In an online sales pitch, a tech consultant to the Arts Council notes the risk of computer investments going badly wrong: “Too many IT transformation projects result in excessive costs, unacceptable business disruption and a high rate of failure.”
These words are attributed on the website of Dublin company Codec to its chief executive, Ronan Stafford.
Alongside consultancies Ergo and Expleo, Codec was one of the main external suppliers that worked on a disastrous computer project for the Arts Council. The debacle has prompted intense criticism from the Government and the Opposition. The “business transformation programme” has now been scrapped, leaving the Arts Council with nothing at all to show for €5.3 million of the €6.68 million it spent.
This has been a humiliating episode for the Arts Council, one of the most pre-eminent state bodies and whose credibility as a steward of public money is in question. After successfully persuading the Government to increase its annual budget by 75 per cent in recent years to €140 million, it faces a world of political pain.
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Questions are also being asked about the information technology (IT) consultancies that carried out the work, companies that continue to provide well-paid services for public bodies and Government departments.
[ Three companies that shared €4.8m from Arts Council for abandoned IT project named ]
In a report this week, the Department of Arts cited a review of the IT project for the Arts Council in 2023. That review found the work was “highly complex”, with computer code “customised to an unusually high degree” in one part of the new system.
“This code was also inadequately annotated so it was almost impossible to determine its purpose,” the Department said, without linking that aspect of the work to any particular firm.
“The report set out that a commercial off-the-shelf rules engine application could have met requirements.”
Minister for Arts Patrick O’Donovan told the Cabinet that Codec received €1.97 million for technology delivery work to design and develop the ill-fated computer system. A further €51,217 was withheld. Codec declined to comment for this piece.
Ergo received €2.11 million: €1.55 million to Ergo Resourcing for management, analysis and system testing; and €558,068 for work that included the “fixing of system defects”.
Ergo’s website says it has more than 300 public sector clients. The company did not reply to a phone call seeking comment.
Expleo received €734,701 for quality assurance work, with a further €149,125 withheld. Expleo did not reply to a call.
These three companies are among many private IT firms that have carved out a lucrative line of business advising the State. Over the years, each has paid out big dividends to shareholders. But who are they? And what other work do they carry out?
Codec’s parent, Durlas, is registered in Malta, a jurisdiction that offers tax advantages to company investors. Codec Systems Ltd had revenues of €39.78 million in 2023 and a €1.79 million pretax profit. It paid €5 million that year to shareholders including Durlas, whose investors include the chief executive.
On its website, Codec lists the HSE, the Health Information and Quality Authority, the National Transport Authority and the Environmental Protection Agency among its public sector clients.
Parliamentary question replies issued this week to Social Democrats TD Aidan Farrelly show Codec has carried out extensive work in recent years for government departments.
Codec has received €2.45 million from the Department of Agriculture since 2023 – €27,722 since the start of January. In the same period it received €1.11 million from the Department of Foreign Affairs. Sister company Codec-DSS received €176,006 from the Department of Defence. Separately, Department of Transport purchase orders show €285,000 in Codec-DSS payments last year.
Ergo is ultimately controlled by Dublin businessman John Purdy, whose holding company Burlawn had sales of €197.13 million in the year to March 2023. Ergoservices Ltd had sales of €68.92 million in that period and a pretax profit of €1.03 million. The company paid a €500,000 dividend that year and a €495,034 dividend the previous year.
Parliamentary replies to Mr Farrelly of the Social Democrats show Ergo received €3.56 million from the Department of Public Expenditure for work since 2023 and €1.69 million from the Department of Housing. The company also received €1.43 million from the Department of Social Protection, €631,105 from the Department of Defence and €133,101 from the Department of Health.
Expleo Technology Ireland Ltd is division of Expleo Group SAS, based in Montigny-le-Bretonneux, France. The Irish business had sales of €73.72 million in 2023 and a €1.92 million pretax profit. In 2020 it paid a €15 million dividend to shareholders.
Replies to Mr Farrelly show Expleo received €1.78 million from the Department of Agriculture for work in 2023, €1.89 million last year and €15,541 since January.
The Arts Council IT project had its origins in 2018. Seven years later, the council and its suppliers are confronted with the consequences of failure.
