Saturday 10 December 2016

Noonan wrote to Philip Lane over C&AG criticisms

Minister sought assurances that procedures have been put in place for severance payments, writes Colm Kelpie

Published 17/04/2016 | 02:30

The C&AG report identified 14 discretionary severance payments, worth more than €50,000 each and amounting to nearly €1.5m, that were made by public sector bodies between 2011 and 2013. The Central Bank made six of these payments, which amounted to more than €540,000 including legal costs. Stock Image
The C&AG report identified 14 discretionary severance payments, worth more than €50,000 each and amounting to nearly €1.5m, that were made by public sector bodies between 2011 and 2013. The Central Bank made six of these payments, which amounted to more than €540,000 including legal costs. Stock Image

Finance Minister Michael Noonan flagged to Philip Lane the C&AG's criticisms of Central Bank severance payments back in December, and asked what he was doing to deal with them.

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The Comptroller & Auditor General, the State's public spending watchdog, published the criticisms last week, highlighting that more than half a million euro was spent by Dame Street on the payments, including €32,000 to an individual who hadn't even started work at the regulator.

The bank suffered costs of €73,000 as a result of the case as it had to cover its own and the recruit's legal fees.

Another two exit packages worth €61,000 each were made to staff who had worked at the bank for less than two years.

The watchdog said the three payments "suggest that the Central Bank needs to review its procedures for managing recruitment and probation".

In a letter to Governor Lane dated December 9 last, released under Freedom of Information, Mr Noonan said he wanted to bring to the Governor's attention the forthcoming C&AG report.

"Among other matters, the report highlights the fact that the Central Bank incurred significant expenditure on severance payments and associated legal costs between 2011 and 2013 and expresses concerns over the processes that led to such payments," Mr Noonan wrote.

The minister noted that he understood that the former Governor, Patrick Honohan, had ensured that improvements were under way to the relevant policies, and that the Bank had made a series of improvements to its HR and recruitment procedures in recent years.

"I would be grateful if you would communicate with my officials the nature of these policy improvements so as to provide me with assurance that procedures are now in place which will prevent recurrence of events like those detailed in the C&AG report," the minister wrote.

The report from the watchdog, which looked at severance payments across the public sector, identified 14 discretionary severance payments, worth more than €50,000 each and amounting to nearly €1.5m, that were made by public sector bodies between 2011 and 2013.

The Central Bank made six of these payments, which amounted to more than €540,000 including legal costs.

Between 2011 and 2013, the report said the bank had "more recourse" to termination agreements and severance payments than the other public sector bodies it examined.

The bank clocked up its own legal costs and the costs of the employee in all but one case, but details of the legal advice it received were not documented in some cases.

In its response to the report, the Central Bank said it has put in place formal guidelines, approved by the Bank's Budget and Remuneration Committee, which set out the governance and authorisation procedures that apply where a severance arrangement is being made.

These include amending the Central Bank's pre-employment processes and changing bank practices to further distinguish between permanent employees and contract workers.

It added that the cases referred to arose in a period of both unprecedented renewal and growth of the Bank where staff numbers grew by approximately one third between 2009 and 2013.

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