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Ireland's political and cultural magazine
10 October-November 2025
This embrrsses members of cbine
— Sen Cnney, Noel Grelish, Prick
O’Donovn nd Simon Hrris — who rised
concerns bou governmen ssurnces
h fund were ring-fenced for school
rnspor; nd curren Miniser Norm
Foley who hs misled he Dil
Introduction
Banking records held by Bus Éireann have
revealed that a succession of ministers for
Education and Transport have misled the Dáil
about its use of funds for the School Transport
Scheme.
The banking records, obtained in recent
weeks show that — contrary to claims by
ministers, senior civil servants and company
executives —Bus Éireann has not ‘ring-
fenced’ the funds paid nor have the surplus
monies been exclusively used on school
transport.
The court-ordered bank statements for all
Bus Éireann bank accounts for the relevant
dates show no evidence of the alleged net
surplus balances held in reserve between 31
December 2010, and 1 December 1 2018, as
claimed on many occasions in the courts and
the Dáil by the company and successive
education ministers.
The legal implications of the company’s
failure to ring-fence the funds it received now
expose the Government to claims that it
provided undisclosed unlawful State aid to
the transport company in breach of EU laws.
The revelation will embarrass current
members of cabinet who have previously
raised concerns about consistent assurances
from government ministers in successive
administrations that all surplus funds from
the School Transport Scheme were ring-
fenced and exclusively used on school
transport expenditure.
These include independent TD, Sean
Canney, who is now Minister of State at the
Department of Transport; fellow independent,
Noel Grealish; and Patrick O’Donovan and
Simon Harris of Fine Gael, all of whom have
been given misleading information in
response to their parliamentary questions on
the scheme.
Illegal se
id lid bre
by exposure of
bnk records
Norma Foley, Leo Vrdkr nd oher
Minisers, quoing Bus Éirenn nd he
Deprmen of Educion, hve misled
he Dil on dozens of occsions bou
school-rnspor finnces
By Frnk Connolly
In July, Tim Doyle, a director of Student
Transport Scheme Ltd. (STS Ltd), obtained a
Circuit Court order requiring Bus Éireann’s
bankers to provide details of its bank
statements and transactions to examine its
handling of funds for the school transport
scheme. The bank statements do not identify
any amount of school transport services
surplus funds that is ‘ring-fenced’ or sealed
o from general expenditure.
With backing from US-based Navistar Inc
and Trailways Inc, STS Ltd. unsuccessfully
sought to obtain a tender to operate the
scheme over a decade ago, and failed in a
subsequent High Court action to establish
that the State was in breach of EU procurement
rules in its management of school transport.
It is now claiming that misleading
information was provided to the court by
barristers acting for the bus company and the
State which may have influenced the
judgements against it.
According to Mr Doyle, the recently
obtained bank records show “that state
funding for school transport was improperly
pooled and co-mingled with other Bus Éireann
revenue and improperly used as cash flow and
working capital across all its businesses”
As well as a possible breach of EU state0aid
rules, the banking transactions “completely
and irrefutably contradict claims made by the
state about Bus Éireann’s handling of funds
from school transport”, according to Doyle.
NEWS
October-November 2025 11
Contradiction of ssurnces
given o High Cour nd
Supreme Cour
In a recent submission to the Legal Costs
Adjudicator, who is assessing the matter of
costs arising from unsuccessful High Court
and appeal proceedings against Bus Éireann
and the State by STS Ltd. the solicitor for the
company, Brian Lynch, stated:
“The bank statements disclosed in July 2025
show that cash inflows from school transport
payments were co-mingled or pooled with
other revenue streams and used to cover the
general expenses of the company. The
‘payments in’ transactions across all bank
accounts originated from various segments of
Bus Éireann’s business, while ‘payments out’
from these same accounts were used to pay
general operating expenses. The funds
received were deposited into general accounts
without segregation”.
The bank details, said Doyle, directly
contradict assurances given to the High Court
and Supreme Court and by successive
ministers in the Dáil that there is no cross-
subsidisation into the commercial activities of
the transport company from the annual
provision from the Department of Education to
Bus Éireann to operate the school transport
scheme. In the years from 2010 to 2024, the
cost of the scheme has increased from over
€163 million in 2011 to €450 million in 2024,
according to figures from the Department of
Education. The total expenditure over those
years has now reached over €3 billion.
The bank records now appear to completely
contradict a claim by Bus Éireann and the state
in the High Court in 2012 that Bus Éireann
made no profit on the school transport scheme
and payments were limited to a cost recovery
basis. They show that there were undisclosed
uses made of school transport funding
because these funds were used in cash flow
and general working capital across all the
company’s operations.
As a consequence, the Minister for
Education, Helen McEntee, is now exposed to
being accountable for breaches of an EU
directive on state aid.
The dismissal of the High Court action in
favour of the minister may also be found to
have been based on falsehoods. The claim by
then barrister, Brian Cregan SC, for Bus Éireann
during the High Court action when he insisted
that the company did not make a profit and that
the school transport scheme operated on a
cost recovery only basis has been undermined
by the content of the bank statements.
Mr Cregan had argued that “…we do not
make a profit, we do not seek to make a profit”.
Counsel for the State repeated this ‘no profit’
assertion and claimed that Bus Éireann was
paid on a cost recovery basis and all funds
were segregated as they should have been..
Eileen Barrington SC, for the State, argued that
“the school transport scheme is hermetically
sealed from the other areas of Bus Éireann’s
activity. The court has seen there is no…it is
operated on a cost recovery basis, there is no
cross-subsidisation and accordingly 100% of
that activity is sealed o from the other Bus
Éireann activity and it is with the state
exclusively”.
The High Court rejected the claim by STS Ltd
in 2012 and the company was unsuccessful in
a subsequent appeal. An application to the
Supreme Court by the company to obtain
transcripts of earlier hearings also failed.
In his Supreme Court judgment in 2021,
former Chief Justice Frank Clarke pointed to the
statement on adavit by the Head of Legal for
CIE/Bus Éireann, Colm Costello, that any
surplus from the school transport scheme did
not constitute a profit because it was held in a
special separate account.
Chief Justice Clarke stated: “Mr Costello
asserts that the Scheme is administered by
Bus Éireann on a costs recovery basis and that
any surplus which arose from the Scheme was
held in reserve and used specifically for school
transport expenditure”.
The Supreme Court suggested that STS Ltd
would have to go back to the High Court order
if there was a fraud committed on the court by
agents of the State in relation to the school
transport scheme since “any such allegation
requires to be fully considered by a court of first
instance with the ability to hear and have
tested evidence relevant to the serious
allegation (of fraud) involved”. The assertions
by the Head of Legal of Bus Éireann and
counsel for the State are now proven by the
recently obtained bank statements of the
company to have been inaccurate and
misleading.
Comptroller nd Audior
Generl Repor
The Supreme Court decision followed a
separate analysis of the School Transport
Scheme carried out by the Comptroller and
Auditor General (C&AG), Seamus McCarthy,
which was completed in August 2017 and
discussed at the Public Accounts Committee
in December 2018.
The recently obtained banking transactions
establish that the C&AG was misled during the
preparation of its ‘Report 98’. However, the
C&AG report concluded that there was no
statutory accounting support for the claims
that the cash existed in any set aside or reserve
account.
‘The Special Report 98 Provision of School
Transport’ examined the oversight
arrangements in place between the
Department of Education and Bus Éireann for
the operation of the scheme. The C&AG found
that the scheme was relying on arrangements
that had been put in place in a 1975 document
entitled ‘Summary of Accounting
Arrangements’.
Mr McCarthy told the PAC that he concluded
that “the accounting arrangements provided
for in the 1975 agreement are inadequate
given the level of costs involved”.
In his report, the C&AG explained that he
was not empowered to fully interrogate the
accounts of Bus Éireann which, as a commercial
state-sponsored body, was beyond his remit.
In Report 98, completed in 2017, the C&AG
In Repor 98, compleed
in 2017, he CAG —
inccurely — sed h:
“The Deprmen’s view is
h he 1975 rrngemen
is cos recovery model
successive Ministers for Trnsport nd Eduction misled the Dil
12 October-November 2025
stated that: “The Department’s view is that the
1975 arrangement is a cost recovery model.
Despite this, funding provided to Bus Éireann
for indirect costs has been in excess of Bus
Éireann’s reported costs incurred. The
Department understand the estimated excess
— €11.2 million at the end of 2015, falling to
€6.7 million in 2016 — is held in reserve and is
available for future school transport
operations. However, the statutory financial
statements of Bus Éireann do not support this
position, and the Department does not include
the estimated excess funding as an asset on
its balance sheet”.
The C&AG continued: “The Department has
not provided a clear explanation as to why the
accumulated surplus is necessary and why it
did not renegotiate the terms of the
arrangement so that it would pay Bus Éireann
the amount of the verifiable costs incurred on
school transport in any given year”.
Parliamentary Quesions nd
Replies
In March, 2024, the Minister for Education,
Norma Foley, replied to a PQ from Michael
Fitzmaurice TD concerning what he described
as “the transaction purportedly returning the
net cash surplus of €6.7 million to her in 2018
from the ring-fenced account”.
In her reply on 6 March, 2024, the Minister
said: “This amount was held by way of an
uncommitted reserve to be used solely for the
purposes of the Student Transport Scheme.
The balance on the uncommitted reserve was
€8.1m at the end of December 2011 and
reduced to €6.7 million at the end of December
2018 when it was repaid fully to the
Department”.
This broadly echoes statements from other
Ministers for Education and Transport on the
matter.
In 2013, then Minister for Transport, Leo
Varadkar, replied as follows to a question from
Sinn Féin’s Mary Lou McDonald: “The scheme
operates on a cost recovery basis and Bus
Éireann does not make a profit on the scheme”.
More recently, elected politicians, including
two Ministers in the current government, were
given similar assurances that any surplus
accrued by Bus Éireann from school transport
funds are ring-fenced by the company.
Among those who have asked how the
surplus in the school transport funds was
handled and disclosed within the Bus Éireann
accounts are current ministers, Noel Grealish
TD, Sean Canney TD, Sean Fleming TD and
Simon Harris TD, as well as Mary Lou McDonald
TD, Pearse Doherty TD, Alan Kelly TD, Catherine
Murphy TD, John McGuinness TD, Michael
Fitzmaurice TD and others as far back as 2011.
In the light of the recently disclosed bank
records, it would appear that the Dáil has been
misled on dozens of occasions by successive
Ministers and Ministers of State over this
period.
Attorney Generl response
Deputy Grealish is currently a Minister of State
in the Department of Agriculture, Food and
Marine. After his appointment earlier this year,
Mr Grealish met with the Attorney General,
Rossa Fanning SC, to express his concerns
about the failure of the Department of
Education to provide him with the information,
including the exact profit related figures from
the school transport scheme, which he
requested in his parliamentary question in
2019. He told the AG that the Dáil record should
be corrected as he believed that the answers
he received from the Department were
misleading. Mr Grealish informed STS Ltd. that
the AG said he would deal with the matter.
In May 2025, Brian Lynch, the solicitor for
STS Ltd., wrote to the Attorney General asking
him to explain what Bus Éireann did with
surplus cash retained by the company from the
School Transport Scheme and referring to the
meeting Mr Fanning had with Minister of State,
Noel Grealish, a month previously.
Mr Fanning had previously responded in
April to STS Ltd, just days after meeting Mr
Grealish, in a letter in which the AG stated that
any proceedings which STS Ltd. wanted his
oce to issue against Bus Éireann and other
parties “would be unwarranted, vexatious and
an abuse of process given the background to
these proceedings and the fact that your
client’s proceedings have been considered
and conclusively determined by the Irish
courts”.
The AG cited comments by the Supreme
Court which were critical of the solicitor for STS
Ltd. and Mr Doyle over what it described as the
“unprofessional nature” of their
communications to various bodies, and their
“fundamental misunderstandings of legal
matters”. Fanning said that the Supreme Court
had explained “why none of the allegations
concerning the withholding of information in
respect of the Bus Éireann accounts come
within the provisions of recent criminal
statutes”.
In its letter of 16 May, 2025, STS Ltd. stated:
“The purpose of Minister Grealish’s
discussion was to request that you take
corrective action in relation to the withheld and
misleading information in the 19 written
parliamentary answers in the appendix to
Counsel’s opinion dated 29th January, 2025.
This included the Bus Éireann profit-related
answer given to Minister Grealish in 2019.
However, rather than have the record of the
Dáil corrected, whoever assisted with your
personal reply letter, unfortunately withheld
information from you and continued with the
same pattern of misleading distraction and
repetition of the same court quotations that are
known to be misleading in fact and law”.
The company wrote to An Taoiseach, Micheál
Martin, on 19 May, 2025, in relation to the
refusal of the AG to correct what it described
as “misleading parliamentary answers” and
the withholding of “key information” from
government minister, Noel Grealish.
The Taoiseach’s oce acknowledged receipt
of the email from STS Ltd.
The revelations that school transport monies
were not “hermetically sealed o” or “ring-
fenced” as claimed by Bus Éireann and the
State for the past decade and more has made
the issue politically damaging for the
Government, former and current Ministers and
the Attorney General as well as for Bus Éireann
and the Departments of Transport, and
particularly Education.
Minister for Educion, Norm Foley, misled
he Dil h he ne csh surplus of €6.7
million o her in 2018 from he ring-fenced
ccoun ’ws held by wy of n uncommied
reserve o be used solely for he purposes of
he Suden Trnspor Scheme’
Leo Vrdkr nd Norm Foley
