Molloy netted €900,000 too much in FAS pay-off deal

The €3.8m 'golden handshake' paid to former FAS director general Rody Molloy will cost taxpayers almost €900,000 more than it should, a damning new report reveals.

The State's spending watchdog found Mr Molloy's pay-off deal was far in excess of what any comparable public servant taking early retirement would have received.

The finding is contained in a highly critical report on internal controls and corporate governance at the State training agency.

The report sheds further light on the culture of excess and lax financial controls that existed at FAS over the past decade.

It will fuel public anger at the generous severance deal sanctioned by Tanaiste Mary Coughlan and Finance Minister Brian Lenihan to secure Mr Molloy's resignation.

Comptroller & Auditor General (C&AG) John Buckley called for a major overhaul of risk management procedures to ensure taxpayers got better value for money.

His report said the board of FAS approved Mr Molloy's controversial severance package, negotiated with officials from the Department of Enterprise, on November 25, 2008.

The enhanced deal included a superannuation gratuity of €333,735, payment in lieu of notice of €55,622, an ex-gratia payment for the same amount, and the ownership of a company car worth €20,800. Mr Molloy will also get an annual pension of €111,245.

The entire package will be worth €3.8m to Mr Molloy over the next 30 years.

Mr Buckley was critical of the deal, saying a comparable public servant retiring with the same level of service as Mr Molloy would get €892,269 less over the 30-year period.

If a comparable public servant had been sacked they would have got €76,422 less than Mr Molloy is to receive, Mr Buckley said.

The report also revealed how up to six top executives at FAS were paid bigger bonuses than they were entitled to in 2008.

Bonuses worth 11.5pc of salary were paid to assistant director generals in breach of Department of Finance guidelines, which cap the payments at 10pc of salary. The inflated bonuses were approved by Mr Molloy. Despite the breach of guidelines, they were also sanctioned by the departments of Enterprise and Finance.

FAS said last night the increased bonuses were awarded in error. It said the assistant director generals had not been asked to pay back the extra money. A spokeswoman for the Department of Enterprise declined to comment.

Mr Molloy also refused to comment on the findings when contacted at his home last night.

The report found FAS spent €200,000 on flights for people not working for the agency, who accompanied officials as part of the now abandoned Science Challenge Programme. Mr Molloy took 28 foreign trips with flights costing €93,000 -- an average of €3,320 per trip.

Around €32,000 was charged to FAS for the travel costs of spouses of senior management. Mr Molloy's wife accompanied him on eight occasions, at a cost of €21,000. None of these costs were reimbursed.

A further €11,200 was spent on flights for the wife of an assistant director general. Just €200 from the costs of those flights was reimbursed to FAS.

Mr Buckley also found questionable expenditure on golfing events, sporting events and concerts -- the majority approved by Mr Molloy.

Explanation

When he wrote to Mr Molloy seeking an explanation for the spending, he got no response.

The report found leading executives were aware of overspending in some areas, but this information was not given to the FAS board.

It also highlighted areas where other procedures were flouted. Of €3m worth of flights paid for by FAS between 2002 and 2008, almost €1m was spent without using the agency's approved travel agent.

Executives approved spending on a number of projects even though they did not have the authority to so, and many payments were made without supporting documentation.

The C&AG also found there were no policies governing the authorisation and use of FAS credit cards and that payments were made before supporting documentation was supplied.

In a statement, Ms Coughlan said the failure of FAS to implement internal controls was the "key failure" identified by the C&AG, adding that she had received assurances from FAS that these controls were now being fully complied with.