Thain accuses BofA of lying during bonus row
Tuesday 28 April 2009
John Thain, the former chief executive of Merrill Lynch, has made a dramatic last-minute intervention in the shareholder revolt at its parent company, Bank of America, suggesting that the company had lied about his role in the controversial payment of $3.6bn (£2.5bn) in bonuses to staff.
Ken Lewis, BofA's chairman and chief executive, faces a tough re-election vote at the company's shareholder meeting tomorrow because of his handling of the $50bn acquisition of Merrill.
An aggrieved Mr Thain – who was fired in January – suggests that BofA's management was fully informed of the bonus payments and of Merrill's spiralling losses in the weeks before the acquisition completed on 1 January.
A transition team led by BofA's chief accountant had been working at Merrill since the deal was agreed in September, after a frantic weekend of talks as Lehman Brothers and AIG were collapsing and the financial system as a whole seemed in danger.
Mr Thain said there is a document, signed by both him and Mr Lewis, which authorises payments out of a $5.8bn bonus pool before the closure of the deal. "The suggestion Bank of America was not heavily involved in this process, and that I alone made these decisions, is simply not true," he told The Wall Street Journal. "Getting fired is one thing. But nobody has the right to say things that they know aren't true."
Revelations about the bonus payouts in December sparked fury, and rebel investors have not been mollified by BofA's claims that it was Mr Thain who decided to bring the payments forward.
BofA said yesterday that the agreement signed by the two men "allows" the payment of bonuses "but does not require it".
A spokesman added: "These issues have been extensively reported. We believe it is time to move on. We wish Mr Thain well in his future endeavours."
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