Nobody knew project off the rails

The democratic process does not discriminate between the banal and the dramatic.

The democratic process does not discriminate between the banal and the dramatic.

Thus the rail signalling inquiry heard discussions yesterday on the quality of plastic covering on copper cables. Hardly exciting, but important when seeking to understand why a complex project initially worth £14 million might ultimately cost CIE £50 million.

What two key witnesses might say about this is not yet clear because despite being called to appear on Monday at the inquiry, they did not. Its chairman, Mr Sean Doherty TD, said this was a serious development, adding that it was open to him to refer the matter to the Director of Public Prosecutions or the High Court.

It is understood he was referring to two British-based consultants to CIE, Mr Michael Hamlyn and Mr Ken Vine.

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Most telling yesterday was the statement of CIE's chief financial officer, Mr Jim Cullen, who said he did not hear of the overrun on the 1997 Mini-CTC programme until July 1999. Mr Cullen, the most senior financial executive in the group, said expenditure up until then was about £10 million.

Because the contract worth £15.7 million was due for completion in December 1999, Mr Cullen said he had no reason to suspect the project had run aground.

But it had - and seriously so. According to the statement of Iarnrod Eireann's chief executive, Mr Joe Meagher, likely cost increases were recognised "early in 1999". The best estimate suggested that work on a parallel network on the railway for Esat Telecom would increase costs by £2 million.

That figure is much less than £36 million, although CIE's contractors have claimed there are clear reasons for such an overrun. The positions adopted by Alstom and Modern Networks Ltd (MNL) differ, but roughly put, they have complained that Iarnrod sought a more sophisticated project but was slow to provide information on the specifics.

The system is still incomplete and Mr Cullen revealed that the group's then chief executive, the late Mr Michael McDonnell, wanted to terminate the contract in September last year and have it completed by a "white knight".

Mr Cullen rejected suggestions that he should have detected the difficulties earlier. The group's computerised accounting system was robust, he said, but it was more than 20 years old and not sophisticated enough to identify such an overrun.

He also said the group's project managers were not aware of the difficulties. "No one was indicating that there was any problem. If the project management people don't know, it's very difficult for the finance people."

It appeared that Mr Cullen did not know early in 1999 what his senior colleague Mr Meagher did.

Still, evidence emerged yesterday that Mr Meagher, too, was unaware of crucial developments with Iarnrod Eireann. He had not read a draft board paper outlining technical difficulties with Sasib, the co-contractor acquired by Alstom, that was changed later.

A subcommittee member, Mr Pat Rabbitte TD, said the change was to play down difficulties with Sasib's bid and play up difficulties with the bid of the its rival, Westinghouse. But Mr Meagher said: "It was clear to me in bringing it to the board and clear to the board that there was a problem with Sasib." The problem was ironed out - before costs started to rise.

Confusion seems to surround the changing of that paper, which was put to the Iarnrod Eireann board by its secretary, Mr Richard O'Farrell. He said the revised paper was an improvement on the draft, but could not identify who advised him to change it.

Iarnrod Eireann's former head of procurement, Mr Brian Powell, said the advice did not come from him. Mr Cullen had not seen the draft and its author, Mr Rory O'Connor, has already said he did not change it.