FÁS WASTED or lost almost €2 million over a five-year period and failed to get full value from up to €40 million in spending on corporate affairs, according to a review of the State agency by an Oireachtas committee.
Procurement to the value of €7 million was not subject to competitive tendering and full value was unlikely to have been achieved there, according to the report by the Public Accounts Committee.
It also expresses concern that €35 million spent on advertising between 2003 and 2007 was not deployed under a coherent strategy. The failure of officials in corporate affairs to have regard to public procurement policy is attributed to “at best, carelessness”.
“It is hard to avoid the conclusion that the budget, in certain respects, was misused, in that contracts appear to have benefited a restricted number of suppliers.”
The committee has called on the Director of Corporate Enforcement and professional regulatory bodies to pursue directors and firms who gained by such “sharp practice”.
According to the report, one company won key contracts over a five-year period without going to tender. Much of the €2 million annual budget for the Fás Opportunities fair was allocated for services not procured by competitive tender: “It was difficult to avoid the impression that certain contracts were awarded in a manner which was significantly at odds with the procurement rules.”
The advertising agency retained by Fás was often bypassed by corporate affairs, which dealt directly with agencies and newspapers. An effective return on advertising spending of up to €10 million a year was not achieved.
“It appears, based on the evidence presented, that there was a deliberate policy to control how the advertising budget was used, ultimately to the benefit of certain individuals and media groups.”
The report also details how the Jobs Ireland website had to be shut down because it duplicated the Fás website, with a loss of €1.2 million. A company which received €1.7 million for developing and maintaining the website was set up just 10 days before getting the contract.
“While this is in itself not unlawful, it raises serious questions as to the adequate capability and experience of the 10-day-old company to undertake this work.”
Fás also lost €160,000 to overcharging, which is being investigated by the Garda.
The committee says it was clear there was no effective oversight of the activities of the director of corporate affairs, and it expressed concern that a single individual could have a “free hand” in expenditure of €50 million over a seven-year period.
Some of the strongest criticism in the report is kept for the board of Fás, which is charged with not discharging its responsibility adequately.
It says the board was not made aware of the findings of an audit investigation of the corporate affairs division until December 2007, two years after the findings were presented to senior management.
“A fault lies both with the board for not pursuing the matter more vigorously and with the senior management and the head of the audit committee for keeping the board in the dark about these issues.”
It says the ignorance of the board is “all the more damning” when the rules for State bodies on competitive tendering are taken into account. The committee says there is a lesson here for all State boards in becoming “pro-actively engaged” in such issues.
The report recommends that the size and composition of the board be reviewed, and suggests it be reduced from 17 to between seven and nine members.
