Why are executives at lenders who gorged €64bn of public money on fat-cat wages? asks Daniel McConnell
Last Friday, following a week of outrage over excessive salaries and pensions in the banks, Transport Minister Leo Varadkar on Morning Ireland made a most extraordinary statement: "People who are on high pay and who are on high pensions, who are not paid directly by the State, pay very high taxes, and if those pensions and high pay are cut that will mean less income taxes coming in and would mean they would have to be passed on in the form of higher taxes for others."
In other words, go away little people and stop making life difficult for Michael Noonan and the rest of us -- and be careful what you wish for.
Normally a voice of common sense in a Government absorbed by self-promotion, Varadkar appeared to have lost the plot in another example of how, after 19 months in office, the Government is out of touch with the public.
From Noonan's declaration that he is legally powerless to rein in bankers pay and pensions, to Enda Kenny's playing dumb, then his feigned outrage at the pay levels in the banks, to Eamon Gilmore's cries of indignation, to Varadkar's intervention on Friday -- it is a long way from the tough-talking claptrap they came out with before the 2011 General Election.
Another significant chunk of this Government's political capital has been burnt by their handling of this latest controversy, all the time playing into the hands of a grateful Sinn Fein -- the charlatans of political rage.
Contrast profligacy at the top of the banks, their record low lending and new charges, coupled with continued Government deference and a disturbing picture starts to emerge.
The latest controversy started 10 days ago when AIB chief executive David Duffy admitted that a €1.1bn transfer into the bank's pension fund was being used to help pay retired executives as much as €500,000 a year.
Public anger was ignited when Bank of Ireland boss Richie Boucher then gave a "minimalist" performance par excellence at the same Oireachtas Finance Committee. In the past seven days, fury has been stoked by continual revelations about pensions paid to Eugene Sheehy, who reduced his pension by €75,000 to €250,000; and Colm Doherty, who has yet to make any move on his €300,000 retirement fund from the State-owned bank.
Last weekend we also reported that 15 of the top guys at Anglo at the time of the September 2008 crash remain in their positions today, on salaries believed to be in excess of €150,000.
This was coupled with the revelation that the IBRC defined pension fund is the only one in the country that is fully funded.
Last Wednesday it emerged that six of the same top guys in IBRC are paid salaries in excess of €500,000.
The remuneration packages of the IBRC staff in Britain and Ireland were given as: 774 on up to €99,000; 146 on €100,000-€149,000; 44 on €150,000-€199,000; 24 on €200,000-€299,000; 12 on €300,000-€399,000; zero on €400,000-€499,000 and six on more than €500,000.
IBRC boss Mike Aynsley's pay is €663,000, comprising a €500,000 salary, allowances of €38,000 and a pension sum of €125,000.
The bank's chief financial officer Jim Bradley, head of asset recoveries Tom Huner-sen, head of Irish recoveries Mark Layther and head of specialised asset management Richard Woodhouse are each paid about €400,000 a year.
They also receive the equivalent of 25 per cent of their salaries in an annual pension payment and a further €30,000 each a year in allowances.
It emerged yesterday that Kevin Blake joins the State-owned bank on Monday as chief risk officer on a remuneration package, including pay, benefits and pension, of over €500,000 -- a package approved by Finance Minister Michael Noonan.
The four foreign executives have also received allowances to run homes overseas but these have run out or will end imminently, the IBRC said. The head of the IBRC's UK operations, Jim Brydie, is currently on a salary of £400,000 (€501,000).
Such salaries, according to Brian Lucey, a professor of finance at Trinity College, "beggar belief", a sentiment echoed by Eamon Gilmore who last Thursday said they were "totally unacceptable".
Other than the expression of indignation, however, it seems very little else is being done.
Today, there are further revelations. Latest figures show there are 65 people at the top of these various bust banks, which have gorged on €64bn of taxpayers' money to stay alive, earning salaries of more than €300,000.
In total, across AIB, Bank of Ireland, the IBRC and Permanent TSB, there are 1,709 people paid more than €100,000 a year, four years on from the crash which brought down this country.
It has also been confirmed that Michael Noonan "did not object" to the transfer of huge sums to the AIB pension fund, having been informed of the move in advance.
"The Department of Finance was informed of the transaction and the department did not object to the final transaction for a number of reasons: It was in the commercial interests of the bank and the State as shareholder; no cash was transferred, and the sole purpose of the transaction was to address the deficit created in AIB's pension fund by the early retirement and voluntary redundancy scheme that will see about 2,500 staff leave their jobs," Noonan's spokesman said.
But Noonan's statement does not sit easily with an explanation by the Taoiseach about the transfer in the money.
"Regarding the bank's capacity to meet its pensions, that is why the €1.1bn was transferred. . . It is a matter for the banks to deal with but I would not be supportive of a further similar transfer in the case of dealing with the pension deficit when they are already retired and in receipt of extraordinarily high levels of remuneration," he said.
Essentially, Kenny said the money was used for funding the top packages for top retired executives like Sheehy and Doherty, who earned €3m for less than 11 months' work, before they were ousted by Brian Lenihan.
Politically, this is an unwelcome headache ahead of a horrid Budget when further cuts to frontline services will be made.
This difficulty is caused by the deferential approach adopted by Noonan -- and Lenihan before him -- despite the opportunity to make sweeping changes when capitalising the banks.
This was typified by Noonan's admission that his request for a 15 per cent pay cut to IBRC board members was declined by Alan Dukes and Aynsley.
Belated attempts are now under way to try and reclaim some authority.
Noonan has ordered all of the State's bailed-out banks to provide detailed breakdowns of the levels of pensions paid to retired bank staff and executives.
Also, a Mercer analysis commissioned in September to formulate a review of top level bank pay in State banks, is due to be given to Noonan by the end of the year.
The Finance Minister has also come under fire from FG rebels, who have sought legal advice to examine the bank guarantee legislation and other existing bank-related laws to see what options are open to the Government.
Michael McGrath and Fianna Fail are conducting a similar exercise at present.
Ultimately, this is a mess the last government created and the current Government has allowed to continue -- and all the time the financiers sit back laughing their way to the bank.