Northern Ireland Assembly Flax Flower Logo

Session 2007/2008

Fifteenth Report

PUBLIC ACCOUNTS COMMITTEE

Report on Hospitality Association of Northern Ireland: A Case Study in financial management and the
public appointments process

TOGETHER WITH THE MINUTES OF PROCEEDINGS OF THE COMMITTEE
RELATING TO THE REPORT AND THE MINUTES OF EVIDENCE

Ordered by The Public Accounts Committee to be printed 12 June 2008

Report: 36/07/08R Public Accounts Committee

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Public Accounts Committee
Membership and Powers

The Public Accounts Committee is a Standing Committee established in accordance with Standing Orders under Section 60(3) of the Northern Ireland Act 1998. It is the statutory function of the Public Accounts Committee to consider the accounts and reports of the Comptroller and Auditor General laid before the Assembly.

The Public Accounts Committee is appointed under Assembly Standing Order No. 51 of the Standing Orders for the Northern Ireland Assembly. It has the power to send for persons, papers and records and to report from time to time. Neither the Chairperson nor Deputy Chairperson of the Committee shall be a member of the same political party as the Minister of Finance and Personnel or of any junior minister appointed to the Department of Finance and Personnel.

The Committee has 11 members including a Chairperson and Deputy Chairperson and a quorum of 5.

The membership of the Committee since 9 May 2007 has been as follows:

Mr Paul Maskey*** (Chairperson)
Mr Roy Beggs (Deputy Chairperson)

Mr Thomas Burns**
Mr Trevor Lunn
Mr Jonathan Craig
Mr Ian McCrea*
Mr John Dallat
Mr Mitchel McLaughlin
Mr Simon Hamilton
Ms Dawn Purvis
Mr David Hilditch

* Mr Mickey Brady replaced Mr Willie Clarke on 1 October 2007
* Mr Ian McCrea replaced Mr Mickey Brady on 21 January 2008
* Mr Jim Wells replaced Mr Ian McCrea on 26 May 2008
** Mr Thomas Burns replaced Mr Patsy McGlone on 4 March 2008
***Mr Paul Maskey replaced Mr John O’Dowd on 20 May 2008

Table of Contents

List of abbreviations used in the Report

Report

Executive Summary

Summary of Recommendations

Introduction

The Financial Management and Control of HANI

The Public Appointments of the Department for Employment and Learning

The Handling of Public Appointments and Serious Conflicts of Interest in the Northern Ireland Events Company

The Evidence of the Commissioner for Public Appointments for Northern Ireland

Appendix 1

Minutes of Proceedings

Appendix 2

Minutes of Evidence

Appendix 3

Chairperson’s letter of 21 April 2008 to Dr Aideen McGinley, Accounting Officer, Department for Employment and Learning

Chairperson’s letter of 25 April 2008 to Dr Aideen McGinley, Accounting Officer, Department for Employment and Learning

Correspondence of 6 May 2008 from Dr Aideen McGinley, Accounting Officer, Department for Employment and Learning

Chairperson’s letter of 21 April 2008 to Mr Paul Sweeney, Accounting Officer, Department of Culture, Arts and Leisure

Chairperson’s letter of 25 April 2008 to Mr Paul Sweeney, Accounting Officer, Department of Culture, Arts and Leisure

Correspondence of 7 May 2008 from Mr Paul Sweeney, Accounting Officer, Department of Culture, Arts and Leisure

Correspondence of 8 May 2008 from Mr Paul Sweeney, Accounting Officer, Department of Culture, Arts and Leisure

Correspondence of 24 April 2008 from Mr Brian Adgey, former Chairman of the Tourism and Hospitality Training Council

Clerk’s letter of 25 April 2008 to Mr Roy Gamble, Northern Ireland Certification Officer

Correspondence of 29 April 2008 from Mr Roy Gamble, Northern Ireland Certification Officer

Chairperson’s letter of 21 April 2008 to the Clerk of the OFMDFM Committee

Correspondence of 16 May 2008 from Ms Gail McKibben, Departmental Assembly Liaison Officer, Office of the First Minister and Deputy First Minister

Correspondence of 19 May 2008 from Mrs Catherine Williamson, former HANI employee

Clerk’s letter of 22 May 2008 to the Clerk of the OFMDFM Committee

Correspondence of 2 June 2008 from the Clerk of the OFMDFM Committee

Correspondence provided by a Committee member to the Committee

Appendix 4:

List of Witnesses

List of
Abbreviations used in the Report

HANI Hospitality Association of Northern Ireland

The Department/DEL Department for Employment and Learning

DCAL Department of Culture, Arts and Leisure

THTC Tourism and Hospitality Training Council

NICO Northern Ireland Certification Officer

FAST Financial Audit and Support Team

C&AG Comptroller and Auditor General

DFP Department of Finance and Personnel

OFMDFM Office of the First Minister and Deputy First Minister

NIHF Northern Ireland Hotels Federation

T&EA Training and Employment Agency

MLA Member of the Legislative Assembly

BIFHE Belfast Institute of Further and Higher Education

FE Further Education

The Commissioner Commissioner for Public Appointments for Northern Ireland

HR Human Resources

PR Public Relations

NIAO Northern Ireland Audit Office

The Code Commissioner for Public Appointments for Northern Ireland’s Code of Practice

Executive Summary

Introduction

1. This report focuses on standards and examines two main areas of concern – shortcomings in the financial management and control of the Hospitality Association of Northern Ireland (HANI) and weaknesses in the public appointments system. A significant element of Northern Ireland public services is delivered by organisations which, while not strictly in the public sector, are wholly or largely funded by public money. It is important that these organisations apply appropriate standards of conduct in their stewardship of public funds.

2. Holders of public office in Northern Ireland have a key role to play. Because the structure of regional administration is highly dependent on a wide range of public bodies whose Boards are filled by Ministerial appointment, it is important that the public have confidence in the appointments system. There are currently just over 2,000 Ministerial appointees in Northern Ireland. The standards for public appointments have been clearly stated by the ‘Office of the Commissioner for Public Appointments for Northern Ireland’. As regards ‘probity’, the guidelines state that:

“Departments must ensure the highest standards of propriety in the conduct of their public bodies in order to ensure public confidence. To achieve these high standards departments must take care to ensure that individuals appointed to their bodies are committed to the principles and values of public service and are capable of performing their duties with integrity”.

Overall conclusions

3. The Committee’s overall conclusion is that this case stands out as a lesson to the public sector in how not to manage a relationship with a third party organisation, how not to operate the public appointments process and how not to handle a major conflict of interest.

4. It is a matter of profound concern to the Committee that this report contains an astonishing catalogue of shortcomings. In far too many respects, the two Departments involved – the Department for Employment and Learning (the Department) and the Department of Culture, Arts and Leisure (DCAL) - got it wrong. Many of the issues examined by the Committee were characterised by poor judgement, slow responses, inadequate liaison and an unwillingness to sort out the problems. There were even situations where senior officials appeared to turn a ‘blind eye’ to behaviour that was manifestly improper. As a result of this and other cases such as the Emerging Business Trust, the Committee is left with the impression that the public service in Northern Ireland has been more vulnerable to abuse by unsuitable individuals than it should have been. This must no longer be tolerated.

5. Many of the failings took place in areas where a wealth of best practice guidance was available and yet, time and time again, this was ignored. On more than one occasion, an opportunity to rectify the situation was missed, or went unheeded. This is not good enough – the Committee expects a much higher standard of public administration.

6. One of the most disappointing aspects of the Committee’s review was the unsatisfactory nature of the Department’s responses to many of our questions. At times during the evidence session, the witnesses from DEL seemed more intent on obscuring the issues, than helping the Committee to highlight the many weaknesses involved in the case. This is unacceptable. The Committee expects the full co-operation of Departmental witnesses in its efforts to expose poor practice, not weak attempts to excuse behaviour and a failure to condemn behaviour that was clearly inappropriate.

7. There are many lessons which come out of this case. Given the extent to which local administration depends on organisations such as HANI to deliver public services and the large number of public appointments in Northern Ireland, it is vital that these lessons are widely disseminated. The Committee looks to the Department of Finance and Personnel to ensure that they are drawn to the attention of all relevant public sector bodies.

The Financial Management and Control of HANI

8. There were widespread weaknesses in financial control within HANI. While an intermediary funding body, the Tourism and Hospitality Training Council (THTC) was required to monitor HANI’s operations, the Department, as the primary funder of both THTC and HANI, was ultimately responsible for the proper stewardship of taxpayers’ money.

9. The Committee was astonished that senior officials in the Department had judged the obtaining of false invoices, by the HANI Training Manager, as a case of ‘mismanagement’. This is outrageous. Such behaviour is fraudulent and can only be intended to subvert the proper use of public funds.

10. It is scandalous that HANI misappropriated public funds. There are many third party organisations who help to provide much-needed public services and do so professionally and with absolute integrity. But there are also an unscrupulous few, seeking to ‘rip-off’ the taxpayer with false, inflated or ineligible claims for public funds. Departments are an important line in the defence against such attempts. They must be aware of the risks and maintain their vigilance at all times. A firm line must be taken in all cases of improper behaviour, to demonstrate that it will not be tolerated. Unfortunately, that was not done in this case.

11. The Committee notes from the C&AG’s report the important role that Proteus (which replaced THTC) played, when it was appointed to oversee funding to HANI. It uncovered the problems of false invoicing which led to an extensive investigation into HANI by the Northern Ireland Certification Officer (NICO).

The Public Appointments of the Department for Employment and Learning

12. The Committee finds it profoundly disturbing that the former HANI Training Manager, who was found to have twice obtained false invoices while in HANI, should subsequently have been appointed, on seven separate occasions, to public office. It is a damning indictment of the Department’s assessment at the time, that such behaviour was judged compatible with public office.

13. There were senior officials in the Department who were well aware of the former Training Manager’s conduct while in HANI, yet they failed to share this with the appointments panels, the Ministers approving the appointments and with other Departments. The Department ignored the findings of a series of investigations and even the advice of its own lawyers, that the conduct of the former Training Manager while in HANI, was not acceptable. Astonishingly, it subsequently extended her term of office on one of its most prestigious Boards.

14. The Committee is left to reflect that one of the most unfortunate aspects of this case is that there would have been other candidates, well-qualified and without any concerns as to their probity, who were denied the opportunity to fill these posts, because of the Department’s failure to follow proper procedures.

15. The Committee noted the extent to which many of the key recommendations it has had to make relating to public appointments had been identified by the Westminster Public Accounts Committee in its report on the Emerging Business Trust. The Committee is not convinced that the wider public service has fully grasped the importance of the ethical standards which these lessons are designed to reinforce.

Handling of Public Appointments and Serious Conflicts of Interest by the Northern Ireland Events Company and DCAL

16. In 2004, the former HANI Training Manager was involved in a major conflict of interest issue in the Events Company, a body sponsored by DCAL. While still a member of the Board, she tendered for, and won, a PR contract for a sporting event that was being supported by the Events Company, with a grant which accounted for 25% of the company’s annual budget. It is completely unacceptable to serve on the Board of a public body and to be perceived as making personal financial gain from consulting business associated with the Board’s decision-making. One cannot, wearing one hat, be part of a Board that decides substantial grant aid for an event and then, wearing another hat, tender for consultancy work for that event. It is an untenable conflict of interest.

17. None of the principal parties involved come out of this case without blemish. The actions of the former Training Manager and the Events Company Chair, in particular, point, at best, to a fundamental lack of understanding of the principles involved. For its part, DCAL’s response was, in large measure, weak and ineffective.

18. This is not the first time that the Public Accounts Committee has had to deal with the failure to manage a major conflict of interest in a Northern Ireland public body and yet it is clear that many of the lessons previously drawn out were not applied in the Events Company case. In the Committee’s opinion, departments need to get a better grip on this issue.

The Evidence of the Commissioner for Public Appointments
for Northern Ireland

19. The Committee was surprised to learn that, under current administrative arrangements, the Commissioner’s Office is not independent of the bodies which it is charged with regulating. The Committee believes strongly that, if the administration in Northern Ireland is to achieve maximum benefit from the post of Commissioner, the Office has to be made truly independent.

20. It is clear that there have been many weaknesses in the public appointments system operating in Northern Ireland. A major shortcoming noted by the Committee was the apparent ‘a la carte’ approach taken by Departments in their application of the Commissioner’s guidelines. The Committee was shocked to hear from the Commissioner’s evidence that a Department had actually sought advice on how to circumvent the Code of Practice, because it said it knew who it wanted to appoint. That is disgraceful behaviour and serves only to undermine the process and destroy public confidence in the system. This has got to change.

21. The Committee is concerned that the evidence session revealed systemic weaknesses in the public appointments system which have not yet been satisfactorily addressed. Due to a legacy of poor practice by departments, the system lacks credibility. The Committee wants to make it absolutely clear that a continuing perception of cronyism is not compatible with the structures being established under devolution. There is an enormous challenge for the Senior Civil Service and the Committee expects it to act urgently to establish confidence in the system.

Summary of Recommendations

The Financial Management and Control of HANI

Recommendation 1

1. The Committee expects funding Departments to ensure that, prior to any public monies being paid to a funded body, effective financial management and control structures, sufficient to protect the integrity of public funds, have been set up within that body. This must be actively checked and verified as an integral part of the setting-up process. Where an intermediary funding body is involved, the Department must ensure that it also fulfils its financial management responsibilities (see paragraph 10).

Recommendation 2

2. In the Committee’s opinion, it is not enough to merely recommend that a body receiving EU funding obtains the guidelines which set out the financial standards required and procedures to be applied. The Committee recommends that any matter of fundamental importance to the proper operation of a publicly-funded programme should always be included as a pre-condition of funding – it should never be presented as a matter of choice. The Committee would like confirmation that all organisations which are funded from resources voted to DEL have copies of the relevant guidance (see paragraph 12).

Recommendation 3

3. Where a Department engages another organisation, such as an intermediary funding body, to administer a publicly-funded programme on its behalf, the Department itself must ensure at the outset and systematically test on a risk-related basis that proper procedures and controls have been set up and are operating effectively. The Committee would like confirmation that this is now the Department’s practice (see paragraph 17).

Recommendation 4

4. Departments must make sure that they apply the appropriate level of resources to run their programmes effectively. While the Committee recognises that resources are often less than Departments would like. Departments are expected to operate a programme with a level of resources that does not expose public funds to an unreasonable degree of risk (see paragraph 18).

Recommendation 5

5. The Committee expects Departments to ensure that staff tasked with monitoring the operations of intermediary funding bodies and organisations such as HANI, delivering public services have the necessary skills and experience to carry out that role effectively. Where training is required, this should be provided before they take up their duties (see paragraph 19).

Recommendation 6

6. The Committee wants to make it absolutely clear that where a body delivering public services is substantially funded from voted money then, whatever its status, there should be no doubt or ambiguity about the Accounting Officer’s absolute responsibility to ensure regularity, propriety and value for money. The Committee considers it important that DFP should check that the guidance leaves no doubt in this matter or, if necessary, issue clarification (see paragraph 21).

Recommendation 7

7. Where roles have been delegated, Departments must retain sufficient control to ensure that all of the parties involved have a clear understanding of their responsibilities and those of their programme partners. In the Committee’s view, a key lesson for all Departments is to avoid, where possible, over-elaborate delivery structures like that in the SELECT programme (see paragraph 23).

Recommendation 8

8. The Committee expects that, in future, FAST reports will include all matters found. This is an essential part of the audit trail. The Committee sets a high premium on transparency and expects Departments to ensure that all material issues uncovered during an investigation are openly dealt with, on the public record. In light of the HANI case, it is also worth emphasising that, where the issues involve potential impropriety, failing to report them comes close to impropriety itself (see paragraph 28).

Recommendation 9

9. In the Committee’s view, there is an onus on funding Departments to ensure that public money does reach the appropriate end recipient. Where public funds have been misappropriated, as in the case of HANI, appropriate action must be taken, even if the loss is not incurred by Government. The Committee is not suggesting that Departments should provide recompense to creditors. The Committee expects Departments to ensure that the governance arrangements in any chain of payments for public services are sufficiently robust that recipients of funds fulfil their obligations to those who have delivered the services (see paragraph 33).

Recommendation 10

10. Should the Northern Ireland Hotels Federation receive any public funding in future, the Committee recommends that the C&AG makes a careful assessment of the risks and, if appropriate, audit the expenditure, using his powers of access to follow the public pound wherever it is spent (see paragraph 36).

Recommendation 11

11. In the Committee’s view, the standards of record-keeping expected of bodies receiving substantial sums of taxpayers’ money must be clearly set out in advance and made a condition of public funding (see paragraph 38).

Recommendation 12

12. The Committee endorses the Audit Office’s view that, where a publicly-funded organisation has been the subject of an investigation which has led to significant criticism or prosecution, the relevant records should be retained for at least 10 years from the date of the conclusion of the investigation. In a case like HANI, where the body ceases to exist, the Committee expects the funding Department to take the necessary steps to secure the relevant documents and ensure that the audit trail is preserved (see paragraph 39).

Recommendation 13

13. The Committee welcomes the Department’s assurances that lessons have been learned from the issues raised by the HANI/THTC case. Given the number of third party organisations and other publicly-funded external bodies in Northern Ireland, the Committee must insist that the lessons learned from DEL’s experience of the HANI case are being fully disseminated to other Departments. Accordingly, the Committee recommends that DFP takes a lead in ensuring that this happens effectively and we do not see these problems repeated in some other part of the public service (see paragraph 40).

The Public Appointments of the Department for Employment and Learning

Recommendation 14

14. The Committee wants to make clear to all Departments, in the strongest possible terms, that obtaining false documentation to support a claim for funding is, by its nature, a most serious breach of the principle of probity. As such, it must never be disregarded (see paragraph 46).

Recommendation 15

15. It is a matter of concern to the Committee that the decision by the police not to prosecute appears to have been taken by the Department as an exoneration of the former Training Manager’s conduct. The Committee expects senior public officials to exercise greater moral leadership in maintaining public standards than was evident in this case. The Committee needs to be assured that it is well understood in the Department that, even where prosecution is not warranted, the Department will take effective action where conduct has not been proper or acceptable (see paragraph 48).

Recommendation 16

16. The Committee expects that senior public officials show leadership in relation to upholding probity and standards in public life and for this to be more clearly reflected in the attitude and evidence of the Accounting Officers who come before us, than was evident in this case (see paragraph 53).

Recommendation 17

17. The sharing of information by Departments, for the purpose of protecting standards in public life and the public purse, is a vitally important issue. The Committee recommends that DFP examines how appropriate arrangements can be set up to facilitate such information sharing, consistent with the principles of data protection and human rights legislation. The Committee also recommends that the Information Commissioner be consulted as to how the public interest can be properly protected (see paragraph 57).

Recommendation 18

18. It is the Committee’s view that had Ministers been properly informed by officials, they may not have endorsed these appointments. Departments must ensure that Ministers are fully briefed on all material aspects relating to any public appointment which they are asked to approve. It is extraordinary to have to make such basic points in a Public Accounts Committee report (see paragraph 60).

Recommendation 19

19. Departments must take care to validate the accuracy of their comments in correspondence with elected representatives. The veracity of such exchanges is an absolutely fundamental element of the system of accountability and this should not be undermined (see paragraph 61).

Recommendation 20

20. The Committee expects the Department to investigate this inaccuracy further to establish how it arose and who was responsible (see paragraph 62).

Recommendation 21

21. It is essential that, in future, where Departments have the power to make a public appointment, they ensure that they also have the clear authority to terminate that appointment. In light of these deficiencies in DEL, the Committee believes it is essential that all legislation covering public appointments is reviewed to make sure all Departments have the appropriate power to terminate. The Committee would like to be informed of the outcome of this review (see paragraph 69).

Recommendation 22

22. The Committee recommends that Departments should not automatically extend the term of office of a public appointee about whom there are concerns in relation to probity, simply because the Board as a whole is being extended (see paragraph 72).

Recommendation 23

23. The Committee finds the circumstances surrounding the June 2000 competition for the New Deal Task Force disturbing and regrets that it is necessary to remind Departments that appointments to any public role must be seen to be fair and objective (see paragraph 75).

Recommendation 24

24. The Committee’s expectation is that all Departments should fully abide by the terms of the Commissioner’s guidelines. If there has to be a departure from the guidelines, the justification for doing so should be clearly documented and authorised at a senior level. The Committee would like confirmation that the recent appointments to the 6 new regional FE colleges were carried out fully in accordance with the current Code of Practice (see paragraph 78).

Handling of Public Appointments and Serious Conflicts of Interest by the Northern Ireland Events Company and DCAL

Recommendation 25

25. The Committee expects Departments to recognise that conflicts of interest involving Board members are by their nature high risk and, if not handled properly, can result in financial and reputational damage. If a conflict is not eliminated then Departments must ensure that it is closely monitored and managed on an ongoing basis. Once a conflict has been identified, a Department must address it immediately and effectively (see paragraph 85).

Recommendation 26

26. The Committee expects Departments to do everything in their power to uphold the principles of good governance. Where it is clear that a breach of these rules has, or is about to be made, the Committee demands that the Department intervenes (see paragraph 88).

Recommendation 27

27. It cannot be right for a public appointee who has inappropriately entered into an unresolved conflict of interest to remain on the Board. The Committee expects that where the sponsoring Department has the power of dismissal, it should exercise that power (see paragraph 91).

Recommendation 28

28. The Committee exphasises that, where a Department has concerns about the propriety of a Board Member’s conduct, it is not acceptable to allow the situation to pass without action. The Committee recommends that the issue is formally raised with the person concerned and that they are given the opportunity to provide an explanation. A resolution of the matter should, where possible, be agreed and the outcome put on the record. The onus is on the Department to ensure that this is done (see paragraph 93).

Recommendation 29

29. The routine monitoring of arm’s length bodies like the Northern Ireland Events Company must be timely and effective. The Committee expects that the staff charged with carrying this out are given clear instructions on the nature and frequency of that monitoring and briefed on any particular risks to look out for, such as conflicts of interest (see paragraph 95).

Recommendation 30

30. It is the Committee’s view that there is no excuse for poor records in a conflict of interest situation. Any competent organisation would have recognised the importance of maintaining a full and comprehensive account of all aspects of the case. The Committee recommends that in order to facilitate a subsequent review, and to support any disciplinary or legal action that may arise, it is vital to ensure that the account is formally agreed with the principal parties involved, as the situation develops (see paragraph 97).

Recommendation 31

31. The Committee recommends that the content of the accredited courses on governance and accountability be reviewed to consider whether greater emphasis needs to be placed on probity and conflicts of interest. It would also suggest that it may be useful, in future, to share the lessons of the Events Company case on these courses (see paragraph 100).

Recommendation 32

32. The Committee recommends that Departments must ensure that all of their public appointees are given thorough training on corporate governance. This should be provided at the start of, or very early in, their period of service (see paragraph 101).

Recommendation 33

33. The Committee recommends that Departments ensure that, within each of their sponsored organisations, performance appraisals of public appointees meet the required standard. Departments should provide the necessary training to Chairpersons, where they have not already done so, as a matter of urgency (see paragraph 113).

Recommendation 34

34. The Committee regards full disclosure of related party transactions as a valuable safety net for ensuring that potential conflict of interest issues are addressed in annual accounts. When the C&AG takes over the audits of companies limited by guarantee, the Committee recommends that the NIAO looks carefully at these disclosures (see paragraph 117).

The Evidence of the Commissioner for Public Appointments
for Northern Ireland

Recommendation 35

35. The Committee recognises that it is not possible to be wholly prescriptive as to what a candidate for public office should disclose where probity may be an issue. It would be helpful, however, if the guidance notes for applicants provided a comprehensive range of examples of the types of issues that may create difficulties (see paragraph 122).

Recommendation 36

36. The Committee also recognises the considerable degree of reliance placed on candidates to openly declare any matters which may impinge on their suitability for public office. In the Committee’s opinion, it should be made clear to all candidates that the rule is - when in doubt, disclose and record (see paragraph 123).

Recommendation 37

37. Staff involved in administering the appointment process need to be trained for the task. The Committee endorses the Appointments Commissioner’s suggestion of setting-up a central unit, to administer appointments across the public sector. Accordingly, the Committee asks DFP and OFMDFM to take this matter forward. Given the obvious shortcomings in the current arrangements, the Committee considers that this issue should be progressed as a priority (see paragraph 126).

Recommendation 38

38. It is a matter of concern that a substantial number of public appointments are not regulated. The Committee calls on OFMDFM and DFP to take the necessary steps to bring all public appointments into the Commissioner’s remit. It is also a concern that there is a further, as yet undefined, group of appointments which do not fall within the current definition of ‘public appointments’, where there would be a reasonsable public expectation of regulation. The Committee considers that these posts should be identified in a comprehensive list and consideration be given as to the extent to which they should also be brought into the regulatory framework (see paragraph 127).

Recommendation 39

39. The Committee’s expectation is that Departments will comply with all elements of the Commissioner’s Code of Practice. In particular, public appointments selection panels must rigorously test all applicants on matters of probity and potential conflicts of interest. There is a need to ensure that those involved in selection are fully trained in all the skills that this important task requires (see paragraph 130).

Recommendation 40

40. The extremely poor performance of Departments in relation to the appointments considered in this report has raised the concern of the Committee of the standards in public appointments across the system. The Committee believes strongly that the post of Commissioner for Public Appointments needs to be strengthened and made truly independent of those whom it is regulating. This is particularly important in relation to staffing, budget and the location of the Commissioner’s premises. The Committee recommends that OFMDFM and DFP take this matter forward as a high priority (see paragraph 133).

Recommendation 41

41. The Committee would also like to see the Commissioner vested with the power to apply some form of sanction in those cases where the appointments process has not been properly applied. This should, at the very least, follow the model in Scotland and include the power to halt a competition that does not comply with the Code of Practice (see paragraph 134).

Recommendation 42

42. The Committee recommends that the Central Appointments Unit in OFMDFM brings forward proposals in which the promotion of public appointment opportunities can be enhanced, in order to attract a larger and more diverse range of local applicants (see paragraph 136).

Introduction

1. The Public Accounts Committee met on 17 April 2008 to consider the Comptroller and Auditor General’s report on the “Hospitality Association of Northern Ireland: A Case Study in financial management and the public appointments process” (NIA 117/07-08), Session 2008-09). The witnesses were:

The Committee also took written evidence from DEL, DCAL, OFMDFM and the Northern Ireland Certification Officer (NICO).

2. This report focuses on standards and examines two main areas of concern – shortcomings in the financial management and control of the Hospitality Association of Northern Ireland (HANI) and weaknesses in the public appointments system. A significant element of Northern Ireland public services is delivered by organisations such as HANI which are wholly or largely funded by public money. It is important that these organisations apply appropriate standards of conduct in their stewardship of public funds.

3. With the structure of regional administration highly dependent on a wide range of public bodies whose Boards are filled by Ministerial appointment, it is important that the public have confidence in the appointments system. There are currently just over 2,000 Ministerial appointees in Northern Ireland.

4. In taking evidence, the Committee focused on four key areas. These were:

The Financial Management
and Control of HANI

5. HANI was an Employers’ Association, run by a Council of Members, elected annually. Between 1995 and 1998, it received some £860,000 in public funding, to run specific training programmes. This accounted for 95% of its total income. Almost all of the public funding came from the former Training and Employment Agency (the Agency) and was channelled through the Tourism and Hospitality Training Council (THTC) and later through Proteus, both of which acted as intermediary funding bodies for EU-funded training schemes.

6. Serious financial irregularities were found in two training schemes run by HANI – ‘SELECT’ and ‘Multi-Skilling’. In November 1998, the Agency submitted an ‘Irregularity Report’ to the EU, naming HANI’s former Training Manager as the person responsible for the over-claiming on SELECT. The HANI Training Manager was again named in an ‘Irregularity Report’ to the EU, in July 1999, as having improperly obtained, on two separate occasions, false invoices showing purchases of television and video equipment as hire costs, when in fact the equipment had been purchased outright.

7. In September 1998, faced with insolvency, HANI ceased trading, with debts of almost £76,000. In 2002, the Northern Ireland Certification Office (NICO) successfully brought a criminal prosecution against HANI, principally for failing to keep proper accounting records and maintain a satisfactory system of control. HANI was subsequently dissolved in 2004.

The standards of financial management in HANI

8. It is clear that stewardship of public funds by HANI was far below the standard required and that this had been the case over a long period of time. The catalogue of weaknesses included HANI’s failure to open a separate SELECT bank account. Instead, it used its general business account to administer the programme. This was contrary both to EU guidelines and the funding contract and meant that both public and private monies were mixed together.

9. HANI over-claimed on SELECT. This included charging ineligible costs and, in some cases, the double and triple claiming of salary costs. On the Multi-Skilling scheme, the HANI Training Manager obtained false invoices on at least two occasions. Given the nature of the shortcomings, the Committee must conclude that HANI was, in effect, ‘ripping-off’ EU Peace and Reconciliation monies. The Committee notes, in particular, that all of these abuses were in relation to HANI’s training role and that the former HANI Training Manager, while not the only person responsible for the shortcomings, was identified from the earliest investigations as having been centrally involved.

Recommendation 1
10. The Committee expects funding Departments to ensure that, prior to any public monies being paid to a funded body, effective financial management and control structures, sufficient to protect the integrity of public funds, have been set up within that body. This must be actively checked and verified as an integral part of the setting-up process. Where an intermediary funding body is involved, the Department must ensure that it also fulfils its financial management responsibilities.

11. The Committee notes that the terms of the SELECT contract “strongly recommended” that HANI obtain a copy of the ‘European Social Fund Finance Guide’, but that this was never done. This was a serious omission and should not have been allowed to happen.

Recommendation 2
12. In the Committee’s opinion, it is not enough merely to recommend that a body receiving EU funding obtains the guidelines which set out the financial standards required and procedures to be applied. The Committee recommends that any matter of fundamental importance to the proper operation of a publicly-funded programme should always be included as a pre-condition of funding – it should never be presented as a matter of choice. The Committee would like confirmation that all organisations which are funded by, or through DEL have copies of the relevant guidance.

The adequacy of the Agency’s monitoring and control

13. The funding contracts between the Agency and THTC, and THTC and HANI, provided a mechanism by which the activities of both THTC and HANI could be monitored and controlled. Despite this framework, proper financial management arrangements were not established in either body.

14. The Committee asked why things went so badly wrong in both organisations. The Department said that, because only two staff were dealing with 250-300 projects, the Agency engaged THTC to administer the programmes. Under the contract, THTC was responsible for monitoring HANI and determining whether it was fit to deliver. This had not worked because of the failures by THTC and HANI. When asked about the Agency’s own role, the Department said that it had been responsible for ensuring that there were appropriate systems and checks and balances, but repeated that it had been let down by THTC and HANI. The Department also said that it had acted quickly and effectively to deal with the problems, once concerns had been raised. It explained that it was a ‘health check’ by the Agency in January 1997 which first raised concerns about THTC and this was followed by a consultant’s report, in March 1997, which found that systems in THTC were totally inadequate.

15. In the Committee’s view, this largely ignores the shortcomings on the part of the Department’s Agency. Concerns about THTC were not raised until a full 12 months into the contract. And it was a further 5 to 6 months before the failings in HANI were exposed. Unfortunately, by this time the die had been cast - all of the abuses outlined in this report had already taken place.

16. The Committee is disappointed with the Department’s explanations. While there were obvious failings in THTC and HANI, nowhere in its evidence did the Department concede that the Agency had also failed to meet its responsibilities. While THTC was required to monitor HANI’s operations, the Agency, as the primary funder of THTC and HANI, was ultimately responsible for the proper stewardship of public funds by both bodies. It was not enough simply to set up a control framework – the Department had to make sure it was actually being applied. It is also important in these situations that the staff within Departments, who are tasked with monitoring outside bodies, have the necessary skills and experience to carry out their duties effectively.

Recommendation 3
17. Where a Department engages another organisation, such as an intermediary funding body, to administer a publicly-funded programme on its behalf, the Department itself must ensure at the outset and systematically test on a risk-related basis that proper procedures and controls have been set up and are operating effectively. The Committee would like confirmation that this is now the Department’s practice.
Recommendation 4
18. Departments must also make sure that they apply the appropriate level of resources to run their programmes effectively. While the Committee recognises that resources are often less than Departments would like, Departments are expected to operate a programme with a level of resources that does not expose public funds to an unreasonable degree of risk.
Recommendation 5
19. The Committee expects Departments to ensure that staff tasked with monitoring the operations of intermediary funding bodies and organisations such as HANI, delivering public services, have the necessary skills and experience to carry out that role effectively. Where training is required, this should be provided before they take up their duties.
The independence of HANI

20. The Accounting Officer considered that one of the main issues for the Committee’s evidence session was to establish where Government’s responsibility starts and ends, in the monitoring and control of operations by bodies like HANI. The point was made that HANI was an independent organisation and it was unreasonable to expect that the Agency should have scrutinised and controlled its operations to the extent implied in the Audit Office Report. The Committee found this an astonishing statement. There is ample guidance on public accountability and the stewardship of public monies and it should be clear that Departments are expected to operate effective oversight of public money that they disburse. The fact that HANI was an independent organisation is not the issue. It was 95% funded by public money and was contracted to deliver Agency funded training programmes.

Recommendation 6
21. The Committee wants to make it absolutely clear that where a body delivering public services is substantially funded from voted money then, whatever its status, there should be no doubt or ambiguity about the Accounting Officer’s responsibility to ensure regularity, propriety and value for money. The Committee considers it important that DFP should check that the guidance leaves no doubt in this matter or, if necessary, issue clarification.
The programme delivery chain

22. The Department commented that part of the difficulty with HANI was a lack of clarity in communication between the various elements of the delivery chain. The Committee notes that there were as many as five links in the spending chain in this case – the Department itself, then the Agency, with funds flowing through THTC to HANI and, ultimately, to the training sub-contractor. It seems almost inevitable that extended delivery structures like this will create uncertainties about responsibilities and lead to increased vulnerability to error and abuse. This was certainly evident in the case of HANI.

Recommendation 7
23. Where roles have been delegated, Departments must retain sufficient control to ensure that all of the parties involved have a clear understanding of their responsibilities and those of their programme partners. In the Committee’s view, a key lesson for all Departments is to avoid over-elaborate delivery structures like that in the SELECT programme.

The Agency’s failure to fully report on serious breaches of financial control

24. One of the most worrying issues in this report is that a number of serious irregularities found by the Department’s Financial Audit and Support Team (FAST) were omitted from its final report. There were four issues involved -

25. The Department’s explanations as to why these issues had been excluded from the FAST report were far from satisfactory. In the case of the bank account and money desk issues, it said that these had been excluded because FAST had made the assumption that the matters had been dealt with. It said FAST only reported on outstanding issues – it finds all sorts of things during an investigation, both important and trivial, and must draw the line somewhere on what to report. In the Committee’s opinion, it should have been obvious that none of the issues concerned were trivial.

26. In the case of the misuse of the credit card and the conflict of interest issues, the Department said that FAST considered them to be outside the scope of HANI’s contract with the Agency. In the Committee’s opinion, this is ridiculous. Some 95% of HANI’s income came from public funds and it should have been obvious that, with all monies being held in one bank account, it was inevitable that taxpayers’ money was involved.

27. The Committee finds the Department’s explanations wholly unconvincing. The full reporting of the findings of an investigation - including issues that have been resolved - is part and parcel of an effective accountability process and a vital element in maintaining a proper audit trail. This is of particular importance where the findings involve matters of potential impropriety, as in this case. Given the Accounting Officer’s comments that FAST acts as her ‘eyes and ears’, surely it is obvious that all of its findings should have been included in its final report. The Committee notes that the Accounting Officer conceded that with hindsight ‘they should have been included because it probably would have provided a fuller picture’.

Recommendation 8
28. The Committee expects that, in future, FAST reports will include all matters found. This is an essential part of the audit trail. The Committee sets a high premium on transparency and expects Departments to ensure that all material issues uncovered during an investigation are openly dealt with, on the public record. In light of the HANI case, it is also worth emphasising that, where the issues involve potential impropriety, failing to report them comes close to impropriety itself.

29. When the Committee asked who had made the decision to exclude these issues from the FAST report, the Department said that it had been the judgement of the Head of FAST. It seems odd to the Committee, however, that serious issues which had been included in an earlier draft of the FAST report were omitted from the final version. There appears to have been some reluctance within the Agency to fully expose and deal with the shortcomings of HANI and its staff and the Committee is left with the impression that it has not got to the bottom of this issue.

HANI’s non-payment of creditors

30. The Committee was disturbed at the non-payment, by HANI, of a substantial debt to HOW Systems, the company sub-contracted to provide SELECT training. When HANI ceased trading in late 1998, it was unable to pay some £30,000 of an overall £60,800 debt to HOW, despite this money having been given to HANI by the Agency. Largely as a result of non-payment, HOW had later ceased trading. While the Department agreed that this was one of the more unsavoury parts of the report, it said that it could not be held responsible for the contractual arrangements between HANI and HOW. In its view, the Agency’s interests ended when the SELECT project finished in September 1998.

31. The Committee finds this response most unsatisfactory. Even though the training which the Agency had paid for had been delivered, it should have been clear that the SELECT money which it had given to HANI, for onward transmission to HOW, had been misappropriated; also, that the decision by HANI not to open a separate bank account for SELECT, contrary to the Agency’s contract, had been a key factor in HANI’s attempt to conceal its actions. For the Department, with the clear benefit of hindsight, to state that the Agency’s interests had already ended is astonishing. At best, it points to indifference, at worst, acquiescence in the shocking behaviour of HANI.

32. The distasteful nature of this episode is compounded by the manner in which HANI wound up its affairs. The Committee notes that the HANI Council took the view there was a need to ‘park’ the present Association but “not bring forward its difficulties into any new body”; also, HANI’s auditor advised the Council that, “ liabilities could then be reduced as far as possible by argument and agreement”.

Recommendation 9
33. In the Committee’s view, there is an onus on funding Departments to ensure that public money reaches the appropriate end recipient. Where public funds have been misappropriated, as in the case of HANI, appropriate action must be taken, even if the loss is not incurred by Government. The Committee is not suggesting that Departments should provide recompense to creditors. The Committee expects Departments to ensure that the governance arrangements in any chain of payments for public services are sufficiently robust to ensure that recipients of funds fulfil their obligations to those who have delivered the services.
The Northern Ireland Certification Officer’s Role

34. The Committee commends the Certification Officer for his role in the investigation and prosecution of HANI. Unlike his parent Department, his organisation is the only public body with supervisory responsibilities in this case which carried out its duties robustly.

35. The Committee has been told by the Department that the successor representative body to HANI, the Northern Ireland Hotels Federation (NIHF), since its formation in 1999, has received around £17,000 funding from the Department. The Committee is also aware that the Northern Ireland Certification Officer has been conducting an investigation into the Federation, linked to the winding-up of HANI. It appears to the Committee that there are grounds for concern in the Federation’s withholding of co-operation. The Committee would have thought it was in NIHF’s interest to clarify any questions about their financial affairs.

Recommendation 10
36. Should the Northern Ireland Hotels Federation receive any public funding in future, the Committee recommends the C&AG makes a careful assessment of the risks and, if appropriate, audit expenditure, using his powers of access to follow the public pound wherever it is spent.

The standards of record-keeping

37. The Committee notes that the Audit Office encountered considerable difficulties in the course of its investigation, due to the poor standard of HANI records - for example, there was a lack of proper documentation in support of key decision-making, authorisations for activities and records of financial transactions. This is not the standard expected from a body being funded for the most part with public funds. It is also apparent that, despite the concerns about HANI’s activities and the number of investigations carried out, not all of HANI’s records had been secured.

Recommendation 11
38. In the Committee’s view, the standards of record-keeping expected of bodies receiving substantial sums of taxpayers’ money must be clearly set out in advance and made a condition of public funding.
Recommendation 12
39. The Committee endorses the Audit Office’s view that, where a publicly-funded organisation has been the subject of an investigation which has led to significant criticism or prosecution, the relevant records should be retained for at least 10 years from the date of the conclusion of the investigation. In a case like HANI, where the body ceases to exist, the Committee expects the funding Department to take the necessary steps to secure the relevant documents and ensure that the audit trail is preserved.
Recommendation 13
40. The Committee welcomes the Department’s assurances that lessons have been learned from the issues raised by the HANI/THTC case. Given the number of third party organisations and other publicly-funded external bodies in Northern Ireland, the Committee must insist that the lessons learned from DEL’s experience of the HANI case are fully disseminated to other Departments. Accordingly, the Committee recommends that DFP takes a lead in ensuring that this happens effectively, so that these problems are not repeated in some other part of the public service.
The Tourism and Hospitality Training Council

41. In evidence to the Committee, the Department sought to lay a considerable part of the blame for the problems in this case on the THTC. Following the evidence session, the former Chair of the THTC wrote to the C&AG stating that, at all times, the affairs of the Council were managed in a professional manner, that at no point did it trade insolvently and when the Council decided to formally wind-up the business, it cleared all its debts in full, paid full redundancies and returned a balance of monies to the Agency. The Committee sought the Department’s comments and notes that, while the Department had a view that the Council was technically insolvent, it was the case that all funds were recovered.

The Public Appointments of the Department for Employment and Learning

42. Despite the substantial body of evidence that pointed to concerns about the former HANI Training Manager’s conduct, and thereby her suitability for public office, she was subsequently appointed to seven public posts. This is disturbing because public appointees are in receipt of sensitive information and involved in decision-making on substantial sums of public money. As such, they must be seen to meet the principle of probity. Failure to do so inevitably weakens public confidence.

43. The C&AG reported a number of fundamental weaknesses in the appointments procedures that had been applied by the Department, including its failure to take appropriate action in light of the concerns about the former Training Manager’s conduct and its failure to disclose those concerns to other interested parties.

The failure to disclose concerns to interested parties

Ignoring improper behaviour

44. It is a matter of particular concern that senior officials in the Department were aware of the former Training Manager’s previous conduct, prior to her appointment to public office, but that this had no impact on the decision to appoint. In each of the Department’s appointments, the concerns do not appear to have been drawn to the attention of the appointments panel, nor made known to the Ministers approving appointments. Similarly, concerns were not shared with the Central Appointments Unit in OFMDFM and other Departments, at an early stage. This was a serious omission. Once the former Training Manager had been given her first public appointment, she was placed on the central list of appointees held by the Central Appointments Unit. This opened the way for her appointment as an independent interview panel member by other Departments.

45. The Committee asked the Department why, during the appointments processes, it had failed, repeatedly, to act on the information it had about the former Training Manager’s conduct. The Department said that officials at the time had judged her conduct to have been a case of mismanagement, rather than suspected fraud. As such, it was considered ‘not of sufficient significance’. The Committee finds this explanation astonishing. Obtaining false invoices was not ‘mismanagement’ - it was fraudulent and could only have been intended to subvert the claims process. False documentation undermines the audit trail on which the Comptroller and Auditor General depends to give the Assembly assurance on the accounts. Any Public Accounts Committee is bound to view this as an extremely serious matter, irrespective of the sums involved and it is outrageous that senior officials took the view that it was not significant. The contrast between the Department’s assessment and that of the retail outlet which had provided the false invoices is stark – the retailer sacked the employee involved. It is a sad state of affairs that the public sector could not apply a standard of probity on a par with the retail sector.

Recommendation 14
46. The Committee wants to make clear to all Departments, in the strongest possible terms, that obtaining false documentation to support a claim for funding is a serious breach of the principle of probity. It must always be recognised as a serious breach of standards in public life and, as such, it must never be disregarded.
The police investigation into the false invoicing

47. The Department also told the Committee that “particularly heavy weight” was given to the fact that the police had investigated the false invoices and decided that the former Training Manager should not be prosecuted. It said that the irregularity had attracted no personal gain; there was no loss to the public and no attempt at concealment. The Committee wishes to differ. Far too much weight was placed on this in the evidence session. There will be many circumstances where prosecution in a case is not warranted, but it does not necessarily follow that conduct has been proper. Accounting Officers should not require a criminal prosecution to help them to recognise unacceptable conduct. Although the false invoices were not used, they could only have been obtained with the intention to deceive. The Department needs to recognise that conduct does not have to be illegal for it to be improper and unacceptable.

Recommendation 15
48. It is a matter of concern to the Committee that the decision by the police not to prosecute appears to have been taken by the Department as an exoneration of the former Training Manager’s conduct. The Committee expects senior public officials to exercise greater moral leadership in maintaining public standards than was evident in this case. The Committee needs to be assured that it is well understood in the Department that, even where prosecution is not warranted, the Department will take effective action where conduct has not been proper or acceptable.
The EU Irregularity reports

49. The Committee suggested to the Department that the completion of the two EU Irregularity Reports was an indication of the seriousness of the former Training Manager’s conduct and, as such, was something that should have been shared with other interested parties, even if it was regarded as mismanagement. The Department said that it did not think the issuing of EU Irregularity Reports was significant; what is more significant is what the irregularities were about. In this case, this seems an absurd distinction. The Department conceded that the issues in these reports were not insignificant and that the duplicate invoicing was towards the suspected fraud end of the spectrum. It is the Committee’s view that the significance of the two Irregularity Reports is that they listed a range of serious irregularities and named the former Training Manager as the person responsible for those irregularities. Moreover, they were prepared by the Agency – the very body which appointed her to its Board some 12 months later.

Other Committee concerns

50. There were a number of other aspects of the Department’s evidence which the Committee found questionable:

(1) The Department told the Committee that, while an Irregularity Report details the name of the person involved in the irregularity, it does not attribute blame. The Committee has since obtained copies of the two Reports and notes that, in each case, it specifically names the former Training Manager as “the person involved in the irregularity”.

(2) Part of the Department’s explanation for failing to act on the information it had about the former Training Manager was that it was the first case of its type since new appointments procedures were set up. It also said that the Code of Practice on public appointments had not been issued until 2002. In the Committee’s view, this does not stand up. The standards expected from those in public life, including the principle of probity, had been very well established in the wake of the Nolan Committee report in 1995 and in the Peach Guidelines of 1996. This was long before the Department’s first appointment of the former Training Manager to public office, in 2000.

(3) At various times during the evidence session, the Department referred to the former Training Manager as having been a ‘junior member of staff’ in HANI and also described her as relatively inexperienced. However, the Committee notes that she was one of the few full-time officials in HANI and responsible for the major part of its budget. The fact that she was appointed by the Agency to the New Deal Task Force and to the T&EA Board as early as 2000, is not consistent with the description of a ‘junior’ employee.

(4) One of the reasons put forward by the Department for failing to share its concerns about the former Training Manager’s conduct with other bodies was that, until 2004, the evidence against her was not confirmed. This is incorrect. The Department’s Internal Audit Service had described her conduct as ‘fraudulent’ in their January 1999 Report. This related to the false invoices, copies of which were available to the FAST Team and therefore the Department. She had also been named in 1998 and 1999 in two EU Irregularity Reports. The Committee notes that this information was shared with the EU, but not with colleagues considering her for public appointments.

51. The Committee is left with a concern that the Department was either seeking to downplay the seriousness of the former Training Manager’s conduct, in order to excuse its lack of action or has an insufficient grasp of the gravity of these issues. In its efforts to deal with poor practice, the Committee demands clear and unambiguous evidence from Departmental witnesses which is consistent with the agreed facts.

52. It should be possible to rely on senior Departmental officials to uphold probity and reinforce standards in public life. Yet, on the evidence in this case and other significant instances in recent years, they have failed to do so. It is clear that they are not taking the ‘probity’ issue seriously enough and this has got to change.

Recommendation 16
53. The Committee demands that senior public officials show leadership in relation to upholding probity and standards in public life and for this to be more clearly reflected in the attitude and evidence of the Accounting Officers who come before us, than was evident in this case.
Information sharing

54. Another reason put forward by the Department for not notifying other bodies of its concerns about the former Training Manager’s past conduct was the legal and human rights implications of making such statements. Surprisingly, the Department said that it looked to the Committee for advice on this issue. The Committee asked whether legal advice had been taken on this and was told that the Department had done so in December 2003.

55. In the Committee’s opinion, it cannot be right that serious concerns about the probity of a potential public appointee are not shared with another public body, which may be considering that individual for a position in which they would have access to sensitive information and make decisions about substantial sums of taxpayers’ money. The Committee believes that, in situations where it is in the public interest to protect standards in public life and the public purse, there should be a mechanism for information sharing.

56. The Department also drew the Committee’s attention to the Central Appointments Unit register which records details on anyone who sits on a public body and asked for more information on the register. The Committee is surprised to note that the database is no more than a record of appointments held. To discover whether there is any information on a candidate’s suitability Departments would have to approach all public bodies where appointments have formerly been held. The evidence of this case suggests that they may not do this and, even if they do, important information may be deemed too sensitive to share.

Recommendation 17
57. The sharing of information by Departments, for the purpose of protecting standards in public life and the public purse, is a vitally important issue. The Committee recommends that DFP examines how appropriate arrangements can be set up to facilitate such information sharing, consistent with the principles of data protection and human rights legislation. The Committee also recommends that the Information Commissioner be consulted as to how the public interest can be properly protected.
The failure to notify Ministers of the police investigation

58. A matter of grave concern to the Committee involved an exchange of correspondence, in 2003, between one of the current Committee Members and the then direct rule Minister. It related to two public appointments held by the former Training Manager, which had been approved by devolved Ministers in 2000 and 2002. In the correspondence, the Member was told that, in each case, the devolved Minister had been made aware of the police investigation. However, the Member was subsequently informed by both former Ministers that this was untrue. During the evidence session, the Department confirmed that it had no record of the devolved Ministers having been informed.

59. This situation is highly unsatisfactory on two counts. First, the Department twice failed to inform its Minister of the concerns about the former Training Manager’s past conduct when they were being asked to approve her public appointments and second, an MLA should not have been given inaccurate information in a Ministerial reply.

Recommendation 18
60. It is the Committee’s view that had Ministers been properly informed by officials, they may not have endorsed these appointments. Departments must ensure that Ministers are fully and accurately briefed, in writing, on all material aspects relating to any public appointment which they are asked to approve. It is extraordinary to have to make such basic points in a Public Accounts Committee report.
Recommendation 19
61. Departments must take care to validate the accuracy of their comments in correspondence with elected representatives. The veracity of such exchanges is an absolutely fundamental element of the system of accountability and this should not be undermined.
Recommendation 20
62. The Committee expects the Department to investigate this inaccuracy further to establish how it arose and who was responsible.

The failure to address concerns about the appointments process

The appointment to the Learning and Skills Advisory Board

63. In 2002, the Department wanted to delay the former Training Manager’s appointment to its Learning and Skills Advisory Board, because it felt that she was likely to attract some ‘adverse publicity’. As it transpired, the Department went ahead with the appointment because it felt it had ‘no choice’. The Committee asked the Department for details and to explain why its record had not been more explicit.

64. The Department said it believed that the timing of this matter coincided with some publicity which had been leaked to the press about the Certification Officer’s impending case against HANI. The reason the Department had considered that there was no choice other than to proceed was that there were four vacancies arising on the Board and the feeling was that it had to be up to strength at the due date.

65. The Committee can see no reason why all four vacancies had to be filled by a certain date, however desirable. Indeed, the Accounting Officer agreed that the Department appeared to be more concerned about potential adverse publicity, than it was about the conduct that had led to the concern in the first place. In the Committee’s view, an opportunity to bring the former Training Manager’s public appointment to an end was missed. Once again, it seems that the Department turned a ‘blind eye’ to the situation, because it did not have the will to take action.

The appointment to the BIFHE Board

66. Following publication of the Certification Officer’s report in 2003, the Department initiated an independent review of the HANI case. At this stage, the former Training Manager held only one public appointment in DEL, on the BIFHE Board. The review concluded that her standards had fallen below those expected of a public appointee. The Departmental Solicitor’s Office advised that the former Training Manager’s behaviour, in relation to the false invoices, could not be regarded as acceptable.

67. Despite this, the Department decided that, on the grounds of what it termed ‘proportionality’ - the lapse of time since she had worked in HANI, the police decision not to prosecute and the public criticism already borne by her - it would not seek to remove her from her post on the BIFHE Board. Instead, it tried, unsuccessfully, to persuade her to resign. The Department also said that it did not actually have the power to terminate an individual appointment; it would have had to remove the whole Board. If this is correct, the Department demonstrated extraordinary incompetence in drafting legislation which left them unable to dismiss an individual appointee and no power to deal with this predicament. The Committee was alarmed to be told that even now 4 years after this occurred, ‘the legislation still has to be tidied up to make it 100% clear that the Department has the power to remove individuals’. This appears to be yet another example of the low priority which Departments seem to place on getting the framework for public appointments right.

68. In the Committee’s opinion, this matter was ill-judged by the Department. Whatever the limitations on its powers to terminate the appointment, this was not a matter on which a ‘proportionality’ judgement should have been applied, especially after the Departmental Solicitor’s opinion. As to the Department being unable to dismiss an individual appointee, this is an extraordinary weakness and one that should never have arisen. Also, it seems rather incongruous that the Department, having decided it was not appropriate to seek the former Training Manager’s removal from the Board, should then try to get her to resign.

Recommendation 21
69. It is essential that, in future, where Departments have the power to make a public appointment, they ensure that they also have the clear authority to terminate that appointment. In light of these deficiencies in DEL, the Committee believes it is essential that all legislation covering public appointments is reviewed to make sure all Departments have the appropriate power to terminate. The Committee would like to be informed of the outcome of this review.
The extension of the former Training Manager’s BIFHE Board membership

70. In 2005, the Department chose to extend the former Training Manager’s term on the BIFHE Board for a period of 12 months. The Department explained that it took place during reorganisation of the sector and the term of all BIFHE Governors was being similarly extended. It claimed that it could not suspend just one member of the Board and so business needs overrode the consideration of the former Training Manager’s past conduct.

71. The Committee does not accept this explanation. This was not about suspending the former Training Manager; the Department could simply have chosen not to extend her term of office. Indeed, the Committee notes that the Department chose not to renew the term of two other Board Members, in different colleges. The Department explained that this was due to concerns about their attendance and commitment. The Committee finds the difference in treatment staggering – fail to turn up and your appointment is not renewed, obtain false invoices and your term of office is extended! Renewing the former Training Manager’s Board membership was a dreadful decision and one which sent out entirely the wrong signal.

Recommendation 22
72. The Committee recommends that Departments should not automatically extend the term of office of a public appointee about whom there are concerns in relation to probity, simply because the Board as a whole is being extended.
Suspected manipulation of appointments

73. The circumstances surrounding the appointment of the former Training Manager to the New Deal Task Force, in June 2000, are disturbing. The criteria for appointment were altered by the then Chief Executive, to indicate a need to appoint a representative from the hospitality industry, rather than the call centre sector. This was despite a leading hotelier already being a member of the Task Force. Following the change in criteria, the former Training Manager was appointed. Two months later, when a further vacancy arose, the need for call centre representation was again raised.

74. The Department could not provide an explanation for the sequence of events. In the Committee’s view, it looks suspiciously like the situation was manipulated in order to create a position for the former Training Manager. This is one of a number of instances where there is a perception of preferential treatment. Public appointments must be seen to be fair and objective. That is not the impression given by the evidence in this case.

Recommendation 23
75. The Committee finds the circumstances surrounding the June 2000 competition for the New Deal Task Force disturbing and regrets that it is necessary to remind Departments that appointments to any public role must be seen to be fair and objective.
The failure to apply best practice in the BIFHE Board appointment

76. Appointments to the BIFHE Board in 2002, including that of the former Training Manager, were not carried out in accordance with the Commissioner for Public Appointments (the Commissioner) guidelines. Although the guidelines stated that no individual should be appointed on the basis of written evidence alone, there were no interviews. The guidelines also required that any significant departures from its procedures must be recorded. The Department did not do this either.

77. The Department said that appointments were being made for all 16 colleges and, due to the volume of applications, a decision was made not to hold interviews. It also said that the posts involved were not monitored by the Commissioner’s Office and so the Department was not bound by the guidelines. The Committee notes, however, that the Department’s submission to the Minister stated, at the time, that the appointments had been made in accordance with the guidelines. The Committee regards this as an extraordinarily cavalier approach to such a large number of the top appointments in the important FE sector. The performance of FE Colleges is vital to addressing the skills deficit which has been identified in the Northern Ireland workforce, yet DEL does not seem to have thought it worthwhile to interview the members it was appointing to the Boards which were to lead the new colleges.

Recommendation 24
78. The Committee’s expectation is that all Departments should fully abide by the terms of the Commissioner’s guidelines. If there has to be a departure from the guidelines, the justification for doing so should be clearly documented and authorised at a senior level. The Committee would like confirmation that the recent appointments to the 6 new regional FE colleges were carried out fully in accordance with the current Code of Practice.

The Handling of Public Appointments and Serious Conflicts of Interest in the Northern Ireland Events Company

79. DCAL appointed the former HANI Training Manager to the Board of the Northern Ireland Events Company in 2002. In the period from March to June 2004, she was at the centre of a major conflict of interest situation in the Events Company, involving a golf tournament. Two years later, in May/June 2006, she was involved in another conflict of interest, having tendered for an HR contract with the Events Company itself, while still a Board Member.

The first conflict of interest: The PR contract for the 2004 Senior British Open Golf Championship

80. The Events Company agreed to provide financial support to the Senior British Open Golf Championships of 2004, 2006 and 2008. Negotiations, beginning in February 2003, led to a funding agreement for £0.5 million in June 2004 for the 2004 tournament. In mid-March 2004, the Events Company was contacted by a member of the local press who sought confirmation that the former HANI Training Manager – a member of the Events Company Board - had been appointed by the company which was managing the tournament, to carry out the PR function. The Events Company wrote to her on 19 March 2004 to clarify the situation. In her response, dated 19 April, she stated that, following a tender process, she had been appointed on 6 April 2004 to handle the public relations for the tournament. She also stated that she had only been approached to tender for the event during the week beginning 29 March, noting that this was “long after the Board decided to support” the event.

81. DCAL’s papers also record its understanding that, in June 2004, following discussions between the Events Company and DCAL, she was asked by the Events Company Chair to either stand down from the Board or to relinquish the PR contract. On the basis of information provided by the Chair, DCAL’s record notes that she declined to stand down from the Board, instead offering to give up the contract. It is also recorded that the Chair decided that, because she had apparently taken on the contract after it had decided to support the tournament, there was no conflict of interest and it was sufficient for her to resign from the Board’s golf sub-committee and not participate in future Board discussions of the event. However, when the tournament had subsequently been discussed at a Board meeting in June 2004, although declaring her interest, she remained in the meeting during the discussions. She also remained present during a further six Board meetings between August 2004 and August 2005, when the tournament was discussed. In these six cases, the Board minutes do not record any declaration of interest.

DCAL’s handling of the conflict of interest

82. This is one of the most poorly handled conflict of interest cases the members of this Committee have seen. None of the parties involved come out of it without blemish and, as for DCAL, its response was, in large measure, weak and ineffective.

DCAL’s initial response

83. Best practice in dealing with conflicts of interest advises that where they cannot be managed, they should be avoided. DCAL accepted that it had got it wrong on both counts in this case. It said, however, that when the conflict issue was identified, it had reacted rapidly to provide support to the Board and Chair of the Events Company. The Committee notes that DCAL did write to the Chair in mid-April 2004, advising him on the way forward. However, despite the absence of a reply from the Chair, DCAL failed to follow-up the issue for another two months.

84. The Committee also notes that DCAL did not seek legal advice until mid-June 2004. DCAL said that it had been waiting for a response from the Chair before doing so. In the absence of that response, it then decided to engage with the Departmental Solicitor’s Office. In the Committee’s opinion, the delays in following-up with the Chair and obtaining legal advice at an early juncture were fatal flaws. By the time DCAL got in touch with the Events Company again and obtained a legal opinion, events had moved on.

Recommendation 25
85. The Committee expects Departments to recognise that conflicts of interest involving Board members are by their nature high risk and, if not handled properly, can result in financial and reputational damage. If a conflict is not eliminated then Departments must ensure that it is closely monitored and managed on an ongoing basis. Once a conflict has been identified, a Department must address it immediately and effectively.

86. In mid-June 2004, the Events Company Chair told DCAL that the former Training Manager had accepted that there was a conflict of interest. He said that, following a meeting with her to discuss the options - to stand down from the Board, relinquish the PR contract, or not to participate in further discussions on the event - he had agreed on the final option as sufficient. DCAL was asked why it allowed the Chair’s decision to stand. It said that the Management Framework between DCAL and the Events Company put the responsibility on the Chair to deal with matters within the Board. In the event, the Chair had judged that it would be disproportionate to ask the Training Manager to relinquish the contract at that stage, or to stand down from the Board.

87. The Committee finds this situation outrageous. The Chair’s decision calls into question his own suitability to Chair a public board – under no circumstances should he have agreed to the former Training Manager retaining the contract. As for DCAL, its failure to reverse the Chair’s decision was an appalling error of judgement. Invoking the terms of the Management Framework is no defence. This Committee is entitled to expect Departments to uphold the highest standards in public life and it is extremely disturbing that, in this case, DCAL failed to do so.

Recommendation 26
88. The Committee expects Departments to do everything in their power to uphold the principles of good governance. Where it is clear that a breach of these rules has, or is about to be made, the Committee demands that the Department intervenes.
DCAL’s failure to use its power of dismissal

89. DCAL’s legal advice was that there was a clear conflict of interest on the PR contract. Under the Events Company’s Articles of Association, it had the power to remove the former Training Manager from the Board, but it chose not to exercise this option. DCAL explained that her performance assessment had recognised her contribution to the Board; also, the Board was relatively small and to appoint a replacement would have meant that it was deprived of at least one member for some months.

90. It seems to the Committee that DCAL is missing the point - there should have been no question of the former Training Manager retaining this contract and remaining on the Board. Unfortunately, DCAL put expediency before principle. In the Committee’s view, being soft on conflicts of interest is a recipe for disaster.

Recommendation 27
91. It cannot be right for a public appointee who has inappropriately entered into an unresolved conflict of interest to remain on the Board. The Committee expects that where the sponsoring Department has the power of dismissal, it should exercise that power.
Concerns about the tournament media launch

92. At the media launch for the golf tournament, the former Training Manager, acting in her PR capacity, used personal business cards in Events Company folders. DCAL’s view was that this was a perceived conflict of interest and a serious error of judgement, which called into question her suitability for service on a public body. However, the issue was never raised with the former Training Manager. The Committee asked why, given DCAL’s strong feelings about this issue, no-one had spoken to her about it. DCAL said that it had understood it was being dealt with by the Events Company Chair. Regrettably, and not for the first time in this case, DCAL failed to keep track of the issue.

Recommendation 28
93. The Committee emphasises that, where a Department has concerns about the propriety of a Board Member’s conduct, it is not acceptable to allow the situation to pass without action. The Committee recommends that the issue is always formally raised with the person concerned and that they are given the opportunity to provide an explanation. A resolution of the matter should, where possible, be agreed and the outcome put on the record. The onus is on the Department to ensure that this is done.
DCAL’s monitoring of the conflict of interest

94. Having failed to avoid the conflict of interest, an arrangement for managing it was agreed between DCAL and the Chair. This required that the former Training Manager would declare her interest and withdraw from any Board meeting where the golf tournament was being discussed. However, on at least seven separate occasions, the Board minutes show that she remained present during discussions and that no declaration of interest was made in six of these. DCAL admitted that it had not systematically checked the Board minutes and so had not been aware that the conflict was not being managed. It said that it had relied in good faith on the Chair to implement the agreed arrangements. In the Committee’s view, this was much too important an issue to rely on ‘blind’ faith.

Recommendation 29
95. The routine monitoring of arm’s length bodies like the Northern Ireland Events Company must be timely and effective. The Committee expects that the staff charged with carrying this out are given clear instructions on the nature and frequency of that monitoring and briefed on any particular risks to look out for, such as conflicts of interest.
The poor documentary record of the conflict of interest

96. One of the difficulties in this case is the poor documentary record of the events. There are different accounts from the various participants involved, much of it contradictory. The Committee notes that, in the case of the Events Company itself, there is virtually no record on the case. This is an appalling indictment of procedures at Board level within the Events Company. To its credit DCAL did maintain a good record of its involvement.

Recommendation 30
97. It is the Committee’s view that there is no excuse for poor records in a conflict of interest situation. Any competent organisation would have recognised the importance of maintaining a full and comprehensive account of all aspects of the case. The Committee recommends that, in order to facilitate a subsequent review, and to support any disciplinary or legal action that may arise, it is vital to ensure that the account is formally agreed with the principal parties involved, as the situation develops.
Governance training for the Chair and former Training Manager

98. In view of the actions of the Chair and the former Training Manager, the Committee asked if training on governance issues had been provided to them. DCAL said that the Chair had been given training in governance and accountability in October 2003. It added that, as a senior official in local government, such issues should not have presented a difficulty for him. The Committee acknowledges the point but notes that neither his background nor the training provided appeared to have proved very effective. It also noted that the training was provided some 18 months after he had taken up office.

99. As for the former Training Manager, she did not get training from DCAL or the Events Company. DCAL pointed out, however, that she was a member of quite a number of other Boards. It also considered that the conflict of interest situation had not occurred due to a lack of training. Nevertheless, the Committee believes that all members should receive training, as a condition of their service and that this should be provided at an early stage.

Recommendation 31
100. The Committee recommends that the content of the accredited courses on governance and accountability be reviewed to consider whether greater emphasis needs to be placed on probity and conflicts of interest. It would also suggest that it may be useful, in future, to share the lessons of the Events Company case on these courses.
Recommendation 32
101. The Committee recommends that Departments must ensure that all of their public appointees are given thorough training on corporate governance. This should be provided at the start of, or very early in, their period of service.
The former Training Manager’s handling of the conflict of interest

102. The Committee has received correspondence from the former Training Manager and looked very carefully at her handling of the conflict of interest issue. In particular, it notes her version of events and how this differs from DCAL’s record. There are a number of points that the Committee would like to highlight.

103. The first point is a concern that the former Training Manager even considered that taking on the PR contract for the golf tournament would be acceptable. Individuals who market themselves as consultants need to be particularly alert to the importance of maintaining a very clear distinction between any public duties and their private sector earnings. It should have been evident that there was an inherent conflict - serving as a Board Member and having been privy to the negotiations to support the event made taking the contract untenable. Second, there is no evidence that she initiated contact with the Events Company on this issue; indeed, the record shows that it was the Events Company which first raised the matter with her, following a call from the local press. Finally, there is the evidence in the Board’s Minutes that she remained in Board meetings while the golf tournament was being discussed and, generally, did so without declaring an interest. This was another unacceptable breach of proper procedures and the fact that the Chair allowed it to happen does not excuse the former Training Manager’s conduct.

104. In the Committee’s view, the actions of the former Training Manager in entering into this conflict, together with her subsequent handling of that conflict, indicate a fundamental lack of understanding of the standards expected in public life.

105. The Committee notes the very considerable extent to which the C&AG’s report reflected the former Training Manager’s account of her actions and her perspective on the issues raised. It also notes her concerns about the C&AG’s review and the public reporting process. The Committee would like to emphasise that anyone who accepts a position of responsibility in public life has to accept that they are accountable for their conduct and that this involves a considerable degree of transparency, and the potential for criticism if standards are not observed.

The Chair’s handling of the conflict of interest

106. The Chair’s handling of the conflict of interest also gives cause for serious concern. As stated above, his decision to allow the former Training Manager to retain the PR contract was wholly inappropriate and he should have been aware of this. His failure to consult with DCAL before making that decision and his failure to ensure that the former Training Manager absented herself from Board meetings, while the golf tournament was being discussed, further call his judgement into question.

107. The Committee also notes his letter of August 2007, to the former Training Manager, in support of her version of events. This letter is notable for its inconsistencies with DCAL’s record. For example, his comment that at no time did the Events Company and DCAL have to challenge the former Training Manager on the conflict issue, contradicts the correspondence which he himself had with DCAL in 2004. Similarly, his statement that it had been DCAL’s view, at the time, that there was no conflict of interest, is clearly incorrect.

108. The Committee notes with concern that the Chair had a previous record in relation to a conflict of interest, while working in local government, which was publicly reported. Interestingly, DCAL said that it had not known about this. The Committee found this surprising, given that it was public knowledge. However, it provides yet another instance where a Department has failed to test candidates, at application and interview, for probity and conflict of interest issues in relation to their previous experience.

109. Overall, the evidence strongly points to a fundamental lack of understanding of the principles of probity and good governance, on the part of the Chair. This is an indictment, not just of him, but also of the sponsor Department which appointed him and monitored his performance.

Other Concerns

The extension of the former Training Manager’s term of office

110. Despite its concerns about the former Training Manager’s conduct around the PR contract for the golf tournament, DCAL extended her Board membership for 12 months and later offered her a further extension of two years which she declined. DCAL said that the first extension was predicated on the need to keep the Board intact after a difficult budgetary process; the second was as a result of the decision to transfer the Events Company to the Tourist Board which already had an unsettling effect on the Board. DCAL also said that the extensions were offered on the basis that the former Training Manager’s performance assessments had deemed her suitable for reappointment.

111. The Committee is exasperated with yet another indefensible decision in relation to a Board appointment. Once again, it appears that DCAL decided to put expediency ahead of principle and turn a ‘blind eye’ to all that had gone before. Its assessment also stands in stark contrast to the decision of the Commissioner, in March 2005, who considered that it would be inappropriate to appoint the former Training Manager to the central pool of assessors. Her reason was the importance of meeting, and being seen to meet, the principle of probity. As the probity of the former Training Manager’s actions had been questioned, the Commissioner believed that appointment as an Independent Assessor may jeopardise public confidence in the central list. The Committee would re-iterate (see Recommendation 21 above) that it expects, in future, that no Department will extend the term of office of a public appointee about whom there are concerns in relation to probity.

112. The Committee cannot see how the former Training Manager could have been assessed as ‘suitable for reappointment’. What is especially disappointing is that DCAL let it pass. It needs to look again at its performance appraisal system and take steps to ensure that material issues are not ‘glossed over’.

Recommendation 33
113. The Committee recommends that Departments ensure that, within each of their sponsored organisations, performance appraisals of public appointees meet the required standard. Departments should provide the necessary training to Chairpersons, where they have not already done so, as a matter of urgency.

The second conflict of interest: the former Training Manager’s HR contract with the Events Company

114. A second conflict of interest arose in the Events Company, again involving the former Training Manager. DCAL explained that she had been awarded a Human Resource Consultancy contract by the Events Company, in June 2006. This contract was tendered while she was still a Board member. DCAL said that tenders were invited on 22 May 2006, with a closing date of 1 June. The contract, for one year, was issued around 12 June, approximately one week after she left the Board. DCAL subsequently confirmed that a conflict of interest did exist.

115. Based on DCAL’s evidence, this was another fundamental breach of the rules on procurement and good governance. It would appear that, as well as the former Training Manager, officials within the Events Company were also at fault, although whether this was because they were ignorant of the rules, or chose to ignore them, is not clear.

116. In relation to the declaration of interest by Board Members, the Committee attaches particular importance to the accounting requirement that related party transactions are fully disclosed in the accounts. The conflict in relation to the Golf Tournament should therefore have been disclosed in the 2004 Accounts. Moreover in checking the accounts, the Department should have learned that they were deficient in this respect. The second conflict in relation to the HR contract, while in its timing, just outside the technical requirement for disclosure, should in the Committee’s view, also have been disclosed.

Recommendation 34
117. The Committee regards full disclosure of related party transactions as a valuable safety net for ensuring that potential conflicts of interest are addressed in annual accounts. When the C&AG takes over the audit of companies limited by guarantee, the Committee recommends that the NIAO looks carefully at these disclosures.

The Evidence of the Commissioner for
Public Appointments for Northern Ireland

118. The difficulties that can arise from a weak appointments process are clearly highlighted in the case studies outlined in this report. Getting the process right, therefore, is a vital part of protecting public funds. The Committee took evidence from the Commissioner for Public Appointments for Northern Ireland. In particular, the Committee asked for her views on the case studies in this report and whether the weaknesses involved still exist in the public appointments process. The Committee also listened to her views on the key changes required to strengthen the public appointments process in Northern Ireland and the extent to which there are barriers to progress.

119. The Committee recognises that the OFMDFM Departmental Committee also has an important interest in public appointments. Based on the evidence presented by the Commissioner and following consultation with the OFMDFM Committee, a number of recommendations have been set out below. The Committee sees these as significant issues to be addressed and would welcome any follow-up of the matters raised, by the OFMDFM Committee in the course of their own work.

Issues raised by the HANI case

120. The Committee was interested in the Commissioner’s views on the standards of behaviour expected from individuals who serve in public office and was reassured to learn that, in the Commissioner’s opinion, most public appointees behave in a proper manner and serve without trying to benefit financially. In situations where an appointee did not behave properly, the Commissioner was clear that the Chairperson, together with those responsible for the individual’s selection, had to deal robustly with the matter.

121. The Commissioner was asked whether there was a threshold for the seriousness of an improper act which a candidate had previously committed, that would influence whether or not they should be appointed to public office. The Commissioner said that there is no criminality threshold, but common sense must be applied. In general, anything that could bring a public body into disrepute, or cause it embarrassment, should be carefully examined.

Recommendation 35
122. The Committee recognises that it is not possible to be wholly prescriptive as to what a candidate for public office should disclose, where probity may be an issue. It would be helpful, however, if the guidance notes for applicants provided a comprehensive range of examples of the types of issues that may create difficulties.
Recommendation 36
123. The Committee also recognises the considerable degree of reliance placed on candidates to openly declare any matters which may impinge on their suitability for public office. In the Committee’s opinion, it should be made clear to all candidates that the rule is - when in doubt, disclose and record.

Weaknesses in the public appointments process

124. The Commissioner outlined two main areas where ongoing weaknesses in the public appointments process had been noted. The first was in the administration of the process, which she described as ‘a patchwork quilt’. The Commissioner said that she regulates only 730 of the 2,000 Ministerial appointments in Northern Ireland and is waiting for legislation which will improve coverage. The Committee is pleased to note that the OFMDFM Committee has indicated that it is content with the draft Commissioner for Public Appointments (Amendment) Order (NI) 2008. There are also other bodies with Boards – such as task forces - which do not fall within the current definition of a public appointment and are unregulated. The number of appointments in these bodies, as a whole, is not known. The Commissioner said that each of the 11 Civil Service Departments has its appointments system, so practices and levels of experience vary.

125. The Commissioner was keen to see a more coherent approach in the administration of the appointments process and suggested that some form of central unit could be set up, with staff trained to run the administrative side of the process. Ministers and senior Departmental officials would still be involved in setting criteria and in selection. The Committee notes that, as well as helping to consolidate experience and good practice in one place, a central unit of this type would also facilitate the type of information sharing that was so clearly lacking in the appointments processes involving the former HANI Training Manager.

Recommendation 37
126. Staff involved in administering the appointment process need to be trained for the task. The Committee endorses the Appointments Commissioner’s suggestion of setting-up a central unit, to administer appointments across the public sector. Accordingly, the Committee asks DFP and OFMDFM to take this matter forward. Given the obvious shortcomings in the current arrangements, the Committee considers that this issue should be progressed as a priority.
Recommendation 38
127. It is a matter of concern that a substantial number of public appointments are not regulated. The Committee calls on OFMDFM and DFP to take the necessary steps to bring all public appointments into the Commissioner’s remit. It is also a concern that there is a further, as yet undefined, group of appointments which do not fall within the current definition of ‘public appointments’, where there would be a reasonable public expectation of regulation. The Committee considers that these posts should be identified in a comprehensive list and consideration be given as to the extent to which they should also be brought into the regulatory framework.

128. The second main area of weakness highlighted by the Commissioner was non-compliance with the Code of Practice. Within the selection process, the Commissioner considered that the testing of applicants on matters of probity and potential conflicts of interest was not being rigorously applied by Departments, despite the requirements being clearly set out in the Code. Another concern was that, on occasion, the quality of performance appraisal of public appointees, by Chairpersons, was found to be very poor. This is important because appraisals inform decisions on whether individuals should be reappointed. More generally, the Commissioner felt that some Chairs could do more to enforce the standards of corporate governance in the day-to-day running of their Boards.

129. The Committee is disappointed that Departments do not always abide by the Code of Practice. The case studies in this report illustrate all too clearly the problems that can arise when unsuitable individuals are appointed to public office. The Code helps to prevent this kind of exposure and failing to apply the safeguards which it contains leads to unnecessary risk.

Recommendation 39
130. The Committee’s expectation is that Departments will comply with all elements of the Commissioner’s Code of Practice. In particular, public appointments selection panels must rigorously test all applicants on matters of probity and potential conflicts of interest. There is a need to ensure that those involved in selection are fully trained in all the skills that this important task requires.

Changes required in the public appointments process

131. The Committee was surprised to learn that, under the current administrative arrangements, the Commissioner’s Office is not wholly independent of the Department which it is charged with regulating. The Commissioner explained that OFMDFM sponsors the Commissioner’s Office, controls its budget and shares the same premises. This creates an innate conflict, because the Commissioner audits its public appointments. The Commissioner also explained that, with only two staff, the resources necessary to do the job have been limited, although there are proposals to appoint two more staff. The Committee is pleased to note the OFMDFM Committee’s interest in this issue and that it will be considering a ‘review of the Commissioner’s Office’ which it expects to receive soon.

132. The Committee was also surprised that the Commissioner cannot apply any sanctions in cases where the appointments process has not been properly applied. This strikes the Committee as most unsatisfactory – a ‘toothless tiger’ will never have the necessary impact.

Recommendation 40
133. The extremely poor performance of Departments in relation to the appointments considered in this report has raised the concern of the Committee of the standards in public appointments across the system. The Committee believes strongly that, the post of Commissioner for Public Appointments needs to be strengthened and made truly independent of those whom it is regulating. This is particularly important in relation to staffing, budget and the location of the Commissioner’s premises. The Committee recommends that OFMDFM and DFP take this matter forward as a high priority.
Recommendation 41
134. The Committee would also like to see the Commissioner vested with the power to apply some form of sanction in those cases where the appointments process has not been properly applied. This should, at the very least, follow the model in Scotland and include the power to halt a competition that does not comply with the Code of Practice.
Increasing local participation in public office

135. The Members of the Committee have noted, through their own contacts with the public sector, that a significant number of public appointments in Northern Ireland are held by persons domiciled outside the province. While the Committee readily acknowledges the high standards of service which they bring to our local administration, the Committee would like to see greater numbers of local people applying for public appointments and from a much more diverse range of backgrounds. The Committee notes that the OFMDFM Committee has been encouraging the Central Appointments Unit within OFMDFM to work with other Departments and the Commissioner to bring forward proposals to improve the diversity of public appointments. Interestingly, the Commissioner noted that, over the past 18 months, around 100 people had graduated through a 10-week course run by Belfast Metropolitan College, aimed specifically at people interested in serving on public bodies. This is most encouraging and suggests that there is considerable potential to increase local participation in public office.

Recommendation 42
136. The Committee recommends that the Central Appointments Unit in OFMDFM brings forward proposals in which the promotion of public appointment opportunities can be enhanced, in order to attract a larger and more diverse range of local applicants.

Appendix 1

Minutes of Proceedings
of the Committee
Relating to the Report

Thursday, 17 April 2008
Senate Chamber, Parliament Buildings

Present: Mr John O’Dowd (Chairperson)
Mr Roy Beggs (Deputy Chairperson)
Mr Thomas Burns
Mr John Dallat
Mr Simon Hamilton
Mr David Hilditch
Mr Trevor Lunn
Mr Ian McCrea
Mr Mitchel McLaughlin
Ms Dawn Purvis

In Attendance: Mr Jim Beatty (Assembly Clerk)
Mrs Gillian Lewis (Assistant Assembly Clerk)
Mrs Nicola Shephard (Clerical Supervisor)
Mr John Lunny (Clerical Supervisor)

Apologies: Mr Jonathan Craig

The meeting opened at 2.00pm in public session.

2. The Chairperson welcomed Mr John Dowdall CB, Comptroller & Auditor General (C&AG), and Mr David Thomson, Treasury Officer of Accounts (TOA) to the meeting.

3. Evidence on the NIAO Report ‘Hospitality Association of Northern Ireland’.

(a) The Committee took oral evidence on the NIAO report ‘Hospitality Association of Northern Ireland’, from Dr Aideen McGinley, Accounting Officer, Department for Employment and Learning (DEL), Mr Greg McConnell, Deputy Secretary, DEL, and Mr Edgar Jardine, Deputy Secretary, Department of Culture, Arts and Leisure.

Dr McGinley declared an interest in that she was a SOLACE representative of the Tourism and Hospitality Council for six months in 1997, and she was Accounting Officer of the Department of Culture, Arts and Leisure from November 1999 until February 2006.

The witnesses answered a number of questions put by the Committee.

2.49pm Mr Burns left the meeting.

3.41pm Mr Hilditch left the meeting.

The Chairperson adjourned the meeting at 4.00pm.

4.00pm The Chairperson and Mr McCrea left the meeting.

4.11pm The meeting reconvened with the Deputy Chairperson in the Chair.

Members requested that the witnesses should provide additional information to the Clerk on some issues raised as a result of the evidence session.

4.42pm The evidence session finished and the witnesses left the meeting.

(b) The Committee then took oral evidence from Mrs Felicity Huston, Commissioner for Public Appointments. Mrs Huston answered a number of questions put by the Committee.

5.15pm The evidence session finished and Mrs Huston left the meeting.

[EXTRACT]

Thursday, 5 June 2008
Room 144, Parliament Buildings

Present: Mr Paul Maskey (Chairperson)
Mr Roy Beggs (Deputy Chairperson)
Mr Thomas Burns
Mr Jonathan Craig
Mr John Dallat
Mr David Hilditch
Mr Simon Hamilton
Mr Mitchel McLaughlin
Ms Dawn Purvis
Mr Jim Wells

In Attendance: Mr Jim Beatty (Assembly Clerk)
Mrs Gillian Lewis (Assistant Assembly Clerk)
Mr John Lunny (Clerical Supervisor)
Mr Darren Weir (Clerical Officer)

Apologies: Mr Trevor Lunn

The meeting opened at 1.30pm in public session.

6. Consideration of the Committee’s Draft Report on Hospitality Association of Northern Ireland – A Case Study in financial management and the public appointments process.

Members considered the draft report paragraph by paragraph. The witnesses attending were Mr John Dowdall CB, C&AG, Mr Robert Hutcheson, Director of Value for Money, Mr Alan Orme, Audit Manager, and Mr Joe Campbell, Audit Manager, NIAO. Members also noted the response from the Office of the First Minister and Deputy First Minister Committee.

The Committee considered the main body of the report.

Paragraphs 1 – 16 read and agreed.
Paragraph 17 read, amended and agreed.

1.48pm Mr Hilditch left the meeting.

Paragraphs 18 – 20 read and agreed.
Paragraph 21 read, amended and agreed.
Paragraph 22 read and agreed.
Paragraph 23 read, amended and agreed.
Paragraphs 24 - 27 read and agreed.
Paragraph 28 read, amended and agreed.
Paragraphs 29 – 32 read and agreed.
Paragraph 33 read, amended and agreed.

2.00pm Mr Hilditch rejoined the meeting.

Paragraph 34 read and agreed.
Paragraph 35 read, amended and agreed.
Paragraphs 36 - 47 read and agreed.
Paragraph 48 read, amended and agreed.
Paragraphs 49 and 50 read and agreed.
Paragraph 51 read, amended and agreed.
Paragraph 52 read and agreed.
Paragraphs 53 read, amended and agreed.
Paragraph 54 read and agreed.
Paragraph 55 read, amended and agreed.
Paragraphs 56 and 57 read and agreed.

2.20pm Mr Hilditch left the meeting.

Agreed: Members agreed that the background papers relating to paragraphs 58 – 61 of the report would be re-issued and this section of the report would be considered at next week’s meeting.

Paragraphs 62 - 67 read and agreed.
Paragraph 68 read, amended and agreed.
Paragraph 69 read and agreed.
Paragraph 70 read, amended and agreed.
Paragraph 71 read and agreed.

2.25pm Mr Craig left the meeting.

Paragraphs 72 - 75 read and agreed.
Paragraph 76 read, amended and agreed.

2.26pm Mr Wells left the meeting.

Paragraphs 77 – 83 read and agreed.
Paragraph 86 read, amended and agreed.
Paragraph 85 read and agreed.

2.34pm Mr Burns joined the meeting.

Paragraph 86 read, amended and agreed.

Agreed: Members agreed to review paragraph 86 at next week’s meeting.

Paragraph 87 read, amended and agreed.
Paragraphs 88 – 111 read and agreed.
Paragraph 112 read, amended and agreed.
Paragraphs 113 – 116 read and agreed.

[EXTRACT]

Thursday, 12 June 2008
Room 144, Parliament Buildings

Present: Mr Roy Beggs (Deputy Chairperson)
Mr John Dallat
Mr Simon Hamilton
Mr David Hilditch
Mr Mitchel McLaughlin

In Attendance: Mr Jim Beatty (Assembly Clerk)
Mrs Gillian Lewis (Assistant Assembly Clerk)
Mrs Nicola Shepherd (Clerical Supervisor)
Mr Darren Weir (Clerical Officer)

Apologies: Mr Paul Maskey (Chairperson)
Mr Thomas Burns
Mr Jonathan Craig
Mr Trevor Lunn
Ms Dawn Purvis
Mr Jim Wells

The meeting opened at 2.09pm in public session with the Deputy Chairperson in the Chair.

2.15pm The meeting went into closed session.

6. Consideration of the Committee’s Draft Report on Hospitality Association of Northern Ireland: A Case Study in Financial Management and the Public Appointments Process.

The witnesses attending were Mr John Dowdall CB, C&AG, Mr Robert Hutcheson, Director of Value for Money, Mr Alan Orme, Audit Manager, and Mr Joe Campbell, Audit Manager, NIAO.

The Committee continued its consideration of the main body of the report paragraph by paragraph.

Paragraph 58 read and agreed.
Paragraphs 59 and 60 read, amended and agreed.
Paragraph 61 read and agreed.

Agreed: Members agreed to include a further paragraph after paragraph 61.

Members considered paragraph 86 which had been revised after last week’s meeting.

Paragraph 86 read, amended and agreed.
Paragraph 117 read, amended and agreed.
Paragraph 118 read and agreed.
Paragraphs 119 and 120 read, amended and agreed.
Paragraphs 121 and 122 read and agreed.
Paragraphs 123 and 124 read, amended and agreed.
Paragraphs 125 and 126 read and agreed.
Paragraph 127 read, amended and agreed.
Paragraphs 128 and 129 read and agreed.
Paragraph 130 read, amended and agreed.
Paragraph 131 read and agreed.
Paragraph 132 read, amended and agreed.
Paragraph 133 read and agreed.
Paragraphs 134 and 135 read, amended and agreed.

The Committee considered the Executive Summary of the report.

Paragraphs 1 – 3 read and agreed.
Paragraph 4 read, amended and agreed.
Paragraph 5 read and agreed.
Paragraph 6 read, amended and agreed.
Paragraphs 7 – 14 read and agreed.
Paragraph 15 read, amended and agreed.
Paragraphs 16 – 21 read and agreed.

Agreed: Members ordered the report to be printed.

Agreed: Members agreed that the Chairperson’s letters requesting additional information to Dr Aideen McGinley and Mr Paul Sweeney, and the responses would be included in the Committee’s report.

Agreed: Members agreed that additional correspondence from Mr Adgey and Mrs Williamson would be included in the report.

Agreed: Members agreed that the Clerk’s letter to the Northern Ireland Certification Officer and his response would be included in the report.

Agreed: Members agreed that the correspondence to and from the OFMDFM Committee would be included in the report.

Agreed: Members agreed that correspondence provided by a Committee member would also be included in the report.

Agreed: Members agreed to embargo the report until 00.01am on Monday 30 June 2008, when the report would be officially released.

Agreed: Members agreed to hold a press conference on Monday, 30 June 2008 at 9.15am in the Press Conference Suite to launch the Committee’s report.

[EXTRACT]

Appendix 2

Minutes of Evidence

17 April 2008

Members present for all or part of the proceedings:
Mr John O’Dowd (Chairperson)
Mr Roy Beggs (Deputy Chairperson)
Mr Thomas Burns
Mr John Dallat
Mr Simon Hamilton
Mr David Hilditch
Mr Trevor Lunn
Mr Ian McCrea
Mr Mitchel McLaughlin
Ms Dawn Purvis

Witnesses:

Dr Aideen McGinley
Mr Greg McConnell

Department for Employment and Learning

Mr Edgar Jardine

Department of Culture, Arts and Leisure

Mrs Felicity Huston

Commissioner for Public Appointments

Also in attendance:

Mr David Thomson

Treasury Officer of Accounts

Mr John Dowdall

Comptroller and Auditor General

1. The Chairperson of the Public Accounts Committee (Mr O’Dowd): I remind members and visitors to switch off their mobile phones, as turning them to “silent” mode still interferes with the recording equipment, and these sessions must be recorded in order to compile our reports. I ask that everyone comply with that request.

2. Apologies have been received from Jonathan Craig.

3. Today’s evidence session relates to the Northern Ireland Audit Office (NIAO) report on the Hospitality Association of Northern Ireland (HANI) — the evidence session will be in two parts. The first part will focus on the report, ‘Hospitality Association of Northern Ireland: A Case Study in financial management and the public appointments process’, which includes reference to the Northern Ireland Events Company (NIEC). The second part will hear evidence from the Commissioner for Public Appointments.

4. I welcome Dr Aideen McGinley, accounting officer with the Department for Employment and Learning (DEL), Mr Greg McConnell, deputy secretary of DEL, and Mr Edgar Jardine, deputy secretary of the Department of Culture, Arts and Leisure (DCAL). You are all very welcome. Members should note that Dr McGinley has declared an interest in this issue in two respects — she was the Society of Local Authority Chief Executives (SOLACE) representative on the Tourism and Hospitality Training Council (THTC) for six months in 1997, and she was the accounting officer for DCAL from February 1999 to February 2006.

5. Before I open questioning, we have a substantial amount of business to get through today, so if members could keep their questions, and witnesses their answers, succinct and to the point, I would be grateful. I am not in any way attempting to prohibit any information that you wish to convey, or to prohibit members either. I just want to ensure that we get as much business done today as possible.

6. I will open by asking the first question to Dr McGinley. In paragraph 2·3 of the Audit Office report, the Department has outlined the framework in place to monitor and control the Tourism and Hospitality Training Council and HANI, yet it is clear that things went badly wrong in both organisations. Why was the framework so ineffective?

7. Dr Aideen McGinley (Department for Employment and Learning): I will start by explaining the context and identifying the organisations involved.

8. The Tourism and Hospitality Training Council was founded in 1991 to represent the interests of tourism, and it became a sectoral partner body, under EU funding, in January 1996. The council asked the Department for assistance with core funding and, as a result, a health check was conducted in January 1997. That check uncovered some anomalies in the workings of the Tourism and Hospitality Training Council.

9. THTC had been acting as an intermediary funding body for the Department in the distribution of European funds. The first ever EU peace grants came through in 1995; and the process evolved from there. The grants, and their rules and regulations, represented new territory for everyone: Departments, the EU, and grant recipients. Intermediary funding bodies, too, were a new concept — the EU channelled moneys through non-government departments to get them closer to areas of disadvantage; that was the role of THTC.

10. Unfortunately, the health check — in a subsequent consultant’s report in March 1997 — concluded that systems in THTC were totally inadequate. THTC had been trading while, technically, insolvent, and, indeed, ceased trading altogether in August 1997.

11. The Department acted immediately by introducing Proteus (NI) Ltd, an organisation that was founded in 1987 and is still recognised as an intermediary funding body. Proteus assessed the Hospitality Association of Northern Ireland’s delivery of funds for training in the tourism sector. Proteus expressed concern to the Department about some of HANI’s practices. The Department immediately organised an investigation by the financial audit support team (FAST). FAST, too, found anomalies, and HANI ceased trading.

12. The Department had a contractual relationship with HANI through various intermediary levels, including the Training and Employment Agency, THTC, in its role as an intermediary funding body, and Proteus. HANI also subsequently subcontracted work. Part of the dilemma was created by a lack of clarity between those various lines of communication.

13. The contractual arrangements of the project were delivered at no loss to the public purse, and at a high quality, as evidenced by its receipt of a national training award in 1997. However, HANI’s internal structure was not fit for purpose, and it ceased trading.

14. The Chairperson: You have outlined a long chain of bodies and abbreviations but will you clarify who is ultimately responsible?

15. Dr McGinley: One of the main issues of today’s meeting is to establish where Government responsibility starts and ends. HANI was — in National Audit Office terms — a third-sector organisation. Third-sector organisations are more traditionally associated with the community and voluntary sectors — social enterprises, co-operatives, and mutual societies. However, HANI was an employer association. HANI was founded in 1922 and, therefore, had a long track record. It became an employer association — under the Industrial Relations Act — in 1992. Under the terms of that Act, responsibility lay with the Northern Ireland certification officer.

16. One must determine how far a Department can reach. This was a contractual arrangement, which was ultimately fulfilled. It was the intermediary funding body’s responsibility to monitor whether the systems, procedures and protocols, and, indeed, the organisation, were fit to deliver that arrangement.

17. There were two systems failures in this process: one by THTC — the intermediary funding body, and one by HANI. As the NI Audit Office stated, there was perhaps an over reliance on the intermediary funding body. However, the NI Audit Office — in paragraph 2·5 — also recognises that the frameworks for control were adequate and contractual.

18. The Chairperson: Is the Department responsible for any of that?

19. Dr McGinley: The Department is responsible for ensuring that there are appropriate systems and checks and balances, and, in that instance, we were let down on two levels.

20. The Chairperson: Surely the Department’s responsibility is to ensure not only that such measures are in place but that they are acted upon. Time and again in the Public Accounts Committee, we are reminded that procedures are in place — filing cabinets are full of procedures — but if they are not acted upon, they are worth nothing.

21. Dr McGinley: That is right. The fact that the Training and Employment Agency’s resources were stretched is a weakness that was highlighted in the Comptroller and Auditor General’s 1997-98 report. For the first time, the Department for Employment and Learning was managing approximately 300 projects, and if one considers the Comptroller and Auditor General’s departmental reports between 1997 and 2001, one quickly recognises the good progress made by the agency and the Department.

22. The 1997-98 departmental accounts were qualified because serious risks were identified. Indeed, the report quoted the Training and Employment Agency, which had put its hands up and admitted that it had got things wrong. However, those problems were quickly addressed and, the following year, the departmental accounts were unqualified because significant improvements had been made to the Department’s control mechanisms. Consequently, in 2000-01, the Audit Office commended the Department for its control systems.

23. The Chairperson: I am sure that members will delve into those matters more acutely. Another point highlighted in the Audit Office’s report into HANI is that the HANI training manager came under scrutiny on several matters, such as invoice duplication and the Select programme’s oversubscription. In spite of that, that individual progressed through the Department and was appointed to other public bodies. Why was that?

24. Dr McGinley: Once again, based on my research and opinion, I shall attempt to set that in context. There were two irregularity reports — in a few minutes, Mr McConnell will explain what irregularity reports are — the first of which concerned over-claiming and ineligible expenditure, and it appears that HANI based its business case for running the project on a private-sector consultant’s report.

25. It is in order for a third-sector organisation to generate profits and, for example, to deposit funds in high-interest accounts, although, obviously, that is contrary to European funding rules. In fact, the Tourism and Hospitality Training Council, in its oversight capacity as an intermediary funding body, did not point out to HANI early enough that there was a misalignment between HANI’s conception of implementing its business case and what Europe would actually allow, and that is what created the irregularity.

26. The Chairperson: Several departmental inquiries pointed the finger of blame at THTC monitoring. Are you saying that THTC was not to blame?

27. Dr McGinley: I am saying — and this is in DEL’s report, which was produced by the retired civil servant who was brought in subsequent to the publication in September 2003 of the Northern Ireland certification officer’s report — that there were issues about seniority and the former training manager’s position, and by the time of the Training and Employment Agency’s financial and audit support team’s report about the Select programme, that person was no longer in the organisation’s employ. I suggest that there are other factors that have not been taken into account.

28. The Chairperson: Was the Audit Office’s report agreed between the Audit Office and the Department for Employment and Learning?

29. Dr McGinley: It was; however, as a result of my attempts to understand the context at the time, my understanding is that there were irregularities. Some of those irregularities, however, can be explained.

30. The Chairperson: That point is at the crux of many of the report’s findings. Is there a reasonable excuse for THTC’s conduct?

31. Dr McGinley: Do you mean HANI’s conduct?

32. The Chairperson: No. I am sorry if I confused you. Why, after concerns had been raised about the former training manager’s work in HANI, was she appointed to other public bodies?

33. Dr McGinley: The sequence of events was such that when the training manager first applied for a public appointment in 2000, the irregularities had been reported by Proteus — the new intermediary funding body — to the police, and a full-blown police investigation failed to bring charges and found that there had been no personal gain, no losses to other individuals, no attempt to conceal a crime, and various other factors that are noted in the Audit Office’s report. At that time, senior management wrote to the Audit Office, saying that it considered the matter to be a case of poor management practice, rather than suspected fraud.

34. I assumed that because the police had not pressed any charges that that was the interpretation. The second point of the inquiry concerned the sensitivity of the information; what type of information was available; how it was controlled, managed and shared. In this case, the information was extremely sensitive. Therefore, it was not shared because, at that time and place, it was judged not to be sufficient to bring into consideration for the appointment.

35. The Chairperson: I want to bring other members into the discussion. I may return to that point.

36. Ms Purvis: I want to return to the earlier point about HANI being an independent organisation. Paragraph 2·8 of the Audit Office’s report quotes the Department as saying:

“it is unreasonable to expect that the Agency should have scrutinised and controlled HANI’s operations to the extent implied in this report.”

Given that 95% of HANI’s total income was public funds, was it unreasonable to expect the agency to ensure that those public funds were handled properly?

37. Dr McGinley: No. The point is that the statutory basis for the organisation was that it was independent. Indeed, in the current context, that applies to many organisations that are funded by Government through the community and voluntary sectors and the private sector. My Department is responsible for over 250 contracts with third-party organisations. We must ensure that the framework is sufficiently robust so that at all stages of delegation of authority, the balance is appropriate. It is the Department’s job to ensure that those are in place and that respective roles are appropriate. In that case, it was the intermediary funding body’s responsibility to ensure that any subcontracting below that level was being managed appropriately.

38. The other check and balance, for want of a better term, was that the organisation was scrutinised by the Northern Ireland certification officer. Indeed, as members know, there was subsequent prosecution for the lack of systems. Company law, the charities commission, and so on, also come into play. Therefore, other checks and balances exist alongside the appropriate systems in the Department. Certainly, the Department is fully responsible for any funding that is allocated. Indeed, in that instance, all funding was vouched for 100%. Outcomes and contractual obligations were fulfilled to a high quality.

39. Ms Purvis: Is the Department aware of the PAC’s report on the Emerging Business Trust, which made clear the Department’s responsibility? I refer to the Chairperson’s earlier comment that an issue that continually comes up in the Public Accounts Committee is that although frameworks and structures are in place, they are not tested. I understand that there was difficulty with the intermediary funding body. However, given that those concerns were flagged up and that the Tourism and Hospitality Training Council was then dissolved, should further checks not have been carried out on HANI, particularly given that the Tourism and Hospitality Training Council was found to be in breach of its responsibilities?

40. Dr McGinley: Again, what actually happened was that the Department had a contractual relationship. The intermediary funding body at the time, Proteus, effectively ensured that finances and delivery of services were in the public interest. HANI’s two programmes, Multi-skilling and Select, were successful. For example, Multi-skilling had a 94% success rate in getting people into employment. Therefore, the outcome was what the Department had intended.

41. The report by the Northern Ireland certification officer was instigated by a complaint from a creditor. The full process, which took nearly four years, involved an intense and detailed investigation into dealings with HANI. The Committee could be valuable to Departments in such situations in order to help them to draw a line — although I do not believe that you can ever physically draw a line — as to where responsibility lies.

42. However, the Department had achieved what it had set out to do. The organisation was not fit for purpose. As HANI had traded when it was insolvent, the law took over and it ceased to exist. Therefore, the checks and balances of the normal legal process came into play. As soon as the Department became aware that there was a problem, the FAST team went in immediately. Within a couple of months, the matter was dealt with.

43. The Department for Employment and Learning has taken that matter seriously ever since, and that can be seen from the structures that are now in place. We are always being criticised for being bureaucratic, and it is said that the measures that we introduce stifle innovation, creativity and the ability to deliver. However, it is important to achieve a fine balance between operational delivery, delegation and accountability.

44. DEL has a European unit, which deals, in great detail, with European funding. The unit comprises individual case officers, and it has an operational manual that is revised and updated. We interface closely with the four intermediary funding bodies, and others, and we have regular one-to-one sessions with project promoters. With regard to clarity, the letters of offer must be clear, and the intermediary funding bodies have a scrutinising role, which they were given by the Special EU Programmes Body (SEUPB), which was established in 2000. There is, therefore, an independent scrutiny layer of accountability.

45. Processes such as the article 10, article 4 and article 6 checks from the European Union are bureaucratic and intensive. I am glad to say that, since 2000, the Department has had no further fraud investigations; in fact, it has been commended for its controls by the Audit Office.

46. I am aware of the responsibility involved, because DEL has 250 contracts. We are reducing our Pathways to Work programme contracts from 150 to 10 core lead contracts. We are trying to rationalise and minimise the systems of control, but, at the same time, ensure that they remain effective.

47. In 2006, DEL created a quality and performance branch. It has three managing inspectors, eight assistant inspectors and the education and training inspectorate. It is a multi-disciplinary team, which manages and monitors the contracts and, alongside Central Procurement Directorate, the tendering process. It examines carefully the management of the contracts, but does so proactively and in partnership. Anecdotal feedback from people who work in those organisations is that they welcome the two-way process. The process is not about us catching out bad practice; it is about us preventing bad practice.

48. Ms Purvis: Is there any difference in working with private-sector independent organisations and the community sector, for example? Are different rules applied to different organisations?

49. Dr McGinley: No. Many organisations in the voluntary and community sectors tender for training, for instance. The LEMIS projects are involved in Pathways to Work. We try to build capability and capacity to recognise that sometimes private-sector organisations are in a better position to tender. Our process is open to all and is not anti-competitive.

50. We worked closely with potential EU bidders for the current round of European structural funds, so everybody shared the same knowledge and understanding of what was expected of them. We, therefore, treat people equally, but we recognise that sometimes we have to work more closely.

51. I am delighted to say that we receive as much positive feedback from contracts from the community and voluntary sectors as we do from the private sector. However, we are not complacent; one must keep a constant eye and monitor and support.

52. Ms Purvis: Paragraph 3·14 of the Audit Office’s report states that concerns about the former HANI training manager’s conduct were not shared with the central appointments unit and other Departments. I noted your earlier comments to the Chairperson. Two Departments subsequently appointed the training manager. Why did your Department fail to pass on its concerns to the central appointments unit and the other Departments?

53. Dr McGinley: The information was sensitive. A judgement was made at the time, and the fact that the police investigation had not recommended any prosecution was given particularly heavy weight. The appointments concerned were public; they were advertised openly. It was a competitive environment, and the person came through on merit. The information was not shared, because the outcome of the investigation ruled that the officer was guilty of mismanagement rather than fraud. I presume, therefore, that senior management gave the officer the benefit of the doubt and did not share the information.

54. Ms Purvis: Was legal advice taken on the information sharing?

55. Dr McGinley: Advice was taken later. We sought advice from the Departmental Solicitor’s Office in December 2003, which was after the certification officer’s report, but not before that date.

56. Mr Greg McConnell (Department for Employment and Learning): As Dr McGinley has said, the view taken in the Department was that the situation was regarded as mismanagement rather than fraud. The police had investigated the fraud issue, and the Department had taken the view that it was not of sufficient importance to bar the person from having an appointment. In those circumstances, one could understand why the Department would not have shared that information, considering that it had reached the view that it was not of sufficient significance. I am not saying that we take that view; I am explaining how we understand the view of the Department at the time.

57. Ms Purvis: Would mismanagement not have been an issue or a concern that should have been passed on to other Departments?

58. Mr McConnell: I do not think so. We deal with a raft of third-sector community and voluntary organisations across the Department, and if we were aware of issues of mismanagement in those organisations, we would never be done passing on information. There is a level of significance, but that takes us into a wider issue, which is effectively drawing up a blacklist. If we were to pass information around the system that we believed was of sufficient significance to be taken into account in public appointments, that, in effect, would take us into the whole issue of whether we should draw up a blacklist, which, in itself, would raise huge administrative, legal and human rights issues. We will be keen to hear the Committee’s conclusions on that at the end of the process.

59. Ms Purvis: Given that the individual concerned was the subject of two irregularity reports, is that not a sufficient reason for information sharing with central appointments unit or other Departments, or is the issue that the seriousness of the irregularity reports has been reduced?

60. Dr McGinley: Mr McConnell will explain what an irregularity report is, and that will put the matter into context.

61. Mr McConnell: An irregularity report is an important aspect of the Audit Office’s report on the Hospitality Association of Northern Ireland. Irregularity reports are the mechanisms used by which member states advise the commission of cases where EU funds have been put at risk. At the time of the report, cases that involved expenditure of over €4,000, which was the target figure, and where the money had been paid to the project and been claimed from Europe, and had been subsequently found to be irregular, generated an irregularity report. The commission’s main interest in an irregularity report was to ensure that any money that had been paid out in error was recovered and that appropriate follow-up action was taken.

62. To put that in context, over the course of the Peace I project, which operated from 1995 until 1999, our Department handled approximately 1,000 projects and, as a result of that, there were approximately 20 irregularity reports issued to Brussels. Those irregularity reports cover many situations, including genuine and honest mistakes, and it is not difficult for that to happen because the EU rules relating to those projects were quite complicated. In many of those irregularity reports, no one could be held responsible and the information would not be shared. At the other extreme, some cases involving irregularity reports would take us into the territory of suspected fraud.

63. Over the years, and since Peace I and ever since, we have never had an irregularity report that has led to a prosecution for fraud. Most irregularity reports are relatively low level. I am not saying that they are not important. An irregularity report is not a very grand-looking document. It is handwritten. It is not very significant.

64. The key point is that there is a box on the irregularity report form that details the name of the person involved in the irregularity and this is the name of the person who is the first point of contact for further enquiries. This does not in any sense denote that this person is responsible for the irregularity, nor does it attribute blame. The irregularity report is simply a mechanism for informing Brussels about times when funds have been put at risk. My main point is that the Committee should not focus on the irregularity report but on the underlying issues — what do those irregularity reports say about the organisation; what are the issues that were reported into them and what was the role of the individuals involved?

65. I do not think that the issue of an irregularity report is significant. What is more significant is what those irregularities were about; one was about duplicate invoices and one was about multiple claiming of salaries. It is these types of issues that are important, and it is that sort of information that the Department should take into account when making public appointments or sharing with others. As previously stated, at the time, the view taken in the Department was that the issues reported on the irregularity reports were not sufficiently significant to be taken into account when making public appointments or to consider sharing.

66. Ms Purvis: On a scale of genuine mistake to fraud, where did these irregularity reports fit?

67. Mr McConnell: They were about half way along that scale. I do not want to use the word fraud, as that is a matter for the criminal justice system. I would, however, use the term “suspected fraud” or “fraudulent behaviour”. In my view, the duplicate invoice issue is up towards the “suspected fraud” end; the multiple claiming of salaries is somewhere in the middle. The issues are not insignificant, trivial things.

68. The Chairperson: I ask the witnesses to keep to the questions. There are nine members here, and if you have any information, they will get it out of you. By the time that we get round everyone, anything that you know, they will know.

69. Mr Beggs: My question is for Dr McGinley. HANI left its Select training provider with a deficit of £30,000, money that the agency had paid HANI but which it failed to pass on to HOW Systems Ltd. HOW was the training provider that delivered this award-winning training and, subsequently, went into liquidation due to its not receiving payment from HANI. However, in paragraph 2 of appendix 2 of the Northern Ireland Audit Office report, the Department said that the agency’s interests in HANI ended when the last project finished in September 1998.

70. Is that fair? Should HANI just have washed its hands of HOW Systems Ltd and left that award-winning organisation to go into liquidation?

71. Dr McGinley: This again is the dilemma. HANI was a private-sector organisation and the relationships that it had with its subcontractors were for it to manage. I regret entirely the outcome, as anyone would, but I do not think that the Department can be held responsible for the contractual relationships between HANI and HOW. I know that that sounds very brutal, as we received what we paid for, but, unfortunately, that is the way of it.

72. HANI, as members know was prosecuted through the Northern Ireland certification officer, and HOW accepted a half-pay settlement. That is one of the more unsavoury parts of the report; that a company that had delivered training did not get paid for doing so.

73. Mr Beggs: I am surprised by that response. I thought that there is an onus on the agency to ensure that the provider of publicly funded training programmes received the payment to which it was entitled. In particular, when it came to the disposal of the assets of HANI, a two-year-old car owned by the company was simply given away. Was that not an asset that could have been sold and the money used to recompense HOW?

74. Dr McGinley: The wind-up of the company was managed by statutory law. The Northern Ireland certification officer did draw attention to the disposal of the company’s assets and the manner in which they were disposed. Indeed, there was a subsequent prosecution of the external auditor. My view is that the Department cannot be held to be totally responsible for the wind-up of HOW. Like any creditor, when a company ceases trading, the creditors claim from that company.

75. Mr Beggs: Was the basic failure to set up separate accounts a key factor? If separate accounts had been set up, and the public money had been placed into an account to pay for training that the company had engaged in, this would not have happened.

76. Dr McGinley: Potentially, yes.

77. Mr Beggs: That is a basic failing. Community organisations that handle hundreds or thousands of pounds only are required to set up separate accounts, yet HANI handled almost £1 million and mixed it with other money.

78. Dr McGinley: That was part of the irregularity problem. The consultants, who advised on the business model, suggested that a separate account was not necessary. In one particular programme, Belfast Institute of Further and Higher Education (BIFHE) was the account holder, and BIFHE set up the separate account. I am not defending the situation; I agree entirely that separate accounts should have been opened.

79. Mr Beggs: Paragraph 3·11 of the report outlines that senior officials in the agency and the Department, including the chief executive, were aware of concerns about the former training manager’s conduct prior to her appointment to public office. However, those concerns were never brought to the attention of the appointments panel. I do not understand that.

80. The report identifies the former training manager’s poor management practice, failure to follow basic EU accounting modes, poor accounting procedures and inability to produce accounts and detailed financial information. Is that a suitable background to promote someone to oversee other organisations? What expertise was passed on to eradicate those poor management practices? How could that individual supply efficient oversight elsewhere?

81. Dr McGinley: A proportionality judgement was made by the senior manager in the organisation. The event had happened seven years previously, a police investigation had not found any evidence for prosecution, it was not the former training manager’s responsibility, and other layers of senior management — not least the chief executive and the chairman of the board — had responsibilities to ensure that appropriate systems were in place. The judgement of mismanagement led to a decision that the information was not relevant.

82. Mr Beggs: Did the individual complain to her line management or the Department about the lack of appropriate procedures? If she had — and her line management failed to respond — I could sympathise because she would have acted in good faith and behaved appropriately.

83. Dr McGinley: Not that I am aware of. It is the responsibility of the organisation — from board level down — to ensure the establishment of appropriate systems. It is not the responsibility of junior members of staff to determine those systems.

84. Mr Beggs: Presumably, junior staff should approach senior management with concerns about procedures in their organisation?

85. Dr McGinley: Certainly; I am sure that the matter was raised internally. However, that matter would not have come to the attention of the Department. A junior member of staff should raise the issue internally with line management.

86. Mr Beggs: Was the individual justified in not raising that concern with management? There may have been a degree of culpability.

87. Dr McGinley: That is an internal matter for HANI as an independent, third-sector organisation. It was the responsibility of the chairman of the board, the members of the board and the chief executive to ensure that appropriate systems were in place. If a member of staff identifies areas for improvement or inadequacies in the system in any organisation, one would hope that that organisation would be open enough to accept that information and act accordingly. However, the responsibility does not lie with a junior member of staff.

88. Mr Beggs: Would you have been satisfied to promote a junior member of staff in such a failing organisation?

89. Dr McGinley: The Department had nothing to do with the —

90. Mr Beggs: The failure to pass on that information could have influenced public appointments.

91. Dr McGinley: Yes, potentially.

92. Mr McConnell: It is important to distinguish between the failings of HANI, which were well-recognised and well-accepted, and the role of the former training manager. It is misleading to lay the responsibility on a junior member of staff for the failings of the organisation.

93. There was a chief executive, and a council comprised of senior members of the hospitality industry was also involved in running HANI. Therefore, it is unfair to place the responsibility and blame on that individual.

94. The Chairperson: Has either Department recommended any of those senior officials for subsequent public appointments?

95. Dr McGinley: I do not know that at this juncture.

96. The Chairperson: I understand. Will you provide that information?

97. Dr McGinley: We certainly will.

98. Mr Dallat: I am sorry that the certification officer is not here today, because his name has come up several times. Had he been here, I would have complimented him on producing one of the most professional reports that I have ever read. Unfortunately, when I asked the Department who the certification officer was, senior officials did not know.

99. Dr McGinley: Our Department is responsible for that Northern Ireland certification officer.

100. Mr Dallat: Yes. Of course.

101. Dr McGinley: I gladly assure you that that is not the case now.

102. Mr Dallat: It is wrong to offload all the blame on HANI, given that the Department did not know who the certification officer was, or that he came under its remit. That was disgraceful.

103. I presume that the organisation was put in place to raise standards, because we were emerging from bad times, and standards in the hospitality industry were very low. Yet every fundamental rule about raising standards was broken. I first became aware of that particular saga long before the Department discovered it. Hoteliers were jumping off it like lemmings. The controls were not in place.

104. I wrote to the direct rule Minister on 2 March 2003. I queried the public appointments, and the response said:

“I am advised that the appropriate Minister was aware of the police inquiry”.

That refers to Seán Farren. That is either inaccurate, or it is a lie, because Seán Farren knew nothing about the police inquiry. In fact, he was told about it only after the event. The same applies to the former Minister, Carmel Hanna. She had no knowledge whatsoever of the police inquiry. That is the sort of mess that was being made in the Department. I have the letters here, and you are welcome to see them.

105. Dr McGinley: I agree entirely, Mr Dallat. The Department has no record of the Ministers having been informed.

106. Mr Dallat: It is important to clarify that for the purpose of this inquiry, because that caused horrendous embarrassment to me and to my two colleagues who had run the Department to the best of their abilities, yet that totally inaccurate material was being churned out.

107. The criteria for appointment to the New Deal task force in June 2000 were altered by the chief executive to indicate the need to appoint a representative from the hospitality industry, rather than the call-centre sector, despite a leading hotelier already being a member of the task force. Following the change in criteria, the former HANI training manager was appointed. Two months later, the need for call-centre representation was raised again. Do you share my concern that the situation was contrived in order to create a position for the former training manager? That is detailed in appendix 3 of the Audit Office report. Why was she given preferential treatment yet again?

108. Dr McGinley: From my perusal of the papers, I can see nothing to indicate why that decision was made. The reference to call centres was added because a vacancy arose, and that decision was made. The task force was an advisory body, so it looked at bringing in expertise where it was needed. I assume that the decision was made because expertise in the tourism and hospitality sector was required. Subsequently, when a vacancy arose three months later, the call-centre issue arose, and they brought someone in with that expertise. That is all that I can find from the records.

109. Mr Dallat: I appreciate that, in a sense, we are shooting the messenger, because you were not responsible for the decisions that were made at the time. However, you are here to answer for the Department.

110. The appointment of the former training manager to the Belfast Institute of Further and Higher Education board, which is outlined in case D at appendix 3, was not carried out in accordance with guidelines. Why were no interviews held for such a high-profile post?

111. Dr McGinley: Again, you are quite right; such an appointment would not be made today because the commissioner’s guidelines state that a paper sift cannot be carried out. However, at that time, paper sifts were part of the practice for appointments to a number of the colleges. There were 16 colleges, so I think that an administrative decision was taken because of the sheer volume of applications. However, as I say, that would not happen today.

112. Mr Dallat: Thank God it would not happen today. However, do you agree that it should not have happened then either?

113. Dr McGinley: An interview should be part of the appointment process for any post.

114. Mr Dallat: Why were the reasons for that departure from the guidelines not recorded?

115. Dr McGinley: Again, the process was not monitored by the Office of the Commissioner for Public Appointments in Northern Ireland (OCPANI). It was not an OCPANI appointment. We used OCPANI guidance where possible, but there was no onus on the Department.

116. Mr Dallat: Leading on from that, when seeking approval for the appointments, why was the Minister wrongly informed that proper procedures had been followed?

117. Dr McGinley: Again, the procedures followed the guidelines as closely as possibly, but, because the post was not an OCPANI-monitored post, we were not bound to bring in the full guidelines. The Minister was informed that, where possible, the guidelines were applied. One deviation from the guidelines was a paper sift, as opposed to an interview process.

118. Mr Dallat: Do you remain convinced that the person in question received no preferential treatment? Even when she was going away, they gave her a free car, did they not?

119. Dr McGinley: I am led to believe that the vehicle was purchased some two or three years before her departure and that part of the payment for the car was the trade-in of that person’s previous vehicle. It was a matter for HANI to determine. It was not illegal for the organisation to do what it did. It was for HANI to decide how the asset should be disposed of. The car was given in lieu of payment for part-time work that the person concerned carried out for a further six months with the organisation.

120. Mr Dallat: Does an activity have to be illegal for us to strive to improve the standards and the behaviour of agencies that are funded by Government? Does a matter have to be criminal before anything is done about it?

121. Dr McGinley: No, but obviously it is difficult —

122. Mr Dallat: All day, we have heard that because the police said something was not a criminal matter, nothing was done about it. Here we have another such example. What way are we going to run Departments?

123. Mr McConnell: Dr McGinley and I have sought to explain our understanding of the thinking in the Department at the time. We have not been asked what would happen today or how we would handle matters today — we would not handle those matters as they were handled at that time.

124. Mr Dallat: I know, but it is today rather than then. Many decent well-qualified people who, perhaps, should have filled those posts were denied the opportunity to do so. We cannot now quantify the cost to them — in human and economic terms — because the correct procedures were not followed.

125. Moreover, those events happened when the whole world was looking to Northern Ireland to set new standards and to introduce new procedures and behaviours. However, the very Department that was in a powerful position to create training and employment opportunities and improve skills acted in the most irresponsible way.

126. Dr McGinley: It is down to the fact that, at the time, the information with which the Department was dealing was extremely sensitive. A decision was made, and that decision fed its way through the system. The appointment was made on merit. The person concerned was experienced and well qualified and was judged alongside others in that competition. It would have been better practice to have held proper interviews, but the appointment was made in a full and open public appointments process.

127. Mr Hamilton: Paragraph 3·12 of the report tells a story that strikes me as somewhat strange. It mentions how the Department wanted to delay the former HANI training manager’s appointment to the Learning and Skills Advisory Board because she was likely to:

“attract some adverse publicity in the press in the next week or two.”

Will the accounting officer explain what that means; and does she accept the terminology, which gives the impression that the Department is hiding in respect of the appointment?

128. Dr McGinley: The certification officer process had already started. As part of that process, the certification officer had referred the case for prosecution, which found that there were prosecutions relating to systems but not to any individual. In May 2002, the report was shared with various parties and had been leaked to the press. I assume that, at that point, the Department knew that there was potential for embarrassment. That is the only explanation that I can give for the sentence to which you refer.

129. The Training and Employment Agency was subsumed into the Department for Employment and Learning in 2001, moving from agency status back into the Department. In the handover, the agency board served for about six months thereafter. The Learning and Skills Advisory Board was then formed and brought in a New Deal task force and further and higher education bodies. It was an advisory body to the Department and ceased to function in 2003. Four Training and Employment Agency members transferred to the Learning and Skills Advisory Board. Officials recognised that there was potential for media attention, and it was decided not to publish the certification officer’s report until September 2003. Therefore, the nature of the information was not confirmed or grounded.

130. Mr Hamilton: Can you see how the criticism could be levelled — and not helped by today’s evidence — that the Department was more interested in the publicity rather than in the conduct that led to the concerns that were being raised?

131. Dr McGinley: That certainly is an interpretation that could be put on the affair.

132. Mr Hamilton: Would that be your interpretation?

133. Dr McGinley: This is the most difficult part of this hearing for me because we are, de facto, talking about individuals and their reputations, regarding not only this case, but in general. There are issues of human rights, natural justice and fair employment to consider, as well as legislation surrounding freedom of information, data protection, and public interest. There is an extensive legal background to this affair. If we get into a system in which we operate de facto blacklists, the day of any form of appropriate appointment will be gone. Therefore, we have to be extremely certain and sure of our information, and mitigate any sense of malign interpretation of that information. The Department was managing the risk in one way because there had not been grounded information, and a value judgement was made, regardless of whether that was the right judgement.

134. Mr Hamilton: Why did the Department say that it would proceed with the appointment because it had no choice?

135. Dr McGinley: That was because four members were moving across en bloc. I presume that that was the reason.

136. Mr Hamilton: Not because of legal reasons?

137. Dr McGinley: No, it was an administrative matter.

138. Mr McConnell: There were four vacancies coming from a due date, and the feeling was that the board had to be up to strength at the due date. There was no option, therefore, but to go ahead and appoint.

139. Mr Hamilton: Paragraph 3·13 points out that two individuals who were up for further education college appointments — neither of them the former training manager of the Learning and Skills Advisory Board — were not allowed to go forward because of questions about their past performance. What role did legal considerations or human rights play in those instances?

140. Dr McGinley: Those were former members of a board, and, through assessment, there was information about their attendance and performance at board level. Therefore, there was grounded information about the performance of those two individuals, and that information was taken into account.

141. Mr Hilditch: I see in paragraph 3·18 that, in December 2003, the Departmental Solicitor’s Office ruled that the former HANI training manager’s use of duplicate invoices for accounting purposes:

“cannot be regarded as acceptable or appropriate behaviour”.

Do you agree that if someone behaves in that manner, he or she is unsuitable for the oversight responsibilities of a public board?

142. Dr McGinley: I do not condone any attempts to mislead, such as the generation of duplicate invoices. Such behaviour is not acceptable. The Departmental Solicitor’s Office said that in December 2003. The Department took the matter seriously: the certification officer reported in September 2003, after which the Department conducted a thorough internal investigation, using a retired civil servant to examine the matter and provide advice. The Department then took the advice from the Departmental Solicitor’s Office.

143. After that, the Department agreed to meet the individual concerned because there was an issue of natural justice — the person concerned had the right to tell her side of the story, which is what happened. At the same time, my predecessor — who took the matter seriously — along with the then commissioner and the head of the Civil Service, set up a working party that examined issues of probity and conflicts of interest. The recommendations of that group are in appendix 4 of the report. Over a six-month period, the working group did an excellent piece of work, which now informs best practice in the issues of probity and conflicts of interest.

144. All of that happened in an era when the procedure for making public appointments was evolving; although the Peach guidelines and the Nolan report were published in 1996, the first code of practice was only published in 2002. Therefore, there was a journey to discover what public appointments were about and what should be built on.

145. After the working group published its recommendations, the Department recognised that it had to act. It spoke to the person concerned and suggested that she considered her position. That person refused to resign but agreed to undertake training. Other Departments were subsequently informed of the matter.

146. Mr Hilditch: Paragraph 3·19 states that the Department told the Comptroller and Auditor General that it had no power to remove the former training manager from the BIFHE board. Are you telling the Committee that the Department has the power to make and extend appointments but no power to terminate them?

147. Dr McGinley: That was the case, and the anomaly only came to light at that time. However, applicants for public appointments are now asked about conflicts of interest, for themselves and their wider family circle, in the application form. Applicants are also asked to make it known if there have been any changes of circumstances from the time of their application to the time of their interview. They are also asked to sign a declaration, which makes it clear that the Department has the power to terminate their appointment and disclose information to others if any information comes to light after their appointment, or if they behave inappropriately during their term of office. Those measures apply across the system because they were part of the recommendations in the report on conflicts of interest and probity. Therefore, the public-appointments process has been significantly tightened to avoid a similar situation arising.

148. Mr Hilditch: Did the Department take legal advice on the matter?

149. Dr McGinley: Part of the Departmental Solicitor’s Office advice was on the possibility of termination.

150. Mr McConnell: From the legislation, the Minister had the power to appoint a full board. That board became a collective — there was no way to remove one individual from it. The Minister could dismiss the entire board but not an individual member. Due to the implementation of the administrative procedure that Dr McGinley described, we can get rid of individuals in the future. However, the legislation still has to be tidied up to make it 100% clear that the Department has the power to remove individuals.

151. Mr Hilditch: At that time, you told the Comptroller and Auditor General that the authority to terminate an appointment lay with the governing body. In this case, it was BIFHE’s governing body — did you approach it about terminating the appointment?

152. Mr McConnell: We did, but, under the terms of the appointment, it could only dismiss an individual on his or her performance on that board.

153. There was no suggestion that the performance of the individual whom we are discussing was in any way defective in respect of the BIFHE board.

154. Mr Lunn: Forgive me if my question covers areas that have already been covered — when we get this far down the list of questions, some of them start of overlap a bit.

155. Paragraph 3.16 of the HANI report states that the Department’s explanation for failing to act on the information that it had about the HANI training manager was that it was the first case of its type since the new appointments procedure was set up. That paragraph includes a marvellous line that says that:

“no record is available which would suggest that consideration was given to whether the matters listed in paragraph 3.1 should have been taken into account”.

156. The matters listed in paragraph 3.1 are the alleged offences. Do you not agree that, because this was the first case of its type, it was even more important to adopt the right approach?

157. Dr McGinley: Yes. I believe that that was alluding to the fact that, with regard to public appointments, this was new territory for everyone. As I said, the guidance was not issued until 2002, and there is no record of concerns being raised about the conduct of the former HANI training manager. The only recorded instance of that is of the then chief executive of the Training and Employment Agency writing to the Northern Ireland Audit Office to say that the agency’s judgement was that it had been a case of mismanagement, rather than suspected fraud. That is the only record that we have of any evidence, so that is where we are taking our line from.

158. Mr Lunn: That matter was referred to at the start of the meeting, when Dawn Purvis asked whether it was a case of mismanagement or of fraud — but does it matter which it was? You said that the appointments guidelines were not issued until 2002, however the Peach guidelines have been in place since 1996, and they refer to probity, propriety, public confidence, high standards, principles, values and integrity. I could not apply any of those words to the behaviour of the person whom we are discussing. Her behaviour and her record were known to the Department, yet, by some means or other, the Department decided that that information was not relevant. Did you seek any advice from the Commissioner for Public Appointments on how to deal with the problem?

159. Dr McGinley: The matter was discussed with the commissioner during the latter stages of the appointment process. I must reiterate that a judgement was made at the time, and those factors were not taken into account because a case of mismanagement rather than suspected fraud was, on the grounds of proportionality, not sufficiently significant to justify sharing the information.

160. Mr Lunn: We keep returning to the question of degree. By that time, the lady whom we are discussing had quite a record, to the extent that an employee of the company involved in the duplicate invoices was dismissed. Does that mean that the private sector has higher standards than the public sector? I would have thought that it would be the other way around — or that it should be.

161. Dr McGinley: It is not my place to make that judgement — the organisation for which she worked did not make that judgement.

162. Mr Lunn: I know that it is not your place to make that judgement; however, you are the only person whom I can ask about it. What are your thoughts on that matter?

163. Dr McGinley: I am trying to be fair to all concerned, and to look back at that period of time, when there was a relatively inexperienced and relatively junior person working in an organisation. The operating processes given to that organisation by professional consultants did not align with European funding rules. As Mr McConnell said, there have been other instances of irregularities. There was also a lack of clarity, which should have been identified at the outset. Therefore, that was one set of irregularities.

164. As for the duplicate invoices, we cannot find any record of them actually being used or claimed. The police decided that the individual should not be prosecuted. The irregularities attracted no personal gain, there was no loss to the public, and there was no attempt at concealment. I am led to believe that the equipment concerned was passed on to the intermediary funding body for use by other EU-funded bodies. Therefore, I do not believe that there was any illegal intent in the individual’s behaviour. I feel that it was a case of poor judgement on the part of the person concerned.

165. Mr Lunn: We are back to Mr Dallat’s point — does something have to be illegal before it is completely wrong?

166. Dr McGinley: No, and that is a very good point. That is where the judgement of the person who is making the decision at the time, in the context of that time, is important.

167. Mr Lunn: I wish to move on to paragraph 3.19, which concerns the decision not to remove the training manager from the BIFHE board on the grounds of proportionality, the lapse of time and the police decision not to prosecute.

168. Are you saying that serious concerns about the previous conduct of an individual could be overlooked? I do not wish to revisit what powers the Department had to remove this person from the board. However, it does seem to be sending entirely the wrong signals if the Department had all that information, failed to act on it and then decided that it could not remove the training manager from the BIFHE board. Even though — as Simon Hamilton said a few minutes ago —the Department did have the power to refuse appointments, it is a very fine distinction. Could you please comment on that?

169. Dr McGinley: Again, I make the point about judgement and context at the time. Particular emphasis was placed on the fact that the police felt that no illegal act had taken place under the terms of the Theft Act and the judgement was then made that the act was not significant.

170. Mr McConnell: I think that we need to emphasise the use of the word “proportionality”. The Department did not have the power to remove the individual and the only action that it could have taken was to remove the entire board and reappoint a new one. That was the Department’s only option, which was disproportionate to the difficulties that were being faced.

171. Mr Lunn: Yes, but the Department ultimately came to the view that it was not desirable for that person to remain on the BIFHE board and asked the individual to resign. The individual then decided not to resign.

172. We then come to the issue of the retraining of the BIFHE board. I would have thought that it was not the BIFHE board that needed retraining, but the people who were making the appointments to that board. It seems incredible to me that those making the appointments could have ignored the level of information available to them and allowed that to happen. Furthermore, I noticed that not just the individual concerned — but the entire BIFHE board — was offered retraining. Were the other members of the board not a little insulted by that course of action?

173. There seems to have been an attempt not to direct the fire where it was deserved — at the individual who was causing the problem — but at the entire BIFHE board. As you say Mr McConnell, the Department had the power to dismiss the whole board, but not the individual who was causing the problem.

174. Dr McGinley: We have subsequently addressed that issue with the procedures and processes that the Department has in place today. We also have regular training for all the board members of the governing bodies and it has become normal practice to keep people up to date. The training element and the learning that has been gained have impacted on the governance training that the Department carries out.

175. Mr Lunn: Is there now an appropriate level of co-operation among Departments to share information in such circumstances?

176. Dr McGinley: The guidance is that when individuals apply for public appointment, they are asked whether they currently serve on any public bodies. If they do, it is the responsibility of the Department conducting the appointment process to contact other Government Departments. The Department then ascertains whether there is any information of which they need to be aware. If an individual has not previously served on a public body, references are asked for and can be taken up.

177. The sharing of information in that way is based on the appraisal process, which has become much more robust since the early days of 2000. There is now an annual appraisal process whereby the chairs of boards are responsible for assessing the performance of individual members. Indeed, no reappointment can occur without consideration of that information. It is also made clear to candidates during the application process that the disclosure and sharing of information among Government Departments will take place. Therefore, we have changed both the process and the system, and a great deal of learning has flowed from the process.

178. Mr Lunn: Yes, but you are still relying, to some extent, on the honesty of individuals in declaring their previous history.

179. Dr McGinley: That is correct. However, the Department concerned also checks whether a candidate is on the central appointment unit register held by the central appointments unit. I apologise for not mentioning this earlier, but anyone who sits on a public body has their details recorded on that register. That allows Departments to perform a further check on applicants. I should have mentioned that at the outset.

180. Mr Lunn: If the individual in question applied for public office today, would your Department circulate other Departments with the information that that person would not be a desirable candidate?

181. Dr McGinley: We would not do it in that manner. We would share any information that we had that related to the performance of the individual.

182. Mr Lunn: You would not wait for the person to make another application?

183. Dr McGinley: No, the information would be shared if they applied for an appointment. That is my point. Indeed, I welcome the Committee’s assistance. I know that the Commissioner will be talking to the Committee later about this matter. This is about the holding of information; what type of information is held; how it is held, and how it is shared. This is fundamental. We must be very careful with people’s reputations, and we must avoid any sort of innuendo. If we were talking about a company director who had been disqualified, there would be very clear information that such a person would not be suitable for public appointment. In that case, due process would have taken place.

184. If someone has a parking ticket, is that taken into account? I do not mean to be frivolous in the use of that example, but what level of information is taken into account?

185. Mr McConnell: If we are drawing up a blacklist, human rights issues are introduced. Individuals would be entitled to redress if they were seen to be disadvantaged as a result of our holding information.

186. Under the Protection of Children and Vulnerable Adults (NI) Order 2003, where a blacklist is drawn up, a tribunal system exists to ensure legality and compatibility. I would caution the Committee on that matter, and we look to the Committee for advice.

187. Once we begin blacklisting in any form, or debarring individuals, we enter a very difficult administrative and legal situation, and we seek guidance on that matter.

188. Mr Lunn: The information that could have been passed between Departments was actually very well publicised at the time. It was in the newspapers, and no action was taken against those newspapers in respect of libel or slander.

189. Dr McGinley: Chairperson, I think that there is a real danger if we refer to newspaper headlines in terms of people’s reputations. I am sure that many of us would be alarmed if we thought that that was a possible conclusion.

190. At that stage, the certification officer’s report had still not been published. There was no actual evidence. The report refers to a second police investigation in October 2002, which did prosecute on the control systems within HANI, but recommended that there was no case for prosecution of any individuals within HANI.

191. Mr Lunn: Criminal evidence is not necessary in these situations. People are either entirely suitable for public appointment or there may be some reason —

192. Dr McGinley: Chairperson, that is the dilemma that this Department faces. How does one weigh up something that has supposedly happened against something for which one has concrete evidence? That is the territory that we are in; it is a dilemma and a dichotomy.

193. Mr Lunn: If enough evidence was not presented to the Department to make a recommendation that the person in question should not have been appointed to further public boards, I do not know what level of information would be necessary. It defies belief.

194. Mr I McCrea: Dr McGinley, paragraph 3.24 states that in July 2006, DEL chose to extend the former HANI training manager’s term on the BIFHE board by a year. I will not go through the rights and wrongs of that, which have already been covered.

195. In paragraph 3.23 of the report, the Commissioner for Public Appointments’ decision not to appoint the person to the central pool of independent assessors was mentioned, as the commissioner judged that it may jeopardise public confidence in the pool, and may undermine the process. Were you aware of that?

196. Dr McGinley: No. The commissioner made that decision within her own remit and had not shared that information, so we were not aware of it at the time. I will explain what happened in the reappointment of the BIFHE board. As many members are aware, under the FE Means Business programme, the 16 colleges were being merged into six, which happened in August 2007. There was only a year between needing boards of governors for the new merged system and the old, and it was agreed overall that an extension would be applied to all 16 boards of governors in all of the colleges.

197. As Mr McConnell described earlier, the dilemma that we had was that we could not suspend just one member; we would have had to stand down the entire board. Therefore, for the sake of a year, a business decision was taken to allow the transition to the major change and to allow the public-appointments process for new governors to occur, which took nearly a year anyway. The business need overrode the consideration of information at that time. However, we were unaware of the commissioner’s decision.

198. Mr I McCrea: On pages 44 and 45 of the report, cases studies A B C and D outline the four occasions on which your Department obtained the Minister’s approval for the former training manager’s public appointments. Those appointments were to the agency board, the New Deal taskforce, the Learning and Skills Advisory Board and the board of governors of BIFHE. Why were the concerns about her previous conduct not drawn to the Minister’s attention?

199. Dr McGinley: The record does not show that there was any consideration. I am aware that I am being repetitive, but it is the same set of circumstances — a judgement was made that it was immaterial.

200. Mr McLaughlin: This issue was touched on earlier by Roy Beggs. The first bullet point in paragraph 2.12 of the report points out that HANI did not open a second Select bank account, despite a formal requirement to do so. As Roy pointed out, that is a fundamental system for keeping public and private money separate. You suggest that the agency’s monitoring arrangements were reasonable or effective; therefore, why was that not picked up?

201. Dr McGinley: The Audit Office report said that the monitoring arrangements were adequate; the Department did not say that. Paragraph 2.5 of the Audit Office report states that the funding contracts failed:

“despite an adequate monitoring and control framework having been set out”.

202. As I explained earlier, at that time, it was a new process. The resources of the Department were stretched. Only two people were dealing with 300 projects. There was an over-reliance on the intermediary funding body getting it right. That system failed, and, as a result, so did HANI.

203. The Department took steps quickly by forming a European social fund team in FAST, which undertook audits of the European social fund funding at the bequest of Europe. In 2007-08, we moved from qualified accounts to unqualified accounts because of the improvements that had been made. The 2001 accounts were actually commended for the systems that we now have in place. Therefore, the agency put a lot of effort into addressing the inadequacies, and learned lessons from what happened with the HANI /THTC issue.

204. Mr McLaughlin: Part 2 of the report deals with shortcomings in the financial management and control of HANI. I am confident that you agree that it makes depressing reading. It outlines a significant catalogue of mistakes and faulty procedures. The financial audit support team also happened on a number of other irregularities, which were not reflected in its final report. The Audit Office criticised that. Do you agree that those irregularities should have been included?

205. Dr McGinley: It is easy for me to say with hindsight, but they should have been included because it would probably have provided a fuller picture. I already mentioned the issue about the separate bank accounts. At that time, assumptions were probably made, which should never be the case in such circumstances. BIFHE had set up a separate account, and moneys had been paid to BIFHE, which was paying HANI for services. There may have been an assumption that that was sufficient; although, obviously, it was not.

206. The second issue was about lodging money in an interest account, which was an instruction in the business case that had been approved. Again, there was a lack of understanding. FAST felt that the issue was understood and had been dealt with. That is why it was not included in the report.

207. The third issue was about the use of a credit card. As I explained, that was an internal matter for HANI and was not regarded as part of FAST’s remit. That issue was pointed out to HANI.

208. Finally, there was the issue of a conflict of interest, which concerned the segregation of duties and the fact that the honorary treasurer authorised credit card bills.

209. Again, a series of compensating controls in the organisation was shown to FAST at the time; for example, more than two signatures were required for cheques. FAST made the assumption that that issue had arisen and was being dealt with, so it reported on the outstanding issues. To provide a full picture, the report should have included those four issues and shown how they were dealt with. FAST dealt with matters that were outstanding.

210. Mr McLaughlin: Having listened to your responses, particularly to Trevor’s questions, I wonder whether there was any joined-up thinking at all? Proteus had contacted the police about the double invoices and the purchased goods that were represented as being hired. Trevor pointed out that the employee of the retail company who got caught up in that matter lost their job. The police decided not to proceed with the investigation. However, internal audit was brought in, and it was quite clear that there had been fraudulent activity. Was there any point at which that information led to a conclusion that there was difficulty with the management of the project?

211. You have repeatedly pointed out that a management team was involved and that there was shared responsibility, and I accept that. We will deal with that issue in a separate discussion on the Events Company. However, I wonder whether the chain of information ever connected. Why did that not lead to the conclusion that an issue had arisen that really needed to be addressed? Who decided not to include in the report the other issues about which FAST had expressed concern? Whose responsibility was that?

212. Dr McGinley: The head of FAST would have made that decision, and the report would have come to the Department. As an accounting officer, FAST acts as my eyes and ears, and it does likewise for the senior management team. It decides whether processes are appropriate. It is outstanding matters that still require action that tend to be reported on. I think that that was genuinely the case in this instance. FAST did not report on certain matters either because it was not for them to report on them — FAST cannot report on everything — or because it had evidence that they were being dealt with. Had that information been included in the report, it would have provided a fuller picture. I agree that this is an example of information being held in different parts of the organisation but not coming together at any one point until further down the line, when a more formal investigation is under way.

213. Mr McLaughlin: Is it the case that the conclusion was reached that certain issues need not be reported on? Was that conclusion reached as part of a hermetically sealed internal process, or did the FAST director discuss that with an agency representative?

214. Dr McGinley: The head of FAST is a professional person. Our team is well qualified, and it would have made a judgement. The author of any report produces a final version of the report that is a distillation of all that went before. A judgement was probably made, on a sound basis, as to what the management team needed to know. Indeed, the FAST team moved in very quickly. The Department put the FAST team in place as soon as Proteus identified that issues had arisen. The team went in immediately and reported very quickly. It was on that basis that HANI subsequently ceased trading.

215. Mr McLaughlin: You indicated that there may have been a question mark over some of that matters on which FAST reported that were perhaps not within its remit.

216. Dr McGinley: Yes, but —

217. Mr McLaughlin: Someone in FAST thought that certain matters were its business, and then someone decided that they were not, and they were left out of the final report. Who made that judgement?

218. Mr McConnell: FAST carried out an investigation and produced a first-draft report internally. As an organisation, FAST looked again at the report and asked what the key issues were. As Dr McGinley said, we believe that FAST thought that the first two issues that were identified had been dealt with. We believe that the view was taken that the other two issues — the credit card and the role of the honorary treasurer — were outside the scope of the agency’s contractual relationship with HANI.

219. We believe that there was a rationale for the approach that was taken, but we are guessing about events that happened a long time back. However, it is not untypical for an investigation team to find all sorts of things, important and trivial, and it must draw the line somewhere when deciding what to report on.

220. Mr McLaughlin: Yes, but some of the detail of the issues is reflected in the report. Was there any cross-referencing with the opinion of the internal audit service? Surely the alarm bells would have been ringing. That should have been picked up. We are now faced with the possibility that the Events Company’s subsequent difficulties might also have been avoided. Are you drawing any of those conclusions at all? Is all material information regarded as relevant, not just in the here and now, but with regard to future potential, bearing in mind that the process of appointment to public bodies continued for that particular person?

221. Dr McGinley: We must be very careful when dealing with information about individuals. However, you are quite right. I can only speak for my Department, but we have put in place a very robust process. I am always reluctant to say that we have a good record, because as soon as I say that, something comes out of the woodwork. One can never entirely eliminate risk. However, the system has learned a great deal about the processes of accountability and public appointments. Some of that learning, in the case of public appointments processes, has come directly from the HANI report, and has informed the process that we have adopted and the best practice that we are developing.

222. The incidents that are covered by the report occurred over a decade ago, when the control climate and the available knowledge was not at the same level that it is now. We have moved substantially in that period and we have learned a great deal. The systems that we have in place today, will, I hope, prevent the anomalies that you have highlighted from arising again.

223. The Chairperson: Simon wishes to ask another question. However, we have been discussing this section of the report for an hour and a half. I will have to be strict about the brevity of questions and answers.

224. Mr Hamilton: Thank you for your indulgence; I will be as brief as I can. Earlier on, Dr McGinley, I raised the issue of the two potential appointees to further education colleges, both of which were eventually turned down because of concerns about their past performance. What were those concerns about their past performance?

225. Dr McGinley: There were issues in respect of attendance and commitment.

226. Mr Hamilton: When I asked you earlier about the former training manager and the concerns about her past performance, which involved the falsification of documents, you said that there was no reason for not appointing her, nor was there any good cause not to move ahead, and that there were various legal and human rights considerations. Can you not see that that gives the impression that if one is a bad attendee, one is let go; but if one falsifies documents, one gets a free pass?

227. Dr McGinley: It is easy to perceive it in that way, but, when that incident happened, there was no evidence available. The person concerned did not admit to the duplicate invoices until 2004.

228. Mr Hamilton: The matter of the invoices was raised in 1998.

229. Dr McGinley: Yes, but there was no evidence —

230. Mr Hamilton: The cloud was hanging there at that time.

231. Dr McGinley: The point is: when and how does one take information? Does one take something that is unproven and apply it? That is the sensitive and dangerous territory that we are getting into.

232. Mr Hamilton: There is a difference between not turning up and falsifying documents.

233. Dr McGinley: I can see Mr Hamilton’s point. All that I can say is that the Department used the tangible evidence that it had to make a judgement.

234. Mr Lunn: The former training manager concerned is now self-employed and is operating a consultancy of some type. Does anyone know, or can we find out, whether she is receiving any work from any Department?

235. Dr McGinley: I cannot answer that at the moment. I will have to contact all the Departments and then write to the Committee.

236. Mr Lunn: Will you find out whether that is the case?

237. Dr McGinley: I am not sure that that is DEL’s responsibility. That may be a matter for the Department of Finance and Personnel.

238. The Chairperson: If it is appropriate and within protocol, you can endeavour to do that. If it is not, you can report that fact back to the Committee.

239. We move on to the next section of the report. Mr Jardine has been waiting patiently for his turn. Dr McGinley, I understand that you may also contribute.

240. Dr McGinley: I am happy to help the Committee with any information that I have.

241. The Chairperson: The Audit Office report on HANI is timely, considering the problems at the Events Company. When the permanent secretary from the Department of Culture, Arts and Leisure attended the Committee in March 2008, he touched on the issues of the Events Company. We understand the sensitivities associated with those matters, and we dealt with them sensitively then. It was clear from the permanent secretary’s account that conflicts of interest are at the core of the problems at the Events Company. Do you agree that the case study that is featured in the Audit Office report suggests a profound lack of understanding of the nature and handling of conflicts of interests at board level in that organisation?

242. Mr Edgar Jardine (Department of Culture, Arts and Leisure): The permanent secretary had in mind that the Northern Ireland Events Company was faced with tension between assisting promoters on the one hand, and taking over a promotional role for events on the other. The NIAO report deals with a different manifestation of the conflict of interest. The board of NIEC should not have a difficulty in handling that type of conflict of interest. Board members are appointed through a competitive process and, collectively, the directors have experience of working at a senior level in the private and public sectors. As a whole, they bring a range of relevant skills and experience in dealing with those issues to the board.

243. The Events Company is limited by guarantee and is therefore subject to company law. The Department had put a fundamental governance framework in place, which set the parameters within which the company is required to operate. An important section of that framework requires that:

“individual board members do not misuse information gained in the course of their public service for personal gain or for political profit, nor seek to use the opportunity of public service to promote their private interests or those of connected persons or organisations; and to declare publicly and to the board any private interests that may be perceived to conflict with their public duties.”

244. The guidelines are clear on that. In October 2003, relevant Chartered Institute of Public Finance and Accountability training was provided for the chairperson and chief executive. The management statement requires the chairperson to ensure that that training is shared with board members. In April 2004, a letter from the Department to the chairperson reinforced the importance of cascading that training. In October 2004, the directors of the company devoted a significant part of their away day to getting up to date with best governance practice.

245. On the basis of the evidence that is now available, the Department accepts that the circumstances of case E in appendix 3 of the report indicate that there was not a significant appreciation of the implications of conflicts of interest in the board. We acknowledge that taxpayers expect that those who hold public office must not only avoid conflicts of interest, but must avoid the perception of such conflict. We accept that there was a conflict of interest, and, when it was identified, the Department reacted rapidly to provide support to the board and chairman of the Events Company in dealing with the incident.

246. The Chairperson: It appears that the board was made perfectly aware of the legislation; training was provided and an away day concentrated on conflicts of interest. That begs the question: why did the conflict of interest happen?

247. Mr Jardine: That is a good question.

248. The Chairperson: I hope the answer is good.

249. Mr Jardine: I will do my best. The conflict of interests happened because the guidance was not applied as it should have been.

250. The Chairperson: The question remains. You referred to case E of appendix 3 of the report.

251. There are different accounts from the various participants in this conflict about why it happened. Will you explain your views on that, and also explain why the Department did not ensure at the time that an authoritative set of documents was produced and agreed with each of the parties involved?

252. Mr Jardine: I have reviewed the Department’s records in relation to the conflict of interest; those are detailed in the HANI report. My conclusion is that it is not possible to fully reconcile the differences in evidence provided to the NIAO, and, on the material issues, I wish to reiterate the Department’s position. The Department is in no doubt that it was first advised of the alleged conflict of interest by the Events Company on 15 April 2004. There is no record of any engagement with the former board member or the Events Company before that date. Records also show that by the time information about the conflict of interest reached the chairman of the board, the contract had already been awarded to the former board member’s company. The record also shows that the Events Company had been contacted by a journalist in mid-March in relation to that contract. That seems to be some two weeks before the board member said that she had been invited to tender for the contract, on 29 March.

253. As I said earlier, the Department was in no doubt that there was a conflict of interest, and acted rapidly and decisively — first, by immediately writing to the chairman of the board, and, in the absence of a reply, the Department sought advice from the Departmental Solicitor’s Office, which confirmed the Department’s concern, and identified possible remedies. The seriousness with which the Department took the conflict of interest was communicated to the chairman at a face-to-face meeting with senior officials on 10 June 2004, and was followed up with a letter the following day.

254. The Department was advised by the chairman that he had reviewed the situation with the board member, who, it appears from the record, accepted that there was at least a perceived conflict of interest. Having looked at a range of options, the chairman advised that it would be appropriate for the former board member to make a declaration of interest, and withdraw from participation in any discussions about the event. However, minutes of subsequent meetings show that the former board member remained in attendance at meetings when the event was being discussed, and there is no evidence that a declaration of interest was made.

255. The Chairperson: The time frame is that the Department met with the chairman to discuss the conflict of interest, and that you advised him on what procedures to take, but those procedures were not followed?

256. Mr Jardine: We advised the chairman of the range of options that he might consider. Those included the board member stepping down from the board, relinquishing the contract, or, at a minimum, making a declaration of interest and withdrawing from any subsequent discussion of the event. The letter that followed up that meeting was quite specific, stating that withdrawal meant leaving the board meeting at the time of the discussion.

257. Ms Purvis: I would like to explore some of those issues a bit further. The report states that the conflict of interest was first drawn to the attention of the Department on 15 April 2004, although you waited some two months before seeking legal advice. Is that rapid?

258. Mr Jardine: Immediately after that, a letter was issued to the chairman, drawing his attention to the issue and inviting him to respond to the Department on what action was taken.

259. When we did we not receive a formal reply to that letter, a decision was taken by the Department to engage with the DSO.

260. Ms Purvis: When you received that advice from the DSO, the Events Company had already decided that the former HANI training manager could retain the PR contract. Is that right?

261. Mr Jardine: I am not sure that that is right. I will stand to be corrected, but my understanding is that the discussion with the chairman on 10 June was around those options, and that that issue was raised.

262. Dr McGinley: The report states that it had already been agreed that she remain on the board when that conversation took place.

263. Mr Jardine: The chairman clearly had had some discussions with the training manager before his meeting with the Department.

264. Ms Purvis: Who on the board decided that the former training manager could retain the contract? Was that a decision by the Events Company board or was it an individual decision?

265. Mr Jardine: My understanding is that that was the chairman’s decision, and that he met with the training manager.

266. Ms Purvis: You set out principles involved in understanding conflicts of interest, including the issue of using information for personal gain. The report shows that, from February 2003 until payment to the company managing the event in 2004, the former training manager was on the board, was attending board meetings and was involved in those discussions. That is clearly a conflict of interest. The chairperson was aware of the principles involved in determining a conflict of interest but decided that the former training manager could retain the PR contract. Was your Department consulted about that decision?

267. Mr Jardine: We were consulted to the extent that we had a meeting with the chairman and discussed the options with him. The chairman’s view was that, although the actual contract for the individual event was not signed until mid-2004, a decision had been taken quite some time in advance of that, stating that the Events Company would, in principle, fund the event for three years.

268. It was the chairman’s view, as I understand it, that the time between the decision being made in principle and the signing off of the contract, was time in which to tie up loose ends. He took the view that the decision had been taken significantly in advance of the contract being given to the former board member.

269. Ms Purvis: Was the Department consulted before the Events Company decided that the former training manager could retain the contract?

270. Mr Jardine: No.

271. Ms Purvis: That decision is clearly inappropriate when one looks at the evidence presented. Why did the Department allow that decision — for the former training manager to retain the PR contract while remaining on the board of the Events Company with the agreement that she would declare an interest and withdraw from meetings — to stand?

272. Mr Jardine: The management framework puts the responsibility on the chairman to deal with matters within the board. The chairman had taken the view that a decision was made to retain her because it would be disproportionate to ask her to relinquish the contract at that stage or to stand down from the board. That is a judgment that the Department accepted.

273. Ms Purvis: Given that you were responsible for the appointments, do you not think that the Department should at least have been consulted about that decision?

274. Mr Jardine: I think that is a fair point and that we might have expected to have been consulted. We were not. The Department accepted the chairman’s rationale for taking the action that he did.

275. Mr Beggs: Conflicts of interest are best avoided completely, but if they do occur, they must be carefully managed, especially when public money is involved. If conflicts of interest cannot be properly managed, they must be avoided.

276. Mr Jardine, do you agree that the conflict of interest in the case of the Northern Ireland Events Company should have been avoided but was not, and was not properly managed subsequently?

277. Mr Jardine: I accept both of those contentions. It is particularly concerning that, even after specific written guidance was provided, the former HANI training manager attended a number of board meetings in which the Senior British Open Golf Championship was discussed. I do not see any reason why that should have happened.

278. Mr Beggs: Do you accept that the former HANI training manager was party to prior information that may have assisted her in the tendering process?

279. Mr Jardine: That is part of the conflict of interest.

280. Mr Beggs: Surely that was a basic conflict of interest that not only the chairman, but all members of the board should have recognised.

281. Mr Jardine: That is a reasonable assumption. The board includes a number of people who hold senior roles in the public and private sector, and they had received the relevant training.

282. Mr Beggs: You mentioned that, after making her declaration of interest, the former HANI training manager attended several board meetings. Did the Department receive minutes of those meetings?

283. Mr Jardine: The Department has the minutes of those meetings, but I am not sure exactly when we received them. We may not have received them conterminously with the event.

284. Mr Beggs: Was it not your responsibility to examine the minutes to ensure that the declaration-of-interest process was being carefully managed? Would you not receive the minutes once they were approved?

285. Mr Jardine: We would not necessarily have received the minutes once they were approved. The management statement makes it clear that the primary responsibility for policing that conflict of interest rests with the board of the Northern Ireland Events Company.

286. Mr Beggs: What responsibility does the Department and the accounting officer have?

287. Mr Jardine: The Department is responsible for implementing an appropriate governance framework to ensure that the relevant requirements of corporate governance are covered. Such a framework has existed for some time in the Northern Ireland Events Company, and, indeed, was refreshed in December 2006.

288. Mr Beggs: It was the Department’s responsibility to monitor what was happening. Apparently, you did not do that.

289. Paragraph 3.28 refers to case E. In mid-April 2004, DCAL wrote to the chair of the Northern Ireland Events Company, advising him to ascertain the facts of the conflict of interest. When you received no reply, why did you not quickly follow up the matter?

290. Mr Jardine: We granted the chairman some time in which to make a response — it may be your view that we afforded him more time than we should have. However, when no response was forthcoming, we sought legal advice. Matters moved very quickly after that, with the Department calling a meeting with the chair within 24 hours. We issued a letter, advising him of the handling of the case within a further 24 hours.

291. Mr Beggs: Do you accept that, if the Department had acted and sought legal advice several months earlier, you could have prevented the contract being signed? By the time you did act, the die had been cast.

292. Mr Jardine: The Department could not have prevented the contract being agreed and signed; it was signed before we were made aware of it.

293. Mr Beggs: It must have been signed very speedily after the commencement of tendering. Was that the case?

294. Mr Jardine: The record shows that the contract was signed around 6 April 2004.

295. Mr Beggs: How long after the tender process began was the contract signed?

296. Mr Jardine: The report suggests that an approach was made to tender for the event in the week beginning 29 March 2004.

297. Mr Beggs: When was it signed?

298. Mr Jardine: It was signed around 6 April 2004.

299. Mr Beggs: That is a very short period. Does that give you cause for concern?

300. Mr Jardine: In retrospect, it suggests that the tender process was quicker than normal for such contracts. We were alerted to that fact in mid-April, by which time the appointment had already been made.

301. Mr Beggs: As a matter of interest, how many tenders were received during that week long process?

302. Mr Jardine: I do not know.

303. Mr Beggs: Will you provide us with that information?

304. Mr Jardine: Yes.

305. Mr Beggs: Paragraph 3.28 of the report explains that the Department obtained legal advice, which concluded that there had been a conflict of interest in 2004 and that the Department had neither approved nor acquiesced in the situation. The only subsequent action that you took was to offer two extensions to her board membership. Therefore, surely you did acquiesce in that situation.

306. Mr Jardine: I will deal with the extensions to the board. In 2005, the first extension was granted for a period of one year, which was near the end of the board’s life. The budgetary process in 2004 led us to call into question whether we had sufficient resources to sustain the Events Company. Quite late in the day, we secured the necessary resources to give us the confidence to go forward. By that stage, it was not going to be possible to have a new board in place at the beginning of June 2005, when the terms of appointments on the previous board expired. Therefore, the extension was limited for one year.

307. Dr McGinley referred to the appraisal report, which suggested that the person in question played a significant role on the board and that she was conscious of the conflict of interest issues, but that they had been addressed.

308. Mr Beggs: Do you accept that the minutes show that those issues had not been addressed?

309. Mr Jardine: I accept that the minutes show that they had not been addressed. That has been brought to light in the report. That information was not available to us when the extension was being considered. It is a relatively small board, which has subcommittees. That puts pressure on members. Incidentally, all the members, including the chairperson, are unpaid.

310. We felt that an extension was the most appropriate way to try to tide things over. The individual in question and other board members were recommended for appointment for a further year. We felt that that was proportionate, and it was a relatively short extension to the board’s life. The member was assessed, and that included evidence that she was suitable for reappointment.

311. Mr Beggs: Did you consider the minutes when determining how each member may have contributed?

312. Mr Jardine: We did not have access to the minutes when the submission was being made to the Minister.

313. Mr Beggs: I am surprised that the Department was not given the minutes of a body to which it is providing substantial amounts of public money.

314. The Chairperson: I suggest that we take a 10-minute comfort break after John Dallat has concluded his questions. Then, I will hand over to the Deputy Chairperson, as I have another appointment to attend. This is turning into a marathon session, so it is only fair that we take a break.

315. Mr Dallat: You must belong to the most good-natured organisation in the world, as there were so many things that were OK and that did not have to comply with the ordinary standard basic compliance. I would love to belong to such an organisation.

316. The icing on the cake was the lady who was awarded the PR contract. Despite the fact that a golf tournament engulfed a quarter of the entire budget of the NIEC, the individual concerned continued to attend meeting after meeting. Who ran the affairs? Was it the training manager?

317. Mr Jardine: The Department of Culture, Arts and Leisure gave the board very clear, unambiguous advice about how to manage that conflict of interests. I do not wish, in any way, to defend a process in which that advice was ignored.

318. Mr Dallat: What type of training and governance was provided for the former training manager over the four-year period that she was on the NIEC board? She was allowed to interfere in the planning of events in which she had a direct interest. It is a good job that the NIEC no longer exists.

319. Mr Jardine: The Committee will consider the NIEC in more detail in due course. An investigation is under way, so DCAL is not in a position to say a great deal about that, except to say that, for many people, the demise of the NIEC has led to feelings of sorrow rather than anger.

320. The NIEC undoubtedly brought very significant events to Northern Ireland. It was also undoubtedly part of the growth of a number of indigenous events here, and it had a number of other significant achievements. However, that does not detract from the very severe problems that the NIEC experienced in its last year or so.

321. The training that that individual had was provided by CIPFA. That individual was a member of quite a number of other boards.

322. Dr McGinley: The BIFHE board received training in 2005.

323. Mr Jardine: I do not believe that that situation occurred due to a lack of training.

324. Mr Dallat: That is what has troubled me all afternoon. The Committee has been told how highly skilled, well-trained and wonderful that person was — in fact, she did not have to subject herself to interview or any kind of vetting procedures at all. Despite that, she made the most fundamental error of all and attended meetings where there was a direct conflict of interest. That has to be a contradiction, and one that does not need repeating.

325. Mr Jardine: A public competition for that post took place. The individual concerned applied, as did many others, and was interviewed by the panel and recommended.

326. Mr Dallat: According to my information, she was ranked eighth. She was chosen for the position ahead of those people who were ranked fourth and seventh — she was not chosen on merit.

327. Mr Jardine: In the public appointments process, the selection panel manages a competition on behalf of DCAL. It is the job of the panel to identify a pool of suitable candidates that the Department then submits to the Minister. The Minister then selects the appointments based on the needs of the board to have a range of skills, and other considerations such as balance of gender and geography.

328. Within that group of the eight highest-ranked candidates, the person in question was the only female. The Minister was concerned at the lack of female representation. Outside of that process, through the central appointments unit, the Minister identified another female who subsequently came on to the board. In fairness, there was a public competition in this case.

329. The Chairperson: The meeting is adjourned for 10 minutes. I apologise that the Commissioner for Public Appointments is not here at present. The Committee will reconvene at 4.10 pm with Mr Beggs in the Chair.

(The Deputy Chairperson [Mr Beggs] in the Chair)

330. The Deputy Chairperson: If members are ready, we will continue with the questions.

331. Mr Hamilton: My first question is for Dr McGinley. Paragraph 3.31 of the Northern Ireland Audit Office report states that DEL told DCAL that it was not going to remove the former HANI training manager from the BIFHE board. DCAL said that that influenced its decision to extend her appointment on the Northern Ireland Events Company board. Do you accept that DEL’s unwillingness to take action with regard to BIFHE created difficulty for other Departments by boxing them in, in some respects, on whether they could make a decision or not?

332. Dr McGinley: I was in post at the time, and, first of all, I was satisfied that DEL were undertaking a very thorough investigation into the matter and into several issues. I accepted that the main issue lay with that Department. When we received the letter that told us what action had been taken, I sought solace — for want of a better term — in the fact that the investigation had not proven to be such that it required the immediate removal of the individual and that training was under way, and that subsequently influenced DCAL’s decision.

333. Mr Hamilton: Mr Jardine, appendix 3, on page 47 of the report, shows a letter that was written on 21 August 2007 to the former training manager from the chairman of the Events Company. That letter supports the training manager’s comments that she had asked for guidance as to whether she would be able to tender for the PR contract, around which the conflict of interest centred. Is there any record of her having sought guidance before tendering for the contract?

334. Mr Jardine: No, there is none.

335. Mr Hamilton: Do you have any idea when the chairman of the Events Company first learned of the PR contract and whether that was before or after the date on which the former training manager tendered for it?

336. Mr Jardine: To my knowledge, from looking at the records, the chairman was unaware of that until, probably, 13 or 14 April 2004. The chairman wrote to the chief executive immediately after that, so the problem revived around that time. As the contract was signed in early April, the chairman would not, as far as I am concerned —

337. Mr Hamilton: That points to the chairman learning of it after it was tendered.

338. It is quite a strange letter in that it seems to go against the evidence that was provided when the conflict of interest first arose. Do you have any idea how the chairman’s remarks last summer can be reconciled with what the Events Company said to the Department back in 2004?

339. Mr Jardine: I am not sure that it is possible to reconcile those, Mr Hamilton. I have read the Department’s record very carefully, and I believe that its account, as reflected in the report, is accurate.

340. Mr Hamilton: Paragraph 3.36 of the Northern Ireland Audit Office report states:

“DCAL also drew to our attention that the former HANI Training Manager was appointed by the Events Company on 12 June 2006, as a Human Resources consultant.”

341. Is there any sense in which that appointment constituted a further conflict of interest?

342. Mr Jardine: The timing of the appointment was unfortunate. I researched the background to the appointment, and I was advised that three companies were invited to tender on 22 May 2006 on a select-tender basis. The former board member’s consultancy was one of those companies. She was still a board member of the Events Company at that time, and, therefore, it was a one-year extension.

343. The closing date for tenders was 1 June 2006, which preceded the life of the board by approximately one week. I understand that the contract was issued around 12 June 2006. To reiterate briefly what I said in my opening statement, paragraph 3.53 of the NIEC’s management statement requires individual members not to place themselves in positions of real or perceived conflict of interest. I believe that there was a conflict of interest in this case. I can confirm that the contract has been terminated.

344. Mr Hamilton: Do you know how the additional conflict of interest was brought to the attention of the Department?

345. Mr Jardine: The fact that the contract was in place was brought to the attention of the Department when it was trying to understand and resolve some of the issues, including personnel issues, that faced NIEC. The Department has taken responsibility for the Events Company. As I said, the Department followed up by researching the background to the award of the contract.

346. Mr Hamilton: Was that conflict of interest recorded in the accounts of the Events Company as a related party transaction or anything similar?

347. Mr Jardine: I am not aware whether it was recorded, and I cannot give a definitive answer. If the Committee is content, I will provide that information to the Committee in writing.

348. Mr Hamilton: That is fine. It would be helpful for that correspondence also to contain any further detail on any issues that you consider would be useful to the Committee.

349. Mr Lunn: Mr Jardine, pages 47 and 48 contain conflicting information. Page 48 states:

“the Events Company, in June 2004, told DCAL that the former HANI Training Manager had accepted there was a conflict of interest between the two roles and that she offered to relinquish the PR contract rather than step down from the Board.”

350. However, three years later in August 2007, the chairman of the Events Company wrote to the former training manager to confirm:

“That at no time were you ever asked to resign from the board or relinquish this contract”.

Those two statements are entirely contradictory.

351. In June 2004, who from the Events Company told DCAL that the former HANI training manager acknowledged the conflict of interest?

352. Mr Jardine: The chairman of the Events Company provided that information at a meeting with DCAL.

353. Mr Lunn: I take it that the chairman met the former training manager to discuss her options?

354. Mr Jardine: That is how it was reported to DCAL at the meeting.

355. Mr Lunn: How can that be reconciled with the chairman’s claim that there had been no challenge to the training manager?

356. Mr Jardine: I carefully reviewed the Department’s records of the exchanges, and it cannot be reconciled. I defend the Department’s record, as reflected in the report.

357. Mr Lunn: A member has already asked about the presence of the former training manager, after she had entered into the PR contract, at board meetings where the event was discussed. Why do you think the chairman allowed such a fundamental breach of normal procedure?

358. Mr Jardine: I find that a difficult question to answer. Clear guidance was provided. The chairman may have considered that the presence of the former training manager was marginal or incidental to the business being discussed. He may not have seen it as a direct conflict of interest, but it is contrary to the guidance offered by the Department.

359. Mr Lunn: Earlier, it was confirmed to us that the chairman and all the board members received training in their roles and responsibilities. What training did DCAL give this chairman and when was that provided?

360. Mr Jardine: Specific training on governance and accountability was provided on 1 October 2003 for the chairman and chief executive. The chairman was a senior official in local government, so such an issue should not have presented a difficulty for him.

361. Mr Lunn: Was the Department aware of the chairman’s previous experience and record in local government, in relation to conflict of interest?

362. Mr Jardine: There no record of it in our files. The chairman was appointed in 2002 through public competition and had come top of the list. Consequently, he had been invited by the then Minister to take on the role.

363. Mr Lunn: We have talked much about probity and propriety. It appears that the chairman had a history of disciplinary action, following a conflict of interest while he was working for a different body. Perhaps Dr McGinley could comment: was the Department aware of that?

364. Dr McGinley: No. At the time, that was not taken into account in any way in the appointment.

365. Mr Lunn: Is that based on your recollection, or do you need to check?

366. Dr McGinley: I do not need to check; I can state that as fact. I was at the Department during the appointment process. I was not on the panel; I was not party to the decision. However, I was aware of the process, and as far as I am aware, no such evidence was given the Minister or the panel.

367. Mr Lunn: I accept that, but it was public knowledge. That should have come out in the process of assessing the suitability of a candidate for membership of a board or for chairmanship of a board.

368. Dr McGinley: I do not know the detail of what you allude to. This relates to sensitivity of information, and that information was not available to the Department or the appointing panel at the time.

369. Mr Lunn: We seem to be going over the same ground. The matter that I mentioned appears to be a surprise to you. It is a surprise to me that it is a surprise to the witnesses. That demonstrates the need for vigilance in such matters. The chairman is asked to make decisions and advise on conflicts of interest, yet, in a previous existence, he was involved in such a situation and had been disciplined for it.

370. Dr McGinley: That is not something that I was aware of.

371. Mr Jardine: Dr McGinley raised the issue of sharing information. Earlier, the focus of our discussion was on the exchange of information between Departments. I am not familiar with the matter to which Mr Lunn refers — it occurred outside the ambit of any Department. We have still not cracked the means of handling this type of information.

372. Mr Lunn: My last question has already been answered, but I ask it nevertheless for the sake of having a clear record. The training manager’s term was extended for 12 months; she was then offered another two years, which she apparently declined. Given the serious concerns about the PR contract, which were evident by then, how on earth was that reconciled by offering her two extensions?

373. Mr Jardine: I will reiterate the explanation for that. The first extension was relatively short — one year. We had received evidence from member assessment, as we did after that for the two-year extension. The first extension was predicated on the need to keep the board intact after a fairly difficult budgetary process. The second extension was as a result of decision, through RPA, that the company be transferred from DCAL to the Tourist Board. That had quite an unsettling and significant effect on the company in general. A review of what has happened in the last year, which is due soon, may prove a significant piece of the jigsaw.

374. The extensions were based on assessments of the member, both of which deemed her suitable for reappointment.

375. Mr Lunn: Do both of you accept that — unlike the BIFHE situation, when DEL said that it could not remove her — the Department had the power to remove that person from the board, because she was your appointee?

376. Mr Jardine: That is correct. The Minister appointed her.

377. Mr McLaughlin: According to the case study contained in the HANI report, DCAL received legal advice that there was a clear conflict of interest with regard to the PR contact. Under the articles of association of the Events Company, DCAL had the power to remove the former training manager from the board. Why did the Department not exercise that option?

378. Mr Jardine: That option was not exercised for two reasons, which I have already mentioned.

379. First, only a relatively short extension was planned at the time. Secondly, similar to the argument about the BIFHE board, the individual as a board member made a contribution to the board, which was recognised in the assessment. During the member assessment, the conflict of interest was specifically referred to and dealt with. The member accepted that and said that she would ensure that it did not happen again.

380. In addition, because the board was relatively small, to appoint a replacement would have probably required a public-appointment process, which takes a fair bit of time and would have meant that the board was deprived of at least one member for some months. Therefore, in consideration of those factors, the judgement was made to recommend to the Minister that the board be appointed en bloc for a further year.

381. Mr McLaughlin: DCAL had received clear legal advice that there was a conflict of interest. The option of remedying that situation was considered and presented to the individual, but they declined to resign from the board. Do the guidelines provide DCAL with that element of discretion — that it can recommend reappointments for the board en bloc, even for a short period?

382. Mr Jardine: Yes. I believe that it can do that for up to 18 months initially —

383. Mr McLaughlin: I am talking about circumstances in which the Department received legal advice about a conflict of interest; I am not querying whether the Department had the right to extend the reappointment for up to 18 months.

384. Mr Jardine: The legal advice did not relate to whether that person’s contract should be terminated; there was discretion, which was exercised by the chairperson, as to how that should be dealt with.

385. Mr McLaughlin: I am talking about you and your responsibility, and about the advice given to the Minister. I am talking about the wider public interest. The small board had difficulties with some evidence of misjudgement and the wider implications involved, and had made a particular call. How did you find it possible to go along with that or even be part of it?

386. Mr Jardine: I certainly do not accept that the Department went along with it; we intervened fairly decisively when it came to our attention. The chairperson took action with his board member. The management framework places a responsibility on the chairperson as to how to manage the board. We accepted — albeit not with a great deal of enthusiasm — that the option that the chairperson took should stand, we rolled forward another 12 months and we had a generally positive assessment. The member recognised that she needed to be careful with that particular aspect of probity. On that basis, we made the judgement that it was appropriate to offer an extension, as with other board members.

387. Mr McLaughlin: We can only conclude from what you say that your ignorance of the fact that the common-sense precautions that should and could have been taken, but were not taken — for example, absenting herself from discussions in relation to the conflict issue — played no part in the recommendation to extend, which was presented to the Minister.

388. Mr Jardine: Our judgement would certainly have been influenced if we had been aware that the clear guidance that the Department had issued was not being implemented. Another aspect that influenced the judgement, and which is referred to in the report, was the correspondence between the commissioner’s office and the board member in relation to the appointment to the Office of the Commissioner for Public Appointments in Northern Ireland select list, and the fact that the commission decided not to make that appointment, although that was a slightly different set of circumstances.

389. I can understand fully why that letter, which was written to an individual applicant for a particular list, was not shared with other Departments for the reasons we have already discussed, which related to due process, human rights, etc. We might have taken a different view if we had seen that letter.

390. Mr McLaughlin: In relation to the action of the chairperson — which you said you accepted without any great enthusiasm — in my view that implied and required a declaration of interest and a physical withdrawal from the meeting at that point. However, did you not consider it necessary to double-check that those minimum responses to the conflict issue were being complied with?

391. Mr Jardine: We would not necessarily have been made aware of the agenda for board meetings, or whether a particular event would have been on the agenda. We would not routinely see the minutes of a board meeting subsequent to the meeting. In fact, the board met only every two months, and normally minutes are not approved until they have been considered by the board. There is an inherent time lag, but the answer is no — we did not systematically check the minutes of every board meeting. However, subsequent to that, we took it in good faith that the chairperson had dealt with the issue and that the guidance that we had offered was being implemented.

392. Mr McLaughlin: Your advice pointed to two options, rather than three: give up the contract or resign from the board, neither of which was taken up. Nevertheless, you find yourself subsequently in a position where you are recommending extension and you do not know whether the third option — for which you had the least enthusiasm, according to your own comments — was even being applied.

393. Mr Jardine: The correspondence with the chairperson took place within a slightly narrower framework. It was advice on handling conflict of interest within the board. The discussion on handling the relevant conflict of interest had been part of a meeting that had been held with the chairman. As has already been identified, the chairman had taken his own view on how to handle it.

394. Mr McLaughlin: We read on: the same section, on pages 48 and 49, deals with DCAL’s own record. It was concerned at the media launch of the golf tournament. The former training manager, in her PR capacity, used her personal business cards in the Event Company’s folders. DCAL’s recorded view is that that was a:

“conflict of interest and a serious error of judgement which called into question her suitability for service in a public body”.

395. If DCAL felt as strongly as that, why did no one raise the issue with the former training manager?

396. Mr Jardine: We understood that it was being dealt with by the chairperson of the board. We saw it as an integral part of the conflict of interest issue. It was related to the same event.

397. Mr McLaughlin: No alarm bells sounded as a result of the history of the individual? Did no one link the various events? The name, “Events Company”, is appropriate, is it not? Did no one keep track of the situation? Was there no method of doing so?

398. Mr Jardine: As I have said before, clear guidance is available in the management framework and the financial memorandum on a range of probity issues that covers much more than conflict of interest. Clear roles and responsibilities are set out for chairpersons, chief executives and board members who are apprised of all this material.

399. The Department took the view that it had referred the matter to the chairman, and that he would deal with the individual concerned in the broader context of that particular event.

400. Mr McLaughlin: Is it accurate to say that no concerns were raised within the board?

401. Mr Jardine: Our advice from the chief executive was that a number of board members had expressed concerns about use of the Events Company folders.

402. The Deputy Chairperson: I address my question to Mr Thomson, the Treasury officer of accounts. In paragraph 3.37, we are told that, as a result of this case, a working group of senior officials drew up guidance for Departments on probity and public appointments. However, I note that both DCAL and DEL renewed the former training manager’s public appointments subsequent to the issue of that guidance. Can members be confident that the guidance is now applied properly?

403. Mr David Thomson (Treasury Officer of Accounts): They can. That guidance was discussed at permanent secretary group in January 2005 and during that year action was taken. Permanent secretaries have discussed the guidance subsequently and the head of the Civil Service issued a further note to permanent secretaries in February 2007, reminding them of those changes. The changes are in place.

404. The Deputy Chairperson: The guidance was issued in January 2005, but one of the appointments was made in June 2005. Will you review the situation to ensure that the guidance is applied?

405. Mr Thomson: It was reviewed during 2006, and the head of the Civil Service wrote again to permanent secretaries at the beginning of 2007.

406. Dr McGinley: A “dear accounting officer” letter was issued in July 2007, reminding accounting officers of their responsibilities to check information and retain records.

407. The Deputy Chairperson: It has been a long session. Dr McGinley, Mr McConnell and Mr Jardine —

408. Mr Dallat: Chairperson, before we conclude, I would like to make a couple of comments.

409. The Deputy Chairperson: Please be brief — it has been a long session. If members are agreeable we might take a few brief questions, but we will submit additional questions as a follow up.

410. Mr Dallat: I wish to make available two letters that I referred to earlier. There has been a lot of discussion about conflicts of interest. During a private PAC meeting I made it clear that at an early stage, before the term of the current Assembly, I was lobbied by an Assembly Member on behalf of Mrs Williamson. We all know that we received a letter from another Assembly Member recently, and I think that this Committee needs to seek guidance on what is appropriate and what is not; that may be an issue for Mr Thomson.

411. I am not mentioning that as a complaint but certainly in my experience I have never been lobbied by any Assembly Member about any individual who may feature in an inquiry. Clarity has to be obtained on that issue in the interests of everybody, including those who may have been involved.

412. The Deputy Chairperson: Thank you. Members it has been a long session and we still have another witness to hear from. If there are any pressing questions I will take them now. If not, questions can be submitted in writing through the Committee Clerk if that is agreeable to members?

413. Members: Agreed.

414. The Deputy Chairperson: It is clear from evidence presented to us today that the agency failed to ensure that proper financial management and control arrangements were established and maintained within HANI and THTC. Those failings allowed certain staff within HANI to act improperly and resulted in a substantial loss to creditors. That cannot be regarded as acceptable.

415. The commissioner’s guidelines regarding public appointments put the onus on the Departments to ensure that individuals appointed to departmental bodies are committed to the principles and values of public service and are capable of performing their duties with integrity. Departments need to monitor and closely follow minutes etc to ensure that that is happening.

416. What we have heard today suggests that during the period covered by this report, Departments were not fulfilling their responsibilities and this had an adverse affect on public confidence and the credibility of the appointments system. That has got to change and our report will be directed toward learning lessons. We expect your Departments to subsequently put any lessons learned into effect. Thank you for coming.

417. Dr McGinley: Thank you.

418. The Deputy Chairperson: I would like to welcome the Commissioner for Public Appointments, Mrs Felicity Huston. You have had a long wait Mrs Huston.

419. Mrs Felicity Huston (Commissioner for Public Appointments): I have, but it has been very interesting thank you.

420. The Deputy Chairperson: Mrs Huston, you have been working in partnership with the Comptroller and Auditor General on this review, providing expert advice and comment. Committee members welcome this opportunity to hear from you — this is your first appearance before the Public Accounts Committee — and you are here to clarify any matters arising from the earlier part of the session. You seem to share the Comptroller and Auditor General’s concern about the handling of the cases set out in this report; I would like you to give your views on what you have heard.

421. Mrs Huston: Thank you very much, Deputy Chairperson, I appreciate the Committee’s invitation to come along and speak. I will try to pick up on points that have been raised, but if I omit anything, I am more than happy to give clarification.

422. I realise that the hour is late — I am the one who has been perched on the chair back there, so I am well aware of it. I appreciate the Comptroller and Auditor General’s invitation to work with him on the report, which I hope will have profound and beneficial implications for the public appointments process.

423. Looking at this case study demonstrated two things. First, when questions are raised about the probity or behaviour of individuals serving on public bodies, there is a lack of willingness to take decisive action. Secondly, there is the behaviour of individuals on public bodies.

424. When someone is appointed to serve on a public body, he or she is there on behalf of all of us. Those appointees are in place to spend my money and your money and to provide services for us all. They do not serve on public bodies to make money for themselves or for any organisation that they might be connected with; that is not what it is about.

425. We often hear the line that Northern Ireland is a very small place and that it is awfully hard to get people to serve on public bodies if they are expected to exercise restraint or behave in a dignified manner. I am sorry; I do not accept that. If one looks at public life, hundreds — even thousands — of people serve on public bodies without trying to benefit financially from that. Individuals should not require training to understand that position. It is blatantly obvious how people should behave. The labourer is worthy of his hire, and it is important that people who serve on public bodies are recompensed for their time, but they should not seek to make a few quid on the side as well.

426. I hardly dare to admit that I used to be a tax inspector — that is why I do not mind being unpopular as the Commissioner for Public Appointments. Coming from that background, I have a certain view about issues such as fraud, evasion, avoidance, good behaviour, and so on. However, I do not think that my world view is particularly different from that of most people in Northern Ireland. We must expect the very best from those who serve on our behalf on public bodies. If they do not behave well, it is up to the chairperson and those responsible for their selection to deal robustly with the matter. Individuals should not be reappointed if they have not had a decent and appropriate performance appraisal of their work on a board in the past.

427. This afternoon, we have heard much about such appraisals and about how x or y had a good appraisal and that was why they remained on boards. However, I see some very poor appraisals during my office’s audits of competitions. I see appraisals that the chairpersons have not even bothered to sign off. In one example, a body met six times a year, shall we say, and an individual who attended it only once was assessed to be a very good board member. One wonders where that assessment came from. Most recently, I had a letter from a Department asking me whether I would be willing to agree to the extension of the appointments of members of the Northern Ireland Events Company for another year. One has to wonder what their appraisals said, given what is in the public domain. Performance appraisals are not what they should be. I am trying to encourage Departments to take them seriously, and I will continue to do so, because they are a very important tool for judging how people behave on boards.

428. The selection process — the way in which people are appointed — must be rigorous. Selection panels must not shy away from what many people find is a somewhat uncomfortable topic. A nil return in the box referring to conflict of interest or probity, on the application form, should not mean that the panel moves swiftly on to the next question. Panels must tackle that matter head on and discuss it. Even if the applicant does not realise that there may be issues, the panel must go over the matter with them. I have made that very clear to the Office of the Commissioner for Public Appointments in Northern Ireland assessors who serve on my behalf on public competitions. I have told them that they are not allowed to let that matter go.

429. However, despite that being clearly mentioned in the code of practice and the guidance issued, extremely senior civil servants still sit on selection panels and do not want to deal with conflicts of interest. In fact, some of them refuse to discuss probity, or they refuse to record anything that has been discussed about those issues at the interview. I recently issued further instructions to my assessors to say that, if they encounter such an attitude, rather than leaving it, or dealing with it later, they must halt the competition and approach my office for further advice, because I find it so reprehensible that that would go on.

430. On the subject of assessors, I wish to make one point clear. I have a panel of 40 OCPANI assessors. The submission from the former HANI training manager mentioned her involvement in the process of being appointed as an assessor. She mentions being personally invited by my predecessor to apply for the post of independent assessor. The letter that she received was the same as that received by 48 or 50 other people. It was a standard letter; not a personal invitation. It was an invitation that was made to a particular group of people. I have copies of the letter, if the Committee wishes to have it for the record.

431. That was a quick canter through some of the key issues, and if there are particular points or other aspects that members would like me to discuss, I am more than happy to answer questions.

432. The Deputy Chairperson: The case studies that we have examined today give rise to great concern about the public appointments process during the period covered by the report. Do those weaknesses still exist?

433. What, in your view, are the key challenges that are required to strengthen the public appointments process in Northern Ireland and what actions are being taken to bring these forward? Also are there any barriers that need to be overcome?

434. Mrs Huston: I will endeavour to cover as many of the questions as is possible. I always say that the administration of public appointments in Northern Ireland is like a patchwork quilt. There are bits here and there and it is not a coherent scenario at all.

435. I regulate about 730 appointments out of the approximate 2000 appointments that there are in Northern Ireland; that is only those that are defined as public appointments. There are appointments which, in a normal context, one would call public appointments. However these appointments are not public appointments legally and I have nothing to do with those, nor does any other Commissioner.

436. I do not regulate, for example, the appointments that the Northern Ireland Office makes to well-known bodies such as the Parades Commission or the Human Rights Commission. I also have no role with Courts Service appointments or quasi-judicial appointments such as those to the Legal Service Commission or anything of this nature. Gaps such as those are regulated by my colleague in England. However I am not sure if all of the Courts Service appointments fall under their remit.

437. We also have bodies who volunteer to be regulated and others that seem to sort of slip by the Commission. I sometimes feel that if I do not read the ‘Belfast Telegraph’ on a Friday night and spot the advert that I would never know that those appointments existed. Therefore, it is very difficult to keep track of all appointments. It is also a very confusing situation for those who are trying to work within the environment and for the stakeholders on the outside whose eyes glaze over when I try to explain it to them.

438. The legislation under which I operate is drawn up under a prerogative Order. This Order lists specific bodies whose appointments I regulate. The Order also refers to pieces of legislation under which the other bodies that I have to deal with can be found. The legislation is currently being revised, which is a very positive step, and the majority of those public bodies which are currently under voluntary regulation will soon be joining the club under compulsory notice. However I am a bit disappointed by how long the revision is taking.

439. In March 2006, the Secretary of State for Northern Ireland announced that all appointments for all public bodies should fall under my remit as part of the review of public administration changes. However it is now two years later and we still do not have that piece of legislation signed off. It is not legislation that goes through this Assembly — the prerogative Order is signed by the First Minister and deputy First Minister. In an ideal world I would like to see the legislation finalised very soon because it does give a really clear indication and a powerful signal to the outside world of what the Commission is trying to do. Its introduction will also make things more coherent.

440. The other issue is one of compliance within the system. There is a code of practice. However, I think I could best sum up the attitude that I see on a daily basis by mentioning a phone call that one of my officials took recently from a civil servant who said: “well we know who we want to appoint, now how do we get round this code of practice.” That is what I deal with on an almost daily basis. To be honest, more time is spent in trying to get round the code of practice and think of ways of avoiding it than actually just getting on with it and doing what it says.

441. As well as my code of practice which lays out basic guidelines and some detail, there is also a best practice guide issued by the central appointments unit of the Office of the First Minister and deputy First Minister (OFMDFM). Many Departments have their own particular guidance as well but, to be honest, it is more honoured in the breach than in the observance.

442. In addition, we have an ethos in relation to conflicts of interest where there is almost a fear of facing down candidates who are not straight about their business dealings and potential conflicts of interest. I have just finished an audit round of competitions that were carried out in 2006-07. Time out of number, both at senior and other levels, conflicts of interest were ignored and what the candidate stated on their application form was accepted — there was no testing of the information. Even in highly sensitive competitions where the conflict is as blatant as any elephant in the living room, it is just ignored. That is most unacceptable. When this has been picked up in audits in the past, Departments have been told to do something about it and ensure that it is dealt with. However it is just not being dealt with and this is very disappointing.

443. I recently embarked on a review and re-write of the current code of practice, which has been in place for many years and is very much a carry-over from the English code. In reviewing it I want to make it more appropriate to Northern Ireland and one of the things which I think that we will have to include in this is — rather than guidance — very firm instructions saying what must be done, particularly in relation to things likes conflicts of interest.

444. I have to say given the culture that is demonstrated frequently, I really do not know what I can do to enforce compliance. I can say: “You must do it”. However, that does not mean that it will be done. That is one of the problems of the post of commissioner.

445. There are no sanctions. The only recompense that someone can have is when I judge that an appointment does not comply with my code. The matter can go to court or to a tribunal. However, I cannot overturn an appointment. Indeed, a while back, a complaint was made about an appointment. On investigation, we found that several of the appointees should never even have been interviewed, never mind appointed. They had not passed the criteria. After a tussle with the Department about whether I was even entitled to investigate the complaint, I received a response from the permanent secretary that said: “OK, but what can I do about it? The appointments have been made now.” If the letter could have shrugged its shoulders, it would have. In some ways, that crystallises the problem that when things go wrong, nothing can be done. Individuals should be able to have some form of redress without having to go to court.

446. You asked about key changes. The culture that I have discussed must change. There needs to be recognition that public appointments are important all of the time. They are important to the Committee and for the people who have worked to provide responses for the meeting. However, in a couple of weeks’ time, they will not be important at all; nor, indeed, will they be until the next embarrassment or crisis occurs. That is what happens. Appointments are pushed to the side as not being terribly important, until one goes wrong, and then there is a big fuss.

447. A genuine commitment to open and transparent process is needed. That would also lead to ensuring that the lower-level staff who run competitions have been trained and understand what they must do. Recently, we discovered that the staff who run competitions in Departments have had no training whatsoever in public appointments. Therefore, they do not understand why I require them to carry out various tasks and why it is important for them to follow certain guidance.

448. A more coherent approach is also needed both in Departments and across the Civil Service. A recent example is when two units of the same Department, who shared the same room, ran high-profile, sensitive appointments competitions at the same time, but never spoke to each other — not even to ask what the other unit was doing or whether they should share good practice. They were like two toddlers running along, but never speaking to each other. Ultimately, that creates confusion.

449. One of the best solutions to that problem, and others that have been mentioned, would be some form of central unit that runs competitions. That would not remove the involvement of Ministers, senior officials and others in setting criteria, being involved in the selection process, etc. However, administration would be run by one unit and, therefore, good practice would be shared. Eleven Departments would not do 11 different things. That could achieve the information sharing that has been knocked about in today’s discussion. The opportunity for that would be created if one unit were to hold all of the information on everyone who is involved in public appointments.

450. The term “blacklist” has been knocked about in the discussion. That is an emotive term; nobody wants its use. Suggestions have been made in the press that there were blacklists in the past. People have come to me and said that they know that they were on a list. They may have believed that they were on a list, say, for example, because they were too stroppy when they joined a public body and that, therefore, they were not reappointed. We do not want such a situation. However, we want information to be shared properly. A central unit would facilitate a much easier way of doing that and would be beneficial.

451. Finally, I want to make a plea for myself and my role as commissioner. In Scotland, there is a Commissioner for Public Appointments. Her post was established by a Scottish Act of Parliament, which gives her clear independence, responsibilities and duties. Her budget is voted on by the Parliament. She can appoint her own staff and choose her own office premises, and so on. She also has the power to halt a competition if she believes that it does not comply with her code of practice.

452. By contrast, as I mentioned before, my post was established by prerogative Order, which is more like a mission statement than an Act of Parliament or clear legislation. I do not have independence over my budget. My staff are allocated to me by OFMDFM and remain on that Department’s establishment throughout their time with me. I am paid to work two days each week. At present, I have two staff — an administrative officer and a deputy principal; that is all.

453. For the last year, a Northern Ireland Audit Office auditor has been seconded to me to enable me to carry out those duties, and I am grateful for that. There is a programme to appoint a permanent auditor, but, to put it mildly, I have limited staff. A review of the work of my office was carried out — which took 16 months — resulting in a proposal to appoint one other clerical member of staff. However, it is only a proposal.

454. I work in Castle Buildings at Stormont, and, as some members know, that it is one of my main bugbears because it is right in the middle of the Civil Service; there is no independence and it causes confusion. OFMDFM sponsors me and controls my budget, and, therefore, there is an innate conflict because I audit its work on public appointments — in fact, I am currently working on two critical reports on its work, yet it is the Department that controls my budget. However, civil servants do not recognise that conflict — they think that is fine and that everybody just separates it all out, but I think that it is unacceptable, and I would very much like something done about it.

455. In his work ‘The Prince’, Machiavelli said that a prince who was loved by his people had no power; only a prince who was feared by his people had power because he had the sanction that came with fear, and love has no sanction. Civil servants may fear me or dislike me but I have no sanctions. If something is not compliant there is not much that I can do about it. All I can do is request that they change it in future, but that is about it. That is a quick romp through all my woes and miseries and some of my experiences throughout the Departments. I am happy to answer any questions.

456. The Deputy Chairperson: Some members have indicated that they want to ask questions. I remind members that we have some administration to complete after the session.

457. Mr Dallat: That was a frank piece of evidence that should not be ignored. I hope that it forms the basis for change. The media has recently picked up on this, and, under freedom of information legislation, has discovered that a large number of people from outside Northern Ireland have been appointed to public bodies. Indeed, more recently, we have discovered the cost of flights and so on.

458. The need to involve the wider community in the affairs of the Assembly is absolutely fundamental. Does Felicity have any advice on how to encourage people to become involved in public bodies and to put an end to finish once and for all what I tend to call the “social circle” that pertained during direct rule and, unfortunately, lives on?

459. Mrs Huston: I have been highlighting to Ministers, for the past two years, the number of non-residents on public bodies, and, therefore, I am glad that issue has entered the public domain. I am not opposed to a variety of people serving on public bodies; we need a mixture, and there were times when no one wanted to come near us, so the country has clearly changed. However, it is important to ensure a mixture, particularly on the key bodies that decide on services and charges for the local community.

460. Constant reinforcement of the fact that this is an open process that welcomes candidates from all walks of life is fundamental to attracting more people to serve on public bodies. We must examine the language used in advertising and on application forms. It is a constant battle to encourage Departments not to write in Civil Service language, but to write in a language common to all. However, that has improved.

461. We must advertise in suitable places — not the public notices in the paper on a Friday night. One of the most positive things in the past year to 18 months has been that the Belfast Metropolitan College has offered a 10-week course called ‘Get on Board’, which is aimed at people interested in serving on public bodies. We have had over 90 or 100 graduates through the course. I go to talk to each course and there is a marvellous mixture of people. There are claims that people do not want to apply, but we must remember that those people sacrifice their evenings or days to attend three hours each week for 10 weeks. Those attending pay for courses with their own money and give their time, which proves that such people exist. The course is a positive development, and it is the only accredited course of its type in the UK. In addition to bringing many people in, the course also enables people who have never served on public bodies to be appointed. That positive story is being pushed in order to encourage people.

462. Mr Hamilton: My question about blacklisting has already been addressed, but I am interested in Mrs Huston’s comments about how a central unit might overcome such problems.

463. When assessing whether someone should be appointed or reappointed, is there a threshold for the seriousness of an illegal act that he or she has committed; must the police have submitted a case for prosecution, or are standards somewhat lower?

464. Mrs Huston: Yes, absolutely. I mentioned my previous profession as a tax inspector. As a consequence of most tax laws, people do not end up in court to be fined for doing something wrong. We do not want anyone who has been involved in criminal activities to be on public bodies, and a civil matter such as fraudulently duplicating invoices is not acceptable; however, there is no criminality threshold. People raise the example of parking tickets, and, obviously — unless one is like Stephen Nolan who has shovelfuls of them, in which case, questions about proper behaviour might have to be asked — that is not a problem. Common sense must be applied.

465. Mr Hamilton: Yes, different reasoning applies to different circumstances.

466. Mrs Huston: That is right. To a certain extent, different considerations relate even to different bodies. Consideration should be given to anything that might bring a public body into disrepute or cause embarrassment, and, from then on, we can crank it up.

467. The Deputy Chairperson: It is worth noting that no one on the Committee initiated the use of the word “blacklist”, which came from civil servants.

468. Mr Lunn: I was going to ask about information interchange between Departments, but that question was answered when Mrs Huston said that she would love to see a central unit established to co-ordinate those matters, and I was glad to hear that.

469. Concerning conflicts of interest or a previous criminal record, bearing in mind that, in this country, fairly trivial offences carry penalties, if it came to light that someone had submitted an application form — perhaps for a position with a high salary — and had failed to disclose relevant information, could you impose any sanctions?

470. Mrs Huston: No. If such a case came to me instead of directly to the Department, I would have to refer to the Department, the permanent secretary or the Minister, and offer my opinion that such an individual was probably not appropriate for public appointment. However, I could not withdraw that person’s application.

471. Mr Lunn: As we heard earlier, sometimes, even the Department appears not to have the right to remove such people. Should a false declaration be a more serious offence, perhaps involving possible prosecution?

472. Mrs Huston: That is an interesting point. Job applications sometimes include a signed declaration that the applicant has not knowingly deceived. The grading, or scaling, of such issues is the difficulty. There would be no problem if the offence had been significant, such as having been found guilty by an organisation of improper professional conduct. However, if the offence had been small, such a declaration would be difficult to define, and, given that there is little enforcement of the rules now, people would run even further from enforcing that new rule.

473. Mr Lunn: You were previously a tax inspector, and I was previously an insurance man. The rule in the insurance business is: when in doubt, disclose.

474. Mrs Huston: Yes, absolutely, and I would always encourage people to share information. Often, genuine individuals disclose information on application forms that does not create a conflict of interest. Nevertheless, unnecessary disclosure is far better than failing to disclose relevant information. My grandmother always said to tell the truth and shame the devil, and that is what it is about — disclose everything.

475. Ms Purvis: In your initial comments you painted a very bleak picture of the public appointments process. I know that, in the past, the public perception of public appointments was one of cronyism: it was a case of not what you know, but who you know. There have been developments, such as the Peach guidelines and the Nolan principles. Appendix 4 of the HANI report sets out the working group recommendations on probity and public appointments. One of those recommendations was that:

“Departments should consider asking candidates to sign a declaration indicating their commitment to seven principles of public life.”

476. Has that recommendation, or any of the others, been implemented? Apart from what you would like to see in legislation, how do you feel about the report’s recommendations?

477. Mrs Huston: One of the difficulties is that the Departments have been given leeway and discretion, which one should want to do. However, I know from discussions that unless it is stated that Departments must do something, they will not necessarily do it. Some Departments will apply everything while others will apply only some of the recommendations. Some Departments do a better job and have their own unit that runs those processes, so that they will implement everything, but others do not. There are people who do a particular job and then find themselves carrying out appointments, meaning that the recommendations are not implemented properly. It is a hit-and-miss process. There is no thorough and robust method for implementing those recommendations. I could probably find examples in which eight of the 12 recommendations are not being implemented — in different competitions, not universally. It is not as straightforward as that.

478. Ms Purvis: You talked about a central unit that would administer and regulate the appointments processes. It seems that the way to build confidence in a public appointments system is to have it regulated. How would that apply to ministerial and non-ministerial appointments?

479. Mrs Huston: I should just clarify one point. At the moment, the Departments run the competitions and I regulate them. Just for the record, I, as commissioner, do not want to run the competitions. The civil servants will continue to run the competitions and I will continue to set the standard. I want to put that on record in case the message gets back that not only do I wish to regulate everything, but I want to run the competitions too.

480. I am sorry, I got slightly sidetracked by that. What was the second part of your question?

481. Mrs Purvis: How do you regulate ministerial and non-ministerial appointments?

482. Mrs Huston: There are varieties of those types of appointments, such as so-called third-party organisations, which the Westminster PAC, as a result of its Emerging Business Trust report, said should fall under the remit of my office. That report was implemented about 18 months ago, and since then, working with DFP, a list has been drawn up of non-ministerial bodies that will fall under my remit and will be subject to what is called “light touch” regulation. Final guidance has yet to be drawn up on exactly how that will be operated, because there have been extended discussions about the bodies that should appear on that list. I felt that the list was a little sparse, to say the least, to start with. DFP are having another rattle at it to see if we can produce a few more.

483. Those organisations will have one of my assessors allocated to their competitions. We expect to set the criteria that candidates will have to meet in order to be interviewed, and to carry out standardising. That is being introduced for those bodies that fall within that particular definition of what is currently identified as a third-party organisation. There are many other organisations such as task forces, report groups and review organisations that are not regulated. Nobody knows how people are appointed to those bodies.

484. The Deputy Chairperson: It has been a long session. Thank you for coming, Mrs Huston. Your evidence to the hearing has been invaluable, and I have no doubt that some of our recommendations may be guided by some of the comments that you have made. The formal hearing is at an end. Thank you for your contribution.

Appendix 3

Correspondence

Chairperson’s letter of 21 April 2008 to
Dr Aideen McGinley

NI Assembly Logo

Northern Ireland
Assembly Public Accounts Committee
Room 371
Parliament Buildings
BELFAST
BT4 3XX
Tel: (028) 9052 1208
Fax: (028) 9052 0366
Email: Jim.Beatty@niassembly.gov.uk

Date: 21 April 2008

Dr Aideen McGinley
Accounting Officer
Department for Employment and Learning
Adelaide House
39-49 Adelaide Street
Belfast
BT2 8FD
Dear Aideen

Re: Public Accounts Committee Evidence Session 17 April 2008

Further to the evidence session at the Public Accounts Committee on 17 April, which you attended, please provide the following additional information which members requested at the meeting:

1 Excluding the former HANI Training Manager, please advise the Committee if any person formerly associated with HANI, either as a Council member or an employee during 1997 or 1998, subsequently went on to take up a public appointment.

2 Has the former HANI Training Manager been successful in obtaining any contracts from Government departments in her current business?

3 I refer to the footnote 15 on page 42 of the NIAO report. Please provide details of all payments made by your or any other department to the NI Hotels Federation.

I should be grateful for a response by 6 May 2008.

Yours sincerely

John O’Dowd
Chairperson
Public Accounts Committee

Chairperson’s letter of 25 April 2008 to
Dr Aideen McGinley

Northern Ireland
Assembly Public Accounts Committee
Room 371
Parliament Buildings
BELFAST
BT4 3XX
Tel: (028) 9052 1208
Fax: (028) 9052 0366
Email: Jim.Beatty@niassembly.gov.uk

25 April 2008

Dr Aideen McGinley
Accounting Officer
Department for Employment and Learning
Adelaide House
39-49 Adelaide Street
Belfast
BT2 8FD

Dear Aideen

Re: Public Accounts Committee Evidence Session 17 April 2008

Further to the evidence session at the Public Accounts Committee on 17 April, which you attended, please provide the following additional information:

(a) The Committee was told (page 11 of the transcript) that legal advice on information sharing had been obtained by DEL, from the Departmental Solicitor’s Office, in December 2003. Would you please provide a copy of that advice to the Committee?

(b) The Committee was also told (page 26 of the transcript) that legal advice had been obtained, from the Departmental Solicitor’s Office, on the possibility of termination of the former HANI Training Manager’s appointment on the BIFHE Board. Would you please provide a copy of that advice to the Committee?

(c) Would you please provide the Committee with copies of the two EU Irregularity Reports submitted to the European Commission, in connection with the SELECT and Multi-skilling programmes?

(d) The Committee has received correspondence from Brian Adgey, former Chairperson of THTC, about the solvency of THTC. Mr Adgey is adamant that at no time did THTC trade while insolvent, that its affairs were managed in a commercially professional manner at all times, that all debts were paid after winding up and monies were returned to T.E.A. Can you please comment on this?

I should be grateful for a response by 6 May 2008.

Yours sincerely

John O’Dowd
Chairperson
Public Accounts Committee

Correspondence of 6 May 2008 from
Dr Aideen McGinley

FROM THE PERMANENT SECRETARY
Aideen McGinley

Department of Employment and Learning Logo

Adelaide House
39-49 Adelaide Street
Belfast BT2 8FD
Tel: 028 9025 7833
Fax: 028 9025 7878
email: permanent.secretary.office@delni.gov.uk

Mr John O’Dowd
c/o Jim Beattie
Clerk to the Public Accounts Committee
Public Accounts Committee
Room 371
Parliament Buildings
Stormont
BELFAST
BT4 3XX

6 May 2008

Dear John

Public Accounts Committee Session on 17 April 2008 - Hospitality Association of Northern Ireland

Thank you for your letters of 21 and 25 April 2008. This response covers all the questions raised in your first letter and the last question raised in your second letter. I am writing separately in response to your other questions. The following paragraphs include advice and information supplied to me by DCAL and OFMDFM.

1. You asked about public appointments held by persons formerly associated with HANI. I enclose a list of names of persons, obtained from OFMDFM’s records, who may have been connected with HANI and who also hold (or held) public appointments. However, I have to advise you that this information must be treated with utmost caution, as we have no other personal information relating to those associated with HANI (eg addresses, dates of birth, etc) that would clearly identify them as the same people as those on the attached list.

2. As far as DEL and DCAL are concerned, records dating back to 2003 show that no contracts have been awarded to the former Training Manager.

3. Only two payments were made to the NI Hotels Federation by DEL in 2000: for £9,909.81 for a Hospitality Careers Day; and £7,854.70 for a NIHF conference. DCAL have not made any payments to the NIHF since 2003.

4. You asked for a comment on Mr Adgey’s recent statement that: THTC was managed in a professional manner; it did not trade whilst insolvent; and all funds were returned to the Agency. Whilst I can advise it is true that all funds were recovered, the Agency’s records show that in July 1997, senior officials were concerned that THTC was “technically insolvent”. Indeed, I note that an insolvency practitioner was consulted at this time, and it was also his view that THTC was “technically insolvent”. On 31 July, the Agency decided that THTC was in breach of its contract with the Agency as it was “unable to pay its debts within the meaning of Article 103 of the Insolvency (NI) order 1998”. Following discussions and an offer of financial assistance which was accepted by the THTC Board, THTC ceased trading from 31 August 1997.

Yours sincerely

AIDEEN MCGINLEY

Name

Body

From

To

John Herlihy
Portaferry Hotel

Strangford Lough Management Committee

10/03/1992

09/03/2001

NI Tourist Board

01/04/1990

31/03/1993

Eileen Kennedy
Catering Manager QUB & Former President of the NI Hotel and Catering Association

Industrial Tribunals

23/03/1993

28/07/2011

Governing Body of Belfast Institute of Further & Higher Education

01/04/1998

31/07/2007

Catering Industry Training Board

12/11/1986

31/07/1989

John Mooney
Hotel Management

NI Tourist Board

01/01/2003

31/12/2008

Rodney Watson
Killyhelvin Hotel

Drainage Council

01/10/1997

30/09/2005

Michael Edward Boyle
Saintfield Road
Belfast

Governing Body of Dominican College, Belfast

23/04/1998

29/12/2009

William O’Neill
Donemana
Strabane

Fishery Conservancy Board

01/08/2005

31/07/2011

Northern Ireland
Assembly Public Accounts Committee
Public Accounts Committee Room 371
Parliament Buildings
BELFAST
BT4 3XX
Tel: (028) 9052 1208
Fax: (028) 9052 0366
Email: Jim.Beatty@niassembly.gov.uk

Date: 21 April 2008

Mr Paul Sweeney
Accounting Officer
Department of Culture, Arts and Leisure
Interpoint
20-24 York Street
Belfast
BT15 1AQ

Dear Paul

Re: Public Accounts Committee Evidence Session 17 April 2008

Further to the evidence session at the Public Accounts Committee on 17 April, which Edgar Jardine attended, the Committee has requested the following additional information:

1 In relation to the public relations contract for the Senior Golf Tournament, which was awarded to the former HANI Training Manager, please inform the Committee how many tenders were received in total.

2. Please provide any background information which is available relating to the conflict of interest in the awarding of the Human Resources contract to the former HANI Training Manager, including dates of tendering, award of contract, whether the conflict of interest was noted in the NIEC accounts and any further details which relate to this issue.

I should be grateful for a response by 6 May 2008.

Yours sincerely

John O’Dowd
Chairperson
Public Accounts Committee

Chairperson’s letter of 25 April 2008 to
Mr Paul Sweeney

NI Assembly Logo

Northern Ireland
Assembly Public Accounts Committee
Room 371
Parliament Buildings
BELFAST
BT4 3XX
Tel: (028) 9052 1208
Fax: (028) 9052 0366
Email: Jim.Beatty@niassembly.gov.uk

Date: 25 April 2008

Mr Paul Sweeney
Accounting Officer
Department of Culture, Arts and Leisure
Interpoint
20-24 York Street
Belfast
BT15 1AQ

Dear Paul

Re: Public Accounts Committee Evidence Session 17 April 2008

Further to the evidence session at the Public Accounts Committee on 17 April, which Edgar Jardine attended, the Committee has requested some further information:

(a) Prior to his appointment in 2002, the Chair of the Northern Ireland Events Company had been the subject of disciplinary action, on a conflict of interest issue, while in the employ of Belfast City Council. Details of the case were reported in the local press in 1998. Can you confirm that no-one in DCAL was aware of this at the time of the Chair’s appointment to the Events Company Board and, if so, would you explain why not and provide details of the checks that were carried out on the probity of the candidate?

(b) Would you provide the Committee with details, including dates, of any training provided by the Events Company and/or DCAL to the former HANI Training Manager, on her role and responsibilities as a Board Member and on the required standards of corporate governance?

I should be grateful for a response by 6 May 2008.

Yours sincerely

John O'Dowd Signature

John O’Dowd
Chairperson
Public Accounts Committee

Correspondence of 7 May 2008 from
Mr Paul Sweeney

Department of Culture, Arts and Leisure Logo

Date: 7 May 2008

Mr John O’Dowd
Chairperson
Public Accounts Committee
Room 371
Parliament Buildings
BELFAST
BT4 3XX

Public Accounts Committee Evidence Session: 17 April 2008 -Hani

Your letters of 23 & 25 April 2008 following the evidence session at the Public Accounts Committee on 17 April 2008, attended by Edgar Jardine on behalf of the Department of Culture, Arts and Leisure (DCAL), refers.

In response to the queries raised in your letter of 23 April 2008 please see as follows:-

1. In relation to the public relations contract for the Senior British Open, the Department does not hold information on tenders received as this was a contract between the Northern Ireland Events Company (NIEC) and the Senior British Open (SBO) Golf Championships. We have contacted the NIEC who were unable to provide any information on the number of tenders received.

2. Regarding the conflict of interest in the awarding of the HR contract to the former HANI Training Manager we were furnished with the following information from the Chair of the NIEC:-

(i) CWA Consultancy was appointed on 12 June 2006 following a tender process which began on 22 May 2006 and ended on 1 June 2006.

(ii) There were 3 companies in the tender process:-
(a) Evolution Consultancy
(b) CWA Consultancy
(c) J Blair Employment

(iii) Tenders were scored and weighted against criteria set out by the NIEC Chief Executive Officer and Senior Events Manager and the successful tender, CWA Consultancy, was appointed on the basis of value for money, experience and suitability.

(iv) The period of the contract was for 12 months subject to review at an annual value of £ 7,200 + VAT.

(v) The former NIEC Chair stated on 7 December 2007 that “CWA Consultancy continues to deliver a HR support service to the company as approved by the Board”.

(vi) The contract was terminated in February 2008.

In response to your letter of 25 April 2008 please see as follows:-

(a) Prior to, and at the time of, the appointment of the former NIEC Chair in 2002, the Department has no record of the former Chair’s alleged conflict of interest issue nor disciplinary action while in the employ of the Belfast City Council.

There is no record of checks being carried out on the probity of the candidate at the time of appointment. As public appointment procedures and protocols have evolved, there is now a much more specific focus on probity issues, both in the information required in the application form and in the conduct of the interview itself.

(b) Regarding training provided to the former HANI Training Manager, as stated by Edgar Jardine at the PAC hearing on 17 April 2008, on 1 October 2003, DCAL provided Chartered Institute of Public Finance and Accountability “On Board” training for the Chairs and Chief Executives of DCAL’s arms length bodies which was attended by the former NIEC Chair and Chief Executive. It was the responsibility of the former Chair to ensure that this training was rolled-out to NIEC Board members. On 16 April 2004, DCAL wrote to the former Chair reinforcing the importance of cascading this “On Board” training to NIEC members. Furthermore, at an NIEC Board Away-day in October 2004, a significant amount of time was devoted to best governance practice and as a result the former Chair felt further training on this subject for NIEC members was not necessary.

I hope you find this helpful.

Yours sincerely

Paul Sweeney

Correspondence of 8 May 2008 from
Mr Paul Sweeney

Department of Culture, Arts and Leisure Logo

Date: 8 May 2008

Mr John O’Dowd MLA
Chairman
Public Accounts Committee
Parliament Buildings
Room 371
Stormont
BELFAST
BT4 3XX

Dear Mr O’Dowd

Northern Ireland Events Company (NIEC)

At a recent PAC (17 April) the Commissioner for Public Appointments for Northern Ireland made an unqualified reference to DCAL correspondence regarding an extension of the NIEC Board appointments.

It may be helpful to the Committee if I provide the context within which this request was made to the Commissioner. You are already familiar with some of the issues surrounding the matter of concern (I covered some of these at my appearance before PAC on 6 March) and although there has been some public speculation as to what has occurred there are some matters of sensitivity which we have tried to handle carefully in order to avoid further prejudicial public discussion. One of these matters related to the role of the Board.

The NIEC is a private company limited by guarantee. The Board members were either appointed by the Department, or nominated by representative agencies, and they are registered as Directors under companies legislation. Individual Directors have a number of statutory duties and obligations in law, in addition to their public accountability role, as set out in a Financial Memorandum and Management Statement.

In light of the deficit that has emerged with the Company’s finances, the Board of Directors are in the process of winding up the Company, although it is still unclear how long this will take precisely. It is entirely a matter for the Company’s Directors to effect this winding up in the most appropriate manner suitable to the circumstances of the Company, in order to fully discharge their responsibilities as Directors, in Law. Insolvency practitioners have identified this as the preferred option.

With regard to the circumstances surrounding the NIEC, there is little point or economy in running a further public appointments exercise (even if it were possible to attract suitable candidates). Therefore the existing Board must fully discharge their responsibilities as Directors under Company Law and wind up the affairs of the Company at the earliest opportunity.

I trust this provides the context for the Departmental correspondence with the Commissioner to which she referred at the PAC hearing on 17 April 2008.

Yours sincerely


Paul Sweeney

Correspondence of 24 April 2008 from
Mr Brian Adgey

Correspondence of 24 April 2008 from Mr Brian Adgey

Correspondence of 28 April 2008 from
Mr Jim Beatty

NI Assembly Logo

Public Accounts Committee
Parliament Buildings
Room 371
Stormont
BELFAST
BT4 3XX

Tel: (028) 9052 1208
Fax: (028) 9052 0366

Date: 25 April 2008

Mr Roy Gamble
NI Certification Officer
10 -12 Gordon Street,
Belfast
BT1 2LG

Dear Mr Gamble

NIAO Report ‘Hospitality Association of Northern Ireland’

The Public Accounts Committee has been considering the above report and hopes to shortly publish its own conclusions and recommendations.

It would be helpful if you would advise the Committee of any contacts or concerns you have had with the NI Hotel Federation, the organisation which appears to have taken over many of the roles of HANI.

Yours sincerely

Jim Beatty
Clerk to the Public Accounts Committee

Correspondence

Correspondence of 29 April 2008 from
Mr Roy Gamble

Correspondence from Mr Roy Gamble 1

Correspondence from Mr Roy Gamble

Chairperson’s letter of 21 April 2008 to
Mr Damian Martin

NI Assembly Logo

Public Accounts Committee
Room 371
Parliament Buildings
BELFAST
BT4 3XX

Tel: (028) 9052 1208
Fax: (028) 9052 0366
Email: Jim.Beatty@niassembly.gov.uk

Date: 21 April 2008

Damian Martin
Clerk to the OFMDFM Committee
Room 402
Parliament Buildings
Belfast
BT 4 3XX

Dear Damian

The Public Accounts Committee is currently considering the NIAO report on issues relating to the Hospitality Association of Northern Ireland, including appointments to the Board. Subject to your Committee agreement, it would appreciated if the following query could be forwarded to the Central Appointments Unit, OFMDFM;-

In its recent Evidence Session on the Hospitality Association of Northern Ireland, the Committee was informed that anyone who sits on a public body has their details recorded on the Central Appointments Unit register. When considering such an individual for further public appointment, the register allows Departments to perform further checks on the applicant. Can you provide the Committee with examples of the type of information on the register that would be helpful in assessing the suitability of a candidate for public appointment?

I should be grateful for a response by 6 May 2008.

Yours sincerely

John O'Dowd Signature

John O’Dowd
Chairperson
Public Accounts Committee

Correspondence of 16 May 2008 from
Gail McKibben

Office of the First Minister and deputy First Minister

Mr Jim Beatty
Clerk to the Committee
Public Accounts Committee
Room 371
Parliament Buildings
Stormont
Belfast
BT4 3XX

16 May 2008

Dear Jim

Register of Public Appointments

Thank you for your letter of 27 April in which you asked for information on the register of public appointments.

When a Department appoints or re-appoints an individual to a public body they advise the Central Appointments Unit of the individual’s name, the public body to which the individual has been appointed, the date the appointment commences and the date the appointment ends.

This information is recorded and stored on the Central Appointments Unit’s Public Appointments database; or register if you will, and provides the basic information to facilitate publication of Volume 2 of the Public Appointments Annual Report, i.e. the names of all those persons holding Ministerial public appointments in Northern Ireland at the end of each financial year.

Over time, as appointment details are added to the database, it provides a record of all current or previous public appointments held by an individual. Subsequently, when an individual applies for a public appointment the Central Appointments Unit can, if asked, provide the appointing Department with details of current and/or previous public appointments held by that individual.

By providing information on current and/or previous public appointments held the appointing Department can conduct further checks on an applicant by contacting the Department that sponsors the public body to which the applicant is currently or was previously appointed, to seek information on, for example, his or her performance whilst a member of that public body.

It is not the database per se that provides departments with the information to assess a candidate’s suitability, rather it helps them identify if other Government departments may be holding information that could help them decide on an applicant’s suitability for a public appointment.

I hope you find this information useful.

Yours sincerely

Gail McKibbin
Departmental Assembly Liaison Officer

Correspondence of 19 May 2008 from
Catherine Williamson

Mr Paul Maskey
Chairman of the Public Accounts Committee
Parliament Buildings
Stormont
Belfast
BT4 3XX

19th May 2008

Dear Mr Maskey,

The PAC has been presented with a report from the NIAO on the Hospitality Association of Northern Ireland on April 17th, 2008 concentrating in the main the issues of;

a) Criticism of appointments to public bodies - of a former HANI employee

b) Conflict of interest case – NI Events Company – of a former HANI employee

It has been the view of the NIAO that they seek to present the PAC with learning experiences for Government departments to include better scrutiny of public appointments in regard to “past conduct of applicants for public appointments” and also the requirement and understanding of the application of “conflict of interest” by public appointees.

The former HANI Training Manager has been unfairly and inappropriately used as an example to support the direction of this report. Few, if any learning experiences have been cited in regard to the financial control of HANI.

Proven evidence supplied by the former HANI Training Manager has contradicted the NIAO’s pre-conceived view to the evidence and criticism made against her.

The inclusion of one of her final letters to them was merely published at the back of their report and obviously not given proper consideration by any of its readers.

THE NIAO, having refused to include the former HANI Training Manager in its “Live” investigation over a 4 year period into the HANI case and only permitting her to submit evidence after their SECOND draft report – has proven that this was too late- that their mind was made up and conclusions and direction of the report already formed.

Before the NIAO agreed to meet with her at her request, they had already spent almost £180, 000 over 4 years in their investigations into HANI. The former HANI Training Manager has been referred to more than 50 times in this report.

Key facts remain;

1. The former HANI Training Manager has suffered severe reputational damage due to the negligence of the Authors of both the NI Certification Officers report and also that of the NI Audit Office. Both bodies have no “watch dog” and no member of the public has any course of appeal if they have been treated unfairly and unjustly in any of their findings.

2. (a) The allegations regarding “the conduct” of the former HANI Training Manager (in relation to her employee within HANI) rely on factually inaccurate and incorrect information against her. This fact was clearly made at the PAC hearing on 17th April by Aideen Mc Ginley, DEL. Therefore continuing to criticise her being appointed to public bodies is unjust.

The NIAO’s reliance on using this example will have a huge impact on current public appointees and also those applying for future appointments. This would also have a huge impact on equality and human rights issues for members of the public that are now on and considering public appointments.

(b) The report focuses on a “conflict of interest” situation in relation to work undertaken by her for a golf event. Strong evidence was presented to the NIAO, by her requesting guidance on whether or not she could undertake this work though the CEO and Chair of NI Events Company who informed DCAL. She had not received any training in her public appointment from DCAL and by seeking guidance could not have taken any other action. She followed the advice given to the letter.

The NIAO report indicates many inaccurate statements to cite one example; “she was present at Board meetings when the event was discussed” but neglects to inform the reader that this comment referred to the year AFTER the event was completed and her contract finished.

One of many inaccurate and misleading comments in the report.

It is understandable that members of the PAC will be mislead by reading this report as they are not in possession of the facts, as many have not been made clear in the NIAO report and in the main have mislead the reader.

It is a fact that this report relies on unsubstantiated facts in an attempt to present some sort of justifiable expenditure on the investigation into the HANI case.

This has cost both the public purse and the former HANI Training Manager dearly.

I would welcome an opportunity to meet with you to discuss this matter further or if you felt it appropriate, would offer any further assistance to the PAC in providing any additional information as necessary.

Yours sincerely

Catherine Williamson
(former HANI Employee)

Correspondence of 22 May 2008 from
Mr Jim Beatty

NI Assembly Logo

Public Accounts Committee
Parliament Buildings
Room 371
Stormont Estate
Belfast
BT4 3XX

Tel: (028) 9052 1208
Fax: (028) 9052 0366

22 May 2008

Mr Damien Martin
Clerk to the OFMDFM Committee
Room 402
Parliament Buildings
Belfast
BT4 3XX

Dear Damien

At its meeting on 24 April 2008 the PAC agreed to seek the views of the Committee for the OFMDFM on a number of proposed recommendations in relation to public appointments. These recommendations are within a draft report being considered by the PAC.

As this is an extract from a draft report which will be published in the coming weeks, I would ask the Committee to treat this document in the strictest confidence.

A reply by Thursday 29 May 2008 would be helpful.

Yours sincerely,

Jim Beatty
Clerk to Public Accounts Committee

Correspondence of 2 June 2008 from
Mr Damien Martin

Office of the First Minister and deputy First Minister logo
Committee for the Office of the First Minister
and Deputy First Minister
Room 404
Parliament Buildings

Tel: +44 (0) 28 9052 1903
Fax: +44 (0) 28 9052 1083

To: Jim Beatty
From: Damien Martin
Date: 2 June 2008

Subject: Public Accounts Committee Report

1. The Committee for the Office of the First Minister and Deputy First Minister welcomes the opportunity to comment on the recommendations in the draft report. The Committee discussed the recommendations of the draft report at its meeting on 28 May 2008.

2. Please see attached a copy of the Committee for the Office of the First Minister and Deputy First Minister response to the Public Accounts Committee’s report.

3. Further to the response, Members agreed that the Chairperson of the Committee would also meet with the Chairperson of the Public Accounts Committee to discuss the Committee’s scrutiny of public appointments policy.

Damien Martin
Clerk to the Committee

Committee response to the Public Accounts Committee’s Report on Hospitality Association of Northern Ireland:
A Case Study in financial management and the public appointments process

1. The Committee welcomes the invitation to comment on the recommendations of the report relating to the public appointments process. In this response, the Committee will be restricting comment to those recommendations which directly relate to the policy development and scrutiny roles of this Committee.

2. The Committee would like to draw the Public Accounts Committee’s attention to the interest of this Committee in policy relating to public appointments and to make the Public Accounts Committee aware of the work that has been undertaken on this issue. The Committee has received a number of briefings over the past year from both the Commissioner for Public Appointments and the Central Appointments Unit within OFMDFM. The Committee also commissioned research on this issue, a copy of which is attached at Tab 1.

Regulation of Public Appointments (Recommendation 38)

3. In correspondence with the Committee, the Commissioner drew attention to the number of appointments that fell outside her control. The Committee subsequently scheduled a briefing from OFMDFM on proposals to introduce a Prerogative Order to extend the number of Ministerial appointments which fall under the remit of the Commissioner. The Committee considered the Draft Prerogative Order in February and are broadly content with the proposals. A copy of the draft Prerogative Order is attached at Tab 2. The Order will see Ministerial appointments of over 30 additional public bodies become regulated by OCPANI. The draft Prerogative Order is due to be considered shortly by the Executive.

4. This Committee’s interest has been in matters relating to Regulated Appointments. In correspondence to the Committee, the Commissioner advised that guidelines for appointments to 3rd Party Organisations (TPO) were circulated to all departments by DFP early in February 2008. The Commissioner also advised that she met with the Minister for Finance and Personnel to resolve issues surrounding TPO’s and was given a commitment that the TPO list would be reviewed.

5. Committee Members wish to make it clear that they are of the view that statutory nominations to public bodies can play an important role within the public appointments process and the Committee is supportive of recent decisions by Ministers and Assembly committees in this regard. The Committee considers that nominations from local government can play a significant role in ensuring that public bodies are made more accountable.

Independence of the Commissioner

6. Regarding the independence of the Commissioner and the Commissioner’s Office, the Committee has considered this issue on a number of occasions and has sought clarification from OFMDFM on its proposals to ensure appropriate staffing and accommodation for the Commissioner. The Committee is currently awaiting completion of phase 2 of a Review of the Commissioner’s Office. OFMDFM has advised this should be with the Committee before summer recess; therefore the Committee will be considering and commenting on the findings of the phase 2 of the review once received.

Diversity in Public Appointments

7. The Committee has discussed the issue of diversity in public appointments and is supportive of efforts to attract a larger and more diverse range of local applicants for public appointments. The Committee has been encouraging the Central Appointments Unit within OFMDFM, to work with other departments and the Commissioner to bring forward proposals to improve the diversity of public appointments. This is an issue the Committee wishes to see progressed and will continue to monitor.

Order of the First Minister
and deputy First Minister

Commissioner For Public Appointments (Amendment) Order
(Northern Ireland) 2008

In exercise of the powers conferred on us by section 23(3) of the Northern Ireland Act 1998 (a), as read with Paragraph 4(1) of the Schedule to the Northern Ireland Act 2000 (b) we hereby make the following Order:-

Title, commencement and interpretation

1. (1) This Order may be cited as the Commissioner for Public Appointments (Amendment) Order (Northern Ireland) 2008 and shall come into operation forthwith.

(2) In this Order, “the 1995 Order” means the Commissioner for Public Appointments (Northern Ireland) Order 1995 (c).

(3) The Interpretation Act (Northern Ireland) 1954 (d) shall apply to this Order as it applies to an Act of the Northern Ireland Assembly.

Public Bodies

2. For the Schedule to the 1995 Order there shall be substituted the Schedule set out in the Schedule to this Order.

Dated the ………………… day of ……………………………………….. 2008.

The Rt Hon Dr Ian RK Paisley MP MLA
First Minister

Martin McGuinness MP MLA
deputy First Minister

(a) 1998 c.47.

(b) 2000 (c.1).

(c) The 1995 Order is printed in the Statutory Rules of Northern Ireland, Part II, page 3586 and is amended by the Commissioner for Public Appointments (Amendment) Order (Northern Ireland) 2001 printed in the Statutory Rules of Northern Ireland 2001, Part III, page 2842.

(d) 1954 c.33 (NI).

Schedule

Article 2

“Schedule
Part I

Agricultural Wages Board

DARD

Repeat

Architecture and the Built Environment – Ministerial Advisory Group

DCAL

New

Armagh Observatory and Planetarium - Board of Governors

DCAL

New

Armagh Observatory and Planetarium - Management Committee

DCAL

New

Belfast Harbour Commissioners

DRD

New

Charities Advisory Committee

DSD

New

Comhairle Na Gaelscolaiochta

DE

New

Council for Nature Conservation and the Countryside

DOE

New

Diocesan Education Committees of the Council for Catholic Maintained Schools

DE

New

Drainage Council for Northern Ireland

DARD

New

Economic Research Institute of Northern Ireland Ltd

OFMDFM

New

General Teaching Council for Northern Ireland

DE

New

Governing Bodies of Further Education Colleges

DEL

New

Historic Buildings Council

DOE

New

Historic Monuments Council

DOE

New

Ilex Urban Regeneration Company Ltd

OFMDFM

New

Lay Observer for Northern Ireland

DFP

New

Londonderry Port and Harbour Commissioners

DRD

New

Northern Ireland Authority for Utility Regulation

DFP

New

Northern Ireland Building Regulations Advisory Committee

DFP

New

Northern Ireland Council for Integrated Education

DE

New

Northern Ireland Events Company

DCAL

New

Northern Ireland Screen Commission

DCAL

New

Northern Ireland Higher Education Council

DEL

New

Northern Ireland Transport Holding Company

DRD

Repeat

Northern Ireland Water Ltd

DRD

New

Rent Officer

DSD

New

Research and Education Advisory Panel

DARD

New

St Mary’s University College – Board of Governors

DEL

New

Statistics Advisory Committee

DFP

New

Stranmillis University College – Board of Governors

DEL

New

Teachers’ Salaries and Conditions of Service Committee (schools)

DE

New

Warrenpoint Harbour Authority

DRD

New
Part II

CARE Tribunal

DHSSPS

Civil Service Appeal Board

DFP

Fair Employment Tribunal

DEL

Industrial Court

DEL

Industrial Tribunals

DEL

Northern Ireland Clinical Excellence Awards Committee

DHSSPS

Northern Ireland Community Relations Council

OFMDFM

Planning Appeals Commission

OFMDFM

Rent Assessment Panel

DSD

Reinstatement Committee for Reserve Forces in Civil Employment

DEL

Special Educational Needs Tribunal

DE

Water Appeals Commission

OFMDFM
Explanatory Note

(This note is not part of the Order)

The Commissioner for Public Appointments (Northern Ireland) Order 1995 (“the 1995 Order”) as amended by the Commissioner for Public Appointments (Amendment) Order (Northern Ireland) 2001 provides that the Commissioner for Public Appointments for Northern Ireland, appointed by the First Minister and deputy First Minister acting jointly, shall have certain functions in relation to public appointments made by Northern Ireland departments to those public bodies to which the 1995 Order applies.

The 1995 Order defines public appointment as any appointment, not being an extension of an existing appointment by re-appointment or otherwise, made by a department to a public body listed in Schedule 2 to the Commissioner for Complaints (Northern Ireland) Order 1996, or in Part I of the Schedule to the 1995 Order, but excluding any public body listed in Part II of the Schedule to that Order.

This Order amends the 1995 Order by substituting the Schedule to that Order with the Schedule to this Order.

Briefing Paper:

The Commissioners for Public Appointments throughout the United Kingdom- Background and Comparative Information

1 October 2007

Introduction

This briefing is prepared for Members of the Committee of the Office of First Minister and Deputy First Minister (COFMDFM) to aid its engagement with the Commissioner for Public Appointments for Northern Ireland (NI). Section 1.0 provides background information about public appointments and the current reform process in public administration in NI. Section 2.0 considers the Commissioner for Public Appointments for NI. Section 3.0 is a comparative perspective and considers the role of the Commissioners for Public Appointments in England and Wales, and Scotland. Section 4.0 highlights key potential issues for the COFMDFM’s consideration of public appointments in NI.

1.0 Background to public appointments in NI

Public appointments are those appointments made by Ministers or Departments to bodies which perform some public function. Bodies of this type are commonly known as ‘quangos’.[1] In March 2006, there were 2,070 public appointments held in 107 public bodies in NI.[2] It is the responsibility of the Commissioner for Public Appointments for NI to review some[3] of these appointments and to review and develop the Office of the Commissioner for Public Appointments Northern Ireland (OCPANI) Code of Practice.[4]

1.1 Public bodies defined

Public bodies are organisations which are set up to carry out a wide range of functions on behalf of the government. The emphasis is on independence of public bodies, which is why they operate at “arms length” from central government, but with the realisation that Ministers are ultimately responsible for the activities of the public bodies sponsored by their department.[5]

1.2 Types of Public Appointment

There are five types of public appointments in NI, including:[6]

  • to Executive NDPBs: these bodies carry out a wide variety of administrative, regulatory and commercial functions. They generally operate under statutory provisions, employ their own staff and have responsibility for their own budgets;
  • to Advisory NDPBs: these bodies are generally set up administratively by Ministers to advise them and their Departments on matters within their sphere of interest. They are normally supported by staff from within the sponsor Department, and do not incur expenditure on their own account;
  • to Tribunal NDPBs: this category covers bodies with jurisdiction in a specialised field of law. Tribunals generally operate under statutory provisions and are serviced by staff from the sponsor Department; and
  • to other NDPBs which include Independent Monitoring Boards provide independent oversight of the prison system.
  • to other uncategorized bodies, e.g. the Senate of Queen’s University Belfast.[7]

Some appointments are remunerated, but it remains the position that most are not.[8]

1.3 Number of Appointments Held

The overall number of public appointments held at 31 March 2006 was 2070 in 107 bodies.[9] This compares with 2073 at 31 March 2005[10] and is a significant decrease from the March 2000 figures held in 118 bodies (see Table 1).[11]

Table 1-Appointments held, 1997-2006[12]

Date

Appointments held

No. of Bodies in which
appointments held

March 1997

2948

145

March 1998

2799

145

March 1999

3031

141

March 2000

2311

118

March 2006

2070

107

1.4 Review of Public Administration (RPA) - ongoing reform

In 2006 the Secretary of State for NI announced that as a result of the RPA[13], which had been ongoing since 2002, there would be a reduction in the number of public bodies and agencies in NI from 154 – 75, an overall reduction of 51%.[14] The government announced a series of reforms based on four guiding principles:[15]

1. Subsidiarity – delivering services and exercising power as close to the people as possible. That means local councils having responsibility for the delivery of a wide range of services that affect the lives of people living in their areas;

2. Equality and Good Relations – equality, social need, good relations, human rights and rural considerations have been key threads woven into both the development of the reforms and the way in which the review was conducted. The local administration arrangements will provide an anchor for ‘A Shared Future’ and ensure that good relations actions are earthed in the needs of local communities;

3. Common Boundaries – having public services organised within the same boundaries (the new local council boundaries) will not only make them easier to understand, but will create real opportunities for well-planned, joined-up working; and

4. Strong Local Government – councils at the heart of the local community providing civic leadership; ensuring the provision of local services, locally delivered; and working with local interests to develop their areas, addressing social, economic and environmental issues that will ensure vibrant, sustainable communities for future generations.

2.0 The Commissioner for Public Appointments for NI.

This section provides information on the role of the Commissioner for Public Appointments for NI and the implementation of the Code of Practice in the appointments process. It also gives background information to the auditing process and the Kitemark schemes for NI.

2.1 Background

The Office of the Commissioner for Public Appointments for NI (the Commissioner) was created in 1995,[16] in response to a recommendation by the Committee on Standards in Public Life, to create an independent Commissioner for Public Appointments.[17] The purpose of an independent Commissioner is to provide effective external scrutiny of the public appointments system. The current Commissioner for Public Appointments in NI has held this post since August 2005.

2.2 The Role of the Commissioner

The Commissioner is independent of the Government and her role is to provide guidance for Government departments on procedures for making public appointments; to audit those procedures and report on them annually and to investigate complaints about appointment processes.[18]

2.3 The Code of Practice[19]

The Commissioner and the government departments rely on the Code of Practice, which outlines the regulatory framework for the public appointments process in NI. The Code is based upon the following seven principles,[20] as recommended by the Committee on Standards in Public Life:[21]

  • Ministerial responsibility
  • Merit
  • Independent Scrutiny
  • Equal Opportunities
  • Probity
  • Openness and Transparency; and
  • Proportionality

The Code aims to provide a clear and concise guide to the steps that must be followed in order ensure a fair, open and transparent appointments process, which produces a quality outcome and commands public confidence.[22]

2.4 Independent Scrutiny in the Appointments Process: Independent Assessors

One of the seven principles included within the Code of Practice is that of ‘independent scrutiny’. In order to ensure the implementation of this principle, public appointments are not made without the involvement of at least one independent assessor. Independent assessors receive training so that they can deliver impartial assessments and bring added perspective to the appointments process.[23]

2.5 Annual Audit

The Commissioner is required to perform an annual audit in order to review the policies and practices of departments making public appointments. This also provides an opportunity to observe the application and effectiveness of the Code of Practice. Each department audited receives a detailed report with the results of the audit and recommendations for improvements to be made.[24]

2.6 OCPA NI Kitemark Scheme[25]

The Office of the Commissioner for Public Appointments NI Kitemark scheme was first introduced in September 2001 to give recognition and highlight the fact that many public appointments are made in accordance with OCPA NI procedures. It is used to indicate a properly regulated and audited appointment process where potential applicants will be treated equally and fairly.

The following two types of kitemark are currently in use:

1. OCPA NI Regulated

This kitemark was introduced in September 2001 and covers appointments to all bodies which fall within the Commissioner’s remit. It must be included in public advertisements for all such appointments. Departments are free to use this on any other associated documentation, such as application forms, information packs and so on. OCPA NI must be sent copies of both the advertisement and the press release.

2. OCPA NI Monitored

This kitemark was introduced in October 2002 and can be applied to appointments to bodies falling outside the Commissioner’s remit, though its use is purely voluntary. Many departments use the Code of Practice to make appointments to such bodies and by using the ‘Monitored’ kitemark, they are publicly demonstrating their commitment to the Code.

3.0 A Comparative Perspective

This section considers the Commissioners for Public Appointments in Scotland as well as England and Wales. It further provides a comparative table about Public Appointment Commissioners in the UK.

3.1 Commissioner of Public Appointments Scotland

The Office of the Commissioner for Public Appointments in Scotland (OCPAS) was established in June 2004. The role of the Commissioner is to regulate, monitor, report and advise on the way in which Scottish Ministers make appointments, and recommendations for appointment, to boards of public bodies and to ensure that appointments are made in a way which is open, transparent and merit-based. The Commissioner is independent of both the Scottish Parliament and the Scottish Executive.[26] The Commissioner was appointed under the Public Appointments and Public Bodies etc (Scotland) 2003 Act[27], which provided for a Commissioner to report to the Office for Public Appointments in Scotland, (OCPAS).

The key functions of the Commissioner are defined as follows:[28]

  • to regulate the appointments process in Scotland, by preparing and publishing a Code of Practice in consultation with the Scottish Parliament, Scottish Ministers and the public;
  • to examine the methods and practices employed by Scottish Ministers in making appointments and investigating complaints;
  • to issue guidance to Scottish Ministers on compliance with the Code of Practice;
  • to report serious breaches of the Code by Scottish Ministers to the Parliament, directing Scottish Ministers to delay making the appointment in question until consideration of the case has been concluded by the Parliament;
  • to prepare a diversity strategy in consultation with Scottish Ministers and Parliament;
  • to appoint independent assessors to assist in the exercise of the Commissioner’s functions; and,
  • to report annually to the Scottish Parliament.

The original Code of Practice was inherited from the previous Commissioner. It applied to England, Wales, Scotland and NI from December 2003. It was adopted by the new Commissioner for Public Appointments in Scotland as an interim Code whilst the new Code of Practice for Scotland was finalised. The new Code was tailored specifically for Scotland to enable appointment practices to be tailored to each round, whilst ensuring consistency of approach and equality of treatment to all applicants.[29]

3.2 Commissioner of Public Appointments England & Wales

The Commissioner of Public Appointments in England & Wales has a similar structure to the Commissioners for NI and Scotland. The Commissioner’s role is to regulate, monitor, report and advise on appointments made by UK Ministers and by members of the National Assembly for Wales to the boards of around 1,100 national and regional public bodies. Some bodies within NI also fall under Commissioner’s remit.[30]

As with NI, government departments are required to follow the Commissioner’s Principles and detailed Code of Practice.[31] The Commissioner is independent of both the Government and the Civil Service. The Commissioner’s role is to regulate, monitor and report on ministerial appointments to health bodies, non-departmental public bodies, public corporations, nationalised industries and the appointments of the Utility Regulators.[32] [33][34][35][36]

3.3 Table 2- Comparative summary of NI, England & Wales and Scotland Commissioners

NI

England & Wales

Scotland

Governing Legislation

Commissioner for Public Appointments (Northern Ireland) Order 1995, as amended by the Commissioner for Public Appointments (Amendment) Order (NI) 2001

Public Appointments Order in Council 2002

The Public Appointments and Public Bodies etc (Scotland) Act 200333

Code of Conduct

Commissioner required by law to publish a Code of Practice on the interpretation and application by Departments of the principle of selection on merit.34

Commissioner required by law to establish a Code of Practice for ministerial appointments to public bodies, and monitor the process to ensure those appointments are made on merit after fair and open competition.35

Commissioner required by law to prepare and publish a Code of Practice to regulate the process by which Scottish Ministers appoint or recommend persons to the board of a public body.36

Kitemark Scheme

OCPA NI Monitored Kitemark Scheme- voluntary and can be used by Ministers if appropriate to their needs. OCPA NI Regulated kitemark scheme covers appointments to all bodies which fall within the Commissioner’s remit. It must be included in public advertisements for all such appointments.37

The “OCPA Regulated” kitemark came into force on 1st April 2000 and it

is obligatory to use it for all bodies which fall within the Commissioner’s

remit38

OCPAS regulated Logo- This logo is produced by OCPAS and indicates that a body is regulated by the Commissioner. This appears on all appointment publicity.

No. of Public Bodies

10739

88340

10841

No. of Appointments by Commissioner

79842

290743

19744
4.0 Key potential issues for consideration [37][38][39][40][41][42][43][44]

Outlined below are a number of key issues that the COFMDFM may wish to consider when engaging with the NI Commissioner for Public Appointments:

1. Gender equality

All three jurisdictions considered in this briefing have noted issues of gender equality within the appointments process. In NI the Commissioner noted that the percentage of overall appointments for 2005-2006 was 68% male to 32% female.[45]

In England and Wales the percentage of appointments for 2005-2006 was 63.4% male and 36.6 % female.[46]

In Scotland there were 395 female applicants and 930 male applicants for public appointment from the period of March 2006-April 2007.[47]

The Commissioner is concerned to note that the percentage of female applicants shows only a slight increase and, at just under 30%, does not compare well with the percentage of women in Scotland’s population.[48]

Scotland is also due to publish a diversity strategy:

In autumn 2007, we will publish a diversity strategy, which will consider opportunities within the public appointments process to embrace diversity, to recognise and value difference and to create a culture and practices that harness the as yet untapped potential of Scottish society.[49]

Diversity strategies must be developed to create a plan for change and further structure in the drive for equality. In July 2005 the Short Term Working Group on Diversity published recommendations for tackling diversity in the public appointments process in NI.[50] It noted that women were under-represented as both applicants and appointees[51] in the public appointments process and that there was potential for improvement of diversity matters in all underrepresented sections of society.

The Committee may wish to consider the above findings when considering the development of diversity issues in the public appointments procedure in NI.

2. Regulation of appointment process using Monitored Kitemark Scheme.

The Monitored Kitemark Scheme allows departments in NI and England and Wales to opt for voluntary regulation of their public appointments process. This process is voluntary and applies to individual competitions only which means that a department is not subjected as a whole to being regulated on a permanent basis. This potentially raises issues about application of the scheme and the regulation of appointments. The Committee may wish to consider such issues when evaluating the Kitemark Scheme.

3. Adopting a new approach to audit

In Scotland, at present, an OCPAS Assessor, independent of both the Scottish Parliament and the Executive, participates in every appointment round to ensure the Code is followed, and the Commissioner conducts an annual audit of the Executive’s processes to ensure a record of the evidence-based decisions taken at each stage of a round is available to demonstrate the fair and open methods used for appointment. This has been criticised as “overuse” of audit and regulation procedures and therefore it is under evaluation:

Models of regulation from across the UK suggest there are other ways to deliver the objective, independent scrutiny required and to encourage the development of good practice. The Commissioner proposes to pilot an Appointment Hallmark, based on the Recruitment and Selection Model in the Investors in People stable. This will provide a framework for good practice, will be externally assessed by OCPAS Assessors and, once the Hallmark is attained, will alleviate the requirement for annual audit from some or all of the Scottish Executive departments. The Hallmark will be designed to achieve savings of time and money and to promote shared responsibility for ensuring Code compliance.[52]

When considering a new approach to the auditing process in NI, the Committee may wish to note the issues which have arisen in Scotland in this context.

[1] ‘Quango’ is an acronym for quasi-autonomous national governmental organisation.

[2] Central Appointments Unit 2006 Public Appointments Annual Report 2005/2006, Volume 1, para 1.10. http://www.ofmdfmni.gov.uk/cau-10th-annual-report-2.pdf These are the latest comprehensive figures.

[3] Of the 2070 public appointments held in Northern Ireland at the 31 March 2006, some 798 fell within the Commissioner’s statutory remit. http://www.ofmdfmni.gov.uk/cau-10th-annual-report-2.pdf s 2.1.

[4] http://www.ocpani.gov.uk/11annualreportjan07-2.pdf para 3, The Commissioner’s foreword.

[5] http://archive.ofmdfmni.gov.uk/publicappointments/guidetocentralappts/publicbody.htm

[6] http://www.ofmdfmni.gov.uk/cau-10th-annual-report-2.pdf para 1.7

[7] http://www.qub.ac.uk/home/RegistrarsOffice/UniversityGovernance/UniversityCommittees/DirectoryofCommittees/Senate/

[8] Just over 4% of the 2070 public appointments held at 31st March 2006 attracted remuneration of £10,000 or more per annum
http://www.ofmdfmni.gov.uk/cau-10th-annual-report-2.pdf para 3.8

[9] Central Appointments Unit 2006 Public Appointments Annual Report 2005/2006,
Volume 1, para 1.10. http://www.ofmdfmni.gov.uk/cau-10th-annual-report-2.pdf

[10] http://www.ofmdfmni.gov.uk/cau-10th-annual-report-2.pdf para 3.5

[11] Public Appointments Annual Report 1999/2000, Vol 1, para 1.11 corrected by information provided to NI Assembly Research and Library Services by OFMDFM 30 January 2002. source: Research paper 04/02 Public Appointments and Public Bodies in NI

[12] Sources: Public appointments and public bodies in NI Research Paper 04/02 ; Secretary of State for NI First Annual Report on Public Appointments Vol 1 para 1.7; Secretary of State for NI Second Annual Report on Public Appointments Vol 1 paras 1.11 and 2.7; CAU Public Appointments Annual Report 1998/1999 paras 1.11 and 3.6; CAU Public Appointments Annual Report 1999/2000 paras 1.11 and 3.6; Central Appointments Unit 2006 Public Appointments Annual Report 2005/2006, Volume 1, para 1.10.

[13] In 2002 the NI Executive launched a review of public administration. Despite the suspension of devolution during that year, the Review was advanced by direct rule ministers with local political parties’ views and opinions from NI being taken into account. The outcome of the review came in two stages- in November 2005 the Secretary of State announced final decisions on the future of local government, Education and Health and Social Service structures and in March 2006 he announced decisions on the remaining public bodies. http://www.rpani.gov.uk/

[14]http://www.archive.rpani.gov.uk/speech210306.pdf

[15]http://www.rpani.gov.uk/pdf_rpa_21_march_doc.pdf

[16] By the Commissioner for Public Appointments (Northern Ireland) Order 1995 as amended by the Commissioner for Public Appointments (Amendment) Order (NI) 2001.

[17] First Report of the Committee on Standards in Public Life.

[18]http://www.ocpani.gov.uk/index/our-role.htm

[19]http://www.ocpani.gov.uk/ocpa-ni-code-of-practice.pdf

[20]http://www.ocpani.gov.uk/index/our-role/seven-principles.htm

[21]http://www.public-standards.gov.uk

[22]http://www.ocpani.gov.uk/ocpa-ni-code-of-practice.pdf para 1.5

[23]http://www.ocpani.gov.uk/11annualreportjan07-2.pdf page 13

[24]http://www.ocpani.gov.uk/11annualreportjan07-2.pdf Chapter 3

[25] Ibid page 46

[26]http://www.ocpa-scot.org.uk/downloads/NewCode.pdf

[27]http://www.scotland-legislation.hmso.gov.uk/legislation/scotland/acts2003/20030004.htm

[28]http://www.parliament.uk/commons/lib/research/notes/snpc-03368.pdf page 6.

[29]http://www.ocpa-scot.org.uk/publications/documents/OCPASAnnualReport2006-07_000.pdf

[30]http://www.ocpa.gov.uk/

[31]http://www.ocpa.gov.uk/upload/assets/www.ocpa.gov.uk/codeofpractice_aug05.pdf

[32]http://www.ocpa.gov.uk/upload/assets/www.ocpa.gov.uk/codeofpractice_aug05.pdf para 1.02.

[33]http://www.hmso.gov.uk/legislation/scotland/acts2003/20030004.htm

[34]http://www.ocpani.gov.uk/ocpa-ni-code-of-practice.pdf

[35]http://www.ocpa.gov.uk/upload/assets/www.ocpa.gov.uk/codeofpractice_aug05.pdf

[36]http://www.ocpa-scot.org.uk/downloads/NewCode.pdf

[37]http://www.ocpani.gov.uk/11annualreportjan07-2.pdf

[38]http://www.ocpa.gov.uk/upload/assets/www.ocpa.gov.uk/codeofpractice_aug05.pdf page 71 For bodies which fall outside the Commissioner’s remit, but where departments have chosen to apply the OCPA Code to their appointments process as an indication of best practice, the process can be “monitored” by OCPA rather than “regulated”.

[39]http://www.ofmdfmni.gov.uk/cau-10th-annual-report-2.pdf para 1.10.

[40]http://www.civilservice.gov.uk/other/agencies/publications/pdf/public-bodies/publicbodies2006.pdf page 6.

[41]http://www.ocpa-scot.org.uk/publications/documents/OCPASAnnualReport2006-07_000.pdf page 19.

[42] Of the 2070 public appointments held in Northern Ireland at the 31 March 2006, some 798 fell within the Commissioner’s statutory remit. http://www.ofmdfmni.gov.uk/cau-10th-annual-report-2.pdf s 2.1.

[43]http://www.ocpa.gov.uk/upload/assets/www.ocpa.gov.uk/2006_report.pdf page 52.

[44]http://www.ocpa-scot.org.uk/publications/documents/OCPASAnnualReport2006-07_000.pdf page 21.

[45]http://www.ocpani.gov.uk/11annualreportjan07-2.pdf page 8

[46] http://www.ocpa.gov.uk/upload/assets/www.ocpa.gov.uk/2006_report.pdf page 50

[47]http://www.ocpa-scot.org.uk/publications/documents/OCPASAnnualReport2006-07_000.pdf page 17.

[48] Ibid

[49]http://www.ocpa-scot.org.uk/publications/documents/OCPASAnnualReport2006-07_000.pdf page 21

[50]http://www.ocpani.gov.uk/working-group-diversity.pdf

[51]http://www.ocpani.gov.uk/working-group-diversity.pdf para 5.6

[52]http://www.ocpa-scot.org.uk/publications/documents/OCPASAnnualReport2006-07.pdf page 28

Correspondence of 2 March 2003 from
Jane Kennedy MP

Letter from Jane Kennedy 1
Letter from jane Kennedy 2

Correspondence of 11 March 2003 from
John Dallat MLA

Letter from John Dallat

Appendix 4

List of Witnesses Who
Gave Oral Evidence
to the Committee

1. Dr Aideen McGinley, Accounting Officer, Department for Employment and Learning.

2. Mr Greg McConnell, Deputy Secretary, Department for Employment and Learning.

3. Mr Edgar Jardine, Deputy Secretary, Department of Culture, Arts and Leisure.

4. Mrs Felicity Huston, Commissioner for Public Appointments for Northern Ireland.

5. Mr John Dowdall CB, Comptroller and Auditor General, Northern Ireland Audit Office.

6. Mr David Thomson, Treasury Officer of Accounts, Department of Finance and Personnel.