Ms Laverne McGuinness:

The appointment of an interim administrator to the Central Remedial Clinic and the Friends and Supporters of the CRC Limited by the director general of the HSE on 16 December 2013 followed the resignation of the board of governors of the CRC and the resignation of all the directors of the Friend and Supporters of the CRC on 13 December 2013.
The interim administrator's role had three strands and he confirmed to the director general, in regard to those specific standards, that service arrangement obligations have been met and there are no apparent obstacles to the HSE and the CRC entering into similar arrangements for the foreseeable future; a competency based board of governors has been appointed and a CEO has been appointed by the new board on the recommendation of the Public Appointments Service following an open competitive process; and the CRC has sound systems of financial control in place and legacy issues identified are confined to a small number of issues which have to be brought to a conclusion by the CRC. The CEO of the CRC had resigned with effect from 6 December 2013 and the interim administrator also carried out many of the duties normally performed by the CEO.
The appointment formally ended on 31 March 2014 and the final report was submitted to the director general of the HSE in May 2014. It is important to note that the HSE did not have concerns in regard to the quality of services or the quantum of services being delivered under the service arrangement. The problems identified at the CRC related to governance and general compliance issues.I must emphasise for the committee that the interim administrator did not have any specific powers or legal standing. However, the exemplary co-operation forthcoming from staff at the CRC enabled him to fulfil the roles assigned to him in an effective manner.
The interim administrator was not appointed as an inspector or investigator and was not authorised to embark on a formal investigative process entailing the formal taking of evidence by way of interviews with a view to making any findings of wrongdoing. In the event of any wrongdoing being alleged, reported or suspected, it would have to be reported to the appropriate authority. The interim administrator did not find it necessary to refer any matter to any third party or authority. However, there were governance difficulties at the top of the organisation relating to certain practices, questionable procedures, wrong interpretations of compliance requirements and poor judgment.
Access was afforded to all available documents and records. The overall standard of record-keeping was good and the normal financial transactions, in particular, were properly supported or vouched. There were some exceptions in the report which are referenced.
Boardmatch Ireland was engaged to assist in the recruitment of a new board of governors for the CRC and a board of directors for the Friends and Supporters of the CRC and the continuing members of the CRC and the Friends and Supporters of the CRC co-operated fully in the appointment of the new boards.
In regard to the operation of service arrangements, it has been recommended that the HSE should assign operational responsibility for each of the larger non-statutory agencies to a designated HSE manager.
The correspondence between the HSE and CRC board on the application of public pay policy and related matters commenced in 2009 and continued until 2013 when all of the CRC governors resigned. A full declaration of all pay arrangements has now been made to the HSE by the CRC and the revised administrative and governance arrangements in place will ensure good practice and compliance with public pay policy in the future.
It is still necessary to red-circle salaries in a small number of cases for further review and deliberation by the new board but the use of an artificial split of the salaries by the CRC that facilitated the avoidance by senior staff of the full impact of public sector pay cuts has ended. The former CEO, as the person charged with the executive responsibility for the administration of the CRC, would have been familiar with public pay policy and moneys paid to him in excess of the properly calculated reduced rate for the period January 2010 to the date of his termination in June 2013 should be recovered. Members of the committee will be familiar with the broad terms of the former CEO's termination agreement as it was discussed by the committee at its meeting on 16 January 2014. In the report, major difficulties with the package, from an employer standpoint, are identified.
There was no ambiguity around the need, under the service arrangement, to obtain the HSE's approval to the subsequent filling of the vacant CEO position in 2013. It is difficult not to conclude that the board knowingly ignored the terms of the service arrangement and its 2009 commitment to the HSE when it proceeded with the appointment of a replacement CEO without HSE approval and offered a salary in excess of the approved pay scale.
Two defined benefit pension schemes are operated at the CRC - the voluntary hospital superannuation scheme, VHSS, and the Central Remedial Clinic pension and death benefit plan, CRC plan. The report states that, from an employer standpoint, the CRC has enjoyed substantial benefits from the VHSS arrangement. The new board now governs the CRC and it has assumed responsibility for its operations. The CRC board and the new Friends and Supporters of the CRC board are also reviewing company governance to ensure best practice in the future.
Undertakings related to the CRC, namely, the Friends and Supporters of the CRC, the Care Trust and CRC Medical Devices Limited are referred to in the report of the administrator. None of these undertakings is in receipt of public funds and they are not section 38 or section 39 organisations. However, a number of big ticket items are referenced in the report which impacted on CRC finances and decision-making. These items include forgiveness of loans to the Care Trust, an unsecured interest free long-term loan of €3 million to the CRC to assist in pension liabilities and a donation of €700,000 to the CRC to finance the termination agreement entered into with its CEO.
In regard to the Friends and Supporters of the CRC, the HSE was not aware of the funds being accumulated by the Friends and Supporters of the CRC. It is recommended that the current Friends and Supporters of the CRC functions should be transferred to the CRC board as soon as is practicable and, ultimately, the company should be wound up.
In the case of CRC Medical Devices Limited, it is recommended that the process of winding up that company in an orderly manner should proceed, preferably with the assistance of its directors and company secretary.
The Care Trust has built a successful lottery for the benefit of the CRC, Rehab and the Mater hospital and it has consistently generated significant funds for the benefit of the CRC. The Care Trust has its own governance arrangements and management structure. It is stated in the report that the Care Trust should be urged to go beyond the minimum company law requirements and publish more details of lottery proceeds and associated expenses.
The report of the interim administrator was accepted in full by the HSE and, since its publication on 19 June 2014 by the HSE, I understand the newly appointed board of the CRC has met to develop a comprehensive plan of action to address legacy and other issues identified in the report. The HSE will support the new board and CEO in their efforts to restore confidence in the CRC as a charitable organisation delivering quality services. The HSE is strongly committed to addressing all pertinent matters referenced in the report under the governance arrangements now in place.
Clarification was sought by Mr. Brian Conlon in regard to the report. May I read that into the record as part of this statement?