James Reilly (Dublin North, Fine Gael) | Oireachtas source

In order to address concerns about persistent underperformance which had arisen in a number of hospitals in Galway-Roscommon, a CEO was appointed to the Galway-Roscommon Hospitals Group which was subsequently extended to become the West-North West Hospital Group in January 2012 and Mr. Daly was appointed chair of the non-executive board on 29 May 2012.

My Department and the HSE first became aware that an issue had arisen in the commissioning of the review of maternity services on behalf of the West-North West Hospitals Group from a media query on 19 May 2014. The director general of the HSE informed my Department on that day that he had requested a team from the HSE's internal audit unit to conduct a report on the matter. In the course of its investigations the HSE internal audit team was assured by the CEO that he had made the decision to source D & F Health Partnership based on its suitability for the project and that the chair had no role in this. The investigation found that while Mr. Daly had disclosed to the board that he was a former employee and former director of D & F Health Partnership, he had failed to disclose that he continued to hold a 50% shareholding in the company. The investigation also established that the procurement of services had not been in accordance with HSE national financial regulations.

On 22 May the findings of the audit were presented to the director general of the HSE who informed my Department and wrote to both Mr. Daly and the CEO to make it clear that further breaches of procurement rules would be unacceptable and that Mr. Daly should have made it clear to board members that he retained a 50% shareholding in the company concerned. The letter to the chair of the board also requested that the chair take immediate steps to ensure a register of members' interests was established and maintained at the hospital group in order that potential conflicts of interest would be avoided. It is important that anyone serving on the board of a public body make a full disclosure of his or her interests in order that potential conflicts of interest can be avoided. Mr. Daly did not want his reputation or that of the West-North West Hospitals Group to be compromised. I shared these concerns and accepted Mr. Daly's resignation.

See this speech in context