Indemnity deal dressed up to disguise massive shortfall

The indemnity deal agreed with the religious congregations fell far short of the Government's minimum and was dressed up by the inclusion of properties previously given to the State, against Departmental advice, documents reveal. Colin Murphy reports

 

Documents reveal that the Government was aware that its indemnity deal with the religious orders came nowhere near the "minimum" threshold initially stipulated by them. They also show that the Government "dressed up" (our phrase) the deal agreed to give an impression that the religious orders had committed significantly more than was the case.

These documents were obtained by Village under a Freedom of Information application and show that initially the State's negotiating team was dismissive of the representation by religious orders that property already handed over to the State should figure in the indemnity settlement.

The documents also show that the State's position all along had been that the religious orders should be required to pay half of the projected cost of the scheme – the projected cost varied between IR£200m-£400m. And yet the final deal required the religious orders to contribute just a net IR£70m (property to the value of IR£31m was added on to boost the gross figure, suggesting the religious orders had come up with 44 per cent more than was actually the case; this gave the "offical" figure of €128 million).

The State agreed a deal that at the time meant the religious orders were contributing not half but between 17.5 per cent and 34 per cent of the projected cost.

The State team, comprising civil servants from the Departments of Education and Finance and from the Attorney General's office, decided to open negotiations by seeking £150 million, intending to settle for not less than £100 million. This was estimated as half the then likely final bill of £200-300 million.

The congregations made an offer of £45 million, and suggested that £40 million in previously transferred property could be taken into account. State officials were dismissive of this, and the offer was rejected.

Charlie McCreevy, then Minister for Finance, wrote to the Minister for Education, Michael Woods, that the congregations' proposal was "quite inadequate" and fell "far short" of a "meaningful contribution".

Michael Woods then personally took over the negotiations from the team of civil servants, and concluded a deal on the basis of a contribution of £70 million plus £31 million in previously transferred property.

The final bill for the institutional abuse redress scheme is now likely to be almost four times that initially envisaged, up to €1 billion. The congregations' contribution of £70 million (€88 million), excluding previous property transfers, would be 8.8 per cent of this.

Early negotiations

In late October 2001, Michael Woods, then Minister for Education and Science, announced the setting up of a body to award compensation to those who had been abused in institutions.

This was a government initiative. The government had decided to go ahead with a compensation scheme irrespective of whether a contribution from the religious congregations was secured.

The religious congregations' representative body, the Conference of Religious in Ireland (CORI), immediately announced its willingness "to become involved in principle" with the scheme.

Ten days later, in early November, the first meeting took place at the Department of Education between CORI and the Department. CORI was represented by Sr Elizabeth Maxwell and Sr Helena O'Donoghue, both Sisters of Mercy, and Br Kevin Mullan of the Christian Brothers.

Secretary general John Dennehy and Tom Boland represented the Department of Education, and there were three staff from the Attorney General's office: the director general, Finola Flanagan, Liam O'Daly and Sinead McSweeney.

Initial meetings through November considered the proposal that discussions would be chaired or facilitated by an independent person (which was later dropped) and the format for substantive discussions. The priority from the beginning was to reach an "early agreement" on the congregations' contribution to the scheme, according to Department of Education memos: legislation establishing the compensation body was to be published in early 2001, and the contributions would need to be agreed by then.

Things progressed slowly. In February 2001, a meeting between CORI (now accompanied by senior counsel Donal O'Donnell) and Department staff discussed tentative figures set out by the Department for the possible number of claimants and cost of a scheme. (These figures were not provided under the Freedom of Information Act.)

The congregations clearly raised the prospect that they might ultimately decide not to participate. A memo of the February meeting notes that the Department's view was that, if the congregations withdrew, legislation could then provide for a waiver of claims against State parties only, with continuance of any outstanding claims against the congregations. CORI's counsel disputed the legality of this.

At a cabinet meeting on 27 February 2001, the Government agreed to Michael Woods' proposal to set up the scheme. A memo prepared by Woods for this meeting suggested that the overall cost of the scheme could run to £200 million (€254 million).

Meetings in March focussed on CORI's concerns that the language used in the scheme would lead to the labelling of individual people or institutions as having been involved in abuse, "in a situation where no significant inquiry was made into the details of an allegation". CORI feared that the religious orders would suffer a "more personalised" impact from the payment of an award than would the State or its employees.

At a meeting on 22 March between CORI, the Department of Education and the Attorney General's staff, the issue of an indemnity was raised for the first time in discussions. The meeting memo notes: "The congregations pointed out that any other system would leave them facing financial uncertainty for years to come. They pointed out this uncertainty would have a direct impact on their present work in the community."

CORI also said they would prefer that negotiations be confined to "a small number of individuals, to facilitate the process of discussion", and that they intended their contribution would be in the form of a single payment into the scheme, according to the memo.

A draft note on the compensation scheme was circulated amongst the civil servants involved in April, outlining a proposal to be submitted to the cabinet. It cites "a figure of a possible 2,000 claims costing c £100,000 each, ie a possible bill of £200 million". This echoed the figure provided to the Cabinet by Michael Woods in February 2001. The note then suggests that the number of claimants "could possibly reach 3,000" and concludes: "Overall, it seems reasonable to think in terms of a maximum potential cost of up to £300m... and a cost range of £200m - £300m" (€254m - €381m).

This note then suggests what the congregations' contribution should be. It states: "The Departmental representatives on the Group and the representatives of the AG's office consider that a reasonable approach would be to have the contribution from the religious congregations based on… 50% of the cost of the Compensation Scheme... However, an opening figure of £150m might be sought… with a view to reaching an agreed sum fairly close to £100m". If the congregations agreed to this, a full indemnity would be provided.

A revised draft of this memo notes that the congregations required that "any presentation of their participation should be carefully prepared so as to reflect their participation as a desire to assist any person who may have suffered damage while under their care, rather than simply as a compensation scheme".

The memo also notes that CORI had suggested that negotiations on the amount be conducted on a "one to one" basis (it doesn't elaborate further on this).

At the next meeting, on 30 April, CORI rejected both the figures presented by the officials and the 50:50 ratio of contributions proposed, as "far beyond what they envisaged happening", according to the Department's memo. They argued that three factors should lead to a lower contribution: the fact that it was the State that had decided to proceed with the redress scheme; the fact that the State had set the level of validation lower than that of the Courts, and their own assessment of their own liability in a Court situation.

CORI then questioned whether there was any point in commencing discussions on the amount of their contribution. "The Departments expressed some surprise at this attitude", the memo notes.

Tom Boland set out the position in a detailed memo to the department's secretary general. This endorsed the recommendation that the cost of the scheme should be divided 50:50, but noted that, because the congregations' resources were limited, unlike the State, "a ceiling should be placed on their contribution". It recommended that the State's opening position should be to seek £150 million, based on an upper limit total cost of £300 million, but that a figure of not less than £100 million could ultimately be accepted. Boland also noted that the congregations saw "the making of a financial contribution to help people who are in pain as consistent with their pastoral mission, as opposed to any making of amends for abuse which has not been proven".

'The final offer'

At the end of June, CORI made their offer, presented as a "final offer", according to Department memos. This totalled £45 million, made up of £20 million in cash payment, £10 in property transfer, a £10 million trust fund for the further education of former residents of institutions and £5 million for counselling services (much of which had already been spent). CORI also noted that congregations had transferred property to the State over the previous ten years "for little or no consideration", which they valued at £40 million.

By now, officials' estimate of the potential cost of the scheme had risen to between £200 million and £400 million. Tom Boland's note to the secretary general noted that negotiations had "reached a critical point" and that the congregations would likely walk away if their offer was refused.

He said the proposal had "many positive elements" and that there was "some merit in the argument made by the congregations that they have made a valuable contribution to Irish society in the past".

He said the congregations' proposed contribution fell "far short of the working objective of the negotiations from the State's viewpoint, which was a minimum contribution of £100 million (unless, that is, the congregations' approach to past property transfers is taken into account)". He noted "we have no reliable information on the congregations' assets and ability to pay".

Then Minister for Finance Charlie McCreevy wrote to Michael Woods, having been informed of the congregations' order. He said he found it "quite disappointing and far short of what I feel would amount to a meaningful contribution". He concluded, "the package offered is quite inadequate and effectively leaves the State to bear virtually the full cost of the Redress Scheme".

According to a later letter, Michael Woods at this point decided that the Government was unlikely to accept the congregations' proposals and did not bring them to the cabinet. There was then a three-month hiatus in the process, during which there was a series of leaks to the media.

After an article in the News of the World on 15 July, the CORI team communicated to the Department that they believed it was "officially inspired or sanctioned at a high level" and Tom Boland wrote a pessimistic memo to the secretary general which concluded that there was "a very real possibility that the congregations will not agree the kind of financial contribution which is sought".

In October there was a further leak, of sorts. The Department of Education's Communications Unit held an off-the record media briefing on 17 October to discuss the Government's programme to redress abuse. Tom Boland said afterwards, in an apologetic letter to CORI's Sr Elizabeth Maxwell, that he had indicated a "highly speculative" figure for the total cost of between £200 and £400 million when pressed by the journalists.

RTÉ's religious affairs correspondent Joe Little reported that evening that he understood "that the state is asking the religious to chip in between £100 and 150 million", based on a possible total bill of £300 million and 6,000 to 8,000 claimants. The CORI representatives were antagonised by what they saw as a leak, and the Department wrote twice to explain the context and attempt to reinvigorate discussions.

In the second of these letters, on 6 November 2001, Tom Boland wrote that "the proposed inclusion of property transfers from the Congregations to the State over the past ten years) was "a problem".

"It is difficult to see how such transfers can be included in the final package of measures, given that they occurred without any reference to a redress scheme", he said.

The paper trail ends there.

Michael Woods closes the deal

The following day, Michael Woods met the three-man CORI team with their counsel. Woods was accompanied by the Department's secretary general, John Dennehy.

There is no memo in the Department of Education of this meeting, or of a second, on 7 January 2002, other than one written retrospectively, by Dennehy, in March 2002 (according to details supplied by the Freedom of Information unit). Yet these were the meetings at which the final deal was agreed.

Following the 7 January meeting there was an exchange of (unreleased) correspondence between CORI and the Department relating to property transfers. On 30 January, the Redress Scheme was publicly announced, with a contribution from the congregations of €128 million, to include €40 million in property transfered since May 1999.

John Dennehy emphasised in the March memo that the agreement was "in principle", subject to legal advice and details relating to property transfers and the indemnity. Meetings over subsequent months focussed on hammering out the details of these.

 

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