Mr. Tony O'Brien:

I would like to begin by congratulating the Chairman on his appointment. I congratulate all the other members of the committee as well. They will have received a copy of the HSE internal audit report on Console, together with other information relating to the topics for examination this morning.

The HSE funds over 1,700 voluntary agencies, which operate over 2,600 separate funding arrangements to a value of approximately €3.3 billion.  Some 39 of these agencies, accounting for €2.6 billion, are funded under section 38 of the Health Act 2004. The remaining agencies are funded under section 39 of the Act. In 2009, the HSE developed a formal national governance framework with national standard governance documentation, service arrangements and grant aid agreements to manage the funding provided to these agencies. This came into operation throughout the HSE in 2010. Four standard documents are in use. First, section 38 service arrangements cover the 16 voluntary hospitals and a group of 23 major non-acute voluntary community agencies. St. John Of God Community Services is one of the 39 agencies covered by these arrangements. Second, section 39 service arrangements cover all voluntary and community agencies, other than the above, that receive funding of more than €250,000. Some 304 agencies, which include - perhaps I should say "included" - Console, are currently covered by these arrangements. Third, section 39 grant aid agreements cover all agencies in receipt of funding under €250,000. The vast majority of agencies fall into this category. Some 1,362 agencies are currently funded under these agreements. Fourth, for-profit service arrangements cover all agencies in the commercial for-profit sector regardless of funding level. Some 218 agencies currently fall into this category.

The HSE has sought to enhance governance arrangements with section 38 and 39 agencies in recent years. In particular, it has established a compliance unit to support the development of a strong and consistent compliance culture across all agencies funded by the HSE. The service arrangements underpin the HSE’s relationship with the funded agencies. The HSE has introduced an annual compliance statement process, whereby the chair and another director of the board of each section 38 agency sign and confirm that the agency is compliant across a range of requirements on behalf of the board. In early 2015, as part of the ongoing development of the compliance process, it was decided that a review of governance by external consultants would be carried out in these agencies to provide external assurances to the HSE.  These reviews commenced in March 2016 and are ongoing. The HSE has a number of processes in place to assure itself that the services it purchases from HSE-funded agencies are of a high quality and provide value for money. I will describe some of the processes that have been in place since 2013 as I provide an overview of two agencies: the charity Console, which is a section 39 agency, and St. John of God, which is a section 38 agency. As the service arrangements underpin the relationship between the HSE and these funded agencies, it is important to note that the HSE's powers in this regard are confined to the funding it provides and the services provided in return for that funding, subject to the terms and conditions set out in the service arangements.  In this context, and given the limited number of HSE internal audit and compliance unit staff, careful consideration needs to be given to the section 38 and 39 agencies that are subject to audit and review.

There has been much media coverage in relation to Console and the findings of the recently completed HSE internal audit. I thought it would be helpful to outline briefly the sequence of events that led to this audit. Console is a section 39 agency that receives approximately 40% of its funding from the HSE. Funding to Console remained relatively static between 2006 and 2013, when it increased to €599,000 from €252,000 the previous year. HSE funding increased at this time to prevent the collapse of a national suicide helpline that was previously funded by another organisation. The increase in funding to Console at that time was predicated on the charity agreeing to a greater level of scrutiny and enhanced governance by the National Office for Suicide Prevention, NOSP. The increased level of scrutiny by NOSP gave rise to a number of concerns, including Console’s continued failure to respond to requests for information, its delivery on its commitments to commission independent reviews of its service and its failure to attend significant meetings, particularly relating to the helpline and its annual accounts. Arising from these concerns, in late 2014 NOSP approached HSE's internal audit division and requested that Console be included in its audit work plan for 2015. In April 2015, the internal audit division wrote to Console to advise that the audit would commence on 27 April 2015. Following a request from Console, the audit start was deferred and commenced on 19 May 2015.

This audit should have taken approximately 12 weeks to complete. However, the audit was particularly complex and challenging and the auditors met considerable resistance from the then chief executive officer. The audit was completed in April 2016 and at all times the auditors were careful to follow fair procedures and due process. The audit report, copied to members, sets out the sequence of events that followed.

With regard to St. John of God, I advise the committee that on 1 July, the St. John of God Order informed the HSE that a number of payments had been made to 14 senior staff in 2013. It is important to point out that in September 2013 the HSE sought written confirmation from all section 38 agencies, including St. John of God, that all remuneration paid to employees was in accordance with Department of Health consolidated payscales and non-Exchequer sources of funding were not being used to supplement employee remuneration to give rise to rates of individual remuneration exceeding the Department's consolidated payscales. If unsanctioned payments were previously paid, the HSE sought confirmation that all such payments had ceased and the recoupment of any overpayments would be pursued as expeditiously as possible.

An important element of the declaration sought at that time was full disclosure on these items. St. John of God has declared itself as non-compliant with public sector pay policy. This declaration and other recent revelations regarding the payments to the 14 staff members are a very grave concern for me and the HSE. Consequently, I have asked the HSE's internal audit division to conduct a review of these matters as a matter of urgency. In this regard, St. John of God was written to by the HSE's internal audit unit on 8 July and asked to provide information and points of clarity by 20 July. The HSE received a solicitor's letter in response to the audit process. The HSE intends to pursue its internal audit process notwithstanding that correspondence.

That concludes my opening statement. Together with my colleagues, I will endeavour to answer any questions the committee might have.