The documentation before the committee - the Campus and Stadium Ireland report and the submission by the Office of Public Works - has only been furnished within the last hour to the members, some of whom have not yet seen it. In view of this, members consider that the sitting should be suspended until 4 p.m. They also request that officials attending the committee be given copies of the documentation. I presume the witnesses have all received a copy of the Attorney General's report.

We have not, Chairman.

We have some spare copies which we will make available.

What about the papers from the Office of Public Works?

The papers from the Office of Public Works will be furnished to the other witnesses. Obviously, Mr. Murphy has them but the Department of the Taoiseach, the Department of Finance and Mr. Teahon may not.

Chairman, I respectfully suggest that you ask each of the witnesses whether they have the documents with which you propose to deal, so that there is a fair and equitable opportunity for everybody to have what you would wish them to have, that is, fair access to everything that may form the basis of questioning.

Attending are Mr. Teahon of Campus Stadium Ireland and representatives of the Departments of Finance and Tourism, Sport and Recreation and the Office of Public Works. I ask them to ensure that they receive from the clerk a copy of the submission from the Office of Public Works and a copy of the Attorney General's report. If they do not have them, they should ensure they obtain them from the clerk. We will suspend the meeting and resume at 4 p.m. in order to give witnesses a chance to deliberate on the contents of these documents.

In the interests of clarity, we should inquire as to who has the documentation already.

I felt that if witnesses did not have the documentation, they could request it.

My expectation, Chairman, was that they would be asked if they had it.

All right. Mr. Teahon, have you copies of the submission from the Office of Public Works?

I do not have a copy of the Office of Public Works document. I have just received a copy of the Attorney General's report and have not had the opportunity of reading it.

Okay. Margaret Hayes?

Chairman, I have a copy of both reports.

What about the Department of the Taoiseach?

To follow up - I asked this question the last day - will it be possible for the witnesses to answer questions on the information available to them from those reports?

You need to be aware of the reports, yes.

I asked that question the last day, Chairman.

What about the representatives of the Department of the Taoiseach?

We have both documents. I have not had a chance to read the Office of Public Works material.

Mr. Murphy, do you require the Attorney General's report?

Yes.

That will be furnished to you. What about the Department of Finance?

We have just received a copy of both reports in the last hour but we need to study them.

Is it acceptable to the witnesses for the committee to resume at 4 p.m.? That is agreed. Thank you. The sitting is suspended.

Witnesses should be made aware that they do not enjoy absolute privilege. Members and witnesses' attention is drawn to the fact that, as and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997, grants certain rights to persons identified in the course of the committee's proceedings. Notwithstanding this provision in the legislation, I remind members of the long-standing parliamentary practice to the effect that they shall not comment on, criticise or make charges against a person outside the House or an official, either by name or in such a way as to make him or her identifiable. Members are also reminded of the provisions within Standing Order 149 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policy or policies.

Members should note that the committee is concerned with the accounts specifically listed for examination and the administrative and operational control aspects related to same which are within the knowledge and competence of the witness being examined.

I call Deputy Durkan to resume questions.

First, can I ask as I did on Friday whether any of the witnesses have any objection to any questions being raised in any particular form?

Would the Chairman like to ask the witnesses, in the first instance, if they had time to read all the documentation to their satisfaction?

Chairman, I want to restate my position. When I opened questioning last Friday I asked a question in relation to, for example, the Attorney General's report and whether it was possible for witnesses to answer questions. Mr. Teahon mentioned at the time that that would be unfair to the Secretary General of the Department of Tourism, Sport and Recreation. From memory, that was the reply. Are there any questions arising from the Attorney General's report or the papers made available from the Office of Public Works about which any of the witnesses are concerned? In other words, are the witnesses happy to answer questions emanating from the discussions which took place on Thursday and Friday of last week and the subsequent reports they have compiled since then?

In response to that, the papers on the Office of Public Works file are part of the deliberative process connected with seeking tenders for the stadium part of the Campus Stadium Ireland project. That process has not ended. It would be preferable, if there are any questions relating to companies in the tendering process, that the names of the companies would not be referred to.

We are in public session and I would like to have prior warning as to the companies about which witnesses do not wish to have questions raised, if that is possible.

There are only three companies at most mentioned on the Office of Public Works papers and I would not wish the names of any of the three to be mentioned in connection with questions. It will still be possible to ask questions without naming the companies.

Excellent. I want to ask one other question before we move into the subject matter. Do any of the witnesses likely to be questioned have any concerns about opinions expressed by members of the committee, within or outside of the committee or in the public arena and, if so, on what basis?

To clarify that, I had a concern during the earlier questioning but fully accept what Deputy Rabbitte said in response to it. I misunderstood what he was talking about when he referred to boxes of documents. Deputy Rabbitte clarified it and I accept that he was referring to a disappointed bidder rather than the successful bidder.

Fair enough. Has any other witness any concerns about the opinions expressed by any member of the committee in the public arena or in the committee?

Chairman, I am not a witness here. I have the role of putting questions but it would be as serious for the members of the committee——

No, no, Chairman.

——to express opinions outside the committee or within it when making inquiries. Opinions are the very matters we should avoid. I am not speaking on behalf of the witnesses before us but I would be surprised if they did not feel there were serious risks potentially to the reputation of any one or all of them in the context of any opinions given.

We will move on to questions.

I thank my colleague for that assistance. I know I can rely upon him at any time.

Do not send for me in three weeks.

Have there been any developments since the last meeting of the committee which any witness wishes to bring to our attention before we commence questions? No.

I will return to the matter we discussed on the last occasion. Mr. Teahon mentioned initially - and again I am quoting from memory - with regard to the appointment of the tendering process and the advice from PricewaterhouseCoopers, that a particular company was a shelf company. That information was made available to him. He conveyed that information according to evidence previously submitted to the board but not to the Government or to the Department of the Taoiseach by whom he was appointed. By what form did he convey the information he had received to the member of the board? Was it advice by way of letter or some other form?

I am not sure we are talking about the same issue but what I said in my statement was that there were three cases in point - the assessment panel, the board and the Department or Government. At the assessment panel I said - and it is reported in the documents before the committee - that there were funding issues, meaning the issue in relation to the Waterworld consortium, which needed to be dealt with. That was the assessment panel. I did not use the word "dormant" on that occasion. In relation to the board, I did not tell the board or the Department. They are the three situations.

You gave the reasons for not telling the assessment panel the information that you had on the last occasion. You felt that it was not relevant, that by virtue of delegated responsibility it was not necessary and that there was not sufficient time to further investigate any outstanding matters. Is that correct?

That was what I said in relation to the different occasions. I saw myself acting on the basis of delegated authority from the board to implement a process that the board had agreed.

How was the information conveyed to you with regard to the status of the company which was referred to as a dormant company by you and PricewaterhouseCoopers?

By way of a document produced by PricewaterhouseCoopers.

Have you a copy of the document?

Yes.

Can you——

Have I got it with me?

Yes.

No.

I hope that at some stage the Committee might have sight of that document if you have no objection.

No, I have none.

With regard to the document from Pricewaterhouse which advised you regarding the status of the company - again I am careful here - I suggested, perhaps wrongly so, that you had withheld information from the assessment group or from the board. You said the information was not given, which was somewhat different. However, we will not get into debate on that issue. In any event the information which was relayed to you by way of the document from Pricewaterhouse regarding the status of the company was not conveyed to the assessment group which subsequently would have to make a decision. Is that true?

No, the assessment panel did not have the document but the assessment panel was not making a decision in relation to the economic and financial standing of the consortia. In other words, the decision of the assessment panel was a decision on who or which consortium would become the preferred bidder, i.e. the most economically advantageous project.

Who, in your opinion, should have that document or the information contained in that document from Pricewaterhouse since it would appear to be germane to the group?

I recognised when I saw the document that there was a clear issue in relation to the economic and financial standing of the consortium of which Waterworld UK was a member. Therefore, there was an issue which had to be dealt with. In effect I said to the assessment panel that there was a funding issue which had to be dealt with. Then I put in place, working with PricewaterhouseCoopers on the financial side and McCann Fitzgerald, a process whereby a letter issued on 19 December to the consortium which said we were prepared to make them the preferred bidder provided they could answer to our satisfaction a number of items. That letter was issued on 19 December.

Surely those items should have been answered prior to that. Those items would have been of normal concern in respect of a tender for any project, whether it be an outline or a full tender. I presume these guidelines and EU rules apply to the procurement process for State contracts? Is that true?

Exactly. The EC rules were followed at the three stages. Firstly, there was an expression of interest stage where the consortia put forward evidence to us. At that stage the assessment panel adjudged that the consortia that had put forward adequate evidence were the ones that went to the next stage, the outline bid stage. The outline bid stage did not involve questions on the economic and financial standing. Nor did the detailed bid stage involve such questions.

Under EU rules is it not a prerequisite before proceeding in that fashion that the relevant directive be referred to?

Yes.

What is the directive?

The issue is one of what you are entitled to judge at different stages. Our legal advice was that at the first stage you have to make a judgment and that was done.

Our legal advice was that at the outline bid stage and the detailed bid stage you were not entitled to make a further judgment on the economic and financial standing. That judgment then fell to be made in relation to taking the preferred bidder forward to heads of agreement and eventually to what is called a project agreement or a contract. What we did with Pricewaterhouse was we put in place a process such that we could make the judgment on economic and financial standing in pursuit of signing a contract.

But you could only make that on the basis of continued dialogue with one or all of those who submitted tenders.

That is correct.

Dialogue was established with all of the people who submitted tenders and kept——

At the detailed bid stage we informed the consortium that the assessment panel judged it to be the most economically advantageous, that we were to make them the preferred bidder, subject to their satisfying us on the issues we raised with them. We notified the other two bidders that we would ask them to keep their bids open. We did that because it was possible that the dialogue or negotiation with the consortium that would become the preferred bidder would not be satisfactory in which case we would have turned to the next bid.

But surely that would imply assisting a bidder. Why not assist all three bidders together?

No, it did not imply assisting anybody. It implied or it was a fact that the assessment panel judged that, for shorthand, the Waterworld consortium was the one that was clearly the best. Therefore, appropriately that consortium would become the preferred bidder provided they were able to satisfy the questions that arose. That is what happened. That is what took place over a series of months.

I must refer Mr. Teahon to EU Council Directive 93/37/EEC, Chapter 2, Articles 24 to 27, inclusive. I presume this particular directive must have been referred in the context of a tender of this size.

I do not have the directive that you are speaking about, but I take it that was the directive to which our legal advice related.

There is a whole series of qualifications. Article 25 in particular says:

Any contractor wishing to take part in a public works contract may be requested to prove his enrolment in the professional or trade register under the conditions laid down by the laws of the member state in which he is established [which is normal practice].

In the United Kingdom and Ireland, the contractor may be requested to provide a certificate from the Registrar of Companies or the Registrar of Friendly Societies or, if this is not the case, a certificate stating that the person concerned has declared on oath that he is engaged in the profession in question in the country in which he is established, in a specific place and under a given business name.

I presume this section was run past those involved in the assessment process or in any part of the process that involved recommendation or a decision being taken.

I am happy to pursue the issue further if you want me to, but at every stage of the process we took appropriate legal advice. I am not an expert on EU procurement law in terms of the type of detail to which you are referring. If you give me the document I will check with our legal adviser and say I was asked if reference was made to it.

I would be happy to furnish the relevant document and hopefully copies can be made available to you before the end of this discussion.

Can I ask another witness a question?

Yes.

Can I ask the Secretary General of the Taoiseach's Department the procedure normally followed in regard to a project of considerable volume, scope and importance coming before Cabinet?

It would be covered by the general guidelines of the Cabinet handbook. In other words, there would be an expectation that the decision sought of Government would be made clear, that the background to that decision would be set out, that the financial implications would be made clear and that the issues which the Government should take into account would be made clear. Those would be the norms within which a proposal coming before Government on such a project, or any other project, would be expected to be formulated. The question of the precise format in which it would come before Government depends clearly on the context and circumstances.

Your Department was the sponsoring one in this situation. Did you prepare any memoir for Cabinet on this subject?

There was a memorandum prepared, based on material which was received from Campus & Stadium Ireland. It was prepared on 19 December and submitted to the Government meeting of the same date. It was prepared in the context of a meeting of the project steering group for having taken place the previous week at which it was reported that the appraisal process was coming towards a conclusion and would be finalised with a view to coming to the Government meeting of 19 December and that it would not therefore be possible to circulate the final text in advance of the meeting because of the requirement for planning permission to be sought by 22 December.

How big a document was the one which came from Stadium Ireland?

It was effectively of the scale of the actual memorandum submitted to the Government, which is appended to the Attorney General's report before the Committee.

Another five minutes.

I know Chairman. I will do my best. May I just move it forward slightly? Did you put your imprimatur on, or did you have sufficient time to study the documentation which came to the Taoiseach's Department before submitting it to Cabinet?

The material was read, studied, clarified with CSID, prepared for discussion with the Taoiseach and subsequently for submission to the meeting.

Who read and studied it with CSID?

My colleague, Mr. Ryan.

He read and studied the document produced by CSID in preparation for Cabinet.

That is correct.

Was the question that arose previously about the status of a particular company mentioned in that brief at that stage?

No, it was not.

Are you quite certain of that?

Yes.

If it was, would the reference from Pricewaterhouse to the effect that a dormant company was involved have affected the summation you would have sent to Cabinet?

It is difficult to speculate on a counter-factual issue. I think it would certainly have been regarded as a relevant matter to draw to the attention of Government, had it then been made known to the Department. I should indicate that the material did indicate that the matter of the recommendation from CSID was based on a clear assessment that this was the best of the three proposals considered under all of the relevant headings and that it was the lowest cost in terms of the Exchequer capital requirement. If, in addition, there had been a question raised in relation to further matters to be confirmed before heads of agreement were signed I am sure that would have been drawn to the Government's attention. In the event, the decision which emerged was for heads of agreement to be signed, but on the basis that some further negotiations would take place regarding a capital contribution and the provision of free swimming hours, which was——

If you were now - this is not necessarily a hypothetical question - preparing a brief for Cabinet would you include the information regarding the status of the company?

I believe that if I had such information I would include it.

Okay. One last question which my colleague, Deputy Rabbitte, raised on Friday. What is the valuation of the Abbotstown complex site? I know what the valuation was but I want confirmation from the relevant authority, be it Office of Public Works or whoever.

The Office of Public Works has not put a valuation on that site. There was a valuation put on it by Pricewaterhouse in its feasibility study.

Was a valuation done at any stage of the site at Abbotstown as it stood?

When you are doing that kind of valuation it depends what the site is going to be used for. There may be a number of valuations. The fact remains that the Office of Public Works did not do a valuation under any heading.

Was a valuation done by anybody else? The value of the site could vary from its unchanged state, prior to any development, to its potential after development, in the course of development or after initial development. Could there be a vast difference between the valuations?

Yes, they would be vastly different.

Is it correct that there would be 500 acres of potential development land after the initial development proposal?

I am not quite sure that you can take 500 acres and multiply it by the value of intensively developed land. In that kind of area and with that size of site there are going to be tracts of it that will either not be capable of being put to full intensive development or tracts that will be retained as open space in parks and so on. I am not sure that it is quite a simple measure. The measure was not made, that is really the key element.

I realise that I have run out of time. I have a number of other questions which I hope to raise again.

Is Mr. Teahon aware that the Government statement in relation to his position with CSID has been issued and handed to me a few minutes ago?

Yes, I am.

Are the contents agreed? Do you have a response to that statement?

The Government asked Mr. Dermot McCarthy, Secretary to the Government, to contact me this morning. He put the terms of the statement to me. I responded to him, after thinking about it, that I agreed, in the interests of the project. I have stated that publicly.

In net terms, you have agreed to this position put to you by Mr. Dermot McCarthy on behalf of the Government?

Yes.

You have agreed to step down as chairman and chief executive?

I have agreed to the terms of the statement.

The terms seem to indicate, as far as I read them, that you are no longer the chairman or chief executive of the project.

That is correct.

Do you have any response to that, in the round, in terms of what you said earlier about not being prepared to resign because you feel you have done nothing wrong?

I remain of the view that I have done nothing wrong. The Government put a proposition to me and I said that I agreed, in the interests of the project. I stated publicly before coming here for the 2 o'clock meeting that when I said "the interests of the project" I believe that the pool for the Special Olympics and the entire sports campus is a development - and I think that it is referred to in the statement - of which Irish people will be proud when completed. It was in that interest that I agreed to the statement. I also said at that time that I have received what were for me a most surprising number of calls and letters of support and I said that I was most grateful to all of the people who gave me support.

On that point, there have been statements in recent days that this project, namely the aquatic project for the Special Olympics, cannot be delivered on time if you are not part of the management team or if the management team is disrupted. Is it your view now that it can be delivered and if it cannot be delivered what are the consequences, financial or otherwise?

The project, the pool at Abbotstown, will be delivered on time and in budget. I believe that to be the position post the Government statement.

So you believe it can be delivered on time. Rather than pondering or delaying on the negative, what is the Exchequer liability if this is not delivered on time, if the Special Olympics do not have a pool? What are the consequences? Presumably we have also contracted with them.

I am not aware of the terms of the contract to which Denis O'Brien referred the other day between the Government and the Special Olympics.

Perhaps someone else here can tell us the terms of the contract with the Special Olympics. This is germane, because clearly now the priority for everyone on the official side around this table must be to deliver on the project. If there is a delay, a problem or a financial cost to not delivering on time we ought to know it now as a committee rather than be asking why down the line. Who is from the sponsoring Department, Ms Hayes?

We would be advising, in a worst case scenario, that the games organising committee look at the availability of perhaps a 25 metre pool. The commitment entered into by the organising committee when it made its bid for the games was that it would provide a 50 metre pool within 30 kilometres of Dublin. If that was not provided, the international committee had indicated that perhaps a 25 metre pool would be acceptable. We would have to look at the availability of a 25 metre pool. It would also be a great inconvenience to the participants. There is, as the committee is aware, a 50 metre pool in Limerick. It does not have the same level of spectator capacity and it is more than 30 kilometres from Dublin, which would defeat the purpose of the organising committee to provide a strong, family-campus style games in Dublin in 2003.

What is the contingency plan in relation to a 25 metre pool or campus? What other venues are being looked at there?

As of now the games organising committee does not have a contingency plan although I suggested to the chairman of the games organising committee in 1998 that it would be prudent to have a contingency plan. He was confident that a 50 metre pool would be provided so he did not look at that contingency.

So there is no provision but there is no contractual financial liability to the State if this goes wrong, if we do not develop it? Many people around this table and outside this room have expressed concern about the management of this project. We should clear ourselves in advance and make sure that nothing else goes wrong.

To clarify, this is a commitment given by the games organising committee. It would be incumbent on the organising committee to look at an alternative if a 50 metre pool was not delivered on time.

So it is incumbent on it and there is no cost. Are you saying that there is no cost to the State if this new chairman and chief executive do not deliver?

My understanding is that there is not. However, there is the issue of image and we certainly would not like to fail to deliver on the promise that Ireland has held out for the games in 2003.

So there is no financial contractual obligation?

No. We would have to look at the contract again, but not that I am aware of, on the face of it.

The 25 metre option is one not for you but for the organising committee of the Special Olympics?

Yes.

So you have no responsibility in that regard. That is good news, I suppose, out of it all. Back to Mr. Teahon in relation to the issues raised by the Attorney General's analysis. Did you provide any information to rebut the Attorney General's analysis of the sequence of events in relation to this matter? It is pages 29 to 43 of his report to the Government.

I wrote to the Taoiseach in relation to the analysis in the draft report. I have only just seen the analysis in the finalised report.

Have you had time to fully consider the analysis in the final report?

No.

Have any immediate changes leapt out to you as you scan this or glance through the draft, between the draft and the final report.

It seemed to me in reading the report which I have done just once, although in some respects it is similar to the draft report, that the chronology, the facts set out in it are the facts as I know them to be. I have no issue with the facts. I felt, in relation to the draft report, I could not agree with some of the analysis.

Are you satisfied now that the changes which have been made from the draft to the final form make you happy with the analysis?

I would now be comfortable with the vast majority of the analysis, but because I have not had the opportunity of studying it in detail and referring back to issues which were raised, not just by me but by others who responded to the draft report I am not really in a position to say at this time that there is nothing in the analysis with which I would not take some issue.

Yes.

For the vast majority I would not have an issue.

Is there anything which strikes you from the small minority of things which you might dissent from or find a problem with? Can you identify anything immediately that springs to mind in relation to the analysis which might strike you as not being in accordance with your analysis or your view?

On the positive side of this my judgment would be that the analysis essentially sets out what the board reported to the Minister, namely that EU procurement law was followed in full. To the extent that is the case I have no problem with it. The analysis also sets down that the consortium which was successful was clearly the consortium which should be preferred. I have no problem with that. Given that I have not had the opportunity to take what is now in the analysis section and cross-check it against the points that I and others made, I would prefer to wait until such time as I had done that to say that there was a piece of analysis with which I did not agree.

You might communicate with us directly in relation to that if there are substantive issues which you question. Let me draw your attention to pages 41 and 42 of that analysis, which I regard as containing the most important conclusions. The statement on page 41 - and I am breaking the paragraph in two in a sense - starts with the statement "However embarrassing the failure of Waterworld UK Ltd as a contracting party may have been, . . . ". The second sentence reads "Failure to alert those politically accountable to the true situation seems to seriously call into question the existence of a proper relationship between the executive and the board and between the board and its State shareholders.". Does that strike you as being relatively accurate, given your statement that maybe you should have told? Is that something you can live with?

One of the problems I had with the analysis in the original draft report - and as I said, I still have not found it in the finalised report - was that in answer to a questionnaire circulated by the office of the Attorney General to board members and assessment panel members I said that I was operating and saw myself operating on the basis of delegated authority from the board. I have not seen this in the analysis section, and I would have expected to see it in the analysis section because it seems a material consideration. In so far as there is in effect a criticism in the sentence "Failure to alert those politically accountable . . . seems to seriously call into question the existence of a proper relationship between the executive and the board and between the board and its State shareholders", I would have thought it would have been in order to set down what the board said to the Minister in its report of 8 March, which was referred to not just by me but by a series of board members in their response to the Attorney General's questionnaire.

A series of board members?

Regarding the answers that board members gave to the questionnaire, I think virtually everybody referred to the fact that the board had sent to the Minister for Tourism, Sport and Recreation a statement, after the board meeting of 8 March, which set down very clearly that the board had put a process in place with which the board was satisfied, and that the board had delegated to the executive the implementation of that process. I would have expected in an analysis section, and given that this was one of the questions in the questionnaire, that in making the statement that failure to alert seems to call seriously into question the existence of a proper relationship between the executive and the board - just taking that piece of it——

That is the key point.

Yes.

Apart from the relationship with the State, it seems - if I am not reading too much into it, and please correct me if I am, Mr. Teahon - that you had an improper relationship with your own board.

This analysis is, I take it, an analysis by the Attorney General, so I am not the person who should answer, in some senses.

To clarify, you are happy that you have had a proper relationship with your board and you cite the 8 March statements by your board members in response to the questionnaire as proof of that.

I would have expected, and said in response to the original draft report, that that would be conveyed. For the information of the committee, I have received a letter from Margaret Hayes, Secretary General of the Department, informing me that at the time the original draft report was given to the Government, the Government also had from the Minister for Tourism, Sport and Recreation and apparently noted, the report from the board. I have a letter to that effect from Margaret Hayes.

What is the significance of having that?

I am simply trying to be as open as possible. I did raise this as a concern on my part and I have a response from Margaret Hayes in relation to raising that concern.

What is that response in effect, Ms Hayes?

Mr. Teahon's concern related to the issue of the delegated framework set out by the board for the procurement process, which delegated certain authorities to the executive chairperson and his executive team and was confirmed by the board in its report of 8 March to the Minister. Mr. Teahon was concerned that that fact might not have been brought to the attention of the Government. I simply confirmed that the Minister, Deputy McDaid, had included the full report from the board to him of 8 March, including that fact, and that it had been noted by Government for the record.

On what occasion was it noted?

When Government considered the draft report from the Attorney General last week.

The Government has noted——

——the full content of the report from the board of CSID to the Minister for Tourism, Sport and Recreation, which contains the statement that the board had established parameters for a process in relation to the award of the contract for the aquatic centre and had delegated the implementation of that process to the executive. The board is satisfied that the process established was appropriate.

The board has established it.

Yes.

What I am trying to get at here is that the Government, if I hear you correctly, has noted that the delegated authority under which Mr. Teahon acted was appropriate and correct and right. Is it usual for the Government to draw attention to this?

He has noted the board's statement that it had established parameters for the process. I think Mr. Teahon's comment relates to the Attorney General's reference.

Is it usual for the Government to note that somebody had acted in accordance with their delegated authority? Is that normal?

If a Minister presented or included in a submission to Government a particular report, it would be normal for the Minister to ask that Government note the report included in his memorandum, and that would be recorded.

The significance of noting, meaning that it is now acknowledged by the Government that whatever Mr. Teahon did in relation to his conduct of these matters——

No, that the board made a clear statement to him that it had established parameters for a process etc.

There is no question, from the Government's point of view, that he was outside his parameters of delegated authority.

It has not disagreed with the board's statement because it has no grounds for disagreeing. The board has assured the Minister that it set out parameters.

What I am trying to get to grips with here is that there is no question as far as you are concerned and the as far as the Government is concerned that he was outside the parameters set by his own board in relation to delegated authority. That is important because in our private session the issue of people's reputations was raised. It seems to be a very germane fact that in effect, in terms of the delegated authority under which he acted in relation to this competition, he was within the board's framework.

Yes.

The Government's objective then is to get the framework set out?

The Government made no further comment. It simply noted the content of the board's report to the Minister for Tourism, Sport and Recreation.

Mr. Teahon might provide clarity on that. Is it your understanding, therefore, that the Government has noted the fact that your company did set out an adequate framework of delegated authority for you?

That is my understanding of what happened. The board had a board meeting, discussed all the issues, produced a statement which all the board members that attended accepted and agreed to on 8 March and sent that to the Minister. The Minister gave it to Government and Government noted it.

As you understand it, that was the go-ahead for the framework or manner in which you conducted all of this?

It was the Government noting a statement by the board of the company that it had put in place a process with which it, the board, in retrospect, having looked at it again, was satisfied, that the board had delegated to the executive the implementation of that. I saw myself, and said so to the board, as acting on the basis of that delegated authority. I should say, because I do not want to be partial in this, that in relation to the other issue I said in my statement to the committee on day one that my communication on the matter was inadequate. I am not trying to have it both ways.

No. When you say your communication was not as good as it could have been, are you saying that you were outside the framework laid down and noted by the Government?

No. When I said the communication was inadequate I said that I would not accept any suggestion from any source that my actions were designed with any dishonest or improper motivation in mind. In other words, I am very clear. I did nothing wrong. I acted on the basis of delegated authority and my communication was inadequate.

Yes, but you definitively were not outside the framework of delegated authority, as you saw it,——

That is very clear in the board's statement.

As you understand it, does the sequence of delegated authority go from the Taoiseach to the Government to the company to the board?

The company is what is known under EU procurement law as the awarding authority. Therefore it is the board of the company that has the entitlement to put a process in place. The board did that and I acted on the basis of that delegated authority.

To return to the proper executive relationship, you have slight concerns about the reference in the Attorney General's report about the relationship between the company's executive and the board which presumably you will flesh out in detail at a later stage.

Yes. If somebody was reading it without complete knowledge of all the different events, that page could benefit if it stated that the board had put the process in place as set down in its report. I feel that the sentence, "Failure to alert those politically accountable seems to call seriously into question the existence of a proper relationship between the executive and the board . . .", would benefit from saying that theboard had put this process in place and had delegated authority. The existence of a proper relationship between the board and its State shareholder seems to me to be a different issue.

Yes.

Ms Margaret Hayes, do you have an observation on that?

I would ask the Deputy to note that on page 40 of the Attorney General's report, under "Corporate governance", the Attorney General acknowledges that:

The board of CSID delegated to the Assessment Panel the function of deciding on the preferred bidder for the . . . .

Therefore there is an acknowledgement.

Yes, there is an acknowledgement but that is in relation to the assessment, not to the delegated authority. Mr. Teahon was not party to the assessment as such, is that not correct?

I was part of the assessment

Party - part of it.

It is a part issue. There is a wider issue which seems to be dealt with in the sentence, "Failure to alert . . . call . . . into question the existence of a proper relationship . . .", in other words, the relationship between the executive and the board is a broader issue than the issue of the board delegating "to the Assessment Panel the function of deciding on the preferred bidder . . .".

On page 41, the last paragraph——

Mr. Murphy wants to contribute.

On a pure technicality, the board of CSID delegated these powers to Mr. Teahon, not to the assessment panel. The assessment panel were not delegated the power. That is mentioned on page 40. It is the executive that actually was delegated that power. The assessment panel was not delegated power.

Therefore is Mr. Murphy saying the Attorney General's report is inaccurate as far as he is concerned?

Yes, we have one or two small inaccuracies to note.

Let us read this back because it is important that we clarify this: "The board of CSID delegated——

Sorry, Deputy.

This is very important.

When we are referring to pages, etc., in order to help the other people here I want to publish it each time because it is not coming up on the screens on the far side of the committee. In future, we will publish it automatically.

I apologise, Chairman. Mr. Murphy from the Office of Public Works is referring to the section headed "Corporate governance" on page 40. This is the statement, in order that we get it absolutely correct:

The board of CSID delegated to the Assessment Panel the function of deciding on the preferred bidder for the Aquatic and Leisure Centre.

It is the first statement under the section "Corporate governance". If I heard Mr. Murphy correctly, he is saying that that statement by the Attorney General is inaccurate,——

Yes.

——that the assessment panel did not enjoy "the function of deciding on the preferred bidder for the Aquatic and Leisure Centre.". Is that correct?

Yes. Chairman, I am saying that if you look at the very last printed page of the report, you will see there——

Can Mr. Murphy give us the page reference?

There is no page number on it, I am afraid, but it is the very last printed page of the whole report, just before the hand-written notes. The committee will see it is headed "Report from the Board of CSID to the Minister for Tourism, Sport and Recreation". Paragraph three states:

The Board had established parameters . . . [etc.] and had delegated the implementation of that process to the Executive.

not to the assessment panel.

It states: "delegated the implementation of that process". Perhaps I am confused but I understand the words to mean that the executive is in charge of a process but that the assessment panel is in charge of the function of deciding on the preferred bidder. Maybe that is a silly distinction. If Mr. Murphy can clarify that, we would be a long way forward on that. It states "delegated the implementation of that process", that is, the award of the contract.

It states "to the Executive" and all the assessment panel does is make a recommendation on which the executive acts.

Deputy, you have two minutes left.

I want to clarify that from Mr. Teahon's point of view because it is quite germane to other issues raised by the Attorney General in his report if we are not clear here who has made the decision. Is that in accordance with Mr. Teahon's view? Was it he, not the assessment panel, who made the decision in relation to the preferred bidder? Was it that he had delegated authority to make that decision?

I would say that one of the parameters that are referred to in the report of 8 March is that the assessment panel would have the function of making a recommendation, in other words, the assessment panel, in my opinion, was not making the decision as such; the assessment panel was reaching a judgment, and that that was one of the parameters.

To the extent that the Attorney General has stated in his first sentence on page 40, under "Corporate governance", that the function of deciding on the preferred bidder was that of the assessment panel, would Mr. Teahon think, as Mr. Murphy does, that that is inaccurate? The panel does not make the decision.

We are getting into issues that are not that material. In other words, I would not see myself, as the executive chairperson, under any circumstance refusing to accept a judgment of the assessment panel. In other words, everybody saw the assessment panel as making the judgment. Nobody would come along and say, "We have the recommendation from the assessment panel but we are not going to accept it". Therefore we are getting into an issue where if anybody said "We will not accept the assessment panel's view on this", I would think they are seriously wrong.

Deputy, your time is up but I want to exhaust this avenue.

I had one final question, Chairman.

I kept the other Deputies to 30 minutes as agreed.

I have one final question.

There is always one final question, Deputy. Mr. Murphy, did you want to say something?

On a point of clarification, I would hope that an assessment panel recommendation normally would be well made but the assessment panel normally only deals with certain elements. In other words, the decision on the overall matter, in this case, would be for the chief executive and it would take into account more than just the recommendation of the assessment panel.

Deputy I will allow you one final short question.

The final question relates to Annex I, Annex J and Annex K in the Attorney General's report, which are principally memos from an Aidan Walsh, who, I presume, is employed by PricewaterhouseCoopers. This includes statements to the effect that Laura Magahy of Magahy and Company raised issues about the lack of clarity in what was being proposed by Waterworld. It also says that this Mr. Walsh highlighted to an Una Carmody the view that the Waterworld and Dial proposals were very thin on the operating side as they did not have P & L and cash flow projections for the length of the concession contract and they did not say how they would finance the operating part of the business. They also point out inter alia that Waterworld UK Limited is a £2 company which has not commenced trading according to its latest annual return. Has Mr. Teahon any problem with that memo from Mr. Walsh, particularly his view that the Waterworld submission was thin on the operating side? We have heard Mr. Teahon's concerns about the financial standing of this consortium but it seems Mr. Walsh of PricewaterhouseCoopers was calling into question the Waterworld and Dial proposals on the operating side which I assume to mean either what they were proposing in operating terms to manage this facility or the personnel involved. I am not clear what he is referring to and Mr. Teahon may have a better view on that.

I would have to say that is one sentence that I do not identify with for two reasons. First, the advice to the assessment panel on the operating issue if we look at the previous paragraph on the third sentence reads "The operating proposals were being reviewed by Kit Campbell". Kit Campbell has expert knowledge in relation to the aquatic centres and if I were making a judgment as I was as a member of the assessment panel on the operating proposals I would have been influenced virtually entirely by the Kit Campbell review. This review was clear minded because the judgment he made was a relative assessment of three proposals. In other words, we had operating proposals from each of the three consortia and Kit Campbell was clear that, by a significant margin, the operating proposals from the Waterworld consortium were significantly the best. I am not sure what Aidan Walsh means by saying the Waterworld proposals were thin on the operating side because, in my opinion, the judgment the assessment panel would rightly rely on was that of Kit Campbell.

For the chairman's own information, I refer to page 2 of the PricewaterhouseCoopers memo from Aidan Walsh in annex 1. It refers to a Keith Neilson from the Office of Public Works who also reviewed the proposals from an operating perspective and concluded that the Waterworld proposal was the most developed and robust. I am trying to find out if the Office of Public Works was involved at some level of review or assessment of the case.

To clarify that matter "operating in this situation" refers to the maintenance of the plant. Keith Milson, who is mentioned here, has nothing to do with operating swimming pools or anything like it - he is a mechanical and electrical engineer in the Office of Public Works and the thing has been mis-stated here. The term "operating" in this context means physically operating.

I ask Mr. Teahon to focus on the critical week of 15 December to 22 December 2000. The Attorney General has set out a road map on page 6. The closing date for the bids was 15 December. On 18 December the board had the PricewaterhouseCoopers due diligence report. On 19 December the consortium was selected as preferred bidder status. On 19 December the Cabinet agreed. On 21 December the board had the completed PWC report and 22 December was set as the date for the planning applications to be lodged.

Mr. Teahon had a very busy week in that period. I am not saying that sarcastically but I do not know how he packed that much into the week. Since the Special Olympics are not until 2003, why was it necessary to impose the 22 December deadline for planning because that seems to be the cause of virtually everything that has happened.

We have - and it may be useful to produce it which I am happy to do - a time path backwards from the date on which the pool will be required for the Special Olympics. There were people who said that even getting it in for planning permission for 22 December might miss the Special Olympics but we were satisfied that once it was in and, allowing for all eventualities in terms of objections which did not materialise that was the date we needed to hit.

The project was granted panning permission in March. It put Mr. Teahon into a situation. He had the preliminary PWC conclusions before he went to Cabinet——

Yes.

——and yet he allowed the Cabinet make the decision to contract the consortium that was not what it represented itself to be which we now know from the Attorney General's report. Its financial capacity was much less than anything else that had been represented and its international reputation in terms of running the water park industry was not what it appeared. Mr. Teahon had time to say "steady up" and refer to the preliminary report indicating these difficulties but instead he let the Cabinet go ahead.

In fairness to myself, I would have to say that one piece which is missing from this chronology is the letter we sent out on the afternoon of 19 December. There was not just a letter on 21 December which is referred to here.

To whom?

To the consortium. The letters that went out on 21 December were letters to each of the three consortia. There was a letter to the consortium on 19 December and there was a reply from the consortium on 20 December.

What did the letter of 19 December say?

It set down the conditions which are spelt out, as I recall, more fully in the letter of 21 December.

Mr. Teahon was in charge of a very prestigious project and was he not alarmed when he saw the preliminary PWC conclusions? Presumably he took the representation of Waterworld UK on its own terms. This company S&P turns out not to be substantial and then NGBS as represented as the company which had the expertise in running the water leisure industry. Alarm bells must have gone off in his head when he saw it.

We are into words here I would think in terms of alarm. I identified that there is an issue. How does one deal with that issue? What the Deputy said is that we allowed the Government to contract. I did not see the situation as being one in which there would be a contract irrespective. I saw that there was an issue in regard to the economic and financial standing of this consortium but it was one that could be relatively readily dealt with. Admittedly, in the fullness of time, it was not dealt with on the basis I would have foreseen on that day or the following day, because the answer that came back on 20 December was that a parent company, or parent company type guarantee would be provided by NGBS International. As far as we were concerned on 20 and 21 December, we were dealing with a consortium that could be adequately dealt with on economic and financial standing.

Remind me when you left the Department.

When did I cease being secretary general?

Yes.

Early May 2000.

Therefore, in your capacity as executive chairman, did you function initially out of the Department of the Taoiseach?

I was involved from the feasibility study, the first thing that happened.

When did you physically relocate to Blanchardstown?

June or July.

It was that early?

In other words, we did not have the building at the very earliest stage.

The Attorney General refers to the memo being faxed from the offices of CSID. Did you, Mr. McCarthy, or anyone in your Department, make substantial changes to that memo?

No, Chairman.

Are you telling us that someone who is no longer a civil servant, who is a business man, was writing memos for the Taoiseach?

Chairman, the position was that the material for submission to the Government was submitted by CSID in the format of a memorandum and, presumably, that reflected the past experience of the people involved as to what would be required. That material was incorporated then into what was substantively a memorandum for the Government.