Before we begin, I remind members, witnesses and those in the Visitors Gallery to turn off their mobile telephones as they interfere with the quality of the sound transmission of the meeting. I advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the House or an official by name or in such a way as to make him or her identifiable. Members are reminded of the provisions within Standing Order 163 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 policies. I welcome the Secretary General of the Department of Education and Skills, Mr. Seán Ó Foghlú, and ask him to introduce his officials.

I am joined by Mr. Christy Mannion, who is a principal officer; Ms Noreen Bevans, who is an assistant principal officer, and Mr. Gary O'Doherty, who is an assistant principal officer.

I ask Mr. Tom Boland of the Higher Education Authority to introduce his officials.

I am joined by Mr. Andrew Brownlee, who is our head of funding, and Mr. Stewart Roche, who is our management accountant

I ask Professor Willie Donnelly of Waterford Institute of Technology to introduce his officials.

I am joined by Ms Elaine Sheridan, who is our financial controller, and Mr. Paul Quirke, who is our head of buildings.

I ask Dr. Brendan Murphy of Cork Institute of Technology to introduce his officials.

I am joined this morning by Mr. Paul Gallagher, who is our vice president for finance and administration.

Mr. John Burke of the Department of Public Expenditure and Reform is also in attendance. I ask the Comptroller and Auditor General to make his opening statement.

The Waterford Institute of Technology financial statements before the committee today relate to the academic year ending on 31 August 2013. The audit was completed in June of this year. Delays in the production of audited financial statements have also occurred in previous years, related in part to a complex set of issues affecting the institute, which the committee has previously examined. Unusually among the institutes of technology, Waterford Institute of Technology set up a number of companies in the 1990s to provide a range of ancillary services such as student accommodation, catering, sporting and recreation activities and retail outlets. These companies are grouped as Diverse Campus Services Limited. The scale of operation of the companies expanded over time and they undertook a number of major capital projects. Diverse Campus Services receives substantial block funding each year from the institute. A note to the institute’s financial statements gives summary information about the companies’ operations, but their results are not consolidated with those of the institute. Based on the nature and pattern of interaction between the institute and the companies, we concluded they are part of the normal services typically provided on the campuses of third level institutions and they should be included in consolidated accounts produced by the institute.

In November 2012, the Minister for Education and Skills commissioned Mr. Dermot Quigley to undertake a statutory inspection to review the relationship between the institute and the companies. His report was published in July 2013. He recommended that the companies should be restructured as subsidiaries of the institute and that the institute should then produce consolidated financial statements for the group. This process has been ongoing. The income and expenditure account shows the institute had income of €84.7 million in 2012-13. Expenditure for the year amounted to just under €85 million, including a transfer of €3.3 million to Diverse Campus Services. This left the institute with an operating deficit of approximately €300,000 for the year. Note 26 to the financial statements acknowledges that the institute has incurred operating deficits for three consecutive years and discloses the rationale for the governing body’s belief that it is appropriate to prepare the financial statements on a going concern basis. I have drawn attention to this note in the audit certificate.

The audit certificate also draws attention to three disclosures about governance issues included in the statement on internal control, relating to non-compliance by the institute with the code of governance of Irish institutes of technology. First, the governing body did not carry out a comprehensive review of the effectiveness of the system of internal controls in respect of the year of accounts, as it is required to do. Second, the institute’s audit committee did not issue an annual report to the governing body until September 2014 due to the committee’s concerns about the timely provision to it of key information. Finally, there were four areas of expenditure with a total value of €524,000 where public procurement rules were not complied with. As a consequence of delays experienced on the 2012-13 audit, we were unable to commence fieldwork in respect of the 2013-14 financial statements until July of this year. The institute is carrying out some additional analysis in relation to issues raised during the audit and has indicated that it expects to respond to the audit queries early in 2016. Assuming we are satisfied with the responses, I hope the financial statements can be certified before Easter. I expect they will reflect full consolidation of the Diverse Campus Services companies.

The consolidated income and expenditure account for Cork Institute of Technology for the 2013-14 year shows an operating deficit of €126,000 for the year ended 31 August 2014. This compares to a surplus of over €1.4 million in the previous year. The institute’s income for the 2013-14 financial year was €98.6 million. The institute incurred expenditure of €98.7 million in the year, with staff costs accounting for €64.2 million or 65% of the total. I issued a clear audit opinion in relation to the 2013-14 financial statements. In March 2014, my office received anonymous correspondence containing a large number of allegations in regard to Cork Institute of Technology. Similar correspondence was received by the Committee of Public Accounts at that time. In view of the breadth of the allegations, my office sent a copy of the correspondence to the chairman of the governing body of Cork Institute of Technology, rather than to the president, who is the accountable person. We sent copies of the correspondence to the president of the institute, the Department of Education and Skills and the Higher Education Authority. We asked to be kept informed about the actions proposed to investigate the allegations. Following a tender process, the institute appointed KPMG in October 2014 to investigate the allegations. We were informed by the institute in December 2014 that the investigation had been completed and that a full detailed report would issue in due course.

On 22 December 2014, my office received additional correspondence, apparently from the same anonymous source. This contained further allegations and repeated some of the allegations raised in the March 2014 correspondence. We sent a copy of the new correspondence to Cork Institute of Technology, the Department and the Higher Education Authority. On 2 April 2015, we received a letter from the chairman of the institute’s governing body indicating that the audit committee had finalised its review of the allegations made in the anonymous correspondence and of KPMG’s findings from its investigations. The letter enclosed a copy of KPMG’s report. KPMG counted a total of 196 allegations made in the two sets of correspondence. It concluded that 66 allegations were repetition of other allegations, 33 allegations did not contain sufficient information to allow investigation and the remaining 97 allegations had been adequately addressed by explanations and documentary evidence provided by the institute. KPMG reported that it had found no evidence of wrongdoing in relation to the allegations but it did identify a small number of control improvement opportunities in regard to three of them.

While carrying out the audit of Cork Institute of Technology’s 2013-14 financial statements, my office assessed the appropriateness of the institute’s response to the allegations made and reviewed KPMG's report and findings. We concluded that the institute's response to the allegations was prompt. We were satisfied that the investigation carried out by KPMG was appropriate and adequate. We saw no reason to disagree with the conclusions it reached. We concluded that the control weaknesses identified by KPMG in its review of three of the allegations were in the nature of management point letters, which we are following up during the audit of the 2014-15 financial statements. I concluded that there was no requirement for me to report formally to Dáil Éireann in regard to the issues raised in the anonymous correspondence.

I thank the Chairman for the opportunity to make this statement concerning the 2013 financial statements of Waterford Institute of Technology and the 2014 financial statements of Cork Institute of Technology. I have already forwarded some advance briefing to the committee and will therefore keep this opening statement short. I assure the committee that the governance and accountability of the higher education institutions is an important matter for the Department and the Higher Education Authority, HEA. The Department, with the co-operation of the HEA, is committed to ensuring appropriate and efficient structures are in place to allow for a system of good accountability in the sector. I have set out in the background note the measures under way to enhance the system in place.

I would like to mention in particular, the Department’s intention, in conjunction with the HEA, to commence a series of corporate governance compliance reviews utilising a centralised procurement framework to deliver reviews which will evaluate the effectiveness of governance in organisations against stated policy, best practice, national and international standards. The review process may focus on a specific aspect or area of governance or may be broader in scope. The Department has recently agreed with the HEA that the first rolling review, so-called, of governance compliance will be on procurement and will look at practices across the third level sector. The terms of reference have been finalised, with the review expected to be undertaken in the first quarter of 2016.

On Waterford Institute of Technology, WIT, as the committee is aware, the Minister took the exceptional step to initiate a statutory inspection into the relationship between Waterford Institute of Technology and companies providing campus services to it in November 2012. The HEA had been liaising with WIT since 2011 in an effort to regularise the relationship between the institute and the companies concerned. The process was quite complex, especially given the financial arrangements in place and the imminent liabilities relating to the Manor Village student accommodation development and the Carriganore complex.

Mr. Quigley provided his report to the Minister in June 2013. He concluded that while the arrangements were well motivated, they were not appropriate and he recommended a reactivation of the process to acquire and restructure the companies as full subsidiaries of the institute. He also recommended that the institute proceed with a buy-out of the Manor Village development and the completion of the Carriganore sports complex. A full overview of the report’s recommendations has been provided to the committee in briefing material. The Department would like to acknowledge the positive engagement shown by both the institute and the companies during this inspection process, and the acceptance of and the speedy implementation of Mr. Quigley’s recommendations. This consolidation process is now complete and the Department is arranging for Mr. Quigley to review current arrangements with a view to reporting to the Minister in the spring.

I am conscious that the committee has taken a particular interest in the current status of the Carriganore sports complex in WIT. As the committee is aware, the project commenced in January 2012, and significant work was completed on it during the year. In parallel, the institute was working towards a regularisation of its relationship with the companies. As the institute was not in a position to access borrowings, other sources of finance were put in place to bring the development to a safe and protected state in early 2013. As noted by Mr. Quigley, this resulted in “major financial headaches from both DCS and WIT”. To protect the investment already made, Mr. Quigley recommended the completion of the Carriganore development and that moneys should be made available to the institute, either through a borrowing facility or Department funding, to do this. In response, the Department initially committed €2.5 million to provide for the completion of the project. This was communicated to the committee previously. There has been an extensive interaction between the Department and WIT since then in an effort to assist WIT in ensuring a final resolution of the issues which were the subject of Mr. Quigley’s report. This engagement has been intensified in recent months as the tender competition for the project drew to a close and complete clarity was finally brought to the costs involved.

In that context, my officials wrote to WIT on 8 October seeking some final documentation on 27 November last to confirm our proposal to provide an additional €2.1 million to enable the completion of the sports complex and to finalise the implementation of the recommendations set out by Mr. Quigley in his report. Following WIT’s acceptance of the proposal, the Minister announced the additional funding on 1 December. The funding brings the Department’s total outlay towards both the purchase of the Manor Village student accommodation development and the completion of the sports complex to €12.1 million. This positive engagement will culminate in the completion of a valuable project for Waterford IT. Cognisant of the benefits to all stakeholders involved in the Carriganore sports complex and the financial situation of the institute, the complex will become a fully functional facility which will benefit the staff and students of WIT as well as the wider local community.

On the anonymous correspondence on a number of issues in Cork Institute of Technology, the committee is aware that KPMG has undertaken a review of the allegations. The report on the first set of allegations involved a review of the 175 allegations identified within the anonymous correspondence. KPMG also provided a detailed report on the 21 allegations contained in the second anonymous letter. Both consultant's reports have been submitted to the HEA and they have found no evidence to support the main thrust of the allegations. The HEA followed up with CIT in respect of some minor issues that arose during the review and these matters have since been addressed. The HEA has confirmed to the Department that, based on the KPMG reports and supporting information supplied by CIT, it is satisfied with the process implemented by CIT in investigating the allegations. I am happy to answer questions from the committee.

I will focus on two issues, the Carriganore project in Waterford Institute of Technology and the anonymous allegations relating to Cork Institute of Technology. In regard to Waterford Institute of Technology, the HEA notes Mr. Eugene McKenna’s correspondence to the committee on 10 October 2015. The HEA was aware of the potential consequences of the institute not proceeding with the Carriganore project, but there was no legitimate funding route available to allow the project to continue. WIT has no power to borrow either directly or through letters of comfort or guarantee. The proposal from DCS was therefore ultra vires the institute. There are no circumstances whatsoever in which the HEA could condone such actions.

In July 2012, the project was over 60% complete, with works to the value of €6.5 million completed on site. There were, however, no funds available to progress the project without borrowings, and the development committee was forced to terminate the contract. The HEA was aware that it is not good practice to terminate the employment of a contractor prior to the completion of a contract. Unfortunately, no other options existed as the project had not been procured in accordance with public procurement guidelines or the capital works management framework, and a moratorium on new capital projects in the higher education sector was introduced in November 2011 which prevented any capital grants being issued to support completion.

The HEA raised concerns regarding the relationship between the institute, the development committee and its associated subsidiary companies as far back as January 2011. The governing body was also known to be considering the relationship. On 14 October 2011, the HEA wrote to Mr. Tony McFeely, then acting president, and sought details of outcomes of discussions at governing body level and requested that the institute put in place a team of appropriately qualified personnel to examine these and related issues and report back to the governing body.

While this examination was progressing, the acting president of WIT, Mr. Tony McFeely, provided a so-called letter of comfort to the development committee regarding the funding of phase 3 at Carriganore. A report on the governance relationships did not issue until June 2012 and the governing body adopted the report and approved the implementation of the preferred option “to revise the structure of the development committee and Campus Services and make them subsidiary undertakings of WIT under new management arrangements”. Numerous challenges faced the institute regarding the consolidation and transfer of significant debts and future liabilities onto its balance sheet.

On 13 November 2012, the Minister for Education and Skills appointed Mr. Dermot Quigley as inspector to carry out, pursuant to section 20 of the Institutes of Technology Acts 1992 to 2006, a statutory inspection of companies providing a range of services in WIT. The report produced confirmed the relationships between WIT, DCS and the subsidiary companies were inappropriate. Fundamentally, the institute was wrong in providing letters of comfort to support borrowings for the Carriganore development.

In terms of Cork Institute of Technology, as the committee is aware, in March 2014 the Comptroller and Auditor General received anonymous correspondence containing a significant number of allegations in respect of CIT. The correspondence was subsequently forwarded to both CIT and the HEA. In late December 2014, a further set of anonymous allegations relating to CIT was received. CIT commissioned an independent firm of auditors, KPMG, to review and report on both sets of allegations. The HEA notes that KPMG carried out a detailed and thorough investigation of these allegations and that only minor matters of clarification were required. The HEA further notes that CIT’s audit committee was satisfied that the matters had been diligently and appropriately investigated.

During the review process the HEA remained in close contact with CIT. It also had the opportunity to review the allegations as well as the KPMG findings and has itself sought additional information or clarification as required from CIT.

This information was provided to the HEA in a comprehensive and timely manner. The HEA is satisfied that a detailed and thorough investigation was carried out by CIT and its auditors, with the auditors identifying no significant issues arising.

In circumstances such as these, it is vital that higher education institutions have processes in place to carry out comprehensive and independent investigations. This is because it is institutions and, in particular, their governing bodies that are primarily responsible for the management and operation of their internal affairs. In the context of dealing with specific allegations, institutions are expected to comply with the provisions of the Protected Disclosures Act 2014 and have procedures in place whereby employees may in confidence raise any concern about possible irregularities in financial, operational or other matters. Indeed, confirmation that such procedures are in place is now a requirement of annual governance reporting arrangements to the HEA. The 2014 Act also provides for disclosures relating to higher education matters to be made to me in my position as chief executive of the HEA.

I am happy to take whatever questions members may have.

I welcome this opportunity to update the committee regarding matters raised at previous meetings and issues reported in the financial statement of the institute for the year ending 31 August 2013. The briefing document supplied to the committee last week presents a detailed response to the various matters reported in the 2013 financial statements.

I propose in my opening statement to concentrate on two major issues that have been the subject of considerable comment at recent meetings of the committee. These are progress in respect of the relationship between Waterford Institute of Technology and Diverse Campus Services Limited, DCS, including on the implementation of the recommendations of the Quigley report, and the status of the Carriganore sports campus development. I will make particular reference to the contents of three separate but related reports, those being, Special Report No. 78 of the Comptroller and Auditor General: Matters Arising out of Educational Audits, which was issued in February 2012; the Grant Thornton report published in June 2012 on behalf of the governing body of the institute; and the Quigley report, which was issued in June 2013 to the Minister for Education and Skills. These reports focused on the relationship between WIT and DCS, the company providing canteen and other services on campus.

Briefly, report No. 78 reads, "The patterns of interaction between WIT and a range of companies that provide services (canteen, residences, recreation facilities, retail outlet and sports hall) on campus suggest that the related activities are part of the normal services typically provided on the campuses of third level institutions and that they should be included in consolidated accounts produced by the Institute." WIT accepted and agreed with this recommendation. Indeed, at the time of the Comptroller and Auditor General's report, WIT's governing body had already commenced a review of WIT and DCS's relationship and commissioned a report from Grant Thornton. The Grant Thornton report was presented to the governing body in June 2012 and recommended that DCS and its subsidiary companies should be restructured under new management as subsidiary companies of WIT. The institute also accepted the recommendations included in the above reports and set about incorporating the DCS companies within WIT and consolidating their accounts within the WIT accounts.

This was overtaken by the appointment in November 2012 of Mr. Dermot Quigley by the Minister for Education and Skills as an inspector under section 20 of the Institutes of Technology Acts to review the relationship between WIT and these companies. The institute welcomed Mr. Quigley's recommendations, which were published in June 2013. His report points to aspects of the relationship between WIT and DCS that could be considered "inappropriate" in so far as they "had adverse effects on governance at the Institute and on the management of its financial affairs".

I am pleased to report that the institute has addressed the key issues raised in Special Report No. 78. The institute has also implemented the recommendations of the Quigley report and full details of their implementation are contained in the briefing documentation supplied to the committee. Specifically, the governance and internal control environments in the DCS group have been addressed. The DCS board has been reconfigured with appointments of representatives from the governing body, institute staff and an external chair. The code of governance for the institutes of technology has been implemented by DCS as far as is practical. These new structures reinforce the alignment of the vision and purpose of the DCS companies with the institutional strategy and the needs of the student community. The process of ensuring that alignment into the future is ongoing. The consolidation of the financial accounts of DCS and WIT has been completed within the 2014 financial statements, which are under audit, as mentioned in the briefing documentation.

I will turn my attention to the status of the Carriganore sports complex development. The key factors that led to the failure to complete the complex were the overdependence of DCS on financial support from WIT, DCS's increasing loan repayments and falling revenue, and the impact of the economic downturn on the institute's financial position. It would have been logical for DCS and WIT to re-evaluate the economic viability of phase 3 of Carriganore, in particular given that phases 1 and 2 entailed an integrated building that did not require phase 3. The sensible conclusion would have been not to have proceeded with phase 3 of the sports complex. This point was noted by Mr. Quigley, who stated it was unfortunate that a decision was made to continue with this phase.

The commencement of phase 3 created major pressure on the institute’s resources. Notwithstanding its decreasing financial resources, the institute made every effort to support the continued development of Carriganore, specifically through the transfer of €6.1 million from the institute to DCS during 2012. By the end of 2012, however, WIT and DCS did not have access to additional financial resources to invest in the sports campus. In addition, WIT's end-of-year accounts were showing a financial deficit. The institute was forced to terminate works on the complex and secure an unfinished building. This resulted in a cost for exiting the project and inevitably a cost for restarting the project at a later stage.

Following the Quigley report, the Department of Education and Skills made some funds available to the institute. These were sufficient to pay the outstanding costs for the Manor Village student accommodation complex, which was another DCS project. However, the residue was not sufficient to cover the cost of reopening and completing phase 3 of Carriganore.

I was appointed president in April 2015. Since then, I have focused on ensuring sufficient funds are available to complete and open the sports complex. Following further engagement with the Department of Education and Skills, sufficient funds have been made available to complete the building. I am pleased that a sustainable repayment schedule for all moneys due to the Department is in place. I am also engaging with the HEA in developing a three-year strategy to restore the institute's financial independence on an ongoing sustainable basis and to focus our resources on the continued education and economic development of the south east.

Regarding the consolidation of companies and associated matters, the institute has responded fully to the concerns raised by the Comptroller and Auditor General in Special Report No. 78 and has implemented the majority of the recommendations of the Quigley report. The future strategic development of DCS is aligned with the institute's strategic priorities. The company's financial and governance structures are also aligned with best practice. The role of the governing body from a governance, oversight and reporting perspective in respect of the subsidiaries is clear. All projects now have a robust and sustainable financial plan in place that will realise significant assets for the institute, the region of Waterford and the State.

I thank the committee for its invitation to attend this meeting on the financial statements of Cork Institute of Technology for 2014. CIT is one of the largest, most progressive and most successful institutes of technology in the country, with 11,000 higher education students, approximately 3,000 craft and junior music students and a staff of 1,400. It operates on four major sites in Cork city and county. CIT is institute of technology of the year for 2016, our third time in the past decade, and in partnership with IT Tralee, it has successfully completed three of the four stages of technological university designation.

The quality of CIT's education programmes and research are overseen by Quality and Qualifications Ireland, QQI, and its governance is provided by its governing body and through its three committees, namely, audit, finance and strategic development.

It operates under the Institutes of Technology Acts 1992 to 2006 and the Higher Education Authority has a regulatory oversight of CIT. Higher education in Ireland has been operating in a challenging financial environment since 2008 with a significant increase in higher education student numbers, reduced staff numbers and reduced State funding. Even though CIT continued to be successful in this period, it is not immune to these financial challenges, as may be seen in our 2014 financial statements. We anticipate no immediate improvement in our financial situation in 2015 with a continuing reduction in State funding, increasing pay costs and a continuing need to dip into our relatively small reserves for essential maintenance and health and safety works.

The results of the Comptroller and Auditor General audit in 2014 complements the result of our internal audit reports. Any issues raised in these audit reports are carefully considered by the governing body, its audit committee and the executive. They are then followed up and corrected. Controls are strengthened and they are monitored by the audit committee. As in any institution, mistakes are made, but they are corrected. Overall, we have a culture of improvement.

It is against this background of a progressive and well-governed higher education institution that one should set the anonymous letter allegations received by CIT from the Comptroller and Auditor General in mid-May 2014 and on Christmas Eve 2014.

In the first anonymous letter a total of 175 allegations were made. Many of these were grossly defamatory on the face of it. The anonymous letter was referred by the chairman of the governing body to the audit committee, which was authorised by the governing body to obtain independent legal advice. Based on this advice and with the agreement of the governing body, the audit committee, via the independent legal advisers, Arthur Cox, tendered for and engaged KPMG to carry out an independent review of the allegations. In the second anonymous letter a further 21 allegations were made. Again, many of these appear to be grossly defamatory and all were considered by the audit committee of CIT. The audit committee engaged KPMG to carry out a further independent review. I will set out a summary of the outcome of the KPMG independent review. Of a total of 196 allegations a total of 35 were deemed to have insufficient evidence to allow further review, 102 were deemed to require no further action because the allegations had been adequately addressed by the institute and 59 were deemed repetitious to other allegations and required no further action.

The governing body received updates from the audit committee during the process. A final report issued from the audit committee and was considered by the governing body at its meeting of 26 March 2015. It concluded that after two intensive external investigations all individuals and agencies identified within the letters had carried out their professional duties highly diligently and with total integrity. The governing body concluded that no further response or action was required from the institute's executive. A full copy of the audit committee's final report to the governing body and the KPMG reports have been provided to the HEA, the Department of Education and Skills and the Comptroller and Auditor General. The chair of the governing body has also provided the HEA with a full written account of the processes undertaken to address the matter.

CIT notes the concerns expressed by the Chairman of the committee in respect of the redacted KPMG report. CIT wishes to state that no slight to the committee was intended at any stage. CIT also respectfully notes that the committee has not made a direct request of CIT for the KPMG report.

CIT has a duty of care to protect the reputation of the institute, its employees and other organisations identified in the anonymous letters. It has received legal advice on its obligations. Given the concerns over the high level of personal information and entirely unfounded nature of the allegations contained in these reports CIT decided that all references to individuals, titles or organisations be redacted. Any other detail of a confidential or sensitive nature that may have led to damage to the individuals or organisations or that may have served to identify same were also redacted. The purpose of the provision of the redacted version of the reports was to provide documentary evidence that a full, comprehensive and independent investigation had been undertaken while also protecting the identities and reputations of those falsely accused.

The direct cost of the legal advice and investigation has amounted to some €65,000, with a significant internal cost as well. In recent days, the committee has requested other documentation relating to the KPMG reports as well as the cost of the due diligence exercise carried out for our Munster technological university stage 2 application. These have been supplied. The committee has also requested the minutes of the audit committee of the governing body since 2010 and the minutes of the CIT safety committee since 2010. These have also been supplied. As requested, we have also supplied a note recently relating to CIT cleaning staff and their sick pay. We remain at the disposal of the committee to answer any questions that members may have on these and other matters. Thank you, Chairman.

Thank you, Dr. Murphy. Can we publish all those statements?

Yes.

I will start with Dr. Murphy. He has given a considerable account around these allegations made anonymously and the process pursuant to them. We have more correspondence. I am unsure whether Dr. Murphy is aware of it. It relates to December of this year, so it is current. It would not be fair to go through the details of it with him now and I have no wish to bounce him in that way. However, a thought occurs to me. How does Dr. Murphy account for this rash of allegations? I am not asking him to comment on the outcome of the independent inquiry. However, questions have to be asked about this pattern of allegations. Is there a cultural problem in the institute? Is there a management problem in the institute? Is it simply disgruntled individuals? These questions occur to me notwithstanding Dr. Murphy's account of the procedure of investigation. Will Dr. Murphy comment on this?

The Comptroller and Auditor General commented on the two anonymous letters and suggested they would seem to be by the same author. There was a certain repetition in style that would lead one to that conclusion. I have no knowledge of a third letter of allegation.

Deputy McDonald referred to the culture within the institute. Like most public bodies nowadays and following the passage into legislation of the Protected Disclosures Act, we have a comprehensive protected disclosure policy which allows any individual to raise matters, either internally or externally, as they deem appropriate. Other than that, we are into the realm of speculation on the motive behind this individual or individuals.

I appreciate that CIT has and is obliged to have procedures for protected disclosures. However, I am asking a slightly different question. We need to get to the bottom of why there is a repeat pattern in allegations. I have correspondence from this month. I had assumed that it had come to the committee, but it may only have come to me. Other members seem to have been in receipt of it as well. Is that correct?

Yes.

In any event, we will not delve into the detail of it. I am not asking Dr. Murphy about the procedural issue; I am asking about the cultural issue. Are there individuals who feel alienated from management? Is there a bad atmosphere in the institute?

The only way I can respond is to point out that although we have a protected disclosure policy, no disclosures have been made under that policy.

What does that tell us?

One could interpret that to mean this is a particular individual who has particular concerns.

One could interpret it to mean there might be a lack of confidence in the procedure in place.

Protected disclosures allow for disclosures to be made to external bodies. They do not have to be made internally. That is the whole purpose of having the protected disclosures policy.

That is certainly the case. Since the correspondence I have before me has been sent to Members of the Oireachtas, one could argue it is a protected disclosure in that respect.

Indeed.

Is it not a bit strange that the procedures CIT has internally, and I have received a communication from a staff member-----

Yes.

Is it not a bit odd, given the background, that the person concerned would not take advantage of the internal procedure and raise his or her concerns with it?

It is hard to know what motivates an anonymous correspondent.

Is Dr. Murphy bothered by the issues that I have raised? Is it something that the institute has discussed as a management team?

In that sense it has not arisen because we have had no protected disclosures. We have put in place a provision for any member of staff or the public if they want to raise an issue to be able to raise an issue.

Can I, respectfully, suggest that the institute, as a team and Dr. Murphy as the leader, might give some thought as to why the institute has had no protected disclosures yet there has been a rash of allegations made outside of orthodox channels? That is something Dr. Murphy should think about and examine in respect of his organisation. I am saying that to be helpful.

Certainly, Deputy.

I thank Dr. Murphy. I wish to ask Mr. Ó Foghlú about the ongoing issue of public procurement. In his first rolling review he proposes to deal with the issue of procurement which is welcome but quite late in the day. Procurement issues arise here constantly more in breach than honouring the guidelines.

In respect of Waterford Institute of Technology, and I note that Professor Donnelly talked about the WIT's end of year accounts which struck me as a nice turn of phrase. It was mentioned that €524,000 of public procurement was transacted outside of the rules. Is that the figure Professor Donnelly gave us?

Yes.

I will question Professor Donnelly on the matter in a moment. I ask Mr. Ó Foghlú to comment on the matter. It is a fairly sizeable sum.

Certainly, Deputy. We are concerned at a number of the procurement practices. I suppose they fit within the overall governance practices that we have. The primary responsibility on governance rests with the higher education institution in question. They have to put in place the appropriate procedures under the governance arrangements that are in place. An updated set of governance arrangements have been put in place by the HEA with them. They are supposed to go through an internal system of financial control-review which is signed off by the audit committee and governing body and then the Chair, in person, reports to the Higher Education Authority. Quite clearly, arising from that, there are a number of difficulties emerging. It is not all of the procurement across the board in the institutions but there are instances in each of the institutions and there are different sorts of instances in each of the institutions.

There are couple of red line issues which I know the committee has discussed and we are very concerned about. It is where an institution has decided not to implement the guidelines put in place by the Department of Public Expenditure and Reform. In particular, that has arisen with two institutions in the recent past and both institutions have been contacted. We, obviously, follow up with the HEA and the HEA follows up directly with the institutions. The HEA has had assurances from both institutions that they will implement the procedures in full.

I ask Mr. Ó Foghlú to clarify who the institutions are for the record.

They are UCD and St. Angela's College of Education.

I thank Mr. Ó Foghlú.

There were different issues with each of them. Those have been identified and they have indicated a willingness to address it.

There are different reasons for procurement practices not having been implemented. For example, there can be a need to roll over procurement and a gap in the availability of a service if that is not identified early enough. This is not satisfactory and has to be addressed. There can be waiting involved. We have many new central procurement arrangements, which are beginning to work well with the Office of Government Procurement, which the Accounting Officer of the Department of Public Expenditure and Reform has discussed with the committee. In this context, the education sector is taking the lead in a number of areas. Implementation can take a while for the new frameworks to be put in place in the structures. Sometimes, an institution must roll over a contract and wait. That is more understandable, but it would also be better were it not to be the case. It has taken place as we have worked to put in place a new system. In other instances, institutes have not appropriately tendered. That is not acceptable.

Will the rolling review propose to capture all of these elements and ensure full compliance? I presume that is the objective.

Yes, that is the aim. When we examined the governance framework, we and the HEA identified the issues of institutions signing off and the cascade upwards were not satisfactory in ensuring compliance with, among other aspects, procurement. We worked with the Comptroller and Auditor General to put a better system in place for conveying information, including regular meetings with the HEA, so that we are not waiting for the accounts. When the Comptroller and Auditor General learns of something, the HEA can pick up on it and engage. Even with that, we believed that we needed something else. We have identified the potential for rolling reviews in terms of governance, with procurement as the first priority. The aim is that the rolling review will identify issues that arise and give institutions the opportunity to respond and ensure that they have the new arrangements in place. It is another mechanism to help ensure that they comply fully.

I am sure that I speak for all committee members when I say that we will anticipate this process and assume that Mr. Ó Foghlú will make it very clear to the institutions concerned. Issues have arisen at Maynooth University, Athlone Institute of Technology, Limerick Institute of Technology, Waterford Institute of Technology, Blanchardstown, Tallaght, St. Patrick's in Drumcondra, Mary Immaculate College and National College of Art and Design, NCAD. This problem is widespread in the sector. I am sure that Mr. Ó Foghlú is not attempting to try to explain it away, as there clearly can be no explaining away. The guidelines are fairly clear cut and the expectations on the system need to be understood by each of the institutions. I believe that we agree on this.

Yes.

On what was the €524,000 of expenditure that fell outside the rules spent?

There were three main areas. One was cleaning services, which accounted for €277,000. That contract expired in June 2012 and was not re-tendered until June 2013. A second area was patent services and legal services, accounting for €51,000 and €136,500, respectively. Developments were ongoing regarding a national tender process for the sector and we were awaiting its completion. Effectively, we used the companies that we used previously. The third area related to international students, in particular those from China. This was a new area for us and we did not have much experience with using student recruitment specialists in China. That was not unique to WIT, since engaging in China to attract students was a new experience for the whole sector.

Previously, the committee considered the expenditure on the watch of one of Professor Donnelly's predecessors. I am not referring to his direct predecessor, but his predecessor's predecessor.

Professor Byrne.

Yes. I do not propose that we rehash every detail of that because we have given it extensive consideration previously. Is Professor Donnelly familiar with a report from Waterford Institute of Technology to the Higher Education Authority dated 3 June 2011?

Yes.

To the best of my knowledge, this report was not referred to or brought to the attention of the committee. I am open to correction but having trawled the records, I do not believe that is the case. Will Professor Donnelly or Mr. Boland offer an explanation as to why the report was not brought to the committee's attention. I will cut to the chase and explain the reason it interests me. There is no doubt that the level of expenditure and the manner of accounting for it using the president's office as a cost centre was hair-raising. When we debated these matters the view was that the Professor Donnelly's predecessor, the former president, had acted extravagantly. To some extent, that holds true to this day. I will not pre-empt that but I note the report states that at no stage has it been suggested that any expenditure incurred in the president's office was for purposes other than that of the institute. I am zoning in on that statement. The tone of it moderates the position as regards Professor Donnelly's predecessor. While it does not change the position entirely, it certainly moderates it as regards the former president's personal interest or lack thereof. Certainly, there was no suggestion of personal gain. Having said all of that, why was this report not given to the committee?

Unfortunately, on my own point, as the Deputy knows, I only started in April. All of these are new documents to me so I cannot answer.

Can Mr. Boland answer?

Only very partially because I do not know what the report is. Certainly, we can look into that and anything available.

The report was made to Mr. Boland's organisation.

Let me comment on some of the content the Deputy mentioned in so far as I can.

I would like Mr. Boland to comment first on the reason the committee did not receive the report.

I genuinely do not know. I mean, I do not know what the report is.

It is to the Higher Education Authority. In fact, it was prepared at Mr. Boland's request. It states that it was prepared in response to a request from the chief executive of the Higher Education Authority, Mr. Tom Boland, and is dated 17 May 2011.

I do not doubt that.

Does that help?

It does not help me remember exactly what the report is or why and in what circumstances it was not available to the committee. I genuinely do not know as I sit here this morning but I can find out very quickly for the Deputy. I do not know at the moment but I can comment on some of the content if the Deputy wishes.

If Deputy McDonald does not mind, for clarity, will the Comptroller and Auditor General indicate whether he has any knowledge of this report?

I do not know to what document the Deputy is referring.

Would he be able to recall it on the basis of the date?

I just cannot recall. It is four years ago.

I do not have all the background papers with me this morning. However, there was a report referred to in my notes which accompanied the Deloitte report, Deloitte 1, and it was given by Waterford Institute of Technology to the Higher Education Authority on 3 June 2011. That documentation was provided to this committee.

I certainly recall a document associated with the Deloitte report.

It is possible that this documentation was provided to the committee. We will have to check.

I would appreciate if someone would check the position as I cannot find a trace of it.

By extension, if the committee received the report, will the Higher Education Authority have received it?

We can provide the information provided by WIT to us on 3 June. We and the HEA provided that information to the committee.

The HEA may have received this report.

Yes, I will have to check our records and the HEA's records to ascertain whether this was sent.

I can draw attention to the special report which was completed in February 2012. At paragraph 2.31, it states:

WIT reported to the HEA on 3 June 2011, drawing on the consultant’s report it had commissioned. A further report has been commissioned by WIT to examine expenses incurred by the President's office in the last two years in more detail. The HEA stated that it will continue to liaise with WIT in relation to the outcome of this report and to ensure that appropriate processes and procedures are in place and being adhered to.

At the first meeting where the special report was discussed, the Deloitte analysis was certainly discussed because I remember references to specific parts of it.

To the Deloitte reports, yes.

That is if it is Deloitte one, as Mr. O Foghlú mentioned. There are two reports and my recollection is that certainly the second report was available and we would have seen it.

We might get absolute clarification on that issue. Mr. Boland wanted to make a brief comment.

I want to be a bit circumspect because many of the issues around the issue of expenses are the subject of cross-litigation between the institute and so on. With regard to the piece the Deputy read out, I do not think there has ever been any suggestion of self-enrichment by anybody in relation to these expenses. It is much more a question of extreme extravagance, rather than personal gain, if I could put it like that.

Mr. Boland is happy to place on record that it was never a question of personal gain.

It is my recollection that there was never a question of personal enrichment.

Will Mr. Boland inform the committee of his relationship with Professor Donnelly's predecessor, Professor Byrne? I presume he had fairly regular interactions with Professor Byrne.

They would have been reasonably regular, yes.

How regular were these interactions? Did they take place monthly or quarterly?

On average, one could say every couple of months. I do not engage directly with each of the presidents on a-----

Certainly, I would not expect Mr. Boland to do so.

I could not say but it would have been a normal relationship.

Does Mr. Boland recall meeting Professor Byrne at the Newpark Hotel on 10 May 2011?

I do.

Would Professor Boland like to tell the committee what transpired at that meeting?

Again, I would have to advise that said meeting, along with a number of other issues, is part of the High Court proceedings that Professor Byrne has initiated against the institute. If I recall correctly, while I do not think I have sworn an affidavit, I have certainly given information to lawyers in respect of that meeting so I am not going to comment on it for that reason.

Mr. Boland will not comment on the meeting.

It is sub judice and it would be inappropriate for me to comment on it.

Professor Byrne says Mr. Boland met him to look for his head on a plate.

I am not going to make any comment.

Does Mr. Boland have the authority to ask for the head of the president of an institute of technology or would that be beyond his discretion?

Absolutely not.

Mr. Boland would not have any discretion to act on any person's behalf, say, for example, a Minister.

Absolutely not.

Does Mr. Boland deny that he asked Professor Byrne to resign?

I am not going to comment on the specific meeting. The Deputy is not going to get me into that space. I cannot comment because it is sub judice. However, on the general issue, the HEA and the chief executive have no function in relation to the appointment or dismissal of presidents of institutes - none.

I do not understand why, if it is Mr. Boland's contention that he did not ask for a resignation and did not go seeking a head on a platter, he cannot simply say that.

It is because the meeting and the discussion at the meeting are part of the issues in a High Court action and I do not think it is appropriate for me to do so.

If I may clarify a matter, when did the High Court action commence?

It was several years ago; shortly after the appointment of a new president.

It was a long time ago.

Yes.

On 10 October 2013, Mr. Boland commented on the meeting before the committee.

Can the Chairman remind me as to what exactly I said?

Mr. Boland gave an explanation, which is in the transcript, in which he made reference to the fact that he had a meeting.

Yes, I also confirmed that today.

In 2013, Mr. Boland stated:

My concern was for the reputation of Waterford, given all the other things that were happening. I had a fairly lengthy meeting with the then president and he was adamant - I had no way of knowing otherwise - that he had no case to answer and that all of the expenditure was entirely appropriate. That is the basis on which we left our conversation.

That is fine. That is correct. I am happy to confirm that.

Mr. Boland did not offer any explanation regarding matters that were sub judice or any other legal matter at the meeting in question. Is that the meeting to which Deputy McDonald referred?

It is the same meeting. I just do not want to get drawn into the details of that meeting.

Was that meeting recorded?

No.

Is Mr. Boland sure of that?

Yes, there is no minute of the meeting on my part. I do not know whether or not Professor Byrne recorded it. I do not think so. The Chairman is taking me into a position where I have not briefed myself recently but I do not think so, other than a note I have given to lawyers in respect of that meeting.

There was a report in The Irish Times from May 2011.

I am looking at the article now. It reported how Professor Byrne was on the on the back foot and how the then Minister for Education, Deputy Ruairí Quinn, and the then Department Secretary General, Ms Brigid McManus, were briefed on the situation. In their judgment, Professor Byrne had to go. The article says:

Said one senior figure: “The idea of Byrne or his crew being chauffeured back and forth to Dublin really sticks in the craw.’’

The problem was that neither the Department nor the Higher Education Authority could interfere in the appointments process. But the WIT board was left in no doubt about what the Minister wanted.

On Wednesday of last week , Byrne was asked to fall on his sword during a meeting with a senior education official.

That senior official at that meeting was Mr. Boland.

I do not know whether it was or not but I asked nobody to fall on swords. I do not want to go into the detail of the meeting.

But he was digging in.

Would Deputy McDonald allow me to interject?

Certainly.

While Mr. Boland says that everything is sub judice and that he does not want to discuss the meeting or any aspect or the particulars of it, he is well able to mention at this meeting the extreme extravagance involved. Mr. Boland has made a very pointed statement regarding Professor Byrne but will not elaborate beyond that. He has just said it and I have written it down. I believe that was a mistake - if one is going to say nothing then say nothing. Mr. Boland has actually coloured the situation by repeating that observation. That is just a point.

I disagree with the Deputy.

It is not to disagree with, it is on the record. Mr. Boland just said it.

I am basically quoting from the conclusion of the Deloitte report.

Okay. As far as this is concerned-----

It is not my view, one way or the other.

-----it will probably end up in court and will be dealt with there. I have my own opinion on who will be successful in this. However, as the facts leak out about Professor Byrne and how he was dealt with, it is becoming more troubling. I am not the only member of this committee who is forming the same opinion. I have raised the matter previously and, on a personal level, I believe Professor Byrne was badly dealt with. Ultimately, all the issues which were lumped together that came about within the Waterford Institute of Technology were dumped on his doorstep and it was unfair. He became the scapegoat for a lot of things that went wrong at WIT and that was extremely unfair. If one looks at the documentation and the history of the situation, once can see that Professor Byrne did a lot of good for the institute and that has been forgotten. There are questions to be answered regarding how the HEA dealt with him. The court will probably determine on that but I am not the only member of this committee who has examined this matter and formed that opinion.

I thank Deputy Deasy. I wish to let Mr. Boland know, sub judice or not, that Professor Kieran Byrne was in contact with me and he is quite categoric that at the meeting in question Mr. Boland looked for his head. Professor Byrne is happy for me to place that on public record. I was not at the meeting, Mr. Boland was there and emphatically denies this account. What was the nature of Mr. Boland's conversations around this? Did he have a conversation with the Minister of the day regarding WIT in general and about Professor Kieran Byrne in particular?

No.

Mr. Boland had no discussion?

I had no discussion that I can recall.

There was no discussion? The proverbial had hit the fan and Mr. Boland had no discussion with the Minister.

It would not be common for me to have detailed discussions with the Minister on issues relating to institutions.

Okay.

I would normally discuss matters with officials in her Department or his Department as it was at the time.

Yes, it was a his - not unusually. Did the witness discuss the matter with Ms Brigid McManus?

I do not recall discussing it specifically with Ms McManus but I have little doubt that at the time I discussed the situation in Waterford with some officials at the Department of Education.

So neither the Minister of the day nor the Secretary General of the Department had a conversation with Mr. Boland, to his recollection, about WIT or specifically about Professor Kieran Byrne?

I can be very specific in my recollection. I have no recollection at all and I do not believe any discussion took place between the Minister and me. I am not sure if I discussed it with the then Secretary General of the Department but it would not be uncommon if I had not. It is far more likely I would have discussed it with the assistant secretary.

Does Mr. Boland keep a diary? He is a very busy man and is bound to keep a diary and a sketch of-----

Yes, I would keep a diary.

-----and notes of-----

I would keep notes of some meetings, not all meetings.

Was this situation a big deal was it not? There was a bit of a media frenzy around it.

Yes, it presented something of a crisis for WIT.

It read really badly and there was the potential reputational damage and so on.

Indeed.

I am somewhat surprised, therefore, that Mr. Boland's memory is not a little bit sharper regarding an exchange, for example, with the Secretary General of a Department.

With respect, it is quite a few years ago and some crises have come and gone in the meantime.

Yes, they certainly have but this matter is still live and there is a court action pending.

I can only assure the committee that I am not being disingenuous. I do not remember exactly who I would have spoken with. I do not want to go into the details of my meeting with Professor Byrne because I believe it is sub judice. That is as much help as I can be today.

Okay. Did Mr. Boland have absolutely no authority to seek Professor Byrne's resignation?

None.

None whatsoever? It would have been absolutely inappropriate and wrong for Mr. Boland to look for Professor Byrne's resignation.

Correct.

Would Mr. Boland say that it would be a resigning matter for him if had he sought Professor Byrne's resignation?

I do not know if that would or would not be a resigning matter for me. I simply would not have done that.

I did not ask that. Would it be a resigning matter for the head of the HEA if he or she had, without authorisation and acting entirely outside of his or her powers, sought the resignation of Professor Kieran Byrne at that meeting?

Possibly, but it is not for me to make that decision. That is a disciplinary matter which would have to be dealt with by the board of the HEA. It would be quite inappropriate for me to ask for that resignation.

It would be more than inappropriate.

Inappropriate is strong enough.

It would be have been completely and utterly unacceptable.

The report to which Deputy McDonald refers, and which was prepared in response to a request from the chief executive of the Higher Education Authority, Mr. Tom Boland, is dated 17 May 2011. Does Mr. Boland recall making that request?

No, I do not but I am quite sure I made the request. If it says I did then I obviously did make the request.

But Mr. Boland does not remember it?

No.

Does Mr. Boland remember receiving the report?

No I do not remember receiving the report. With respect, Chairman, these are matters of detail that happened four years ago. As far as they are on the record, they happened. I accept that they happened.

They are very significant things that happened, regardless of whether it was four years ago.

They have been dealt with since.

Information has been placed on the record of this committee to which this also refers but which was not put before us. Mr. Boland himself referred to it on 4 October 2012 when he outlined what he asked of WIT on 17 May 2011.

To go back to a comment made by Deputy Deasy regarding Mr. Byrne, the report stated, “At no stage has Deloitte or the governing body suggested any expenditure incurred in the president’s office was for the purposes other than that of the institute”. There are significant findings in this report, relative to facts and figures, which, had they been placed before the committee after the request for the 2011 report, may have caused us to think differently about events and expenditure.

As I understand it, the Deloitte report was made available to the committee. That quote is from the Deloitte report.

Yes, it is. However, this is a report Mr. Boland requested from Waterford Institute of Technology regarding the expenditure incurred by the office of the president. If Mr. Boland requested the report - I understand it was some years ago - it did have an impact on how all of these matters were viewed. If Mr. Boland then received the report, what actually happened with it within the Higher Education Authority?

I am at a disadvantage here as I have not got the report. It seems to me, however, it is some kind of summary of the Deloitte report.

No, it is an answer to Mr. Boland’s request.

It is based upon the Deloitte report, as I understand it. I am at a bit of a disadvantage in that I have not seen all the papers.

Surely Mr Boland must have read the report

Of course I did. I am quite familiar with the issues around Deloitte and Waterford but I do not remember details today.

Mr. Boland made a statement a short while ago about the extravagance of the spend.

Yes. That is my recollection of what was the conclusion of Deloitte.

However, Mr Boland failed to enter into the record what was in this report. I am just reminding Mr Boland of that fact.

Okay. I will have to check into that. We have not, in fact, concluded that we did not make it available. Deputy McDonald has done her research. We will have to find out. I promise we will give the committee the full information. As of now, however, I do not know what the report was for and I do not know whether we made it available to the committee.

Even though Mr Boland asked for it.

Even though I asked for it.

I call on Deputy Deasy.

I know I had an exchange with the Comptroller and Auditor General about audit committees and the role of the Higher Education Authority on the previous occasion. Does the Comptroller and Auditor General’s jurisdiction or remit cover a review of what was reported and what was not reported by an audit committees to the Higher Education Authority and how they all acted?

I am a bit of a loss as to what the specific question is here.

The specific question is ultimately about responsibility and who acted at the time. The Comptroller and Auditor General has heard the discussion going on. Much of the blame has been laid at one particular location. There are audit committees in all of these institutes. The suggestion is that, in many respects, they may not have carried out their functions and reported to the Higher Education Authority and vice versa. Is this something the Comptroller and Auditor General could examine?

Around 2011?

Yes.

I do not think I would be in a position now to look at how they acted in 2011. I only have powers to carry out an audit or a value for money examination. The focus of work I would do now would be regarding what is happening now or what happened in the recent past. This is a hypothetical rather than in relation to Waterford Institute of Technology. If we were to find an audit committee in a current year we were examining was not active or was producing poor quality recommendations to the college, we might look back to see if there was a pattern of that or when it had commenced. It would always be grounded in what was happening currently in the governance of the organisation.

I do not know if that answers the Deputy’s question.

Okay. I understand from where the Comptroller and Auditor General is coming. I might return to this at another time.

I thank Dr. Murphy and Professor Donnelly for attending. Mr. Séan Ó Foghlú and Mr. Tom Boland referred to the sports campus and Waterford Institute of Technology. Is it the case that the contract issues were dealt with yesterday and this work will recommence next week?

That is correct. It will commence next week and we hope to have it finished by June.

I am going to park that once and for all. That is good news and positive for the institute. Has the loan for Manor Village been agreed and finalised with the Department of Education and Skills?

Yes, that is the case.

In his opening statement, the Comptroller and Auditor General referred to the subsidiaries formed with regard to the sports campus at Waterford Institute of Technology. Is it the case there is an improvement and we are heading towards finalising this issue?

Yes. I have talked about other third level institutes and the importance of consolidation. Over several years, many of the third level institutions have established subsidiaries to carry out particular functions. It is a perfectly reasonable approach to take to the business. However, it is important that if there are assets, liabilities or transactions, they would be consolidated. Accordingly, when the financial statements are presented, one gets a full picture of what are the assets, liabilities and transactions of the entity, rather than a compartmentalised one.

Most of the colleges have moved to consolidate those or were already doing so. Waterford Institute of Technology was different in that it maintained that there was complete independence between the subsidiaries and the institution, so it was not consolidating them. The risk was that there was something going on in the companies. We had no particular evidence that there was a problem. We felt consolidation would be good practice, particularly because of the amount of money that was being given.

It transpired afterwards, however, that there were guarantees and undertakings provided by the college to the companies. That certainly strengthened the case for ensuring they were consolidated. This was confirmed by Mr. Quigley in his report. Progress is being made. In the 2014 financial statements, we will able to see the full standing of the college on 31 August 2014.

That is fine. It is being dealt with.

On procurement, Mr. Ó Foghlú referred to the Institute of Technology, Tallaght and made a pointed remark that the education sector is the worst when it comes to non-compliance with procurement guidelines. Based on what he said, I am not going to say it is endemic or systemic. However, it seems to have got worse and seems to be a serious problem.

Notwithstanding what Mr. Ó Foghlú said about a rolling review, an issue has arisen in the education sector that seems to be getting slightly worse. This is a matter we have dealt with continually. I commented earlier that this committee is almost becoming desensitised to non-compliance in many respects. The subject arises so often at meetings, not only in respect of education but throughout the various Departments. The question has been answered, yet another meeting on this issue has been held today.

I will repeat the point I made earlier. Owing to the way financial reporting is done in the education sector, more of the institutions are coming to the attention of the committee. The HSE has a systemic problem; it is significant in that organisation. With regard to the list in front of the committee members, I have reported previously that there is non-competitive procurement of goods and services in the National College of Art and Design in the order of almost 100%. That is why there is no figure appearing in the document regarding that college. For the other colleges, I refer to the exceptions that have been found. I would not describe the problem as being systemic in the other colleges but it is significant.

That is fair enough. Professor Donnelly, there is a bigger subtext in respect of the current status of Waterford Institute of Technology. With regard to what we have been dealing with in respect of the institute, namely, regularising what seems to have taken place, we are at a point where we must move on, as the Controller and Auditor General is making clear. Financial systems and the health of the institute have been dealt with. Since the Comptroller and Auditor was there in April, he contributed an awful lot to that. We are at the point of moving on but the more significant subtext concerns the status of the merger with the institute in Carlow. That has always been the bigger issue. Could we have a status report on the merger? I understand it is in phase 2 and that it is expected that could be completed early next year.

I am on the record as saying the major challenge for the south east is the university for the south east. I have worked on this for 22 years. As people now know, we started a facilitation process involving ourselves and those concerned in Carlow. That has gone very well and we have a very good relationship with the president in Carlow. We are now at a stage where we can review the next phase in the development, which will be the engagement of the two governing bodies and, following that, the engagement of the executive. I am confident that the process is where it should be at this stage and that we should move forward in the right direction.

As far as timelines are concerned, could we have an update on when Professor Donnelly expects the next phase to be completed, if all goes well?

The next phase is vital. I would prefer not to give a timeline but to say we have to build the proper foundation. Things fell apart before because the foundation was not in place. The consequent recovery phase was pretty difficult for everybody. We do not want to go there again; we want to get it right and have a university of real quality for the region. That is what we are focusing on. It is best to ensure we get everything right and move forward rather than setting some unrealistic date on which everybody is focused rather than the process and the way we engage with one another.

That is understandable. I understand the input of Mr. Ó Foghlú is critical in this. Obviously, his oversight is ongoing. Could he comment on the process?

Obviously, it is principally a matter for the two institutes but given the Government's priority in this area, we are supporting the engagement of the facilitator we discussed at the last meeting. In fact, the facilitator was chosen in light of her experience of facilitation. We are actually expanding the amount of facilitation to host a number of further meetings to assist in what Professor Donnelly has referred to. We are confident that the two institutes are working well together. The Minister committed additional funding of €2 million for next year to support all the technological institutes in consolidating in respect of applications for technological university status. The HEA is currently going through a process, using additional funding it has made available from within its own overall budget, to have applications from various higher education institutions that are seeking to move towards amalgamation. They are going through that process at present. We are making additional funding available towards supporting this and to help the Minister's assistants in expanding both the loan for the Carriganore sports complex and the timescale for the loan. This is also support for WIT-----

The Department's financial backing for these initiatives is an indication of its support. That is fair enough and clear.

Professor Donnelly's statement on the Chinese market was interesting. I acknowledge it is probably non-compliant; we will not go there. How did the officials get on? I realise the professor’s institute is not the only one that has considered the Chinese market and tried to attract Chinese students. Was the successful? Is the process ongoing?

It is ongoing. We were one of the first to enter that market. We have a good history in China. It is a very good market for us. We have many students from China. It is an important market, not only educationally but also economically. The educational and economic links are connected. It is a market that we prioritised and continue to prioritise and develop.

It is fair to say that both the Chairman and I have spoken about Waterford and Carlow institutes of technology outside these meetings. We have had a good few meetings in the past three or four years. The purpose of today’s meeting was really to draw a line under the issues that have dogged the institute in Waterford in the recent past. Apart from the issue concerning Mr. Byrne, it is fair to say, and there is agreement, that this has been achieved. For the first time, the direction that Waterford Institute of Technology is going financially with IT Carlow is extremely positive.

I wish to clear up a matter that concerns the Controller and Auditor General and audit committees. There was a point in my brief referring to the institute’s audit committee not issuing an annual report to the governing body until September 2014. That is the point I was trying to make.

There is a requirement in the code that the audit committee should report on its proceedings but it felt it was not in a position to do that and did not submit the report on the year 2012–13 until more than a year later. I believe the date was in September 2014. Obviously, there is reliance in the governance of an institution on the audit committee and, therefore, it is important that internal auditing processes and audit committees be functioning. The college has disclosed that this was a problem in the SIFC. I drew attention to it because it is a significant matter.

I was just seeking clarification.

I thank everybody for their contributions on the institutes around the country. I am very conscious that the HEA manages a fund worth €2.5 billion. There are 170,000 students in higher education and over 17,000 staff. These figures have a bearing on growth in the economy. It is important that there be regional development and a connection with IDA Ireland. Last week, the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, made a big announcement in IT, Sligo, on the potential for developing a high-tech company in conjunction with IDA Ireland.

I have no doubt but that, with a fund of €2.5 billion, 170,000 students and 17,000 staff, issues will arise.

With regard to footprints and reconfiguration, a similar debate to that with regard to the institutes of technology in Waterford and Carlow is taking place in Sligo with regard to the institute of technology there, along with Letterkenny IT and GMIT. What are the issues and challenges? How have the numerous protected disclosures been managed? It is hard to imagine there would not be issues given the scale of the funding and the number of staff and students.

The key outcome the Government and the Irish people should expect for an investment of €2.5 billion is that the higher education sector provides the skills and related competencies needed by the economy, the IDA and society more generally. In the past two years, we have introduced a very specific system for assessing the performance of the sector and the performance of individual institutions against stated national objectives. This strategic dialogue, or performance management, tool is very valuable to ensure the higher education sector delivers what it is supposed to deliver. In addition, we have a robust system of governance and accountability for the higher education sector. There is no dispute among the institutions or anybody else that all of the institutions are accountable to the Government through the HEA and the Department of Education and Skills for every cent they spend, and by and large the system of governance works well.

Deputy McDonald mentioned earlier that procurement is honoured more in the breach than in the observance, and in fairness I take issue with this. Procurement in any one year amounts to approximately €1 billion and, overwhelmingly, it is done properly. This is not in any way to excuse those instances in which it is not done properly, and there is zero tolerance of these types of departure from the norm, although putting it into practice can be somewhat difficult. By and large, there is a strong higher education system delivering what Ireland needs. It is well governed at institutional level and there is a good governance and accountability system in place. I have said before that no system of governance is exempt from human error, and it will happen. The particular job of the HEA is to ensure when it does happen that proper action is taken so it does not happen again.

There are 170,000 students in the system. Foreign direct investment is driven by the huge acclamation of the calibre of the students and graduates that we have. We also have SMEs in the Enterprise Ireland portfolio. Is there much collaboration? Sligo Institute of Technology works very closely with start-up companies through facilitation of low rent for accommodation. I have observed the recognition of the institutes of technology, their partnership with SMEs and their support for foreign direct investment. Is it fair to say much foreign direct investment is based on a very efficient institute facility. Sligo has several thousand students, and companies consider the calibre of the students with IT degrees or qualifications in forensic science. Is this the engine of growth for foreign direct investment? We have a regional development plan, but it is very much focused on the calibre of students. It is important to recognise the role of the HEA with regard to the institutes of technology. Do we have 19 institutes of technology?

We have 21 institutes of technology and universities and a small number of other institutions.

Does Mr. Boland agree that the institutes of technology are more focused than the universities on industry?

A key requirement of the higher education system is to liaise closely with the economy, business and enterprise and, increasingly, institutions are doing so. This is without any dilution of the broader mission of education as we all understand it. It is very evident that a significant factor in attracting foreign direct investment to the country is the availability of skilled graduates. The institution in Sligo is a particularly good example of an institution that works very well locally and nationally in identifying skills needs.

Procurement was mentioned. How does the national procurement office work? There can be anomalies and there are always matters that are not correct. Given the amount of €2.5 billion and the number of purchasing managers in each college, is there much involvement with Mr. Quinn's office on procurement issues?

As I understand it, the purpose of the central procurement office is to centralise all procurement in the public sector in a single function in the interests of efficiency and getting value for money. The higher education system is ready to embrace this. The final i's have not been dotted and the t's have not been crossed, but it is a work in progress.

With regard to the 170,000 students in lifelong learning, the fact that people have gone back to education is very encouraging and it facilitates industry by allowing staff to qualify in institutes. What are the projections for future student intake and the future demands of industry?

The anticipation is that, even with the current level of participation in higher education, we will have an increase of around 25% in student numbers until approximately 2028 through demographic growth alone. It is very significant amount which consists just of school leavers, by and large. Another major piece to be delivered is upskilling people, both those who did not have an opportunity to go into education earlier and those whose skills are now redundant or need additional honing. This is a very important piece of the higher education system for the future. We already have the Springboard programme, which accommodates approximately 6,000 students and has proven to be very successful in getting unemployed people back to work by giving them more relevant skills. The issue of the relevance of what the higher education institutions are doing for the economy and society keeps coming up. People need high-quality relevant skills.

With regard to lifelong learning and investment by institutes of technology, how big an emphasis is there within the HEA on the capacity of the institutes of technology to deliver online courses for people who may not be able to attend on campus?

It must be part of the way in which we respond to the huge demand for higher education. The use of technology is a very important factor in the sustainability of the system. I do not ever envisage a situation in which courses can be delivered exclusively online, especially to undergraduate students. The more effective way of dealing with technology in education is through a blended system whereby technology is used. Without wishing to engage in plamás, Sligo is a leader in this particular space.

With regard to Carriganore, a statutory inspector was appointed to investigate issues at Waterford Institute of Technology. It appears the HEA has adhered fully to the recommendations in the report. Is this correct?

Yes.

Did the HEA and the Department not allow the institute to borrow the funds to finish the project? Is this correct?

It was not a question of not allowing it. It simply could not. It had no power to do so.

Was this due to the financial emergency measures?

No, it was due to the fact that, under the legislation governing the institutes of technology, an institute may borrow only in accordance with the framework that is agreed between the Higher Education Authority, the Minister for Education and Skills and the Minister for Finance. No such framework is in place.

Will Mr. Ó Foghlú comment on this because it is an important point? If there is an appeal to the Department in such cases, does the Minister have discretion in the matter? We are talking in this instance about a situation where a cost-benefit analysis and due diligence were done but it ended up with contracts having to be cancelled and new ones drawn up. It is important to know what happened because the institute might be blamed for it. In fact, Waterford Institute of Technology did not have the power to borrow the moneys needed. I am asking whether, if those funds were available, the Department could have intervened to provide them?

If we did intervene and the intervention we made was to start an investigation because we did not have sufficient information about the indebtedness of the company, that is a very serious matter. The investigation was undertaken on our behalf and the Minister then made a call to make a loan facility available, which has not been made available to anybody else, for both the student accommodation and the Carriganore campus.

However, the contracts were cancelled.

We needed an investigation because there was not sufficient information available.

Surely, in that window of opportunity, there must have been consultation on the cancellation?

The information flows were so bad that we needed to undertake a statutory investigation.

Was the Department happy with that statutory investigation?

Yes, it was very effective.

Were no major anomalies found?

The investigation found many anomalies, which is why the recommendations coming out of it have been very detailed, as Mr. Boland said. We have sought to implement the recommendations relevant to us and, as Professor Donnelly detailed, Waterford Institute of Technology has sought to implement the recommendations it was given. We intend to have a follow-up on the investigation in the new year which will involve sending Mr. Quigley back to double check that implementation has been completed in the institute.

There seems to have been a lack of collaboration and consultation and certain anomalies in regard to the commencement of phases one and two and again prior to the announcement of phase 3.

The issue was the commencement of phase three without certainty around the funding. Mr. Quigley has some detailed comments on that in his report.

It is important to note that the institute did not have the facility to borrow.

Without wishing to be too parochial, I have a question regarding St. Angela's College in Sligo. It is the only school of home economics in the country and is now part of the institute of technology campus along with the school of nursing. There is an issue there whereby a capital project was approved in 2011 but was subsequently shelved. I am aware that many other projects have since been approved. There is a health and safety aspect involved here in that there is no access for wheelchair users from one facility to the next. What is the status of that project, with particular reference to the accessibility issue?

I will not be able to give the Deputy chapter and verse today but I can find out for him. I am aware St. Angela's College has made an application for funding for certain works, some of them relating to health and safety issues. The difficulty is that it is not alone in the sector and there is a large number of capital works projects that could be done if funding was available. I am sure the committee understands that funding is very limited. I am aware this particular project is one of those being considered by the HEA.

The point I wish to emphasise is that these works were included in a list of approved projects in 2011. I understand all the other projects on that list have either commenced or been completed and other projects have been undertaken which do not have the same level of priority. The shelf life of the St. Angela's College project dates back to 2009 or 2010. Does the HEA or the Department have the final say in this matter?

We decide these matters in combination but, ultimately, it is the Department that makes the funding available for all capital projects.

We have not had extensive higher education capital funding available in recent years and there has not been a wide range of commitments made on capital for new buildings in the sector. In fact, a moratorium was in place, although it was partly lifted in exceptional circumstances. No other project that was paused or stop has been recommenced. In the six-year Government plan for capital spending, there is some €300 million available for higher education, €200 million of which is for public private partnerships, PPPs. In other words, there is very limited funding for projects outside of PPPs. We will be consulting with the HEA on the prioritisation of projects. As I said, we are very challenged on higher education capital funding.

The project in question has a cost of €3.5 million and is intended to address an issue of health and safety. It is unacceptable in the 21st century to have a building that is not accessible to students who use wheelchairs. It does not involve constructing a new building but linking one campus to another. I hope the delegates will do their best to advance it.

I refer to a report issued to the Higher Education Authority on 3 June 2011 from Deloitte in response to a request from Mr. Boland. Is Mr. Boland aware of the report to which I am referring?

This issue was raised by Deputy McDonald. I am not familiar with the report, as I said earlier, but I accept it was done.

It was done in response to a request from Mr. Boland.

Yes, that is as I understand it.

However, Mr. Boland is saying he is not familiar with it?

As I said earlier, I do not recall it. It was done four years ago.

I apologise if I am repeating material that was already covered. The report I am referring to was produced by Deloitte.

As I understand it, the report was from Waterford Institute of Technology to the HEA and it drew on a report from Deloitte. I am somewhat at a disadvantage here because I do not have the detail of the report in front of me.