Senior BBC execs get €1.65m more than needed in pay-offs

Senior managers at the BBC were paid £1.4m (€1.65m) more than their contracts demanded in pay-offs over a three-year period, according to a new report.

The National Audit Office (NAO) examined a further 90 severance payments made to corporation bosses after its initial study of 60 cases, published earlier this year, showed some staff were paid more than they were entitled to.

The report states: “Across all 150 severance payments to senior managers in the three years to December 2012, the BBC paid more salary in lieu of notice than it was contractually obliged to in 22 cases, at a total cost of £1.4 million.”

The NAO said that in 18 of the additional 90 cases, severance deals had been agreed ``before the supporting business cases had been through the relevant scrutiny and approval process''.

It said: “In one case, approval to pay severance of £141,000 (€166,000) was not provided until after the payment was made.”

The BBC also paid £687,333 (€811,290) in redundancy to executive Jana Bennett, a former head of television at the corporation, after she left a new position at its commercial arm, BBC Worldwide, before it “reversed its decision and recovered the money.”

The report stated that Worldwide is “responsible for meeting its own redundancy costs” but the BBC “met the cost in this case on the understanding that it had committed to do so as part of the individual’s move from an executive director post at the BBC to a senior role at BBC Worldwide Limited in 2011”.

The BBC got its money back from Worldwide last month.

Ms Bennett hit the headlines in 2009 when she claimed £500 (€590) on her BBC expenses to replace a stolen handbag.

In its conclusion to today’s report, the NAO states: “The results of our examination of a further 90 severance cases confirm the conclusion set out in our earlier report, namely that weak governance arrangements led to payments that exceeded contractual entitlements, provided poor value for money and put public trust at risk.”

It also highlighted the case of a senior manager who received a pay-off of £179,200 (€211,518), but then returned to the BBC for 20 days and was paid £9,650 (€11,390).

The BBC has also published a separate report by auditors KPMG examining severance payments from July 2006 to December 2009.

BBC chief Tony Hall said: “Reforming severance pay arrangements and addressing these problems of the past have been a priority for me from day one as director-general. I commissioned today’s KPMG report to ensure that we can get everything out in the open and help bring this difficult chapter to a close.

“Both these reports underline what we already knew – approvals, record keeping and oversight were poor. Although as a result of these deals the BBC delivered savings of £37 million a year in management costs, it did it in the wrong way.

“The measures I am announcing today further strengthen the new controls I have already put in place. I want to make sure that the BBC does everything it can to give the public confidence we are managing their money in the right way.”

The KPMG report, which examined senior staff pay-offs from July 2006 to December 2009, showed 176 managers left the corporation in that time with an average payment of £130,068 (€153,525).

Among the senior executives who left in that period was former BBC1 boss Peter Fincham who reportedly got a £500,000 (€590,000) pay-off when he left the corporation in the wake of a scandal sparked by misleading footage of the Queen.

Mr Fincham, who is now director of television at ITV, quit in 2007 after an independent inquiry revealed a catalogue of ”misjudgments, poor practice and ineffective systems” at the corporation.

The KPMG report notes the highest payment made in that time for a “consensual termination” was £500,100 (€590,290).

Mr Hall said a review of all severance deals will be included in the BBC's annual report.

The first two reports will be written by Dame Fiona Reynolds who will be able to “examine any severance packages which she feels merit further investigation”.

It also announced a “detailed business justification report” would be needed for each severance deal before it is agreed.

Mr Hall has already announced a cap on severance pay of £150,000 (€177,000).