Officials fail to seek repayment of €300m

Almost €300m in taxpayers’ money has been potentially lost by the State because officials have repeatedly failed to reclaim vital funds given to insolvent companies under redundancy debt relief.

The situation has been revealed in an unpublished Department of Social Protection internal audit report, which has also warned some firms have received the help without showing clear “financial proof” they legitimately need it.

Details obtained by RTÉ’s This Week programme show Tánaiste Joan Burton’s department currently has no formal policy to reclaim the funds, which are given to companies when the State is forced to step in and fund employee redundancy if bosses cannot afford to pay.

And as such, the debt is increasing “year-on-year” at a time when the country continues to face major economic turmoil.

According to the internal audit, between 2011 — when the Department of Social Protection took over responsibility for the scheme from the Department of Enterprise and Employment — and last year, a massive €300m was paid out as part of redundancy debt relief.

However, of this sum, just 4.7% was retrieved at a later date from firms which initially said they could not pay.

The internal audit said the situation has been caused by a lack of a “comprehensive policy for pursuing outstanding debt”, which regularly sees companies receiving the funds not being contacted for years over the need to return the funds.

As such, there has been a “continuing to rise [in debt] year-on-year with no clear direction or strategy on how to deal with it”.

Hitting out at the situation, the internal audit team said the issue poses severe “financial and reputational” risks for the Department of Social Protection.

It said a series of problems are causing the situation, chief among them a lack of expertise within the department in how to chase down company owners who are obliged to repay the debt.

While the internal audit team said those working on redundancy and insolvency cases within the department need specialist training due to the complexity of the files being examined, just €1,000 was provided to an external training budget for the purpose in 2013.

In an attempt to address the difficulties, which are continuing to put badly needed taxpayer funds at risk, the internal audit said the level of proof for firms accessing the debt relief scheme should be strengthened and a new debt recovery strategy put in place “as a matter of urgency”.

Responding to the situation, a Department of Social Protection spokesperson said officials are confident the self-declaration provided by employers via the official application form is sufficient.

He added that new legislation will help to address the problem as it includes the power to place attachment orders on future earnings, and opportunities to recover outstanding funds through employer PRSI payments.

However, despite the defence, Fianna Fáil public expenditure and reform spokesman Seán Fleming said vital taxpayers’ money is being needlessly lost and must be retrieved immediately.