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HomeCharities in focusCHARITY CHIEFS GOT €2M IN SECRET TOP-UPS

CHARITY CHIEFS GOT €2M IN SECRET TOP-UPS

By Michael O’Farrell

Investigations Editor

A TAXPAYER-FUNDED charity in receipt of hundreds of millions from the HSE made secret top-up payments worth millions to more than a dozen senior managers, an Irish Mail on Sunday investigation can reveal.

The payouts by the Saint John of God group, from its own funds, appear to have been designed to circumvent strict HSE rules forbidding health agencies funded by the State – known as Section 38 agencies – from breaking public-sector pay limits.

Today our investigation can reveal: 14 executives shared up to €2m in upfront lump sum top-ups. Each payment was between €50,000 and €250,000. The payouts were not declared in any publicly available accounts.

The HSE was not informed until after the MoS confronted St John of God executives about the matter. Our revelations come in a week in which the controversy surrounding suicide charity Console has highlighted the lack of statutory powers afforded to the Charities Regulatory Authority.

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The Irish Mail on Sunday – July 3, 2016

The HSE has confirmed that on foot of today’s MoS revelations it is launching an investigation into ‘concerns regarding St John of God’scompliance with public pay policy’.

As part of ‘a full review of the matter’ the HSE also said it would examine options for recovering the money.

‘The HSE was never at any time consulted on any – so-called – buyout of pay entitlements for senior staff members at St John of God,’ a spokesman said. ‘As discussed with St John of God since the HSE became aware of this, St John of God should have fully disclosed this to HSE at that time,’ he said.

A Government source told the MoS, based on our revelations, that the Public Accounts Committee will be asked to examine the St John of Godorganisation.

The new chairman of the PAC Seán Fleming last night described the payouts, and the manner in which they were made, as ‘outrageous’. ‘The PAC will be taking this up with the HSE,’ he said. ‘The Section 38 issue is not finished business at all as far as the PAC is concerned.’

The publicly funded charity sector in Ireland has been convulsed by pay and governance scandals ever since controversy erupted over salary levels at the Central Remedial Clinic and Rehab in 2013. These scandals ultimately resulted in the entire board of the CRC stepping down and the resignation of longstanding Rehab chief Angela Kerins.

The St John of God group was one of a number of publicly funded Section 38 agencies – the Central Remedial Clinic among them – found to be in breach of pay rules by a HSE audit in 2013.

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As a result the charity – which receives €125m of its €150m annual budget from the State – was facing 20% funding cuts unless it became compliant with public sector pay rules.

However, instead of cutting unauthorised payments to managers, as instructed by the HSE, the group arranged a secret pay deal to buy out the value of the top-ups to executives up to the point of retirement. The deal was concluded in December 2013.

Managers who received the payouts include group CEO John Pepper, finance director Annamarie McGill, regional director Clare Dempsey and procurement director Jane McEvoy. None of these executives commented when approached by the MoS.

The HSE was never informed or consulted about the transaction by the St John of God group until last Saturday – the day after the MoS first confronted executives about the matter.

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WELL GROOMED. St John of God group finance director Annamarie McGill (photo Michael Chester)

The clandestine nature of the payments allowed the charity to declare it was compliant with HSE pay rules each year after 2013 – while in fact the top-ups had been paid in advance.

The St John of God group has confirmed the payments were made to ensure compliance with pay rules and said they ‘were made directly by the Order and not from public funds’.

But under HSE and Department of Health rules, all Section 38 agencies must comply with public-sector pay scales and cannot top up wages through the use of private funds or otherwise.

Each agency must also sign annual declarations of compliance and annual service level agreements with the HSE in order to receive each year’s funding allocation.

The MoS has confirmed the St John of God group signed annual compliance statements, declaring compliance with public sector remuneration rules, in 2013, 2014 and 2015.

These were signed by the chairman of the St John of God group, Brother Donatus Forkan. He is the Provincial of the Saint John of God Order.

In order to get its State funding allocation, the group also signed annual service level agreements with the HSE which contained specific provisions specifying that pay rules were being complied with. These were signed by St John of God group CEO, John Pepper.

Breaches of these agreements and declarations can result in the HSE moving to recoup funds paid in unauthorised top-ups either directly via salary deductions, or from the annual allocation to the agency concerned.

The HSE has confirmed it is investigating the possibility of recouping funds in this fashion by using powers contained in the Financial Emergency Measures in the Public Interest Act.

Despite the HSE’s investigation, the group insisted ‘there were no incorrect payments made’.
Asked about the 2013 payments appearing to be in breach of the spirit and the letter of HSE Section 38 pay rules a spokesman said: ‘We have nothing to say about whether something is in breach of the spirit or letter of the HSE Section 38 payrolls and public sector payrolls.

‘As a body in receipt of public funds the clear objective is to do things within the law and as stated in compliance with public pay policy rules at all times, as was the case here.’ It is also a condition of access to public service health pension schemes that staff are paid in accordance with Department of Health salary scales.

The St John of God group has confirmed that those in receipt of secret payments in 2013 include members of these pension schemes. The HSE has confirmed this aspect will form part of its investigation.

A spokesman confirmed the HSE is also investigating whether or not other Section 38 agencies may have declared themselves compliant with pay policy by making similar secret payments to managers. PAC chairman Mr Fleming said he’d be ‘interested to know’ how the payouts were treated for tax purposes.

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CHARITY MANAGERS. St John of God Provincial Brother Donatus Forkan, Regional Directors Teresa Mallon and Phil Gray, former Community Services Director Bernadette Shevlin and current Community Services CEO Clare Dempsey, Regional Director Pauline Bergin and group CEO John Pepper.

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‘I’d say that the taxation side of it will require further examination… Is the tax compliant by the normal meaning of the word or is it a technical interpretation of it by tax advisers? That will have to be established as well.

John of God can’t have it both ways,’ added Mr Fleming. ‘This is an organisation that is overwhelmingly funded by the taxpayer and they must comply with public ‘John of God can’t have it both ways’ sector rules in its entirety. There’s no scope for payments like that in the public service. This option wouldn’t have been available in the public service.

This is a tax payer-funded organisation, almost exclusively, and they can’t be allowed to do these things.’ The Irish Nurses and Midwives Organisation – whose members recently voted for strike action over proposed cuts at St John of God facilities – called for an independent investigation into the charity.

‘This will be of considerable anger and concern to our members,’ said INMO industrial relations officer Michael Dineen. ‘I believe there is merit in an external party looking at the management structures and the workings of the organisation.’ The revelations come a fortnight after the MoS revealed how the St John of God group spent more than €23,000 sending six members of staff to an Orlando conference earlier this month while it was cutting services back home.

Separately parts of the St John of God facilities in Drumcar, Co. Louth, and St Raphael’s in Celbridge, Co. Kildare, closed recently after damning HIQA care audits.


How account of what head of St John of God told us changed…

Provincial Brother Donatus Forkan, St John of Gods in Dublin, Ireland. The MoS has confirmed the St John of God group signed annual compliance statements, declaring compliance with public sector remuneration rules, in 2013, 2014 and 2015. These were signed by the chairman of the St John of God group, Brother Donatus Forkan. He is the Provincial of the Saint John of God Order. 18/6/2016 nBr Donatus Forkan,St John of Gods.nPic Tom Honan.n
Provincial Brother Donatus Forkan, St John of Gods in Dublin. (Picture – Tom Honan)

SATURDAY JUNE 18: In an interview with Brother Donatus Forkan – head of the John of God order in western Europe – the MoS asks a general question, which we had already posed in writing beforehand, about how the group became compliant with Section 38 pay rules. ‘We are compliant. There’s no questions about that,’ he said. Asked what changes took place to bring about compliance he said: ‘I can’t recall what changes… but we certainly became compliant. We didn’t see ourselves not in compliance but… we reassessed and re-examined and we certainly are and have been compliant.’

SATURDAY JUNE 25: The MoS raises buyout payments of up to €2m to St John of God management. The group releases a statement confirming payments were made by the Provincial Council of the Saint John of God Hospitaller Order ‘to ensure compliance with public pay policy’. ‘The payments were made directly by the Order, not from public funds and were subject to normal statutory deductions… payments ensured the contractual obligations with its managers were discharged.’

SATURDAY JULY 2: The MoS asks the Order if Brother Forkan – who signed the group’s compliance statements each year since 2013 – regretted stating he could not recall how the group became compliant. A spokesman says Brother Forkan ‘regretted’ there had been ‘a misunderstanding’ when he was asked about Section 38 compliance during an interview set up specifically to discuss a controversial trip to an Orlando conference by St John of God managers.

The spokesman said Brother Forkan had prepared for the meeting in that context and ‘provided all the facts and information about the conference’. ‘When asked about the Section 38 compliance, as he was not the Provincial in 2013, he said honestly and openly he couldn’t remember all the detail. Because he was talking to a newspaper, he would clearly like to have all the facts and not provide any inaccurate information. The inference that he said something else is incorrect.’

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POSTSCRIPT

Our revelations about secret top ups for managers and other controversies at St John of God set the news agenda on all TV, radio, newspaper and online media outlets for weeks. In the wake of our story the HSE sent in auditors to the charity to investigate as Government Ministers, public representatives from all parties, trade unions, parents of John of God service users and the charity sector roundly criticised the top ups.

A day after our story the St John of God group confirmed its group CEO – John Pepper – was receiving a salary of E185,000 while the CEO of St John of God Community Services Ltd – the firm in receipt of E150m in annual tax-payer funding – was receiving a salary of E125,000. The public sector cap for those in Section 38 organisations funded by the taxpayer is E110,000.

The group also confirmed that the secret top ups to its 14 managers totalled E1.6m and that Mr Pepper had received the largest sum – a total of E600,000. The St John of God group had previously declined to answer our questions about salaries and top up amounts.

On July 15 – two weeks after our revelations – HSE bosses appeared before the Public Accounts Committee (PAC) to answer questions about the top ups scandal. A transcript of that meeting can be viewed here. The PAC is expected to examine the matter in further public while a HSE investigation into the top ups is imminent.


 

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Michael O'Farrell - Investigations Editor
Michael O'Farrell - Investigations Editor
Michael O'Farrell is a multi-award-winning investigative journalist and author who works for DMG Media as the Investigations Editor of the Irish Mail on Sunday newspaper.

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