State agrees to €238k pay for new VHI chief

The Government has been accused of ignoring the needs of patients and ordinary health service workers after agreeing to breach a pay level for VHI’s new incoming chief by almost €48,000.

Ministers came under fire last night after it emerged they have agreed to pay a salary of €238,727 to John O’Dwyer, the health insurer’s new CEO.

The salary is tens of thousands of euro more than the amount originally agreed as a starting salary for the position.

However, the Department of Public Expenditure said yesterday that Mr O’Dwyer’s salary would not breach the general salary cap agreed for new CEOs of commercial state companies last year.

A statement on behalf of minister Brendan Howlin said the amount agreed was below the cap of €250,000 agreed for new CEOs of such companies.

However, the department conceded that the €238,727 salary was above the general starting rate agreed for VHI last year, which was €191,014.

Mr Howlin had previously signalled that exceptions may be necessary, his office said. His office added that the rate was agreed after a case for the salary was made by Health Minister James Reilly.

“In some limited occasions a higher rate can be paid for a role of substantial importance. On the basis of the particular challenges facing the VHI currently, Minister Howlin acceded to the request made by Minister Reilly on this occasion.”

VHI yesterday said that Mr O’Dwyer would not receive bonuses.

Sinn Féin questioned the agreed salary, especially at a time where ordinary health workers were facing the threats of pay reductions and services were being cut.

Health spokesman Caoimhghín Ó Caoláin said: “Yet again, the double standards of this coalition government are on display. Low and middle-income earners in the health service have taken decreases in their incomes in recent years and are expected to deliver better services with fewer staff.

“This week they were also threatened by [Transport] Minister Leo Varadkar to further reductions to their incomes, in breach of the Croke Park Agreement. Then we find that Minister Howlin on the request by Minister Reilly has sanctioned a breach of the Government’s own salary limit for the new VHI chief on the basis of the ‘particular challenges facing’ the VHI currently. It seems that the particular challenges facing frontline workers and patients do not count.”

Fianna Fáil’s Sean Fleming said: “This is another example of the government saying one thing and doing something else.

“I would demand that in future the Government stick to their own guidelines on pay scales. What is the point in establishing these pay scales if they don’t adhere to them across the board?”

Mr O’Dwyer will join VHI from the Dutch insurance firm Achmea. He is currently on secondment to their Greek company Interamerican, the second biggest insurer there.

Prior to his current role he held positions as managing director of Friends First Life Assurance, director of operations at Bupa Ireland, and assistant chief executive with responsibility for claims in VHI. He was also non-executive chairman of the board of the National Treatment Purchase Fund.

Mr O’Dwyer will replace Declan Moran, VHI’s acting CEO, who took up the position in Nov 2011 on a salary of €240,000.