THE GOVERNMENT is hoping the new relationship framework that will govern its dealings with Irish Nationwide will assist it in recouping money from the society’s former managing director, Michael Fingleton.

A spokesman for Minister for Finance Brian Lenihan yesterday rejected suggestions a confidential intermediary had discussed with Mr Fingleton his €1 million payment last year, which Mr Lenihan now says he wants returned.

The Sunday Independent yesterday published a letter sent by Mr Fingleton to the society in September 2009 in which he dealt with the controversial payment.

He said that when it was agreed between him and the society’s board that he would continue working for another year after he reached retirement age in January 2008, it was also agreed that he would be paid the same amount he was paid in 2007. His remuneration in that year had included a €1 million bonus. He said that when later a controversy arose over his being paid this money in 2008, legal opinion was sought by the board from Michael McDowell SC, which confirmed that Mr Fingleton was entitled to the money.

He said he made contact with the Government “on a confidential basis through an independent intermediary” and that the “Government contact” said that the question of the payment was not a legal but a political one.

He said it was agreed that if he voluntarily returned the money, then there would be “full and complete closure”, including on the issue of his pension entitlements. It was for this reason that he offered to return the €1 million.

When Mr Lenihan asked the two Government appointees on the society’s board to initiate an inquiry into his payment and his pension entitlements, he considered that the agreement, made through the intermediary, had been repudiated.

A spokesman for Mr Lenihan said there were no contacts by way of a confidential intermediary. “The only intermediary between the Minister or the Department and Mr Fingleton was Irish Nationwide.” He also said the relationship framework might assist in the recouping of money from Mr Fingleton. “One of the elements of the framework agreement that is now being drafted with Irish Nationwide is that it will include a Legacy Action Plan. This plan will identify and focus on issues for the society arising from the previous management, and set out how the society, in co-operation with the appropriate regulatory authorities, proposes to deal with any issues arising.”

Under the framework and subject to the separate and independent role of the Financial Regulator as regulatory authority for all building societies, all material actions arising from a legacy issue in respect of a director or former director of the society will rest with the Minister, the spokesman said.

Because of the disastrous management of Irish Nationwide under Mr Fingleton, the State is going to invest €2.7 billion into it to enable it to meet its regulatory capital requirements. Last week the society reported losses of €2.5 billion. Mr Fingleton, in his letter, does not refer to his disastrous management of the society.

On the society’s dealings with the former chairman of Anglo Irish Bank, Seán FitzPatrick, Mr Fingleton said there was “nothing improper, illegal or irregular” about the loans it gave him. “For the record I wish to state that I never spoke to Mr FitzPatrick about those loans, or him to me.” He said he never had any business dealings with Mr FitzPatrick.

Mr Fingleton also said that he saved substantial amounts for the society when he took over the management of his own pension fund in the early 1990s.