Richard Bruton’s delay over Paul Appleby retirement

RICHARD Bruton waited an astonishing four days to tell the Taoiseach that Paul Appleby was retiring.

Despite being told the Director of Corporate Enforcement’s shock decision last Friday, the Enterprise Minister waited until the Cabinet meeting at 10.30am Tuesday to break the news to his shocked colleagues.

Mr Appleby will stay in his €146,000-a-year job – and keep the €225,000 lump sum and €75,000-a-year pension he should have seen reduced.

After announcing on Tuesday morning that he was to retire this month, Mr Appleby backtracked on the bombshell decision following negotiations with ministers.

The same day was the deadline for the Government’s early-retirement scheme under which civil servants can claim pensions based on their salaries before recent rounds of public sector pay cuts.

Continuing beyond this date would have reduced Mr Appleby’s pension by around €4,000 a year and his lump sum by around €6,000, to €219,000.

But there were red faces as the Government had to make an exception for Mr Appleby – who is heading the investigation into Anglo Irish Bank – within hours of Tuesday’s deadline.

Last night, when asked for the time and date when Enda Kenny was first personally made aware of Mr Appleby’s decision to apply, a spokesman said: ‘It was at that Cabinet meeting.’

Public Expenditure and Reform Minister Brendan Howlin insisted on Tuesday that he, too, had just heard the news.

But it has been assumed that – at the very least – Mr Bruton might have phoned or even sent a message to the Taoiseach to tell him about the imminent retirement of the man heading up the largest investigation of its kind in the history of the State.

Indeed, it now appears that it was only after the Taoiseach was told of the matter that it was resolved and Mr Appleby was persuaded to stay on at the Office of the Director of Corporate Enforcement.

Fianna Fáil finance spokesman Michael McGrath warned that there were ‘more Paul Appleby’s’ waiting to happen.

He said: ‘The whole Paul Appleby story just undermines the ham-fisted way the Government has approached the retirement of public servants. People in senior positions, particularly in sensitive roles, should have been required to inform the Government several months in advance what exactly their intentions were.

‘Clearly that didn’t happen and now the Government is fire fighting.’

He added: ‘We will see more cases like Paul Appleby where the Government is just going to have to make this up as they go along.’ Mr Appleby was appointed to the role in 2001 to tackle the pervading culture of non-compliance with company law following banking scandals and tribunal disclosures.

His resignation had sparked fury, with one caller to RTÉ’s Liveline saying, ‘A man in such a high position should have the good of the nation as his top priority, like the captain of a ship should.

‘For God’s sake, see this investigation through.’ Last night, it was confirmed that a deal has been formally agreed and that he will be appointed as acting director of the ODCE.

A spokesman for Mr Bruton said last night: ‘The minister’s focus at all times has been on the investigation into Anglo, and the solution reached reflects the importance the Government places on this investigation.

‘It has been confirmed that Mr Appleby will be appointed as acting Director of Corporate Enforcement for a period of six months at his current salary level, subject to the normal abatement rules.

‘The minister is satisfied that it will now be possible to ensure a smooth transition to a successor for Mr Appleby and also to maintain the impetus in the investigation.’

And he added: ‘The minister is happy to confirm that he has received sanction for the recruitment of a successor to Mr Appleby.’

When asked why the minister had waited so long to tell the Taoiseach, the spokesman replied: ‘Mr Bruton met with Mr Appleby on Monday to discuss the matter and then raised it at Cabinet on Tuesday.’

Last night, the ODCE declined to make any comment. Mr Appleby’s resignation statement was still posted on the office’s website last night, without any reference to Tuesday’s U-turn.

Fine Gael and Enda Kenny Aviva election rally

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Competition Authority probing €2bn bid-rigging cartel

By Brian Carroll.

DETECTIVES have uncovered evidence pointing to a E2.5bn conspiracy to rig bids on

Government construction contracts.

More than 30 construction companies are being investigated for falsifying tenders and up to 110 firms may have participated.

Every major Government construction contract for the past 10 years is under review.

The Competition Authority this weekend refused to comment on any probe.

However, in a statement issued in response to the Irish Mail on Sunday’s exclusive revelations, it said it would offer immunity to those willing to testify about their involvement in bid-rigging.

The authority and the DPP are offering whistleblowers a place on what they called the Cartel Immunity Programme.

The authority and officers seconded from the Garda Bureau of Fraud Investigation have executed more than 20 search warrants at construction company offices nationwide.

After a two-year investigation, detectives made a critical breakthrough recently when they discovered falsified tenders agreed between companies.

The documents appear to show a conspiracy between various companies to alternate the winning of Government construction contracts by submitting falsified tenders.

The companies were agreeing in advance which would submit the lowest tender and, while the officers are concentrating on 30 companies at the moment, there is evidence that up to 110 firms may have participated.

The Competition Authority said: ‘The authority treats investigations into allegations of bid-rigging very seriously. Anyone with information on such activities would be encouraged to contact us.

‘Of particular interest would be information from anyone that may work or have worked previously in the industry and would have attended meetings, have knowledge of agreements between competitors on taking turns at winning contracts, or knowledge of communication generally among companies relating to how they operate agreements.

‘For any individuals concerned about their own involvement in bid-rigging activities, it is worth looking into the Cartel Immunity Programme that is operated in conjunction with the DPP.

The programme offers the opportunity for anybody involved in a cartel to avoid prosecution by being the first person in a cartel to come forward and cooperate fully with the authority investigation.

‘That person or company cannot be the leader of the cartel.’ The Cartel Immunity Programme number is 087 763 1378.

The authority refused to comment on the specifics of its investigation.

However, the MoS has learned that the investigative unit in the cartels division of the Competition Authority, assisted by two detective sergeants from the Garda

Bureau of Fraud Investigation, achieved major breakthroughs in recent months.

A source close to the eight-person investigation team said: ‘We were gobsmacked when we started looking into this. I can’t go into how or why the investigation started, but no one expected it to be this big.

‘You’re really talking about every public tender for Government construction contracts, hospitals, schools, and even a couple of major private contracts. We are going back to contracts from the late 1990s.’

Fine Gael and Labour have called on the Government to give extra investigative resources to the Competition Authority to expedite the investigation.

An expert working on the investigation said: ‘The bid-rigging is very sophisticated. It works like this. State buildings are being refurbished across the country, for example.

‘The Office of Public Works has to put a public tender out for each project. The OPW looks for expressions of interest. People are then asked to send a detailed tender document. There is a rigged system in place where the builders decide it is a particular person’s turn to win the contract.

‘You have eight contractors. The person whose turn it is to win the contract draws up all eight tenders, ensuring his is the lowest, even though it’s inflated by several hundred thousand euros.

He then sends a tender to each of the other people. ‘This “cover” or tender is then submitted by the other builder to the OPW, even though they know they can’t win the contract.

In this way they divvy up all the Government construction contracts.’ The OPW has had a total gross expenditure of over E6bn in 10 years.

The Department of Education separately spends E500m a year on school building and refurbishment projects. The Department of Health administers the hospital building programme, for which E564m was set aside for 2006 alone.

It’s understood that some of the search warrants executed by detectives working for the Competition Authority have resulted in the seizure of ‘cover letters’.

‘You are talking about a very narrow window here,’ said the expert. ‘You have to seize the cover letter between the tender being advertised and the tender being issued. The investigators have done that in a number of cases.

‘There’s 30 companies at the core of this, but it had to be broadened out after some of the searches.

There’s about 110 companies involved in total. We are talking [about] a long investigation here.’ Company directors found guilty of bid-rigging or operating a cartel can face up to five years in prison and/or a fine of E4m or 10pc of the company’s turnover, whichever is bigger.

A Competition Authority team is preparing files for the DPP. Sources, however, say a combination of staff shortages and the complexity of the cases means the investigation could take another two years at least.

‘In fairness to the Government, it had no idea of the size of this thing. Much more staff are needed.

‘When we started looking into it, we were amazed. The chartered accountants haven’t put a figure on it yet but you are talking about at least E250m a year, going back 10 years at least.’

Fine Gael deputy leader and finance spokesman Richard Bruton said: ‘We deploy 14,000 gardaí a day to deal with so-called ordinary crime. White collar crime is serious crime and we have to deploy resources to match.

‘The State has to take this seriously. If there are allegations of this magnitude, the Competition Authority has to be given the resources. We are talking here about E2.5bn. That’s equivalent to E2,000 out of the pocket of every family in the country.’

Labour finance spokeswoman Joan Burton said the cost of public construction contracts in Ireland had always been suspiciously high.

She called on the Government to increase resources to the Competition Authority.‘It has been an ongoing cause of complete puzzlement to many, many people how the cost of construction contracts and public projects have been so high here relative to other countries. Almost any public project you can think of in Ireland has been far more expensive than equivalent projects in other EU countries.’