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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  • Pigeon Toes

    Excellent work Mick!!
    It certainly raises a lot of questions, one of them being why was Mc Kenzie informed two days into the job that he was going to be made accounting officer, and why was this not
    discussed prior to taking up the post, say as part of the recruitment process, or at least at interview stage?

    “On my second day in post, Mr Priestly made me aware that he intended to appoint me as
    accounting officer. I did not really know what an accounting officer was. I had to do some fast
    reading to understand what my responsibilities were. I realised quickly that I would carry
    personal responsibility. I took that very seriously”

  • Cynic

    A further point on this, at the time of letting the contract who was the Accounting Officer for NIW?

    Was the Chair and Acting Chief Exec the AO or the Sub Accounting officer. There is a critical difference. If he was a Sub Accounting Officer then the Perm Sec in DRD as AO was responsible for the processes and for assuring himself directly that the governance systems were appropriate AND were functioning correctly

  • William Markfelt

    ‘- 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.’

    This would certainly appear to be ‘convention’, as it isn’t the first time it has occurred.

    But it raises two points.

    One, it used to be ‘convention’ to stick small boys up chimneys. Did we continue doing it or challenge those conventions? Are the PAC saying that everything is set in stone, and nothing can ever be changed within the broad framework of their existence?

    Two, more importantly, PAC seem to ignore ‘conventions’ when it suits their purposes, such as the ‘standards in public life’, which appear to have been breached, and acknowledged as breached, by the main suspects. I believe that PAC have questions to answer regarding the apparent hypocrisy in their position, which appears to change according to who is on the stand.

    I’m exceptionally keen to hear Mr. Mellor’s side of the story (aka ‘the truth’) and see where this leaves Priestly, McKenzie and the PAC.

  • drumlins rock

    Thanks Mick, the water is clearing slightly so to speak.

  • William Markfelt

    ‘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).’

    This point is core.

    Could it be that audits didn’t reveal any issues because no issues existed?

    It is not beyond the bounds of possibility that problems were simply produced for…what purpose?

    Presumably, beyond Nicola Brennan’s ‘failure’ to find the non-existent(?), NIAO also signed off NIW’s accounts without identifying issues.

    Either there were issues or there weren’t. If there were, then NIW’s own Audit team, and the NIAO’s Audits need to be put under the spotlight as both having ‘failed’. If there were no issues in the past, how did ‘issues’ only come to light more recently with the same chap praised by the Minister subsequently hung out to dry?

    I have my own theory on this one.

  • drumlins rock

    go on willie tell us!

    It would we great to hear Chris Mellors account of events, is he on record anywhere with a response?

  • Pigeon Toes

    “It would we great to hear Chris Mellors account of events, is he on record anywhere with a response”

    I think that for any type of clarity we NEED their side of the story.

    At present the timeline might indicate that perhaps McKenzie at least was acting in “good faith”.

  • drumlins rock

    or did he panic and over re-act to a minor issue?

  • “28th July 2009 – Laurence MacKenzie is appointed…”

    Mick, surely that’s the date he moved into his new office. He was appointed the previous April.

  • Pigeon Toes

    Equally is it possible that DRD civil servants panicked at the thought of another CEO of NIW resigning, and instead decided to rid themselves of the Board who had now confirmed “no confidence” in the CEO.

    This was before the IRT was convened, and the TOR defined.

  • PT, it would appear that those at the recent July 1 PAC meeting were unfamiliar with the Hillyard IWRP Strand 2 report [28 Jan 2008] as the latter refers to the roles of the two accounting officers:

    2.31 We believe that these concerns can be resolved through the leadership role of the Minister and through his accountability to the Assembly. As stated above, the Department operates under the direction and control of the Minister. As long as NIW remains in the public sector it will require a sponsoring Department and a senior civil servant to take on the role of Accounting Officer, alongside the Chief Executive as Accounting Officer in NIW. Where there is tension – for example between social and environmental priorities – it is the Minister’s responsibility to reconcile them, in consultation as appropriate with his Executive colleagues. The function of the Department is to advise and support him. …

    22. The Permanent Secretary is personally answerable to the Assembly for the Department’s use of public funds, including money allocated to NIW: he has designated the Chief Executive as the Accounting Officer for NIW, who is answerable for the use of public money within the company.”

  • Pigeon Toes

    Far be it from me to pedantic Nevin, but Mc Kenzie was actually appointed in March 2009

    http://news.bbc.co.uk/1/hi/northern_ireland/7939297.stm

  • In the private sector the Head of Communications would be central to evaluating how such announcements/matters might be presented and the ‘impact’ of actions/options. FOI might be useful there to understand the communication between the Head of Comms and the Chairman/CEO, and also with DRD talking to the head press/media/comms people there. Think the Head of Comms once worked for the Parades Commission, so his take on transparency and accountability in such high profile public/political situations might be?

  • William Markfelt

    Drumlin,

    I’d love to tell you about another case that replicates the shenanigans in this one to a remarkable degree.

    I would be in a position to name names on that one, but I think Mick would not be best pleased with that action, so for now, in this forum, at least until that issue raises itself here or elsewhere in public, I’m afraid I HAVE to keep my powder dry.

    The instant it attracts some public interest (if ever) I’m in a position to point certain people in a certain direction, regarding names.

  • Pigeon Toes

    Mr MacKenzie:

    I say that coming from an environment where there had been robust controls and where procurement was taken seriously and was approved at the appropriate level. Therefore, I believe that the culture in the company was that it believed that it had been freed of its shackles.

    “One of the things that surprised me was a reluctance to engage with the Department; I was told from early on to keep it at arm’s length. I recall a non-executive colleague telling me to watch them. He told me a story about the frog that boiled: they will make the water nice and warm for you and keep making it warmer and warmer; you will get friendly with them until one day they boil you; therefore do not tell them too much”

    Might it be possible that MacKenzie felt that he would be held personally accountable for any failings and indeed

    ” I realised quickly that I would carry
    personal responsibility. I took that very seriously”.

    Could Mr MacKenzie, indeed have felt like that frog, and as a result tendered his resignation before he was er “pushed”?

    “Mr Priestly:

    Laurence had been with the company for a couple of months; he had uncovered this and brought it to my attention and I was shocked when he did. He told me that he had resigned. I asked him the reasons why he had resigned, and I said to him: “This is foolish, Laurence; it is you who are uncovering this malpractice.” I assured him that I would take the matter seriously and that we would put in place an independent review that would quickly produce a report to get to the bottom of the affair.

    On that basis and with my agreement, he decided to try to withdraw his resignation. The board of Northern Ireland Water contacted me to say that it was minded to refuse to allow him to withdraw his resignation. I said that, if the board did that, I would get the Minister to get Mr MacKenzie kept on the board and that Mr MacKenzie could not be allowed to resign.Mr McLaughlin:

    That is very interesting, but I want to finish the point. I take some reassurance from the support that you offered to Mr MacKenzie. However, you reported to your board that you had uncovered a very serious issue, but the board did not support you. Is that not what provoked your resignation? When you offered your resignation the board accepted it, but now Mr Priestly tells us that some board members said that they were of a mind not to accept your retraction. It is a very interesting little sequence, is it not?

    Mr Priestly:

    May I develop the point? The chairman and other members of the board approached me and said that I was overreacting. My reaction was that they did not seem to understand the seriousness of the matter: public money was involved and what happened should not have happened. However, I could not persuade them of that.”

  • Pigeon Toes

    Paul Priestly

    “I assured him that I would take the matter seriously and that we would put in place an independent review that would quickly produce a report to get to the bottom of the affair.”

    That’s a very telling statement i.e would getting to the ” bottom of the affair” not actually be the priority rather than producing ” a report” and surely why did it need to be done so “quickly”?

  • William Markfelt

    ‘- 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”.’

    Exactly. Working to an agenda set by….???

    It seems wholly clear that the purpose in assembling the IRT is to work to that ‘gerrymandered’ framework of investigation under discussion.

    Judging by the actions of certain individuals, it appears that we need only look in one direction for the individual with a particular agenda -to create a few ‘victims’.

    Of course, this isn’t unique to the NIW issue. It’s wholly apparent that the DRD, and key figures within it, were also determined to create a few ‘victims’ in the context of the Rathlin Island ferry debacle.

    Right now, the question is ‘why?’. What’s the purpose on embarking on a one-man crusade, slash and burn, mixed metaphor ‘war’?

    What’s the satisfaction in it? Clearly, judging from recent performances, it isn’t the triumph of good over evil. Recent performances have suggested a certain economy with the truth, and there’s some brass neck involved to turn in a piss-poor performance like that without blushing or feeling ashamed.

    So…tough it out. But there is some sort of deeper lying malaise at the heart of it.

    I can’t see any value in it other than the personal satisfaction of generous remuneration from others currently not being investigated for contract breaches.

  • William Markfelt

    ‘he had uncovered this and brought it to my attention and I was shocked when he did.’

    What, exactly, had he ‘uncovered’?

    All very John Le Carre in its language, but essentially we’re taking ONE contract that McKenzie -and McKenzie alone- did not regard as ‘good value for money’.

    He has looked at figures on a page, and maybe a specification that, on paper, doesn’t look right. Did he ask for details from the contractor as to why costs were high? And regarding costs, whose figures are we going on as to what represents ‘value for money’?

    A consultant’s? McKenzie’s own assessment of a fair price? We need to know.

    That’s the problem with these theoreticians who have never done a proper day’s work in their lives. It’s all reduced to a pile of figures on a page, and no real grasp of what real work entails or where costs can mount.

    ‘Uncovered’? Even that language is couched in ‘fraud’ type overtones. He looked at an invoice, the same way anyone else in NIW could have done. And did. And appear to have been totally nonplussed about.

    McKenzie needs to outline the contract under discussion, the costs involved, and we need to hear from the contractor as to how those costs stacked up.

    It would also be interesting to see if the likes of McKenzie have ever looked at invoices from the perspective of contractors providing ‘excellent value for money’ and reporting it. The culture appears to be that everyone is on the take, at all times, and in all circumstances. Which isn’t remotely true. Many (most?) contractors offer excellent service and value for money, but we never hear of these theoreticians uncovering that, do we? I wonder why that is?

  • Pigeon Toes

    Maybe poor Laurence had heard how DRD normally treats whistleblowers…

    I wonder if perhaps he mentioned that he had gone to his “chum” Peter, and by way of reassurance it was suggested that Peter form part of the IRT, just so that Laurence could be convinced that they were not out to get *him*. Of course it helped that Peter and Paul already knew each other, with Northern Ireland being such a “small place” and with Peter being a NED on Belfast Harbour Commission.

  • William Markfelt

    Ah, yes.

    Reassurances from the IRT.

    I’m sure that such matters were never discussed. After all, such issues might lead to accusations of gerrymandering the framework of this ‘independent’ review who tellingly appear to have been instructed to produce at haste, rather than forensically.

  • William Markfelt

    ‘Maybe poor Laurence had heard how DRD normally treats whistleblowers…’

    Anonymously?

    Six phase of a big project:

    1. Enthusiasm,
    2. Disillusionment,
    3. Panic and hysteria,
    4. Search for the guilty,
    5. Punishment of the innocent
    6. Praise and honour for the nonparticipants.

    How much that amusing little vignette is reflected in the repeated actions of the DRD.

  • Pigeon Toes

    But surely then MacKenzie would have immediately informed Paul, that Peter was in fact his “chum”, and that his inclusion in the IRT would “certainly give(s) rise to a perception” of a conflict of interest?

    Paul and Peter with their vast knowledge of accountability and transparency would have realised that Peter should not have formed part of the IRT, and Paul would have looked elsewhere.

  • Pigeon Toes

    Paul Priestly:
    “You work with people believing that they are being professional and have high integrity, but I have to tell the Committee that, at various points during this affair, we four witnesses have felt exposed and vulnerable. I have found myself having to give support to Laurence, Lian and Nicola. I have found myself going to the Comptroller and Auditor General for support and asking whether I am doing the right thing, and, thankfully, I am being encouraged that I am doing the right thing.

    It has been difficult for the people who thought that they were doing the right thing to feel that we are not and that we are almost victimised. I am not looking for your sympathy, but it has been tough.”

    Aw my heart bleeds Mr Priestly… Where was the support for others uncovering ” an inept process”? I don’t recall any particular support for the “witnesses” there.

  • drumlins rock

    Two little dickie birds….

  • Cynic

    Another point on this. The Assembly was reconstituted in MA 2007. So if the errant contracts had been in existence for 3 years that means they were let in 2006 under Direct Rule by the NIO.

    So why is the PAC in London not dealing with this?

  • William Markfelt

    Peter, Paul and Larry.

    There’s a folk group in it. Songs like ‘Golden Vanity’, ‘Best of Friends’, ‘Delivery Delayed’, ‘Don’t laugh at me’, ‘Have you been to jail for Justice’, ‘Take off your Mask’, ‘Sweet Survivor’ and ‘Whsipered Words’.

    ‘I have found myself going to the Comptroller and Auditor General for support’

    Holy f***!!!!! See what I mean about the ‘independent’ NIAO?

  • William Markfelt

    What errant contracts, Cynic?

    All we have so far is that Priestly claims McKenzie ‘uncovered’ something that HE didn’t think was right.

    Based on what we know, I think we’re entitled to ask questions about this so-called ‘errant contract’.

    You’re right. Three years. NIW’s Internal Auditor apparently found nothing. The previous board found nothing. The NIO found nothing. The NIAO reported nothing.

    So what, exactly, is the ‘errant contract’? One man’s personal opinion that it didn’t represent ‘value for money’. From where I’m stood, that’s not any real basis for ‘fraud’ or wrongdoing. It’s just a personal opinion. And, until we hear otherwise, not a very sound personal opinion. The performance in front of PAC suggests not very sound judgement. So why can’t he find out about this contract and have its ‘value for money’ independently -properly independently- assessed?

  • Pigeon Toes
  • I appreciate the correction, PT.

  • Pigeon Toes

    “I got an e-mail
    from an individual who worked in the organisation that stated that that person wanted to award a
    named individual the contract continuation for 2010-11, which was 130 days at £775 a day”

    But still cheaper than what they paid out for Independent Review
    “Is it true that you paid one person £1,100 a day, another
    £800 a day and that £350 was thrown in for secretarial expenses?
    Ms Patterson:
    Those rates are correct. The rate of £1,100 a day was £400 cheaper than the government
    procurement framework rate.
    Mr Dallat:
    It was a real bargain.
    Ms Patterson:
    The framework was £1,500 a day.”

    Um something there isn’t computing with me…

  • Pigeon Toes

    “Mr Hilditch:
    It has been flagged up to me recently that the jungle drums are out. I hope that nothing is hiding round the corner.”
    Indeed.

  • DC

    I have found myself going to the Comptroller and Auditor General for support and asking whether I am doing the right thing, and, thankfully, I am being encouraged that I am doing the right thing.

    FAO Mr Priestly

    Re: Doing the Right Thing

    Click Here

  • Cynic

    The issue isn’t the quantum. It is the process and what was delivered for the quantum.

    First it seems there was no competition for the contract and, it is alleged, parties had a former connection with NIW. That needs to be explored.

    Second is that, unless there was a lawful route to procure that service by single tender and it looks as though there wasn’t,

    1 as a public sector body NIW was bound by EU and UK procurement law and there should have been a full European procurement process. As there wasn’t, any interested party disadvantaged has a right to sue and to compensation for breach of the law. The normal level of compensation is the value of the contract paid to every disadvantaged competitor

    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

  • Pigeon Toes

    Cynic,
    Does it not depend on the type of service eg Part A or Part B, and the value?
    It’s interesting to hear Priestly pontificate about the need for transparency, accountability, bad practice, the need for competition etc.

    In fact it’s pretty damn ironic, given the responses given to the European Commission by his department around the time he was getting so “shocked” about what went on at NIW.

  • Cynic

    Yes …but my understanding is that this one at this value might normally be a full OJEC process. I stand to be corrected though

  • Pigeon Toes

    The thing is Cynic, we do need greater clarity on the issues, but my hunch is that these issues would never have seen the light of day, had Mr MacKenzie not tendered his resignation over this, the subsequent vote of no confidence and the then hastily arranged IRT.

    It’s not like DRD to actually invite such litigation, and indeed seem to do their “best” to cover such issues up.

    Or are they safe in the knowledge that such litigation is now time barred under EU law? (Six months?)

    However, one assumes that proceedings could be brought under misfeasance and perhaps malfeasance…

  • William Markfelt

    “It has been flagged up to me recently that the jungle drums are out. I hope that nothing is hiding round the corner.”

    He should start worrying when the jungle drums stop.

    That’s when certain people get eaten alive (and I guess there’s probably quite a bit of meat on an Elvis impersonator)

  • PAC v NIW – January 2008 [Priestly not long in post and questions responded to by Sterling]

    “23. A specific area of concern is the revelation that DFP guidance does not apply to Northern Ireland Water (NIW). Although DRD indicated that it had impressed upon NIW the importance of operating in the spirit of the guidance, this is of little comfort to the Committee as is the comment by the DRD Accounting Officer that “it more or less owns the company”. It has subsequently emerged that the company has already spent the astounding figure of £16 million on consultancy in the first 6 months of 2007-08.

    Recommendation 6
    24. It is important that there is full clarity about the position of Northern Ireland Water (NIW). DRD completely owns the company and the Northern Ireland taxpayers pick up the bill for any failure to ensure value for money in NIW. The Committee therefore recommends that DFP guidance should apply in full to NIW’s use of consultants.”

  • William Markfelt

    ‘First it seems there was no competition for the contract and, it is alleged, parties had a former connection with NIW. That needs to be explored.’

    Sometimes, there won’t be competition for contracts. All of this hinged on what work the contract entailed.

    Supplying envelopes? Then no competition smells (although a further case could be made for the cost of advertising a contract exceeding any money ‘lost’ on envelopes being marginally more expensive than from supplier B or C).

    But let’s assume the contract is for steeplejack asbestos removal, or some other highly specialised work. For one, there’s no competition because maybe one company in all of Ireland or the UK can do that work. And in that case the company write their own cheque and McKenzie can drone on all he wishes about ‘value for money’. Theoretically,’ the work needs to be done, and that’s what you’re paying us to do it’.

    I don’t expect desk jockeys like Priestly or McKenzie to grasp these realities of business, though.

    This isn’t new or confined practice, incidentally. While construction companies for certain public authorities are subjected to the rigours of application for three year contracts, flooring contractors are not subjected to the hourly rate set down by that authority and essentially write their own cheque and have done for many, many years.

    And, incidentally, a senior management figure in that same public authority took it upon himself, a few years ago, to get new windows fitted to one of that authorities buildings, selected a contractor, and issued a series of £1000 small works orders to avoid the nasty business of public tender. The public authority closed the building in question two years later.

    Brown envelopes and a very close working relationship? You bet it was.

    Did the NIAO uncover this sharp practice? No. What a shocker.

    Are that supplier and manager still enjoying an extremely close relationship, work wise? Yes.

    Does that manager’s wife hold a position that might be construed as ‘conflict of interest’ as regards their pillow talk?

    I have all the names, incidentally. Proving it is another thing. I know I only need suspicion to approach the NIAO as a whistleblower but, frankly, their track record on this is piss poor, and I’m not prepared to give them this info.

    It’s best, I think, that the manager and his wife should continue to enjoy holidays at what is, essentially, taxpayers money hoovered away by the contractor they enjoy this close relationship with.

  • Cynic

    Call crimestoppers or the bbc or utv

  • Pigeon Toes

    But let’s assume the contract is for steeplejack asbestos removal, or some other highly specialised work

    Like a ferry service for example? I believe that indeed EU rules allowed them to call for a “simple expression of interest” for small island ferry services.

    Problem being that (cough, cough) DRD actually allegedly undertook a competitive tendering process..

  • Pigeon Toes

    Cynic
    As one award winning journalist replied “but to what end?”

  • Pigeon Toes

    “I have all the names, incidentally. Proving it is another thing. I know I only need suspicion to approach the NIAO as a whistleblower but, frankly, their track record on this is piss poor, and I’m not prepared to give them this info.”

    With hindsight, I wouldn’t bother either…
    “You work with people believing that they are being professional and have high integrity, but I have to tell the Committee that, at various points during this affair, we four witnesses have felt exposed and vulnerable. I have found myself having to give support to Laurence, Lian and Nicola. I have found myself going to the Comptroller and Auditor General for support and asking whether I am doing the right thing, and, thankfully, I am being encouraged that I am doing the right thing.

    It has been difficult for the people who thought that they were doing the right thing to feel that we are not and that we are almost victimised. I am not looking for your sympathy, but it has been tough.”

  • Pigeon Toes

    Did it apply to DRD in January 08?

    I “can find no evidence” to suggest that they were at least “operating in the spirit of the guidance”

  • Pigeon Toes
  • William Markfelt

    ‘Call crimestoppers or the bbc or utv’

    Unless there’s some femme fatale shagging a young fella, I expect there’s not much mileage in it for them.

    Are any of the above bodies covering themselves in glory regarding NIW? Or the Rathlin Island ferry?

  • William Markfelt

    ‘I have found myself going to the Comptroller and Auditor General for support ‘

    Collusion. It’s not an illusion.

  • William Markfelt

    Exactly like a ferry service, PT.

    Of course, Priestly crying like a baby to the NIAO is just, apart from being a laugh on its own terms, a stark reminder of the man’s naked hypocrisy.

  • William Markfelt

    http://www.lse.ac.uk/collections/LSEPublicPolicy/pdf/The%20National%20Audit%20Office,%20the%20Public%20Accounts%20Committee%20and%20the%20risk%20landscape%20in%20UK%20public%20policy.pdf

    5.7 (paraphrasing) If NAO are seen to encourage blame culture, it might inhibit riskier strategies that produce value for money in the long term.

    Indeed.

    Have desk jockeys like McKenzie or Priestly got the necessary skills to recognise such strategies? Or are they rather more concerned in scaling the greasy pole of ‘look at me!!!!’ public sector employment, where their agenda appears to be making a name for themselves as big fellas?

    Again, it would be interesting, in fact it’s vital, that we hear Chris Mellor’s testimony on this matter, to determine the extent of self-serving by those in the DRD, or Water Board.

    Surely we can catch a quick word when they come off the back nine?

  • Pigeon Toes

    3.5 All VFM reports must be agreed (word for word) prior to publication by the C&AG and
    the Accounting Officer for the department concerned, normally the Permanent Secretary
    (Roberts and Pollitt, 1994). The rationale for this clearance process is that factual
    disagreements cannot go before the PAC, but only a fully agreed report. Clearance can often
    be a very fraught process, where the department disagrees with NAO’s judgements. It can
    also be very time consuming, with many multiple redrafts, as departments seek to dull the
    critiques, or to dispute the findings of NAO reports. Sharma (2007) gives an in depth report
    of this process, discussing how a 2002 NAO VFM report into Waste Reduction was altered
    between draft stage and final publication:

  • Pigeon Toes

    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

  • William Markfelt

    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.

  • William Markfelt

    ‘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.

  • William Markfelt

    ‘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.

  • Pigeon Toes

    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?

  • Pigeon Toes

    Declan Gormley was also refused the opportunity (Twice?) by the Regional Development committee.

    Baaa said the sheep

  • Pigeon Toes

    So who briefed them prior to 01/07/10?

    Why are they only sticking the boot into DRD now? (and by association the MSM)

  • Cynic

    “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

  • Cynic

    “their apparent unaccountability, makes their entire existence questionable”

    They are accountable …to the Assembly (not the Executive) via PAC

  • William Markfelt

    ‘They are accountable’

    Examples?

  • Pigeon Toes

    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?

  • William Markfelt

    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.

  • William Markfelt

    ;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.

  • William Markfelt

    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.

  • Pigeon Toes

    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

  • William Markfelt

    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?

  • funnyold world

    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?

  • William Markfelt

    ‘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.

  • Servant

    It is interesting to see the scrutiny that this issue is getting post PAC.

  • William Markfelt

    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.

  • wild turkey

    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/

  • Colin Burnside

    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.