In 2023, then Fine Gael TD Fergus O’Dowd railed against payments to cover the Bord na Móna chief executive Tom Donnellan’s tax bill for his electric BMW and health insurance, calling them “unacceptable”.
He had uncovered via parliamentary questions that the previous year, Mr Donnellan received more than €50,000 to cover the tax bill due on these benefits in kind, known in taxation jargon as “grossing up”.
O’Dowd said that “ordinary Joe Soaps” would be shocked that a chief executive’s bill for benefit-in-kind would be covered by a semi-State company.
Bord na Móna said all payments and benefits were fully taxed in line with relevant tax legislation, adding that the package was subject to the approval of then minister for the environment, Eamon Ryan.
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However, behind the scenes, officials at the Department of Public Expenditure (DPER) were unhappy. When Bord na Móna came looking for an increase to Mr Donnellan’s salary of €225,000, they didn’t hide their feelings.
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After two earlier requests for a new contract – it was to expire in April of this year – the Department of the Environment told the DPER that there was “no more room to wait”.
In January, the new Minister, Darragh O’Brien, wrote a letter requesting an extension of three years “on enhanced terms”.
DPER hit back. The “unsanctioned grossing up arrangement (valued at approx €57k) put in place by the Board of BnM is intended to cover the taxes paid on the benefits in kind received,” it wrote, explaining that typically “the recipient of the benefit is intended to pay tax on such benefits as prescribed by the Revenue Commissioner”.
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It said NewERA, which provides financial and commercial advice to the State, had “explicitly highlighted” the practice and indicated that it should be disallowed.
“As a publicly owned semi-State company, Bord na Móna’s current grossing up arrangement undermines the principle of the recipient of a taxable benefit being the one who pays the tax on the benefit-in-kind and poses significant public perception risks,” wrote the DPER.
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“If sanction were to be conveyed to continue this arrangement for any period of time, it would legitimise the arrangement and consequently undermine public pay policy.”
A contract offer was signed in April which, according to papers submitted to Mr O’Brien, was on the salary of €225,000 for three years but which allowed that “no grossing up arrangements can be in place”.
Bord na Móna confirmed the contract was extended in April with “remuneration terms … fully in line with the approvals granted.”
It said that the company has contributed almost €100 million to the State in dividends since 2022 and has a cumulative operating profit of more than €280 million in this period. Its value has increased by €1.8 billion during Mr Donnellan’s tenure, the company said.
