FG questions Molloy severance

The Taoiseach this morning defended the severance package given to former Fás director general Rody Molloy after Fine Gael questioned its compliance with Department of Finance guidelines.

Addressing the Dáil this morning, Fine Gael leader Enda Kenny said that on September 25th, the Taoiseach had said the additional €1.1 million package was dealt with in accordance with department guidelines," but Mr Kenny said he understood three department officials said enhanced package was outside the guidelines issued by the Department of Finance.

"In fact the letter sent from the Department of Finance to the Department of Enterprise, Trade and Employment on the 26th of November said: 'I note that the terms offered by your department for Mr Molloy are not fully in accordance with those of the circular letter of 26th May, 1998, from this department to all heads of department. Nonetheless, I am to convey sanction of proposed terms and conditions, but this is an exceptional case, and that your department is satisfied that these terms are appropriate in the circumstances'," Mr Kenny said.

The Fine Gael leader called on Brian Cowen to say if he still held the stance that the terms of the additional package awarded to Mr Molloy complied with Department of Finance guidelines.

Mr Cowen said the correspondence "simply reflects the fact that the Fás director general's severance arrangements were informed by what he could have claimed under the 1998 guidelines if his contract had been terminated. It's been quite clear all along that the terms he received were broadly in line with what he might have sought if the contract had, in fact, been ended by the Fás board.

"It was clearly the case that [it was] regarded in the best interests of the organisation that the change take place, and the arrangements that were made therefore were analogous to, as far as the board was concerned, if the contract had been extended," he said.

"In the exceptional circumstances of this case . . . severance arrangements were approved by the departments under the provisions of the Labour Services Act 1987, which covers the DG's remuneration and superannuation terms."

Mr Kenny said he was still not clear what had happened. "The guidelines say to all heads of departments, 26th May 1998 . . . 'it is not therefore appropriate to make payments where the initiative for the termination of a contract comes from the CEO concerned'. That's very clear. . . . In this case, Mr Molloy was not sacked . . . Mr Molloy resigned, and according to these guidelines, issued in 1998, it is not appropriate to make this payment.

"If this was deemed to be an exceptional case, why was there no Government decision made authorising that exceptional case, and if it didn't go to Government, who overruled who here? . . . somebody gave a direction that this be deemed to be an exceptional case without it going to the Cabinet. I'd like to find out who that person was or on whose instructions this was actually given.

The Taoiseach said Mr Kenny's contention was wrong, and repeated that the severance arrangements were covered under the Labour Services Act 1987.

Internal correspondence among officials in Government departments on Mr Molloy’s severance package reflected “normal practice”, a Department of Finance spokesman said. “The discussions reflect normal practice in any office where the pros and cons of issues are debated,” he said.

In a statement this afternoon, Fine Gael enterprise spokesman Leo Varadkar TD claimed it was becoming "increasingly clear" that Brian Cowen, Mary Coughlan and Brian Lenihan had colluded on Mr Molloy’s package.

“Brian Cowen is now claiming that Rody Molloy’s deal was approved under the terms of the Labour Services Act 1987, a 22-year-old law which also predates the current guidelines by 11 years. By doing so the Taoiseach is clearly trying to shift the goalposts and divert attention," Mr Varadkar said.