Opposition welcomes AIB decision to withhold bonuses

THE opposition last night welcomed AIB’s decision not to pay €40m in bonuses to staff, but said the bank and the Government had to be “shamed” into acting on the issue.

AIB had initially felt obligated to pay the monies, but reversed its stance after receiving a letter on the issue from Finance Minister Brian Lenihan.

Fine Gael deputy leader James Reilly said Mr Lenihan had “belatedly and reluctantly caved in to public outrage and opposition pressure” over the issue. He described the issue as yet another “debacle” of the Government’s own making which could easily have been avoided.

“When the Government took a majority stake in AIB two years ago, it should have insisted that bonuses or increases in salaries could only be sanctioned by the minister,” Mr Reilly said. “Because the Government failed to do so, AIB was free to award bonuses off its own bat.”

Labour TD Pat Rabbitte said the Government and AIB had to be “shamed into reversing a decision that was patently unjustifiable”.

Earlier, Labour leader Eamon Gilmore called for the entire board of AIB, which includes the party’s former leader Dick Spring, to be sacked if it had been party to the decision not to contest the legal action from which the controversy stemmed.

That uncontested action resulted in the bank having to pay trader John Foy a deferred bonus of €161,000, and prompted AIB’s initial decision to pay the other outstanding bonuses.

However, the Finance Minister last night defended the AIB board and claimed Mr Gilmore had been irresponsible in his comments.

Mr Lenihan said the board had received legal advice that it had no defence, as John Foy was contractually entitled to his bonus.

“In a claim on a debt, you have to have a sworn defence,” Mr Lenihan said. “You swear that on oath... and to swear falsely on oath is perjury. Once they were advised that they couldn’t defend this case, they could not swear an oath that they had a defence.”

Any suggestion that the board erred was, therefore, “entirely wrong”, he said.

His letter warning that no further state funds would be given to the bank if the bonuses were paid created a new legal context and allowed the board to withhold the bonuses in the best interests of the bank, Mr Lenihan added.

“I welcome the decision of the board of AIB and reiterate my total confidence in the executive chairman and the board of the bank,” he said.