State did not seek legal advice on 'sweetheart deal' for ex FÁS boss

The Government signed-off on an €1m pension windfall for former FÁS chief Rody Molloy after he threatened legal action if he didn't get a 'golden handshake', it was revealed today.

Fine Gael TD Bernard Allen has angrily claimed today that former FÁS boss Rody Molloy was appeased with a sweetheart deal rewarding failure.

Allen, chairman of the Dáil Public Accounts Committee, said that no Government department sought legal advise before signing-off on an €1m pension windfall for Molloy, after he threatened court action if he did not get a 'golden handshake', it was revealed today.

The Dáil's public spending watchdog was told Mr Molloy strongly warned he would go to the courts if he did not get a lucrative pay-out in exchange for his resignation.

The ex-director general stepped down last November at the height of controversy surrounding lavish expenses by top officials at the scandal-hit state agency.

"Why was the value, equivalent to winning the lotto, transferred to the former DG (Director General) for his pension, when the man spent and oversaw spending on travel, on a lifestyle more equivalent to a rock star than a public servant?" he asked.

"I don't think we should be appeasing people who make mistakes for fear of litigation."

Mr Molloy walked away with a pension worth €111,000 a year, a tax-free lump sum of €333,732, and a taxable ex-gratia payment of €111,243.50.

The ex-FÁS boss had four and a half years added to his pension entitlement, worth around €1m if he drew it down for 30 years.

Sean Gorman, secretary general at the Department of Enterprise, said he led the day-long negotiations with Mr Molloy on his resignation package.

The top civil servant said the ex-FÁS chief made it clear he would fight for the deal.

"In the negotiations that took place it was made very clear that a part of the terms on which he was prepared to resign was that he was treated reasonably," Mr Gorman said.

"It was made very clear that if the individual felt he wasn't being treated reasonably he was reserving his right to take court action.

"That was made very clear."

Mr Gorman said the resignation was offered but only on the condition there would be a settlement.

Tony Jordan of the Department of Finance said there was a 'pragmatic' approach taken to the deal.

He said the negotiations were set against Tánaiste Mary Coughlan's desire to see Mr Molloy go and his threat of litigation, which could hit the taxpayer with more costs.

Mr Allen said it appeared Mr Molloy was only willing to resign if he got a golden handshake.

Outgoing FÁS chairman Peter McLoone said the resignation came at the end of a long and tough day of negotiations.

Laws are expected to be brought forward in the coming weeks giving the Government power to dissolve the 17-member FÁS board following further evidence of massive overspending at the beleaguered agency.

Key findings of the Comptroller and Auditor General report included more than €600,000 being frittered away on TV advertisements that could not then be broadcast because there was no money left to pay for it.

Over a period of years there was also at least €622,000 paid to two individuals for which there is no evidence that any goods or services were provided, with the matter referred to the gardaí.

Spending on jobs fairs was allowed to run €6.1m over budget, including one in a Manhattan hotel and an unproved deal to stage a €640,000 event in Croke Park.

Some €9,200 euro was spent on a car that was never delivered.

The damning C&AG report sparked the powerful PAC to reopen its inquiry into the massive waste of taxpayers' money at the agency responsible for getting people back into employment.

The Labour Party's Roisín Shortall branded the €1m payment a buy-out.

"It's very hard to stomach at the very least on behalf of the taxpayer, how you could possibly justify that kind of level of expenditure," she said.

Earlier, Mr Molloy's successor Paul O'Toole expressed his regret at the level of spending at the agency.

"On behalf of FÁS, let me indicate our regret that the serious matters raised by the Comptroller and Auditor General... necessitate our presence here today," Mr O'Toole said.

"This regret is based on the knowledge that the confidence of the committee, the Oireachtas and the general public has been undermined by the continual revelations regarding our stewardship of the taxpayers' money."

Mr O'Toole said the advertising budget for the state agency has been slashed by more than 90% this year.

Credit cards will no longer be issued for staff and have been withdrawn from those who had them, the DG said.

Foreign travel spending has been cut by more than 60% this year also.

C&AG John Buckley is working on a second report into overall running of the state agency and he told the committee it is expected to be finalised in around six weeks.