Taoiseach Brian Cowen admitted today that former director-general of Fás Rody Molloy did not threaten legal action during discussions which led to him being given a €1million 'golden handshake.'
Speaking on RTÉ's This Weekprogramme this afternoon, Mr Cowen defended the payments to Mr Molloy, saying that the severance package was in accordance with legislation and guidelines. He stressed that he played no part in negotiations over the final package that was agreed upon.
"The situation as I understand it is that the overall package was offered on the basis that it would be the agreed way by which he would leave the organisation quickly...the question of the threatened legal action, that's a matter...which could have emerged subsequently if there wasn't an agreement," said Mr Cowen.
"My position on this is that it was done on the basis of the best interests of the organisation," he added..
At a meeting of the Public Accounts Committee earlier this week, it was revealed that a decision was taken to award a generous severance package to Mr Molloy. The former director general’s length of service was increased by an extra four-and-a-half nominal years, which increased the size of his lump sum payment by approximately €50,000 and his annual pension by about €11,000 per annum.
The actuarial total cost of the deal, on a presumption that Mr Molloy lived for another 30 years, was €1 million. No legal advice was sought before the decision was agreed. Tánaiste and Minister for Trade, Enterprise and Employment, Mary Coughlan has since been in contact with the Attorney General and ordered a review into the terms of the deal.
It has previously been alleged that the decision to award the so-called 'golden handshake' was taken after Mr Molloy threatened to take legal action during discussions over his severance package.
Speaking yesterday, Minister for Justice Dermot Ahern insisted that the pension deal was done 'for the benefit of taxpayers.'
"As always in these situations where you're negotiating...you obviously have to take what's in the best interests of the taxpayer and if it was a case that this man went to court subsequently, and even might still go to court, you would have a protracted High Court action, possibly a Supreme Court action, which would cost the taxpayer much more money," said Mr Ahern.
Meanwhile, Fine Gael leader Enda Kenny today criticised the Government's handling of the controversy and said that he would have fired Mr Molloy.
Speaking during a Lisbon referendum canvass on Dun Laoghaire Pier today Mr Kenny accused the Government of “hiding behind the process” involved in awarding a €1 million 'golden handshake' to Mr Molloy to induce him to resign.
Mr Kenny said “in view of the incompetence of the former director general of Fas, I would have sacked him and I would have allowed the law to take its course”.
Separately, the Labour Party called on the Taoiseach to specify the guidelines under which the additional payments were made.
"Originally we were told that the increased payments were made under the terms of the Labour Services Act of 1987, which established Fás. Now we are being told that they were in accordance with unspecified ‘guidelines,’ said Roisin Shortall, a member of the Public Accounts Committee.
"Mr. Cowen in his interview today also referred to these guidelines, but we have never been told exactly what these guidelines are," she added.
