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Tuesday, April 5, 2016

Central Bank made €73k severance payment for employee before they started work


The Central Bank has been criticised by the State's spending watchdog for paying severance packages which ran up costs of more than half a million euro.

An audit by the Comptroller and Auditor General's office found one of the confidential deals saw €73,000 paid to terminate an employee's contract before they had started work with the regulator.

That arrangement included €32,000 of a severance payment and the rest on legal fees.

Others included payouts averaging €61,000 to two workers who were with the Central Bank for less than two years.

A fourth payment highlighted by the C&AG was €60,000 paid to a contractor who had worked with the Central Bank for more than five years but had never been an employee.



The C&AG said the Central Bank paid out to terminate contracts more frequently than any other public body during 2011-13.

It found six discretionary severance payments totalling €384,000 plus legal costs of nearly €157,000.

"It was found that the Central Bank did not adopt a standard approach for assessing and determining severance payments," the C&AG said.

"In addition, the payment of severance was approved at varying levels within the organisation and there was no formal delegated authority to make such agreements."

It added: "In three of the six cases reviewed, there was no evidence on file that a review of all the options, risks and costs involved had been undertaken before a decision was taken to pay severance."

The Central Bank said: "The report notes that widespread use of severance payments in the public sector could result in appreciable outflows of public monies, however, it recognises that reluctance to use severance arrangements in appropriate circumstances could result in the retention of employees who are not contributing to the goals of the organisation and who may pose a significant risk to it."

Severance deals in the public sector between 2011 and 2013 were valued by the C&AG at €17.9m with €11m going on pension enhancements like paying for added years.

The C&AG also revealed payments worth more than €1m in total were made to chief executives of two unidentified state bodies.

Both unnamed bosses got pensions enhancements without the required prior approval of the Department of Public Expenditure and Reform.

Some €671,000 was paid out to cover the cost of added years and €374,000 was paid out for what was described as "early pension".

According to the C&AG report one retired secretary general in the civil service waived their entitlement to a cash payment of nearly €127,000.

The C&AG also highlighted one case of a worker in an Irish embassy overseas being paid €67,000 when their contract was terminated - €13,000 more than they were entitled to in a severance deal.

The report said embassies do not provide the Department of Foreign Affairs in Dublin with documentary evidence on how severance payments for local staff are calculated.

The C&AG said requests for sign-off were routinely sent by email and little or no consultation with paymasters in the Department of Public Expenditure and Reform.


"Reliance is placed on the embassy calculating the amount and determining eligibility. There is little evidence on file of the department centrally verifying the information provided or documenting the approval for the payment," the report said.