Consultants who advised on part of the State’s search and rescue tender shared directors with a potential bidder for the contract, it has emerged.
Accountants KPMG hired aviation consultants Frazer-Nash early last year to advise on preparing the business case for the Government’s tender for the Republic’s search and rescue service.
Frazer-Nash was then part of aerospace and defence group Babcock International, a potential bidder for the contract.
The Department of Transport maintained that while Babcock owned the consultancy, KPMG had assured officials that Frazer-Nash was completely independent, ruling out any potential conflict of interest.
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However, Independent Senator Gerard Craughwell has found that five Frazer-Nash directors were also directors of multiple Babcock International companies at the time the consultancy firm was working with KPMG.
He also maintains that company records show Frazer-Nash had the same corporate administrator as the rest of Babcock International, Babcock Corporate Secretaries Ltd.
Senator Craughwell found that Frazer-Nash director Iain Stuart Urquhart was a director of 59 Babcock companies, including Babcock Marine and Technology and Babcock Defence and Security.
The others were Derek Malcolm Jones, John Wallace Howie, Neil Malcolm McDougall and Robert Ronald Burge, who between them held 24 Babcock directorships.
Babcock sold Frazer-Nash late last year, but the consultancy worked with KPMG on preparing the search and rescue contract while it was still part of the group.
Minister for Transport Eamon Ryan and Minister of State Hildegarde Naughton told Senator Craughwell in a letter last month that Frazer-Nash provided KPMG with “very limited technical support” in preparing a preliminary business case.
Frazer-Nash and KPMG both confirmed that the consultancy had completed its work for the accountants’ firm before the formal search and rescue tender started.
However, Senator Craughwell argued that under Irish law, if the Cabinet did not know of the potential conflict of interest when it approved the business case for the tender last year, then its decision was unsound.
He pointed out that the list of Frazer-Nash directors showed one of them was also a director of 59 Babcock companies, while two more had multiple shared directorships. “That should have been declared,” the Senator said.
The Ministers’ letter to Senator Craughwell states that they cannot say whether Babcock International subsequently bid for the search and rescue contract as the Government is obliged to keep participants’ identities confidential.
They point out that Frazer-Nash was part of Babcock’s maritime and technology division when it worked with KPMG, but had its own board, management and staff.
Any bid for the Irish contract would have been from Babcock’s defence and security division.
“The organisational reporting lines between Frazer-Nash and any potential team from defence and security remained independent, right up to the group chief executive,” say the Ministers.
A Department of Transport spokeswoman said that when Cabinet approved the business case, there was no procurement process under way, so “no potential, perceived or actual conflict of interest existed or could have existed”.
Both the Ministers and the department argued that EU regulations governing State procurement contracts were satisfied.
Frazer-Nash said that before it began working for KPMG, the department was told that Babcock owned the consultancy and that “appropriate measures” were in place to manage any potential conflict of interest.
“Frazer-Nash maintained complete operational independence from our previous owner Babcock International, who had no access to any project information,” the firm said.
The business maintained that it was not aware if Babcock was bidding, as the actual tendering had not begun.
Babcock sold Frazer-Nash last October for a reported £293 million. Babcock did not comment on either the search and rescue contract or Frazer-Nash’s work with KPMG.
