PENSIONS around the VHI boardroom table have been building for some time, but are now coming to a head as a report from a sub-committee recommends that the contract of managing director, Mr Brian Duncan be terminated. The report will be discussed at a full meeting of the board tomorrow, when the extent of support among members for the sub-committee's report will become evident.

It is not yet clear what Mr Duncan's response will be to the sub-committee's report. He is likely to take legal advice on the position, while the board has also, no doubt, been consulting its advisers. The extent of support for Mr Duncan around the boardroom will also be an important Factor.

There have been rumblings of tension at the organisation for some time now. Among the issues, which have caused disagreement between Mr Duncan and the board, are the role of a senior executive in the organisation. The board is understood to have wanted to remove some of the responsibilities of this executive, but Mr Duncan felt they were wrong and refused to do so. This issue has still not been resolved.

Other tensions have surrounded the handling of disputes with hospital consultants and private hospitals. Mr Duncan is understood to have wanted to make efforts to reach a settlement with the private hospitals in particular. However, the dispute remains unresolved. A more recent row has also broken out with the Galway University Hospital.

Some sources say that these reflect significant differences in the handling of issues between Mr Duncan and the board.

It has all been happening against the background of political pressure to control premium levels and the entry of competition to the market, with BUPA, the British company, soon to offer products to Irish consumers.

The report by the board sub-committee - whose members were Mr Paul Coulson, Mr Phil Flynn, Ms Clare O'Connor and Ms Suzanne Kelly - looked at all these issues and at the role and function of the managing director and the board. It is understood to have recommended that Mr Duncan's contract be terminated.

The sub-committee also examined the role of the board, under chairman Mr Noel Hanlon. It recommends that Mr Hanlon remain as chairman. His current term is up next February.

Mr Duncan was appointed two years ago to the VHI. He is understood to be on a five-year contract. He formerly, worked with Irish Life where he became one of its senior executives, heading its operations in Ireland.

Mr Duncan's appointment followed the departure of former managing director Mr Tom Ryan who had disagreed with Mr Hanlon on their respective roles at the company. Shortly afterwards, a committee was established to examine the company's management and board structure. One of its main recommendations was the enlargement of the board. This was undertaken in May.