Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 160 - 179)



  160. It was urgent then. It actually said in 1994: "We recommend that the Corporation issue firm guidelines on the need for an operation of internal audit, and closely monitor the extent to which that guidance is implemented". That was in 1994.
  (Dr Perry) That is right, and—

  161. It did not happen.
  (Dr Perry) No, it did happen, but the real tightening up of the regulatory system, the devices for ensuring the way in which the existence of internal controls was reported to us, that was tightened up after Focus came to light. In early 1994 from memory, but I will correct that in writing if it is not the case, there had been the introduction of quarterly financial returns for larger RSLs, so bit by bit the system was already being tightened up. Clearly it would have been preferable for it to have been tightened up even faster than it was[12].

  162. I have been told that I have only got two minutes left, and that was probably about a minute ago. It says here: "The Corporation should closely examine the reasons for the Association's poor performance and the length of time over which problems have remained and they should be prepared, if necessary, to withhold further allocations of funds." Has that happened at any time since 1994?
  (Dr Perry) Withholding allocations of funds because of concerns about the governance? Frequently.

  163. It has?
  (Dr Perry) Oh, yes.

  164. Finally—I thought I would squeeze that in—why are you here?
  (Dr Perry) Why am I here?

  165. You were not involved with all this, were you?
  (Dr Perry) I am the Chief Executive of the Housing Corporation and have been since 2 October and so I appear before you.

  166. It is a load of nonsense, is it not, your having to come here and answer for your predecessors? Not even your immediate predecessor but your predecessor but one.
  (Dr Perry) I am here at your invitation.

  167. I know you are. Maybe it is something I should more appropriately ask the C&AG. It seems to me, C&AG, that what we have got here is someone who is fresh into the job, he has done a very good job of providing us with the information that is to the best of his knowledge, but it would have been a lot more helpful to this Committee if we had the guy who was actually there, who I believe is still around and active in public service. I think it is a travesty that we have got this gentleman sitting here. Mr Hennessy, were you there at the time?
  (Mr Hennessy) I was at the Corporation's headquarters, yes.

  168. But not in your present capacity?
  (Mr Hennessy) No, not in this post.

  169. What happened to the people who were responsible for that oversight within the Housing Corporation, who actually had all that said to them at the time about the inefficient way in which they had overseen RSLs at the time? What happened to those people? Are they still there or were they kicked out of the Housing Corporation? Was action taken against them because of the poor management?
  (Dr Perry) I think there is a distinction between people who were involved in the specific issue of Focus—

  170. No, no, I am not talking about that. What I am talking about is it is pretty clear that the culture of oversight and scrutiny at the Housing Corporation was weak in 1994 and it persisted weak for a period of time after that. Changes were made but it took a long time for those changes to be effectively implemented. What I want to know is, given the criticism that took place in 1994, were there any changes that took place in the managerial responsibilities of people at the Housing Corporation because of the way in which this Committee made its recommendations?
  (Dr Perry) I would take issue, with respect, on the issue of weakness. What you had, if I can quote an answer I gave earlier, was an evolving system whereby—


  171. Could you just answer the question. Was anybody sacked, anybody rebuked? Was anybody in any way penalised as a result of not following the original recommendations of the PAC?
  (Dr Perry) I do not have any knowledge of that.

Mr Gardiner

  172. Could you provide a note then to the Committee? I know this is an embarrassing question for you and it may not be one you have mugged up on. Thank you for your evidence today13.
  (Dr Perry) Thank you.


  173. Thank you. Dr Perry, could we have as well a list of the occasions when—I think you said frequently—money was withheld on governance grounds?
  (Dr Perry) Yes.

  174. Over five years.
  (Dr Perry) Over the last five years, certainly.

  175. Perhaps you can tell me, what is the average frequency of your planned inspection visits? Mr Hennessy may know.
  (Mr Hennessy) It will vary according to the size of the organisation, there is not a set one. If it is a large association we will put more people in for a longer period.

  176. Let us say for a large association, how often would they see them?
  (Mr Hennessy) I expect they would be in the building for several days.

  177. How often? How many years between visits?
  (Mr Hennessy) On which inspection are we talking about?

  178. You were talking before about this pseudo-randomised or targeted inspection procedure, were you not?
  (Mr Hennessy) Yes.

  179. How often does that happen?
  (Mr Hennessy) It is difficult to clarify this one point because of the types of visits.

12   Note by Witness: Quarterly financial returns from larger RSLs were first introduced in 1993-94. The requirement for RSLs to include in their accounts a statement about internal controls was introduced in March 1996. Our supplementary memorandum summarises our actions on each of the matters Members enquired about. Back

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Prepared 9 July 2001