Why we're still angry about bonuses

SANTA Claus himself, would have gone out on strike in protest and I for one, would have donned my old ski gear, grabbed a turkey sandwich or two and joined him with my placard, had AIB staff succeeded in receiving one cent of the €40 million bonus money they claim they are owed.

Legal opinion or no legal opinion, Brian Lenihan knew that it just couldn’t happen, as it would have been tantamount to waving a large red flag before an island full of very angry bulls.

The nation already had its back arched, head down, eyes bulging, nostrils flared and were snorting with rage and pawing at the ground in anticipation. Lenihan knew that the bulls were threatening to charge.

It had been flagged last month, when AIB, having failed to enter a defence against a case taken by trader John Foy, ended up, rather conveniently, being ordered by the High Court to pay backdated bonuses to some staff. Few expressed surprise that AIB failed to fight the case; after all, if John Foy won his test case, then the precedent would apply and all bank staff would get what they claimed was owed to them.

However we are now talking about a bank, which within a few months, will be owned in the main by the state, financed by the state and most importantly, is supposedly under new management. The same new management, which we assumed, obviously incorrectly, had been put in place to ensure that the mistakes of the past would never be repeated.

One of the same lending institutions, which, despite reckless trading and subsequent failure, somehow still manages to hold the entire nation to ransom and still believes it is entitled to be rewarded for its conduct. And in this case, the law behaved, as it so often does, like an ass. It played into the hands of AIB who hid behind the mantle of the High Court ruling and claimed that it had no choice but to pay out the backdated bonuses.

But a High Court ruling was not going to wash, in fact, had the Archangel Gabriel himself appeared before us and expounded at length on the virtues of paying the bankers their bonuses, we wouldnt have been impressed.

This week however, we discovered that our anger was justified when Fintan O’Toole revealed that AIB had apparently rushed through inflated staff bonuses in January 2009 in the knowledge that it would be their last chance to do so.

This week, obviously, the Government and AIB were going through the motions and playing out a little game for the benefit of the nation. And it might well have worked. Lenihan had played his ace card by threatening to pull the financial rug from under AIB if it even attempted to try to take advantage of the High Court ruling and pay their staff bonuses.

AIB responded to Lenihans threatening letter like a naughty child, relieved to have at last, been punished and forced into compliance. 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.”

My suspicious mind however, wonders about the possibility of a double twist in this tail. Now that the Government appears to have done the correct thing by threatening to withdraw financial assistance if AIB paid its staff bonuses and AIB appears to have done the correct thing by conceding to this threat and agreeing not to pay its staff these bonuses, they have both effectively washed their hands of the entire debacle.

Leaving it wide open for individual bankers to avail of the precedent set by John Foys successful appeal to the High Court. How convenient would that be for all parties concerned? Lenihan also realised that, if he had agreed to bankers receiving bonuses, much of which was earned on the back of lending vast sums of money into the now defunct property sector, it could well have resulted in civil disorder and riots. Indeed, property and land ownership has always been of great importance to the citizens of this country and Lenihan took this fact into consideration in the recent Budget.

So rather cleverly, he gave us a little Christmas gift, one, which he knew we would like, but which cost him absolutely nothing to give. He gave us a reduction in stamp duty, which is lovely if you are one of the lucky few currently able to purchase property. But, in the sure knowledge that first-time buyers are virtually the only ones now in that happy position, he made sure to include them in the new tax net. It’s like waking up on Christmas morning to find that Santa Claus visited and left you a few cheap toys but robbed you of all your other possessions.

* Isabel Morton is a property consultant

Talking Property