Central Bank’s €540,000 pay-offs to be questioned

Two individuals who never worked for the institution received severance

THE Central Bank will this week explain why it made controversial discretionary severance payments amounting to over €540,000 to six individuals, two of whom had never actually worked for the institution responsible for the supervision of most financial institutions in Ireland.

Central Bank officials are to appear before the Public Accounts Committee to be questioned on why it did not adopt a standard approach for assessing and determining the six cases, or for approval of the severance awards.

Those who received the payments included an individual that had not yet commenced employment with the bank, two employees who each had less than two years’ service and a long-term contractor who had never been an employee of the bank.

In its mission statement, the Central Bank states that “safeguarding stability, protecting consumers” is “at the heart of all that we...”

The bank also says it is committed to being an “independent, forthright and influential organisation” with a “compelling, clear and challenging vision of being ‘trusted by the public’.”

Now, officials are to appear before the PAC to explain the findings of a little-reported Comptroller & Auditor General (C&AG) report finalised on December 23, the day before Christmas Eve in 2015, into an examination of the management of severance payments in public sector bodies made between 2011 and 2013.

The report was published in April this year, shortly after the general election and at a time when negotiations to form a government were under way. As such, the report went largely unreported.

However, the former Central Bank governor Patrick Honohan has welcomed the report and the Central Bank has since implemented most of its recommendations.

The estimated value of severance awarded in those years under six public sector schemes was €17.9m, of which nearly €11m related to non-cash elements in the form of pension enhancements. The C&AG examination found broad compliance with scheme rules in most cases, with the exception of a scheme for chief executives of State bodies.

Two State bodies made severance payments, in the form of pension enhancements, between 2011 and 2013, without the required prior approval of the Department of Public Expenditure. The estimated total value of the severance awarded in those two cases amounted to over €1m.

Other key findings included that three of the schemes did not set limits on the maximum amounts payable; rules did not adequately cover movements by employees between related schemes; payments were generally not disclosed in financial statements and there were deficiencies in documentary evidence in relation to one scheme.

The examination identified 14 high-value discretionary severance payments, amounting to nearly €1.5m, made by public sector bodies between 2011 and 2013. Six of the discretionary payments, amounting to over €540,000 (including legal costs), were made by the Central Bank.