The chairman and chief executive of the Welsh Development Agency were questioned about the redundancy package by the cross-party public accounts committee, which is investigating irregular payments, including the hiring of women from a model agency. It follows a damning report by John Bourn, the Comptroller and Auditor General, on irregularities at the WDA, the like of which one senior Tory MP said he had never experienced in 20 years as a politician.
Mr Bourn reported to the committee that in June 1991, the agency agreed an early retirement package for A C M Price, its international director, comprising: a gratuity of pounds 21,350; compensation of pounds 64,258; and a pension of pounds 10,000 a year for 15 years, which was worth about pounds 169,000, according to an actuarial report.
Mr Price left in February this year, aged 50, and signed a confidentiality clause.
Alan Williams, the Labour MP for Swansea West, said: 'That is a lot of money to buy silence.'
Philip Head, the WDA chief executive, replied: 'There was no question of buying silence.'
Mr Williams said later: 'It was a quarter of a million - the price for silence.'
The Comptroller told the committee that Mr Price was appointed international director after the WDA's American consultant on inward investment had been fired, and had taken furniture which cost the agency pounds 53,288 but was worth considerably less.
During 1991, the WDA also appointed Neil Smith as director of marketing. In November this year, Mr Smith, an undischarged bankrupt who had served three prison sentences for deception, pleaded guilty to seven charges of forging and using references and curriculum vitae.
While working for the WDA, he paid a model agency pounds 3,330 for promotional work. The committee was told that one Sunday afternoon, Smith invited 11 women from the agency to his hotel room to interview them about their suitability for a WDA advertising promotion.
Robert Sheldon, Labour chairman of the committee, said: 'How on earth did such people come to be employed by the WDA?' Mr Head replied: 'Mr Smith was a con man. We were conned.'
The Comptroller also reported on the payment by the WDA of a rural conversion grant for craft workshops of pounds 16,895 to Gwyn Jones, shortly before he became chairman of the agency. It was subsequently found that part of the workshops had been converted for residential use, and Mr Jones had to repay pounds 3,379.