Inquiry into allegations, arising from a BBC NI Spotlight programme aired on 3 July 2013, of impropriety or irregularity relating to NIHE managed contracts and consideration of any resulting actions – Phase 3

Session: 2014/2015

Date: 16 April 2015

Reference: NIA 222/11-16

ISBN: 978-0-339-60574-9

Mandate Number: Mandate 2011/16 Twelfth Report

Download the full report: Volume One, Volume Two

Executive Summary

In a BBC NI Spotlight programme, which aired on 3 July 2013, allegations were made of wrongful political interference in the Northern Ireland Housing Executive (NIHE), potential breaches of the Ministerial Code of Conduct and misleading of the Assembly and the Committee for Social Development (the Committee).

On 3 October 2013, the Committee agreed the Terms of Reference for its Inquiry. The Terms of Reference contain three distinct strands and this Report deals with strand i:

Decision making relating to the award, modification and cancellation of NIHE maintenance contracts to establish any impropriety or irregularity and, in particular, whether the actions of Ministers were appropriate

The Committee took evidence on the actions of Minister McCausland in relation to the termination of the Red Sky contracts and the discussions regarding a possible extension of the Red Sky termination date. The Committee agreed that the former Minister’s actions were the central issue to be considered during phase 3 of the Inquiry.

The Committee also heard extensive evidence in relation to the actions of Minister McCausland’s Special Adviser; the role of the Department for Social Development; claims of political lobbying in favour of Red Sky; and allegations of unfair and sectarian treatment of Red Sky. The appropriateness of the actions of other former Ministers for Social Development in relation to the Red Sky contracts were also considered.

The Committee showed considerable flexibility throughout the Inquiry in accommodating witnesses who were not available to attend the evidence sessions as scheduled which resulted in delays to the inquiry process.

The Committee also encountered serious difficulty in its engagement with the BBC. While the Committee acknowledges that the organisation provided a significant amount of written material to the Inquiry it regretted that the BBC would not attend the Inquiry to provide oral evidence.

The Committee was also concerned at Minister McCausland’s refusal to inform it of any of the details of the outcome of a fact-finding exercise that was conducted in response to allegations made against the Special Adviser, Stephen Brimstone, in the Spotlight Programme until a year after the exercise had concluded. While the Committee was notified on 25 September 2013 that the exercise, which had commenced on 20 August 2013, had been completed, the Committee was only informed of Minister McCausland’s decision not to initiate any further action in September 2014 despite several letters to the Department over this period seeking clarification.

When Minister Storey released a redacted version of the report in a response to a notice compelling its release under Section 44(7) of the Northern Ireland Act 1998, the Committee noted that the report recommended a formal disciplinary investigation into the behaviour of Mr Brimstone. The Committee expressed concern in relation to this evidence, having already been informed that Mr McCausland, after considering the report, had decided no further action was required.

The Committee believes that this decision should be reviewed by the current Minister. The Committee has made every effort to understand why information may have been justifiably redacted but has been unable to establish this and calls on the Minister to publish the report in full.

The Committee considered evidence concerning a meeting Minister McCausland attended with East Belfast MLAs and the former Managing Director and former independent Financial Director of Red Sky on 27 June 2011. The Committee noted that Departmental officials had advised him against attending this meeting which was to discuss the Red Sky contracts, on the basis that it was an on-going contractual matter between the Housing Executive and Red Sky.

The Committee concluded that the Minister was free to meet whomever he chose and that the decision to attend the meeting was not in itself inappropriate but it was imprudent, particularly as Red Sky was in administration and the Administrator, BDO, was not present at this meeting.

The Committee agreed that the Minister’s statement, as indicated in the note of the meeting, that he would ‘like to have the administrator in place until the end of August to allow all issues relating to the handover of contracts to be considered, during this time the proposed new company might also be able to progress matters’ was inappropriate. Whether it was his intention or not, the Minister’s decision to seek to have the termination deadline of the Red Sky contracts extended impacted on the existing arrangements to transfer contracts to adjacent contractors and potentially provided commercial advantage to a newly reconstituted Red Sky (‘Newco’).

The Committee also considered evidence in relation to meetings the Minister attended on 28 and 30 June 2011 with senior members of the NIHE and a subsequent written request that was sent to the former Chairman of the NIHE Board on 1 July 2011.

In his letter Minister McCausland confirmed that he had asked officials to carry out a forensic investigation of other contractors including those to whom the Red Sky contracts would be assigned. He then went on to request that the Chairman put to the Housing Executive Board that the termination date of the Red Sky contracts should be extended from 14 July 2011 to allow an open procurement competition, subject to the Administrator stating that it could continue to service these contracts. He stated that these contracts should be for a period of six months or until new contract procedures could be put in place.

The actions of the Minister, subsequent to the meeting of 27 June 2011, are considered by the Committee as evidence that the Minister became involved with contractual matters that, as advised by his officials were outwith his responsibility, and which rested solely with the NIHE and the Administrator, BDO. The Committee therefore concluded that the Minister acted inappropriately in seeking to have the termination date extended.

The Committee concluded that had the NIHE Board acceded to the Minister’s request this would have effectively reinstated the contract to an organisation that had lost the trust and confidence of the NIHE necessary for the satisfactory operation of its contracts. In effect, this would have facilitated the interests of a private organisation in securing a public contract and, rather than protect the public purse, the request had the potential to undermine value for money service provision to tenants.

The Committee heard extensive and conflicting evidence in relation to a phone call that was made by the Minister’s Special Adviser, to DUP Councillor Palmer on 1 July 2011 in respect of her participation at the special NIHE Board meeting on 5 July 2011. This meeting was called to discuss the Minister’s request that the termination date for the Red Sky contracts should be extended. The Committee concluded that it was reasonable to assume that the former Minister was aware that Mr Brimstone was going to call Councillor Palmer on this matter.

The Committee noted Mr Brimstone’s proclaimed inability to recollect certain details surrounding this phone call and his refusal to answer related questions. In contrast to Mr Brimstone’s evidence the Committee found Councillor Palmer’s evidence on this matter to be consistent, convincing and compelling. In particular, the Committee considered that Councillor Palmer had provided supporting evidence in the form of 5 redacted drafts of an apology. While Mr Brimstone refuted the evidence Councillor Palmer had provided, he did not provide any further material to support his position on the basis that this related to “internal party matters”. The Committee noted that during his evidence session Mr Brimstone had been advised by the Chair that “internal party matters” was not a legitimate reason for refusing to answer questions.

The Committee concluded that, in calling Councillor Palmer, Mr Brimstone was attempting to influence the board’s discussions on behalf of the Minister in relation to the termination of the Red Sky contracts and that this was inappropriate.

The Committee also expressed concern about an email sent by the Department to the Chairperson of the NIHE Board on the morning of the special NIHE Board meeting of 5 July 2011. This email stated that the Minister’s Special Adviser believed that the proposed 6 month extension was too long and should be 4 months (3 months as per advice received by the Department from the Central Procurement Division plus an additional month for associated administration).

The Committee received conflicting evidence from Mr Sands and Mr Brimstone as to how it was decided to send this email and who made this decision. Both witnesses did agree however that the email had been sent following discussion between them. Mr Brimstone also indicated that others from the Department may have been present. This raised concerns as to the full extent and appropriateness of the role of the Department in the revised request to Mr Rowntree.

The Committee received no evidence to suggest that there had been lobbying by political representatives, or Ministerial pressure brought to bear on the NIHE on behalf of Red Sky, or other companies, before the decision to terminate the Red Sky contracts was taken.

However, the Committee also considered whether political motivation underpinned the Minister’s actions to seek to have the termination date extended. Noting Mr McCausland’s actions following his meeting with party colleagues, and the former Managing Director and former independent Financial Director of Red Sky and, in particular, the evidence given by Mr Brimstone in his fact-finding interview, the Committee has been driven to the conclusion that the decision to seek to extend the termination date of the Red Sky contracts was politically motivated.

The Committee concluded that there is no evidence that the decision to terminate the Red Sky contracts was a sectarian one and that the NIHE Board legitimately terminated the Red Sky contracts based on the trust and confidence necessary for the satisfactory operation of the contracts having been undermined. Indeed the Committee noted the evidence of former and current NIHE Senior Officials and the findings of the 2012 NIAO report into response maintenance, that there had been a long history of problems with Red Sky stretching back to 2000.

The Committee also considered the actions/interventions of other former Ministers for Social Development and concluded that there was no evidence of impropriety or irregularity on the part of Minister Ritchie. It also concluded that Minister Attwood’s intervention in relation to Red Sky was not politically motivated.

The Committee, in adhering to its procedural fairness guidelines, provided Mr McCausland and Mr Brimstone each with a draft report for comment. However, the Committee only received a response from Mr Brimstone and this can be found in appendix 6. The Committee considered Mr Brimstone’s response at its meeting on 16 April and, in particular, discussed whether changes should be made to its draft report as a result of his comments. The Committee did not accept the points raised by Mr Brimstone in his response to the Committee and agreed that no further substantive changes to its Report were required.

The Committee also agreed to consider an alternative draft report by a minority of members who fundamentally disagreed with the Committee’s Report. For this draft report which was not agreed by the Committee, see appendix 8 to the report.

Recommendations

It is the Committee’s view that, in the case of an inquiry into the actions of a Minister, there is a clear conflict of interest where that Minister is required to authorise the release of evidence to the Committee. The Committee is of the view that these procedures should be reviewed.

The Committee considers it entirely inappropriate that the decision on whether to take forward a formal disciplinary investigation into the actions of a Special Adviser rests with the appointing Minister and recommends that this procedure be urgently reviewed.

The Committee is also of the opinion that the existing civil service guidelines and mechanisms for challenging Ministers in relation to their becoming involved in operational or contractual matters are not sufficiently robust and should be urgently reviewed.

The Committee notes that there is currently no existing mechanism for independent investigation of allegations of inappropriate conduct made against Ministers. As part of its terms of reference the Committee agreed

“Should the committee identify any evidence of fraud or corruption in relation to the operation of NIHE maintenance contracts and/or any actions indicating possible breaches of relevant codes of conduct, these will be reported directly to the appropriate authorities.”

If such mechanisms existed the Committee would be referring its report to the ‘appropriate authorities’ for consideration.

The Committee believes that procedures for establishing a mechanism for investigation and the consideration of the findings of any subsequent report into such allegations should be taken forward as a matter of urgency by the Assembly.

 

Download the full report: Volume OneVolume Two

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