Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence


Examination of Witnesses (Questions 500 - 519)

WEDNESDAY 24 JANUARY 2001

MR T MATTHEWS AND MR R THORNDIKE

Dr Ladyman

  500. You say it was advertised openly, in which case you will be able to give us a note telling us where and when it was advertised so we can look at those advertisements. Would you be prepared to do that for the Committee?
  (Mr Matthews) Yes. As I said, my understanding from reading the files, and these are reports of what went on rather than actual records, is that a selection process took place.

Chairman

  501. You could tell us how many people applied and what their qualifications were.
  (Mr Matthews) I can certainly provide what information we have on file.

  502. Can you also tell us whether the people responsible for this are still employed?
  (Mr Matthews) The Finance Director who made that appointment is no longer working for the Agency, indeed none of the senior staff who were involved in the whole process of resource accounts are.

  503. He is not still working with one of your contractors, is he?
  (Mr Matthews) He is not still working with one of our contractors, no.

  504. Is he working with a contractor? Let us use the English language precisely. I am informed that he might be working with a contractor.
  (Mr Matthews) That is my understanding but those contractors are no longer working for the Agency, so whatever arrangement he has with his new company is not something I can really comment on.

Dr Ladyman

  505. Is he working on any project being paid for by the Agency?
  (Mr Matthews) Are we talking about the Finance Director or the contractor?

  506. The contractor.
  (Mr Matthews) No.

  507. He is not.
  (Mr Matthews) No.

Mr Donohoe

  508. The Finance Director?
  (Mr Matthews) No.

  509. You say you were not at the Agency at that point.
  (Mr Matthews) No, I was appointed last September.

  510. I get the impression that you are being protective. If I were in your situation I would distance myself from it. The propriety of that particular arrangement does not look to me as though it is all above board.
  (Mr Matthews) I am trying to help the Committee understand and account for the actions of the Agency. I certainly was not involved and it is not the way I would necessarily have handled things. Let me be clear. There are elements of the way in which that process was managed, both in terms of the procurement arrangements and the time it took to deliver, which, coming in as I have done, are very disappointing and not ways which do the Agency—

Chairman

  511. They are unacceptable, are they not? Do not let us be-mealy-mouthed about it. Fourteen million pounds of public money, the first £7 million spent on it on the basis of somebody appointed by the Finance Director whom they knew and whom there is evidence they are still working with now, even if for a different contractor. Let us not be mealy-mouthed about it, that is unacceptable, is it not?
  (Mr Matthews) What was unacceptable in my view, and I have had to rely largely on the independent audit which was taken in 1998 of the process, was not the level of expenditure, because we have to bear in mind that the Agency is responsible for the second largest asset.

  512. Yes, and the system now works so efficiently that it is worth £14 million. Is that what you are telling us?
  (Mr Matthews) In terms of value for money, establishing a resource accounting set of systems for the Agency with an asset base of £65 billion does not necessarily represent poor value for money.

  513. I see. So if you have very large assets it does not matter what the taxpayer has to pay in order to establish a system.
  (Mr Matthews) No, it is the size and complexity of the asset which you certainly would not get in an Agency or any other public organisation where most of your expenditure is related to staff and therefore you do not have a huge asset base.

Mr Donohoe

  514. Concerns over this arrangement have been expressed within the Agency itself by employees.
  (Mr Matthews) Yes, I understand that.

  515. What structure have you put in place now for people with a similar complaint, similar grievance, in order that something like this cannot happen again and that people will be listened to? They still complain about the fact that they are not listened to.
  (Mr Matthews) Two aspects to that. There are formal systems of procurement and financial and contractual delegations now in place which were not in place at the time. That is in terms of the systems. In terms of the reporting arrangements, my predecessor changed the reporting line of the head of internal audit from reporting to the Finance Director to the Chief Executive. So there is a direct line from internal audit to me now. We also have in place what to my mind are clear whistleblowing policies which mean that anybody who has a significant concern with any aspect of the organisation, whether it is procurement or not, has a direct line to me.

Chairman

  516. Those people were not penalised in any way for telling the truth.
  (Mr Matthews) No.

  517. It has not in any way damaged their progression within the civil service.
  (Mr Matthews) No, not as I understand it.

Dr Ladyman

  518. Have the police been invited to give an opinion on what happened?
  (Mr Matthews) No. My predecessor commissioned two sets of scrutiny in 1998, one by the DETR audit staff and subsequently, on the auditors recommendation, a specific inquiry by a firm of external accountants into one aspect of the procurement process. Neither of those reviews, which were available to the National Audit Office, suggested that there was any suggestion of fraud or corruption. Certainly severe criticism was made about the procurement process and our systems at the time of financial delegation.

Chairman

  519. Do the persons responsible remain in post? Were they moved elsewhere? Did they go voluntarily?
  (Mr Matthews) The person who was responsible for the contract signing left in 1999 at the end of his contract. He was on a short-term contract.


 
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