Fás pension deal 'for the benefit of taxpayers' - Ahern

The decision not to seek legal advice before awarding a €1million 'golden handshake' to former Fás director-general Rody Molloy was done in the best interests of both Fás and the taxpayer, Minister for Justice Dermot Ahern claimed today.

Speaking on RTÉ radio this afternoon, Mr Ahern said the threat of a protracted legal action was one that was best avoided and defended the Tánaiste's handling of the affair.

"The fact is that at the particular time the board spent over a day discussing this issue, obviously they had certain information on which they based their judgment on...there was a pressure to get Mr Molloy to move on in order to try and address some of the issues that were well publicised and that people had difficulty with. So a judgment had to be made," said Mr Ahern.

"As always in these situations where you're negotiating...you obviously have to take what's in the best interests of the taxpayer and if it was a case that this man went to court subsequently, and even might still go to court, you would have a protracted High Court action, possibly a Supreme Court action, which would cost the taxpayer much more money," he added.

Fine Gael justice spokesman Charlie Flanagan said Mr Ahern's description of the pension boost as "another few pound" was an example of "ivory tower arrogance".

"It says it all about Fianna Fail's approach to public money when a €1 million pension top-up can be dismissed as a few pound," he said

At a meeting of the Public Accounts Committee earlier this week, it was revealed that Mr Molloy’s length of service was increased by an extra four-and-a-half nominal years, which increased the size of his lump sum payment by approximately €50,000 and his annual pension by about €11,000 per annum.

The actuarial total cost of the deal, on a presumption that Mr Molloy lived for another 30 years, was €1 million. No legal advice was sought before the decision was agreed.

Tánaiste and Minister for Enterprise, Trade and Unemployment, Mary Coughlan has since ordered a review. However, she has faced growing pressure to explain the exact circumstances surrounding Mr Molloy’s departure from Fás and why legal advice was not sought by the department.

Mr Ahern said that Ms Couglan and the Fás board would have relied on advice given by the accounting officer and had to take a decision "based on the best interest of the taxpayer and taking into account the necessity to get Mr Molloy to move on."

"It was about making a judgment call, do we cut our losses at this stage and pay a little bit extra to prevent a court action stringing out and eventually probably costing the taxpayer an awful lot more money with legal teams having to be paid," he said.

Minister Ahern disagreed with suggestions that the decision to increase Mr Molloy's severage package was a poor judgement.

"It you look at the history of trying to get CEO or chairmen of State boards to move on you will find that most of them were caught up in legal action...ultimately this decision was taken in the best interests of Fás, in the best interests of the taxpayer and, responding to the obvious public outcry about the need to get Mr Molloy out of his position," he said.

Also speaking on RTÉ radio, Fine Gael's Billy Timmons described the Government's handling of the Fás affair as "a monumental cock-up," and an abuse of public funds.

"Elsewhere, Labour Party leader Eamon Gilmore today said the Taoiseach Brian Cowen should consider whether Ms Coughlan should continue to keep her portfolio.

Mr Gilmore said that recent events called into question Ms Coughlan's ability and suitability to carry out her duties properly.

However, the Taoiseach Brian Cowen has backed the Tánaiste, saying she had effected necessary changes and it seemed she was now being criticised for making a "swift and expeditious change".