Eircom investigates allegations of bonus manipulation

Eircom has held an internal investigation after suspicions were raised that the performance measurement of a number of the company's senior staff may have been manipulated to boost their bonuses.

The investigation, which was launched in the weeks leading up to Christmas, has focused on the alleged past actions of a small number of key personnel.

The pay of many of the company’s senior staff is heavily weighted towards performance.

The sums involved in the allegations are not thought to be material to the financial performance of Eircom, but were considered significant enough to raise concerns at the highest levels of the company.

Sources said the investigation is being kept tightly under wraps by the company’s leadership. Eircom declined to comment when asked a series of detailed questions about the scope and findings of its investigation.

First major crisis

The investigation has presented the first major crisis issue to be faced by

Richard Moat

, Eircom’s chief executive, who was appointed in November following the departure of

Herb Hribar

.

Any such issues in relation to bonus payments for senior staff are likely to be particularly sensitive for Eircom’s rank and file employees, who have borne the brunt of cost cuts in recent years.

Staff have endured more than 2,500 redundancies as the company restructured its operations and attempted to bring its debts back to a sustainable level.

Employees also contributed to annual cost cuts through a near six-year pay freeze and deep changes to work practices.

In addition, staff and Eircom pensioners absorbed sweeping cuts to the benefits afforded under its pension scheme, while temporary pay cuts of 10 per cent for some staff were implemented in 2011 via a cut in working hours.

Redundancies

Eircom took a €235 million charge in its financial results last year, mostly to cover the cost of redundancies.

It also said last year it had exceeded its target of annual cost cuts of €100 million through an acceleration of staff exits. In its quarterly results for the three months to the end of last September, it said its pay bill was down 18 per cent.

The company now employs about 3,500 staff but it has indicated it does not envisage any more job cuts. Further savings of €50 million annually are being sought through non- pay cost cuts.

Eircom recently said it plans to invest €18 million over the next five years in a programme to recruit 400 apprentices and graduates.