Legal challenge stopped bank's bid to curb backdated payments
Published 10/12/2010 | 05:00
AIB's efforts to curb the payment of bonuses to employees were stopped in their tracks last month when a trader successfully sued the bank.
John Foy, a trader in the bank's profitable Capital Markets Division (CMD) brought a High Court test case in which he claimed he was entitled to a €160,000 backdated bonus for work in 2008.
Some 90 employees also threatened to sue the bank for the backdated bonuses for work carried out in 2008 -- before the introduction of the banking guarantee.
AIB ceased paying bonuses after a government-appointed committee recommended no bonuses be paid for 2008 and 2009. But the bank was forced to honour the payment of the backdated, deferred bonuses.
Notwithstanding the fact that the bank later posted record losses, and had to call on the taxpayer for support, the contracts could not be undone retrospectively.
Politicians, including Finance Minister Brian Lenihan, have indicated that a "super tax" on future bank bonuses may apply following amendments to the Financial Emergency Measures Bill, which is due to clear all stages in the Dail by this afternoon.