Examination of Witnesses (Questions 160
- 179)
MONDAY 13 NOVEMBER 2000
SIR JOHN
BOURN, DR
NORMAN PERRY,
MR BILL
HENNESSY AND
MR RICHARD
CLARK
160. It was urgent then. It actually said in
1994: "We recommend that the Corporation issue firm guidelines
on the need for an operation of internal audit, and closely monitor
the extent to which that guidance is implemented". That was
in 1994.
(Dr Perry) That is right, and—
161. It did not happen.
(Dr Perry) No, it did happen, but the real tightening
up of the regulatory system, the devices for ensuring the way
in which the existence of internal controls was reported to us,
that was tightened up after Focus came to light. In early 1994
from memory, but I will correct that in writing if it is not the
case, there had been the introduction of quarterly financial returns
for larger RSLs, so bit by bit the system was already being tightened
up. Clearly it would have been preferable for it to have been
tightened up even faster than it was[12].
162. I have been told that I have only got two
minutes left, and that was probably about a minute ago. It says
here: "The Corporation should closely examine the reasons
for the Association's poor performance and the length of time
over which problems have remained and they should be prepared,
if necessary, to withhold further allocations of funds."
Has that happened at any time since 1994?
(Dr Perry) Withholding allocations of funds because
of concerns about the governance? Frequently.
163. It has?
(Dr Perry) Oh, yes.
164. Finally—I thought I would squeeze
that in—why are you here?
(Dr Perry) Why am I here?
165. You were not involved with all this, were
you?
(Dr Perry) I am the Chief Executive of the Housing
Corporation and have been since 2 October and so I appear before
you.
166. It is a load of nonsense, is it not, your
having to come here and answer for your predecessors? Not even
your immediate predecessor but your predecessor but one.
(Dr Perry) I am here at your invitation.
167. I know you are. Maybe it is something I
should more appropriately ask the C&AG. It seems to me, C&AG,
that what we have got here is someone who is fresh into the job,
he has done a very good job of providing us with the information
that is to the best of his knowledge, but it would have been a
lot more helpful to this Committee if we had the guy who was actually
there, who I believe is still around and active in public service.
I think it is a travesty that we have got this gentleman sitting
here. Mr Hennessy, were you there at the time?
(Mr Hennessy) I was at the Corporation's headquarters,
yes.
168. But not in your present capacity?
(Mr Hennessy) No, not in this post.
169. What happened to the people who were responsible
for that oversight within the Housing Corporation, who actually
had all that said to them at the time about the inefficient way
in which they had overseen RSLs at the time? What happened to
those people? Are they still there or were they kicked out of
the Housing Corporation? Was action taken against them because
of the poor management?
(Dr Perry) I think there is a distinction between
people who were involved in the specific issue of Focus—
170. No, no, I am not talking about that. What
I am talking about is it is pretty clear that the culture of oversight
and scrutiny at the Housing Corporation was weak in 1994 and it
persisted weak for a period of time after that. Changes were made
but it took a long time for those changes to be effectively implemented.
What I want to know is, given the criticism that took place in
1994, were there any changes that took place in the managerial
responsibilities of people at the Housing Corporation because
of the way in which this Committee made its recommendations?
(Dr Perry) I would take issue, with respect, on the
issue of weakness. What you had, if I can quote an answer I gave
earlier, was an evolving system whereby—
Chairman
171. Could you just answer the question. Was
anybody sacked, anybody rebuked? Was anybody in any way penalised
as a result of not following the original recommendations of the
PAC?
(Dr Perry) I do not have any knowledge of that.
Mr Gardiner
172. Could you provide a note then to the Committee?
I know this is an embarrassing question for you and it may not
be one you have mugged up on. Thank you for your evidence today13.
(Dr Perry) Thank you.
Chairman
173. Thank you. Dr Perry, could we have as well
a list of the occasions when—I think you said frequently—money
was withheld on governance grounds?
(Dr Perry) Yes.
174. Over five years.
(Dr Perry) Over the last five years, certainly.
175. Perhaps you can tell me, what is the average
frequency of your planned inspection visits? Mr Hennessy may know.
(Mr Hennessy) It will vary according to the size of
the organisation, there is not a set one. If it is a large association
we will put more people in for a longer period.
176. Let us say for a large association, how
often would they see them?
(Mr Hennessy) I expect they would be in the building
for several days.
177. How often? How many years between visits?
(Mr Hennessy) On which inspection are we talking about?
178. You were talking before about this pseudo-randomised
or targeted inspection procedure, were you not?
(Mr Hennessy) Yes.
179. How often does that happen?
(Mr Hennessy) It is difficult to clarify this one
point because of the types of visits.
12 Note by Witness: Quarterly financial returns
from larger RSLs were first introduced in 1993-94. The requirement
for RSLs to include in their accounts a statement about internal
controls was introduced in March 1996. Our supplementary memorandum
summarises our actions on each of the matters Members enquired
about. Back
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