The Public Accounts Committee is on Thursday examining recent spending controversies, in particular the €6.7 million spent by the Arts Council on a new IT system that was eventually abandoned.
The controversial project sparked a full review into the operations of the council, after Minister for Arts and Culture Patrick O’Donovan said an initial report found it was not prepared for the scale of the IT project.
We’ll keep you updated with the hearing as it happens.
Main points:
- The Arts Council has commenced legal proceedings against two contractors and is in the ‘pre-action stage’ in relation to two others in a bid to recoup around €4 million lost via the botched IT project.
- “We are vigorously pursuing our cases to reduce the loss to the taxpayer,” Maureen Kennelly, director of the Arts Council, said.
- Ms Kennelly said she is “very disappointed” she has not been granted another term as director, but Arts Minister Patrick O’Donovan “did not consent to a second term”.
- Representatives from the National Gallery said they hope that a scanner bought for €125,000 which lay idle for eight years will be up and running before the end of this year.
- Mr Feargal Ó Coigligh, secretary general at the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media, said “mistakes were made” and the department has to “make sure that this does not happen again”.
In his closing remarks, chair John Brady thanked the witnesses for their time.
The committee clerk will follow up with the organisations in question to request any outstanding information or documents, including a copy of the contract for the controversial IT scheme.
The committee has now concluded, thanks for staying with us today.
Fine Gael TD James Geoghegan asked for clarity on the legal action being taken by the Arts Council against some of the contractors involved in the IT project.
Mr Martin O’Sullivan, deputy director, finance director and company secretary of the Arts Council, confirmed that the organisation is seeking to recoup around €4 million - or 75 per cent of the money lost - via legal proceedings.
The Arts Council has commenced legal proceedings against two contractors and are in the “pre-action stage” in relation to two others.
Mr O’Sullivan confirmed that the two claims currently underway relate to around €2.275 million and €750,000 respectively.
The two other claims would seek to recoup in the region of €1 million, the committee was told.
Mr Brady asked Dr Caroline Campbell, director of the National Gallery, about the fact the gallery was searched by gardaí as part of an investigation into “covert monitoring”.
In March, the Sunday Independent reported that An Garda Síochána received a complaint about potential criminality at the gallery, including the possibility of a listening device being illegally used at the institution.
Dr Campbell said she could not comment on the matter as it related to an “active investigation”.
Committee chair John Brady noted that Ms Kennelly and other Arts Council representatives said the contract for the IT project was “deemed to be weak” and “milestones” were not met.
He asked for a copy of the contract to be sent to the committee so they can examine it in greater detail.
Ms Kennelly, who took over as director of the Arts Council in April 2020, said she “inherited” the “poorly conceived” IT project.
She told the committee she “did my best to rescue it at every turn” but ultimately could not.
Ms Kennelly said she is “very disappointed” that she has not been granted a second term as director.
“I’m very disappointed that a second term wasn’t sanctioned for me, because I had very great plans for the organisation. The board fully supported me ...
“There were a number of reforms that I brought in, and there were a number of other reforms that I really wanted to see through. So it’s a source of great disappointment that I won’t be able to see those through.”
Ms Kenneally noted that close to €7 million has been spent on the botched IT project to date.
She said, via the ongoing legal cases being taken against a number of the contractors involved, “we would be hopeful of gaining a significant amount back”.
When asked by Fianna Fáil TD Albert Dolan if she was resigning from the role or if it was a matter of her contract ceasing, Ms Kennelly said her contract came to an end on May 4th.
She wanted to stay in the role, but her contract was not extended.
“As I said, the minister, unfortunately, wouldn’t sanction a further five-year term, which was precedential with all my predecessors in living memory, I think.
“And I was offered a short-term contract which I deemed unacceptable,” she told the committee.
When asked if Arts Minister Patrick O’Donovan did not grant Ms Kennelly a second term because of the IT project controversy, Mr Ó Coigligh said: “The minister sanctioned the contract that he deemed appropriate.”
When asked about the fact she will be stepping down from her role in June, Ms Kennelly said she would have liked to stay in place.
She said the board of the Arts Council made a “very strong business case” for her to be granted a second five-year term, noting that her predecessors had been.
“Unfortunately the minister did not consent to a second term,” she said.
Mr Feargal Ó Coigligh, secretary general at the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media, said he understands her frustration “in relation to the loss on this expenditure”.
“It shouldn’t have happened,” Mr Ó Coigligh said, adding that the department “should have called it out earlier”.
Mr Ó Coigligh said lessons have been learned to prevent such financial losses in the future.
“So, what’s going to happen going forward? We have to make sure that this does not happen again,” he said.
Mr Ó Coigligh later told the committee: “Mistakes were made, and we put up our hands that mistakes were made.”
When it was put to him that it is the public who pay for these mistakes, he said: “That’s why I was very, very annoyed. That’s why I commissioned the report. That’s why I’m putting in place changes to make sure it doesn’t happen again.”
The minister has established an Expert Advisory Committee, led by Professor Niamh Brennan, to review the Governance and Organisational Culture in the Arts Council, Mr Ó Coigligh added.
The committee is back after a break.
Sinn Féin TD Cathy Bennett said she understands that the Arts Council and the National Gallery made mistakes, but she takes real issue with the department’s overall handling of the situation.
“The problem I have here is, it’s with the government.
“You know, the Arts Council have made mistakes, the art gallery have made mistakes, but it’s the department that gets me ...
“There’s no lessons learned here. There’s money being spent all the time, money being lost all the time,” she said.
Dr Campbell said the gallery is working hard to bring the X-ray system into operational use, noting it will provide public value for years to come.
She hopes it will be up and running before the end of the year.
Independent TD Catherine Connolly is now asking representatives from the National Gallery about the X-ray system it bought for almost €125,000 which lay idle for eight years.
Dr Caroline Campbell, director of the National Gallery, said that a business case was made for the X-ray system in 2017 and that a room to store it in was identified.
It later transpired that this room was not appropriate. The machine requires a room with lead-lined walls to shield against emitted X-rays when in operation.
Dr Campbell said the gallery was “very, very sorry” that the system lay idle for so long.
Ms Connolly said that everyone makes mistakes and she did not wish to hear more apologies; instead she wanted to know their learnings to prevent something like this from happening again.
When questioned on whether or not such a failure could happen again, Ms Kennelly said much had been learned and changed since then.
“We have far better, tighter procurement processes in place now ... to ensure this could never recur,” Ms Kennelly said, adding that she introduced a programme management office in 2024.
Legal action is currently being taken against two companies in relation to the failed project, Ms Kennelly said, while the process is in a “pre-action phase” with two others.
Mr Martin O’Sullivan, deputy director, finance director and company secretary of the Arts Council, said the legal action being undertaken “will account for 75 per cent” of the cost.
He could not say if the companies against which the legal action is being taken are still involved in other projects with the Arts Council or other organisations which receive Government funding.
Ms Kennelly acknowledged that there were numerous issues with the project, but said the Arts Council “didn’t have the senior IT experience to properly interrogate the work”.
“This was a project built on extremely shaky foundations. When it started back in 2017 the appropriate resources weren’t there,” she said.
Ms Kennelly said, to address this deficit, the Arts Council hired people into new roles in early 2024.
Fianna Fáil TD Paul McAuliffe asked what was the “business case” for the new IT system.
Ms Kennelly said the old system was “on its last legs” and “creaking at the hinges”.
Mr Poly Anyanwu, the Arts Council’s business transformation programme director, said it was hoped that the new system would improve efficiency and make the process of applying for grants easier for artists.
Ms Kennelly said the money that was lost to the project was capital funding, saying it was “never the case” that grants or other payments to artists or organisations were impacted by the issue.
When questioned by Sinn Féin’s Joanna Byrne, Ms Kennelly confirmed that payments to the companies involved in the project are being withheld while legal proceedings are taking place.
It was later confirmed that around €200,000 is being withheld.
Ms Kennelly said, “following review and attempted reworking”, the Arts Council “were ultimately advised by new ICT consultants at the end of 2023, that the system was too flawed to rectify in a reasonable time frame”.
The development of the system was then paused and ultimately stopped.
“The effect of this decision was an overall loss of value of €5.3 million, which was reported to the C&AG and included in our 2023 annual report and accounts,” she said.
Ms Kennelly said a number of issues resulted in the failure of the project including “lack of internal expertise, poor performance by our contractors and also the impact of Covid-19″.
“We have commenced legal proceedings against two contractors and are in the pre-action stage in relation to two others. We are vigorously pursuing our cases to reduce the loss to the taxpayer.
“We have senior ICT expertise in-house now. We have identified and implemented improvements to our procurement and project management processes.
“We are in the process of implementing all recommendations relevant to us from the department’s examination report.”
Ms Kennelly said the Arts Council “greatly regret that this ambitious and complex project was not completed”.
Maureen Kennelly, director of the Arts Council, tells the committee that the goal of the botched IT project was to “modernise our IT systems and integrate five systems into one”.
She said the council’s systems “date from 2008, they are not integrated and are difficult to use”.
“Everything on this project was procured under public procurement guidelines. We used the Office of Government Procurement Framework, and the main contractor was on the OGP-approved ICT framework,” Ms Kennelly said.
“We engaged external contractors to manage and deliver the work, as we did not have the internal resources to deliver this large-scale project.
“As we approached our expected delivery in September 2022, a year later than initially planned, multiple bugs were discovered. This substandard work meant the project could not move forward to completion.
“We ended contracts with both our testers and developers, changed the developers, project governance and management structure, and began work to rectify and complete the programme.”
Ms McGrath said the board of the Arts Council wants to work with Minister for Arts and Media Patrick O’Donovan and his department “to ensure that we have an Arts Council that is expert, functional, efficient”.
She noted that a full examination report was published in February of this year.
“We accept the findings of this report and are in the process of implementing its recommendations that relate to us,” she said.
“As members are aware, in addition, an external review is being undertaken by a committee headed by Professor Niamh Brennan. We are fully cooperating with that work.
“I look forward to taking it on board and to leading the Arts Council in implementing any further recommendations.”
Maura McGrath, chair of the Arts Council, is delivering her opening statement.
Speaking about the controversial IT project, said it “was not and is not an optional extra”.
“It began out of necessity, and it is a necessity that remains to be addressed. However, the expectation that small State bodies set up for specialist purposes should be expected to carry the load on complex IT projects should be questioned,” Ms McGrath said.
Dr Campbell said the National Gallery has “identified several key learnings” from the situation, which are:
- the impact of competing and changing operational needs in a building with restricted space
- the impact of a lack of a formal project management structure for special projects
- the impact of a lack of succession planning for key staff involved in special projects
“Unfortunately, on this occasion, the gallery did not meet the high standards we set ourselves,” she said.
“We are satisfied, as outlined in our briefing document, that we have put in place improved project management, risk management, procurement processes and other resources so that a similar situation will not recur.”
Dr Caroline Campbell, director of the National Gallery of Ireland, is now addressing the committee.
“I want to start by saying that the gallery is very sorry for the length of time that it has taken to get the X-ray system up and running. The X-ray system is an important piece of equipment which will be used and provide value for many years to come,” she said.
“We anticipate that the system will be operational by the end of 2025, at no additional expense to the Exchequer. The National Gallery acknowledges weaknesses in its project management practices which contributed significantly to our inability to bring a digital X-ray system purchased in 2017 into use.
“Pressures on the use of our building, unanticipated operational issues following the reopening of the Gallery’s Historic Wings in 2017, the impact of the Covid-19 pandemic and changes of key senior personnel during this period have also been contributing factors.”
In relation to the National Gallery, Mr McCarthy noted that he certified its 2023 financial statements on October 30th, 2024.
“I drew attention to ineffective expenditure on an X-ray machine. The National Gallery acquired the machine in 2017 at a cost of just under €125,000 to provide for non-destructive examination of collection items,” he said.
“The cost of the machine was capitalised at that time, but we identified that the asset had never actually been brought into use, because a suitable location was not available in the gallery’s premises. As a result, there was a loss of value of the public resources used to acquire it.”
The PAC is now in public session.
Seamus McCarthy, the Comptroller and Auditor General, is now addressing the committee.
In relation to the Arts Council funding, Mr McCarthy noted that when he received the organisation’s 2023 financial statements in 2024, he “drew attention to the termination of a project to develop a new, integrated grants management system”.
“The original budget set for the project was around €3 million, with an expected delivery date of the end of 2021.
“Work on the development of the system had cost €6.5 million to June 2024 when the project was discontinued.
“The overall loss of value in respect of the project to June 2024 is estimated at €5.3 million. The balance of €1.2 million is considered to be reusable in the implementation of an off-the-shelf grants management system.”
In April, John Brady of Sinn Féin was named as the new chairman of the PAC, which acts as the spending watchdog for public money.
At the time, Mr Brady told The Irish Times that eliciting the facts on the Arts Council’s expenditure on the aborted IT system was an immediate priority for him, as was an examination of why the National Gallery let a scanner it bought for €125,000 lie idle for eight years.
The equipment had been deemed essential for examining the gallery’s paintings in a non-destructive way.
In a statement on Wednesday, the board of the Arts Council said it was with “deep regret” that Ms Kennelly will step down as director in June.
“Maureen concluded her five-year term on 4 May and has generously agreed to remain in her role to represent the Arts Council at upcoming Public Accounts Committee and Oireachtas hearings,” it said.
Noting that Ms Kennelly was appointed during the “height of the Covid-19 pandemic”, the board said she led the organisation through an “exceptionally challenging time”.
“Under her leadership, the Arts Council underwent a period of significant cultural change, with a strong focus on organisational development and staff wellbeing.
“She successfully resolved long-standing legacy challenges and brought renewed strategic clarity to the council’s work.
“Together with the council, she secured unprecedented increases in State funding for the arts – enabling artists and organisations across the country to create and present work of outstanding quality. She also championed higher professional standards and fostered a climate of trust and respect across the wider arts sector,” it said.
Ahead of today’s PAC hearing, Maureen Kennelly announced her intention to resign as director of the Arts Council next month.
In communications to staff, Ms Kennelly said she will be leaving her position soon after the Oireachtas committee hearings are complete.
Ms Kennelly, who was appointed in April 2020, told staff her term as director was due to finish this month, adding that last December, the board of the Arts Council made a business case for her contract to be renewed for a further five-year term.
However, following the publication of the Arts Council’s annual report in February, which included details of the IT project costs, Ms Kennelly said the Minister refused to sanction the renewal.
The board subsequently suggested that a decision on the renewal of Ms Kennelly’s contract be deferred until after the work of the review group was complete, she said.
Ms Kennelly told staff the board was “disappointed” that the department could not see a way to do this, adding that she was subsequently offered a short-term contract with conditions she felt she “could not accept”.
She told staff it has been an honour to lead the council through “tumultuous and exciting times” in the arts.
