The Agreement in Principle

Letter from the assistant secretary to CORI dated 6 November 2001

4.41. The Committee feels that a letter from the Assistant Secretary on 6 November to CORI was the key letter in the negotiating process. It was a written offer by the Department to the Congregations. The Committee notes that in the letter, the Department totally reversed its position and made major concessions on its negotiating position. The letter stated the State would be willing to provide a permanent indemnity against litigation in cases which would come under the remit of the Redress Board. It outlined the nature of the package the State would accept, which was in line with what the Congregations were requesting. It stated that the contribution could be capped at €127 million and that the problem of previously transferred property, against which the Department had always held out, would be conceded, back to the date of the Taoiseach’s apology. It concluded that if past transfers were excluded, the contribution envisaged from the Congregations would be of the order of 10% to 20% of the expected final liability.

4.42. On 6 November 2001, the number of claimants was 3,000 and the estimated cost was €381 million. The Committee considered whether the decision to cap the contribution based on the estimate of 2,000 claims, when it was known that claims were running at 3,000, hampered the State’s ability to get a better deal for the taxpayer. But the notion of going beyond €127 million appears not to have arisen. The original negotiating position was that a 50:50 deal should be sought but as the discussions progressed it became obvious this was not going to be the case.

4.43. The Committee noted the effect of the letter of 6 November. The concession on limiting property transfers to the date of the Taoiseach’s apology subsequently accounted for €40 million of the overall contribution, because that was the value put on the transfers that took place back to the date of the apology in 1999. Furthermore the requirement for a 50:50 contribution was removed and the £100 million (€127 million) cap was put in its place. A very strong commitment was made on the indemnity. Although there was “much to be discussed in relation to the size, nature and timing of the Congregations’ possible contribution to the scheme particularly around the possible transfer of further property”, at that point, the negotiation was well in play. After the letter, the negotiating team was effectively stood down as the negotiations were taken up by the Minister and the Secretary General.

Concession on the Transfer of Property

4.44. The Department’s interpretation of the letter and subsequent meetings is that the Minister was seeking to break the logjam by setting out a possible way forward for the negotiations, that there was no agreement to anything and that the letter contained ideas that could be explored in discussions. It was not intended to be binding in any way on anybody. The Committee disagrees. It holds that the letter contained concessions offered by the Department to break a negotiating logjam but it is unclear that these concessions were properly authorised.

4.45. The Committee asked if the Minister made this concession unilaterally or was it checked with the Department of Finance or authorized by Government. The Department held that the only significant change was that the Congregations had not previously been told that these proposals had been discussed among the officials. Accordingly, it was not a significant change in a negotiating position but rather a position that had not previously been declared to the Congregations, in the interests of getting as much of a contribution from them as possible. A conclusion had been reached at that point that something major needed to be done if the Congregations were not to walk away from the negotiations completely. The process contemplated these things being done at a much earlier stage.

4.46. The Committee asked if the offer of €127 million was authorised by the Department of Finance prior to the issuing of the letter. The Department advised that the State’s position had been determined in April 2001 at 50:50, if it could be achieved, in the realisation that it was highly unlikely, with a cap of £150 million but with an absolute baseline of £100 million. The Committee established that the Department did not have clearance from the Department of Finance to offer a specific figure to the Congregations but the Department held that the figure of £100 million would be acceptable to the Department of Finance. It is unclear if the letter was discussed by the cross-party group of negotiators from the Departments of Education and Science and Finance and legal representatives. It appears to have been issued unilaterally from the Department.

4.47. The Committee noted that the letter indicated that the Congregations’ proposed contribution, when past transfers are excluded (€57 million), represented only 10% to 20% of the likely final cost. This confirms that the Department’s estimate of liability had moved to in excess of €500 million. When the Department got its negotiating mandate in April 2001, the estimate had been €254 million. Despite this increase, the Department was operating under the same mandate as in April 2001. It was basing its estimate on what would be a reasonable monetary contribution from the Congregations on figures that were out of date. .

4.48. The Committee asked if the leaks to the media had an influence on the position stated in the letter of 6 November and the subsequent change in the negotiating team. The Department denied that the leaks influenced the letter in any way and asserted that the letter was a declaration of the State’s bottom line in an effort to reach agreement on the matter. The Committee noted that the change in position on property that had been transferred previously had not been the negotiating team’s bottom line at any point and was not in any of the documentation. The Committee established that the legal adviser (who was a member of the negotiation team) participated in the drafting of the letter. There were discussions at official level with the Minister on the issue of property in the interests of breaking the log-jam. With past transfers going back ten years out of the question, it was hoped there might be some scope to talk about transfers from a date that had some meaning, like the date of the Taoiseach’s apology.

Congregations’ perspective

4.49. The Committee asked how the Congregations were able to convince the Minister that properties transferred to non-governmental organisations, which transfer had nothing to do with the controversy of abuse, could be construed as forming a part of the contribution. When the first offer was made in June 2001, the amount offered was far short from what the State was prepared to accept. By 16 October 2001, it was clear they were not going to bridge the gap with property and cash that the Congregations could give. The issue was whether there was some ground on which they could agree. During the conversation on 16 October, there was an acknowledgement by the State that the Congregations had been involved in very significant transfers of properties through the State for the benefit of many, particularly for people in need. These actions had significantly affected the assets held by the Congregations. The idea then developed that property which had already been transferred to other bodies (such as Health Boards and NGOs) could be taken into account. If that did not happen, agreement would not have been reached.

4.50. In the agreement reached, the State was willing to include various ways in which the Congregations had provided for social need over the preceding years. These provisions had come from the Congregations’ assets. The idea that property was in almost constant movement towards State or voluntary bodies from Congregations at this particular time was recognised as a fact and a reality by the State side. It was in that context that credit was given to the Congregations for the transfer of some earlier properties. The acknowledgement of what had been going on for the good of society was taken into account.

4.51. The Committee noted that the property element was one of the more difficult aspects of the deal to agree on, as shown in a letter on 29 April 2002 from the Department of Finance in which it was still strongly resisting this idea. One of the critical aspects is that property that goes to voluntary bodies could as easily go to State bodies. The only difficulty is that State bodies are more difficult than voluntary organisation to deal with in acquiring property. The restrictions on a health board in acquiring a property often prevent it happening.

Extent of the indemnity

4.52. The Committee pursued the understanding of the two Departments about those persons who would be covered by the indemnity. The Department of Finance felt that it covered the Congregations and members being accused of wrongdoing. Eighteen congregations signed up to the indemnity deal. However, the agreement would only have financial implications in cases that go to court. For a case to qualify, it must commence within six years of the commencement of the Residential Institutions Redress Act 2002. It was intended that the Redress Board would provide compensation for most, if not all, of the claimants. It is the Department’s belief that the number of cases which will benefit from the indemnity will be minuscule.

4.53. In the preparation of the mandate on the indemnity and the initial negotiating position (Spring 2001), it was necessary to conclude on the State’s stance. In correspondence, the Attorney General’s Office noted that it was its understanding, when previously involved in negotiations during 2001 that the indemnity would only extend to cases which would actually go before the Redress Board. In a letter to the Attorney General’s office (Spring 2002) the Minister clarified the policy objectives that while the indemnity would cover all cases which would come within the remit of the board and that it would be time limited. It appears that the Attorney General thought that it only related to cases that would go before the Redress Board.

4.54. The Committee considers that the extent of the indemnity was determined in the letter of 6 November 2001. In this letter, an offer was made that a permanent indemnity against litigation in cases which would come under the remit of the Redress Board would be given ¹. The issue of the indemnity had always been an integral part of any agreement that would be reached with the Congregations and was flagged to the respective Ministers and the Attorney General in April 2001 when the negotiating strategy was developed.

4.55. The Department argued that the precise extent of the indemnity was not ultimately agreed until 2002. The exchange of correspondence with the Attorney General’s Office suggests that there was a change of policy between Spring 2001 and Spring 2002 that widened the remit of the indemnity. The Department maintains that this is not the case. There was no change to the originally agreed mandate. The situation was that the State would be liable for costs on both sides in case that went to the Courts and came within the terms of the redress scheme. The objective of the Redress Board is to take all of the qualifying cases out of the courts. Qualifying cases involve those who were in institutional care for which the State had regulatory and supervisory responsibility. Any applicant to the scheme can go right through the process and still carry forward his or her case in the courts or he or she may go directly to the courts without going through the scheme.

4.56. The issue was defining which cases would benefit from the indemnity. The Congregations wanted the widest possible indemnity. They sought a limitless indemnity for all time in respect of all cases that could have occurred up to the date of its signing. It was ultimately agreed that qualifying cases were those that could go before the Redress Board where litigation commenced within six years of the date of the indemnity, the date of the Act. They were policy decisions made by the Minister which in part, caused the delay in responding and giving directions to the Attorney General as to exactly what was being negotiated.

4.57. The Committee asked if the Department estimated the possible contingent liability arising from the indemnity. The Department expects that the number who may be involved will be very small on the basis that if the scheme is successful, the overwhelming majority should go through the redress scheme, in which case it will cost between €500 million and €1 billion. A small number are likely to go to the courts but they are part of the same pool. Therefore, the Department’s expectation is that the indemnity will not significantly affect either estimate.

First Meeting between the Minister and the Congregations

4.58. Two meetings involving the Minister effectively broke the negotiations logjam. Prior to those meetings, the Congregations had not come close to the amount the Ministers for Education and Science and Finance and the Government regarded as the bottom line.

4.59. The first meeting was short - perhaps 20 minutes – on 7 November 2001. The Minister told the Congregations that if they were not willing to come into the redress scheme and make a contribution to it, the Government would press ahead on its own. They were asked to think about this. The Minister advised that to be included they would have to at least reach a minimum contribution level of €128 million.

Congregations’ perspective on the first meeting

4.60. The Congregations had not absorbed the full message of the letter of 6 November 2001 when they met the Minister on the following day. There was nothing in the letter that had not already arisen in the discussions and negotiations. The advances coming through were that a figure had been proposed, and there was agreement to give an indemnity and cap the figure at £100 million. The Congregations had given the State a draft indemnity document in May, which was comprehensive and would have covered all claims eligible to come before the Redress Board in due course. At the meeting, the issue on which the Congregations were surprised was the willingness of the State to accept past properties dating back three years to the Taoiseach’s apology in May 1999. That helped bridge a gap between the figure they felt they could offer and the figure the State required, which had otherwise been regarded as unbridgeable. The Congregations left the meeting to consider whether this would be a possibility. They needed to check details of what properties had been transferred within the three-year period and ascertain if the proposed way of reaching an agreement, would be acceptable to them.

4.61. The Congregations did not know how the State had computed the minimum contribution amount of £100 million. It did not seem to relate in any way to the cases they had and on which they had made their assessment of exposure. The State had the same cases. The Residential Institutions Redress Act had not yet been passed so the issue of claims increasing significantly after that was not an issue of which they were aware at the time. They were making a contribution on the basis of the claims they had. From their perspective, the first meeting discussed the issue of the contribution, the elements of the June 26 offer which had come to between €50 million and €60 million and the question of including some properties already transferred but within a three year time limit. They agreed to examine the three year possibility on property transfers and look at the package they had presented in June and see if it could be reformulated in a way that would be acceptable to their congregations, and be somewhat closer to what the Minister was looking for.

4.62. Information about the number of assets that had been transferred in the three year period dating back to 1999 was received on 18 December and passed on to the Secretary General. At that stage they also looked at other elements of the package like counselling. They wanted to address the issue of access to education, which was a recurring theme among former residents of institutions, and their need for opportunities to be made available to them. The Congregations wanted that included in the cash contribution.

Second Meeting between the Minister and the Congregations

4.63. The second meeting lasted 45 to 50 minutes. The purpose of the meeting was to explore how the Congregations would come into the scheme with the detail to be worked out separately by officials on both sides with the required legal presence. In this meeting the Congregations brought a legal adviser with them because they raised the question of the indemnity based on a document supplied to the negotiating officials many months earlier. The only detail discussed was the sum of money involved - €128 million. The Congregations gave a breakdown of what they were prepared to offer, which was an improvement on the earlier situation to the extent that they were now offering €128 million. They were also including property transferred from a period beginning in 1999 rather than ten years previously. The Minister agreed to use his good offices to put the deal to the Government but refused to discuss its terms in any way. He said he could only do so if he had the official legal arm of the State present with him.

4.64. It was made very clear by the Minister at both meetings that he was not agreeing to anything, nor was he binding anybody else to any form of agreement. He was willing to listen to the case and accept the document provided only as a summary of the issues the Congregations wished to raise. The Committee asked why the Department’s Legal Adviser (who is a barrister) was not included on the State side especially when there were barristers on the other side of the table at the second meeting. The Minister had set up a meeting with the Congregations where he wanted to move the agenda forward, re-establish a position of trust and see if an agreement could be reached. He only asked the Secretary General to come along with him and was aware that the Secretary General worked closely on this issue with the Legal Adviser. Suggestions have been made of a sweetheart deal at the meetings with the Minister. The Committee is satisfied that this is not the case. There is sworn evidence from the Secretary General that the indemnity was not discussed in detail. The time was spent on the money figure. The Congregations also confirmed there was no discussion of the indemnity up to January 2002, i.e. at the two meetings with the then Minister. They were concerned that they had not had much discussion on the elements of the indemnity. At the meeting on 7 January, they emphasised that they needed an assurance that the indemnity was in place. Following that meeting, their recollection was that the issue of the indemnity had not been responded to by Government officials.

Letter from the Congregations to the Secretary General on 14 January 2002

4.65. The Congregations were concerned that there should be no misunderstanding of what had been agreed between the two sides, especially concerning the indemnity. They felt it very prudent that what had been agreed would be committed to paper so that there would be a record of it. They were aware it was intended to bring the deal to Cabinet the next day. No documents transferred between both parties after either of the meetings.

4.66. The Congregation side took very few notes because it was very clear in their minds as to what was being agreed to. The Congregation’s legal adviser attended the meeting of 7 January 2002 as they felt it important to have a witness to what was agreed. The letter of 14 January 2002 is their record of what happened.

4.67. The Congregations had discussions about the press release arising from the Cabinet meeting specifically about the figures that would be included in the press release. The indemnity is the main issue in the letter. The Congregations felt secure in all elements of the agreement reached. Although there was no definitive response to the original indemnity proposal (May 2001) it was now on the record. In the discussions with the Minister the Congregations referred to the indemnity they anticipated. The letter is very strong on this point.

4.68. The Attorney General in subsequent letters to the Department at the end of January 2002 asked what had been agreed about an indemnity and whether there was any note or statement. This became a public row later on when the then Attorney General went public and had a difference of opinion with the Department. The Congregations were not aware of the issue questioned by the Attorney General.

4.69. When the then Minister was explaining the indemnity on “Morning Ireland” the following morning, he stated that cases that went to the Redress Board would be covered. In the following months when the technicalities of the agreement were worked out, the issue of time-limiting the indemnity came to the fore. In many ways what was hoped for had not been fully achieved at that stage. The State’s side achieved a full indemnity limited to three years after the Redress Board’s period has concluded. The Congregations’ position had been that a ten year timeframe should have been involved.

4.70. The Congregations succeeded in getting an amendment to the Schedule of the Bill which included special schools and hospitals. They had no knowledge that hospitals or long-stay places for children who were ill would be included in the Bill and learned of it only through the news. While the Congregations were pegged back on the time limit of the indemnity, it was extended to cover other institutions where litigation might arise. Claims made by victims that they were abused in hospitals and special schools run by the religious orders are covered by the indemnity. The indemnity now has a wider scope and covers more than the schools the Congregations had originally negotiated for. The Congregations had no part in initiating this.

4.71. The Committee asked the Congregations why it was necessary to mention a contribution from the insurers in the letter of 14 January. The Congregations stated they were reiterating what had been raised throughout the discussions with the State officials. They were looking and hoping for insurance as in some cases, there was no capacity for some Congregations to pay their portion of cash without insurance proceeds. They told the Minister that agreement had not been reached with the insurers.

4.72. In response to the letter of 14 January, the Secretary General indicated orally that certain items would require legal involvement and could not be put in a letter without legal advice being given.

Cabinet decision on the indemnity

4.73. When the Congregations offered to pay €128 million, the Minister took a proposal to Government in January 2002 and made an oral report. The advice to Government was that this was as far as the Congregations would go. The Government made a decision which was conveyed to the Department. The decision was not made by reference to the assets held by the Congregations, their ability to pay or the likely percentage it would represent of the overall cost of the scheme. The two meetings held in November 2001 and January 2002 resulted in a Government statement in January 2002 in which all the details were agreed in principle.

4.74. When the Cabinet agreed to the deal in principle, it did not know what the terms of the indemnity were. In outline, it would have known that the Congregations were looking for a very broad indemnity. All the Cabinet could reasonably have been told was that the principle of an indemnity was in contemplation but that no terms had been worked out.

4.75. The Attorney General noted in June 2002 on the indemnity, that an estimate of the doubling of the number of cases to 5,200 might be conservative. He pointed out that the contribution of €128 million might be insufficient and highlighted the lack of a mechanism for increasing the contribution if the number of cases increased greatly. From the very outset the Department had made the Government aware that it was almost impossible to predict what the eventual cost of this scheme would be. The Minister for Finance made the same observation. The decision, based on all the information available to it, was ultimately taken by Government with respect to signing off on the sum that would be acceptable.

The finalisation of the Agreement

Subsequent negotiation of the indemnity

4.76. From March until June 2002 work began in earnest on the draft indemnity. The final document does not look much like the one presented in May 2001 and the State drove a better bargain when it came to finalising the deal over these final months. All of the negotiations were very difficult. The main areas agreed when formalising the indemnity were a restriction that it should be time limited to three years after the life of the redress scheme. Second, a constriction was accepted on properties transferred to voluntary bodies so that the State’s interest would be protected, namely, that the voluntary body could not off-load the property for 25 years without the consent of the Department of Finance.

4.77. The Committee noted the Congregations had clear goals they hoped to achieve but the State side never came to grips with the elements of the waiver of indemnity until the deal was done by the Cabinet and the legal people started to analyse it. From the Congregations’ point of view they were trying to envisage the situation as time would go on and avoid a situation of double jeopardy. An extensive point-by-point response to the CORI submission of 21 March 2002 was sent. Items that were taken from the letter of 14 January 2002 were in fact dealt with as early as 20 March 2002. The Attorney General was involved in the finalisation stages from April to June 2002.

4.78. If a particular Congregation wished to take and defend a case, obviously it would do so for very good reasons, in which case the indemnity would fall. In other areas, it was agreed that the State will do the defending and the Congregations will provide what is required. In regard to what has happened since, the indemnity in terms of court cases was called down on just three cases in the past two years.

4.79. A key objective for the Office of the Attorney General and the Department in the discussions, was that any case to which the indemnity would be applied would go to a court hearing and that the State would have complete control over the running of the case. Thus, in the event that the Congregations wanted to have control, the indemnity would cease to apply. In addition, under the terms of the indemnity, the Congregations are obliged to co-operate in every way and give all information to the State in respect of any case that goes to a hearing. The final indemnity also provided for a process of arbitration in the event of any breakdowns between the parties that could not be resolved by agreement.

Limit of the indemnity to proceedings commenced within 6 years

4.80. Subsequent negotiations established the permanent indemnity would only apply to those cases which would come within the remit of the scheme and in which proceedings commenced within a period of six years. This had not been included in the letter of 6 November 2001 and represented a tightening of the indemnity as the negotiations continued, to the advantage of the taxpayer.

Extension of the indemnity to cover certain hospitals and schools

4.81. The scope of the indemnity was significantly broadened by the inclusion of additional institutions such as hospitals and special schools. On 12 March 2002, the legal adviser contacted his colleagues in the Department of Finance suggesting that the Congregations’ position as regards the extension of the Bill to cover certain hospitals and special schools should be teased out. These institutions were not covered by the Bill when the agreement in principle on their contribution was reached. The State negotiators asked for an increased contribution to have the indemnity extended to these institutions.

4.82. There is confusion over the lists of institutions involved. The Congregations have no recollection of the extra institutions under the headings of hospitals and special schools. They had been concerned since December 2001 that the list of institutions to be appended to the Bill was not complete in respect of institutions that had moved on from the early days of the 1930s, 1940s, 1950s and 1960s. In the 1970s and 1980s many of these institutions moved out of the large buildings into group homes. A list from each of the Congregations was provided to the Department of Health and Children, in early March 2002, of what they understood were the institutions by their present day names, or by the names they had been for the past 10 or 15 years. However, when it came to the enactment of the Bill, the original list was appended to it. The legal adviser assured the Congregations that it was not that there was any difficulty in including them but that they did not have time, in advance of issuing the Act, to check each one. No ministerial order has been made since the Act was enacted to include the list supplied. The Congregations have no recollection of where the additional hospitals and schools came from. They thought it must have come from some other lobby group who wished to have the hospitals and special schools included. Their major concern was that all of the residential institutions that were industrial schools or reformatories would be included under their more modern names as well as their previous names so that nobody who had been in them, for instance, in the 1970s and 1980s would be excluded because the name was not on the list.

Property transfers to non-governmental agencies

4.83. The agreement stipulated that past transfers to non-governmental organisations or charities would only be accepted by the State in so far as they provided for a restriction on being sold for a period of 25 years. They could not be sold without the consent of the Minister for Finance. There was also a condition that transfers would only be accepted in the event that the body which benefited was not connected with the Catholic Church. The actual amount of cash was increased by €3 million in the course of the negotiations.

4.84. The State negotiating position had been that any properties that changed hands to non-governmental agencies prior to a certain date would not be taken into account. The Committee asked for the Congregations perspective on this issue. It was explained that this issue was not a focus of attention in the discussions and that these properties were under the general heading of properties already given, which had been talked about throughout the negotiations. There was no doubt in the minds of the Congregations that part of the package agreement included properties that were transferred to State or voluntary sector within three years of the Taoiseach’s statement although the Government’s press statement on 30 January 2002 is contradictory on this point. Some misunderstanding arose in terms of a legal agreement and the matter came back to the Congregations. The Congregations wrote to the Secretary General and the Legal Adviser to confirm their understanding of that matter.

4.85. The Committee noted that while the agreement, in principle, was announced on 30 January 2002, by the time the indemnity was signed on 5 June, a substantial tightening up and major benefits for the taxpayer in terms of value for money and ultimate exposure of the Exchequer had been achieved during the detailed negotiations.

Role of the Attorney General’s Office

4.86. The Attorney General’s Office was formally represented at meetings on 10 and 22 November 2000, 7 and 21 February 2001, 6 and 22 March 2001, 4 and 30 April 2001, 10 May 2001, 5 and 26 June 2001 and 16 September 2001. Between October 2001 and April 2002, the Office was not represented or had no contact with those negotiating on behalf of the State. The Attorney General was not present at the two meetings with the Minister and the Congregations held in November 2001 and January 2002. The stated reason is that these meetings were policy meetings where it was not necessary for the Attorney General’s office to be represented. This was not an unusual situation.

4.87. At April 2001, the State’s negotiating position had indicated that the State should, as a quid pro quo for a reasonable contribution, grant an indemnity to the Congregations which contribute to the scheme in respect of all civil actions arising from acts of abuse committed on people who were eligible to make a claim to the compensation scheme. Having examined the files, it was clear to the Committee that all parties to the negotiations from the State side had agreed the wide range of people who could be covered by the indemnity. They did not have to make the claim to the Redress Board to be eligible. The letter of 6 November 2001 conceded the indemnity sought. The letter from the Congregations of 14 January, to which extensive reference has been made, says essentially the same thing. When the C&AG issued his 2002 report, the Attorney General (now a Minister of Government) flatly contradicted that this was his understanding of the position. However, the files clearly indicate that the Attorney General’s Office had the relevant information.

4.88. When an announcement was made in January 2002 that an agreement had been made in principle, the Attorney General wrote seeking information of the negotiations and of the extent of the indemnity on 31 January 2001 and on 1 February 2002. The Attorney General told the Minister that his Office had been excluded from the negotiations and asked to be sent any note, memorandum or minute of what was agreed. The Attorney General’s Office had been, effectively, out of the loop since the previous negotiations broke down. No reply was received. The Committee asked why it had taken so long to reply to the Attorney General’s queries. It was only when the Attorney General advised the Minister, on 13 March 2002, that his office could not act for the State because of this lack of information that he received a reply, on 13 April 2002, outlining the policy approach to be adopted in further negotiations on this indemnity.

4.89. The Department’s view was that the Attorney General’s Office, very reasonably, wanted the Minister to decide on the policies and principles which would underpin the indemnity agreement before engaging in any detailed discussion with the lawyers for the Congregations. There were two key issues which the Minister had to decide - what cases should be covered and the period for which the indemnity would apply. During that period the Minister and officials took some time to formulate the policy responses to the issues being raised. It would be a misunderstanding to think that during that period there was no contact between the two offices. While no formal letter of reply was sent during that period there was substantial contact between officials from the Department of Education and Science and the Attorney General’s office.

4.90. On 13 March 2002 and 12 April 2002, there were two meetings at official level, involving officials from the Departments of Finance and Education and Science, at which the Attorney General’s Office was not represented. They dealt mainly with process and procedure for the indemnity. The first meeting took a decision that the detail of the indemnity would not be discussed until such time as the legal teams from the Congregations, the Department and the Attorney General’s office could meet. The indemnity was not discussed in detail.

4.91. The key problem for the Attorney General’s Office was that they were waiting for a reply with instructions from the Minister on two key policy issues before they would attend meetings to discuss the detail. The Attorney General’s office was represented at all of the meetings held on 19 and 23 April, 1 and 8 May, and 16 May 2002 when a crucial and long meeting took place in the Department of Finance in relation to finalising the package that finally went to Government.

4.92. The Committee felt it was quite extraordinary that the Attorney General had to send these letters at all but also that he had to wait for several months before receiving a reply. It felt that it was strange that the Attorney General should seek an outline of the State’s position when it had agreed the position in April 2001. The Department’s view was that the position signed off in April 2001 in respect of the indemnity, was substantially the position which was ultimately agreed in Spring 2002. There was no change of the financial parameters of the agreement when the discussions were among officials, when the negotiations broke down or when the agreement was brought to the Minister over the winter period and, ultimately, agreed by the Government at the end of January.

4.93. The reason why the Office of the Attorney General wrote the letters in January 2002 when it had signed up to the agreement eight months earlier has not been adequately established. It appears there was some confusion in the Office at the time. On the other hand, the Committee felt it should not have taken the three months from the end of January until April to establish exactly what the position was. The Office explained to the Committee that it is not possible to advise on matters without precise instructions on precisely what was agreed. They would not have known what had been agreed at the two meetings where they were not present. As the position could have changed, it was a question of seeking particular instructions in regard to a matter on which they were to advise. The Committee asked if that type of letter would be a one-off or would such a letter be issued regularly. Lawyers and the Attorney General’s office will say that they cannot give advice on matters if they have not got instructions in regard to them.

4.94. In a letter to the Deputy Director of the Office of the Attorney General on 31 January 2002 in regard to the contribution of €128 million, the Department stated that:

In return for this contribution, the Minister agrees the Congregations would receive an indemnity. The detailed terms of that indemnity were not discussed. In principle, however, it was agreed that the indemnity would be such as to cover all qualifying claims, by which we understand all claims which are dealt with through the Redress Board or which could be so dealt with within the terms of the Residential Institutions Redress Bill 2001.

To that extent, the Attorney General’s office was aware of the position in January 2002 but it wanted a detailed minute of what precisely was discussed at the meetings with the Minister.

4.95. The Committee asked if it was reasonable for the Office to be left out of the loop in respect of an issue as big as redress. The Office has no opinion on this. It is a matter for the primary parties to negotiations to decide when they involve their legal teams. Very frequently, the Office would not be at negotiations in important matters. Whether they are bigger, smaller or different, is not really the question. It would be normal procedure to write to a Department seeking direction or seeking for the case involved to be laid out for the Office.

4.96. The Congregations did not have any knowledge of the turmoil the deal provoked, between the Attorney General and the Minister and between the Attorney General’s Office and the Department, as evidenced in the correspondence. As the Attorney General attends Cabinet meetings it was assumed by the Congregations that everyone involved was informed of the deal that had been reached.

Participation in the negotiations

4.97. The Committee reviewed the involvement of the Attorney General’s Office in the negotiation of the agreement with the Congregations. The Office was involved in a series of meetings during the negotiation on the eventual agreement between the Government and the religious Congregations. When they attended meetings, they provided legal advice. Following the announcement of agreement in principle, they wrote and asked for details of what had been agreed at the meetings. This was normal practice.

Organisation of legal work

4.98. The Committee asked about the organisation of work on child abuse cases in the Chief State Solicitor’s Office (CSSO). The CSSO is divided into five different groups with advisory counsel in each. The matters relating to child abuse are dealt with by one group that deals with other matters as well. The group has five lawyers and a group manager at Assistant Secretary level. The litigation is spread across the lawyers within the group, with specific institutions allocated to the various members of the group. This provides for consistency of approach. There is a childhood abuse litigation panel of counsel which is also divided up by institutions, with a limited selection of counsel allocated to each institution. In so far as is practicable, the group sticks to the distribution of institutions among its members.

4.99. Two staff deal with separate legal issues concerning the Ryan commission. These are not covered by the Redress Board or the indemnity and relate to litigation regarding abuse that arose in day schools. This is dealt with in the group and there are approximately 250 such cases. The groups are organised so that they meet weekly to discuss their work.

4.100. Overall activity in litigation concerning institutional childhood abuse has fallen off to a considerable degree. Many of the cases are being dealt with by the Redress Board so the cases are not actually proceeding. To that extent, the cases are really invisible to CSSO. The first indication is when an award has been accepted and that the case has been discontinued or will, in due course, be discontinued. Then there may be advices relating to the operation of the indemnity and these are all dealt with in this group.

The indemnity agreement

4.101. From a negotiating point of view, the draft of the indemnity, on which all negotiations were based, was supplied by the Congregations. There was never a draft from the State side. The Committee asked if a draft from the Office would have strengthened the negotiating position of the State’s side. The Department felt that allowing the Congregations to come forward with their draft first was a good idea from a negotiating position because if they had drawn up a first draft they might have conceded more than was sought.

4.102. The Department believes that the Office made an enormous contribution to the final indemnity. At the beginning of the negotiations the Congregations presented a three page indemnity that indemnified just about everything one could imagine and was something which could not have been accepted. It was quite reasonable, in the context of the exercise, to ask their lawyers to draw up the first text of the indemnity. The Office of the Attorney General ran a fine toothcomb through it and caused many amendments to be made. More than 50% of the final document was drafted by the Office.

4.103. The negotiation of the indemnity also covered matters like the timescale of the indemnity which is now tied down to cases up to December 2008. It also involved matters like where the indemnity would have come into play and where it would have been withdrawn in cases that went to court and where the State would not have control of the defence. There were many issues that had to be sorted out that could not have been envisaged by one or two lines in a memorandum going back to April 2001.

4.104. The Committee asked how the case load compares with the army deafness experience in terms of volume, scale and complexity. It is a very different and more difficult type of litigation. There are problems in administering the case load. The aim is to ensure the cases will not go to trial so that one will avoid the cost, delay and other difficulties associated with a trial. In so far as is possible to estimate, the cost is higher than the army deafness is likely to turn out to be. Most army deafness claims at this stage are of a relatively low order and costs are quite low. If one was to aggregate the costs relating to child abuse litigation in many instances those costs would be much higher than the 70% figure mentioned earlier. The issue involves a very big caseload.

Involvement of the Department of Finance

Department of Finance financial procedures attaching to an indemnity

4.105. Under the heading C8 - contingent liabilities - the Department of Finance specifically provides that in the absence of specific legislation covering the issue of a particular indemnity, any letter issued should indicate clearly that the assurance contained therein is not an unqualified promise to pay but rather an undertaking by the Minister concerned to take the appropriate steps to seek the necessary authority of the Oireachtas to ensure payment and that the advice of the Department of Finance, and where necessary the Attorney General, should be sought on the actual form of words used. This condition implies that the indemnity required legislation and the approval of the Oireachtas.

4.106. The indemnity was encompassed by the Redress Act which was enacted on 10 April 2002. The Act gave a more general power to give an indemnity, the actual terms of which were never incorporated in the legislation. The Department started discussions on the indemnity on 19 April 2002. In the procedures laid down by the Department of Finance it is clear that the approval of the Oireachtas is required. The Department hold that approval in principle had been given. The Committee established that the terms of the indemnity were not debated in the House although the indemnity itself was discussed.

4.107. The legislation provides for the indemnity, which would be sufficient cover for the Department of Finance regulations. On that basis the Attorney General’s office would have confirmed that the legislation was in place to facilitate the indemnity.

Department of Finance view of the agreement reached

4.108. The Committee asked why the Minister for Finance wrote to the Minister for Education and Science pointing to his unhappiness with the figure, at a time when he thought the total liability was approximately €258 million. The Minister for Finance wrote to the Minister for Education and Science in June 2001. At the time the offer from the Congregations was €50 to €60 million. In this context the Minister for Finance wrote to encourage the Minister for Education and Science to hold out for a much higher figure.

4.109. A range from £150 million to £100 million was accepted by the policy process as being appropriate in the context of the nature of the State’s exposure. The Department of Finance view was to begin by looking for £150 million and settle for a minimum of £100 million. This was decided when the figures on the table in April 2001 were for a cost range of approximately £200 million. The figure was £381 million in April 2001, according to the C&AG’s report. There was a maximum potential cost of £300 million at that point. Therefore, the Department was getting its 50%, approximately. From an initial negotiating point of view, that was the mandate officials sought. It was aimed at securing a figure of about 50%.

4.110. A contribution of €128 million made up of cash and property and an indemnity was the outcome the Ministers for Finance and Education and Science, with their appropriate authority, had mandated the negotiating team to secure. As far as the Department of Finance was concerned, the outcome of the discussions between the Minister for Education and Science and the Congregations was in line with the negotiating strategy. The Committee expressed concern that the Department of Finance was happy with the outcome, although they were aware by the time it went to Cabinet that the numbers were rising. The Department indicated that the Cabinet and the policy-making process had considered the totality of the emerging situation. Taking into consideration the victims and the policy response, it was felt any contribution from the Congregations towards the cost of the compensation process was better than no contribution in a situation where the Government would have had to foot the entire bill on its own and then seek to recover through the courts a legally adjudged contribution in each and every case from the Congregations.

4.111. It was not that the Department of Finance was happy with the result but that was the policy decision that had emerged. The Department of Finance was satisfied that the compromise outcome that had been reached was consistent with overall Government policy as it evolved. The series of policy issues that reflected the official input into the process as part of the negotiations need to be acknowledged. The Government and the Legislature decided to put the redress scheme in place. Policy dictated the nature of the process, that court rules would not apply and that there would be a low burden of proof. It dictated that, in the public interest, the State would own up to its share of culpability.

Reasonableness of the agreement with the Congregations - The Canadian Experience

4.112. The Accounting Officer from the Department of Education and Science informed the Committee that in Canada, in different circumstances, the State bore responsibility for 70% of child abuse claims and the religious orders, 30%. In a 1998-99 case in the Supreme Court of British Columbia (Blackwater v. Plint), the decision was that the State was 75% liable as opposed to 25% for the Congregation concerned. The Federal Government in Canada had been in negotiations with the various religious orders in relation to their possible contribution to an administrative compensation scheme. Pending its conclusion, the Federal Government decided in October 2001 that it would initially carry 70% of the award and that 30% would be borne by the Churches. The total cost of claims in Canada was reckoned to be about €1 billion. The Anglican Church was responsible for operating the institution which gave rise to 17.5% of the claims (i.e. €175 million). In February 2002 the Federal Government reached an agreement where the Anglican Church agreed to pay €25 million.

4.113. Using the Department’s current estimate of the cost of compensation (€508 million), the Congregations’ contribution is close enough to 25%. Based on the Department’s higher estimate of €772 million, the agreement with the Congregations is not that far removed from the settlement in Canada with the Anglican Church.

Reasonableness of the agreement – Congregations’ perspective

4.114. The Congregations eventually agreed to a figure of €128 million, which was far more than their estimated exposure in a legal process. However, when it subsequently emerged that figures of €600 million, €700 million or €800 million might be involved, it would be fair to say that the Congregations were pleased when matters came to a conclusion during the period January to June 2002, regardless of the overall cost of the scheme. The maximum figure of €128 million was not arrived at on the basis of means but on the basis of the numbers of claims extant, without discrimination and which might eventually involve considerable outlay in the courts. The preference was that the outlay would go directly to the former residents rather than into the courts system. It was not related to the assets of the Congregations.

4.115. The Committee asked if no agreement had been reached, whether the higher burden of proof required in a civil case compared to a tribunal of compensation would have resulted in a reduced liability for the religious institutions. They had taken the approach of looking at all the claims they had but they preferred to have an agreement with the State. If the negotiations had broken down, the Congregations would have known the approximate figure they might be facing.

Implementation of the Agreement

Institutions under the remit of the Redress Scheme

4.116. The Committee noted there were currently 123 institutions under the remit of the redress scheme and asked if this number was likely to increase. There is capacity within the legislation for the Minister to make an order extending the scheme. No decision has been made, one way or another, in that regard. It depends on the claims history, in terms of claims being made against institutions not already listed.

Additional Institutions added to the list covered by the indemnity

4.117. The Committee noted that the proportion of the contribution of the Congregations to the final cost may be reduced by the decision of the Minister under the Act to add another thirteen institutions to the numbers covered by the Redress Board. The Department is of the opinion that the additional cost associated with the inclusion of these 13 institutions will be relatively small in the context of the overall cost of the redress scheme. Records kept within the residential institutions redress unit in the Department in the past 24 months and discussions with the solicitors for the relevant Congregations indicate that there are less than 100 potential Redress Board applications pending inclusion. However, information is becoming available all the time and there is no guarantee that the likely level of applications will remain at 100. If the Department had been aware at the time of the passing of the Act of the full details of the 13 institutions concerned, they would have been included in the Schedule.

4.118. The Committee asked if a check was made before the Minister was advised to extend the remit of the board to include the 13 additional institutions. The relevant check was to establish if the institutions came within the ambit of both the indemnity agreement and the Act. This was confirmed. In regard to the institutions where the Department was a respondent or a defendant, in respect of one institution there were 15 or 20 civil cases in existence. It will be possible for people with civil cases, if they wish to do so, to proceed now to the Redress Board. It was noted that it was a fixed policy of Government at the time that this would be an all-encompassing scheme and that all individuals who had a case relating to abuse in a relevant institution would be comprehended by the arrangement. It was also fully accepted at the time of the passing of the legislation that, because of the age of some of these institutions, the fact that some had been closed and some uncertainties in regard to them, all the information was not available, which is why that provision was inserted in the Act to allow for an extension. If any case emerges within the lifetime of the Redress Board relating to an institution which is not scheduled, the proper course of action, given the policy line that was adopted, would be to schedule it by way of ministerial order to ensure that cases do not have to go to court and that they are covered by an all-encompassing arrangement.

4.119. While the Committee accepted the position, it noted that there had been a proposal to seek an additional contribution from the Congregations in view of the extension of the ambit of the redress scheme. The reality was that once the negotiations reached a conclusion, a decision was made that €128 million was as much as the Congregations were going to give in any circumstances whatsoever. This was a judgment call on the final sum on offer by the Minister and the Government of the day.

4.120. There was no cross-referencing to check if any of the claimants in respect of the additional institutions added to the list had already been before the courts. From information held the Department checked to see if there were civil cases in regard to these institutions in existence and the number of them. Some of the institutions would have been identified to the Department by either the Congregations or former residents who would have alleged that abuse had taken place there. The Department checked with the Department of Health and Children to see if they qualified as being eligible for inclusion, that is, if the State had an inspection or regulatory function in respect of them. On that basis, the Minister would have been entitled to make an order to add those to the schedule.

4.121. The advice of the Attorney General’s Office was not sought before the Minister extended the remit to include the 13 institutions. There was no need to seek the advice of the Attorney General’s Office on this as it was clear from the legislation and the indemnity agreement that there was provision to do so.

4.122. The Committee asked if there was a likelihood of further institutions being added resulting in further costs under the scheme. Section 4 of the Act provides that the Minister may provide for the addition to the Schedule of institutions identified as reformatory, industrial, orphanages, children’s homes and special schools in which children had been placed and resident and in respect of which a public body had a regulatory or inspection function. When the Bill was being discussed in the Houses of the Oireachtas in 2002, the Minister made it clear that the schedule of institutions appended to it might not be the complete list of institutions to which the Bill would apply. Before an institution can be added to the Schedule, it must be identified as one in which children were placed and resident and in respect of which a public body had a regulatory or inspection function. The 13 institutions added to the list satisfy these requirements and were either run directly by the State or managed by one of the 18 Congregations which contributed to the indemnity agreement.

4.123. There is a range of psychiatric institutions under consideration but there is very little evidence regarding allegations of abuse within them. There are a further 11 institutions known as Mrs. Smyly’s homes, institutions in respect of which the State had a regulatory or inspection function. The Department has written to Mrs. Smyly’s Homes Trust with a view to meeting to establish if it would make a contribution to the redress scheme if it were to be covered by the indemnity. As they are institutions which do not come within the terms of the indemnity agreement, if included, the question of a contribution would arise. No decision has been taken regarding the inclusion of additional institutions, apart from the 13 recently added.

4.124. The Committee inquired whether it was fair to conclude that given the 13 institutions added and the likelihood of others being included, the estimate of €650 million from the Redress Board, which remains disputed, and the new figure of €828 million from the C&AG should be revised upwards. The Department maintains the final figure will be as indicated because of the likely reduction in the average amount paid out.

4.125. The Committee reviewed the process for invoking the indemnity. When a claimant does not proceed to the Redress Board but goes to the courts to obtain compensation, the indemnity is automatically invoked in all cases. In exceptional cases a congregation, if it wishes not to invoke the indemnity, will step outside it. Approximately 2,300 sets of High Court litigation are currently pleaded against the State and religious institutions. The vast majority of plaintiffs are anxious to go before the Redress Board and have their proceedings resolved in that forum. Analysis of the caseload in the CSSO suggests that in respect of approximately 85 to 100 cases, either the application is outside the scope of the Redress Board or the applicant wants to continue to court action. Most of these cases would not have been within the original remit of the indemnity and have come in with the extension of the remit of the Redress Board to include other institutions. There is confidentiality in the applications between the applicant and the Redress Board. With the extension of the remit of the Redress Board, the CSSO is examining those cases to see whether there will be a lessening of activity on the litigation files.

Use of the Indemnity

4.126. Up to the beginning of March 2005 the indemnity has been used five times. While the total amount of the settlements in the first four cases was €480,000, giving an average of €120,000, the fifth case (Noctor) involved a Court award of €370,000 which was substantially in excess of the top award made by the Redress Board. The fact that the award included €160,000 for loss of earnings – which would not be possible under the Redress Scheme – could lead to a situation where a certain category of claimants will decide to have their cases heard in the High Court rather than going through the Redress Board. If this scenario were to unfold it could have implications for the contingent liability attaching to the indemnity when all legal costs are taken into account.

However, there are a number of factors which would indicate that the Noctor case is not representative of the generality of cases coming before the Redress Board viz.

• the level of abuse suffered by the victim was exceptional;
• the perpetrator of the abuse had already been convicted of sexually abusing other persons; and
• the State admitted liability and the Court was required to assess damages only.

On the face of it, it appears that the Noctor case is of relevance only to cases of severe or exceptional abuse and/or cases involving significant loss of earnings.

Notwithstanding the foregoing, it is difficult to predict, with confidence, how claimants in such cases will pursue their claims in the wake of the Noctor judgement.

Implementation of the Contribution

Cash Settlement

4.127. By October 2003, the cash payment of €41.14 million had been made in full. The Committee was concerned about the source of the cash settlement. The Congregations had a parallel track of negotiations with their insurance companies. Just one insurer agreed to make an ex gratia payout, because of a long-standing commitment over many decades. This was only agreed six months after the negotiations with the State were completed and it was minimal in terms of the overall picture. Some 15 of the 18 Congregations have benefited in different portions from that €6.5 million sum. All of the Congregations have set aside what they got from insurers for the services of former residents in one way or another.

Property Transfers

Overall Position at February 2005

4.128. The Committee noted that the property element of the contribution from the Congregations remains approximately €5.6 million short of the agreed amount but is largely being met. The Committee inquired to what degree has State funding in the maintenance and acquisition of such properties been taken into account in making an assessment as to whether the State is getting its own property back or is separate property from the religious Congregations involved. None of the properties handed over so far were owned by the State. If there has been State investment in those properties there is a mechanism in place to offset such investment when the final figure is worked out with the Congregations.

4.129. There are two schedules regarding property to be transferred. The Department has accepted 35 properties in principle (to a value of €38.28 million including €4.98 million of cash in lieu of property) in respect of property transfers since the date of the agreement. In terms of property transferred since May 1999, the Department has accepted 27 properties in principle (to a value of €32.93 million) and quite a number of others have been rejected. The agreement specified a sum of €40 million for property transferred between 1999 and 2002 but the Department rejected quite a lot of the initially proposed property under this heading. It is to the State’s advantage, from the point of view of implementation of the agreement, that the Department rejected some of the previously transferred property and sought new properties in its place.

4.130. Many of the properties have been handed over to Health Boards; some to city councils and the Department of Education and Science is looking at some properties as possible school sites. The legal transfer is a long process but some of the properties are already occupied by Health Boards. A mechanism has been agreed for a timeframe when a cash replacement might be made, if there is arbitration on property that the Department cannot get.

4.131. Only 10 of 37 properties were independently valued by the State. Of this sample, two were rejected and another two were not proceeded with in terms of valuation. The State carried out valuations of the remaining six properties and in one case there was a serious discrepancy between the Congregations’ valuation and the valuation arrived at by the State. The Committee asked if the Congregations would be surprised if there were discrepancies in respect of the further 30 or so remaining properties. The Congregations are completely open to any independent examination of the valuations. The valuations carried out by Congregations were done by professional bodies which must stand on their status in respect of such valuations.

4.132. There is no distinction in both schedules between land and buildings. The property can be used for the provision of ongoing services or as sites for building schools and will be put to a variety of uses, including social housing. Dublin City Council has accepted a property which will be used to provide social housing.

4.133. There was no time mechanism as to when the cash or property option comes into play. Accordingly, payment of the remainder of the money may be protracted. There was a fear on the State side that, because children and young adults in the institutions were wards of the State, 100% liability would eventually attach to the State. The Committee considered that an argument could have been made that many of the children and young adults concerned had been placed in institutions, not for reasons of physical safety or because of any law-breaking but because of the moral discomfort society felt at the time. That attitude was engendered by many of the religious institutions. The Committee felt this aspect should have been debated when the agreement was being put in place.

Counselling Services

4.134. The Committee noted that the Congregations have identified counselling services to a value of €11 million as part of their contribution. This amount consists of €4.5 million paid to Faoiseamh and €7 million which has not been directly accounted for. The Faoiseamh element reflects professional counselling (billed and documented in full) provided for victims of abuse through the Catholic Church and other congregations involved but it does not differentiate between particular forms of abuse that might have taken place in residential institutions and other types in which religious may have been involved. The Department is insisting that any counselling provided for is provided for former residents of the institutions covered by the indemnity. Counselling provided for anybody else, whether it relates to other forms of abuse, is excluded. The finalisation of these issues has taken a long time in painstaking discussions and negotiations with the Congregations. It has been agreed that the whole issue will be independently audited when a final agreement is reached.

Education Fund

4.135. Included in the €41 million cash settlement is a €12.7 million education fund that has been set aside to provide additional special educational facilities for the individuals concerned or their offspring. An administrative scheme was put in place pending enactment of legislation. An ad hoc steering committee involving the National Office for Victim Abuse NOVA, the organisation representing many of the former victims, and the City of Dublin VEC is currently administering the scheme which has to date paid out €1 million to individuals. A Bill will be introduced to amend the original commission to inquire into child abuse legislation and the opportunity will be taken to put the educational fund on a statutory basis.

4.136. It was agreed that the Department would oversee the spending of the fund. It has been the subject of negotiations between the Department, the four support groups affiliated to the NOVA and their educational facilitator. An application process and framework document has been developed to enable the people concerned to be helped. Application forms are available through NOVA or any of the victim support groups and outreach centres in the UK. The procedure for transferring funding from the National Treasury Management Agency through the Department to the agencies which will be involved in running the scheme has been finalised.

4.137. The Department is coming to an arrangement with the VECs to provide teaching programmes. About 30% of the people who sought funding came from outside the State, mainly from the UK. From the beginning it was obvious to the Department that there would be claims made by people outside the State, and many of the survivor groups have been met in Britain by officials and the Minister. There has also been contact with survivor groups in other countries.

Recovery of amounts from Insurers

4.138. When the Congregations appeared before the committee, they stated that at all times they made it quite clear to the Department that insurance was an issue. The Committee asked for a summary of the perspective of the Department on this issue. The Department stated that the issue of whether the Congregations could get an insurance pay-out from their insurers was discussed at a meeting on 25 September 2000 in the Attorney General’s Office. There were Departmental officials at the meeting. At no stage was insurance a major issue in the negotiations and it did not form any part of the discussions surrounding the level of contribution. The State side was always given the clear impression that for the period during which it was felt the majority of the claims would materialise, the Congregations did not have cover.

4.139. The Congregations indicated to the Committee that the issue of insurance was raised as a minor issue at one of the two meetings with the then Minister. At that stage they were “hoping and looking” for some insurance pay-out. Insurance was listed among many other issues held of importance to the Congregations in the letter to the Secretary General of the Department sent in January but it did not register with him. At a meeting between the Minister and the Congregations after the deal was agreed, the then Minister indicated that if they had received any insurance settlement, it was his view from a moral perspective that that money should be available as part of the deal. The issue of a contribution from insurers is placed on the record by the Congregations in the letter of 14 January 2002 which states:

“In particular, I would be anxious that everybody involved would be clearly aware of the nature of the proposal made and those matters which are critical to it, such as the final agreement on the precise institutions which would be indemnified, the question of contribution from our insurers [and] the need for amendments to the Bill …”.

4.140. The letter refers strongly to the understanding that was agreed, but because the issue was going immediately to Cabinet, it needed to be clarified for other people. The reference to the contribution from insurers is directed specifically to the Accounting Officer. It would have been seen by at most two or three officials in the Department.

Impact on the Estimates

4.141. A primary objective of the audit report was to set down the basis for the Estimates of the costs of the redress scheme. The basis on which they were compiled is clear. In 2003 there were very few awards and it is possible to be more definitive in 2004 but even those Estimates need health warnings with them. What is important is that people got their awards and the scheme was set up. It is commonly agreed that it was a good scheme, on a social rather than financial basis. It is important to know the full financial extent of the liability.

4.142. The Department of Finance is making multi-annual provision for the compensation. €120 million has been provided for in the 2004 Estimate and a further €23 million will be provided by way of Supplementary Estimate as cases are being dealt with somewhat faster than expected. The Estimate for 2005 is €170 million. There is an agreement that these Estimates are ring fenced in that moneys not used for the purpose for which they were provided will be taken back and given again the next year. Also, a Supplementary Estimate will be provided if the commission deals with cases faster. The lifetime cost of the scheme is not affected by how fast the commission deals with cases. It is in the interest of both the State and victims that cases are dealt with as quickly as possible. The Department will provide whatever money is needed each year.

Concluding perspectives on the Agreement

4.143. The Committee asked why the Government accepted that a contribution capped at €128 million was appropriate. It also considered why, when so much information was available about the estimated potential final liability, it was not used by the Minister. The Department stated that a whole series of policy decisions and legal considerations led up to the acceptance of the agreement. One of those was that an established pattern had emerged, as far back as the Kennedy report in 1970, that the State had for its part failed to discharge its obligations in terms of the inadequate contribution of funds to these institutions, that there was a failure to ensure that people working in the institutions were properly trained, the inadequate nature of the supervision and inspection regime and the alleged failure to follow up on information that allegedly may have been there. The question of the degree of culpability of the State in its capacity as guardian of children in these institutions was a major part of that acceptance.

4.144. The Government set up the redress scheme and wanted a contribution from the Congregations. If it had waited to negotiate a contribution based on a percentage of the final figure, the negotiation would not have happened as the final liability is as yet unknown. An appropriate contribution needed to be defined as a monetary figure as opposed to a percentage of final figure. The end result of the negotiations is that resources to a value of €128 million have been transferred to the State.

4.145. The Department does not wish to perpetuate the idea that the figure sought was in any way linked to a percentage or proportion of the potential cost of the claims. The original negotiating position was that there would be a 50% contribution which would represent half of the estimated lowest liability at that time. This is not what was achieved. It is important that in coming to policy decisions in these areas the policymakers and ultimately the Government have the fullest possible information available to them. In making such decisions, the information available to them should be absolutely up to date and as comprehensive as possible. The C&AG report indicates that less than full use was made of the information in the possession of the Department.

4.146. From the Congregations’ point of view, they were asserting that if the full range of court procedures was to be brought into play in determining financial attribution for what had occurred or what was alleged to have occurred, they were determined in a court setting to rigorously defend those who were accused because of the passage of time, the fact that many people were deceased and that there was a huge gap of decades in some cases. The extent to which they felt their legal exposure would be confirmed by the courts was a big argument on their part against a contribution and against accepting a major share for the deal the Government put in place. The policy under which decisions were made was to have to the maximum extent possible a soft process for the people who were abused so that they would not be exposed through the redress process to the full range of critical examination, counter-examination, cross-examination, etc. that would happen in the courts. The final agreement is achieving its original purpose of providing, in a humane way, compensation to those that suffered abuse with an acknowledgement of what had happened by the key parties involved. .

5. Adoption of Reports

5.1. The Committee completed its examination of Chapter 7.1 of the 2002 report and of Chapter 9.1 of the 2003 Report on 9 December 2004.

5.2. The Committee noted Vote 13 – Attorney General’s Office for 2003 on 25 November 2004.

5.3. The Committee adopted Chapter 7.1 of the 2002 Report and Chapter 9.1 of the 2003 Report on 24 February 2005. The Committee noted Votes 26, 27, 28 and 29 for 2002 and for 2003 on 24 February 2005.

Findings and Recommendations

The Committee of Public Accounts:

finds specifically that

Redress

1. A very significant contingent liability existed in respect of victims of child abuse, suffered in institutions where the State had a regulatory or inspection function, who sought compensation through the courts. On 11 May 1999, the Taoiseach issued a public apology on behalf of the State to the victims of such abuse. A redress scheme was launched to facilitate the compensation of victims. The final cost of the redress scheme must be viewed in the light of the very substantial costs that would have been incurred in any event if no such scheme had been established and if the cases had been processed in the normal manner through the courts.
2. The government decision on the establishment of the redress scheme was informed by estimates of the scale of the likely claim load by the Department. However, the Department did not use all the data available in estimating the potential ultimate liability from the scheme and did not update its estimate of the liability as new information came to light.
3. The latest estimate of the final cost of the redress scheme is a range from €610 million (Department) to €828 million (C&AG). The initial estimates made by the C&AG were prudent and sought to take account of the ultimate number of claims that may be filed. In the Appropriation Accounts of the Department for 2002 and 2003, which were certified by the C&AG, the Department stated that “the amounts involved cannot be determined at this point”.
4. A mandate, which was approved by the Minister for Education and Sceience, for pursuing an agreement for a contribution from the Congregations was drawn up by the Department in consultation with the Department of Finance and the Office of the Attorney General. The mandate was to provide, to Congregations contributing to the scheme, an indemnity in respect of all civil actions arising from acts of abuse against people who were eligible to make a claim to the compensation scheme. In return, a minimum contribution of £100 million (€128 million) towards the costs of the redress scheme was expected from the Congregations.
5. The mandated minimum contribution bears little relation to the negotiating position that was favoured by the Department of Finance. Insufficient use was made by the Department of the information held about the likely final liability in establishing the mandate and the negotiating position. The underestimation of the final liability had implications for the negotiating mandate adopted by the State side.

Negotiations

6. The State negotiating team had no prior knowledge of the ability of the Congregations to pay the contribution expected and should have pressed for contextual information about the extent of available assets. It is acknowledged that pursuit of a negotiation strategy based on ability to pay would have had implications for the likely time required for the finalization of the agreement.
7. The State adopted a negotiating position to seek a 50:50 sharing of the ultimate cost of the redress scheme. The Congregations viewed this position as unfair.
8. The initial offer of the Congregations of €50 to €60 million, made in June 2001, was considered unacceptable by the Minister and was not taken to Cabinet. At October 2001, the State’s negotiation team believed that the negotiations had stalled and underestimated the desire of the Congregations to be part of the scheme. Media coverage of the negotiations affected the trust and confidence of the Congregations in the State’s negotiation team.
9. A letter issued by the Department on 6 November, 2001, supported by two meetings between the Congregations and the Minister and Secretary General of the Department enabled agreement in principle to be reached on all main issues, in particular, the amount of the contribution to be made, the extent to which property already transferred could be included and the indemnity.
10. Written documentation of the original negotiation mandate (April 2001) exists. The documentation of the meetings with the Minister in November 2001 and January 2002, when agreement in principle was reached, was not good. No contemporaneous minute was kept by the State side. The Congregations wrote to the Department in January 2002, to ensure a record of its understanding of what had been agreed was available.

Indemnity

11. A Government decision in principle, to approve the Minister’s proposals for a deal with the Congregations, was made on 31 January, 2002. When the Government reached this decision neither the detailed terms of the proposed indemnity nor the value of the previously transferred properties were known.
12. Formal documentation of policy positions and the progress of the negotiations left a lot to be desired, as reflected by the uncertainties raised by the Office of the Attorney General. There was a considerable difference of understanding over the agreed extent of the indemnity on the State’s side. Between January and March 2002 the Attorney General wrote two letters seeking details of the agreement. Officials in the Attorney General’s Office were not sufficiently aware of the original mandate agreed in April 2001. This was only clarified by a letter from the Minister to the Attorney General in April 2002.
13. While resort to the indemnity has been low to date, the Court award of €370,000 on 1 March, 2005 could lead to a change of approach by some claimants which would favour recourse to the Courts rather than the Redress Board. A substantial change of this kind could have implications for the ultimate cost of the redress issue.
14. The State’s power to enter into such indemnity agreement has been based on the premise that the Executive Branch of Government has exclusive power to do so.
15. The Department of Finance was satisfied that the original mandate for reaching agreement with the Congregations was met.

Implementation

16. The full cash element of the contribution has been paid. The Department has been diligent in pursuing the transfers of property and in following up the counselling and education fund elements of the agreement.
17. While the nominal amount of the contribution was €128 million, the acceptance of property to a value of €40 million already transferred since 1999 and of the inclusion of counselling services to a value of €10 million, leaves a balance of €78 million, in cash and additional property, which was received subsequent to the finalisation of the agreement.
18. The final outcome of the redress scheme is that victims are compensated in a humane way with 80% of the costs of the scheme going to them. The legal costs of the scheme make up 15% of overall cost and administrative costs consume the remaining 5%.

and recommends in general that

1. The strength of the State’s negotiation team should be equal, at all times, to that of those with whom they are negotiating.
2. Departments involved in significant negotiations that commit large amounts of taxpayers’ money should provide appropriate training and development for staff expected to serve on negotiation teams. The Civil Service should aim to ensure that its capacity to negotiate on significant issues is maintained at a sufficiently high level to match the negotiation strength of the opposing side. Where required, the facility to import the required specialist skills and expertise should be available.
3. In order to remove any potential doubt about the State’s authority to enter into indemnities of this nature, the Committee considers that there may be merit in having the law officers of the State review the appropriate measures, statutory or otherwise for authorising indemnities or material financial commitments of this kind.
4. The Department of Finance accounting procedures for contingent liabilities should be reviewed and brought into line with good practice. The general approach to identifying, recognising and measuring contingent liabilities should be reviewed and updated in the light of the experience for the redress scheme. Guidance on suitable approaches to estimating contingencies should be developed so that departments can estimate and report on contingencies in a more realistic way.
5. A statement of good practice for the formal documentation of policy positions, negotiating positions and mandated positions should be developed by the Department of Finance for the Civil Service.
6. There should be a practice note regarding the involvement of the Office of the Attorney General in major negotiations with a legal dimension, particularly where the legal dimension is complex and / or where large amounts of money may be involved. Further guidance on negotiation strategies should be developed where more than one department is involved. This should include appropriate standards for the documentation of meetings and key decisions and of the information to be provided to cabinet.

¹ Deputy Michael Noonan replaced Deputy Padraic McCormack by order of the House on 18^th June, 2003.

² Deputy John Deasy replaced Deputy Paul Connaughton by order of the House on 20^th October, 2004.

³ Deputy Tom Hayes replaced Deputy John Perry by order of the House on 20^th October, 2004
Deputy Michael Noonan elected as new Chairman on 21^st October 2004

⁴ Deputy Michael Smith replaced Deputy Batt O’Keeffe by order of the House on 16^th November, 2004.

¹ The letter stated: “In return, the participating congregations would receive a permanent State indemnity against any and all litigation in cases which come under the remit of the Redress Board”.