The Irish Management Institute has had to rewrite its accounts for the past six years to meet the cost of additional pension payments to a former chief executive. The IMI's 2003 accounts, which have been seen by The Irish Times, include a provision of €1.34 million to fund the arrangements for Mr Barry Kenny, who left the institute last January, writes Paul Cullen.
No provision was made for the cost of Mr Kenny's benefits to be funded from the institute's pension scheme, which cannot meet the extra obligation, a spokesman for the IMI acknowledged last night. The cost would therefore have to be met directly by the institute.
The spokesman said the board learned only late last year of the additional pension benefits agreed with Mr Kenny at the time he negotiated a second five-year contract in 1998. At this time, Mr Kenny was chairman of the pension trustees, he confirmed.
However, Mr Kenny said last night his deal had been properly approved by the board and its remuneration committee. Denying that any conflict of interest arose from his chairing of the pension trustees when the deal was negotiated, he said it was normal for the chief executive to hold this position and pointed out that a professional trustee was also involved.
Asked why the deal hadn't appeared in the accounts until now, Mr Kenny said this was a question for the IMI to answer.
The adjustment means that the institute, which provides training and consultancy for Irish industry and counts leading business figures among its board and council members, recorded a loss of €100,000 last year, instead of the small profit which was expected. Profits which were originally recorded in previous years going back to 1998 have also been wiped out.
The arrangement allowed Mr Kenny to retire at age 55 with a full pension as well as "consequential" pension entitlements past the age of 60, according to a note in the 2003 accounts.
According to the IMI spokesman: "The additional cost is being treated as a prior year adjustment and, as such, will impact on accumulated reserves but will have no impact on either the pension fund or the profit-and-loss account going forward." He declined to comment further at this stage.
However, the accounts also note that the staff pension fund has a €1.6 million deficit. In order to ensure the scheme is properly funded, employer and employee contributions are being increased and benefits reduced.
The current chairman of the IMI council, Dr Chris Horn, briefed staff on the developments last week. Dr Horn, who is chief executive of Iona Technologies, is in China and could not be contacted yesterday.
In his foreword to the current accounts, Dr Horn says the IMI had a "good underlying performance" last year in spite of the additional pension-related costs.
However, the institute, which was set up in 1952 to improve standards in Irish management, has been experiencing increasing difficulties in recent years. In spite of the economic boom, membership has dropped from over 2,000 in 2001 to 1,459 last year. Its international arm ceased trading in 2002.
Unrest among the staff of 90 peaked last year with an overwhelming vote in support of union recognition. However, no moves have been made in this direction.
The a.g.m. of the institute, which was postponed several times because of the pension issue, is now scheduled to take place on June 17th. A new chief executive is expected to be recruited shortly.