Wednesday, January 25, 2012

"Bad administration, bad governance, bad controls"-Irish Red Cross Secretary General, Donal Forde

Note: The link to the full transcript of the Public Accounts Committee hearing into the Irish Red Cross is at the bottom of this article.

Under sustained questioning from well briefed and well prepared members of the Irish parliament the Irish Red Cross Secretary General, Donal Forde, was forced to admit the Society had suffered from “bad administration, bad governance, bad controls”. His admission was given in evidence at the parliament’s Public Accounts Committee (PAC) Hearing into financial mismanagement and misgovernance at the Irish Red Cross on 19th January 2012.

Similarly under pressure the Irish Red Cross Chairman, David O’ Callaghan, conceded the situation around the discovery of 49 undisclosed bank accounts and the involvement of the national Vice Chairman, Anthony (Tony) Lawlor, in the largest of the undisclosed accounts was “a mess”.

The Irish Red Cross admitted that despite the scale of the crisis and the errors and wrongs committed by certain board members “no disciplinary action” was taken.

Throughout the entire proceedings it was clear for all those watching to witness the look of disbelief, exasperation and incredulity on the faces of the PAC members as the Irish Red Cross struggled to provide acceptable and credible answers.

The 19th January 2012 was a shameful day in the history of the Irish Red Cross. It was a new low for the Society to have its leaders provide a litany of untruths, inaccuracies and falsehoods on public record before the Irish Parliament.

It is the view of this Blog that those who issued these untruths should resign immediately before any further damage is done to the Society. Every attempt will be made to expose these untruths and falsehoods. They will not go unchallenged.

The position of the national Vice Chairman is completely untenable and it is clear from reading the transcripts of the PAC hearing that the Committee members feel the same. Mr Lawlor’s continued presence on the board and other committees of the Irish Red Cross continues to do irreparable damage to the Society’s image, credibility and reputation. Surely the Society will not re-appoint Mr. Lawlor for the 22nd year in a row in May 2012. To do so will bring howls of derision down on the Society. The Blog has also called on numerous occasions for the resignation of the national Treasurer whose inactions make him fully complicit in the “mess” referred to by the Chairman, David O’ Callaghan.

The Irish Red Cross should use the occasion of the special Central Council meeting scheduled for 10th March 2012 to announce the permanent departure of the Vice Chairman and Treasurer.

The Irish Red Cross no doubt believed the PAC hearing on 19th January 2012 would draw a line under the sand of recent controversies, mismanagement, misgovernance and financial irregularities. Because of the depth and extent of the untruths and misrepresentation of facts told at the hearing the Society has plunged itself into a whole new crisis. Not only does this risk entangling senior individuals from the previous leadership who have since resigned but it also embroils the new leadership.

Once again the crisis and reputational damage facing the Society is entirely self inflicted. If the values of integrity, honesty, openness, transparency, justice and courage prevailed all this could have been completely avoided. Unfortunately, that is not the Irish Red Cross way.

The Blog intends to go through in minute detail the transcripts from the hearing. It will formally respond to the Department of Defence and the Public Accounts Committee. In doing so the Blog will outline all untruths and falsehoods so that the truth is formally recorded and available to the public. It is essential the Irish Red Cross is held fully accountable for their actions. Every attempt will be made to do so.

The link to the full official transcript of the hearing is:

Peace if possible, truth at all costs-Martin Luther King

Thursday, January 19, 2012

Parliamentary Committee exposes financial and governance scandals at Irish Red Cross

NOTE: The Examiner newspaper carries an article in its 20th Jan 2012 edition concerning the admission in Parliament by the Irish Red Cross that its serving Vice Chairman, Tony Lawlor, was one of the signatories on an undisclosed bank account containing €160,000. The link to the article is:

NOTE 2: The Public Accounts Committee has published on public record the following letter from Noel Wardick to Irish Red Cross Chairman, David O' Callaghan:

The Irish Red Cross was subjected to nearly three hours of vigorous and robust questioning by the Dail’s (Irish Parliament) All Party Public Accounts Committee (PAC) earlier today 19th January 2012.

The well prepared members of the Committee (all elected representatives) exposed once again the scandalous goings-on at the Society over the last number of years. PAC members looked shocked, exasperated and disgusted with many of the responses from the Irish Red Cross Secretary General, Donal Forde and the Chairman, David O’ Callaghan.

This Blog has written at length about the misgovernance and financial irregularities at the Irish Red Cross. It was of the view it could no longer be shocked by the Society’s cover ups and deceit. How wrong the Blog was.

Today in Ireland’s national parliament the Irish Red Cross told clear and blatant untruths to elected public representatives. In time and once the full transcript is available this Blog will document in detail every single one of those untruths and seek that those responsible are fully held to account for their actions.

This disgusting debacle must stop and these individuals must not be permitted any longer to make a mockery of the Irish public, of elected representatives, of genuine Irish Red Cross volunteers and staff and of our national parliament.

It is high time for the International Red Cross in Geneva (both ICRC and IFRC) to come off the sidelines and prevent any further damage to and deterioration of the credibility of the Red Cross in Ireland. The Red Cross emblem and everything it stands for is being trampled into the ground by individuals prepared to deceive and misrepresent at the highest levels. Geneva, its time to wake up and do your job: protect the Red Cross emblem before irreparable damage is done.

The 19th January 2012, a day of infamy for the Irish Red Cross.

RTE (Ireland’s national broadcaster) has carried the below news article on the Irish Red Cross performance:

Irish Red Cross did not disclose bank accounts

Updated: 12:42, Thursday, 19 January 2012

The Irish Red Cross, under questioning at The Public Accounts Committee, has said that one of the two signatories on a previously undisclosed bank account was Vice Chairman of the Society nationally.

The Irish Red Cross, under questioning at The Public Accounts Committee, has said that one of the two signatories on a previously undisclosed bank account, valued at €160,000, was Vice Chairman of the Society nationally

He still remains the Vice Chairman.

Representatives of the charitable organisation, have confirmed that when the Head of Finance was made aware of this account and 48 other undisclosed accounts (to the value of €200,000 in total), he did not disclose the accounts to the Board of the Society.

The sitting Chairman of the Public Accounts Committee, Kieran O'Donnell, said it seemed extraordinary that the Head of Finance did not disclose such accounts to the Board.

Eoghan Murphy, member of the Public Accounts Committe, questioned why someone would continue in position of governance in the Society for 27 years considering there are serious questions raised, particularly by the Minister of Defence, in relation to poor governance in the Irish Red Cross.

Deputy Murphy said this "flies in the face of good governance".

His assertion was challenged by Donal Forde, newly appointed Secretary General of the Irish Red Cross, claiming that the Society has completely overhauled its system of governance, and all the branches of the society will be audited for 2011.

He added that an investigation was carried out by the society and there was no malevolence found, and no misappropriation of money, but it was clear there was poor governance. He confirmed there was no disciplinary action taken.

Mr. David O'Callaghan, The Chairman of the Irish Red Cross, admitted "there was a mess", and there was bad governance. But he added this was a restricted account, no cent was moved or was missing.

He added that an investigation was put in train and changes have been made in relation to codes of conduct, auditing and governance in the Irish Red Cross.

Saturday, January 14, 2012

Irish Parliament continues its investigation into financial mismanagement & poor corporate governance at Irish Red Cross

On the 19th January 2012 the Dail (Irish Parliament) will reconvene its investigation into financial mismanagement and poor corporate governance at the Irish Red Cross. The investigation is being carried out by the parliament’s Public Accounts Committee (PAC), the most senior of the Dail’s all-party committees.

The Hearing on the 19th, at which the Irish Red Cross has been requested to attend to account for its actions, must represent one of the lowest points in the Irish Red Cross’s already highly chequered history. The Society’s record on integrity, openness, competence, accountability, transparency, professionalism, financial management and corporate governance has been widely questioned for over twenty years. The Dail’s investigation on 19th January 2012 represents the culmination of this appalling 20 year history of lies, deceit and cover up.

The Public Accounts Committee will take up its investigation where it left off from the Hearing of 13th October 2011. At this the Secretary General of the Department of Defence (which has statutory responsibility for the Irish Red Cross) was robustly questioned by PAC members (all elected representatives). The Secretary General struggled to answers questions in a satisfactory manner. His weak performance and difficulty in answering questions led the PAC Committee to determine that another hearing was required where the Irish Red Cross leadership would be asked to explain their actions and to account for their behaviour.

It will be interesting to see who represents the Irish Red Cross at the hearing on the 19th. Presumably it will be the Chairman, David O’ Callaghan and Secretary General, Donal Forde.

Readers should note that the hearing is held in public and can be viewed live on line by visiting the Oireacthas website (and then clicking on one of the Committee Rooms until the room with the PAC hearing appears). The Hearing is scheduled for 10.00 am on 19th January:

The 19th January 2012 represents an important opportunity for the Irish Red Cross to finally and once and for all tell the truth and nothing but the truth. The Irish Red Cross should note that a half truth is in fact a full lie. This Blog does not expect the Irish Red Cross to tell the full truth and nothing but the truth but nevertheless it hopes it will. Telling the truth is the right thing to do. The Irish Red Cross has a very poor record of doing the right thing, in particular when it comes to accountability, financial management, integrity and corporate governance. The 19th January 2012 is a chance therefore to break with the past. Will Irish Red Cross take it? Highly doubtful. The Blog will of course be happy to be proven wrong on this.

On the 19th January 2012 the Irish Red Cross should at a minimum and on public record:

1. Announce an immediate independent investigation into the use of possibly millions of Euros intended for overseas disaster appeals but instead used for domestic expenditure and projects. It is appropriate to announce this just as the 2nd anniversary of the Haiti Earthquake has passed. As this Blog has reported many times the Irish Red Cross allocated over €600,000 intended for Haiti to its domestic accounts in 2010. A similar practice has existed at the Society for over 20 years. This unethical morally reprehensible betrayal of the Irish public is deserving of an independent investigation.
2. Following 1 above the Irish Red Cross should commit to returning all monies used inappropriately domestically back to the various overseas appeals the money was originally taken from. The Blog accepts that this would likely have to be done over a number of years as millions of Euros may be involved. As a first step and as a gesture of genuine intent the €600,000 taken from the Haiti appeal should be immediately returned. A failure by the Irish Red Cross to announce points 1 and 2 will confirm to all and sundry that the Society is prepared to lie and deceive and to do so at the highest levels of Irish public oversight. It will be a shocking indictment on not only the Irish Red Cross but on the Red Cross globally.
3. Announce the immediate resignation of the Vice Chairman and Treasurer in the interests of best practice, good governance and as a statement of clear intent that henceforth people in the Irish Red Cross regardless of their privileged board positions will be held accountable for their actions and inactions. If the Irish Red Cross cannot give cast iron assurances that both the Vice Chairman and Treasurer will resign immediately (or as a compromise step down at the end of their current terms in April 2012) and never again serve on the Executive Committee, Central Committee or any other committee or body of the Irish Red Cross then it will be confirmed for all to see that their statements on governance reform and commitments to good practice are meaningless.
4. Confirm that a 3 year mandatory break in board service will apply to both the Central Council and the Executive Committee after a maximum of 6 years service (2 terms of three years). Under the proposed new Irish Red Cross Constitution members can serve for life on Central Council. It must be absolutely compulsory to step down after 6 years. Under the proposed Constitution a member who has served 6 years on the Executive Committee only has to step down if another person is nominated for the post. If no-one is nominated then the incumbent does not have to step down. Those familiar with the Irish Red Cross will know too well that this will result in people being strongly discouraged from putting their names forward so as to ensure certain long serving members can remain on well past 6 years.
5. Confirm that the proposed Constitution will be amended to ensure cumulative service (past service) is taken into account when calculating if a member has served on the Central Council/Executive Committee in excess of 6 years. As it currently stands service to date is not taken into account. Only future service is to be considered in the calculations. Should Irish Red Cross announce this proposed amendment then any current Central Council or Executive Committee member who has already served for more than six years should step down in April 2012. The current situation whereby the Society refuses to take into account service to-date makes a mockery of its statements that it is committed to governance reform and best practice. The Irish Red Cross continues to ignore Minister Shatter’s wishes in this regard.
6. Issue a public apology to those families who donated property to the Irish Red Cross over the last number of decades and for which the Irish Red Cross never accounted for or recorded in its financial statements and balance sheet and for which the Irish Red Cross lost track of titles and deeds. The failure of the Irish Red Cross, in breach of financial practice, to properly record, account and utilise these assets is a testament to the abject incompetence of its governance over decades. The families who donated these high value assets deserve a public apology and a clear statement outlining how the Society intends rectifying the situation.
7. Explain to the PAC and the Irish public how it is that the Irish Red Cross, in its 72 year history, has failed to ever carry out a full organisational wide external audit. This is in flagrant breach of its own ‘Rules of the Society’ which mandates that a full organisational wide audit take place every six months. In 72 years a full external audit has never occured. An external audit only takes place of the head office in Merrion Square, Dublin. This external audit has never included the branches, areas or regions and as such millions and millions of Euros have remained unaudited for seven decades. The Irish Red Cross must announce that the 2011 finances will be subject to a full organisation wide external audit and that the audit will not be restricted to just the head office. It must state that the branches, areas and regions will be subjected to an extensive external audit and that this will happen every year henceforth. It is incomprehensible how an organisation in receipt of government and public funding to the tune of millions of Euros over decades has never been externally audited. The consequences of this are obvious for all to see.

The Blog has no doubt many more issues could be added to the list above but if the 7 points are addressed as outlined real progress will have been made in transforming the Irish Red Cross. The Irish Red Cross will say alot of the 'right' things on January 19th...committed to reform, change taking place, mistakes made in the past, lots of new policies, progress being made etc etc but to determine if there is any substance to their statements it is necessary to scratch the surface and look at the above 7 issues. If the Irish Red Cross is not prepared to implement the 7 points as outlined then we will know nothing has changed. The Society will have confirmed that they have no intention of holding individuals to account and no desire to part with the despicable governance culture that has brought disgrace and shame on the organisation. By mid-day on January 19th 2012 we will know one way or the other.

You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all the people all the time-Abraham Lincoln

Sunday, January 1, 2012

Irish Red Cross ends 2011 back in media spotlight for all the wrong reasons

The Irish Red Cross concluded 2011 just as it had started it, in the national media for all the wrong reasons.

On the 25th December 2011 the Sunday Independent, Ireland’s largest selling newspaper, in its Christmas Day edition carried a large and detailed article on the ongoing financial irregularities and misgovernance at the Society. The article demonstrated the extent of the financial inadequacies as well as reporting on Minister Alan Shatter’s displeasure at the long board service of a number of Irish Red Cross members.

In his end of year report to the Central Council the Irish Red Cross Chairman, David O’Callaghan, attempted to blame everybody including politicians, former staff, current and former members and volunteers as well as the media for the woes of the Society. This staggering display of delusion would appear to have been rewarded by the Sunday Independent with another well written article outlining the litany of problems the Society has encountered in recent years. The Sunday Independent informed its readers it has a copy of the Central Council report which it quoted from extensively.

Following the Sunday Independent article perhaps the Chairman and Board members within Irish Red Cross will desist from blaming others on the Society’s dysfunction and perhaps concentrate on dealing with and removing those who are responsible. Shooting the messenger never achieves anything.

The full transcript of the Sunday Independent article is transcribed below or alternatively can be read by clicking on the following link:

In addition to the above article the Irish Red Cross, in a statement to the Irish Independent for an article on falling donations to charities on 29th December 2011, was reported as saying that “fundraising was on a par with last year (2010)”. This statement was issued to the media by Irish Red Cross spokesperson Rebecca Thorn.

In his report to the Central Council issued in early December, Chairman David O’ Callaghan stated the following “All of our revenue lines are reducing and we must anticipate that this trend will continue for the next number of years....Our fundraising income has reduced considerably. As at the 31st October 2011, our gross income is €800k-compared to €1.48m at the same time last year....The revenue streams that have been particularly impacted this year are committed giving, legacies and tax rebates for donations...Our income is reducing significantly and these trends look likely to continue for the short to medium term”.

It would seem clear that one message has been given to the Irish Red Cross board and an entirely different and contradictory message given to the Irish public and media. The question must therefore be asked why did the Irish Red Cross spokesperson issue a statement to the media stating that funding in 2011 was on a par with 2010 despite the Chairman clearly stating that funding has declined significantly during 2011. Whoever authorised this apparently misleading statement to the media needs to explain their actions and be held to account immediately. A corrected statement confirming a significant decline in funding needs to be issued to the media to counter the original misrepresentation.

In addition, how the same Irish Red Cross spokesperson could say that the response to the Dublin Floods was “a big response” only she will know. With only €30,000 raised it must rank as one of the most poorly responded to national appeals ever launched by the Irish Red Cross.

The Irish Independent article can be read on the following link where it will be seen that other charities interviewed had no hesitation in admitting funding had declined during 2011:

While we can only hope that during 2012 there will be real accountability within the Irish Red Cross as well as the necessary personnel change at Central Council and Executive Committee level the well known French proverb unfortunately springs to mind plus ca change, plus c’est la meme chose

The full Sunday Independent article of 25th December 2011 is below:

Red Cross 'needs year to shake off bad press'

Charity beefs up its governance practices after financial failings

By DANIEL McCONNELL Chief Reporter
Sunday December 25 2011

THE chairman of the embattled Irish Red Cross, which was dogged by financial and governance failings last year, has said it will be at least another year before it can be fully cleansed of "negative press".

In a detailed half yearly report to the charity's central council seen by the Sunday Independent, David O'Callaghan said that 2011 saw a sizeable drop in the number of negative stories about the ongoing "turmoil" at the Irish Red Cross.

Mr O'Callaghan said that a small number of current and former volunteers, as well as former staff members, had been conducting a "campaign against the society", which he described as "deeply unhelpful".

"The ongoing campaign against the society by former staff, supported by a number of current and former volunteers, is deeply unhelpful. Certain sections of politics and the media remain cynical towards the IRC. It will be another year at least before clear light and distance is put between the society and the negative press of 2010," he wrote.

Mr O'Callaghan's report detailed a host of new financial and governance practices which have been introduced since reports of a lack of proper financial control first emerged in early 2010.
"The first challenge was the requirement to strengthen our governance and supervisory processes at every level to a standard that meets best practice for the charity sector. This is the only way in which we will conclusively put the turmoil of recent years behind us," he said.

Given significant drops in its revenue, from €1.48m in October, 2010, to €800,000 this year, Mr O'Callaghan detailed a cost reduction programme across the society, but also highlighted that many deficiencies in the handling of monies within the society remained.

He said that while compliance on financial returns from local branches had improved substantially since 2010, "we still have a lot of work to do".

"Some of the issues that have arisen are: lack of supporting information; expenses not vouched correctly; lodgements and cheque books not sequentially numbered; no quarterly returns; no receipt books used; branch committee forms not completed and aged debtors outstanding with head office."

All area secretaries and treasurers around the country have been sent a list of issues that remain outstanding and which Mr O'Callaghan said must be dealt with if the Irish Red Cross is to demonstrate its commitment to high standards and to establish the Irish Red Cross as a best practice organisation.

As a result of consistent weaknesses in documentation from local branches, Mr O'Callaghan said the organisation's financial officer is calling local treasurers on a daily basis to ensure full compliance.

"The financial control environment has changed for us all. We must meet higher and more demanding standards, and branch and area officers must respond appropriately," he added.

The Irish Red Cross was heavily criticised back in the summer by Justice Minister Alan Shatter, who has statutory responsibility for the society, and appoints its chairman and members of its board.

In July, it emerged that Mr Shatter had written to the Irish Red Cross stating that he opposed long board service and had requested the Irish Red Cross to expeditiously address this problem.

The minister clearly stated in Dail Eireann on June 29, 2011, that he is opposed to any board member serving in the same position for more than six years and in a leadership role for a cumulative period of more than 12 years.
- DANIEL McCONNELL Chief Reporter