[Article] Fraud, Kickbacks and corruption in CIE

[Mark Hennessy]

This will hardly shock folks here but CIE are squandering millions of our taxes in an uncountable way.

When the CIE books don't add up at the end of the year, what do they do?
a) Find out where the waste happened, sack those responsible and ensure it doesn't happen again?
b) Introduce car parking charges and put up the cost of tickets?


http://www.independent.ie/business/irish/kickbacks-waste-and-bogus-orders-costing-cie-millions-1910407.html

AN explosive top secret report on Iarnrod Eireann has found that kickbacks, squandering of millions of euro in taxpayers' money and collusion with contractors, and incompetence has been rife in the loss making semi-state company for several years, a Sunday Independent investigation can reveal.

[Mark Gleeson]

Those of us in the know, know how deep it goes and very senior people are going to find themselves in serious trouble.

We know all about the holiday cottage scam

[roamling]

is there any chance that CIE can be forced to make the "top secret explosive" report available to the public?

[Mark Gleeson]

If the report was made public several very senior staff in both CIE and IE could be in line for a P45 so they are of course going to cover themselves.

We have details on many parts but have to be very careful what we state in public. We are aware of more issues than those raised in yesterday article. There are issues to do with the management of internal employee insurance funds. The Portlaoise incident relates to wooden sleepers disappearing, not only is it fraud but also illegal to sell used railway sleepers due environmental reasons.

The issues are generally local level middle management who appear to have been able to operate under the radar of HQ. Though how HQ dealt with certain staff afterwards is curious.

[PLUMB LOCO]

Those of us in the know, know how deep it goes and very senior people are going to find themselves in serious trouble.

We know all about the holiday cottage scam

No - must have missed this - can you expand upon? :confused:

[roamling]

maybe an Oireachtas hearing could apply pressure on senior staff within CIE and IE . At the end of the day its the taxpayer's money and the days of squandering and cover up are over.

[Mark Gleeson]

If we gave details we could get sued by both CIE and the member of staff involved. Needless to say they know we know. We can't give the location, the cost or the nature of the works undertaken, we know all three. This incident was the trigger for the fraud squad to get called in.

This one incident could possibly have the biggest impact of all once the full details can be made public.

[essoII]

this is actually highly interesting...will be interesting to see what comes of this. If any allegations of corruption are confirmed I think a major restructuring at senior levels will be a certainty..

[Colm Moore]

http://www.irishtimes.com/newspaper/ireland/2009/1013/1224256510110.html

Fraud at Iarnród Éireann costs €2.5m
TIM O'BRIEN

AN INTERNAL fraud at Iarnród Éireann has cost the company €2.5 million in materials and loss of EU grants, the company said yesterday.

The fraud involved the unauthorised sale of redundant sleepers from the company’s North Wall site and what Iarnród Éireann called “other plant procurement issuesâ€�. It was identified in reviews by the company, which said three staff had been dismissed and gardaÃ* informed.

The company said issues relating to the loss of sleepers, plant procurement and removal of soil had cost the company €900,000.

However, a further loss of €800,000 was suffered due to the non-eligibility of procurement activities for EU grants, while the procurement issues themselves had cost the company €780,000.

In a statement yesterday, the company said of €2.5 million, just €670,000 related to fraud within Iarnród Éireann.

“To place this in context, these areas collectively in the period reviewed . . . had expenditure on external vendors totalling approximately €800 million and the amounts of losses represent less than one-third of 1 per cent of the total external expenditure in these departments�.

Fine Gael transport spokesman Fergus O’Dowd said the statement showed Iarnród Éireann should not be exempt from Freedom of Information requests. “CIÉ is an organisation that hoovers up over €300 million a year in taxpayers’ money to help run its loss-making services. This is in addition to the €1 billion-plus it has received to help purchase new infrastructure.

“I have consistently argued that there was absolutely no transparency on how this money was spent or accounted for.�

[Mark Gleeson]

and more

Dempsey demands CIÉ fraud report
By Seán McCárthaigh
Tuesday, October 13, 2009

TRANSPORT Minister Noel Dempsey has demanded a full report from CIÉ over an internal company investigation which uncovered losses of €2.5 million due to alleged fraud and collusion.

Mr Dempsey confirmed yesterday he was unaware of the report by consultants – Baker, Tilly, Ryan, Glennon – before details of it were published in the Sunday Independent this week. Clearly annoyed at the failure of CIÉ to inform him about the report’s existence, Mr Dempsey said he had now sought a full explanation from the state transport company. The minister said he should have been informed about the report, which claimed losses of millions of euro of taxpayers money were incurred due to fraud and poor control procedures at CIÉ. Although it appeared CIÉ had detected the problems and subsequently acted to redress the situation, Mr Dempsey said no waste of taxpayers’ money could ever be condoned.

CIÉ spokesman Barry Kenny admitted yesterday the report had uncovered evidence of malpractice within Iarnród Éireann, which had resulted in three employees being fired.

Speaking on RTÉ’s Morning Ireland, Mr Kenny insisted that losses of just €670,000 were suffered as a result of the unauthorised sale of railway sleepers from Iarnród Éireann’s North Wall depot in Dublin. However, he was forced to admit that the company had also suffered additional losses of €1.8m as a result of poor procedures and controls in its procurement policy.

CIÉ also acknowledged that a payment of €257,000 to an unsuccessful applicant for a tender to remove top soil from a site at North Wall in Dublin was the subject of a Garda investigation and other legal proceedings.

Mr Kenny said the losses should be viewed in the context of overall spending of €800m by CIÉ over the four-year period covered by the consultants’ report.

Meanwhile, Fine Gael transport spokesman Fergus O’Dowd called on the Joint Oireachtas Committee on Transport to arrange an emergency meeting to discuss the allegations that millions of euro were squandered by CIÉ.

Mr O’Dowd said CIÉ chairman John Lynch and Iarnród Éireann chief executive Dick Fearn should appear before such a meeting to provide an explanation.

The Louth TD said the Freedom of Information Act needed to be expanded to allow quasi-commercial companies like CIÉ to be opened up to full and proper scrutiny.


Read more: http://www.examiner.ie/ireland/dempsey-demands-cie-fraud-report-103212.html#ixzz0TnklgHDZ

[drumcondra commuter]

"Fine Gael transport spokesman Fergus O’Dowd said the statement showed Iarnród Éireann should not be exempt from Freedom of Information requests."

Say what now? They are?!?! :eek:

[Mark Gleeson]

The CIE group is exempt from FOI, the RPA are not.

Despite this we have obtained large volumes of documents through FOI as CIE seems to send copies of most things to the Department of Transport which is where we file our requests

[dermo88]

I hinted at this a few years ago and it was unsubstantiated allegations by me back then. I did not have access to direct and definite proof, but there was too many - shall we say strange coincidences taking place. Then I was warned of the risks of Platform11 being sued. So I think, knowing the extent of Irish libel laws, its dangerous territory, but say with a mild grin, "I told you so". I'd happen to respect the libel laws here than any other website, where I will fire off on all cylinders.

Its merely stating what we all know, and certain Irish business persons involved with communications and a former transport minister have a reputation for suing people and organisations for the slightest infringements.

[Mark Gleeson]

Since the days of Mini CTC we have all known of issues, but of course the inquiry got bogged down due to a completely unrelated legal problem. There was the newspapers at stations scam back in the day. Mini CTC led to a serious rethink in procurement which seemed to be delivering improvements but it appears the system was open to abuse

We can't name people, we are keeping a close eye on matters. One name has come up more than once.

2.5 million is a very large sum of money, it buys quite a lot of stuff.

[zag]

P11 committee,

With all due respect, these types of posts indicate a very strong Famous-5 type approach going on here.

All too often there are posts from committee members indicating that "we know all about this but can't publish", "we know they know we know", etc . . .

I mean, if you (as a customer representative body) are aware of details, have documents, etc . . . that prove (as you claim) cases of fraud among other things, do you not think there is somewhat of an onus on you to publish, to provide details to newspapers, to provide details to relevant Oireachtas committees, to amenable TDs, etc . . .

If you have the hard evidence you suggest then a quick read of the Sunday newspapers will give you more than a few names of journos who will take this hard evidence and publish.

How do you think it will reflect on P11 in a few years time if/when these abuses come to light and P11 is asked for a comment and they say "Oh, well of course we knew about this yeeeeeeeears ago but we didn't actually do anything about it. Oh gosh no, we didn't do anything. There was a good reason, but I can't remember it now."

Seriously, if the issues are as cut and dry as they are made out to be then why do you not publicise them or make the details available to people who will publicise ?

z

[Mark Hennessy]

Zag,

You think we dont report this information?

IE are not subject to FOI, when information comes to us and we pass it to a journo, do you think IE give them anything to work on?

Do you think opposition TDs get anywhere trying to get information on the internals of IE?

The fact that the sindo got this report ahead of Dempsey show's that IE are accountable to no one. Hopefully, as Mark G points out, the fact that this has come into the open will lead to pressure to reveal more details of the wrong doings within CIE.

[zag]

Mark,

The point I'm trying to make is the RUI seem to specialise in saying "We have the details, we know what happened and who did it, and there's lots of it going on but we can't tell anyone at all. Far too secret/complicated/techincal for anyone else to get to grips with. It's probably safer if we hold on to the information. You might go mad if you knew what we know."

I understand that IE are not subject to FOI, but RUI is saying they *have* the information, so you don't need to FOI it.

What I'm trying to get at is that saying you have the information is all well and good, but it's putting it to use that is the important part.

I could come on here every few days and say "I know all about the mess up with the donut supplies on a certain train ex-Dublin on Tuesdays. I've been watching it for some time and I have a dossier compiled but I can't let you into the details. I'm keeping my eagle-eye on it and will be for some time to come. I know who you are." but it doesn't actually result in any improvements and changes.

I'm not doubting that you guys have much valuable information, but sitting on it and telling people you have it but can't use it isn't going to change things.

"You think we dont report this information?" - based on the comments in the various threads here, yes, I think you don't report it. All I seem to see is references to having it but not being able to publish it.

"Do you think opposition TDs get anywhere trying to get information on the internals of IE?" - no, but if you guys claim to have the data then why not pass it on ?

z

[Thomas Ralph]

A lot of the information isn't watertight; defamation laws mean you need to be certain before you go splashing accusations about.

[zag]

100% agree and accept the defamation thing. I wouldn't go posting details saying that John Doe in IE was on a serious kickback from a vendor if I only had a hunch about it or had heard rumours about it.

However, if I had (as seems to be claimed in some of the posts) pretty strong evidence about it and I wasn't fully sure of it *but it was still a serious issue* I would be in touch with one of our more crusading journos and feed him/her a little of the information. Or I would be in touch with the opposition transport people and feed them a little of the *evidence*.

Maybe RUI are doing this, but it's not communicated in the posts here.

I'm thinking of posts like this - "Those of us in the know, know how deep it goes and very senior people are going to find themselves in serious trouble.

We know all about the holiday cottage scam"

If it is so sure that high ranking people will be in serious trouble then by all means plough ahead and make it happen. If it's not so sure, or it's just rumour then it's no different than I said in an earlier post - "I know all about the mess up with the donut supplies on a certain train ex-Dublin on Tuesdays. I've been watching it for some time and I have a dossier compiled but I can't let you into the details. I'm keeping my eagle-eye on it and will be for some time to come. I know who you are." I can say this as much as I like but there will continue to be donut irregularities on that train.

Seriously guys, if there's hard evidence then you should act on it. If you have acted on it then you should communicate this. If there's no hard evidence then you should perhaps rethink some of the definitive wording you are using.

I'm all for armchair fist-wavers (like me) taking the occasional potshot at IE, but I'm doing it as an individual. I think RUI needs to step up to the plate as an orgainsation with an interest in improving the transport environment. If you have hard evidence you ought to use it in my view.

z

[Traincustomer]

I'm not going to pass comment on the matters as I'm not in any way au fait with them, apart from what I've read here, but against this background I think it's deplorable that we might have cutbacks in CIÉ services in the future (as already publically highlighted and there have already been cuts in Dublin Bus). Again the ordinary bus or rail user suffers. How unjust and unethical. A strong signal needs to be sent to the powers that be that it is not ok for some to have the life of Reilly so to speak at the expense of public transport.

[Mark Gleeson]

http://www.independent.ie/national-news/breach-of-rules-loses-cie-83649m-heuston-grant-1924027.html

The drip feeding continues. The Heuston contract is complicated since its not actually about Heuston alone, the contract was known as HACM, Heuston and Connolly Maynooth

http://wrsl.co.uk/Downloads/Heuston%20datasheet.pdf

[Mark Gleeson]

Its the three amigos John Lynch, Dick Fearn and Barry Kenny in the hot seat in Lenister House. They don't look happy at all :D

I don't think the 2 million is not a large amount of money excuse is going to work this time.

Shane Ross is also at the table with the Baker Tilly report which is a good inch and half thick, which will be fun as he knows more about this than anyone else outside the lucky few who have seen the reports

[roamling]

http://www.independent.ie/national-news/cie-lost-836425m-to-fraud-and-poor-cash-controls-1925953.html

Independent,
Wednesday October 28 2009



POOR financial controls and fraud cost the state public transport company CIE almost €2.5m in four years.

CIE chairman Dr John Lynch -- who is a former FAS director general -- denied claims that the state transport company was "rife with backhanders, collusion and fraud" yesterday.

The Dail Transport Committee heard yesterday how fraud cost CIE €665,807.

Only €100,000 of this sum had been repaid -- and poor financial controls relating to procuring goods and services had cost the company another €1.8m.

A draft report from forensic accountants Baker Tilly suggested the losses could be as high as €8.7m -- but CIE ordered that the reference to this amount be removed from the final report because it was a "guesstimate" and could not be proved. The company ordered the accountants to only outline the losses that could be proved.

"Iarnrod Eireann is portrayed as rife with backhanders, collusion and fraud," Dr Lynch said. "Three people out of a staff of 11,300 hardly warrants headlines of backhanders. It is grossly untrue and unfair to workers.

"The European Commission this year has said that procedures are excellent and monitoring good. There is one credit card in CIE, and two credit cards in Irish Rail. The reason we took on Baker Tilly was to see if our systems were robust enough."

The committee was told that in 2005, an internal unit set up to establish where money could be saved became concerned about a number of issues at the company's North Wall site in Dublin.

Following investigations, gardai became involved and it emerged that employees had been selling disused railway equipment including railway sleepers.

Forensic

It also emerged that one employee was in collusion with a contractor, who had falsely billed the company for work not done. When these issues were addressed, the company began a review of its financial systems and also hired forensic accountants Baker Tilly Ryan Glennon in 2007. The firm was asked to investigate financial controls in the company and make recommendations on improving systems, and to look at the actual losses incurred.

The report cost €450,000 to compile, and while it did not identify further instances of fraud it identified losses of almost €2.5m because of weaknesses in the system.

It also made over 100 recommendations.

But independent senator Shane Ross said that the consultants had used a figure of €8.7m in a draft report when estimated historical losses were included.

"It's quite devastating, a litany of woes in Iarnrod Eireann," Mr Ross said. "I counted 19 times the word 'fraud'. It (the report) talks about malpractice which is endemic; this is a semi-state company which is completely out of control. It's quite obvious this has been going on for a long time."

Fine Gael transport spokesman Fergus O'Dowd said the Baker Tilly report showed the need for CIE's exemption from the Freedom of Information Act to be lifted.

- Paul Melia

Irish Independent

[Thomas Ralph]

There's an article on page 2 of the Metro about it as well.

[KSW]

The report cost €450,000 to compile, and while it did not identify further instances of fraud it identified losses of almost €2.5m because of weaknesses in the system.

That is crazy in its self, How much that report cost. Literally Four more times that report it would add the same amount to CIE's €2.5m

[Mark Gleeson]

So far 2.5 million in fraud, plus 9 million in lost EU grants, thats 11.5 million and that number is incomplete

[roamling]

will the transcript of the Dail Transport Committee hearing be available?

[Mark Gleeson]

It will be available here http://debates.oireachtas.ie/CommitteeMenu.aspx?Dail=30&Cid=TR by the end of the week

[Mark Gleeson]

Its online as of this lunchtime

[MOH]

There's some serious goalpost moving going on in that:

It consists of a holding company, CIE, and three operating companies, Iarnród Éireann, Dublin Bus and Bus Éireann. They were set up in 1987 by statute. The total number of employees is 11,300.
then moments later, referring specifically to IE
Three out of 11,300 hardly warrants headlines referring to graft and extensive backhanders
One moment it's 11,300 employees across all 3 companies, the next it's 11,300 in IE alone.


Then on the cost of the report, it's just comical:

Share Ross: How much did the report cost in total, by the way?
John Lynch: The figure was roughly €50,000. Excuse me, I am told the figure is €450,000.
....
SR: If Dr. Lynch is prepared to spend €500,000 on an investigation, he must think there is something serious going on.
JL: I would like to come back to the Senator with regard to that figure.
SR: Is it right or wrong?
JL: I do not know.
SR: To begin with, Dr. Lynch said it was €50,000. When he was prompted, he said it was €500,000.
JL: The answer is that I do not know.
SR: Mr. Fearn said he did not know.
JL: I was prompted. I do not know. We will check it out before we leave.


By the time they start arguing over whether 2.5 million wastage is technically a 'loss', it's beyond a joke. I'm probably going to smash something before i finish this

SR: Going on to the terms of reference of this company, Baker Tilly Ryan Glennon, the report finds a figure of €2.4 million for the loss, or was it €2.6 million?
JL: It depends on whether you are talking about €2.4 million or €2.6 million with regard to actual loss. As Mr. Fearn read it out, €668,000 is the loss, of which we have recovered €100,000. The rest is due to procurement. That is a loss to the Exchequer in the way that people carried out procurement. It is not the same as someone putting his hand in your pocket and taking the money.
SR: There was a figure of €2.6 million average loss.
JL: Loss is the wrong word.
SR: Actual loss, it is in a column in the report. It is the right word.
DF: If we add up the total areas I described in my opening statement, they add up to that figure of €2.6 million.

[Park Royal]

Reading the Committee minutes.... from the answers the CIE people gave it appears the SAP system was not operating or applying to the Rail Maintenance Dept of IR when the "issues" arose.

While there was a lot going on in IR , new track ,new stations, new platforms new signalling, new carriages, new timetables, new management changes etc, new lifts....

It would appear at this remove the board of CIE and IR were negligent in not having all of IR...... SAP compliant.

SAP was in several sections of IR , Business Section , Rail Operating, Loco Maintenance ?, but not in track/Rail maintenance.

Why did the top managers and the Boards leave this situation lie for years, .......because that section was doing so much engineering over such along period perhaps?....indeed they are still into big projects.Malahide, Heuston approaches etc.

I suspect there are horses for courses and people good with shovels and picks may not be good with keypads and SAP. But top management are paid to sort these matters out?.:rolleyes:

[karlr42]

Also interesting to note that the €100,000 "recovered" was apparently obtained by way of an agreement with the ringleader of the sleeper sale- he paid that amount of money in return for being reinstated in the company:

It has also emerged that, after being initially sacked, the ringleader of the scam was subsequently reinstated by the company. As part of his reinstatement it is believed he paid €100,000 to the national rail company.

http://www.irishexaminer.com/ireland/rail-staff-sold-toxic-sleepers-to-market-104432.html#ixzz0VKaRt9Gf

[Mark Gleeson]

Its a very big report, lots of black marker
1082

[Mark Gleeson]

Finally name and shame begins

http://www.irishtimes.com/newspaper/ireland/2009/1119/1224259108686.html

Seriously though how on earth was this guy not thrown in jail the first time. What is shocking is he is not the only member of staff taken back after a serious disiplinary case was proven. What do you have to do to get sacked

[dowlingm]

You have to have a father who worked for IE. There's a lot of them.

[Mark Hennessy]

We have had a hard copy of the report for a few weeks now but getting it out to the masses is taken care of, thanks to Gavin Sheridan's blog.

He's also done great work on the John O'Donoghue expenses scandal so tip of the hat Gavin for your hard work.

http://thestory.ie/2009/11/23/the-baker-tilly-report-into-cieiarnrod-eireann/

[mcam]

had a quick look at it, seen many of names have been blocked out. any idea on the contractors involved ?

[Mark Gleeson]

For legal reasons we cannot permit anyone to be named as it can't be proven.

Yes we have a good idea what is behind the black pen, makes no difference, lax management controls within Irish Rail are the cause - not the external contractors