Ms Laverne McGuinness:

Mr. Kiely referenced the fact the CRC was singled out separately. The Secretary General of the Department of Health asked us to examine the disability sector with regard to salaries and pay scales in the first instance. This is where we commenced. Having done so, the CRC replied to us in this regard.

I wrote to Mr. Peelo on 24 April 2009, setting out that the Secretary General had requested us to examine the salary scales of the CRC. I set out the fact the salary levels were far in excess of what had been determined by Government pay policy and what would be expected. At the time I requested that the board would immediately review and take steps to significantly reduce the level of remuneration for senior management and let me know within two weeks how it proposed to do so.

I received a response from Mr. Peelo on 8 June 2009. He set out very clearly that he was disappointed with the sentiment set out in the letter and that the board could only in effect take account of the fact that it was an independent legal entity, which it is and we recognise this. He stated:

It is our firm contention that the level of Management salaries is a matter solely for the Board of Governors of the CRC to determine. It would be utterly inappropriate to simply unilaterally "significantly reduce the level of remuneration of senior management staff in the CRC" and indeed it may very well be contrary to the principles of Employment Law.

This was referenced by Mr. Martin.

On foot of this we further wrote on 15 June, when I stated that it would appear from the data in the letter the CRC was contesting the amount of money we stated was appropriate for the particular salary scale and was suggesting we may have made some inaccuracies in our comparisons. We tried to assure the CRC that any comparisons on remuneration of senior staff were made either with organisations of similar size in the disability sector, many of which had a very comparable range of specialist health services, education, vocational training and social and personal services, and with various roles in the HSE where general managers were responsible for large budgets across a wide range of specialist services in this regard.

In the same letter I set out that although the contention was:

that the level of Management salaries "is a matter solely for the Board of Governors of the CRC to determine"... as the main funder of the CRC, the HSE has a responsibility to ascertain whether the current remuneration levels of senior staff in your organisations, as outlined in the information supplied by your organisations represents best use of funding from public sources.

At that point I requested the CRC attend a meeting with me and Mr. Liam Woods, the director of finance at the time, and suggested a date. The meeting took place on 25 June.

My reply to the meeting of 25 June was set out on 7 July 2009, and it is important because it does not necessarily concur with statements made by Mr. Peelo. We acknowledged very clearly the CRC plays a vital role in providing a significant and excellent service to the patients and clients it serves. We stated we understood its position, that it had historical arrangements, but:

the Board of Governors will appreciate the requirement for the HSE to ensure the best value for money in the expenditure of organisations which are substantially funded by the Executive. This applies even in situations where the organisation has access to other sources of funding.

At that point I enclosed a list of senior executives and the rates of applicable pay and set out clearly in the second page that I would appreciate if the chairman would review the information on the salary scales with the board of governors and revert to me with proposals on how the senior staff salary levels could be brought into line with the levels we indicated were appropriate.

We received a reply from the CRC dated 17 November 2009 which stated: "We undertake the CRC, as a voluntary organisation, will itself fund the excess of the salaries concerned as identified by the HSE." The arrangement as agreed at the meeting on the management posts concerned was that, "As and when the management posts concerned fall to be replaced through retirement or resignation, the salary of the incoming replacement will be discussed and agreed with the HSE".

There was no response to this and we did not agree any amount of extra funding or where the funding was to come from in this regard. We put in place a set of governance arrangements through a section 38 agency and the parameters under our legal obligations with regard to the public funds which we administer. Mr. O'Brien can refer to the note. It was not that there was agreement.