The VHI struck a six-figure deal with a private consultancy firm so it could benefit from the advice of its former chief executive who resigned from his post last year.
It is understood that the arrangement allowed for the former VHI chief executive, Jim Tolan, to be available to the company for one day a week in a deal worth an estimated €100,000 plus Vat.
Mr Tolan decided to leave the VHI in May 2011 after working there for more than three years on a remuneration package of €525,000 a year.
He left after clashing with James Reilly, the health minister, over Government plans to break up the company.
In January, he was hired by PricewaterhouseCoopers (PwC) to head up its healthcare policy division.
The contract with the VHI was worked out after he joined the private firm. Mr Tolan’s work for the board of the VHI supplemented that of the then acting chief executive.
It is understood the VHI has terminated parts of the arrangement involving Mr Tolan following the appointment of his permanent replacement earlier this summer.
However, the VHI would not comment on the status of the contract and said it would not discuss the consultancy provided by PwC.
“As a policy, VHI Healthcare does not comment on consultancy contracts we currently or previously had in place with various providers,” the company stated.
“Like all commercial businesses, VHI Healthcare employs the services of external consultancies to provide advice on various aspects of our business. These arrangements are confidential.”
The VHI said it never had a consultancy contract directly with Mr Tolan.
PwC said it had no comment to make.
The Department of Health was aware of the situation. However, Mr Reilly’s spokesman said any decision that VHI took regarding Mr Tolan was a matter for the company.
When Mr Tolan joined PwC, the consultancy firm said the appointment would allow it to enhance the services provided to hospitals and healthcare companies.
Mr Tolan joined the VHI from Fyffes in 2008 on a pay packet worth €520,000 a year, including pension payments and a €25,000 car allowance.
This would have risen to €625,000 if he had succeeded in raising the VHI’s capital reserves to a point that it could stand on its own as an authorised insurer, without the need for a State guarantee.
The company has still not achieved this target despite recent orders from Europe that the guarantee must end. The European Commission said it will investigate the VHI if the situation is not addressed.
Last October the VHI announced that Declan Moran would serve as acting CEO until a permanent replacement could be found.
This summer the VHI announced that it had poached John O’Dwyer from Dutch company Achmea to fill Mr Tolan’s former role.
© Irish Examiner Ltd. All rights reserved