Oireachtas Joint and Select Committees
Thursday, 9 May 2024
Public Accounts Committee
Financial Statements 2022: University of Limerick
9:00 am
Brian Stanley (Laois-Offaly, Sinn Fein)
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Apologies have been received from Deputies John Brady, Marc Ó Cathasaigh and Imelda Munster.
The witnesses are all very welcome. I apologise for the late start to the meeting but we had some unavoidable private business to deal with. I remind all those in attendance to ensure their mobile phones are on silent mode or switched off.
Before we start, I wish to explain some limitations to parliamentary privilege, and the practice of the Houses as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected, pursuant to both the Constitution and statute, by absolute privilege. This means witnesses have an absolute defence against any defamation action for anything they say at the meeting. However, they are expected not to abuse this privilege and it is my duty as Cathaoirleach to ensure this privilege is not abused. Therefore, if witnesses' statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative they comply with any such direction. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity.
Members are reminded of the provisions within Standing Order 218 that the committee shall refrain from enquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policies. Members are also reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. Furthermore, it is not the role of this committee to make findings of fact about a person who is not a Member of the Oireachtas that could impinge on their good name or reputation. I ask members to be mindful of this in their examination of the issues and questioning.
It has been reported in the media that matters related to the purchase of houses at Rhebogue have been brought to the attention of An Garda Síochána. Accordingly, we would request that members and witnesses refrain from commenting on matters that may be the subject of a live criminal investigation.
The Comptroller and Auditor General, Mr. Seamus McCarthy, is a permanent witness to the committee. He is accompanied by Ms Mary Henry, deputy director at the Office of the Comptroller and Auditor General.
This morning, we will engage with officials from the University of Limerick to examine the financial statements for 2022 for the University of Limerick. We are joined by the following representatives from the University of Limerick: Professor Brigid Laffan, chancellor; Professor Shane Kilcommins, provost and deputy president and now the designated Accounting Officer; Mr. John Kelly, corporate secretary; and Mr. John Field, director of management planning and reporting. We are also joined by the following representatives of the Higher Education Authority: Dr. Alan Wall, chief executive officer; Ms Pearl Cunningham, head of finance; and Mr. Ciarán McCaffrey, head of capital funding; and by the following officials of the Department of Further and Higher Education, Research, Innovation and Science: Mr. Paul Lemass, assistant secretary, head of corporate services and capital division; and Mr. Keith Moynes, assistant secretary, head of higher education and policy division. They are all very welcome.
I call the Comptroller and Auditor General, Mr. Seamus McCarthy, to make his opening statement.
Mr. Seamus McCarthy:
The total income of the University of Limerick group for the accounting year 2021-2022 was just over €352 million. A total of €117 million of this comprised recurrent State grants and pension funding. Academic fees amounted to €124.4 million, with 30% of this received directly from the Higher Education Authority. Research income recognised in the year was €36 million, including more than €26 million from State sources. Other operating income of €56 million was derived from a range of sources, with €20.4 million coming from the rental of student accommodation. Total expenditure of the group for the year was €341 million, and pay and pension costs accounted for €236 million of this. The group surplus for the year was €10.8 million, an increase of €2.9 million when compared with the previous year.
I issued a clear audit opinion on the 2021-2022 financial statements. The audit report was signed on 12 May 2023.
The planned development of additional student accommodation in a 20-house, 80-bed scheme at Rhebogue is disclosed in the president’s report and in the annual statement of governance attached to the 2021-2022 financial statements. The governance statement refers to the scheme being available for use in September 2023 but does not disclose the associated acquisition cost, which was likely to be a 2022-2023 transaction. The contract cost was not included in disclosure note 25 concerning capital commitments that existed at 30 September 2022. In closing out the audit, my office received formal confirmation from the president of the university confirming that all contractual commitments at the reporting date had been disclosed to us. We now know that note 25 capital commitments should have reflected a contractual commitment of €11.9 million that existed at 30 September 2022 in respect of the Rhebogue scheme.
The audit fieldwork in respect of the 2022-2023 financial statements has now been completed and the audit file is under review. There are a number of matters where my office has sought additional information and backup documentation from the university. This includes impairments that have been publicly signalled in respect of both the Rhebogue scheme and the premises at Honan’s Quay in Limerick city centre acquired by the university in 2019. When that additional information has been received and reviewed, I will be in a position to clear the financial statements for certification.
Members may also wish to note that I am preparing a report under my value for money remit in relation to the purchase by the university of the premises at Honan’s Quay and the houses at Rhebogue. I began the examination because of the difficulty that arose with the publication of the report by KPMG of its investigation into the city centre premises purchase. We planned to review the Rhebogue acquisition, expecting that lessons learned from mistakes in the Honan’s Quay purchase had been properly applied in later major acquisitions. In the event, this has turned out to be a complex and evolving story which potentially has significant implications for the 2022-2023 audit. A draft of the value for money report is currently with the university for comments. My plan is that the report will be finalised in the next six to eight weeks.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Thank you. Professor Kilcommins and Professor Laffan have five minutes to make their opening statements. I understand Professor Kilcommins is the lead speaker.
Professor Shane Kilcommins:
I am the provost, deputy president and acting chief officer. I am joined by the chancellor of the university, Professor Brigid Laffan, John Kelly, corporate secretary, and John Field, director of management planning and reporting. We welcome the opportunity to address the matters outlined in the committee’s correspondence.
Our staff, students, regulators, academics and business affiliates, and, of course, this committee, are justifiably shocked about what has emerged in regard to Rhebogue, coming as it does immediately after a poorly executed deal to buy the former Dunnes Stores building. There is sadness and anger, too, at the damage the Rhebogue controversy has done to the reputation of the University of Limerick, UL. We are in the media for all the wrong reasons. There are fears that UL's fine achievements, built upon the successes of students and staff, are being undermined.
As the person leading today's delegation, I want to say I am deeply sorry for what has happened. This acquisition should never have been allowed to progress. Although there are a number of internal and external reviews and investigations in train, we intend to be as open as we possibly can. I will set out the summary of events, after which we are happy to deal with members' questions.
Regarding Rhebogue, we provided to the committee the fact-finding review undertaken by Ms Niamh O'Donoghue. In summary, it found gaps in due diligence, non-adherence to UL policies and procedures, shortcomings in information presented to decision-making committees, inappropriate valuations, contractual changes made without approval and issues with planning permission. In late 2021, a representative of a developer approached the chief corporate officer with a proposal that purported to help address the accommodation crisis. Rhebogue, which had planning permission for 20 houses, was offered as a potential solution and was considered potentially viable. The proposal involved the adaptation of the houses to maximise the number of bedrooms. The project sponsors were the chief corporate officer and the chief financial and performance officer.
Not everyone thought the Rhebogue acquisition was a good idea. Those who were of that view conveyed their concerns and objections to the project sponsors. Notwithstanding that, the sponsors progressed the project and it ultimately came to the governing authority for approval. On 3 August 2022, a presentation was given to the governing authority in support of the proposal and, following discussion, it was unanimously approved. It has since come to light that key information necessary to enable the governing authority to make an informed decision was not provided, including vital particulars on planning risks, valuations and funding models. The governing authority was also given to understand that key individuals were part of the team and were fully supportive, but this was not the case. A planning warning notice has since been received outlining Limerick City and County Council's views on the use of the houses as student accommodation. A reply was provided and the matter is with An Bord Pleanála.
After the deal concluded, a stamp duty liability emerged. This increased the net cost of the houses, requiring UL to assess the carrying value of the assets. The valuation is subject to sign-off by UL's external auditors but the indications are that it will result in a significant financial impairment in the order of €5.225 million. When the stamp duty issue and a discrepancy in the approved purchase price emerged, the governing authority immediately referred the matter to the audit and risk committee, ARC. A fact-finding review was commissioned. It identified a series of shortcomings in the due diligence process around the acquisition. There was, in effect, an override of management controls. Concerns expressed about the acquisition were not adequately considered. All these matters now form part of both the internal and external reviews by the governing authority and the Higher Education Authority, HEA.
Regarding the city centre campus, the committee asked at a previous hearing whether UL overpaid for the former Dunnes Stores building. The answer is "Yes". An impairment review has also been carried out and the impairment figure is €3.04 million. UL occupies the building in collaboration with Limerick City and County Council. In time, it is hoped the new city campus will help to realise the potential of Limerick's world-class waterfront project plan.
On culture and accountability, the Rhebogue acquisition has brought issues of organisational culture to the fore yet again. It also shows that steps taken since the city campus purchase have not addressed some core governance issues at UL. Organisational culture must be a key focus for UL to return to the positive and supportive environment that was once pervasive. Members will have read the KPMG report last year and will be aware of the commitments given to our stakeholders, including this committee, in 2023. It must be acknowledged, given what has happened with Rhebogue, that those commitments do not bear up to scrutiny. The governing authority has engaged fully with the HEA in regard to the review undertaken under section 64 of the Higher Education Authority Act 2022. UL will be subject to intense scrutiny for some time arising from Rhebogue, and justifiably so.
As chair of this delegation, I offer my assurance to the committee and our other stakeholders that we are confronting the issues and working tirelessly to address them. I can only ask members to take these assurances at face value in order that we can later evidence to the committee the changes that will be made. The University of Limerick is a fine institution. It is a young, energetic and enterprising university with a proud record of innovation in education and scholarship. In terms of meeting our core objectives, we face many of the same challenges as our contemporaries. Overcoming these challenges and building our institutional profile, with the support and oversight of our stakeholders, should be UL's focus. No matter what the surrounding circumstances, a university should never do anything that could jeopardise its academic reputation and standing. The chancellor has emphasised that, in addition to reform, there must be accountability for what occurred to ensure it never happens again.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I thank Professor Kilcommins. I invite Professor Laffan to make her opening statement.
Professor Brigid Laffan:
I became chancellor of the University of Limerick on 2 November 2023, just before Christmas, following a unanimous decision of the governing authority. I was one of the founding members of the institution. I began my studies in Limerick in 1972 and I held my first academic post there. The University of Limerick matters a great deal to me. It was transformative of my life. When I became chancellor, I was looking forward to giving back to the institution and bringing to bear my 46 years of experience in higher education nationally and internationally. However, the chancellorship has been very different from what I anticipated. It has been dominated by capital acquisition matters, namely, the legacy issues of the Dunnes Stores purchase and the Rhebogue acquisition.
At my second meeting of the governing authority, a memorandum came to us highlighting a potential stamp duty liability on a capital acquisition of houses in Rhebogue, which was a place of which I had never heard. There was also a difference between what the governing authority understood was paid for that acquisition, which was €10.9 million, and the actual contract price of €11.4 million. In addition, a subsidiary of the university, PCC, which handled student accommodation, had received a warning letter regarding planning on 13 December. The governing authority was not informed of this. In my view, that was a serious omission.
As outlined in my written submission, deep concern was recorded in the minutes of that meeting about due diligence and whether the policy for the acquisition of new property, buildings, land and infrastructure was passed. There was concern about the apparent high price of the buildings acquired. We understood immediately, given the sensitivity of the Dunnes Stores purchase, that we had to act. We asked the audit and risk committee of the governing authority to look at the acquisition immediately. We did not even wait half an hour. We did it immediately. It became very clear to the ARC that it needed to do an end-to-end review of the Rhebogue acquisition, including the decision gates, what happened and how it happened. We were updated at every meeting. There was no delay in terms of how the governing authority handled the response to the acquisition.
Parallel to that, there was also an impairment review, which was necessitated by the requirement to look at the carrying value of the Rhebogue acquisition. The impairment review came out with a draft impairment figure of €5.2 million, which is a very large quantum. As a university professor, I know what €5 million can do in a higher education institution. Both the impairment review and the fact-finding review undertaken by Niamh O’Donoghue came to the governing authority on 28 March. Two days before that meeting, I received from the HEA a letter that no chancellor of an Irish university wants to receive. In the letter, the CEO of the HEA said, "I am writing to communicate to you my deepest concerns in relation to the governance and culture of the institution and the potential impact on the reputation and financial stability of the University." As I said, this is not a letter any chancellor of an Irish university ever wants to receive. We are working with the HEA. Under its terms of reference, we will undertake a section 64 inquiry, on which work has already commenced.
The events of the past two months have generated deep concern and anger among the campus community. I met with 750 members in person and another 500 online on Easter Thursday. That engagement was a symptom of just how important this issue is within the university. UL finds itself once again in the glare of adverse publicity. There are major trust issues within the institution, with our stakeholders and, of course, for this committee.
I emphasise that the problems in UL do not arise from its core academic mission or the academic programmes of the institution, and I say that as a seasoned academic. Between the time the university bought Dunnes Stores and the Rhebogue acquisition, 19,000 students graduated from the university with fine degrees and fine academic credentials. Those students are now working in the region, in Ireland and abroad. They are paying taxes and contributing to society. We have to remember that those students matter and make sure their credentials are upheld.
I will not ask the committee to trust us or tell it that there is no need for deep change within UL. Today, I want to convey my determination and the determination of the governing authority to ensure that UL emerges from this as a stronger, better governed institution. I want the committee to judge us by our actions and results. I will not ask it to trust us. It should monitor and verify what we do. Only by doing and changing can we regain the reputation necessary for UL and the trust of the university community, its students and stakeholders and all the members of the committee. We are happy to answer questions. We need to bring the university to a safe harbour because it has been a difficult time for the 20,000 people on that campus, comprising 2,000 staff and 18,000 students. We need to be cognisant of them.
Brian Stanley (Laois-Offaly, Sinn Fein)
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The first speaker is Deputy Devlin. The committee will take a break a little later perhaps. We will try to get the first round of questioning done first.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I thank the witnesses. As it happens, for the 2020 financial statements we engaged in May 2022 and I was the first speaker in that engagement, too. Some interesting questions were asked then and some interesting answers given at that point. It appears we are still none the wiser from both opening statements from UL. We are not through it. There still seem to be more questions than answers. Today will be important for us to try to get to the bottom of where things are at. I will start with what the Comptroller and Auditor General said in his opening statement around note 25 and the non-disclosure of the acquisition costs. How did that come about? How was it discovered by his office in the auditing of the accounts?
Mr. Seamus McCarthy:
At the time the audit was carried out of the 2021-22 financial statements, we looked at the capital commitments. UL provided a schedule. The figures made sense, but we were not aware of the contract that had been signed for Rhebogue or the terms of that contract. It was not included on the schedule, but it should have been.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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The Comptroller and Auditor General may not be aware of it, but perhaps Professor Kilcommins will. Was Professor Kilcommins aware of that transaction at that point?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Had it come before the governing authority?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Of 2022. How long has Professor Kilcommins been with the university? I know he has not been in this particular role for the whole period.
Professor Shane Kilcommins:
I have been in the university since 2014, originally as a professor in the school of law. For a year and two months I was dean of the faculty of arts, humanities and social sciences and I took over as the chief academic officer, provost and deputy president on 1 July 2022.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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The chancellor alluded to the morale of staff. Given that Professor Kilcommins has been with the organisation for ten years, has he seen a change in morale and the operation of the university during that decade?
Professor Shane Kilcommins:
Having worked in the school of law for seven years and the faculty, my feeling on the ground when I worked there was that there was a strong culture with colleagues. There was a real sense of service to the university among staff and a strong sense of contribution and the life-enhancing opportunities the staff were providing through the institution. One of the things that is becoming apparent, however, and will be apparent to the Deputy is that, with respect to culture, the trust in the senior management is low among staff. That is so for a number of reasons, including the fact that repeated governance issues have come up since 2015. We saw it in the Deloitte report, the Mazars report of 2016, the "Prime Time" TV programme in 2017, the Thorn review of the same year, the 2018 report of the Comptroller and Auditor General and the issue of the Dunnes Stores site that arose in 2019. It has been repeated and that undermines trust in the institution and in the leadership of the institution. That goes right up to the Rhebogue transaction in 2022.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I do not know whether Professor Kilcommins can comment on it, because I am sure other investigations are ongoing, but how could it happen that such a sizeable acquisition was not recorded in the accounts? The governing authority was aware of it but it was not contained in the financial accounts.
Professor Shane Kilcommins:
The governing authority approved it on 3 August so it was there. The Deputy asked how it occurred. There are a number of reasons. The first key issue is how this was framed. It came from the chief corporate officer and the chief financial officer in the university, who presented this proposal as executive sponsors. They presented it through the process to the executive committee on 16 March at an early stage of the proposal. On 21 March it went to the subcommittee of the governing authority, again at a relatively early stage of the proposal. Ultimately, it came to the executive committee on 29 July where it was approved and then to the governing authority.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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How is the executive committee formed? Who is on it?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Following on from that committee meeting, the committee made a recommendation to the governing authority.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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At the last engagement with UL at the Committee of Public Accounts, which I believe was in May 2023, assurances were given about property acquisition. It was stated that a new policy was in place to ensure the issues around the Dunnes Stores site could not happen again, that lessons had been learned and so forth, yet the Rhebogue site did not seem to follow any new policy. Is that correct?
Professor Shane Kilcommins:
The Rhebogue transaction can be in many respects contrasted with the Dunnes Stores acquisition. I ask the Deputy to bear with me for a moment because it is a good question. The Dunnes Stores site transaction had a number of failings. One was that no policy or procedure was in place. There was no engagement with the director of building and estates or the building and estates team. The proposal came in late. A full appraisal of that proposal was not done. As I said, there was no engagement. The relevant due diligence was not done. It arrived very late onto the table of the governing authority and was approved in those circumstances.
The contrast with this transaction as it was presented is that these controls were in place. There was a property acquisition policy which to begin with had executive sponsors who had oversight of the project. Engagement with building and estates, finance and the legal division was needed and the report had to be presented to the governing authority and executives.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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The assumption was that all this was done.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Was there almost a rush to get this done?
Professor Shane Kilcommins:
The process as to how this was presented, which comes from the review as well, shows that it was done, but in a way that was unusual. The process used was that meetings were often called late. Informal meetings were being used. The first executive meeting of 16 March was an informal meeting. An executive, but informal, meeting would not be agenda led. It would be to discuss issues that may come up.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Were minutes kept of informal meetings?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I know we are getting technical, but are minutes of an informal meeting brought to a formal meeting of the executive?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Yet draft minutes were created.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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From the time of its inception in January, at what stage was the contract signed or approved?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Eight months.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I will come back to Professor Kilcommins. There are various reports, investigations, or whatever he would like to call them. Let us call them reports to be polite. They are from Deloitte, KPMG and Mazars. There is also the Thorn report and the current report from Ms Níamh O'Donoghue. I am dizzy with the number of reports that have been conducted within UL. I do not know who from the HEA wants to take this. From its perspective there is a litany, year after year, of different investigations for different reasons. Is there not a red flag here? Did it not go up a long time ago, and what is being done about it?
Dr. Alan Wall:
I agree with the Deputy. If he gives me time, I will outline why we are where we are. After the 2021 PAC an issue about Dunnes came up which we did not know about. After that we spent a long period engaged with the university on its rules and regulations. There was the KPMG report that we were worried about. It was hard to get parts of the KPMG report.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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We had engaged on that.
Dr. Alan Wall:
We worked for about one year to help them to get a process in place for that. There is something that has never been made sufficiently clear to the PAC and I will take a moment to do it now. When the Department puts us in funds to give to a university for a project, the Department, under the public spending code, is the approving authority. When we give that money for a project, we do a massive amount of due diligence. The approving authority requires us to give it clarity and assurances around that. When we do not put it in funds, but the university decides to buy land or property of any sort, under the Universities Act it does not have to tell the HEA, the Department or the Minister. It is entitled to do that under the Universities Act.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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It is autonomous.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I have got that.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Except of course in the situation we are facing now.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I have two minutes but go ahead.
Dr. Alan Wall:
I beg the Deputy's pardon. What we addressed in the Dunnes issue was the governance gap between what the governing authority and executive did when it decided to buy its own land, and how it informed us of that. We used the new Act to create 14 touch points they had with regard to Rhebogue where they could have told us. We rely on assurances. The authority has the autonomy to do this, but the autonomy comes with a price. It is a public body and is obliged to stay within the public spending code.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Absolutely.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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How often does the HEA engage with UL?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Did that not change, given this litany of reports? Did that not change, even from 2015? Let us go back to that report from Deloitte. Even from that, did the HEA not say that this university may need a monthly meeting?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Was it monthly?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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But Dunnes was earlier, in 2020.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Let us go back to Deloitte.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I will just ask the questions. From 2015, into 2016 with the Mazars report, and up to 2019 with the KPMG report, there are different reports year after year for different issues. Did the HEA not decide there was a problem in UL? Different personalities had come through the doors, yet the problems persisted. Did the HEA not say it had a problem there, regardless of the spending code?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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What did it do?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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When did the new Act come in?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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What about prior to 2022? Let us forget 2020, 2021 and 2022. Prior to that in 2015, five years earlier, did the HEA not act quicker?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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It is not personal.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I am talking about the organisation. Did the HEA, which is charged with good governance, not say from 2015 that it will have more than a quarterly report and casual engagement with the University of Limerick?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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With the Chair's permission I have one more question. During my last engagement in May 2022, I asked Mr. Moynes, "Would the Department not have a view on the process undertaken, given the fact that it is State money and given how the site was acquired?" The site I enquired about was the Dunnes Stores site. We are now talking about the Rhebogue site, and his response to me at the time was that, "There is a governance process in place between the HEA and the university. We have paused funding while we await the KPMG report". The same question applies to the HEA. This is a new Department looking specifically at higher and further education. First, what has it done to liaise with the HEA? Second, what has it done after reading countless newspaper reports, and the reports - all from UL - with which at this stage you could probably paper the walls of the Department?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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There still seems to be.
Mr. Keith Moynes:
The HEA now has powers, and it is exercising them. That is what the position has now been brought to. It is using the powers to seek the review and it has a range of powers escalating from that to take action on foot of that. The HEA did not have those powers before the 2022 Act and that was the big issue. We had autonomous institutions, which we relied on assurances from, but we lacked the powers to intervene where those assurances-----
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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My observation to Mr. Moynes is to say that between the HEA and the Department there seems to be a kind of attitude of, "It was not us". Forgetting the new legislation of 2022, there is a serious failing between the two organisations given that there is a litany of reports from 2015 onwards. It seems that the Department funds the HEA. The HEA funds universities. This particular university has had a litany of issues and yet nobody seems to be able to say they spotted this, they intervened early on and some of this could have been thwarted.
Verona Murphy (Wexford, Independent)
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I say to Mr. Wall that was a somewhat a concerning engagement.
All I can say is that it brings to mind the expression, "A poor workman blames his tools." I will leave it at that.
I want to deal with the Rhebogue acquisition. I am concerned on a number of fronts. I realise we do not have present all the actors we previously engaged with but I certainly remember robust engagement, particularly with regard to the purchase of the Dunnes Stores site. What is concerning is that the matter at hand is a hundred times worse than that. Bearing in mind the amount of engagement and, as my colleague said before me, the number of reports that emanated because of poor governance in the purchase of the Dunnes Stores site and the deficits that occurred from valuations, UL finds itself in a much worse position. I do not even have words for it. How was it possible? Who was responsible for not understanding stamp duty was to be paid as part of the transaction? How did it become a surprise to anybody engaged in this that stamp duty was to be paid? How did it just fall out of the sky? My understanding is-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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Mr. Kelly, the corporate secretary, might take that.
Verona Murphy (Wexford, Independent)
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Mr. Kelly possibly. My understanding is that the title is “chief commercial officer”.
Verona Murphy (Wexford, Independent)
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At the point of time in question, what was the remit?
Verona Murphy (Wexford, Independent)
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A broad portfolio, but those building estates would have had an understanding that stamp duty was required in any transaction.
Mr. John Kelly:
Certainly. I think the issue – obviously, there is a financial element to this – is that the university is a registered charity, and registered charities are exempt for the purposes of stamp duty. However, there was an amendment to the Stamp Duties Consolidation Act that brought into scope purchases of ten properties or more. If a body were to buy ten or more properties, even if it was a registered charity, a stamp duty liability would attach to the purchase. I do not believe that was appreciated as the due diligence was going forward. It emerged subsequently, at a later point in respect of the contract.
Verona Murphy (Wexford, Independent)
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Was it brought to the attention of the governing authority?
Mr. John Kelly:
I do not think it had been realised at the point at which it was brought to the governing authority. It arose subsequently, and that, in fact, is what brought to light many other shortcomings with the transaction, including the fact that the purchase price approved by the governing authority, €10.9 million, was in fact €11.9 million because stamp duty applied at 10% of the purchase price. That is really what triggered the chancellor’s review.
Verona Murphy (Wexford, Independent)
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Did that invalidate the contract, or did it go back to the governing authority for reappraisal?
Mr. John Kelly:
It did not invalidate the contract because the contract drafted subsequent to the governing authority’s approval was correctly drafted from the perspective of the solicitors acting for the university. They drafted according to the instructions they were given, which were for a contract worth €11.9 million. There was reference in the presentation given to the governing authority to a rental agreement, with rent to be paid in tranches in parallel with the tranches to be paid for the Rhebogue development. However, when the contract was drafted, rent was treated as capital. There was actually no rental agreement in place. The contract effectively treated rent as capital, adding a further €1 million to the cost of the properties. The governing authority approval was for €10.9 million, not €11.9 million.
Verona Murphy (Wexford, Independent)
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Again, I do not know. Could Professor Kilcommins tell us where the process, as outlined at the previous committee meeting and in all the reports, failed, thereby bringing us to this point?
Professor Shane Kilcommins:
It failed on a number of levels. To begin with, it failed in terms of how it was framed. It was presented by the chief corporate officer and chief financial performance officer. A template document was used and it indicated that the university team, which included finance, legal, and building and estates, were part of the team. What that did not disclose at the outset was that the team was raising issues, including the point the Deputy just made, namely the stamp duty issue. The director of buildings and estates highlighted very early on in this process the fact that stamp duty needed to be looked at in respect of it. The initial point concerns how the transaction was framed. It was also framed as and titled student accommodation and it was benchmarked in the presentation in terms of bedrooms and cost per bed. It was benchmarked against other institutions, including DCU, UCD and Maynooth, accounting for what it would cost to build on campus. The presentation, as presented, indicated €136,000 per bed. To build on campus, the suggestion was that it would be €150,000 per bed, and then there were the benchmarks I talked about in respect of other institutions. The first point concerns how the matter was framed.
Verona Murphy (Wexford, Independent)
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Framed by whom?
Verona Murphy (Wexford, Independent)
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Who else in addition to the chief corporate officer?
Verona Murphy (Wexford, Independent)
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Was that revisited at any point? It was framed in that regard and I understand it was passed to move to the next level. It was accepted as a proposal.
Professor Shane Kilcommins:
And moved through the levels, from the preliminary executive meeting that Deputy Devlin discussed to the finance subcommittee. It was mentioned that there was an initial discussion at that point. It was suggested that it would come back for fuller discussion and appraisal. Then it moved to the governing authority. I am referring to the presentation. There was the executive involvement first, on 29 July, and then it moved to the governing authority.
Verona Murphy (Wexford, Independent)
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For that sequence of events to have occurred, there had to be a misrepresentation of what had occurred prior to moving to the next step. If Professor Kilcommins is saying it was suggested that there should be further discussion, it indicates nothing was agreed and that it was to be revisited. However, Professor Kilcommins is telling me it went to the next step, to the governing authority, for approval.
Verona Murphy (Wexford, Independent)
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After the governing authority meeting?
Verona Murphy (Wexford, Independent)
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That is my point. There had to be some misrepresentation, such that what has been alluded to was not minuted and that the matter proceeded to the governing authority without being revisited. Maybe Professor Kilcommins is not aware of whether it was minuted in that regard.
Verona Murphy (Wexford, Independent)
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Out of how many?
Mr. John Kelly:
Six out of 11 were not there on the day. Therefore, it was a much smaller meeting. I understand it was chaired by the chief corporate officer, but I would need to check that. A very small number of people initiated the process. The president, for example, was not present at the meeting, nor was Professor Kilcommins.
Verona Murphy (Wexford, Independent)
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Who convened the meeting?
Verona Murphy (Wexford, Independent)
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Would it have been normal for the president not to be present or not to convene the meeting herself?
Mr. John Kelly:
It is not necessarily unusual to have somebody deputise for the president. Generally, the most senior officers in the university would take the initiative in that regard. However, what was somewhat unusual, or very unusual, was the nature of the meeting and the matter up for discussion, which was a property acquisition potentially costing €11.9 million, as we know now, or ultimately €11.4 million. That would be an unusual occurrence.
Verona Murphy (Wexford, Independent)
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I would imagine that nothing was progressed in this way ever, never mind in UL, to be honest.
I do not have much time, so I want to come back to the HEA on this. I understand what Dr. Wall has said about the approving authority being UL. At some level, the HEA must have been aware of this transaction.
Verona Murphy (Wexford, Independent)
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Is that because the HEA did not inquire?
Verona Murphy (Wexford, Independent)
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What is the stance on those assurances now?
Verona Murphy (Wexford, Independent)
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Dr. Wall will have heard the expression about closing the door when the horse has gone.
Verona Murphy (Wexford, Independent)
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Dr. Wall does not accept that.
Verona Murphy (Wexford, Independent)
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I thank the Chair. My time is up.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Dr. Wall can complete his point.
Dr. Alan Wall:
I am defensive about it to some extent. I can see how it looks, but the university was not aware that there was an issue with Rhebogue until December. In January, we wrote a letter stating that we wanted to review how it had implemented the policy. We did not go after Rhebogue; we went after the policy. In March, we wrote a section 64. In April, we were down there for three days agreeing a tender reference which goes deep into the culture.
Verona Murphy (Wexford, Independent)
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A red flag was raised in August 2022.
Verona Murphy (Wexford, Independent)
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We are dealing with taxpayers' money, or Dr. Wall is.
Verona Murphy (Wexford, Independent)
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The flag was raised when the Dunnes site was purchased. It looks like the HEA took its eye off the ball.
Dr. Alan Wall:
It was exactly the opposite actually. There are two and a half pages - the Chair will have a copy - detailing the engagements we had with the University of Limerick around what happened post Dunnes, KPMG, the spending code, getting assurances from the chancellor, the president and the head of audit to say that a new way of being had been agreed on how it purchased property. That was an intensive engagement over 18 months. It was much longer. To be honest-----
Verona Murphy (Wexford, Independent)
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What was the oversight?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Could Dr. Wall conclude his remarks? Deputy Kelly wants to ask his questions.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Is Dr. Wall finished?
Alan Kelly (Tipperary, Labour)
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To be honest, the O'Donoghue report reads like a script for a miniseries. I am not kidding. It is like a script for a miniseries on Netflix because there is so much in it, and it comes from way out of left field as well. I live very close to UL, even though I am from Tipperary, although some of the Limerick TDs probably live closer. I have been in and out of the Committee of Public Accounts since 2016. The concern here is that lessons have not been learnt. I will come back to Dr. Wall with a question because I am a bit concerned about what I have heard.
We are talking about a scenario whereby there were no checks and balances in place in regard to the original proposal, the valuation, the final purchase price, stamp duty, planning and an agreement to pay rent. I have bought two houses in my life. There was a checklist involved. This is the University of Limerick. It is incredible.
Here is the first question. The chief corporate officer's title keeps coming up. Why is he not here?
Alan Kelly (Tipperary, Labour)
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Was that individual not the person who proposed this?
Alan Kelly (Tipperary, Labour)
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I have gone through the list of dates of various meetings, both formal and informal, at a governing and executive level. Did Professor Kilcommins ever express concerns about this project at any of these meetings?
Professor Shane Kilcommins:
I did not express concerns. I was on the governing authority and the executive. It was my first governing authority meeting. At the time this went through, there was a 22-page presentation. It was unanimously approved. I did not express concerns until the day after the meeting of the Committee of Public Accounts last year.
Alan Kelly (Tipperary, Labour)
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Did anyone else express concern at an early stage?
Professor Shane Kilcommins:
As an example, on 8 March 2022 – this is six weeks into the project, and we should bear in mind that the proposal came in on the 24th – we had the director of management, planning and reporting, who is with us today, raising concerns in a memo about the public spending code, ensuring that there was not a premature commitment-----
Alan Kelly (Tipperary, Labour)
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Was there anyone else?
Alan Kelly (Tipperary, Labour)
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What happened when those concerns were raised?
Alan Kelly (Tipperary, Labour)
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Professor Kilcommins must remember that there are thousands of people watching this meeting. All of these eminent individuals, including the solicitor, expressed concerns and the project still moved forward. How did that happen without somebody at a very senior level acknowledging that all of these people had concerns and asking if they should not re-examine the matter?
Alan Kelly (Tipperary, Labour)
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I read that.
Alan Kelly (Tipperary, Labour)
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To anybody looking at this objectively, it is utter madness. We have four or five eminent people, probably more, at different times basically saying they have concerns in respect of what was happening. Two external reports stating that there were issues in relation to valuations and other issues came in, and yet the project still proceeded to the next level.
Professor Shane Kilcommins:
It continued to move forward through the meetings we talked about earlier. There was an informal meeting. Then, as I said in response to the question Deputy Verona Murphy asked, it went through the finance sub-committee, but with a request that it would come back because it was at a very preliminary stage. One of the controls that was introduced post the deficiencies in the Dunnes purchase was a template document for the governing authority. The inference was that the team we talked about that was raising concerns was part of the team that was supporting it.
Alan Kelly (Tipperary, Labour)
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It almost comes across from Professor Kilcommins last statement that the series of meetings moved this to the next level. There was almost a manufacturing process.
Alan Kelly (Tipperary, Labour)
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I am just summating that from the evidence Professor Kilcommins has given to all three of us. Would that be a fair assumption?
Alan Kelly (Tipperary, Labour)
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They were being bypassed.
Alan Kelly (Tipperary, Labour)
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It is the same thing.
Alan Kelly (Tipperary, Labour)
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That is startling evidence. I have been at this for a number of years and that is startling evidence.
Alan Kelly (Tipperary, Labour)
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I know. That is why I said it is like a soap opera or a miniseries.
Was there an attempt at any stage in recent years to change the role of the chief corporate officer?
Alan Kelly (Tipperary, Labour)
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I ask that in light of the concerns Professor Kilcommins has outlined.
Alan Kelly (Tipperary, Labour)
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What happened?
Professor Shane Kilcommins:
The post changed in October 2021. He was previously the director of human resources He was then appointed to this chief corporate officer role. That included human resources, but also corporate strategy and corporate governance. In addition, in the January he took over building and estates and the-----
Alan Kelly (Tipperary, Labour)
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I am not getting into the individual's name or anything like that. I am just basically asking whether, given the concerns Professor Kilcommins outlined in regard to the meetings, anyone said that there was a need to reorient - perhaps more than just one role - or rejig roles? Was there any attempt to do that?
Professor Shane Kilcommins:
I did that after the Committee of Public Accounts meeting last year. I came back and one of the suggestions that I had very quickly was that having controls and building and estates in the same portfolio made no sense and that the two needed to be separated. There was agreement on that. The role changed then.
Some of the functions, in particular the control functions around corporate strategy, corporate governance and so on were moved-----
Alan Kelly (Tipperary, Labour)
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To a separate-----
Alan Kelly (Tipperary, Labour)
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I find it hard to understand but, reading the documentation, I can see how the bypassing-overruling manufactured meetings argument takes place but it is still the governing authority that has to make the final decision. The governing authority cannot be overruled or bypassed.
Alan Kelly (Tipperary, Labour)
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When the €10.9 million became €11.9 million, did that not go back to the governing authority and did somebody not say "Hold on a second, what's going on here?"? I know what was passed by the governing authority was €10.9 million.
Alan Kelly (Tipperary, Labour)
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I saw that.
Professor Shane Kilcommins:
-----and 25%, 45%, 65%, 85% and then 100% returning to the university. This matter was raised afterwards. That in total brought it to €11.97 million. As the O'Donoghue review noted, that was a very unusual way to present it. Subsequently, a supplemental agreement was signed on 2 August 2023. What that did was to reduce that total cost of €11.97 million to €11.4 million with the agreement that it would be paid as a balloon payment all at once. That did not come to the governing authority.
Alan Kelly (Tipperary, Labour)
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That is incredible. So essentially, after finding out that there was an excess of €1 million to paid, which was then cut in half or a bit more than that, that balloon payment never went through the governing authority. The going around or going over continued to that level. Would it be fair to say that?
Professor Shane Kilcommins:
The significance of that is that when the contract was agreed on 4 August - the original governing authority approval - the agreement was that there was a deposit of €10. Obviously, it is specific performance and a contract is still in place. What it meant was that the university did not have to pay until the completion of the project, which occurred in October 2023. The supplemental agreement ensured that it was all paid at once. That was very significant because our ability to question the payments, particularly on planning, the issues that were arising-----
Alan Kelly (Tipperary, Labour)
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It was all in one.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I have a question about the position of chief corporate officer. That position has been there for a number of years. Has the same person occupied the position and if so, for what period of time?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Which of the witnesses present were also here the last day?
Brian Stanley (Laois-Offaly, Sinn Fein)
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From the answers that are being given, it would seem that the chief corporate officer would have had a central role in negotiating all of this and much of the work around it but that person is not here today, so we will give that person the benefit of the doubt. On the last day, that person was not here because we were told they had a long-standing commitment and were unavoidably absent. Is that correct?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Professor Kilcommins was provost at that stage.
Professor Shane Kilcommins:
I was provost at that stage. I still am. I was speaking on that issue. The chief corporate officer asked whether I would also speak on Rhebogue and I was happy to do so in good faith. I was told by him that, as the executive sponsor, he did not want to come because there was an investigation ongoing into the transaction.
Brian Stanley (Laois-Offaly, Sinn Fein)
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That is not what we were told.
Brian Stanley (Laois-Offaly, Sinn Fein)
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That is not what the committee was informed. The committee was told he was unavoidably absent due to a long-standing commitment.
Professor Shane Kilcommins:
It is exactly as the Cathaoirleach said. At the meeting that day, it was suggested that he had a long-standing commitment. I was surprised because I had been told differently. I came to speak on the Rhebogue transaction because he could not attend for the reasons he gave me. I was surprised by that comment. I followed up the next day and sent email correspondence to the president and the chief corporate officer suggesting that what I was told previously was different from what the committee was told on 18 May and if there was an issue, the record needed to be corrected. I brought that up and we had an emergency executive meeting on 19 May where it was discussed.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Was there a meeting prior to that? Was there a meeting of some of the management team who attended that day? Was there a formal or informal meeting of that group of people prior to that meeting of this committee?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Was the chief corporate officer in attendance?
Brian Stanley (Laois-Offaly, Sinn Fein)
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After the meeting?
Brian Stanley (Laois-Offaly, Sinn Fein)
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That would indicate that the chief corporate officer was in Dublin before and after-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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Was there any communication with the chief corporate officer during the meeting of which Professor Kilcommins is aware?
Brian Stanley (Laois-Offaly, Sinn Fein)
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At the time, we felt it was important. I remember the reason that was given at the meeting and I just wanted to quote that.
Verona Murphy (Wexford, Independent)
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Could the Cathaoirleach give members who were also here on that occasion the opportunity to come in on that point?
Brian Stanley (Laois-Offaly, Sinn Fein)
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I will finish my line of questioning and let members in afterwards. Professor Kilcommins signed the contract for Rhebogue.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Many people, including me, find this unusual, given the history of the Dunnes Stores site. That site was bought for some €5 million more than the previous valuation and here we are again talking about similar sums of money. There could be a wide variation in terms of valuation when it comes to a commercial property but it is not the same with houses. I can tell Professor Kilcommins what a three-bedroom house in the estate in which I live in or the nearest estate to it is being sold for. I can tell him what a four-bedroom or two-bedroom house is selling for. What I cannot get my head around as a layperson is the fact that the university ended up paying double the value of those 20 homes. Did that not strike Professor Kilcommins as odd? A very simple check on daft.ie or elsewhere on the Internet would have shown what houses were selling for in the area. Did he not find that odd at the time?
Professor Shane Kilcommins:
I am going to speak to that but the first thing I am going to say is that the approval took place in the governing authority on 3 August. On 4 August, I came to work and the university solicitor asked to see me as the contract needed to be signed. I am not an authorised signatory. As chief academic officer, I do not have the authority to sign but I was told that it was delegated to me by the president. The other person who could sign was the chief corporate officer, who is an authorised signatory. The president was on leave. I do not know where the chief corporate officer was but he was unavailable on the day.
It was explained to me that I had to sign it on that day as the planning permission was about to run out and the builders were going to move on to another project. I signed, as a delegated signatory, and did so with a memorandum from the external legal advisers to say it could be signed as agreed, that the full legal due diligence had been completed, that their construction team had looked at it, that it was appropriate for signing and that the adequate protections were in place. I signed on that basis.
With regard to the key point about the issue of knowing the price of property, what I would say is that at the outset the director of planning and reporting was flagging the issue of the costs of houses in Rhebogue in early March and was bringing this to the attention of the chief financial and performance officer, explaining exactly the point the Chair made. Again, that information never found its way into the approval process.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I ask Mr. Kelly, as corporate secretary, whether he would normally attend the meetings of that executive committee.
Brian Stanley (Laois-Offaly, Sinn Fein)
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The price for Rhebogue far exceeded what it would make on the open market as residential property, as homes. Was the issue of the price and valuation and also the fact it was being designated as a commercial purchase raised at that committee?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Those two issues.
Brian Stanley (Laois-Offaly, Sinn Fein)
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No, but the university was buying homes in a housing estate-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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-----on what is called the "open market". It is the same as me getting a mortgage and buying one of them. The university was buying 20 houses. It was not buying them commercially. It would subsequently become commercial at the point at which they came into the university. The university may have a commercial dimension then, in that it becomes student accommodation by changing the sitting rooms into bedrooms, etc. That is the reason for some of the issues we are addressing here. Was the issue raised at those meetings and who was it raised by and what position were they in?
Mr. John Kelly:
As to the first two meetings, I had not joined the university so I cannot speak to whether that came up during the first two meetings. I joined the university in May and the first meeting I attended was the July meeting, which was the meeting before the governing authority meeting. There was a discussion about price at those meetings. I just cannot recall whether the unit cost was done for the houses, maybe the provost can recall that, but I do not believe it was discussed.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Yes, please.
Professor Shane Kilcommins:
The presentation that went to the executive at the end of July, and a very similar presentation went to the governing authority on 3 August, benchmarked it. It was presented as €136,000 per bed. That is how it was presented and it was framed then against student accommodation. There were two valuations then. The proposal-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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I am taking on board what Professor Kilcommins is saying but what I am trying to reconcile in my head is that the university was not buying individual units or buildings with four self-contained units in them. It was buying three-bedroom homes. That is the point I am trying to make. There are 30 pages in the policy for the acquisition of new property and buildings, land and infrastructure. Did anyone at those executive committee meetings raise the issue of whether all of the procedures set out in this policy were being followed?
Brian Stanley (Laois-Offaly, Sinn Fein)
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There were procedures there beforehand.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Yes, and I have been trying to make sense of the issue of this rental agreement from the briefing notes we were given. It seems as if the issue of rental and stage payments was basically a load of cock and bull just to try to cloud the issue. The purchase price is the purchase price, is that right?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Of course, there was not. External advice was sought and given on this from a company. Is that external company still retained to give advice to UL? Is the company still doing work for UL?
Brian Stanley (Laois-Offaly, Sinn Fein)
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On the valuation.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Tell me about the advice on planning in a minute.
Brian Stanley (Laois-Offaly, Sinn Fein)
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What was the first one?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Market value is the only issue. It is what you can buy for.
Brian Stanley (Laois-Offaly, Sinn Fein)
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If somebody is going to buy a bullock that is a year old he or she does not buy it at the value of what it will be when it is three years old and fully fattened. It is a ridiculous situation.
Brian Stanley (Laois-Offaly, Sinn Fein)
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With regard to planning, is it the case that the planning issue was addressed by external advice? It appears that it was the word of the developer and that that company said the planning was okay and there is nothing to worry about here. Is that the case?
Professor Shane Kilcommins:
That is a really good question. To begin with, it was the vendor's planning that was received and that vendor's planning had indicated that this was ordinary accommodation and a planning issue did not arise in the circumstances. Although they also went on to note that they had not seen any internal alterations that were going to take place. Subsequently, on 23 March the university obtained its own planning advices and I want to refer in particular to one piece of correspondence. Initially, on 23 March both said there were concerns that this could be an alteration of use, a change of use, which gave rise to concern. It could also be an intensification of use. The exceptional provision does not apply in respect of any internal alterations at design phase. They were flagging this very early on. Even more recently, bearing in mind it went to the executive and the governing authority on 3 August, as late as 15 July one of those planning consultants - the architects - came back and expressed serious concerns about four issues. The planning issues, noting there were previously 62 objections in terms of the housing, noting that there was a warning letter for the developer-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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Was this brought to the attention of the executive committee?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Was it brought to the attention of the governing authority?
Brian Stanley (Laois-Offaly, Sinn Fein)
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No. I thank Professor Kilcommins.
Verona Murphy (Wexford, Independent)
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From what I am hearing and even observing, I cannot help but think it does appear the process was followed as a box-ticking exercise in order for a valid contract to emerge and be signed as quickly as possible. With regard to signing the contract, with hindsight, would Professor Kilcommins sign that same contract today?
Verona Murphy (Wexford, Independent)
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That is fine and that is the answer I was expecting. I understand Professor Laffan was only appointed as chancellor in November 2023. I want to come back to what was said with regard to the previous PAC meeting. What did Professor Kilcommins hear at that meeting that he did not know before that gave rise to him becoming concerned?
Professor Shane Kilcommins:
I was appearing before PAC. It was my first appearance. Deputy Verona Murphy was asking me questions on the student records system and that is what I was appearing at the meeting to do. As I mentioned, I was asked to also deal with Rhebogue as a student accommodation issue and I have responsibility for students. In the days leading up to it, I asked for documentation, particularly with respect to the planning matter, so that I could understand what was around the transaction. I received those two dissenting planning opinions that I just spoke to the Chair about. I also received a very important piece of correspondence from 7 June. It was where the planning opinions had been sent to an external legal adviser to ask them to comment on which of the planning advices should be pursued. I received that letter. It was addressed to the chief corporate officer at the time and I then had that correspondence. I am not an expert on commercial transactions. The only one I have ever been involved in was this. What that brought to my attention and what raised concerns was that the letter was relatively agnostic. It went through the three opinions. It said that it was not conclusive and was open to interpretation.
For me, that information was very material and the decision-makers, both the executive and the governing authority, should have had that information in making the decision. When I came back from the PAC last year, I wanted initially to find out how this was the case and why it actually happened. Why was this information not before the decision-makers? I raised those concerns in written correspondence and at the emergency executive meeting that took place on 19 May.
Verona Murphy (Wexford, Independent)
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Did Professor Kilcommins not raise concerns as to why he was here to answer for Rhebogue? As stated to our chairman previously, Mr. Flaherty was in the hotel with Professor Kilcommins the night before the meeting, on the morning of the meeting and after the meeting. Why was he not here to answer for Rhebhogue?
Verona Murphy (Wexford, Independent)
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That is not what the president told us. When asked, the president said that he had a long-standing engagement and was not available. We took that in good faith. This is a statutory committee. My understanding is that was a blatant lie, if what Professor Kilcommins is saying is true.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Deputy, be careful with language please.
Verona Murphy (Wexford, Independent)
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What way would you like me to frame it? It is a blatant mistruth.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Untruth.
Verona Murphy (Wexford, Independent)
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If the president said one thing and Professor Kilcommins is now attesting to another-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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We have established that.
Verona Murphy (Wexford, Independent)
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I want to know the reason behind it.
Professor Shane Kilcommins:
I want to clarify. I do not know whether the chief corporate officer had a long-standing engagement or not. All I can relay to the Deputy is that what I was told, in coming to the PAC, was the he could not attend because of an investigation into the transaction. I went on that basis. When this engagement was communicated to members at the PAC meeting last year, that was a surprise to me as well. I do not know whether he had or had not a long-standing commitment. The issue I raised, on my return from PAC, was that there was an inconsistency. On the one hand, I was told one thing and, on the other, PAC was told another thing. What I raised with the president and the chief corporate officer was that if there was an issue in terms of what they told PAC that needed to be corrected and that they should do so.
Verona Murphy (Wexford, Independent)
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It was not corrected until today, from what I know. I do not ever recall it being corrected or that there was a correction to the record. Was there a correction, Chair?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Not that I am aware of.
Verona Murphy (Wexford, Independent)
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Not that I am aware of either.
Verona Murphy (Wexford, Independent)
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It may be but what is certainly not the position is that officers who should be here would avoid being here for any reason that is not divulged correctly. Does Professor Kilcommins believe the reason he was given to be true? Was that a plausible reason? Was there a disclosure?
Verona Murphy (Wexford, Independent)
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Is that completed?
Verona Murphy (Wexford, Independent)
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I still find it very unnerving that we find ourselves in a situation whereby Professor Kilcommins comes in and tells us that somebody was not present but it would appear that the reason given meant that the only hours he was unavailable were the hours that PAC was sitting. The advice was that there was a long-standing engagement that only pertained to the hours that PAC was sitting.
Professor Kilcommins said there was an emergency executive meeting after the PAC, after he raised his concerns. Who attended that meeting?
Verona Murphy (Wexford, Independent)
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What was the result of that meeting, having raised his concerns?
Professor Shane Kilcommins:
The result of that was that my colleagues were considering it. The chief corporate officer and the chief financial officer were there and again, they sought to defend what was done. They explained the transaction and the process and said that in their view, all relevant information had been provided to the executive and governing authority and that it was sufficient for the purposes. They did not share all of the details, including that legal correspondence and the dissenting opinions, because it was not necessary. In the correspondence it was clear they had taken the view that they were happy to take that risk in terms of the different opinions that were being presented and on the basis of the advice that was being received by the external lawyers.
Verona Murphy (Wexford, Independent)
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What was the result from the executive committee?
Professor Shane Kilcommins:
The executive committee was kind of left there, to be honest. Subsequent to that, I put my concern into the disclosure, which I mentioned was ongoing. I put it into that disclosure to have it investigated. That concern was around whether the executive and the governing authority, as decision -makers, had sufficient information, particularly on the planning issue, to make an informed decision.
Verona Murphy (Wexford, Independent)
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Was that investigated?
Verona Murphy (Wexford, Independent)
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When he says "initially it was going to be", what gave him that impression?
Verona Murphy (Wexford, Independent)
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By whom?
Verona Murphy (Wexford, Independent)
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Is that the same investigator who was investigating the actual disclosure?
Professor Shane Kilcommins:
Yes, and that disclosure, which came in February 2023, was looking at five issues. It was looking at planning in respect of the transaction, valuations, the public spending code, procurement and the issue of the extent to which the agreement had been reached in advance of the proper process.
Verona Murphy (Wexford, Independent)
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Just to finish that point, Professor Kilcommins's concern never did go into that investigation. Did the external investigator categorically not investigate that concern?
Verona Murphy (Wexford, Independent)
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Jesus. Please excuse me. Was that orchestrated?
Professor Shane Kilcommins:
My initial impression was that it was going to be investigated and I was waiting to hear from the actual investigator. When I had not heard, I followed up with the investigator who told me that he had not received that information. This was the point about the importance of the governing authority and executive receiving those planning reports. I thought that was material. I had contacted the investigator through the president's office. The president came back to me and said I should not have done that and that it was inappropriate. The reason for that was that my submission was never going to be investigated and that I had misinterpreted the decision of the protected disclosure group.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I will take one more member before we go for a break but I would remind members not to use language that is outside the-----
Verona Murphy (Wexford, Independent)
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Is that the "lie" or "Jesus"?
Brian Stanley (Laois-Offaly, Sinn Fein)
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I take on board your point relating to the variations and untruths. It is correct that there is a mismatch there and that is clear. That is clear from the previous discussion on it. Deputy Kelly is next.
Alan Kelly (Tipperary, Labour)
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There are only two of us left standing. There are five or six issues I wish to raise.
This is like an episode of Hamlet without the prince. The prince was across the road in some establishment texting people here the last time. The prince is not here this time. Does Professor Kilcommins know who the chief corporate officer was texting at the last meeting?
Alan Kelly (Tipperary, Labour)
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Anyone else?
Alan Kelly (Tipperary, Labour)
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I want to ask everybody here from UL a general question. In my previous interaction with Professor Kilcommins, I found him to be a very valid and considered witness. We went through the conversations and got to a point where there was a feeling that meetings were manufactured to go around the process in order to get to a point where this transaction took place. Is there anybody here from the university who has a different view or who opposes that view in any way? If anyone has a differing view, please say so. I note that nobody has raised a hand to express a different view.
I understand that Mr. Field objected to this process and put that in writing. Is that correct?
Alan Kelly (Tipperary, Labour)
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Does Mr. Field have a different view from Professor Kilcommins? Better still, will he outline the concerns in the memo and when it was sent - briefly, as I am caught for time?
Mr. John Field:
I will try to be as brief as possible. My initial involvement in the transaction was on 15 February 2022. I was invited to a Teams meeting where the chief corporate officer and chief financial performance officer briefed four other people regarding the transaction and the proposal to purchase houses in Rhebogue. They indicated they had an interesting proposal they planned to bring forward and were seeking assistance from the point of view of due diligence work. I have a finance role in the university and have a role around capital and capital funding. There were no written papers at that meeting; it was entirely a verbal briefing. A number of attendees sent memos after the meeting in reply to the two proposers - that was the university solicitor and the director of commercial development and finance - outlining matters that had to be looked at.
The next meeting was called on 7 March, which I attended. Prior to that meeting, I confirmed with those three people whether they had received replies. No replies to any of the questions had been received. There was still nothing in writing. At that meeting, it was outlined that it was intended to bring the proposal to the executive committee the following week, to the finance committee of the governing authority the week after that and to the governing authority the week after that. I was extremely alarmed at that proposed timeline.
Alan Kelly (Tipperary, Labour)
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Rightly so.
Alan Kelly (Tipperary, Labour)
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Who did you write to?
Alan Kelly (Tipperary, Labour)
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Where did that go?
Alan Kelly (Tipperary, Labour)
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What happened afterwards?
Mr. John Field:
I know now the transaction proceeded to the executive committee the following week. I said in the memo the matter should not be progressed to the executive committee because I was aware from the previous day that was the intention. It was progressed. The presentations to the executive committee and the finance committee the following week were on the basis that due diligence was ongoing. It was not presented as a final proposal at either of those meetings, just to clarify that point. It was presented as a proposal subject to due diligence.
After it went to the finance committee, I received an email from the chief corporate officer attaching one valuation. He suggested in the email the matter had been approved by the executive committee to be proposed further, that he was attaching the valuation and that he would call a meeting of the group of us who were assisting with the due diligence to discuss the project and further due diligence. That meeting was held on 23 March-----
Alan Kelly (Tipperary, Labour)
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If you could be brief, as the time I have is limited.
Alan Kelly (Tipperary, Labour)
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Did you put that in writing?
Alan Kelly (Tipperary, Labour)
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Is that minuted?
Alan Kelly (Tipperary, Labour)
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Who wrote the minutes?
Alan Kelly (Tipperary, Labour)
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Mr. Field's evidence is compelling and very good but he would not disagree with my opening statement.
Mr. John Field:
I do not feel the word "manufactured" is appropriate. There was a meeting of the executive committee on 29 July. It was a formal executive committee meeting and paperwork was considered, and the same with the governing authority. I do not think it is fair to characterise that as a manufactured meeting.
Alan Kelly (Tipperary, Labour)
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Okay, but as regards the process this went through, Professor Kilcommins agreed with me that the circumstances by which this decision was made at various meetings and the presentation of information created a strong possibility of a certain outcome. Would that be fair enough? Would that be a fairer, more diplomatic way of saying it?
Alan Kelly (Tipperary, Labour)
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Would anyone disagree with any of that?
Alan Kelly (Tipperary, Labour)
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That in itself is a statement, so that is fine. There are two further things. Dr. Wall outlined to my colleagues, Deputies Devlin and Murphy, that he initiated discussions once concern had been raised. I presume there is documentation with UL and with the Department on that correspondence and phone calls. I do not want a response------
Alan Kelly (Tipperary, Labour)
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In relation to this issue. Will Dr. Wall provide all of it to this committee by return? That is all I ask.
Professor Laffan provided a strong statement in which she said there would be consequences. Does she expect in the near future there will be a senior management review and significant changes? I live among people who work and go to college in UL. I drove my children around UL and told them I hope that is where they are going to college because it will be cheaper for me. I jest, but seriously, thousands of people are looking at this. Everybody in the mid-west and further afield is taking a view on this. Will there be consequences in the very near future? I am not saying Professor Laffan can tell us what they are. That would be impossible but will there be consequences and changes as a result of all of this?
Alan Kelly (Tipperary, Labour)
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I do not understand why.
Alan Kelly (Tipperary, Labour)
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I did not say any specific individual. I am talking in general. Will there be changes?
Alan Kelly (Tipperary, Labour)
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Does Professor Laffan foresee the possibility of changes at management level in the university? I think it is in her interest to answer this directly.
Alan Kelly (Tipperary, Labour)
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That is, unfortunately, a weak answer. It was going pretty well until then.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I am going to suspend the meeting for a short break.
Verona Murphy (Wexford, Independent)
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I was going to suggest to continue to conclusion given the lack of members.
Brian Stanley (Laois-Offaly, Sinn Fein)
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There are people who have been here for three hours.
Verona Murphy (Wexford, Independent)
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I understand that. They are not-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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I want to break.
Verona Murphy (Wexford, Independent)
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You will be here on your own because Deputy Kelly and I have to go.
Alan Kelly (Tipperary, Labour)
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We have made the effort to be here.
Verona Murphy (Wexford, Independent)
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I would say another 15 minutes will conclude.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I do not think we will be finished in 15 minutes but we will stay going and try to finish by 12.30 p.m. Is that all right?
Verona Murphy (Wexford, Independent)
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I think so.
Alan Kelly (Tipperary, Labour)
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Yes, thanks.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Just be mindful there are staff here since before 9 a.m.
Verona Murphy (Wexford, Independent)
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If people want to take a break, absolutely. I have no-----
Alan Kelly (Tipperary, Labour)
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If somebody needs a break, that is fine.
Brian Stanley (Laois-Offaly, Sinn Fein)
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We have to be mindful of that.
To revert back to Rhebogue, the independent valuations confirming the oversight appeared after the event. They were not sought by the governing authority before it approved the purchase. Is that correct?
Mr. John Kelly:
The valuations were put to the governing authority on a slide deck. There was a detailed PowerPoint presentation of around 22 slides, which provided the outcome of the valuations, as opposed to the paper version of the valuations. They were spoken to at the meeting. The presentation noted they were at market value, which, as the Chair pointed out, is not the case.
Brian Stanley (Laois-Offaly, Sinn Fein)
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They were a long way off market value, as a cursory glance at the Internet would show. Professor Kilcommins's opening statement outlined the damage to the university's reputation, etc. Has it impacted on the reputation and fundraising of the university? Would Professor Kilcommins like to comment briefly on that?
Professor Shane Kilcommins:
The institution has been there for just over 50 years. It was tucked in between Galway and Limerick. Those institutions go back to the 1840s.
The people of the mid-west region have fought very hard to create this university and it has been sustained by students and staff. There are more than 120,000 alumni and 2,000 staff in the institution. It is really creating life-enhancing opportunities for so many young people. One of the great things is that they are actually staying in the region now on that Atlantic corridor because of the opportunities and employability. As the Chairman has just spoken about, this has had significant implications for the university. We cannot sign off on our accounts. We cannot finish our annual governance statement. For US federal subsidies, we cannot sign off on those accounts. It is also the demoralising impact it has had on our staff. It was referred to at the outset by the Chairman. Our students-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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Did it affect the important work of research?
Brian Stanley (Laois-Offaly, Sinn Fein)
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No, what I am saying is-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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The loss of funding, yes. That is the impact. Of course the university would not be appearing before the committee for academic reasons.
Brian Stanley (Laois-Offaly, Sinn Fein)
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We are talking about the finance.
Mr. John Kelly:
-----that have had long association with UL have been in contact asking, for example, whether funding is being put towards the deficit in respect of the Rhebogue acquisition. Concerns like that have come across from very reputable companies that have engaged with UL for many years. Therefore, it has created much disquiet among those organisations that have networked with UL for many years.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Do the witnesses expect it to have a long-term impact? Is it damage that can be repaired?
Professor Brigid Laffan:
Of course it is, because the academic core of this university is very strong. However, the university will not thrive or flourish until it changes its culture and until we cease to have the iterated problems we have talked about today. I have absolutely no doubt that the university will recover and flourish, but not without change. While we change, we have also got to continue because there are students doing examinations now and they need to graduate, etc.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I will revert back to the Dunnes Stores site for a moment. What is the current position with respect to the publication of the KPMG report? There was an issue around legal proceedings. Where is that issue of legal proceedings now? What are the legal proceedings?
Mr. John Kelly:
I will speak about that. Legal proceedings are ongoing, but the university's governing authority under our new chancellor has been of the view that it is in the best interests of the university that as much of that report be put into the public domain and shared with the university community as possible. The Chair knows the issues in that regard. The report was more about process than individuals, and there were a number of individuals who felt that they were adversely implicated. We are at a stage where we are possibly in a position to come to an agreement in respect of that litigation.
The step we have not taken, which was discussed at the previous governing authority meeting, is that we need to have a conversation with our stakeholders before we take any action in that regard. I would be - I will not say confident - but I think there is a reasonable prospect that issue will be resolved and the outcome will be that the report will not be disturbed, but less of the report will be put in the public domain in terms of individuals and names.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Have recommendations in that report been implemented in full?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Obviously, since all of this came to light. It is really time now to-----
Mr. John Kelly:
I do not think we will see an acquisition in the near future the way things are going. There is a section 64 review ongoing. A governance committee was put in place, which was chaired by Professor Kilcommins, post the previous Committee of Public Accounts. One of the recommendations was that even though we have a policy and, frankly, were it followed, this would not have happened, the policy and procedure need to be more closely aligned and much more detail needs to be put in the policy to make absolutely certain.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Would Mr. Kelly accept that at this point that the university did overpay for that site? On the previous day here it did not happen.
Brian Stanley (Laois-Offaly, Sinn Fein)
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No one here would disagree with that.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I saw that in the briefing notes. That is accepted by the people present. I understand part of the building is in use at the moment. Is that correct?
Brian Stanley (Laois-Offaly, Sinn Fein)
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How much of it?
Brian Stanley (Laois-Offaly, Sinn Fein)
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What is it used for?
Mr. John Kelly:
It is used for a fabrication laboratory for the school of architecture. It is used as a public space in conjunction with Limerick City and County Council. The +CityxChange project is based there as well. As I said, approximately one third of the building is back in use. The question for the university is the extent to which it should invest in this building in meanwhile use if the ultimate plan is to redevelop it or demolish it. That is a fine line. How much does one spend to put a building back into repair if the ultimate plan is to rebuild?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Is there still a question over its demolition?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Has it come up in executive committee meetings despite the fact one third of it is in use?
Mr. John Kelly:
A committee has been established to draw up a master plan for the site. As the Chairman knows, there is a development with Limerick City and County Council, that is, the world class waterfront, and Dunnes city campus is right on that corridor. Therefore, what happens that building is of interest not just to the university but also to the city of Limerick and Limerick City and County Council.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Therefore, we are in a new situation. Deputy Murphy is very welcome; I know she was held up. We were going to continue as four of us want to come back in and Deputy Murphy needs to come in. Some people have been here since before 9 a.m. so I will suspend the meeting for a very short break. We will resume in ten minutes sharp.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Deputy Catherine Murphy has ten minutes.
Catherine Murphy (Kildare North, Social Democrats)
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I thank the Cathaoirleach. Apologies, I could not be here earlier.
It is obvious that one cannot compartmentalise reputational damage. The reputational damage goes across the spectrum. I would have thought that would be something that the University of Limerick, in particular, would be conscious of given that this is not the first time that this kind of thing has happened.
In fact, it is quite infuriating. I am aware that there was a meeting in the university and there are people within the university who are very angry about the repeat of this problem.
The governing authority obviously was not given adequate information. It was to come back to them after there was due diligence. It did not come back to them and then the contract was signed. Am I correct that Professor Kilcommins was the one who signed the contract?
Catherine Murphy (Kildare North, Social Democrats)
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Was Professor Kilcommins conscious that information had not gone back to the governing authority?
Professor Shane Kilcommins:
The contract was signed on 4 August after the presentation to governing authority. At that stage, it was approved and, in good faith, I signed the contract. I signed the contract with a memo from the external solicitor saying that I could sign as agreed, that this had all been agreed. I dealt with it as a delegated signatory and - it is important to know this - the chief financial and performance officer, who was an executive sponsor of the project, had already signed the contract. I signed as a delegated signatory. I did so on the basis of the external legal advice and the internal legal advice that I could sign as agreed.
Catherine Murphy (Kildare North, Social Democrats)
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There is legal advice and then there are obviously one's own concerns. Professor Kilcommins had concerns.
Professor Shane Kilcommins:
Not at that point. My concerns only arose as I was preparing for PAC last year when I got the relevant information that there were issues. I was coming in to PAC on 18 May last year, and Deputy Catherine Murphy was present.
In the days leading up to it, I was asked to speak to the transaction on Rhebogue and in speaking to it, I asked for the information. At that point, I received some planning opinions that were not made available at the time and external legal advice, which looked to mediate between the different opinions. It was at that point that I became very concerned.
Catherine Murphy (Kildare North, Social Democrats)
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The witnesses are giving us assurances that this is not going to happen again and are asking us to take them at face value. It is very difficult for us to take anything at face value from University of Limerick given that this is not the first occasion on which this has happened. There may well be different personnel involved, but we need to see evidence. We need to see evidence of the governance arrangements because it looks like there were people who treated the governing authority like a lapdog or some sort of rubber stamp. If that is the culture there, there is nothing to stop this from happening again. Are there any other issues of concern regarding transactions that have happened at University of Limerick?
Professor Shane Kilcommins:
In terms of the transactions, the Dunnes Stores site was bought in 2019. The Rhebogue transaction happened in 2022. There have not been any transactions other than that. What is actually happening at the moment is that we are working with the Higher Education Authority, HEA, under that section 64 review to go back and look at our capital programmes. It is a review going back to 2010.
Catherine Murphy (Kildare North, Social Democrats)
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I know this pre-dated the position Professor Laffan currently holds. Presumably, there would have been a handover when she assumed that position and she would have been aware of the Dunnes Stores issue. Obviously, it has just been confirmed that the Rhebogue issue would have been known in advance of Professor Laffan taking up her position. Did she ask questions with regard to Dunnes Stores or about governance given that this kind of damage cannot be compartmentalised?
Catherine Murphy (Kildare North, Social Democrats)
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No, I am not asking about that. I mean before Professor Laffan took up the role. She has a reputation - everybody else here has a reputation - and she would want to make sure her reputation is not damaged. Surely, when she was taking up the role of chancellor, she would have asked about things that have the potential to do reputational damage to the university and to her. Did she have that conversation?
Catherine Murphy (Kildare North, Social Democrats)
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Presumably, it would have been brought to the attention of the previous chancellor.
Catherine Murphy (Kildare North, Social Democrats)
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I am sorry; we have just been told that UL was preparing for the previous meeting of the Committee of Public Account last year and Professor Laffan became aware of it at that stage. That is the timeline we are talking about. We had the former chancellor sitting exactly where Professor Laffan is sitting last year. She must have been aware of Rhebogue at that stage. Surely, Professor Laffan would have asked if there were issues she should be made aware of that would have the potential to do reputational damage in the same way as Dunnes Stores.
Catherine Murphy (Kildare North, Social Democrats)
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She did not ask whether there was anything else.
Professor Brigid Laffan:
I genuinely cannot remember. I will just say that when I accepted the appointment to become chancellor of University of Limerick, I did so as one of its founding students. I have 46 years in higher education. I really wanted to contribute to the academic mission of the university.
Catherine Murphy (Kildare North, Social Democrats)
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No, look, I will ask-----
Catherine Murphy (Kildare North, Social Democrats)
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Professor Laffan certainly does not want to do reputational damage. Therefore, I would expect that she would make sure there is nothing that would contribute to reputational damage. Making herself aware of that and asking that question, at the very least, would have been prudent. Let us put it that way.
Catherine Murphy (Kildare North, Social Democrats)
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It should not have happened. Professor Laffan should have been informed about it. I would have expected her to say that she should have been informed about it because it was something that had the potential to do serious reputational damage.
On the carrying value of €5.225 million, if UL was to sell those properties now, what is the valuation on them?
Professor Shane Kilcommins:
We recently received a valuation from valuers in respect of that property on the open market. As I understand it, the market valuation is €6.5 million. I will ask the director of management planning and reporting to come in on that for the Deputy. That is my understanding, however.
Mr. John Field:
We conducted an impairment review during late February and early March of 2024 when it became apparent that the carrying value of the asset, which was €12.7 million on our balance sheet, exceeded the recoverable value of the asset. That involved us having to do one or two tests on what the market value was. We retained Power Property to do a market valuation. On 30 September 2023, it valued the 20 houses at €6.585 million. We also engaged Mazars Ireland to conduct what is called a value-in-use test, which looks at a cash generating asset and what it will generate in net cash terms over a period of time and it discounts that back to a present value. That value-in-use figure came in at €7.4 million. Therefore, the difference between that value-in-use figure and the carrying value became an impairment. Therefore, we have to write the asset down to the new value, which is the-value-in use figure. The €5.2 million is the amount of the write-down-----
Catherine Murphy (Kildare North, Social Democrats)
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What is the fallback position? Presumably, UL is considering all aspects with regard to An Bord Pleanála. We do not know what the decision is going to be by An Bord Pleanála but presumably UL has some sort of fallback position. I presume it is do with the fact that they are built as houses and there is obviously a commercial use and that is really the substance of the issue. Does UL have a plan or fallback position in that regard?
Professor Shane Kilcommins:
At the moment, the fallback is that our director of building and estates is working closely with Limerick City and County Council. We are responding to An Bord Pleanála. We are actually putting in a response in respect of it. That is where we are at the moment in respect of these transactions. It is to mitigate the damage that has been done around this planning issue to the best extent possible. That is what the plan is at the moment.
Catherine Murphy (Kildare North, Social Democrats)
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I will go back to the governing body. Are the same personnel involved? What are the changes on the governing authority? Have there been changes? Are there shortcomings in the governing authority with regard to asking questions or having the financial competence to ask questions?
Catherine Murphy (Kildare North, Social Democrats)
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In terms of transactions and economic competence, what is the position of the board?
Brian Stanley (Laois-Offaly, Sinn Fein)
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I thank Deputy Murphy. I call Deputy Kelly. We will take five minutes each.
Alan Kelly (Tipperary, Labour)
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Okay. On that last question, it is quite obvious that there was a failure in the governing authority to ask questions with regard to this issue. We could not possibly say that the right documentation was not put in front of them. However, if a governing authority has enough people with enough financial background, in particular, they would know the documentation is in front of them in the first place. I do not want an answer to that because I only have five minutes. That is a statement of fact as far as I am concerned. It is an observation from me.
Total impairment now is €12.7 million minus €7.4 million or €6.585 million. Which is it?
Alan Kelly (Tipperary, Labour)
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So is the total €5.3 million?
Alan Kelly (Tipperary, Labour)
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Is that the loss?
Alan Kelly (Tipperary, Labour)
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There is a huge governance issue here. From my perspective and from all the knowledge I have in relation to UL, there is quite good academia and research there. The production is fantastic, and I say that as somebody who lives locally. For all of that to continue, however, corporate governance has to dramatically improve because there will be reputational damage, as Deputy Catherine Murphy said.
I will ask Professor Kilcommins a similar question to the one I asked Professor Laffan earlier. Professor Kilcommins is left in a very tricky situation, I might add. With the current structure of management in there, does Professor Kilcommins believe that every member of the team is pulling in the same direction?
Alan Kelly (Tipperary, Labour)
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Professor Kilcommins might come to my question.
Alan Kelly (Tipperary, Labour)
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Professor Kilcommins does not see the need for any changes.
Alan Kelly (Tipperary, Labour)
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I understand all that. What if Professor Kilcommins had a crystal ball, for instance? Does Professor Kilcommins see the exact same team in place in two or three years' time?
Alan Kelly (Tipperary, Labour)
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The reason I asked Professor Kilcommins the same question essentially in different ways is because people who knew want me to ask. I am just telling Professor Kilcommins that. I have given them both a chance.
Alan Kelly (Tipperary, Labour)
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One last question, which I do not think has been asked by anyone, is a question maybe we should have started off with. Given the situation we have with accommodation in Ireland, was there any consideration given to why a university was buying accommodation such as this in the first place? I know the pressure is being put on by the former Minister, now Taoiseach, and all of that.
Professor Shane Kilcommins:
There was consideration given to that very early on. I referenced with the Deputy that in the first six weeks already the team internally in UL was talking about different options and the generation of different options. The Deputy is living in the area. There was a Park Point option that was available. All of this was being put on the table by the team as well.
Student accommodation is something that is really important to the university-----
Alan Kelly (Tipperary, Labour)
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Absolutely.
Alan Kelly (Tipperary, Labour)
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I had to get a bus service from Tipperary for you, but anyway. It is working well.
Alan Kelly (Tipperary, Labour)
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The point is there will be some people who are watching in saying that given the accommodation crisis, there is a debate regarding the need for people to have housing versus in some cases student housing. I am wondering was that prefaced in the discussions beforehand. Obviously, there have been planning issues consequential on the basis that the planning authority has a different view as to what they should be used for in the first place. How did that discussion not take place and manufacture a result that this might not have been the best option?
Professor Shane Kilcommins:
Looking at the options appraisal that I spoke to the Deputy about earlier from that financial perspective, there was a view that this would be beneficial from a community perspective. It is a university city. Having students in a community like that would be seen as beneficial but I can see the point that the Deputy is making.
Alan Kelly (Tipperary, Labour)
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I will conclude by thanking the witnesses. In my time in PAC, they have been one of the more open groups of representatives that have come in front of us. I want to acknowledge that.
Catherine Murphy (Kildare North, Social Democrats)
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We have kind of concluded with RTÉ on a range of issues that were about governance failures and one of the conclusions was that the board did not ask hard questions. Their assessment of themselves was too favourable and the recommendation there was that there would be a three-yearly review of their performance. Is there a review of the performance of the governing authority? Otherwise, they are assessing themselves.
Professor Brigid Laffan:
First, let me say that this governing authority is new. It has just had its five meetings. It was constituted just late last year.
We have already started to make changes as to how we handle the agenda. We had an away day at the end of February to look at our responsibility as governors and how we interacted with the executive but, of course, in the review of structures under section 64, we will review the governing authority and we will make sure that the governing authority functions appropriately and effectively.
Catherine Murphy (Kildare North, Social Democrats)
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Can Professor Laffan send us a note, because I have a few other questions? Can Professor Laffan send us a note on exactly what the procedures now in place are-----
Catherine Murphy (Kildare North, Social Democrats)
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-----in relation to property acquisition and can she send us a note on where those failures were and the difference that has been made since? If Professor Laffan could that in writing, I would appreciate it.
In terms of the personnel involved, were the same people involved with the Dunnes Stores transaction and the Rhebogue transaction? Was there anybody who is a common denominator in relation to both?
Mr. John Kelly:
There is one. Obviously, I do not want to name anybody, especially as there was only one. That person was the person who raised concerns in relation to the acquisition of Dunnes Stores. It was one of the persons who asked the right question in relation to the Dunnes Stores acquisition. That is the only person carrying forward.
Catherine Murphy (Kildare North, Social Democrats)
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Right, okay. If people were to go and buy those houses in Rhebogue when they were being sold, I can imagine they would have assumed that they would not be able to compete with the university given the amount. Did people not know what property was going for in the area? This was not 5,000 houses. This was a relatively small number of houses with a very bad transaction. Even looking up the auctioneers in the area to see the market value, I would have thought it would have been bog-standard for people to say that those houses cost €200,000 or whatever more than the going price. Were such questions not raised? One does not need to be a property expert to look at the window of an auctioneer's shop.
Professor Shane Kilcommins:
Deputy Catherine Murphy has raised the same point that the Chairman raised earlier and it is a good point. The university's internal team were flagging those concerns at the outset. The director of management planning and reporting was flagging this fact about the cost of houses in Rhebogue and what they would be going for at market value.
Catherine Murphy (Kildare North, Social Democrats)
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Why were they not listened to?
Catherine Murphy (Kildare North, Social Democrats)
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Surely the governing authority that was in place at the time were unaware of roughly how much housing are going in the area for.
Catherine Murphy (Kildare North, Social Democrats)
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Does Professor Kilcommins feel that in that context, you were all duped?
Catherine Murphy (Kildare North, Social Democrats)
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Was Professor Klcommins duped? You have must have felt duped. You must feel really angry about this.
Catherine Murphy (Kildare North, Social Democrats)
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Do you all feel you were duped on this? If one wanted to manipulate an organisation, one would give it misinformation and give it very little time to make decisions. This is the same kind of profile as what happened with Dunnes Stores. I would have thought that lesson would have made people ask what kind of student accommodation we are talking about here. I would have thought those kinds of rudimentary questions would have been obvious when something came in front of the governing authority, given the profile of what had happened before.
Professor Shane Kilcommins:
What I can suggest to the Deputy is the contrast with Dunnes Stores. Both transactions, as we mentioned at the outset, were poor transactions from the University of Limerick perspective, but the second transaction, the Rhebogue transaction, was almost presented in a different light, as if it was actually following the controls and the policy that was now in place. It was presented in a very different manner. In many respects, that transaction is worse than the Dunnes Stores transaction.
Catherine Murphy (Kildare North, Social Democrats)
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Is it not about the presentation? It is up to the governing authority to interrogate that presentation in detail. Were there people there who were capable of saying, “I want more information on this. I am not happy to sign off on something unless I see the A to Z of what we are putting our names to here”?
Professor Shane Kilcommins:
That expert group on finance had looked at it but, unfortunately, it looked at it at a very preliminary stage, when all of the information was not available to it, particularly the planning reports and so on, and it did not go back to them as it should have and as was minuted in respect of that meeting. Therefore, it moved forward in the absence of that expertise but it also moved forward in the absence of provision of the expertise that had been gathered internally by our team in building and estates and in finance, and also the external expertise that was providing information in respect of the transaction.
Catherine Murphy (Kildare North, Social Democrats)
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I ask that we get copies of the minutes where this matter arose, whether it was at the governing authority or the audit and risk committee. I would like to see that.
Brian Stanley (Laois-Offaly, Sinn Fein)
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The key point is that it was misrepresented as something different. We went through this area. It was 20 homes. All they had to do, as the Deputy said, was look at the auctioneer’s window or, as I said, check on the computer for the house prices in the area on any of the auctioneer sites. They would have found out that houses were selling for half the price the university paid. It was bumped up to be something else with cock and bull about rental payments that did not exist and stage payments. I accept there were stage payments, but it is mystifying why the word “rental” was put into it. The only reason it could be put there was that completely misleading information was given. What has happened is not acceptable.
The thing that puzzles me about it is that so many people different people looked at this. I have read the information supplied. For the life of me, I cannot see why somebody did not ask if these houses were on a housing estate. After a five-minute check, anybody would have been able to say, “Hang on here a second, these are selling for half that price.” It is a puzzle to me why it happened. We can talk about people who were sponsors and who were driving it, but it is bigger than that. It is a puzzle how a project like this could get going.
We could go around it all day. That is the point where it went wrong. As somebody said earlier, this was bog standard or very standard procedure that any couple going out to look at a house this evening would do. If they were going out to buy a house at Rhebogue, Terenure in Dublin or Portlaoise, they would do the very same thing. I cannot get my head around why that basic procedure was not done by anybody to say, ”Stop.”
I see Mr. Kelly wants to come in.
Brian Stanley (Laois-Offaly, Sinn Fein)
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It was misrepresentation.
Mr. John Kelly:
-----to the governing authority around the fact they were all in one location, for example, the fact they were all A-rated and the fact the university was going to be able to police them with its campus security. All of those things were put forward as a basis for a commercial valuation versus a domestic valuation.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Anything built in the past few years is A-rated.
I have a question for the Higher Education Authority. The information supplied states that, on 30 July 2022, the governing authority approved a new policy for the acquisition of property, buildings, land and infrastructure. Following that meeting, a status update was provided to the HEA. At the same meeting, the governing authority was briefed about “one short-term solution that would yield up to 80 beds”. The information supplied goes on to say that this was successful. It then states that on the faith of the assurance given to the HEA by the university, because the HEA was withholding the money, it was confirmed to the university on 20 July 2022 that the pause that had been placed on the drawdown of approved capital funding of €3.7 million would be lifted. The campus community were notified by the president of this occurrence on the same day.
I ask Dr. Wall, given what went on with Dunnes Stores, whether that was done on the basis of a verbal assurance.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Would that not raise red flags for the HEA?
Dr. Alan Wall:
Before that, there was a year of action between us and the university on the KPMG recommendations. If the Chair remembers the summer of 2021, there was a lot of heat and light around KPMG; the committee could not see them and we could not see them. We engaged with the chancellor, the president and the chief commercial officer, as I think he was, or chief corporate officer, around establishing a way in which we could get assurances that the KPMG recommendations would be implemented, the chancellor, the president and the head of audit would move to a position where we could see them and we would know what they were, we could interact with them, we could get them implemented, we could see a policy, we could get an implementation plan for the policy, and then we would get sign-off from the chair of the audit committee, independent of both the university chancellor and the university president, that all of this had happened. There was a year of activity around that to get those assurances. For the HEA, the only anger in the room was that-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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The HEA pressed the button to release the funding because of assurances given.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I accept that Dr. Wall is saying that the HEA was told but did it go through a root-and-branch check to see that?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Was it implemented?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Did a member of staff go down there and say-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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In what way was the assurance given?
Brian Stanley (Laois-Offaly, Sinn Fein)
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On that basis, the pause button was released and out came another €3.7 million.
With regard to the UL accounts, note 11 on page 80 of the financial statement shows that €8.2 million was spent on audit and professional fees. However, the breakdown of the audit fees totals €369,000 and the breakdown of the advisory fees is €3.8 million. That leaves €4.2 million. What was that spent on?
Mr. John Field:
For the €8.2 million audit and professional fees figure, in the note we break that down into advisory fees. It is a requirement of the code of governance for State bodies to set out advisory fees, so the €3.8 million is part of that. The rest is not advisory fees; it is other professional services-type fees.
Brian Stanley (Laois-Offaly, Sinn Fein)
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It is not listed in the accounts.
Brian Stanley (Laois-Offaly, Sinn Fein)
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It is at page 80 of the accounts. I am asking what that €4.2 million was spent on.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Can Mr. Field give me a rough idea? It is not a small sum. What type of things was the €4.2 million spent on?
Brian Stanley (Laois-Offaly, Sinn Fein)
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It has been listed under audit and professional fees.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Will Mr. Field repeat what he said?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Yes.
Mr. John Field:
It was spent on things like student services or medical services for students, which are outsourced. They come through that. That is a doctor, effectively, and we pay that. They are professionals. It includes graphic design costs, which involves professionals. They would not be providing advisory services but a professional service. There are digital marketing costs and media costs. There were costs relating to work on website cookies, workflow solutions for ITD to improve systems and things like that. There were some support costs for external people towards other IT systems. They were providing a professional service but not advisory professional services. That is the distinction.
Brian Stanley (Laois-Offaly, Sinn Fein)
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That concludes the questions for today. I thank the witnesses and staff of the university, the HEA and the Department of Further and Higher Education, Research, Innovation and Science. I accept that the witnesses provided a lot of information before and since they came in today. A lot of ground was covered. I acknowledge the work done in preparing for the meeting. I also thank the Comptroller and Auditor General's office and staff for their assistance and the committee staff. Is it agreed that the clerk will seek any follow-up information and carry out any agreed actions arising from today's meeting? Agreed. Is it also agreed that we note and publish the opening statements and briefings provided for today's meeting? Agreed. We requested some follow-up information, such as the breakdown. That can be forwarded to the secretariat. I thank the witnesses for attending.