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Andrew Lynch: Arrogant AIB has screwed us all... and Lenihan's tax cop-out is the last straw

What a disaster. Just as the Government was breathing a sigh of relief over passing the Budget, another banking skeleton has come tumbling out of the closet.

The news that AIB executives have awarded themselves a €40m chunk of bonuses in the same week as vicious social welfare cuts is the perfect symbol of everything that's gone wrong in this country -- and no amount of powerful media performances by Brian Cowen can change that basic fact.


As usual, the Government says it's very annoyed about the bank's behaviour but is apparently powerless to do anything about it.

Despite the fact that we now own almost 98pc of AIB, Brian Lenihan's new 90pc tax on future bonuses does not apply to these payments.

Senior bankers will be having a very merry Christmas with an average of €180,000 on top of their basic salary, while other hard-working parents will be forced to tell their kids that Santa has been unavoidably detained this year.

The AIB fiasco is just the latest in a great Irish Budget tradition, which is that something unexpected always comes along to trip up the Government.

In this case, the scandal is not directly related to the Budget itself. However, watching a bailed-out bank screw the taxpayer just a couple of days after widows, carers and the blind all have their funding cut is obviously obscene -- and it is the one defining image that the public will take away from this week.

Even by AIB's usual standards, the arrogance of this latest move is simply breathtaking.

Thanks to its own toxic loans and rank stupidity, the bank has already had to be propped up with €7.4bn of public money with another €8bn on the way.

It lied to the Minister for Finance on the night of the banking guarantee in 2008, it lied to NAMA about the value of its mortgages and it wiped out many people's life savings when its share price collapsed.

The Government seems to have no problem telling small employers that they should plead "inability to pay" if they find they cannot even provide their workers with the minimum wage. At the first sign of a legal threat from the banks, however, Brian Lenihan is apparently willing to roll over and play dead.

Instead of inviting the bankers to meet him in court, the Minister has copped out by introducing a tax that only applies to future bonuses -- and since there won't be any of those for a long time, it all feels a bit like something out of George Orwell's 1984.


The really frightening thing is that AIB are not the only people at it.

Thanks to a Central Bank report last week, we know that Anglo Irish and Bank of Ireland have also paid out bonuses this year -- but not who got them or how much was involved.

Unbelievably, the regulation system is still so weak that the report has to beg whistleblowers within the banks to expose any executives who they think might be overpaid.

When Government ministers say they are outraged by the banks' behaviour, they are probably being sincere. The problem is that they are still locked into a mindset that sees the poor as easy pickings and powerful people from the world of finance as untouchable.

This Budget has finally capped the salaries of semi-State chief executives at €250,000 -- but it will do nothing to hit the existing bosses such as ESB's Padraig McManus (€432,688) and An Post's Donal Connell (€386,000) who have already signed legally binding contracts.

Budget 2011 will now be best remembered for something that wasn't even in it.

That may seem a bit unfair to Brian Lenihan, but it's nothing compared to the injustice that the public have suffered at the hands of AIB and its banking cronies. A booby trap has just exploded in the Government's face -- and it's hard to feel that they deserve any better.