John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Before we begin, I remind members, witnesses and those in the Public Gallery to turn off their mobile telephones as the interference from them affects the sound quality and transmission of the meeting. I wish to advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give the committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence.

Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the House or an official by name or in such a way as to make him or her identifiable. I remind Members of the provisions within Standing Order 163 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policies.

I welcome Mr. Tony O'Brien, director general of the Health Service Executive, and I ask him to introduce his officials.

Mr. Tony O'Brien:

I am accompanied by Dr. Geraldine Smith, assistant national director of internal audit in the HSE, Ms Paula Lawlor, general manager of the human resources directorate division, Ms Colette Cassidy, who is also from that division, and Mr. Ray Mitchell, who is known to the committee.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I invite the officials from the Department of Public Expenditure and Reform to introduce themselves.

Mr. Tom Heffernan:

I am from the sectoral policy division, and I am accompanied by my colleague, Mr. Peter Brazel, from the remuneration and industrial relations division.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I invite Mr. Tony O'Brien to make his opening statement.

Mr. Tony O'Brien:

I thank the committee members for the invitation to be here today. As they will be aware, we recently submitted to the committee a copy of the HSE's internal audit report, entitled Internal Audit Report - Section 38 Agencies Remuneration, which is the subject of today's hearing. I do not propose to go into the detail of the report in my opening statement as we will discuss it but I would like to make the following points.

Between March and November 2011, the HSE, at the request of the Department of Health, sought to establish the level of compliance by section 38 agencies with various aspects of approved public sector pay policy. In March 2011, the HSE sought confirmation from section 38 agencies of their adherence to approved health salary scales. Later in July of that year, we requested each section 38 agency to confirm their compliance with the Financial Emergency Measures in the Public Interest Act, FEMPI, and that the performance related award scheme continued to be suspended. At that time, the HSE reiterated that, in compliance with Government policy, bonus payments should not be made. In September of 2011, the HSE sought confirmation that section 38 agency chief executive officers were not in receipt of additional remuneration for any services or duties required by virtue of their role.

That was followed up in October 2011 when we sought information on allowances and regrading and whether they had appropriate approval. Later in November 2011, we sought confirmation of compliance with the one person, one salary principle that board fees should not be paid to public sector employees who sit on their own organisation's board or the boards of other public sector organisations.

Between March and May 2012, there were media reports that executives in a HSE-funded agency were in receipt of additional remuneration and a HIQA report identified that an executive in another HSE-funded agency was in receipt of additional remuneration. In May 2012, the HSE wrote to the section 38 agencies requesting that they provide the HSE with the remuneration details of senior managers employed or contracted by the agency, including pay, allowances, grants, bonuses, foundation payments and payments from any other body or organisation to the individual managers. The human resources section of the HSE received the requested information from the section 38 agencies.

In June 2012, the then CEO of the HSE requested HSE internal audit to undertake a review of the remuneration paid by section 38 agencies to their senior management. The audit identified significant key findings, which we will discuss during the hearing. The auditor's overall assessment of the control environment was that it was considered to be seriously inadequate due to the significance of the issues identified. The internal audit report, which was presented at a meeting of the HSE board on 23 July 2013, made 22 recommendations to address the issues and HSE management unreservedly accepted the recommendations and immediately set about putting into action the recommendations in conjunction with the Department of Health. To date, nine of the 22 recommendations have been fully implemented, a further eight are in progress and five have been identified as superseded. A copy of the status update on the recommendations in the report was previously provided to the committee on 14 November 2013.

In response to a number of the recommendations contained in the audit report on 27 September 2013 the Department of Health, following consultation with the Department of Public Expenditure and Reform, issued Circular 11/2013 on compliance with health sector pay policy as it applies to the health services and in particular to those bodies funded by the HSE in whole or in part. The circular reflects Government policy on senior public service pay. The policy makes it clear that bodies funded under section 38 of the Health Act 2004 may not supplement approved rates of remuneration either with Exchequer funding or non-Exchequer sources of funding. The Department of Health circular was issued to the health sector by the national director of human resources by way of HSE HR Circular 016/2013 on 30 September 2013. This communication issued to the CEOs of the section 38 agencies. It included a copy of the audit report and sought confirmation of compliance with the terms of the Department of Health circular. Agencies were requested to confirm their unequivocal confirmation of compliance by 28 October 2013 and were advised that failure to provide a reply by that date would be considered an unqualified confirmation of compliance with the pay policy.

By 28 October 2013, responses had been received from 33 of the agencies, with a number of agencies responding with a holding position stating that additional time was needed to consider the implications of the circular. Some agencies also identified the need to seek legal advice in respect of existing contractual arrangements. On 5 November 2013, the national director of HR sent a further letter to agencies that had responded with a holding position. This letter reiterated the requirement to deal with this issue as a matter of urgency and requested a comprehensive response no later than 19 November 2013. On 22 November 2013 the national director of HR wrote to five agencies that had not provided a response to the initial letter in September, which indicated unqualified compliance, requesting that for completeness and in an effort to avoid any confusion they would provide a formal response to the confirmations sought by return. Of the 42 responses received to date, 30 agencies have categorised themselves as compliant and 12 non-compliant. Of the 30 confirming compliance it should be noted that seven agencies are considered as being in compliance; 15 agencies indicated remuneration being paid which is not in compliance with the pay policy; seven agencies were identified through the information provided to internal audit as paying non-compliant remuneration; and one agency submitted formal approval from the Department of Health for the non-compliant allowance being paid. To date, one agency has not yet responded.

For the avoidance of doubt, my position on this matter is that the HSE will deem to be non-compliant any agency that has one or more employee whose pay does not conform to health pay policy. Some agencies currently claim to be compliant while at the same time identifying individual exceptions. For this reason a further process of verification and clarification is required for agencies categorising themselves as compliant where there is recorded deviation from the pay policy, and until the situation in each organisation has been fully verified, none of these organisations can be deemed fully compliant. Further action will be taken by the HSE to ensure the full implementation of the provisions of the health sector pay policy as a matter of priority, and in this regard we intend to work with each agency to ensure compliance with Government pay policy.

As set out in section 7 of the pay policy, if an organisation wishes to make a business case for the continuation of an unapproved allowance, it is open to it to do so and any such cases will be considered by the HSE, with the involvement of the Department of Health and the Department of Public Expenditure and Reform. A business case will also be required for the continued payment of allowances which are not encompassed by or in line with the Department of Health consolidated salary scales but which may have been sanctioned in the past. There has been much media focus on the individual recipients of payments encompassed by this audit report. Our focus is on the governance of the agencies that have acted, or in some instances may have acted, outside their authority in inappropriately offering and then paying amounts that are neither sanctioned nor authorised. It is those who purported to authorise such payments rather than those who received them who have serious questions to answer.

I would also like to refer briefly to the speculation in the media about the timing of the HSE's provision of the internal audit report to this committee and in particular the manner in which it was presented to the committee, namely, during the committee's examination of the Comptroller and Auditor General's chapter on medical cards on 14 November. I wish to state categorically that such speculation is without foundation. The facts are simple. The HSE had been in receipt of two freedom of information requests from the media for the release of the report. In addition, the Department also had a freedom of information request from the media for the report as well as all correspondence between the Department of Health and the Department of Public Expenditure and Reform relating to the matter. The material was due to be released in compliance with freedom of information legislation on 15 November. It was important for the HSE, as a matter of due respect to this committee and the Oireachtas, that the committee would be provided with the report before it appeared in the media. Accordingly, we provided the report to the committee on 14 November on that basis. I referred to that in my opening statement on the day. That concludes my opening statement and, together with my colleagues, we will endeavour to answer any questions members may have.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Can we publish the statement?

Mr. Tony O'Brien:

Yes.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Mr. O'Brien is very welcome. I thank him for attending today to answer questions. When did the payments begin?

Dr. Geraldine Smith:

What we have ascertained is that the payments appear to have been in pay for some time. The level of the audit did not go into when they were paid. One of the issues we looked at was to try to ascertain when they were approved. From the audit report, it is clear there was a distinct lack of documentation. We cannot say for definite when the payments commenced, but it is fair to say they probably were in pay for some time.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

When Dr. Smith says "some time", does she mean a number of years?

Dr. Geraldine Smith:

Yes, a number of years. The internal audit reports seems to suggest that it was an issue going back at least to 1996 or thereabouts.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

It has been ongoing since 1996. Who audits the section 38 agencies?

Dr. Geraldine Smith:

It is important to state that section 38 agencies are independent entities that are funded by the HSE in regard to the services they provide on behalf of the HSE. Some of them are statutory bodies, for example, St. James's Hospital, Beaumont Hospital and perhaps the Dublin Dental University Hospital, but the rest of them are independent entities with their own boards of independent members, their own management teams and external auditors.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I appreciate that. Are they companies limited by guarantee?

Dr. Geraldine Smith:

No, there would be a range of company types.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

What is the range?

Dr. Geraldine Smith:

Some could be limited by guarantee, others are companies in their own right and others are set up by statute.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Are they all audited externally?

Dr. Geraldine Smith:

Absolutely. That is one of the key controls on which the HSE would rely. We have what are known as service arrangements with the agencies and one of the key issues is that they provide audited accounts to the HSE. Those accounts go to the various line managers responsible for the business relationship with them.

They would certainly rely on the true and fair view external auditors of those agencies provide in those accounts.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

What do those service level agreements state about payments in excess of the maximum? I understand the section 38 agencies are linked to the Health Service Executive pay policy, the Haddington Road agreement, the Croke Park agreement and so on. What does a service level agreement state about pay policy?

Dr. Geraldine Smith:

The service level agreement is very clear about pay policy. I should say that the HSE put a lot of work into developing its governance framework with the agencies, and from 2009, the HSE started to revise the arrangements because the Deputy may recall that the former health boards would have had different ways of doing things. Some had service agreements; others did not. There were different standards and so on, but the important point to bear in mind is that, in 2009, the HSE engaged in a process with the agencies to develop a governance framework. The service arrangements were put in place in 2010. The HSE went back again, in consultation with the agencies, and put a revised, enhanced service arrangement in place for 2011.

The Deputy is asking about the provisions for pay. The service agreement for section 38 agencies is very clear. Section 3.2(c)(v) states that a provider shall "not pay nor subsidise salaries [etc.] which exceed those normally paid within the public sector". There is a further provision at section 16.5 that: "The Provider will adhere to the consolidated salary scales where they apply and is not authorised to pay salaries in excess of the consolidated scales for approved grades." It is quite clear in that respect.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Some of the allowances are sanctioned. Who sanctions them? I presume it is the board of the various section 38 agencies. What is the timeline in which the organisation can respond on their allowances? I refer to the ones that have not responded or those that are not compliant.

Dr. Geraldine Smith:

I will hand over to my human resources colleagues in that respect.

Ms Paula Lawlor:

Obviously, we are looking to effect the provisions of the health sector pay policy which we issued on 30 September. This is a live process we are in and we are still receiving responses. What has been put forward today in the opening statement is the current position, and the Deputy will notice from that that a large majority of the organisations consider themselves compliant. However, they are paying allowances that are not in compliance with the health policy. We will be putting in place a rigorous verification process with those agencies to seek the detail behind the allowances. Some of them suggested they would have had prior approval, perhaps from the Department, that they are legacy issues or others they put in place themselves for which they did not have approval. It requires more investigation from us because as we have gone through the process, even from the time of the internal audit report, which started in 2012, other issues have cropped up.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thought this was first diagnosed in 2008. Is that correct?

Dr. Geraldine Smith:

No. What I said was that, in 2008, the HSE put in place revised service level arrangements with the agencies but, in the internal audit report, the Deputy will see there were certainly indications from the Department to the HSE that there could possibly be problems.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

When was that made available? Was that in 2008 or in 2012?

Dr. Geraldine Smith:

That was 2008. Essentially, that-----

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

This is now 2013. Almost €4 million has been paid out, and I understand most of them continue to be paid. The HSE has an extremely difficult budget, which I am sure I do not have to tell the witnesses about. Most of these section 38 agencies deal with disability. As we know, that budget has been rigorously cut. Donations have been given to section 38 agencies from genuine people in every community, yet this is still continuing. That is crazy.

Mr. Tony O'Brien:

The Deputy's point that those who have responsibility for making those payments have had fair notice and that they have all signed service level arrangements which make it explicitly clear is well made. They have been in a process involving internal audit for more than 12 months. The policy has been made abundantly clear to them and at this point we are still not satisfied that the self-declarations of compliance are valid.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Are they continuing to be paid every month by the HSE? All of them are being paid a substantial sum of money. A total of €1.6 million alone is paid to section 38 agencies. I do not know how much is being paid to section 39 agencies but that is almost 11% of the HSE budget. They are not in compliance. Are they still being paid to deliver services?

Mr. Tony O'Brien:

At the present time, yes. If we were to stop funding, services would end and that would not be the desired outcome. What we want to do is bring the entities into compliance. Clearly, as we approach a new service year we will be taking into account the extent of their co-operation and compliance as we commence new funding arrangements with them. They are very clear that that is likely to be the case.

The Deputy's question is about what happened since 2008. I am not in a position to describe that in detail as I was not there. It is true to say that if we look back, it is possible that a more robust approach could have been taken. That very robust approach has been in train now for well over a year. The product we are discussing, the audit report, is part of a process of cleaning house in regard to these matters and we will certainly be getting to the end point of that in terms of ensuring agencies understand their compliance obligations and bring themselves into compliance.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is there a standard chart of accounts for all the section 38 agencies?

Mr. Tony O'Brien:

No. There would not be a standard chart of accounts.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Why not?

Mr. Tony O'Brien:

There is not a standard chart of accounts throughout the health service in general. They are all audited in accordance with their own separate stand-alone chart of accounts.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I understand they will be under the Companies Act but if they are covered under a service level agreement, I would have thought it would be part of the audit process to ensure the service level agreement is being enacted.

Mr. Tony O'Brien:

They make returns that align their expenditure with agreed standard headings but that is not what is audited by their external auditors.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is that something the HSE will examine with a view to putting in a standard chart of accounts where we can see everybody's salary and what is being paid from where?

Mr. Tony O'Brien:

Part of our finance reform process, which we discussed in a different context two weeks ago-----

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I appreciate that.

Mr. Tony O'Brien:

-----will bring about a standard chart of accounts and a standard system which is to be applied through all statutory services and all the substantially funded services. It is our intention to get to that place. As I mentioned at that time, we are developing a business case which we will be discussing with our colleagues in detail in the new year to implement that system.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am aware of that. As Mr. O'Brien knows, I was here that day.

Mr. Tony O'Brien:

Yes.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Will that extend to section 38 and section 39 agencies?

Mr. Tony O'Brien:

It will extend to section 38 agencies. At this point it is important to recognise there is a significant distinction between section 38 and section 39 agencies, which were not the subject of this report. We have received correspondence on this matter just this week from the Department of Health which makes it clear that, formally speaking, they are not subject to public pay policy but we will be writing to all of them, as requested by the Department, asking them to have due regard to public pay policy. Clearly, that is different from an absolute obligation to abide by public pay policy. While many of the section 39 agencies may be in receipt of substantial public funds, they may not, in the majority, be funded by the HSE.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is it correct that many of the section 39 agencies are covered by the pay agreements that apply to the Haddington Road agreement?

Mr. Tony O'Brien:

No. They are asked to have regard to it but they are not formally covered by public pay policy.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That does not seem to be understood on the ground from my understanding of it. Will the HSE make available the details of the non-compliant organisations?

Mr. Tony O'Brien:

We will. I have a list which I am willing to share with the Deputy at a point the Chairman deems appropriate.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Have any other business cases been submitted to the HSE and are they being considered with regard to making-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Before Mr. O'Brien answers that question, in his opening statement he referred to different agencies that may not be in compliance, and he mentioned one that did not write back. Can we have the names of the agencies-----

Mr. Tony O'Brien:

Yes. We have a sheet that gives the names in each category that we can distribute.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

-----and whether they replied, are compliant or ignored the HSE.

Mr. Tony O'Brien:

Yes. I will ask Mr. Mitchell to provide it to the clerk.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Can that be circulated now to the members?

Mr. Tony O'Brien:

Yes, certainly.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Are business cases being submitted that make these allowances appropriate?

Ms Paula Lawlor:

We have not received business cases yet. I refer the Deputy to section 7 of the pay policy that issued which states that section 38 providers are required to cease supplementing approved rates for remuneration and where, if they have an allowance they believe should continue, they should make a business case for that. If not, it should cease.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The HSE has not yet received any business case.

Mr. Tony O'Brien:

One has been received.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Can we get details of that?

Mr. Tony O'Brien:

I can tell the Deputy the agency, which is the COPE foundation.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Can we get the details of the business case it made?

Mr. Tony O'Brien:

I am not sure if we are in a position to do that at this stage.

Ms Paula Lawlor:

Not at this point.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Does Ms Lawlor not believe that is of public interest?

Ms Paula Lawlor:

It is, but we are in a live process, as I said earlier, trying to go through all the responses we have received. We have not reverted to COPE on its business case or had any further engagement. Therefore, I do not think it would be appropriate to give the documentation-----

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Ms Lawlor has received it but she has not made any decision on whether it is appropriate.

Ms Paula Lawlor:

Yes.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Can the witnesses supply a breakdown of the details of the funding that is being made from private sources and from what sources? Is funding from shops, car parks or donations sponsoring these allowances?

Dr. Geraldine Smith:

What we know from an audit perspective is that the agencies, in their returns to me as part of the audit process, identified certain elements of pay which were funded privately. Not all of them stated or indicated what were those private sources. There certainly were some general descriptions, such as being from fees, licence income and so on, but we could not state specifically what are those private sources except-----

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Does the HSE intend to request that information from the agencies?

Dr. Geraldine Smith:

That probably will be part of the human resources, HR, process that is ongoing at present, that is, the validation of the allowances and so on.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I would have thought the HR process was to identify whether they were entitled to it but as for the origins of the money, I would have thought that would be part of the audit process.

Dr. Geraldine Smith:

We can state that as part of the audit process, we specifically asked them what elements were paid from public sources and what elements were paid from private sources.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

However, in respect of private sources, no distinction was made as to whether the money came from income generated on the premises, such as a shop or a car park, as opposed to a donation .

Dr. Geraldine Smith:

As I stated, they gave some indication as to whether it came from fees, licences and so on. However, they did not give a breakdown and again, that is quite a generic term.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I think it would be of interest to the public to know where the money came from in respect of the different agencies, especially those people who are making contributions to specific agencies.

Dr. Geraldine Smith:

Absolutely, I agree.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Consequently, I would appreciate it were that information requested of them.

Are some of these allowances being called salary? Some apparently are motor allowances. Are some of them deemed to be salary or to be bonuses? Is it known how they are being treated and why? If they were deemed to be bonuses, is there a sample as to what such bonuses were related?

Dr. Geraldine Smith:

The table on page 5 of the audit report identifies the allowances those agencies have returned to us, as well as the various categories. The Deputy will see there are 36 allowance types paid by the 36 agencies to 191 managers, which is approximately 53% of the managers they returned. All we know is they have set out here the types of allowances that are in payment. Some have indicated that they were approved by their boards and so on. We have not drilled down into the individual allowances that individual agencies have stated they are paying. The purpose of this exercise was to validate and to identify in the first instance what allowances were being paid in the section 38 agencies, as well as to identify whether there were any bonuses or pension contributions and whether any or all of these were from private or public sources. It was an attempt to identify what was the state of play, because there had been quite a lot of information about these allowances and the possibility that they were being paid.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

What actions are being taken in respect of the Health Information and Quality Authority, HIQA, report on Tallaght hospital? Is that additional remuneration, which I understand to be €150,000, still being paid?

Mr. Tony O'Brien:

The HIQA report into Tallaght hospital, which was about something else, uncovered the fact that a parallel payroll was in operation in that location. We are satisfied this arrangement is no longer in place. There were changes of personnel and the board of that institution was reconstituted by the Minister, Deputy Reilly, in the immediate aftermath of that event. We are satisfied that governance arrangements there have substantially improved from where they were.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is action being taken about that payment in respect of the person who was being paid? Was it appropriate or was it approved?

Mr. Tony O'Brien:

It was not in accordance with approved scales but our understanding is that it was part of a contractual undertaking that had been entered into by the board of that institution at that time. I made the distinction in my opening remarks between those who approve and arrange for payments and those who receive them, who often, in effect, were innocent parties. If persons are recruited and offered entrance salaries, they are not always in a position to know whether that has been approved by the relevant authorities. Consequently our focus is very much on the governance aspect of this, rather than on the individuals who were receiving the payments.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

How long more do the witnesses think it will take before this situation is resolved and there will be transparency in all section 38 institutions? How long before people receive their fair pay to which they are entitled?

Mr. Tony O'Brien:

We are working as quickly as we possibly can to bring that about. We have set a number of deadlines this month, each of which now has passed. We have shared with the committee the current status with regard to each of those. We intend to take a forensic look at the returns we have received, particularly where the evidence of the audit report and other evidence available to us suggests the self-declaration of compliance may not be valid. We will consider exactly what should be our next steps as all this information becomes available but we certainly intend to address this in the context of the 2014 service level arrangements if it has not been resolved before then.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

When looking at self-declaration, do the witnesses not think it might be advisable to send out an audit team? As this pertains to 44 agencies, it would not take a huge number of staff members to conduct such audits.

Mr. Tony O'Brien:

No, that in fact is our intention. If it is necessary to satisfy ourselves, then formal audit will occur. However, we are waiting just long enough to give each agency the opportunity to self-declare appropriately before we take that next step.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I encourage the HSE to ascertain, as quickly as possible, whether it can get that audit out there because the public requires transparency in this regard. If they are self-regulating, that could take a lot of time and one will never know for sure.

Mr. Tony O'Brien:

Unless we are absolutely satisfied, we will seek absolute unambiguous evidence of compliance and until we have that, we will regard them as being non-compliant and will treat them accordingly.

Áine Collins (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Okay. I thank Mr. O'Brien.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I welcome Mr. O'Brien and his colleagues to the meeting and thank them for having submitted - in the last few moments - this schedule summarising the level of compliance to members. Essentially, the HSE's documentation states that out of the 43 agencies that have replied, only seven are fully compliant. As far as the HSE is concerned, 36 of the 43 are not yet compliant . Given the internal audit report was completed on 15 March and several months have passed, could more progress had been made with the aforementioned 36 agencies? Is the HSE satisfied at the rate of progress in recent months? Mr. O'Brien provided members with an update on the implementation of the 22 audit recommendations. In light of the recent information the HSE has received, does that schedule require revision regarding the level of progress? Some agencies were indicating compliance would be achieved by certain dates but in light of the more recent information received, this appears to have been moved somewhat. I accept the report the HSE gave to the committee on 14 November probably was valid up to that time. However, has the HSE subsequently received any information that might oblige it to revise that report? Essentially, is Mr. O'Brien happy with the HSE's progress in respect of the aforementioned 36 agencies?

Mr. Tony O'Brien:

I refer to the timing of the initial completion of internal audit's report, its submission to our audit committee and then to our management team and then on to our board in July. This was run in parallel with one of the key recommendations, which was the requirement for a clear restatement of public pay policy, which our colleagues in the two Departments provided to us in the latter end of September. In that context and with regard to the actions we have been taking since then, I am satisfied with progress. I of course would be happier were a greater number of these agencies in a position to satisfy us of their compliance. However given that the clear statement of policy against which we now are judging compliance was available to us at the end of September - I believe it issued on 30 September - the rate of progress since then has been reasonably good. We expect that more of these agencies will be in a position to assure us of compliance than have yet done so. Equally, however, I expect that we will be obliged to go the next step with a number of them as well.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What is the next step?

Mr. Tony O'Brien:

The next step is as I discussed with Deputy Áine Collins.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Okay. In looking at the report, the seven about which I have concerns are the seven agencies that indicated compliance but for which the HSE's internal audit report states the case is otherwise. They are Cheeverstown House, St. James's Hospital, St. John of God's, Stewarts Hospital, the Carmen Centre in Leopardstown Park Hospital, St. Vincent's Hospital and the Royal Victoria Eye and Ear Hospital. It is extraordinary that the aforementioned seven agencies are telling the HSE they are compliant, when from its internal audit the HSE knows this is not the case. What does that say about the level of confidence and trust because much of what is being discussed here concerns verification? Can the HSE really accept an assurance from organisations that tell it they are compliant when the executive knows this is not the case? What does that do for the HSE's level of confidence in such organisations?

Mr. Tony O'Brien:

To an extent, we must keep an open mind and we have not reached our final judgment. However, we are stating clearly that at this point, we are not judging them to be compliant. We must acknowledge and record the fact they are self-declaring themselves to be compliant in circumstances in which we believe more verification, more information or different information is required.

We will be going through that process with them. They are aware that we do not at this point accept their declaration of compliance.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I appreciate that.

Moving on to what I would call the specifics of income from top-ups or private sources, would Mr. O'Brien be satisfied that these 44 organisations are tax compliant and have tax clearance certificates?

Mr. Tony O'Brien:

I would draw a distinction between me being satisfied about their tax compliance and their possession of a tax clearance certificate. The provision of a tax clearance certificate is a condition of their service arrangement and they are required to produce that as part of the process. At the point in time each year when they complete their service arrangement, they are required to provide us with a tax clearance certificate. Beyond that, I do not have a basis upon which I can separately verify their tax compliance.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Reading a little into what Mr. O'Brien stated, he is saying they produce a tax clearance certificate but he has some niggling doubts as to whether they are tax compliant. Is that the gist of it?

Mr. Tony O'Brien:

I have no basis for expressing a doubt. Neither do I have any basis for expressing the contrary.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

On the individuals highlighted in the report, has the HSE gone the next step to see some of these P60s? This is the question I want answered. Did what is now being described as private top-up income appear on the main P60? Do the staff concerned have separate employers for these top-up payments? Would there be differing practices as to whether some of the funds came from the foundation or from the sweet shop, as the case may be? Some of the payments have been described as funds from private sources. They say, maybe, it has to do with private practice, and that might be separate self-employment. I ask them to talk about the P60s. In the case of all of these top-up charges, did the universal social charge, PRSI and pension levy apply? When the Financial Emergency Measures in the Public Interest, FEMPI, Act pay cuts were being introduced, did that apply only to their publicly known and stated salary or did they apply to their total payment from these organisations, including the top-ups?

Dr. Geraldine Smith:

I can answer part of that question on the P60s. It is to do with the validation process of the audit. As the committee will be aware, I circularised the agencies on 25 June last at the start of this audit and I provided back to the agencies the information that they had provided to HR. I asked the agencies if they could please review this information and confirm to me that it was correct or, if they would like to update it, to do so. I asked them to confirm that what they were providing me with was the totality of the information - the pay remuneration package. I also asked them about pensions, bonuses, travel allowances, board directors' fees, etc. I also ask them to confirm which elements of the information they were providing came from public and from private sources. That information came back. As Deputy Áine Collins mentioned, it is self-declaration. I reviewed that and analysed it.

One of the validation tests I did on that was to ask the agencies then to confirm to me what figures they had provided back to the Revenue in terms of the gross income for the individual persons. I did not want net figures or anything like that. It was the gross, what was chargeable to tax. That exercise took some time. Agencies came back with the information.

I did a reasonableness check on what they had originally provided and what they were saying they had returned. That indicated one or two issues for me where I was able to go back to the agencies to ask could they please explain because I did not understand why there is a differential, and they were able to explain. In one particular case, they came back and said they had under declared to me and provided me with a further private allowance. Overall it was a reasonableness check. That, essentially, represented what went through the payrolls of those agencies.

I also asked the agencies to confirm how many payrolls they were running, again, cognisant of the fact that the HIQA report on Tallaght had identified an external payroll, and they came back to indicate the number of payrolls. Practically all, except one agency, have one payroll. There is one agency which identified that it has three.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Dr. Smith did a reasonableness check, which, for the non-accountants, is where the overall picture of what she got seemed to make sense with where she felt it should be, rather than a specific check. Is she satisfied that the reasonableness check, even though it was not exactly specific, is accurate enough?

Dr. Geraldine Smith:

I am satisfied that what they returned they could stand over and what they had returned to me they had returned to the Revenue Commissioners through their payroll.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

In other words, the top-up payments from a sweet shop or car park were on their mainline P60s.

Dr. Geraldine Smith:

Yes.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That is an important point. Did the FEMPI Act pay cut apply to the basic salary or did it apply to the additional private income as well?

Ms Paula Lawlor:

It should apply to all of the income. I am not too sure, through the internal audit, if that detail was given. Obviously, any top-ups should be added to the base salary and it should all be subject to the FEMPI Act.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Was that specific question requested? I accept it is easy for me to ask the question now. Did they specifically look at whether the FEMPI Act changes affect basic salary only or whether they included the extra income from the private sources by way of allowances?

Dr. Geraldine Smith:

This was information that they would have provided as payroll as at 2011. As I say, the audit would not have looked at the FEMPI Act cuts. Essentially, they returned information stating that this was the pay scale that they were on and also provided information in relation to any bonuses or privately-funded elements.

Mr. Tony O'Brien:

We would not regard as compliant any entity that has not subjected the pay that was declared in the internal audit to the subsequent FEMPI Act cuts.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We are impressed with the work of Dr. Smith we received and we are happy with the report. One issue I would ask her to revisit is the question of whether the FEMPI Act cuts implemented in the case of these additional payments that would have been implemented across the board. I accept she asked for the figures at a point in time but that might place a question mark over the agencies' confirmed compliance. They might have been compliant with public sector pay guidelines but I would be happier if it could also be confirmed they were compliant with the FEMPI Act. Maybe that is something she did not deal with in the audit but it would be helpful.

Let us be clear about this. We all have met some of the 100,000 staff in the HSE who are aghast. I refer to staff on the front line of home help and other areas. I will not go through all of that. They are aghast that somebody at a higher level is getting these top-up payments that are coming from the health budget. In fairness, not only to the public but to the morale within Mr. O'Brien's organisation, they would like to see if they suffered, which word "suffered" I use advisedly, the FEMPI Act cuts that everybody else in the organisation who is being paid out of the health budget had applied to them. Dr. Smith might have to come back to us in that regard.

Dr. Geraldine Smith:

As part of the HR exercise, that will certainly become apparent. The one thing I will say is that if you look at the audit report, there is a table in there which sets out the base salaries of the various CEOs of the agencies and one can certainly see consistency among them. That indicates that the salaries are all within certain bands and that the FEMPI Act would have applied to that.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

From now on?

Dr. Geraldine Smith:

No.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

At the time?

Dr. Geraldine Smith:

At the time.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I appreciate that.

In general, do the section 38 organisations get a payment from the HSE on a monthly basis, a weekly basis or quarterly? What is the payment frequency? I ask the question because there are organisations that are not responding to the HSE's letters. Will those organisations get their cheque on Monday next regardless? That is really the question. They must feel some bit of public accountability here.

Mr. Tony O'Brien:

The payment frequency depends on their size and scale.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Give us the gist.

Mr. Tony O'Brien:

A very large section 38 operation with a multi-----

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Million.

Mr. Tony O'Brien:

Some section 38 operations would have budgets in excess of €200 million. I refer to the large hospitals. They could be cashed more than once per week.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

More than every few days, in other words?

Mr. Tony O'Brien:

I believe that to be the case, whereas smaller agencies – some would be much smaller – would involve cashing in on a more periodic basis.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Maybe once per quarter.

Mr. Tony O'Brien:

It would vary quite considerably.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Let us consider some of the larger hospitals such as the maternity hospital that has attracted a lot of publicity, Holles Street. It has an income from the HSE in the order of €43 million. I have looked at its foundation's summary of the figures. Some 70% of its funding comes from the HSE. Typically, would an organisation of that scale receive payments weekly, every few days or monthly? Could we have a little more accuracy?

Mr. Tony O'Brien:

I have not checked this recently but my expectation is that, at that scale, it would probably be twice per month.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. O’Brien should remind those people who are not replying to his letters of that fact. He should make that point.

Mr. Tony O'Brien:

Sure.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Let me move on to two final points. Were the appointments of the people getting the top-ups cleared by the HSE? Did the board say it was proposing to appoint such a consultant as the master, for example? Were the appointments approved by the HSE?

Mr. Tony O'Brien:

The individual would not have been subject to approval. If a funded body coming under section 38 has a vacancy for a CEO, it has to have approval before it can refill the post.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

But they did not come back to Mr. O'Brien with the names subsequently and said they proposed to appoint certain individuals.

Mr. Tony O'Brien:

No.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That is not the procedure.

Somebody asked when these payments all started. One of the organisations, the South Infirmary-Victoria University Hospital in Cork, got approval for a non-standard allowance. It was on 21 April 1995, almost 20 years ago. Is that still being paid to the person in that post, or is it the same person who received the approval? It is the only evidence I have seen how long a period is in question. We all know the payments dated back to 2005 in Tallaght but here we have a figure dating back to 1995. Are there many other payments that have been made for that duration?

Mr. Tony O'Brien:

It is quite likely there are. I think the report suggests somewhere that the vast majority of such payments actually predate the establishment of the HSE. That would date them from before 2005, although their continuation, their application to persons who have come into posts since that time, would make them constitute a new event, in a sense. There may be a continuation of a prior practice but it is a new event.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Let me outline the last topic I want to raise. Has Mr. O'Brien any concerns regarding public procurement guidelines? I will pick an example that has been mentioned in the newspapers a lot. I am reading from a document stating the National Maternity Hospital has outsourced some of its obstetric scans to a private clinic next door that is run by a partnership including the master and other consultants. Would there be a conflict of interest in terms of public procurement? Would any of the individuals be on the board of directors of the foundation?

Mr. Tony O'Brien:

Certainly, it is possible for arrangements like that to constitute a conflict of interest. As matters like that come to light, it is quite likely that we will be specifically investigating them.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Last night I printed off from the website extensive documentation on the organisation called Merrion Fetal Health. We all know the organisation we are talking about. I am not suggesting there is anything wrong but believe it is interesting that the hospital all the consultants are working in does not have the resources to carry out the obstetric tests although all five consultants are able to put a partnership together in a clinic next door where the tests can be carried out through a private business arrangement. Why this could be valid and while the price might be right, is there any way of knowing? The National Maternity Hospital would be paying taxpayers' money to the organisation. Are such arrangements put to tender? Mr. O'Brien said the HSE receives the audited reports of these companies. Would contracts entered into between senior executives or members of the board of the foundation and third parties have been listed in the financial statements? That would be normal. Has it been highlighted in the organisations' financial statements that Mr. O’Brien has but which we have not been able to see?

Mr. Tony O'Brien:

I cannot answer on that specific case today. Generally, one would find many instances where consultants, in accordance with the terms of their contract, band together in respect of their private practice to establish private clinics, often adjacent to the public facility. Sometimes they are even within public facilities. The specific issue the Deputy is raising is the procurement by a funded entity of services for public patients from a private entity in which they may have a material interest. That is a different matter and something we will have to examine.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Has that been examined yet?

Mr. Tony O'Brien:

Not yet, no.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Could that be an issue of wider application than the section 38 arrangements? Could it happen in some of the normal HSE public hospitals throughout the country where there are groups of consultants with private practice arrangements? We have no problem with that in that there is public health and private health in the country we live in. There is no issue with either once there are proper lines of demarcation and transparency.

Mr. Tony O'Brien:

Any payment to a private provider - there are certainly some outsourced services in public hospitals – through a HSE entity would be subject to full rigorous public procurement procedures.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

However, Mr. O'Brien cannot say that about the case I am talking about.

Mr. Tony O'Brien:

Not here and now.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. O'Brien might look into it and revert to us. I will leave it at that.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Deputy Fleming asked about the tax clearance certificates and Mr. O'Brien stated they must be produced. For whom must they be produced? Rather than answering the question as to whether the entities are tax compliant, the delegates should state who actually sees the tax clearance certificates.

Dr. Geraldine Smith:

Those tax clearance certificates would actually come into the relevant business manager in the HSE who is responsible for the business relationship with the agency. They would actually have sight of a valid tax clearance certificate.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Can Dr. Smith state that each and every agency has provided a tax clearance certificate rather than suggest evidence of tax compliance? The latter is the subject that Deputy Fleming asked Mr. O'Brien about. Has a HSE officer seen each and every tax clearance certificate involved? Are they up to date?

Dr. Geraldine Smith:

Payments from the HSE cannot be released until tax clearance certificates are in place. Our AP systems are set up such that there has to be a valid tax clearance certificate before payments are processed.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I take it, then, that the HSE has seen all of the tax clearance certificates.

Dr. Geraldine Smith:

I would not have seen them all personally.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Not Dr. Smith, but those concerned.

Dr. Geraldine Smith:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The second question arising from what Deputy Fleming said concerns the Department of Public Expenditure and Reform, which is being represented today by Mr. Peter Brazel. Has he provided any paper trail in relation to approvals from 1995 to the HSE or the Department of Health? One of the issues concerns who approved the payments. If approval was sought, it was presumably sought in the days in question through the health boards and, after 2005, the HSE. Would any of these entities have written to the Department of Health or would they have written to the Department of Public Expenditure and Reform? If so, how much information has the Department of Public Expenditure and Reform given to the Department of Health on the specific question as to how many of the agencies wrote to ask for approval? It seems to me from various circulars that the Department of Public Expenditure and Reform, the Department of Health or the HSE has written to the agencies stating departmental policy on issues surrounding salary payments. What is the role of the Department of Public Expenditure and Reform in this?

Mr. Peter Brazel:

There are two points to be made. First, the nature of the payments, as we understand them as part of the internal audit, confirmed that they were unsanctioned payments. Therefore, the expectation of any paper trail leading to my Department would be unlikely in that circumstance. The normal process for confirming the consolidated salary scales for the health sector is engaged in through the Department of Health, which would provide the consolidated salary scales which form the approved salary scales for the health sector.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

If the Department of Health wanted approval or was asked for approval, would it not have to mention it to the Department of Public Expenditure and Reform?

Mr. Peter Brazel:

The approval would be based on the sanction of the Minister for Health with the consent of the Minister for Public Expenditure and Reform.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is Mr. Brazel telling the committee there is no paper trail?

Mr. Peter Brazel:

There is no paper trail regarding the payments identified in the internal audit.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Does this relate to the same question about circular No. 89 that we discussed with Mr. Brazel last week?

Mr. Peter Brazel:

I would not think so.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It is important for the committee to bear in mind there is no paper trail granting permission from the Department of Health for any of these payments.

Mr. Peter Brazel:

That is correct.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Can the Department of Health act on its own initiative and sanction them?

Mr. Peter Brazel:

No.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. Brazel is not aware of any sanction bar the single one we have been discussing.

Mr. Peter Brazel:

Yes. As was stated in the pay policy statement from the Department and ourselves, the normal process would be for one of these agencies to make a business case to the HSE, Health Service Executive, for an additional payment. It would be sent to the Department of Health which would consider it.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is there any record in the HSE, or in the former health boards as this goes back to 1995, of any business case made on the payments in question?

Mr. Tony O'Brien:

The relationship of these entities would not have been to the health boards but to the Department directly. Section 38 bodies were not part of the health board architecture.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Has the Department told Mr. O'Brien of any business cases in place since 1995?

Dr. Geraldine Smith:

I will take that question. One concern I had in carrying out the audit was that a sanction would appear from somewhere. One of the tests I carried out was to contact the Department to check through all its records on these agencies. We gave the Department the information the agencies had provided. The Department came back with three sanctions which were quite old and had nothing to do with the current information I had provided.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

How old were these three sanctions?

Dr. Geraldine Smith:

One was from 1999, another from 1995. None of them references any of the individuals’ information I provided to the Department.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Can the committee presume then that, apart from the three sanctions, no other business case was made for any of the payments in question?

Dr. Geraldine Smith:

Absolutely, yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Accordingly, all of the agencies are acting outside of the regulations.

Dr. Geraldine Smith:

Some of the agencies informed me there was verbal approval from the Department.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What is “verbal approval”? Was the name of the person who gave the approval given?

Dr. Geraldine Smith:

No, but one of the recommendations I had in the report was that any conversations in this regard should be documented on file.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

They are not documented, however.

Dr. Geraldine Smith:

They are not documented. There is no documentary evidence.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It is hearsay.

Dr. Geraldine Smith:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Surely, then Dr. Smith must tell the Department that this is not acceptable, there is no note on the file and, therefore, they are not authorised payments.

Dr. Geraldine Smith:

Certainly the recommendations in the audit state clearly approvals should be formal, documented with no verbal agreements.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Yes, there should be no verbal agreements.

Dr. Geraldine Smith:

Absolutely, yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Would hotel accommodation provided for consultants be part of this trawl of bonus payments? The committee conducted hearings over a long period on departmental expenses and prepared a report on it. It would appear we did not ask the right questions because none of this showed up. There are issues around top-up payments in section 38 bodies even though in 2011 we knew it was happening in one or two hospitals. We now know permission was sought for some of the older top-up payments.

Is there any other payment or accommodation for people in this category which might fall under the radar simply because it is not down as salary or a top-up?

Mr. Tony O'Brien:

That theoretical possibility exists. However, it is clear the type of facilitation the Chairman referred to, such as temporary accommodation, is encompassed by the overall subsistence and travel regime. There are very limited circumstances in which a detention rate can be applied. Such a payment must also have the sanction of the Department of Health with the approval of the Department of Public Expenditure and Reform.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Can the HSE ask these agencies this question? Otherwise, they will say we did not ask the right question.

Mr. Tony O'Brien:

We will take the Chairman’s sage advice on that.

Dr. Geraldine Smith:

I asked the agencies in question to verify if there were other travel allowances, car expenses allowances or car allowances as part of the audit, as well as other benefits, allowances or payments.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What about long-term accommodation arrangements?

Dr. Geraldine Smith:

I did not specify that.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We should ask for that. We did have an example of it last week.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

In his opening statement, Mr. Tony O’Brien stated, “It was those who purported to authorise such payments rather than those who received them who have serious questions to answer.” I could not agree more as I stated at last week’s meeting. We should invite in the chairs of the agencies involved to explain their case. The boards of the voluntary hospitals and section 38 agencies are responsible for approving any salary top-ups. If Mr. Tony O’Brien were in our shoes, what questions would he ask them?

Mr. Tony O'Brien:

I expect to be in those shoes before this process is over. Along this journey, there will be encounters with the boards and chairs of those agencies about which we are not satisfied. We will be wanting to establish exactly on what basis they believed they were able to approve such top-ups. If they are contending, as some of them still are, that they are compliant, then I will be looking for absolute verifiable evidence to support their compliance - in other words, the flip side of the Chairman’s questions as to what is on the files in the Departments of Health and Public Expenditure and Reform.

I will be looking for an action plan from them as to how they are going to attain compliance. I must recognise that in some instances, they will have contractual issues to overcome and it may take some time for them to extract themselves but we will be looking to ensure that public funds are not used to pay unauthorised allowances. In some instances, we have already made deductions from grants to agencies equivalent to the amount they were paying from public funds in an unauthorised way. That is only a first step but we will certainly be going down those roads.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

It is clear from reading the documentation circulated on Mr. O'Brien's behalf earlier that 43 of the agencies have responded and one has clearly decided not to. There has been no response at all. The HSE has been exchanging paper with these organisations for a considerable period of time. Has anybody paid a visit to the individuals concerned at Cork University Dental School & Hospital in respect of whom no response was received to an initial letter indicating compliance, according to the HSE's information here?

Mr. Tony O'Brien:

Nobody essentially has but our local management will be in touch with that institution concerning its non-compliance.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

But there has been none to date?

Mr. Tony O'Brien:

Not yet.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

So despite considerable effort to engage with this organisation, no response has been received? Perhaps Mr. O'Brien would clarify this.

Mr. Tony O'Brien:

I remember that the deadline was just a few days ago. We have been collating the evidence, or the information, I should say.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

That may well have to happen.

Mr. Tony O'Brien:

At this point, we have not moved to the next step. Clearly, we have also been concerned with preparing our information to be in a position to deal with the committee's questions as well. Once we have concluded our business with the committee today, we will return to the process of pursuing this matter.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

Can Mr. O'Brien say categorically that the type of allowances that have been uncovered during this audit and that have been reflected in media coverage in recent weeks - motor allowances, pension payments, private health insurance payments - are not being paid to senior management at any of the HSE hospitals?

Mr. Tony O'Brien:

I certainly can.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

Without a shadow of a doubt?

Mr. Tony O'Brien:

Yes and the reason for that is that unlike the section 38 agencies, we have direct access to that information; our internal audit regularly reviews these things; we are subject to the Comptroller and Auditor General's direct auditing unlike these agencies; and I am able to place reliance on those things. In addition, we control the payroll and can see it. We cannot see the payroll in these entities.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

From the point of view of the FEMPI legislation, I am still not clear whether Mr. O'Brien is satisfied that, for example, the pension levy has been paid in all instances. The HSE did what Mr. O'Brien called a reasonableness check but that will only show up a certain amount of global information. It will not go into the minutiae. We are all aware that health and public service workers and the services themselves have taken hits over the past few years. In the absence of payment of pension levies and the kind of salary reductions we have seen throughout the consolidated salary pay scale, we could see the development of a two-track health service in terms of payments and we do not want to see that. We do not want a situation to arise where certain doctors, nurses and ancillary staff in hospitals are required to be compliant with the FEMPI legislation while those managing the hospitals in some instances - the section 38 hospitals - are not required to be compliant. We were talking earlier about compliance and how we need to get to a situation where all of these agencies are compliant. I am assuming Mr. O'Brien will not be satisfied that they are compliant until he and all of us are satisfied that pension levies have been paid and salary cuts in the context of FEMPI legislation have been made. Is that the case?

Mr. Tony O'Brien:

Absolutely. It is completely at odds with where we should be that there is a subset of individuals who perhaps through no fault of their own have found themselves in a position where they appear to be treated differently from the general category of the other 100,000 staff who are categorised as public sector employees in the health service. It is not acceptable that there can be one rule for some and another rule for others. Based on the process we are going through, it is also clear that it is not possible for us to operate purely on the basis of trust. We now need firm - I would use the word "evidence" - of compliance. That is the direction in which we are going. Obviously, the external auditors in each case check and confirm that there is a true and fair view of the accounts and that would include tax compliance but we would need to have separate verification of the particular detail around the pension levy, FEMPI and so on.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

Can Mr. O'Brien paint a picture for the committee of the type of action the HSE intends to take over the next few weeks for those who are clearly not in compliance?

Mr. Tony O'Brien:

We want to get to a position where we have a full picture, particularly regarding those who have either not declared compliance or have declared compliance in circumstances where we have evidence or information to the contrary. We want open disclosure from them. That is the first point. We want a clear plan from each of them as to the steps they will take to achieve compliance. We will need a new basis upon verification of compliance into the future. Clearly, we see in some of the responses referred to by Dr. Smith evidence of what was perhaps in the past a nod and a wink culture of "I had a word with somebody. They said it would be alright. I haven't got documentation but sure we'll do it anyway". That clearly must be consigned to history. We have gone through a process seeking open disclosure. I am sure we have had that from some but not from others. We now need to get to a position where we are probably seeing P60s and where we are clear that there cannot be a case for parallel payrolls. Dr. Smith referenced the fact that using the statutory powers available to it, which are slightly more extensive than our powers, HIQA was able in the course of a separate review into something completely different to establish that there was a separate payroll using public funds but operated by a separate entity acting as an agent for the hospital. We need to establish how in the future we can continuously assure ourselves that those things are not part of the way this game, if I can use that term, is being played.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

What sanctions will the HSE impose on the agencies benefiting from substantial amounts of taxpayers' money if they do not comply?

Mr. Tony O'Brien:

They will certainly find, as one agency already has, that an equivalent amount will be deducted from their grant.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

Which agency has been subject to that cut?

Mr. Tony O'Brien:

The COPE Foundation.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

I think Mr. O'Brien mentioned it earlier.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Looking through the internal report by Dr. Smith, who I welcome, I can see that the person responsible for implementing the 22 recommendations is the national director of HR, Mr. Barry O'Brien. Is there a reason Mr. O'Brien is not here today?

Mr. Tony O'Brien:

He is out of the country on annual leave. We discussed whether the committee would prefer to wait for him or proceed more quickly. On balance, it was agreed we should proceed more quickly.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Our role as the Committee of Public Accounts is to ensure that the taxpayer is getting proper value for money. Section 38 agencies do very good work. I am looking at it from the perspective of the end user in terms of hospitals and the various agencies and disabilities. Side by side with that, there are difficulties with pay scales for people working in these organisations, particularly at the higher end. People are fund raising up and down the country for these agencies and they are looking for this money to go to front-line services. The HSE has written to the various organisations. From Mr. O'Brien's presentation, I can see that the HSE has written to them nine times on this issue between March 2011 and 22 November 2013, which seems a ridiculous length of time to have to write to these bodies. Why is this the case?

The report indicates that seven agencies have confirmed compliance and the audit did not identify any issues in respect of them. A further seven have confirmed compliance but the audit report indicated that further verification is required. Another 15 agencies confirmed compliance but later indicated exceptions to pay policy. One agency confirmed compliance but sought approval for a non-standard allowance. Non-compliance was confirmed in other cases by letters and issues were identified in audit that no approval was sought for deviations from pay policy. One agency did not respond. This means 36 of the 43 do not appear to be in compliance. Does Mr. O'Brien believe the Government's guidelines on pay policy are being abused by these 36 agencies and can he quantify the amount of money involved?

Mr. Tony O'Brien:

I will ask Dr. Smith to quantify the amounts. In regard to the question on abuse, I am not yet satisfied that we can be assured there is not abuse. The entire process leads me to believe there are practices which are not in conformity with public pay policy and that a variety of mechanisms, allowances and sources of income, as well as the use of statutory income, have been in place.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

These agencies appear to be ignoring the HSE. It wrote to them nine times in various forms since March 2011. What is the HSE's level of control and why are they ignoring it?

Mr. Tony O'Brien:

I would draw a distinction between the letters issued as part of our gathering information for the purposes of the audit and those issued following the clarification we received and the clear statement on public pay policy. I agree that it should not be necessary to write more than once to ask the simple question of whether an agency is compliant. As several of the letters were written before that time, I would not classify all of them in the same way.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The elephant in the room is the service plan. The service plans of these organisations must be approved by the HSE.

Mr. Tony O'Brien:

The service agreements rather than the service plan.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The service plan.

Mr. Tony O'Brien:

The service plan is a national document.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Excuse me, I refer to the individual service level agreements with the agencies. They must be approved by the HSE. Surely that gives it a veto over the agencies to ensure they are in compliance with Government pay scales.

Mr. Tony O'Brien:

I am not sure that we have a veto. We have the right to insist that they comply, to carry out the audit and to escalate to further measures now that we know what we know. It is clear in general that the persons who made these decisions must have known they required approval to enter into these additional pay arrangements but, for whatever reason, they either convinced themselves they were exempt from the requirement for such approval or that some conversation they had with somebody somewhere can be construed as amounting to approval.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I ask Dr. Smith to respond because his report made reference to their reliance on various criteria as their explanation for breaching Government pay scales. He might outline the reasons, which date back to 1996. People are concerned that the money they have raised through fund raising is being spent on other than front-line services. I am worried this will tarnish the great work that is done by the majority working for these agencies. This issue needs to be clarified immediately. I also ask Dr. Smith to quantify the cost for the 36 agencies.

Dr. Geraldine Smith:

I will deal with the cost for the agencies. The report states that the allowances from HSE sources and public funds amount to €3.223 million in total.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I know about that.

Dr. Geraldine Smith:

There is a further €912,000 from private sources. In respect of the 46 agencies examined in the audit report, HSE funded salaries and allowances amounted to €31,531,438.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Approximately 10% of that €31 million was for funded allowances for 191 people, according to the report.

Dr. Geraldine Smith:

Yes.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I ask Dr. Smith to outline the reasons they gave for paying these allowances in breach of Government policy.

Dr. Geraldine Smith:

The first thing the audit identified was a parliamentary question that was tabled in 1996 regarding the payroll for Tallaght hospital. The question sought information on the payment of privately funded allowances for the CEO of Tallaght hospital and other agencies. The reply indicated that, while public pay scales had been agreed, other arrangements for work additional to the incumbent's public duties are matters solely for the agency and individual concerned. The report suggested that agencies relied on that reply to some extent because it was in the public domain.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

In Dr. Smith's option, were they reasonable in taking that approach?

Dr. Geraldine Smith:

That is an interesting question. The reply was in the public domain. Further issues arose subsequently, which I will outline in sequence to provide a better context. In 1998, as part of enhancing partnership discussions on disability services, one of the quotes from an agency was that the Department of Health was aware that chief officers were being paid over and above the rates through other sources of funds. In July 2008, the Department requested the HSE to write to the disability agencies to seek all expenditure, whether funded by the HSE or otherwise. In August 2008, the HSE wrote to the agencies. In October 2008 the Department wrote to the head of human resources in the HSE to advise that there may be cases in voluntary agencies - hospitals - where unauthorised salaries were in payment. It arrived at that view because it was dealing with a particular case. In January 2009 the HSE submitted a report on pay and non-pay expenditure in non-statutory disability service providers to the Department, which noted that certain agencies reported that some of the salaries they paid were supplemented with fund raising and retail income. In 2009, the Department wrote to a particular agency to raise a list of hybrid pay scales and to note that they were not authorised.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

When did Dr. Smith reach a point where there was no longer any ambiguity on whether the agencies were in breach of Government pay scales?

Dr. Geraldine Smith:

It is clear from the service level arrangements to which I referred earlier. Two conditions in the arrangements state that agencies have to be compliant with consolidated payscales.

A condition of admitting those agencies and voluntary hospitals to the health sector pension funds is that they comply with the consolidated pay scales. It raises issues for their employees who are on unapproved scales regarding pensions, so it is a serious issue.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Nine agencies and 29 people are involved, and €346,561 was contributed to private pension schemes. That ranged between 4% and 46% of their pay. How did that situation arise, how was it allowed to continue and how is it still continuing?

Dr. Geraldine Smith:

That information came about as a result of the audit circularisation, in which we asked them about pensions and private pensions and they provided that information. It ranges from 6% to 46.6%.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

What are those agencies?

Dr. Geraldine Smith:

The nine agencies are the Brothers of Charity in Clare, Roscommon, Waterford and Galway, Carriglea Cairde Services, the Sisters of Charity of Jesus and Mary, Stewarts Hospital, Sunbeam House and Kare.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Where did their percentages fall between 4% and 46%?

Dr. Geraldine Smith:

The agencies on 46% are the Brothers of Charity in Clare, Waterford, Galway and Roscommon. Carriglea contributed 27%. In Kare it ranges from 6% to 15%, depending on the grade. In the Sisters of Charity of Jesus and Mary it ranges from 17% to 28%. In Sunbeam House it is 12%. Within that there are some staff for whom we have not been advised of the rate of contributions. In discussions I had with some of the agencies it was emphasised to me that various schemes, having known they were contributing to private schemes, had been in discussions with the Department on admittance to the public schemes. Where agencies were not admitted, they kept up the private schemes, as they would be obliged to do as employers.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Can we take it that this matter will be resolved and that these agencies will come into the public schemes?

Mr. Tony O'Brien:

That is not within the HSE's gift. There is a requirement to resolve this issue. While it would clearly be better that they be brought within the schemes, there would be a complication with retrospective admission to schemes because the contributions required would be-----

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

When people are out fund-raising for all these agencies and they see a situation, regardless of its merits or demerits, with this level of pension contribution into private schemes from public funds, there is a major question mark. Under section E, non-compliance, there are 12 agencies confirmed in letter and identified under "no approvals submitted for deviations from payroll pay policy." The 12 organisations are Carriglea, Dublin Dental University Hospital, Royal Hospital Donnybrook, Muiriosa Foundation, Sisters of Charity of Jesus and Mary, the Adelaide and Meath Hospital, the Coombe Women's and Infants' Maternity Hospital, Our Lady's Hospice and Care Services, Cappagh National Orthopaedic Hospital, St. Michael's House, the Rotunda Hospital, the Central Remedial Clinic and the National Maternity Hospital. What reasons did they give for breaching the Government pay policy?

Dr. Geraldine Smith:

They identified the various allowances and were asked to provide evidence. They did not provide evidence, and on that basis they have been deemed non-compliant.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

So they wrote back in defiance to the HSE saying, "This is what we are paying; you can like it or lump it. We are not answerable to the HSE." Do those 12 agencies have service level agreements with the HSE?

Mr. Tony O'Brien:

We should step back a little from the characterisation that they were telling us to "like it or lump it." We cannot go that far. They are in a process. That process has not been completed. They are not where we would like them to be in that process. I would be more concerned about the entity that has not replied.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Mr. O'Brien is missing the point. We have a job here, as public representatives of the people on the ground who are dealing with the agencies every day of the week, many of them out fund-raising. This issue is dominating with regard to salaries. I am more concerned about the funding that goes to front-line services. I want this matter sorted. This is not a proper use of either Mr. O'Brien's time or mine. This issue should not arise. There is a service level agreement there. From what Dr. Smith has said, they are required to comply with Government pay scales. Clearly, they do not. Twelve of them have written back and given no explanation whatsoever as to why they are in breach of the policy. As a person elected by the people I am duty bound to ask how this has happened.

Mr. Tony O'Brien:

I completely agree. We are not in disagreement. We are probably violently in agreement. I was just cautioning that on the basis of the information we have supplied to the Deputy it may be premature to reach the conclusion that the agencies are telling us to "like it or lump it."

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Someone was a little over-enthusiastic with the headline they gave on any non-compliance. Is that not the case?

Mr. Tony O'Brien:

No; that is correct, but I am concerned that although they are in the same category, their attitudes and approaches may be slightly different. I would not want the Deputy to think-----

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Then what exactly is the position?

Mr. Tony O'Brien:

It is no more than that. They have not told us to "like it or lump it." They have not told us they are completely outside any accountability to us.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Then what have they told the HSE?

Mr. Tony O'Brien:

They have confirmed their non-compliance and have not submitted any evidence to justify it.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The HSE has written to them nine times. These are intelligent people running these organisations. The power lies with the HSE within the service level agreement to ensure compliance. The HSE's service plan has gone to the Minister. Feeding out of that are the service plans for each of these agencies. These agencies and the people working in them do great work. This is a distraction from that work and needs to be sorted out. What can the HSE do within the service level plan to ensure we are not back here next year going through the same issue?

Mr. Tony O'Brien:

I reiterate the answer I gave to Deputies Áine Collins and Sean Fleming. As we bring this process to a conclusion it is likely that we will meet with the chairpersons of those agencies that are unable to demonstrate compliance to our satisfaction and consider what actions we will take regarding their service levels.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

When?

Mr. Tony O'Brien:

There is not much of it left, but we will do it this year.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

So Mr. O'Brien is talking about the next four weeks.

Mr. Tony O'Brien:

Yes, before Christmas.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Does Mr. O'Brien expect that, starting from 1 January next year, all the organisations will be compliant with the national service plan and the service level agreements?

Mr. Tony O'Brien:

I cannot guarantee they will be compliant. I can guarantee that if they are not compliant they will be in the process of having various actions taken to bring them into compliance. I must caution ourselves and the members that some of these entities will be in a position in which they have legally binding contracts with individuals that cannot be arbitrarily broken. The process of coming into compliance may not be straightforward for them.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Those are business cases being put forward, etc.

Mr. Tony O'Brien:

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

With regard to Deputy O'Donnell's point about this news damaging the morale of those who are fund-raising or within hospitals on the front line, I raise a question that came about in correspondence.

There was a medical superintendent in one of these section 38 hospitals, and now that person has two titles and a top-up. For some, if not all, of the years that he or she held this position, the salary was topped up by way of fund-raising. The correspondent then goes on to make the complaint that the CEO, who had retired, is now back employed on a substantial sum per annum for six days a month. It is rumoured to be a considerable amount of money for those six days. In the HSE's examination of the issue, does it dig so deep as to come across issues such as this? Does it probe them about other matters of governance that might concern anybody? Would something like this be revealed to the HSE?

Mr. Tony O'Brien:

We do from time to time receive information on the same basis that the Chairman has received that - what we would loosely describe as whistleblowing-type information - and we do pursue that rigorously. I do not think we have received that particular piece of information, though.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I will make it available to Mr. O'Brien. It is €48,000 per annum for six days a month.

Mr. Tony O'Brien:

We will appreciate receiving it.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It is a matter of concern.

Mr. O'Brien mentioned the contracts to Deputy O'Donnell. In its discussions with these agencies, hospitals and so on, has the HSE established how many contracts are in place? Presumably there is a contract in place for every single position. Therefore, one could expect a business case relevant to that position in every instance.

Dr. Geraldine Smith:

As it is part of the HR process, I think it is more appropriate for HR to answer that one in terms of what is expected.

Ms Paula Lawlor:

We did seek legal advice on receipt of the internal audit report, which obviously went into the various issues the Chairman has just raised. There will certainly be challenges on employment legislation with the individuals. However, it is a process we are going to have to work through. The other important thing to notice is that from the information that would have been given to us over a year ago, I think changes have been made in some of those organisations, and we can see some slight changes in what they are suggesting now.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

But the HSE has not carried out a complete analysis of all of that yet.

Ms Paula Lawlor:

No. We have done a complete gathering. Even as late as today we were still receiving more information. It is still a very live process, but we think we have got everything now that we can verify against and go back to those agencies, as Mr. O'Brien has already-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The HSE will have a busy time between now and Christmas.

Mr. Tony O'Brien:

We certainly will - on a number of fronts.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I do not think there will be any Christmas holidays for the HSE this year.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Will we need to come back?

Mr. Tony O'Brien:

A meeting on the 25th, perhaps.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Given that we see so much of each other, it would be nice not to see each other in and around 25 December.

I welcome Mr. O'Brien and his team. Dr. Smith has done an impressive body of work which is very helpful to the committee and taxpayer in trying to ascertain what is going on here. I am encouraged by what Mr. O'Brien has said and his determination to deal with the problem and to clean up what has been a mess for a number of years whereby taxpayers' funds have been going into organisations. Once the cheque leaves the HSE or the Department of Health, to a large degree people have been left to their own devices, or certainly have not been scrutinised as well as they should have been. However, it seems to be a case of "Here we go again." The HSE is in trying to clean up the mess and we are here trying to find out what went on, and nobody is responsible. The boards or the section 38 agencies have made these payments that never should have been made. There were, to use the witness's words, potentially nod-and-wink or verbal agreements with the attitude of: "Your man down the road said I could have the payment." The Department of Public Expenditure and Reform has advised us that there is no paper trail for any of these verbal agreements.

It cannot be a case of the dog eating the homework. It is not acceptable to claim that the system messed up and that it was a systemic problem. Somebody in the HSE, the Department of Health, the Department of Public Expenditure and Reform or its predecessor, or all three, messed up by taking his or her eye off the ball. How did we get to this nod-and-wink culture? Surely somebody in the Department of Public Expenditure and Reform - or the Department of Finance, as it was for a large part of the time - was keeping an eye on the money that was been given to the Department of Health, to the HSE, or to the boards of section 38 agencies. It is not an acceptable answer for very hard-pressed taxpayers, who are preparing to hear details of the HSE's very difficult service plan, to hear that it just happened and it was the culture. It was the culture, but can anybody be held responsible? Who is responsible? I ask Mr. O'Brien to respond first, but I believe the question goes even wider than the HSE.

Mr. Tony O'Brien:

At the individual level, with regard to whoever was responsible at the time for the governance of each agency, where there is no evidence of any reasonable quality that the necessary approvals existed, it is reasonable to conclude that the necessary approvals did not exist and that therefore someone made the decision to proceed in the knowledge that they did not have the necessary approvals. The reality is that they have the effective freedom - not the real freedom, but at a practical level they have had the freedom - to do this because they have their own payroll system. They simply have the capacity to do it. We are moving, as we discussed elsewhere, to a different type of financial control environment, in terms of the facilities we have, to have a view of transactions of payroll through a shared services environment. When we get there, it simply will not be possible for entities to make and implement such decisions, unless they do the absolutely fraudulent thing of running their own payroll off somewhere; then we would be able to see the money leaving.

There has been a structure, an architecture, that has enabled this to happen, but clearly there was a culture - we are going back to the 1990s in some instances - in which it was considered acceptable and appropriate to do it. Not least because of the economic and fiscal circumstances the country has been through, with the FEMPI legislation and so on, we are at this point coming to a position at which it is understood that this is not acceptable, and we are going to bring about an environment in which it cannot be done.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Page 7 of Dr. Smith's report states:

In instances whereby senior management salary levels differ from Consolidated Salary Scales, agencies stated that verbal DOH approval had been sought and obtained. However, these discussion/agreements were not documented on DOH files.

Dr. Geraldine Smith:

No. They would just have said that they had verbal approval from the Department, because at that time - pre-2005 - the agencies would have had a direct business relationship with the Department, but they did not name any individuals.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Does Dr. Smith know who in the Department would have been in a position to sanction such verbal agreement and at what level he or she was at?

Dr. Geraldine Smith:

Those types of decision would have been taken in the personnel section of the Department, possibly the external personnel section, but I would not know the individuals who were in the posts at the time.

Mr. Tony O'Brien:

No official of the Department of Health would have had it within his or her authority to grant approval for an allowance outside the scale. The procedure is very clear; if such approval were to be sought, the Department would have needed the sanction of its Secretary General and possibly of its Minister too to make a business case to the then Department of Finance or the Department of Public Expenditure and Reform. So it would have been documented. No official of the Department of Health would ever have believed that they had the authority to verbally sanction unsanctionable allowances. It is just not conceivable.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

To be blunt, does Mr. O'Brien believe there was no verbal agreement?

Mr. Tony O'Brien:

There may have been discussions in which someone said "I'd be supportive of that," which may in fact have been "Send me a business case," but there would never have been any expectation - legitimate expectation - by either party that a conversation such as that could amount to formal approval. Some of these are serious entities of serious scale. Some of them are established by the State and would have provisions in their establishment orders which make it clear that salaries are to be determined by the Minister for Health with the consent of the Minister for Finance given at the time. Others, though not established on that basis, would be of sufficient scale that I think it is unreasonable that they would expect to do business with the State on that basis. Notwithstanding the fact that in the 1990s there was perhaps something of a nod-and-wink culture, no one could, I think, legitimately claim that a conversation with an assistant principal or a principal officer could constitute formal approval.

They would have at least expected to have it documented in writing in my view.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

One would hope not. The scary thing is they are telling an agency auditor they did. This is why we need-----

Mr. Tony O'Brien:

It is a potentially convenient answer.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I agree. This is why we need to hear from the chairs of the boards. Some criticism of the HSE has also arisen in Dr. Smith's report regarding the haphazard, or at times slow, way the HSE responded to queries from the Department of Health between 2008 and 2011. Between February 2011 and October 2011 the Department of Health wrote to HSE human resources, HR, on five occasions trying to establish the level of compliance. This is on page 24 of Dr. Smith's report. The HR section responded to the Department of Health on only two occasions. Why did it not respond on the other three? This is a fair assertion.

Dr. Geraldine Smith:

The Deputy is correct; it responded on two occasions but not on the other three. In one instance it was waiting for HR area directors to provide replies. The fact remains it did not reply to the correspondence sent by the Department. One of the recommendations of the audit was whatever correspondence the Department sends needs to be answered promptly.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I accept Dr. Smith's recommendation and I am pleased the HSE accepts it. We are only going back as far as 2011. The Department of Health corresponded with the HSE about the importance of section 38 in complying with public sector pay conditions and on three occasions the HSE did not bother to reply.

Ms Paula Lawlor:

In May this year two of those pieces of correspondence, from 31 August 2011 and 28 October 2011, were responded to.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

There was significant lapse. I am trying to get inside the mindset. Why was there such a delay? The HSE was waiting for information to come back up the chain.

Ms Paula Lawlor:

It can be very challenging, as has been already demonstrated, to get responses from the agencies. There can be much chasing when it is required of us. It is not excusing the exorbitant delay but it can be a challenge.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Department of Health wrote to request adherence to the one person one salary principle. One HR section did not respond and the other response was incomplete. I presume we deem this unacceptable.

Mr. Tony O'Brien:

Indeed we do.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Was this for a similar reason?

Mr. Tony O'Brien:

We believe so. The recommendations related to this, once provided by internal audit, were immediately accepted by the person who is now, but was not then, the national director of HR, the previously mentioned Barry O'Brien, who has taken a robust approach since his appointment, as indeed did my immediate predecessor, Mr. Magee, in response to the emerging issues from HIQA. He was then accounting officer and formally requested consultation with the board of the HSE, then chaired by the Secretary General, on carrying out an internal audit. I characterise this as a turning point in the approach of the HSE to this issue which we are now seeking to see through and bring home.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

If this is the case I accept Mr. O'Brien's evidence before the committee today and there is no need for me to go through several more of the 51 incidences in the report where there were issues regarding the HSE not taking this matter as seriously as it should have.

Mr. Tony O'Brien:

There is no attempt on our part to seek to justify or offer a defence for those legitimate criticisms.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I want to understand how Dr. Smith classifies some of the allowances or top-ups, or whatever we wish to call them, in her audit. I will take the example which has been possibly dominating the media. I also adhere to Mr. O'Brien's principle that it is those who purported to allow the allowances occur in the first place who are most culpable. The media has been covering a story with regard to the National Maternity Hospital. In the audit report, Dr. Smith describes the €45,000 paid to the master of the maternity hospital as a privately funded allowance. How did she determine it was a privately funded allowance?

Dr. Geraldine Smith:

I determined it was a privately funded allowance because this was the exact description the National Maternity Hospital provided. I had further assurance as to the information provided by the National Maternity Hospital because it informed me the information released to internal audit had to be validated by the chairman of the board of the National Maternity Hospital. The return clearly states four private allowances were described as externally funded and the amount was quoted. When I asked the hospital to specify the elements which were private and the sources, it gave a definition: external funded equals private funds including rents, license fees and other incomes. This was cleared by the chairman of the board of the National Maternity Hospital before the secretary manager of the National Maternity Hospital could provide the information to me.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

This is helpful because as the Chairman and Deputy O'Donnell stated that many of the section 38 agencies provide vital services and many of them depend on significant fund-raising, but we have had weeks of sweetshop funds and car parking fees going to CEOs and officials. I am trying to seek clarity on how a privately funded allowance is defined. Dr. Smith is telling me in the case of the National Maternity Hospital, to take a high-profile example, she asked the hospital to explain and the hospital defined it as such and gave the information. Is there necessarily a correlation that money for a privately funded allowance is not generated from private patients and the treatment of private patients in hospital?

Dr. Geraldine Smith:

No. Various people gave various descriptions of privately funded allowances. One agency stated one of the salary payments it made was from fund-raising. We have seen the description from the National Maternity Hospital. We have seen references to other sources of income. The distinction for the agencies was that these were not funded through the HSE funds but came from other sources available to them.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As an auditor, does Dr. Smith accept the representation in some quarters that the privately funded allowance in the National Maternity Hospital has been derived from the treatment of private patients as accurate or inaccurate?

Dr. Geraldine Smith:

All I can say is the information the National Maternity Hospital has provided to me is that it is privately funded from licences and other income. It did not state it was from private patients. It did not get down to this level of specificity.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Perhaps it is something we can take up with the hospital.

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

I welcome Mr. O'Brien and his colleagues and thank them for their assistance with this. This question may have been asked earlier. Is it possible these voluntary organisations can be brought before the Committee of Public Accounts?

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We have agreed this.

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

I apologise. Obviously it was dealt with before I arrived. I wish to ask about two of the non-compliant organisations. I realise because they are non-compliant the witnesses may not be able to give me much in the way of answers.

I wish to express an interest because I am on a leave of absence from a school under the patronage of the Central Remedial Clinic. I wish to ask about this organisation and about Our Lady's Hospice in Harold's Cross. I find this issue very difficult because I worked in the school I mentioned for more than ten years. I loved working there and I worked with great staff. It is a matter of great distress for me, and for others I know who work there, that the recently retired CEO was receiving top-up payments. The witnesses may not be able to answer questions regarding from where the money came given it is on the non-compliant list. I understand top-up payments were made to others and I do not know whether the witnesses can speak about these. Like other committee members I wonder if the witnesses have established whether the Financial Emergency Measures in the Public Interest Act guidelines were fully operational there.

This matter distresses me, as I am aware of certain people who lost their jobs because of cutbacks and of children who desperately need to swim but who are no longer able to do so because of a cutback at their school. It is difficult to tally their situations with these serious top-up payments. Can the witnesses throw light on this matter? If not, I assume this is the information they are trying to get from the organisation. Will they ask whether the top-ups will apply to the new CEO of the Central Remedial Clinic, CRC? Is he the same person who used to be the CEO of the Mater hospital? If so, it is an interesting coincidence, as the CRC's previous CEO also came from the Mater hospital.

Other Deputies have raised this issue, but from where did the top-up money come, who authorised it and what sanctions will the witnesses be able to put in place? If possible, I will revert to the issue of Our Lady's Hospice once these questions have been answered.

Dr. Geraldine Smith:

I will take a part of-----

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

I apologise for being emotional, but it cuts deeply.

Mr. Tony O'Brien:

That is very understandable, Deputy.

Dr. Geraldine Smith:

I will take the first part on what the internal audit ascertained. It identified HSE-funded salaries and what was called CRC-funded salaries on top of those as well as CRC-funded allowances. These were not only for the CEO, but several other senior managers.

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

How many?

Dr. Geraldine Smith:

We were notified of six. Actually, let me clarify. For one individual, the CEO, there was a HSE-funded salary, a CRC-funded salary and a CRC-funded allowance. For another individual, there was only a HSE-funded salary. For a third individual, there was a HSE-funded salary and a CRC-funded salary. There was the same for a fourth individual. For two other individuals, there were HSE-funded salaries and CRC-funded salaries. There was also a contribution to an employer's private pension fund in respect of the CRC-funded element. The CRC stated that the non-public part of the funding came from CRC's own resources and not Exchequer funding and that the funding of employer pension contributions was proportionate to the salary breakdown. We have identified that the proportions of the CRC-funded salaries were approximately €32,000 for the CEO and €8,000 for the other individuals. The CRC also informed-----

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

Did the CRC indicate from where the top-up fund came?

Dr. Geraldine Smith:

No. It referred to its own resources.

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

This is one of the reasons the HSE is still seeking further information.

Dr. Geraldine Smith:

Yes. That is the HR aspect of the matter. The purpose of the audit was to ascertain the environment. We were trying to develop a picture. What is clear from the audit report is that there was much speculation over the years about whether allowances were being paid privately, etc. The purpose of the audit was to take a snapshot, particularly of the private element, which had not been done previously. This is what is before us today in respect of the audit report. My colleagues in HR are working with it to try to address the issues.

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

I suggest that the HSE also audit the accounts of the two or three schools that are under the CRC's patronage. I appreciate that they are possibly not in the HSE's domain, but the Departments of Education and Skills and Health are closely interlinked in the organisation because it also provides health services for its clients.

Mr. Tony O'Brien:

We will examine that.

Dr. Geraldine Smith:

Yes. The Deputy must bear in mind that we are constrained by our section 38 agreements. There was certainly engagement between the CRC and the HSE, as the CRC indicated to me. The CRC stated that senior management remuneration was the subject of a comprehensive review in 2009 involving the chairman, other board members of the CRC and senior officials of the HSE. At the time, it was agreed by the board of governors that a lesser amount be charged to the HSE and that the balance, for employment contractual reasons, would be directly funded by the CRC, the employer. It was also agreed that, when the posts concerned fell to be replaced through retirement or resignation, the salaries of the incoming replacements would be discussed and agreed with the HSE. This agreement took effect from 1 January 2009 and continued up to the CRC's statement in June 2013. The only changes that have affected the agreed rates since 2009 have been the salary reductions imposed on 1 January 2010.

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

I am unaware of any profit making in CRC, but I have been asked to look into it. Has the practice we have been discussing stopped or does it apply to the new CEO?

Ms Paula Lawlor:

According to our most recent documentation, which came in on 25 November, there are five remaining executive staff of the original nine with those contractual arrangements still continuing. This morning, we received confirmation that the chief executive is on the correct consolidated salary scale.

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

There is no large top-up as there was for the previous CEO.

Ms Paula Lawlor:

Confirmed today.

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

Turning to the question of sanctions and so on, obviously the HSE is not finished with its investigations, but what is in its armoury?

Mr. Tony O'Brien:

There has been a fairly robust engagement with the CRC during the course of this year in respect of the appointment of the successor CEO and the assurance that we required that the salary being paid was appropriate. We will deal with the other matters as we proceed. One of the options available to us relates to the service arrangement for 2014. We are not yet at a point of knowing exactly which way we will approach it, but there has been a fairly robust dialogue between the CRC and our area manager responsible for it, particularly on the salary level of the replacement CEO, because we were not satisfied about those arrangements in the first instance.

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

Is that the same person who was previously the CEO of the Mater hospital and was referred to in the news print?

Mr. Tony O'Brien:

The person has the same name and looks very much like him.

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

I thank Mr. O'Brien. In asking about the two institutions, I will make the same point made by Deputy O'Donnell. It is a serious issue for these organisations when their good name is brought into question. The CRC and, even more so, the hospice at Harold's Cross are significantly dependent on the largesse of the public. I am concerned about the damage that will be done. I understand that approximately 10% of the hospice's staff are paid out of fund-raising. None of us would like to see that provision removed. Everything that I have heard about the operation of Our Lady's Hospice has been praiseworthy. The number of families of which I am aware that speak highly of the hospice's work is difficult to calculate.

I have a couple of other questions about Our Lady's Hospice. Has an explanation been provided for the HSE allowance of €12,700 for the CEO for managing the Blackrock Hospice, a further €7,000 for the CEO from fund-raising or a further €19,000 that seemed to come from investments in respect of the CEO and three other senior managers?

Dr. Geraldine Smith:

The hospice provided information to the effect that the CEO was in receipt of a HSE allowance to manage Blackrock hospice, which allowance was part of the CEO's contractual agreement with the hospice. It also stated that a board of director's allowance of €7,000 was paid to lead fund-raising, a second board of director's allowance was paid to another individual to manage the fund-raising and a third board of director's allowance was paid in respect of implementation of governance and policy framework, all of which it was stated come from non-public sources.

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

Is Dr. Smith satisfied that all those payments are kosher or has she yet reached a conclusion in that regard?

Dr. Geraldine Smith:

In essence, this was an information gathering exercise to identify the state of play. All this will be delved into as part of the exercise which will be carried out by my human resources colleagues.

Mr. Tony O'Brien:

They are classified as-----

Robert Dowds (Dublin Mid West, Labour)
Link to this: Individually | In context | Oireachtas source

I am particularly concerned because I understand that approximately 70 to 80 posts within that organisation are funded through fund-raising. It would be very serious if their work had to be stopped.

Paul Connaughton (Galway East, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I welcome the witnesses. I will try to be brief as much has been discussed. Mr. O'Brien stated what while the investigation of the agencies is ongoing, there are few sanctions open to the HSE if, at the end of the process, a matter has not been resolved. Am I correct that if following the conclusion of the process an issue has not been sorted, one of the sanctions may be a funding cut for an organisation?

Mr. Tony O'Brien:

Yes.

Paul Connaughton (Galway East, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am concerned that if that happens it will be the service user who will be affected most.

Mr. Tony O'Brien:

That is the great dilemma we face. Clearly, we will have to find ways in which we can do that while not allowing any diminution in service. The Deputy is right to point out that there is a danger that anything we might do could end up being passed on by way of service reduction, which would not be consistent with our service arrangements. We will seek to find ways in which we can avoid that.

Paul Connaughton (Galway East, Fine Gael)
Link to this: Individually | In context | Oireachtas source

What the HSE is trying to do is cut out top-up or additional payments. Obviously, it is not possible to reduce the pay of any of the CEOs of the organisations concerned. If the HSE cannot do that but proposes to apply a sanction, it will be the service user who will be hit.

Mr. Tony O'Brien:

If the organisation is fully co-operative, engages in the business case process, is able to demonstrate that it is legally bound in what it can do and none the less enters into an arrangement with us to ensure these payments are phased out and not repeated and is compliant in all other respects, we will have to take a view on that.

Paul Connaughton (Galway East, Fine Gael)
Link to this: Individually | In context | Oireachtas source

If there are any ramifications for an organisation, they should lie with the chairman of the board who made the decision and the CEO and not with the service user.

Mr. Tony O'Brien:

The Deputy is correct. A small number of the boards are statutory boards. In respect of those boards which are not compliant, we may have to draw that to the attention of the Minister to whom they are accountable. In relation to any findings which suggest that charitably raised funds are being improperly used, that may be a matter for those who regulate the charitable institutions.

Paul Connaughton (Galway East, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the witnesses.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I, too, will be brief. When it comes to the traffic laws in Rome, the saying is "It is a matter of opinion". Having listened to the debate thus far, it is clear that when it comes to Government policy in the health care sector, these section 38 organisations are treating remuneration and everything related to remuneration as a matter of opinion. Reference was made earlier to the HSE report on allowances and what was missed in that. It is perhaps not the only thing missed when it comes to State agencies' pay. Has the Comptroller and Auditor General looked at other sectors across the board within Government in this regard?

Mr. Seamus McCarthy:

The Deputy will recall that we reported on payments in excess of ministerially approved levels in the third level education sector, where similar issues arose. The bodies which I audit are required under the code of practice for the governance of public sector bodies to ensure disclosure in the annual financial statements of the remuneration package of the chief executive. In general, the information includes the basic salary, any bonus paid, a pension contribution or payment in lieu of pension contribution and benefit-in-kind. This is standard information required of each body I audit.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That is as much as is given.

Mr. Seamus McCarthy:

We would obviously test to see if there are any other perquisites of the employment that are not disclosed in that way.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

What is the process in that regard?

Mr. Seamus McCarthy:

We go through every type of payment made to the chief executive, including expenses such as travel, subsistence, credit card payments and so on.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Based on the information given today, is Mr. McCarthy concerned that the code in other areas has not been as rigorously adhered to as it should have been?

Mr. Seamus McCarthy:

In relation to the section 38 bodies we audit, we look to see that there is compliance with the code of practice and that there is disclosure in the financial statements in relation to allowances paid to the chief executives. I am not sure whether the code is imposed on the section 38 bodies that are funded by the HSE and are not audited by me. Perhaps the HSE could respond further on the matter.

Mr. Tony O'Brien:

Our understanding is that the code does not apply to non-State entities, for example, those which the Comptroller and Auditor General is not empowered to audit.

Mr. Seamus McCarthy:

Another element of the code is an assurance in the form of a report from the chairperson of a public sector body to the Minister that it is in compliance with public sector pay policy. There are a number of other things covered as well, including investment in capital projects, public procurement guidelines and so on. Specifically, they are required to confirm to the Minister that they are compliant with public sector pay policy. The element that might be additionally sought is an assurance from somebody that those assertions are tested. By requiring some disclosures in the financial statements, the auditors of those bodies would be in a position to test and confirm that what is stated in the financial statements is true.

Dr. Geraldine Smith:

It is not specifically stated that the section 38 agencies must comply with the code of practice for State bodies, rather it is stated that they must endeavour to deal with the HSE at all times in accordance with the code of governance of the executive. Our code of governance is based on the code of practice for the governance of State bodies 2009. Further to what the Comptroller and Auditor General stated in terms of external auditors, as I mentioned, these agencies, because they are independent agencies with their own boards and so on, must provide the HSE with external audited accounts. Those external auditors, as part of a standard external audit process, would review salaries authorisations in order for them to give a true and fair view on the state of the accounts. This is what the HSE would rely on as the first line of defence.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

It is fairly clear that there has been wholesale non-compliance with or contravention of Government policy in the area of remuneration. Because it is Government policy does not mean it is right in many cases.

Mr. Tony O'Brien:

The Deputy may say that but I cannot.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I know. The witness's job is to police it but the organisation has not policed it well, in fairness. Notwithstanding what Deputies Dowds and O'Donnell have stated with regard to fund-raising and the efforts people make in these organisations, have there been any justifications as to why they did what they did and broke the rules? Have they made any arguments as to why they felt it necessary for the organisations to be non-compliant? Was it wilful and carefree avoidance of the regulations?

Ms Paula Lawlor:

In some instances we had examples where a post was not replaced and somebody has been given an additional amount of money to cover a role. That would have been seen as a way of being more efficient and effective. That is one end of the scale.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

They would argue they had saved money.

Ms Paula Lawlor:

Yes.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

How many instances are we talking about?

Ms Paula Lawlor:

I do not have the exact detail to be able to go through it with the Deputy at this time as it is still a live process.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

To play devil's advocate, we are in a funny political environment when it comes to pay. In many cases the issue of pay in the media can be very one-sided. I am asking the question of the HSE, and the witnesses are dealing with these organisations. Have they given justification, outside of the incident the witness has detailed, as to why they have acted in this way? Is this wilful and carefree non-compliance?

Mr. Tony O'Brien:

At the anecdotal or informal level, one is aware that it is being argued but not yet reflected in formal submissions in some instances that bodies feel the approved rate for a given job - such as CEO of a particular hospital - is insufficiently high to enable them to attract and retain the type of talent required.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That is what I thought the witness would say. How many instances of this are we talking about?

Mr. Tony O'Brien:

I have only heard it said with regard to one instance so far but I imagine it may be argued with more.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Somebody has made the argument to Mr. O'Brien.

Mr. Tony O'Brien:

It has not been made formally. It was done informally.

Ms Paula Lawlor:

In other instances the organisations have grown and developed, with private companies or other entities around them.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

These individuals are not dark shadows and we know who they are. Do the witnesses agree with that?

Mr. Tony O'Brien:

Whatever one thinks or does not think about Government policy with regard to pay, it is not optional. We should be absolutely clear about that.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I understand.

Mr. Tony O'Brien:

Nothing I would say in any way provides any cloak of cover for persons treating public sector pay as if it were optional.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The job of the HSE is to police this.

Mr. Tony O'Brien:

Yes.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

To be honest, that has not been done very well. Our job is to deal with the policy aspects of this. I am trying to figure out if there are policy issues surrounding this that have not been dealt with.

Mr. Tony O'Brien:

I suspect that in some instances there have been areas of entrepreneurial freedom rather than making the case for an improvement in what was perceived to be an inadequate level of pay. That was either because these bodies did not recognise a necessity to do so or felt it would not be successful. They have gone around the scrum, so to speak, and done something on the basis that it is easier to be forgiven than get permission. That appears to be what happened in some instances. That was foolish and it would have been far better to make the case, which may or may not have been successful. Nevertheless, the bodies would not have found themselves in this clearly very damaging position for each of the institutions and the individuals involved.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Generally speaking, Mr. O'Brien is finding the arguments pretty flimsy.

Mr. Tony O'Brien:

Yes, as it was not necessary to make up rules and for the bodies to do it their own way. It would have been possible to make a business case. People would be concerned if a business case was made but was unsuccessful, only for the body involved to proceed with it. It would be in even more trouble then than if something was done without permission.

Mr. Seamus McCarthy:

I have one point following up on what Dr. Smith said about the testing that might be done by the auditors. Typically, my understanding would be that the auditors would be checking to the contract terms to establish that what was paid to the chief executive was what was in the contract. In the public sector, there is another layer, which is that what is in the contract should be consistent with Government policy or the sanctions set by the Department of Health. It may be that there is a necessity to specify in the service level agreements that this test must be done as well. That would create a dynamism in the audit requiring the issues to be surfaced and reported.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

In the same vein and in regard to the report, it is critical of the differences in the salaries being paid to chief executives versus the size of the hospital, project or institution. What steps is the HSE going to take to bring that into some formal structure in order that the people who are chief executives of very large organisations or small bodies will see it reflected in the salary? Does the witness foresee difficulties with the construction of that type of template? With regard to voluntary hospitals, what role is played by the boards in agreeing the salaries and top-ups being paid? Is the agreement reached between an individual and a chief executive?

Mr. Tony O'Brien:

With regard to the first point, the HSE does not have a role in approving the different salary scales and the consolidated salary scale document, because that function is, in effect, discharged between the two Departments and ourselves. We could have a role in proposing or supporting business cases that may come in respect of new roles or in respect of these, but we have not historically been in a position of putting forward arguments either for reductions or increases in the approved rates of pay. That is clearly something we may need to consider in this context and particularly as posts become vacant.

The boards of voluntary hospitals have the same type of general governance responsibility as those of any enterprise, and one would expect the chair of the board, the remuneration committee and the audit and risk committee would have a strong view and appropriate internal approval processes for all issues of senior management remuneration. It should not be possible without board level approval for any adjustment or commencement of the initial salary to take place and be processed within the financial regulations of the institution.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Has the HSE established there is an audit committee or a remuneration committee within those boards and that they have been active in dealing with these payments? Is it just a case of the boards meeting and providing a rubber stamp, with the chairman providing a recommendation? Is there an analysis of what has been going on?

Ms Paula Lawlor:

We have not identified the extent of audit, remuneration or various governance committees in the agencies. They certainly all have independent boards and one would expect, in terms of good governance, that they would have those sub-committees of boards. In some correspondence there has been reference to sub-committees and the boards approving allowances, etc. They certainly have independent boards and some or most would have remuneration and audit committees. That would have to be determined.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The answers to the questions have to be determined, and there is also the structure of the salaries being paid to all these people. The HSE will possibly have to make recommendations on these as it is at the coalface and understands the challenge to keep staff. There is a balance that may be difficult to strike relative to what we are speaking about. There is a challenge that will exist in these organisations to keep staff. Deputy Dowds expressed very well the voluntary fund-raising that goes on. There should be some kind of code of governance to be observed and the HSE will probably have to make some sort of recommendation in that regard.

Mr. Tony O'Brien:

I agree. When one or two agencies engage in this type of practice, it leaves others at a competitive disadvantage and many encourage a flow of this kind of behaviour among those who do not have the right but have the ability to do these types of things.

That, in turn, gives that sector a competitive advantage over the statutory sector - that is, the entities currently directly managed by the HSE, where neither these freedoms nor these abilities exist.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Have you met with the CEOs or the chairpersons of the boards of the organisations?

Mr. Tony O'Brien:

Not in this context. I have met with some of them and, as we work our way through this process, I expect to meet with all of those that are non-compliant.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That is most of them.

Mr. Tony O'Brien:

At this stage it is most of them. I am hoping that before we get to the final part, where I have to start meeting them, that there will be a greater degree of compliance.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

In terms of the HSE and the oversight it possibly should have had in place - I am not referring to your watch because it goes back a long time - what has it done or what will it do? Will you wait until the end of this process to decide what is necessary to ensure that this does not happen again and that there will be a unit in your organisation that will insist on compliance? Have you discussed it yet with the Department of Public Expenditure and Reform or is that something that will happen at the end of this process?

Mr. Tony O'Brien:

We have not had discussions with the Department about that at this stage, but we have already been having discussions internally about the exact nature of the environment we must create in the context of the 2014 service plan and the service arrangements that derive from it to beef up our ability to rely on the information that is provided to us, such as some of the things the Comptroller and Auditor General has mentioned regarding the duties of the auditors and, for example, the extent to which we may need to see verifiable confirmed data on payroll, including P60s and that type of information. In theory, the service level arrangements are robust. The challenge for us is to put in place processes that enable us to verify beyond all doubt that there is compliance. As Deputy Fleming said earlier, we have gone from an allegedly nod-and-wink environment to an environment largely based on trust, once people have signed. It is now very clear that we cannot operate on the basis of trust any longer and that we must have absolute verifiability from this point forward. The challenge for us is to create that environment and we are currently examining how to do that.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

I have some questions about the Central Remedial Clinic. Deputy Dowds dealt with it to some extent, but what is the exact situation there? What is the top-up and what is the amount funded by the HSE for the chief executives?

Dr. Geraldine Smith:

The information it provided to the audit was that of the chief executive at the time. The HSE-funded element of the salary was €106,900 and the CRC-funded salary was €116,949. The CRC-funded allowance was €19,016. On top of that, there was a contribution of 25% of the CRC-funded salary to a private pension fund.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Has the witness any idea of where the money for the non-HSE-funded part comes from?

Dr. Geraldine Smith:

The information it provided was that the non-public funding comes from CRC's own resources, not from the Exchequer. The employer pension contribution is proportionate to the salary breakdown. That is the information it provided.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

What resources does the CRC have?

Dr. Geraldine Smith:

It did not provide that. As I said, the purpose of this was to identify the lie of the land out there - that is, what was being paid, what were the allowances and if there were any travel or other benefits.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Does the witness not approve of that top-up? Does that not mean the CRC is not complying?

Mr. Tony O'Brien:

Yes.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Does it matter in the view of the HSE if the CRC is doing that? What Deputy Dowds said was very interesting and personal. He said that he had heard of the CRC cutting back on a number of things, with children unable to get treatment, disabled people unable to get swimming lessons and so forth. Has the HSE any role, given that it is funding the CRC, in ensuring that type of activity does not happen if the organisation is well able to afford what it is claiming it cannot?

Mr. Tony O'Brien:

A service agreement will specify both the type and the quantum of services to be provided in return for public funding. It is not allowed to arbitrarily reduce the level of services unless there has been a commensurate reduction in public funding. We do not have visibility, of course, of what it may or may not be doing with any privately derived income.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

There is a group called the Friends and Supporters of the Central Remedial Clinic. Is the witness aware of that group?

Mr. Tony O'Brien:

I would have donated to it on occasion in Clontarf and various other places.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Okay. Has the witness ever looked at its accounts?

Mr. Tony O'Brien:

No, I have not.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Those accounts are readily available. That company received €2 million in lottery funds in 2011, which is the latest accounts I have, and €1.9 million in 2010. On top of that, the accounts state that a surplus of €14 million is carried forward at the end of 2011. I presume those accounts are correct because they are audited by Ernst & Young. That does not mean they are correct, but that there is a good chance they are. The accounts indicate that this is a mechanism of funding the Central Remedial Clinic, given that the group is called the Friends and Supporters of the Central Remedial Clinic. I cannot see the channel but I can see there is a connection between them. The Central Remedial Clinic has a source of funding which is extremely large and to which the HSE is contributing. It is paying a salary of an extra €100,000, presumably out of that resource. I do not know if it has any others. There is another company called Central Remedial Clinic Medical Devices Limited. It is a rather strange company too. There is a huge overlap of directors in these three companies. It is not defensible that a company which has a funding source that appears to have €14 million in the bank is making cutbacks. What does the witness think?

Mr. Tony O'Brien:

It would certainly seem strange.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Would it be acceptable to the witness?

Mr. Tony O'Brien:

In general, it would not be. Obviously, I know little about the company but-----

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

I can give these figures to the witness.

Mr. Tony O'Brien:

-----members of the public are donating to a charitable fund, presumably for the benefit of the users of the CRC.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

I might be mistaken, but does the witness understand the point I am making?

Mr. Tony O'Brien:

It appears that in 2011 none of the funds went in the direction of CRC-----

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Yes.

Mr. Tony O'Brien:

-----and that €750,000 went to the CRC.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Yes. It is a mechanism for funding the CRC, and there is €14 million in it.

Mr. Tony O'Brien:

The interesting issue, from reading this, is that in the course of the year, it received in excess of €2 million in lottery funding. In the same year, it had a surplus in ordinary activities of nearly the same amount.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Correct.

Mr. Tony O'Brien:

There are questions to be asked and answered about that.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Would it be the responsibility of the witness to ask those questions?

Mr. Tony O'Brien:

I am not sure it would be. It is not an entity to which we have a legal relationship.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

The HSE funds it.

Mr. Tony O'Brien:

We do not fund the Friends and Supporters of the Central Remedial Clinic.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

No, but the HSE funds the CRC.

Mr. Tony O'Brien:

Yes.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Would it not be a reason to withdraw funding if, having plenty of money elsewhere, it refused to give children the swimming that they needed?

Mr. Tony O?Brien:

What I would need to know before reaching a view on that is what the aims and objectives of this entity were, the purposes for which it obtained these funds and whether it was legitimate for us to take the view that, if these funds were available to the CRC, it needed less funds from us. I do not have any of that information at this time, so I would be cautious about forming an opinion. Clearly, there are some interesting questions that could be derived from an examination of this revenue account in so far as it relates to 2011 and 2010.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

I accept that Mr. O’Brien has that responsibility, but the entity calls itself Friends and Supporters of the Central Remedial Clinic. It would be odd if it had any other mission in life.

Mr. Tony O?Brien:

Many hospitals, both public and voluntary, have friends groups not to provide funding directly into the revenue accounts of those institutions, but to provide patient comforts. They may donate equipment, organise trips and so forth. One would not necessarily expect to see a direct subvention from a friends organisation into the service provider. I do not have sufficient information to reach a conclusion, but a cursory examination of this revenue account, particularly the relationship between lottery proceeds, the surplus and the ordinary activity at the end of the year, certainly raises questions.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

It seems like a strange time to have €14 million in the bank when there are children in need.

Mr. Tony O?Brien:

Indeed it does. I was also asked about my view on salaries. The combined pay package referred to in respect of the then CEO certainly seems overly generous for an organisation of this size compared with any other service provider in the State.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

I will conclude on my next point, provided Mr. O’Brien provides a satisfactory reply.

Mr. Tony O?Brien:

Fair enough.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Will Mr. O’Brien give us some assurance that he will look into the CRC situation and let us know his conclusions?

Mr. Tony O?Brien:

I certainly will. If I might just note the gender composition of the team with me-----

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

I noticed it as well. It is very unfair on the male gender.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is the Deputy happy with the response?

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Yes.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Perhaps we should also send the transcript of this part of the meeting to the CRC, with the appropriate information that has been submitted, and request a full response to the queries raised. I will ask the clerk to do so.

Regarding the other section 38 organisations that have not responded or to which the HSE is writing, it should be made clear by this committee that we have serious concerns about the situation. We are also concerned that they have not responded within a reasonable time to the queries that the HSE has put to them. This is simply not acceptable to the organisation immediately responsible for what is happening, or to us as the committee that must examine the situation. It would be in their best interests to respond comprehensively to the queries the HSE has raised with them and to the queries that they have undoubtedly heard from members today so that we can clarify matters and, as members have stated, try to restore some confidence among those who support them in a voluntary and financial fashion. I would like to see a lot more co-operation. We will meet the Department of Health and the Department of Public Expenditure and Reform to discuss how the matter has been managed over the years, because it is simply unsatisfactory. It took Deputy Ross, for example, to give us the information on the payment made to the CEO that amounted to €266,000 when one includes the top-up money and the pension contribution. That is unacceptable. It also important for us to point out here that the control environment was seriously inadequate. I know Mr. O'Brien and his staff are working on the matter and afterwards we will see some sort of conclusion.

I do not wish to pick any bones with Mr. O'Brien, but he stated in his opening remarks what was said in the public domain about the report and how it was presented to the committee last week. The report was presented on 15 March of this year, within his own organisation, to various individuals. The reason I was concerned about how it was presented to the committee was that the meeting took place on 14 November, so the HSE pondered the report from March until November. It might have been better if the report had been given to us earlier and properly. That is my only concern about the matter.

The HSE's report is very good. Like what Deputy Ross has said, the HSE should not be afraid of naming names and releasing the figures attached to the names. Apart from political or media analysis, we would have a fact-based document that contains literally everything from A to Z. We must strive towards that type of report, which will help everybody. I thank Mr. O'Brien and his officials for attending here at short notice.

I wish to refer to two matters very quickly. I know that the HSE will be very busy between now and Christmas and I may not get another chance to say the following to Mr. O'Brien. I want to put on record the fact that I raised the issue of reviews and appeals at the last meeting when we discussed medical cards. I will not reopen the debate, but I want to mention two things. The person who dealt with reviews and appeals of medical cards looked at me in disbelief and said he did not see how that kind of letter would have gone out. There were 29 different pieces of correspondence around these medical cards that the HSE deals with. I want to read into the record of this committee that an applicant was told in a letter that their application could only be reviewed if they had additional relevant information. This was a case in which all of the information had been given. Everything had been put before the HSE's medical card section and a review was requested due to the serious nature of the illness of the applicant - who, by the way, has since passed away. I raise the matter because it caused a difficulty for that particular applicant and their family, because they could not get someone within the HSE to understand that a review was absolutely necessary and urgent. In case the delegation thinks this was an isolated case, I checked my old files as quickly as I could today and found a second instance in which a review was denied unless relevant information was given. The applicant had given information from her consultant and doctors, as well as all kinds of personal information. After dealing with all of the issues raised in the correspondence about medication, money issues and so on, the applicant wrote:

So, you are asking for new information. Well, here it is. We cannot afford our healthcare and medication without a medical card. We have cut back on the tablets that our GP says we must take to stay alive. Our lives may be shortened or abruptly end because of your decision.

I have had to quote these to prove that letters are being issued that give the impression, though possibly not intentionally, that a review can only be considered if there is fresh evidence. I further stated at the meeting that consultants and doctors were getting annoyed with these patients returning to them asking for fresh proof that was necessary, as if it were needed in either of those cases, to restate their position. I do not want to reopen the debate on the matter. I just wanted to clarify that I have the evidence. I thank Mr. O'Brien's officials for the direct assistance that they have given when we raised such concerns.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is it possible for me to ask a supplementary question?

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

If it is short.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Yes, it is very short. Dr. Smith compiled her reports and produced a figure of €3.2 million for allowances and €912,000 for externally funded salaries.

That was in respect of which year?

Dr. Geraldine Smith:

That was in respect of 2011.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Did the HSE, at the time, extrapolate and come up with a figure for the total amount that would have been involved over the years?

Dr. Geraldine Smith:

No.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Does Dr. Smith know what year these allowances have been paid from?

Dr. Geraldine Smith:

No. These allowances could have been paid over various years. Given that we are talking about a lot of individuals in a lot of different agencies, we cannot say all of the allowances started on a particular day. They were put in place at different times but we do not have the information on that. We cannot give the committee an exact figure in terms of the amount of allowances in play.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Roughly, what would the HSE expect the total to be? Would those figures be reflective of the situation over the past five or ten years?

Mr. Tony O'Brien:

Without putting a precise figure on it, it is reasonable for the Deputy to conclude that this is a multi-year issue and therefore, the overall cost over the years is a multiple of the one year figure.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

How many years are we looking at here?

Mr. Tony O'Brien:

In one instance, the payment of an allowance dates back to the 1990s. Essentially, the object of the exercise was a point in time analysis to determine what the position was then, rather than to go back and determine when these payments started. We do not have evidence upon which to base-----

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

It is both a legacy and current issue. Given that one of the payments began in the 1990s, this has been going on for the last 20 or 25 years.

Mr. Tony O'Brien:

In some instances that is certainly possible, yes.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Finally, from what year does the Financial Emergency Measures in the Public Interest, FEMPI, legislation apply?

Mr. Tony O'Brien:

I think, from memory, the first FEMPI Act came into effect at the beginning of 2010. Prior to that, a pension levy was introduced. That was in 2009, to the best of my memory. Obviously, there was a subsequent FEMPI Act this year.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

In terms of addressing the issue under the FEMPI legislation, can the HSE deal with this from 2010 or 2009 onwards?

Mr. Tony O'Brien:

It is not at all clear to me, at this stage, that the FEMPI legislation can be used in a general sense to deal with these payments. Clearly any payment should have been subject to the FEMPI Act in its own way but whether the legislation provides a device to deal with the bigger issue and the totality of these unauthorised payments is not clear.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The HSE has written to all of the agencies involved. Has any of them changed their pay scales and allowance regimes to come back into compliance with Government guidelines? Of the 43 agencies that the HSE wrote to, did any of them respond to the effect that they were changing their pay and allowance scales?

Ms Paula Lawlor:

In the document circulated, the second group of agencies listed are those which confirmed compliance with the Government guidelines but for which our audit report indicates that further verification is required. We would be hopeful that those seven have now ceased the payment of the allowances that showed up in the audit last year but we need to go back and ask that question of them. They have just confirmed compliance with regard to the question we asked.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Really what Ms Lawlor is saying is that of the 43 agencies, seven have confirmed compliance. The HSE expects that a further seven agencies will have made the adjustments downwards to be in compliance with Government pay guidelines. That leaves 29 agencies about which the outcome is still unclear.

Mr. Tony O'Brien:

To clarify, the part of the payments which was in conformity with the approved scales, as distinct from anything over the approved scales, was adjusted downwards in line with the FEMPI legislation. We cannot speak to the other part at this stage.

Kieran O'Donnell (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Could Mr. O'Brien repeat that last point please?

Mr. Tony O'Brien:

In respect of the pay packages of those who were in receipt of so-called top-ups, the core part of their pay was adjusted downwards in line with the provisions of the FEMPI legislation.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We should also make it clear that those agencies which are not compliant and may continue to be non-compliant will be invited before this committee. We will be writing to them and furnishing them with the transcript of this committee hearing and asking them to come before us. That may assist the HSE in the work it is undertaking.

Mr. Tony O'Brien:

If I may say, we appreciate the opportunity to come here and discuss this matter with the committee. We also appreciate the very clear support for the process that is being offered by the committee, including what the Chairman has just said. I am sure the prospect of an engagement in this room at some future point will help to focus minds.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Indeed. I thank the witnesses for appearing today.