Enda Kenny (Mayo, Fine Gael)

The Department of Finance is examining that matter following the making of a request by the Minister.

We have to look at new remuneration allowances for the future. As the Deputy is aware, there are similar developments in the European Union where there are directives on the remuneration of senior bankers and in which their bonus culture is attacked head on, which did not happen here. We will be moving towards a new regime to replace the old one. I am conscious of the fact that there are people with legal entitlements that will be very difficult to disentangle.

The pension cash payment in the case of Mr. Doherty arose under the Finance Act 2006. Pension pots above €5 million, the standard fund threshold, were made subject to a very high tax rate. The SFT was reduced to €2.3 million in the last budget. Individuals with bigger pots were allowed to agree a personal fund threshold with Revenue that eliminated retrospective tax liability. Usually, no future payments were made into the pension fund. Some employers offered lump sum tax payments which were taxed as income each year in place of pension contributions. When this issue was examined by the CIROC group, it recommended against making these payments in lieu of pensions and AIB agreed to withdraw its scheme. However, it indicated to CIROC at a meeting in February 2009 that Mr. Doherty had agreed his arrangement with Revenue and would suffer financially if he attempted to undo it. This was accepted. When AIB sought the agreement of the Minister for Finance on the appointment of Mr. Doherty in November 2009, it was agreed that his salary should be €500,000. AIB also sought approval for a continuation of the pension cash allowance. This was agreed, subject to it being strictly in line with existing contractual entitlements.

The important point is that the Department of Finance did not have the details of Mr. Doherty's contract. The then Minister for Finance, referred to as a person of high office in the Nyberg report, should have known this. Certainly, as a person who did not want to have Mr. Doherty appointed in the first place, he should have made it clear that he should have been apprised of each and every issue regarding the internal appointment of Mr. Doherty by AIB.

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