Report notes unapproved overtime payments
Among them were unauthorised overtime payments to staff, one of whom received €13,720 and three others being paid about €3,000 each. The chief executive Eddie Ward’s approval had not been sought but they were later found to be justified and were cleared in 2005, after Mr Ward had queried them.
A merit award of €19,230 was made to IT manager Neil Ryan, which was not approved by Mr Ward or the board, which does not have a merit award scheme and is seeking recovery of the money, which amounted to about €10,000 after tax.
Comptroller and Auditor General (C&AG) John Purcell’s investigation found deficiencies in operation of the NEWB’s banking controls, as staff routinely signed cheques for amounts greater than allowed. They provided that Mr Ward and the director of corporate services must sign for amounts above €10,000.
But seven cheques from 30 to the main supplier of IT equipment which Mr Purcell examined — ranging from €20,663 to €161,523 — did not have the chief executive’s signature. Mr Ward said limits had not been adhered to because key staff failed to stick to internal controls and procedures.
Mr Purcell also said the findings suggest other departments need to better monitor and support new semi-state bodies to control the risks associated with passing functions to them.
The report acknowledged it is not always easy to prevent or detect situations where staff act collusively with suppliers or bypass controls. But, it said, the NEWB’s experience highlights the need for state-sponsored bodies, especially new organisations, to assure themselves that procedures are implemented.
“There may also be scope for supervising departments to take a greater role in facilitating the smooth transition of the organisation to semi-state status,” Mr Purcell wrote.
However, he added, such transition monitoring could not replace enforcement of a sound system of financial and corporate governance within any organisation.
This was acknowledged by Education Minister Mary Hanafin in Brussels, after she laid the special report on lapses in internal control at the NEWB before the Dáil and Seanad yesterday.
She said lessons have been learned from this case and procedures in the NEWB have been changed as a result. The minister said all departments would have to take account of the report’s recommendations, although the circumstances in this particular case were unusual and were restricted to one person.
June 2001: National Educational Welfare Board becomes a statutory body.
May 2003: Neil Ryan takes up duty as IT manager.
June 2004: PriceWaterhouseCoopers begins review of internal controls and accounting system.
June 2005: Neil Ryan asked by chief executive Eddie Ward to explain a missing email sent to both from finance manager. Missing email also brought to attention of Comptroller and Auditor General’s (C&AG’s) office.
July 2005: Ernst & Young (E&Y) commissioned to investigate missing email.
August 2005: E&Y reports evidence of inappropriate business relationship between Neil Ryan and a supplier.
Findings to be examined by PwC finance probe.
Neil Ryan suspended.
September 2005: Neil Ryan ill, unable to co-operate with NEWB investigation.
November 2005: E&Y report highlights existence of inappropriate business relationship.
January 2006: Letter requesting repayment of all monies sent to Neil Ryan.
March 2006: Neil Ryan resigns, NEWB refuses his settlement offer.
May 2006: IT supplier offers to co-operate with enquiries, lists €136,405 payments made to Neil Ryan
Garda Bureau of Fraud Investigation told about case.
September 2006: IT supplier ends co-operation.
October 2006: Formal complaint made to gardaí.
November 2006: PwC report shows NEWB suffered a loss of €136,405 to €271,452, no evidence of misbehaviour by other staff or suppliers.
March 2007: Legal proceedings begin in High Court, NEWB seeks recovery of amounts lost from Neil Ryan and IT supplier.
July 2007: Affidavits lodged in High Court on behalf of Eddie Ward and others.
Yesterday: C&AG’s report finds:
* NEWB had IT equipment costing almost €200,000 more than its needs and estimated losses of up to €271,000 on foot of payment for IT services not provided.
* The losses and surplus equipment were attributable to internal control weaknesses exploited by a member of staff, apparently in collaboration with a supplier.
* Fees of €228,000 incurred so far investigating.
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