NI Water: Is the Audit Office about to take the gloves off?

One of the most interesting aspect of this story is the degree to which most of the mainstream media (pace UTV and the News Letter) does not seem to understand what led to the point at which the Northern Ireland Audit Office is now going into the offices of NI Water to examine their financial record keeping against the findings of an Internal Audit.

Interestingly they are also going to be looking at legacy issues from the days when the Water Service was under the direct control of DRD. They will have four weeks in which to conduct their inquiry.

Control over this matter is slowly slipping out of the hands of the Minister, the new Board and Paul Priestly’s successor Dr Malcolm McKibben. The Auditor General has been in with the PAC for the last two weeks in camera and has clearly decided to act on foot of their instructions.

Slugger has had sight of the draft terms of reference for the examination and we’re satisfied that it gives the team going in sufficient scope to determine just how robust NI Water’s reporting systems have been.

Given that in one contract the Department had to go to the supplier to ask for records it hadn’t kept itself, that should make for interesting reading.

It will also examine independently collated material provided by Contracting Out to the PAC, regarding their work on the controversial Steria contract. The C&AG has quite specifically asked his team to take, so far as they can, a view on any substantial detail on which the two reports differ as to the facts of the case.

That too, should make for some very interesting reading…

It’s encouraging that the C&AG is beginning to work hand in glove with the Public Audit Committee like this. It’s to be welcomed and very much encouraged. The development of democracy in Northern Ireland depends on this kind of scrutiny, and all concerned taking a pride the fact they are the last backstop for probity in government.

If there is any doubt now, the Northern Ireland public will shortly learn what the southern public have known for some years now: ie, that it matters greatly to everyone’s quality of life, how government (whether that be Minister, or the ‘permanent government’) spends the limited resources at its disposal.

Mr Wilson is promising £2 Billion of cuts and a likelihood of more on the way.

If the Audit Office and the PAC cannot between them figure out where the money is going inside an off balance GoCo like NI Water, how on earth are they going to track the waste inside government to help pay for investment in our hospitals, schools and infrastructure?

The time for casual (not to mention convenient) scape-goating is over…

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  • Pigeon Toes

    “Given that in one contract the Department had to go to the supplier to ask for records it hadn’t kept itself, that should make for interesting reading”

    Oh sweet Jeebus,… It’s almost inconceivable that no such record keeping was in place.
    Presumably, there was at least a “formal contract”
    http://www.scribd.com/doc/7089374/Rathlin-Ferry-Contract-Award-Letter
    “Control over this matter is slowly slipping out of the hands of the Minister, the new Board and Paul Priestly’s successor Dr Malcolm McKibben. The Auditor General has been in with the PAC for the last two weeks in camera and has clearly decided to act on foot of their instructions”

    I know that it’s stating the obvious, but it should never have been within their control, and the decision for NIAO to investigate, should have been reached quite some time ago, before reputations and careers were destroyed.

    Whether this heralds a new dawn, in terms of civil service accountability and transparency remains to be seen, but I suspect that for a time, at least, DRD will be a little more concerned with getting it right in the first instance, than spending endless efforts in scape-goating and cover ups.

    Though that particular department must be hoping that there will be nothing more coming to bite their arses in the coming weeks and months…

  • Pigeon Toes

    http://www.newsletter.co.uk/news/Audit-Office-sent-in-to.6518701.jp

    “Mr Murphy has repeatedly said that there were procurement problems in contracts worth more than £28 million, but an analysis of the contracts by the political website Slugger O’Toole claimed that at most an estimated £550,000 was lost.

    The Audit Office probe will attempt to clarify exactly how much – if any – public money was lost as a result of the procurement issues.

    Mr Murphy’s decision to fire all but one of NI Water’s directors in March has been brought into question in recent weeks after it emerged that the Sinn Fein minister’s most senior official had suggested – in some cases successfully – changes to the independent report into NI Water procurement used to justify firing the directors.

    The terms of reference for the Audit Office probe also task it with establishing whether the procurement problems were the fault of the non-executive directors fired – some only in place since July 2008 – or since the days of the Water Service.

    If it is discovered that the procurement problems stem from before the creation of Northern Ireland Water, it would then turn the spotlight on the Department of Regional Development (DRD) which was then wholly responsible for the utility.”

  • Jj

    “turn the spotlight on the Department of Regional Development (DRD) which was then wholly responsible for the utility”

    Not just back then – the Shareholder Unit was charged, since April 2007, with protecting the shareholder interet in the company. It did not do so – no shareholder would think the way this was handled was appropriate or protected ther interest. The head of the Shareholder Unit should be suspended.

  • mopphead

    “It’s encouraging that the C&AG is beginning to work hand in glove with the Public Audit Committee like this.”
    Jebus H Corbett.
    The whole point of the C&AG’s office is to work with and for the PAC. Take a look back at all the PAC reports since devolution returned, haltingly, in 1998. How many of these reports were not based on Audit Office reports or memoranda? Very very few if any.

  • Pigeon Toes

    http://www.niassembly.gov.uk/qanda/2007mandate/writtenqfora/drd/drdwq2.htm

    7. Mr P McGlone (Mid Ulster):

    To ask the Minister for Regional Development, in relation to the Public Accounts Committee inquiry into NI Water, why his Department was reliant on Atkins Contractors to provide detail of the £5,222,144 paid by the Department to them between March 2002 and April 2007, in relation to DRD Water Service Contract work.

    This for answer by the 22nd September… At a guess the response will be “Prior to April 2007 NI Water’s financial system did not record supplier expenditure to individual contracts….. have been provided to us directly from Atkins records”

  • Mike Scott

    Interesting take from Mick – “Slugger has had sight of the draft terms of reference for the examination and we’re satisfied that it gives the team going in sufficient scope to determine just how robust NI Water’s reporting systems have been.”

    As long as Slugger O’Toole is satisfied then that’s alright. Jesus Mick, climb down from the pedestal, it doesn’t suit you.

  • According to the Minister, mopphead, the forthcoming PAC report follows a request from the CRD:

    “Obviously, you then asked the PAC to conduct an investigation into the procurement issues and how they
    were handled.”

    In the case of the Rathlin investigation, the NIAO was given procurement related material to investigate but it passed the material on to the DRD instead of carrying out its own investigation or working with PAC on the issues raised.

  • Pigeon Toes

    Slightly off -topic, but I see DRD are now publishing the details of FOI requests made to the Department.

    http://applications.drdni.gov.uk/publications/document.asp?docid=19303

    SUMMARY OF INFORMATION ACCESS REQUESTS AND RESPONSES
    Period – Thursday 19th August – Wednesday 25th August 2010

  • Mick Fealty

    Mike,

    What is wrong with that?

  • Mick Fealty

    No, forget that. I see it. Pompous. Agreed.

  • McCavity

    So NIAO is going to investigate the Steria issue but is this cause for celebration or further concern. Their study of the Steria contract in late 2007 concluded that there was no basis for a full study to be conducted – to what extent will they be looking to defend their previous position.

    In addition NIAO is going to have to depend on NIW to provide it with the necessary information and documents for this investigation given the reason for this investigation this does seem very circular – Mick does the TOR give any clues as to how they will get over that circularity!!!

    Finally what confidence can we have that those at the top are really looking for clarity – raking around the internet the following jumped out.

    The guy who was the contract lead and MD of Steria at the time the actions, which have taken NIW to court, were occurring was appointed (Aug 09) to a top job at DFP – CEO and Undersecretary no less.

    His linked-in shows how he is still connected to Steria. Further the online Court records for the Steria versus NIW case which was commenced by Steria Sept 2009 and is still ‘active’ has the same fellow identified as the correspondent for Steria!!!! Given the case was lodged after his appointment to DFP this is of itself – odd at the very least.

    How will DFP deal with this if and when the ex Steria MD is called to testify. Perhaps the question is if ?

  • Mike Scott

    Well you half way answered it yourself Mick, but it’s more than pompous.

    Who is the “we” that is satisfied – is it Slugger / Mick / all bloggers on the site?

    It seems to me that as a political blog which reports on facts and accomodates others views on those facts, for that blog to express whether it is “satisfied” about something like a ToR, takes the blog over the line. No longer a reporter but a player.

    Is that where SOT sees itself on this story, as a player? It is an important question.

  • “It’s to be welcomed and very much encouraged.”

    It certainly is, Mick; sadly this backstop hasn’t always done its job.

    Just a few snippets from the News Letter from 2008 – yes the News Letter again – not renowned for its receipt of plaudits 🙂

    “A £4 million contract for a taxpayer-subsidised ferry service is being investigated by the Audit Office, the News Letter can reveal.”

    A hint of the slide to come appears further down the article:

    “The Audit Office said it was investigating the complaint with DRD.”

    The ‘independent’ investigation was actually carried out by DRD, even though DRD was one of the parties under scrutiny!!

    Perhaps we shouldn’t lavish too much praise on the NIAO just yet – just in case.

  • Mick Fealty

    As you well know the ‘we’ thing is an old device, It anything it was me asserting my ownership of the site, not trying to speak for all the bloggers and commenters on it.

    On the player things, I am not sure what you mean by that. But honestly, given the silence of the MSM on this matter, we have to be viewed as a live factor in how the case is being conducted, mostly through the material evidence we’ve exposed.

    But I don’t see how that stops us from accommodating other views on the matter… Just look at the variety: you, Mopphead, and McCavity. All informative, all useful correctives to my lapse into pompousness.

    My mistake was in chosing to editorialise on the matter whilst not sharing the primary material.

  • Mick Fealty

    I will pick that one up directly!

  • McCavity, can you provide a link to the late 2007 NIAO investigation into the Steria contract? I can’t find any mention on the NIAO website list of reports.

    There is, however a link to governance by departments of arms’s length bodies dated May 2007.

    Unfortunately, it’s not cut and paste friendly 🙂

    Now if only DRD, its shareholder unit and NI Water had followed the advice given rather than allow the document to gather dust ….

  • Pigeon Toes

    http://applications.drdni.gov.uk/publications/document.asp?docid=19196

    19/11/09
    Working lunch – Biannual meeting of Audit Chair (NI Water) DRD
    Tea, coffee, sandwiches & fruit platter
    29.70
    Audit Meeting
    15/12/09
    Working lunch with Chief Executive of NI Water
    Lunch menu (Deanes Deli)
    93.01

    The last suppers?

  • Pigeon Toes

    2/9/09
    Meeting with DRD Minister and new NIW Chief Executive
    Lunch and beverages
    141.60
    Minister and DRD senior officials hosted lunch

    http://applications.drdni.gov.uk/publications/document.asp?docid=19195

  • Pigeon Toes

    Someone’s got their fact wrong…

    The News Letter reported that the Minster met with the IRT on 23rd February”
    http://www.newsletter.co.uk/news/Note-links-Murphy-to-report.6482832.jp
    t is not clear whether the hand-written note was written on the same day as the email, which was sent on February 17, but it was almost certainly written at some point between then and February 23, when the minister met the IRT, as the note gives a very clear impression that the meeting had not yet taken place.”

    Yet the exchange at the Regional Development committee went like this…

    “Mr McDevitt:

    Minister, can I take you to your comments about the private meeting that you had with the IRT?

    The Minister for Regional Development:

    Yes.

    Mr McDevitt:

    Who was present at that meeting?

    The Minister for Regional Development:

    Two of the three members of the IRT were present: Peter Dixon and Jackie Henry.

    Mr McDevitt:

    Was anyone on your side present — anyone else from the Department?

    The Minister for Regional Development:

    No.

    Mr McDevitt:

    Was your special adviser present?

    The Minister for Regional Development:

    No.

    Mr McDevitt:

    When did that take place?

    The Minister for Regional Development:

    It was prior to my receiving the report. I am looking at the chronology of events.

    Mr Gary Fair (Department for Regional Development):

    I think that it was on 25 February.

    The Minister for Regional Development:

    Yes, it was on 25 February.

    Mr McDevitt:

    That was the day you received the report?

    The Minister for Regional Development:

    No, that was the date when I met the IRT.

    Mr McDevitt:

    On what date did you receive the report?

    The Minister for Regional Development:

    I received the report after that. The report was sent to the Department and I received it, I think, within a day or two after that.

    Mr McDevitt:

    In your statement to the Assembly on Monday 15 March, you said:

    “The independent review team commenced work on 25 January and submitted its final report on 25 February 2010.” — [Official Report, Vol 49, No 5, p315, col 2].

    The Minister for Regional Development:

    Yes, it was submitted to the Department.

    Mr McDevitt:

    So when did you receive it?

    The Minister for Regional Development:

    I received it within a couple of days of its being submitted to the Department.

    Mr McDevitt:

    OK. So, that was the day the IRT submitted its report to the Department?

    The Minister for Regional Development:

    Yes.

    Mr McDevitt:

    So the report was written?

    The Minister for Regional Development:

    Yes.

    Mr McDevitt:

    OK. To go back to the question of draft reports —

    The Minister for Regional Development:

    At that stage, if the IRT felt that it was being pressurised in some way into writing a certain type of report or if it felt that its independence or integrity was compromised, it had an opportunity, before the report was formally handed over to the Department, to raise those issues with me in private. It assured me of its independence and that of the evidence it gathered and the conclusions that it drew.”

    Hmmm….

  • interested

    “mock PAC” meeting??????????

  • Pigeon Toes

    I don’t think it fully prepared them for that 1st July one though… 😉

  • Pigeon Toes

    Does anyone have the date for the email sent by MacKenzie where he discussed Mellor leaving, as “no great loss”?

  • Pigeon Toes

    01/02/10
    IRT checkpoint meeting
    Tea, Coffee, Sandwiches, Fruit
    29.70
    Meeting of Independent Review Team

  • Pigeon Toes

    Maybe a different IRT…. (Glad they din’t go hungry)

  • mopphead

    Here’s a little prediction from the crystal ball at Mopp Towers. The ink will barely be dry on the Audit Office findings before the mighty Sluggerites denounce it for a whitewash.
    And here’s a tip: the Audit Office and the PAC don’t do policy, so their scope for reviewing the Minister’s actions will be somewhat limited.

  • Pigeon Toes

    The Minister didn’t think there was any loss of money, way back in March…

    http://www.theyworkforyou.com/ni/?gid=2010-03-15.2.8
    “There is no evidence that there was any loss of money for consumers. However, where single-contract tenders were awarded, one cannot provide evidence that value for money was achieved. Where people are in competition for work, the implication is that that provides value for money. However, one cannot say with any certainty that those tenders were, indeed, value for money. We could not be sure of whether that was the case unless we went back over the process and retendered. That situation, therefore, leaves NIW in a vulnerable position. Clearly, single-contract tenders are appropriate in certain specified circumstances. However, the circumstances in which NIW operated them were not defensible. That left us with no option but to take appropriate action. However, we have no evidence to suggest that there was a loss of money to consumers as a result of that.”

  • Pigeon Toes

    The Minister then went on to say…
    “…..Regardless of whether the matter is damaging to the NIW, the whole public sector and other government agencies in the longer term, it is important to apply scrutiny, and action must be taken against people who do not measure up to the appropriate levels of responsibility for running agencies or Departments. Regardless of whether that is deemed an ongoing embarrassment, I make no apology for that approach. It is right to deal with those issues in an open, transparent and upfront way and deal with the consequences.”

    Wise words indeed

  • Pigeon Toes

    “crystal ball at Mopp Towers”

    It’s a pity you couldn’t have used it sooner, to give the Minister a heads up .. 🙂

  • Mick Fealty

    That’s remarkable for the number of ‘howevers’ in one paragraph alone…

  • inpursuitoftheinedible

    Hey mopphead

    Yes that may be the case indeed and why should they not! it is not as if those involved do not give us cause – have you not reviewed the documents presented on this site – read them and form your own opinion based on that evidence. They and their friends flout every known proper behaviour it is possible to contemplate. They are brazen and have shown open contempt for the rank and file who do not have the means to seek redress because all the forums where they must answer are controlled or influenced by their friends and cohorts or made inaccessible by other means. Slugger and Co provide a valuable platform outside their sphere of influence and I will support places such as these as long as there is breath in my lungs and blood in my veins. Your contempt shows a lack of proper understanding. I for one welcome your comments and appreciate your involvement.

    You need perhaps to reflect on who the real enemy is…

    We need accountability and leadership not cronyism and nepotism. We need forums like Slugger to show them, in the words of Dylan, that we will not go quietly into that good night but will rage against the dying of the light…

  • interested

    achieving best value for money or optimum outcomes also requires effective management at the contract level. Is repeated audit the only tool being used or are there also evaluation reports?

  • Jj

    “However, one cannot say with any certainty that those tenders were, indeed, value for money. We could not be sure of whether that was the case unless we went back over the process and retendered. ”

    Nonsense. This is a Gary Fair line. Mick on the other hand spelled out the potential for a 10% saving had there been a wide ranging retendering which put the potential losses to the public purse (over several years) in proper context.

    Further, Mick’s calculations didn’t take into account the additional costs which such a widescale tendering process would cost, resulting in an offset to any savings achieved through tendering process.

    Accountants such as GF are well aware of this – the PAC should be aware as well. This evidence is not providing the clarity which they and we deserve. Don’t forget that it was this advisor who explicitly set out in an email about the appointments process, that he was being deliberately obscure. This attitude continues and is evidence of intent to mislead.

  • Jj, Fair has provided some clarity about the controversial selection of the interim NEDs and George Savage has put down a question about declaration of interest, a question which may impact on Paul Priestly. The question is to be answered by September 21.

  • Pigeon Toes

    http://applications.drdni.gov.uk/publications/document.asp?docid=19196

    If this does relate to NIW IRT a few questions

    Who attended this meeting?
    Where are the minutes of the discussion?
    Was it a planned meeting, i.e from the outset, and not an ad hoc meeting connected with the various “difficulties” supposedly being encountered.
    What input did DRD have into this meeting, and did it influence the way in which the IRT continued their work.

    1st February being five days after the IRT began their work, and indeed some time, before the first draft report appeared.

  • Pigeon Toes

    So did the Minister meet the IRT on the 23rd February, or on the 25th- as suggested on behalf of the Minster by Gary Fair – at the Regional Development Committee meeting ?

  • I’ve scribded the hospitality documents and highlighted some gatherings involving the Minister, senior DRD officials, the NIW CEO and the IRT.

  • Justice for NIW

    Mopphead

    Here’s a question I hope you can truly answer (crystal ball would be handy). How can MacKenzie rebuild working relationships with his employees? Mr MacK must now be aware he has few (if any) friends either side of the moat wall he’d built around himself. Where would he begin to restore peoples’ pride to work in that company?

  • Pigeon Toes

    19/11/09
    Working lunch – Biannual meeting of Audit Chair (NI Water) DRD
    Tea, coffee, sandwiches & fruit platter
    29.70
    Audit Meeting

    Don Price?

  • Pigeon Toes

    Interested
    How could they have evaluated anything for VFM, if as Mick points out above, they weren’t actually keeping any records of what was being spent on individual contracts?

  • interested

    PT
    this cant really be true -an annual budget of
    £350million!!

  • Pigeon Toes

    http://news.bbc.co.uk/democracylive/hi/northern_ireland/newsid_8957000/8957022.stm

    “Democracy Live” has the full footage of that meeting….

  • Pigeon Toes

    Politics NI has an interesting document from The Commissioner for Public Appointments office.

    http://politicsni.files.wordpress.com/2010/09/martina-hanna-e1284056604989.jpg

    “Minutes of the meeting were not kept as Lian requested the discussion to be kept/treated as an informal confidential matter.
    The Commissioner agreed but stated that should the Department require an “exception” to the Code of Practice they should set out their reasons for doing so, along with the proposed way forward in a letter.
    Lian agreed that should it be necessary she will write officially to the Commissioner”

  • Pigeon Toes

    The date of the above document is 11th March, the day the other NEDs were sacked.

  • PT, I’ve just been informed that the CPA office will be publishing the FoI responses re. NI Water early next week. Perhaps other agencies will soon follow suit – with the cautionary advice that electronic redaction has its limitations!

  • Mick Fealty

    That’s very good news!!