NI Water: Were the IRT’s Terms of Reference ‘Gerrymandered’?

The latest we hear is that DRD/NIW are having problems getting anyone to take on the role of chairman of NI Water. Slugger understands that a number of individuals have declined an approach. It is not difficult to see why.

As a careful reading of the final report makes clear the IRT itself did not believe there was a substantive connection between the CEO’s problems with a Board that refused to rescind his resignation and the report’s headline problem of ‘single tender actions’.

It’s a bit like that infamous Illinois Congressional District 4 Gerrymander, where the constituency’s east and west boundaries slip down the central reservation of Route 294 before linking to the other half of the constituency to link to racially similar areas.

In the case of NI Water, the terms of reference appear to have shoe-horned two apparently unrelated matters into the same vehicle (emphasis added):

• 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.

Even the IRT struggled to resolve such disparate demands in one report. The device they chose was to spend two/three out of five full paragraphs in the Overview of the Conclusions (5.1) to say that the CEO/Sub Accounting Officer should deal with the matter of his relations with the Board as he sees fit and with the backing of the DRD:

As detailed in Section 2 of this report, the IRT is aware of a serious breakdown between the NIW Board and its CEO over the way the Contracts Approval Internal Audit report had been notified to the Shareholder without consideration by the NIW Board.  The IRT has been advised by the Chair of NIW that, in his opinion, the CEO does not have the trust and confidence of the Board and that this position is now irreconcilable.  The CEO advised the IRT of a breakdown in trust between himself and the NIW Board.

The IRT is concerned about the severe difficulty this situation causes in enabling the Shareholder and NIW to put in place the necessary remedial action plan to implement the recommendations of this review and to deal with the emerging findings of, amongst other things, the deep dive audits.  It is our view that this situation cannot be allowed to continue and appropriate and action must be initiated by the DRD Accounting Officer to ensure that a proper governance and control environment is secured within the NIW as a matter of urgency. In our view this would be best secured by tasking the current CEO and NIW Sub-Accounting Officer to deliver the agreed action plan, supported as necessary by DRD.

Tellingly the issue gets just one bullet (5.4) in the detail of the conclusions, which simply refers the reader back to this rather general and un-prescriptive 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.

The lack of progress in tackling the main issue in the report contrasts heavily with the swift and high profile sacking of the board. This rather one-eyed focus on the Board rather than procurement was obvious to Don Price (the one NED to survive the cull) just three days before the IRT’s final report was published (cribbed from the Hansard of the PAC meeting):

“-The issues reflect non-adherence to procedures rather than lack of a control/governance framework

-This non-adherence to procedures was not picked up by Internal Audit (despite 3 Audits on Procurement in 2009) nor were they picked up by Halcrow and at no time were they reflected in reports or assurance statements to the Board.

Despite this, the Panel from the outset has seemed determined to find Governance failures by the Board rather than working with the Board to ensure the necessary corrective actions.”

Any qualified prospective Board member will surely sniff the air at that one, and ask themselves:

  • One, can I trust a single shareholder (DRD) which appears to have gone to considerable lengths to publicly contaminate the last Board with issues that did not come under their direct purview?
  • And two, would I ever be allowed to discharge my legal responsibility to consistently provide independent advice to the company’s internal management structure as a Non Executive Director?

As I noted on the thread under our first report this expensive GoCo (£64 Million)/NDGB (£25 Million) contraption is now extremely dangerous for anyone who tries to ride it. If there is not some decisive political movement forwards or back, even more people will get crunched…

In short, the Minister Conor Murphy has a rather expensive and complicated mess on his hands.  How big that mess is really depends on who did what and said what to whom and/or when… Summer recess or no summer recess, the FOIs are storming in from all sides…  This one is just not going to go away, you know…