AIB WAS directed by government officials, acting on behalf of then minister for finance Brian Lenihan, to pay Colm Doherty his contractual entitlements when it was told to dismiss him as managing director last September.
John Corrigan, chief executive of the National Treasury Management Agency (NTMA), wrote to the board of the bank directing that it terminate Mr Doherty’s contract as a condition of the second bailout of the bank. In the letter, AIB was told to pay him what he was entitled to under his contract.
Mr Corrigan was writing on the direction of the minister.
A spokesman for the NTMA declined to comment. A spokesman for the Department of Finance confirmed that AIB had been directed to pay Mr Doherty his full legal entitlements.
The Irish Timesreported on Tuesday that Mr Doherty received a pay package of more than €3 million when he left the bank last November. This included a cash payment of €2 million instead of contributions to his pension fund.
Taoiseach Enda Kenny said the Government committee set up to assess bankers’ pay after the guarantee advised against cash payments being made to executives instead of pension contributions. However, AIB lobbied the committee in February 2009 that Mr Doherty would “suffer financially” if he tried to undo a deal agreed with the Revenue Commissioners and the committee accepted this.
Minister for Justice Alan Shatter has said senior bankers may not get contractual pay-offs on retirement because their banks are effectively in liquidation.
Mr Shatter told the Association of Garda Sergeants and Inspectors’ annual conference in Limerick that payments such as Mr Doherty’s deal were “grossly immoral”.
He acknowledged that bankers had legally contractual positions and an expectation that they should receive financial rewards if their employment is curtailed. However, employment contracts were a “two-way process”, he said, and some bankers had run their banks so badly that it amounted to a “fundamental breach of contract”.
Mr Kenny said other bankers may have legal entitlements to similar deals and the Department of Finance was investigating this.