Tribunal orders AIB to pay €138,384 to sacked manager

A tribunal has ordered Allied Irish Bank (AIB) to pay a sacked former senior manager €138,384 after finding that he was unfairly dismissed.

In making the award to Sean McHugh, the Employment Appeals Tribunal (EAT) said that AIB's action in sacking the man from Barna, Co Galway was "disproportionate".

However, the EAT described Mr McHugh’s dealings in the matter that got him the sack as “naive, reckless and careless”; and said that he put the loyalty of Galway United before his loyalty to the bank and that there was a conflict of interest in Mr McHugh’s dealings with Galway United.

A branch manager in AIB’s Galway business centre, which in 2006 alone sanctioned €2 billion in loan facilities, Mr McHugh (56) was given 10 minutes to clear his desk and was “frog-marched” from the building in September 2012 when initially suspended by the bank.

Conflict of interest

Mr McHugh was subsequently sacked in March 2014 for an alleged conflict of interest due to his activities and role at Galway United Football Club, which was in debt to the bank.

Mr McHugh was a season ticket holder at Galway United and acted as licensing officer at the club in a voluntary capacity.

In the case, Mr McHugh personally sanctioned €160,000 in loans to four directors at the club out of €180,000 loans to six club directors.

AIB produced a figure for those combined directors' loans for €300,000, and that included €120,000 in interest accrued.

At the tribunal, Mr McHugh said he had facilitated personal loans to a number of Galway people to benefit the club. He told the tribunal the club needed money urgently to prevent it potentially being wound up by the Revenue Commissioners.

Personal loans

Given the club’s indebtedness to the bank, letting it go under would have exposed the bank to a considerable loss, and facilitating personal loans over which the bank would have recourse to the borrowers was protecting the bank’s interests, he said.

At the tribunal, senior bank official Brendan O’Brien, who recommended that Mr McHugh be summarily dismissed without notice and without pay in lieu, told the hearing that Mr McHugh had a “blatant conflict of interest” in relation to the football club’s dealings with AIB.

However, Mr McHugh insisted that there was no conflict of interest, on the basis that he did not gain or potentially gain any benefit either personally or financially from his affairs with the club.

In its determination, the tribunal found that given Mr McHugh’s incident-free 37 years’ service to the bank he should not have been summarily dismissed and that a lesser penalty should have been considered and imposed.

After a hearing in Dublin that lasted eight days, the EAT found that while the bank was ultimately culpable, Mr McHugh contributed to his own downfall. It awarded €120,000 compensation to Mr McHugh for unfair dismissal and €18,384 for minimum notice.