Northern Rock troubleshooter billed taxpayer for £173,000 expenses

Zurich-based Ann Godbehere, 53, became chief financial officer of the failed Newcastle bank on a £900,000-a-year salary but decided to commute between home and work every week.

Northern Rock accounts published today show she earned £786,000 last year having joined the lender in February after it was nationalised. After expenses the total bill to the taxpayer was £959,000 for little more than 10 months' work.

Critics called the payouts "silly money" and accused the Government of wasting taxpayers' cash.

It came as the wreckless lending habits of the bank before its collapse were laid bare.

More than 8,000 of the 177,000 borrowers from Northern Rock's high-risk Together business -which offered 125 per cent mortgages - were in arrears at the end of last year. That was 4.53 per cent, up from 0.95 per cent at the end of 2007.

Northern Rock also confirmed it made losses of £1.4 billion last year.

Matthew Elliott, chief executive of the TaxPayers' Alliance, said: "Northern Rock's catastrophic problems have already cost taxpayers a fortune without the new management trying to fill their boots as well. This is silly money. To have any hope of getting taxpayers' money back from Northern Rock it must be run as a tight ship, but there are worrying signs that the gravy train is still rolling along."

Northern Rock said that once tax and national insurance payments were taken into account, Ms Godbehere's travel bill was £95,000 for 10 months or just over £2,000 a week. This covered regular business-class travel between her family in Zurich and work in London and Newcastle.

A spokesman said: "Ann Godbehere is a highly experienced and respected finance director appointed by the Government who met the requirements of Northern Rock during the intense period of activity following nationalisation. The fact that she was based in Zurich necessitated a large amount of travel between Switzerland and the UK."

Ms Godbehere, a former financial chief of insurance giant Swiss Re, left Northern Rock at the end of January.

Other government appointees at Northern Rock also earned a fortune last year.

Chairman Ron Sandler was paid £760,000 while new chief executive Gary Hoffman earned £645,000 for just three months' work.

Mr Hoffman, a former Barclays banker, was given a golden hello of £400,000 when he joined in October - to be repeated in October this year and again in October next year - on top of his £700,000 annual salary.

Northern Rock also awarded payoffs worth more than £1.25 million to departing directors Bryan Sanderson and Andy Kuipers.