Happy Holidays

Media Boy UK HQ would like to wish Happy Holidays to everyone who view this blog. Don't forget Media Boy UK launches on January 4th 2025 on Blue Sky.

Wednesday, 8 May 2024

RTÉ News: Weak risk management 'directly contributed' to RTÉ crisis

Story from RTÉ News:

A highly critical review of governance in RTÉ has blamed weaknesses in risk management and internal controls for the crisis at the broadcaster.

The wide-ranging report said these issues "directly contributed" to the failure to detect issues at the organisation.

The Review of Governance and Culture at RTÉ, which was chaired by Professor Niamh Brennan of UCD, said risk management had been "immature, under resourced and hardly considered at all by the board and former executive board".

It said that it had "identified cultural issues" that created an environment that reduced the likelihood of the detection of the use of the highly controversial barter account and misstatement of former presenter Ryan Tubridy's earnings.

The report said that both RTÉ's board and the internal audit function said they were not aware of the existence of barter accounts. 6-"As such we consider the barter accounts 'were hiding in plain sight'," the report said.

It said that consultants Mazars were unable to identify who made the decision to move the barter accounts off RTÉ's balance sheet.

The report found the oversight of the broadcaster by the Minister for Media Catherine Martin, her Department and the Oireachtas proved "ineffective in preventing the issues that have arisen".

The review said board appointments by the Minister for Media and the Oireachtas did not address important skill gaps that undermined governance and assurance in RTÉ, adding that: "The audit and risk committee had no experience in advertising and therefore no expectation of the existence of barter agency accounts."

It said the board's ability to scrutinise was impeded by inappropriate and frequently informal management practices including verbal rather than written reports and that the board's ability to scrutinise remuneration was limited because it did not have visibility of top on-air talent pay.

It said many critical decisions were made outside the forum of the executive board.

The Review of Culture and Governance recommended that RTÉ move to a more sustainable funding model, and that there is a review of legislation covering governance.

It also recommended that the Broadcasting Act is amended to appoint the Comptroller and Auditor General to examine RTÉ's accounts, terms of reference are established for the board, and that RTÉ appoints a suitably qualified Group Secretary, Chief Risk Officer and a Head of Compliance.

The review was one of three reports into RTÉ published by Minister for Media Catherine Martin this afternoon.

Two Government-commissioned reports - on governance and culture at RTÉ and on contractor fees and Human Resources - contain 116 recommendations regarding required changes at the national broadcaster.

The third report by the auditing firm Mazars, examined RTE's books and its controversial barter account.

The Government has accepted in principle all 116 recommendations and said RTÉ would be required to prepare an implementation plan within six weeks. The plan will be overseen by a Monitoring Group.

The review of Contractor Fees and Human Resources in RTÉ recommended that any future exit, severance or early retirement programmes at the broadcaster be formally approved by the RTÉ Board and that a financial cap is applied.

The Expert Advisory Committee chaired by Brendan McGinty carried out this review.

It said that progress reports on the implementation of any such programme should include regular reporting by the Executive Leadership Team on the consistency of application of the rules of the scheme to the Remuneration and Management Development Committee of the RTÉ Board.

The Committee also said that any future schemes should apply a financial cap "in the interests of transparency".

It said the "nature of any caps, levels, how they should be applied and in what circumstances should be considered in the interests of full transparency and in the context of achieving the objectives of the scheme".

The review also recommended that proposed exits by a member of the Executive leadership team should also be subject to approval by the Remuneration and Management Development committee of the board.

It said that this should happen before the parties enter into any legally binding agreements.

The review also looked at how RTÉ engages presenters and contractors, their fees and the use of agents.

The Expert Advisory Council recommended that RTÉ introduce "pay bands" for on-air presenters and publish them in its annual report.

In its recommendations, the EAC said that RTÉ should review its policy on presenter pay, which it said must be based on "transparency, consistency, fairness, clarity and sustainability".

The pay bands, the review says, should reflect the range of roles, competencies, skill and qualifications, and the review also says there should be "clear pathways for progression" within the band as part of a programme to nurture presenter talent.

The EAC said that it was not feasible to investigate the nature of a typical agent's contract with a presenter client in RTÉ.

It said agents were "unwilling to disclose actual fee arrangements" with their clients, but the Expert Advisory Committee concluded that fee percentages typically ranged from 10% to just over 20%.

The review said that RTÉ had confirmed to it that all engagements with agents representing contractors now stipulate the new approval process introduced in January 2024.

The committee said that RTÉ said it takes market rates into account when discussing and agreeing presenter fees, regardless of whether they are represented by an agent.

"The EAC therefore has seen no evidence that costs to RTÉ have been artificially inflated due to the nature of agent fees," it said.

The Committee said it was a matter for the broadcaster to decide on the fair value of any contractual arrangements with presenters, and that the level of fees for agents "should remain a matter between an agent and their client, rather than RTÉ".

The review noted that most presenters in RTÉ who are "independent contractors", already negotiate directly with RTÉ. It also noted that RTÉ does not engage or negotiate with agents who represent employee presenters.

The Review of Governance and Culture said a list of highest paid presenters should be included in the RTÉ annual report, and that this should be accompanied by an external auditors' assurance report.

A total of 147 employees were being paid a salary of more than €100,000 as of December last year. This includes 125 people who are paid between €100,001 and €150,000.

A further 16 people are paid between €150,001 and €200,000, while six others are paid between €200,000 and €250,000.

€250,000 is the highest salary to be paid to an RTÉ employee.

However, the Expert Advisory Committee said that the broadcaster confirmed that two other employees will have earnings above that figure following the application of a "collectively agreed pay increase of 1.5% applicable from 30 April 2024".

The review said that five current independent contractors have earnings of €250,000 or above and that each of those five are engaged through the mechanism of a limited company.

A total amount of €3.3 million was paid to "key management personnel" at RTÉ in 2022 in salaries, post-employment pension benefits and termination benefits.

This group includes people who have authority and responsibility for planning, directing and controlling the activities of the company. This sum of €3.3 million is an increase from €2.9 million in 2021.

The Expert Advisory Committee said that RTÉ must "urgently" take "exceptional disclosure measures" concerning senior figures in the organisation when it comes to remuneration.

It said this would "contribute to rebuilding public and organisational trust through greater transparency and accountability across RTÉ".

The review recommended that in addition to existing disclosure obligations, RTÉ should publish details of total remuneration including salaries, gifts, hospitality and declarations of personal interests for all "senior leaders" on a base salary of €200,000 or more.

"Exact details should be disclosed for Executive Leadership Team members and Board members," it said.

The committee also recommended that expenses should also be published in this regard.

Meanwhile the forensic examination by auditing and accounting firm Mazars has not identified any further off-balance sheet accounts held by RTÉ between 2017 to 2022 apart from the barter account.

RTÉ said it welcomed the publication of the three reports and that it accepts in principle the recommendations made by the two Expert Advisory Committees.

"RTÉ has supported both Expert Advisory Committees and Mazars in their work and we welcome the publication of their reports by Government today," said Terence O'Rourke, Chair of the RTÉ Board.

"Their analyses and their recommendations, all of which we accept in principle, will make a significant contribution to the task of rebuilding trust in RTÉ," Mr O'Rourke said.

In a statement, RTÉ today published details of the total amount of compensation paid to key management personnel in 2023, usually reported in its annual reports.

"None of the former members of the RTÉ Executive, written to by RTÉ, has consented to waiving their right to confidentiality regarding exit payments," according to the statement. 55-The figures show that the total amount of compensation paid to key management personnel in 2023 was €4 million, up from €3.3 million in 2022.

Termination benefits, including legal fees, came to €700,000 last year, up from €300,000 in 2022.

© RTÉ 2024.