27 September 2001 Edition
A tale of two cables
BY ROBBIE MacGABHANN
In the mid 1990s, CIE and in particular the investment starved Iarnrod Éireann faced a double dilemma. First, they needed to quickly improve rail safety on the Irish rail network, one important aspect of which was the installation of a new signalling system. At the same time there was increasing pressure on public sector companies from the Dublin government to raise their own revenue through any means possible.
Five years later, Iarnrod Éireann still doesn't have a new signalling system and the one they set out to build in 1997 is now going to cost £50 billion, an overrun of £36 million on the original estimate.
However, ESAT telecom have an extensive and working cable system stretching along CIE's rail network. The value of this network to the company is estimated to be in the hundreds of million of punts, none of which has found its way into CIE coffers. ESAT shareholders were the sole beneficiaries of this cable network when the company was sold to British Telecom in 2000. CIE had sold ESAT access to their rail network as a means of earning once off revenue rather than as partners in the project.
For the past three weeks, the Public Accounts Committee of Leinster House has been holding an inquiry into what went wrong with this project. The evidence given so far, if true, exposes an appalling litany of error and mismanagement at the company.
Take for example the actions of the Modern Network Ltd (MNL), one of the companies contracted to lay the CIE cable. MNL knowingly laid 300 km of the wrong cable. Not only was it the wrong cable, it was damaged during installation and therefore useless. The ESAT cable which was being laid at the same time by MNL was checked every four or five km to see if it was working. No such checks were made of the signalling cable.
CIE prioritised the completion of the ESAT cable at the expense of its own and allowed the contractors miss an EU deadline for funding. The CIE project began in 1997 with a two-year deadline that was never met.
Worse still, senior CIE management knew nothing of the delays or the massive cost overruns until late in 1999. Jim Cullen, CIE's chief financial officer approved, during these two years, £10 million in payments to contractors without knowing that the work hadn't been done.
Another executive at CIE, Dr Ray Byrne, on leaving full time employment with CIE remained on as a consultant for the company and found work at ESAT at the same time. Byrne has been cited at the inquiry as having ended a long standing system of supplying quarterly progress reports to the board. Byrne's actions also led to the cancelling of monthly meetings of the CIE's project monitoring group. Byrne left CIE in 1999 as the full extent of the problems with the rail signalling project became known within the company. Byrne told the inquiry that he had, ``no indication that early warning bells were being rung''.
Perhaps the strangest aspect of the inquiry so far has been the revelation that safety personnel from the Rail Inspection Office spent four years asking for information from CIE about the signalling project. The office, which is based in the Department of Public Enterprise, is supposed to approve all new rail works. They had written to CIE eight times since 1997 seeking information about the signalling project. They finally received the information last week.
There is still much more evidence to be heard in this inquiry, but like the DIRT inquiry before it and the previous four tribunals, we once again have a tale of two partners, the wily and clever private sector entrepreneurs who pocket all the profits while the mismanaged public sector companies and ill-informed civil service carry all the costs.
In the mid 1990s, CIE and in particular the investment starved Iarnrod Éireann faced a double dilemma. First, they needed to quickly improve rail safety on the Irish rail network, one important aspect of which was the installation of a new signalling system. At the same time there was increasing pressure on public sector companies from the Dublin government to raise their own revenue through any means possible.
Five years later, Iarnrod Éireann still doesn't have a new signalling system and the one they set out to build in 1997 is now going to cost £50 billion, an overrun of £36 million on the original estimate.
However, ESAT telecom have an extensive and working cable system stretching along CIE's rail network. The value of this network to the company is estimated to be in the hundreds of million of punts, none of which has found its way into CIE coffers. ESAT shareholders were the sole beneficiaries of this cable network when the company was sold to British Telecom in 2000. CIE had sold ESAT access to their rail network as a means of earning once off revenue rather than as partners in the project.
For the past three weeks, the Public Accounts Committee of Leinster House has been holding an inquiry into what went wrong with this project. The evidence given so far, if true, exposes an appalling litany of error and mismanagement at the company.
Take for example the actions of the Modern Network Ltd (MNL), one of the companies contracted to lay the CIE cable. MNL knowingly laid 300 km of the wrong cable. Not only was it the wrong cable, it was damaged during installation and therefore useless. The ESAT cable which was being laid at the same time by MNL was checked every four or five km to see if it was working. No such checks were made of the signalling cable.
CIE prioritised the completion of the ESAT cable at the expense of its own and allowed the contractors miss an EU deadline for funding. The CIE project began in 1997 with a two-year deadline that was never met.
Worse still, senior CIE management knew nothing of the delays or the massive cost overruns until late in 1999. Jim Cullen, CIE's chief financial officer approved, during these two years, £10 million in payments to contractors without knowing that the work hadn't been done.
Another executive at CIE, Dr Ray Byrne, on leaving full time employment with CIE remained on as a consultant for the company and found work at ESAT at the same time. Byrne has been cited at the inquiry as having ended a long standing system of supplying quarterly progress reports to the board. Byrne's actions also led to the cancelling of monthly meetings of the CIE's project monitoring group. Byrne left CIE in 1999 as the full extent of the problems with the rail signalling project became known within the company. Byrne told the inquiry that he had, ``no indication that early warning bells were being rung''.
Perhaps the strangest aspect of the inquiry so far has been the revelation that safety personnel from the Rail Inspection Office spent four years asking for information from CIE about the signalling project. The office, which is based in the Department of Public Enterprise, is supposed to approve all new rail works. They had written to CIE eight times since 1997 seeking information about the signalling project. They finally received the information last week.
There is still much more evidence to be heard in this inquiry, but like the DIRT inquiry before it and the previous four tribunals, we once again have a tale of two partners, the wily and clever private sector entrepreneurs who pocket all the profits while the mismanaged public sector companies and ill-informed civil service carry all the costs.