Monday 22 December 2014

Hogan in firing line on €50m water bill

Coalition tension as Brian Hayes calls Irish Water consultants' fees a 'disaster'

Published 12/01/2014 | 02:30

Phil Hogan

Environment Minister Phil Hogan is becoming embroiled in the growing controversy over Irish Water's extraordinary €50m spending on external consultants.

Tensions are mounting within the Coalition over the latest revelations, with questions being raised about a lack of transparency and the extent of Mr Hogan's knowledge.

Mr Hogan took ministerial responsibility for Irish Water away from junior minister Fergus O'Dowd after the legislation to set it up had been completed.

The Oireachtas Environment Committee's chairman, Labour Party TD Michael McCarthy, said Irish Water executives will be asked how much the minister knew of the spending when they are quizzed by committee members on Tuesday.

Irish Water boss John Tierney is under intense cross-party political pressure this weekend to explain and justify the expenditure of €50m.

Junior Finance Minister Brian Hayes described the debacle as "a PR disaster", while Tanaiste Eamon Gilmore has privately expressed concerns about the impact of the controversy on public confidence in one of the Government's flagship projects. But it is not clear how much information the new semi-state company will divulge to the Oireachtas Environment Committee.

Minister of State O'Dowd called on Irish Water to disclose a full list of the external companies it hired and the costs involved. However, Irish Water said it may not be possible to provide some "commercially sensitive" information about contracts.

Mr O'Dowd said he was not informed of the contracts as his involvement ended with the legislation establishing the agency.

The revelation throws the spotlight on Mr Hogan, who has overarching responsibility for bringing the new utility agency into operation.

Sources close to Mr Hogan insisted the minister was unaware of the spending on consultancy. While he was aware that €100m was being spent establishing the agency, he was not informed that €50m of this was being spent on outside consultants.

Mr Hogan's spokesman said: "The minister asked the Commission for Energy Regulation to examine the costs and it said they were reasonable. However, they will be doing further ongoing analysis of the establishment costs."

Public Accounts Committee chairman John McGuinness suggested the legislation setting up Irish Water had been constructed so it would not be accountable to the Comptroller and Auditor General and the PAC. He was also critical of the fact the agency was not subject to the Freedom of Information Act.

The Government, he warned, "has created a Frankenstein's cross between Nama and the HSE in terms of accountability and the rights of the citizen to know how their money is spent".

Fianna Fail environment spokesman Barry Cowen said that "from its genesis a cloud of secrecy has surrounded the running of Irish Water".

He dismissed next week's Environment Committee hearing as representing "one day out in the sun after a year where Ministers Hogan and O'Dowd have consistently refused, or claimed they are unable to answer, questions on expenditure on consultants."

However, Mr O'Dowd insisted that the legislation allowed Irish Water to be held fully accountable by the Oireachtas and parliamentary committees.

"It is open to the Dail and the Seanad to bring Irish Water into committee as often as they see fit," he said.

The junior minister also said Public Expenditure Minister Brendan Howlin had given a commitment to bring the agency under the Freedom of Information Act once it was up and running.

Mr O'Dowd said that as far as he was aware all of the external contracts had been subject to a public tendering process.

According to the Government's eTenders website, there were almost 40 individual Irish Water contracts offered for public competition since 2012. The tenders were issued by Bord Gais Eireann on behalf of the water company and included a wide-ranging search for "subject matter experts" in areas such as engineering, project management, governance, quality assurance and industrial relations.

Only five of the successful bidders have been disclosed: they were IBM, Accenture, Pricewaterhouse Coopers, KPMG, Ernst & Young and Oracle.

The agency indicated that while it was "working across the weekend" to compile a full list for the committee, there may be some contracts which it cannot reveal.

An Irish Water spokeswoman said: "We want to disclose as much information as possible, but obviously we have to have due regard for any commercially sensitive information."

Intense political pressure was being piled upon the agency this weekend.

Sources close to Mr Gilmore, in a stark warning, said: "An awful lot of money is involved here.

"We expect Irish Water will clearly justify and explain all this expenditure before the committee on Tuesday. People will not be at all happy if they do not do so."

Fine Gael junior finance minister Brian Hayes warned: "This is a PR disaster for Irish Water, the company is 10 points down in the game.

"They have to resolve this issue swiftly and in a manner that inspires public confidence.

"They are going to have to set out and clearly justify the value for money of this expenditure. This is a touchstone issue for the public. The taxpayer wants and is entitled to know how their money was spent."

The finger of blame for the PR calamity has been pointed firmly at Mr Tierney for failing to explain the range of work the company needed to outsource to external consultants when it was set up.

The bulk of the money was spent on hardware and software systems for customer services, IT, billing and asset management.

"He'll have to sort it out on Tuesday," a source said.

Meanwhile, it has emerged that a British company, headed up by a former Irish civil servant who is also on the board of Irish Water, has been advertising the Irish Water Board as being among its clients.

Irish Water is listed among "our clients" on the website of a British-based consultancy firm run by Regina Finn, who is also a director of Irish Water.

But Ms Finn, a director of Lucerna Partners, a consultancy firm specialising in regulation and public policy, said that Irish Water was not a client.

She said there was "no contractual arrangement" with Irish Water and it was merely listed she had worked with the company.

"They are not a client. On the website it lists people you have worked with," she said.

Ms Finn, who started her career in the civil service in Ireland, is a former chief executive of the British water regulator, Ofwat. She was appointed to the board of Irish Water last November and has extensive experience in the water and energy sector.

 

Shane Phelan, John Drennan and Luke Byrne

Irish Independent

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