Did other bankers ‘run off’ with cash?
Feb 28 2009 by Andrew Hebden, The Journal
HUGE payouts to executives at banks bailed out by the Government were under scrutiny last night amid legal moves to claw back any unnecessary payments.
Prime Minister Gordon Brown said he was angry that people whose mistakes forced the taxpayer to prop up banks were able to “run off” with entitlements.
He renewed the threat of legal action to recover some of the “unacceptable” £693,000 pension being paid to 50-year-old former Royal Bank of Scotland chief Sir Fred Goodwin.
And Business Secretary Lord Mandelson said Sir Fred was in a “state of denial” and should do the “right thing” for the sake of his “self-respect”.
It emerged last night that Lloyds Banking Group was examining pay-offs to former Halifax Bank of Scotland (HBOS) directors to check they had been paid no more than necessary.
A spokesman for UK Financial Investments - which manages the taxpayer stakes in part-nationalised banks - said Lloyds had agreed to ensure ex-directors had got “no more than was legally necessary”.
“We understand that this process of thorough legal assurance is nearly complete,” UKFI said.
The Government owns 43% of Lloyds and 70% of RBS.
The UKFI checks came as Sir Fred Goodwin came under mounting pressure to forego his generous early-retirement package which Mr Brown said was “unjustifiable and unacceptable”.
Lord Mandelson said: “I think Sir Fred Goodwin undoubtedly should give it, or the bulk of it, back.
“I think in a sense he’s in a state of self-denial about the state of public opinion. I don’t think he quite understands how people feel about this - how angry they feel and how outraged they feel - and I think that for his own self-respect really he should do the right thing.”
Sir Fred has rejected ministers’ calls for him to waive his entitlements as “not warranted“ and suggested City minister Lord Myners had effectively sanctioned the deal.
That claim sparked calls from a senior Tory MP and a trade union for the minister to quit.
Controversy over Sir Fred’s pension - which he is already enjoying - blew up as RBS unveiled record losses of £24bn.
Lord Myners wrote to Sir Fred last night urging him to reconsider his “unacceptable“ refusal to give up all or part of his pension.
He insisted that, when Sir Fred’s deal was agreed in October, he understood it was an unavoidable legal commitment. It was only last week he became aware the then RBS board may have exercised discretion in effectively doubling his pension pot from £8m to £16m.
