Officials to scrutinise bankers' contracts
Golden handshake of €3m for AIB's ex-managing director sparks fears other executives are in line for hefty pay-offs
Published 21/04/2011 | 05:00
FINANCE Minister Michael Noonan has ordered officials to scrutinise contracts and entitlements in the banking sector, amid fears more senior bankers could walk away with golden handshakes.
The Government faces the prospect of having to pay millions to senior bank executives if it wants a clear-out at the top of financial institutions. Mr Noonan has now asked officials in the Department of Finance to tease out the exact nature of bankers' contracts and entitlements with the National Treasury Management Agency (NTMA).
The minister has said the whole approach to bankers' remuneration must be re-examined after AIB managing director Colm Doherty received a €3m package when he was forced to leave the bank last November.
But government sources last night could not say how long it would take to get a sense of bankers' entitlements and legal sources stressed that it would be very difficult to interfere with bankers' existing contracts.
Taoiseach Enda Kenny admitted there may "may well be" other senior banking executives who have "legal entitlements similar" to those enjoyed by Mr Doherty.
Mr Kenny added there were bank employees with "legal entitlements that will be very difficult to disentangle".
Earlier, Justice Minister Alan Shatter claimed senior bank officials could be in breach of their contracts. Mr Shatter said contracts were a "two-way process" and that some banking chiefs had run their banks so badly that it amounted to a "fundamental breach of contract".
"It defies belief that at a time when our banks were on public life support as a consequence of bad management, flawed judgments and indefensible structures, that a retirement package to the reported value of €3m could (be paid)," he said.
"No one should expect Irish taxpayers to carry an ever increasing burden to facilitate retiring bank executives to lead lives of unjustified luxury."
Mr Shatter also pointed out that companies in liquidation would not have to make such payments. Aoife Bradley, of legal firm LK Shields, said this would not apply in the banks' case as none of the banks are actually in liquidation.
Sinn Fein leader Gerry Adams said some senior banking figures had acted in breach of their duties and almost bankrupted the State.
"I know of no other sector in which this conduct would be rewarded," Mr Adams added.
During a special Dail debate on the latest banking report by Peter Nyberg, Mr Noonan said there remained legacy issues in the banks that the Government had to address.
"Yesterday was a sobering day for anyone interested in how a successful economy can in parallel, develop the seeds of self-destruction and how these seeds can take root, grow and develop and eventually create enormous havoc," Mr Noonan told the Dail.