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Tuesday 17 October 2017

Disgraced Fas chief's €1.4m hike in pension

Ministers Lenihan and Coughlan blame each other for cash boost

Daniel McConnell

Daniel McConnell

Controversial former Fas boss Rody Molloy had his pension boosted by an estimated €1.4m after the intervention of two senior government ministers, who are this weekend blaming each other over the affair.

Molloy, who presided over an incredible culture of waste at the €1bn-a-year state agency, has now, as a result of the intervention, a total pension worth more than €4m.

The Sunday Independent can reveal that when Mr Molloy resigned, Tanaiste Mary Coughlan intervened to bump up his pension and the move was rubber stamped by Finance Minister Brian Lenihan.

Mr Molloy (55) resigned after a Sunday Independent investigation revealed a culture of excessive waste at Fas, but only after the Tanaiste 'sweetened the deal' by adding five years to his service.

By doing so, Mr Molloy saw his 'Rolls Royce' pension increase in value overnight by an estimated €1.4m.

The opposition has strongly criticised the "outrageous" move to reward a man who had to resign amidst deep public outrage.

It has emerged that the additional years were awarded to Mr Molloy by the ministers because, had they tried to remove him without the sweetener, it was thought he would be likely to bring the Government to court.

However, the awarding of the additional years to his pension appears to contravene existing pay and pensions legislation, according to legal and pensions experts.

Under the Superannuation and Pensions Act 1963, the minister can intervene in a case where a public servant retires early or is removed from his/her position. However, there is no provision in a case like Mr Molloy's where he resigned his post.

Two independent pensions experts have confirmed to the Sunday Independent that Mr Molloy's pension is now worth in excess of €4m, and that Ms Coughlan's intervention added in the region of €1.4m to €1.6m to its value.

In addition, Mr Molloy received a "golden handshake" of €440,000 when he resigned, made up of a €330,000 pension tax free lump sum and the rest in a half-year's salary. Given that he didn't complete 40 years' service, he shouldn't have been entitled to the full one-and-a-half-year's salary tax free or the half-year's salary.

Legislation and pensions expert Catriona Ceitin said: "There is no reason why Mr Molloy should have been given the additional payout on his pension. He resigned. I have studied all the relevant legislation and it appears that the rules were not properly applied. He resigned, he was not removed nor did he retire early. Nothing in the legislation from what I can see permits that to happen."

The ministerial involvement in Mr Molloy's case was confirmed by Mr David Doyle, Secretary General of the Department of Finance, at an earlier Public Accounts Committee meeting.

Under questions from Roisin Shortall and Senator Dominic Hannigan of Labour on Mr Molloy's departure and his package, Mr Doyle said: "As regards the severance payments that the deputy mentioned, obviously those issues relate to contractual considerations. In one case there would have been ministerial involvement, in regard to Fas."

The valuation of Mr Molloy's total pension and the add-on awarded to him on his resignation was calculated over 25 years, an average term of a pension. The add-on value of Mr Molloy's pension is the difference between what he is receiving and what he would have received had no intervention taken place.

This weekend, Both Mr Lenihan and Ms Coughlan were placing responsibility for the lavish payout at each other's door.

In a response to our queries, the Department of Finance denied the minister involved was Mr Lenihan. In a statement, a spokesman said: "This (Mr Doyle's reference to ministerial involvement) is a reference to the Minister for Enterprise, Trade and Employment. The Minister for Finance did not intervene as suggested.

"Following discussions with Mr Molloy, the Department of Enterprise, Trade and Employment agreed pension arrangements with him which would apply following his resignation as Director General of Fas. The Department of Finance was consulted and indicated that it had no objection to the proposed terms on condition that it was an exceptional case and the DETE was satisfied that the terms were appropriate in the circumstances."

The spokesman added that there was provision for CEOs of semi-state bodies to be granted the additional years on their pension if their contract was terminated. However, pensions expert Ms Ceitin disputes that this covers resignations.

The spokesman continued: "On termination of a contract and on fulfilling certain conditions regarding service, the CEO of a non-commercial semi-state body may be granted added years up to a maximum of five years, subject to the total superannuation service not exceeding 40 years.'' Subsequently, the Finance spokesman said: "For clarity, our reference to ministerial involvement by the Minister for Enterprise, Trade and Employment simply means the necessary work of the minister and her department in making a submission to the Department of Finance of proposals for consideration and approval."

However, a spokesman for the Tanaiste told the Sunday Independent that the deal was done with the full agreement and sanction of the Department of Finance.

He said: "In relation to the settlement negotiated with Mr Molloy, which did include 4.5 years added service for superannuation purposes, the Department of Enterprise, Trade and Employment received the necessary sanction from the Department of Finance.

"The settlement negotiated with Mr Molloy was agreed at a time where the need for Fas to focus on its core mandate and robustly address matters of concern that had arisen required a change of director general."

Last night, a spokesman for the Tanaiste queried the Sunday Independent's figures.

The opposition were very vocal in their criticism yesterday of the rewarding of a man who resigned amid public controversy and said it was an outrageous abuse of taxpayers' money.

Speaking to this newspaper yesterday, Ms Shortall slammed the practice of rewarding those responsible for such excessive waste in our state organs.

"I intend bringing this matter up at the PAC next week and I welcome the Sunday Independent's findings in relation to this matter," she said.

Fine Gael's Paschal Donohoe, who has championed reform of the public sector, said yesterday: "This is a terrible example of how there appears to be two laws in our country. One for the ordinary people who pay their taxes and another for a golden circle created by Fianna Fail. This Government speaks of having to make cuts, but how can it govern with any credibility given these kind of antics?"

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