Rehab finances: The issue that refuses to go away
FOR a duo intent on saying as little as possible, former Rehab CEOs Angela Kerins and Frank Flannery have an uncanny knack of being the only people anyone wants to talk about.
Today, the Dáil Public Accounts Committee will hold yet another meeting on the high-profile figures, this time behind closed doors, after fresh revelations concerning the disability charity’s financial dealings.
In keeping with recent tradition, Ms Kerins and Mr Flannery are continuing to refuse calls to attend any upcoming PAC meeting on the issues — or to clarify exactly how much they have taken from the charity in salaries, bonuses, expenses, perks, and pensions since retiring.
Last Thursday’s no-shows at the PAC have increased the likelihood of both individuals being “compelled” to attend the committee, a controversial move that, while legally allowed, has never been tested.
However, while this latter issue is the central point of discussion for the committee today, the reasons why both individuals’ attendance is so badly wanted — and, a cynic might ask, why they do not want to attend — are almost certain to be discussed.
At last Thursday’s six-hour hearing, it emerged that Mr Flannery, a former Fine Gael advisor, received €409,000 in consultancy work from Rehab since retiring as chief executive in 2006.
The pay-outs, far higher than previously known, are noteworthy for a number of reasons — not least being what they were actually for.
After stepping down as Rehab chief executive in December 2006, Mr Flannery received €40,000 in 2007, €68,750 in 2008, €44,044 in 2009, and €60,000 in 2010.
He returned to Rehab as its board’s chairman between 2011 and February this year, when the ongoing controversy forced him to cut the ties, receiving a further €51,000 in 2011, €66,000 in 2012, and €79,950 in 2013.
Rehab’s finance director, Keith Poole, told last week’s meeting that the money was for “international representation” and Charitable Lotteries Act lobbying. However, a promised breakdown, pay-out by pay-out, of what this specifically entailed has not yet been provided.
Of equal concern is why Mr Poole only found out about Mr Flannery’s payments on preparing Rehab’s 2012 annual accounts, which highlighted the deals to the recently returned board chair.
After examining the records, Mr Poole found the money had, until then, been paid to Mr Flannery’s firm Laragh Consulting, which no longer existed.
After the Laragh issue and the equally serious point of a board chair receiving consultancy work from the board, a move which breaches Rehab’s memorandum of association document, Mr Flannery’s funds continued, only this time through Rehab’s UK subsidiary TBG Learning.
PAC chair John McGuinness said last week the issue was “unusual”, as it meant either Mr Flannery was suddenly performing the same work in another country or there was an attempt to avoid the payments stopping for conflict of interest reasons.
As the payments fell below €50,000, almost all were signed off on directly by Rehab chief executive from 2006 to February 2014, Ms Kerins, not Mr Poole.
Under its own rules, no group in which a Rehab director has over a 1% stake can receive money for consultancy work on behalf of the group. What a surprise, then, that quite a few firms fitting this exact description benefited from deals.
As Mr Flannery and Ms Kerins were Rehab’s CEOs for three decades and, in some cases, have direct involvement in the pay-outs, the PAC is keen to seek their assistance on the matter.
Weekend reports revealed that, as CEO, Mr Flannery signed off on €2.5m worth of consultancy work for a Fine Gael minister’s brother-in-law, who was also a Rehab director at the time.
The money was paid to John Hussey for management consultancy services averaging €200,000 a year between 1994 and 2005, while he was a director. Rehab paid him €175,000 to terminate his consultancy contract by “mutual consent” in 2006.
While Rehab said it has no record of concerns being raised over the pay-out, it has been claimed there was “disquiet” when the sums were detailed to the board.
However, Mr Hussey is not the only person to have received consultancy money from the charity while also a director.
Among the payments is a €60,000 sum provided to director Liam Hogan, who is also the head of the charity’s audit committee, for working one day a month for six years. Mr Hogan told the PAC last week the deals were “legal” but “dynamite”, given current circumstances.
A further €30,000 has also been paid out over the past two years to South Dublin-based quantity surveying firm KCMS, of which ex-Rehab director Barry Keogh is a partner.
Another €102,000 was given to an unnamed UK-based Rehab director of charity subsidiary TBG Learning for as yet unknown reasons.
Those following the ongoing Rehab saga will be aware of the coffins importation deal involving Ms Kerins’ brother Joseph McCarthy, husband Sean Kerins and Mr Flannery, which is increasingly taking centre stage. The chronology alone demands an explanation.
In summer 2009, a Rehab Recycling official put forward a business deal whereby the charity would import coffins from China before putting them together in Ireland and selling them on.
The plan was initially shelved, until then-CEO Ms Kerins raised the topic again at a November 2009 board meeting. At this meeting, Ms Kerins proposed Complete Eco Solutions to provide the service, as it imported items from China.
At last month’s PAC grilling, Ms Kerins said she stressed her personal connections and stood back from deliberations — a claim challenged by internal Rehab emails at the time.
Complete Eco Solutions was given the deal, which ended after a pilot project found the scheme was not a money-maker. Interestingly, however, Companies Registration Office files show the firm was not set up until December 7 — a fortnight after the Rehab meeting recommended it.
At last week’s committee meeting, it also emerged an official involved at the start of the coffins plan, Michael Horgan, received a six-figure “settlement” on leaving the charity.
Mr McGuinness, has claimed this is because he was “forced to leave the organisation”.
Given the large number of still unanswered questions over Rehab’s deals, you could easily forget the issue which first sparked public interest — top-level pay.
Through her solicitor last week, Ms Kerins effectively gagged Rehab from revealing any more details about her pay packet. The recently retired official has previously detailed under duress that her salary was €240,000 a year, that she was entitled to a yearly bonus worth up to €80,000, and that her charity perks included the use of an Audi company car.
However, for the time being, her pension remains secret.
The same issue exists for Mr Flannery, who is refusing to attend the PAC as he is a private citizen and has claimed his “constitutional rights” are being ignored.
However, the fact that Rehab is 92% funded by the taxpayer — either through donations or a €90m-plus annual State cheque — means that, despite what Mr Flannery and Ms Kerins wishes, the issue is unlikely to go away any time soon.
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