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Stand-off over Sir Fred's pension Brown vows to claw pension back
(about 1 hour later)
Ex-banker Sir Fred Goodwin's refusal to hand back his £16m pension has been condemned by the Treasury as "unfortunate and unacceptable". Gordon Brown has repeated his threat of legal action against ex-Royal Bank of Scotland chief Sir Fred Goodwin over his "unacceptable" £16m pension.
Sir Fred says ministers knew about the £693,000 a year deal for months and that it was approved by Lord Myners. The prime minister said he was "considering every legal means at our disposal" to get some of it back if Sir Fred continued to ignore public anger.
Lord Myners denies this and has said such a "huge reward" cannot be justified given the bank's losses. Sir Fred has rejected government pleas to return the money, claiming ministers knew about the deal and approved it.
RBS announced a record corporate loss of £24.1bn on Thursday and received a second taxpayer bail-out of £13bn. RBS has unveiled losses of £24.1bn and received a second taxpayer bail-out.
Former chief executive Sir Fred's pension pot doubled to £16m last October when the 50-year-old agreed to take early retirement. Sir Fred's pension pot doubled to £16m last October, guaranteeing the 50-year-old £693,000 for life, when he agreed to take early retirement. It is thought he would have received significantly less if he had been sacked.
The Treasury, which pumped £20bn into the crippled bank, was anxious to get new management in place.
'Clawing back''Clawing back'
The Treasury, which pumped £20bn into the crippled bank, was anxious to get new management in place.
But it now says it was misled by RBS's board at the time, which "gave the impression" that Sir Fred's pension was legally binding.But it now says it was misled by RBS's board at the time, which "gave the impression" that Sir Fred's pension was legally binding.
They knew all along about this pension so all this synthetic anger now is just long after the horse has bolted Shadow chancellor George Osborne class="" href="/1/hi/uk_politics/7913582.stm">Full text of Sir Fred's letter class="" href="/1/hi/uk_politics/7913957.stm">Lord Myners' reply class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/02/the_goodwin_pension_questions.html">Robert Peston on the argument class="" href="/1/hi/business/7911722.stm">RBS records record £24bn loss class="" href="/1/hi/business/7667214.stm">Profile: Sir Fred Goodwin Prime Minister Gordon Brown said he discovered a week ago that the package was "discretionary" and could have been blocked.
Chancellor Alistair Darling said he discovered a week ago that the package was "discretionary" and could have been blocked.
He said the government was now investigating ways of "clawing back" some of the money, amid mounting cross-party anger about rewards for failure.He said the government was now investigating ways of "clawing back" some of the money, amid mounting cross-party anger about rewards for failure.
They knew all along about this pension so all this synthetic anger now is just long after the horse has bolted Shadow chancellor George Osborne Full text of Sir Fred's letterLord Myners' replyRobert Peston on the argumentRBS records record £24bn lossProfile: Sir Fred Goodwin
But its appeal to Sir Fred to hand it back voluntarily was angrily rejected by the former banker, who claimed it had been approved by Treasury Minister Lord Myners.But its appeal to Sir Fred to hand it back voluntarily was angrily rejected by the former banker, who claimed it had been approved by Treasury Minister Lord Myners.
Sir Fred said he had already given up a significant part of his salary as a "gesture" when he was negotiating his departure from the bank.Sir Fred said he had already given up a significant part of his salary as a "gesture" when he was negotiating his departure from the bank.
In a letter to Lord Myners, he said: "I am told that the topic of my pension was specifically raised with you and you indicated that you were aware of my entitlement and that no further 'gestures' would be required".In a letter to Lord Myners, he said: "I am told that the topic of my pension was specifically raised with you and you indicated that you were aware of my entitlement and that no further 'gestures' would be required".
'Synthetic anger''Synthetic anger'
In a letter to Sir Fred, released by the government, Lord Myners said the discussions he had with the former banker about the financial arrangements of his departure from RBS "did not amount to approval" of his pension payment.In a letter to Sir Fred, released by the government, Lord Myners said the discussions he had with the former banker about the financial arrangements of his departure from RBS "did not amount to approval" of his pension payment.
I believe basically take it off him and let him sue in the courts John Prescott, former deputy prime minister
He added: "I do not agree with your rationale for declining my request that you voluntarily reduce your pension."He added: "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 (Thursday) by the bank which you ran until October cannot justify such a huge reward.""And indeed I hope that on reflection you will now share my clear view that the losses reported today (Thursday) by the bank which you ran until October cannot justify such a huge reward."
I believe basically take it off him and let him sue in the courts John Prescott, former deputy prime minister
But shadow chancellor George Osborne, for the Conservatives, said the government's anger at the former bank chief's pension was "synthetic" because they knew about the package.But shadow chancellor George Osborne, for the Conservatives, said the government's anger at the former bank chief's pension was "synthetic" because they knew about the package.
He said: "The problem for the government, and for Lord Myners who's a government minister, is that they knew all along about this pension so all this synthetic anger now is just long after the horse has bolted."He said: "The problem for the government, and for Lord Myners who's a government minister, is that they knew all along about this pension so all this synthetic anger now is just long after the horse has bolted."
'Utterly grotesque'
The shadow chancellor added: "It seems to me they're on the hook either way. They knew and they didn't stop it and that's what Fred Goodwin's saying."The shadow chancellor added: "It seems to me they're on the hook either way. They knew and they didn't stop it and that's what Fred Goodwin's saying."
'Utterly grotesque'
He said the pension payout was "very symbolic" of what had gone wrong in the City and there was little chance of recovering the money in the courts, if the government decided to sue.He said the pension payout was "very symbolic" of what had gone wrong in the City and there was little chance of recovering the money in the courts, if the government decided to sue.
"I don't think the government's got much of a leg to stand on in the courts if they're going to take legal action. Let's hope they succeed, but it's doubtful.""I don't think the government's got much of a leg to stand on in the courts if they're going to take legal action. Let's hope they succeed, but it's doubtful."
Mr Osborne's assessment was echoed by Lib Dem Treasury spokesman Vince Cable, who said: "It's clearly utterly grotesque that somebody should be paid this enormous sum of money."Mr Osborne's assessment was echoed by Lib Dem Treasury spokesman Vince Cable, who said: "It's clearly utterly grotesque that somebody should be paid this enormous sum of money."
Former deputy prime minister John Prescott said it had been an "extraordinary" decision to award Sir Fred the pension and called for the use of "all legal means" to claw it back.Former deputy prime minister John Prescott said it had been an "extraordinary" decision to award Sir Fred the pension and called for the use of "all legal means" to claw it back.
He told BBC Radio 4's Today programme: "The taxpayer has rescued them, there is billions of pounds involved, he's not entitled to this kind of pension, whether who knew about it or not, you can investigate that later.He told BBC Radio 4's Today programme: "The taxpayer has rescued them, there is billions of pounds involved, he's not entitled to this kind of pension, whether who knew about it or not, you can investigate that later.
"I believe basically take it off him and let him sue in the courts.""I believe basically take it off him and let him sue in the courts."
He blamed the former board of RBS for the "extraordinary" decision to award the "obscene" level of Sir Fred's pension.He blamed the former board of RBS for the "extraordinary" decision to award the "obscene" level of Sir Fred's pension.
In October, Alistair Darling hailed the fact Sir Fred had waived his contractual entitlements and decided "to do the right thing".In October, Alistair Darling hailed the fact Sir Fred had waived his contractual entitlements and decided "to do the right thing".
There was no mention of the size of pension he was going to receive.There was no mention of the size of pension he was going to receive.