NI Water: After listing his concerns, McKenzie makes a radical suggestion
There’s enough in the UTV programme for a great deal more threads. But here’s something that was new even to Slugger. It relates to McKenzie’s bizarre resignation over what amounts to a few minor irregularities in procurement (by which I mean these were monies legally spent, and which the Department was not in a position to claim back)…
MacKenzie had enough and resigned on Monday morning Jan 18. He told the Department for Regional Development which oversees the water company.
Anxious not to lose him MacKenzie was asked by a department official what it would take for him to stay.
What the Chief executive then said provides the crux of the story we have been researching over the past three months. In the course of this investigation we have discovered a trail of emails and other communications which shed new light on why the four non executive directors were fired.
Among the documentation we have obtained is a summary of this critical meeting between Laurence MacKenzie and the DRD official.
After listing a series of concerns including how his health was suffering and how his reputation was at risk, MacKenzie makes a radical suggestion. He said as other directors had been in charge when the contracts problem arose, they should consider their positions. Anyone familiar with management speak knows that Mc Kenzie is saying perhaps those directors should resign.
On the same day officials in the DRD seek information about regulations governing the dismissal of directors from NI Water.
Some excellent points made by John Dallat, re Eastern Europe before the Wall fee, and from Mick on ‘flipping investigations to make the result you want fit the investiagtion you subsequently hold’ (paraphrasing what Mick said).
Murphy, sadly, seemed determined to bash on about a ‘side show’ with the ‘core issue being money lost’, something Mick destroyed in a sentence.
Brilliant stuff!
‘before the wall FELL’ was what I meant to type.
Though, and heartbreakingly for some of us, this isn’t new in the DRD or elsewhere.
“He said as other directors had been in charge when the contracts problem arose, they should consider their positions
Declan Gormley was appointed in 2008, and was therefore hardly in charge when the majority of these contract had been let.
Mr Murphy also now seems to be claiming that he called for the investigation, or did I misinterpret that?
Is he providing cover for his Perm Sec?
‘a few minor irregularities in procurement (by which I mean these were monies legally spent, and which the Department was not in a position to claim back)…’
Exactly so.
We still aren’t having the REAL numbers crunched for us regarding loss, waste of whatever you want to call it.
I’ve made the point previously that, while procurement demands something be done in a certain way, the real world often demands some tweaks to procedure.
So it may be that a contract was offered for consultancy or what have you without competition because the cost of the contract offered without competition made more economic sense than advertising costs and man hours spent sifting through various tenders. This is how real life works.
On another thread, I’ve already linked to the fact that BELB have, since this NIW story broke, decided not to re-advertise contracts, but keep the existing ones in place.
Now, either BELB is wrong in doing that, or it’s right (based on an economic decision).
Ditto NIW.
What we need to learn now is the real figures concerned, not this pie-in-the-sky sum being floated around by Murphy which Mick rightly points out above (and in the programme) isn’t the real, proper, realistic figure.
And we need to know why DRD/NIW are stuck on that figure. It couldn’t be that £22m sounds like a scary number of lost cash, while actual figures for contracts offered without competition can be boiled down, in theory, to a mere few thousand that can be extrapolated across to being more cost-effective than the advertising and tender analysis of fresh, but competitive, contracts?
No, it’s not. Neither is the talking up of imaginary sums of money which end up presented in reports as ‘fact’.
My initial feeling from the programme is that ‘independence’ has a unique definition within the DRD or NIW incomprehensible to the rest of us, and we also need to add ‘fact’ to the list of words that take on a different meaning inside the department or NIW
“pie-in-the-sky sum”
I think he referred to £28.5m at one point, and £24.5m a few minutes later…
Here’s the thing though, there is a billion going out of the public purse into private contracts, and the place is swarming in high paid consultants and the best these guys can dig up is a measily £28 million in minor breaches of protocol?
With that kind of spend there has to be a decent whack of recoverable cash. It shouldn’t be a hanging offence in getting a contract wrong, but it should be admitted and the remedy made.
When those coalition cuts come we need departments to be on top of their spending, Instead this department seems to have spent all its effort in beating down any form of honest reporting.
Listening to the Minister, the thing is he asks us to believe that he asked his department and got honest answer. The board might reasonably expect that outsourced audits from Ernst and Young and the DFP’s award of ‘Centre of Excellence’ (by, ahem, NIW client, PWC) on NI Water, that the Board might also be forgiven for believing what they were told too.
Hearwarmingly, I get the impression that Declan’s not going let this go. I wish him every success in casting off a cloud that has been allowed to settle on his reputation.
(Incidentally, Declan, if you’re reading, you might wish to consider a Facebook account. You build it, and they will come, is all I have to say
)
“It shouldn’t be a hanging offence in getting a contract wrong, but it should be admitted and the remedy made.”
That is if it’s an “honest mistake” due to lack of training, but when it’s wilful and I understand the Northern Ireland 2006 Fraud Act may come into play.
Though Mr Murphy seems to have changed his tune on such impropriety.
As reported in many previous threads DRD “have previous” when it comes to sloppy management. A good example was (from memory) the Westminster PAC looking at the old water service and their absenteeism. Absolutely eye watering stuff.
Murphy went quite a long way tying himself to his perm sec. Not sure this is always a good idea. May live to regret that one.
The real test is now with the PAC. The Minister has put it to them to come up with something effectively.
Would hate to be in the position of some of the SF members on the Committee.
Blinder played Mick!
I think it will be quite enlightening to hear a re-run of the Minister’s assertions. I thought I heard him claim that he knew about MacKenzie’s antenna twitching back around 10 August 2009 when MacKenzie informed Mellor and Priestly. Which brings us back to the peculiar Gilmour sequenced departure.
Much ado about nothing.
Time the spotlight fell on the Commission that appoints these people in the first place.
I liked the suggestion for giving much more independent power to PAC members, which allow them to challenge in a more productive way, than the information merely being presented to them by civil servants.
That might actually work, and increase public confidence that such committees are indeed undertaking a thorough scrutiny role.
just sayin’, tonight’s performance by Murphy tended to reinforce my view that Priestly was more or less doing his master’s bidding or what he anticipated his master would want done.
It was further encouraging to hear that he had challenged these slurs “quite rightly”.
PT, the PAC seems to be able to get the information they ask for, the problem lies with knowing what information exists.
Perhaps committees just need to be a little bit more assertive – not wait for direction from the minister.
Conor Murphy seemed completely ignorant of the questions asked by Dawn Purvis…
Just saying…
‘this department seems to have spent all its effort in beating down any form of honest reporting.’
By the time PAC reconvenes I have confidence that John Dallat will have tossed in an FOI request to ascertain the costs involved in all these investigations as a percentage of what the (real) sum involved in ‘loss’ actually was.
And when McKenzie begins babbling about ‘£770 a day’ not being good value for money’, perhaps some sort of yardstick by which to measure that sum might be appropriate.
If we can learn that, in a competitive tendering, a second bidder would have charged £700 or £800 a day gives us some perspective on VFM, competitive tender or not.
I still work on the premise that £770 a day from a company whose standard of work is top-notch sometimes does still represent better VFM than an untried, untested company tendering at £600 or £500 a day.
The new board fascinate me. Have any of them any real active private sector industrial knowledge or back ground. Two have IDA and IDB right through them like a stick of rock. In fact I fear a real yes minister team here. More Bisto please and no imaginitive menus here. We ‘re all right jack and stuff the chuffing taxpayers. Dont rock the boat or that dangerous thing democratic accountability might kick in and really banjax the FY2 cosiness of our feather bedded existence. Lets face it its nearly ten times what an OAP gets per week and we only have to work half a day for that.
Making the sum up as they go along? LOL. Yes. This sum isn’t ‘fraud’ or ‘loss’. This sum is the total of the contracts for work done.
So you need to subtract the sum for work actually undertaken from the sum Murphy’s dreaming up every time Jamie Delargy points a camera at him to come to the actual, real figure which is ‘suspect’ (and maybe not even ‘suspect’ then).
Wouldn’t that be why there should be a robust PQQ?
Unless of course it’s DRD, who decide to abandon the quality terms of those. (Sssh)
It’s on UTV player already.
“the thing is he asks us to believe that he asked his department and got honest answer.”
Ah sure don’t you know everyone’s a liar except DRD civil Servants?
That’s despite the answers given at PAC tending to show the opposite.
NIW’s accounts show Declan Gormley was on £250 a week.
That’s a figure to keep in mind when their next accounts are published. It’ll be interesting to see how much less the new NEDs earn in order to offer real VFM.
Mick – despite the above comments you were very poor. A coherent sentence would ahve been good. To the rest – i am a taxpayer, and am deeply concerned about the practices in NIW in letting contracts. EU procurment law exists for a reason – as does their absolute responsibility to secure value for money on my (our) account. Think you have all bought inot the Dallat/McGlone self publcicity train and missed the bigger picture.
could well be – big question for pac is who was leading who ? any odds on Priestleys employment status in 2011?
I wondered who was providing cover for whom?
Politically, I imagine Mr Murphy is untouchable, and by providing a defence of Priestly he may well escape .. That is, if there isn’t anything more to come.
Murphy (6.48 mins into his piece): “.. so the core issue is here is that attention my attention was brought to the fact, initially in relation to one contract that there was something on-toward going on within NIW and I asked for further inquiries into that and that turned up 73 contracts with £24.5 million of awarding of contracts which couldn’t be defended which was done in an improper fashion”
This would indicate that the Minister was intimately involved from about August 10, 2009 – if not earlier. I don’t think this was mentioned in the July 1 PAC meeting.
Another thought, just why did Mr Murphy have to ask the IRT if they had come to their conclusions independently?
Surely he wouldn’t have had doubts?
And was that “assurance” given in writing by the team?
Of course they would be duty bound to answer yes, if such a conversation took place.
He said, she said
Mick, with all the cronyism./corruption that appears to be inherent within the public procurement sector in Northern Ireland there is a severe problem which does need to be addressed.
“I’ve made the point previously that, while procurement demands something be done in a certain way, the real world often demands some tweaks to procedure”
Like giving ferry contracts to business owners, who don’t actually possess the necessary vessel. That procedure was “tweaked”..
Dot, it’s not a fan club you know. Fire away!
I am very concerned about the value for money angle too. I’m just not convinced that sacking four NEDs (who were not even given sight of the internal review before being investigated), compensates for a hard number crunch and forensic investigation that evidences actual wrong-doing.
The key point for me is that this was not done to get to the bottom of the problem but to solve a problem for Mr McKenzie. What the problem really is, as Dawn Purvis notes, we still don’t know.
What problem would be deep enough to cause McKenzie health problems, and to resign (unbeknownst to most of his own workforce) and then cashier a board on the flimsy excuse that £28 million spent was not in line with departmental regulations?
You can believe that if you want to…. But I go back to my earlier point that some proportion of a billion pounds spent on private contracts has to have gone astray, yet all we have is a minor procedural error dressed up as a catastrophe.
PT, I think you’ll find the ‘shes’ were excluded!!
Oh yes? On what grounds precisely?
“On the same day officials in the DRD seek information about regulations governing the dismissal of directors from NI Water”
And then cobble together the IRT.
Nevin old age getting to you? IRT had female on the panel…
Apparently it’s a morality tale, Mick, size isn’t everything. Conor was convinced there was ‘wrongdoing going on within NIW’ and he’s determined to stamp it out. No more prevarication like in the bad old days of direct rule: the Minister hears, the Minister decides, the Minister kicks ass.
He’s a great ventriloquist. I’m convinced those were Murphy’s words issuing from the mouths of Priestly and MacKenzie at the PAC meeting and he was moving their lips!!
Late hours!! Done a little transcription for Slugger, NALIL blog and Scribd.
Mick,
This whole episode is getting rather confusing for me and perhaps others.
Could anyone put together a coherent timeline explanation of what has happened. There seems to be a lot of smoke but no fire!
Ladies and Gentlemen,
As a disinterested watcher of this situation from across the sea I have a couple of points to make:
1. There is very little detail anywhere, from either the PAC hearings or the UTV Programme behind the reasons for the single tender contract awards. Some of it may well have been for good reasons, some not. We still don’t know.
2. The most significant point must be that Paul Priestly of DRD took significant time and trouble to re-write the Independent report on the board, in order to move any scintilla of oversight from him and his department to the non-execs on the board. This is highly obnoxious in so far as what he is trying to achieve. One must ask the question why he is so committed to do MacKenzie’s bidding to clear the decks of the board as previously constituted. Why indeed…..
3. What exactly is the nature of the relationship between Mr MacKenxie and Mr Dixon of Phoenix Natural Gas. Mr .Dixon gave his time free of charge to be a member of the committee investigating the board, but clearly comething else is going on between him, Mr Mackenzie and Mr Priestly.
We need to understand Mr MacKenzie’s desire to have a new board, his desire to have his “friends’ appointed to scrutinise the board, and his “friend’s” relationship with Mr Priestly of the DRD.
In one e-mail after meeting Mr Priestly he tells Mr Dixon to “expect a call “. The next dayMr Dixon is appinted to the independent committee. Did Mr Mackenzie instruct, request, bribe, badger, or guilt Mr Priestly into putting his “friend” (his words, not mine) on to this committee?
There is also the question of Mr Dixon’s language around Mr Priestly of the DRD “I bet PP’s eyes were bulging” Why would they be bulging? What happened in this meeting?
Also – mr Dixon and Mr MacKenzie appear to treat the regulator with serious distain “Dangermouse” “the wee mouse” etc – although I think they meant Penfold, but no matter.
What, exactly, are mr Dixon and Mr Mackenzie cooking up between them?
Also – what do we make of Mr.Dixon’s atttirude to the PAC and subsequest slap he got from Gerry Loughran with regard to using Phoenix as a vehicle for his own personal foibles.
And finally, what is the current nature of the relationship between Mr MacKenzie and his previous masters at Viridian?
And Finally Finally, what would one find out from an FOI request to look at any emails concerning any of these murky matters that Mr MacKenzie deleted, ordered deleted, or attempted to delete from NIW e-mail archives??
What are they up to in there?
\Think you have all bought inot the Dallat/McGlone self publcicity train and missed the bigger picture.’
Yeah, you said that in the programme, Conor.
Just Google NI Water Timeline. But if you are confused now, that won’t help.
Preistley telling an Independent inquiry team to point their guns away from him and at the Board, whom he then sacks. It wasn’t in the programme, but consider this is a piece with his BLOCK CAPs instruction to the Audit Office.
Politically, Murphy is entitled to a degree to protection on this. But Priestly, I suspect, will be viewed by his own peers as the stupid boy who got caught with his fingers in the cookie jar and (almost) gave the game away for the rest.
The questions keep popping up though.
Why did the CEO offer to resign over a few minor irregularities (even if £28 mill sounds like an impressively large number), that even Ernst and Young could not find?
And why sack a board over a few minor breaches they weren’t even told about?
And why did PWC give NI Water a Centre of Excellence certificate in September when all this stuff was kicking off?
Meanwhile, local MP spent £42.50 down at Tescos shocker… so who cares whether there’s a real procurement problem at NI Water or not…
You can be convinced of that Nev, but you have no evidence one way or the other. A conspiracy theory it’s called. Not saying you are wrong, but we’ve had plenty people ‘seeing things’ that aren’t really there in this story already.
And the emails read out by John Dallat…
I also note that there was withholding of FOI material, and presumably they also didn’t let on that the material existed.
I could have written the script for this…
http://www.newsletter.co.uk/news/Pressure-mounts-on-Sinn-Fein.6478169.jp
“A series of leaked e-mails revealed that the report, which cost taxpayers £50,000, included word-for-word some of Mr Priestly’s edits, while some others were partially written into the final document. However, some proposed edits were not included.
In an interview broadcast after the programme, Mr Murphy, who is out of the country on holiday, made clear that he is standing by Mr Priestly, insisting that the Independent Review Team report which led to the directors’ sacking was entirely independent of his officials.”
Just to verfiy William’s point about contract renewals etc (@11.35pm yesterday) – in my experience some contracts have a clause of sorts inserted to allow renewal unless the department have had cause for complaint (since the original vmf analysis should have accompanied the initial competitive award). It may even fall within procurement guidelines that such a clause should be inserted (although that is pure conjecture).
PWC and the Centre of Excellence cert is typical of all such systems – there are rules to the game and everyone knows how to play them. The question is – why go through this charade of giving such designations to government departments (and waste money doing so).
There is a more interesting question than that. Why is PWC, who also do work for NI Water, giving out gongs to an organisation which saw fit to cashier four out of five NEDS over the same matter.
Either the IRT was right or, PWC was? Or if they are both wrong why is government spending shedloads of money with these outside contractors if they so casually erode their own value as outsiders to government systems?
“…giving out gongs to an organisation which saw fit to cashier four out of five NEDS over the same matter.”
Either the gong is meaningless and is the physical expression of a way of disbursing money to your buddies (money for old rope).
Or, as works in all institutional reviews – the value system is understood to the last letter and semantics is employed so that everyone is happy. Basically any review process is always carried out within the letter of the rules (so the result is ‘unchallengeable’) rather than the spirit (which will be conveniently dismissed as subjective). I’ve said this before – the same value system that any of us would apply is not being operated in the upper levels of the civil service or other large institutions (e.g. the banks). We would consider morality, ethics, just governance, efficiency etc as performance markers – not so in the bodies I mentioned.