A health board has agreed to repay £2.7m of endowment funds to its linked charity, after criticism from elected officials and newspapers that it misused charitable funds.
Tayside NHS Board used funds from Tayside NHS Board Endowment Funds when "faced with a funding deficit" in 2013/14 to pay for Tayside NHS Board projects including a new IT system.
The charity and the health board are nominally independent of one another, but share all the same non-executive directors. Those directors temporarily suspended the charity's constitution to make the payments, in order to retrospectively patch a hole in the NHS Board budget.
Scottish health secretary Shona Robison announced last week that she would be exercising ministerial powers of intervention and moving NHS Tayside to "the highest level of escalation".
The Office of the Scottish Charity Regulator (OSCR) opened an inquiry into Tayside NHS Board Endowment Funds last week.
At Robison's request, NHS Scotland’s chief executive Paul Gray replaced the board’s chief executive Lesley McLay and chair John Connell, who were both also on the executive team of the linked charity.
Yesterday, interim chair John Brown announced that the board had decided to repay the money after holding an extraordinary meeting with interim chief executive Malcolm Wright.
Brown said: “For our staff and our patients, we believe this is the right thing to do.
“The decision made by the board today doesn’t pre-empt the findings of the formal inquiry into Tayside NHS endowment funds by the OSCR.
“It does mean that we can move forward, start to rebuild confidence and ensure there are no distractions to continuing to do what we do best and that is making sure everyone in Tayside receives high-quality and effective care and treatment.”
In Tayside NHS Board Endowment Funds’ accounts for 2013/14, it says: “During the year Tayside NHS Board was faced with a funding deficit and trustees were asked to retrospectively fund projects already approved by the Board and for which expenditure had been incurred.
“In order to facilitate this, a temporary variation to policy and procedures was approved, suspending the ban on retrospective approval of expenditure for one month.
“Various projects were identified where the trustees could have provided funding and these were subsequently put forward for approval by trustees.
“This resulted in Trustees reimbursing £2.71m to Tayside NHS Board in the year. This expenditure is included within charitable activities.”
Robison said in a letter last week: “Issues over past few weeks have laid bare the extent of the problems facing NHS Tayside and the minutes of a meeting of Trustees in 2014 outline, in detail, the approval of the use of endowment funds by the chief executive.
“It has become clear to me that the current structure of the board cannot deliver the improvements required to return to a sustainable position, while continuing to deliver safe and effective services to patients.
"In particular, I have concerns about the overall management of the board’s finances and the ability of leadership to carry through the change required to bring the Board back into financial balance.
“As such, I will be exercising ministerial powers of intervention and moving NHS Tayside to the highest level of escalation and I have instructed the chief executive of NHS Scotland to strengthen the leadership of NHS Tayside with immediate effect.
“It is imperative that all boards use charitable donations for the purposes of which they were given. At my request, the chief executive of NHS Scotland has written to every NHS board chair seeking assurance that endowment monies are being spent for the correct purposes. We are also engaging directly with OSCR on this issue.”