Kenny 'appalled' at Doherty pay

Taoiseach Enda Kenny has said he was “appalled” by the “latest banker scandal” following the revelation that former AIB managing director Colm Doherty received a remuneration package totalling more than €3 million when he resigned in November last year.

Speaking in the Dáil Mr Kenny rejected a call by Sinn Féin leader Gerry Adams to introduce emergency legislation to stop the payment, which Mr Adams described as “subversion”.

He said the “golden circle” still existed, naming a number of public interest directors in AIB including former Tánaiste Dick Spring and former chief of the National Treasury Management Agency Michael Somers.

The Taoiseach said he did not know who was party to the negotiations on Mr Doherty’s remuneration but he said “that’s gone . . . The payment has been made.”

He said however that the Cabinet, which discussed the Nyberg report (into the causes of the Irish banking crisis), would prioritise legislation for a referendum on the Abbeylara judgment, to give Oireachtas committees much stronger powers of investigation and ability to compel witnesses to appear.

Joe Higgins said it was rather unfortunate that the sheer naked corporate greed was not identified as the major driving force that led to the insanity in the property market and the subsequent crash.

He said the “herd instinct” referred to in the Nyberg report was to recklessly pursue massive commercial and corporate profits for a tiny elite at the expense of society.

The comments come after The Irish Times revealed the former managing director of Allied Irish Banks, Colm Doherty, received a pay package of more than €3 million last year after stepping down in November as a condition of the State's second bailout of the bank.

Mr Doherty received a salary of €432,000 for the period from the start of the year to early November. Under his contract, he was entitled to a termination payment of €707,000 in lieu of a year’s notice after the board of AIB was told to terminate his contract at the direction of the then minister for finance Brian Lenihan.

Mr Doherty received a further cash payment of about €2 million in lieu of a contribution to his pension. This was made under an existing agreement which entitled him to a taxable cash payment after the government capped the pensions of company executives at €5 million in 2006.

He received the payments under a contract agreed when he was promoted in November 2009 to the role of managing director, replacing chief executive Eugene Sheehy.

The Department of Finance signed off on his pay, under which Mr Doherty took a salary cut from €633,000 to €500,000 a year, the Government cap for senior bankers.

Earlier Minister for Finance Michael Noonan said the issue of bankers pay has to be re-examined.

Mr Noonan said the €3million payment to Mr Doherty was part of “a very strong legacy from the previous government which we are trying to clear up.”

He said while the Government will be making decisions to make sure it doesn’t happen again there is nothing they can do about Mr Doherty’s payment.

“We’ll be taking decisions going forward that matters like this don‘t happen again unless they are under contract,” he added.

The AGSI, which is holding its annual conference in Limerick today, has criticised the arrangements that allowed a senior banker secure such a final payment. It said the money from the State-owned bank could have been spent on more worthy projects.

Larry Broderick, general secretary of the Irish Bank Officials' Association, said he was “appalled” and it “beggars belief” that a chief executive of an organisation which made a €12 billion loss can walk away with a €3 million pay package.

He said at a time when over 2,000 bank workers are to be made redundant there seems to be “one rule for those at the very top who have destroyed the organisation and another rule for the ordinary staff on the ground.”

Mr Broderick said he didn’t believe the culture at the top had changed and described the incident as “totally unfair”. He called on the Government to issue a statement to clarify its position on the matter.

He said: “Government has said they are coming in with a clean sheet, they want to try and radicalise the industry and change the culture, well this is the opportunity for them to come and see can they do anything about it.

“If they can't address it historically then they have to address it into the future and they have to ensure that all staff in the industry are treated in a fair-minded way.”

Fianna Fáil spokesman on finance Brian Lenihan said the AIB executive payment would be greeted by "anger and disbelief".

"The news this morning that a former AIB bank executive received €3 million remuneration in 2010 will be greeted by anger, frustration and disbelief by the Irish public. I share these feelings.

"The public interest directors of AIB lobbied for the appointment of this individual but as Minister for Finance I was successful in imposing a limit on banker salaries. I ensured that a pay reduction applied to this individual upon his appointment as managing director of AIB," Mr Lenihan said.

"The other entitlements, including pension entitlements, were pre-existing contractual obligations and had the same legal standing for the last government as they do for Minister Michael Noonan and his colleagues."