It is ‘reasonable to conclude’ payment was salary not fees
IT is ‘reasonable to conclude’ that the additional €40,000 payment to Dr Rhona Mahony by Holles Street was ‘salary’, and not simply fees from private patients, the HSE’s internal audit has said.
The NMH has consistently argued that the payment to Dr Mahony – and her predecessors as Masters of Holles Street – came from fees from its Semi-Private Clinic, and did not represent a topup on her €235,000 public salary.
However, the HSE audit points to three pieces of Holles Street’s own documentation which refer to payment of salary. These were:
The AGM of the Medical Council held on February 2, 2012 stated that the ‘Master’s salary from fund was agreed at €40k’
NMH’s invoice to the SemiPrivate Clinic (Medical Fund) seeking a reimbursement of the monies it paid on behalf of the Semi-Private Clinic (Medical Fund) describes the reimbursement sought as ‘Recharge for Master (CEO) Salary 2012’
NMH’s debtor listings for 2011, 2012 and 2013 described the debt as ‘Master’s Salary’
The audit states that these references to the payment as a ‘salary’ in these ‘key documents’ reflected the NMH’s assertion to an earlier HSE Internal Audit in 2012 that the money was a salary which was externally sourced and funded.
Crucially, the new audit states: ‘In Internal Audit’s opinion, based on all the evidence available, it is reasonable to conclude that, while the €40,000 payment to the Master (CEO) was sourced from Semi-Private Clinic (Medical Fund) fee income, the additional payment paid through NMH’s payroll did not represent a distribution of fee income in respect of activity in the Semi-Private Clinic.’
Documentary evidence shows it was a transfer of funds to NMH to fund what the Semi-Private Clinic (Medical Fund) minutes and NMH’s invoice and debtors’ listings described as salary, and which NMH’s Board minutes describe as a ‘contractual arrangement’ between the hospital and individuals. The audit also says there is a ‘lack of documentation’ such as a Memorandum of Understanding, or some sort of contractual agreement, regarding how this extra payment to Masters was arranged. There is also a lack of paperwork for each individual payment.
The report also questions why the €40,000 was paid through NMH’s public payroll.
‘It is not clear why it would use an alternative mechanism (i.e. NMH’s payroll) to make what it describes as an additional distribution of fee income to the Master.’ In its response to a draft version of the audit, Holles Street explained that its decision was based on tax advice.
‘Until recent years, all income distributions from the Medical Fund to the consultants were made through the Hospital payroll as a result of tax advice received by the Hospital at the time.
‘However, on receipt of more recent tax advice from the Hospital’s tax advisors, the procedure was changed and payments to consultants are now paid directly by the Medical Fund as distributions of private fee income.
‘However, the additional distribution to the Master continued through the Hospital’s payroll, again on the advice of the Hospital’s tax advisors. However, this tax advice has since been reviewed and the distribution to the Master is now paid directly by the Medical Fund as a distribution of fee income in line with the payments made to all other consultants.
‘It is also incorrect to say that there was no written agreement for this arrangement. These payments are noted in the minutes of the board meeting every year. This additional payment of €40,000 is monies arising from professional private income. Dr Mahony is a consultant as well as Master of the Hospital and she has an entitlement under her contract of employment to carry out private practice services.’
‘A lack of documentation’