Examination of Witnesses (Questions 80-99)
DEPARTMENT OF
ENTERPRISE, TRADE
AND INVESTMENT
AND INVEST
NORTHERN IRELAND
13 FEBRUARY 2006
Q80 Mr Curry: The reason I ask is
because in paragraph 1.46 the Comptroller and Auditor General
says that the former LEDU must have been well aware of the conflict
because it had objected to an analogous appointment. So it was
not that it was incapable of acting or did not know the rules.
Either one got under the radar or there were reasons why it was
not caught on the radar, and I do not think you know which it
was, to be honest.
Mr Quinn: I accept that the knowledge
of a particular conflict registered in the FPM case should have
led inevitably to the same line being taken in respect of the
MTF. There is not, as far as I can discern, a satisfactory explanation
for why LEDU did not raise the same objection in both cases.
Q81 Mr Curry: Would these appointments
have been subject to ministerial approval?
Mr Quinn: Which appointments?
Q82 Mr Curry: The appointments to
the various boards.
Mr Quinn: I think the appointments
to the LEDU board would be subject to ministerial approval. The
appointments to the Emerging Business Trust Board would not have
been.
Q83 Mr Curry: If a list of appointments
had been given to a Minister to approve there would have been
a commentary, no doubt, attached from the people making the recommendation,
and that commentary would have alerted the Minister to any criticism
there might be of conflict of interest?
Mr Quinn: Yes. The Commissioner
for Public Appointments issued guidance in 1996 which covered
conflicts of interest, and public appointments after that should
have addressed potential conflicts of interest. Unfortunately
the records in relation to some of the appointments in the late
1990s were not complete, but it is clear that potential conflicts
of interest were addressed in respect of Invest Northern Ireland
appointments in 2002.
Q84 Mr Curry: So it is prior to that
that we think that may not have happened?
Mr Quinn: It may or may not have
happened.
Q85 Mr Curry: But had we got the
record we would have known there was a note to the Minister saying:
"You may wish to be aware, oh Minister, and take this into
account."
Mr Quinn: I would surmise that
did not happen for this reason; that if LEDU had identified a
fundamental conflict of interest between Mrs Townsley's membership
of the EBT board and her provision of management services through
MTF, then I think they would have intervened and objected at large.
Q86 Mr Curry: Do you think, Mr Quinn,
in general terms that in Northern Ireland, with brief moments
when Stormont had responsibility but most of the time not, is
there a sense of the administration being on some sort of automatic
pilot and perhaps people taking decisions which normally might
have been referred elsewhere?
Mr Quinn: I do not think so. I
have no evidence of that at all.
Q87 Mr Curry: Regarding this share
purchase which we are all getting a little bit concerned about,
you said that Mr Townsley acquired these shares and apparently
the discount was due to the fact that this was a remuneration
in kind of some sort?
Mr Morrison: Right.
Q88 Mr Curry: If it were, it would
be declared for tax purposes, would it not?
Mr Morrison: I am not sure about
the tax.
Q89 Mr Curry: Well, it would be,
because if I am given a car that is declared on my tax forms.
So Mr Townsley could clear this up, could he not, if he invited
people to inspect his tax returns for the relevant year?
Mr Morrison: I cannot answer that
specifically.
Q90 Mr Curry: The reason I am asking
is that he bought his shares at a certain time and they were purchased
by the board at a certain time. Was there anything which determined
that they had to be bought at these times? Was there a point at
which the share option, which is what it appears to be, had to
be exercised?
Mr Morrison: I do not think there
was any form of option here. I do not think the timing was in
relation to an option which would lapse.
Q91 Mr Curry: So he had a choice
as to any purchase, as far as you know?
Mr Morrison: As far as I know,
and I am rather speculating here, the timing of the purchase must
have had something to do with the corporate finance needs of the
company.
Q92 Mr Curry: Yes, he did not spend
much. He did not do a great deal for the corporate finance needs
of the company if it needed £2,500 as badly as that, did
he?
Mr Morrison: True, and as you
know the subscription of the EBT, which came hard on the heels,
raised about £50,000.
Q93 Mr Curry: The reason I ask these
questions is it is quite clear that the sequence of events makes
one very concerned about what happened and it must be in the interests
of everybody to be able to clarify that, and I was merely suggesting
a route by which Mr Townsley could dispel any notion that he was
buying these shares or exercising this option in the knowledge
that they would become quite rapidly worth 15 or 16 times as much?
Mr Quinn: That would be for Mr
Townsley as a private citizen, of course.
Mr Curry: I appreciate that. Thank you.
Q94 Chairman: You said records were
lost? What records? When?
Mr Quinn: I am not sure they were
lost. We tried to track down the files relating to Mrs Townsley's
appointments or reappointments to LEDU during the 1990s, she was
first appointed in '93, reappointed in '96 and reappointed in
'99, and we had limited success in tracking those down.
Q95 Chairman: Were other files lost
in that period? Is this usual?
Mr Lavery: It is not usual that
none of the files were available.
Q96 Chairman: What do you mean, "It
is not usual"? If it is not usual, why were these files lost?
Mr Lavery: I think the files may
have been destroyed because they were over five years old.
Q97 Chairman: So were other files
of this period also destroyed?
Mr Lavery: Yes.
Q98 Mr Williams: Mr Quinn, there
seems to have been an explosion of companies created around about
this time. We had to go to the Sharman Committee ourselves about
publicly-owned companies of this time, because that is the one
format other than charity that takes them outside the scrutiny
of the Audit Office. Was that a factor in that decision being
arrived at?
Mr Quinn: I do not believe it
was.
Q99 Mr Williams: You were not there
at the time, were you?
Mr Quinn: I was not but I referred
earlier to the organisational culture of the European Peace Programme
and the International Fund for Ireland. Almost as an act of policy
they were operating through third party organisations as a way
of reaching out to the Northern Ireland community, but I did not
think there was much more to it than that.
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