CRC pays €660k for administration of non-existent fund

'€660,000 for administering a phantom fund? That's outrageous.'

Scandal-struck Central Remedial Clinic chiefs have been paying millions of euro to the Mater Hospital in a mystery deal to administer a fund that does not exist, a parliamentary hearing has been told.

In bizarre revelations described as “bonkers”, the disability clinic’s former chief executive Paul Kiely said he tried to break the payments a number of times but was warned to stay away from it.

“It was kicked out of the water,” he said.

“I was told it is what it is, and that’s the way it is to stay.”

Mr Kiely, who is in a storm of controversy over his own salary and a €200,000 pay-off lifted from charitable donations, said he handed over a cheque every year for €666,000 to the Mater Hospital for a phantom fund.

The deal is part of a legal agreement dating back 30-odd years, he said.

Before an Oireachtas Public Accounts Committee (PAC), he testified the “money going around the houses” scheme forced the CRC to pay between 10% and 13% of staff salaries to the Mater every year.

This was supposed to be for administering a pension fund for the workers, known as the Voluntary Hospitals Superannuation Scheme (VHSS).

The historic agreement was drawn up at a time when CRC staff were not recognised as directly eligible for the pension.

“The Mater Hospital then, in a book transfer, came up with the idea that they would pay the full gross salaries of the individuals to the Central Remedial Clinic and the Central Remedial Clinic was in return to send the full gross salary of the individuals back plus 10 to 12.5% premium for the Mater,” Mr Kiely told visibly shocked TDs.

“It was ridiculous but I tried to break it on numerous occasions, and no one wanted to know.”

Barry O’Brien, the Health Service Executive (HSE) director of human resources, said the pension scheme was administered centrally in Manorhamilton, Co Leitrim.

“I have no idea why they would be charging anybody any fee when we do the work centrally for them,” he said.

Asked by Independent TD Shane Ross if the Mater has been charging the CRC €666,000 a year to administer a “phantom fund”, Mr Kiely simply replied: “Yes.”

Mr Ross said: “This is bonkers.”

Former chief executive Mr Kiely, who also revealed he has resigned from the CRC board since the scandal erupted, said the directors knew about the arrangement.

Furthermore, he said the Mater informed him in correspondence that it was doing the same thing for other organisations.

Mr Kiely said he last brought the payments up with his own board in the early 2000s.

“I always questioned it,” he said, adding that he also always paid it, because he was told it was a legal agreement.

The CRC ex-chief said he tried to get the clinic registered with the VHSS scheme to get out of the payments but was refused.

The scheme could have been administered internally within the clinic by a grade three clerk, earning between €27,000 and €30,000 euro a year, he told the hearing.

PAC chairman John McGuinness said the revelations would come across as an absolute farce to anyone looking on, and ordered the HSE to produce a report by next week.

The parliamentary hearing, lasting almost six hours, heard five bosses at the CRC were paid top-up payments from public donations.

As well as Mr Kiely, the hospital dipped into charity funds to boost the already substantial salaries of four other managers by tens of thousands of euro every year.

A manager of client services, an administrator and HR manager were each on a Health Service Executive-funded salary of €79,000.

But the CRC took cash from its fundraising company called Friends and Supporters of the Central Remedial Clinic to boost their executive pay packets by €32,357 each.

In the case of the IT manager, who was also on an HSE salary of €79,000, the top up was €37,841.

Mr Kiely admitted he received a tax-free lump sum of €200,000 euro from the public donations when he retired as chief executive earlier this year. His €240,000 euro a year salary was largely drawn from the same funds.

Asked about the arrangement, he replied: “Have I qualms? I have qualms about everything to do with this. Absolutely everything.”

Mr Kiely retires on a pension of around €90,000 euro a year from a private scheme – which was also propped up by a €3m loan from the donations.

Around 70 staff at the CRC are involved in the private pension scheme.

Mr Kiely was secretary of both the CRC and the fundraising company at the time of the loan, described by Mr Ross as a “gift”.

Acting CRC chief executive Jim Nugent told TDs that bosses paid more than the public sector pay cap were never asked to take a cut.

David Martin, a director of the board, said it was a private company and made its own decisions on salaries.

As a solicitor, he knew they were bound by existing employee contracts and did not need to take outside advice on the issue, he insisted.

Asked if the salaries and top-ups, which were notified to the HSE in April last year, were morally justifiable, Mr Nugent said they could be sued if they enforced a pay cut.

Several TDs demanded the rest of the board of directors resign over the scandal.

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