Committee of Public Accounts

09/Oct/2008

Prelude

The Arts Council Accounts 2006.

Special Report No. 10: National Library of Ireland.

Ms Mary Cloake (Director, Arts Council) and Mr. Fiach MacConghail (Director, Abbey Theatre) called and examined.

Chairman:  I welcome everybody to the meeting, which is now in public session. We are considering the Arts Council accounts for 2006; the Abbey Theatre, chapter 3 of Special Report No. 10; and the National Library, chapter 4 of Special Report No. 10. The Department of Arts, Sport and Tourism is represented.

Before we open proceedings, witnesses should be 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 who are identified in the course of the committee’s proceedings. These rights include: the right to give evidence; to produce or send documents to the committee; to appear before the committee either in person or through a representative; to make a written and oral submission; to request the committee to direct the attendance of witnesses and the production of documents; and the right to cross-examine witnesses. For the most part, these rights may only be exercised with the consent of the committee.

Persons invited before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may need to be made aware of these rights and provided with a transcript of the relevant part of the committee’s proceedings if the committee considers it appropriate in the interests of justice.

Notwithstanding this provision in the legislation, I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official, by name or in such a way as to make him or her identifiable. Members are also reminded of the provisions within Standing Order 158 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or of a Minister, or the merits of the objectives of such policies.

Having said that I welcome Ms Mary Cloake, director of the Arts Council, and ask her to introduce her delegation.

Ms Mary Cloake:  Ms Ellen Pugh is the finance director of the Arts Council and John O’Kane is arts director.

Chairman:  Mr. Fiach MacConghail is the director of the Abbey Theatre. I ask him to introduce his delegation.

Mr. Fiach MacConghail:  I thank the Chairman for the invitation. I am accompanied by my colleague, Mr. Declan Cantwell, director of finance and administration.

Chairman:  We have officials from the Department of Arts, Sport and Tourism.

Mr. Dara Mullaly:  I am accompanied by my colleague, Ms Sharon Daly.

Chairman:  We also have officials from the Department of Finance.

Mr. John Thompson:  I represent the Department of Finance.

Chairman:  I ask Mr. Buckley to introduce the Arts Council accounts 2006 and chapter 3 of Special Report No. 10 on the Abbey Theatre.

Mr. John Buckley:  The latest accounts for the Arts Council relate to its 2006 activities and the 2007 accounts are currently being finalised. The 2006 accounts record that the council received €83 million from the State, and on the expenditure side, apart from meeting its administration costs, approximately €7 million was paid out to individuals, including Aosdána, and the balance of €68 million went to organisations in the form of support grants and to assist in development work.

Although the accounts do not detail the grant recipients, this information is set out in the council’s annual report. In case it leads to some confusion when the grants for the Abbey Theatre are being discussed, I point out for the sake of completeness that the amounts reported in the council’s annual report in respect of current and capital grants for the Abbey, while correct in the aggregate, are misclassified. The annual report shows €7.4 million for current grants but this should be €7.2 million. Correspondingly, the capital grants are out by a similar amount.

Overall, funding provided by the Arts Council is quite widely spread. Other large recipients of aid include the Wexford Opera Society, which received €1.3 million for current expenses and €850,000 for refurbishment, and Opera Ireland, which received €2 million for running expenses. The chief executive will be in a position to give any further details on expenditure of the council.

Turning to the Abbey Theatre, a restructuring took place in 2006 which led to the formation of a company limited by guarantee. The new company, Abbey Theatre Amharclann Na Mainistreach, has been provided with a three-year envelope of funding amounting to €25.7 million, which covers the period 2006-08.

In the longer term a new national theatre will be located at George’s Dock at a site provided by the Dublin Docklands Authority. The procurement will be handled entirely by the NDFA and the project is scheduled for completion around 2011. Notwithstanding this planned move to new premises, the existing theatre needed considerable refurbishment and funding was provided to facilitate this. Overall, the funding has been applied to carrying out improvements to the auditorium and some associated works.

Much of what is dealt with in Special Report No. 10 relates to concerns about whether best value procurement was achieved in circumstances where there was a limited spending window for the completion of those capital works. Typically, capital works have a long lead time and by and large, this lead time is necessary so the projects can be properly appraised, planned and carried out in a way that gets optimum value for the money invested.

The late availability of additional funding during 2006 and the pressure to spend the funding within the year led to the theatre shortcutting the procurement procedures, so instead of allocating work on the basis of competitive processes, it resorted to identifying suppliers through its firm of architects for approximately €900,000 of work. Ultimately, approximately €400,000 of the work was acquired under single tenders.

Turning to what we might learn from an assistance point of view, the events outlined suggest there may be a problem at the wider systems level because of countervailing pressures which come to bear on organisations acquiring capital works. On the one hand there is a requirement to comply with procurement rules while on the other, accounting and funding rules impose spending deadlines. Organisations which are caught in this sandwich often resolve the problem by taking procurement shortcuts in order to hold on to the funding. The difficulty is that value is likely to suffer if the focus is on quick rather than effective spending.

Ms Mary Cloake:  I will summarise orally the opening statement submitted in advance. I thank the committee for inviting us before it. I hope a few brief remarks about the Arts Council’s work will give the background to the issues before the committee today.

The Arts Council is tasked by Government with two central jobs, expressed differently from time to time. For example, we have a strategy at the moment but the two objectives are for the public to have the widest access to the arts, across the country and in every part of society; and that the arts in Ireland are of the highest standard. This means not only that our artists be proficient but that the arts are relevant and reflect our contemporary society.

We have had some success in achieving these goals with the assistance of Government funding over the past number of years. I will deal first with the public access goal. People here will be very familiar with new and upgraded facilities which have appeared right around the country. We have Spraoi from Waterford, the National Sculpture Factory in Cork, Artspace Studios in Galway, the Lighthouse cinema, Axis in Ballymun and DanceHouse on Foley Street. Dublin has done well too.

Our specific performance indicator on this is what do these figures show, what does the public know about these projects and do the public consider these an improvement in the availability of the arts. Is there an increase in numbers attending and participating? The answer is a resounding “Yes”. Things have greatly improved. In our recent study, The Public and the Arts 2006, we looked at changes over the last decade. In 1994, 73% of people said they had difficulty in attending and availing of the arts. By 2006 this figure was reduced to 17%. That means, as a result of sustained investment in the arts, the tide has turned, and 83% of the population say they do not experience difficulties in attending or participating in the arts. We think this is very important.

We know from recent research that 100,000 people saw shows in a touring programme we had. The Dublin Theatre Festival, which is on at the moment, is having a record box-office year, and people are joining in as well as attending. We published on Tuesday a new policy on choral music. There are at least 400 choral groups around the country, and 10,000 people sing in these every week. We would say that from a public access point of view our policies have been successful and our objectives have been met. I have some copies of the Raising Your Voice report, which was published on Tuesday, for members.

The second indicator — this is relevant to the issue of the Abbey — is standards. It is always difficult to measure artistic standards in finite numerical terms. We have ways of doing this in the Arts Council, but one rule of thumb for artistic standards is international recognition. We are all aware of Ireland’s success globally in terms of literature. We await the outcome on Monday of yet another Booker Prize competition featuring an Irish writer, Sebastian Barry. Ireland’s theatre has swept the boards with recent international successes by Druid and the Gate, and indeed the Abbey itself won the Fringe First Award at the Edinburgh Festival this year. Internationally, people say the arts in Ireland are of a very high standard. The value of this international success is proven by figures from the tourism sector, which is worth €5.1 billion to the Irish economy. Of the 400,000-odd products the Irish tourism industry has to offer, by far the largest category — 1084 — are directly related to arts events. Thus, people are coming to Ireland because of the high standard and public accessibility of the arts.

With these two core objectives in mind — public access and high standards — I want to set out the background to our grant aid for the Abbey Theatre during the period in question. The council’s decision to offer funding to the Abbey Theatre for the three-year period 2006 to 2008 is relevant to this report. In 2004, members will remember that the Abbey Theatre was suffering a severe financial crisis. In response to this crisis there was a major debate in Government, in society and in the media about the need for a national theatre. I hope my colleagues from the Abbey will discuss that later. The consensus at all levels was that the people of Ireland wanted a national theatre, a strong institution of which we could be proud. Following this debate we, with the Department of Arts, Sport and Tourism, looked very carefully at whether an investment in a national theatre would meet our public sector objectives for arts funding, which, as I mentioned, are public access and high quality. After careful consideration at many levels it was agreed that if properly structured, managed and resourced a national theatre would be an important cultural resource for the country. The board of the Arts Council, with the express backing of the Department of Arts, Sport and Tourism, and in exchange for significant financial support, insisted that the Abbey carry out an organisational review, which recommended the steps required to place the theatre on a secure footing for the future.

On the basis of additional funds provided by the Department from Government, the council provided the Abbey with exceptional funding at the end of 2004, amounting to €2 million, in order to secure the survival of the company at that point. A further €4 million was offered at the end of 2005 to wind up the old National Theatre Society Limited, as was mentioned in the introductory report. The council’s offer of December 2004, together with the offer of revenue funding in 2005, was explicitly conditional on the implementation of the recommendations of an organisational review and a comprehensive change process. The board of the Abbey agreed to these conditions and during 2005 full implementation of the recommendations followed. Additionally, in 2005 the Department of Arts, Sport and Tourism commissioned KPMG to undertake a detailed audit of the Abbey’s financial control systems and to make specific recommendations in this regard.

The impact of these changes has been highly visible and, over the course of the period 2006 to 2008, the theatre has clearly benefited from the use of responsive and timely systems of financial control. In October 2005, the organisation submitted a three-year business plan to the Arts Council. Following long and detailed consideration the council decided to offer three-year funding to the value of €25.7 million in revenue. This was broken down as follows: 2006, year 1, €7.2 million; 2007, year 2, €8.5 million; 2008, year 3, €10 million. Our view, backed by the Department of Arts, Sport and Tourism, was that having started this journey to reform the organisation it was a priority to stabilise it by supporting this initial three-year plan to the best of its ability. The funding was also an opportunity to radically change, reform, improve and modernise the Abbey, which was a very out-of-date organisation, and real momentum was built up around this change. For the first time in many years we felt there was an opportunity to sort things out in Abbey Street. Second, there was a strong conviction among everybody that the vital and vibrant role the Abbey could play should be an important aspect of the life of the nation.

When we were finalising this three-year plan, we were unable to respond to the request for capital funding. Despite the fact that the Abbey asked us for €2.29 million in capital funding for the three years 2006, 2007 and 2008 to go alongside the revenue current funding, we were not in a position to do this initially. After a mid-term budget review in the middle of 2006, we were able to find, from savings, €484,000 from our own expenditure to be used to upgrade the front-of-house areas and external signage. This, we felt, was crucial. I do not know whether anyone remembers this, but at the time there was a vox pop on the “Six-One” news, in which the newscaster was outside the Abbey Theatre with a microphone asking people if they knew where the Abbey was. Nobody knew where it was, and they were standing in Abbey Street. We felt that if public access is an important goal for the Arts Council, this work — to make sure the foyer was people-friendly, so that people did not feel intimated when going in, and to make sure they knew where it was — was vital. That is why we found this funding from our internal budgets.

Subsequently, on being notified of a Supplementary Estimate from the Department, we found we were in a position to offer €600,000 to be used for essential maintenance and upgrading of equipment to ensure compliance with health and safety regulations. We were very concerned about health and safety not only in the public areas but also for the people rigging, those using the lights, the actors and so on, who were at risk. We were very concerned, for example, about the possibility of a lamp falling on somebody during a show. We thus decided to prioritise the €600,000 grant for essential maintenance and health and safety once we had the extra funds.

While most of this funding was drawn down on the basis of invoices received, the Abbey Theatre told us in December of 2006 that it would not be able to get everything finished before the end of the year. The reason was that while contracts were agreed and the work was ongoing, it would not be completed before the end of the year. Members may remember that it was the very height of the building boom and it was impossible to get builders to do anything, and when one did get them it was hard to get them to focus on the job in hand. They could not complete it before the end of the year. We were fully confident that the Abbey would use the money for the purposes outlined, and this was borne out subsequently when the theatre drew down the money from us in February 2007 for the completion of improvements to the interior of the theatre.

Given the advanced state of the works, and recognising that the Abbey had entered a new era of financial management, we required the Abbey to establish an escrow account in which the Arts Council subsequently placed €286,000, the outstanding value of the work of the project. The reason we did this was that the works were very nearly complete; of €1.084 million, only €286,000 remained to be drawn down. However, we did not have the formal evidence of certification and invoicing. Thus, we felt that the most prudent thing to do was to put the money in the escrow account and release it only when the invoices were certified. The subsequent decision by the Comptroller and Auditor General to accrue the €286,000 supports our assessment that the expenditure related to 2006 and that drawdown conditions were the real issue. We are very satisfied that the money was used exclusively for the purposes agreed and that payments were not made on any invoices without certification.

We understood that the Abbey Theatre was going through a procurement process. It is our policy that all bodies should follow public procurement guidelines and we now set this down explicitly. Where we make capital grants we have new grant conditions and these can be shown to the members. I can give an undertaking that every capital grant offered by the Arts Council in the future will have these strict public procurement conditions outlined, specifically and explicitly. We take on board the comments made in the report and if this end of year issue happens again we will accrue the amount rather than use a net escrow account.

On the liaison between the Department of Arts, Sport and Tourism and the Arts Council, we had a very close informal liaison during that period but have now established a new liaison group consisting of officials from the Department and the Arts Council. It meets six times a year and the Abbey Theatre is a recurring item on its agenda. We can ensure there is a good flow of information regarding the management of that organisation’s funds. I am satisfied these procedures will be followed in the future. It is hoped that, with investment from Government, oversight by the Arts Council and supportive communication with the Department of Arts, Sport and Tourism, the Abbey Theatre’s future will be rosy. It is a welcome situation to be in, from the perspective of the Arts Council. Looking back at where we have come from, we are happy to be here and we can be confident that situations such as end of year accounting or public procurement will not arise again.

Chairman:  Can the committee publish the statement from the Arts Council?

Ms Mary Cloake:  Yes.

Chairman:  Mr. MacConghail will not make an opening statement so I open the floor to members.

Deputy Jim O’Keeffe:  I will resist beating my local drum on behalf of the West Cork Arts Centre and will focus on the national issues. There are some general issues I wish to address before we return to the report of the Comptroller and Auditor General on the Abbey Theatre. In his opening statement the Comptroller and Auditor General mentioned a discrepancy of €200,000 in the accounts. This may be an administrative issue but perhaps we might sort this question out before we address others.

Ms Mary Cloake:  We have an erratum slip that we can circulate to members. Ms Pugh will talk about the details.

Ms Ellen Pugh:  As the Comptroller and Auditor General stated, the figures in the financial statements are correct. Due to a publishing error the listing that appears in the annual report in respect of revenue and capital grant breakdown is recorded incorrectly. If one adds the totals together they are correct but the split between revenue and capital is listed incorrectly. The figures in the financial statements in the 2006 accounts are correct.

Deputy Jim O’Keeffe:  That covers that issue. How does the Arts Council satisfy itself that a recipient body is not receiving funding for the same purpose from another source? That matter was touched upon in the special report. Are there some procedures to cover it?

Ms Mary Cloake:  There are strict guidelines governing that and I ask Mr. John O’Kane to respond. He is the arts director and has been working on the funding programmes in the Arts Council over the past four years.

Mr. John O’Kane:  When organisations apply for funding we structure the application process so that they must make explicit to what purpose the funding will be used and must make clear the relationship between that and funding from other sources. In the case of the Abbey Theatre, we went to some lengths to ensure that in capital funding, as discussed by Ms Cloake, our funding did not duplicate that provided by the Department of Arts, Sport and Tourism.

Deputy Jim O’Keeffe:  Another general issue is that the Arts Council makes it a condition of capital funding that procurement is in accordance with EU and Department of Finance procurement rules. There appears to have been a gap in procedure at one stage. Has that gap been fully closed?

Ms Mary Cloake:  It has. I have the new guidelines on capital. We have inserted, at No. 4, an express condition that states the organisation must abide by provisions of the public procurement guidelines competitive process, including the provision to apply a number of price quotations for the work in question to ensure value for money in public expenditure. Every recipient of capital grants from the Arts Council must now sign these conditions before payment is made.

Deputy Jim O’Keeffe:  The overall approach of the Arts Council seems to indicate that a good job is being done there and it is important to put that on the record.

With regard to the Abbey Theatre, there appears to have been several procedural shortcuts and I must deal with those. I shall cut straight to the chase, however, in respect of the capital work done. I address this question to all involved, whether they are in the Abbey Theatre, the Arts Council or the Departments. Is everybody satisfied that the outcome was a job well done and that good value was had for the money spent? That is my main concern. I shall come later to the procedural shortcuts that were taken at the end of the year, possibly under pressures of time.

Ms Mary Cloake:  From our point of view we believe it was excellent value for money. One of the ways we measure value for money in respect of grants to performing companies is to judge how many people come to see them and whether those people have a good experience as a result of their visit. I would like the personnel from the Abbey Theatre to speak about their box office returns. The work done has been a considerable success, however, in increasing significantly the numbers that visit that theatre.

Mr. Fiach MacConghail:  Although there have been some procedural short falls, value for money, and the impact the work has had on the audience, the employee, the actor and the writer coming to the Abbey Theatre, have been considerable. When we visited this committee in November 2005 the building was in a state of gross disrepair. There was no sign outside that inside was an active and vibrant theatre. The health and safety aspects of the interior of the building and the customer service we offered to citizens who attended our productions were under-resourced and the auditorium was shabby. When we received the funding we implemented a progressive and good fit-out of the theatre. This not only expresses value for money but ensured that we could treat with dignity and respect our customers, the citizens who come in droves to the Abbey Theatre. In 2007 120,000 people attended our productions. It also meant that our employees worked in a safe environment.

Deputy Jim O’Keeffe:  There is a point on which the public would wish to have reassurance concerning the proposed major move to the docklands area. Can Mr. MacConghail assure the committee that the capital expenditure incurred was necessary despite this major move being on the way?

Mr. Fiach MacConghail:  The Deputy will know it is public knowledge that it is the Government’s decision that the Abbey Theatre will move, subject to an international design competition and a successful winner of that. The move will happen once that process is in place. In the meantime we have a responsibility to our artists, actors, employees and audiences to ensure that we work in a safe environment. Investment will always be required for the building and all the money we spend, and which has so far been spent, has been to appropriate and relevant ends, representing good value. While we are in this gap of procuring a new building for our national theatre, we must not ignore our current audience who come in increasing numbers to see us. We have begun responding to new quality of life issues in that all our productions now begin at 7.30 p.m. This means that audiences can come in, have a cup of tea or coffee and have a comfortable time in our theatre. That is also paramount for value for money when people buy tickets to our productions.

Deputy Jim O’Keeffe:  The main issue the committee would like reassurance on is the background to the procedural shortcuts that appear to have been taken. On first reading of the reports, these grants appear to have been confirmed at a late stage in 2006, and were required to be spent before the end of the year. The comptroller mentions that the shortcuts taken seem to indicate that at one stage there was only a single tender and that the full procurement procedures were not followed. Mr. MacConghail might explain what happened, why it happened and give reassurance that there was nothing untoward, other than trying to deal with the short time factor available.

Mr. Fiach MacConghail:  One of the advantages of running a national theatre is twofold. We know how we perform by how much our audiences come to see our work. It is almost like getting votes in an election. We are also answerable to this committee and the Comptroller and Auditor General every year. We are very aware of our responsibility to the taxpayer. Our funding is mediated and assessed through the Arts Council.

There was no guarantee in 2005 that we would receive any capital funding over the succeeding three years. We submitted a detailed capital works programme to the Arts Council, and we informed the Department of Arts, Sport and Tourism of that programme. When money became available with the condition we would spend it by the end of the year, we took a responsible approach and decided the money should be spent in the appropriate areas we felt deserved that attention. It is about health and safety, the audience and our employees. We had already retained the services of our architect who had designed the original portico opened in 1991. We had a procedure by which we knew we would get value for money.

Procedurally, there was a hiatus where there was extreme difficulty in getting even three quotes from some of our suppliers, partly because there was a spike in the construction industry, and getting people interested in mundane jobs like painting and decorating was very difficult. In Special Report No. 10, we acknowledged we did not stick with the public procurement procedural guidelines. We have subsequently put that in place through our audit committee and employee scheme. It does not mean we did not get value for money for the work we did; we did get value for money.

The auditorium seating was already in place; it was not subject to a deadline. We are a specialised theatre company. Three contractors submitted tenders. We could not find five contractors, we felt it was an exceptional circumstance and we were pleased that the successful contractor was the appropriate one. The media and the audience have proved what we have done is of exceptional quality and value for money.

Deputy Jim O’Keeffe:  The theatre relied a great deal on the architect in the case.

Mr. Fiach MacConghail:  Yes, we did.

Deputy Jim O’Keeffe:  Who was the architect?

Mr. Fiach MacConghail:  The architect for the front and back of house decorating was McCullough Mulvin, an award-winning company. They designed the original portico of the Abbey Theatre. The architect for the auditorium seating was John Keoghegan who has huge experience in the specialised area of seating, and how to configure it to have a relationship with the stage. We worked with a separate adviser from France, Jean-Guy Lecat who also has that experience.

Deputy Jim O’Keeffe:  While we are probing the issue, there is one other point that arose from the Comptroller’s report. He mentioned that regarding the auditorium seating, three quotations were received, the highest one was accepted. Was there a particular reason for that?

Mr. Fiach MacConghail:  Obviously, in terms of procurement, the lowest is not necessarily the best. We did a field trip to all the companies involved and we felt this one was the best. We had to do this in 12 days. We had a responsibility to our citizens to continue to keep the Abbey Theatre open, produce plays and minimise disruption to our other income from box office and ticket sales. One of the key conditions we wanted was to complete this in 12 days, to shut down over Easter and make a radical change. It has since been proven that the contractor who won that award was in the best position to achieve that over 12 working days.

Deputy Jim O’Keeffe:  I understand the pressures of trying to operate within a tight time frame. Our job is to ensure the best value for money for the taxpayer is obtained. Have the theatre and the Arts Council learned anything from this? New procurement rules have been issued by the Arts Council. Have the Abbey Theatre put in place processes and procedures that, as far as possible, enable them to fully comply with regulations in the future?

Mr. Fiach MacConghail:  We have. It is difficult for us to reject any offers of financing. We have implemented a set of guidelines on how to publicly procure contracts over a particular price and we circulated that to all our employees more than a year ago. That decision was also passed by our own board and the audit committee. We have learned and become stricter in our procurement policy. We are a specialised industry with specialised needs. Where it is possible we have gone for five quotes, which is the stipulation. We hope to continue with that.

Deputy Jim O’Keeffe:  The last point is that there is a lesson for us all to examine the kind of difficulties that arise where capital grants are sanctioned late in the calendar year, with a tight time frame and a possibility that the grant may be lost if it is not spent before the end of the year. That has broader implications as an issue for the committee and others to look at.

Mr. Fiach MacConghail:  The ultimate winner is the audience. Every kind of work the Arts Council and the Abbey Theatre do benefits the end users, which are our citizens.

Chairman:  Arising from Deputy Jim O’Keeffe’s questions, under the codes of practice for governance of State bodies, the Chairman of the Abbey Theatre should have reported to the Department of Arts, Sport and Tourism. Was there a report submitted for 2006, and were the breaches of procedures identified in that report to the Department?

We are discussing the pressure to spend before the end of the year. Is this cropping up more and more in Departments?

Mr. Dara Mullaly:  The Abbey Theatre does not, as a commercial company, report to us on its corporate governance. In our dealings with it, we expect it to comply with corporate governance requirements.

Chairman:  The Abbey reports to the Arts Council. The Arts Council reports to the Department.

Mr. Dara Mullaly:  Yes.

Chairman:  Were the breaches identified to the Department through the Arts Council?

Ms Mary Cloake:  At the end of the year, the Abbey reports fully on its activities. I invite Mr. John O’Kane, the liaison person with the Abbey Theatre, to speak about it.

Mr. John O’Kane:  Communication with the Abbey is conducted via regular monitoring meetings so that we are fully appraised of what is going on with the Abbey. There is no formal annual reporting from the chair.

Chairman:  There should be, under the code of practice for the governance of State bodies.

Ms Mary Cloake:  There is a formal meeting with the Arts Council at which the chair reports verbally to the Arts Council. My understanding was that the Abbey, in its new format, was not covered by the code of practice for State bodies. The chair was in two months ago and gave a full report on 2007 but we do not have a formal written report from the Abbey.

Chairman:  That is the interpretation of the Arts Council. Is it the interpretation of the Department of Finance?

Mr. John Thompson:  The Chairman asked in particular about the end of year pressure. This has been around for a long time. Two developments in recent years have made that less of a problem than it was. First, we now have an arrangement of capital carryover, whereby 10% of a Department’s capital Vote can be carried over into the next year, so that the “use it or lose it” situation is abated. Second, we have moved more to long-term planning, in view of capital, through the successive national development plans which have expanded in scope over time. There is less of the end-of-year pressure to spend than there would have been some years ago.

Chairman:  On the other question, are we all happy that the Abbey is not subject to the codes of practice?

Mr. Fiach MacConghail:  The Abbey Theatre is subject to the code of practice for governance of State bodies. The chairman of the Abbey Theatre reports to the Minister for Arts, Sports and Tourism. He submitted a report in 2006 but did not include the breach of the public procurement guidelines.

Chairman:  So there was a report to the Department?

Mr. Dara Mullaly:  The annual report was submitted.

Mr. Fiach MacConghail:  It is a formal communication between the chairman of the Arts Council and the Minister of the day. A report was submitted in 2006.

Deputy Niall Collins:  I wish to ask one question relating to the partnership of arts officers with local authorities. It is fair to say they do very good work. Will Ms Cloake expand on the nature of the partnership? Are the contracts of arts officers open ended or fixed term? Is there co-funding of the arts budget from the Arts Council in conjunction with the local authorities? The budgets under which they operate are minuscule in comparison with the overall budget of a local authority. For example, the local authority budget in Limerick is €130 million. Does the Arts Council liaise with the managers of local authorities to increase the funding available to the local arts officers?

Ms Mary Cloake:  The local arts officer network has been one of the real success stories of the last ten years. For the first time we have a complete complement in that every local authority area has an arts officer. It is indicative of how popular the arts have become at local level. We have a long-standing partnership arrangement where we contribute to elements of the cost. In some cases, where a county is badly provided for in terms of a rate base, we provide funding for the salary but, increasingly, the local authorities are paying all of the salary themselves, which is very good. We look at the programme offered at local level and we contribute to certain elements of it. Limerick city and county are among the best for supporting individual artists and communities in the arts. Some sterling and exemplary work is going on in the city and county. That is evidence that when there is a long established programme the standard of work can be very high.

On the question of spending from local authorities, it is not what we would want but it has increased three-fold during the past ten years, from approximately €5 million to €15 million. In regard to our original policy on venues, Deputy O’Keeffe mentioned west Cork arts centre. We started off being the organisation that would fund the arts centres around the country and would provide 80% to 90% of their funding, with the local authority providing 10% or 20%. In the 1980s and 1990s we had a policy of matching local authorities 50-50 on contributing to the running costs of arts centres. What has happened now is that the local authorities are way ahead of the Arts Council in their contributions to the arts centre networks. We consider that to be a real success. Yet, one of the frustrating aspects is that the potential for the work of arts officers is so vast that they could usefully spend twice what they are getting. I suspect that is a matter of time.

Deputy Niall Collins:  What is the position with the security of tenure of their contracts given that there is only one arts officer in each local authority who does sterling work? There are other disciplines in local authorities where there are probably excesses and there will probably be cutbacks across the board, in terms of resources. I would not like to see the arts officers come in under the umbrella of these cuts. Are the contracts open ended or fixed term?

Ms Mary Cloake:  It is different from county to county. We recommend strongly that the arts officer is a permanent member of the local authority staff and, in many instances, that is now the case.

Deputy Thomas P. Broughan:  I heard Mr. MacConghail recently on an arts programme with directors from the other three national theatres who made a very good case for the performance of the Abbey in recent years, particularly in bringing theatre to the whole nation and also in involving all the other theatre groups. I commend him on that. What happened to the special account, the escrow account? Why was the special money put into that account for the refurbishment?

Ms Mary Cloake:  I will invite our finance director, Ms Ellen Pugh, to explain what happened and to outline the status of the account.

Ms Ellen Pugh:  We put it into the escrow account because the conditions of the grant were not fully met. In order to draw down payments for capital grants, organisations have to submit the original invoices plus a certification from their accountants to say that the invoice was paid. In this case, while we knew that the work was ongoing, that the Abbey was doing the work, we did not have the certification from the accountants so we did not accrue it in the account but put it in our accounts, an escrow account, because we thought this was the most prudent place to put it and the money could be drawn down subsequently. In January we received invoices from the Abbey. We put €286,000 into the escrow account. In January we received invoices for €225,000 and we subsequently accrued that amount in the accounts in conjunction with the Comptroller and Auditor General. The balance was over €60,000. In June 2005 we received invoices from the Abbey for €51,000 and we released money from the account to that amount. There was a balance of just over €8,000 and the Arts Council got a refund of the balance later in 2007.

Deputy Thomas P. Broughan:  So this account is closed.

Ms Ellen Pugh:  Yes. In the 2007 report, the Comptroller and Auditor General was concerned about the possibility of any double spending. Did double spending occur?

Ms Mary Cloake:  No. There was extensive liaison on an informal basis between the Arts Council and the Departments of Art, Sport and Tourism. The Arts Council would not be a major capital funder. We did as I said earlier. We were very concerned about the public interface of the Abbey and also health and safety so we did what we could but the major work such as seats would be a matter for the Department. That was under constant discussion and negotiation throughout the period in question.

Deputy Thomas P. Broughan:  Is the Comptroller and Auditor General convinced, therefore, that there was not any form of double spending in this instance?

Mr. John Buckley:  Yes, we were fairly satisfied. One of the points we would make is that there would be much more coherence to the system if all capital funding was coming from the same source, either the Department or the Arts Council. In that way a single agency would be monitoring it. One of the lessons that might be learned from it is that there would be value in consolidating the funding for capital that is going to an agency like the Abbey so that people on both sides of the transactions would be aware fully of the entire picture.

Deputy Thomas P. Broughan:  I will put a final question to the director. Regarding the big move, everybody is delighted that there are plans for the new theatre. I am not sure what type of international competition was run 30 or 40 years ago but it appeared to be something like an office building in the middle of the city or a fortress of “luvvies” against the surrounding world. I am delighted to hear there will be an international competition. What is the position now in terms of the big move? Will that be a PPP project? It is something this committee will have a major interest in tracking up to the days when hopefully the people involved will be doing their work in an appropriate building on the banks of the Liffey.

Mr. Fiach MacConghail:  I thank the Deputy for his kind words earlier. While the building we have is very austere, I would contend it is not a fortress of “luvvies” but a fortress of citizens. What is happening on our stages and continually since we were founded is a major debate about what is going on in our society, both nationally and internationally, and long may that continue.

We welcome the Government decision to relocate the Abbey Theatre to the docklands. It was agreed also that this would be procured through a PPP. I will let my colleagues in the Department of Arts, Sport and Tourism answer the PPP element of it but in terms of what is happening at the moment, we are finalising the accommodation brief, in other words, what the building will entail in terms of our theatres, the rehearsal space and so on.

At the same time as finalising that accommodation brief we are also working as a project team where the Abbey Theatre is a part of that team along with the Department of Arts, Sport and Tourism, the Office of Public Works, the National Development Finance Agency and all our various technical advisers. We are now trying to secure and complete the competition regulations which will be run by the Royal Institute of Architects of Ireland. When those two processes are complete, the international design competition will be announced. In terms of how long that will take, the end result and when we will move into our new building, I will defer to the Department on that.

Chairman:  In case the representatives think some members have lost interest in the proceedings, there is a vote in an adjoining committee. That is where some of the members have disappeared to.

I have a question for the Department of Finance representative. Is there international experience in regard to the provision of theatres through PPPs? Has the Department studied any case histories?

Mr. John Thompson:  Quite honestly, I do not know. The technical aspects of a PPP are handled by the National Development Finance Agency which has built up specialised expertise in this area. I assume that will include looking at examples from around the world where other people have done this sort of project from which they would learn.

Chairman:  Could somebody provide us with the information?

Mr. John Thompson:  We can certainly check that out for the Chairman.

Deputy Thomas P. Broughan:  On a related point, will we end up having to pay a levy for seats in the various theatres when they come on stream? In other words, will it turn out to be another M50 fiasco?

Mr. John Thompson:  I do not think I can comment on that.

Chairman:  Having listened to the proceedings, does Mr. Buckley have any comments to make?

Mr. John Buckley:  It is acknowledged that there were rules that were not observed in this case and that has implications for value for money as well as probity in the sense that people have an entitlement to expect that they will get a chance to bid for contracts such as this. Equally, the non-compliance with rules, especially when they breach the EU procurement thresholds, could expose organisations to claims from potential tenderers.

The Department of Finance mentioned there has been a general improvement with the advent of capital envelopes and so on. That has eliminated the pressures at year end, the splurge and so on, but there is still considerable residual pressure, as this particular report indicates. What we may have to reflect on long term is the effect of procurement funding rules and accounting rules and whether they should be aligned better or more goal congruent.

The obvious point is that procurement takes time. To comply with procurement rules time is needed whereas pressure to spend within a defined window creates a countervailing pressure that cannot be readily resolved. In business, holding money to leverage the delivery of a product to somebody’s satisfaction would be the norm whereas the pressure here, under the Government accounting and funding rules, tends to be to force the person who should have the leverage to forfeit it and spend the money.

On the other side, I would make the point that accounting rules should be neutral. They should not influence what people are doing. We may have to reflect on that too when we consider this and a number of other reports on procurement which the committee is looking at.

One way of resolving it is for the funding agency like the Arts Council to accrue the funds in its accounts and hold them until the following year rather than resorting to escrow accounts and so on. An alternative way is to create a mini-capital envelope situation, when we have semi-State bodies and companies like the Abbey, and allow the money to move to the capital accounts of the recipient companies on condition that it is spent within six months. It allows an appropriate window for them to carry out all the administrative responsibilities they have to do to comply with the procurement rules.

The general point is that when we have these countervailing rules, something has to give. It has been resolved up to now by people giving precedence to the accounting rules on the simple basis that they need to get control of the resources and hold the money, and they would feel foolish if they gave up the money. On the other hand, there are many legal responsibilities attached to procurement and if it is to be resolved it is necessary to resolve it in favour of compliance with the procurement rules, which are somewhat driven by Europe and exposure to suit and claims from other people if they are not honoured.

Some reflection is needed on the way these matters would be balanced, and it may be opportune to do it in the context of a review of public financial procedures which is going on currently in the Department of Finance. It may give an opportunity to reflect on these matters and to consider whether certain archaic rules can be reworked and reformulated so as to serve us better in the future.

Chairman:  Mr. Buckley mentioned accrual accounting. Are there any proposals to implement accrual accounting for departmental Votes? I believe that was flagged some years ago but why has it not happened?

Mr. John Thompson:  My understanding is there is no plan as such. The issue is under consideration from time to time. Some aspects of accrual accounting have been brought into accounts in that there are statements of accruals in prepayments, asset registers and so on but a full move to accrual accounting does not seem to be in prospect. I am aware it has been under consideration from time to time but there does not seem to be any move to go down that route at the moment.

Chairman:  Why not?

Mr. John Thompson:  There are advantages and disadvantages in any system of accounting. In the commercial world there are accrual accounts but one also keeps a close eye on cash accounts. I do not know if the Comptroller and Auditor General will agree that, in the context of a control function, having the focus on cash is probably more appropriate, given that, in terms of accrual accounting, questions of opinion and value judgments come into play which may not be entirely appropriate or may be difficult to get right. Accrual accounting is not a panacea; it has its advantages but it also has its disadvantages.

Chairman:  We were wrapping up the discussion, but Deputy O’Brien indicated he would like to contribute.

Deputy Darragh O’Brien:  I had to briefly leave the meeting, as a vote had been called at another committee. I apologise if the points I wish to raise have been covered.

On the issue of procurement, there is a trend among most State agencies which have appeared before the committee, as I am sure the Comptroller and Auditor General will testify, of regular breaches of procurement rules, from which we cannot hide. We must examine some financial system to address this.

I wish to put a question to the officials from the Department of Finance. It has been mentioned that the Department permits a 10% capital carry-over to the following year. Is that correct?

Mr. John Thompson:  Yes, a carry-over of up to 10% is permitted. This assumes there is an underspend in year one and the money is carried over into year two.

Deputy Darragh O’Brien:  Is that deemed sufficient? From Mr. Thompson’s experience, in the context of agencies spending purely in order to draw down funds in the accounts for one year, is this an issue the Department will wish to address?

Mr. John Thompson:  The carryover provision was intended to make sure there would be much less pressure for this to happen.

Deputy Darragh O’Brien:  I have two brief questions for Mr. MacConghail. He said he was satisfied he had received value for money for the work done. How does he know this, given that procurement rules were not followed? He sought advice from his architect. A substantial amount to the tune of €900,000 was spent. How can he say he was satisfied that the taxpayer had received value for money?

Mr. Fiach MacConghail:  If we break down the costs involved and consider the seating scenario, a significant cost, we invited three companies to tender for the work which is specialised. We are talking about theatre seating, a bespoke requirement. The procurement guidelines indicate we should have obtained five tenders. We obtained three and proceeded with one, which we considered was appropriate. Value for money was obtained in that respect. As regards the other three aspects, I made a valid judgment on the basis that we had a long-standing and good relationship with the architect who knew our building well and had interfaced regularly with the construction industry at the time. The architect contacted three contractors by telephone and one response was obtained and accepted. I consider fair value was obtained, but we did not adhere to the procurement guidelines.

Deputy Darragh O’Brien:  Mr. MacConghail would admit that was far from ideal.

Mr. Fiach MacConghail:  Yes, I would.

Deputy Darragh O’Brien:  The Arts Council would share much of the blame in that it did not make it clear in respect of the grants it would give that procurement guidelines would have to be followed. Will the witnesses from the Arts Council confirm that there were no breaches of public procurement guidelines in 2007 in respect of any grants allocated by it?

Mr. Fiach MacConghail:  As regards the Abbey Theatre, since 2006 we have implemented the procurement guidelines which we circulate to all our employees and subcontractors. I can verify——

Deputy Darragh O’Brien:  Is Mr. MacConghail satisfied they are being followed?

Mr. Fiach MacConghail:  Yes.

Deputy Darragh O’Brien:  Is the Arts Council satisfied such guidelines are being followed?

Ms Mary Cloake:  Yes, we did not have any capital grants in 2007. Any capital grants from 2008 onwards will be subject to the new conditions.

Chairman:  The committee will note the Arts Council’s accounts for 2006 and dispose of chapter 3 of special report No. 10 of the Comptroller and Auditor General on the Abbey Theatre. Is that agreed? Agreed. I thank the witnesses for attending.

The witnesses withdrew.

Sitting suspended at 11.55 a.m. and resumed at noon.

Mr. A. Ó hAonghusa (Director, National Library of Ireland) called and examined.

Chairman:  Witnesses should be aware that they do not enjoy absolute privilege. 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. These rights include the right to give evidence; the right to produce or send documents to the committee; the right to appear before the committee, either in person or through a representative; the right to make a written and oral submission; the right to request a committee to direct the attendance of witnesses and the production of documents and the right to cross-examine witnesses. For the most part, these rights may only be exercised with the consent of the committee. Persons invited before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to be made aware of them and provided with a transcript of the relevant part of the committee’s proceedings, if the committee consider it appropriate in the interests of justice.

Notwithstanding this provision in the legislation, I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside of 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 in Standing Order 158 that the committee shall also 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.

I welcome Mr. Aongus Ó hAonghusa, director of the National Library of Ireland. I invite the officials from the Department of Arts, Sport and Tourism to introduce themselves.

Mr. Chris Flynn:  I work in the cultural institutions section of the Department which deals with the National Library of Ireland.

Mr. Dermot Quigley:  I work in the procurement unit of the Department of Finance.

Mr. Aongus Ó hAonghusa:  I am accompanied by Mr. Gerard Lyne, the library’s keeper of manuscripts.

Chairman:  I invite Mr. Buckley to make his opening comments.

Mr. John Buckley:  The National Library of Ireland became an autonomous body in May 2005 under the National Cultural Institutions Act 1997. It now operates under a board of 12 members appointed by the Minister. In 2007 its total expenditure was €13.6 million.

Special Report No. 10 outlines the circumstances surrounding the procurement by the library of certain Joycean material. The material involved consisted of six pages relating to Finnegans Wake. It was initially sourced at the premises of a Paris book dealer in 2004 and the actual purchase which was finalised in 2005 was funded by a private institution using tax relief provisions set out in section 1003 of the Taxes Consolidation Act 1997. This involves the institution getting a tax credit equivalent to the purchase price.

There are sensitive issues around the establishment of title in the case of Joycean material and consequently in acquiring it. It is clearly prudent that the library validate the provenance of the documents. Overall, two somewhat competing versions of the facts relating to the acquisition have been put forward. First, a temporary employee of the library inspected the papers in Paris in May 2004 and in the period up to the end of the year kept the library informed on progress in making them available for acquisition. On the other hand, a dealer who was contracted to the Department in respect of running the Bloomsday Festival asserted that she had already acquired title to the papers in April 2004, which was before the employee’s visit to Paris. While the employee had concluded that the documents were available for approximately €400,000, the ultimate cost in terms of tax credits was approximately €1.2 million.

The documents were bought from the dealer who was contracted to the Department. Both the library and the Department have conducted independent investigations of the matter and the library has concluded that the dealer had, in fact, purchased the papers in April 2004 and that any delay in following up on the material was due to complications in regard to title that would have arisen if a direct approach had been made to the dealer in Paris. The library favoured acquiring this type of material using the services of a reputable dealer. It has provided assurance that it is introducing collection development policies and acquisitions guidelines to cover future procurement. The director will be in a position to update the committee on the progress made in this respect.

Chairman:  I ask Mr. Ó hAonghusa to make his opening statement.

Mr. Aongus Ó hAonghusa:  I am pleased to have this opportunity to appear before the committee to discuss the Comptroller and Auditor General’s recent report on procurement in the National Library of Ireland. As the report points out, the acquisition that is the subject of the report was the third significant collection of James Joyce material to be acquired by the library in the space of just over four years. The acquisition was completed in a thorough manner. The authenticity of the material was verified and its importance from a literary perspective confirmed by external experts. Independent professional valuations were also carried out. The vendor provided appropriate information on the provenance of the material. The library was anxious at all times in the acquisition process to ensure the State received value for money in the transaction. Working closely with our legal advisers, appropriate contractual arrangements were put in place to safeguard the library’s interest in the matter.

The conclusions of the report, as set out in paragraph 4.30, are worth noting:

The key point is that the material was obtained at market value. The report does not record any impropriety on the part of library staff.

The acquisition was effected through the use of section 1003 of the Taxes Consolidation Act 1997. The Joyce material was purchased by a commercial bank which then donated the papers to the National Library. Subsequently, the bank sought and received a tax credit in the same amount as the amount it had paid for the material. The application for the tax credit was approved by the selection committee established under section 1003. The committee determined that the material in question met the statutory criteria that apply under the scheme. These criteria are that the material should be an outstanding example of the type of item involved, pre-eminent in its class, the export of which from the State would constitute a diminution of the accumulated cultural heritage of Ireland or the import of which into the State would constitute a significant enhancement of the accumulated cultural heritage of Ireland. Under the tax credit scheme, the Revenue Commissioners are required to obtain an independent valuation of an item approved by the committee for donation. Such a valuation was obtained in this case — one of three valuations commissioned in the whole process.

The National Library has an active acquisitions programme funded from its annual voted allocation. We also have access to instruments such as the tax credit scheme and the heritage fund. I am pleased that the institution continues to receive donations of material; this varies from single items to large collections. Acquisitions can be and are a time consuming and long drawn out process, as a range of issues must be addressed. These include the importance, authenticity and provenance of material. Negotiations with vendors can be tedious but I must stress that the library endeavours to acquire material for inclusion in its collections at the lowest possible cost to the State. In that respect, it adopts a commercial approach in its negotiations with vendors.

The three Joyce acquisitions mentioned have helped make the National Library probably the world’s foremost repository of Joyce material. Scholars and researchers come from around the world to undertake research on this material. Material from the 2000 and 2002 acquisitions formed a central part of the library’s ground breaking Joyce exhibition which ran from 2004 to 2006. It is fair to say these acquisitions have helped to raise the profile of the library and allowed the institution to develop new and innovative programmes and attract new visitors.

Returning to the report, it appears the Comptroller and Auditor General’s concerns, in so far as they relate to the National Library, can be summarised as relating to possible conflicts of interest on the part of library staff and possible delays in pursuing an acquisition once the existence of the material became known. I have addressed these points in my responses which have been incorporated in the report, but I wish to add a few more comments.

With regard to possible conflict of interest, I must stress that there is no evidence of any conflict of interest on the part of any library staff member involved in this acquisition. In a report commissioned by the Minister for Arts, Sport and Tourism — a copy of which is in the Oireachtas Library — the vendor has made clear that no information was received from anyone in the library in relation to the material or the library’s interest, or lack of interest, in pursuing a possible acquisition.

In early 2007, the board of the National Library commissioned an external review of the acquisition. As part of that review all of the key library staff involved in the transaction were interviewed. The external reviewer did not find any evidence of a conflict of interest on the part of library staff. The wider review which, as I mentioned, was conducted on behalf of the Minister for Arts, Sport and Tourism, reached the same conclusion.

As director of the National Library, I became aware of the existence of this cache of Joyce material in the early summer of 2004. I believed at the time that it would be difficult for the library to pursue an acquisition through a Paris based vendor — the material having been discovered in a Paris bookshop. My rationale for that decision was that the library did not have the resources to pursue an acquisition through an unknown Paris book-dealer. That is no reflection on that person; it was simply an acknowledgement of the reality that, at that point, not only did we not know the bookseller, but we did not have the resources or the capacity to commit to what was likely to be a complex and time-consuming acquisition process.

The material ultimately came on the market some months later via Sotheby’s of London, which had handled a previous Joyce sale to the library on behalf of a different vendor. Sotheby’s had a good understanding of what the library would require in order to complete the purchase. Therefore, the acquisition proceeded quite smoothly from the time Sotheby’s first came to the library in late 2004 to the conclusion of the process in June 2005. A six-month period to conclude an acquisition such as this is by no means unusual. I make no apologies for the approach taken. It may seem conservative, but I regarded it then, and I still do, as a prudent and reasonable approach.

I should stress that the Joyce material was never on offer to the library before December 2004 and that up to that time the institution had nothing remotely resembling an entitlement to acquire the material for any price lower than that at which it was ultimately acquired. It subsequently transpired that the vendor had acquired the material from the Parisian book-dealer in April 2004 and, therefore, any direct approach by the library to the book-dealer would not have achieved success.

The library and its board have taken steps to ensure that appropriate policy and governance arrangements are in place dealing with acquisitions. This process began when the board was established in 2005. Arising from the concerns that arose in relation to this particular acquisition, the board, in early 2007, established an acquisitions policy advisory committee. The remit of this committee is to support the board in terms of acquisitions policy generally. Work is nearing completion on a collection development policy which will spell out the library’s policy on the type of material the institution wishes to acquire.

A further element that is planned is the preparation of a set of acquisitions guidelines that will lay down for staff the key principles to be followed in the acquisitions process. Ethical issues will undoubtedly feature in these guidelines.

The library already complies fully with its obligations under ethics legislation. In particular, staff holding designated positions are required to complete declarations in accordance with the legislation, staff contracts and terms of employment are consistent with the appropriate guidelines, and an ethics policy is in place for staff. This ethics policy is in the course of being reviewed. The existing policy already explicitly addresses the issue of conflict of interest. However, as part of the review consideration will be given to strengthening further the relevant section.

Chairman:  May we publish Mr. Ó hAonghusa’s statement?

Mr. Aongus Ó hAonghusa:  Yes.

Chairman:  Thank you.

Mr. Aongus Ó hAonghusa:  There might be some minor changes to it, but nothing of substance.

Deputy Jim O’Keeffe:  Does the director accept that, on the face of it, some serious issues arise concerning this purchase, in particular from the point of view of conflict of interest aspects? I am not thinking of his point of view of course, but that of the people who were involved.

Mr. Aongus Ó hAonghusa:  Conflict of interest is always a difficult issue to understand. I am satisfied that, in this case, on the part of library staff there was no inappropriate action. No information about the library’s negotiation position or its commercial decisions was released to anybody. That is clear and I am satisfied that was the case.

Deputy Jim O’Keeffe:  As regards the library staff, however, that is not the central issue. In May 2004, the employee of the library inspected the Joycean material in question, which was for sale at that time apparently for the sum of €400,000, and duly reported back to the library. Yet, subsequently, the dealer who was under contract to the Department claims to have purchased this material the previous month. That does not seem to add up, does it?

Mr. Aongus Ó hAonghusa:  There are a couple of points. The library employee who visited Paris was a temporary employee and visited Paris in a personal capacity. I know the distinction between a personal capacity and one’s employment is not always clear to temporary employees. That is one of the lessons we have learned in this process, so we have to make it clear to temporary staff what they can and cannot do. To some extent, however, that is a side issue. He went to Paris on a private project in keeping with his own professional area of expertise, which relates to Joycean texts. That is why he went to Paris — to see if there was any truth in this rumour, what the documentary material was and where it might fit in to the overall scheme of Joycean things.

I cannot say much about the other aspect of it. I mentioned the report that had been commissioned by the Minister for Arts, Sport and Tourism. The person who conducted that report, the previous Secretary General of that Department, had addressed some of these issues and, I think, had contact with the vendor. That person has confirmed that the material had been bought, or that the deal to complete that sale had been done, in late April 2004. He expressed the opinion that it was nothing unusual and was still available to be perused in Paris. As regards the issue of the possible relevance or otherwise of the figure of €400,000, we simply do not know. Certainly, that was never brought to my attention as being an asking price. The deal seems to have been done anyway between the Paris book-dealer and the vendor. Even if we had tried there and then to start an acquisitions process and begin negotiations, it seems that there was nothing to buy.

Deputy Jim O’Keeffe:  The director must understand the concerns we have on behalf of the taxpayer, who is indirectly paying for this material, arising from the fact that this material appears to have been openly for sale in May 2004 at a price of €400,000, which was duly reported to the library by the employee. Yet, the library subsequently had to pay a figure of €1,170,000. Does the director understand our concerns arising from that situation?

Mr. Aongus Ó hAonghusa:  Of course I appreciate and understand the concerns, but the reality is that the material was not available to the National Library. It was not on offer to the National Library and we were not in negotiations with the vendor in Paris. The figure of €400,000 was not made available to me until much later in the process.

Deputy Jim O’Keeffe:  Would the director further understand our perhaps more serious concerns that the material in question appears to have been acquired by somebody who was being paid by the taxpayer under contract to the Department, working at that time as administrator of the Bloomsday centenary committee?

Mr. Aongus Ó hAonghusa:  That information only became available much closer to the time when the contract was being concluded in the middle of 2005. We were dealing with Sotheby’s from December 2004 on a one-to-one basis with a senior person in Sotheby’s who was clearly acting on behalf of an unknown vendor. I cannot answer on behalf of a third party as to what was their role in the process or how they became involved in the transaction.

Deputy Jim O’Keeffe:  What third party?

Mr. Aongus Ó hAonghusa:  The vendor.

Chairman:  Your agent?

Mr. Aongus Ó hAonghusa:  No, the person who ultimately sold the material to the commercial bank.

Deputy Jim O’Keeffe:  It was the dealer who was working for the Department at the time.

Chairman:  It was your agent, was it not?

Mr. Aongus Ó hAonghusa:  Perhaps the Department might like to deal with that. I cannot really deal with it. The National Library had no contractual arrangement with this person.

Deputy Jim O’Keeffe:  At what stage did Mr. Ó hAonghusa become aware that this dealer had acquired this material?

Mr. Aongus Ó hAonghusa:  Does the Deputy mean an identifiable individual?

Deputy Jim O’Keeffe:  Yes.

Mr. Aongus Ó hAonghusa:  In May 2005. That was the first time I was made aware that the person, who was on the other end of Sotheby’s if you like, was this person.

Deputy Jim O’Keeffe:  Was that a voluntary disclosure or was it at the insistence of the library?

Mr. Aongus Ó hAonghusa:  When we started to talk to Sotheby’s in December 2004, we had always made clear to it that at some stage in the process we would need to be informed as to the identity of the vendor because a contract for sale would need to be signed. We would have needed to know with whom we were dealing. It was not an issue for the first couple of months because we were dealing with the range of paperwork at our end but then as it came close to preparing final drafts of the contract, we insisted that Sotheby’s reveal the name of the individual and it did so approximately a month before the contract for sale was signed.

Deputy Jim O’Keeffe:  Apparently what was then disclosed was a claim that the material in question had been purchased in April 2004 and that the payment, therefore, had been finalised in December 2004. Is that correct?

Mr. Aongus Ó hAonghusa:  That is my understanding. In the documentation the vendor supplied through Sotheby’s, a copy of an invoice for a receipt indicating that the sale was completed in December 2004 was included with it.

Deputy Jim O’Keeffe:  My next question is more for the Department. At the time of the purchase, the person in question was under contract and working for the Department. Is it correct that her contract provided that she should not engage in any other work for the duration of her contract that would constitute a conflict of interest?

Mr. Chris Flynn:  The contract for the individual in question contained a fairly standard clause in relation to other work. It stated:

On entering into that contract with the individual, the Department was aware that the individual was a collector and a dealer as well as being a Joycean. That was our starting point.

Going on the data we have from Mr. Furlong’s report into the acquisition and other events, it is clear the collector, or the vendor if we can call her that, agreed to purchase this collection at a time when she was under contract to the Department. She concluded the actual sale when she was outside contract and Mr. Furlong’s conclusion, having looked at all the facts, was that there was no conflict of interest in her continuing to do what she had done prior to entering into contract with us.

Deputy Jim O’Keeffe:  Would Mr. Flynn accept that is a conclusion which might not be fully shared in the context of the circumstances now outlined by the Comptroller and Auditor General?

Mr. Chris Flynn:  That is the conclusion at which the former Secretary General arrived. We sought legal advice on the matter in the general sense of conflicts of interest and contracts of this nature. I will refer to some of the advice we got back from the Attorney General. Clauses such as restricting people’s activities in contracts of this nature are difficult and can be taken as restricting people’s freedom to trade. One may, in a sense, put a clause into a contract that is unenforceable. If one says to someone that he or she may not do certain things while under contract to the Department, one cannot, therefore, extend that after the contract period which is, effectively, what happened in this case. The deal was closed after the contract had been completed.

Deputy Jim O’Keeffe:  Has Mr. Flynn been able to ascertain when the dealer in question first became aware of the existence this material and from whom and in what circumstances she was made aware of it? Has he been able to ascertain the amount of money for which the dealer was able to acquire the material in question? The figure seemed to be €400,000 in May 2004.

Mr. Chris Flynn:  No. We do not have that information. To answer the Deputy’s first question, the information we have in relation to when the collection was first notified to the dealer was February 2004.

Deputy Jim O’Keeffe:  Will someone explain the role of Sotheby’s in this whole transaction because it appears somebody from Sotheby’s was advising the dealer in relation to this matter as well as the National Library?

Mr. Aongus Ó hAonghusa:  Sotheby’s was always working for the vendor in this case. It was never working for the National Library. It was never our agent in the process.

Deputy Jim O’Keeffe:  I see. It was clearly for the vendor.

Mr. Aongus Ó hAonghusa:  Absolutely. It was out to negotiate the best deal possible for its client and, working with our legal advisers, we were trying to do the same on behalf of the State.

Deputy Jim O’Keeffe:  If this material was openly on sale in a bookshop in Paris in May 2004 for €400,000, it is a bit difficult to understand why what would appear to be a circuitous route going through Sotheby’s, and ultimately paying over €1 million for the material, was used.

Mr. Aongus Ó hAonghusa:  We will never get the answer to that because we still do not know if it was ever on sale for €400,000. I do not know how much the vendor paid for it in Paris. The Sotheby’s route——

Deputy Jim O’Keeffe:  Mr. Ó hAonghusa’s employee reported that it was for sale in the middle of May 2004 for €400,000.

Mr. Aongus Ó hAonghusa:  He reported that it was in Paris. As to whether he gave any indication about the €400,000, myself and my colleagues were never made aware of that. The significance of that is still not clear to me. In the summer of 2004, for a whole variety of reasons, we felt we could not sustain a campaign to buy it from Paris. All our previous experience in these areas had been with the likes of Sotheby’s and before it with Christie’s on an acquisition in 2000 which was done by auction. We were in no particular hurry to buy this. I suppose we have a more cautious policy and we feel it paid off in this case.

We do not know what would have happened if we had started to try to negotiate with the book dealer in Paris. He might have tried to gazump the vendor. Who knows? We simply do not know, nor will we ever know. Again, the process worked its way. Three separate valuations have confirmed that the price the commercial bank paid for it represented value for money. I suppose all that could be said about the Paris situation is that possibly — it is completely hypothetical — we missed out on a bargain.

Chairman:  Mr. Ó hAonghusa said there was no evidence it was available for €400,000. The Comptroller and Auditor General’s report states that the National Library’s man, the part-time employee, went to Paris and concluded that the asking price would be in the order of €400,000 on the basis of material, recording that figure being placed adjacent to the manuscripts. How can Mr. Ó hAonghusa state then——

Mr. Aongus Ó hAonghusa:  That information was never brought to my attention. The staff member, as I explained earlier, went to Paris in a private capacity. He had no responsibility for the acquisitions. He certainly was not in a position to negotiate on behalf of the National Library. The book-dealer in Paris did not know where he was coming from. He did not know that he was involved in the National Library. He thought, because this gentlemen is not Irish, that probably he was from an American institution or somewhere else. Frankly, we will never get to the bottom of the significance of that figure of €400,000.

Deputy Jim O’Keeffe:  The danger of being gazumped in dealing with the book-dealer was mentioned.

Mr. Aongus Ó hAonghusa:  It was not that we were being gazumped, rather that perhaps if we had gone to Paris on foot of our staff member’s report and started trying to negotiate with the bookseller, he might have changed his mind and withdrawn the sale from his first client. We will never know the answer to that either.

Deputy Jim O’Keeffe:  Does the director not understand how perplexed somebody like me would be looking at it from outside? Surely it would have been worth the price of a Ryanair ticket to Paris to check out something at €400,000 for which we subsequently paid more than €1 million.

Mr. Aongus Ó hAonghusa:  In the summer of 2004 the price was not a factor. Certainly, the figure of €400,000 had not been brought to my notice and the price was not a factor in our decision-making process. It was a variety of things. First, we did not have the staff resources to go to Paris. In hindsight, maybe it might have been worth our while, as Deputy Jim O’Keeffe stated, to send somebody to Paris to investigate it further, but the decision we made was that we had other priorities in the summer of 2004.

Deputy Jim O’Keeffe:  The director did not rely on the report that he got from his own employee, who apparently is quite an established Joycean scholar.

Mr. Aongus Ó hAonghusa:  There is no doubt he produced a comprehensive report on the quality of the material. It was a clearly thought-out academic paper on the importance of the material and how it fitted in with other Joycean material, both in the National Library’s collection and in other collections. There was no doubt when that became available that it was quite an important document.

Our concern was more in terms of the complexities associated with the negotiating position and the commercial side of it. Certainly, I was not happy, and I did not have the resources to start dealing with an unknown book-dealer in Paris.

As it happened, it came to us ultimately through Sotheby’s. Sotheby’s, although it was acting for the book-dealer, had acted for a previous vendor three years previously and had been through all of the negotiations with the National Library with a previous director, and knew clearly what the National Library would require in terms of contractual arrangements. All of those arrangements were agreed quite smoothly with Sotheby’s.

Deputy Jim O’Keeffe:  Does the director understand how difficult it is for us, who are here on behalf of the taxpayer, to reconcile a situation where apparently this material was available for €400,000, at which time it had been looked at and reported on positively by an employee of the National Library, and then that the National Library subsequently ended up paying €1,170,000 to somebody who acquired it while working for the director’s parent Department?

Mr. Aongus Ó hAonghusa:  I already indicated that I understand and appreciate the concerns. What is clear is that this material had already been sold on in April 2004 before the National Library staff member even saw it. We cannot rewrite that piece of history.

My colleague, Mr. Lyne wants to add to this.

Mr. Gerard Lyne:  I wish to make two points. The sum of €400,000 has been tossed about in the course of the discussion.

Chairman:  It is not tossed about; it is in the report.

Mr. Gerard Lyne:  I beg the Chairman’s pardon. Yes, of course. I use that phrase figuratively.

If we look closely at the report of the employee in question, he states that he came to the conclusion that this material was on offer for €400,000 because of a notice in association with the material. That seems to me a very vague statement. Why did he not go to the dealer and get confirmation that this was price? He did not. Therefore, there was no basis for action on our part. That was an inconclusive statement by the employee in question.

My second point relates to the director’s decision to proceed through an established and reputable auction house, Sotheby’s. He made that decision in consultation with senior staff in the National Library and we unanimously endorsed his decision in that respect. We did so for very good reasons, that it was a safe route because a reputable established auction house will provide a solid provenance for the material. As the committee will be aware, provenance is most important in any acquisition by an institution such as ours. Those two points need to be taken on board.

Chairman:  I thank Mr. Lyne.

Deputy Niall Collins:  I want to take up where Deputy Jim O’Keeffe left off. The director’s presentation is made in an unapologetic fashion. He has been outmanoeuvred and wrong-footed by people associated with the National Library, and possibly his own staff. That is patently clear.

Mr. Aongus Ó hAonghusa:  Hold on a second——

Chairman:  Mr. Ó hAonghusa should let Deputy Collins finish.

Deputy Niall Collins:  We represent the public and the taxpayers who have ultimately paid the price here. An intermediary came into the process and, obviously, made profit. That profit was borne by the taxpayer. The director is unapologetic about it and that it not appropriate in the situation.

The director stated he is happy there was no conflict of interest. First, he has not told us how he arrived at that conclusion. Second, it would be fair to say that, regardless of conflict of interest, there had to have been collusion between the temporary employee, who first apparently discovered the material in Paris, and the vendor, from whom the National Library ultimately bought it.

My final observation on it is that the director states that the National Library is relying on the term market value and on a number of valuations that the National Library received. That is not a fair comment either because it is not a pure market. There is not a number of suppliers of this material and there is not a number of people interested in acquiring it. It is probably fair to state that the National Library, representing the State, would probably be the leading entity targeting that type of material.

To move it forward, what is the director doing to ensure that something like this will not recur? Is he putting in place confidentiality clauses with all the National Library’s employees, both permanent and temporary, and can he restrict their private activities? How is the National Library tying in people?

This does not involve small sums of money. There must be a lesson learned from this. The director’s presentation lacks a little humility. He was outmanoeuvred on this and he should acknowledge it.

Mr. Aongus Ó hAonghusa:  I am sorry for my earlier intervention. I am concerned that Deputy Collins referred to somebody and has implied collusion between a former staff member and a third party. The record is clear. There was no such collusion.

There was a report commissioned by the Minister for Arts, Sport and Tourism. The board of the National Library commissioned a report. The public servant, doing that report on behalf of the National Library, sat down with an individual and specifically asked him had he had any contact with the person who sold it to us. He said that he had not such contact. I asked him the same question. There is no evidence whatsoever that any collusion took place. I am disappointed that this would be said because there is absolutely——

Deputy Niall Collins:  Equally, there is no evidence that collusion did not take place. How do we——

Chairman:  There is no evidence of collusion. However, there is evidence of quite a serious sting operation——

Mr. Aongus Ó hAonghusa:  I do not accept that.

Chairman:  ——by an agent of the Department and the vendor. In my opinion our guests were the victims of a sting.

Mr. Aongus Ó hAonghusa:  A sting also implies collusion. It is unfair to——

Chairman:  Not with the employee.

Mr. Aongus Ó hAonghusa:  However, it still implies that more than one person was involved. There is no doubt that the person who sold this material to the National Library or to the bank that received the tax credit was involved in a contractual relationship with the Department and was known to the library. We had a business relationship with this person.

We all wish that things could have been done differently. I am not exactly sure what we might have done differently at the time. Perhaps we might have travelled to Paris sooner than we did and commenced discussions with the person there. However, I do not believe this would not have resulted in a different outcome. I am unapologetic about certain matters and it is important to state that we have added an important acquisition to the national collections.

Deputy Collins referred to confidentiality clauses. Like their counterparts across the civil and public service, our employees are required to sign declarations of confidentiality. As part of their employment contracts, they are required to comply with the provisions of the Official Secrets Act and the Freedom of Information Acts. Those Acts regulate, to a certain extent, the way in which public employees can release information. Mr. Flynn dealt earlier with the issue of whether it might be possible to introduce restrictive practices conditions into employment contracts. I do not know whether it would be feasible to do so. The advice he received indicates that there are concerns with regard to introducing such conditions.

Mr. Chris Flynn:  On the issue of conflicts of interest, it is important to state that no laws were broken and nothing illegal was done in this instance. The person who sold the material to the National Library is a collector. She also provided material on loan for the exhibition the library mounted in respect of Joyce. She is known internationally as a collector.

Deputy Collins made a good point on the three valuations obtained in respect of this material. He also stated that the National Library was the lead purchaser in this market. It is not strictly correct to say that. There would be at least three institutions in the United States that would give anything to procure this particular collection. The strictest confidentiality had to be observed in respect of earlier collection of Joyce material that was purchased for a large sum because we were aware that there was one university in the United States which would have procured the collection if it had been in a position to do so. The National Library would not necessarily be the leader in this market and there are others who would be extremely competitive in the context of containing manuscripts of this nature.

Chairman:  How does Mr. Flynn know that?

Mr. Chris Flynn:  From previous experience. One of the largest collections of Joyce material is held in the United States.

Deputy Jim O’Keeffe:  Is that not all the more reason for the relevant employee to have travelled abroad in May 2004 to check on availability of the material before anyone else could procure it?

Mr. Aongus Ó hAonghusa:  We answered that question already. I only became aware of the importance of this acquisition in late June 2004. An initial report was prepared in mid-May of 2004, at which point we were gearing up for a major Joyce exhibition. The National Library has many priorities, of which the making of acquisitions is only one. For example, we are faced with difficulties in respect of our buildings.

Deputy Thomas P. Broughan:  Is it not the case that the Joyce research fellow, Dr. Luca Crispi, stated on 29 June — we know this through an FOI request — that the library would have the right of first refusal through July? In other words, it was aware of the material’s existence and had the right of first refusal in respect of it until the end of that month. Is that correct?

Mr. Aongus Ó hAonghusa:  The individual has explained what he meant by that. It did not involve the concept of first refusal. In his statements to the independent review commissioned by the board, he effectively withdrew that comment and indicated that, as far as he was aware, no one else was interested in acquiring it at that stage. He was clearly mistaken.

Chairman:  From what source did Deputy Broughan obtain his information?

Deputy Thomas P. Broughan:  It came to my attention on foot of an FOI request, which indicates that Dr. Luca Crispi stated on 29 June that the National Library had the right of first refusal through July. Did formal or informal discussions involving Mr. Ó hAonghusa, Ms Laura Barnes — the vendor — the dealer, Dr. Luca Crispi and Dr. Stacey Herbert in respect of these manuscripts take place in 2004?

Mr. Aongus Ó hAonghusa:  I can confirm that I only engaged in discussions with the first of the individuals, who was a member of staff of the library, to whom the Deputy refers.

Chairman:  For the sake of fairness, will Deputy Broughan make the information in his possession available to members because they do not know from what he is quoting?

Deputy Thomas P. Broughan:  It is a document entitled Irish Historical Mysteries: The Trade in Joyce Manuscripts, which deals mainly with the Léon cache but which also refers to this particular sale.

Mr. Aongus Ó hAonghusa:  I am aware of the document and I have a copy with me.

Deputy Thomas P. Broughan:  The book dealer in this case is a Jean-Claude Vrain. A key issue for Joycean scholars in purchases of this nature relates to the veracity of documents. There is a lengthy discussion in Irish Historical Mysteries: The Trade in Joyce Manuscripts on the fact that the manuscripts came from the apartment of the writer himself and were apparently sold at auction at the Hotel Drouot between 1941 and 1946 by a dealer named Maurice Bazy. Are we sure of the provenance of the documents? Was what the Americans refer to as “questioned documents” research carried out in respect of them? When the National Library became aware, through the work of its employee, that Jean-Claude Vrain was in possession of the documents, why did it not immediately despatch someone to provide an expert opinion in respect of them and then commence the process of purchasing?

Mr. Aongus Ó hAonghusa:  As stated in my presentation, and as the Comptroller and Auditor General pointed out earlier, provenance is extremely important in the context of Joyce material. It is, in fact, important with regard to all collections because we need to know that we are not buying a pig in a poke. However, a particular issue arises in respect of tracking Joyce documents as a result of his transient lifestyle. He lived in many places and he gave material to different people, so it is hard to track every item. Much of his material was taken from his residence in Paris when he left and it was auctioned. Any time we buy Joyce material, we must track back and we put the onus on the vendor to provide solid provenance. The information regarding the provenance Deputy Broughan set out about the auction in the hotel in Paris in 1946, the first dealer, on to the second dealer and, ultimately, to the vendor was provided by the vendor as part of the supporting documentation for the acquisition. That was thoroughly checked out by our legal advisers who sought French legal advice to see that those steps complied with French law and, as a result, the library’s position was protected and no action could be taken against the library if there was an issue over the provenance. There is also a provision in the contract for sale that if the provenance is erroneous or misinformation was given to us, we have a legal route to seek redress against the vendor.

Mr. Gerard Lyne:  The material Deputy Broughan quoted provides an admirable illustration of the complexities surrounding provenance in the case of Joyce manuscripts and it illustrates why the National Library was well advised not to proceed precipitately in this case.

Deputy Thomas P. Broughan:  Is it true that due to the research conducted by the temporary employee, the library had first refusal up to the late summer of 2004?

Mr. Gerard Lyne:  We had a very vague statement of the sum the manuscript was on offer for and we needed to conduct measured and careful research into the provenance. This is why the director, with the full support of his senior staff, chose to proceed to an established and reputable auction house. It made eminent good sense.

Deputy Thomas P. Broughan:  Is it not the case that Joycean scholars in Ireland and the US are a closely knit band and, considering this from the public’s point of view, this entire affairs stinks and there is a perception a sting occurred or at the very least sharp practice was involved, which left the State exposed? At the end of the day, the State need not have incurred this significant expenditure if the library had taken action earlier.

Mr. Gerard Lyne:  That is a conclusion the Deputy is entitled to come to. Two separate investigations have come to an opposite conclusion.

Deputy Thomas P. Broughan:  In 2006 the Chairman’s esteemed former colleague, Paul McGrath, who was in the House yesterday, made a formal complaint to the Ceann Comhairle apparently after he was contacted by Ms Laura Barnes, the dealer, having submitted a parliamentary question on the matter but before he had received a reply from the Minister for Arts, Sport and Tourism, which is an extraordinary sequence of events. Was this extraordinary matter investigated by the Department? If so, what was the result? How could a parliamentary question from Deputy McGrath, acting in the public interest, become known to any participant in the case?

Mr. Chris Flynn:  The issue of the parliamentary question tabled by former Deputy, Paul McGrath, was also gone into by former Secretary General Furlong and the conclusion he came to in his report on that matter was that the Department did not adequately respect the integrity of the parliamentary question process and this resulted in a badly timed telephone call from the vendor to the former Deputy before the latter had received the ministerial reply to his question. The circumstances surrounding the background to that are dealt with in Mr. Furlong’s report. An official in the Department communicated with the vendor to extract details to have the answer for the parliamentary question and, in contacting the vendor, inadvertently made the vendor aware of the parliamentary question. He was trying to elucidate the question but, at the same time, made her aware of the parliamentary question being tabled. That is in a nutshell what happened behind that. It is accepted by the Department and the official in question that the timing was less than desirable.

Deputy Thomas P. Broughan:  Was a decision taken to change practices in this regard? It seemed like an outrageous attempt to try to influence a Deputy discharging his public duty.

Mr. Chris Flynn:  We have all been very well reminded of the necessity to deal with parliamentary questions through the proper procedure and the necessity to keep information relating to parliamentary questions within the Department and the Dáil until they are answered.

Deputy Thomas P. Broughan:  If the original valuation was accurate, what is the net cost of this affair to the Exchequer?

Mr. John Buckley:  If the original cost was valid and there is some doubt about that, the premium the State would have paid would have been of the order of €770,000.

Deputy Darragh O’Brien:  Does that include the tax credit?

Mr. John Buckley:  The tax credit was the way it was paid for.

Deputy Darragh O’Brien:  It was returned to the commercial bank. That was given to the bank in full.

Mr. John Buckley:  It will be offset against the bank’s tax bill. One can offset it against the bill or write a cheque. It is the same thing.

Deputy Darragh O’Brien:  People can draw a number of conclusions and we are at cross purposes regarding some of them. This case is beginning to sound more like Frederick Forsyth than James Joyce given all the trips to Paris, who did what to whom and who did not do this, that or the other. I cannot understand how, based on the Mr. Furlong’s report, it was seen that there was not a conflict of interest involving this person who was effectively paid for by the State, employed by the Department and worked for the National Library and who put a deal together from which she benefitted financially. In no way, shape or form, could I draw the same conclusion. We are discussing someone else’s conclusion. Has this individual been engaged in other work by the Department or the library since this issue emerged regarding the Joyce manuscripts in Paris?

Mr. Chris Flynn:  The individual in question has had several contracts following on from the administrator job on the Joyce festival. Three other jobs were carried out for the Department involving Beckett — a feasibility study relating to Beckett, a calendar of events for the Beckett centenary and, as a result of a competitive process——

Deputy Darragh O’Brien:  How much was she paid?

Mr. Chris Flynn:  She was paid a fee of €45,000 in total as Beckett centenary co-ordinator. Her total remuneration from four contracts was more than €100,000. I emphasise that much of that would have been put down to expenses and to paying other parties.

Deputy Jim O’Keeffe:  What expenses were paid in addition to the €100,000 to the same person?

Mr. Chris Flynn:  A total of €174,000 in expenses in addition to that sum. The auditor has the figures in the report.

Deputy Darragh O’Brien:  I saw it, but the figures Mr. Flynn is giving are separate to the expenses.

Mr. Chris Flynn:  There was remuneration of more than €100,000 plus expenses of €174,000.

Deputy Darragh O’Brien:  Was the person in question working in conjunction with the National Library since this? Has she worked with the National Library on other projects or just directly with the Department?

Mr. Chris Flynn:  Those were with the Department.

Deputy Darragh O’Brien:  This is what I do not get. Whatever way one looks at it, judging by the evidence from the Comptroller and Auditor General’s report, I do not dispute the fact that nothing illegal has been done, this individual did not live up to the spirit of the law and of her contract. It beggars belief, therefore, that the Department still engages a person who, from the information we have, at the least acted inappropriately, and that we continue to pay for her services through the Department. I do not understand that.

Many people would have serious concern in this regard. If the original amount of €400,000 is correct, and the State ends up paying €1.1 million, there is at least a €700,000 loss to the taxpayer while in the meantime there is a profit for this person, yet we continue to engage her. It seems from earlier comment that we were almost grateful this person has lent us transcripts for previous Joycean exhibitions. The taxpayer must be protected. How do we know this situation will not recur?

Mr. Chris Flynn:  I have no knowledge of the €400,000 and cannot comment on it. It is a hypothetical figure.

Deputy Darragh O’Brien:  It is the figure cited by the Comptroller and Auditor General in the special report.

Mr. Chris Flynn:  I have no knowledge of that. With regard to the conflict of interest, the first contract specified she would not engage in paid employment that would conflict with her work for the Department. However, the question must be asked whether what she did in pursuing the occupation she habitually pursued, namely, collecting Joyce material, conflicted with the contract. The opinion of the Secretary General, Mr. Furlong, and legal opinion after the event, are that was not a conflict. I must rest on that.

Deputy Darragh O’Brien:  I will put it to Mr. Flynn again. On what grounds does the Department feel it is appropriate to continue to engage this person and to pay her substantial amounts of money following the Comptroller and Auditor General’s report and the comments made here today?

Mr. Chris Flynn:  The Deputy should look at the timing. The last work done by the individual in question finished in May 2006.

Deputy Darragh O’Brien:  Has there been nothing since then?

Mr. Chris Flynn:  Not for the Department.

Deputy Darragh O’Brien:  What about for the library?

Mr. Aongus Ó hAonghusa:  No.

Chairman:  Mr. Flynn mentioned she was a collector. She was not really a collector, but someone who bought and sold, a dealer.

Mr. Chris Flynn:  My information from the beginning was that the individual in question was a collector of Joyce material, going back many years. At the time we interviewed for the initial contract, her CV mentioned her involvement in an American company which is a rare book enterprise specialising in 20th century literature, especially the works of James Joyce. I know that through her involvement in that she built up a collection of Joyce material herself. Therefore, it is fair to say she had been a collector, going back to before the year 2000.

Deputy Thomas P. Broughan:  The document about which I inquired indicates the complexity of Joycean memorabilia and scholarship. The director said he wanted to try to improve the National Library, which is almost an alma mater for those of us who studied in Dublin and was always a welcoming place. Does this affair, and the controversy over the earlier cache, not reveal a worrying and significant deficiency on the part of the National Library with regard to one of the world’s and our greatest writers? Have we any way of knowing this deficiency does not still exist?

Mr. Aongus Ó hAonghusa:  A deficiency in what sense?

Deputy Thomas P. Broughan:  In other words, there is a deficiency when the National Library is unable to put its expert on a plane to Paris to give an immediate opinion on whether this was a likely Joycean cache.

Mr. Aongus Ó hAonghusa:  I am privileged to have a fantastically professional staff in the National Library, who are experts in their field. However, we are limited in what we can do. We are limited by staff numbers and resources and cannot simply drop everything and jump on planes to go to foreign destinations, much as we might like to. We have an active acquisitions programme. My colleague Mr. Lyne is in regular contact with agents, dealers and individuals, particularly in Ireland, trying to encourage them to donate material to the National Library or to negotiate with them. Our hands are already full.

Deputy Thomas P. Broughan:  The library’s budget is approximately €12 million and in this case there is the guts of a €1 million additional cost to the State. This is such a significant part of the expenditure of the library that the public should be entitled to feel the library has the necessary expertise to deal with such issues.

Mr. Aongus Ó hAonghusa:  We have excellent expertise and a very committed staff in the library. The staff are experts in their field and know Irish literary, historical and estate papers, photographic and print collections like the back of their hands. They know what is happening. To return to a point the Deputy made earlier, he asked what investigations had taken place in terms of the authenticity of the material. In something as specialised as that, we would have to rely on the external experts. In this case, the external people were able to confirm that the material was in Joyce’s handwriting. Things like this are important.

Deputy Thomas P. Broughan:  There are the other issues around Joyce. One must also consider that someone other than the dealer, Sotheby’s or the original bookseller may own the documents. Is that not an issue with regard to Joycean material?

Mr. Aongus Ó hAonghusa:  It is. As I explained, the contract for sale we signed with the vendor and to which the commercial bank was a party provided safeguards in the unlikely event anything would happen that would affect our interests. We have safeguards in a range of areas.

Deputy Thomas P. Broughan:  A final point, does the director regret this whole affair?

Mr. Aongus Ó hAonghusa:  No.

Chairman:  I call on Mr. Buckley for his final comments on behalf of the office of the Comptroller and Auditor General.

Mr. John Buckley:  Reflecting on the debate and the report, there are immediate lessons we could learn. One such is that it is necessary to finalise the library’s collection development policies and acquisition guidelines. These must be finalised in a way that takes account of the kinds of risk we have identified in our discussion. The overriding concern must be to protect the interest of the taxpayer. While the Department and the library have given assurances that transactions were arms length, there is a risk to be managed, especially in circumstances where there is a limited number of people with expertise and that small circle interpenetrates the public and private domains.

We must give consideration to whether it is possible to insert clauses in contracts that restrict trade and the potential of people contracted to the State, in whatever guise, to compete with the State for the kind of material related to the work in which they are engaged under contract or to benefit from any information they get in the course of that engagement. While it was prudent to wait until the material came into the hands of a reputable dealer, the option probably should have been considered of engaging such a reputable dealer to handle the State’s interest and to proceed with more speed, if this were to happen again. Those are my thoughts on the discussion.

Chairman:  I thank Mr. Buckley and the witnesses for their contributions. If I may speak for members, the committee will not pass this report. We will not note it as we need to discuss today’s proceedings and decide what to do with the report. I propose we defer the passing of this report until we have considered it further. Is that agreed? Agreed.

The witnesses withdrew.

The committee adjourned at 1.10 p.m. until 10 a.m. on Thursday, 16 October 2008.