Double-counting reports dismissed as 'whitewash'

THE CHAIRMAN of the Dáil’s spending watchdog has described the conclusions of two official reports on a €3.6 billion discrepancy in the Government’s debt figures as a “whitewash”.

John McGuinness, chairman of the Public Accounts Committee (PAC), said the two reports, one internal and one external, had made no reference to the role and responsibilities of senior management in the Department of Finance, including former secretary general Kevin Cardiff.

The reports examined how a double-counting error that added €3.6 billion to the General Government Debt figure went undiscovered for four years between 2007 and 2011.

Mr McGuinness, a Fianna Fáil TD, told a meeting of the PAC yesterday that the sum of €61,500 spent on an external report by consultants Deloitte had been an “appalling waste of taxpayers’ money”.

The new secretary general of the Department of Finance, John Moran, appeared before the committee yesterday to inform it of the department’s new management strategy, its progress in dealing with the major banking and economic issues and his own outlook on recovery.

He said considerable progress had been made but “significant headwinds” remained, especially out of Europe.

Mr Moran also issued the two reports into the €3.6 billion error to committee members. While the controversy arose before he took up his post, he set out details of the department’s response to the reports. A finance and risk office had been established to prevent a recurrence, he said, and a more robust double-checking regime was in place in the department.

He cautioned against any expectation of a wholly foolproof system: “Human error, while it can be minimised, cannot be eliminated altogether. Which of us can genuinely say that we have not made a mistake along the way?”

In that regard, he said a system was needed that ensured mistakes were identified quickly. He said it was important, too, to have a culture where people were not afraid to admit to mistakes.

The two reports had concluded there had been too much duplication of effort between Finance and the Central Statistics Office, failures in communications and reporting, and a lack of resources that left the compiling and checking of key statistical work in the hands of one overstretched individual.

Mr McGuinness and Sinn Féin’s Mary Lou McDonald were scathing of the absence of any reference to senior management in either report.

“Kevin Cardiff should have come back from Europe [he is now a member of the Court of Auditors] and told us it was his human error that there was not support staff in place,” said Mr McGuinness. “It was a whitewash, the critical issues were not examined.”

Ms McDonald said: “The reports have nothing to say about the person with whom the buck stops. I find that very odd.”

On banking, Mr Moran pointed to the reverse in bank deposit outflows as an indication the bank strategy was working. He said deposits had grown to about €150 billion, €10 billion higher than the low in June of last year.

He said solutions were needed to the mortgage arrears problems to allow banks to return to viability.

Fine Gael TD Kieran O’Donnell asked if that meant moving tracker mortgages out of the banks into another vehicle, such as the Irish Bank Resolution Corporation (formerly Anglo Irish Bank) in order to clean their balance sheets.

Mr Moran said the plan for Permanent TSB had set out very clearly what needed to be done. He said that low-yield assets (such as tracker mortgages), if they were to be moved out of the banking system, would allow banks to recover more quickly. He said there was no instrument available at present to do that.

In an indirect reference to Spain, he said that as Europe continued to grapple with the banking problem there was a likelihood new tools would become available.

Fine Gael TD John Deasy made what was seen as a veiled criticism of Taoiseach Enda Kenny and Tánaiste Eamon Gilmore when he described as unhelpful and annoying comments made after the referendum that suggested a deal might be forthcoming on banking debt.

He said the German dismissal of it did little for positive perception of Ireland.

“I have a problem with people making unwitting statements on something that has no basis in reality,” he said.

Ms McDonald said Finance was “slow and sluggish” in its response to the Spanish banking crisis. Mr Moran rejected her claim, saying she had misunderstood his explanation of the department’s strategy on such matters.