At the November 2012 States meeting I provided answers to a set of Rule 5 questions asked by Deputy Peter Gillson.
- 1. Could the Chairman of the Public Accounts Committee please explain why the Committee felt it preferable to inform Members of this Assembly that Ernst & Young had been appointed to undertake the investigation into the £2.6m fraud by copying a press release to Members rather than by making a Statement to the Assembly, especially considering that the Assembly was in session at the time the press release was circulated to Members.
A press release was circulated to announce the appointment of Ernst & Young to undertake the external review because the Committee considered that it was not necessary to request the permission of the Presiding Officer under Rule 8 of the Rules of Procedures to make such a statement.
The Committee used the Rule 8 procedure in the September States Meeting, at which I provided a detailed statement explaining the scope of the review and the Committee’s intention to appoint external reviewers. The media release issued to the Members of the States on 31st October 2012 sought only to confirm the name of the appointed reviewers, the maximum budget and timeframe for the first stage of the review. Given the limited amount of new information to be communicated, the Committee did not consider a formal statement to the States was necessary, in addition to the circulated release.
As you know, the media release was circulated to all Deputies on Wednesday 31st October. It was subsequently provided to the media embargoed until Friday 2nd November. The release was also uploaded onto States of Guernsey website on Friday 2nd November and may be accessed through the Public Accounts Committee website.
- 2. The independence of the review is vital to public confidence, therefore could the Chairman please provide the following information:
a) The nature of any contract Ernst & Young currently have with the States of Guernsey, in particular those with Treasury & Resources, and provide the total value* of these, if any.
b) The nature of any contracts Ernst & Young have had with the States of Guernsey for each of the past 5 years, again, providing the total value of these, if any*.
c) Are Ernst & Young in the tender or pre tender stage and contracts with the States of Guernsey? if so what are they?
d) Are any Partners or members of the Senior Management Team of Ernst & Young members of any States Departmental or Committee Board, or members of any of the Boards of any States owned trading company?
(* to protect commercial confidentiality, providing the total value of contracts to the nearest £50k for each of questions 1, 2 and 3 will suffice, i.e. below £50k, or between £50k and £100k, etc. etc.)
In response to part (a) of the question, I can confirm that Ernst & Young presently have only two contracts with the States of Guernsey, including the contract with the Public Accounts Committee under which they are carrying out this review. The other contract is for ICT consultancy work and has no bearing on the Committee’s review.
Further, ahead of PAC’s engagement Ernst & Young reviewed its available records to determine whether potential conflicts might arise out of its performance of the Services and no such conflicts were identified. However, I should note that given the very nature, diversity, magnitude, and size of the Ernst & Young organisation and its past and present professional relationships it does not allow the organisation to be certain that each and every possible relationship or potential conflict has come to its attention, but the letter of engagement requires Ernst & Young to promptly notify the Committee if additional relevant relationships or potential conflicts come to its attention.
In response to part (b), I can inform you that Ernst & Young have reviewed their global billing system and identified three invoices in the last five years. Two invoices related to the ICT consultancy work mentioned above and one relates to a one-off assignment performed under a separate engagement letter for an independent States body seeking advice on a tax matter. These invoices amount to less than £50,000 and the work was performed between April 2008 and November 2009.
In response to part (c), I can inform you that the only formal pre-tender Ernst & Young has identified is the submission of a Pre-Qualification Questionnaire entitled “Professional services to develop and implement a corporate approach to risk management across the States of Guernsey”. The outcome of the submission of this pre-Qualification Questionnaire is not currently known. Ernst & Young has informed the Committee it is not aware of other formal tender. The current contracts have already been detailed.
In response to part (d), the Committee has made enquiries of Ernst & Young who have confirmed that no partners or executive directors are members of any States Departmental or Committee Board, or members of any of the Boards of any States owned trading company. However, for completeness, please note that one partner/executive director of Ernst & Young has confirmed he is a Commissioner and Treasurer of the Guernsey Arts Commission.
Finally, I can confirm the Public Accounts Committee is not aware of any possible conflicts of interest and it is assured of the independence of Ernst & Young in conducting this review.