Gilmore criticises Lenihan’s AIB decision

BONUSES WORTH €35.5 million may have to be paid to AIB executives despite a decision by the board of the bank not to do so, it has been claimed.

Labour leader Eamon Gilmore made the claim in the Dáil and asked “are we in a position where the Minister has shut the door after the bonuses have bolted?” But Taoiseach Brian Cowen said they were in “difficult legal territory” but believed they had found a means not to pay the bonuses in a way that “withstands legal scrutiny”.

During leaders’ questions Mr Cowen confirmed that 91 AIB employees out of 1,460 who had chalked up aggregate bonus awards, had begun legal proceedings in the Circuit or High Court in October for the payment of bonuses totaling €35.5 million and the first case was scheduled for November.

Minister for Finance Brian Lenihan had sent a letter to the board of the bank warning that the provision of further State funding was conditional on the non-payment of any bonuses, no matter when earned. The Minister had also acknowledged that payment of a bonus to trader John Foy, who took the first legal challenge, could not be stopped.

But Mr Gilmore said “the Government was shamed into sending that letter, having told us originally that there was nothing that could be done for legal reasons”. He said “the issue that arises is – is it too late?” The Labour leader said everyone supported the Minister’s position that if the bank paid those bonuses it would not get any further State funding.

But he queried whether this would work because according to the 1950 Buckley court case “the Executive cannot intervene or supervene, the word’s that now being used by the Minister, in a case which has already commenced”. He said: “If that’s the case then we’re in territory where the Minister has sent his letter but bonuses may end up having to be paid.” He added: “Are we in a situation where Minister is shutting the door after the bonuses have bolted?” This was because the Minister did not take action when the guarantee legislation went through the Dail and Seanad.

Mr Gilmore also questioned why the Minister had not sent the letter sooner. He believed he could have done so when the bank guarantee legislation was dealt with in 2008, which provided that terms and conditions attached to the guarantee were linked to remuneration and bonuses. It could also have been sent when the original letter of recapitalisation for €3.5 billion was sent, he said.

Mr Cowen said it was important “to deal with this matter as expeditiously as possible to provide as much legal justification as possible” for the decision not to pay the bonuses. The Taoiseach told him that the “supervening” event was that unless the bank was “not to go ahead” they would be putting at risk the State money in the recapitalisation of the bank.

Mr Cowen said Mr Lenihan indicated that “this is difficult territory in legal terms but we believed that this is the means by which we can ensure that bonus payments aren’t paid and do so in a way that withstands legal scrutiny”.