Inquiry into Bank of Ireland bonuses

MINISTER FOR Finance Brian Lenihan has started an investigation into millions of euro in undisclosed bonus payments paid to staff by Bank of Ireland since the Government’s bank guarantee scheme.

Last year the bank told the Government it had not paid any performance-related bonuses to staff since the guarantee in September 2008.

Following subsequent queries by Department of Finance officials, it has emerged the bank did not disclose millions it paid out as part of contractual bonuses, which also have a performance-related element.

Neither the bank nor the department would comment last night on the scale of the bonus payments or how many staff benefited until investigations are completed. However, one well-placed source said the figure would be at least several million euro.

Other banks covered by the guarantee scheme have paid out a total of almost €46 million in bonuses between 2008 and 2010.

Anglo Irish Bank was responsible for some €20 million in bonus payments in the last months of 2008. AIB also paid out about €20 million, the bulk of which went to overseas staff. The sums recorded for Bank of Ireland were nil.

The latest information on bonus payments has come to light following a parliamentary question by Labour’s finance spokeswoman Joan Burton TD.

She said yesterday that the bank’s failure to disclose the payments was an “act of deceit” and an “astonishing display of arrogance and contempt” for the Government.

Minister for Finance Brian Lenihan said the bank’s chief executive had acknowledged the difficulties caused as a result of the misinformation and apologised unreservedly.

Mr Lenihan said he was undertaking an “urgent investigation” into bonus payments made since the guarantee scheme and of additional payments the banks may have intended making in the future.

The Minister said previous information given to his department that indicated that no performance-related bonuses were paid to staff was incorrect, as it did not take into account “contractual bonuses” which were performance related.

A spokesman for Bank of Ireland yesterday said there was never any intention on behalf of the bank to mislead the department.

He said some of these bonuses had not been classified as performance-related and were typically paid because of legal obligations or arrangements which predated the bank guarantee scheme.

Ms Burton, however, said it beggared belief that the bank did not have data on bonuses at their fingertips. “It is money from the taxpayer and a State guarantee that are keeping the Bank of Ireland afloat,” she said.