AIB official sacked over soccer loans gets €138k at tribunal
Published 08/08/2016 | 02:30
A tribunal has ordered Allied Irish Banks to pay a sacked senior manager €138,384 after finding that he had been unfairly dismissed.
In making the award to Seán McHugh, the Employment Appeals Tribunal (EAT) described AIB's decision to dismiss him as "disproportionate".
However, the EAT described Mr McHugh's dealings in the matter that got him the sack as "naive, reckless and careless".
It found that he put the loyalty of Galway United before his loyalty to the bank and that there was a conflict of interest in Mr McHugh's dealings with the soccer club.
A branch manager in AIB's Galway business centre - which in 2006 alone sanctioned €2bn in loan facilities - Mr McHugh (56) was given 10 minutes to clear his desk and then "frog-marched" from the building in September 2012, when he was initially suspended.
Mr McHugh was subsequently sacked in March 2014 for an alleged conflict of interest, due to his activities and role at Galway United Football Club, which was in debt to the bank.
He was a season ticket holder and acted as licensing officer at the club in a voluntary capacity.
Mr McHugh personally sanctioned €160,000 in loans to four directors at the club, out of €180,000 in loans to six club directors.
AIB produced a figure for those combined directors' loans of €300,000, including €120,000 in interest accrued.
At the tribunal, Mr McHugh said that he had facilitated personal loans to a number of Galway people in order to benefit the club.
He told the tribunal that the club needed money urgently to prevent it potentially being wound up by the Revenue Commissioners.
Given the club's indebtedness to AIB, letting it go under would have exposed the bank to a considerable loss, he said.
Facilitating personal loans over which the bank would have recourse to the borrowers was therefore protecting the bank's interests, he argued.
Senior bank official Brendan O'Brien, who recommended that the senior manager be summarily dismissed without notice and without pay in lieu, told the hearing that Mr McHugh had a "blatant conflict of interest" in relation to the football club's dealings with AIB.
However, Mr McHugh insisted that there was no conflict of interest, on the basis that he did not gain, or potentially gain, any benefit, either personally or financially, from his dealings with the club.
The tribunal found that given Mr McHugh's incident-free 37 years of service to the bank, he should not have been summarily dismissed and a lesser penalty should have been considered and imposed, such as a serious written warning, reprimand, demotion, loss of increments, temporary suspension without pay or "a period of suitable retraining".
After an eight-day hearing in Dublin, the tribunal found that while the bank was ultimately culpable, Mr McHugh had contributed to his own downfall.
Mr McHugh "was naïve, reckless, careless and displayed a serious lack of judgement on his part, but there was no malice", it found.
The EAT concluded that there was a conflict of interest and Mr McHugh had placed himself in a situation whereby there were divided loyalties between the club and the bank.
In doing so, his loyalty to the club was put before his loyalty to the bank.
The investigation into Mr McHugh by the bank included going back over his accounts for 13 years and his entire family's accounts, including his parents, who were aged around 87. The trawl didn't turn up anything.
In its ruling, the tribunal awarded €120,000 compensation to Mr McHugh for unfair dismissal and €18,384 for minimum notice.