Harney asked chairman to resign from hospital board
Health Minister Mary Harney asked Philip Lynch to consider his position as chairman of the children's hospital project after other board members raised concerns about his commitment to the Mater Hospital site in central Dublin.
At least two board members are believed to have approached Ms Harney to report concerns that Mr Lynch was questioning the logistics of building the hospital in the city centre, sources said.
The board members were unhappy that Mr Lynch had met the developer Noel Smyth, who has offered a cheaper alternative for the children's hospital on a site on the outskirts of Dublin to be built on a "not-for-profit" basis by a voluntary group.
The board was further divided when it emerged that Mr Lynch had an "off-the-record" meeting with a delegation over their concerns about the planned hospital's city centre location.
Mr Lynch is believed to have grown increasingly concerned about the logistics of completing the children's hospital within budget in the busy location.
Sources said Mr Lynch believed there was a shortfall of at least €200m in funds and that wealthy private donors could not be relied on to meet the bulk of it.
The businessman was so concerned that he flagged the funding issue at a board meeting of the National Paediatric Hospital Development Board.
He also raised questions about access to the hospital, the traffic flow in the area, and the planning issues on what was a "difficult" city centre site.
Supporters of Mr Lynch believe the catalyst for his showdown with the minister was his meeting with Mr Smyth and a subsequent meeting with members of the Children's Medical & Research Foundation, a high-powered group which raises money for Our Lady's Children's Hospital, Crumlin, and is believed to have funds of €30m at its disposal, which the State wants to earmark for the new children's hospital site
Michael O'Flynn, the Cork property developer and a director of the foundation, contacted Mr Lynch for a meeting to discuss concerns about the location of the children's hospital.
Mr Lynch agreed to meet a delegation from the foundation on an "off-the-record" basis, along with members of the executive of the children's hospital board, according to sources.
The delegation questioned, among other issues, insufficient car parking spaces, access and traffic management at the Mater site.
When news of this meeting emerged at a children's hospital board meeting, some directors strongly objected to it.
Ms Harney summoned Mr Lynch to a meeting a fortnight ago, apparently seeking an update on the project. However, during the meeting she told Mr Lynch that she no longer had confidence in him as chairman.
Mr Lynch's supporters claim that the minister had been misinformed about his intentions, which were to "give space" to other board members to question some aspects of the project and to address the concerns raised by stakeholders.
Mr Lynch broke his silence last Friday after more than a week of media speculation on his reasons for quitting. In a statement he claimed he resigned of his own volition after significant and fundamental differences with Ms Harney. He cited a substantial funding gap and "planning and design challenges" and "clarity or absence of governance proposals for the new hospital". It concluded: "It is my opinion that if the above issues are not addressed, the successful delivery of the new hospital, wherever it is located, is at serious risk."
Ms Harney countered yesterday that she had asked Mr Lynch to resign, as it was not in his remit to revisit the government decision to locate the hospital beside the Mater. She also said she had no issue with Mr Lynch's meeting with the Crumlin research foundation.
The minister, along with Taoiseach Brian Cowen, sought to move on from the controversy yesterday, saying the National Children's Hospital will proceed as planned. The head of Temple Street Children's Hospital, Donal Walsh, also backed Ms Harney yesterday.
However, the departure of Mr Lynch has highlighted serious differences over the viability of the children's hospital.
The new hospital, due for completion in 2015, will merge the three existing children's hospitals in Temple Street, Crumlin and Tallaght into one 16-storey building adjacent to the Mater Hospital, with 1,000 underground parking spaces. Last week, the hospital's development board said €650m in funding was secure, with €450m provided by the Exchequer and €90m in projected earnings from retail, car park fees and consultants' suites.
However, a presentation submitted by Mr Smyth to Mr Lynch, seen by the Sunday Independent, claims that the Mater Hospital will "face very great obstacles" both in raising the shortfall and in satisfying planning conditions.
"We understand that there is a shortfall in the Mater funding of €250m -- to be 'made up' from private sources. We expect that it will be extremely difficult to raise such funds for a State-owned hospital," Mr Smyth wrote.