The Stage

Abbey draws on emergency arts council cash to pay staff

Published Wednesday 3 August 2005 at 16:05 by Anthony Garvey

Ireland’s beleagured national theatre, the Abbey, has had to use emergency funding from the Irish Arts Council to ensure that its staff are paid.

The intervention from the arts council came last week after a high-ranking civil servant on the Abbey board, Michael Somers, warned that the theatre’s financial situation had become so criticial it faced the prospect of “immediate technical insolvency”. Without urgent funding, he said, the theatre would be unable to meet its liabilities, including wages, and would be required to issue protective notice to employees.

The emergency funding is believed to have come from the arts council’s annual grant to the Abbey, which this year totals just over €5 million. The council is still withholding a significant portion of a €2 million “stabilisation grant” provided for the theatre by arts minister John O’Donoghue, insisting that this money is conditional on radical changes in Abbey management, structure, staffing and work practices that have still to be implemented.

At the heart of the current crisis is the fact that the theatre lost €1.85m in 2004, its centenary year, which was more than double the expected figure. An overly ambitious centenary programme, a hugely expensive production of The Shaughraun - currently running in the West End - and a serious miscalculation of the cost of touring The Playboy have been blamed for the black hole in the accounts, which left the Abbey struggling with a total operating deficit of €3.4m euro at the end of last year.

A report on the crisis prepared by business consultants KPMG is critical of the Abbey board for not exercising more effective oversight of the theatre’s financial reporting and cost controls, particularly in relation to the centenary programme. It details poor corporate governance, accounting errors, faulty accounting systems, inadequately trained staff and ad hoc financial analysis as contributing to the scale of the problem, and recommends a series of sweeping changes.

The report makes clear there was no evidence of theft or fraud and no suggestion of misconduct by any member of the board or finance committee. But it says it found five separate Abbey budgets for the current year, all with different projected outcomes, and adds that the income and expenditure statements for the first four months of the year are “incomplete and unreliable”.

Both managing director Brian Jackson and artistic director Ben Barnes resigned following the discovery of the accounts black hole of €1 million. Now, in the wake of the KPMG report, the theatre’s finance and audit committee is to stand down. The current board will also go shortly, according to chairwoman Eithne Healy, with O’Donoghue planning to have a new nine-member board in place by September.

The minister, who has received a copy of the KPMG report, said it appeared there had been “gross incompetence” in the management of the theatre’s finances. However, he added there was “no danger of the Abbey going out of business” and said that its move to a new home in Dublin’s docklands would not be affected by the current difficulties.