Examination of Witnesses (Questions 500
WEDNESDAY 24 JANUARY 2001
MR T MATTHEWS
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.
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
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
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.
508. The Finance Director?
(Mr Matthews) No.
509. You say you were not at the Agency at that
(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
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
(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
513. I see. So if you have very large assets
it does not matter what the taxpayer has to pay in order to establish
(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.
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.
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.
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.
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.