"And I just wonder when is enough enough? I mean, where do you draw the line with regard to infractions on guidelines that you are policing?"
PUBLIC ACCOUNTS COMMITTEE
Dec 11, 2013: Central Remedial Clinic officials called and examined
John Deasy: I want to clear something up with regard to the lump sum, €200,000. Can I ask the CRC where the €200,000 came from? And how that was funded?
Jim Nugent, Director CRC: The lump sum would have been paid from the Friends and Supporters support fund, the reserve fund.
John Deasy: Were you aware of that Mr Kiely, the €200,000 lump sum that you received came from that fund?
Paul Kiely, former CEO, Central Remedial Clinic: I don’t want to say it’s complicated, but it is – it’s complicated. And the whole thing doesn’t play out for another three years. So my entitlement is to the maximum amount of the…
John Deasy: I understand that, and that’s fair enough. Did you have any qualms that lump sum was coming from that fund?
Paul Kiely: Have I qualms? I’ve qualms about everything to do with this. Absolutely everything to do with it. I am looking at the situation though, where there is entitlement. That entitlement is bestowed by the Revenue Commissioners in a personal fund threshold.
John Deasy: Do you know what? I feel slightly uncomfortable about parts of this myself. I have to ask that question though. Can I ask the HSE with regard to the guidelines, what are you guidelines when it comes to lump sum payments in that regard, or do you have any? ... Did you know that that money was coming from the Friends of CRC?
Barry O’Brien, National Director HR, HSE: Well, to reply to Deputy Deasy, it would be important to say that earlier, and Mr Kiely clearly advised the committee he was not a member of the Voluntary Hospital Superannuation Scheme, that he was a member of a private scheme. And therefore that the reason, and 70 of his colleagues in CRC…
John Deasy: I got that answer.
Barry O’Brien: Therefore we wouldn’t have any influence or decision making because we would have no control over the terms of that scheme as it applied personally to Mr Kiely.
John Deasy: What’s the guideline with regard to that?
Barry O’Brien: If you’re a public servant… if you’re in the Health Service you’re a member of the Superannuation Scheme, and the remainder of the 278, the 208 people in CRC, are members of the Voluntary Hospital Superannuation Scheme, which has clear rules and regulations, [under] which we pay lumps sums based on your consolidated salary scale as approved by the Department of Health and DePer [Dept of Public Expenditure and Reform].
John Deasy: I’ll ask you again. Were you aware that the lump sum was coming from that fund? You weren’t?
Barry O’Brien: We had no knowledge of that.
John Deasy: Okay. With regard to what we’re dealing with in this committee here today, I have to ask you Mr Nugent, do you think it was appropriate that that huge amount of money – and you’ve actually averaged out the amount, I think, at €1.4 million per year, that would be donated into that fund – that such a large proportion should be used for that purpose.
Jim Nugent, Director CRC: The fund is there to support the CRC. And the CRC had a pension fund to which both the employees and the employer contributed.
John Deasy: How do you think though people will feel about hearing that today – outside of the top-up arrangements? I don’t think they’d be feeling good about the fund being used for that purpose, and that amount of money.
Jim Nugent: I take what you’re saying, but at the end of the day the CRC has to get funds from somewhere if it’s not part of the public sector pension fund, and it couldn’t be and that’s fair enough… we have to find funding to do it.
John Deasy: I understand that...
Jim Nugent: And I think everyone in the room would accept that the vast majority of people in employment have their salary package, they have a pension package. And whatever the company is has to find a way to earn that, and pay it out. That was the process.
John Deasy: I just think it’s clarified as to where the money came from, the €200,000 lump sum. Okay? We have clarified that now. If anyone else wants to follow up on that, that’s fair enough.
People down the line here, asking for a board resignation, and I’ve gone through this, and it seems to me the HSE knew very well what was happening. Yes, you issued letters and warnings. You questioned things over a number of years, but you were responsible for policing this. And I just wonder when is enough enough? I mean, where do you draw the line with regard to infractions on guidelines that you are policing? In my opinion, for a long period of time you knew exactly that there was widespread disregard when it comes to public sector wages as it relates to Section 38 agencies. And I think it was to a certain extent a paper-pushing exercise that you engaged in over a number of years. But you never actually drew the line. And you never instructed, or made it clear to boards, that the behaviour was not going to be tolerated. And we’ve arrived in this situation today where we’ve a public hearing. And I think if people are going to actually ask for board resignations they should look at the HSE and the people who are policing this as well. And it seems to me that people who are actually responsible for the policing of this particular area, just because they work in Government, they shouldn’t be immune from that kind of sanction, as well as the people who actually involved in the boards.
So I understand that you may have identified it, made it clear to the boards in question that what they were doing was contrary to public sector wage guidelines, but I think you could have done a bit more with regard to dealing with this definitively, and I don’t think you did.
Barry O'Brien: Could I comment on that chair? If I could refer Deputy Deasy to his colleague, Deputy Harris, I think Deputy Harris set it out very clearly. On over 20 occasions this year alone, we had direct consultation with the CRC when we became aware of the practices that were in place, and specifically with regards to the replacement of post of CEO. I think we in the HSE, under the Health Act, take our responsibilities very seriously. I think the detail that Dr Geraldine Smith identified in the audit, I think the quality of the audit report, I think the identification of each of the agencies sets out quite clearly that it was far more than a paper-pushing exercise. I think I received a report on a date in March. In six days I gave a comprehensive reply to the responsible manager… If you take the period of time since you will see what was happened. There has been a formal new pay policy for the health sector, approved by DePer and the Dept of Health, that has been advised to every manager [and] every voluntary Section 38 for full compliance. We have come before the group and by way of an update we forwarded an update which says tomorrow we will be meeting all of the chairs of the Section 38 board members. Yesterday I issued notification to 353 agencies which are deemed Section 39s, each of which we use the threshold of €250,000 as being the grant aid we give. There are many more below that – several couple of thousand – but each one of those, despite the fact they’re not covered by Government pay policy, we have brought it to their attention that with regards to the remuneration of their senior managers, and particularly CEOs, they should have regard to Government public sector pay policy.
I think, chair, we have been very diligent and I think there’s a very important point to be made here. What the audit has discovered is that, through no fault of the HSE’s, there is now a due diligence process required for individual employees of Section 38s who have contractual entitlements to certain rates of pay where no approval was given [from Departments or Health Boards] or the HSE since 2005. And I think that’s a reasonable analysis of where we find ourselves today from our perspective.
John Deasy: Can I just thank Mr Kiely for coming and attending at the committee today. Thank you.
Selected contributions, 2013 meetings of PAC
As the public spending watchdog, the Public Accounts Committee is one of the most powerful Oireachtas Committees. It has a key role to play in ensuring that there is accountability and transparency in the way Government agencies allocate, spend and manage their finances and in guaranteeing that the taxpayer receives value for money for every euro spent.