State pays €11m for ‘outdated advice’ in aquatic row
THE state forked out €11m on consultants who gave outdated advice to chase a no-win €10m VAT lawsuit through the courts.
Even though the law had been changed reversing a tax break, Campus Stadium Ireland Development (CSID) spent another €1m trying to recoup construction levies from building the National Aquatics Centre.
A public spending watchdog revealed the extent of the losses run up as public servants went against what it called the correct and common sense advice of both the Attorney General and the Comptroller and Auditor General.
John McGuinness (pictured), chairman of the Public Accounts Committee, said the case should never have been taken.
"What I find most disheartening is that there appears to be no acknowledgement that mistakes were made right through the handling of this case," he said.
CSID took Dublin WaterWorld all the way to the Supreme Court in a complex tax case chasing €10.25m. It lost in 2010.
Under laws enacted in 2002 the company, which had a 30-year lease on the €74m aquatics centre, was not liable to pay a VAT bill which would only have covered the VAT costs incurred by CSID during construction.
A breakdown of the consultants' costs showed €7.84m spent on professional services and €3.04m spent on executive services from 2000-2010.
Further information supplied to the committee by the Department of Transport, Tourism and Sport in March this year showed €6m of the total was regarded as professional and legal fees and more than €1m euro for consultants.
Legal bills for the CSID lawsuit have run to €240,000 and could top €1m when Dublin WaterWorld's fees are added.
Mr McGuinness said he questioned whether the highly paid tax advisers gave value for money.
"It would seem that the best advice they got was free. Use common sense, stop. And they went along," he said.
"It smacks of following on with this just because they could and they had the taxpayers' money."
John Moriarty, chief executive of Dublin WaterWorld, said the CSID board and highly paid advisers must be called to account for a wanton waste of taxpayers' money and pointless exercise.
"CSID and the Department of Sport went all the way to the Supreme Court with unchecked access to taxpayers' money but, regrettably, with no case," he said.
The report said that the consultants hired by the state used guidelines from the Revenue Commissioners to advise on VAT rather than by inspecting detailed up-to-date tax law. Some of the Revenue's own guidelines from the time were found to be incorrect.
Mr McGuinness said the Department of Public Expenditure and Reform should review performance clauses in contracts for consultants so that under-performance is not rewarded.
"Relative to the question of the advice, that is an issue for the department to discuss," he said.
"In the private world if I paid for that advice I'd be inclined to question that and what I was paying for."
The committee called for lawsuits only to be taken if there is a value, and it called for care to be taken when legal cases are based on guidelines rather than the law.
It also said the Department of Finance and the Department of Public Expenditure and Reform should review their procedures in relation to giving oral advice especially when it is linked to a lawsuit.
Revenue has been urged to review the CSID case and also how tax reforms are incorporated into guidelines to avoid a repeat.