SENIOR BANKING executives might not be entitled to contractually based retirement packages because their banks are effectively in “liquidation”, Minister for Justice Alan Shatter has said.
Mr Shatter strongly criticised the payment of €3 million to former AIB managing director Colm Doherty, describing such payments as “grossly immoral”.
He told delegates at the annual conference of the Association of Garda Sergeants and Inspectors in Limerick yesterday that Irish taxpayers should not carry the burden to facilitate retiring bank executives leading “lives of unjustified luxury”.
Such a payment “defies belief” at a time when banks are on life-support and it demonstrated that “bad judgment, hubris and greed are still alive and well” among the Irish banking fraternity.
Mr Shatter said the Government is examining ways to ensure there would be no repeat of such payments.
He acknowledged that bankers had legally contractual positions and an expectation that they should receive financial rewards if their employment is curtailed.
However, he said employment contracts were a “two-way process” and some bankers had run their banks so badly it amounted to a “fundamental breach of contract”.
Their banks were effectively in liquidation and dependent on the State for survival. In such cases, there ought to be a provision that bankers in receipt of State aid should not receive financial rewards if they retire early or are removed from office, he said.
Mr Shatter said the Government was laying down a “marker” to other senior bank executives that it would address the subject in the future.
The issue of Mr Doherty’s pay package and the general issue of bankers’ bonuses were raised repeatedly during the conference, with speakers contrasting the payments with the cuts in income they have had to endure.
Delegates applauded Mr Shatter when he said bankers should be paid no bonuses of any kind in the current economic climate.
Those responsible for the banking debacle should “hang their heads in shame” and it was past time for a public acknowledgement by them of the “gross immorality” of excessive retirement rewards.
Instead, the public was expected to carry “an ever-increasing burden” for retired bank executives to live “lives of unjustified luxury”, he told the conference.
“Unfortunately, it seems that the unreality which dominated bankers’ boardrooms over the past decade continues to infect the expectations of those who long ago should have vacated their positions,” he said.
“Financial compensation sought or demanded for early retirement may not be criminal but it is grossly immoral.”
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There will be no training of new gardaí before December this year at the earliest, Mr Shatter has said.
At present there is a public service embargo on Garda recruitment and the force has to reduce its numbers from 14,500 to 13,000 under the terms of the EU-IMF bailout.
There is a pool of recruits who are currently waiting for entry to Garda Training College in Templemore, but there is no indication when they can start training.
The Minister rejected suggestions that it could be 2020 before new garda recruits hit the street .