NI Water: “No, I do not believe that there was a conflict of interest.”

Slugger understands that there is growing unease amongst members of Stormont’s Public Accounts Committee with Peter Dixon’s unprecedented attack on the Committee’s line of inquiry, and the apparent silence on the matter from their own chair, Paul Maskey.  This passage from Hansard is illustrative of the line which drew fire from the Phoenix Gas CEO:

Ms Purvis: On the back of that, Chairperson, I raised the point with the regulator last week that Peter Dixon was to head up the independent review team. What is the nature of Mr MacKenzie’s relationship with Mr Dixon, given that they were exchanging e-mails and that Peter Dixon then appears on the independent review team?

Mr MacKenzie: Peter Dixon and I were both chief executives of utilities. We have a relationship, we have common interests and we are regulated by the same regulator. He is a business acquaintance of mine; no more than that. I do not socialise with Peter Dixon. I think that I have met him for coffee three or four times since I took up the post, but I do not socialise with him or anything like that.

Ms Purvis: Did the permanent secretary not see a conflict of interest in that?

Mr Priestly: I did not consult Laurence or anyone else on the appointment of the independent review team. Lian and I did it, and we did it very quickly. Laurence informed me about these things on 18 January, and an independent review team was launched on 20 January. My desire was to get to the bottom of this as quickly as possible.

Ms Purvis: Did you not see any conflict of interest in that?

Mr Priestly: I know many people in the business community in Northern Ireland, and I have known Peter Dixon as a business contact for a couple of years. This is a very small place, so it is inevitable that people will know each other. The judgement to make is whether these people are professional and have high integrity and whether they undertook an evidence-based review. I think that the answer to the last question is yes — the review was evidence based. They reached their conclusions on the basis of evidence.

Ms Purvis: That was not the question that I asked. I asked whether you thought that there was a conflict of interest.

Mr Priestly: No, I do not believe that there was a conflict of interest.

Mr Dallat: You were both chief executives. That is very formal. Another e-mail reads:

“Peter

How would you be fixed for a ‘catch up’ next week? Lots going on!…

Would work for me. I need help from friends at the minute. Hope things are fine with you now.”

That is not a formal letter between two chief executives. I have several more e-mails here that clearly state that you and Peter Dixon are chums.

Mr MacKenzie: He is a business acquaintance.

Mr Dallat: It is all here.

The responses from both men raise important questions of just how independent the Independent Review Team actually was, not least that when pressed several times the Permanent Secretary apparently sees no conflict of interest here.

We are currently trying to obtain copies of the two earlier drafts of the report dated the 15th and the 18th February to see what, if any, substantial changes were made to the report after consultation with Mr Priestly’s DRD officials.

In the meantime it is actually very rare, even in Westminster, for a parliamentary committee to gain the kind of inside track we’re seeing here. Civil Servants generally exercise complete command over their own jealously guarded executive structures.

Yet despite apparently tipping that executive machine over sideways, we still only have suspicions – and no substantial evidence – of wrong doing or misdirected process.

Much depends on what happens next. Some of the more troubling aspects of this story may be resolved by the judicious setting of FoI requests from journalists or other members of the public. But the Public Accounts Committee may never get a better chance to lay down a marker for public servants tempted to sell them short in the manner Mr MacKenzie clearly has above.

As member of the same party as the Minister, PAC chair Paul Maskey may feel some natural reluctance to press the committee’s case as hard as he might otherwise feel inclined. And his party will no doubt come under external pressure from some of the parties involved. But he’s not the first Stormont MLA to find himself in that position.

He should try to seize to the initiative and lead his committee’s charge from the front. Any embarrassment (and we don’t believe it would be anything more than that) caused the Minister should come second to ‘doing the right thing’.

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  • Cynic

    I think you are wrong Mick.

    There are some fundamental issues here not being addressed at all. The NIAO have repeatedly warned Departmental about misconduct and poor governance in Arms Length Bodies. This shambles appears to have gone on for over 3 years. Where were the auditors? The Department? What did it say or do?

    Allegedly the Company denied the Department access to its Internal Audit reports. If that is true, having asked for them, why did the Department – as owner of the business – not insist or sack the board? Why did alarm bells not ring? Who took the decision not to press the issue? Why?

    Who appointed a former member of staff on a contract that allegedly entitled them to 6% of potential savings identified without them ever having to actually achieve a single penny in savings? Who approved that ridiculous situation? How was it resolved?

    Why did previous senior staff leave the Company? On what terms?

    Innded, I beleieve that there is a lot more to be unpicked around the contractual oposition and remuneration of some seniro executies now and in the past.

  • Mick Fealty

    I’m not sure where we are actually disagreeing cynic?

  • Cynic

    I think in terms of the Department and therefore Minister’s accountability too. The questions are what did they know, when and what did they do about it

  • Pigeon Toes

    http://blog.procurement-excellence.com/northern-ireland-water-procurement-leads-to-floods-of-tears/

    “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….”

    With a few more such ironies to come…

  • “The vision of the NIAO is to promote accountability and the best use of public money. To achieve this, its mission is to:

    provide objective information, advice and assurance on the use of public funds; and encourage:
    beneficial change in the provision of public services;
    the highest standards in financial management and reporting; and good governance and propriety in the conduct of public business.”

    Why didn’t the DRD hand over the review to the NIAO in the first place? This point was made in 2008 on NALIL blog but the DRD persisted with essentially an in-house investigation. Another conflict of interest?

  • Mick Fealty

    There is nothing wrong with an independent review Nevin, so long as it is independent. It limits cost and they can deal with a very precise set of references. These were the TORs in this case:

    • Analyse how the governance failures detailed within the Contracts Approval Internal Audit report occurred;
    • recommend any further action necessary to address the governance issues surrounding procurement;
    • recommend any additional governance arrangements to be introduced by NIW;
    • make recommendations in relation to the position of NIW Board members (executive and non-executive) and other senior managers involved in these issues;
    • provide an analysis of any failures by DRD as Shareholder and any necessary recommendations; and
    • make any other recommendations the review team believe to be relevant and necessary under the circumstances.

    The overview section of the report’s conclusion spends two out of five paragraphs at 5.1 to say that the CEO/Sub Accounting Officer should deal with the matter (bullet 4 above) of his relations with the board as he sees fit and with the backing of the DRD.

    Yet, even though it is one of the six terms, the issue then only gets one bullet in the rest of the conclusions, which simply refers the reader back to that general statement in the overview.

    Nowhere, that I can see, does the report’s analysis even attempt to draw the behaviour of the Board into the central issue at hand (apparently): the problem with procurement procedures.

    I don’t read these kinds of reports in my spare time a rule, but that strikes me as odd.

    And add that to the fact that left up to his own devices the CEO neglects to map the Head of Procurement into his initial internal investigation (although we do know he has brought in the Head of HR), and it becomes even odder.

    It’s almost as though the problem with governance issues were a sub note to the need to force the board to back the CEO (or get fired). Yet surely that’s something they could have achieved without commissioning an IRT?

    I’m hopeful that having sight of the first two drafts will tell us something useful about the effect the IRT’s conversation with DRD had on the drafting of these conclusions.

  • William Markfelt

    ‘Slugger understands that there is growing unease amongst members of Stormont’s Public Accounts Committee with Peter Dixon’s unprecedented attack on the Committee’s line of inquiry, and the apparent silence on the matter from their own chair, Paul Maskey.’

    PAC is not spelt G.O.D. Dixon has the right to criticise and condemn PAC if he wishes, and PAC are probably in serious need of being given a kick in their undemocratic goolies. He is entitled to dismiss them as a bunch of ne’er do well half-wits and even, if he wishes, make the point that several of them have, in their time, been apologists for terrorists, so the idea that he’s taking a bout of finger-wagging from them is something PAC can stick up their arse. In the same position I think I might have been sorely tempted to highlight their recent, individual pasts as apologists for the forces of evil whose self-rightwousness is jaw-droppingly hypocritical.

    Of course, he also has the right to make a prick of himself when emails about coffee mornings and an overly cosy ‘independence’ emerge.

    A plague on all of their houses.

  • funnyoldworld

    This “Independant Review Team” appointed by Priestley and his pal Lian is as close as it gets to someone slapping you in the face, calling you stupid, and hoping you won’t notice!

    A Permanent Secretary and underling who don’t believe there is a conflict of interest in appointing – Jackie Henry (Deloittes), Glenn Thompson (listing himself as a Deloittes Associate), and the daddy of them all- Peter Dixon the cringe making exchanger of e mails with the C.E.O of the company being reviewed. – and believes there is nothing which creates a conflict of interest, considering the overwhelming evidence of either personal relationships or paid work (running into millions) in the past – should be asked to consider his position immediately.

    Clearly he is either too stupid to understand what is needed in his role, or so full of chutzpah that he is basically sticking up two fingers to the MLAs!

    Peter “I did this work pro bono” Dixon struck me as just another [text removed – mods] until I heard that having being party to the removal of 4 of the Non Execs at N.I.W., it turns out 2 of the people proposed to replace them were direct associates of Dixon!!

    Both appointments were vetoed by Minister Murphy (clearly as we’ve seen he had his own list to choose from!) but it raises even more serious questions about this entire process and just what is really behind the “show trial” to remove the 4 Non Execs from the Board of N.I.W.

  • Pigeon Toes

    William, one assumes that Mr Dixon was passing comment in a personal capacity.
    Presumably he should not have been using company headed paper to lunch this “unprecedented attack”

    Though I have in fact read similar “attacks” presented to PAC
    I”s the Northern Ireland Assembly and NIAO over-seeing a police state reminiscent of the worst excesses of the Stasi? No need to answer that actually: you are. How this event was handled is almost Kafkaesque in its execution. I was interviewed as a “witness” and only later discovered that I was regarded as a “suspect”. No accusations have ever been brought to me, but I appear to have been found guilty, without any recourse to due process, and without actual charges. Questioning as a “witness” had, I suspect, an entirely different tone to that I might have expected to be asked as a “suspect”, and the NIAO’s report uses “witness” statement to skew its findings. In my opinion, it pretty much makes it up to provide the answers it wants. It is a shameful, disgraceful way of conducting affairs.”

    http://www.niassembly.gov.uk/public/2007mandate/reports/2009/Report_01_09_10.htm

    I

  • Pigeon Toes

    “lunch” (Freudian slip, with all the coffees and dinners 🙂 )

  • Pigeon Toes

    “This “Independent Review Team” appointed by Priestley and his pal Lian is as close as it gets to someone slapping you in the face, calling you stupid, and hoping you won’t notice!”

    In fairness, they have done it, and (on the face of it) gotten away with it before- about this time two years ago in fact!!

  • Mick Fealty

    William,

    You are missing the point entirely, It’s about NIW and its weird relationship with DRD, not the PAC. More tomorrow.

  • Pigeon Toes

    We assume there is a question of “independence” in this case. Would it be therefore reasonable to assume the same question in other cases?

    Is that NIAO, not an “independent” organisation?

    Why bring in consultants, when such reviews and investigations are in the remit of the NIAO?

    Or could it be the case that the NIAO might set the TOR, which might just be at odds with the desired outcomes of those commissioning their own report? (But being paid for with public funds)

  • Pigeon Toes

    ” weird relationship with DRD”

    There’s a lot if it about ;-o

  • Pigeon Toes

    “The judgement to make is whether these people are professional and have high integrity and whether they undertook an evidence-based review. I think that the answer to the last question is yes — the review was evidence based. They reached their conclusions on the basis of evidence.”

    Note he didn’t refer to *all* “the evidence”…

    I might also suggest that phrases like “we can find no evidence” is very different from “there is no evidence” and indeed that might further depend on how speedy the shredder/delete button was working.

    Internal review then external review reviewing the internal review, followed by NIAO reviewing the external review reviewing the internal review followed by PAC reviewing the NIAO review, reviewing the external review reviewing the internal review.

    Oh and let’s not forget all the draft reports!
    http://www.computerweekly.com/Articles/2006/08/29/218034/NAO-report-a-journey-from-criticism-to-praise.htm

  • Pigeon Toes

    Of course it becomes more difficult to discern the facts, if the independent review team (reviewing the internal review) are astonishingly reluctant to call vital key “witnesses”.

  • The PAC may be in the same boat, PT. It seems reluctant to call vital witnesses.

    What about Sammy Wilson and the previous DUP DFP ministers, Peter Robinson and Nigel Dodds? They are and were the ministers of procurement acting through the Procurement Board and the Central Procurement Directorate. CPD gets a few mentions in the July 1 exchange.

    There seem to be a lot of supervisors. Perhaps that’s been part of the problem.