The Aquatic Centre affair was marked by incompetence, writes Michael Clifford
BACK in the bubble days, Mary Harney proclaimed that we had money to burn. Yesterday, an Oireachtas committee published a report on the abandon with which some state bodies went about burning truckloads of it.
The report into the National Aquatic Centre’s Vat fiasco gathers many of the elements that contribute to the image of state bodies acting with arrogance and incompetence. It also highlights the total disregard shown for any citizen that gets caught up in the march down deadends where the primary focus is covering ass.
Campus Stadium Ireland was a dreamboat for Bertie Ahern. An 80,000-seater stadium was his main focus, but it also included a 50m swimming pool. Harney put the kibosh on the stadium, but the swimming pool went ahead to create the National Aquatic Centre.
The cabinet gave the nod to the pool in June 2000. Four days later, tenders went out. Speed rather than value for money was the guiding light. The project was to be overseen by a quango called Campus Stadium Ireland Development (CSID). Thereafter, the whole affair was marked by incompetence.
The pool cost €74m to build, including a €10m Vat bill. An outfit called Dublin Waterworld won the tender to run it. The main man in the DWW was John Moriarty, a Kerry-based developer. He brought in others who had experience in running the highly successful Aqua Dome in Tralee.
Then Moriarty was handed the Vat bill. Ordinarily, the Vat charged on construction could be recouped in the lease, but following a change to the law in 2002, this could only be done if the lease was calculated to be worth the same or more than the construction costs.
Moriarty said there was no way he was paying. As far as he was concerned, the value of the lease was much less than the construction cost. His position was later borne out to be on the button.
CSID was adamant he had to cough up. If he didn’t take the Vat bill, it would appear on the balance sheet of CSID, reflecting badly on those running the quango.
So began an eight-year legal battle. It ended up in the Supreme Court in 2010, which found in Moriarty’s favour. The court also noted that even if it had found against Moriarty, there would have been no net benefit to the exchequer as the money could have been recouped. In other words, for eight years a state quango pursued a costly legal action for no apparent reason.
Along the way, CSID got down and dirty. It had a valuation report on the aquatic centre prepared, which weakened its case. The report was never shown to Moriarty, and ultimately only produced in the throes of a High Court case three years after it was prepared. The Supreme Court was not impressed when this came to light. Yesterday’s PAC report described this as “sharp practice which should have no place in the way the State conducts its legal business”.
The report went on: “It should not have taken the Supreme Court to tell a state company with direct access to top legal and professional advice and with access to the office of the Attorney General that the legitimacy of any charge and especially one that runs into millions should be clearly outlined to the person who is expected to pay this charge.
“The committee can only conclude that full transparency on the findings of the Valuation Office could have ended the dispute regarding Vat as early as 2002.”
The Department of Sport, the sole shareholder in CSID, washed its hands of the affair early on. Advice from both the Comptroller and Auditor General and the Attorney General was to use “common sense” and not pursue the action. This advice was accepted initially by CSID but then ignored.
The Department of Finance failed to properly inform sport or CSID that there would be no net benefit in pursuing the action. The PAC found that finance failed to even put its position into writing.
Then there was the advisors employed by CSID. In total, throughout this period, the quango is understood to have paid €11m to consultants, advisers and experts. None of them apparently knew basic law about Vat.
“The committee would have expected that highly paid experts retained by CSID to deal with the Vat issue would have examined the legislative provisions in great detail and would have given CSID a full assessment of the strengths and weaknesses of the Vat case as part of the preparation for court proceedings.”
So much for the incompetence and cavalier attitude towards public money. Then there was the treatment of Moriarty. Just three weeks after the High Court ruled that the Vat had to be paid following arbitration, Moriarty received a solicitor’s letter from the quango.
“On behalf of our clients we hereby demand immediate payment of the said sum, €10,254,600. In the event that the said sum is not discharged within three weeks of the date of service of this letter upon you, our client will petition for the winding-up of the company or to seek such other appropriate legal address as it sees fit without further notice to you.”
Unless Moriarty won the Euro lotto overnight, there was no way he could get his hands on that kind of money. The people in CSID would have been well aware of that. The letter was effectively threatening him that his future and that of his capacity to earn a living was in the hands of the people who ran CSID.
Moriarty and his employees lived with that threat hanging over them for five years until the Supreme Court threw out the CSID case in 2010.
Who is to blame for the fiasco? Well, nobody. As usual, in the public realm, nobody is responsible for anything. The legal bill for an eight-year Lanigan’s Ball will just have to be paid out. If Moriarty is successful in a legal action, that money will be handed over also. Already, the legal costs amount to over €240,000 and the PAC chairman John McGuinness said yesterday the final bill could run as far as €1m.
Equally, the so-called experts, who operate under the moniker of “consultants” and charge ludicrous fees bear no responsibility. In a world less crazy, they could be pursued for monies if the advice they proffered was of the quality one might expect from a first-year law student. In the private sector, that is precisely what would happen. But not here. In this case, as in many others, it is the exchequer which bears the burden.
Yesterday, McGuinness made the point that one of the most shocking elements to the saga was that a legal action was pursued by an agency of the State simply because it was able to do so.
Speaking yesterday, Moriarty praised the work of the PAC in getting to the bottom of the eight-year saga.
“The taxpayer should not be the one who has to foot the bill for all this,” he said.
The investigation, however, does provide some hope the committee is serious in its attempts to bring reform where for far too long there has been so much waste.
© Irish Examiner Ltd. All rights reserved