THE chief executive of the VHI has said he will respond in full to criticisms of him in a report put before the company's board. Mr Brian Duncan said the conclusions of the report of a board sub committee were "unjust and unsupported". The report concluded that his contract should be terminated.

The board of the company "received" the report of the subcommittee, according to a brief statement issued after yesterday's meeting. It said that the board "will meet on October 2nd to further consider the report". The board met for around six hours in VHI [headquarters in Dublin, although, as it was a normal monthly meeting, a range of issues was discussed.

Mr Duncan, who is not a member of the board, is not believed to have attended for the main discussion on the sub committee report yesterday. Speaking after the meeting, he said he would respond in full to it when the board met on October 2nd. His statement that the conclusions were "unjust and unsupported" indicates he intends to dispute the findings of the report.

The VHI statement confirmed that the four board members who had drawn up the report were Mr Phil Flynn, the former ICTU chairman, Mr Paul Coulson, a businessman, Ms Suzanne Kelly, barrister and tax adviser and Ms Clare O'Connor, a microbiologist. Mr Flynn chaired the group which produced the report, which is thought to run to just three or four pages.

The report is understood to be critical of Mr Duncan and to reach the conclusion that the board and the chief executive should reach a settlement and terminate his contract. All four members of the subcommittee signed the report.

The sub committee is understood to have examined in detail the conflict over the role of another senior executive in the company, which was one of the triggers of the current dispute. Earlier this year, before seven of the existing 12 board members were appointed, a serious row broke out between Mr Duncan and the board over the role of this executive.

Proposals put forward by the executive and supported by Mr Duncan were rejected by the board, who recommended that responsibility for some areas of business be removed from the executive. Mr Duncan refused to carry through the board's instruction in relation to the executive.

Shortly afterwards the new board members were appointed and were forced to confront this issue. Tensions also developed between Mr Duncan and the board over the handling of a major dispute with the private hospitals.

The report is understood to comment on relations between managers in the organisation and the morale of staff. It also examines the breakdown of responsibilities between the board, the chairman and the chief executive.

The chief executive will reject the core findings of the report. He would not comment in detail on the report last night, but is likely to argue that the substance of it does not support its conclusion that his contract should be terminated. He is two years into a five year contract at the company.

It is understood that relations between Mr Duncan and the board chairman, Mr Noel Hanlon, have broken down completely in recent months, with the two men communicating by memo or through other staff. Mr Hanlon's current term as chairman will be completed next February.

The board is understood to have received the sub committee report yesterday and asked questions about it to clarify certain points. The extent of board support for the conclusions is not known. However, some sources point to the fact that three of the four board members who drew it up were among the seven new appointees as evidence of broad support for the approach taken.

Some board members are understood to believe that a new approach is needed in the face of competition coming into the market for the first time. BUPA, the British health insurance company, has already established its Irish headquarters and is due to offer policies in Ireland before the end of the year.

The way the board deals with consultants and doctors is also at issue between board and management.

The VHI must also decide what new products to put on the market in the face of competition from BUPA.