Urgent reality check should dissolve the board of the Health & Safety Executive

Last week the spending proclivities of taxpayers’ money by the board of the Health & Safety Authority on themselves got an airing at the Public Accounts Committee. They apparently spent €625,000 from 2005 to 2011 but the explanation of this sought since last July is still not forthcoming.

The Chairman of the Committee, John McGuinness TD referred to spending on wine, flowers and restaurants. A trip to Paris apparently cost €1,250. Dinners’ two days apart from each other
cost €2,208 and €2,220 each and the restaurant tip was €300! A total of €4,086 was spent on
travel in a single day, the purpose of which was ‘unexplained’. Purchases from a health centre in Limerick cost €200.

Public curiosity in this matter started on 6 July 2011 when an internal audit got under way. The Department of Jobs, Enterprise & Innovation reported to the Public Accounts Committee 17 November that the internal audit took five months to complete and that the report of it would be issued, but that no evidence has emerged of ‘wholesale, or systematic abuse of corporate credit cards at the Health & Safety Executive’. Apparently more questions have arisen for the HSA.

Up to €25,000 of this expenditure was ‘questionable’. My curiosity became agitated. I am puzzled to understand if the Members’ appetite for corporate governance has been as refined and elegant as their passion for epicurean splendour and fresh flowers. Furthermore, is this form of institutional governance really fit for purpose in a State that has endured 338 workplace fatalities
during the 6-year period of this splurge?

Compliance is the cornerstone of the HSA regime. Achieving and maintaining a high level of compliance requires effective enforcement and uncompromising efficiency. Is this achievable under the auspices of a 12-person board, comprising lobbyists’ and ‘happy-clappy’ political appointees of a chronically failed government who are supposed to determine ‘operational policy’? There is not a single word in the HSA annual reports from 2005 to 2010 to describe the
leadership, governance, technical and professional credentials of the Members of the Authority.

The annual reports of 2005, 2006 and 2007 did not include detailed audited accounts. This blatantly disregards the Code of Governance of State Bodies published by the Department of Finance over a decade ago. The toleration of this must have required the blind-eye of the former
Secretary-General of the parent Department. He was once a member of the board that presided over the rampant, inept corporate governance and delinquency at FÁS and who allowed Rody Molloy depart for good in a taxpayer-owned Audi, as if that was Molloy’s inalienable right.
The published HSA financial data from 2005 to 2008 could have been printed on a bus ticket. No wonder it takes over nine months to conduct an internal audit of boardroom spending for the Public Accounts Committee in such a self-serving culture of mottled opacity and muddled priorities.

The annual reports of 2009 and 2010 contained somewhat more detailed information that included a reference to a fund called Grant XO1 (Note 11 Board Members Disclosure of Transactions).This amounted to €410,000 over these two years. While the name of this grant sounds like a washing powder additive intended to take stubborn stains out of old men’s underwear, it was, apparently, supposed to fund a number of ‘external organisations’ and ‘strategic partnerships’, which were directly connected to Members’ of the Authority who presumably enjoyed the hospitality of the corporate credit card. The approved fund was paid into that most ambiguous of cul-de-sacs, a ‘partnership account’, which was “controlled” by the
noblesse oblige of the Construction Industry Federation, an entity which has not issued audited accounts for public inspection, or an explanation of what becomes of ‘partnership money’.

It is impossible for taxpayers to discern if Grant XO1 had a legacy prior to 2009 because of sparse information but I would like to know who the actual beneficiaries were; how this money was spent and what was accomplished throughout the life cycle of this grant.

Substantial money spent by the National Health Service Partnership Forum allocated to SIPTU never even found its way onto the SIPTU financial radar. This is the reason that there is no difference in the mind of taxpayers’ between a ‘partnership account’ and a slush fund for self-important apparatchiks’ of elite soviets to attend foreign sporting events at taxpayers’ expense.

This board structure is obsolete. It ought to be promptly replaced by a Health & Safety Commissioner whose reporting protocol would not be dissimilar in nature to that of the Director of Office of the Director of Corporate Enforcement – and without a board of directors.

The immediate impact of this would save taxpayers €120,000+ per annum in fees and direct expenses and the public would have a clear-sighted, unambiguous understanding of where precisely responsibility and authority rests for the promotion of health and safety on the farm and in the workplace and compliance with the law.

The British counterpart of the Health & Safety Authority is the Health & Safety Executive. It has a board of nine members. Detailed biographical details are available on each director together
with extracts from the Register of Interests. The budget of the British body is £236 million – ten times larger than the HSA. It has in the region of 3,500 permanent employees compared to 175 in the HSA.

There were 48 workplace fatalities in Ireland in 2010 compared to 152 in the UK. Radical change might lead to radical improvement.

Rescue remedy needed for training and education system

The viability, reputation and stature of our national training and education enterprise is sailing like the Titanic en-route to the iceberg and there are no life jackets on board.

Despite recurring and widespread allegations of systemic malpractice and accounting failures at FÁS, SIPTU announce glibly that the ‘problems’ at FÁS can be overcome, a perspective not apparently echoed by IBEC. Is this a case of mutual recognition by birds of a feather, or does it merely imply that SIPTU has a higher than desirable tolerance of mediocrity and slovenliness and an aversion to change and radical reform?  FÁS is a creature of a social partnership process that has self-destructed as a result of insular thinking, incompetent, delinquent and politically compromised leadership. The best days of FÁS are behind it and only those with deep vested interests, most precious to themselves, refuse to recognise this while those most effected deserve a much more enlightened and inspiring response.

Secondly, a stronger level of Government supervision is urgently needed over the plethora of private third-level colleges emerging in this country. This could take the form of an operating licence reflecting the conformity of its teachers and courses to designated national standards.  Some of these so-called colleges are purely money-making rackets promoted by individuals with no background in education and no substantial personal academic credentials. They should be immediately banned from advertising courses that have no Irish State accreditation rather than playing on the desperation and gullibility of an unsuspecting public, presumed to believe that any entity with the initials C D in its identity automatically has the prestige and resourcefulness of a distinguished university. When there is incisive and scathing official criticism of a private college it is no defence whatsoever to state that such criticism is "not as positive as we might have hoped".

Thirdly, the realisation that 40% of our adult population struggle with primary school maths and that 10% of the candidates for ordinary maths in the 2010 Leaving Certificate failed is a symptom of a fundamental failure in leadership at an institutional and also at a political level. If that trend is not successfully arrested the prospects of our society being able to sustain the standard of living it aspires to will be sorely compromised and those adversely affected will find it increasingly difficult to obtain meaningful work at home and abroad because such a wide range of skills are based on some understanding of maths and mathematical relationships.

Time for The Public Accounts Committee to make its mark

THE Chairman of FÁS has resigned and the rest of the board is set to resign. When the Public Accounts Committee considered the examination of the Comptroller & Auditor General into FÁS affairs last week, Bernard Allen, the Chairman of the Committee rebuked Niall Saul, the Chairman of the Audit Committee and non-executive Director of FÁS, who was contemporaneously giving a radio interview while the Committee proceedings were under way, - for doing so. He would have preferred to hear Saul’s views directly at the Committee.

I listened to a recording of this interview this evening. Saul was at pains to point out that the Audit Committee conducted its role vigorously but were impeded and frustrated by the leadership of the agency, as was the Public Accounts Committee. The Audit Committee were presented with 22 complaints against the Internal Audit team, none of which were upheld. The Audit Committee may have conducted its affairs with textbook perfection but the hidden hand of vested interests lurked persistently in the twilight until the C&AG shone a penetrating light into the murkiness the debacle in April 2008 and, again, in June 2009.

The FÁS controversy was exposed by the Sunday Independent and that publicity was the catalyst for the urgency of resolution. The preliminary comments made by Rody Molloy, on this day twelve months ago, are interesting to revisit in the light of what is now known. Molloy stated then that “FÁS is not a perfect organisation” and “unfortunately, the internal audit reports released by us under the Freedom of Information Act have been sensationalised by the media and used by some with a destructive agenda towards FÁS”. While Molloy stated that he recognised the efficacy of the audit function he also expressed concern “that anything written will be used by persons outside the organization with a negative agenda” and that “if these reports were released into the public domain they could be damaging to the organization”.

Did he not consider that the media would have no credibility if damaging insinuations had no real substance? These were surely the comments of a person whose own organisation was imploding under him and who had isolated himself to the point of downfall. The C&AG Report has borne this out, not the use of the word ‘entitled’ in place of ‘eligible’.

But these comments also offered a rich insight into the culture of FÁS – an agency whose scope and budget had grown so much that a great many more snouts were feeding at its trough than was ever envisaged. The Prime Time investigation into meals-on-wheels in Castlebar did not inspire optimism that all the effort and expenditure was wise, prudent and appropriate. The importance of an organisations culture should never be underestimated. It is culture that facilitates change; guidelines incur inertia.

The persistent use of the legal fig leaf by other FÁS contributors to The Public Accounts Committee was another symptom of a death rattle and reminded me of the defenders of the ‘B’ Specials police reserve in Northern Ireland decades ago.

Mirror, mirror on the wall,
Who is the fairest of them all?

It was the same newspaper that blew the gasket of the DIRT controversy, submerged since 1991, with a headline on 5 April 1998 ‘AIB Had £600 million in “Bogus” Accounts’. The role played by the Public Accounts Committee in the 1999 – 2000 Parliamentary Inquiry into DIRT was pivotal in charting a new direction with respect to this particular issue.

Impact of DIRT Inquiry

The economic, social and political impact of the DIRT Inquiry was comparable in scale and importance to a grand slam rugby victory.

One constituency embraced radical change because they felt they had no other choice – their survival was at stake. The game changers were The Revenue Commissioners. Not alone did they eventually collect hundreds of millions of euro due in taxes, interest and penalties, but a new generation of competent leadership successfully reformed their own organisation. Reform did not come easily, nor did it come quickly. It came with painstaking effort - but it came and it endured.

The other constituency – the banks did not fundamentally change because those in charge believed that change and reform was beneath them. They knew they were systemically important. They also knew their influence could prevail against all comers in most circumstances. Why else would they have overcharged customers with impunity?
They, of course, paid whatever they were obliged to pay and complied, in certain respects, with other mandatory matters.

But the fundamental self-serving, obscenely remunerated culture prevailed because nothing impacted on them personally to make change happen or threaten their personal status or income until they scuttled the economy last year. Four of them were so nonchalant that they were cited for personal income tax evasion by The Revenue Commissioners on 28 March 2006. Reform, it seems, was only for the ‘little people’. Their legacy is now overwhelming.

Taxes and penalties amounting to hundreds of millions of euro were recovered by the Revenue Commissioners, whose own organisation was radically overhauled and invigorated to make it fit for purpose and recognised as such across the world. The DIRT Inquiry did not, unfortunately, lead to a a similar cultural renaissance in the banking system, where rampant overcharging of customers and shoddy standards became endemic and some of whose senior executives were cited for personal tax evasion by the Revenue Commissioners in March 2006.

Department of Finance Guidelines

Much has been made of the Department of Finance Guidelines with respect to the retirement terms of Rody Molloy. These Guidelines were created in 1998 by John Hurley, the retiring Governor of the Central Bank. They were intended primarily to deal with circumstances in State bodies where chief executives were recruited on fixed-term contracts. Their purpose was to establish clear and consistent maximum limits on the pension and lump sum payments that could be provided to a CEO who was either retiring at the natural conclusion of a contract or was retiring prior to that at the request of his board for relatively benign reason – such as a desire for a change of leadership, or direction at the agency concerned.

The Guidelines provide for the payment of a pension and a lump sum to a retiring chief executive aged 55, having acted in that role for at least 6 years, with 15 years pensionable service in the public sector based on actual reckonable pensionable service. A retiree could possibly be granted one added year of pensionable service for each year in excess of 15 years overall actual service in the public sector, subject to a maximum of 5 years.

A person who voluntarily retires does not qualify for these arrangements. Alternative arrangements are in place for younger retirees.

The Guidelines particularly stress that the board of a State body is free to apply lesser benefits or not to apply early retirement benefits at all. Bearing in mind the Guidelines were created to deal with benign circumstances the example of a board desiring to reappoint a chief executive to another fixed term as an instance where such additional benefits would not be offered, is cited. There is no reference in the Guidelines to retirements in controversial circumstances, which is not surprising.

Public Accounts Committee
a potential game-changer

Where does this leave the Public Accounts Committee in its deliberations with respect to FÁS? The side issue of the company Audi has surfaced but this matter, which is now to make its fifth appearance before The Public Accounts Committee since 2 October 2008, has ramifications that transcend FÁS. Their deliberations will have a profound impact on the entire State sector.

The implications of the recent retirement of Paul Moloney as Chief Executive of Dublin Docklands Development Authority have similar, but unascertainable and potentially serious implications, when the details of the transactions involving Anglo Irish Banks and the Irish Glass Bottle Co site are disclosed. Moloney held this position since 2005 having worked previously with Dublin City Council. His appointment to the Authority was blessed with superlative tributes by then Chairman, Lar Bradshaw, who was to resign from the board of Anglo Irish Bank last December, along with his close friend Sean FitzPatrick.

The entire State sector is observing unfolding developments closely to glean what the consequences of the C&AG examination are. They are also closely watching how Sean FitzPatrick deals with his debts due to Anglo Irish Bank and whether the Minister for Finance is kept appropriately abreast of developments by those acting in the public interest.

If there are no apparent consequences, apart from the thrashed reputations of the institutions connected FÁS and the burden that is borne by those who represented these institutions together with the personal distress that Molloy must inevitably endure, then a damaging vacuum is established. How is it possible to clearly identify the boundaries of what is acceptable and what is not acceptable when standards fall well short of acceptability and serious damage ensues? If the boundaries are unclear, or there are no boundaries, the State sector will convulse itself to avoid ignominy - but will probably do so in a manner that is ineffective and at a cost to its own productivity, agility, sense of integrity and effectiveness.

If there are no consequences, how can the characteristics of stable governance with integrity and commitment flourish in any State agency? Mr Saul confirmed that the procedures and protocols in FÁS. That is the case in most public bodies. Paper doesn’t refuse ink ~ but it is the culture , dynamism, passion and energy of an entity that makes things happen –for better, or worse.

The deliberations of The Public Accounts Committee could therefore result in another ‘grand slam victory’ and have a profoundly positive impact as a consequence of this crisis if the outcome successfully redefines and refocuses FÁS and individuals emerge of the calibre and ambition of those that emerged in The Revenue Commissioners a decade ago. FÁS has been a major by-product of social partnership. Social partnership could also get new life and sense of purpose but the fuel to ignite that will not be found in damp deadwood hidden behind legal fig leafs.

It would, on the other hand, be most disappointing if the enduring outcome of The Public Accounts Committee was merely to record the frustrations, impediments and difficulties in conducting its examination of this matter the only practical outcome is one of Plus sa change, plus c'est la meme chose.

The Debacle that is FÁS

WHEN public trusts is so utterly compromised, as in the case of FÁS, one is inclined to question upon what basis trust was reposed in the first instance. The executive leadership of FÁS never seemed to earn the highest public acclaim. Taxpayers’ and citizens’ would have thought that the board of an enterprise that was spending over €1 billion per annum and contained within its ranks trusted individuals who would be competent, visionary, inquisitorial and vigilant. But, tragically, the board of FÁS operated to the standard of geriatrics’ book club and the reputational fallout is far reaching at a personal and institutional level as the stench of geriatrics’ stale urine.

The architect of the culture of any organisation is its chief executive and the calibre of a chief executive defines an organization.

The public are now aware of what the management of FÁS were fully acquainted with last year when they appeared before The Public Accounts Committee. I read the transcript of the FÁS dialogue with The Public Accounts Committee again over this weekend. The explanations tendered to that Committee, in respect of certain decisions, are so utterly self-serving in the light of evidence now to hand. There was a great deals of wriggling and waddling behind the fig-leaf of legal nicety but to what ultimate avail?

The most recent report of the Comptroller & Auditor General is a sequel to a previous report with adverse findings on procurement and related matters at the agency.  It deals with the management of advertising, promotion and related activities, including jobs and activities to promote science.

The C&AG found that advertising and promotional activities lacked strategic direction because there was no marketing and communications strategy.  There was a substantial and prolonged breakdown in budgetary control.  Promotional expenditure in the period reviewed exceeded budgets by 38% and the general advertising expenditure exceeded budget by 66%.  But much of the advertising was ineffective in achieving the objective of increasing the awareness of the services provided.

There was nugatory expenditure of €622,000 as a result of a series of transactions for which there was no evidence of goods and services having been provided.

There was also considerable non-effective expenditure including over €600,000 spent on advertisements that were not broadcast and payment of €9,200 for a car that was not delivered.

The board of FÁS, under the chairmanship of Peter McLoone,  is to resign following the publication of this second report.  The chairmanship of this agency alternated between trade union representatives and the employer lobby group, IBEC.

 

The Belly Dance is about to begin …

As you listen to the siren calls for the curtailment of government expenditure reflect on the energy and vitality applied to curbing excessive spending at this agency.  The period between 2002 and 2007 was an era as close to full employment as Ireland is likely to see for a long time.  Did any of the distinguished board raise there hand to successfully counter this trend?  This board did not even react when the expenditure for the agency, as a whole, exceeded income in 2005 and 2006.  Perhaps they were in Florida having a pedicure.

Year	Income € Million	Surplus / (Deficit) of year-end income over expenditure €000	Live Register	Unemployment
2002	859.3	812.00	166,142	80,000
2003	823.1	664.00	170,604	85,200
2004	833.3	481.00	158,816	83,600
2005	912.0	-4,597.00	155,833	82,100
2006	974.6	-572.00	155,389	88,200
2007	1,071.5	5,762.00	170,376	93,400
	€5,473.8
CHANGE	24.7%		2.5%	16.8%

 

When IBEC Boys Choir hums sweetly about a reduction in wages and a reduction in welfare, should these remarks, in the interests of clarity and the elimination of ambiguity, be prefaced by:

 – “wages are what they are because of the social partnership agreements that IBEC negotiated with other stakeholders”

When you speak about welfare cuts, you could mention “

“when I was sitting on my precious idle arse in the boardroom of FÁS, dreaming about Ireland’s first astronaut, I did absolutely nothing to prevent the FÁS State subsidy increasing by 24.7% between 2002 and 2007 while the Live Register recorded a mere 2.5% increase and the number unemployed increased by 16.8% to 93,400 persons. My board knew nothing about the derring-do, even though expenditure exceeded income by €4.59 million in 2005 and by €572,000 in 2006.”

I look forward to the third report of the C&AG and the unfolding dynamic of the social partnership process with intriguing interest, especially as the Voice of the da Vulnerable has once again raised his hidden jowl above the parapet of public opinion, this time from a newly created vantage point but representing the sentiments of the same constituency. The stature and credibility of social partnership has, unfortunately, also been thrashed leaving its stakeholders naked and impotent.

Charity Begins at Home!

The Irish Government may not have anticipated the grave extent of the exchequer deficit at the end of February, but this deficit, the enormous increase in unemployment and the threatened reductions in welfare in the forthcoming budget are all indicators that must surely alert the Government to rising levels of destitution, neediness, distress and desperation in this country. Ireland will no longer be a rich nation and the national economic wellspring is severely weakened.

The Survey on Income and Living Conditions (SILC) 2007 published by the Central Statistics Office indicated that the risk of poverty in Ireland at that time was 16.5% and that 5.1% of the Irish population endured consistent poverty. There is now a compelling need for urgent new thinking, fresh priorities and new practical initiatives, beginning with a separate approach to aid and welfare by the Government.

The Irish Government, through Irish Aid, has spent more than €5.3 billion on overseas development assistance making the nation one of the most generous donor countries in the world. Ireland committed to spend 0.7% of GDP on official overseas development assistance by 2012 at the UN Millennium Summit in 2000. That ambition is laudable and realistic when the resources to achieve it are ample but this is not the case in the foreseeable future and the Government needs to pardon itself from fully meeting this objective within that timescale. Charity begins at home and a portion of these resources are now badly needed to provide aid at home.

This arises in the context of the number unemployed in Ireland escalating from 165,000 to 365,000 requiring a further €200 million in welfare support and with singificant further increases anticipated. There has been a 19% drop in tax revenues in January and a 20% drop in retail sales in 2008.

A significant amount of FÁS resources are distributed to community related initiatives at least some of which, like meals-on-wheels in provincial areas, have essentially a charitable purpose and need to be realigned and accounted for as such.


The Government could begin by diverting at least €100 million to augment the diminishing resources of credible long-established voluntary charities, such as The Society of St Vincent de Paul, The Simon Community and others that directly alleviate dire need and galvanise their voluntary efforts. Their reputation is impeccable and their integrity above challenge. Their overheads are modest. Their modus operandi is focused, practical, widely understood and readily acclaimed. Their reach is extensive and their impact is mighty.


The Department of Community Rural & Gaelteacht Affairs could be augmented to act as overseer of such an initiative and create inspired guidelines and policies. The distributions of funds to the charities could be controlled by an independent commissioner operating to specific guidelines and accountable to the Public Accounts Committee.


There is a well developed and experienced set of voluntary agencies in this country that operate overseas and which demonstrate great flair in fund raising and promoting their work. The Irish people are deeply compassionate and demonstrate enormous generosity in their support of these, particularly at Christmas, Lent and in response to catastrophes’, strife and famine. There is no reason to believe that this spirit will abate and Ireland should continue to be a prominent donor to the relief of distress throughout the world while the Government is not ignoring the consequences of imminent poverty at home.