Siptu 'slush fund' still shrouded in mystery
Committee hears evidence that suggests 'partnership had a price'
Published 10/10/2010 | 05:00
THIS time last year, Matt Merrigan's world came crashing down. And it wasn't just the Health Service Executive (HSE) audit of the peculiarly private union bank account -- awash with State funds -- which he used to oil the wheels of industrial relations. Felling trees in a relative's garden in Dublin, he fell to the ground, broke several bones and was hospitalised for several months.
Given the gravity of his injuries, it is fair to assume that the pressures of his job as a top union official with Siptu would have been far from his mind. But Mr Merrigan's serious accident couldn't have come at a worse time.
The HSE's decided to audit a curious State grant paid into a Siptu bank account in Bank of Ireland on O'Connell Street. The bulk of the €3m that sloshed through the account -- €2.3m -- was a "grant" from the Department of Health. But it has since emerged that some €790,000 was paid into the same bank account by the Department of the Environment, channelled through a low-profile local authority organisation.
While Mr Merrigan lay on his sick bed, HSE auditors probed. They found how the money was transferred to a Siptu bank account, which Siptu claimed it knew nothing about. The union's auditors didn't even know about the account, let alone the State funds that passed through it.
Mr Merrigan, and his union side kick, Jack Kelly, were the only ones with access to it. Yet HSE auditors claimed that there were scant receipts and invoices to show how it was spent.
There is no suggestion that Mr Merrigan or Mr Kelly benefited personally from what FG TD Jim O'Keeffe last week called a "slush fund for the expenditure of public money for improper purposes".
How a high-ranking, life-long union activist managed to secure such a huge whack of State funds, which were at his unique disposal for the guts of a decade, was a feat in itself. What political madness sanctioned such largesse with no strings attached, was even more curious.
At the Public Accounts Committee on Thursday -- the first public airing of the scandal -- the most pressing questions from its chairman, Bernard Allen, were who struck the deal with Mr Merrigan and why?
Not even the sombre crew of senior officials who run the health service could answer these questions when they appeared before the Public Accounts Committee last Thursday. There was no record of the payments in the Department of Health, no paper trail to show who sanctioned the grants and what exactly the money was intended for.
There seems little doubt that the deal was born out of national wage talks at the start of the decade, when a new national wage agreement had been negotiated. The trade union buzzword was 'up-skilling' -- train up low-grade workers to rise with the rest of the Celtic Tiger boats. It was a time of industrial unrest. Nurses had voted to strike over pay and work conditions. Health workers were unhappy.
A number of serving cabinet ministers were implicated at the time. Micheal Martin, the Foreign Affairs Minister, was in charge of the health portfolio until 2004. Noel Dempsey, the Transport Minister, was Minister for the Environment when similar grants were paid to Siptu through a local authority agency. And Bertie Ahern, the former Taoiseach, was of course widely regarded as among the architects of social partnership.
Mr Merrigan, whose late father was also a union leader, was one of several activists who spearheaded the union talks at the time. So how did he get control of a Siptu grant? According to the HSE audit report -- which refers to him as "Union A Employee 1" -- negotiated the grant himself directly with the Department of Health. And, he told the auditors, there were no terms and conditions attached.
The Department of Health traced the first payment of £75,000 to Siptu in 2000, another for €190,000 in 2001 and again in 2002. Michael Scanlan told the PAC that the money was to be paid directly to Siptu to fund "frontline supervisors programme", to train up nurses.
Given the sums involved, one would expect cabinet ministers to have signed off on such generous trade union payments. But ministers' signatures were notably absent from the limited correspondence that was aired at the PAC hearings last week.
Most of the sanction letters were signed by Department officials, including one nursing policy official who was left to take the flak for one of the first Siptu payments in 2001. Teresa Cody had signed a letter saying it would be "appreciated" if the (health) board could ensure the relevant amount -- about €190,000 could be paid to Siptu. Was she asked why, asked Roisin Shortall. Mr Scanlan replied: "She cannot recall."
"If substantial payments from the Department of Health and Children are being made by senior members of staff, it is not enough for the Secretary General to come along and say nobody can recall why they were made, or what their purpose was," said Ms Shortall.
Other officials were named, too. Frank Ahern, the department's director for per-formance management and development, sanctioned a €190,000 payment in 2002: Kieran Feeley, from nursing policy division, sanctioned another the following year.
In 2004, William Beausang, a principle officer in personnel, signed the sanction letter. And later that year, Bernard Carey, another senior official in health, wrote to Mr Merrigan confirming that the funding had been increased to €250,000 for "human resource/personnel development" and "management union partnerships", putting the "ad hoc" arrangements on to "a firm footing".
When the Skill programme was set up on foot of a Labour Court recommendation in 2004, the funding arrangement changed. The Skill programme was set up to train up health staff with a budget of €12m a year over five years, paid by the Department of Health and channelled through the HSE. According to the HSE auditors, once that funding was agreed, the Department decided at that point to pay the grant out of the €60m Skill funding, attaching no terms, conditions or stipulations on how the money was to be spent. There was little or no paper trail to chronicle this State-sponsored largesse.
As the auditors noted, the Skill programme was intended to spend money on training lower-paid staff. Now about €250,000 of its annual budget was hived off for a management/union slush fund.
Many of those appointed to the Skill steering committee were old hands at industrial relations, whose paths had crossed during numerous talks.
Bill Attley chaired meetings for a fee of €1,000 a pop. Mr Merrigan and the co-signatory on the Siptu bank account, Mr Kelly, sat on it alongside officials from health, finance and the HSE.
They included some officials who had dealt with Mr Merrigan and his Siptu grant. And some joined in the overseas trips, which were so generously paid for by Siptu using tax payer's money.
The HSE auditors counted up 31 foreign trips across the globe in five years, paid for from the Siptu health and local authority levy fund. Such was the dearth of paperwork about these trips that departmental investigators were restricted to interviewing staff and piecing together their recollections with what scraps of paperwork that could be found.
Several of the 31 visits, as Mr O'Keeffe observed, coincided with St Patrick's Day celebrations in the US and Australia.
From March 13 to 19, 2004, for instance, a group headed off to New York on a trip, but no one seems to remember its purpose.
On it were Mr Merrigan and his co-signatory on the Siptu health and local authority level fund, Mr Kelly; Alan Smith, general manager of the Skill programme; Bernard Carey, from the Department of Health who informed Mr Merrigan that his funding was to be put on a more formal footing; Tom Dowling from the Department of Finance, who was to join the steering committee; Frank Ahern, a former official at the Department of Health; Se O'Connor from the HSE and Larry Walsh, a director of another union talk shop, the Health Services National Partnership Forum. No one can remember the purpose of it.
Mr Smith, a former Department of Health official who retired as head of the Skill programme last year, travelled to the Australia from March 6 to 24, 2005, with another HSE official, Martin McDonald. The purpose of the trip was an "official health service management union study".
Another group of up to 18 people travelled to New York from March 15 to 22 in 2006, including Peter McLoone, the former Fas chairman and head of Impact, Bernard Carey and Frank Ahern.
Mr Smith made another "round the world" trip to Brisbane, Australia, the US and Hong Kong, in October 2008. Mr Dowling, the finance official, travelled on eight on the 31 trips. Some officials brought their spouses.
The HSE auditors couldn't shed much more light on these trips for the PAC: "The HSE did not have any real information about these trips because Siptu organised them," said Geraldine Smith, one of the auditors.
"We have no information regarding the travel arrangements or destinations relating to these trips or the purpose or outcome of and lessons learned from them."
The HSE claims that, in the absence of crucial financial information that only Siptu can access, the ball is now back in Siptu's court. Siptu is conducting is own audit and will be invited to present its findings before the Public Accounts Committee. In the meantime, it has lodged €300,000 as surety against unvouched expenses, which the union still denies is an admission of liability.
Mr Merrigan has been co-operating fully, despite his ill-health. He produced a box of papers for HSE auditors containing an "analysis of expenditure" but even he couldn't fill in some of the blanks.
The records noted €73,000 on degree courses; €30,000 on laptops for Siptu members; a €10,000 fee to a union academic; an €18,500 promotional video for Skill; €10,000 in PR material; entertainment for various delegations included meals hosted in Dublin pubs and restaurants but there were no figures available.
Former union colleagues have described him as a man who ironically had no interest in money. Which is why, one explained, his accounting and book keeping wouldn't have been the best.
One trade unionist who sat on boards with Mr Merrigan said: "He drinks tea, follows soccer and works. The inside view in trade unions is he was oiling the wheels of negotiations.
"He was able to bring managers on trips, fellow trade unionists on trips."
Mr Merrigan's may be the name caught in the headlights. But the evidence aired at the Public Accounts Committee last week raises suspicions of partnership at a price, a government so intent on keeping the industrial peace that it didn't even keep tabs on the hand-outs to trade unions.