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Analysis/Comment Last Updated: Sep 12, 2010 - 10:28:00 AM


Cowen makes another “rallying cry”; Court appointed examiner seeks €425-an-hour; 18 State agencies fund 4,000 non-staff flights in 2 years
By Michael Hennigan, Founder and Editor of Finfacts
Feb 5, 2010 - 9:05:49 AM

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An Taoiseach Brian Cowen TD

Taoiseach Brian Cowen is reported to have made another “rallying cry” at a Dublin Chamber of Commerce dinner last night, while earlier in the day a court appointed examiner was seeking payment of €425-an-hour in the High Court and  the Central Bank spouse travel saga rumbled on but it was only one State agency in this perk as 4,000 flights had been paid for non-staff by 18 agencies in 2 years.

The country needed a “can-do and win-win attitude” now more than ever, Cowen said last night. “We are going to come through it. Recessions end. The question is: are we in the best position that we can possibly be to pick up? Or are we going to prolong the recession and defer opportunities because we were not prepared to take decisions that we know in our hearts of hearts that we had to take now?” He added that the lesson from recent economic history was that difficult decisions could not be deferred nor could the Government spend its way out of recession. He rejected the claim that the country’s prosperity was founded on construction alone, arguing there were many other factors at play.  Exports between 2000 and 2008 doubled he said but he did not say that no additional jobs were created in the sector and the boom was in effect powered by construction.

Talk is cheap and as we said last week, apart from the measures taken in response to the public finances implosion, the Taoiseach has nothing to say on reform.

For example, the European Commission, the IMF and OECD have repeatedly warned about the semi-monopolies in the sheltered sectors of the private sector but while Cowen calls for "sacrifices" it's business as usual for those in accountancy and law, providing undertaking services for the failed businesses of the crash.

The public sector is the biggest procurer of goods and services in the State and goes along with what are effectively fee cartels among professional services firms.

Lawyers and insolvency accountants are on a roll and the State's "bad bank" NAMA has a €2.5bn meal ticket for the big firms over the coming decade; Two civil servants run NAMA and it has already incorporated the Victorian era culture of secrecy on contracts  -- which hardly helps to promote competition and cannot be in the public interest.

Dr. Don Thornhill, the chairman of the National Competitiveness Council said last month that a lot of second-tier law firms have let people go, but he asked, have the prices charged by those firms reduced?

Even though excess fees are either paid by the State or struggling business creditors, the professional institutes have nothing to say about it and IBEC, the employer's body, is also reluctant to upset vested interests.

On Thursday, in the High Court, an examiner seeking  fees equivalent to a €884,000 annual salary for investigating the viability of the insolvent Dublin private members club Residence, was told by the High Court to re-examine his rates.

Mr Justice Peter Kelly said fees of €425 an hour sought by Jim Stafford, of Friel Stafford Corporate Recovery, were not acceptable in the current climate.

Stafford is seeking costs of €61,857, plus €50,000 legal costs, for the examinership period.

The judge questioned why five people (including Stafford) were involved in an examinership and he also queried the legal fees.

This Residence business was a small one -- just think of the bonanzas available from the bigger examinerships and collapses.

Any accountancy firm worth its salt could assess the viability of a business -- and any legal question is farmed out. So why is it a closed shop?

Apart from the approval of fees by the courts, the rest of these sectors operate in an opaque Victorian system.

Last year, the court was asked to approve ridiculous charges for staff doing photocopying.

Governor Patrick Honohan of the Central Bank said Thursday evening:“Over the period 2007 to 2009 I am informed that the Central Bank and Financial Services Authority of Ireland (CBFSAI) paid for the travel of accompanying spouses to business meetings on 71 occasions. The total cost of this was €67,450. Of these trips 62 were within Europe with an average cost of €435."

Last week a survey appeared in an appendix to  Comptroller and Auditor General John Buckley’s value for money report on training agency, FÁS, last week. Buckley’s office conducted the survey of the agencies asking for details of foreign travel undertaken during 2007 and 2008

18 State agencies from a survey of 20, reported that they paid for flights for people other than staff members. While some organisations reported that they were reimbursed for some non-staff flights, around €1.5 million incurred for 4,000 flights for non-staff members was not reimbursed.

The organisations involved are: IDA Ireland; Forfás; Teagasc; Enterprise Ireland; Bord na gCon; Tourism Ireland; ESRI; the Central Bank; Beaumont Hospital; Horse Racing Ireland; Fáilte Ireland; Údarás na Gaeltachta; Irish Blood Transfusion Service; Institute of Public Administration; Ordnance Survey Ireland; Dublin Institute of Technology; the Irish Sports Council; Science Foundation Ireland, Shannon Development and the National Treasury Management Agency.

The Dáil Public Accounts Committee has decided to contact the Central Bank requesting details relating to flights paid for by them for spouses of employees.

Committee Chairman, Bernard Allen TD said on Thursday:
“The Public Accounts Committee has jurisdiction for the Central Bank under its value for money remit, so we will be seeking the information under this heading.

The Committee will also be inviting the Central Bank to a full meeting of the Committee as part of its overall examination of the financial sector. We are due to receive the report of the Comptroller and Auditor General shortly on the Financial Regulator and as part of the overall examination of the cost of the bank stabilisation measures, the Committee will be looking at failures in banking regulation which were the responsibility of the Central Bank. These hearings will commence in April.

Furthermore, according to the Comptroller and Auditor General’s report the Central Bank was far from the only state agency which spent money on flights for people other than staff members. The report revealed that around €1.5 million was incurred for 4,000 flights for non-staff members which was not reimbursed, while business class was used for almost one-third of long haul flights and first class travel on 13 occasions.

We also intend to get to grips with what has gone on in other State agencies as well as the Central Bank.”  

They're well versed in the Oireachtas, in gilding the lily themselves.

TDs' claiming expenses of €150,000 or more annually; part-time Dublin senators have been claiming about €25,000 annually in tax-free expenses - - basically getting paid a mutiple of the cost of getting to work - - one allowance has provided €144 each day where the individual lives beyond a radius of 15 miles from Leinster House.

As to getting to grips with what "has gone on in other State agencies as well as the Central Bank,” it would be laughable, if it wasn't so serious.

This system of limited accountability, where the buck appears to stop nowhere, remains intact; Brian Cowen delivers another “rallying cry” at a Dublin Chamber of Commerce dinner; a judge has to call time on excessive professional charges; former FÁS chairman, Peter McLoone, heads a public sector trade unions' strike committee hoping for a trade on what he has termed "transformational" change  and meantime, the victims of the collateral damage from this rotten system,  struggle in silence far from the media glare.

Plus ça change, plus c'est la même chose!     

Finfacts articles:

Jan 2010: Ireland's Choice: Reform or risking status as a failed rich State

Aug 2009: The big fee "cartels" in Irish professions; Time for Ireland to change "the natural state of things"

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