The focus on creating a ‘university of international standing’ in this region remains high on the agenda of Waterford TD and Oireachtas Public Accounts Committee (PAC) member David Cullinane (SF).
Speaking to The Munster Express in the wake of the PAC’s examining a special report by the Comptroller and Auditor General (C&AG) into the sale of Feed Henry, a spin out company of TSSG, to Red Hat for €63.5m, Deputy Cullinane said his eyes remained fixed on the establishment of a Technological University.
“My focus is to ensure that a University of international standing is put in place for the South East,” he stated. “This will happen as a collaboration between WIT and IT Carlow. It is my considered view that the main campus and the Administrative and Academic Headquarters of a Technological University must be in Waterford City.”
Fears about the location of the Headquarters of the Technological University of the South East (TUSE) were voiced by former mayor Seamus Ryan (Lab) at his local election launch on Friday last.
Speaking to The Munster Express, Seamus Ryan said he was “very concerned that the Headquarters of which I heard and read a lot about, could possibly go to Kilkenny. This is something which we cannot accept in Waterford and I for one, if elected, most certainly would not accept this; in fact, I would fight it tooth and nail.”
Asserting to the significance of the location of the TUSE’s HQ, Mr Ryan stated: “I think it’s very important because it sends out a message. It sends out a message to the rest of the country and it would also send out a message internationally which would re-enforce Waterford’s status as the capital of the South East of Ireland. And if it’s not here, then people are going to start asking questions as to why it’s not in Waterford, and rightly so. We’ve got to make sure that we secure the head office of the new TU and not allow the Government to railroad us when it comes to this issue.”
Last Thursday’s PAC session cast WIT back in the national spotlight via the C&AG’s report on the institute, with C&AG In his opening statement to last Thursday’s sitting of the PAC, the Comptroller and Auditor General (C&AG) Seamus McCarthy addressing the session.
In his opening statement to last Thursday’s sitting of the PAC, Mr McCarthy, referred to WIT’s receiving €1.6 million from the net proceeds of FeedHenry’s 2014 sale. A national code of practice on research commercialisation was published in 2004, which recommended the adoption of “formal policies to deal with (the) commercialisation of IP, and the management of associated conflicts of interest”. Mr McCarthy’s report notes that WIT’s Governing Body adopted a policy statement in February 2010, with decisions subsequently regarding the assignment of the FeedHenry IP coming into “conflict with its provisions”.
“For example, an internal commercialisation committee established under the February 2010 policy to review and approve all agreements on commercialisation of IP held its first meeting only on 6 December 2010. The minutes of the committee’s first meeting do not record any discussion of the assignment of IP to FeedHenry Limited, which occurred on 15 December 2010. Also, the institute’s IP policy indicates that a 15% equity stake in a spin-out company would usually be appropriate in exchange for transferring IP owned by the institute. In the case of FeedHenry Limited, the institute agreed in July 2010 that it would accept a 15% equity stake in the company on condition investors put €500,000 into the company. In December 2010, the institute accepted a stake of 10.8% when it assigned its IP to the company. The basis for agreeing to accept the reduced equity share was not documented by the institute. The reason for variation from the indicative 15% shareholding was not considered either by the governing body or by the commercialisation committee.”
From the monies received by WIT, “around €647,000” was distributed “to other beneficiaries under pre-existing arrangements. The institute paid €147,000 to a financial institution under the terms of a 2005 profit-sharing agreement, but was unable to locate a signed copy of that agreement when requested to do so by the examination team…Some of the TSSG staff who received payments under the incentive scheme had separately benefitted financially from the sale of shares they held in FeedHenry limited. The examination found that neither institute nor national policies deal with situations where staff members have significant personal interests in companies acquiring IP from their employer organisation. In the case of FeedHenry Limited, there was no service level agreement or cost-sharing arrangements with the institute in place prior to November 2010, even though the company’s registered address had been on the institute campus since 2008.”
The C&AG’s report into the spin-out has made 11 recommendations, seven of which are “the primary responsibility of WIT while four are the responsibility of the HEA”.
Addressing the PAC, Department of Education Assistant Secretary William Beausang said the Department believes there are “significant issues raised relating to institutional governance and oversight in connection with the process for the commercialisation of IP in FeedHenry by WIT, as well as issues with the existence and effective operation of relevant policies, procedures and guidelines by the institute. The Department regards these issues seriously and, subsequent to the publication of the report, it engaged directly with the chair of the governing body of the institute. We have written formally to the chair requesting further information on a number of issues arising from the Comptroller and Auditor General’s report.” The Governing Body is expected to respond to this request imminently.
On the issue of documentation that is no longer available, Deputy Cullinane and Prof Donnelly exchanged as follows in the wake of Mr McCarthy commenting on the lack of the aforementioned. Deputy David Cullinane: “Does Professor Donnelly agree with that?”Professor Willie Donnelly: “I have to agree that there was a lack of documentation. However, we have to be aware of the fact that we are talking about eight years ago. Does the Deputy know how many companies keep documentation for eight years? Does the Deputy know the number of years that legally one is expected to keep documentation for?Deputy David Cullinane: “I do not but, first of all, the person who sought the documentation was not me. The organisation that sought the documentation is the Office of the Comptroller and Auditor General. That is the job of the Comptroller and Auditor General as the auditor. The Comptroller and Auditor General concluded that there were weaknesses in supporting documentation. It was not me. I would go further. We will go through the report now and we will see what I believe the weaknesses to have been.”
Professor Willie Donnelly: “I think he said that there was a lack of documentation from eight years ago, and I accept that.” Commenting on last Thursday’s meeting, Deputy Cullinane stated: “The C&AG’s report identified weaknesses in the management of conflicts of interest and the protection of the institutes equity in the company. The report found that evidentiary documentation was not available to the C&AG’s office to support assurances given by WIT.” He added: “The C&AG’s report also found a serious lack of Governance and oversight. Key decisions such as the transfer of Intellectual Property from WIT to this private company was made without any oversight by the Governing Body. Likewise an agreement to reduce WIT’s equity in the company was made without board approval. The report also found weaknesses in the management of conflicts of interest given that senior management at WIT and TSSG were also shareholders in this private company.2
David Cullinane concluded: “I am pleased that WIT has accepted all of the recommendations made by the C&AG’s office. The work of the C&AG and the PAC has resulted in significant improvements in oversight and Governance. Developing spin out companies, commercializing Intellectual Property and supporting innovation are key components of Research and Development. I strongly support and encourage such activity. However it is vital that institutes have robust Governance arrangements in place to ensure the institute is protected and conflicts of interest properly managed.”
When asked about the current status of the TUSE process, Prof Donnelly told the PAC on Thursday last: “It takes about 80 per cent of my time at the moment. We have an application ready to go, and we have worked hard on that between the two institutes. We have an issue in the sense that we have an engagement with the TUI, which is the academic union, and we are in negotiation with it to look at how we complete a memorandum of understanding (MoU), which it wants to complete before we move to the next phase. Things are progressing, maybe not as fast as we would all like, but it is extremely important that we engage the staff and that the staff are fully part of the process.”