Irish Red Cross evidence to Parliamentary Committee continues to be challenged

On 16th March 2012 Noel Wardick, former Head of the International Department at the Irish Red Cross, continued to challenge evidence the Irish Red Cross provided to the Dail's Parliamentary Public Accounts Committee (PAC) on the 19th January 2012 and in subsequent letters it sent to the PAC. Mr. Wardick's letter is published in its entirety below.

On a separate matter the position of Chairperson at the Irish Red Cross becomes vacant in April. For the first time in the Society's history the incoming Chairperson will not be appointed by the Irish Government but instead will be appointed by the Central Council (governing board of the Irish Red Cross).

The Irish Red Cross has established a five person Nominations Committee (3 from the Executive Committee and 2 from the Central Council) which is tasked with identifying a number of suitably qualified candidates. Once identified the role of the Nominations Committee is to recommend a number of names to the Central Council who will then vote to determine who is appointed Chair for the next three years.

As is the norm with the Irish Red Cross the new process of appointing the Chairperson is shrouded in secrecy and distinctly lacking in transparency. The names of the Nomination Committee have not been forwarded to all members and volunteers and the process for submitting applications to the Nominations Committee has not yet been outlined or articulated. No information on the matter is available on the Society's website. Could it be that the ruling elite of the Irish Red Cross already know who the new Chairperson will be and as such are not actively seeking applications? Is someone about to be 'crowned' Chairperson as opposed to being genuinely, openly and transparently elected?

The appointment of a Chairperson in April/May of this year presents the Irish Red Cross with the perfect opportunity to begin the process of true reform and renewal. Should an individual of real independence, capability, integrity, professionalism, courage, energy and competence be appointed the Society will have taken a great leap forward in rebuilding its tarnished reputation.

In addition to the Chairperson the positions of Vice Chair, Treasurer and Secretary also become vacant in April and it is critical for the Society that all three incumbents are replaced. The current Treasurer and Secretary are government nominees appointed by the former and now disgraced Fianna Fail government. It is unlikely either will feature in Minister Shatter's four appointments to the Central Council. All other positions on the Executive Committee become vacant in April and as such members of the Central Council have an opportunity to replace the jaded, staid and ineffective group currently in place. The re-appointment of incumbents will only serve to consign the Irish Red Cross to endless years of under performance, stagnation and reduced funding.

March 31st sees the closing date for applications for the newly created voluntary position of National Director of Units (NDU). All branches have previously been served with application forms, a detailed job description and submission procedures. The NDU will automatically have a seat on Central Council thereby making the individual eligible for election to Executive Committee. It can only be hoped the person appointed will be capable, independent and not a crony of the current leadership. Fresh blood, vigor and new ideas are required. The Blog concurs with the many comments that were posted advocating the appointment of a female NDU in order to address the inexcusable gender imbalance within the governance of the Society. Should a female candidate be appointed it is, however, of critical importance that the individual not be one of the current power obsessed cabal that control the Society. The same applies to the appointment of the new Chairperson.

Noel Wardick's letter to PAC follows:

16^th March 2012

Mr. John McGuinness TD,

Chairman,

Public Accounts Committee,

Leinster House,

Kildare Street,

Dublin 2.

Dear Chairman,

Reference previous correspondence from me to the PAC, in particular my letter of 25^th February 2012 and the letter from the Irish Red Cross, of 14^th March 2012, signed by Mr. Donal Forde, Secretary General.

I wish to make a number of important observations and comments on IRC’s letter which are necessary once again to ensure inaccuracies are corrected and to ensure the public record contains correct and exact information.

I am, however, conscious that the PAC has already invested a considerable amount of time on examining the situation at the Irish Red Cross and I am anxious to avoid overburdening the Committee with an endless series of ‘he said, she said’ correspondence. Nevertheless this is a matter of public interest as it involves an organisation in receipt of substantial monies from the Government and from the Irish public. I believe the public record must record the facts and where attempts are made to distort such facts the public record must be protected and those facts stated on public record and done so numerous times if necessary.

I note from the transcripts of the PAC meeting held on 8^th March 2012 that the members are considering inviting a number of individuals before the Committee who have not appeared before it to-date. This is a most welcome development and once again I state my willingness to appear and be questioned on public record. More importantly I also note the PAC would appear to have determined that the best way of getting the answers it and the general public require is to have the Irish Red Cross independently investigated. I and others have advocated for a long time that a full independent investigation into the Irish Red Cross is required and that until such an investigation is held the Irish Red Cross will remain mired in secrecy and controversy. An independent investigation, chaired by an individual of the highest calibre, integrity and repute with no past or current connection whatsoever to either the Irish Red Cross, the International Red Cross or the Department of Defence, is the only way the true facts will emerge. Such an investigation, if properly implemented with a focus on true accountability, putting the facts on public record, and mapping a way forward would have real potential to bring years of turmoil, misgovernance and dysfunction at the Society to an end.

It is important to note that in the last number of years there have been numerous calls for an independent investigation into the Irish Red Cross. Such calls have been made at varying times by Fine Gael, Labour, Independents and Transparency International. In addition the Comptroller and Auditor General has examined financial irregularities at the Irish Red Cross and allocated a full chapter (32) to the Society in his 2010 Annual Report. Necessary reform of the Society was included in the Fine Gael and Labour 2011 election manifestos and is clearly stated as a policy objective in the Coalition’s Program for Government. The Society was investigated by RTE’s Prime Time in August 2010, there has been hundreds of Parliamentary Questions from parties of every hue and colour and the Society has been the subject of two full PAC hearings and discussed at subsequent hearings. As such the PAC joins a long list of individuals, groups and organisations that are deeply concerned about what is happening at the Irish Red Cross. The decision by PAC to consider the need for an independent investigation is therefore welcome and timely. Its findings will also hopefully serve as a road map to a much desired and wished for recovery.

In relation to the Irish Red Cross (IRC) letter of 14^th March 2012 to PAC I wish to put the following on public record:

What is most striking about the IRC letter is the absence of commentary on a number of key points which I made in my letter of 25^th February 2012. I think the silence of IRC on these issues is more revealing than their denials and statements on other issues.

In relation to the Tipperary Tsunami Bank account IRC states “We do not wish to comment further on the Tipperary account references at this point”. Given that IRC gave incorrect, false and inaccurate information to the Dail Public Accounts Committee on this issue and given that the Chairman of the PAC, at the meeting of 8^th March 2012, stated in relation to IRC “We need to review this correspondence on the Red Cross because, among other issues raised, the Committee may have been misled” it is probably unsurprising that IRC wishes to disengage discussion on this matter. It is in their interests to do so but contrary to the interests of the Irish public.

I stand over all my previous correspondence submitted to PAC on the Tipperary Bank Account.

In relation to the undisclosed Banagher Branch bank account the IRC appears to miss the point completely. In my submission to PAC I referred to the €8,058 as an overdraft. IRC explain in their recent letter to PAC this was a term loan and not an overdraft. This is pedantic irrelevance by IRC. An overdraft is a short term loan and a term loan a longer one. That is not the point. The issue is that the Banagher branch failed to declare this bank account to IRC Head Office as per IRC Financial Policy. The Banagher account was one of 49 undisclosed bank accounts discovered in early 2008. The fact that the Banagher branch took out a term loan of €8,058 and did not declare the account to head office until a secret audit discovered it would be a matter of serious concern in any well functioning organisation. When IRC states in its letter “Banagher Branch was not in breach of any IRC policies as Mr. Wardick has suggested” they are simply incorrect. Not declaring a bank account (and one with a loan on it) is a serious breach of IRC policy. It is therefore important to know who were the signatories of this account, were any of them members of IRC governance and what action if any was taken for this breach of policy.

In their letter IRC have a full section on Financial Accounts of the Society. I do not intend to repeat at length what I have stated in detail in previous submissions other than to state that I stand over everything previously submitted. In their most recent letter IRC, once again, fails to address the FACT that as an organisation IRC has never once in its 72 history conducted a full organisational wide external audit as they are OBLIGED to do under their own Rules of the Society. The IRC is in breach of its own rules by restricting its annual audit to its head office only. By doing so its 145 Branches, 26 Areas and 4 Regions, which have millions of Euros of publicly donated money on their books, have never been formally externally audited and consolidated into one set of national Irish Red Cross accounts. It is inexplicable that an organisation would not be externally audited in its entirety. IRC’s auditors, who are the subject of an investigation by the Chartered Accountants Regulatory Board (CARB) because of their handling of the IRC audit, have confirmed in writing that the IRC is in breach of its own rules by not conducting a full organisational wide audit. This can be provided to PAC if required.

In relation to the satisfaction or otherwise of the auditors vis a vis IRC accounts I refer again to the statement by the IRC Secretary General at the 19^th January 2012 PAC hearing where he stated the auditors were “unconditionally and absolutely” satisfied with the Society. Any examination of the management letters written by the auditors, BDO, over the last number of years, which the Comptroller and Auditor General also referenced in his 2010 annual report, would clearly contradict this view. Very serious concerns were raised by the auditors in these letters. I would also make the point that the list of discredited audit reports that have materialised in Ireland and overseas in recent years raise serious questions about the reliability of any audit statement that says ‘a true and fair’ view. As an example I have no doubt the audit report of AIB in 2007, 2008 etc presented the bank’s accounts as ‘true and fair’ but despite this the actual reality of spectacular mismanagement, greed and incompetence was not revealed, disclosed or referenced. As we now know AIB had to be bailed out to the tune of billions of Euros by the Irish taxpayer in order to prevent a systemic collapse of the Irish banking system. Other notable examples of companies that received a ‘true and fair’ statement from their auditors include Enron, Lehman Brothers, Anglo Irish Bank, Irish Nationwide etc etc, all now bust. In addition and to demonstrate the point that audited accounts of organisations are no longer considered sufficiently reliable when determining the overall financial health and capacity of an organisation Irish Aid, as part of its funding application process, requests copies of both audited accounts AND auditors management letters.

The Irish Red Cross accepts that it does not prepare its accounts based on the Statement of Recommended Practice (SORP) for Charities. Addressing this has been long overdue and the failure to implement SORP reflects poorly on the financial capacity of the Society. It is now standard practice for charities to prepare their accounts in compliance with SORP and many Irish charities have been doing so for years. The Irish Red Cross has been in breach of SORP in relation to its property portfolio because of its failure to disclose the majority of its properties in its financial statements. This breach is recorded and noted in the externally audited accounts which IRC continually reminds us are a “true and fair” view of the Society. In addition the Irish Red Cross has been a recipient of Irish Aid funding over a number of years. It is my understanding, and I stand corrected if I am wrong, that recipients of Irish Aid funding must prepare their accounts according to SORP standards.

Regarding the Haiti earthquake appeal the IRC continues to insist they did not incorrectly allocate over €600,000 to their general domestic fund instead of the Haiti appeal. As Head of the International Department of the Irish Red Cross at the time I stand over my claim that they did. It was morally and ethically wrong of Irish Red Cross to do so. The IRC letter states that “our unattributable donors are systematically challenged to establish their wishes or preferences and monies that remain unattributable to a specific cause are then allocated to an unrestricted fund”. If in issuing this statement IRC is implying that during the Haiti earthquake appeal donors who contributed unspecified income were “systematically” contacted to determine where exactly they wished their money to be allocated to I can state categorically they were not. Given the hundreds and thousands of small unspecified donations that come into the IRC during a major international disaster contacting individual donors would simply not be possible. The IRC has not done so during such appeals and any implication that they have is false.

It is also important to restate what I said about the General domestic fund, to which IRC allocates all unspecified donations. I stated in a previous submission to PAC that “The balance was...put into the General domestic account where it can be used for a variety of purposes including administration and general overheads”. It is clear from this statement I did not claim that the money is solely used for ‘administration and general overheads’. The important point is that the money is used solely for domestic purposes when in fact such monies were intended by donors for overseas appeals.

In relation to the specific figures I provided PAC outlining monies allocated to the General domestic fund and raised during the Haiti appeal I stand over these figures. The information on which the figures are based was provided to me while I was employed by the Irish Red Cross by two members of the senior management team at the time. I will not name them in this correspondence but am prepared to do so along with their positions if specifically requested by the PAC. I will also share such information with any independent investigation should one be established.

In their attempts to reject my assertions IRC in fact prove my point that the General Fund is a domestic only fund where overseas appeal money should never be allocated as once done it never gets spent on overseas activities. The list of activities provided by IRC outlining which activities the General fund is spent on prove my point exactly that the fund is “a domestic account used for a variety of expenditures including administration and overheads”. Most of the activities listed such as youth programming, community services etc are provided by volunteers free of charge and as such related costs are in fact primarily administration, overheads and salaries. It is also very important to point out that the annual fee paid to the International Committee of the International Red Cross (ICRC) is paid from the Government’s grant in aid and the contribution to the IFRC is an annual administrative membership fee that goes to an administrative IFRC account. It is misleading by IRC to give the impression that this therefore proves the General Fund is somehow used for international activities when it is not. At no stage during my employment with IRC did the Society allocate any money from the General Fund to international activities. No General Funds monies are spent on overseas staff or programs or activities and they never have been. And therein lies the problem because overseas monies have been allocated in their millions to the General Fund. No amount of denials by IRC changes the fact that millions of Euros of publicly donated money for overseas disaster appeals was NEVER sent overseas. This is a practice that has gone on for twenty years. I look forward to the independent investigation verifying this.

In relation to the issue of a legacy donation in 2010 I recommended an investigation to determine the veracity of the donation. No allegation was made by me so therefore IRC’s rejection of my ‘allegation’ is totally unnecessary. A call for a matter to be examined is not an allegation so to say it is “untrue” as IRC does is meaningless. It would, however, be important to determine how this legacy was spent. During my time as a senior manager all legacies were spent covering domestic expenses and activities unless the donor specifically restricted the donation. No ‘unrestricted’ legacy received during Oct 2005-Nov 2010 was ever used on overseas programming as the IRC would not permit such money to be spent on its overseas activities. I sincerely doubt that those families who made such legacies to the IRC were ever made aware of this.

In relation to IRC properties I do not intend to re-iterate the extensive correspondence submitted to PAC to date except to say that I stand everything previously stated. The facts on the undisclosed IRC property portfolio over an extensive period of time in breach of accounting practice speak for themselves as do the auditor’s notes in the IRC accounts which couldn’t be any clearer. It is also important to note that the first time a list of IRC properties was ever made known to board members was when the list was submitted to the PAC on 2^nd February 2012 following a request from PAC members. IRC has been under pressure to address the property issue since 1992. Without concerted pressure in recent years from former staff and former board members as well as the media and politicians including members of PAC and the exposure of numerous scandals within the Society it’s questionable whether the matter would ever have been addressed satisfactorily.

The IRC letter makes a remarkable statement regarding various drafts and texts of the new IRC Constitution, a statement which clearly proves the undemocratic nature of the organisation and the presumption of power, unilateral decision making and control that exists amongst those at the top of the Society.

In previous correspondence to the PAC I outlined the reasons why the supposed 3 year mandatory break (after six years on the board) was not in fact 100% mandatory because the IRC Constitution only made it mandatory if another person went forward for the position. If no-one else went forward then the incumbent could serve for a third three year term and so on indefinitely so long as no-one else went forward. The Constitution with this clause in it was approved and endorsed by the IRC Central Council on 28^th May 2011[1]. No other individual, group or committee within the IRC has the authority to amend or reword the constitution once approved other than another vote of the Central Council. However, the IRC letter of 14^th March 2012 clearly admits that the wording of the constitution as approved by the Central Council on 28^th May 2011 was changed in August 2011. The IRC letter states “the clause to which he (Noel Wardick) refers was in an earlier draft and was removed in August last year (2011)”. Under IRC laws and regulations and under the legislation that underpin them there is no authority to alter the wording of the approved constitution other than by a vote of the Central Council. No Central Council meeting took place in August 2011 and therefore no vote took place by the Central Council to remove such a clause. No such vote took place at the December 2011 Central Council meeting. Therefore whoever claims to have altered the wording of the constitution in the absence of a vote by Central Council clearly acted ultra vires and as such this means the removal of the clause was null and void. Therefore statements issued by IRC during the PAC hearing of 19^th January 2012 in response to a question asked by Deputy Eoghan Murphy, Fine Gael, WERE false and inaccurate.

On 10^th March 2012 the Central Council of the IRC convened. Once again a reworded constitutional text was presented to members whereby the three year mandatory break was amended for the second time. The revised wording removed the possibility of avoiding the three year break if no-one else presented for the post. As a result a member of the Executive Committee is compelled to step down after serving two 3 year terms regardless of whether someone else is nominated for the post or not. The Central Council voted to accept the revised wording. As such the revised wording came into force for the FIRST time on 10^th March 2012. It did not come into force in August 2011 as the authority to make the amendment simply did not exist.

The fact that the IRC letter of 14^th March confirms certain individuals believe they have powers to unilaterally alter the constitution of the Society in the absence of Central Council approval is cause for deep and fundamental concern.

The amendment to the constitution which now compels members of the Executive Committee to step down after 6 years with no wriggle room to remain on is a welcome development and is a direct result of lobbying and pressure by a number of individuals. What remains seriously flawed in the new constitution is the absence of any acknowledgement of accumulated service to date or retrospection. As such long serving board members can continue to serve for another six years. In one case, the national vice chairman, this would bring his service to 27 years on the board, making a mockery of all claims to good governance.

The IRC letter also attempts to mistakenly imply that the Society, under the Acting Chairmanship of the Treasurer, Mr. Ted Noonan, willingly, readily and enthusiastically decided to instigate an independent investigation into the Tipperary Tsunami bank account in the last quarter of 2010. The reality is the IRC had covered up the matter since the account was first discovered in March/April 2008 but because of sustained and severely critical media and political pressure including an RTE Prime Time investigation in August 2010 the IRC’s inaction and refusal to investigate became utterly untenable. Under ferocious pressure they caved in and announced in September 2010 that an independent investigation was to commence. The IRC, in its letter of 14^th March 2012, uses this to present Mr. Noonan in a favourable light. What the letter neglects to explain is that Mr. Noonan was the Treasurer of the Society at the time (as well as temporary Acting Chair) and from the time of his appointment as Treasurer in June 2009 until fifteen months later he never once sought to examine or have the undeclared Tipperary tsunami account (or the 48 other undeclared accounts) investigated.

Despite ‘announcing’ an independent investigation in September 2010 four weeks later the IRC cancelled the investigation in favour of a highly compromised internal review. Having announced an independent investigation as Acting Chairman and informed all IRC Central Council members, Executive Committee members, Working Group members, Area Secretaries, Branch Secretaries, Regional Directors, Area Directors and all staff in a written memo as well as the national media there is no evidence that Mr. Noonan opposed or sought to prevent the complete reversal of this decision four weeks later.

In Mr. Noonan’s memo of 3^rd September 2010 announcing the independent investigation he also stated the following:

“To have the communities we seek to serve question our integrity and motives is an insult to everyone in the Irish Red Cross who have given so much of themselves to help others”

The above by Mr. Noonan as Acting Chairperson of the IRC is a shocking and revealing insight into the culture and mentality of those who lead the Society. For the IRC to be challenged, questioned or criticised was to them utterly unacceptable, unfathomable and intolerable. Mr. Noonan’s words sent a chilling message to all within the Society....do not question us. Mr. Noonan remains IRC Treasurer to this day.

In the IRC letter of 14^th March the Society attempts to discredit my account of what happened regarding the Tipperary bank account but they do so in a manner unbecoming of a Red Cross national society. They cannot provide a single fact that actually proves my account inaccurate but instead they use pejorative and negative language in a ‘standard operating procedure’ widely used by lawyers when trying to damage truth telling witnesses.

In my letter of 25^th February 2012 to PAC I noted the following regarding an email I sent in 2008 that clearly disproves evidence given by the IRC at the 19^th January PAC hearing:

“It is important to note that the email referred to above has been reviewed by the Irish Red Cross Chairman, David O’ Callaghan and therefore he has been fully aware of it since soon after his appointment”

In the IRC letter of 14^th March the Society makes no reference to the above statement and by doing so it is reasonable to deduce that they do not contest it and thereby accept their account of events relating to the Tipperary account to be inaccurate.

During the PAC hearing the IRC made false and damaging statements about the former Finance Consultant/Acting Head of Finance/Acting Secretary General concerning his role and actions around the Tipperary tsunami bank account. While the Society did not name the individual all those familiar with the IRC know the name of the individual they were referring to. It is critically important that the IRC issue a public apology to the individual concerned as they have wronged his name and character.

The PAC has wisely discussed the necessity of requesting an independent investigation into the affairs of the Irish Red Cross. I stand over my assertions to-date and as stated many times I am prepared to appear on record before the PAC. I am also prepared to stand up in a court of law should that become necessary in the future. I will also cooperate fully with any independent investigation once established.

For too long in Ireland those responsible for wrongdoing have not been held to account. The Irish Red Cross is no exception. A robust investigation with a wide remit led by a person of true independence has the potential to bear witness to the truth. I have no doubt the truth, once established and published, will vindicate those who have suffered at the hands of IRC for insisting on unconditional integrity, competence, good governance, honour and sound financial stewardship.

I believe the request for a truly independent investigation will meet strong resistance as there are powerful, influential and well connected people and at least one government department that would much rather allow ‘sleeping dogs lie’. I can only hope the PAC is not dissuaded from its decisions.

Yours sincerely,

Noel Wardick

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[1] It is to be noted that the original text of the constitution to be put before the Central Council only contained a mandatory one year break but 12 days before the Central Council meeting of 28^th May 2011 the Minister for Justice & Defence wrote IRC a strongly worded letter outlining what he regarded as good governance and appropriate board tenures. This letter was not shared with Central Council members, in flagrant breach of good governance, but the draft text of the constitution was amended at the last minute to increase the one year mandatory break to a qualified three year mandatory break