SENIOR VHI executive Ms Aisling Kennedy, who became involved in the controversy between the board and the former managing director, is understood to be leaving the organisation.

Ms Kennedy declined to comment yesterday. However, reliable sources said the executive's decision to leave the organisation was discussed at a board meeting yesterday. It is understood that terms are now being discussed with Ms Kennedy.

At yesterday's meeting, the subcommittee charged with recommending a new chief executive for the organisation reported to the board. No appointment has yet been made.

Ms Kennedy, who is director business development at the VHI, was involved in a disagreement between former chief executive Mr Brian Duncan and the board of the organisation. Proposals for the development of the organisation drawn up by Ms Kennedy and supported by Mr Duncan were rejected by the board.

The then board recommended that Ms Kennedy's area of responsibility be altered. Mr Duncan refused to carry out this board instructions. Shortly afterwards seven new members were appointed to the board. The new board had to confront this issue and other tensions which had developed over issues such as the handling of a major dispute with the private hospitals.

A sub committee of the board was set up to consider the role of Mr Duncan and the conflict over the role of Ms Kennedy. The committee of four - Mr Phil Flynn, a former ICTU chairman, Mr Paul Coulson, a businessman, Ms Suzanne Kelly a barrister and tax adviser and Ms Clare O'Connor a microbiologist - was critical of Mr Duncan. It concluded that the chief executive should reach an agreement and terminate his five year contract.

Mr Duncan described the conclusions as "unjust and unsupported". Within days he resigned from the VHI.