Probe into €500,000 'secret' bank bonus
BoI official paid without Lenihan's knowledge
Published 18/12/2010 | 05:00
THE Department of Finance is investigating the payment of a secret €500,000 bonus to a senior figure in Bank of Ireland.
The Irish Independent has learned the payment was made to the executive in Bank of Ireland Asset Management (BIAM) in recent days -- without the knowledge of Finance Minister Brian Lenihan.
The Government has demanded full details on the bonus -- one of the largest paid in the Irish banking system.
A Department of Finance spokesman confirmed last night: "The payment was not notified to the minister, NTMA or the department. We are awaiting an explanation from the Bank of Ireland."
The money was paid in the form of a guaranteed loyalty bonus, which is given to executives who remain with their companies for several years.
Against a background of mounting public fury over bonuses to bankers, Bank of Ireland declined to comment on the latest bonus, which was accumulated over more than one year.
It is understood that other executives at BIAM were also paid bonuses, although the amounts were smaller.
The bank has many generous perks for its senior executives. The chief executive gets an annual cash allowance of €34,000 for his car on top of his basic salary of €690,000.
Head of retail Des Crowley receives an annual car cash allowance of €27,500 along with €20,000 for entrance fee to clubs, and €7,000 for annual membership fees.
Like all banks, Bank of Ireland is seeking to reduce bonuses as losses mount and the bank struggles to stay outside state control.
Meanwhile, AIB is facing more than 75 separate lawsuits as workers in the bank's Capital Markets division challenge government plans to block their bonus payouts.
The Irish Independent has also learned that 17 individuals, including senior figures in AIB's Capital Markets division, have lodged proceedings in the High Court over the past two days.
The claims are all for amounts of more than €38,000 and some run to six-figure sums, reflecting the bonuses that the workers earned in 2008.
About 60 other employees and former employees have lodged similar proceedings in the Circuit Court, which handles smaller claims.
All papers were lodged before a new bill designed to block the payouts was signed into law yesterday, allowing the bankers to argue that their claims pre-date the new rules. The plaintiffs' solicitors Whitney Moore declined to comment last night, while AIB failed to return calls.
It is understood, however, that the workers will argue that they should be paid the bonuses since their capital markets division made profits of €500m in 2008. The workers are also expected to stress that they were promised the bonuses would be paid, and therefore had a reasonable expectation of getting the cash.
Sources also stressed that most of those suing were "ordinary working people" and not "fat cat bankers" on hundreds of thousands a year.
The one worker who has been awarded his bonus, trader John Foy, got €161,000 and is understood to no longer be working in the bank.
The court records include the names of three senior figures who are suing -- Aidan Storey, head of Telecoms & European Corporates; Michael Foley, head of Corporate Operations; and John Lowry, associate director of Debt Asset Management.
The names are available because their papers were lodged on Thursday. The names of the other 14 who are taking High Court actions won't be available until next week because their actions were lodged yesterday.
Banking sources said managers in AIB Capital Markets were typically paid less than their peers in the AIB Group, with the difference made up by bonuses. The cases are expected to take several months to resolve. Further actions may also materialise over the coming weeks; however, these will face the additional hurdle of overcoming a law that is in force.
The Government's new legislation makes AIB's multi-billion support conditional on the non-payment of any bonuses, regardless of when they were earned.