University of Limerick at Public Accounts Committee

University of Limerick at Public Accounts Committee

Deputy Marc Ó Cathasaigh: It has been an extraordinary meeting, and we started by talking about culture change and transparency. I am not sure I have seen that reflected in the some
of the language which we have been using. I have some very quick questions regarding the
Opera site. Was that proposed site acquisition discussed at the physical development review
committee? This is the normal process, as I understand it. It should be first discussed at the
physical development review committee, and then presented to the finance resource asset management committee for consideration. Finally, it goes to the governing authority for approval.
In the case of the Opera site, was that process followed?

Professor Kerstin Mey: To the best of my knowledge, the acquisition of the Opera site was
discussed as part of the development of a physical development plan for the university. I think
that is what the Deputy is referring to.

Deputy Marc Ó Cathasaigh: Was it discussed at the physical development review committee? As I understand it, there is a three-stage process. It is discussed at the physical development review committee, then it goes on to be presented to the finance resource asset management committee for consideration and then finally to the governing authority for approval. Was
this followed in the case of the Opera site?

Professor Kerstin Mey: Yes Deputy, to the best of my knowledge, that was followed for
the Opera site.

Deputy Marc Ó Cathasaigh: Three days before the Dunnes Stores acquisition, was a 58-
page application made to the HEA?

Professor Kerstin Mey: The Deputy is correct. We submitted our application for a skills
academy on 2 April to the HEA.

Deputy Marc Ó Cathasaigh: Professor Mey said earlier that she has no figure for sunk
costs with respect to the application for the Opera site. Even with the preparation of a 58-page
application, I would imagine the hours put into that would be quite considerable but Professor
Mey has no figure to give us this morning on the sunk costs?

Professor Kerstin Mey: We will get back to the Deputy with regard to the exact figures
quantifying the staff time involved in preparing the application.

Deputy Marc Ó Cathasaigh: Okay. Are these two processes happening, more or less, in
parallel? That is what we are given to understand. In one case, regarding the Opera site, we
have these three committee structures that have been followed through, followed by a 58-page
application. In the case of the Dunnes Stores site, we have a proposal document which is some
two pages long in terms of writing, if I am right, with some pictures in it.

We have a lack of clarity around the agenda. Mr. Kelly spoke about contact being made
about the possibility of adding something to an agenda. Was an agenda circulated with this item
on it previous to the meeting?

Mr. John Kelly: No.

Deputy Marc Ó Cathasaigh: Okay. Well, we should be clear about that. Were I a member of the governing board on that evening, when would have been the first indication that an
acquisition of some €8 million was going to be discussed at the meeting that evening?

Mr. John Kelly: The process of a governing authority meeting is that the agenda is set a
week beforehand, and this matter—–

Deputy Marc Ó Cathasaigh: I would imagine so, and particularly for an acquisition of
this size and nature. My question is, if I was a member of the governing authority on that evening, when would I have learned that this was going to be an item for decision?

Mr. John Kelly: As I understand, it was tabled on the day of the governing authority meeting. Obviously, the chancellor would have had awareness of the matter beforehand by reason
of contact via the corporate secretary’s office from the president, seeking to put the item on the

Deputy Marc Ó Cathasaigh: As a member of the governing authority, as I was sat in that
meeting on that evening or day – I am not sure which – when would I have become aware that
this was a matter for decision?

Mr. John Kelly: I would need to check—–

Deputy Marc Ó Cathasaigh: Would I have aware prior to the meeting?

Mr. Bobby O’Connor: On the day.

Deputy Marc Ó Cathasaigh: A day has 24 hours in it. At what time would I have been
made aware of that? Before I arrived at the meeting, at the start of the meeting or would the first
that I heard of it have been when it was raised under any other business?

Mr. Bobby O’Connor: I am not sure where in the meeting it was raised but the Deputy will
have seen from the KPMG report that it was raised during the meeting for an ordinary member
of the governing authority.

Deputy Marc Ó Cathasaigh: Okay. How often does the governing authority make decisions of this size, that is, of an €8 million investment? How often would the governing authority be asked to make a decision of this kind?

Mr. John Kelly: Very infrequently.

Deputy Marc Ó Cathasaigh: Would it be usual for it just to arise during the course of a

Mr. John Kelly: It would not be usual, Deputy, but the circumstances here were unusual, in
that the property came for sale at relatively short notice, which required a matter to be brought
to the agenda out of cycle. In a normal case, something would be added to the agenda well in

Deputy Marc Ó Cathasaigh: Members of the governing authority were told that this was
a decision which had to be made immediately. What is the language that was used? We had
valuations tabled. The only concrete figure I have heard is the €3 million, which has been disparaged. There is a contrary figure of Dunnes Stores asking for €11 million. At least the figure
of €3 million is underpinned by some sort of work. I drive a 2004 Vauxhall; I could ask for
€10,000 for it but that does not mean I am going to get it. That is not a valuation. When we
say there were valuations tabled, was that actually the case or was there offer and counter offer
made? Those are two very different things. If valuations were tabled they were underpinned
by something.

Mr. Bobby O’Connor: As the Deputy is aware, the report deals with that matter. That is a
fundamental question. The governing authority commissioned the report on the basis that on
the day that it made the decision it was presented to it that were written valuations, when in
fact there were not. That is what the report addresses and deals with and that is why there are
recommendations arising from the report. It is worth saying—–

Deputy Marc Ó Cathasaigh: Sorry, I am against the clock here. How long does a governing body meeting normally take? Would it be an hour, an hour and a half?

Mr. John Kelly: Three hours plus.

Deputy Marc Ó Cathasaigh: This was raised at the end of a three-hour meeting. We are
three hours in the room, I am a member of the governing body and someone suddenly says “By
the way, we want to buy a site for 8 million quid”. Am I understanding the scenario correctly?

Mr. Bobby O’Connor: I was not present, but my understanding is that the president presents a report to every meeting of the governing authority. It was raised as part of the president’s
report. It amounts to the same thing.

Deputy Marc Ó Cathasaigh: I know there was unanimous support for the decision. Did
no one question the wisdom of making such a serious decision right there and then because of
fears that someone else would swoop in and pay €5 million over and above the last valuation of
the site? Did no one raise concerns about the speed and alacrity with which this decision was
being made?

Mr. Bobby O’Connor: To reiterate, the report deals with that. One person in the meeting questioned whether the due diligence had been carried out. Our understanding is that this
member of the governing authority was given assurances that the necessary due diligence had
in fact been completed.

Deputy Marc Ó Cathasaigh: This is extraordinary. We have not even got to the issue of
the student centre yet. We have not had time to get into it. We have not gone after the student
records yet because we have not had the time. It is quite extraordinary.

Regarding the engineering reports, Mr. O’Connor used the phrases “some engineering reports” and “early engineering assessments”. I presume he cannot tell me who prepared these
engineering reports or assessments?

Mr. Bobby O’Connor: I do not know.

Professor Kerstin Mey: The preliminary assessments were made. I could not say by—–

Deputy Marc Ó Cathasaigh: Who made these assessments? Were they done internally
or externally?

Professor Kerstin Mey: That goes to the core of the report. As I said before, we have now
put robust processes in place with the development of our new policy in order to make it a prerequisite for any decisions taken on property acquisition that these reports are in place.

Deputy Marc Ó Cathasaigh: In these early engineering reports, assessments or whatever
they are – prepared by whomever – was the issue of asbestos identified?

Mr. Bobby O’Connor: I do not believe so.

Deputy Marc Ó Cathasaigh: Was the presence of asbestos within the building so difficult
to ascertain that the engineers preparing these advices, reports or assessments could not identify
that it was present? The substantial remediation cost of the removal of the asbestos was not
factored into the cost, and the asbestos was removed in two separate operations. Should the
taxpayer not have been indemnified against an oversight of that kind in terms of the production of engineering reports? If there were engineering reports produced, I should say. What
recourse do we have regarding the engineering advices we received that failed to identify the
significant remediation costs that were going to be involved on the site? Does the taxpayer have
any recourse of any type for this oversight?

Mr. John Kelly: That depends very much on what the advisers were engaged to do. As
outlined, they were preliminary assessments. Anyone who does a preliminary assessment is going to bind themselves in such a way as to give the university indemnities to say that everything
is in order. At preliminary assessment level, I do not think that the university would have any
recourse. I do not think any professional adviser would put themselves in a position where they
would be liable in such situation.

Deputy Marc Ó Cathasaigh: Regarding the student centre, the proposed cost has ballooned from €20 million to €34 million. Once the €20 million threshold is breached, the public
spending code states that a cost-benefit analysis must be provided for a project. Has such an
analysis been proposed as per the public spending code on this expanded budget for the student

Professor Kerstin Mey: The student centre is of enormous importance for our student

Deputy Marc Ó Cathasaigh: I am sure it is.

An Cathaoirleach: The question the Deputy is asking is has a cost-benefit analysis been
proposed. Yes or no.

Deputy Marc Ó Cathasaigh: In line with the public spending code.

Ms Rosemary Fogarty: No, it was not completed. When the project was originally looked
at, the cost was under €20 million at which point the cost-benefit analysis requirement did not

Deputy Marc Ó Cathasaigh: It has gone to €34 million now.

Ms Rosemary Fogarty: It has, but it was at the implementation stage at that point. One
does not go backwards at the implementation stage to carry out a cost-benefit analysis. We find
ourselves in this situation because the original builder who signed the contract to commence
work in 2019 went out of business.

Deputy Marc Ó Cathasaigh: Is Ms Fogarty happy to state that there has been no breach
of the public spending code in moving to €34 million for a project originally costed at under
€20 million, and this only coming to light in December? Is she happy to state that, in her opinion, there has been no breach of the public code because that cost-benefit analysis has not been

Ms Rosemary Fogarty: It is my understanding that when we went to tender after the original builder went out of business, we got advice in that regard. That was the advice we were
given but I do not have it here with me

Transcript of the full session can be found here: