Gardaí are investigating recent tendering arrangements at Beaumont Hospital, Dublin, which allowed contractors to be paid large sums of money for work that was never done.
The Comptroller and Auditor General, Mr John Purcell, told the Committee of Public Accounts yesterday that the hospital's internal controls failed to stop a possible case of fraud.
Mr Purcell revealed that between 1998 and 2001 the hospital awarded construction work to the value of €3.3 million to a single contractor.
While this did not necessarily imply something untoward, the fact that payments were made for work that was not done "strongly suggested irregularities".
The hospital subsequently commissioned a firm of quantity surveyors to report on the value of works executed on the site. Their report found the hospital was charged €782,180 for eight construction jobs - more than twice a "reasonable cost" for the work.
In September 2001, the manager of the technical services division, which was responsible for awarding the contracts, resigned. It subsequently emerged that the employee had submitted falsified documents, purporting to be an engineering qualification, in support of his application for the post.
Mr Purcell said the evidence of an internal audit suggested quotations were constructed for "non-existent companies" in the tendering process in order to portray a competition where there was none. In other instances, fictional tenders were drawn up subsequent to the completion of work.
Mr Liam Duffy, chief executive of the hospital, said "in retrospect" it should have tackled the irregularities earlier.
However, he said, the procurement department operated within its own "ringlet" at the time, adding management checks had since been strengthened.
He said the hospital now advertised for tenders without specifying the work in order to create a panel of contractors. These panels were rotated every two years, thereby helping to avoid "collusion" between people.
He said Beaumont also now checked educational qualifications with relevant universities. He pointed out, however, that the manager who had falsified his job application had worked with other companies, which in turn provided references to the hospital.
Mr Duffy added that the matter had been referred to the Garda, which had yet to make a decision on whether to prosecute.
The Committee also heard that the hospital was now "happy" with the operation of a controversial car park scheme, which the C&AG had estimated to have cost the Exchequer up to €13 million.
Mr Duffy said Beaumont had negotiated a new agreement on the car park with Winston Properties, which entered into a joint venture with the hospital in 1998.
"The car park is now operating as originally planned with annual income of some €750,000 accruing to the hospital.
"Ownership of the car park will revert in full to the hospital in 2011," said Mr Duffy.
