The Oireachtas Joint Committee on Public Enterprise and Transport has established a subcommittee to examine the £25 million (€31.74 million) cost overrun on a new signalling system for Iarnrod Eireann. The seven-person committee will be drawn from all political parties and will take independent legal and accounting advice. The subcommittee will be modelled on a similar group set up by the Committee of Public Accounts to inquire into the underpayment of DIRT by Irish banks.
The decision to establish the group was made in a closed session of the full committee on Tuesday. Senior management of Iarnrod Eireann appeared before the committee on Tuesday to defend the overruns on the contract, which they claim still represents good value at £40 million. One of the areas that the committee members want to investigate further is the decision to lay cables for Esat Telecom alongside the new cabling for the signalling system. The company entered into an agreement to lay the cables in 1997 even though it was outside the powers of Iarnrod Eireann and its parent CIE. The State company needs permission from the Minister for Public Enterprise to carry out any business other than public transport. Work on the Esat contract started before this was obtained.
Another issue that will be explored is why Iarnrod Eireann did not auction the rights to lay cable alongside the railway, instead of doing a private deal with Esat, according to Mr Emmet Stagg TD, the Labour transport spokesman who is a member of the new sub-committee. Iarnrod Eireann management has told the committee that it spoke to several telecommunications companies, including British Telecom and WorldCom, before choosing Esat on the basis of independent advice.
A review of the problem with the new signalling system, carried out for the rail company by PriceWaterhouseCoopers, laid a considerable portion of the blame on the Esat contract. The company was under pressure to meet its commitments to Esat and this meant that some of its own cable was laid prematurely and turned out to be unsuitable. On other occasions it laid the Esat cable even though it was not ready to lay its own cables. The signalling cable had subsequently to be laid by hand. An Esat spokesman confirmed last night that if Iarnrod Eireann had failed to meet its commitments to Esat, there would have been financial penalties.
The spokesman said that Esat was not involved in any cable-laying directly. Its contract was with CIE and Iarnrod Eireann, who in turn sub-contracted a consortium of SASIB, an Italian signalling manufacturer and Modern Networks, an Irish engineering company, to carry out the work. The sub-committee also wants to examine further the circumstances under which a number of key Iarnrod Eireann staff involved in negotiating the contract subsequently went to work for Modern Networks. They include Mr Brian Powell, who was head of procurement at the rail company and was one of the key negotiators of the contract.
