Wednesday 26 November 2014

Rat deserted CRC ship as the storm gathered

Months before Shane Ross exposed the pension top-up scandal at the clinic, former CEO Paul Kiely suddenly decided it was time to go . . .

Shane Ross

Published 19/01/2014 | 02:30

David Martin of the CRC Chairman and current interim chief executive of the CRC, Jim Nugent Former CRC chief executive and Paul Kiely (right) pictured  after a Public Accounts Committee meeting (PAC) to examine top-up payments at the CRC in Leinster House, Dublin. Photo: Gareth Chaney Collins
David Martin of the CRC Chairman and current interim chief executive of the CRC, Jim Nugent Former CRC chief executive and Paul Kiely (right) pictured after a Public Accounts Committee meeting (PAC) to examine top-up payments at the CRC in Leinster House, Dublin. Photo: Gareth Chaney Collins

WHY was Paul Kiely in such a big rush to the exit? Last March, the Central Remedial Clinic (CRC) board heard that Paul Kiely was in an awful hurry to leave. He was determined to be gone by June 16. One board member insisted that this date was unrealistic, leaving far too little time to find a successor.

According to the board minutes, there was "universal agreement" on this point. They should not have worried. Of course it would normally take more than two and half months to pick a successor to a boss of Kiely's calibre. But Kiely was not for turning. He wanted to be shot of the place before mid-June. Was he planning to leave the CRC in the lurch?

Normally, a board would expect at least six months notice to fill a position at this level. Kiely was neither old nor sick. Yet, without explanation, he was retiring more than three years early. Perhaps he sensed the trouble coming down the line? Perhaps he feared that the top-ups controversy was about to break.? If that was the case, he would have been wise to target an available and sympathetic successor to ensure a rapid transition.

The board moved fast. It decided to limit the selection to "internal" candidates. That would short- circuit the process. For unknown reasons they went to the trouble of asking recruitment firm Amrop to advise them. They even set up a sub-committee to hasten the appointment. On the sub-committee sat a long-time CRC director, a man called Brian Conlan.

The board need not have worried. The gods rode to Kiely's rescue. Sometime after the recruitment process began, in a flash of divine inspiration, Conlan saw the blindingly obvious. He had found his vocation. He himself was the man for the job. So he applied. He was short-listed. He attended one interview, where fellow board members ushered him past the winning post. He was even allowed to attend the board meeting where his appointment was ratified.

Conlan took the gig on July 1. Kiely must have been mightily relieved. What had the board been worrying about? Why had they not recognised such outstanding talent sitting among their number?

Equally conveniently, Conlan had surprisingly jumped ship from his job as boss of the Mater Hospital barely three months before Kiely's decision to create a vacancy. What a wonderful coincidence that the vacancy arose less than three months after he had left the Mater. He denies that he was in an advantageous position.

Happily, the board felt that Conlan and the clinic were the perfect fit. Conlan sailed into the job.

Kiely had retired early. So had Conlan. It was the clinic's good fortune that Conlan was hanging around, bored and jobless, at the very moment that Kiely stepped down! Kiely handed over the CRC to Conlan in an almighty shambles.

The staff worked miracles in keeping the operations thriving, but the financial and governance structures were a disgrace. Nevertheless, his timing was impeccable. Its only subsidiary, CRC Medical, was in big trouble having lost money for four years. The CRC's expenditure was too high despite a government subsidy of €16m. It was dependent on the Friends and Supporters, the fundraising arm, for resources to support some utterly dubious items of expenditure. The 2012 accounts would reveal a €3m 'loan' from the fundraising arm to top up the pensions of senior people in the CRC.

By the time that little timebomb had come into the open Conlon would be in the saddle and Kiely would probably be on the high seas. No doubt, all interested parties hoped that the €3m "loan" would never attract unwelcome attention. When I discovered it in the accounts it looked innocent enough, accompanied by a note from auditors Ernst & Young that it was "not repayable in the short term". A second glance raised my curiosity. I knew it wasn't right and brought it to the attention of the Public Accounts Committee (PAC). Then the dam burst.

Within two weeks the entire board was forced to resign. Last week the HSE revealed that the former directors had taken no chances with the second, far better hidden, explosive device -- the board's decision to give Kiely a €740,000 golden handshake. This item was buried, described in the 2013 draft internal accounts as a "donation". On the same day in June as he received his final salary payment , Kiely was given a cheque for €473,336. Additionally, €268,689 was paid to pension professionals, Mercers, to ensure that Kiely received a pension, as if he had worked until November 2016.

The deal was artificial and shameless. No one was ever meant to know about it; but just to be sure, a legally binding agreement was drawn up to protect Kiely's sordid little secret. The method of enforcement was positively masonic. The sense of entitlement was stunning.

The board must have known that this concoction stank. It had a special stench with few known parallels in Irish business life. We can forgive tax dodgers, we are accustomed to padded expenses, we have great tolerance for greed. Even the bankers, in their worst moments, would not stoop so low as these guys. It was clear that the directors were ashamed, even frightened of their own actions.

They knew that the Irish public would never tolerate the big pillage: they were taking millions away from the needs of paralysed children to enrich the CRC's elite. So they resolved to keep the deal under wraps. For ever. What the disabled children did not know about they would never miss. Their wheelchairs could wait. Luckily for the directors, as it later turned out, the succession solution ensured that the secret would be in little danger of leaking as Conlan would be in pole position, unlikely to spill the beans on his former comrade Kiely or his fellow directors. Last Thursday, when Conlan appeared before us at the PAC, he was spilling no beans.

Instead he was in denial mood. He knew no secrets. He knew nothing of Kiely's €740,000 pay-off until Wednesday night.

He had not been at the crucial board meeting. He had read no minutes. He had asked no questions. His evidence was not just unconvincing. It was insulting.

The big rush, the coup that saw Conlan take over from Kiely, has not worked. The outcry demanding that Kiely returns the full €740,000 is getting louder every day. The public anger is palpable. This CRC catastrophe is a successor to FAS. The pattern is similar. The giant FAS budget was meant for the vulnerable jobless, but was partly spent on junkets to Florida. The CRC's funds, earmarked for the even more vulnerable disabled, were used to enrich the boss's pension. The episode reflects an ugly part of Ireland that still flourishes in powerful places. The culture of cabals, secrecy and entitlement survives .

Shane Ross is an independent TD for Dublin South.

Irish Independent

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