Sir Fred 'may lose pension on grounds of negligence'

Published on Wednesday 4 March 2009 21:18

SIR Fred Goodwin's pension could be clawed back under existing laws because he was "negligent" in his business dealings, MPs have been told.

Vince Cable, the Liberal Democrat deputy leader, yesterday said that a new law may not be needed to halt the payment of 703,000 annually to Sir Fred, the former RBS chief executive.

Mr Cable told MPs during Prime Minister's Questions that "instead of this rather eccentric proposal for a 'Harriet's Law' to stop Sir Fred's pension, would it not be more sensible for the government to use existing legislation under which pensions can be forfeited in cases of employee negligence?"

He was challenging earlier claims by Harriet Harman, Labour's deputy leader, that fresh legislation would be enacted to try to halt the payments to the former banking chief.

Standing in for Gordon Brown while the Prime Minister was in America, Ms Harman told MPs that the government was trying to pursue all legal avenues to call in the pension pot, which is worth around 16 million. UK Financial Investments (UKFI), the body set up to manage taxpayers' interests in the part-nationalised banks, had been asked to investigate Sir Fred's contract, she said.

Lawyers are already looking at whether any previous board members can be held accountable for the pay-out. Ms Harman did not repeat her assertion, however, that the government would simply change the law if the courts overruled attempts to take back Sir Fred's pension.

Mr Cable's remarks came as Ms Harman made a blunder by insisting that Sir Fred had been knighted for his services to the Princes' Trust charity. In fact, he had been knighted in 2004 for services to banking.

Ms Harman, who has been by far the most outspoken Cabinet critic of Sir Fred's pension deal, was challenged about the honour by Elfyn LLwyd, Plaid Cymru's Westminster leader.

Asked who had put him forward and why, she told him: "I think Sir Fred was nominated for a knighthood because of his services for the Prince's Trust.

"I understand it was not in recognition of his services to banking."

But after the Question Time session, she was forced to correct her blunder. In a statement, her office said: "The Leader of the House is happy to correct what she said at Prime Minister's Questions regarding Sir Fred Goodwin's knighthood. It was, in fact, the case he received his honour for services to banking but no doubt his contribution to the Prince's Trust would also have been taken into account."

Ms Harman has been accused of positioning herself to take over as leader should Mr Brown lose the next election.

She was teased by William Hague, the shadow foreign secretary, over her alleged ambitions. Mr Hague, who was once Tory leader, said: "I'm only a deputy now, but at least I'm a loyal one." Ms Harman hit back, pointing out that Mr Hague had himself been paid 30,000 for two speeches at RBS.

Royal Bank staff left feeling betrayed, says union leader

STAFF at Royal Bank of Scotland are feeling "betrayed" after the 703,000-a-year pension pay-off to Sir Fred Goodwin, a union chief has claimed.

Rob MacGregor, Unite national officer for the finance sector, also warned that up to 30,000 banking jobs in Scotland could be at risk because of the economic crisis.

Speaking to The Scotsman after giving evidence to MPs yesterday, Mr MacGregor said he would be writing to the trustees of RBS's pension scheme to seek "clarity" amid concerns that their pensions could be placed in jeopardy by the use of 16 million of the RBS pension pot to pay Sir Fred.

Mr MacGregor said: "There has been a huge amount of anger and dismay from ordinary RBS employees in branches across Scotland and, indeed, up and down the UK, at the manner of his departure and the fact that all their jobs are potentially undermined and at risk, and he is awarded a quite obscene amount of money for the rest of his life, at a relatively young age.

"One of the things about bank workers is that they are incredibly loyal to the organisation they work for. But I don't think you can overstate the damage this episode has done to their confidence in the company and their general morale. Words like betrayal are bandied about quite regularly. People are dismayed."

He added: "We are concerned that the decision to award Sir Fred Goodwin 700,000 a year may undermine the health of the existing RBS pension scheme, not just for those who are employed by the organisation but in respect of pensions already in payment."