'Nobody said stop': HSE paid €15m to now-defunct firm without a contract for respiratory sensors

Bernard Gloster described the non-compliant procurement issue as being 'one of the most defining collapses of corporate governance you could imagine'. File photo: Sam Boal/Collins Photos

The HSE paid out €15m to a company without a contract for the provision of respiratory sensors, the Public Accounts Committee (PAC) has heard.

In a tense hearing with HSE senior officials, including outgoing chief executive Bernard Gloster, who described the non-compliant procurement issue — which saw up to a €7m loss incurred in terms of overpayments to a company in liquidation — as being “one of the most defining collapses of corporate governance you could imagine”.

Dating back to the onset of the covid pandemic in 2020, it saw up to a €7m loss incurred in terms of overpayments to a company in liquidation for the sensors that were used to gauge the severity of disease within patients.

Mr Gloster told the committee on Thursday that it is now clear that: 

• Payments were being discharged to the company on a quarterly basis with no knowledge of whether stock was being received in return; 
• One invoice worth €723,000 had been paid out twice by two separate HSE sections; 
• There is no hope of recovering the loss as the company has now collapsed.

He further acknowledged that the loss was only noticed at the instigation of a grievance by the company itself, not the HSE.

“Nobody called it. Nobody said stop. It didn’t come about as a result of us proactively seeking it out,” he said.

Asked whether any HSE employee had been sanctioned for approving the invoices, Mr Gloster said “a number of people have since left the organisation”, adding that they had done so of their own volition.

“The key people central to the decision-making are not available,” he said. “I am not afraid of accountability, but if something is exhausted then it is exhausted.” 

Non-compliant procurement is something the HSE has struggled to control for decades, primarily due to the fragmented nature of the various financial reporting systems which were previously used by the various different health organisations around the country.

Comptroller and Auditor General, Seamus McCarthy, told the committee that a recent audit by his agency of non-tendered procurement within the HSE found that at least 9%, or €132m, was non-compliant, but that the “true rate” could be higher.

Contracts with staff firms

Regarding the issue of the HSE paying for services from its own employees’ companies, the HSE told the committee that a recent review had identified 23 employees “who are directors of companies used for insourcing and outsourcing in the HSE”.

In a briefing note for the committee, the organisation said such arrangements are required to be declared as part of the HSE’s own annual statement of interest, and that where that is not the case and a possible conflict of interest is identified then “it is followed up in line with established internal management procedures”.

It comes as the PAC also heard that University Hospital Limerick (UHL) paid more than €2m without any formal contract to companies owned by HSE employees within the hospital itself as part of attempts to reduce waiting lists.

Mr McCarthy said an internal audit investigation into the hospital’s procurement of clinical services found that UHL had paid €14.2m in total from the HSE’s own Access to Care funding to various suppliers for insourcing services in recent times.

Insourcing refers to the use of in-house hospital equipment and services to reduce waiting lists by providing appointments and services during non-core hours, such as weekends.

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Mr McCarthy told the PAC, ahead of an appearance by the HSE itself, that two of the providers used by UHL were companies either owned or part-owned by the hospital’s own staff.  A staff member from another HSE hospital was a director of a third supplier, with payments of just over €2m paid out to the three companies.

None of the €14.2m was paid out via a competitive tender, putting it in violation of public procurement laws. Likewise, the HSE was unable to verify that any of the HSE employees who had provided the services via their own companies had described those services via a declaration of interest, as is standard procedure.