Sir Fred Goodwin, the former head of the Royal Bank of Scotland, last night refused to give up part of his £693,000 a year pension in defiance of Gordon Brown, and in turn accused ministers of approving the terms last autumn.
Sir Fred Goodwin, the former head of the Royal Bank of Scotland, last night refused to give up part of his £693,000 a year pension in defiance of Gordon Brown, and in turn accused ministers of approving the terms last autumn.
Insisting he was not prepared to give up part of his £16.6m non-contributory pension pot, which MPs yesterday branded "obscene", a furious Sir Fred also accused ministers of leaking his pension details to the media just hours after pressure had been put on him to forego some of his entitlement.
Earlier, Chancellor Alistair Darling denied the government had agreed to the deal in October, suggesting ministers could have been misled over the status of Sir Fred's pension at the time.
On a day when the Edinburgh-based bank recorded a £24.1bn loss for 2008, the biggest in UK corporate history, and when the UK Government announced potentially its largest ever financial commitment with taxpayers becoming liable for as much as £600bn worth of bad loans and investments, the political headlines were dominated by Sir Fred's gold-plated retirement and who knew what when.
Sir Fred, in a letter to Lord Myners, the Pensions Minister, rebuffed the moral pressure exerted by the Prime Minister by insisting he had already made sacrifices, including waiving a £1.3m pay-off when he retired in October, and was not prepared to give up part of his £16.6m non-contributory pension pot. In his letter to Lord Myners, the former banker claimed that during talks about the terms of his departure: "I am told that the topic of my pension was specifically raised with you by both the chairman of the group remuneration committee and the group chairman and you indicated that you were aware of my entitlement and that no further gestures' would be required."
Referring to a telephone conversation with the minister on Wednesday, just hours before details of his pension were leaked, he wrote of his "surprise" that the "substance of our telephone conversation had been placed in the public domain a few hours after we spoke".
Responding by letter this evening, Lord Myners disputed the banker's version of events and told him his decision not to volunteer a reduction in his pension was "unfortunate and unacceptable".
Earlier, Stephen Hester, the new Chief Executive at RBS, had also suggested ministers had been involved in Sir Fred's pension deal, saying: "The arrangements for my predecessor's departure were negotiated directly between past directors of this board and the government and him."
On the taxpayers' stake in the bank, Mr Hester said the public purse had a "good shot" at getting its money back but admitted it "could easily be five years".
At Westminster, George Osborne insisted the UK Government was "on the hook". He said: "Either they did know and failed to act, or didn't know and failed to ask the right questions."
At Holyrood the issue of Sir Fred's pension dominated First Minister's Questions with Alex Salmond blaming the UK Government, quoting Mr Hester and saying Westminster had been "fully involved" in arrangements.
However, Mr Darling insisted this was not the case. The Chancellor told MPs: "What we did know last autumn was that we were told there was a contractual agreement between the board of the bank and Sir Fred.
"What we didn't know - and it was only very recently that we became aware - (was) that the decision of the previous board to allow Sir Fred to take early retirement had the effect of increasing his pension entitlement and that that might have been a discretionary choice."
Sir Tom McKillop, RBS's chairman last October, and the board's remuneration committee were involved in agreeing that Sir Fred could take early retirement at 50, which had the effect of increasing his retirement pot from £8.3m to £16.6m.
