Taoiseach Leo Varadkar believes RTE’s executive “certainly failed” in its duties by not properly informing the national broadcaster’s board about a musical which ultimately recorded multimillion euro losses.
RTE’s Toy Show The Musical recorded more than 2.2 million euro in losses after a season at Dublin’s Convention Centre in 2022.
An independent report into the controversy found that the musical required board approval but it was not sought or provided, and also identified additional costs of 69,000 euro – bringing the total losses to 2,272,859 euro.
The report, which was commissioned by the RTE board and published on Thursday, also found there was “no justification” for the way the broadcaster recorded 75,000 euro in advertising money and that the musical would have struggled to break even under the proposed number of shows.
Mr Varadkar said the RTE board “could have asked more questions” about the project before it went ahead.
Speaking to reporters in Dublin, he said: “I think it’s clear that proper accounting procedures and proper governance procedures weren’t followed.
“The board weren’t properly informed of this major new venture, didn’t approve of it, and the executive certainly failed in their duties in that regard.”
Following the publication of the Grant Thornton report into the matter, RTE director-general Kevin Bakhurst described the details as “shocking”.
Mr Bakhurst, who took up the role after the losses incurred by the musical emerged, said: “It should never have happened. I’m very confident that we put in place now the measures that make sure this sort of thing could never happen again in this organisation, and I’d like to reassure people about that.”
He added: “Since I’ve arrived here, as things come up, we have driven huge change. The governance here was very weak, the relationship between the then-executive and the board was dysfunctional.
“We’ve put in place changes, the relationship is hugely improved, driven massive change for the organisation, and I have to say, I’ve done that with the support of the board – and I needed that to do it.
“There’s more change to come, there’s a strategy to come. And we will continue driving forward to make sure this is a better organisation.”
The chairwoman of RTE’s board apologised for a “significant lapse in oversight” of Toy Show The Musical and committed to changes in governance so that it would not happen again.
Siun Ni Raghallaigh, who described the incident as a “debacle”, said that information was withheld from the board about Toy Show The Musical and that RTE executives should have been interrogated by board members “in a much more rigorous fashion”.
“The report clearly illustrates that the board was not kept appropriately informed about the project as it was being developed. External expert advice was ignored.
“Information was also withheld from the board. Significant contracts were committed to without the knowledge or approval of the full board.
“The executive should have been interrogated by the board on the project, on an ongoing basis and in a much more rigorous fashion.
“The commercial risks associated with an undertaking of this nature were grossly underestimated. The project was not appropriately stress tested.
“The report also highlights a failure in generally accepted accounting practices, in that sponsorship was not correctly presented to the board and all costs were not properly captured and linked to the project.”
She also expressed confidence in members of the current board who also sat on the board during the time of Toy Show The Musical.
Asked about accountability over the matter, Mr Varadkar said: “I know some people interpret accountability as ‘off with their head and find out what happened later’ – I don’t.
“To me, accountability is people being asked to explain their actions, explain their thinking, explain their decision-making. So that’s something we have to take into account.”
The Grant Thornton report, published on Thursday afternoon, does not name anyone involve and refers to them as ‘Person 1’ to ‘Person 26’.
The report stated that two individuals said there was little interrogation of the financials and audience numbers.
It also revealed that there was limited questioning about the show because directors did not receive documentation in advance of meetings, and the oral presentation of the musical in various meetings was presented as a “fait accompli” or as a “briefing”.
It was also revealed that RTE moved 75,000 euro in TV advertising money into “sponsorship” for the musical.
The musical pulled in 45,000 euro in sponsorship. However, in a 13-page report provided to the board in January and February last year, it stated that the event had sponsorship of 120,000 euro.
On July 4 2023, RTE amended the sponsorship income figure to 45,000.
It emerged that 75,000 euro was taken from TV advertising revenue and transferred into the musical account.
The report found that there was “no justification” for recording the additional 75,000 euro as musical money.
The report also reveals there was more concern about the creative project rather than selling tickets.
Some directors also said that insufficient information was provided to attendees of various meetings, including board meetings, to enable them to fully identify and assess the risks of the show.
The author of the report said: “Some of the members of the RTE Board I met acknowledged that with hindsight, more questions should have been asked about TSTM (Toy Show The Musical).”
The report also found that, based on documentary evidence, there was no evidence found in the minutes that the RTE board approved the show.
It found that no formal vote was taken by the board approving the musical.
The 2021 business plan drawn up for Toy Show The Musical showed that it was expected to generate millions of euro.
Three years of summary financials, shows total revenue in year one of 2,084,120 euro; year two of 2,124,120 euro; and year three of 2,254,278 euro.
The author of the report stated that they found no evidence that the 2021 business plan was shared with members of the RTE board.
