Steep climb for Cycling Ireland to restore reputation after State grant debacle

The catalyst for trouble at Cycling Ireland was a claim it made in June 2020 for a €52,100 capital grant from the Government, setting in train events that led to an unsparing audit carried out on behalf of Sport Ireland, Garda scrutiny and disarray in the organisation’s board.

The Department of Sport refused to provide the money because of concern about the similarity of invoices setting out quotes for equipment in the grant application. An internal audit by Kosi Corporation for Sport Ireland later found that “false comparative quotations” were submitted, saying there was an “absence of full openness” on the issue in the body’s executive.

“A straightforward open explanation of what happened and why things happened was not provided,” Kosi said in findings dated October 2021 and seen by The Irish Times.

“On the basis of audit findings, limited assurance is placed on the adequacy and effectiveness of the internal controls and governance arrangements in Cycling Ireland when compared to the requirements of the governance code for sport.”

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Separate internal records seen by The Irish Times point to schisms at the board last year over the grant application issue

The auditor called for action “to promote and ensure a culture of integrity” in the body and for its code of ethics to be strengthened.

Cycling Ireland is the trading name for the Irish Cycling Federation, an all-island organisation with some 22,000 members and big-name sponsors including the Renault motor retail group. In the five years to 2020 the organisation received €9.92 million in public funding from organisations such as Sport Ireland, the statutory authority tasked with developing sport in the State and supervising governing bodies like Cycling Ireland.

Responding to questions about the audit findings, the body said its board is working on a root-and-branch overhaul of governance with the aim of presenting a revised constitution and structures to members this year. “This process is under way. The board resolved at its January board meeting to retain legal and accountancy advisers to review the structures of the company and the financial controls in place.”

Asked whether there was any reason to suspect – or evidence – that false quotations were submitted in any other application for State funding, Cycling Ireland replied: “To the knowledge of the board, there is no reason to suspect that this happened in other cases.”

The body is under new leadership these days after Co Limerick-based accountant Liam Collins became president of the organisation and chairman of its board in November 2021. His predecessor, Ciarán McKenna, held the office for six years.

Sport Ireland said it has received written commitments from Collins and chief executive Matt McKerrow on the complete implementation of Kosi’s recommendations to overhaul how the body works. “While a formal update is expected, Sport Ireland understands that progress on the implementation is well advanced,” the authority said.

Three new board members have been appointed in recent months. They include independent director Marcus Dowling SC, who joined in December and is now chairman of the governance and risk subcommittee. Emma Hunt-Duffy, head of marketing with fruit importer Fyffes, joined in January and Conor Campbell, a solicitor working for a US law firm, joined in November.

While steps are under way to appoint a further member with specific expertise in risk to the governance subcommittee, other board officers have been in place for years. They include vice-president Brendan Tallon and treasurer Eugene Moriarty, each in their fifth year on the board, and Anthony Mitchel, who is in his eighth year as secretary.

Some research suggests an extra 250,000 people have taken to the bike since the lockdowns began

Separate internal records seen by The Irish Times point to schisms at the board last year over the grant application issue. When solicitor Yvonne Nolan quit as a director last September, she complained in a resignation letter marked confidential that her views on the “seriousness and urgency” of the capital grant issue were not aligned with some other board members.

Nolan, who declined to comment for this article, had joined the board in August 2020 and was chairwoman of the governance subcommittee from January 2021. In a confidential note with her letter, she said information on the grant issues was withheld from the board and added that there was no indication at first “of a fabrication of quotes or any wrongdoing of that nature”.

Asked about issues raised in Nolan’s private correspondence, Cycling Ireland said it “does not propose to comment” on her reasons for resigning.

In its October report, Kosi criticised the organisation’s executive for not carrying out a “full investigation” as soon as possible and address the shortcomings.

An investigation was by then under way but the auditor found that the failure to act earlier “further undermines confidence in effectiveness, control and accountability” in Cycling Ireland.

Kosi cited recommendations in a separate governance review that included a call for a “schedule of matters” setting out the separation of responsibilities between the executive and board of the body. The audit found a “lack of board confidence” in Cycling Ireland’s executive. For its part, however, the executive was “uncomfortable with what it considered as overreach on behalf of the board”.

After the lifting of pandemic restrictions that curtailed organised sporting events, these should be good times for the body. The organisation has made notable appointments in the last fortnight, selecting star cyclist Nicolas Roche as director sportif and former British Cycling head coach Iain Dyer as high-performance director. Although cycling was already a popular pursuit before coronavirus struck, some research suggests an extra 250,000 people have taken to the bike since the lockdowns began.

But Cycling Ireland is now confronted with the fallout from serious governance failings highlighted by Kosi and the suspension of some public funding last year.

“Cycling Ireland was prohibited for applying for sports capital grant funding for a period of 12 months. It would not be possible to quantify what impact, if any, this sanction had as awards under this scheme are discretionary,” a spokesman said.

The implications of the Kosi report, which highlighted a lack of rigour on procurement, are clear

Separately, however, the body received €420,000 in core funding and €90,000 high-performance special project funding last year from Sport Ireland. Asked about its response to the affair, the Department of Sport said: “The release of any 2022 Sport Ireland funding will be dependent on the implementation and advancement of the various recommendations in the audit report.”

There is more. After the department reported the grant issue to the Garda, Cycling Ireland still risks being drawn into a full-blown investigation by the National Economic Crime Bureau. “An Garda Síochána has received correspondence which is currently being assessed to determine what, if any, Garda action is required,” said a spokeswoman for the force when asked about the status of the case.

No matter what happens next in the Garda examination, Cycling Ireland is confronted with a mammoth task to restore its reputation. Far from securing an additional €52,100 in public funding, the body faces a bill for many multiples of that to meet legal and other costs linked to investigations triggered by the grant application.

The latest estimate of the likely cost is some €350,000, it is understood.

The Kosi report highlights “errors and ineptitude” in the preparation of grant applications, referring not only to the bid to the department, but also to a submission to Sport NI in Northern Ireland for funding arising from Covid-19 disruption.

“There were failings in procedures, processes and practices in Cycling Ireland in two grant applications made by the body,” the audit report said.

“The first related to the inclusion of false comparative quotations as part of a capital grant submission to the Department of Transport, Tourism and Sport. The second related to an erroneous interpretation of the criteria for accessing the Sport NI sustainability fund which could not be supported by evidence.

“The applications in both instances represented poor practice and undermine confidence in the integrity of the body.”

The Sport NI issue had been raised in a June 2021 report of the comptroller and auditor general (C&AG) in the North, which noted that Cycling Ireland received only £14,600 after claiming £400,000 to cover itself and 122 clubs. The C&AG’s report said the body “failed to follow the required guidance and did not use the application form nor supply appropriate supporting documentation”.

Asked who exactly was responsible for the grant application to the Department of Sport, Cycling Ireland said it cannot comment on individual responsibility for operational matters.

“To do so would, at a minimum, breach the rights of the individuals concerned under [the EU general data protection regulation],” it said.

On the question of any disciplinary action being taken against any individual, the body referred to an independent investigation by a third-party professional. “As that investigation dealt with individual employee issues, Cycling Ireland cannot comment in detail on its output.”

A spokesman said, “Cycling Ireland cannot comment on individual employee matters” when asked whether any person had been required to leave the organisation as a result of the grant affair.

The implications of the Kosi report, which highlighted a lack of rigour on procurement, are clear. “False quotations have no place in any procurement procedure. That this happened evidences an absence of adherence to good practice,” the audit report said.

It went on to criticise the lack of an overhaul of the grant procurement after problems surfaced. “Following on from the negative outworking of the erroneous grant submissions, not to prepare and implement a revised grant procedure to ensure that confidence in CI’s grant application process can be restored, is a failure.”

The task now is to pick up the pieces.