Lifting lid on Irish Water reveals unusual governance
Author: Professor Niamh Brennan, UCD College of Business
One of the most controversial aspects of the Fianna Fáil-Fine Gael deal is the treatment of Irish Water. While Irish Water will not be abolished, under the deal, no fewer than three advisory bodies/committees are to be established to oversee the utility’s efficiency: a statutory external advisory body, an expert commission to examine a long-term funding model for water services, and an Oireachtas committee to make recommendations to the Dáil. The objective is to restore public confidence in Irish Water.
Before judging these new arrangements, let’s look at the current governance at Irish Water.
As it is, the governance of Irish Water is unusual, in that it is structured as a wholly owned subsidiary of another State body, Ervia (formerly Bord Gáis Éireann). Initially, the board of Irish Water comprised 14 directors, of whom 10 were independent non-executive directors (ie, they did not work in Irish Water on a day-to-day basis) and four were executive directors. Then, the minister for the environment at that time, Alan Kelly announced he would be putting in place a new unitary board, combining Irish Water and parent company Ervia.
In setting it up, Kelly said, “The new board will provide for stronger governance and improved setting of strategic objectives.” By the end of November 2014, all the non-executive directors were gone, leaving Irish Water with a solely executive board, comprising (according to the 2014 financial statements) Michael McNicholas, chief executive of the parent company, Ervia; John Tierney, managing director of Irish Water; Brendan Murphy, Ervia group finance director; and Michael O’Sullivan, Ervia group commercial regulatory director.
Thus, there is currently no direct non-executive oversight of these four executive directors on the board of Irish Water. Instead, Irish Water is subject to the control and oversight by the board of Ervia, its parent company.
The position of chairman of Ervia is currently vacant, following Rose Hynes’s resignation in October 2015. How can the board of Ervia be operating effectively without a chairman? In November 2015, Irish Water announced that John Tierney would be stepping down as managing director at the end of April 2016. Who is Irish Water’s managing director now? Does Irish Water currently have a managing director?