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Northern Ireland Events Company failure the worst scandal since devolution

The Public Accounts Committee, which has published its report today into the now defunct Northern Ireland Events Company (NIEC), has highlighted the appalling level of mismanagement and impropriety which led to a financial deficit of approximately £1.6 million.

Speaking at the launch of the report, Chairperson Michaela Boyle, MLA said of the company and its demise: "This is one of the biggest scandals that has arisen in the history of the Committee under devolution; the level of scandal involved is completely shocking."

DCAL engaged consultants in November 2007 to provide a preliminary review into the circumstances behind the deficit. After considering the findings, DCAL referred the issue to the Department of Enterprise, Trade and Investment (DETI) which appointed the Company Inspectors (the Inspectors) to investigate the affairs of NIEC in November 2008, as they had the necessary wide-ranging powers to investigate all areas of concern.

The Inspectors completed their investigation in March 2014 and concluded that of a total deficit of £1.45 million, £1.3 million could be attributed to overspending on events promoted by NIEC between 2005 and 2007; the majority of this related to Motocross and Supermoto events.

In evidence to the Committee, DCAL officials admitted that the demise of NIEC was a comprehensive failure on the part of the DCAL to fully discharge its responsibilities in terms of sponsorship; it was a failure on the part of the NIEC Board to provide effective leadership, direction, support and guidance to the organisation; and it was a failure on the part of Janice McAleese, the Chief Executive of the company, to ensure that public funds were properly managed and safeguarded.

Speaking about the report, Chairperson Michaela Boyle said: "After reflecting on all the information provided to the Committee, we agree with the Department's analysis of what went wrong with the NIEC. This debacle makes uncomfortable reading for the public service in Northern Ireland–this may have been a small company but the scale of the mismanagement was massive. Unfortunately it is the taxpayer who has ultimately footed the £1.6 million bill to pay the outstanding creditors and associated fees and costs."

It is also abundantly clear to the Committee that the Chief Executive appointment process had fundamental flaws despite NIEC Board members having experience in appointing persons to senior posts. The Committee heard evidence that Janice McAleese did not meet the essential criteria for the post of Chief Executive to which she was appointed. There is no evidence that the NIEC Board raised any concerns and they endorsed Ms McAleese's appointment as Chief Executive. DCAL was informed that Janice McAleese and two other candidates had been selected for final interview, but was not aware that Ms McAleese did not appear to meet the essential criteria for the post despite there being a DCAL representative present on the final selection panel

The Committee also heard that the inspection into NIEC took five and a half years and cost £1.24 million to complete. It has taken DETI a further 18 months to issue pre-proceeding letters in the Director Disqualification process. The Committee was disappointed that this process has taken, and continues to take, so long to reach a conclusion.

Ms Boyle concluded: "The Committee's report should be compulsory reading for all public sector management boards, Chief Executives and Accounting Officers. The report demonstrates just what can go wrong if there is poor oversight, poor management and a culture of poor governance. Not only was public money squandered, confidence in the ability of arm's length bodies will have been diminished.

"This situation must never happen again and public sector officials and board members must be constantly alert to the important lessons that can be learned from the failure of the NIEC."

Notes to Editors:

  1. The Northern Ireland Events Company (NIEC) was incorporated as a limited liability company in 1997 with a remit to support major events in Northern Ireland. Its main source of funding was an annual budget provided by central government. It received around £18 million of public funding between 1997 and 2008.
  2. The company was controlled by a Board of publicly appointed Non-Executive Directors. Day to day operational management of NIEC was carried out by an executive management team, led by a Chief Executive, who was the designated Accounting Officer.
  3. The NIEC Chief Executive (Janice McAleese) resigned in May 2007 and in September 2007 the acting Chief Executive (Jasper Perry) notified the Department of Culture, Arts and Leisure (DCAL), its sponsor Department, that NIEC had accumulated an estimated £1.2 million financial deficit. Shortly after, the Minister of Culture, Arts and Leisure sought and obtained the agreement of the Northern Ireland Executive, that DCAL would meet any outstanding liabilities and that NIEC would be wound up at the earliest opportunity.
  4. In November 2008, Company Inspectors (the Inspectors) were appointed under Article 425(2) of the Companies (NI) Order 1986 to investigate and report on the affairs of NIEC. The Inspectors completed their investigation in March 2014.
  5. In September 2015, a report by the Comptroller and Auditor General (C&AG) identified a wide range of serious concerns about the operation of NIEC during the 2004-07 period. The C&AG concluded that failures of oversight on the part of both the NIEC Board and DCAL, combined with the actions of Janice McAleese, the then Chief Executive, led to the ultimate failure of the Company and the accumulation of the deficit.

 

Channel website: http://www.niassembly.gov.uk/

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