Deputy John Deasy, Public Accounts Committee chairman, John McGuinness TD, and Comptroller & Auditor General Seamus McCarthy prior to this morning’s private meeting with John Muwanga, Auditor General of Uganda, who uncovered a fraud which included €4 million of Irish aid money in 2012. As a result the Irish Aid programme was suspended and the money subsequently repaid in full. The PAC examines the controls on the Overseas Development Aid budget with the Department of Foreign Affairs on an annual basis, with delegations to two programme countries — Mozambique and Ethiopia — having looked at how risks can be mitigated.
PAC Meeting | May 1, 2014
Department of Social Protection
Ms Niamh O'Donoghue (Secretary General, Department of Social Protection) called and examined.
Ms Niamh O'Donoghue: There is a criminal investigation under way...
Acting Chairman (Deputy John Deasy): The matter needs to take its course before the Department proceeds.
Niamh O'Donoghue: Yes.
Acting Chairman (John Deasy): For clarification and in the context of the €1 million, one individual colluded with regard-----
Niamh O'Donoghue: Potentially.
Acting Chairman (John Deasy): Yes. The person potentially colluded with regard to facilitating multiple claims on the part of other individuals. Is that the case?
Niamh O'Donoghue: There is an investigation underway and allegations regarding an inappropriate use of money - over €1 million - have been made.
Acting Chairman (John Deasy): So one individual is at the centre of the matter-----
Niamh O'Donoghue: Yes.
Acting Chairman (John Deasy): -----but there are potentially multiple claims in respect of other people involved.
Niamh O'Donoghue: Potentially.
Acting Chairman (John Deasy): Information on John Deasy Zoom on John Deasy So that is what we are dealing with here.
Niamh O'Donoghue: Yes.
. . . LATER / Acting Chairman (John Deasy): The Comptroller and Auditor General and Deputy Kieran O'Donnell referred to the issue of there possibly being a large misappropriation. I am trying to figure out its scale and the number of individuals who might have participated in it. We are no stranger to fraud and potential fraud at this committee, even when it comes to Irish Aid money going astray in places like Uganda. However, I have never come across anything of the scale involved in the social welfare area. Notwithstanding the fact that an investigation is ongoing and that Ms O'Donoghue is limited in what she can say, can she give us any idea of the potential number of participants in this scheme?
Niamh O'Donoghue: I do not wish to be unhelpful to the committee, but I am constrained in what I can say because investigations are ongoing.
Acting Chairman (John Deasy): Can we get an idea of the number and types of claim involved?
Niamh O'Donoghue: The area in which the fraud is alleged to have been perpetrated involves a mixture of discretionary payments and claims. I do not know what the breakdown is between them other than that a range of issues are being pursued as part of the investigation.
Acting Chairman (John Deasy): It took place over the course of six years. If it amounted to more than €1 million, we would have to be speaking about a sizeable number of people. It would be something that was very organised and involved a large number of participants.
Niamh O'Donoghue: Again, that would be on the assumption that claims were made for real people or payments were made to real businesses. That is all part of the investigation.
Acting Chairman (John Deasy): Overpayments seem to be the topic of the day. The legislation made provision for reductions of 15% in welfare payments to provide for better recovery.
Deasy: "We are no stranger to fraud and potential fraud at this committee, even when it comes to Irish Aid money going astray in places like Uganda. However, I have never come across anything of the scale involved in the social welfare area."
The Act also provided for the use of attachment orders. How effective and how widely utilised has this been since the enactment of the legislation? Previously, there was a deduction of €2 or €3 a week. We talked about this issue a couple of years ago and Ms O'Donoghue suggested the figure had ended up being included in the legislation. How has it worked out?
Niamh O'Donoghue (above): It has worked out very well based on the fact that our recovery figure in 2013 was significantly ahead of our recovery figures in 2012 and previous years.
Acting Chairman (John Deasy): By how much? That is important.
Niamh O'Donoghue: It was €70 million in 2013 compared to a figure of €54 million in 2012.
Acting Chairman (John Deasy): Does Ms O'Donoghue attribute this specifically to the provisions included in the Act?
Niamh O'Donoghue: It is primarily due to the 15% provision but not exclusively because we have upped our game in pursuing payment recovery at an early stage. We are not recovering 15% in all instances because a deciding officer has discretion. While we seek to recover 15%, if the circumstances of the individual are such that it would cause great hardship, the deciding officer can come to a different arrangement.
Acting Chairman (John Deasy): The point of including it in the legislation was to improve it and Ms O'Donoghue is saying definitively that it has worked.
Niamh O'Donoghue: Absolutely and we expect it to continue to improve in the coming years. The attachments facility has had a twofold impact. The fact that we have the facility to attach, whether to bank accounts or earnings, has been very significant and it is a power of influence over people to come to voluntary arrangements with us. In some instances, the fact that we said we had this power and would use it has encouraged people to come to an arrangement that has stopped short of our putting it in place. There are cases in which we are in the process of putting attachment orders in place. So far this year, 57 cases suitable for attachments have been referred for consideration in the Department and engagement is happening in most of these cases. Final demands have issued in only 12 of these cases, ten for attachment of earnings and two for attachment to amounts held in financial institutions. In six of the 12 cases people have begun to repay their debts or approached us with acceptable payments to do so. In the other six we are moving to the next stage of putting the attachment procedures in place.
Acting Chairman (John Deasy): In the Act is there a provision to deduct amounts from other State payments?
Niamh O'Donoghue: That is another development we are seeking, particularly regarding payments such as redundancy lump sums.
Acting Chairman (John Deasy): If it has been so effective so far and there is progress on the overall overpayments issue, is the Department moving towards this?
Niamh O'Donoghue: We will have to take legislative steps to do it and that is our intention. We are exploring the issue in the context of attachments to other payments and tax refunds paid by Revenue.
Acting Chairman (John Deasy): The reaction when people know the Department has these powers is interesting.
Niamh O'Donoghue: The deterrent effect.
Acting Chairman (John Deasy): If the Department allows itself additional powers, the position is likely to improve further. Is that the thought process?
Niamh O'Donoghue: Absolutely. A number of years ago when we had this conversation at the committee, I signalled that we were considering taking a multi-strand approach to recovering debt. The 15% provision was one element, among others. We are seeking to pursue everything we can and it is all about trying to protect the Exchequer. Ultimately, we want to try to ensure overpayments do not occur in the first instance.
Acting Chairman (John Deasy): The number of applicants for invalidity pension in 2012 was 50% higher than in 2008. To what does Ms O'Donoghue attribute this?
Niamh O'Donoghue: The most significant single contributory factor was the change in the criteria for the payment of illness benefit. Illness benefit is a short-term, contribution-based payment for people in work who are ill. As it originally had no particular term, one could have been in receipt of illness benefit for multiple years. The scheme was changed and the first impact was felt in 2011. The length of time for which one could receive illness benefit was limited to two years. Many people who might have stayed on the payment were no longer eligible and the next progression was to invalidity pension.
Acting Chairman (Deputy John Deasy): In the headline figures included in her opening statement Ms O'Donoghue quoted €18.9 billion for 2014, outside the €600 million in administration costs. Is the reduction from €20.1 billion accounted for largely by reductions in income supports or do other reductions in the Department account for that lower figure?
Niamh O'Donoghue: As the figures are for the programme of expenditure, they are the income support payments. The reduction is due to changes in eligibility and conditionality attached to jobseeker's payments, one parent family payment and various others.
Acting Chairman (John Deasy): When will the card be rolled out completely?
Niamh O'Donoghue: The contract we have in place is to issue 3 million cards by 2016. As I indicated in my opening statement, we have issued 660,000. Our target is to issue 900,000 in 2014, a similar number in 2015 and approximately 600,000 or 700,000 in 2016. We issue the card only to adults, not to those under 18 years. With such numbers, it goes way beyond the customer base of the Department. Because it is a public service card with major potential as an authenticator of identity, we are talking to various other organisations about the use and deployment of the card and it would help in engaging with customer bases.
Acting Chairman (John Deasy): Because of the new checks, what impact does Ms O'Donoghue envisage it will have on security issues, overpayments, fraud levels, etc.?
Niamh O'Donoghue: It has been very successful for us as an identity check.
Acting Chairman (John Deasy): Does it work?
Niamh O'Donoghue: Absolutely. There are 15 cases in which we have definitively identified the fraudulent use of identity for claiming. This has generated savings of several million euro for the Department already; it is an instant tool. When somebody comes in to claim and his or her photograph is taken for a public service card, that photograph is compared almost in real time with what is contained in the Department's existing database of photographs and it identifies potential matches.
Where potential matches are identified, they are eyeballed to ensure we are looking at the same person or whatever and then referred to investigation if necessary. As I said, there are 15 cases where there was suspected fraud and where we have been able to investigate, cease claims and generate savings for the Department.