Spending watchdog will get to bottom of Siptu junketeering
New documents show globe-trotting Merrigan and €4.4m slush fund were out of control
It was early 2008 and controversial Siptu official Matt Merrigan sat at his desk in Liberty Hall. There, he picked up the phone and contacted some of the most senior health officials in the country, including Barry O'Brien, now one of Health Minister James Reilly's chief lieutenants in the HSE.
"Hey, there is a trip to Savannah, Georgia, in March and you're invited. The flights will be waiting for you and your wife at the airport, so just collect them when you are there," was his message.
The seven-day jaunt, from March 13 to 20, was one of six "highly inappropriate" trips over the St Patrick's Day holiday that Merrigan and his invited guests went on to the United States between 2004 and 2009.
Merrigan was one of two signatories of an unauthorised Siptu bank account relating to a fund set up in 1998 as part of social partnership, aimed at upskilling workers and union officials.
The Skill and Health Service National Partnership Forum were two of the 'collaborative arrangements' put in place to further social partnership in the health area and were the conduits for the money from the State.
But by the mid-2000s, Merrigan and his fund were out of control and nobody was paying attention or asking any questions about what he was up to.
On arrival in Georgia, Merrigan would make a cheque out to cash in order to get a sufficient amount of dollars to fund expenses for those who travelled. He also had free rein on a credit card, which, in addition to paying for all the flights, was used for hotel bills and entertainment. The bills for such largesse ultimately ran to almost €1.1m and, according to the Comptroller and Auditor General (C&AG), were totally "outside the scope of the fund's original objective".
The itineraries for these trips were more suited to the No Frontiers television travel programme than to State businesses.
It was a familiar routine for the man who himself travelled more than 40 times, who ultimately organised a total of 74 foreign trips and who ultimately oversaw a €4.4m "slush fund," as described by Fine Gael TD Simon Harris at the Dail's Public Accounts Committee (PAC).
Merrigan lived the high life across the world at the taxpayers' expense.
New documents obtained show that Merrigan travelled to New York in March 2004, again in January 2005, again in March 2006, again in February 2007, again in November 2007 – with his spouse – again in March and June 2009.
He also went to Georgia in March 2008, Brisbane in October 2008 and took five separate private trips to Lanzarote between January 2007 and July 2009, all of which were paid for on the fund's credit card.
Merrigan only later refunded the monies relating to these trips and others "where there was insufficient documentary evidence to support the business element of the trip", after gardai had begun to investigate the matter.
Recently, other trips uncovered by the Comptroller and Auditor General that Merrigan "possibly went on" include destinations such as Orlando in April and October 2007, California in early 2008, Texas in August and November 2008 and February 2009.
The new documents obtained for the first time allow us to show the full extent of the extravagance enjoyed by a small elite of 19 "of the most senior public servants", trade union officials, other health personnel and their spouses.
But more alarmingly, the Sunday Independent can reveal that on 10 trips five serving Department of Health officials and a retired official, Frank Ahern, went on the 'study trips'.
So the taxpayer was paying for a retired official – who had previously been responsible for the allocation of money to this fund from the health budget – to attend 'study trips' aimed at allowing people do their job better.
Worse still, another department official, Bernard Carey, the senior official who sanctioned the handing over of the cash to Merrigan's fund, travelled on five of the six US trips around St Patrick's Day.
Again, based on the documents obtained, we can reveal today that Mr Carey travelled to New York in March 2004 and March 2006, Boston in 2007, Georgia in 2008 and New York again in 2009 and that all trips were paid for out of the Siptu fund.
At the PAC, Ambrose McLaughlin, secretary-general at the Department of Health, defended Mr Carey's unblemished record of public service over 35 years and said no evidence had been found that merited sanctioning any of his officials.
However, members of the PAC, particularly Simon Harris and Labour TD Derek Nolan found it "incomprehensible" that no sanctions had been brought against any individual.
"I am getting fed up of things being blamed on systems," said Harris. "There were people involved here and we need to hear from them as to how this happened."
Today, we also reveal the names of civil servants, trade union officials and other personnel who were present on these trips (see panel on the facing page).
In total, 28 trips to the United States occurred; 25 to the UK; the five trips to Lanzarote; two trips to Australia in 2005 and 2008; two trips to Barcelona, both in 2008; two trips to Stockholm in 2002 and 2004; two trips to Brussels in 2005 and 2009; as well as trips to Canada in 2003; Frankfurt in 2006; Milan in 2008; Zurich in 2007; Moscow in 2004; Lyon in 2007 and Paris in 2008.
Indeed, as the country fell off the cliff in 2008, Merrigan's foreign activity peaked, with 18 separate trips occurring that year, according to the new documents obtained.
"I am lost for words," Derek Nolan said at the PAC hearing on Thursday. "This was the perfect crime. It is like events were created to justify this."
The documents also show that in total €598,000 was paid out of the fund's accounts on travel, including business-class flights and accommodation. One travel agent made €388,000, while in total €108,000 was spent, as Simon Harris said, on "wining and dining" in Dublin and across the globe in swanky restaurants.
Documents obtained show that between 2002 and 2009, Merrigan had two credit cards relating to the funds, which racked up spending totalling €335,000. Alarmingly, no bank statements relating to these cards before 2004 could be found.
Indeed, records show that payments totalling €46,000 were made to one single eatery and bar over the period.
While the foreign travel and the entertainment were clearly excessive, the Sunday Independent can reveal some other issues on Merrigan's watch.
The documents again show that 27 cheques, totalling €42,000, were made out to cash, many of which were impossible to trace, in what PAC members have suggested was a means to avoid paying tax.
Indeed, it has been confirmed that the matter is now with the Revenue Commissioners, having been referred by the C&AG. It is also subject to a garda investigation.
We have also found that cheques to enable Merrigan and his invited guests have sufficient expenses money while abroad totalled €37,000.
It has also been confirmed that only when the scandal broke in 2010 did those who had travelled with their spouses on the trips begin to refund the cost of the flights in large numbers. In total, €125,000 was reimbursed and of that, 28 refunds were made in 2010, amounting to €82,000. This compared to refunds of just €3,200 in 2007.
But, the question has to be asked – how was this allowed to happen in the first place?
But the scandal has also been the source of great tension between the HSE – the chief funder – and Siptu. They have blamed each other for failing to call a halt to the 'slush fund' much earlier.
Siptu's Joe O'Flynn said at the PAC that he found it incredible that the HSE had never sought any documentation or any review documentation when it was handing over all the money, year after year. He also accused the HSE of leaking damaging details of the case to the media when the story first broke in 2010.
While the HSE and the Department of Health certainly tried to lay the blame solely at the feet of Merrigan, O'Flynn and several members of PAC, including Simon Harris and Derek Nolan, said such suggestions were "totally inconceivable".
"I cannot simply accept that this was all the fault of one man," said Harris.
Dr Geraldine Smith, head of internal audit with the HSE, who has spent four years trying to get to the bottom of the scandal, highlighted in some detail the difficulties she had encountered in obtaining information from Siptu.
Merrigan has refused to co-operate with either the C&AG or the PAC in their investigations and has also repeatedly refused to release the €76,000 Grant Thornton report that he commissioned in order to defend himself, once gardai had begun their own investigations.
However, in a bizarre twist, the fund account, which Merrigan had intended to use to pay for the report, was frozen – yet he still assumed ownership of the report.
Siptu bosses, shocked that this fund had run for years without their knowledge, attempted to get hold of the report but ultimately agreed to pay Merrigan's lawyer €76,000 just for 'sight' of the report.
They entered into a legal agreement that they would not copy it nor reveal its contents to anyone else. O'Flynn defended this decision by saying that even obtaining sight of the report was "useful".
PAC chairman John McGuinness said it was "farcical" that Siptu did not get a copy of the report, having paid for it, and called on the union to attempt to obtain the report now. Grant Thornton failed to respond to calls from the Sunday Independent this weekend.
It has been confirmed that the PAC is to meet in private session on Tuesday to discuss with its legal adviser how to compel Mr Merrigan to cough up the report and also to get him to appear before the committee, given the serious nature of the scandal, in which he is the central player.
Another key individual who has also been uncontactable is Alan Smith, head of the Skill programme. He retired from the health service in 2009 "just as we were going through the audit process".
According to the documents and to testimony at previous PAC hearings, Smith "travelled on all of the trips".
"He would have been a close link in regard to the operation of the Skill programme from its inception, prior to being in the HSE and the Office of Health Management, but he has not co-operated with any of our investigations or indeed our details," Sean McGrath of the HSE said.
Despite the ongoing investigations, the undocumented spends of monies, the excessive trips around the world, only Merrigan has been sanctioned by Siptu.
No official in the HSE or the Department of Health has faced any disciplinary action for their involvement in the junketeering. Both Ambrose McLaughlin and HSE boss Tony O'Brien said they found "no evidence" to merit sanctioning any of their staff.
Yet again, "catastrophic systems failures" have been blamed and individuals have so far escaped punishment, but the PAC is determined to get to the bottom of it.
This saga is a long way from being over.
Revealed: 'the perfect crime' of indulgence, avarice and greed . . . all paid for by the taxpayer
By Daniel McConnell
* In total, the fund was given €4.4m, but actually spent €3.85m before it was shut down in 2010. After refunds, the staggering net cost of the "slush fund" to the taxpayer was €3.15m.
* €1.1m of the total spend, including €348,000 on marketing and promotions, €598,000 on travel and €99,000 on hospitality were "outside the scope of the fund's original objective".
* €598,000 was spent on "wining and dining" of officials and public servants and their spouses around the world. €76,000 related to airline tickets, €79,000 was spent on hotels and €108,000 on restaurants during this time.
* Those who went on trips included: Siptu officials Matt Merrigan and Jack Kelly; Aiden Brown (HSE); Michael McDonald (HSE); Barry O'Brien (HSE); Alan Smith (general manager of Skill training scheme); Larry Walsh (Health Services National Partnership Forum); Se O'Connor (HSE); Caroline O'Regan and Ann Judge (SKILL); Marian Larkin (HSE); Tom Dowling (Department of Finance); retired Department of Health official Frank Ahern; Bernard Carey (Department of Health); Conal Devine (described as an IR practitioner); Frank Kelly (Local Authority); G O'Brien (NI Disability Forum); Peter Bunting (ICTU); P Harvey (North West Health Board); and three unidentified individuals Brian Bird, John O'Dowd and Paul Donnelly.
* "Events were created" to justify such lavish spending – Derek Nolan, Labour TD and PAC member.
* Between 2002 and 2010 – 74 trips to destinations including New York, California, Australia, Orlando, Boston, Savannah in Georgia, Milan, London, Hong Kong, Brussels, Texas, five trips to Lanzarote, Frankfurt and Zurich.
* Merrigan ran up charges of €335,000 on his credit card – including charges of €46,000 to one bar/restaurant.
* Officials invited on trips often "simply had to collect business-class tickets at the airport".
* Six trips between 2004 and 2009 to the United States coincided with St Patrick's Day.
* One HSE official, Bernard Carey, who sanctioned payment to the unauthorised fund himself, travelled on five out of six foreign trips to the US around St Patrick's Day.
* Another civil servant, Frank Ahern, pictured right, travelled on several foreign "study trips" at taxpayers' expense, despite being retired.
* €583,000 was paid to 250 individuals rather than businesses for "reimbursement of expenses, education grants or the provision of services".
* €422,000 was paid in grants to trade unions, while the fund also made "bizarre" donations of €49,000 to charitable organisations including the Special Olympics. Such payments have been described as "outside the scope of the objectives of the fund".
* 27 cheques totalling €42,000 were made out to cash, many of which were not adequately documented for. The matter has been referred to Revenue for investigation by the C&AG.
* Cheques totalling €37,000 were used to purchase foreign currency, which was used to "cover expenses on foreign study trips".
* Payments totalling €58,000 could not be identified as payee names on cheques were not "legible".
* A massive spike in refunds from spouses who travelled occurred in 2010, but only when the scandal about the trips first broke. In total, more than €139,000 relating to spouses' travel has been paid back – €82,000 was paid back in 2010 alone compared to €3,200 in 2007.
* "Unauthorised Siptu slush fund" was set up by Matt Merrigan, above, with Jack Kelly (being the second signatory on the account) in Bank Of Ireland branch on December 3, 1998. Siptu claims it had no knowledge of it.
* Bizarrely, Siptu paid Merrigan's lawyer €76,000 just to see a Grant Thornton report he commissioned to defend his role in the fund, amid Garda enquiries, which Merrigan is refusing to hand over.
* "Proper books were not kept", incomplete invoices and "no evidence" that goods and services bought were procured properly.
* Most shockingly, no sanctions brought against any HSE, Department of Health or Siptu officials, despite a "catastrophic failure" in governance.
Source: HSE internal audit reports, C&AG reports and documents from the PAC.