Page last updated at 17:43 GMT, Friday, 12 March 2010

Four Northern Ireland Water board members sacked

Conor Murphy said people needed to have confidence in the board members

Four NI Water board members have been sacked following an investigation into how the company awards its contracts.

The company's chairman, Chris Mellor, and three other board members are to go following an independent report.

The report found that there had been a "serious breakdown in the governance and control framework" of the company.

Regional Development Minister Conor Murphy said the company could be open to legal action over the way contracts were awarded.

"I am concerned of course that people may feel hard done by and try and bring some kind of legal proceedings," he said.

"We'll have to deal with that if that arises."

Mr Mellor, a qualified accountant, became NI Water chairman in February 2006.

He has worked in the water industry for nearly 25 years.

The other three board members who have been dismissed are Ruth Thompson, Declan Gormley and John Ballard.

The report was jointly commissioned by NI Water's chief executive, Laurence MacKenzie, and the permanent secretary of the Department of Regional Development.

Laurence MacKenzie said he would ensure appropriate controls were put in place
Mr MacKenzie said appropriate financial controls will be put in place

It found there had been a serious breakdown in the relationship between Mr MacKenzie and the board of NI Water over the way the company awarded its contracts.

It states: "The Internal Review Team (IRT) has been advised by the chair of NI Water that, in his opinion, the chief executive officer (CEO) does not have the trust and confidence of the board and that this position is now irreconcilable.

"The CEO advised the IRT of a breakdown in trust between himself and the NI Water board."

The review team added that is was concerned the breakdown in this relationship would cause "severe difficulty" when it came to implementing the report's recommendations.

The Department of Regional Development said that the report initially identified 24 contracts where appropriate governance procedures "had not been followed".

"Due to further evidence being provided by management following the realisation of the serious nature of the initial findings, the number of contracts is now sitting at 21, representing a total value of £8.4m. Further "deep dive" audit work is ongoing," a spokesperson said.

The chief executive of the NI Consumer Council, Antoinette McKeown, said consumers must be told about any financial implications which may have arisen as a result of how contracts at NI Water were awarded.

"They need to know that they are getting the best possible value for their money and the reality is now they don't know," she said.

Past difficulties

NI Water, a government owned company, has been embroiled in a number of controversies since its inception in 2007.

In February, an internal investigation at NI Water warned the company to toughen up its procedures in relation to staff taking new jobs outside the organisation.

The recommendation stemmed from an investigation into a case where a NI Water employee involved in awarding a contract to an outside company then went on to take a senior job with them soon afterwards.

Problems at NI Water
Internal probe into company practices
Utility Regulator orders £91m spending cut
More than 5,000 customers overcharged
2,400 customers undercharged resulting in £250,000 loss
NI Water miscalculate projected income by £20m

In the same month, the Utility Regulator told the company to cut its spending by £91m over the next three years, a reduction of 8% on NI Water's original proposal.

Last year, NI Water began to contact thousands of non-domestic customers who were overcharged.

More than 5,000 businesses, farms, schools, charities or churches paid too much - some by as much as £4,000 in a mistake discovered late in 2008.

A further mistake meant that 2,400 customers may have been undercharged. This resulted in a loss of revenue of about £250,000.

In 2008, the Utility Regulator launched an investigation after it emerged the company had miscalculated its projected income by £20m.

The mistake, if left unchecked, would have resulted in every household facing £30 extra on their water bill, had they been introduced.

The company's then chief executive, Kathryn Bryan, subsequently resigned.



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SEE ALSO
The trials and errors of NI Water
12 Mar 10 |  Northern Ireland
NI Water 'must toughen job procedures'
23 Feb 10 |  Northern Ireland
NI Water must cut spend by 135m
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NI Water announces 1.5bn plans
04 Aug 09 |  N Ireland Politics
Overcharged water users contacted
30 Jul 09 |  Northern Ireland
Three year water deferral planned
28 Apr 09 |  Northern Ireland

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