[Article] Fraud, Kickbacks and corruption in CIE

[Mark Gleeson]

http://www.independent.ie/national-n...t-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

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-n...s-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/Committ...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?.

[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...#ixzz0VKaRt9Gf

[Mark Gleeson]

Its a very big report, lots of black marker

[Mark Gleeson]

Finally name and shame begins

http://www.irishtimes.com/newspaper/...259108686.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-ba...rnrod-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