A minister's short memory; A Govt's short-term policy

Minister Martin Cullen spoke to The Irish Times Travel supplement about the hotel industry on Wednesday, post-Budget;

He warned that a lot of the Republic’s hotels, which have an overcapacity of “about 15 per cent”, “will probably go, through Nama or one way or another”. He said: “In fairness to [hoteliers] they are kind of focused. What we want them to do is to focus on their own business, to stop worrying about what the other fella is doing, to focus on how you can be more competitive.”

The Minister was clear about where the Republic’s tourism industry got it wrong: “We priced ourselves out of the market. Golf is a very good example. We had and still have a fantastic golf product, but charging guys €400 and €500 for a round of golf on the west coast of Ireland was crazy. That is all gone, because they lost their market, and we have got to go and rebuild that market…”

Eh.

At one point in the late nineties there was a shortage of hotel rooms, partially weakening Ireland as a tourism destination. This would likely have changed naturally as the economy developed, accompanying the influx of foreign direct investment. In those circumstances the industry would have developed in same way as has elsewhere; with individuals or groups with an interest in building a reputation (and sustainable profit) in the sector setting up hotels. That would have quickly filled any vacuum in the market that existed.

Instead, the Government of the time, led by Minister Cullen’s Fianna Fáil party, altered the policy. Matt Cooper covers what happened thereafter better than I could in his excellent book Who Really Runs Ireland? The Story of the Elite Who Led Ireland from Bust to Boom… and Back Again.

My emphasis;

The support for development of the hotel industry made sense at one point. There was a shortage of suitable stock of hotel bedrooms and associated facilities, which put Ireland at a disadvantage as a hotel destination. Unfortunately the availability of massive capital grants to offset against income from other investments persuaded many land-owners and builders – with no experience in how to run hotels of real interest in the provision of the necessary service – to enter the hotel construction game. Continue reading “A minister's short memory; A Govt's short-term policy”

A Smart Budget for a Smart Economy?

[Cross-posted on Irishelection.com – please appreciate I wrote this at 1.30am after a day spent reading official documents. Mistakes are a possibility, I’m open to discussion in comments section]

It’s about a year since An Taoiseach announced plans to develop ‘The Smart Economy’ (the successor to ‘The Knowledge Economy’, remember that?). In those twelve months we’ve heard constant mention, plugging and referencing of the phrase. It has become a Government mantra, said constantly when the state of the public finances is discussed. On Drivetime today Brian Lenihan spoke about it, on the Nine News Brian Cowen picked up the baton and later he handed it onto Eamon Ryan for Prime Time. You can be guaranteed we’ll heard it mentioned every few hours in the next week too.

“We need to settle the public finances with a view to developing a model for sustainable growth through the Smart Economy, going forward”, don’t say it doesn’t ring a bell.

I can’t find an explicit definition of what the Smart Economy would be constituted of, but if asked, I’d guess a Government representative would describe it as something like; “an economy that has a workforce that is able, educated, competent and competitive in areas and skills which will be needed by companies in growing industries, to attract those companies”. Fair?

Continue reading “A Smart Budget for a Smart Economy?”

O'Nuallain, Gormley, DCU and the Employment Appeals Tribunal

While the Budget rightly dominates coverage today, a story that on other days may have been a page lead, sits quietly in the bottom corner of a late Home News page in The Irish Times.

Might be nothing huge to it, but interesting all the same. Olivia Kelly reports…

MINISTER FOR the Environment John Gormley intervened in a disciplinary dispute between DCU and a lecturer at the university, when he was a Green Party TD, an Employment Appeals Tribunal has heard.

Mr Gormley in 2002 contacted the president of DCU, Ferdinand von Prondzynski, on behalf of computer applications lecturer Dr Seán O’Nuallain. Prof Prondzynski told Mr Gormley it would be unethical to discuss the case, the tribunal heard…

Read the rest of this article on Irishtimes.com

The Digest – Dec 6 2009

Starting now, a Sunday night weekly round-up type thing.

The Digest will contain links to sources and stories worth reading – usually on topics kinda relevant to our terms of reference – from the week that was…

There’ll be about five links under each of three headings, Home, World and Other.

– HOME

Keiran Walsh, lecturer in UCC, writes about The Murphy Report and intra-agency co-operation on the excellent new Human Rights in Ireland blog. Walsh is currently pursuing a PhD examining the role of risk analysis and preventative measures in child protection. He’s also a former advisor to the Special Rapporteur on Child Protection and Barnardos. Subscribe to that blog.

Chief Cedar, union member and now union critic, WorldByStorm, eviscerates the union leadership for their negotiation failures

That we are, as it were, being forced by orthodoxy to look at only one side of the equation of tax and spend, that being spend.

Indeed one could argue the the strategic goal of the unions should have been to act to put that argument front and centre before the Irish people, ahead of public sector wages, ahead of everything. Because once you accept the parameters of orthodoxy you’re lost, since then it comes down to how much is cut and not why there are cuts. And since the eschatological approach of those arguing for cuts leaves no wiggle room (look at the actuality of unpaid leave, effective 5 – 7% wage cuts, as against… er… 5 – 6% wage cuts sought by Cowen today from pay cuts). Truth is pay cuts may be less penurious than unpaid leave. But that won’t get through the filter.

Despite the impression held by many, just 16% of families traveled north of the border to shop in Quarter 2 (PDF link) this year, says the CSO. Continue reading “The Digest – Dec 6 2009”

The tax defaulters list; June to September

The Revenue Commissioners published their quarterly list of tax defaulters during the week. It’s always worth a scan through if you’re a nosey bollocks who doesn’t like tax avoiders journalist at a loose end.

Revenue Tax Defaulters List for June 1 to September 30 2009

€179.4m was recouped altogether, with details of the big-baddies being made public. It was a colourful bunch this time too, a postman, the owner of a lap-dancing club, a taxi driver, a singer and – with impeccable timing – a priest, were all amongst the redden-faced. The usual types were in there of course also – property developers, construction industry types, farmers, auctioneers, company directors, etc.

The papers and broadcasters, as is their perogative, covered the stories of the lads and lassies fined big numbers. I prefer the other stories though, the ones that tend to get glossed over… you know, the people fined just forty or fifty grand – as opposed to millions – for trying avoid contributing to the country’s coffers…

It’s been a tough few months for Michael McDarby and Séan Acton. Back in February 2008 the two lawyers from Mayo were dragged before the Solicitor’s Disciplinary Tribunal (SDT), where they were found guilty of eight counts of professional misconduct. An embarassing incident, no doubt. According to the Mayo News, the counts included… Continue reading “The tax defaulters list; June to September”

BOI & AIB: A year? More like a week…

Four days ago on this site I noted Miriam Lord’s article in The Irish Times about representatives of Bank of Ireland and AIB appearing before the Oireachtas Finance Committee. Ms Lord wrote…

The Bank of Ireland went so far as to say it wouldn’t have to go back to the Government next year for a further handout. Sheehy was similarly upbeat about AIB.

Today RTÉ Business Editor, David Murphy spoke on the One O’clock News (TV) on the likely repercussions of this NAMA-related story

Previously people expected that the discount on the loans would be in the region of 18% for Bank of Ireland. [Today] Bank of Ireland has got more information regards how the loans will be valued and it has checked it against its own loan portfolio and as a result it has given a broad hint that the figure will be 25%. That’s a big change there, that means they will require more capital…

Later on the Six One Mr Murphy went a step further…

Bank of Ireland had expected a discount of 18% on the €16billion of loans it will transfer to NAMA, now that discount will be more like 25%. That means the bank will need more capital, potentially a billion euro more than expected.

If things are bad for Bank of Ireland they are worse for AIB which is to transfer a much bigger €24 billion of loans to NAMA.

The weaker position of both banks means using the stock market to raise funds is a less likely option. The only alternative is getting State money to stay above water.

RTE News understands one option under consideration by Government is for the State to convert the €3.5 billion already given to both banks into ordinary shares to plug the gap in their finances – but that would imply massive state shareholdings.

It looks like Cearbhall was right to be sceptical…

What I find odd – and believe me I’m no business expert – is during the cited exchange at the Oireachtas Finance Committee Deputy Michael McGrath said to Richie Boucher of BOI that the discount was never going to be near 18%. Not that he should have needed notifying. This, Mr Boucher conveiniently ignored in his reply…

Richie Boucher: … Bank of Ireland’s modelling, based on various assumptions with regard to what could be the discount, means that we can take the discounts that might be envisaged and still be in a position to meet the regulatory capital requirements. However, in the medium term we will be obliged to look to the level of capital that is appropriate. The level of capital we require is also proportionate to our balance sheet.

Deputy Michael McGrath: Realistically, if the write-off is going to be of the order of 30%, or a further €4 billion to €5 billion, what level of additional funding – whether from the State or from international investors – would the bank require to satisfy the requirements of the markets?…

Richie Boucher: …Based on the modelling we have carried out, our core tier 1 capital will be significantly ahead of the regulatory requirements and will in fact be such that we believe it will satisfy the bond markets on which we are reliant. We are satisfied, taking into consideration the potential discounts we would be obliged to accept in respect of the transfer of such loans, that the bank will be significantly in excess of the requirements relating to its being able to continue to fund its balance sheet on the markets. I do not believe that this will be an issue.

Bankers appear before finance committee… this time

There’s a most interesting and pertinent piece of political writing in today’s Irish Times by Miriam Lord. She watched high-ranking bankers appear before the Oireachtas Finance Committee.

Eighteen months ago…

…when the same Oireachtas committee wanted to ask the same banks about the way they conducted their business, fewer chairmen and chief executives deigned to turn up. To add insult to injury, the bankers then proceeded to talk down to the worried politicians, assuring them their fundamentals were sound.

…Richie Boucher, before his big promotion, was present back in July of 2008. “Unequivocally,” he declared, “we do not believe there is a Northern Rock lurking in Ireland.”

His colleague, David Guinan, stated: “We pride ourselves on the fact that we have been and continue to be very prudent and responsible.” Donal Forde of the AIB offered the following gem: “In regard to lending standards in AIB, we have behaved very responsibly in recent years and we have maintained a very prudent credit stance.” (Correct. There was a whole shed load of them.)

The highlight of the committee meeting was supplied by Willie McAteer, then executive director of Anglo Irish Bank. “Clearly, the whole perception of Ireland and the negative sentiment towards it are obviously of concern to us. However, this sentiment is not borne out by the fundamentals.”

Here’s another rib-tickler from Willie: “I reject the suggestion that banks have been foolhardy in recklessly lending and driving up values . . . in my experience, the banks have been prudent.”

Yesterday…

The Bank of Ireland went so far as to say it wouldn’t have to go back to the Government next year for a further handout. Sheehy was similarly upbeat about AIB.

Do you believe them this time ’round?

Read Miriam Lord’s article in full on Irishtimes.com

The Baker Tilly Report into CIÉ/Iarnród Éireann

The Baker Tilly Report details questionable procurement practices, suspected fraud and collusion between employees and tendering companies within Iaranród Eireann, the sub-section of CIÉ which manages our rail network.

It covers the period between January 2004 and January 2008 and runs to more than 350 pages, making it the biggest official report I’ve read in quite a while. Although the directors of CIÉ received a copy in early 2008, shockingly, they didn’t think it proper to give the minister of transport a copy until the Sunday Independent got a few leaks about the contents in October of this year. It became available under FOI in the last two weeks. It should be noted that the minister is a shareholder in CIÉ, and the company got more than €300m in taxpayers money last year alone. Also worth noting, the department only requested a copy of the report after seeing the SIndo – otherwise this may never have become public knowledge.

Since collecting a copy from the department last week I’ve scanned and sent it in batches to Gavin. He OCR’d them and stitched them back together into a single PDF file which can be viewed at the link below, it gets interesting around page 260. As far as I am aware, this is the only digital copy in the public domain.

The findings are shocking. There was widespread “on-going non-compliance” with procurement procedures resulting in “fundamental system deficiency” in how private companies won contracts. EU procurement laws were ignored. Employees stole railway sleepers from stock, continuously over a long period, and sold them for their own profit – the methods (or lack thereof) used to monitor stock meant this went unnoticed. Companies were paid for work which doesn’t seem to have been done. Paperwork on a serious number of contracts was near non-existent. Explanations for discrepancies arising in stock records are not investigated to a satisfactory extent. Employees colluded with companies to ensure contracts were won. Staff weren’t trained in how to do their job, and one person who signed off on a contract for work which didn’t seem to get done had the contractor working on their private residence.

It’s Fás Mark II.

One figure for definable loss to the company is €2.6m, but this is low due the lack of paperwork available to quantify whether or not elements of contracts, or whole contracts, were losses or not. The Baker Tilly team even state  “we are confident that other unidentified loss exists within the organisation”. Shane Ross puts the figure at €9m.

The Spencer Dock/North Wall development project makes up €892,887 of the definable figure of which €363,540 was down to “known or suspected fraud”. In another area a loss of €271,665 was put down to collusion with contractors – specifically “fraudulent invoices paid over a number of years” at the specific request of an employee whose name has been redacted. The report says the employee has repaid €100,000 in compensation, though it doesn’t say whether or not they’re still an employee to this day.

Another person was employed as an inspector to monitor the work of various contractors (aka vendors), however…

…the work which was being described on the system was not actually being carried out. Surveillance showed that the contractors were doing little or no work when they should have been under the supervision of the inspector in question.

In one instance the vendor was seen to be carrying out work at the inspector’s private address.

It is likely that the company [IÉ] has suffered financial loss whether through value for money or actual fraud during the period examined for the said inspector. Invoices for the period examined total €30,602. It is also highly likely that further losses have been incurred as a result.

However, it’s goes beyond the above. The first 200 pages, though insanely boring and lacking figures, document a complete lack of oversight and  management within the organisation. There was no standard procurement paperwork, for example, meaning it is difficult to trace who was responsible for issuing contracts, what the contracts were for or even who was invited to compete for the work.

Also, service entry details were being based on “pro-forma invoices received after work had been completed rather than being based on an original request, prior to the work commencing”, which makes little sense. The “quality of supporting timesheets and work dockets” and the level of information included on these documents “varied between contractors” due to the poor paperwork system and insufficiently trained staff. This meant there is “little or no detail” about what exactly what was being paid for in some cases.

In short, it seems that at times money was paid to companies, but nobody can tell what was paid for – there was just an invoice.

The Baker Tilly team interviewed a large number of staff and had more fill in questionnaires about their work. They found “no manager or Senior Executive Buyer was aware of the existence of a Corporate Board Procurement Strategy for the Iarnród Éireann Organisation for Infrastructure Maintenance, Signal Electrical & Telecommunications (SE&T) & New Works” – the departments which procure most work. Furthermore, In three Iarnród Éireann divisions – Athlone, Dublin and Limerick – the Baker Tilly team found:

Detailed procedures followed at the Dublin, Limerick and Athlone Division in relation to the following areas for Infrastructure Maintenance and SE&T are not currently documented:

The request for plant hire/labour by the Permanent Way inspector SE&T Inspector;
The approval of the request and the selection of the contractor;
The valuation of the work for the selected contractor;
The input of the details into SAP [business management software] and the creation of a service entry form, where required; and
The receipt, review and approval of the contractor monies and the release of the service entry

The part of the report about the New Works section lists the procedures which are said to be gone through when labour or plant hire is required. The procedure goes something like;

Relevant managers meet and discuss what work will required for the next few weeks;

The co-ordinator then prepares a detailed spreadsheet to estimate the value of the plant hire and labour being requested;

This is then entered in the SAP system;

The co-ordinator emails the contractors with relevant details;

The work is completed and timesheets are signed by an Iaranrod Eireann representative;

The contractor submits invoices which are reviewed in detail and approved by the co-ordinator, two managers and an accountant

But the sentence after that is… “the above procedures followed by New-Works Construction Unit are not currently documented”. It was the same for other sections also. No paperwork.

In the SE&T section “there was no documented evidence presented [to show]… the actual work performed and invoiced is monitored in accordance with the scheme plans and the tender” and that “an estimate of the work to be performed is not calculated prior to the work being requested from the contractor”. How the hell is that possible?

The most unusual piece activity related to payment, supposedly for the removal of soil, to a company whose details are redacted. I’ll finish by quoting a few paragraphs… they’re worth reading.

As part of the Docklands Station Development Project, work was completed in the freight yard in preparation for the project commencement in 2006. As part of the preparation New Works prepared a tender package in July 2006 for the removal of hazardous and non hazardous soils which were accumulated during the course of construction.

REDACTED tendered for this contract to remove non Hazardous Soil in July 2006 but was unsuccessful and the contracts were awarded to REDACTED. However, invoices were received at a later date from REDACTED for the removal of non-hazardous soil from the area outlined above from January to July 2006. It is the contention of New Works that REDACTED were never tasked with, nor did they perform soil removal activities from the North Wall Freight Yard during the course of the project and they are disputing the full extent of the invoices.

The invoices were signed off by and were paid by accounts payable between January and July 2006 quantified at €257,681.60 gross. The invoices were not matched to any planned work or budget of costs for the project, prior to payment of the invoices. Further invoices were submitted by REDACTED in December 2006 however these were not paid by The Company. We understand that there are currently legal proceedings ongoing with the said company.

Blanket purchase orders are set up on the SAP system at the beginning of each year by the procurement department for general plant hire work in the Infrastructure Maintenance Department. The invoices that are the subject of review were charged against a blanket purchase order and then coded to a capital WBS code.

On review of the invoice insufficient detail was provided and no supporting documentation was available. This made it difficult to determine if the work was actually done, figures provided by REDACTED independent consultant engineers, indicated that the work detailed in the invoices could not have been done as the quantity of soil left over to be removed from site was minimal.

It stinks, and I don’t mean the soil.

FOOTNOTE: CIE isn’t covered by the FOI Act, this document was obtained from the Department of Transport. Therefore, a lot of the dirty details may never come out.

My ears are burning…

I’m expecting a number of FOI requests to come back this week, including one from Fás. Strictly speaking, the Fás one should have been sent from their office today, as it was submitted exactly four weeks ago… so it was interesting to note an upsurge in hits to this site from the Fás server this morning.

At 10.06 the first click-through from the Fás internal PHPBB forum landed on this site. Since then there have been approximately 75 more (it’s now 2.45pm) – nearly every second hit to this site today has been from the same thread on the internal Fás forum.

All the Fás click-throughs land on this website’s About page, which makes it more interesting.

As I am a conspiracy theorist journalist; this raises a number of questions…

  • why is there a link to this site from the Fás internal server?
  • Is it relevant to the FOI requests I’ve submitted?
  • What is being said?
  • If relevant to the FOI request, why does it matter who sent the request?
  • Who in Fás went looking for me online and found this website?
  • What does it matter what the work I’m doing for this site involves?
  • Does this effect whether or not the FOI is granted?

I wonder… it should be noted however that at the moment I can’t know if the thread is relevant to my FOI or not, I’m just making an educated guess as I’ve had no other involvment with Fás at any point.

Anyone with access to the thread [which can be found at this link, if you’ve access to the Fás server, http://intra.fasoffice.com/phpbb/viewtopic.php?t=11270] could let me what’s happening, my number is kicking about

Or I could simply FOI the details of the thread and find out for myself in four weeks time.

Dear Fás: I’m watching you watching me? So, who are you?

Of course, I’m not one to miss an opportunity to use a Bros song in a blog post.

Donations to senators 2002 – 2008

When this site first went live we posted spreadsheets of all know political donations made to TDs and political parties – you can view them here and here (annotations have been made to some donations to add relevant details about the donor).

We now have a spreadsheet for donations made to individual senators. There’s not too many, but they’re there now and will later be added to the KildareStreet database.

Donations to Irish senators 2002 -2008