Ex-RBS chief's pension unacceptable, says Brown

Click to follow
Indy Politics

Gordon Brown today voiced his "anger" over the £693,000-a-year pension awarded to the former boss of Royal Bank of Scotland Sir Fred Goodwin, which the Prime Minister described as "unjustifiable and unacceptable".

Mr Brown said the Government was seeking legal advice on clawing back the pension, and repeated his call for Sir Fred to waive at least part of the money.

The former RBS chief executive last night rejected ministers' calls for him to give up his entitlements as "not warranted" and suggested City minister Lord Myners had effectively sanctioned the deal when he was forced out of the troubled bank last October.

Controversy over Sir Fred's pension for life - which he is already enjoying at the age of just 50 - blew up as RBS announced UK record losses of £24bn yesterday.

Lord Myners wrote to the banker last night urging him to reconsider his "unacceptable" refusal to give up all or part of his pension.

The City minister insisted that at the time Sir Fred's early retirement deal was agreed in October, he was under the impression it was an unavoidable legal commitment. It was only last week that he became aware the then RBS board may have exercised discretion in effectively doubling his pension pot from £8m to £16m.

Downing Street today said Mr Brown continued to have full confidence in Lord Myners, who was recruited to the Government from the City only days before the state's rescue of RBS last October.

The PM's spokesman told reporters: "He believes that Paul Myners is a minister who brings a huge amount of expertise and experience in City matters, which is why he was appointed City minister."

Speaking today during a visit to Oxford, Mr Brown said: "The behaviour in the RBS where very substantial additional payment awards were given is something that makes me angry and will make the public of the country angry.

"That is why we are taking all the legal advice that is necessary to secure the rights of the general public in this and we are still asking Sir Fred to waive the pension he has been given.

"I think the whole public know that when people make mistakes and banks fail, the people who made the mistakes can't and shouldn't run off with entitlements and with additional discretionary payments that people rightly believe they shouldn't have.

"The legal advice is designed so that the public can get money back."

He added: "I still think it would be better if Sir Fred waived the pension entitlement himself, but if that is not to be done, then we will continue to seek the legal advice that is necessary.

"The anger that the public have is anger that I have as well. This is unjustifiable, unacceptable and we are going to clean up the banks so this doesn't happen again."

Questions were being asked today about exactly what information the Government was given about Sir Fred's pension deal at the time it was negotiated last October.

Union leader Paul Kenny, of the GMB, called on Lord Myners to resign if he knew about Sir Fred's pension arrangements or, "even worse", did not check how much he was going to be paid.

Shadow chancellor George Osborne said Lord Myners was in "a very difficult position". Ministers let slip the opportunity to block the discretionary payments in October and it was "pathetic" of them to protest now, he said.

"Fred Goodwin is pretty clear that the Government agreed to this arrangement," Mr Osborne told the BBC News channel. "Certainly, the board agreed to this arrangement.

"Of course our anger should be directed at Fred Goodwin for taking this pension, but it should also be directed at Gordon Brown and Paul Myners for allowing this pension to be paid out for failure - a £700,000-a-year pension in effect backed by the taxpayer.

"We should be angry that this row has further sapped confidence in the Government's ability to handle the banking crisis which is at the heart of this recession."

Asked repeatedly at this morning's daily briefing of Westminster reporters if Lord Myners asked the RBS board whether there was any discretionary element to Sir Fred's pension, Mr Brown's spokesman would say only that the City minister was "left with the clear understanding" that it was a legally enforceable contractual matter.

UK Financial Investments - the arm's-length body which oversees the taxpayers' stake in part-nationalised banks - is looking into the question of whether the RBS board was fully informed about the discretionary nature of some of the payment, he said.

The spokesman's comments appeared to open the question of whether Lord Myners, or even members of the RBS board, might have been misled about the nature of the early retirement package.

He declined to comment when asked if the Government was considering legal action against the RBS board over the pension.

"What we are doing is examining the legal basis for these payments," said the spokesman.

"We are asking RBS to look at whether the board made the decision in full knowledge of the facts.

"Paul Myners' understanding was that there were contractual obligations which had been entered into and there was no scope for any discretion over the entitlements involved."