By: Michael O’Farrell
Investigations Editor
ONE man controlled all financial decisions relating hundreds of millions of euros in public funds at a major charity, it has emerged.
St John of God boss John Pepper dominated a poorly governed system of financial control, an internal governance report commissioned by the charity has concluded.
It meant that hundreds of millions of euros – provided by the HSE in recent years – was not in the direct control of the entity to which funds were provided.
That’s the conclusion of a neverbefore-published external evaluation of management structures at the SJOG group by governance expert Patricia Quinn.
The review was completed between April and June in the wake of top-up scandals that saw large sums secretly paid to top managers – including more than €2m to Mr Pepper – as the charity lied to the HSE to say no such payments were being made.
According to the review, SJOG directors themselves are concerned about the system of controls in place at the charity and in particular ‘the absence of an internal audit function’.
Interviewed by Ms Quinn, some directors also expressed concerns about the composition of the board and the dominant role played by group CEO John Pepper. Mr Pepper has been on sick leave since shortly after the Irish Mail on Sunday revealed the secret top-up scandal more than a year ago.
Last year, the charity boss missed ‘Failure to establish an internal audit function’ a crucial audit meeting with the HSE, saying he was going to Africa on official business; however, the MoS revealed that Mr Pepper did not leave Ireland.
Officially, he is the group chief executive of Saint John of God Hospitaller Ministries Ltd, a new entity that has not begun trading. It is envisaged it will be the charity’s central controlling vehicle on behalf of the St John of God Order.
Meanwhile, the company in receipt of hundreds of millions from the taxpayer in recent years – St John of God Community Services Ltd – has a separate CEO and board which are legally responsible for all HSE funds provided.
Alarmingly for the taxpayer, the review concludes that Mr Pepper – not the CEO or board of St John of God Community Services – controlled all financial decisions involving public funds. ‘The executive heads of finance, HR, communications/IT respectively, who each are responsible for lead executive functions to Saint John of God Community Services, all report directly to the group chief executive of Saint John of God Hospitaller Ministries, rather than to the CEO of Saint John of God Community Services,’ the report reads.
This mechanism, the report concluded, is not properly accountable from a good governance point of view.
The report recommends that the Group Chief Executive of Saint John of God Hospitaller Ministries Ltd not be allowed to be a member of the board of Saint John of God Community Services Ltd.
‘The system of internal financial controls is not under the direct supervision/control of the Board of Saint John of God Community Services,’ the report reads.
‘Directors are not satisfied with the continuity of management controls as between central HQ and local service centres, and with the failure until very recently to establish an internal audit function.’
