Friends of CRC may be on hook for thousands
'Friends' sold assets of wheelchair firm but stay liable for €675k debt
Published 12/01/2014 | 02:30
The charity lottery company that was used to top-up the salaries of executives at the Central Remedial Clinic (CRC) is now liable for debts of hundreds of thousands of euro from a loss-making wheelchair business set up by the disability organisation.
The CRC sold the company, CRC Medical Devices, in November for an undisclosed sum after it failed to make a profit. Details of the sale have not been disclosed but it is understood that only assets were sold.
But the company's outstanding debts, which stood at €675,000 last May, are now expected to be absorbed by the CRC's fundraising arm, Friends and Supporters of the Central Remedial Clinic.
According to documents, seen by the Sunday Independent, Friends and Supporters of the CRC signed a "letter of support" to keep the business afloat. The documents show that the company's debts in May last year -- five months before it was sold -- include the €550,000 loan from the CRC, plus €125,000 owed to trade creditors many of whom are understood to still be awaiting payment.
The business was supposed to be an income stream for the beleaguered CRC during the boom but it never made a profit. It now raises the possibility that the company may cost the disability organisation hundreds of thousands.
Friends and Supporters of the CRC is funded by the public who are encouraged to sign up for charity lottery draws. It took in €2m in charity lottery funding in 2012.
Independent TD Shane Ross said this weekend that the CRC has many questions to answer about the sale of the bust company as to whether it was "another sting on the taxpayer?" Mr Ross will raise questions about the cost of the failed business at the Dail Public Accounts Committee (PAC) when it revisits the "top-ups" controversy.
Brian Conlan, who replaced Paul Kiely as chief executive of the CRC and who negotiated the sale of CRC Medical Devices, is due to appear before the committee on Thursday.
Mr Conlan resigned as chief executive last month, quickly followed by the board following fraught questioning by the PAC. It followed the disclosure that charitable funds from Friends and Supporters of the CRC were used to "top up" the salaries of senior executives and fund a €200,000 pension lump sum for another former chief executive, Paul Kiely. The board of the CRC was due to report back to the PAC on the sale of CRC Medical Devices.
The business was established in 2006 with a loan from the CRC that now stands at €550,000. It ran up losses year after year, blamed on fewer sales, with the HSE, its biggest customer, cutting down on its orders.
The CRC transferred ownership of the ailing business to Friends and Supporters of the CRC, and it was only the support of the charity lottery company that kept it in business. Friends and Supporters of the CRC signed a Letter of Support two years ago promising to honour debts.
By last summer, its losses were almost €50,000, it owed €550,000 to the CRC and €125,000 to trade creditors.
It is understood that the company that bought the business from the CRC made an upfront payment for the stock but did not take on the debt.
The chairman of the CRC was unable to provide details of the sale of CRC Medical Devices when he appeared before the PAC last month. James Nugent had been asked by Fine Gael TD, Kieran O'Donnell, "How much money which should have been used for frontline services will Friends and Supporters of the CRC Limited end up having to use to bail out what is, effectively, a commercial concern?"
The HSE, which has taken over the running of the CRC since the board resigned, has begun an audit of the CRC and its related companies.
The board of St Vincent's Healthcare Group is also due before the PAC on Thursday to be questioned about top-ups paid to six senior staff. The group chief executive, Nicholas Jermyn, receives a total package of more than €292,000 a year.