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RBS misled us over Sir Fred’s pension deal, ministers claim
Joe Murphy and Paul Waugh27 Feb 2009
Downing Street was today embroiled in a bitter blame game over the “obscene” £693,000 pension for disgraced banker Sir Fred Goodwin.
Lord Myners, the Treasury Minister who failed to stop the massive pay-off, was under increasing fire from Labour MPs, Tories and trade unions.
No 10 hit back this afternoon, suggesting senior figures at the Royal Bank of Scotland misled the minister into thinking the deal could not be blocked.
That was understood to refer to the bank's ex-chairman Sir Tom McKillop, who informed Lord Myners about the size of the pension last October.
According to one account, Sir Tom told him in front of a lawyer that the £16 million pension pot was a contractual obligation.
It is now clear that the bank doubled the pot to allow Sir Fred to retire 10 years early at just 50, meaning he is already pocketing £13,000 every month for doing nothing.
Lord Myners took no action and did not even tell Chancellor Alistair Darling about the looming furore.
At the time the Government was desperate to remove Sir Fred and, MPs are speculating, former businessman Lord Myners lacked the political experience to realise how much outrage the pension would cause. Treasury insiders say the full RBS board was not told it could have refused to pay the full amount.
Lawyers for the Government are now looking into whether the pension could be overturned on the grounds the board was in the dark about the full facts.
Gordon 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 angry.
“That is why we are taking all the legal advice necessary to secure the rights of the general public in this and are still asking Sir Fred to waive the pension.”
However, pressure on Lord Myners to explain how he missed a chance to block the pension was growing.
Former Cabinet minister Peter Hain said it was “astonishing” that such a massive pay-off went through under ministers' noses.
GMB union leader Paul Kenny, said: “If Lord Myners agreed ... or even worse if he did not check what sort of pension he was going to get, he should go.”
Labour MP John McDonnell said the Government was “negligent” if it had failed to “read the small print”.
Shadow chancellor George Osborne today said the Government was to blame: “The problem for the Government, and for Lord Myners, is that they knew all along about this pension so all this synthetic anger now is just long after the horse has bolted.”
Sir Fred Goodwin to Lord Myners:
“To voluntarily accept a reduction in a pension entitlement which has been built up over many years and in other employments in addition to RBS is not warranted. While I suspect that you will not now agree with it, I hope you can understand my rationale for declining your request to voluntarily reduce my pension entitlement.”
Lord Myners to Sir Fred Goodwin:
“I do not agree with your rationale for declining my request that you voluntarily reduce your pension. And indeed I hope that on reflection you will now share my clear view that the losses reported today by the bank which you ran until October cannot justify such a huge award”
Reader views (21)
this is all getting out of hand and being whipped up by the media AND politicians. Harmann's comments were pathetic, the idea that 'public opinion' should take precedent over contract law is not the way a democratic country should be behave, it sounds more like Zimbabwe than the UK. As if depriving Goodwin of the pension makes any difference to the big picture. It is blatant attempt to seek 'someone to blame'....Goodwin is guilty of nothing other than being a strong personality with the ability to persuade shareholders...the acquisition of ABN was clearly a mistake, but RBS is a public company and the shareholders voted this through...
we need to remember that he did not personally 'run down the bank' - the responsibility sits with the shareholders - without whom he could do nothing....
- Martin_Clerkenwell, london, 02/03/2009 09:50
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Anyone currently paying into a pension should be very wary of supporting this government`s idea (Harriet Harman QC over the weekend) of bringing in retrospective legislation to stop Sir Fred from getting his pension. NuLabour has a very poor track record in drafting law. One has only to think of the Anti Terrorism legislation to see how that has been misued, because it was so badly drafted. If such an Act was to be introduced it would not just target bankers; but everyone. So if your business is failing, or your boss thinks you have under performed, he may well cut your pension or take it away from you entirely. I think we must just accept the govt cocked this one up and let Sir Fred have his pension. The consequences for everyone else by introducing new leglislation does not bare thinking about.
- Brian Gare, Norfolk Gorleston, 02/03/2009 09:48
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It funny how those receiving family credit/benefits etc that are mis calculated by the State are forced to repay the pittance of overpayment (when they have limited budgets in the first place and have spent the money on the basic needs of their families) but bankers who created the increase in unemployment are given a pension that many won't earn in their life time.
- Andy, London, 02/03/2009 09:47
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I was alarmed to see that Gordon Brown and now Harriet Harman share the same view that the Court of Law comes second to the Court of Public Opinion. Are the Government now seeking to interfere with the Law of this country? This is very unsafe territory! If the settlement with Sir Fred Goodwin was properly authorised and therefore presumably legally granted then surely it should stand, excessive as it may seem. To blame Fred Goodwin for the current crisis is laughable. Should the Government not look closer to home in levelling blame at its own door for failing to control the economy and the regulators for failing to monitor the banks? If Fred Goodwin is expected to take on personal liability, then where does that leave the Chief Executives of every other bank or for that matter, any other Chief Executive? The Corporate Veil is lifted! If one extends this thought process further, then should Gordon Brown and his cabinet colleagues not be repaying their salaries and foregoing their pension rights for their participation in this economic crisis? This publicity stunt by Messrs Brown and Harman smacks of the Government trying to divert attention away from the real culprit. The failings of the current Government
- Iain C, London, 02/03/2009 09:30
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Mark my words---there will be a great row, and at the end of the day-NOTHING DONE. I know, you know it, Gordon Brown knows it and so does Sir Fred. Politics as usual.
- Ruckus, Myrtle Beach USA, 02/03/2009 00:22
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It would seem that 'accountablility' applies only to some. I am beginning to think that the taxpayers' pot must be brimming with wealth given the generosity with which public funds are handed out. Our hospital consultants received big financial rewards with the intention that the health service would benefit, but then these benefits were not negotiated. Great value for money for taxpayers and not the only example of ineptness. Now money is being ploughed into banks. I expect we will once again read of anger but little will be done to rectify the situation and those who negotiate bad deals on the behalf on taxpayers continue unscathed. Small wonder that ordinary people have little faith in those intrusted with power and position. Is this a fuss intended to distract public attention away from something else? Probably.
- Jill, London, 28/02/2009 13:59
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This is a pretty shameful example of government leaks and media management. We have the prime minister (well, he lives at number 10) discussing the personal details of a pension agreement of 1 man (who's real mistake was buying ABN AMRO, and not much else), private conversations being double backed on and shouted from the rooftops and ALL to get us away from the fact that the chancellor and the former chancellor sat back for a decade and watched the corporate tax roll in without ever exercising their duty in regulating the risks going on. Wake up people. 600k+ a year is not the issue here, it's the failings in the system and the pension funds demands on their investments. Of course, the pension funds doing well and taking the pressure off the mismanaged state pension farce is nothing to do with it....
- Mark, London, 28/02/2009 12:10
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Who needs bank robbers on the outside, these people are doing it from within?.
Money "THE ROUTE OF ALL EVIL"?.... FACT.
- John L., Scarborough, N. YKS, U.K., 28/02/2009 09:01
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Will Brown forfeit his pension for ruining UK PLC ? I think not, so why should Sir Fred
- William, London, 28/02/2009 04:15
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Gordon's shining Knights now look at bit lack lustre.
As for Sir Derek Wanless(ex Northern Rock)we should not forget his ignominious departure from NatWest in 1998, following a disastrous foray into investment banking.
A feeling of deja vue when Ron Sandler was parachuted into Northern Rock after the collapse. It was also Ron Sandler that was parachuted into NatWest in 1998 to replace Wanless. In fact you could throw a blanket over all these bankers. Paul Myners (now Lord Myners) was also on the Board of NatWest. If any other banker is offered a Knighthood by Brown, they would do well to first consider Groucho Marks sage advice on the topic of invitations !
- Phil, hereford uk, 27/02/2009 22:20
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We need an investigation into corruption at the highest levels.
- Terry, Hennebont, 27/02/2009 13:53
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How many others are there at RBS with extreme pensions.
- Mr S.Port, London, 27/02/2009 13:15
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Paul Myners will soon be able to join the 'distinguished' group of private sector financial experts personally selected by Gordon Brown to advise him.
The list currently includes, amongst others;
- Sir Derek Wanless (ex-Northern Rock)
- Glen Moreno (ex-LGT)
- Sir James Crosby (ex-HBOS)
- Sir Victor Blank (Lloyds, at least for the moment!)
and of course Sir Fred Goodwin himself!
With these people providing insight about financial matters to Gordon Brown, is it any surprise that the UK finds itself in the current situation?
- Manny Goldstein, London, UK, 27/02/2009 13:12
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Why is the media so fixated on this man's pension, I'm more concerned that this government is about to pour more billions of our money down the drain bailing them out. The story is just a cynical political smoke screen.
- Stuart, London, 27/02/2009 12:43
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We cannot rely on the Govt to ensure that the failed banks leaders are held fully accountable for their mis-deeds as ministers are too intertwined with them. A lot of taxpayers money goes to the UK judiciary, who now need to urgently intervene to establish who really is personally responsible and accountable for bringing the UK financial system to its knees and ensure those found guilty are made to pay.
- Mike, london, 27/02/2009 12:04
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Jobs for the boys and looking after their own as per usual.Nothing is ever done about these issues. Why?
- Mike, London England, 27/02/2009 11:53
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Whilst such an agreement was foolish - it was based on the information about losses provided by RBS boss at the time - did he reveal the true extent of the losses to the government at the time the agreement was made? If not, then there has to be grounds for nulling the departure contract and leaving him with nothing!
- Andy, London, 27/02/2009 11:52
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If we are going to make Fred the posterboy of 'bad bankers' then let's make it count. Strip his title, his pension and then find a way of putting him in prison. However, as much as I despise Fred, there are hundreds more out there with massive pensions who need to take responsibility for their actions, not least Gordon himself.
- Alex C, London, 27/02/2009 11:23
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Why should anyone believe what The Treasury says?
- Chuck Unsworth, London UK, 27/02/2009 11:22
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Goodwin seems capable of managing his own finances but not the banks.
- Fly, london, 27/02/2009 11:03
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Stop paying the pension and let Goodwin sue. Then we can all hear why he thinks he deserves a whacking great pension for being the worst banker in history.
- Chris H, City, 27/02/2009 10:59
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