UL failed to consult Minister on severance packages, the report says
THE STATE spending watchdog has found that the University of Limerick did not comply with good practice in offering two employees severance packages amounting to over €450,000 between them, following a review of high-value discretionary severance payments.
It also found that in addition to not seeking approval for these packages from the Department of Education & Skills, which it was obliged to, the severance packages were higher than normal, exceeding the limits of a comparator scheme, and included confidentiality clauses regarded as not appropriate.
The report by the office Comptroller & Auditor General (C&AG) into the management of severance payments in public sector bodies identified three questionable severance packages made by two bodies in the third-level education sector.
As there is no approved scheme of severance in the education sector, the Department of Education requires that prior approval be received from the Minister of Education and Skills, with the agreement of the Minister for Public Expenditure and Reform.
However, the detailed report by the C&AG states that ‘Body D’ - the University of Limerick, which it does not name – made two separate severance payments of more than €200,000 during the period 2011-2013.
Body C - the second institution - has not been identified to date. The Central Bank was the only public body named in the report because of the high number of discretionary payments it made.
In a brief statement to the Limerick Leader, UL confirmed that it made severance payments in 2012 as outlined in C&AG report. “These payments were disclosed in our financial statements at that time.
“It should be noted that confidentiality clauses in 2012 predated protected disclosure legislation and that since the introduction of the legislation, it is a statutory right, under the act to make a disclosure and this cannot be prevented by any confidentiality clauses,” the statement read.
Other queries from this newspaper – such as whether UL sought advice from the Department or the Minister on the severance packages of nearly €60,000 each offered to two suspended employees – were not addressed by UL.
A footnote in UL’s financial accounts for UL for the year ending September 2012 states that “wages and salaries include severance payments of €220,331 and €231,506 respectively to two staff”, amounting to a total of €451,837.
The report by the C&AG did find in the case of UL that it did show documented consideration of the options available, that it had documented legal advice, and disclosed these payments in their financial statements, amongst other elements of good practice.
The C&AG’s report states that the Department of Education and Skills was not aware of those payments prior to receiving a draft copy of this report.
The report adds: “The institution [UL] was of the view that a termination agreement represented the most economic and efficient course of action in both cases.
“Legal advice obtained by the institution indicated that it was appropriate to enter into agreements with both individuals whereby they would cease employment and receive a severance package.
“The institution has stated that the terms agreed in both cases were based on the provisions of a voluntary redundancy scheme announced by the Minister for Health for HSE staff in 2010 and agreed at a senior level in the institution’s finance and human resources departments.
“The institution did not discuss the agreements with or obtain approval from the Department of Education and Skills or the Department of Public Expenditure and Reform.
“The Department of Education and Skills, after becoming aware of the payments, has sought assurances from the third-level institution that it now clearly understands that severance payments should not be made without prior written sanction from the Department, and that the necessary sanction should be obtained prior to making such payments in the future.
“After receiving further information from the institution in respect of the cases included within the scope of this report, the Department has stated its view that both of the severance payments made by institution D were significantly at variance with the terms of the HSE scheme, as they exceeded one of the limits provided for within that scheme i.e. one-half of the salary payable to preserved pension age.”
Fianna Fail deputy Niall Collins, who has spoken out in recent times regarding other financial matters concerning the university, said serious questions must now be addressed.
“The senior management at UL need to explain why they showed complete disregard for the departmental guidelines around severance payments and confidentiality clauses,” he said. “In making such payments without seeking the appropriate approval, they were playing fast and loose with taxpayers' money.”
Last year Mr Collins strongly criticised UL in the Dail following allegations made by whistleblowers from the UL finance department, two of whom have been suspended with pay for almost a year after they were found to have made a “malicious” complaint against a colleague. Their allegations, published in the Limerick Leader, are the subject of High Court action taken by the university against the paper and personally against editor Alan English.
A report commissioned by the Higher Education Authority found that they were correct to raise their concerns about certain expenditure and the HEA stated that “that there may have been, or may still be, a culture in the university of inappropriate claims being made, until challenged”. UL issued a strong denial of this suggestion.
Mr Collins said of this week's C&AG disclosures: “They [UL] need to give a coherent explanation for why they made those payments without approval.
“We know that they also signed off on severance payments amounting to two years' salary for the suspended whistleblowers - again, more taxpayers' money with more confidentiality clauses included. Was approval sought on that occasion and how many other severance payments or offers to employees have been made?
“We need to know if this inappropriate practice has been discontinued - and is anybody being held accountable for it?”
Another Fianna Fail TD, Willie O'Dea, who also criticised the treatment of UL whistleblowers in the Dail, said that the severance payments, as well as other allegations regarding UL, should be raised at the Public Accounts Committee when the Dail resumes.
“The people who took these decisions in UL may have to come up and explain themselves to the PAC,” he said. “This has certainly raised more questions, especially in the context of the two employees who remain suspended.
“I think it's quite a significant development. We're talking about public money here. The PAC has to ascertain whether public money is being spent properly, and this is something I'll definitely be investigating, and speaking to the new chairman of the PAC about this matter. Does the Minister for Education know this was done without her authority, and what does she propose to do about it? Who's responsible for this and how can they explain it?
“Whatever about getting legal advice, the legislation is quite clear that you have to get the authorisation on monies you spend because the Dail votes on money spent on education.”
Minister Jan O’Sullivan was not available to comment at the time of going to press.