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Friday 19 September 2014

Noonan: 'I'm powerless to tackle bankers' pay & perks'

'A hard bastard with a hide like a rhino' - Shane Ross on Bank of Ireland chief Richie Boucher

DANIEL McCONNELL Chief Reporter

Published 04/11/2012 | 05:00

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FINANCE Minister Michael Noonan has said he is powerless to rein in the pay and pensions of some of Ireland's most senior bankers after it emerged that the State's biggest bank, AIB, used some of a €1.1bn taxpayer bailout to fund former chief executive Eugene Sheehy's estimated annual pension of €529,000.

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Mr Noonan is under considerable fire this weekend from within his own Government and from the opposition for failing to get tough with the bailed-out bankers, who have been branded "arrogant" and accused of giving "McCarthy-ite responses" to an Oireachtas committee last week.

The Sunday Independent has also learned that 15 of the most senior figures in Anglo Irish Bank from the time of the September 2008 crash are still employed at the institution, on salaries believed to be in excess of €150,000.

Mr Noonan said he is not "legally empowered" to reduce them.

"There are some historic salaries above the ceilings, but they are a matter of contract and I wasn't legally empowered to reduce them and they are very few at this stage," he said.

Public anger was fuelled by the "minimalist responses" by Bank of Ireland chief executive Richie Boucher to the Oireachtas Finance Committee last week.

Independent TD Shane Ross, writing in today's Sunday Independent, described Mr Boucher as a "hard bastard with a hide like a rhino" and the "embodiment of all that is bad in Irish banking" following his "hostile" appearance before the committee.

Eugene Sheehy was CEO when he and his Bank of Ireland counterpart Brian Goggin, along with their chairmen Dermot Gleeson and Richard Burrows, "bounced" the then government into the bank guarantee on September 29, 2008.

His successor, Colm Doherty, who was paid €3m for less than 11 months' work, will receive an annual pension of €300,000 when he turns 65, again paid for with taxpayers' money. Despite the outcry over what he called the "controversial pensions" paid to Mr Sheehy and the €866,000 salary package paid to Irish Bank Resolution Corporation (formerly Anglo) boss Mike Aynsley last year, Mr Noonan is unable to tackle them because of contractual obligations.

His admission comes as it was also revealed that the former Anglo Irish Bank, which has received more than €34bn of taxpayers' money to date, is the only defined benefit pension scheme in the country which is fully funded.

This is in contrast to thousands of workers who now find their pension schemes insolvent and are being shut down. The pension fund of the IBRC is the only one in the country to declare itself "fully funded" since 2008 with a funding rate of 111 per cent.

This is according to a Lane Clark and Peacock study published this weekend.

Last year, this newspaper revealed that 22 of the most senior Anglo executives who were there in 2008 were still in place on salaries in excess of €175,000.

A spokesman for the IBRC said yesterday that of the 15 who remain today, "not all of those remaining since 2008 are above that level".

Their defined benefit pensions, which entitle them to a tax-free lump sum equivalent to a year-and-a-half's salary plus an annual pension of half their final salary, are also guaranteed.

Expanding on his lack of options, Mr Noonan said the controversial agreements were not possible to change because of legal difficulties, and the cash injection by him in March 2011 was to fund a massive redundancy scheme.

He said: "The very high pensions were put in place before the Government went into power and were funded in the pension scheme before the additional capitalisation went in.

"The reason the additional provision [put in by the Fine Gael/Labour Government in March 2011] was made was to allow for the very big redundancy scheme that AIB brought in. It is not connected to the controversial pensions."

Mr Noonan's comments come after the country's leading bankers, including Mr Boucher and IBRC bosses Mike Aynsley and Alan Dukes, were severely criticised after their appearance before the powerful Oireachtas Finance Committee.

Writing today, Mr Ross accuses Mr Boucher of provoking a hostile response from committee members due to his "minimalist level" engagement, as described by Ciaran Lynch, chairman of the committee.

"He is old school. He was a director of the Bank of Ireland at the time of the bank guarantee in 2008. He was a lender during the property frenzy. He is paid €620,000 a year. He is unapologetic about his record and the Bank of Ireland's murky recent history," Mr Ross writes.

"Mr Boucher provoked hostile comment. Despite the presence of his public relations advisers in the gallery, Richie was in no mood to concede any quarter to his questioners.

"He blocked, he refused to answer and he obfuscated. His PR guys must have been squirming."

Mr Lynch, speaking yesterday, said it was totally unacceptable for Mr Boucher or any banker to hide behind some "opaque notion of commercial confidentiality".

"What the Irish public demand is nothing short of full disclosure.

"Far from the impression that the committee was a witch hunt, we were entitled to get the information we asked for," he said.

Another committee member said the performance of Mr Boucher was the epitome of arrogance, and likened his lack of engagement to a "McCarthy-ite trial response".

Sunday Independent

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