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Council ignored damning report in paying extra €90,000 to firm

A CONSULTANCY firm was paid a further €90,000 by a council despite a damning internal audit that questioned its lavish expenses and found that some of the advice given was available for free on the internet.

A special internal report raised serious questions over Donegal County Council's payments of more than €2.4m to a London-based company, One Sigma Limited.

These concerns included why lavish spending on fine wine and first-class travel was charged to expenses -- and why almost €10,000 was paid for expenses at one point despite a lack of receipts.

The damning internal audit was completed in June 2010 but the Irish Independent has learned that Donegal County County continued to pay the firm until late last year.

One Sigma was hired to examine all aspects of work by council staff and suggest new work practices in a bid to cut costs.

The company and associated firms, headed by directors Stephen Cang and David Stroll, earned almost €3m from the council over the course of seven years between 2004 and 2011.

Mr Cang was also paid a further €483,635 in fees between 1996 and 2004. The money paid included contracts worth €2.4m, which were awarded without first being put out to tender, as required by law.

A subsequent audit found lavish expenses were paid to One Sigma to cover fine wines, first-class travel and four-star hotels. It also found some of the information paid for by Donegal County Council was available for free on the internet. However, the council proceeded to pay a further €90,000 to the company -- before finally ending payments just a few months ago.

The council now maintains it had no option but to continue paying the cash to complete the project. And it is to spend even more money by hiring new consultants to find out if One Sigma's work was worthwhile.

Mr Cang first began his work as a consultant with the council in August 1996. Between then and May 2004, he received €483,635, documents obtained by the Irish Independent show.

In April of 2004, Mr Cang and co-director Mr Stroll established One Sigma, and went on to collect €2,206,000 in consultancy fees up until the end of 2011. The council was their only client, records show.

They also received €430,000 from the council, which was paid to two other companies in which they were also directors; one provided software systems to improve efficiency at the council.

Liam Ward, the council's head of corporate services, said the authority had "no choice" but to continue working with One Sigma.

"A decision was taken in June 2010 to complete the work with One Sigma for a fixed fee of €90,000 and that work has been completed. It wasn't possible at that stage to tender for this extra work," he said.

"The council has taken a decision to commission an evaluation report in relation to the work done by One Sigma and we expect to issue a tender for that shortly."

Auditor Tony McCrossan found the initial contracts had been issued without any tendering process, breaching both Irish and EU regulations.


Mr McCrossan said he found it "particularly difficult to understand" why the council had sought Mr Cang's advice as the same information could have been downloaded for free.

He was also scathing about the expenses arrangements with the consultants, who had a written contract stipulating first-class rail travel, club-class air travel and reimbursement for all meals, hire cars and four-star hotels. This was "against normal practice", he said.

The auditor discovered one claim for €600 for wine consumed by the consultants over four stays at the Castlegrove House Hotel in Letterkenny.

Despite his recommendation in his report in June 2010 that these expenses and others totalling thousands of euro should be recouped from One Sigma, they never were.

The auditor also discovered €180,000 in payments to the company were paid in advance of work carried out, in breach of normal council policies

The Irish Independent put several questions to One Sigma in relation to their work for the county council but they offered no response.

Irish Independent