Bank of Ireland misled State over €66m given in bonuses
Lender forced to pay government €2m after failing to disclose payments
THE country's biggest bank gave inaccurate and misleading information to the Government about €66m of bonuses paid after the state guarantee, a top level probe has found.
Bank of Ireland was last night forced to make a €2m payment to the Government after a damning 14-page report by the Arthur Cox legal firm found the bank failed to disclose all the payments it made between September 2008 and December 2010.
The report also found sloppy record keeping at the bank and refers to a "catalogue of errors".
And the bank has also revealed that it will pay out another €21m this year in bonuses and commission payments.
It claims it is either tied into these arrangements based on old agreements or needs to keep key staff as it is trying to sell certain businesses to interested buyers.
The investigation ordered by the Department of Finance came after Bank of Ireland admitted that inaccurate information on bonuses was provided last November, in answer to a Dail question.
This inaccurate information was ultimately read out in the Dail by Finance Minister Brian Lenihan. He then ordered the law firm to conduct a detailed examination after revelations about the bonuses emerged in the media, including in the Irish Independent. The outgoing government reacted with anger last night at the conclusions of the report, which is likely to heap pressure on chief executive Richie Boucher.
A statement from Finance Minister Brian Lenihan said the "inaccurate, incomplete and/or misleading information'' was unacceptable.
Despite the outrage the bank is set to make more payments this year, which it is legally tied into, amounting to €10m. The government has plans to tax these payments at a rate of 90pc, said the Department of Finance last night.
The bank said last night there was "no intention'' to mislead and one of the reasons the information was not accurate was because the bank had a different interpretation of what qualified as a "bonus''.
The bank claimed that "performance bonuses'' only meant payments agreed with groups of staff that were optional for the bank. In other words, individual deals with executives did not need to be disclosed.
But the Arthur Cox report rejects this. "The bank's contention that because there were bonuses to which the employees were contractually entitled they should not be termed performance bonuses, is not accepted,'' the law firm stated.
The Arthur Cox report reveals for the first time the scale of bonus and other payments at the bank paid out or awarded between September 2008 and December 2010.
- Some €30.7m of "contractual'' payments were paid out to staff at various levels.
- Almost €1m in "discretionary'' bonuses were paid out, including to businesses that are closing down or being sold off.
- About €11.3m of loyalty bonuses -- designed to keep staff at the bank -- were paid out.
- Commissions totalling €23.2m were paid to staff, mainly in the sales area.
These figures, when broken down further, show that senior executives were paid €4.3m of previously agreed bonuses in 2009 and last year. Some executives are due to be paid €600,000 in loyalty and deferred bonuses this year.
In a deeply embarrassing finding for the bank, the law firm also called into question whether the bank gave accurate information to the Government on bonuses before it received €3.5bn of cash in 2009. Under a subscription agreement the bank was asked about its bonus structure and payment rates for staff.
"The information supplied by the bank. . . was incomplete and misleading in some respects,'' said Arthur Cox. Future injections of money into the bank should only happen if it complies with the government's wishes, said the law firm.