€138k for manager sacked over loans to soccer club directors

A tribunal has ordered Allied Irish Banks to pay a sacked former senior manager €138,384 after finding he was unfairly dismissed.

In making the award to Sean McHugh of Barna, Galway, the Employment Appeals Tribunal (EAT) said his sacking by AIB was “disproportionate”.

However, it also described Mr McHugh’s dealings in the matter that got him the sack as “naive, reckless, and careless”.

He had put loyalty to Galway United FC before his loyalty to the bank and there was a conflict of interest in Mr McHugh’s dealings with the soccer club.

A branch manager in AIB’s Galway business centre, Mr McHugh, aged 56, was given 10 minutes to clear his desk and “frog-marched” from the building when he was initially suspended in September 2012.

He was subsequently sacked in March 2014 for an alleged conflict of interest due to his activities and role at Galway United Football Club, which was in debt to the bank.

A season ticket-holder at Galway United, he acted as licensing officer at the club in a voluntary capacity. Mr McHugh personally sanctioned €160,000 in loans to four directors at the club, out of €180,000 loans made to six club directors.

AIB produced a figure for those combined directors’ loans for €300,000, which included €120,000 in interest accrued.

At the tribunal, Mr McHugh said he had facilitated personal loans to a number of Galway people to benefit the club. He told the tribunal the club needed money urgently to prevent it potentially being wound up by the Revenue Commissioners.

Given the club’s indebtedness to the bank, letting it go under would have exposed the bank to a considerable loss, and facilitating personal loans over which the bank would have recourse to the borrowers was protecting the bank’s interests, he said.

Senior bank official Brendan O’Brien, who recommended Mr McHugh be summarily dismissed without notice and without pay in lieu, told the hearing Mr McHugh had a “blatant conflict of interest” in relation to the football club’s dealings with AIB.

Mr McHugh insisted there was no conflict of interest, on the basis that he did not gain or potentially gain personally or financially from his affairs with the club.

The tribunal found that given Mr McHugh’s incident-free 37 years’ service to the bank he should not have been summarily dismissed and a lesser penalty should have been considered.

After an eight-day hearing, the EAT found while the bank was ultimately culpable, Mr McHugh had contributed to his own downfall. The EAT said Mr McHugh “was naive, reckless, careless, and displayed a serious lack of judgement, but there was no malice”.

The EAT concluded that there was a conflict of interest and

in its ruling, it awarded €120,000 compensation for unfair dismissal and €18,384 for a minimum notice breach.