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.

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