By Michael O’Farrell – Investigations Editor
HE St John of God group paid more than €170,000 to a firm co-owned by the cousin of a senior manager, the Irish Mail on Sunday can reveal.
The revelation – described as a ‘very serious’ procurement breach in internal files – comes a week after the charity decided to cease providing HSE-funded services to thousands of clients.
The decision – which the St John of God (SJOG) group blamed on underfunding by the HSE – followed years of controversy involving governance irregularities.
Details of the breach are contained in a protected disclosure made to the Irish Mail on Sunday by a whistleblower. His files link Brendan McCormack, the long-serving information and communication technologies (ICT) manager at the SJOG group, to the procurement breach.
In 2013, Mr McCormack was named as one of 14 senior managers who received secret payments that the SJOG group lied to the HSE about. Mr McCormack’s share of those payments amounted to €89,602.
In all, more than €2m was shared by the 14 executives in 2013 – money the HSE insists must be repaid to the Exchequer. Now, Mr McCormack is linked to a fresh controversy involving payments awarded to a company co-owned by his first cousin.
Because SJOG Community Services is almost entirely funded by the HSE to the tune of €150m annually, it must follow public sector procurement and governance regulations. But in 2016 it began paying an average of €44,000 annually to Lantaca Ltd – a firm half-owned by businessman David Kerr. Mr Kerr is a first cousin of Mr McCormack.
The work awarded to Lantaca – for which the firm was paid more than €170,000 since 2016 – was not put out to public tender as required.
This omission is described in internal SJOG communications as a ‘very serious, top level’ breach of public procurement guidelines.
‘I do think it is very serious that a complete breach at the top level in public procurement has happened,’ one March 2018 email from procurement manager Jean Mullin to group CEO Conor McCarthy reads.
Other internal correspondence indicates Lantaca was paid as much as €5,000 a month – or €60,000 a year – by the SJOG group in 2019.
The Lantaca contract involves a networking solution to allow computer users in up to 50 SJOG houses around the country to securely access the group’s internal computer network.
But internal files indicate that questions about the Lantaca contract were first raised in early 2018 as different SJOG regions were billed for work.
Ms Mullin wrote: ‘While expenditure is from Regions’ individual budgets, the procurement or engagement of the supplier was through ICT Department, the Regions have assured me. They need to be fully assured that this supplier and any other suppliers procured centrally are publicly procured.’
In follow-up correspondence, the procurement department advised that the Lantaca contract be halted. Days later Ms Mullin recommended the removal of the Lantaca equipment.
The danger of the matter becoming public was also to the fore as Ms Mullin included an attachment of news coverage of procurement breaches at another charity for the attention of group CEO Mr McCarthy.
Despite the recommendation that the Lantaca equipment be removed, it remains in place to this day and no tender has yet been issued.
An SJOG spokesperson said this weekend that Mr McCormack had declared his relationship with his cousin and ruled himself out of any involvement in future tenders involving the firm when it became one of two suppliers to begin a ‘pilot scheme’ for the charity in 2016.
The scheme was to run for two months after which, at the advice of SJOG’s procurement department, all equipment was to be removed pending a competitive tender process.
According to SJOG, Mr McCormack informed management ‘that if Lantaca in the future were to submit a tender, he would step back from the process.’
Ultimately, though, no tender was ever issued and Lantaca continues to provide services to SJOG to this day.
In response to questions from the MoS this week, Lantaca owner David Kerr said his cousin had ‘no direct or indirect commercial interest in Lantaca’.
‘He was doing his best in trying to find the best solution to what is a very complex problem for SJOG and solely by virtue of family contact, he knew of our work in this area. It would be ridiculous for him not look at a Lantaca solution, if appropriate, solely due to his family connection,’ Mr Kerr said.
Mr Kerr also argued that ‘no procurement rules have been breached.’
