Fás controversy: the final chapter

A confidential report upholds some complaints by the ex-employee who says he was ‘scapegoat’

IN THE autumn of 2008 a gale force 10 scandal hit the national training authority, Fás, and its then director general, Rody Molloy.

Amid great controversy over the use of public funds for foreign travel and top-class hotel accommodation, Molloy went on RTÉ radio and asserted he was entitled to take first-class flights to the United States.

Within days he was gone, but not until the Government had agreed to a €1 million-plus injection into his pension, and let him keep his car.

Inquiries at the time by the Dáil Public Accounts Committee (PAC) into expenditure controls in the Corporate Affairs Division in Fás had an added element of frisson because of the belief that Molloy was close to Fianna Fáil, and in particular to the then taoiseach, and fellow Offaly native, Brian Cowen.

However, the committee’s probing into the corporate affairs division, which funded the foreign travel as well as publicity and other expenditures that appeared lavish and in breach of procurement procedures, was complicated by the fact that the director of the division during the period under review, Greg Craig, was on sick leave when the scandal broke.

The committee had all but finished its work and reported on its inquiry by the time Craig was back at his desk and making submissions to the inquiry.

He told The Irish Timesin December 2008 that he had indeed breached procurement policy during his time as director of corporate affairs, but that his actions were at all times known to his superiors.

In January 2009 he made a lengthy submission to the PAC in which he claimed he was being made the “scapegoat” for what had gone wrong in the massive training agency.

Now a confidential report, the findings of which are known to The Irish Times, has upheld some of the complaints made by Craig after his return to work, and raised questions about the nature of the response of senior management at Fás when it found itself in a media whirlwind.

The report is being sought by the PAC but has not yet been given to it. It was compiled by three partners in the Mazars consultancy firm, all of whom are experienced auditors. It was commissioned and paid for by Fás, after Craig submitted a series of complaints to Molloy’s successor, Paul O’Toole, over how he had been treated, and O’Toole agreed to the holding of an inquiry. The findings have been accepted by Fás. Less than one-fifth of Craig’s complaints were upheld by Mazars.

One complaint that was upheld concerned what happened when Craig was declared by a doctor to be fit to return to work, in September 2008, at the height of the crisis. Solicitors acting for Fás contacted the solicitors acting for Craig, and sought to exert pressure on him to stay away. However, the Mazars people were unable to establish who instructed the Fás solicitors to take this action.

William Fry solicitors, who act for Fás and have been paid hundreds of thousands of euro for their advice in relation to the controversy, did not engage fully with the Mazars inquiry, and it was because of this, according to the report, that the Mazars team were unable to identify who in Fás issued the firm with instructions to exert the pressure on Craig. A request for a comment from William Fry this week met with no response.

The report says its finding that pressure was exerted on Craig, “is based on the fact that we can confirm that pressure was exerted on the complainant through his solicitor by the Fás solicitors”. The report does not disclose what information the team had that allowed it say it could confirm that pressure had been exerted.

The scandal at Fás goes back to 2004 and an anonymous letter that made certain allegations that were never upheld but which, nevertheless, led to an internal audit report being produced. This report, INV 137, raised serious concerns about spending controls in the corporate affairs division. This led to Craig being disciplined in a relatively minor fashion by Molloy.

However, after the report was mentioned in turn, and in passing, in a report by the Comptroller and Auditor General’s office, a redacted copy was released in June by Fás to The Irish Times and, in time, to the PAC. It became a template or reference book for much of the ongoing probing and controversy at Fás. At around the time the redacted report was released under the Freedom of Information Act, Craig went on sick leave.

The Mazars report says that “acting on the reasonable assumption that the Fás solicitors would only act on instructions from senior Fás management, it would appear that the motivation for this pressure was the environment in which Fás management was operating at the time and the uncertainty of the results of internal audits on breaches of procurement practices that had not concluded by September 2008, and that Fás management would greatly prefer that the complainant would stay out of the office for an extended period”.

It goes on to say it is not clear which member or members of the Fás senior management instructed their solicitors “who declined to be interviewed as part of this investigation” and that it is not possible to uphold the grievance specifically against any of the five people Craig complained about. The Mazars team decided, rather, that they would uphold the grievance against Fás as an organisation.

The report also upholds some other complaints against Fás from Craig. It said that during the 2008 and 2009 period, confidential, personal information about Craig was released to a number of newspapers. This information included information to do with his sick leave, disciplinary action taken against him in relation to INV 137, his bonus, his salary, his application for promotion to assistant director general, details contained in sick certificates provided by doctors outside of Fás, and details relating to a review of his e-mails.

The report found against Fás as an organisation in relation to this, rather than against individuals. It said the organisation had failed in its obligation to protect Craig’s personal details.

“It is our view that on the balance of probability, assuming that the complainant [Craig] did not provide these details himself, and assuming good HR practice and personal record confidentiality, in some instances the information in question could only have been available to a senior member of staff, members of the HR department or a board member.”

On October 2nd, 2008, Molloy, who was under significant pressure, appeared before the PAC. Under questioning from Róisín Shortall, of the Labour Party, Molloy said, in a reference to Craig: “He continues to be employed by Fás but he is out on sick leave. He does not currently have a job title because it is clear it would be inappropriate for him to come back into [corporate] affairs when, and if, he returns to the organisation. He does not have a job title.”

The Mazars report does not name Molloy but it says that the making of this disclosure and the fact that it had not been communicated to Craig at the time “can be considered to have been in contravention to the Fás policy, Respect and Dignity at Work”.

Molloy’s radio interview with Pat Kenny was on Monday, November 24th, 2008, and his resignation was announced by the then tánaiste and minister for enterprise, trade and employment, Mary Coughlan, on November 25th. Two days later senior Fás management were back before the PAC. Assistant director general Christy Cooney led the team.

Cooney was then the president designate of the GAA and among the matters being queried about the corporate affairs division was the decision to move the Fás jobs fair, from its traditional home, the RDS, to Croke Park, which some viewed as a less satisfactory venue.

During the PAC meeting Cooney announced, in a reference to Craig, that Fás “has suspended the individual as a result of new information that has come to light from a recent audit report which was being undertaken on [corporate] affairs which began during the summer of this year”.

Craig was to later say that this came as a surprise to him, and that he heard of his suspension on national radio.

The Mazars report upholds the complaint from Craig “that a senior manager suspended the complainant in the public domain and without prior written notification and in breach of medical advice received by Fás”.

When the report was finalized late last year, its findings were accepted by O’Toole. He met with Craig in January of this year and it was agreed that a third party would negotiate the making of a financial settlement to Craig and the issuing of a public apology.

Meanwhile, however, a consultant from the midlands, Ignatius Lynam, had been commissioned by Fás following a public tender, to conduct an inquiry into some 22 internal audits, many of which raised issues for the corporate affairs division over the period covered by the INV 137 report.

Lynam’s review led him to investigate the conduct of 14 people, some of them former employees. His final report led to a number of disciplinary recommendations, the most severe of which was against Craig, who was found to have been involved in multiple breaches of procedures.

It was on the basis of this finding that Craig was informed on September 5th that he was being summarily dismissed for gross misconduct.

Craig appealed the decision and then went to the High Court seeking to challenge the employment authority’s decision. The matter was settled earlier this week.

Following the settlement, Fás issued a statement saying Craig had accepted the termination of his employment and would receive an ex gratia termination payment of €75,000 without prejudice to the position adopted by Fás in respect of the breaches of its procurement procedures. Additionally, he is to get €50,000 plus Vat towards his legal costs, €15,000 in respect of certain findings made in the Mazars report, and €35,000 in respect of his claim to be paid for annual leave not taken over an extended period. Craig also received an apology arising from the findings of the Mazars report.

One of the complaints upheld by the report was that the PAC had been given incorrect evidence during its sittings at the height of the controversy. This matter is now the subject of dealings between the agency and the PAC, and it is likely to be the last of the legacy issues that will arise from the 2008 controversy.

INQUIRIES INTO BREACHES AT FÁS: COSTLY BUT NECESSARY, SAYS NEW CHIEF

THE DIRECTOR general of Fás has said it was necessary for the organisation to conduct both an investigation into complaints made by Greg Craig and an inquiry into breaches of procedure at the corporate affairs division formerly run by Craig.

Paul O’Toole said he wanted to make it clear that the two inquiries dealt with very different matters.

The second inquiry, conducted by Ignatius Lynam, looked at the findings of a number of internal audit reports and at breaches of procedure and came up with disciplinary recommendations against 14 people, some of whom are retired. It recommended dismissal of Craig on the basis of serious misconduct.

The Mazars investigation dealt with Craig’s complaints against Fás.

Both processes have now been brought to a conclusion following this week’s settlement with Craig.

O’Toole said the decision to undertake the two independent investigations was the right thing to do, “even if they were painful and extended processes with a consequential financial cost”.

“We knew what had happened but we didn’t know why it had happened, who was responsible, and who, if anyone, was culpable. The Lynam investigations were designed to address these questions.”

O’Toole said something clearly went wrong within Fás during the 2005 to 2008 period.

“Ultimately it contributed to the demise of a significant state organisation and we need to understand how that occurred.

The new board and management put in place in the wake of the 2008 controversy needed more insight and information as to how these problems had arisen.

“If we did not get to the bottom of the matter and deal with it, it could very well have remained embedded in the culture of the

organisation,” he said. “We have dealt with these problems, faced up to them, and now they are less likely to recur in the future.”

What had happened was a pity given that so many people in Fás are doing such fine work, and that had been tarnished, he said.

The organisation has cut by 90 per cent its budget for advertising and promoting job fairs.

Every year the organisation is working successfully to reduce its costs, he said.

Mazars has been paid €167,000, before Vat, for its work for Fás while additional legal costs of €25,000 have also been paid.

The Lynam inquiry has cost €231,000 in fees, excluding Vat, with further miscellaneous costs of €9,300.

William Frys solicitors has been giving advice to Fás in relation to the Lynam inquiry and was paid €2,900 in 2009, €179,500 in 2010, and €74,800 this year.

The training authority has yet to be told the legal costs of the High Court action initiated by Craig and which was settled this week.