Oireachtas Joint and Select Committees
Wednesday, 6 November 2024
Joint Oireachtas Committee on Agriculture, Food and the Marine
Governance Issues: Irish Horseracing Regulatory Board (Resumed)
5:30 pm
Tim Lombard (Fine Gael)
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Apologies have been received from Deputies Cahill and Kehoe. I will take the Chair for this meeting. Before we begin, I remind members and witnesses to turn off their mobile phones. Members are requested to ensure their mobile phones are turned off completely or switched to a flight safety mode, whichever is appropriate to the device, for the duration of the meeting. It is very important that they are turned off because they may interfere with the broadcasting system.
I welcome the witnesses. I will now read the notice on privilege. Witnesses giving evidence from within the parliamentary precincts are protected by absolute privilege in respect of the evidence they give to the committee. This means that witnesses have a full defence in any defamation action taken based on anything they say in the committee meeting. However, witnesses are expected not to abuse this privilege and may be directed to cease giving evidence on an issue at the Chair's discretion. Witnesses should follow the direction of the Chair in this regard. They are reminded of the long-standing parliamentary practice to the effect that, where reasonable and unless there is no alternative, no commentary should be made identifying a third person or entity. Witnesses giving evidence from outside the location of the parliamentary precincts are asked to note that they may not benefit from the same legal immunity as witnesses giving evidence from inside the parliamentary precincts and may consider taking legal advice on this matter. Privilege against defamatory action does not apply to publication by the witnesses outside the precincts or the committee on any matter raised by these proceedings.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside these Houses or an official by name or in such a way as to identify him or her. Parliamentary privilege is considered to apply to the utterances of members who participate online in a committee meeting but they must be within the parliamentary precincts. Participating in a public meeting online from outside the parliamentary precincts may result in that member having online access removed.
The first item on the agenda is an examination of governance issues with the Irish Horseracing Regulatory Board. I welcome the members of the board. I will ask Mr. Darragh O’Loughlin to introduce himself and to deliver his opening statement.
Mr. Darragh O'Loughlin:
On behalf of the IHRB, I thank the Chairman and members of the committee for the opportunity to appear before the committee this evening to discuss governance in the board. I am the chief executive officer of the IHRB and I am joined by our new chief financial officer, Mr. John Murphy, and our chief veterinary officer, Dr. Lynn Hillyer.
The Irish Horseracing Regulatory Board is all-island body that exists to assure public trust in horse racing in Ireland and safeguard its global reputation. The Irish horse racing industry supports more than 30,000 jobs and contributes €2.46 billion to the economy. In 2023, between flat, national hunt and point-to-point racing, IHRB professional officials and volunteer race day stewards oversaw a combined 483 race fixtures across the 32 counties, with 38,601 runners in total.
It is the ambition of the board and management that the IHRB be recognised as a world-class regulator for horse racing with an ongoing focus on excellence in the delivery of our core functions of integrity, rider safety and equine welfare. The IHRB is currently engaged in an ambitious programme of modernisation and change, guided by the board's strategy for the period 2024-2027, which we published late last year. This strategy commits us to consistently applying a robust governance framework and rigorous probity regime.
The IHRB’s horse racing integrity services funding comes via Horse Racing Ireland, HRI, and we meet at least quarterly with HRI to ensure transparency and oversight of spending under the agreed budget. In mid-2023, a significantly revised and strengthened service level agreement governing the provision and use of funding for horse racing integrity services was agreed between IHRB and HRI and we continue to operate within the agreed funding parameters.
As the committee will recall, the board became aware in June 2023 of an issue relating to financial governance which had occurred in early 2022. This was immediately brought to the attention of the Minister for Agriculture, Food and the Marine, Horse Racing Ireland and the Comptroller and Auditor General, and was disclosed to the Oireachtas public accounts committee the following day. The issue concerned an unauthorised transfer in January 2022 of €350,000 from the Jockeys Emergency Fund, a charity bank account administered by the IHRB, to the IHRB’s bank account. This was subsequently reversed in April 2022.
The professional services firm Forvis Mazars was engaged to carry out an independent review of this and other financial governance matters, which involved detailed scrutiny of six years’ worth of IHRB financial and other records as well as interviews with relevant individuals. Its report was received late last week and has been shared with the Department of Agriculture, Food and the Marine and the Office of the Comptroller and Auditor General. It was published yesterday.
The IHRB recognises the importance of a robust governance structure and believes the incident that gave rise to the Forvis Mazars review should not have happened. Reassuringly, the review identified no transactions in breach of financial governance requirements other than that which prompted the initial concern, and there was no evidence of misappropriation for personal gain. Nonetheless, since commissioning the review, significant changes to enhance financial governance have been implemented by the IHRB or are in progress, guided by draft reports provided during the review process.
These measures, designed to address the recommendations, include strengthened financial controls, particularly regarding the authorisation and approval of online banking payments, with strict transaction approval limits and segregation of accounts access; developing and enforcing comprehensive documentation and formal approval procedures for all material financial transactions; strengthening and expanding the existing service level agreement between IHRB and HRI to capture governance and other requirements and enhanced transparency and reporting mechanisms in relation to the integrity services budget; putting in place formal written agreements and detailed procedures with all charities and non-profit entities receiving administrative support from the IHRB, setting out roles and responsibilities; strengthened governance procedures on the approval, funding and reporting of redundancy and retirement payments; supporting the trustees of the charities in their implementation of appropriate and effective charity governance policies and procedures; recording and tracking our organisational compliance with the code of practice for the governance of State bodies; closer collaboration with HRI and the Department of Agriculture, Food and the Marine on financial and governance matters; and increased operational collaboration with HRI on efficient delivery of shared objectives, which is already bringing gains in capacity, effectiveness and resilience.
The IHRB is resolute in our commitment to fully addressing the issues highlighted in the review, making the necessary changes to uphold the highest standards of financial governance and assuring public trust in the IHRB as the regulator of Irish horse racing. We are satisfied the measures identified will address the recommendations made by Forvis Mazars and we are on target to have them fully implemented by year end.
Reducing the risk of injury to racehorses on track, especially fatal injury, is a significant challenge to racing jurisdictions worldwide and is a core pillar of the IHRB strategy. To this end, the board initiated the equine injury in Irish racing risk-reduction project to determine, analyse and mitigate risk factors for racing-related equine injuries in Ireland and to identify opportunities to improve safety for our horses and riders. The project’s findings have led to an enhancement of the IHRB’s race-day equine veterinary inspection programme, new standards for racecourse trot-up areas, and implementation of an evidence-based risk assessment for race-day injury. Alongside enhanced inspections on track before any previously injured horse returns to racing, the IHRB veterinary team works with trainers and their own vets to ensure the horse’s suitability to race. We also run periodic expert seminars for trainers and vets to provide information on reducing race-related equine injury.
The equine anti-doping programme remains a top priority and our approach continues to evolve in line with international best practice, with ongoing phased implementation of the recommendations of the independent Suann review. IHRB teams took 5,866 samples from horses in 2023, which were analysed at LGC in Newmarket, one of only six IFHA recognised reference laboratories worldwide. These resulted in the detection of six adverse findings and the trainers involved have been dealt with through our disciplinary processes in accordance with the rules of racing.
This year we also launched a joint anti-doping initiative with the British Horseracing Authority which saw approximately 250 samples, both blood and hair, taken from more than 120 horses across 14 training establishments in advance of the Cheltenham festival. To enhance transparency, we have begun monthly publication of anti-doping and other integrity activity data on our website, including details of horses which have been the subject of an adverse finding.
I thank you, a Chathaoirligh, for the invitation to appear and for members' attention this evening. My colleagues and I are happy to expand on any element of this statement or to answer any other questions members may have.
Victor Boyhan (Independent)
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I have audit business relating to the Oireachtas to do and I will have to go. I am very conscious of audit and have a huge interest in the corporate governance of organisations. I have served on a number of State boards. I welcome Mr. O’Loughlin, Mr. Murphy and Dr. Hillyer and thank them for coming here.
This is probably the last meeting of the agriculture committee before the general election. I take this opportunity to acknowledge the significant work of our Chair, Deputy Jackie Cahill, who has indicated he will not be standing in the next general election. He is not here and I would have liked to have said it directly to him. He has been an exceptional Chair. I would not like to let this opportunity go without acknowledging his excellent and amazing knowledge of agriculture and his very fair approach to chairing the business of this Oireachtas committee. He understood the brief exceptionally well. He worked exceptionally well with the members and the Department. He was never afraid to confront or challenge the status quo and worked effectively with organisations. He included them and encouraged them to come in here in an open and frank way and participate and engage. He was always courteous to us and facilitated us here. I take this opportunity to wish Jackie well in the future. As I say, he was an excellent Chair and guided us through our work. At this point I also acknowledge the work of our clerk and the secretarial support and all the other support around it. I just wanted to get that out of the way. Jackie is an exceptional man with huge knowledge of agriculture and we will certainly miss him and his guidance of this committee.
Coming to the business in hand, I start on a positive note. I was speaking in the Seanad the day before yesterday, and we were celebrating and I was talking about the Irish jockey Robbie Dolan, who rode Knight's Choice and claimed the Lexus Melbourne Cup. What a day and what an achievement. It is a really positive story for racing internationally. I am sorry I did not have a penny on him because, at 80-1, the odds were fantastic and happy days for anyone who had €500 on that. That is a really positive note to start here.
We have an amazing equestrian industry and an amazing reputation all over the world. We do not want that to be blemished or undermined. We want to work constructively with all stakeholders in this sector because the Irish sports horse and all that goes with it are vital. We have discussed the issue at length. We acknowledge that there are shortcomings in governance. There have been challenges with testing for doping in sports in the past but I think things are genuinely improving.
I do not intend to ask too many questions but I want to make a few observations. I considered in detail the various reports that were submitted to us. All members have seen them and studied them. We teased out the details among ourselves. I examined the IHRB annual reports before I came here today.
The IHRB statement of strategy for 2024 to 2027 is fantastic. It is great to set goals and achievements. We cannot forget what has gone before but that is really positive and important. The statement is well laid out and explained. It is easy to measure and I salute the witnesses for that.
I looked at the report of the equine injury in Irish racing reduction project, which is important. It was interesting to learn about that. I read the IHRB equine anti-doping reports, which were interesting. There are challenges in that regard, as the witnesses acknowledge. There have also been vast improvements in that regard. I also read the independent review of the IHRB equine anti-doping programme, which is important. I see pathways and evidence of a concentrated and positive way of going forward. That is what I want to dwell on tonight.
I have also studied the detailed financial governance review from Forvis Mazars and certain transactions with the IHRB. That sets out a comprehensive background to some of the issues that the witnesses have addressed today. I do not intend to dwell on those matters. It is good that we have an auditing system. Mazars is an exceptional company and it has set out a number of issues, so that is transparent and important. Transparency is key to governance.
I will touch on a few issues. I looked at the strategic plan, the vision and governance, and the various pillars that have been set out. The IHRB, as we all know, has a legal responsibility to protect the reputation and integrity of the Irish horse racing sector. That is important. We talked about the Melbourne Cup. Anything to do with our reputation is critical to the success of the industry, its further growth and the realisation of its potential. That is something that Irish people in general are very proud of and it is important.
I also think of the context of this report. There is an absolute responsibility in terms of administration and management. Substantial Government grants are significant to the industry. Every year, we approve funding and consider issues around sports horses generally. It is not always easy. There is a lot of conflict around some of those issues in the days leading up to the approval of funding with consideration of whether it should be varied and whether more money should be designated or ring-fenced for welfare as opposed to something else. That is important. I have no vested interest here and I do not know anyone on the board or any of the governors or trustees. I see evidence of a clear strategy for good corporate governance, which is important.
There is the ongoing issue and challenge around ensuring compliance with good practice and the code of practice for the governance of State bodies. The witnesses will be familiar with that. I see evidence of all of that. It is there. The witnesses are clearly aware of their corporate governance responsibilities in that area, which is also important.
I am not fully apprised of and do not have an in-depth knowledge of the organisation in respect of how it is resourced for compliance and risk functions. I note that is in there but it is an important challenge. There is a risk assessment audit system within the Oireachtas. Every organisation has such a system. It is important that sufficient resources and skill sets are available and applied to ensure high compliance. What gives confidence to people in respect of compliance is transparency. The witnesses are here today on a programme that is broadcast on Oireachtas TV. They are on the record of the Oireachtas. That sort of transparency instils confidence and that is important.
I encourage the witnesses to have greater collaboration with HRI. Mr. O'Loughlin identified that issue. He said that he plans to have greater engagement with HRI and the Department of Agriculture, Food and the Marine, as it is now. It may become a different Department in a few months' time.
It is nice and dandy to say there will be constructive stakeholder engagement through strong communication processes, consultation or collaboration, but there needs to be greater evidence, going forward. I ask the witnesses to focus more on that issue because it is important.
It is rare that I come to this committee, which I have been a member of for the past five years, without a question to ask. Having studied in detail the documents submitted to the committee, I am of the view that the board is putting in place, and has put in place, mechanisms. It would be interesting if the witnesses were to come back to the committee in 12 months' time and tell us how it is going. I do not have any questions. I thank the witnesses for coming and for being upfront and honest about the problems they have encountered. They have acknowledged that some system threw up this anomaly or concern and that has now been addressed. I thank the witnesses for coming before the committee.
Paul Daly (Fianna Fail)
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The Senator said he did not have any questions but the witnesses may like to comment on his comments.
Mr. Darragh O'Loughlin:
I am grateful for his comments. I echo his words about Deputy Jackie Cahill, the Cathaoirleach of this committee, who has always been a great supporter of the horse racing industry. I have had conversations with him at racecourses across the country. He is not just a supporter but a constructive critic when that is needed. That is always useful. We send him our regards through the committee.
I am grateful for Senator Boyhan's observations. I am grateful that he took so much time to read our documentation. As he said, we are trying to be as transparent and open as we can to set out a plan for the future. We are guided on a daily, weekly, monthly and annual basis by that strategy. My staff are probably sick of hearing me tell them why we do what we do under that strategy and linking that work back to that strategy. It is important to have a vision for an organisation. That vision for us includes governance, probity, transparency and accountability. That is important.
The Senator spoke of, and emphasised the need for, consultation and collaboration. I agree with him. Over the course of this year, which is the first year of the strategy, we have made particular efforts to expand our consultation and collaboration with stakeholders. We have, for example, engaged frequently, professionally and constructively with the Irish Jockeys Association, even in relation to penalties for riding offences under the rules of racing. There has been a need to increase penalties in some areas and to ease them in others to modify behaviour and ensure safe riding. We have found through that engagement that the jockeys have been very helpful. The resulting changes have landed much better. They have been accepted by the members of the association and that audience, which makes for a smoother and better regulatory atmosphere. We are not asking them what penalties they want but we are explaining why we are doing what we are doing and the jockeys are helping by telling us how they think we should do what we were going to do anyway. I agree with the Senator on that point and, as I said, I am grateful to him for taking the time to understand our organisation and industry to such an extent.
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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I thank Mr. O'Loughlin and his colleagues for coming before the committee. I have a couple of queries. Who brought in Forvis Mazars? Was it the Department or the board?
Mr. Darragh O'Loughlin:
We commissioned Forvis Mazars partly because we did not have an existing relationship with the organisation. It provides internal audit services to HRI and in the interests of transparency and speed, we jointly commissioned the report with HRI. HRI, which has governance oversight of the IHRB, selected Forvis Mazars to conduct the report. The terms of reference were signed between us, HRI and Forvis Mazars in order to carry it out. The report was issued to us and to HRI simultaneously.
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Who paid for the report? Was it HRI or the IHRB?
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Is Forvis Mazars still providing a service or has it finished with the IHRB?
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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That is grand. How much did the report cost?
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Mr. O'Loughlin said it was good that no impropriety was detected. How did the transfer of €360,000 happen? Did someone press the wrong button? What is the explanation?
Mr. Darragh O'Loughlin:
We detected no other inappropriate transaction. That transaction of €350,000, which was transferred from the Jockeys Emergency Fund to the IHRB bank account, was an improper, inappropriate and unauthorised transaction.
We were reassured that we had asked for Mazars to scrutinise all of our financial transactions and financial records going back to the establishment of the IHRB at the beginning of 2018, and they found no other similar transactions. I just wanted to clarify that.
With regard to how this happened, unfortunately I do not believe it was an inappropriate or accidental pushing of a wrong button. This is a step that was proactively taken in a particular set of circumstances and, as I said in the opening statement, it should not have happened.
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Was it for personal gain or was it to cover issues that were happening within the finances of the organisation?
Mr. Darragh O'Loughlin:
As set out in the Mazars report, they looked at the particular circumstances around it. They looked at the transaction itself, how it had happened, and the particular set of circumstances that led up to it. It was not a question of misappropriation or personal gain. According to the Mazars review there was a particular cash flow crisis, as it were, in January 2022 because a number of payments had been made that had not yet been funded. Redundancy payments were being made and there was a shortage of money in the IHRB bank account such that that month's payroll potentially could not have been met. It was in those particular circumstances that the then chief financial officer actioned this transfer.
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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I see that a number of steps have been taken to guard against that. What is the procedure now for someone to transfer money within the organisation?
Mr. Darragh O'Loughlin:
Before any transfer, we have different procedures. We have tightened procedures for all transfers. Depending on the value of the transfer, the procedure can be even tighter. For a transfer of that scale, it would require me as chief executive officer to sign off on it and to see the reasoning or the rationale for that transaction. Any transaction over €100,000 requires me as CEO to authorise it personally, in addition to one other member of senior management such as the chief financial officer beside me.
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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That is very good. I assume the €360,000 was returned.
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Did that cause any issues then for the Jockeys Emergency Fund given the 90 or so days?
Mr. Darragh O'Loughlin:
No. The Jockeys Emergency Fund did not suffer nor did any beneficiary of the Jockeys Emergency Fund suffer the loss of the money for the period. In saying that, I am not suggesting for a moment that it was appropriate or okay that it happened. It is a reassurance that the charity did not miss the money to extent of any beneficiary suffering any ill effects. The charity carried on as normal.
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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I thank Mr. O'Loughlin. I have a question for Dr. Hillyer on anti-doping measures. There were 5,866 samples in 2023. What is the target for this year?
Dr. Lynn Hillyer:
We are hoping to achieve around the same number. At the moment it does slightly depend on the challenges that come in. We have some flexibility within the budget to allow us to do that. As we have said before, it is not purely the numbers it is the type of sample as well. It is very important that we take the right sample at the right time so we can balance the two.
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Last year there were just fewer than 39,000 runners. I was never good at maths but that is probably less than 20% sampled.
Dr. Lynn Hillyer:
Overall, but several horses get sampled more than once. It is basically done on a risk basis as well. Again, we try not to just pick it on the numbers. We try to assess the risk in each individual horse's circumstance. The really important point is to make sure we take sufficient samples off the racetrack. Keeping that percentage of out-of-competition samples up is one of my priorities.
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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What is the international standard or the norm?
Dr. Lynn Hillyer:
It does vary depending on the jurisdiction. There are some racing jurisdictions where the first four horses in a race could be sampled and other jurisdictions where there is no out-of-competition testing. The common theme in all jurisdictions is to achieve best practice internationally. That is set out in an international agreement to which we are a signatory. The quality of the product depends on the circumstances on the ground. We take that very much into account here.
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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With that international best practice, in terms of a percentage, we are probably at one in five horses competing. What is the international standard?
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Is Dr. Hillyer comfortable that we are not scaling it up? Does he think that we should scale it up, notwithstanding resources? Given the vast amount the State invests in horse racing and the annual contribution to horse racing, which I fully support, and which is routinely derided by many of the public, does he believe there is an onus on IHRB to ensure the absolute integrity of this sport?
Dr. Lynn Hillyer:
We absolutely do and our focus is relentless on that, on both the anti-doping and the equine welfare side. They are both very much interlinked. It is really critical that we do not stand still. We have to keep moving forward. Developing my team, developing how we take our samples, where we take them, what we take and what we do with those results, is a constant focus. It is always evolving. I keep going back to this; it is not just about the numbers. We need to make sure the numbers are as high as they can be within reason but it is the quality as well as the quantity that is so important.
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Horse racing has a good many friends within this House at the minute but this might not always be the case. IHRB certainly must ramp up what it is doing in anti-doping. It is increasingly an issue among the general public. Most of us who grew up in rural Ireland fully support horse racing and country pursuits, and we enthusiastically support them and follow them, but there is an onus on IHRB to ramp up what it is doing on doping. I understand that this will present issues for IHRB in respect of staffing and resources. I am aware it is not straightforward to take a sample off a horse and that it is multifaceted but there is an onus to ramp it up.
On the initiative IHRB undertook with the British Horseracing Authority, BHA, was this initiated by that authority or was it a collective meeting of minds to do that around the Cheltenham Festival?
Mr. Darragh O'Loughlin:
It arose out of discussions I was having with the director of integrity or regulation in the BHA. We have regular interactions with them in professional forums such as the European Horserace Scientific Liaison Committee, of which Dr. Hillyer is a member, and various other similar fora. On the fringes of that we had discussions because, as the Deputy will know, many Irish horses go over to the UK and many British horses come here. We try to encourage that flow back and forth. We thought it could be useful as a way of demonstrating confidence in each other's testing regimes if we were to go testing together. Their director asked that Dr. Hillyer would get in touch with the chief veterinary officer in the BHA and set something up. Dr. Hillyer might explain how it came about it.
Dr. Lynn Hillyer:
It is exactly as Mr. O'Loughlin has said. We have been collaborating informally for years. I came from that jurisdiction some years ago so there was a quite a knowledge, an understanding and an informed exchange of information on anti-doping and equine welfare, which are the two pillars I work in. It became very clear, as Mr. O' Loughlin said, that we needed to make sure we have a consistency between the two jurisdictions. The shared testing was an obvious part of that.
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Are there plans to build on that?
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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We have the big festivals happening again in 2025. Has the IHRB met with any the representatives of the Irish festivals with which it will do that joint initiative?
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Will that cross-agency approach include some of the Irish festivals in 2025?
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Will it be one or two?
Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Two. That is very good.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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As other Deputies and Senators have done, I wish to pay tribute to Deputy Jackie Cahill. The one thing about this committee is that politics went out that door with everyone, in fairness to everyone here who worked together with him. The Chairman was very helpful. I have been in the Dáil for a few different agriculture committees and I found him to be one of the most helpful Chairs that we ever had. I wish him well. The Dáil is finishing and I thank Christy and Rebecca and the rest of the secretariat team for putting up with us for the past few years.
I thank the witnesses for coming in. When the figure of €242,990 was being given who came up with that? Was Mr. Murphy the chief financial officer at the time?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Were there more redundancies in that line of the business?
Mr. Darragh O'Loughlin:
There was a voluntary redundancy and early retirement scheme in place in HRI and it was extended to IHRB, as the Mazars report outlines, in 2021. In the scheme rules, there were criteria for calculating how much a person's redundancy or retirement payment would be by reference to their salary and number of years of service. It was those criteria that were used to calculate individual entitlements.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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It must be an unusual type of criteria because I see what is written in the newspapers about even politicians and what they get or are entitled to when they retire. The figures I see there are fairly substantial. How were they arrived at?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Am I correct in saying that in the report there was no formal written justification, or IHRB got no go-ahead from HRI, to sanction this?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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They went ahead without approval.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I presume there is a board and different people in positions. How many of the people who were involved in making that decision are still there?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I do not care if there are 28. I am asking how many people are still there who decided to give a package without the go-ahead from HRI. Are any of them still on the board? Were there any sanctions?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Who gave the go-ahead?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I refer to the jockeys fund. I cannot understand this and I ask Mr. O'Loughlin to explain it to me. The IHRB gets a budget to do its different things for the year. I refer to the amount of moneys that were unforeseen, we will say. I understand the jockeys one, where it was put over because there were cash flow problems, even though it was not the proper process. Then when the money came in from wherever the IHRB was getting the money, it reverted. Explain to me the following. If you get €10,000 to run a house for a year, you have €10,000, so you have to make the best of it. I refer to unforeseen expenses. Where did that large amount for paying the CEO come from? Is it money the IHRB can do without every year?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I know that but I am talking about the separate payment to the CEO.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I presume that when the yearly amount was agreed, this figure was not foreseen, to put it simply.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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What was done by the end of the year? Was this money picked up by someone? Obviously, the taxpayer picked it up in the end.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I am trying to find out the following. Of the budget agreed at the beginning of the year, whatever figure it was, was this money given to the IHRB to cover it, did it have to do without it or was something cut?
Mr. Darragh O'Loughlin:
I am going back to September 2021 because the report says that is when the payment was made. At the beginning of September, the IHRB received the money for the September budget. The Deputy is correct that this sum would not have been included in the budget because it was not foreseen at the beginning of the year when the budget was done. The payment was made. There would always be a balance in the bank account. The bank account of the IHRB is not zero.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Would it be that big of a balance?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Was Mr. O'Loughlin there by the end of the year? When was he there?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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So Mr. O'Loughlin was there.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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We are sort of working in the dark, are we?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I know that. I am sick looking at reports.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I understand that but I am only asking a simple question. When Mr. O'Loughlin came in, was there a shortfall of that figure in his books for the end of 2021?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Did extra money come in?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Which services that the IHRB had budgeted for was money not given to?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Surely, there is a schedule for the year of what the IHRB needs money for. I presume Mr. O'Loughlin would try to find out if it went there or not when he came in as CEO.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Was that for other salaries and redundancies?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I understand Mr. O'Loughlin joined in June and he was not there before that. There was a shortfall in January, so moneys were transferred across. Was a bigger budget then given by HRI to cover the deficits for 2022?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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How much?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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HRI gave money to IHRB that it never sanctioned, but it gave it to the IHRB the following year.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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That is taxpayers' money.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Dr. Hillyer appeared previously before the committee and we spoke about a few things in the line of doping and all of that. When she was here, we bought up a difficulty that was happening when the IHRB was going out to where horses were kept or trained because, at times, horses could be gone somewhere else, and there was not traceability. Has that been resolved?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I asked a question. Has it been resolved?
Dr. Lynn Hillyer:
We do not have a full traceability system in place at the moment. That project is being led by the Department of Agriculture, Food and the Marine with assistance from us and Horse Racing Ireland. That traceability project is not yet completed but it has made good progress this year.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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What does Dr. Hillyer mean by "good progress"?
Dr. Lynn Hillyer:
We have monthly board meetings - we had one this morning, actually - to monitor progress. Weatherbys Ireland is a key stakeholder in this regard. There is a great deal of work under way. My team has been involved in end user testing of prototypes. We are now at the stage of there being something to test, so I am encouraged by the progress.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Testing what?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Will it be like the AIM system for cattle?
Dr. Lynn Hillyer:
In time. We are starting by picking up the known movements of thoroughbreds. When foals are notified to Weatherbys as being in existence, as it were, when they are registered, when they pass through public sales and each time we identify them through their microchips, all of those points along the animals’ lifespans will be documented and recorded. We will then fill in the gaps.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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That will not solve the problem. From memory, the IHRB told us at a previous meeting that there was a difficulty, in that it could visit somewhere and be told that a horse had gone somewhere else. From what Dr. Hillyer is saying now, it is like we are Nanci Griffith and looking at it “From a Distance”, in that we are looking at different parts of where a foal is, but before the IHRB goes out on a visit, it cannot press a button and know exactly-----
Dr. Lynn Hillyer:
We are coming at it from two different directions. The big traceability project is what I have just described. Concurrently, we are putting into the rules of racing, where we have jurisdiction, the requirement that licensed trainers return the whereabouts of all the horses on their licensed premises.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Return them how quickly?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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No. I mean, how quickly will they be required to return that information? Will it be within a day, a week, a month or a year?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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The IHRB will know exactly where every horse that is in training is.
Dr. Lynn Hillyer:
Every horse that is on a licensed premises, regardless of whether it is involved in training, will need to be notified to us via HRI. This is a significant move forward. As Mr. O’Loughlin mentioned, we have been working in close consultation with the Irish Racehorse Trainers Association and others on moving this forward. It is not the IHRB-----
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Are the witnesses aware that there is a problem and there is still not proper movement? This is not a matter for the IHRB directly, but are the witnesses aware of the problem with books for horses and so on?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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The IHRB might take it seriously, but the witnesses are probably aware that there is a problem when a foal is born and gets its books and so forth.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Is the IHRB frustrated by that?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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When the IHRB last appeared before us, we discussed a matter that some members have raised at this meeting, namely, how the IHRB was considering a system whereby, between a horse just running and before the finish, it could be checked from where it took off. Was that ever done?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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At the time, there were allegations that there were certain ways of boosting a horse and we inquired into them at the meeting. A shot could be given to the horse that would only last for a certain time and would not show up if it was tested afterwards. The IHRB was considering a way of testing horses at the starting point of a race. Was that ever done?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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It was a while ago, so off the top of my head, I think that there were some allegations, which may or may not have been true and I am not saying they were true. The IHRB stated that it would consider testing horses at where they would be taking off from. Was anything ever done in that regard?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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What is pre-race testing? Explain it to me as someone who does not know.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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When Dr. Hillyer refers to the racetrack, does she mean down near where the horse takes off or where?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Can hair samples not be taken?
Dr. Lynn Hillyer:
We take hair samples as well. The key is to take the right samples at the right times. Hair samples, blood samples and urine samples all have good qualities and show us different things. The key is to use them in a mixture. We do that every day. Every time we go racing, we look carefully at which sample we need to take from each horse. That is the same whether it is done on the track or off it. That is what gives us our strategy and is very important.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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My final question is for Mr. O’Loughlin. The IHRB has a new governance system. Who pays the €80,000 for someone to do this report?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I know that, but I presume it was the IHRB that required the report because it wanted HRI to account for everything and be transparent.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I presume that is more taxpayers’ money.
Mr. Darragh O'Loughlin:
It is part of HRI’s internal audit budget. Senator Boyhan spoke about the costs associated with governance and compliance. There is a cost, and it needs to be resourced. Forvis Mazars already provides internal audit services to HRI. It is as part of that contract that it conducted this particular audit of the IHRB.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Regarding the system for adjudicating what a person is worth, is it the IHRB that writes that up?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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If someone is getting a redundancy payment, who puts that calculation together? Is it done internally by the IHRB?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Essentially, HRI lays out how it is done.
Mr. Darragh O'Loughlin:
It sets out the criteria. The calculations were done in the IHRB and checked by HRI. The calculations of the amounts were checked by Forvis Mazars as part of this report. It has reported that, in the case of the voluntary and compulsory redundancies, all of the calculations were correct.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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What is the IHRB’s situation now?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I mean financially.
Mr. Darragh O'Loughlin:
Any regulator would say that it would like to have a bigger budget, but we are managing. We have agreed an annual budget with HRI and are operating within the agreed funding parameters. We meet HRI at least every three months to review our management accounts for that period and to preview spending for the upcoming period. We operate on the basis that there should be no surprises. We like HRI to know where we are financially. If we are anticipating any particular expense, for example, a large legal expense or a capital expense, we always flag that with HRI well in advance.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Does HRI have another pot of money from which it can throw more to the IHRB? Is it a fixed budget for the year? How does it work?
Michael Fitzmaurice (Roscommon-Galway, Independent)
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Mr. O’Loughlin stated that, if something cropped up, the IHRB would flag it. Does HRI have another piggy bank from which it can pull another bit? I am trying to fathom how this works.
Michael Fitzmaurice (Roscommon-Galway, Independent)
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I thank Mr. O’Loughlin.
Martin Kenny (Sligo-Leitrim, Sinn Fein)
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I thank the witnesses for their presentation. I apologise, as I was late arriving and missed their opening remarks.
I will make a few brief comments.
We all recognise the importance of the equine industry in Ireland and the huge contribution it makes to the economy and our reputation internationally. Part of that is about having a proper regulatory structure in place to ensure authenticity in what happens in this regard. When questions arise, naturally people will immediately look to the regulatory authority. They will ask why, if there are rules in place, they are not being followed and why there are breaches and issues. In that context, it is important that the regulatory authority have everything in order, more so than anybody else, because it is the body that is supposed to be policing everybody else. In this context, it is quite alarming that there were issues. In fairness, the delegates have dealt with them and they have been spelled out here. Nonetheless, we need to have accountability in all of this. Sometimes there are blame games in various places. Blame is one thing but it is really a matter of responsibility and taking responsibility. I acknowledge that the delegates have taken responsibility for the issues that have arisen but there are still difficulties for many people and many issues. Various people from the equine industry in general have raised difficulties and problems with us, and this too needs to be acknowledged and dealt with.
On the issues in regard to the financial transactions and the way money was moved, are the delegates certain that none of these issues can arise now?
Mr. Darragh O'Loughlin:
We have controls in place. We have very much tightened the controls around all these financial transactions. A transaction of the scale in question cannot happen unless I have personally authorised it. I have to physically sign off on a transaction of that scale before it can happen.
Martin Kenny (Sligo-Leitrim, Sinn Fein)
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Up to what scale does Mr. O’Loughlin not need not to sign off?
Mr. Darragh O'Loughlin:
We have thresholds in place, and anything between €25,000 and €100,000 requires me or the chief financial officer to sign off on it, in addition to at least one other member of senior management. If the sum is above €100,000, it has to be me and the CFO or another member of senior management. What the Deputy is alluding to would require all of us acting in concert, and I would like to think that would not happen.
Martin Kenny (Sligo-Leitrim, Sinn Fein)
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We would like to think it would not have happened before, but it did, and that is why we are in this position.
We also need to recognise that there have been issues with documentation. The issue of passports has arisen here before. I am aware that our guests are not directly responsible in this regard but the governance needs to be tightened up with haste because it is a problem for people.
On the anti-doping regime, it is equally important that we have high standards and that those standards are seen to be met and worked on. Colleagues have mentioned that the State puts a very large amount of money into the horse racing industry. There is no other “sport” in Ireland that gets funding at anything like the same level. Government coffers are always tight and there are always issues. We have people on waiting lists to get appointments in hospitals and to get housing, and one of the things that keeps coming up is the absence of resources. The public sees a large amount of money going to an industry that, to most looking from the outside, is doing pretty well. If the Government and the Oireachtas as a body are to stand over that, they have to be certain of authenticity and that the bodies that provide funding and the regulatory bodies that govern all of this do so with absolute integrity. That is why it is so important that we get all this stuff right.
I acknowledge that it is not just the blood sports and horse racing that do very well out of this. There is the wider industry. The gambling industry also does very well, and that is why it is so important that we get all of this stuff right and be seen to hold the IHRB and other agencies involved in this industry to account for everything that has happened and is going on.
Of course, there are great success stories. The Irish horse industry is renowned throughout the world. We have had successful jockeys, including Robbie Dolan, the young man in Australia who won the Melbourne Cup the other day. We have great success stories that we need to acknowledge. However – I want to finish on this point as I am not here to ask questions and was late to the meeting – it is important that the board that governs the IHRB, and not just the guests present, and the boards that govern all the organisations that benefit from Government funding for the horse racing industry recognise that they have a huge responsibility to the public to ensure everything is done with complete integrity in the industry. There have been serious question marks in this regard. This is a message that the guests need to take with them. I will leave it at that.
Paul Daly (Fianna Fail)
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I also want to be associated with the remarks regarding our outgoing Chair, Deputy Jackie Cahill. It is no secret that Jackie, along with being a colleague, is a very good friend of mine. While we might knock sparks off each other as quickly as anybody else on an issue, we have had a very good working relationship. It was always a pleasure to be here at his request to step into the Chair if he had somewhere else to go. Perhaps the clerk could convey to him the expressions of high regard made here this evening. As Deputy Fitzmaurice said, this committee is here for the good of dealing with the topics in front of its members. Politics was left outside the door. That came down to how Jackie chaired the committee and approached everything. He will be a loss to these Houses and we wish him well and thank him for services rendered.
I always have to put on the record that I am a racing man. I am a director of Kilbeggan Racecourse, as is known. Also for the record, I am a horse owner. I would have been the proud owner of a runner in the 4.45 p.m. race in Dundalk only she turned up in season this morning.
I apologise for having to leave for a vote. It was the famous vote on the Finance Bill, which is now passed. As they say in racing, the white flag is officially raised. I could not miss the vote and I apologise if I repeat anything said while I was away. The guests can tell me they have dealt with any matter I raise if that is the case and I will be able to find the response in the transcript.
I will probably concentrate mainly on the Mazars report, which we got yesterday evening and which I read. I welcome it and all the actions coming from it, but I want to go back to why it had to be commissioned in the first place. Saying we will leave it now and walk on is like saying that, although there were problems, they will never happen again. We cannot turn our backs on what did happen. I have a few questions based on that. There are two paragraphs in the material on the report with which we were supplied that I find very damning. I will take it from there. They are about the payment of the former CEO. They state:
On this basis we do not consider that this payment fell within the rules and criteria of the Scheme. We consider that the use of public funds provided by HRI to IHRB for the purpose of a retirement payment to the Former CEO, was not specifically sanctioned in writing by HRI. We believe such a formal/written sanction should have been required under the governance arrangement for retirement and redundancy payments established by HRI.
From a review of the Financial Statements of IHRB for the year here from a review of the financial statements for the year ended 31 December 2021, we noted that the retirement amount paid to the Former CEO was reported as being part of the Voluntary Redundancy and Early Retirement Scheme. Based on our review and analysis, as noted above, this payment was not made or formally approved within the criteria of the Scheme, and this disclosure is therefore incorrect.
That is in IHRB’s accounts. It is public funding. As said on a couple of occasions while I was here this evening, we are getting more and more grief every year when it comes to us – perceived to be racing people – sanctioning the horse and greyhound fund. Then one reads what I have just quoted. It is in the public domain. I just quoted it for the purpose of my question. The questions raised are still not answered. It is okay to say that what happened happened and that there are recommendations from a company – they cost €80,000 – to ensure it will never happen again, but it did happen and we need answers. The retirement amount is recorded in the accounts as being part of the voluntary redundancy and early retirement scheme.
The only word missing is "or". It should read "and or early retirement". Did the man take voluntary redundancy or early retirement? Why did he receive €141,000 more than was in the package? Did any heads roll over this? The argument that this is never going to happen again and that we should move on does not wash with me to be honest.
This all came to light at a meeting of the Committee of Public Accounts. Mr. John Murphy's predecessor was on paid leave for over a year. I read last night about what was going on. There were voluntary redundancies. How many people applied for them and how many were unsuccessful in their application? Compulsory redundancy was also mentioned and I would like to know more about that too. The money was not there to pay them or to pay the over-and-above payment for the CEO's retirement. In fairness to Mr. Murphy’s predecessor, from my reading of it, he found himself in a situation in which the wage checks were going to bounce. He got €350,000 to make sure that did not happen by moving money from one account to another in order to get over the hump because €141,000 was spent that had not been budgeted for. He got over the hump and then the money went back. Did he leave of his own free will after one year of garden leave? Is he the only person who fell on his sword? I believe he was doing the best he could to ensure wage checks did not bounce. There are a lot of questions to be answered before we accept that the systems in place now are the solution to the problem because this problem happened.
I have a big grievance. As I said at the outset, I am racing man. I attend a lot of racing and talk to a lot of racing people. A lot of people are annoyed and will be even more annoyed when they read this report because it damages the good reputation of racing. The reading of this report could not be more damaging to the good reputation of racing. As people said to me on the racetracks, a trainer called John Joseph Hanlon, better known as “The Shark”, inadvertently - and it was careless - did not secure a tarpaulin properly over a dead horse on a Friday evening when he needed to move it or he would have been in bother for not moving before the following Monday morning. He received a ten-month suspension as a result. Horse welfare is involved when horses have to be moved. The suspension has been halved on appeal. Those horses have to be moved. There are jobs at loss. That man is suffering for a little bit of recklessness in a rush on a Friday evening. I am being told by racing people that this man is being used as an example. No one will suffer in this case, however. Who is getting the ten-month suspension over what happened here? Who is going to lose their job? Who is going to have to sell off their horses? Who is going to have to let staff go for the now reduced time of six months? I am only relaying what has been said to me on the racetracks. He is being used by the IHRB as an example to show that it is running such a tight ship and that this is how it deals with someone who brings racing into disrepute. Who, however, is suffering and falling for this?
Mr. Darragh O'Loughlin:
I thank Senator Daly. We, of course, are familiar with his love of racing, which we all share. The two cases cannot be equated. It would not be fair to Mr. Hanlon for me to expand on his particular case. The charges were brought under the rules of racing to which all trainers and licensees sign up. The man appeared before a referrals committee, which is our disciplinary process, and was fully represented by a solicitor and senior counsel. As the Senator said, he had an appeal, which is a part of our process.
Paul Daly (Fianna Fail)
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Maybe I spoke for too long because I feel passionately about it. The comparison between the two cases in that the one common denominator, in my opinion, is the damaging of the good reputation of racing. Both cases are similar in that regard. That is the common denominator.
Paul Daly (Fianna Fail)
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Who is suffering for damaging the reputation of racing in what happened here?
Tim Lombard (Fine Gael)
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I instruct members and witnesses to talk to the topic on the agenda. I do not want to go into other issues. We must stick to the topic on which the Irish Horseracing Regulatory Board was asked to attend this committee meeting.
Mr. Darragh O'Loughlin:
As Senator Daly pointed out, the then-chief financial officer of IHRB is no longer in place. It is a matter of public record that he was on leave. He was placed on leave at the end of June 2023 when we became aware of what had happened more than one year earlier at the beginning of 2022. He resigned earlier this year. That again is a matter of public record. The man resigned from the IHRB at the beginning of July. I will not say any more about him other than that the Senator is correct; he was on a period of leave. The Senator is also correct that he resigned.
Since this happened in the IHRB, we have a new CEO, chief financial officer and new independent directors on our board of directors. We have a different chairman and a new strategy which has been published and is providing the direction in which we are travelling. We are professionalising what we do. We are aiming for a measure of consistency in how we enforce the rules of racing and sanction people who are in breach of the rules or racing. We are using the time and the expertise of judges and retired judges from the High Court to make the important decisions in our referrals and appeals. We are an utterly transformed organisation and are still not finished. We collaborate much more closely with Horse Racing Ireland, HRI, than was the case previously. As I detailed already, we have quarterly meetings which are quite formal in nature in which we go through and expose all of our finances, management accounts and our spending. We also have ongoing informal communications. As I said in the opening statement, we work with HRI on shared objectives such as a shared IT strategy and a shared services approach to human resource management and procurement. It provides us with resources and assistance and, in turn, we provide it with full transparency in all of these areas of governance which are so important. HRI has governance oversight of the IHRB and there is nothing we are not being transparent about with it at the moment.
Rather than looking backward and deciding who should suffer and what they should suffer in terms of sanctions, we are very much looking forward. We have put controls in place, which I outlined earlier, to ensure that nothing of this nature can happen again. We have not for a moment said that what happened and what is described so accurately and in such detail in this Forvis Mazars report was acceptable or that any of it should have happened. We have held our hands up as an organisation and have outlined all of the steps we are taking under new management, with new independent directors on our board, to address this and to make sure that from this point forward, we do things as they should be done.
Paul Daly (Fianna Fail)
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I welcomed the report and everything Mr. O'Loughlin has just outlined going forward. I do not accept, however, that we should not be looking back and only be looking forward. Some €141,000 of State, taxpayer and public money was paid, which was not sanctioned by HRI. It was accounted for, “as being part of the Voluntary Redundancy and Early Retirement Scheme payments”. Was there any effort to get that money back? It was not part of the package. Who decided to pay it? When a payment like this is discovered, on the back of a report which is basically saying that it was mis-accounted, you cannot move on. We are responsible for the public purse. I cannot walk out of here this evening and say this will never happen again, that there was €141,000 and I am happy in the knowledge that it is never going to happen again. I cannot do that. I take my job seriously. I am responsible to ask the questions on behalf of the taxpayer who paid that €141,000 at the end of the day.
Paul Daly (Fianna Fail)
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They are funded by HRI which, as has been stated, receives massive sums of money from the public purse ever year. While it may receive a certain amount of money from the State and a certain amount of money from elsewhere through entry fees or whatever, putting the two parts together, there is no way of knowing what part was used. When a body is in receipt of public funding and money is spent or misappropriated, it is public money. It has matching funding and other sources of income, but it is a beneficiary of public funding.
Why else is it even duty-bound to come in here? Why else is it answerable to us? Why does it answer to the Oireachtas? Why does it and HRI have to attend the PAC? It is public money.
Mr. Darragh O'Loughlin:
It might be helpful for me, for the committee, to distinguish between the Irish Horseracing Regulatory Board, IHRB, which is the racing regulatory body under the Horse Racing Ireland Act 2016, and the Turf Club and the INHSC, which before 2018 carried out that function. The INHSC and the Turf Club are not currently the racing regulatory bodies; they are private members' clubs. They are very important stakeholders in the IHRB and they each nominate directors to our board. Those two organisations, as private members' clubs, do not receive State funds. The Turf Club is not State-funded; it is a private members' organisation. The IHRB is a separate entity. My contract of employment is with the IHRB, not with the Turf Club and not with the INHSC. I do not work for those clubs, my CFO does not work for them and my chief veterinary officer does not work for them. We work for the IHRB, and the IHRB is funded by the taxpayer through an integrity services budget which comes from HRI. As the Senator has outlined, HRI is funded by the taxpayer. The-----
Paul Daly (Fianna Fail)
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That was the package. There was €141,000 on top of that.
Paul Daly (Fianna Fail)
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That was the package, just for clarification.
Tim Lombard (Fine Gael)
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That is taxpayers' money, Paul. It is the €242,000.
Paul Daly (Fianna Fail)
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The €141,000 was paid over and above that.
Tim Lombard (Fine Gael)
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The €141,000 is the Turf Club's money then.
Tim Lombard (Fine Gael)
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That is where the split came. The HRI money was €242,000 and the Turf Club money was €141,000.
Paul Daly (Fianna Fail)
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But where was the €141,000 in the package, in the severance, in the terms and conditions?
Mr. Darragh O'Loughlin:
In our financial statements for 2021, which I did not bring with me, it was disclosed by the Comptroller and Auditor General that the total payment was €384,870. I am reading from paragraph 2.1.4 of the Mazars report. The total payment was €384,870, of which €141,880 was funded by the INHSC and the Turf Club. The remaining €242,990, which is the amount he was eligible for under the scheme, was funded by HRI.
Paul Daly (Fianna Fail)
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Why then would it be here, in what I read out at the start? Why would it have to be camouflaged in accounts as being recorded as being part of a voluntary redundancy and early retirement scheme? It was not a voluntary redundancy; it was an early retirement scheme. Why was there a need for that false accounting, for want of a better term?
Mr. Darragh O'Loughlin:
At the time, there was a single scheme which was called a voluntary redundancy and early retirement scheme. People will go out on either voluntary redundancy or early retirement. What Mazars has found, however, is that because the package agreed with the CEO at the time was greater than the scheme rules allowed for, and, as Mazars has written in its report, because it was not sanctioned in writing by HRI, it did not comply with the terms of that scheme and, according to Mazars, should not have been reported as part of the scheme. Our financial statements for 2021, however, were audited, and in the audit report it was disclosed exactly how much had been paid to the retiring CEO. Then, as regards the three redundancies, there was one figure given for the scheme, and Mazars has said now, in 2024, that the way in which it was disclosed in the financial statements for 2021 was not correct, in its opinion. At the time, however, the auditors audited and they disclosed the payment that was made to the then former CEO.
Tim Lombard (Fine Gael)
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Paul, you are over time by three minutes. I will come back to you.
Tim Lombard (Fine Gael)
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Could I just get clarity on this? The package was €380,000-plus.
Tim Lombard (Fine Gael)
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So €242,000 basically came from the Department. You could argue the point that this is State money. The sum of €141,880 was the top-up, for lack of a better word to describe it.
Tim Lombard (Fine Gael)
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By whom was that third party professional services firm hired?
Tim Lombard (Fine Gael)
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The IHRB got an outside consultant to evaluate the potential package, and the top-up then came from the Turf Club to fill the hole regarding the potential package.
Tim Lombard (Fine Gael)
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Would you not consider that totally irregular?
Tim Lombard (Fine Gael)
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Has the Turf Club ever corresponded with you, as an organisation, about the €141,000? Will this be the next CEO's proposal, that he will have another top-up from the Turf Club?
Tim Lombard (Fine Gael)
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It is quite a bizarre situation, though. I know of no other organisation where an outside entity would channel money into it for a top-up for a retirement fund. It is potentially unheard of.
Tim Lombard (Fine Gael)
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Four of those directors who were there in 2021 are still in place. Am I right?
Tim Lombard (Fine Gael)
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But there are still four who were in place, so there are four individuals on that board who believe this was appropriate. Am I right in making that statement?
Tim Lombard (Fine Gael)
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Have they ever commented publicly or privately about the possibility that it might not have been in the best interests of horse racing?
Tim Lombard (Fine Gael)
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Have the four members who were on the board at the time ever made a comment publicly about that issue?
Tim Lombard (Fine Gael)
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Confidence is required in the system. The confidence comes from leadership, and if you have four members on that board who had confidence in it at that time, I just question how we can have confidence in the set-up at that stage.
Mr. Darragh O'Loughlin:
I will say if, I may, Chairman, that in my two and a bit years in this role, I have found the board to be supportive of the governance, probity, transparency and accountability measures we are putting in place. They have been supportive of the process by which we have arrived at this report and they have been very supportive in terms of the list of measures we outlined earlier that we are implementing to ensure that the issue I described here as an issue of grave concern in June of last year cannot reoccur. I have been challenged on my use of the words "grave concern" and I stand by them because at that time all I was aware of - all we were aware of - was that moneys from a charity had been moved-----
Tim Lombard (Fine Gael)
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We need to wrap up shortly. I will come to the charity issue in a moment. Regarding the top-up, what guarantees does the committee have that the potential CEO, whoever it might be, does not get another top-up from the Turf Club in respect of this issue?
Mr. Darragh O'Loughlin:
An expression that my mother used to use was, "Once bitten, twice shy." I imagine that expression could probably come into play. There is no reason why that particular set of circumstances would ever arise again. The circumstances were different in that the individual concerned had worked for 20 years, maybe more, for the Turf Club before becoming CEO of the IHRB, so there was a pre-existing relationship.
Tim Lombard (Fine Gael)
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It was bizarre, to say the least - and I am being polite - to think that the Turf Club would potentially have given money to the IHRB as part of a package of €380,000 for the individual in question.
Tim Lombard (Fine Gael)
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Money was moved out of a charity account for 94 days. This is a significant issue. What safeguards have been put in place regarding the charity aspect? As CEO of his organisation, does Mr. O'Loughlin believe that its work with the charities needs to be looked at? Is it part of his remit to manage the charity fund? Should other entities be involved in managing the fund? When one looks at IHRB's role as a regulator and how it is involved in the charity aspect, I am perturbed in the context of how they all fit together. Will Mr. O'Loughlin explain how they fit together and whether they way in which his organisation and the charities work together is appropriate and international best practice? How does it work?
Mr. Darragh O'Loughlin:
-----with much input and support from the Turf Club over the years. When the IHRB took on the role of racing regulatory body, it inherited the administration of these charities almost as custom and practice, as the Leas-Chathaoirleach pointed out, rather than as part of the regulatory remit. The measures that we have put in place meet the recommendations of this Mazars report in the immediate term. Ultimately, as the Leas-Chathaoirleach said, we need to take a higher level view and ask ourselves if it is appropriate for us, as a regulatory body, to be administering charities, albeit in a related area.
Tim Lombard (Fine Gael)
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Even the legalities of it are an issue. The IHRB is acting as a charity regulator and dealing with other issues that do not relate to it as the regulator of horse racing. It is slightly bizarre, to say the least, that the IHRB is tied into it.
Mr. Darragh O'Loughlin:
It is probably important to note that we just provide the administration service to the charities. In other words, we provide the staff who do the administration. We do not provide decision-making for the charities. They all have their own boards of trustees and committees of management that do the decision-making, but IHRB implement those decisions to manage the accounts and finances.
Tim Lombard (Fine Gael)
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When it comes to paying out, if they have to, which I hope they do not, it is effectively IHRB's staff who make those payments.
Mr. Darragh O'Loughlin:
That did not happen in this case. The report is clear and we are all clear that what happened should not have happened. The Leas-Chathaoirleach's question remains valid, and we are asking it ourselves. Given that, as we discussed, our resources are not overly plentiful and should be applied to regulating horse racing, which we exist to do, we have to ask if it is appropriate that we are using our time and people to provide administration services for charities and ending up in a situation such as this. I am satisfied that we would not end up in this situation again but it happened and we have to ask if that is the right model. It would not be right for us to simply cut those charities adrift. That cannot happen. They do not have employees. We are doing the work for them.
I have already undertaken discussions with the Department to the effect that in the new year we have to go back and look at the effectiveness of what we are doing and how we are doing it. We need to come up with a model that is sustainable and that provides the right level of accountability, transparency and safeguards. I imagine we will be invited back here this time next year and I will report at that stage on what we have done in the intervening period to strengthen governance and make sure we have the right level of segregation between entities and accounts, which I think the Leas-Chathaoirleach is hoping to see.
Tim Lombard (Fine Gael)
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My final point is about the cash flow issue that the IHRB experienced. I do not think there was any malice or personal gain to what happened, but it was a cash flow issue that brought the IHRB into that scenario. As an organisation, what management changes has IHRB put in place to make sure it does not have another cash flow issue, taking into consideration changes in staff and redundancy? I am not sure. Issues might emerge within the organisation. Has the IHRB looked at other cash flow elements? How did it run into this cash flow issue? I think making redundancy payments was the issue. What strategic planning is happening to make sure that the IHRB does not have these cash flow issues?
Mr. Darragh O'Loughlin:
In this particular case, exactly as the Leas-Chathaoirleach said, redundancy payments were being paid out to individuals before the corresponding funding had come in from HRI. We have a service-level agreement with HRI which captures all of this. We strengthened it, revised it and worked on it in the past year. We are working on it again, with another review before the end of this year. Under the agreement that we now have with HRI, if we were proposing any redundancies, we would have to do a business case. We would give the business case to HRI, it would approve the redundancies, assuming the business case stands up, then having approved the business case, it would then approve the funding. We will not even offer terms to our employees or the union on any potential redundancy until we have that approval from HRI on the terms of the redundancy. No payment will be made to any individual who is being made redundant until the corresponding funding has come across from HRI. We prevent the cash flow issue by getting the cash in before the cash goes out. We will get the approvals in place in writing before any steps are taken.
Regarding cash flow issues generally, we continually scan the horizon. We are quite strict about looking at what lumpy expenditure is coming up on big-ticket items. We make sure we have the money upfront in our account, from our funders, before the expenditure is incurred.
Paul Daly (Fianna Fail)
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Mr. O'Loughlin has nearly covered anything. I will not hog the meeting because we have been here for nearly two years. I asked about redundancies and Mr. O'Loughlin answered at the end. I know he said it was done with HRI. Were the voluntary redundancies a cost-cutting measure or was the IHRB overstaffed? Why was there a voluntary redundancy scheme to start with? Compulsory redundancy is mentioned in the Mazars report. I am intrigued by that. Maybe there are circumstances where Mr. O'Loughlin cannot comment on it. It jumps out when one sees compulsory redundancy in an organisation.
Mr. Darragh O'Loughlin:
Yes. An individual was involved. I will not discuss any individual here, notwithstanding the privilege. Regarding why there was a round of redundancies, it was not just a cost-cutting exercise, but is about efficiency. It is not just about whether we have the right number of people but whether we have the right people in the right jobs for where we are today and where we want to go in the future. As an organisation, we continually have to evaluate what our resources are, who we have, what the skills base we have is, whether we have enough skills in the areas where we are very active, and if we are overpopulated in areas where we are not so active. I was not there at the time, but I understand this was not about cost-cutting as much as efficiency.
It was not to reduce the overall headcount. It was to make sure we were recruiting and retaining people with the skills that were needed at the time in the organisation and giving people whose skills might have been superfluous the opportunity to leave on good terms.
Paul Daly (Fianna Fail)
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I think it was reported it was two people during this period. There were two voluntary redundancies.
Paul Daly (Fianna Fail)
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Were there unsuccessful applicants, for want of a better word, or was it just two people who took the package on?
Mr. Darragh O'Loughlin:
In my experience, across industries there are always disappointed applicants when you have a voluntary redundancy scheme. Any manager would tell you that dealing with the disappointment of the people who are not selected for the voluntary redundancy is often the trickiest part of managing it and in this case, the IHRB is no different.
Tim Lombard (Fine Gael)
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On behalf of the committee, I thank the witnesses for their appearance here. It is very important that we have had this discussion. Hopefully we can build confidence in the industry going forward. I sincerely thank the three witnesses for coming in.