Rail report of 'grave concern', says Dempsey
CIE faces further Oireachtas quiz on fraud, theft
Rail chairman John Lynch
Sunday November 08 2009
Transport Minister Noel Dempsey has expressed "grave concern" about Irish Rail's procurement policies.
Speaking for the first time since the release of the €450,000 Baker Tilly consultants probe into fraud, theft, malpractice and incompetent procurement procedures at the embattled semi-state body, Mr Dempsey said "systemic deficiencies" and weaknesses were identified by the investigation.
He told Fine Gael TD Fergus O'Dowd in a late sitting of the Dail last Thursday that, within Irish Rail, there was a high incidence of "non-compliance with procedures, inadequate audit trails, a lack of documentation or improperly completed documentation".
The minister's blunt statement will come as a blow to CIE and its chairman, John Lynch, who have been rubbishing the Sunday Independent's exposure of malpractice at the loss-making semi-state.
Mr Dempsey told Mr O'Dowd that there was a "serious problem" at the company in terms of procurement, and said he had expressed concern to Mr Lynch at his failure to inform either the minister or his department about the findings of the Baker Tilly Report.
The minister's statement threatens to blow the CIE scandal further into the public arena, as CIE spinners frantically attempt to downplay its significance. His response has prompted Mr O'Dowd to bring the issue to the floor of the Dail this Wednesday -- when TDs will debate a Fine Gael private member's motion about CIE.
Deputy O'Dowd will open a full Dail debate, and express the Opposition's "alarm that CIE is not subject to any accountability or transparency, including the Freedom of Information Act, the Oireachtas Public Accounts Committee or the Comptroller & Auditor General".
Last week, CIE refused to answer 10 questions about its activities put to it by the Sunday Independent. The company receives a state subsidy of more than €300m a year.
The minister has also promised to provide Mr O'Dowd with details of the semi-state's top 10 procurement contracts.
Meanwhile, the Sunday Independent has learned that Iarnrod Eireann is continuing to do business with one of the companies named in the Baker Tilly investigation as having been involved in the malpractice.
Despite ongoing investigations and damning findings from the consultants, the same company continues to win lucrative contracts from CIE. Drafts of the Baker Tilly report identify the company, but its name has been removed from the final report.
In their report, the investigators assess the actual loss due to breaches of procedure with the unnamed company alone at €1.6m over a three-year period.
The reasons for the loss include the actual cost of known or suspected fraud, loss of grant aid and the risk of litigation from unsuccessful suppliers. The report instances several cases of missing documentation -- when investigators tried to trace the trail of the tender awarding the contract to the company under scrutiny.
The Oireachtas Committee on Transport is expected to call the CIE & Irish Rail boards to give evidence in the coming weeks to answer questions about their knowledge of the Baker Tilly Report, its dramatic findings and the failure of the directors to inform the minister.
Last night, the chairman of the committee, Fianna Fail's Frank Fahey, insisted that he was determined to get to the bottom of the issue of procurement in CIE.
"We will be calling in the consultants and recalling Iarnrod Eireann chairman John Lynch and his chief executive Dick Fearn in the coming weeks," he said.
- Shane Ross and Nick Webb
Sunday Independent
