton and perhaps the Senior Legal Assistants from the Office of the Attorney General to appear before the Committee again at a date to be fixed, either two weeks from now or shortly thereafter, to explore this matter further. I believe I speak for the entire Committee in saying that we are quite astounded at the lack of effort to reduce or renegotiate the costs in this instance, and are not at all happy with the explanations put forward.

When next appearing before the Committee, Mr. Mullarkey, I request that you bring any evidence you or your Department has that there is a more generous regime of legal fees in the UK, as you appear to suggest, than is evident from the report of the Comptroller and Auditor General. I also ask that you obtain the reference made by Mr. Mansfield on the “Late Late Show” before the summer, in order to consider his views on the legal fees, and following that I ask you to explain why your Department has taken no action, despite the urging of the Committee for 18 months, to get these costs down.

Mr. McDonnell: To clarify your last point, Chairman, we did not seek evidence that there may have been legal fees at a higher level in other areas because our brief was simply to consider the costs of the Scott Inquiry. It may well be that, as Mr. Mullarkey has remarked, there are other levels of fees in other areas, but we obtained our information from our counterpart in the UK, the National Audit Office, which was all the information it had. I make that point because it is suggested that the comparison might not be like with like and it may well not be.

Chairman: With regard to the Department of Justice officials I would like Mr. Mullarkey, when he comes before the Committee in two weeks time, to have a brief for the Committee in relation to the role of the Taxing Master and to whom he is accountable. I would also like the observations of the Department of Finance as to how legal fees of this nature appear to be so much higher in this jurisdiction when compared to other jurisdictions. I do not just mean in respect of the moneys paid by the Exchequer - if we are paying higher legal fees than the British public sector there may be a possibility that private citizens here are paying more in legal fees than those in other jurisdictions. If that is the case the Committee will want to know what the Department will do about it.

The Witness withdrew.

THE COMMITTEE ADJOURNED.