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14/12/2010
Brian Blocks Bank Bonus Bonanza
The Irish Republic's Finance Minister has blocked the payment of €40 million in bonuses by the state dependant AIB bank.
Brian Lenihan wrote to Allied Irish Banks (AIB) saying that state support for AIB was now conditional on the non-payment of bonuses, no matter when they may have been earned.
The bank's board has this morning issued a statement saying it has "considered the Minister’s letter" and decided not to pay the bonus payments.
However, despite the crackdown, there are suspected to be some legal issues with the non-payment after the bank's legal advisers said it was obliged to pay the bonuses, and staff member John Foy successfully took legal action to force the bank to pay him his €160,000 bonus earlier this year.
Mr Foy is believed to be receiving his bonus despite Mr Lenihan's intervention.
This morning a spokesman for the bank said that despite its legal advice and a High Court Ruling to the contrary, the letter from the Minister overtook their obligation.
The Executive Chairman of AIB Mr David Hodgkinson said: “The Board of AIB very much welcomes the actions of the Minister and is relieved to be in a position not to pay these bonuses.
"We are determined to position the Bank to play a full role in the recovery and development of the Irish economy. In doing so, we are committed to treating our customers, staff, the taxpayer and the public in a fair and transparent manner”.
Minister Lenihan said he welcomed the decision of the Board of Allied Irish Banks and reiterated his total confidence in the Executive Chairman and the Board of the Bank.
"I appreciate that AIB was not in a position to put up a sworn defence in the High Court proceedings and that the Executive Chairman and the Board have acted with complete propriety in this matter.”
Legislation implementing the bonus block will be discussed by Government today, and is expected to feature clauses to circumvent the bank's legal requirement to its staff, but it is unclear whether this will be safe from legal challenge as it will require the legislation to be retrospective – which is difficult to defend in court.
Fine Gael Deputy Leader James Reilly TD today called the issue a "debacle" that wasof the Government's own making.
"Brian Lenihan has finally responded to public outrage and Opposition pressure on the obscenity of AIB bonuses. This decision only came following Fine Gael's proposals for a 99% super tax on the bonuses, and after a call for an extraordinary general meeting at the bank."
(DW/BMcC)
Brian Lenihan wrote to Allied Irish Banks (AIB) saying that state support for AIB was now conditional on the non-payment of bonuses, no matter when they may have been earned.
The bank's board has this morning issued a statement saying it has "considered the Minister’s letter" and decided not to pay the bonus payments.
However, despite the crackdown, there are suspected to be some legal issues with the non-payment after the bank's legal advisers said it was obliged to pay the bonuses, and staff member John Foy successfully took legal action to force the bank to pay him his €160,000 bonus earlier this year.
Mr Foy is believed to be receiving his bonus despite Mr Lenihan's intervention.
This morning a spokesman for the bank said that despite its legal advice and a High Court Ruling to the contrary, the letter from the Minister overtook their obligation.
The Executive Chairman of AIB Mr David Hodgkinson said: “The Board of AIB very much welcomes the actions of the Minister and is relieved to be in a position not to pay these bonuses.
"We are determined to position the Bank to play a full role in the recovery and development of the Irish economy. In doing so, we are committed to treating our customers, staff, the taxpayer and the public in a fair and transparent manner”.
Minister Lenihan said he welcomed the decision of the Board of Allied Irish Banks and reiterated his total confidence in the Executive Chairman and the Board of the Bank.
"I appreciate that AIB was not in a position to put up a sworn defence in the High Court proceedings and that the Executive Chairman and the Board have acted with complete propriety in this matter.”
Legislation implementing the bonus block will be discussed by Government today, and is expected to feature clauses to circumvent the bank's legal requirement to its staff, but it is unclear whether this will be safe from legal challenge as it will require the legislation to be retrospective – which is difficult to defend in court.
Fine Gael Deputy Leader James Reilly TD today called the issue a "debacle" that wasof the Government's own making.
"Brian Lenihan has finally responded to public outrage and Opposition pressure on the obscenity of AIB bonuses. This decision only came following Fine Gael's proposals for a 99% super tax on the bonuses, and after a call for an extraordinary general meeting at the bank."
(DW/BMcC)
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