CRC made €2m deal to save face

The Central Remedial Clinic was far more concerned with saving face than it was with saving money.

CRC made €2m deal to save face

It was so worried about the bad press it would get when its former chief executive’s salary was revealed, it agreed to a €2m savings strategy he prepared himself and of which he was the main beneficiary.

This was the stand out finding in the report by the interim administrator.

Interim administrator John Cregan said that, for four years, the CRC did everything possible to keep its former chief executive Paul Kiely’s €233,000 salary a secret.

“The available evidence points to the CRC Board being more concerned about the company’s independence and the attention that revealing the level of the CEO’s remuneration would attract, rather than the level of remuneration itself,” said Mr Cregan.

“Requests from the HSE, commencing in 2009, for details of the CEO’s remuneration arrangements were initially stonewalled and ongoing media queries were rebuffed on the basis that the CRC was a private and independent organisation.”

When it eventually became inevitable that the salary would have to be disclosed, the CRC decided to plot an exit package that was supposed to save more than €2m between now and 2019.

Mr Kiely received €741,000 of this, which was largely paid for by the clinic’s fundraising arm the Friends and Supporters of the CRC. The deal was supposed to save the CRC €367,000.

“The existing CEO [received] the benefit, by way of direct and indirect payments, of the bulk of the savings made, and a relatively small balance in savings flowing to the CRC,” Mr Cregan said.

However, the €2m face-saving package was ultimately based on flawed calculations of Mr Kiely’s salary and did not take account of pay cuts that were supposed to be applied under the Haddington Road Agreement.

The plan resulted in an unspecified overpayment to Mr Keily, which the administrator said should be repaid.

Overall, the CRC lost money on the plan.

The termination agreement Mr Kiely walked away from the CRC with was presented by himself to the board and was agreed.

“By early 2013, it was recognised by the CEO that, the CRC as a charity, could not continue to resist demands for greater disclosure and transparency in relation to his salary,” said Mr Cregan. “It was then that he undertook to put forward an exit strategy for the approval of the board,

“The terms of the exit strategy, as presented to the chairman by the CEO, were fully incorporated, without amendment, into the termination agreement approved by the board.”

In saying goodbye to its former CEO, the board had not learned its lesson. In hiring a replacement the CRC sought to ignore HSE best practice in order to hire a former board member.

The HSE threatened to suspend its service agreement because of its reservations with the appointment.

However, according to Mr Cregan, this was an organisation that kept financial information from the its funders as a matter of course.

Along with its CEO arrangements, the CRC channelled fundraising money and lottery grants through the Friends and Supporters of the CRC in order to keep its full financial position from the HSE.

“The only rationale for the establishment of Friends and Supporters was to maximise the HSE funding of CRC services — the inference drawn being that if the HSE had been aware of the level of funds available, it may have reduced its annual allocation to the CRC,” Mr Cregan said.

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