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 8 Nollaig 1994

Thursday 8 December 1994

The Committee met at 11 a.m.

MEMBERS PRESENT

DEPUTY JIM MITCHELL IN THE CHAIR

Mr. John Purcell, (An tArd Reachtaire Cuntas agus Ciste), called and examined.

Mr. Niall McSweeney, Mr. John Thompson, Mr. Phil Ryan, Mr. Jim O’Farrell, Mr. Colm Gallagher and Ms. Bríd McSweeney, Department of Finance representatives, in attendance.

APPROPRIATION ACCOUNTS 1993

VOTE 38 - FOREIGN AFFAIRS

VOTE 39 - INTERNATIONAL CO-OPERATION

Mr. Noel Dorr, Secretary, Dept. of Foreign Affairs, called and examined.

LEGAL FEES

Mr. Matthew Russell, Senior Legal Assistant, Office of the Attorney General and Mr. Michael Dowling, Secretary, Dept. of Agriculture, Food & Forestry, called and examined.

Chairman: We will take Items 2, 3 and 4 together - the resumption of our consideration of paragraphs 66 and 67 of the Report of the Comptroller and Auditor General. They relate to the excess Vote for the Department of Foreign Affairs - No. 38 - and International Co-Operation - No. 39. I welcome the Accounting Officer, Mr. Noel Dorr. Perhaps you would introduce your officials.

Mr. Dorr: On my right are Ms Anne Anderson, Assistant Secretary in charge of administration, and Kieran Dowling, Counsellor - that is Principal Officer, who is Finance Officer in the Department. On my left are Ronan Murphy, Assistant Secretary in charge of the Development Co-Operation Division, Joyce Duffy, Assistant Principal in that Division, and Ken Thompson, Counsellor, i.e. Principal Officer in the Development Co-operation Division.

Chairman: Paragraphs 66 & 67 of the 1993 Report of the Comptroller and Auditor General read:

Late submission of accounts and material errors on accounts

66. The statutory date for the submission of the 1993 Appropriation Accounts was 30 April 1994. The Appropriation Accounts for Vote 38, Foreign Affairs and Vote 39, International Co-operation were not submitted until 30 June 1994 due, in part, to transitional difficulties involved in changing to a new computer system in 1993.

It was clear from an examination of the Accounts as presented that there were deficiencies in the Department’s procedures for recording and documenting the transactions underpinning the Accounts. In particular, in relation to the Appropriation Account for Vote 38, there was a failure to reconcile the accounting entries with the cash transactions; there were unsubstantiated adjustments to trial balance figures to bring them into line with the final account figures and there was a failure to provide an analysis of the Miscellaneous Suspense Account, with this account effectively being used to balance the final account.

I brought the deficiencies to the attention of the Accounting Officer and I asked whether the apparent deficiencies in the Department’s internal accounting procedures and controls were being addressed. I also sought his views on the adequacy of the planning and implementation of the transition to the new computer system.

The Accounting Officer indicated that he believed that the transition to the new computer system was planned, managed and controlled in the best manner possible, consistent with the relatively short time scale within which the Department had to operate and the various design adaptations which had to be made arising from the particular requirements of the Department.

While regretting the deficiencies which affected the preparation and submission of the 1993 Appropriation Accounts, the Accounting Officer stated that the very great amount of staff attention which had to be devoted to resolving the various problems with the new computerised accounting system had reduced considerably the time which, in normal circumstances, would have been devoted to checking procedures. Following my inquiries, the documentation required to substantiate individual adjustments had since been identified and made available and, with regard to the failure to reconcile the cash transactions, the Accounting Officer indicated that the remaining difference had since been eliminated. In relation to the failure to provide an analysis of the Miscellaneous Suspense Account, he indicated that a detailed analysis of suspense accounts would be provided as part of future Appropriation Accounts.

He assured me that, now that the new financial management system is operational, it is intended to give priority to the production by October 1994, of a comprehensive manual and revised accounting instructions covering each area of the Accounts Branch and that, in addition, immediate steps are being taken to ensure that Accounts Branch staff have further training in all aspects of Government Accounting procedures.

Subhead C. - Payment to Grant-in-Aid Fund for Bilateral and other Aid Contributions for Developing Countries (Grant-in-Aid)

Excess Vote £1,803,859

67. Public financial procedures allow certain services to be provided for by way of grant-in-aid. The main distinguishing features of grants-in-aid are that they are exempt from the normal rules, that balances unspent at the end of year must be surrendered to the Exchequer and that no excess may be incurred on a grant-in-aid subhead.

During the course of audit of the Bilateral and Other Aid Fund (Grant-in-Aid) Account, which is funded from Subhead C of the International Co-operation Vote, it was noted that expenditure for 1993 totalled £17,542,630, although only £15,738,771 was available for disbursement viz. the opening balance of £438,771 plus the 1993 subhead provision of £15,300,000. As this constituted a breach of public financial procedures through incurring expenditure of £1,803,859 in excess of the amount provided by Dáil Éireann, I enquired as to the circumstances in which this had occurred.

The Accounting Officer informed me that, as of 31 December 1993, a total of £1,359,000 of the excess charge to the Vote, still remained under the control of the Department in Development Co-operation Office and Bilateral Aid Project Accounts; transfers had been made from headquarters in the context of the Department’s concern (against the background of a greatly expanded aid programme) that there should be sufficient funds on hands in the overseas accounts at year end to maintain the continuity of the aid programmes at the start of 1994.

Nevertheless, he accepted that proper financial procedures had inadvertently not been followed in the Development Co-operation Division which had responsibility for administering the Bilateral Aid programme and this, coupled with problems encountered with the new computerised accounting system, led inadvertently to the issue of moneys in excess of what was provided. He assured me that the Department was taking immediate steps to ensure greater control on expenditure from the Development Co-operation Division, that an internal auditor had been recruited with a brief to undertake a full review of procedures and controls both at headquarters and in Aid Offices abroad and that, on the basis of the internal auditor’s preliminary recommendations pending this full review, interim measures were being introduced with immediate effect to ensure improved financial management and accountability within the Division.

The effect of the overexpenditure from the grant-in-aid fund was that an excess issue had to be made from Subhead C which will require the approval of Dáil Éireann by Excess Vote (See also paragraph 2 of this Report).

Chairman: The Committee will recall that some weeks ago we discussed at length the circumstances in which an excess Vote of £1.8 million was incurred by the Department of Foreign Affairs. That is the highest excess Vote ever incurred. The Committee was, rightly, very cross that this was allowed to happen. Before we decided to recommend approval of the excess Vote to the Dáil we asked the Comptroller and Auditor General to return to the Department of Foreign Affairs to see if its accounts were now in order. I call on the Comptroller and Auditor General to report his findings.

Mr. Purcell: The Committee will note from my report that the Department of Foreign Affairs has made a big effort to put its accounts branch and Development Aid Division on a sound footing from the point of view of financial and accounting controls. On the basis of the recent examination carried out by my staff at the request of the Committee, I am satisfied that the systems now in place should prevent a recurrence of the problems referred to in our 1993 Report.

In the accounts branch, bank reconciliations are up to date, monthly accounts have been balanced and suspense accounts are being cleared. In the Development Aid Division procedures have been introduced to eliminate the risk of spending in excess of the available funds. However, the system is only as good as the people who operate it. The Department has recognised this fact by undertaking a training programme for the staff involved and by preparing written procedures for the affected areas. The renewed focus on the importance of the finance function in the Department should also underpin the success of the measures taken.

Chairman: Does Mr. Dorr wish to make an opening statement?

Mr. Dorr: I do not wish to say anything in detail. I thank the Comptroller and Auditor General for his report. I am glad to have the assurance he has given both in his oral statement and in his written report. It was a matter of deep concern to me, as Accounting Officer, that there were problems. It was also a matter of concern to the staff of the Department who have always had a sense of commitment and professionalism. I am reassured to hear the Comptroller and Auditor General’s comments. On the last occasion you sought an assurance from me. On the basis of the C & AG’s assurance I am happy to give my own assurance that I and the staff of the Department are concerned to ensure that this will not happen again. I could go into more detail but I have said most of what you wished to hear from me on the last occasion. I am willing to answer questions from the Committee.

Deputy O’Keeffe: Mr. Dorr talks about commitment and professionalism. Would he agree that as Accounting Officer he is responsible for the efficient and effective running of his Department?

Mr. Dorr: Yes.

Deputy O’Keeffe: Is this the first occasion that your Department has had serious difficulty with the Comptroller and Auditor General in respect of the Department’s accounts? In other words, has there been a signposting along the way that the management of your Department may not have been as efficient, effective and professional as it might have been? Would you confirm that there were signs that this was a fact over a number of years given previous reports from the Comptroller and Auditor General?

Mr. Dorr: To my knowledge, there has not been an occurrence of this kind previously. There has not been an excess Vote in the Department since 1981-1982. On my previous appearances before the Committee there was never any criticism. However, I am aware that the Comptroller and Auditor General on the last occasion some weeks ago stated that he had pointed out problems at working level that might give rise to difficulties in the accounting area. I am concerned at that and we have taken steps to ensure that it will not happen again. I was never in this position before the Committee previously. However, the former Comptroller and Auditor General at the last meeting clearly said that he had previously pointed out some difficulties at working level.

Deputy O’Keeffe: Perhaps the Comptroller and Auditor General would respond to my question to Mr. Dorr regarding previous years. How happy was he with the accounts presented in the past? Can he confirm that there were difficulties and that these difficulties were pointed out to the Department?

Mr. Purcell: There was nothing in our annual report on these matters other than references on a number of occasions to problems with suspense accounts. They are problems that arise in the case of the Department of Foreign Affairs because of embassies and the temporary nature of many of the charges that are allocated to its Vote.

At a working level there was correspondence, as late as 1991, about the danger signals we had spotted at that time. That was certainly the case in the matter of bank reconciliations or paymaster general reconciliations - which are the same thing for the purpose of this discussion. In the 1990 accounts they were all done together at the year end rather than on a monthly basis which would have been the proper and wise way to do them. There were problems with the miscellaneous suspense account also.

As the Accounting Officer correctly stated, we did not point these out to him in correspondence but to officers at the appropriate level. I should explain that there is a wealth of correspondence with various Departments at what we call a semi-official level, between our audit manager on the spot, the accountant or the relevant Principal Officer in a Department - which is apart from what the Committee sees as the product of our work in our annual report. In this case it did not really affect the production of accurate and complete accounts on time in that particular year but we felt the dangers signs were sufficiently significant to bring them to the attention of the Department.

Deputy O’Keeffe: The Comptroller and Auditor General stated categorically that there were danger signals and that correspondence existed between the C&AG’s Office and the Department of Foreign Affairs. As a Committee, we would be most concerned to know what happened in the interim. I surmise from the Comptroller and Auditor General that what happened on this occasion was no great surprise and that, due to the lack of controls in evidence, something like this was inevitable. Mr. Dorr, what avenues were pursued and what changes were put in place since the correspondence of 1991 to improve the accounting system within the Department?

Mr. Dorr: The most notable change is that we have introduced a new computerised financial management system.

Deputy O’Keeffe: If I could take Mr. Dorr back to 1991 in particular, the Comptroller and Auditor General indicated that there were weaknesses in the system. Correspondence passed between the Comptroller and Auditor General and the Department, clearly indicating those weaknesses. The question for the Committee is what happened in the intervening period. Why were systems not put in place at that time, when the weaknesses were identified to him? Would the situation within his Department not have been averted if cognisance had been taken of the signals from the Comptroller and Auditor General as to the lack of accountability and control within the Department?

Mr. Dorr: The Comptroller and Auditor General said he was in continuous and regular correspondence with our accounts branch. Since 1991, we have appointed a finance officer, at Principal Officer level with responsibility. We have introduced a financial management system. Last year, we had a particular hiatus or problem in that our accountant, who is at Assistant Principal level, was taken seriously ill in May and is still out ill. We held the post open for some time but we replaced the accountant in September. As I said at the last meeting, we have introduced a comprehensive computerised system of accounting, as from November last year. I believe the weaknesses have been corrected. I am not sure that I can immediately say what was done in 1992 or 1993, but I am giving the general picture. If the Deputy wishes, I will get the detail.

Deputy O’Keeffe: It is important that the Committee receives the detail because this difficulty is not only confined to the Department of Foreign Affairs. The Committee would be concerned if the Comptroller and Auditor General was in correspondence with Departments. I think I am correct in saying that there could be a gap of 18 months between what happened, for example, in this set of accounts, and correspondence between the C&AG and the Department. It is important for the Committee to establish that if the Comptroller and Auditor General pinpoints particular problems, one could expect those problems to be attended to almost immediately, rather than a time gap that obviously occurred in this instance. The fears of the Comptroller and Auditor General are realised in the accounts before the Committee today.

Mr. Dorr: As I understand it, the Comptroller and Auditor General is in regular correspondence with accounts branches in Departments, such as the Department of Foreign Affairs. There is a regular exchange. I am not sure that I can clearly identify what the Deputy has in mind. The Comptroller and Auditor General said he was worried about some aspects of the 1990 or 1991 accounts. I am not sure there is anything I can pin down specifically on it. We have acted and a fully comprehensive computerised financial management system is in place. Unfortunately, a problem arose at the end of last year. In his original report to the Committee, the C&AG pointed to certain delays in submitting certain documentation. All of this has been remedied. The C&AG made one particular point that the reconciliations were done at the end of the year, rather than month by month. As his most recent report makes clear, we have now done it on a monthly basis. We are entirely up to date, as of October, and work is being completed on the November reconciliation. On the bilateral aid side, where the excess Vote occurred, we held a competition and appointed an internal auditor, an accountant, who has a mandate from the Department to examine all the systems there and report on them. His work has already been quite useful and effective and many of the things he recommended have been put in place. While I cannot specify at this point exactly when anything was done, the C&AG’s report and what I am saying provides me at least with reassurance that the systems are working well now.

Deputy O’Keeffe: From what we heard from the Comptroller and Auditor General, the systems now in place seem to be adequate. However, I am not clear as to the tenor of the correspondence which took place between the C&AG and the Department from 1991 and the deficiencies highlighted in the letters to and from the C&AG. The Committee must satisfy itself that since 1991 remedial action was taken in time. If proper heed been taken to the advice emanating from the C&AG’s office in time, would this overrun in the accounts have occurred? It would be appropriate for the Committee to obtain copies of the correspondence from the C&AG to the Department from 1991 so that it can evaluate in full whether proper action was taken and the timescale involved was not too long. It could have connotations for other Departments also in so far as if a Department runs into trouble with the C&AG, the Committee wants to see how quickly action is taken to bring about some improvement.

Chairman: It is very clear from what we heard on 27 October and the C&AG’s report that appropriate action was not taken. The Committee correctly vehemently expressed its anger about the lack of control in the Department of Foreign Affairs. I make no bones about embarrassing the Accounting Officer. He is the Accounting Officer and he neglected his duty in this respect. I will ultimately recommend to the Committee that it pays this excess Vote but the Accounting Officer is getting away without a recommendation of a surcharge against him personally by a very narrow margin, so serious is this matter. I am glad to hear that things are up to date but the Accounting Officer should not be under any illusion whatsoever that the Committee is at all happy that things were left to develop as they did and warnings as far back as 1991 were not heeded. It is a very serious matter. It is clear to me that the accounting area was underrated by the Accounting Officer and the Department of Foreign Affairs.

Deputy O’Keeffe: I have two further questions. What was the timescale involved in the implementation of the new system? Was the system the same as that operating in other Departments and did proper co-ordination take place between the various Departments?

Mr. Dorr: The new system referred to is the FMS - Financial Management System - which is a comprehensive computerisation of our accounts. It had to be introduced with a deadline of November, that is to say, one month before the end of the financial year, because the central computer in Kilmainham was being closed down. The system is in use in ten or 11 other Departments but it required special adaptation for the Department of Foreign Affairs as we have 45 offices abroad as well as our headquarters and we operate in 30 different currencies. The computer system had to be adapted to our needs and to that end there was a project team and a consultant hired. The systems were run in parallel for September. The total cost of the new system to date is about £94,000 some of which is consultant’s fees. This system is comprehensive: it covers all our accounting areas including the development co-operation division, and it makes the running total of expenditure available immediately. Any computerisation system has bugs and difficulties but I am as satisfied as one can be that this system is good. It is now in place and has been working since November last.

Deputy O’Keeffe: We raise our eyebrows when we hear about consultants. There is now a computerised system in various Departments and one would have thought that there would be a certain element of co-ordination of activity and programming. One would have thought that the last thing we want at this stage is more consultants given the amount of money that was paid to them by other Departments. In terms of the introduction of the various computer packages in the Departments, has the Comptroller and Auditor General looked at the effectiveness, the co-ordination and the amount of money spent by each Department in the introduction of the computer programmes?

Mr. Dorr: In the light of the Deputy’s question to the Comptroller and Auditor General I will clarify my last reply. The system I am talking about was developed under the sponsorship of the Department of Finance - it is what is called the profit financial management system - with Civil Service wide application. It was developed by the Irish software company PROSE. The then Department of Tourism, Transport and Communications was the pilot Department for the system, and a contract was placed for installation in the latter half of 1991 in that Department. Inevitably the system required adaptation for a Department such as ours which has to work in 30 foreign currencies, but my understanding is that the basic system is live in ten Government Departments at present and is being implemented in a further seven. As to the consultancy fee, the consultancy requirement was to help us in applying and adapting the general system to the particular needs of our Department which are unique in the Civil Service. The approximate figures for costs paid to date are as follows: software £54,000, hardware £26,000 and consultancy £13,000. The exact total is £94,134 and as the estimate for the cost was £100,000 we are within budget.

Deputy O’Keeffe: This again raises the question why the consultancy fees in this case were £13,000. If a similar system operates in ten other Departments the expertise must be available to cross Departmental boundaries rather than have outside consultants for every new system or system adaptation.

Mr. Purcell: The expenditure in all Departments would have been examined from the point of view of regularity and proper accounting. The question of the payback to the State in overall investment in IT, including accounting systems, is something we are considering for a value for money examination in the light, as the Deputy rightly says, of the huge investment that has taken place in that area, particularly in recent years. In looking at next year’s programme for value for money examinations that is being considered.

Deputy Foley: I welcome the opening statement of the Comptroller and Auditor General with regard to the Department of Foreign Affairs. Mr. Dorr mentioned that a new financial management system has been introduced. How many accountants are in that system?

Mr. Dorr: There is a staff of 25 in the accounts branch of the Department proper. Some of the staff, including two qualified accountants, that is including the internal auditor, are in the development co-operation division. The 25 staff are, of course, not chartered accountants.

Deputy Foley: There are two accountants.

Mr. Dorr: On the development co-operation side we have two professionally qualified accountants.

Deputy Foley: Does the Department’s new financial management system include International Co-Operation?

Mr. Dorr: Yes.

Deputy Foley: Are there two qualified accountants overall?

Mr. Dorr: We have two professionally qualified accountants in the development aid area. One of them is the internal auditor who was recruited this year with a mandate to examine all our systems. In the general accounts branch of the Department which handles all payments for the Department we have a total staff of 25. That is headed by an accountant in the Departmental sense, at Assistant Principal level and we have a finance officer at Principal Officer or Counsellor level.

Deputy Foley: What is the total amount of financial transactions under the various headings in the Department of Foreign Affairs, including International Co-Operation, for 1993?

Mr. Dorr: That would be the total of the appropriation account. It is approximately £54 million for development co-operation and £42 million on the foreign affairs side.

Deputy Foley: A sum of £96 million in total.

Mr. Dorr: Yes, it is of that order.

Deputy Foley: Are you satisfied with the present management system with two qualified accountants dealing with £96 million?

Mr. Dorr: I would make something of a distinction. I am talking about professionally qualified accountants who have outside qualifications in accountancy. The government accounting system is not necessarily the same as a commercial accounting system and the people who are working in the accounts branch have been working for a number of years in that area. I do not regard it as a fair comparison or a fair way of measuring the degree of our attention to accounts to look at the number of professionally qualified accountants we have recruited. We have recruited them for particular reasons on the bilateral aid side and one of them has a particular mandate to examine all our systems in that area. We are considering whether we should also recruit an accountant for the accounts branch but I would not consider that a necessity in any Department. It is not necessarily the case that one must have professionally qualified accounting staff if one has people who know their business and have learned to handle Government accounting.

Deputy Foley: The Department is dealing with £96 million and there is a staff of 25 which includes two qualified accountants dealing with that. Is that the case?

Mr. Dorr: No, I said there were 25 people in the accounts branch proper. In addition there are two qualified accountants and three or four other staff in the development and co-operation division.

Deputy Foley: Does that mean there are two separate accounting systems dealing with the international co-operation division of the Department of Foreign Affairs?

Mr. Dorr: Not quite -- all the payments go through the central accounts branch but we have additional staff handling accounting within the Development and Co-Operation division. That goes across to the central accounts branch for payment.

Deputy Foley: I apologise to Mr. Dorr for harping on this. The Department has a central accounts branch. Does that handle the £96 million?

Mr. Dorr: Yes.

Deputy Foley: How many people are in that branch?

Mr. Dorr: There are 25.

Deputy Foley: Of that 25, are there two qualified accountants?

Mr. Dorr: No.

Deputy Foley: What accountants deal with the £96 million?

Mr. Dorr: Of that money, £54 million is spent on development co-operation. There is a small staff of three or four in that division which looks after its accounts and two of those are qualified accountants. For every payment they make, instructions are sent to the central accounts branch, which has a staff of 25. All the payments go through that central accounts branch.

Deputy Foley: What staff deal with the remaining £42 million?

Mr. Dorr: The same 25 staff.

Deputy Foley: That means three or four people are dealing with £96 million which then goes through to the central accounts branch.

Mr. Dorr: I am sorry if I am not being clear. The expenditure of the development co-operation division is £54 million. That division has a staff of three or four dealing with accounts, two of whom are qualified accountants. Everything that division authorises for payment is channelled through the central accounts branch of the Department, where there is a staff of 25. One could say the £54 million, although it applies to the development co-operation section, still flows through the central accounts branch and must be handled there. I have a small correction to what I said earlier. The exact figure for the Department for that year was £40,797,000.

Chairman: The figure of £96 million refers to the current year.

Deputy Foley: What staff is dealing with the £40 million? I am sorry for concentrating on this point.

Mr. Dorr: The 25 staff in the central accounts branch deal with both our votes

Deputy Foley: In paragraph No. 66, the Comptroller and Auditor General stated the new financial management system was operational and it was intended to give priority to the production by October 1994 of a comprehensive manual and revised accounting instructions covering each area of the accounts branch. Has the comprehensive manual been produced yet?

Mr. Dorr: Yes.

Deputy Foley: Are the staff now trained to the satisfaction of the witness?

Mr. Dorr: Yes they are.

Deputy Foley: Do the system weaknesses lead to the system being open to fraud?

Mr. Dorr: I do not believe so. I explained on the last occasion there was a spill over of payments to our development offices for bilateral aid. Money was transferred before the end of December but it should not have been. If it had been transferred in January it would have been all right. It is not that more money has been spent in the normal sense but that we were not correct in our financial proceedings by the end of December.

Deputy Foley: An internal auditor’s full review is mentioned in paragraph 66 dealing with the excess vote. When will that be completed or has it been completed already?

Mr. Dorr: His appointment is for three years. He has done the important basic work but the review will be continuous. The role of an internal auditor should be to keep systems under constant review. Much that he has recommended has already been implemented. We expect to receive his report on all our systems in the Development Co-operation Division in three months but in the meantime we have implemented his recommendations to date.

Deputy Foley: Under Vote 38 there is a large surplus for office machinery and office supplies for each of the three years 1991, 1992 and 1993. The surpluses are 23 per cent, 29 per cent and 48 per cent respectively.

Chairman: In the year under review the Department overspent by £951,000. Can you explain that to us, Mr. Dorr?

Mr. Dorr: I think I touched on this on the last day. There was a clerical problem with the issuing as a single payable order of what should have been four payable orders. That transaction totalled £753,000. The real excess in the sense of over spending under the subhead was £197,000. However £753,000 is accounted for by payable orders which were issued at the end of December but had to be sent back for cancellation because four orders were required for four different purposes, rather than a single order. The cancellation did not take place until early January so there was a spill over at the end of the financial year. The actual excess under that subhead was £197,000, which was met by virement from elsewhere in the Vote. That excess was for the purchase of additional passport booklets for the new machine readable passports we are printing.

Chairman: I am anxious to conclude this hearing within the next few minutes. Deputy Durkan, Deputy McCormack and Deputy Broughan are offering and I will take them as speedily as possible.

Deputy Durkan: In view of the over spending, which calls for a serious review of procedures, is the Department — and the overseas aid section in particular — likely to be able to operate and respond as quickly as heretofore, or will it be impeded by the new procedures?

Mr. Dorr: I do not think we will be impeded. The section has been concerned to find that its laudable and praiseworthy efforts to devise and run a good bilateral aid programme ran into difficulties, in that there was a spill over and more money was spent before the end of last year than should have been. The staff members have all been working hard to ensure the new systems are adequate and I have no reason to believe they will cause any problem. There was a commitment in the programme for the previous Government to increase steadily our bilateral aid and that was in place. What has happened is a salutary lesson to us however, that the increase must be done with a full degree of financial control. The Comptroller and Auditor General’s report bears out that the controls are now in place and I have no reason to believe they will impede the staff in their proper work, which they carry out with commitment.

Deputy Durkan: My reason for asking that question was to record our appreciation for the work that branch of the Department has done through its ability to respond. It would be sad if something happened as a result of its best efforts which had the consequence of us introducing regulations restricting the branch to the extent that it might be afraid to operate. I am happy with the reply. To what extent are the new procedures on suspense accounts likely to safeguard the State against difficulties which might arise in the future? Can the witness comment on the need for such accounts?

Mr. Dorr: A Department such as ours has to operate suspense accounts and there has been concern in the past about some historical balances which we have been working hard to clear. The current suspense accounts have been kept totally up to date and the old accounts are being cleared as best we can. In a Department with 45 offices abroad which also undertakes expenditure abroad on behalf of other Departments, it is inevitable that there will be suspense accounts. In the period from November 1993 to October 1994 we have reviewed 800 suspense accounts and have completely cleared 650. It is a continuing process; we had a staff of five on that task which is now a staff of 11. We have cleared 650 of them completely. It is a continuing process. We had a staff of five working on clearing up the old balances, which were a problem but this has been increased to 11. Current accounts are being kept completely up to date but there will always be suspense accounts.

Deputy Durkan: The out-turn and the projections for the forthcoming year are obviously some of the items which have a bearing on the preparation of the Estimates for the Department. Given the existence of, and necessity for, suspense accounts, is there a greater danger of difficulty or miscalculation than if you were not working in that kind of environment, that is if you did not have to use suspense accounts to the extent to which you must?

Is there a greater tendency for confusion and under projections or over projections, given the nature of your business?

Mr. Dorr: The answer is yes. It is an indication of the complexity of a Department which is working with 30 different currencies and 45 offices abroad. A suspense account arises also if we transfer money to one of our embassies abroad for its own current running expenses until it has submitted its accounts and the matter has been brought to account.

Deputy Broughan: Would you hold those accounts in local currencies?

Mr. Dorr: Money transferred abroad would normally be held in a local currency account. In some countries, especially developing countries, there are restrictions on bank accounts and there are problems about foreign bank accounts. Accounts are normally held in local currencies however, because payments have to be made in such currencies.

Deputy Durkan: This needs to be carefully monitored in the future because of the nature of the business undertaken by the Department. This can create a problem for it, even if it has the best will in the world and we should note that.

Chairman: This is a very valid point. The Comptroller and Auditor General has already looked at this area and will keep it under review.

Mr. Purcell: Yes, that is our intention and, indeed, our duty.

Mr. Dorr: We are aware of this, it was raised before the Committee in the past and we are devoting considerable attention to it at the moment. We have about 3,300 accounts to be reviewed but 2,300 of these have a credit or debit balance of less than £40. In some instances the number of accounts is large but the actual balance is not great.

Deputy McCormack: Some £94,000 was expended on changing the system. What period of time did it take to do this?

Mr. Dorr: I have already given the basic figures on this.

Deputy McCormack: Attention was first drawn to this matter in 1991, how long after that was the new system in place?

Mr. Dorr: The new system went on line in November, 1993. The Department of Finance decided in 1991 to close down the central computer bureau for the Civil Service at the end of 1993. We engaged a consultant in early 1992 and the contract was signed with Progressive Systems Enterprise Limited on 31 May, 1993. We had to meet the deadline of the end of the year and the new system was up and running in November 1993. We ran it for one month in overlap. We would have liked a longer period to introduce it and would have liked to have been able to do so at the end of a financial year rather than during it. Those are approximately the dates for which the Deputy asked.

Deputy McCormack: What overspending took place in the interim period between 1991 and 1993?

Mr. Dorr: I do not believe there was any overspending except that to which attention has been drawn, that is the excess spending on bilateral aid in 1993. There was no overspending to my knowledge, unless I am subject to correction from the Comptroller and Auditor General.

Deputy Broughan: I congratulate the Secretary and his staff for another excellent year’s work for our country. For the last two years, under the Government which has unfortunately collapsed, we have instigated a massive increase in the Department’s budgets. In view of the fact that there were difficulties with the huge increase in foreign aid, what kind of a budget would the Department have in the next three or four years, if we achieved the target of spending 0.7 per cent of GNP on foreign aid, and would you be confident that you could manage such a budget?

Mr. Dorr: It is not possible to be exact because as GNP increases the total of the percentage of GNP increases. I have a figure in mind of approximately £140 million. Our strategy plan, published in July last year, projects that by 1997 the total would be £135 million.

Deputy Broughan: Would you be confident that with this greatly increased bilateral aid budget, the Department will have procedures in place to ensure it gets to the most worthy and needy people on the ground in the southern world?

Mr. Dorr: Yes. Correct spending and observing proper financial procedures are absolutely vital and central. Increasing the amount is good but we must handle it correctly. I am well aware of this and have been reminded of it by the events in this Committee. On the spending of the money on the ground and seeing that it gets to the right people, our aid programme is people- related and not spent on big projects like dams but where it is needed. We have development co-operation offices in some of our priority countries and they are close to the ground on these matters. We also give a good deal to non-governmental organisation co-financing. This means that we augment what is done by, for example, an Irish missionary or a teacher on the ground by providing a jeep, a well or something of that kind. I am reasonably satisfied that in comparison with other aid programmes of larger countries ours is very much directed where it is most needed. There is also an arrangement under the Development Aid Committee of the OECD where two countries hold an inquisition on a third country’s programme. We have gone through that process in the past few months and the report will soon be published. I believe it will praise the programme.

Chairman: The Secretary of the Department of Foreign Affairs has been put through the rack over two hearings about this Excess Vote. He has been extremely forthcoming in his replies, notwithstanding the embarrassment involved for him. It is only fair to say that it has been the experience of this Committee that the Department of Foreign Affairs in general is run in a very good way and we appreciate this. There was a lapse in the accounts but we are glad to hear from the Comptroller and Auditor General that it appears to have been put right. In the circumstances I ask the Committee to recommend that we ask the Clerk to draw up in the normal format a report to the Dáil to the effect that we see no objection to the Dáil providing for this Excess Vote. I also suggest that we record the decision that all Accounting Officers be requested to ensure that adequate controls and procedures are in place at all times to alert them personally when there is a danger that expenditure in excess of their Votes might arise and that the Department of Finance be requested to examine the possibility that some second check be put in place in the office of the Paymaster General with a view to ensuring that there is early warning for Accounting Officers when the maximum amount of the sum voted is being approached. Is that agreed?

AGREED.

I thank the Secretary of the Department of Foreign Affairs and I appreciate how forthcoming he has been and I hope that when we visit him next year there will be no accounting problems.

Deputy O’Keeffe: I wish to raise an issue which is pertinent to this. When the Comptroller and Auditor General identifies problems in Departments, this, in itself, is an early warning system. While I have no difficulty with the recommendation made by the Committee this morning, I have difficulty with the fact that, since 1991, the C&AG has been pinpointing weaknesses in the system within the Department of Foreign Affairs and nothing has been done, in a concrete way, to ensure that there is not a recurrence, or an improvement, and now this overrun has arisen. It could therefore be surmised that the overrun was a result of not taking remedial action, a warning having been given by the C&AG. In view of this, it would be remiss of the Committee not to include this as part of its report.

Chairman: What do you propose Deputy? Perhaps, Mr. Purcell, you might have some comments to make.

Mr. Purcell: It is a common problem that where there are weaknesses in systems, management often tends to believe that computerisation, or re-computerisation as it would be in this case because there was already a computer system in place, will solve everything. However, the experience is that it compounds the problem, and the manifestation of it is not always pretty. In this case, computerisation compounded the problem, rather than solved it. This has been the experience, not only in the public sector but also in the semi-State and private sectors.

Chairman: The point is well made and perhaps we will put the issue of computerisation, and the snags that go with it, on the agenda. Perhaps it is an issue on which we should consult with the Secretary to the Department of Finance with regard to having some general, better and more specific controls and guidelines on the issue of computerisation.

Mr. Dorr: Two problems arose. The first was the excess on the bilateral aid, and the second was pinpointed by the C&AG, in that certain reconciliations were not done, and so on, and the accounts were late. This latter aspect is handled in our accounts branch, and with regard to computerisation, the branch was wrestling at that time with introducing the new computer system for November 1993, one month before the end of the financial year. I am subject to correction on this, but it was not a problem with the computers as such, but rather that the staff were at that moment, one month before the end of the financial year, wrestling with the introduction of the system. The excess on the bilateral aid side is a different matter. There is a regular transfer of funds out from our headquarters to our development offices which goes on all the time, and must do so. The key matter is that by the end of the year, 31 December, because it is a grant-in-aid Vote, the total should not exceed the amount in that subhead. The mistake made was to transfer too much out before the end of the year; it should have been held for another week and transferred out the following year, but it would have had to be transferred in any event. It was not therefore an overspend in the normal sense. It was, of course, wrong, and I have accepted responsibility for it. It was also a breach of financial procedures, but it does not mean that more money was spent on bilateral aid if the two years were taken together. I am not going back on the whole issue, which, Chairman, you closed off well in thanking me, but I am endeavouring to clarify the point regarding computerisation in case it will be helpful to the Committee if it considers this matter further.

Chairman: I welcome this clarification from the Accounting Officer. It has been resolved that the Clerk will draw up the report in the normal format and return it to the Committee for formal approval at the next meeting of the Committee. I propose that we note Vote Account No. 38 and Vote Account No. 39. Is that agreed?

AGREED. Thank you, Mr. Dorr.

Mr. Dorr: Thank you Chairman, for your words at the end.

The Witness withdrew.

LEGAL FEES

Mr. Matthew Russell, Senior Legal Assistant, Office of the Attorney General and Mr. Michael Dowling, Secretary, Dept. of Agriculture, Food & Forestry, called and examined.

Chairman: We now move on to Items 5 and 6 on the agenda, which I propose we take together. In this instance, Mr. Matthew Russell, Senior Legal Assistant, Office of the Attorney General is in attendance, with Mr. Michael Dowling, Secretary to the Department of Agriculture, Food and Forestry. This arises because last week the issue was raised that the Beef Tribunal fees were a matter for the Department of Agriculture. They were the paymasters, but they had no control over them. In addition, we considered last week the issue as to why it was not possible to renegotiate the legal fees, especially in view of the fact that the economic and PR consultants’ fees had been renegotiated downwards.

Mr. Dowling, you were not requested to attend the Committee last week when we were at the point of attempting to discover why it was not possible to renegotiate downwards the level of legal fees, as the Beef Tribunal proceeded, when it was possible to renegotiate the fees of the PR and economic consultants downwards. The Committee is attempting to ascertain who negotiated these fees, and who negotiated them downwards. Can you shed any light on this?

Mr. Dowling: With regard to the negotiations with the consultants, the rates were fixed at the outset. In the case of John Hogan and Associates they were fixed for a limited number of days, ten and fifteen days. In the case of Car Communications or their representative, Mr. Donal Cronin, they were fixed at a daily rate, with limited time, but without the same limitation on the number of days. When their period was up, and the State’s legal team at the Tribunal sought to have them retained, as it did on two or three occasions, we took the opportunity in negotiating with them to try and push the fees down, and this is what happened.

In the case of the legal fees, the Attorney General appointed the legal teams. He informed us of the rates which should be paid since the payment was to come from our Vote under the agreement set up on the establishment of the Tribunal. There were no circumstances which allowed a renegotiation. We followed the normal convention where the Attorney General in all cases in which the State is involved, for example, the courts system, fixes the rates of fee with the State counsel. We did so on this occasion also. At your request, as you will recall, we inquired of the Attorney General’s Office if there were circumstances which would enable us to reduce the rates of fee. We were informed that there were no circumstances under the agreements reached with the Bar Council which would enable such a renegotiation to take place.

Chairman: Did your Department fix the daily rate of fees in the beginning for the economic and public relations consultants?

Mr. Dowling: Yes, the firms had views as to the rates they should charge. We negotiated with and talked to them about their rates and we then sought the approval of the Department of Finance for their engagement and for the rates.

Chairman: When did that negotiation take place?

Mr. Dowling: In the case of John Hogan & Associates, it took place on 5 March 1992. In the case of Car Communications, it took place between April and June of the same year. You may recall that when we were here before we indicated that the approval of the Department of Finance was sought at the beginning of the appointment, or, at least, immediately after the appointment of John Hogan & Associates. In the case of the man from Carr Communications, he was employed for approximately one month before we were asked to approve his engagement. We sought sanction from the Department of Finance in both cases shortly after receiving this information. As regards John Hogan & Associates, the sanction of the Department of Finance was relatively quick, but it was delayed for Carr Communications.

Chairman: You are raising a major issue here because it seems to go against what the Committee was told previously on a number of occasions. You said that your Department negotiated the fees for the two consultancies. Yet, we were previously told that both had started work before you knew about it. In the case of one firm, it had started work a day before you knew and that it was three or four days before sanction was sought from the Department of Finance. In the case of the second consultancy firm - and this is not from memory - it was more than a month at work before you were asked by another Department to get approval for it. Is this recollection of events correct?

Mr. Dowling: In the case of John Hogan & Associates, the request to us to engage this firm came the day after it began its employment. In the case of Carr Communications, it came after approximately one month. The man from Carr Communications started work sometime in March and the letter to us from the Attorney General’s Office regarding his services, at the request of the legal team, came to us on 28 April.

Chairman: We will get the dates later. My recollection is different to yours because I believe you were not asked to get approval until June. We will check that out.

Mr. Dowling: We did not ask the Department of Finance until June, but the letter came to us on 28 April.

Chairman: It is not material to this point. Did they start work without a rate being fixed or was a rate already fixed by someone else? We have not managed to ascertain what official in what Department made contact with those firms and told them they were hired. Who did that and who agreed the fees?

Mr. Dowling: The contact in both cases with the firms concerned was made by the legal team. The requests for their engagement came to us via two other Departments. However, the requests were stated in both cases to be requests from the legal team who had engaged them prior to our being informed of their engagement.

Chairman: Describe how the daily fee of £1,800 in each case was initially agreed? Was that suggested to you? Had it already been paid before you knew about it or was it negotiated by your Department post facto?

Mr. Dowling: Nothing was paid before we knew about it.

Chairman: But, agreed.

Mr. Dowling: The fee in both cases was suggested to us by the firms concerned. We take it to mean that was the fee suggested on their engagement. That was the fee they indicated they would require when they were being engaged.

Chairman: In one case you were a few days behind and in another case you were a number of weeks behind because they were working for a number of weeks. Someone hired these firms unknown to you. Are you saying the legal team hired them without approval from any Department?

Mr. Dowling: My understanding is that the requests for their engagement came from the legal team. In both cases they were employed before those requests came. The legal team could not have paid them because they would not have the means to pay them. Payment had to issue from our Vote because that was the arrangement. In both cases the firms indicated to us the daily rate they required to do the job they were engaged to do. In the case of John Hogan & Associates, the rate varied initially between £1,800 for a ten day engagement and £1,200 for a 15 day engagement. When the legal team sought their retention, we took the opportunity again, sometime after they continued to be retained, with the approval of the Department of Finance, to have the daily rate reduced. The daily rate was reduced to £800. At a later stage we also took the opportunity to try to negotiate downwards the rate which had been agreed in respect of Carr Communications.

Chairman: Before this Committee raised the issue in June last year and given that you took the initiative to negotiate downwards the daily fees of the consultants, did your Department or any other Department take the initiative to renegotiate downwards the daily fees of the lawyers involved?

Mr. Dowling: I am not aware if they did, but, as I said, we did not see ourselves as being involved in setting or negotiating the fees for lawyers. These were set by the Attorney General and, in the case of the Tribunal team, the Chairman of the Tribunal.

Chairman: The Department saw itself as having a role in negotiating downwards the consultants’ fees because of the passage of time, but having no role in even talking to the Attorney General’s Office about the possibility, in view of that passage of time, of renegotiating downwards the legal fees.

Mr. Dowling: While the consultants were engaged by the legal team, fees for consultancies were matters in which we would have seen ourselves as having an involvement. We did not, rightly or wrongly, see ourselves as having an involvement in the legal fees. In all other legal activities with which we are involved - this is true of all Departments we are involved with as State institutions - the engagement of counsel and the fixing of fees in respect of counsel is carried out by the Attorney General. In our view, that was also the position in this case.

Deputy O’ Keeffe: I raised the problem of the bureaucratic back pass at the last meeting of this Committee. I understood Mr. Russell to say that the Attorney General set the legal fees. Mr. Russell indicated that, as Accounting Officer at the Office of the Attorney General, he had no involvement in that area because it was not coming out of his budget. Mr. McCaffrey from the Department of Finance told us that it had tried to decrease the fees but was not successful. Mr. Dowling was then left acting as paymaster without having any control over the situation. While there was a reduction in the consultants’ fees, the only application for a reduction in the legal fees came about because of the discourse that took place in this Committee. Would it not be fair to surmise that there was no proper control system put in place in terms of the three Departments involved - the mechanism one would have felt should have been in operation - and that Mr. Dowling should not have had somebody else negotiating for his Department while it would have to pay out of its account? Does that not seem most odd, unusual and inappropriate?

Mr. Dowling: It is unusual, but obviously the Beef Tribunal was not a usual event. Normal procedure has been that the State engagement of counsel for similar actions in court is through the Attorney General engaging the counsel and fixing the fees. We saw that position as being the logical one to apply in the case of the Beef Tribunal as well. We would not have had, in any event, the knowledge to say what was an appropriate fee for a senior or junior counsel operating in this or any other area. We have no involvement in setting such fees, no knowledge of what is a reasonable level and are therefore, in no position to make a judgment. We would have to rely upon the judgment of the person within the State system who is the most competent to make that decision, who, in our view, is the Attorney General. One could argue that applying all the expenditure through our Vote was unusual if the Attorney General was to be the person who would determine the fees. However, we did not take that decision. It was taken for bureaucratic convenience, rather than anything else. In regard to the legal fees, to a large extent our function was in ensuring they were properly certified either by the President of the Tribunal, or through the Office of the Attorney General in the case of the State’s own team, and then paying them at the rates agreed and set by the Attorney General.

Deputy O’Keeffe: The Chairman referred to an appropriate point. It was seen fit to renegotiate the consultants’ fees. I understand that suggestion emanated from Mr. Dowling’s Department. Given the fact that the Tribunal was going to continue for a long time - this became evident at an early stage - would it not have been appropriate that, after having renegotiated and seen the necessity to renegotiate the consultants’ fees, it would have been equally necessary to have a review carried out on the long term fees of the legal personnel involved?

Mr. Dowling: In the case of the consultants, particularly in that of John Hogan & Associates, the situation changed, which made it easier to have a renegotiation. Because the fees were fixed for a short term consultancy engagement - no more than 25 days - this gave us the opportunity to negotiate the fees when it came to be extended. Our understanding was that in the initial engagement, Mr. Hogan was backed up by a team of five to six other consultants. Therefore, the fee negotiated was one which covered the whole team. When he came to be retained later on in the Tribunal, we understood that he was not necessarily being backed up at all times by a similar team for the later stages. Therefore, we had a better case for renegotiating. I am not sure whether one could have argued that it would have been possible to renegotiate in the case of the legal team. We did not see it as our role in any event because we had not been involved in the setting of the fees and did not have the knowledge on which we could base any renegotiation. When the issue was raised - I agree with the Deputy in that it was raised as a result of a request from the Chairman of this Committee - with the Office of the Attorney General, the advice we got was that there was no basis on which the original agreement reached could be renegotiated for lower fees. If that is true, that would be the case for all situations, irrespective of whether one negotiated towards the end of the Tribunal or in the middle of it.

Deputy O’Keeffe: As a result of the matter being raised in this Committee - we touched briefly on this at our last meeting - Mr. Dowling wrote to Mr. Russell in connection with the renegotiation of the fees. Mr. Russell rightly pointed out that there was no legal basis for renegotiation. I also do not think there was any contractual basis for that renegotiation. Mr. Russell said at our previous meeting that he was aware of the indignation felt by the general public at the scale of the fees being charged and the amount of money being accumulated by those involved in the Tribunal. Although it was his considered opinion that there was no legal or contractual basis, given that the members of this Committee had signalled their concern, would it not have been appropriate for Mr. Russell, on moral grounds if nothing else, to write to those involved and indicate the indignation being felt, both inside and outside the House, about the enormous level of fees charged and because of that indignation, ask them to reconsider the amount of fees they were levying on the State?

Mr. Russell: When I received Mr. Dowling’s letter of 21 July, 1993, I consulted the Attorney General on the possibility of there being a basis for approaching counsel to take less fees than had been agreed. He expressed the view, which I shared, that there was no legal or contractual basis. If one approached them ad misericordiam or ex gratia to agree voluntarily to take less fees than had been agreed, this would be likely to damage the State’s reputation as an engager of counsel in the long term in the sense that counsel might very well take the view that they could never be quite certain about what fees they would get in a situation where the State had agreed with them in advance to pay them at a particular rate. As I mentioned on a previous occasion, in regard to the vast majority of litigation which the Attorney General conducts on behalf of the State, the Attorney General fixes the fees after the event. He pays counsel what he thinks they should get, not what they are asking for, so the question therefore does not arise in those cases. The view he expressed when I consulted him on the letter from Mr. Dowling was that there was no future in the proposal, that it could not be done. That was a view I shared, and it was a view I conveyed to Mr. Dowling.

Deputy O’Keeffe: While the Attorney General would be conscious of the damage done as an engager of counsel, it could also be said that the legal people involved could equally be concerned about the damage done to the reputation of the legal people involved as a result of the indignation at the level of the fees that were charged. Would it not be valid for me to suggest to you that given that it was seen fit to renegotiate downwards the fees of the consultants involved, there would be a moral obligation to allow the legal people to respond to the requests from this Committee? After all, when they were engaged by the Attorney General, they were engaged on a short term basis. It became evident very early on that they would be employed by the State on a long term basis. It appears to me that there are and should be grounds for a renegotiation of fees and that there is a moral obligation on you and on the Attorney General to reflect the rightful indignation felt by members of this Committee and the indignation felt by the public outside. At this stage we have decided not even to ask if they would reduce fees. We have decided that there is no legal basis for it, we have not given them the opportunity to give a reduction in the fees. In my view that is incorrect. We should have put the onus on them to respond to the request from this Committee for a reduction in fees. I propose even at this stage, Chairman, that such a letter should emanate from the Attorney General’s office. Thank you.

Chairman: I will certainly put that suggestion to the Committee when it comes to the conclusion of this section of our business.

Deputy Durkan: I wish to refer back for a moment to the appointment of consultants. I wish to ask Mr. Dowling whether he could elucidate somewhat further on the manner and methods by which they were appointed, taking into account the fact that they were in situ when the Department became aware of it. How did that happen? Did they happen to be passing by outside on the road a couple of days beforehand? How did they happen to become appointed, and how was the message communicated to you?

Mr. Dowling: In the case of Carr Communications, we got a letter from the Office of the Attorney General saying that the State’s legal team at the Tribunal had felt it essential to engage the services of a PR consultancy, that they had engaged Carr Communications and that the Attorney General’s Office accepted the State’s legal——

Deputy Durkan: The Office of the Attorney General himself or a member of the Office staff?

Mr. Dowling: The letter was signed by Mr. Russell on behalf of the Attorney General as I understand it.

Chairman: It is clear that Mr. Russell conveyed the decision of the Attorney General. That has been established very clearly.

Mr. Dowling: The Attorney General’s Office accepted that the State’s legal team had engaged this firm and they felt there was justification for retaining it. We put in place the process for approving that. In the case of John Hogan and Associates, the request to me came from the Secretary of the Department of the Taoiseach in a telephone call on 3 March 1992, saying that the Taoiseach, on the advice of the legal team, was asking for the engagement of a firm of economic consultants, John Hogan and Associates. As I understand it, the then Secretary of the Department of the Taoiseach has written to this Committee, explaining the circumstances in which he made that telephone call, indicating that he was operating on the basis of a general earlier instruction given by the Taoiseach rather than a specific instruction given in this case. The recollection and my clear understanding at the time was that the engagement was being suggested on the advice of the legal team and as it transpired subsequently the firm had in fact been engaged from the previous day, 2 March.

Chairman: Mr. Dowling, the matter to which you have just referred is the subject on which you refused to come before this Committee. It will be further pursued in coming events. We have to be absolutely clear as to why you did not come before the Committee when summoned and as to the nature of your evidence today and on previous occasions, I caution you that that issue is not dead and that the Committee may be revisiting it very shortly. We take very serious exception to Accounting Officers not coming here when summoned to answer questions. The same applies to Mr. Russell. I do not want to go into that issue here today, we are here to talk about the legal fees and why they were not renegotiated.

Deputy Durkan: I would like to know more about the normal procedures in relation to when an indication was received in your Department as to the appointment of a team of consultants. What procedures are then normally applied? For instance, why could any of us around the table not present ourselves as consultants in the Department? On what basis is the appointment made? What vetting takes place? Is it normal that appointments of this nature are made in that fashion, or are one, two or more quotations sought in relation to a service? What is the procedure?

Mr. Dowling: First, this was not a normal situation. A normal situation in which we are involved in consultancy is that we are seeking consultancies for work which the Department is doing for itself. In those cases, in normal circumstances we would draw up terms of reference for a consultancy operation and seek tenders either publicly or from people, groups or firms who are known to be in the business of providing that consultancy service. There are occasions where a consultancy would be required in either a very specialised area where there might be only one firm involved, or very urgently, not involving great expenditure, where we might go directly to one firm that would be known to have the necessary expertise and who would probably have done work for the Department in the past. The more usual arrangement is to go to tender on the basis of terms of reference drawn up for work which we are involved in doing ourselves. In this case however, it was not work we were involved in doing ourselves, it was professional expertise which the State’s legal team said was essential for the conduct of the work of the Tribunal. We took that advice on the basis that they were representing the State’s interest and would be similar to a senior counsel representing the State’s interest in, for example, a normal court case.

Chairman: We know they were hired before you knew about them, that they were already in place and that procedures were not observed and tenders and tax clearance certificates were not sought. However, we do not know who told them to start work even before you knew they had started. Will you shed some light on that? Who was the official or person acting on behalf of the State who told them to start work?

Mr. Dowling: I cannot answer that because I do not know. I understand that their recruitment was organised by the State’s legal team, but I do not know who in that team organised it. It is true that tax clearance certificates were not obtained at the time, although in the case of John Hogan, a tax clearance certificate was obtained prior to any payment being made to him. In the case of all concerned in the Tribunal, certificates showing that their tax affairs were in order were subsequently obtained.

Chairman: Will Mr. Russell shed any light on who told those people to start work? Who telephoned them, wrote to them or informed them to start work on 2 March?

Mr. Russell: In the case of Mr. Hogan of John Hogan & Associates, I think it was a member of the State’s legal team on foot of a decision taken by the entire team that it was necessary to engage consultants of both types.

Chairman: Who was it in the case of public relations consultants?

Mr. Russell: I think it was a member of the State’s team, but I cannot be certain about that.

Chairman: At what point did they seek the go ahead from your Office?

Mr. Russell: They did not seek the go ahead from the Attorney General’s Office at any stage. At a later stage, in the case of each consultant, they sought the continued retention of the services of that consultant. They wrote seeking the retention of the two consultants via the solicitor in the Chief State Solicitor’s Office who was instructing them.

Deputy Durkan: By his own admission, Mr. Dowling said this was not a normal situation as it transpired. Would that have been the view of other Departments? Was it generally accepted in the Department and in other Departments that the Beef Tribunal was not a normal situation and that perhaps it would take longer than normal in such circumstances given that there were only two previous inquiries which were of a shorter duration?

Mr. Dowling: The question you asked was how would we normally recruit and remunerate consultancy firms. The normal situation when recruiting consultancy firms for work in which the Department is involved is that we draw up terms of reference and go to tender in most cases, etc. As far as we were concerned, this was abnormal in that it involved consultancy firms being engaged by the legal team representing the State at a major tribunal. They were not, therefore, recruited in the way which was normal for consultancy firms being recruited for work for which the Department was directly responsible.

Deputy Durkan: Did you ask any questions about the abnormality of the appointments given that as Accounting Officer you might have been asked questions about it at a later stage?

Mr. Dowling: Initially and subsequently we queried the need for the retention of the services of both firms. We were strongly told by the State’s legal team that their continued presence as advisors to that team was essential.

Deputy Durkan: How did the State’s legal team communicate with your Department? Was it by telephone, by letter or by some other means? Who communicated with your Department? You admit that communication was unusual, that the nature of the investigation was likely to be unusual and that the nature, manner and method of the appointment of consultants was also unusual. Is it not normal practice in your situation to set down some parameters which might safeguard you and the Department in the event of questions being asked at a later stage?

Mr. Dowling: I explained how the initial communication occurred. Subsequent communication was sometimes by telephone but more often by letter either through the Attorney General’s Office or directly from the State’s legal team on at least two occasions. The contact which I am aware of came in written form from the State’s legal team - in two cases from Conor Maguire SC and in another case from Henry Hickey SC. The reason it was not normal was because it did not relate to our own work. They were professionally engaged by the State’s legal team and we had to accept, since we had no way of disagreeing with it, their word that they were essential to the proper conduct of their work in the Tribunal. As time went on we attempted to control costs to a greater degree by seeking to have fees reduced and to set a limited number of days initially, particularly for the Hogan consultants.

Deputy Durkan: How did the legal team get authorisation to direct a Department about the nature of further appointments given that they were appointees?

Mr. Dowling: The legal team was of the view that the engagement of these consultants was essential to the way in which they could conduct the State’s business in the Tribunal. We had no way of disagreeing with that assessment. The team were engaged by the Attorney General to present the State’s case and they felt its case could not be well presented without the services of these consultants being available to them. I cannot explain any further why they felt it was essential but they made it quite plain on at least three occasions that that was the case and that the services of the consultants were essential for reasons which went beyond the Department and they reminded us that they represented a number of other agencies also.

Chairman: We are treading over old ground. The purpose of this week’s and last week’s hearings is to find out why it was not possible to renegotiate legal fees downwards and why efforts are still not being made to renegotiate fees downwards in view of the fact that it was possible to do so in the case of both consultants, Irish Steel and TEAM Aer Lingus workers, etc. Mr. Russell told us last week that no contract existed with the lawyers and that if there was one, it was verbal and not written. We were told there was no contractual basis on which to renegotiate downwards. This is unsatisfactory.

Deputy O’Malley: There are matters of importance in addition to the matter which you adverted to there. I would like to put some of these to the two Accounting Officers. Mr. Dowling has just said that he was told that the employment of these two sets of consultants was “essential for reasons that go well beyond the Department”. Who said that to you?

Mr. Dowling: The legal team.

Deputy O’Malley: Who in the legal team?

Mr. Dowling: Subject to correction, I think it was Conor Maguire. I can check that.

Deputy O’Malley: What you were told was undoubtedly right - they were essential for reasons which went well beyond the Department. They were essential for personal and political reasons, it appears. Would you, as Accounting Officer, have allowed the payment to these people of approximately £300,000 if you knew that they were being employed to further the interests of one member of the Government to the detriment of the interests of another member?

Mr. Dowling: I can confirm that the letter stating that the presence of the two consultancy firms went beyond work which the Tribunal team was doing in respect of the Department’s interests at the Tribunal was from one of the senior counsels, Conor Maguire.

Chairman: Can you quote that letter?

Mr. Dowling: I could but it is a long letter.

Deputy O’Malley: Perhaps he could circulate the whole letter later.

Chairman: OK.

Mr. Dowling: He said that their interest covered five Government Departments, six State agencies and three semi-State bodies, all of which are named.

Deputy O’Malley: Was the Department of Industry and Commerce named as one of those whose interests were being looked after?

Mr. Dowling: Yes.

Deputy O’Malley: Did you inform the Department of Industry and Commerce that these two sets of consultants were there to further its interests or its Minister’s interests?

Mr. Dowling: We took the view that the State legal team, on its own statement, was representing the interests of the 14 sets of agencies referred to.

Deputy O’Malley: Would you agree that it was a curious matter that if these people were employed for the benefit of five or six Departments and 14 agencies, that some of the Departments were never even told of their existence? How could they avail of their undoubtedly valuable services?

Mr. Dowling: I am not aware of that. I assumed that the contact between the State legal team and the other Departments was similar to that between the State legal team and our Department, in the sense that there was regular contact between the team and the officials of the Department who were operating in the Tribunal on our behalf.

Deputy O’Malley: Who in the Attorney General’s Office contacted you about the employment of Carr Communications as PR consultants?

Mr. Dowling: The letter was written to us by Mr. Russell on behalf of the Attorney General. The letter specifically said that he was writing at the request of the Attorney General.

Chairman: What was the date of that letter?

Mr. Dowling: 28 April 1992.

Chairman: They had already started work on 2 March.

Mr. Dowling: No, Mr. Hogan began work on 2 March. I think that Carr Communications began slightly later.

Chairman: We were previously told that they both started work on the same day.

Mr. Dowling: I would not want to wish to contradict you, I will have to check that.

Deputy O’Malley: Could you circulate Mr. Russell’s letter to you also?

Mr. Dowling: It was 9 March.

Chairman: That is different information to that which we were given previously.

Mr. Dowling: I will check it but according to our schedule the firm does not appear to have been paid before that.

Chairman: We have the documentation here from you. There is a letter from you, dated 18 February 1994, in which you say that Carr Communications was engaged by the State legal team from 2 March 1992.

Mr. Dowling: There is another document here which seems to suggest that the first day for which he was paid was 9 March. It is not a huge difference but we will clarify it.

Deputy O’Malley: At page 261 of your evidence here on 10 March 1994, you told me that you were told by Mr. O’hUiginn, the then Secretary of the Department of the Taoiseach, that the Taoiseach had agreed that Mr. Hogan should be appointed on the specific advice of the legal team. Did the Department of the Taoiseach subsequently put out a different version of that and say that it was not agreed by the Taoiseach?

Mr. Dowling: Certainly, the contact with me by the then Secretary of the Department was to the effect that the Taoiseach had accepted the advice of the legal team that ¹Carr Communications should be engaged. As I understand it from the letter which Mr. O hUiginn subsequently sent to this Committee, when he said that, he was working on a general instruction which the Taoiseach had earlier given to him that the Tribunal and the State’s legal team should be facilitated in all ways. That was the meaning which he attached to the words which were said to me. I can only confirm what was said to me at the time.

Deputy O’Malley: Thank you. You may have seen the Official Report of the Dáil questions for 20 April 1994 when the Taoiseach said, in reply to Deputy Rabbitte, that he had nothing whatever to do with the appointment of either of these firms.

Mr. Dowling: I have seen the Official Report.

Deputy O’Malley: Notwithstanding what was said, you stand over your evidence to this Committee, both on the last day and today.

Mr. Dowling: Yes, but I am standing over that Mr. O’hUiginn expressed the request to me in those terms. However, he subsequently qualified that, as I said, in his letter to this Committee which said that when he said that, he was working on the basis of a general instruction given earlier by the Taoiseach rather than a specific instruction in regard to this particular case.

Chairman: Which letter are you referring to?

Mr. Dowling: There is a letter of 10 March------

Deputy O’Malley: I am not familiar with that letter.

Chairman: I have no recollection of such a letter.

Mr. Dowling: It is a letter from 6 May, I apologise.

Chairman: It is dated a week after the Taoiseach gave his reply in the Dáil.

Mr. Dowling: The letter is dated 6 May 1994.

Chairman: To whom and from whom is the letter?

Mr. Dowling: It is to Ms Connolly from Mr. O’hUiginn.

Chairman: It is in the appendix to the annual report.

Deputy O’Malley: It is written from 20 Oldbridge Road, Dublin 16.

Mr. Dowling: I assume that is Mr. O’hUiginn’s private address.

Deputy O’Malley: Was he retired at that stage?

Mr. Dowling: Yes, he was.

Deputy O’Malley: He must have been asked to mend fences. Obviously, what he told you did not suit in retrospect.

Chairman: The reality is that neither Mr O’hUiginn nor you, Mr. Dowling, would return here on summons from this Committee to be cross examined on this matter. I have already stated that this Committee takes a very serious view of that failure on your part, in particular, as an existing Accounting Officer. I do not think that we can progress this matter until we get the power to compel Mr. O’ hUiginn to return to be cross examined on this issue.

Deputy O’Malley: You will recall that Mr. O’ hUiginn said to you in spite of what he said subsequently in his letter in May, that it was on the specific advice of the legal team. Does this not appear to contradict totally what Mr. O’ hUiginn told you the first time when he said that it was not a specific but rather a general direction?

Mr. Dowling: Mr. O’ hUiginn said to me that the specific advice of the legal team that the consultancy firm should be engaged had been accepted by the Taoiseach and he was passing it on to me. What he subsequently said to this Committee, as I understand the letter, was that in the contact he had with me he was acting, not on a specific instruction from the Taoiseach but, on a general instruction given to him at an earlier stage that the work of the Tribunal and the State’s legal team should be facilitated at all reasonable times - or some such words.

Deputy O’Malley: What was said to you at the time - not what was subsequently corrected - was that this matter was being recommended or the employment of these people accepted because they were specifically requested by the legal team.

Mr. Dowling: That is correct.

Deputy O’Malley: It is deplorable that £300,000 of State money was used for no public purpose but rather to enable one member of a Government to do down another member of the same Government. In those circumstances I ask whether that money should be refunded by somebody because it was never expended for a public purpose.

Chairman: This issue -----

Deputy O’Keeffe: Personal viewpoint.

Chairman: We are not going to resolve this issue today. I note the points and personally take a poor view of the fact that normal procedures were not observed. Serious omissions were clearly made by everybody, including Mr. Dowling, in not observing Department of Finance guidelines for hiring these people. No strenuous objection seems to have been made by him to the breach of these procedures. Am I being unfair to you, Mr. Dowling?

Deputy Foley: Mr. Dowling referred to correspondence from Mr. Maguire of the State legal team which confirmed that the consultants were representing a number of Departments including the Department of Industry and Commerce. Is that correct?

Chairman: That is what I understand.

Deputy Foley: He was instructed on that basis. It was not for him to notify the various Departments. The legal team was responsible.

Chairman: But clear financial guidelines are laid down for the hiring of consultants and so on. These included public tendering, clear terms of reference and the necessity to request tax certificates in advance and none of these procedures were observed. These people were hired and no public servant directly seems to have given approval. Regardless of the issues involved and obviously there is a political dimension to those issues, we, as a Committee, have to say that this was wrong and there were lapses. I put a point of criticism to Mr. Dowling and in fairness we should allow him to respond.

Mr. Dowling: I repeat this was not a normal situation. A legal team appointed by the Attorney General to represent the interest of the State before a Tribunal had indicated to us that they regarded it as essential for the conduct of their business at the Tribunal that the services of these two consultancy firms should be engaged and retained and that they had in practice in any event engaged them prior to coming to us. It would not have been possible to go to tender in that event. While we did not go to tender we did seek and obtain the sanction of the Department of Finance for the expenditure involved. Therefore, the expenditure was properly authorised and accounted for.

Deputy Doherty: Are the decisions of the Attorney General in the fixing of fees binding on you in this respect?

Mr. Dowling: We would have taken the view that they were although this is obviously not a view that everybody shares. We would have taken this view largely because in all other cases where we are involved, for instance in a court action as defendants or plaintiffs, the Attorney General organises the counsel to represent us and sets the fees. We have no function in either regard. The only difference in this case was that the fees were paid out of our Vote because the original decision was that all expenses involved in running the Tribunal would be paid out of our Vote. We took the view that the Attorney General’s decision on the engagement of counsel and their remuneration was, in practice, binding on us. We would have had no basis on which to contradict him.

Deputy Doherty: Would you agree, Mr. Dowling, that it establishes a very dangerous precedent? Somebody clearly has a function allowing him to fix fees and I am not sure from which source or authority such a function is derived. You, as Accounting Officer of the Department of Agriculture, were required to adhere to a decision taken, it would appear unilaterally, by the Attorney General to pay out State funds and to believe it was correct and right to do so even though you are the Accounting Officer responsible at all times for payments from your Department and more particularly you have a responsibility to delay, refuse or raise questions about them rather than, as appears to have happened in this case, acquiesce without protest.

Mr. Dowling: I accept a degree of confusion probably exists in this case because of the way in which the Tribunal funding was organised. If there is a similar Tribunal in the future, it would be more sensible if the arrangements for the State’s involvement in court cases was applied to the legal costs for the State’s team in a Tribunal. If the Attorney General’s advice on the level of fees is to be critical, it would be more logical for legal fees to be included in the Vote of the Attorney General’s office. However, that was not the decision taken in this case and we have to live with that.

Deputy Doherty: Did you at any time immediately after becoming aware of the level of fees agreed or at any subsequent time during the period of the Tribunal express any concern about the level of fees?

Mr. Dowling: Informally a number of people may have expressed concern at the level of fees. This concern was mainly based on natural surprise but also on ignorance. I did not know nor do I yet know whether such fees are the norm in legal cases in this country. Our understanding at the time from any contact we made was that the fees were fixed in line with the going rates -----

Chairman: Yes.

Mr. Dowling: ----- and took account of the complexity of the case. The letter to us from the Attorney General’s Office initially said that: “The amounts of these fees are based on the complexity and difficulty of the case - there is a great mass of papers from the several Departments involved - professional standing of the counsel and the importance of the issues at stake”.

Chairman: That is correct and it has been said ad nauseam. However, it was also said to us during earlier hearings on this matter that the level of fees was fixed because it was never expected that the Tribunal would last as long as it did. Yet no attempt was made by anybody to renegotiate these legal fees even though you took the initiative to renegotiate the consultants’ fees.

Deputy Doherty: That is the point. This is a fish and flesh attitude - one situation was treated differently from another. Is it not normal, Mr. Dowling, that in your work as Accounting Officer you encounter situations from time to time where payments of which you would have had no prior knowledge must be made? Indeed you would be working from a position of ignorance, as you have described it, about certain payments that might have to be made for the first time. I presume that in such circumstances you would investigate whether you were getting value for money. Would it not be realistic to expect that of you?

Mr. Dowling: Yes. If the expenses were in regard to the normal work of the Department we would have a basis on which to investigate whether we were getting value for money. We did not have any basis to do so in this case. One person was in a position to advise us as to the correct level of fees and we had no option but to take that advice.

Deputy Doherty: Are there not situations where you would have similar experience - where you would investigate fees in respect of contracts you would enter into on behalf of your Department although you would have no previous experience or knowledge of such contracts? Are you telling me that because something is unusual, new or different and that because you get a request to pay the fees from a person whose status is no more than that of Attorney General - and we have already established what that is - you proceed to accept the level recommended or prescribed and you do not question it?

Mr. Dowling: There is a difference. In regard to virtually any other case - whether it is the first time or not - it would relate to work which is proper to the Department and in which we would have some experience. We would have a basis for questioning the fees and we would probably go to tender to assess the going fee in the market. In this case, we had no such basis and we had no possibility of going to tender. The person who fixed the fees did so in all other cases in which the State was involved. I cannot see how in those circumstances we had a possibility of negotiating a lower rate of fees.

Deputy Doherty: Why did you make the distinction between the consultants recommended by the State legal team and their fees in so far as you sought to negotiate them downwards?

Mr. Dowling: It is not the State legal team that is at issue in regard to the fixing of fees.

Deputy Doherty: I know.

Mr. Dowling: It is not their opinion; it is the opinion of the Attorney General. With regard to the consultants, that is an area in which we have a degree of other experience.

Deputy Doherty: Similar?

Mr. Dowling: We have been involved with other consultancies.

Deputy Doherty: No. I asked if it was similar. This consultancy was recommended as being necessary for the purposes already stated by the legal team.

Mr. Dowling: It was recommended as being necessary. However, in the case of the legal fees the person responsible for determining fees for the State decided what the fee should be from his experience. In the case of the consultancies no such other person existed so we had some possibility of negotiating. There was nobody between us and the legal team - which only advised us that they should be employed - to determine what was a reasonable fee. We took the opportunity to haggle. We did not have a similar opportunity to haggle about the legal fees.

Chairman: You did not try.

Mr. Dowling: If one does not have an opportunity, one cannot try.

Chairman: Did it not occur to you to create the opportunity?

Deputy Doherty: You wrote a letter concerning the fees to Mr. Russell on 21 July, 1993. Is that correct?

Mr. Dowling: Yes, at the request of the Chairman of this Committee.

Deputy Doherty: Prior to the request from the Chairman, had you any views as Accounting Officer on the level of fees you were asked to pay?

Mr. Dowling: I have already said that I was surprised at the level of the fees. Equally, I was told that these were the normal fees payable for such counsel in cases of such complexity. I had no way of disagreeing with that and there is no evidence that that is not the situation. We are not experts on that. A person is employed as Attorney General whose view is the critical view in regard to what is the going rate of fee.

Chairman: We have two difficulties with that. First, we were told several times - especially during the early hearings on this subject - that it was not expected that the Tribunal would go on for as long as it did. The fee was justified on the basis that it would be a short duration. Secondly, we are told that the Attorney General is not accountable to this Committee. Expenditure was undertaken by you on the basis of the opinion of somebody who is not accountable to this Committee. An area of public expenditure, therefore, is not controlled by Parliament through this Committee. Mr. Russell has rightly pointed out in his evidence to this Committee in the past that he was not the Accounting Officer for the money expended so he cannot answer for it. That is right - he cannot. In the letter to which he referred from Mr. O’hUiginn he makes the same point - that you were the Accounting Officer.

Deputy Doherty: This is the kernel of what I am trying to establish. Mr. Russell has stated his position in relation to the decision to fix the fees. It appeared not to be his function. The Attorney General is not answerable. He seems to consult with you through Mr. Russell, who has no function. You are the person who has absolute control of the purse strings of your Department. On a presumption that the Attorney General knew the correct amount it was deemed proper that his figure should be accepted without any other investigation or analysis. Surely, having regard to the role of the Attorney General which is one of non-accountability, you have a serious responsibility - a responsibility that was ignored.

Mr. Dowling: With respect, I repeat that we had no basis on which we could have decided whether the fees which the Attorney General set were correct.

Deputy Doherty: The fees were agreed in the context of a daily figure to be paid although you or the Attorney General did not know the number of days the Tribunal would last. If it lasted for 10 or 20 days the fixed amount would be paid. Surely, you must have at some time been conscious of your accountability and your accounting responsibility and must have concerned yourself with the fact that this Tribunal was continuing. You know that at some point in time you could have said “Stop. We will pay you for the 10 or 20 or 40 days but we will not pay you at the same rate.” You did not do that. Is that true?

Mr. Dowling: When we asked about the possibility of renegotiation we got the clear advice of the Attorney General’s Office that there was no basis to renegotiate.

Deputy Doherty: At that point, it might well have been the case. However, throughout the work of the Tribunal you could have at any time recognised that this fixed daily payment was unacceptably high and worthy of your criticism. That was not forthcoming nor was it given.

Mr. Dowling: If there was no basis of renegotiating there was no basis to renegotiate. It does not matter what period one mentions. I wish to put on record that the fees fixed by the Attorney General in respect of the State’s team were, by and large, the same fees which the Chairman felt were reasonable in respect of the Tribunal’s team.

Chairman: Two people, who are not answerable to the Committee, are setting levels of public expenditure which are not under the control of Dáil Éireann. This is not in accordance with the Constitution. It is not acceptable that lawyers should fix high fees for lawyers without the control of the Parliament.

Deputy Doherty: It is equally important at this stage, subject to the view of the Committee and due to the unusual circumstances in which Mr. Dowling may have found himself, that he should be in a position to give views to the Committee as to what he might do in similar circumstances in the future should they arise.

Chairman: I am sure that lessons have been learned all around. Deputy McCormack, perhaps you could address the subject briefly.

Deputy McCormack: I will, Chairman. However, I have not interrupted the proceedings for the past two and a half hours; I have not spoken for two minutes yet. I clearly indicated my intention to speak earlier and I thought the Clerk of the Committee took note. However, I will be brief as I was on the last occasion. Did Mr. Dowling say the legal team made it known that they requested consultants after the consultants had started work?

Mr. Dowling: In the case of Carr Communications, that is the situation. In the case of John Hogan and Associates, he began work on 2 March and the contact with me by the then Secretary of the Department of the Taoiseach, was on 3 March. I cannot say that the request from them came before or after he was appointed because it could have come on the same day.

Chairman: It was, of course.

Mr. Dowling: The request to me from the Secretary of the Department of the Taoiseach was on 3 March. I do not know the date on which the team contacted the Secretary of the Department of the Taoiseach.

Deputy McCormack: This clearly establishes that the legal team did not hire these people. A question was already asked as to who hired them and the Committee did not receive an answer. I have a question for Mr. Russell. It appears that the opinion of the Office of the Attorney General was that there was no legal basis for the renegotiation of fees. Apart from what Deputy Doherty and others said about the duration of the Tribunal and that it was not anticipated it would go on as long when these people were hired, was there not a basis in Mr. Hogan’s case? In the first few days, apparently Mr. Hogan was part of a back up team and the fees or the entire fee covered him and his back up team. When did it become necessary for Mr. Hogan to have a back up team? Was that not a reason for renegotiating the fee?

Mr. Russell: I had no knowledge at any stage of the amount of the fees being paid to either consultant.

Deputy McCormack: Mr. Russell’s office was asked at one stage whether there was a case for renegotiating the fees-----

Chairman: Let us be clear.

Deputy McCormack: -----a basis for renegotiating the fees. The reply given was that there was no basis for renegotiating the fees.

Mr. Russell: This was the legal fees, the fees of counsel and not the consultants.

Chairman: To be fair, it was not Mr. Russell’s view. He was conveying the Attorney General’s view.

Deputy McCormack: I am talking about his Office, not Mr. Russell personally. Would there not have been a public opinion or a moral case for renegotiating the fees? This can happen at any level. For example, the recent increase in ministerial salaries. People knocked at doors in Cork and found out how the public felt. At least one of the former Government parties, which will be in Government with other parties, stated that this is its policy and we presume those rises will be renegotiated in the next couple of weeks.

Chairman: Yes, but the judges’ increases cannot be rescinded.

Deputy McCormack: I am talking about Ministers’ increases. Public opinion demanded that this should be the case. Does Mr. Russell not believe it was reasonable, when the Tribunal continued and Mr. Carr and Mr. Hogan were employed at a cost to the State of £300,000, that there would have been a moral reason for renegotiating their fees?

Mr. Russell: I had not any view about the fees of the consultants because I did not know what they were at any stage. As regards the lawyers, it strikes me that, being lawyers, they would want to adhere to the agreement made with them for the amount of the fees. It was an open ended agreement, that is, there was agreement with them as to how much the brief fee would be and how much the refreshers would be every day for the duration of the Tribunal.

Deputy McCormack: In deference to the Chairman, I will pass.

Chairman: Was the phrase “for the duration of the Tribunal” written down anywhere?

Mr. Russell: No. Nothing was written down because it is not the practice to have a written contract with counsel. When counsel is engaged for a case, he is engaged for the whole of the case.

Deputy Foley: I return to points made about the fees, which is the main bone of contention over a long period of time. The impression being given is that Mr. Dowling was in a position to renegotiate these fees but he had no choice in the matter. He was dictated to by the Attorney General in correspondence that the fees were fixed. This is the point I wish to put on record. Where he was in a position to renegotiate consultants’ fees, he did so. However, he was not in a position to renegotiate these fees and this should be put on record.

Deputy O’Keeffe: On the last occasion, Mr. Russell indicated that a number of people had lodged claims. He may have mentioned a figure of 17. Would he be in a position to give the Committee details of the claims which have been lodged to date?

Mr. Russell: I am afraid not. I think there were about 20, on the last occasion. If the Committee thinks it useful, I could convey this information. I presume there would be no difficulty about that. This question takes me slightly by surprise. I do not know if there is any confidentiality-----

Chairman: If there is any difficulty Mr. Russell can let the Committee know. Will he allow us to have the information?

Mr. Russell: I will.

Deputy Durkan: Mr. Russell stated that, in many cases, legal fees are agreed after the event. Is this correct? Why was this not the situation in this case? Why was it not possible, as I understand it is customary in such instances in other areas, to pay a sum on account, with the final account furnished after the event?

Mr. Russell: If counsel ask how much they will be paid and say they want to know how much they will be paid before they agree to act for you, in that situation, you must tell them how much they will be paid. In the majority of cases, they do not ask that question. However, they did ask in this case because, I suppose, they realised that the case would last longer than the average case.

Deputy O’Keeffe: Mr. Russell’s letters said there was no legal or contractual basis on which fees would be reviewed. It was stated that there was no written contract. Would this not suggest that there is an opportunity, given that there is nothing in writing by way of a contract? Is the State and the Committee to abide by a gentleman’s agreement, given that practice in the past has been that fees are agreed at the end of the proceedings?

Mr. Russell: Where counsel, as in this case, asked that the fees be fixed before they would agree to act, we were bound by it. For example, if counsel is not paid the agreed fee, he can report the matter to the Bar Council. As a historical anomaly, he cannot, in fact, sue for his fees but he can make sure that nobody else will work for the solicitor who welshes.

Deputy O’Keeffe: It would be entirely accurate, therefore, to say that there was no legal basis, no contractual basis. What we are talking about is a gentleman’s agreement.

Mr. Russell: It is a bit more than that. There were gentlemen involved, but it still involved an agreement which both parties regarded as binding and there would be enormous repercussions for the State engaging counsel if the State simply broke its word.

Chairman: Nobody is proposing that the State breaks its word. What was proposed is that the State make an attempt to go back to those people and renegotiate. No attempt was made. It is clear that Mr. Dowling as Accounting Officer in the Department of Agriculture was put in an invidious position. He is appointed as the Accounting Officer for the Vote out of which this money has to be taken yet, effectively, he had no control whatever over it.

Deputy O’Malley: It is unsatisfactory that other people from other Departments who were asked about this said that it had nothing to do with them as Mr. Dowling is the Accounting Officer.

Chairman: It is deeply unsatisfactory that everybody is pointing the finger at Mr. Dowling as the Accounting Officer whereas, in reality, Mr. Dowling had no control. We have already identified this as a significant failure of our control system and we are assured that there are new control systems in place and that this will not happen again. We have discovered between last week and this week that there was no written contract with counsel for the State or counsel for the Tribunal. When Mr. Russell wrote back to Mr. Dowling at the request of the Committee that there was no contractual basis for renegotiating legal fees I understood that to mean that there was a written contract. Obviously, I was mistaken in that respect. Eighteen months after having made that original request for renegotiation - and another subsequent request - no attempt was made to do so. The Committee’s concern is still live. The horse may have bolted, so to speak, in respect of counsel for the State and counsel for the Tribunal but the Committee surmises that the legal fees thus set are the basis upon which other fees will be taxed by the Taxing Master. Therefore, even at this late stage if we can reduce those fees we could achieve a significant saving for the State. The Taxing Master has not yet fixed the costs of the other 108 lawyers involved in the Tribunal. In that context Deputy O’Keeffe has made the proposal that the Accounting Officer of the Office of the Attorney General be requested to write to the legal personnel involved in the Beef Tribunal for the State requesting a reduction in the level of legal fees charged in view of the timescale of the Tribunal, and the fact that a precedent is in place whereby consultants have agreed scaled down fees in similar circumstances. Deputy O’Keeffe referred to legal personnel involved for the State but not to legal personnel involved for the Tribunal and that may somewhat complicate the case.

Deputy O’Keeffe: If we could set the precedent with those involved for the State we could advance from there. Knowing the honourable gentlemen and women involved they may wish to have the opportunity to scale down those fees.

Chairman: Would you have any difficulty writing such a letter, Mr. Russell?

Mr. Russell: I do not think so if the Committee would like me to do so. It is true that I would be writing about fees which, if repaid - we are speaking about repayment as they have been paid - would go to another Vote. That would not be a bar on my doing so.

Deputy O’Keeffe: Mr. Dowling has his hands out.

Chairman: Is the proposal agreed? AGREED.

VOTE 13 - OFFICE OF THE ATTORNEY GENERAL

Mr. Mathew Russell, Senior Legal Assistant, Office of the Attorney General, called and examined.

Chairman: Mr. Russell has been in correspondence with the Committee about this Vote. Are you in a position to answer in general terms today about the Vote?

Mr. Russell: I am afraid not. The Committee will recall that in October I was notified that the Committee had fixed 12 January for the examination of the accounts. That would be the normal period of notice which would have been entirely adequate. On Friday afternoon we were notified by telephone that the Committee wished to advance the date of the hearing from 12 January to today and I replied pointing out the difficulties which the Office has faced. I pointed out that quite apart from the shortness of time, which, in any event, would make it impossible to do the work in time for today, we had certain other difficulties. Our office manager who deals with the administration has been absent through illness, indeed, for a longer period than I mentioned in my letter - I mentioned a fortnight in my letter but it is about five weeks. The assistant office manager who is the only other member of our administrative staff - we have only two - has been heavily involved with the visiting personnel from other Departments who are engaged in the examination of administrative procedures in the Office. I have been heavily involved recently in certain other matters which have occupied me virtually full-time, particularly in the last few days. I spent most of the working day yesterday in Leinster House rather than in my office in connection with the business of the Select Committee on Legislation and Security. All of this has prevented me from making the preparations which are necessary when one appears for examination by this Committee.

Chairman: I understand the notice is short. Bringing forward the Vote was prompted by the difficulty you had in answering some questions last week because you felt that you were here on a specific brief. I can understand that you would not be ready to answer detailed questions about the Vote today but questions have come to public attention - you alluded to them in what you have just said - about staffing levels in the Office. You say that there are two administrative staff. Had requests been made for additional staff for the Office of the Attorney General?

Mr. Russell: There had been requests for additional staff and for restructuring in the Office over the past couple of years in particular. It was our intention to ask for additional administrative staff also because both are needed.

Chairman: Were the requests made to the Department of Finance?

Mr. Russell: Yes, in regard to extra professional staffing and restructuring.

Chairman: When were the requests made?

Mr. Russell: There were a number of separate requests at different times in the past two years. A small proportion have been met. The majority have not.

Chairman: When were the small minority met? Was it recently or before the recent controversy?

Mr. Russell: About three weeks ago.

Chairman: Nearly all the requests were turned down until about three weeks ago?

Mr. Russell: I should make that a little clearer. The development which occurred was that we were given two additional legal assistants in the Office who took up duty three weeks ago. That had been sanctioned by the Department of Finance last May and then the recruiting process took place.

Chairman: What overall number of extra staff did you request in the last two years?

Mr. Russell: We requested three legal assistants-----

Chairman: Some administrative staff also?

Mr. Russell: I do not want to speculate, I would have to check. There were certainly requests for restructuring which was thought necessary; those requests were not met but I would prefer not to go into detail until I have the opportunity to refresh my memory on that subject.

Chairman: Did that restructuring apply to the system of management in the Office of the Attorney General?

Mr. Russell: It applied to the professional management.

Chairman: I think that is relevant because of recent developments.

Deputy Doherty: Chairman, in the circumstances I think it is better to adjourn to allow Mr. Russell the opportunity he feels necessary. I move that we adjourn.

Chairman: I am in the hands of the Committee. There is a proposal that we adjourn.

Deputy Durkan: There is not much sense in pursuing the issue if we do not have the information.

Deputy Foley: I second the proposal.

Chairman: The brief of the Committee of Public Accounts includes the efficiency and effectiveness of the Office of the Attorney General. I feel that given the recent controversy we have a duty to address that question. In fairness to Mr. Russell, we have a duty to give him an opportunity to give the full picture.

Deputy Doherty: Yes, that is correct.

Chairman: I am anxious to do that. If the Committee feels we should adjourn at this point I am happy to abide by its wishes. Is there anything further you wish to say on that matter, Mr. Russell?

Mr. Russell: I have the impression that the management issues would arise under the 1994 accounts, under the Comptroller and Auditor General (Amendment) Act, 1993. As you will know there are a number of examinations taking place in the Office which are to be reported to Dáil Éireann. Those reports will deal with the management matters.

Chairman: Yes but nothing in that will preclude this Committee from examining as it sees fit any area of public administration or public finance.

Mr. O’Farrell: I appreciate Mr. Russell would not have studied the files but I would not like it left on the record that the Department of Finance had refused a significant staffing request from the Office of the Attorney General. In terms of numbers there is only one head of staff sought which was not sanctioned and even that would be subject to review in the light of workloads — that occurred when three legal assistants were sought and two were sanctioned. The restructuring would not have been extra heads of staff; it was a proposal to upgrade three officers in situ from one grade to another.

Deputy O’Malley: Would that make them more efficient?

Mr. O’Farrell: The request was not sanctioned so the Department of Finance view was that it would not necessarily have led to more output. Structural and administrative matters are the subject of the review being conducted at present and that will emerge from the outcome of the review. I would like to put the record straight that there is no significant gap in terms of numbers between what was sought and what the Department of Finance sanctioned.

Chairman: The scheduled date for dealing with the Office of the Attorney General is in early January. I think we should give notice now that - notwithstanding the other controversies which have led to a fierce spotlight and strong pressure on the Office - the Committee will be anxious to establish the level of efficiency and effectiveness, as we tried to do in the Office of the DPP over the past number of months.

We wish to establish the type of files which come in; the average length of time taken to deal with the files; the process by which they are handled; the number of staff, the manner of accounting within the Office and the manner of controls. We will be asking questions in relation to those issues. There is a consensus that the Committee should adjourn at this point so the meeting is adjourned.

The witness withdrew.

THE COMMITTEE ADJOURNED.

¹See letter dated 13 April 1995, from Mr. Michael Dowling, Secretary, Dept. of Agriculture & Food.