Sunday 28 December 2014

CRC set up fundraising arm to disguise wealth from HSE

Published 20/06/2014 | 02:30

Former CRC chief executive Paul Kiely
Former CRC chief executive Paul Kiely

THE Central Remedial Clinic (CRC) took a "carry on regardless" attitude to using charity funds to bankroll generous salary top-ups and pensions for its senior executives.

The disgraced disabilty agency set up its fundraising arm, the Friends and Supporters of the Central Remedial Clinic, to channel charity money – estimated at €12.8m – into a separate company.

This was aimed at diverting HSE attention away from how cash-rich the service was in order to ensure that it got a maximum State funding.

The damning finding has emerged in the report of the HSE administrator John Cregan, who was sent in to run the organisation in the wake of the salary top-ups controversy.

However, the audit did not find "any wrongdoing" and the agency will not be subject to the authority of any outside watchdog despite "questionable procedures" being uncovered.

Mr Cregan pointed out the lack of scrutiny by the HSE, which gave it €16.5m last year, and said that had it bothered to check the published audited accounts of the clinic or its fundraising arm, the extent of its funds would be clear.

Opportunistic

The Irish Independent first revealed in November that its former chief executive Paul Kiely, who took early retirement last year, was on a salary of €223,000 along with an allowance €19,000. Some €135,000 of this money was from the clinic's own funds. It later confirmed this top-up was from charity funding.

Mr Cregan said the board miscalculated Mr Kiely's massive retirement package of €740,000 because he had not been subject to pay cuts for the public part of his salary.

The report also revealed:

* The CRC maintained two separate and "opportunistic" payrolls with executive salaries in a "private" stream – an artificial split to allow for senior staff to avoid the full impact of public service pay cuts.

* The fundraising arm was used for a series of "big ticket" items including an unsecured loan of €3m to prop up its pension fund.

* And it repaid €550,000 to the CRC last year on behalf of CRC Medical Devices, a loss-making mobility distribution company which is now sold off.

* Its fundraising income fell from €417,975 in 2010 to €190,934 last year.

* Fundraising by the CRC, such as the Santa Bear Appeal and flag days amounted to €190,934 in 2013. But costs and overheads amounted to €204,340, ending up costing it €13,406.

* The CRC was told by the HSE in 2009 to stop paying top-ups but this was "never tackled".

* Although record keeping overall was good, the human resources files for two former chief executives could not be found and an anonymous claim was made that they were shredded.

Mr Cregan, whose report contains a range of recommendations, said: "The past six months have proved to be a traumatic time for the staff at the CRC, but the appointment of new boards and a chief executive should pave the way towards a reinvigorated CRC.

"The difficulties faced by all concerned should not be underestimated but, they are dwarfed in comparison with the challenges faced by many of the CRC's clients and their families."

Responding to the report, the new board of CRC said it already beginning to address issues highlighted and it is due to "meet immediately" to develop a comprehensive plan.

Former board chairman Hamilton Goulding "rejected suggestions that fundraised monies were somehow kept secret from HSE".

He added: "The details were published in annual accounts and formed the basis for jointly funded projects with HSE.

Mr Goulding said the report "vindicates both himself as chair and the board generally of the serious allegations of wrongdoing".

Irish Independent

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