Former FAS chief Rody Molloy today quit his role promoting high standards in the public sector.
The career civil servant stood down from the Institute of Public Administration (IPA) – his second resignation – amid revelations he threatened to sue to get a €1m pension for his speedy departure from FAS.
Mr Molloy offered to give up his IPA chairmanship as the Government faced deepening criticism for signing off on the FAS golden handshake.
Taoiseach Brian Cowen defended the lucrative pay-out insisting it was within public sector norms and the Department of Finance guidelines.
He insisted: “Formal Cabinet approval isn’t required in respect of these matters.”
Enda Kenny, Fine Gael leader, rejected claims that all Government ministers had not been aware of the lucrative pension deal.
“I don’t believe frankly that the Cabinet were not aware of the situation regarding the removal of the former Director General of FAS,” the Mayo TD said.
Mr Kenny also said it was incomprehensible officials did not get legal advice on Mr Molloy’s threat.
Tánaiste Mary Coughlan has ordered a review of the pension deal and belatedly sought legal advice.
Green Party leader and Environment Minister John Gormley said he was confident the Tánaiste’s actions would resolve the controversy.
It is understood the junior coalition partners had not been aware of the pension package with Senator Dan Boyle demanding explanations over how it was agreed.
Mr Molloy walked away with a pension worth €1m – €111,000 a year, a tax-free lump sum of €333,732, and a taxable ex-gratia payment of €111,243.50.
He had threatened to take legal action unless he was given the deal adding four-and-a-half years of benefits to his pension worth an extra €11,000 a year.
The Government has not disclosed why it did not seek legal advice on Mr Molloy’s challenge to officials at the Department of Enterprise – experts in workers’ rights and workplace rules and regulations.
Labour’s Roisin Shortall said the Government was closing the stable door after the horse has bolted.
She branded the million euro pension a grubby deal.
“What appears to have been in operation here was a cosy circle between some of those at the top of FAS and the ministers who provided their funding,” she said.
“The ministers in charge ensured that FAS got plenty of money. FAS, in return, lavished gifts and expensive foreign travel to pleasant foreign locations on their political paymasters.
“It is clear that we still have not got to the bottom of the FAS story.”
Ms Shortall, who sits on the Public Accounts Committee, said it defied belief that the Department had not asked for legal advice following Mr Molloy’s threat.
Sinn Féin finance spokesman Arthur Morgan called for the Tánaiste to resign.
IPA chief Mr Cullen said he had a brief phonecall with Mr Molloy, who did not discuss why he was stepping down. He thanked him for his service with the institute.
“He gave me no reason. It was a very short phonecall and I was not in the business of querying it to any great extent,” Mr Cullen said.
The 16-member IPA board, which has not discussed the FAS scandal or Mr Molloy’s pension deal, is expected to meet in the next few days.
The State body runs training and education for public sector workers and others involved in administration.