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Archive for June, 2013

Quizzing Mathew Elderfield at the PAC 13th June 2013

Watchdog wounded by political flak

 

THE Dail’s Public Accounts Committee (PAC) is a pretty sniffy body. It looks down its nose at other Oireachtas committees. Uniquely, its members are deemed so distinguished that no substitutes are ever allowed.

 

The rules do not permit a mere senator within an ass’s roar of its proceedings. Until recently, the vulgarity of voting was never indulged. This elite cabal, full of politicians, perpetuates the nonsensical fiction: that it is above politics.

Last Thursday, that little myth exploded. The PAC’s proceedings were pure politics. Some members came to hang Fianna Fail chairman John McGuinness, others to save him. Politicians outside the committee were watching the proceedings eagerly. Nervous civil servants were believed to be glued to their screens in their offices.

The PAC is the watchdog over public expenditure. Its chairman is a crusader for thrift in public bodies, a consistent critic of waste and extravagance. Consequently, more than one or two eyebrows were raised when Irish Independent journalist Fiach Kelly revealed that when John McGuinness was a minister in 2007, his office had been extravagantly refurbished, his son had been employed in his department where he received generous overtime, and his wife had enjoyed a few happy trips abroad at taxpayers’ expense.

John McGuinness had made a career out of his crusade against extravagance with the public purse. It probably gave him the profile that saw him made a junior minister in 2007. But his ministerial career was abruptly ended by Brian Cowen in 2009 – a sacking that, ironically, probably saved his Dail seat. He took the opportunity of his dismissal to distance himself from Fianna Fail excesses.

After his removal, he lashed out at Mr Cowen, his own senior minister Mary Coughlan and his former department. He was furious, giving angry interviews, including one to The Late Late Show, and even defying the party by missing crucial votes in the Dail.

Within weeks, he became a Fianna Fail maverick. At one stage soon after his removal, he denounced his former colleagues in withering terms, declaring: “I am only sorry that I did not have the time, as a minister, to kick a larger hole in the wall of incompetence, waste, inefficiency and lack of professionalism that confronted me at both political and bureaucratic levels within my department.”

Such a record and his semi-detached status in Fianna Fail made him an ideal candidate for the chair of the PAC when he was re-elected a TD in 2011. New leader Micheal Martin picked him for the post, a gig traditionally reserved for the biggest opposition party.

(I must declare a minor interest here : as a member of the committee, I contested the position but was trounced by Mr McGuinness. By agreement, the three biggest political parties whipped their TDs into line, putting Mr McGuinness in position and me in my place!)

Mr McGuinness has been good at his job, far better than I would ever have been. He is patient, fair-minded, challenging to witnesses and determined to pursue waste.

Such an exalted reputation for abstinence and thrift is double-edged. When Fiach Kelly broke the bad news, RTE’s Morning Ireland demanded answers. TDs followed suit, wanting to know how a zealot against waste could justify apparent extravagance in his ministerial office and taxpayer-funded benefits for his family?

He answered the charges last Thursday. He did pretty well. He pleaded no wrong-doing and the totally different economic circumstances prevailing today. Even if he was far too shirty at times, it was obvious – early on in the proceedings – that the chairman had not committed a hanging offence. He had broken no rules or guidelines. He had been foolish, maybe. He held bizarre views on spouses travel, but that was all.

The questions were mostly confined to detail about various trips to Canada, Edinburgh and London when he was a minister. After two hours, the grilling was coming to an end. Mr McGuinness was bruised, but unbowed. Walking towards freedom.

Suddenly, the Dail division bells rang. We adjourned to allow members to vote.

Just outside the committee room door, waiting patiently, sat the Financial Regulator, Matthew Elderfield. Originally billed for a hearing much earlier, the nation’s key mandarin was fiddling with his iPad.

I arrived in the Dail chamber for the vote to be greeted by independent TD Finian McGrath. “How’s the hanging going,” asked the only TD to have demanded Mr McGuinness’s resignation.

“There will be no hanging,” I replied. “McGuinness is through the hoops.”

Mr McGrath sighed.

Mr McGuinness was free as a bird because he had dealt with the questions and rebutted any suggestion of breaching rules. He had been guilty of appalling judgment, at worst. The meeting had been defused, an anti-climax. There was no politicking. The PAC was emerging with its reputation as a non-political body confirmed.

Even the partisan intervention of Taoiseach Enda Kenny two days earlier, criticising Mr McGuinness from faraway Rome, seemed forgotten.

When we reassembled, Fine Gael dissident John Deasy emerged from the shadows. It was a high-octane intervention. RTE described his contribution as a “bombshell”. Mr Deasy began to inject the entire room with political dynamite.

Members from all sides had been fearful that Mr McGuinness might be ambushed with politically charged allegations from the Fine Gael ranks. It was anticipated that Fine Gael members might echo Mr Kenny’s cry that “Caesar’s wife must be above suspicion”. The political fiction that the PAC was above politics could be exposed.

Mr Deasy is well capable of such an outburst. But he indulged himself in a different type of outburst. Instead of ambushing Mr McGuinness, he torpedoed his own side. Speaking very deliberately, he paid veiled compliments to the Fianna Fail chairman’s “combative” style.

Pointing towards the Cabinet, he spoke of how “people throughout government think you have crossed the line”, of how certain individuals will “use this as an opportunity to remove you”. He spoke glowingly of how Mr McGuinness fulfilled the need for a “combative” chair and of his political enemies. A conspiracy theory was being fuelled.

Mr Deasy was plunging the bayonet deep into the ribs of his Fine Gael colleagues and his party leader. And he was thoroughly enjoying it.

Mr McGuinness, grateful for the leg-up, responded with an equally friendly compliment about Mr Deasy’s own “combative” style. A mutual admiration society had been formed. Mr McGuinness, preaching from the high ground, proceeded to lecture the meeting about the “bell tolling for democracy”. Referring to the media stories, he said he was “damn sure the leaks came from the department”.

Suddenly the genie was out of the bottle. Mr Deasy and Mr McGuinness had decided to play the political card. The rumoured sources of the leaks were named in public. No evidence was produced. An embittered Fine Gael TD was pointing the finger at his bosses. Mr Deasy used the PAC to shaft his leader, to undermine his colleagues and to throw a lifeline to Mr McGuinness. This was raw politics. Mr McGuinness responded by attacking civil servants in the Department of Enterprise. It was the best political one-two witnessed in Leinster House for many years.

Fine Gael members are furious with Mr Deasy for saving a Fianna Fail chairman from embarrassment. Such a manoeuvre may yield short-term benefits for Mr Deasy and Mr McGuinness, but will leave the watchdog over public expenditure permanently weakened.

The meeting ended in acrimony. Labour TD Derek Nolan described the final exchanges as a fiasco. The sniffy PAC, which supposedly looks down its nose at political manipulation, has been relegated to the realm of a political battleground.

As this political scrap dragged on, Matthew Elderfield remained outside the door playing with his iPad.

The man in charge of regulating the banks was forced to play second fiddle to politicians throwing shapes at each other and settling scores within their parties.

Shane questioning John McGuinness (PAC Chair) on his controversial remarks & positions regarding state expense

The policy of increasing the pupil-teacher ratio in fee-paying schools

FG grabs turn on bank quango

 

QUESTION One: why is former MEP Eoin Ryan not being reappointed to the board of the European Bank of Reconstruction and Development (the EBRD)

Answer: because he is a Fianna Fail loyalist. Worse still, he is a member of a FF dynasty.

Eoin Ryan’s term in this lucrative European banking gig ends on June 30.

Question Two: why has the Government’s nominee for the post, Sean Donlon, been selected to replace him?

Answer: because he is a Fine Gael loyalist.

No doubt both men have admirable talents, but no credential is more important for this banking sinecure than a party pedigree.

The EBRD board has been forced to put up with a pile of Irish party-political appointees since its formation in 1991.

Fianna Fail appointed ex-TD and Senator Brian Hillery, nephew of former FF president Paddy Hillery, in 1994.

Charlie McCreevy slotted a soulmate, the retired Progressive Democrat leader Des O’Malley, into the job in 2003 and Brian Cowen put his pal Eoin Ryan into a director’s chair when Ryan lost his European Parliament seat in 2010.

Ryan even sought a bigger plum, the European commissioner’s job, before that was claimed by another FF loyalist, Maire Geoghegan Quinn. Like him, she has as much chance of being reappointed next year as Coco the clown.

Fine Gael will either donate this gift to Enda’s anointed, or to another cabinet minister incurring unpopularity for the party at home. Expertise in European affairs will scarcely count.

The sinecure at the EBRD is used by Irish political leaders as a below-the-radar consolation prize for political casualties or as a reward for party loyalty. When I asked a mandarin at the Department of Finance last week whether there had been a selection process, an advertisement for the Donlon job, you could have heard a pin drop. The idea that Donlon might have been interviewed about his qualifications or his banking experience had never arisen. No, that was not how this appointment was done.

The press release announcing Donlon’s arrival in the post was modest. Very modest. It listed his achievements as a diplomat, mentioned his “non-executive” directorships and, of course, his stirring “sacrifice” in declining to take any of his civil service pensions with him into the new job.

It omitted lots of interesting details about him. Not only was Donlon special adviser to Fine Gael Taoiseach John Bruton from 1994-97, he had a close relationship with another Fine Gael powerhouse – none other than the man appointing him, current Minister for Finance Michael Noonan. Donlon served as special adviser to Noonan from 2001 to 2002 when he was party leader – and in all kinds of trouble.

The release did not mention that Donlon has close Limerick connections, specifically as ex-chancellor of the University of Limerick, Noonan’s home patch. Nor does it declare his seven-year vice-presidency of the nearby Shannon-based GPA Group, a company that provided a home after politics for such other Fine Gael luminaries as Peter Sutherland, Michael Lillis and Garret FitzGerald himself.

Indeed, so deeply embedded was Donlon in FG’s inner circle that he acted as master of ceremonies at Garret FitzGerald’s 75th birthday party. Not the sort of bundle of fun you would expect from a FF hoolie, but it was, by all accounts, a tribal gathering. At the birthday bash, his patron Michael Noonan made the keynote speech.

Not mentioned in the press release and not mentioned today in polite FG circles was another service Donlon did for the party. In 2004, he told the Moriarty Tribunal inquiring into the award of the second mobile-phone licence by Minister Michael Lowry that at John Bruton’s request he had “looked at the process through which the decision had been reached” and that he “went back to John Bruton and said I believed that the decision, that the process was such that it could not have been subverted”. Wow.

Fine Gael was temporarily off the hook. Donlon, a distinguished former diplomat, had found nothing untoward.

Strangely enough, the press release failed to reveal any details about the job itself and very little about the virtually unknown EBRD.

So I decided to ring the mysterious EBRD headquarters in London to find out.

Its press office is no champion of transparency. When I asked the press officer how much Donlon would be paid, she first suggested that I ring the Irish office. When, mildly irritated, I repeated the request, she replied: “I don’t know – it’s on the website.”

After a bit of persistence, she disclosed: “According to the Financial Report, it would be €172,000.”

“And what are the tax arrangements?” I asked.

“Don’t know,” came the tight reply, indiscreetly volunteering the fact that the Sunday Times had already been enquiring.

As my blood pressure rose about the lack of information, she asked me to hold on.

The pause lasted nearly 10 minutes. It was worth it. She returned with a bombshell.

Donlon’s pay is subject to an “internal” tax she muttered.

And what in the name of God, I wondered, is this unique creature?

“It is a tax which is applied according to people’s personal circumstances,” she said. “Salaries and emoluments at the EBRD are exempt from income tax in the UK.” Ahem.

“What are the rates of internal tax?” I queried.

“That is not public information.”

“Why do you not disclose it?”

“Because we don’t,” shot out the reply, slamming the door.

And that was that. But it was enlightening in one way. I now know why it might be relatively easy for Donlon to “sacrifice” his public service pensions. His “personal circumstances” will now tumble to an income of only €172,000 a year (plus unspecified expenses)!

The rate of “internal tax” will presumably be adjusted down to rock bottom, probably zero. His great “sacrifice” blazoned in the press release suddenly looks less virtuous.

Now I am beginning to understand why a 72-year-old man with a civil service pension is prepared to relocate in London to a virtually unknown bank with a dubious record.

Furthermore, he is unlikely to be accountable to the media in Dublin or London for his stewardship of this low-profile Euroquango. Has anyone ever read a word in the media of the hours of toil (or otherwise) put in by Eoin Ryan, Des O’Malley or Brian Hillery while working in this outfit?

Instead, the media has tended to highlight the multitude of scandals and extravagance that have haunted the EBRD since its infancy. It was set up to help rebuild the devastated economies of Central Europe.

It made a bad start when it was exposed as spending over €300m on flash offices, high living and jet travel in its first two years. Italian marble floors and lift frames in its London building cost €1m. Gold-plated door handles decorated the corridors.

As recently as 2011, this bank – with such a noble mission – was rocked by corruption allegations. According to Reuters, immunity given to four of the bank’s officials was lifted to enable criminal investigations. Elsewhere, companies aided by its funds have been involved in money-laundering scandals.

What a cosy, little convalescent home for political protégées or politicians nurturing the wounds of defeat.

Nothing has changed.

Irish Independent

 

Exposing double standards at RTE

 

THREE cheers for RTE and presenter Oonagh Smyth for their brilliant expose of children’s creches on Prime Time: A Breach of Trust last week.

They rocked the normally calm foundations of the cabinet room on Wednesday morning, sending ministers scuttling in all directions. Parents of young children in Ireland should sleep a lot easier after this ghost is exorcised.

RTE has a mixed record on investigative programmes. It badly blotted its copy book in the programme A Mission to Prey with its defamation of Father Kevin Reynolds. Despite this blemish, its crusade to shine a light into the dark corners of Irish life has been important in the development of the State.

It boasts presenters and producers who could command jobs in any global market. It has led the field in demanding transparency from bankers and businesses. Its ace interviewers – like Pat Kenny, the Morning Ireland team, Marian Finucane and Sean O’Rourke – are uncompromising in their challenges to Ireland’s icons. Its presenters rightly demand transparency, sometimes even solvency, from Ireland’s big beasts. What a pity RTE management fails to impose the same standards on itself.

Unfortunately, the antics of RTE’s backroom bureaucrats must be deeply embarrassing to the frontline troops who, day in and day out, deliver information and entertainment to the nation.

Behind the shiny shop window of superstars lurk some pretty manipulative apparatchiks. RTE is losing money hand over fist. Not really on highly paid presenters, but on wanton waste.

Have you heard that extraordinary promotion constantly running on RTE recently? It is the bizarre creation of an outfit in financial trouble.

“Did you know,” blares out the advert, on air at peak advertising times, “that RTE contributed €384m to the Irish economy in 2011 – and for every euro of licence fee RTE receives, it invests more than double back into the economy?”

It goes on: “Find out more about how RTE contributes to the Irish economy by reading the recently published independent PwC report at rte.ie/about. RTE today, tomorrow, together.”

Sad life that I have, I must be the only poor sod in Ireland who decided to download the PwC report. Does RTE really believe that the ordinary citizens of Ireland are going to be spellbound by the tortuous work of PwC? Are they today rushing to the RTE website for some light bank-holiday weekend reading?

Why is RTE exploiting its control over peak advertising time in a nakedly self-serving message? No wonder they are losing money if they are grabbing these spaces for themselves, slots they could have sold to a client.

RTE kindly provided me with this “independent” report, written by big guns PwC, the same “independent” consultants who pronounced the Irish banks adequately capitalised in late 2008, the very same PwC that has been independent auditors to Bank of Ireland throughout the banking crash, the same PwC whose earnings from auditing a single Irish bank have exceeded €100m in recent years.

Happily for PwC, their banking clients have been delighted with them, their independent auditors, in recent years. RTE must be equally delighted with their favourable findings.

Aware that PwC certainly knows how to charge a king’s ransom for these independent services, before I tackled the report I asked RTE how much it cost.

No dice. RTE refused to say. According to a spokesman, it was a “commercially sensitive” matter. A request for the figure had already been refused to another journalist.

By whom?

By RTE’s very own ‘Freedom of Information Officer’ – RTE’s shield against journalists prying into its financial affairs. Quite a good wheeze when your own frontline staff are so skilled at insisting on transparency from others spending public money.

Quelle surprise. When you do hypocrisy, you might as well do it properly.

RTE commissioned the report into itself. It will pay PwC the secret fee with taxpayers’ money. Was PwC, I wondered, asked to do something useful, like to discover why RTE lost €16.8m last year, or to suggest remedies, even to advise on savings?

Not at all. Nothing so practical. PwC was asked to tell the station chiefs what economic impact RTE had on the economy. It sounded like a totally pointless exercise. It was.

And guess what? PwC’s “independent” estimate of economic impact was music to the ears of those who commissioned it. It states that RTE “contributed €384m to national output”. Which presumably means that, somehow, it spent that much somewhere in the economy.

It triumphantly estimated that RTE “supported approximately 3,550 full-time equivalent jobs across the country”. Whatever that really means. Shades of the claims of Enterprise Ireland.

It helpfully found that RTE supports a “vibrant” acting community. It spent €49m on independent commission activities. It even funds indigenous sporting organisations.

It revealed that RTE enjoys high levels of public support, with 75 per cent of the Irish population declaring they were “proud” of the RTE brand.

Despite competition from the BBC, RTE was still commanding a huge audience. It was “trusted”. It had proved its “effectiveness” as a public service broadcaster.

PwC’s superlatives would make arch-rival KPMG blush.

And from what sources, I wondered, did PwC draw its selective information?

According to the small print in the report, it relied “primarily upon secondary data from [er] RTE”. Ho Hum.

This was beginning to look a little bit too cosy.

The report never once mentions that RTE is a financial basket case. It never addresses waste, overlap, over-staffing in middle management or commercial imperatives. It never suggests any remedy to RTE’s chronic financial crisis. Instead, it is sympathetic with a brave victim of the recession, bemoaning the loss of revenue from the licence fee and RTE’s consequent dependence on commercial income. It applauds RTE for its cutbacks, maintaining that “the scale of this reduction is almost unique in the Irish semi-state sector”.

The report is shameless RTE propaganda. Its authors even had the gall to seek endorsements from those to whom RTE gives business galore. Celebrities such as the GAA’s director-general Paraic Duffy and Football Association of Ireland chief John Delaney are wheeled out as big fans of the station.

Both provide complimentary quotes for PwC’s paean of praise. Both men’s organisations are, incidentally, big beneficiaries of revenue from RTE.

PwC has spun a good yarn, a eulogy of their patrons. They would have done the nation a better service to have commented on RTE’s last annual report. That tells a different story, a tale of multi-million-euro losses, of tanking revenue from advertising and smaller state subsidies, of a politically appointed board, of a director-general paid far more than the Taoiseach, of a pension fund in dangerous and deep deficit.

Last year, RTE cleverly released its diabolical results in August when the Dail was on holidays and the figures were likely to pass beneath the radar. Do not be surprised if they try and pull the same stunt this summer.

That would be the station’s second “stroke” in a matter of weeks. The first was RTE’s decision to use its own advertising time to promote an “independent” report, commissioned by itself, paid for by the taxpayer, to give itself plaudits by the bucketful.

There are two RTEs. The first is the RTE of last Tuesday’s Prime Time, the RTE of Miriam O’Callaghan, of George Lee and other determined interviewers, demanding answers from politicians, businesses and semi-states.

The second is the profligate, secretive semi-state that commissions sympathetic consultants with big names to produce soft reports for consumption by a gullible public.