Mr. Kieran Timmins:

I thank the committee for the invitation to attend today's meeting to discuss the report of the interim administrator appointed by the HSE to the Central Remedial Clinic, or CRC, and Friends and Supporters of the CRC Limited, or F&S. I introduce my colleague who is with me today, Ms Stephanie Manahan, the new CEO of the Central Remedial Clinic. The Central Remedial Clinic, Friends and Supporters of the Central Remedial Clinic, the Care Trust and Central Remedial Clinic Medical Devices Limited are all mentioned in the report. I point out that they are all separate legal entities. I am here today as chair of one of those entities - albeit closely intertwined with the others - and will primarily address the issues in relation to the CRC. I will touch upon the other entities as far as I can. The standing and relationship among all these legal entities is currently the subject of discussion and consideration among the boards concerned.
The new board of the CRC received Mr. Cregan's report on Tuesday, 19 January 2014 and considered it at its meeting the following day. As the new chairman of a new board, I consider that the report is clear, fact-based and helpful. I hope the committee agrees. In summary, the following emerges from the report. There is no question but that the competence, professionalism and care provided by staff is of the highest quality. There are sound financial systems in place. The CRC delivered on its services arrangement obligations and there are no apparent obstacles in place to the HSE and CRC entering into similar arrangements for the foreseeable future. However, governance did not meet modern standards and the report reveals that the board did not follow the commitment it gave to the HSE on the remuneration and appointment of senior executives.
The root of its problems and the reason we all find ourselves here today related to the application of public pay and CEO recruitment policies at the CRC. As stated in the report, whether deliberately or unintentionally:

In regard to the application of Public Pay and CEO Recruitment Policies the CRC, notwithstanding its 2009 commitment to the HSE, approved a series of appointments to the Executive Team without consulting the HSE; and the CRC artificially divided senior management and administrative salaries into two categories – Agreed HSE and Private CRC - and used the artificial split of the salaries to facilitate the avoidance by senior staff of the full impact of public sector pay cuts.

The report further states:

There was no ambiguity around the need, under the service arrangement, to obtain the HSE's approval to the filling of a senior management position. It is difficult not to conclude that the board knowingly ignored the terms of the service arrangement and its commitment to the HSE in 2009.

This was facilitated by a number of undesirable governance practices whereby members and board members served several companies in several different capacities and the distinctions between companies and their boards may have been allowed to become blurred. We cannot change the past but we can put measures in place to ensure that this could never happen again. The new board is here to support Ms Stephanie Manahan in leading the organisation in her role as CEO. Together, we are determined to drive a culture of good practices, ensure good policies are in place and above all ensure transparency and accountability. We do this to underpin the delivery of quality services to all of our clients and service users and to establish comprehensive engagement with all our stakeholders.
I am more than happy to return to the committee to provide further updates or for any member of the committee to contact me with any queries in the future. What we hope to do today is to give the committee a sense of the steps we have taken and to set out our action plan. Some of the issues facing us – particularly those concerning individuals – will require expert advice before final decision making. To take governance first, a new board of governors of the Central Remedial Clinic is now in place. The new board is competency-based. I have sent on copies by way of background material of the biographies of each member of the team. Each individual member has been identified and selected on the basis of that individual member's skills, expertise and experience drawn from relevant disciplines and different industry sectors. The current composition of the board is on our website. I say "current composition" because the board is committed to continually examining its needs versus its skill set and will consider appointing new members as required. We are also examining ways of letting our clients and staff get more involved in providing input to the board.
The board has set up the following work groups and committees: a remuneration committee charged with ensuring that the remuneration for senior members of the CRC is open, fair and transparent; an audit committee charged with oversight of financial reporting and disclosure; a committee on fundraising governance, structures and best practices; and a working group to review the current memorandum and articles of association with a view to bringing them into line with current legislation and best practices including term limits for board members to allow new blood to be constantly added to bring in fresh ideas and challenge existing practices. I note that the remuneration committee was involved in the appointment of Ms Manahan who was appointed following an open and transparent recruitment process using the Public Appointments Service with effect from 1 June 2014. Ms Manahan has extensive experience in the health sector both in the UK and Ireland and was most recently deputy hospital manager at James Connolly Memorial Hospital.
Friends and Supporters of the CRC, as a separate legal entity now has a separate and independent board, chaired by Mr. Tom Quinn. Mr. Quinn is also on the board of CRC but is the only member from F&S. I believe this is prudent. Mr. Quinn excuses himself from meetings during discussion of any area where there would be a conflict of interest, real or perceived. As part of its deliberations, the F&S board recently wrote to me and informed me that it had resolved that its 50% shareholding in the Care Trust Limited should be transferred with immediate effect to the Central Remedial Clinic; that all revenues accruing to F&S from the Care Trust Limited from a current date should be paid direct to the Central Remedial Clinic, and that it should request its legal advisers to prepare all the necessary legal documentation to give effect to these resolutions. This offer is being considered by the relevant subcommittee of the full CRC board and will subsequently be considered by the board itself. I welcome the general thrust of these resolutions. In addition, we have asked our audit committee to meet with our auditors, Ernst and Young, to understand how we best reflect the relationship between CRC and F&S in our 2013 books so that anyone who examines the accounts of CRC will be immediately made aware of the existence of F&S.
Given the current separation of the two boards and our committee on fundraising governance, structures and best practices, we are in the interim implementing a process by which funds can only be drawn down on foot of an agreed and approved business case signed off by both boards. In the meantime, the CRC board has resolved as an additional layer of transparency that all donations raised by the CRC itself in 2014 will be put in a separate bank account. Those funds may only be accessed on foot of two of the three authorised board level signatories. We are committed to full transparency and accountability so that all our funding partners, including the HSE and our donors, can see how all monies are spent. CRC Medical Devices is a subsidiary of F&S which has had no directors since the resignations in December last. I understand that F&S is in the process of appointing directors to allow it to regularise legalities surrounding the company, pay off outstanding invoices and wind the company down in an orderly fashion.
I trust the committee will appreciate that there are several constraints to my going into executive and senior administrative pay arrangements in any great detail at this time. However, I would like to make the following comments.

On payments to former chief executive office, Mr. Paul Kiely, it is the intention of the board to write to Mr. Kiely about the report’s finding. The calculations of payments to the former chief executive officer, however, are complex and require careful consideration and legal advice prior to any decisions on how to proceed. Issues such as the full implementation of the Financial Emergency Measures in the Public Interest Act, as well as the Croke Park and the Haddington Road agreements, on the full salary, calculation of severance payments, retirement age and other matters all need to be looked at prior to any contact with Mr. Kiely.

On other executive and senior administrative pay arrangements, the new board is determined all salaries and appointments will be at levels consistent and agreed with the Health Service Executive, HSE. A small number of senior management pay levels are outside the approved HSE scales. Mr. Cregan’s report recommended these salaries be red-circled until 2015 to allow some limited time for the new board and chief executive officer to review management structures, job descriptions and executive pay arrangements. We consider this is appropriate as it gives us time to develop a new strategic plan for the Central Remedial Clinic, CRC, for 2015 and beyond. We already know the current management structure has to change as key gaps need to be filled and several retirements will take place in 2015. I am willing to attend the committee again, either formally or informally, to update it as we go through these processes.

From our early beginnings in 1951 to today, the CRC has grown to be one of the largest organisations dedicated to the well-being and health of people with physical disabilities. The legacy issues we are discussing today were not of the making of the staff. They were caused by governance issues at the top of the organisation. Staff at the CRC continue to provide our clients with the services they need and deserve in the professional manner they have come to expect.