Report on The Governance of Land and Property in the NIHE

Report on The Governance of Land and Property in the NIHE.pdf (365.3 kb)

Executive Summary

Introduction

The Northern Ireland Housing Executive has played a pivotal role in the provision of social housing over the past 40 years, often in difficult and challenging circumstances. It is Northern Ireland’s largest landlord, responsible for the management of around 87,000 homes and is also one of the largest landholders in Northern Ireland, holding more than 900 hectares of land.

In early February 2010, three NIHE Directors highlighted concerns, to the then Chief Executive, about the involvement of other senior NIHE officials in a planning application relating to land owned by a private developer at Nelson Street in Belfast. In September 2010, the Northern Ireland Commissioner for Complaints issued a report which found maladministration relating to the disposal of NIHE land at Hardcastle Street in Belfast. In response to these concerns, NIHE conducted a series of investigations into a number of land dealings which took place prior to 2010, eventually referring five cases to the Police Service for Northern Ireland (PSNI) for further investigation. Whilst two of these cases were passed to the Public Prosecution Service, no prosecutions have resulted.

These events brought to light serious failings in NIHE’s corporate governance regime. Following the conclusion of the PSNI investigations the Comptroller and Auditor General (C&AG) published his report[1] in January 2016 highlighting concerns around the governance, leadership and ethical standards in NIHE prior to 2010. The C&AG concluded that weaknesses in NIHE’s governance and an inadequate internal control environment prevented it from protecting its own interests and demonstrating value for money and probity in some of its land deals with private developers.

Conclusions

The Committee’s examination of a number of individual land disposals has left the impression that some staff in NIHE felt they did not need to operate within the Housing Executive’s governance and control systems. Advice and guidance was simply ignored, with serious consequences for NIHE. The Committee finds it difficult to understand how some staff could take such a cavalier approach and even more difficult to understand why senior management, the Department or other NIHE staff failed to challenge the obvious disregard for proper processes and fundamental controls.

The Committee can only conclude that such an approach demonstrates an organisational culture which was seriously flawed. This should have been tackled at the top of the organisation. It was not. The Board failed to establish a culture of compliance around the stewardship of publicly owned assets in its care. The Board clearly did not set the right tone and did not lead the way on promoting an appropriate organisational culture – this was left to senior management. It appears to the Committee that some senior officials were in reality making Board-level decisions. This was wrong. The roles of the Board and senior management should be separate: the Board governs and the Chief Executive manages the organisation.

The Department and indeed NIHE missed opportunities to tackle the weaknesses in governance and control. The multiple concerns raised by audits in the period between 2001 and 2010 should have prompted action. The Committee considers that there were clear failings in the Department’s oversight of NIHE. It is unbelievable that the Department did not think it necessary to test the performance and governance assurances received from NIHE.

In 2013, this Committee concluded that the culmination of basic failures in governance and management over many years exposed the Housing Executive to a very significant risk of fraud, impropriety and poor value for money in relation to its response maintenance expenditure. These governance failings also applied to land dealings and left the Housing Executive vulnerable to corruption in its dealings with private developers.

The Committee recognises that much has changed in the Housing Executive since these serious issues were initially uncovered. Both the Executive and the Department have made considerable strides in addressing the serious flaws that emerged. However, we consider that the lessons emerging from this report are important not only for the Department for Social Development and the Housing Executive, but also for Boards, Audit Committees and senior managers across the public sector.

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