Cash crisis `permeated' BTSB decisions receiver

The dire financial situation in which the Blood Transfusion Service Board found itself in the early 1980s "permeated" its decision…

The dire financial situation in which the Blood Transfusion Service Board found itself in the early 1980s "permeated" its decision-making, the tribunal has been told.

Mr John McStay, an experienced liquidator and receiver engaged by the blood board to give the tribunal an overview of its accounts, said the financial crisis experienced by the board "couldn't but" have impacted on its decisions.

It was more than £1 million in debt in 1981 and was bailed out by the Department of Health to the extent of £1.6 million in 1982.

However, having reviewed BTSB documents, Mr McStay said he found no evidence that anyone acted contrary to good medical advice because of the financial circumstances the organisation found itself in.

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However, documents opened by counsel for the tribunal, Mr Gerard Durcan SC, showed the BTSB spent more than two years, from 1981 to 1983, discussing the possibility of making a more concentrated form of Factor 8 at Pelican House, to replace imported concentrates which were known to be made from the blood of "skid-row types" and paid donors.

The board talked about seeking grants from the IDA and the EEC "in the context of the year of the disabled" to fund the project.

Cross-examined by Mr Durcan, Mr McStay said he found no documents to show the BTSB had applied for these grants.

In 1984 the BTSB abandoned the idea of making Factor 8 itself and looked instead towards custom fractionation, whereby it would collect plasma from voluntary donors in the State and ship it abroad to be processed into Factor 8.

Counsel put it to the witness that BTSB documents suggested if it made the product at home, it would lose out on the profit it was making from importing products and this would make its financial situation worse at a time (1983) when it was facing a shortfall of £250,000. Mr McStay agreed.

Minutes of a BTSB budget committee meeting in 1983 said that "new products such as Factor 8 concentrate, while being highly desirable as import substitutions, will not generate a profit in the early stages of production".

Other minutes, those of a board meeting in February 1983, noted that it would be "economically prudent" to continue with imports that year.

Mr McStay said it was clear BTSB documents referred to the profit that could be made from custom fractionation and he estimated that the board would have made a net profit, but how much it amounted to, he didn't know. He said the information did not exist to allow this calculation to be done.

Mr Durcan pointed to a financial report prepared for the BTSB in May 1985 which suggested the annual surplus generated from custom fractionation would be £135,000. He said a further internal memo in July 1985 presented "an even more rosy view of what the profit level might be".

Another BTSB document, entitled "Comments on draft revenue accounts for year ended 31/12/85", referred to the sale of factor concentrates and said: "More purchases = more sales = greater profits (in general)".

Mr Durcan asked: "Was that the general view in the BTSB at the time?". Mr McStay said he could not comment on that.

Handwritten notes made by Mr John Cann, former chief technical officer of the BTSB, on the minutes of a finance committee meeting in June 1986, were also read out by Mr Durcan: "JC made point about purchases of fractions (hence sales) being a good thing!".

Counsel said all these documents reflected the point that officials were aware of the profit that could be made from selling imported clotting agents. Mr McStay agreed.