DAMNING CATALOGUE OF LIES
One by one the deceit is uncovered by HSE’s forensic audit as the Order attempts to halt shock revelations
THE draft HSE audit of St John of God contains startling details on how the Order conducted its business and raises significant questions about implications for the taxpayer. The revelations include:
‘A compensation scheme was devised’ with ‘no documentation provided to the 14 senior managers about the scheme… there were no terms and conditions’ and ‘no signed agreements or acknowledgements’.
Itwas not appropriate ‘for the Order to remove a perceived risk’ for itself ‘by compensating employees for any future liability’ for pension deductions and contributions. It points out that ‘the contracts of all senior managers clearly identified that the additional salary topups were not reckonable for any pension benefits from the Order’. Its opinion is employees ‘could have no expectation of any such benefits’. It said the fact that employees ‘signed no waivers’ in exchange for the compensation is ‘highly irregular’. It said St John of God apparently did not consider ‘that it was potentially transferring a significant liability onto the Exchequer’. It said the Order ‘should have consulted with the HSE prior to executing any such agreement, as its actions had direct consequences for its funder’.
It said the Order’s audited 2013 statements ‘make no reference to the costs as salary expenditure and there is no reference in the accounts to the compensation payments’.
‘One of the senior managers availed of a redundancy package of €157,109 in 2015. HSE approval was not sought.’
The Order notified the HSE in November 2016 ‘that it had identified a further 83 anomalies’
‘whereby allowances and salaries paid to some employees were not in line with’ the required salary scales and that these were not identified in a 2013 review. ‘The total annual cost of the payments was €146,958, comprising allowances of €23,692 paid to 67 employees and salary payments of €123,266 paid to 16 employees. None of the 14 senior managers …identified in this report were included in these 83 instances.’
Furthermore the Order notified the HSE in February 2017 of ‘a further 56 anomalies’ where ‘allowances and salaries… were not in line with’ required salary scales and again had not been identified in the 2013 review. Again ‘none of the 14 senior managers’were included in these.
‘There were no clawback provisions…if any manager leaving the employment of the St John of God before their retirement date.’
Regarding the Order’s assertion that ‘the payment of compensation’ to 12 of the senior managers ‘was to mitigate a potential future pension/ legal risk for the Order that the pensions would not be paid on the additional salary top-ups’, the audit’s opinion was that the managers’ contracts ‘were exceptionally clear that the Order had no liability for any pensions on the additional amount of salaries paid’ to them. It said the Order’s arrangement of ‘a separate payroll’ in 2009 ‘without ever informing the HSE’ or consulting over whether it ‘(a) had a bearing on its compliance with public sector pay policy; and (b) had the effect…of transferring risk’ onto the public-sector pension scheme.
It states that ‘it is difficult to comprehend the fact that there were no terms and conditions, and no settlement agreements were executed, in relation to the compensation payments. In the context of purchasing out an alleged substantial future pension risk, it is remarkable that St John of God considered this to be a satisfactory resolution to the perceived risks.’
‘The bottom line is…these employees, having paid (and been compensated) for pension contributions and deductions on these increased salaries from 2014 until the date they retire (six to 22 years later), may have an expectation of a pension from’ a public-sector scheme.
‘The funding of the increased cost of these salaries by a management charge on’ the Order ‘is prohibited under the September 2013 Health Sector Pay Policy.’
‘In 2014, managers were in receipt of increased remuneration funded from private sources and a redundancy package was provided to a senior manager who had also received lump sum compensation in 2013 These activities were contrary to public pay policy.’ And no HSE approval was not sought.
The Order’s ‘payment to a senior manager after retirement of salary in lieu of untaken annual leave’ and its related costs ‘is inappropriate’. It said this creates a ‘financial incentive for public servants not to use all their annual leave before retiring and to seek payment for untaken annual leave after they retire without this payment being subject to’ pension deductions.
The Order’s community services chief reporting to the Group CEO is
‘Signed no waivers… highly irregular’ ‘Contrary to public pay policy’
‘a matter of concern’.
If the Order ‘had any doubts about how the HSE would treat the additional payments for pension purposes, the matter should have been fully disclosed. Any potential resolution should have been discussed’ with the HSE. The fact that the Order dealt with it inhouse means the ‘managers may be doubly compensated’ and the ‘risk has been transferred to the taxpayer’.
In response to being told it was non-compliant the St John of God chairman said that ‘matters concerning public pay policy were not clear before 2013’ and ‘references to [the Order’s] breaches… should not be referred to in the final report’ and any comments ‘suggesting long term non-compliance… or comments of that nature’ would be ‘misleading and defamatory’. The audit rejected this suggestion.
The chairman ‘categorically rejected’ the questioning of the Order’s candour and ‘very strongly requested that this be deleted from the report’. The auditor rejected this.
The HSE’s Head of Operations of Disability Services ‘expressed grave concerns regarding non-compliance’. The HR director said there are ‘serious issues of trust and confidence issues’.