NI Water Timeline: “Administrative procedures are the responsibility of management…”
I’ve been working on a timeline of the NI Water story just to try and put some of the material we have into some kind of objective order… I’ve gone for completion rather than trying to hone in on any one aspect… However a number of things jump out…
- One is how long Priestly is in post before any of the problems identified by MacKenzie emerge (Hansard also tells us Nicola Brennan conducted three successive audits without finding them either).
- Two, how at the most critical stages in the development of this story MacKenzie chooses (presumably because NI Water meet DRD 80 times a year, whilst he only meets his own Board 10 times) to keep Priestly in the loop before his own chair.
- And three, intriguingly the manic flurry of activity only begins once MacKenzie threatens to resign… Priestly literally convenes the IRT overnight, and produces that set of conveniently ‘gerrymandered’ references…
For those of you with the patience, it is worth going directly to Dawn Purvis’s taut line of questioning (almost 4/5 of the way down the page) in the last PAC session. But, it seems to me, she neatly wraps up the grand deception (if deception it was) in this paragraph from Hansard:
I do not see, and neither has it been explained clearly, where four non-executive directors are culpable for those alleged failures in governance; I see breaches in administrative procedures, which are the responsibility of a management team.
I cannot find where there have been failures in governance, particularly as the independent review team reported that the frameworks and the appropriate approvals were in place and that the board had received assurances from the executive team that it had been informed properly and fully.
Under interrogation Priestly uses a classic dog-ate-my-homework excuse when he is asked precisely what changes he demanded from the IRT report “I thought that I had that information with me”, but he doesn’t ante up. Anyway, here’s the time line (more anon):
- 3 December 2007 – Paul Priestly is appointed Permanent Secretary of the Department for Regional Development.
October 2008 – NI Water is designated as a Non Departmental Government Body: as Lian Patterson put “it [initially] was reclassified for public expenditure purposes only and for all other areas all other “.
February 2009 – Laurence McKenxie interview for NI Water CEO’s job
7th April 2009 – Conor Murphy confirms the reappointment of all Board members…
28th July 2009 – Laurence McKenzie is appointed…
10th August 2009 – McKenie discovers one contract, which in his view did not represent particularly good value for money.
15th September 2009 – Laurence McKenzie designated as NIW Accounting Officer by DRD Permanent Secretary. This fundamentally changes the CEO’s relation to the Board and to Mr Priestly who now becomes his line manager.
September 2009 – Nicola Brennan publishes Internal Audit Report highlighting process isssues requiring moderate improvement. There is no mention of any Procurement Breaches.
September 2009 – DFP issue Exemplar status to NI Water in procurement practices.
27th October 2010 – McKenzie brings breaches to the Board who instruct him to conduct an Internal Audit Review.
Tuesday, 12th January 2010 – McKenzie receives a copy of Brennan’s ‘contract approvals audit’.
Friday, 15th January 2010 – McKenzie calls a meeting of the executive management.
Monday, 18th January 2010 – McKenzie circulates a summary report to the Board (in a two page email) and later that morning to the accounting officer (ie, the Permanent Secretary) in DRD. At 9-40am he tenders his resignation.
Tuesday, 19th January 2010 – Priestley decides to form an Independent Review Team (IRT) and advises Chairman he is setting up the IRT and informs him who will be on panel.
Wednesday, 20th January 2010 – The IRT is assembled and has its first meeting with the Permanent Secretary. McKenzie at a 10-30am meeting and in response to a question from Chairman Chris Mellor confirms he still intends to resign. Then withdraws his resignation that evening around 5-30pm in message left on Chairman’s mobile.
Thursday, 21st January – Just after midnight, Priestley writes to Gary Fair, Head of the Shareholder Unit reporting back from meeting with IRT and also asking him for clarification of what they might need to sack Directors. Later in the day, the Board gets sight of a full copy of Brennan’s Audit Report (note that McKenzie has it from the 12th January).
Friday, 22nd January – After a day spent trying to speak to the Permanent Secretary, Mellor emails Priestley confirming the shift in McKenzie’s decision on the Wednesday. He further notes that the whole board (including Price, but minus Gormley) is in favour sustaining the resignation.
Saturday, 23rd January – McKenzie confirms that he has taken legal advice that he is entitled to withdraw his resignation because the board had not accepted it in writing.
Monday, 25th January 2010 – The board (minus Gormley) meets formally in Belfast to consider Brennan’s internal audit in detail. The IRT starts work at some point during this week.
Monday, 15th February – IRT submits the first draft (v1) of its report. On this same date Paul Priestley confirms to NI Water’s Chairman that Peter Dixon and Laurence McKenzie had met on 5th February. The Permanent Secretary does not believe this brings into “question the independence of the review”.
Tuesday, 16th February – McKenzie accepts the report is factually correct.
Wednesday, 17th February – 8.30 Priestly writes to the IRT suggesting that they should not feel constrained by the (already Gerrymandered) Terms of Reference.
Thursday, 18th February – At some point during the day, the IRT submits their second draft (v2).
Friday, 19th February 2010 – Don Price complains in an email about “how the IRT [seem] determined to find Governance failures by the Board rather than working with the Board to ensure the necessary corrective actions”.
Monday, 22nd February – Deadline for comments on submissions on v2 of the report.
Thursday, 25th February 2010 – Final draft is published.
Thursday, 11th March 2010 – On the advice of Paul Preistly (and Lian Patterson) four of five Non Executive Directors are sacked by email.. Don Price, chair of the Board’s audit committee, is retained after agreeing to implement the IRT report and agree to “terms”. Terms which, so far as we understand, have not yet been disclosed to the PAC.
Monday, 15th March 2010 – Minister Conor Murphy makes a statement to the house naming two members of the Executive Management group – George Butler (Asset Management) and Ronan Larkin (Finance & Regulation) – will be investigated. Neither have direct oversight of procurement.
Monday, 28th June 2010 – PAC rejects Chris Mellor’s offer to give oral evidence to the committee’s hearing and asks instead for him to lodge written material instead. It cites a convention of only calling Accounting Officers.
Wednesday, 30th June 2010 – Minister appoints an interim set of four Non Executive Directors by an emergency process, three months after the original sacking.
Thursday, 1st July 2010 – PAC cross examines MacKenzie and Permanent Secretary Priestly…
Friday, 2nd July 2010 – It is believed that two more members of NI Water senior management team are being investigated in the wake of the PAC meeting…
Monday, 5th July 2010 – Peter Dixon, a member of the IRT and CEO of Phoenix Gas, writes to the Chair of the PAC complaining about the manner in which the PAC conducted its interrogation.. John Dallat and Patsy McGlone respond by writing to the Phoenix Board and their private equity owners asking if Dixon’s attack is a reflection of the management and owners.
Monday, 19th July 2010 – The Chair of Phoenix Gas and former Head of the NI Civil Service Gerry Loughran writes back to John Dallat explaining that Mr Dixon has “very limited knowledge of the Assembly’s accountability processes” and that having had this explained to him by the Board, Dixon now withdraws his letter.
As a footnote, we have an unconfirmed report that Deloitte are now reinvestigating the deep dive report that the IRT (including their senior partner Jackie Henry used to base their findings on. If they are, it would be useful to find out whether they are funding that themselves or being paid out of the public purse. (Not to mention whether Phoenix Gas continued to pay their CEO during the pro bono period of nearly a month he gave to the working of the IRT).
In any case, any such investigation by Deloitte cannot touch the purpose to which the redrafted report was put by the Permanent Secretary (and his Deputy Lian Patterson): ie the recommendation to his minister that a Board – which demonstrably had no direct responsibility for the problem in hand – be sacked.
Topic: Government
Region: Northern Ireland
Prior to the Committee hearing, NAO study teams will brief the Chairman and the PAC
on which questions they should ask, and which lines of inquiry should be followed (Sharma,
2007). At this stage in effect, study teams can be more frank about or critical of departments
and agencies than they were able to be in their cleared reports. Briefings to the PAC might
typically include: a summary of the NAO report; a list and synopsis of the issues the study
team feels that the PAC should explore; notes on witnesses; and key questions to ask
witnesses and their expected answers as well as further supplementary questions for
witnesses. The PAC Chair will always start by asking a penetrating series of questions,
operating initially from a list of NAO-prepared questions, although he or she will select within
it and often adapt the wording. The questions will be addressed to a number of witnesses,
usually the Permanent Secretary of the department concerned plus some senior colleagues,
or Chief Executives and Directors of agencies or NDPBs whose programmes are under
consideration. Single department reports may have only two witnesses, but often three
or four, while cross-governmental studies may have up to five or six. The witnesses from
departments have also normally been briefed in general terms by NAO on the opening line
of questioning. Ordinary PAC members used to see a long list of other possible questions
but now do not do so. In recent years PAC Members have sometimes asked to be briefed by
the NAO study team as a group or more rarely individually. Often PAC members may also be
briefed by their own researchers (who are often parliamentary interns from the LSE) who
digest and interpret the most important parts of the reports for committee members. The
senior government-side member usually asks the concluding questions of the PAC session
Oh! The department disagrees with the NAO’s judgement?
So, the department gets to water down criticism. The NAO agree to water down (not much independence in evidence there, is there? And I presume the NIAO work, more or less, from the same or similar directives and guidelines, so it’s safe to assume auditing ‘culture’ is exactly the same in NI.
The NIAO and government departments in cahoots.
And where, pray tell, is mention of the ‘victims’ of NAO and departmental ‘show trials’ in all of this?
Chris Mellor was refused the opportunity to present his version of events to the PAC. What is happening here, time and time again, is a demonstration of the NIAO/department in question getting their revenge in first, unchallenged.
In terms of democracy and respect for due process, it’s farcical and laughable.
‘NAO study teams will brief the Chairman and the PAC
on which questions they should ask, and which lines of inquiry should be followed’
And again, none of this seems remotely ‘independent’.
Perhaps the issue here isn’t so much one of the NIAO complying with any broad definition of ‘value for money’, but whether or not the NIAO can be regarded as ‘fit for purpose’.
Their complicity with government departments, and their apparent unaccountability, makes their entire existence questionable.
‘I am not looking for your sympathy, but it has been tough.”’
Oh, the humanity!
Break out the violins or, better still in the context of the broader issue, the fiddlers.
Ah Deep , ye beat me to it,
Here we have the sham of our democratic representatives that purporting to be asking those “hard questions”.
Cept it turns out that ere being briefed by the NIAO.
What was that about sewers and the smell of shite?
Declan Gormley was also refused the opportunity (Twice?) by the Regional Development committee.
Baaa said the sheep
So who briefed them prior to 01/07/10?
Why are they only sticking the boot into DRD now? (and by association the MSM)
“Cept it turns out that ere being briefed by the NIAO.”
Sorry but nonsense.
Advising PAC is one of NIAO’s statutory roles just as NAO is the creature of the PAC in London
“their apparent unaccountability, makes their entire existence questionable”
They are accountable …to the Assembly (not the Executive) via PAC
‘They are accountable’
Examples?
Cept it turns out that ere being briefed by the NIAO.”
Yeah I lost the “w”
They are accountable …to the Assembly (not the Executive) via PAC
But Cynic, and perhaps you might see the problem if they are commissioned by PAC, and briefing PAC how can they be accountable via PAC. Who would PAC go to for an audit of NIAO ? An IRT perhaps?
Does anyone know when the NIAO (or the NAO, or Audit Scotland, or NAW) were last audited?
Does the money they spend justify the money they save?
Could it be that, even if they do identify savings, it doesn’t represent good value for money?
Would the ‘alarm’ of a single person be enough to constitute a report to be produced as quickly as possible? Who would determine the framework of such a report?
So, please, Cynic, no BS about their ‘accountability’. While it exists in a nominal sense, it’s lip service, and we all know it.
;2 as a public body NIW was bound to secure VFM and it is alleged that it didn’t. That very much depends on what was delivered for the cash. It also seems odd for a consultant to be paid a success fee of 3% for ‘identifying’ cost savings without them having to be realised in any way’
It is alleged.
As is often the case with public authorities, allegations can be bandied around, without ever be outlined in the public domain. And these public authorities act on them.
Realistically, an allegation could be made for the reason that the person making the allegation didn’t offer sweeetners to the person now making the allegation, and now it’s payback time. Or those offering the biggest sweeteners have the way cleared for them by others being made the subject of allegations.
This actually happens in NI.
Procurement process? The current contract holder of an M&E contract for one public authority was walked through the entire procurement process by persons in that public authority. Others were left to flounder.
Those framing procurement were able to do it in such a way that the eventual ‘winner’ was pretty much the only qualified candidate at the time the contract went to tender. Late on, the procurement qualifications were changed, thus wiping out half of the applicants at a stroke.
Sort of related. Sort of not related.
http://www.bbc.co.uk/news/uk-politics-10670182
Culture Secretary accuses BBC of ‘enormous waste’.
via the link you can read that the government want the NAO to audit their accounts. The BBC (despite using NAO to audit part of their accounting) is reluctant because it fears ‘it could threaten the corporation’s independence’.
What does this infer? That the presence of the NAO (or NIAO) threatens independence because, by extraopolation, the NAO (NIAO) are in the pocket of government?
If this is the case, how can the NAO (NIAO) be trusted to produce independent reports of any validity?
Applied to the NIW saga, it’s quite clear that something is amiss regarding the auditing. Three (?) years accounts, presumably signed off by the NIAO, with no suggestion of wrongdoing, and Chris Mellor praised by the minister. The instant McKenzie arrives, to accuse NIW of ‘enormous waste’, it appears that the accounts weren’t quite right, and an investigation ensues. Were the NIAO doing their job correctly?
And now Priestly runs bawling to the NIAO like a big wane, ‘for support’, which looks remarkably like they’re in, and have always been in, his pocket. After all, we read elsewhere that the NAO’s presence inevitably threatens independence, due to them having an agenda set by their political masters.
Shake a few internet pages and actions that don’t square up begin to emerge from conflicting sources.
I wonder how many more actions that don’t square up would emerge on the back of Chris Mellor’s truth?
“5. The C&AG agrees a yearly programme of reports for review with the PAC. Within PAC the most influential figure is the Chairman, currently Edward Leigh MP. By convention the Chair is always drawn from the main opposition party.”
The Chairman of PAC and the Minister for Regional Development have both been members of the same party since May 2007. Shouldn’t someone else take the chair in a PAC v DRD exchange?
Hello MW
Extract from NIAO final accounts 09/10 available at http://www.niauditoffice.gov.uk/pubs/2010/8651accountsfinal.pdf
[sorry cannot reproduce table]
Use of resources
The resources used by the Northern Ireland Audit Office in pursuit of the above are set out in the following table. The table compares the Office’s financial outturn for 2009-10 with its Estimate:
Estimate; Outturn; Saving;/(Excess);
£’000; £’000; £’000; %;
Gross Resource Requirement 12,059; 11,027; 1,032; 8.5
Income 2,472; 2,472; -; -;
Net Resource Requirement 9,587; 8,555; 1,032; 10.7;
Capital 230; 217; 13; 5.6
The gross expenditure is made up of:
a. Salaries of permanent staff (67% of gross expenditure);
b. Temporary appointments and consultants (3%);
c. Expenditure on audits which are contracted out (13%);
d. Non cash costs such as depreciation, cost of capital and provisions (4%); and
e. A number of smaller items of expenditure such as professional training, travel costs, general office supplies and other running costs such as rates, electricity and maintenance (10%);
f. A one-off adjustment to reflect the cost relating to prior years of introducing an accrual for accrued employee leave as required under IFRS (3%) – see note 22 to the accounts for further detail on this.
One assumes that neither Paul or Peter will have to “fly away” from their rather cosy nests. Unlike others at the mercy of the IRTs
Thank you for that, Articles. Very much appreciated.
What I would concern myself with is the veracity of the figures.
NIW’s accounts appear to have been absolutely kosher while being internally audited. Once an external auditor was appointed things changed.
Can we be confident that NIAO’s self-auditing accurately reflects what goes on? Should we take them at their word? If we can take them at their word, why shouldn’t we take NIW’s internal audit at face value? What gives one set of figures greater credence than another?
The inability /unwillingness of the Audit Office to act in a truly Independent Manner is a matter of great concern for us all. If they are not prepared to act independently then we need to revise totally our governance structures.
Call me naive but I believe that what happened at the July 1st PAC will prove to be a tipping point. At least 3 MLAs acted in a way that a proper PAC should behave.
Having led the way I think others will follow.
If Messrs Priestley/Patterson/Brennan/Mc Kenzie think this matter is done I have a hunch that this is only the beginning!
Something about the removal of 4 Non Execs( for so far unproven culpabilty ) strikes me as being indefensible,
and you can sense that the PAC know it,the body language of Priestley/McKenzie/Patterson show they know it(Brennan didn,t strike me as having the intelligence to know what was going on!) and the Audit Office by now must know that they have been sold a pup by DRD.
It is about time that we heard from the 4 Non Execs-where are they ,and why aren’t they making a much greater fuss?
It is my view that there is a significant part of this story which is still to be told and as the forest of F.O.Is start being responded to by DRD/NIW what do you bet we’ll find
some of the answers?
Is my faith in the ability of our MLAs on the PAC misplaced?
‘Declan Gormley was also refused the opportunity (Twice?) by the Regional Development committee.
Baaa said the sheep’
It’s funny how the government of the people do their level best to keep the people at arms’ length, by essentially denying some of them (key witnesses in many of these issues) a voice.
What’s the deal? Are the ‘great and the good’ of an opinion that the unwashed cannot articulate or navigate the waters of the very difficult business of politics?
Frankly, I think the PAC committee’s performance in questioning Priestly and McKenzie was generally inept, unfocussed and stuttering, while still managing to make Priestly and McKenzie look inept, stuttering and unfocussed. Imagine what a few public representatives of proper intellectual calibre might have done to Dumb and Dumber.
If ‘the people’ are going to be denied a voice in the context of these proceedings, then it’s time to look at the system. Or simply storm the gates of the winter palace and remove them from office. Most of these MLAs appear to serve no one but themselves.
It is interesting to see the scrutiny that this issue is getting post PAC.
It is getting scrutiny because, after a long list of DRD, PAC and other government agency failures of individuals and ‘the people’ in general, the NIW saga is the first to go ‘mega’, in a sense.
Routine government failure, ineptitude and lack of concern for matters like due process have managed to be swept under the carpet, possibly because those issues, and the individuals and companies involved, are much further down the food chain.
This one isn’t in that category, so each squeaky bum experience by the main players, and the rank hypocrisy of their position creates a delightful sense of schadenfreuede (spelling?). Hopefully, the comments and experiences outlined all begin to stack up in the debit column, to the point where several key players only have the escape route of resignation. In this, and in other cases, the key players (and the same names turn up in several different cases) will be forced to fall on their swords. They deserve it.
In at least one of these cases, a family was almost destroyed as a result of the actions of these no-necked nincompoops. I’m a great believer in karma, so I’ve been delighted to watch the shit hit the fan.
am still having difficulty getting my head around this, but as someone said ‘I smell a rat’
below is a snippet from Procurement Excellence
can any of the forensically gifted posters but this in some kinda of context? in advance, thanks
http://blog.procurement-excellence.com/northern-ireland-water-procurement-leads-to-floods-of-tears/
‘But in the spirit of investigative blogging, I have got even more fascinating detail than the SM article suggested. If you plough through the detailed report here, the contract, let as a single tender, that triggered the whole thing is itself a contract for procurement consultancy! And not just that – it appears to be a ’share of savings’ consulting contract where the supplier (unnamed) is claiming £ million plus as their share. From the report;
“The investigation into Contractor A, a consultancy specialising in procurement, had
concluded that that organisation had been engaged through a STA with a spend to date of
£660,000, a further £50,000 in the pipeline and a settlement on the six per cent incentive
bonus relating to ‘identified savings’ yet to be reached (detailed in Schedule 7 to the
contract master agreement and relating to the termination of the Customer Billing/Contact
contract). We understand that in December 2009 NIW received a further invoice for
£888,000 based on Contractor A’s calculation of the savings and interest to date on the
claims identified, which remain outstanding. We were told by NIW that the position is
under consideration.
A ’share of savings’ invoice for £888,000 “under consideration”! I bet it’s under consideration….and how much further liability might NIW be carrying for this contract?
So we have a failure of procurement governance in the engagement of a procurement consultant whose assignment was to look at other procurement spend. Irony on irony….’
http://blog.procurement-excellence.com/northern-ireland-water-procurement-leads-to-floods-of-tears/
[...] February. Once I became aware of the problem, swift action was taken.But here’s the problem. Looking at the timeline again, the 18th was the date of the second draft, not the first nor the final, which only officially [...]
Hi Folks. Paul Priestly did nothing wrong and i will tell you why. Everything in the Civil Service revolves around figures. Stats as a clerical assistant in 1974 i got the job of completing returns from the Government Training Centres. Board Sponsored Non Board Sponsored and so on. I presented the figures to the last trainee every week. What did my clerk do. Oh NO Colin these figures go to the EU for Grants. Give me them. He shouted at me time and time again. The figures where always altered. More money from Europe. Civil Servants are greedy. Use it up before the accounting date comes up or we will not get the same grant for next year. Ha Ha. Sounds familiar. So the bottom line is by the time it gets to the PS well hey what. I resigned the guy who altered the figures OH he was promoted to the top of the Civil Service and who was I. I was blamed for the whole mess. Easy scape goat. A we clerical assistant got the figures wrong. No No. My figures where perfect. And by the way i found the Assistant Sec mothers purse in Cherryvalley and handed it in to the Petrol Station Harry McRobb owned it then. The Assistant Sec came to my mum and dads house. And that,s how i got into the Civil Service. Its not the Permanent Sec that calls the Shots. Its the NIO.