Myners recalled the tumultuous weekend of 11th-12th October 2008, when he met RBS’s directors to negotiate the first banking bailout. On the evening of Saturday 11th, it became clear that the directors had decided to replace Sir Fred Goodwin and Myners was informed that the pension arrangements “had already been decided” upon. Myners told the committee that he urged RBS’s representatives that “there should be no reward for failure and costs of departure should be minimised” but that his ministerial responsibilities were to arrange a bailout, not to scrutinise RBS’s executive pension scheme. “I did not negotiate, settle or approve Sir Fred’s pension. The RBS board took that decision... it was their responsibility”. The government had to act swiftly to avert a financial catastrophe. “There was a limit to what we could do...I had no information” about the pension. But he gave a further clause, which lays bare the government’s attitude. “I sought no information”. As Fraser noted at the time, there was insufficient scrutiny at any stage.
However, Myners’ statement contradicts what he told the House of Lords on March 5th. “I did discuss Sir Fred’s pension on the evening of the 11th”. Michael Fallon asked what those discussions entailed and Myners flapped. “The pension was discussed but not its value”. A discussion about pensions that does not extend to value is like a public apology bereft of any contrition. Andrew Tyrie asked Myners if it had occurred to him that the value of Goodwin’s pension was in the public interest. It seemed it had not. Tyrie and other Tories probed further, eliciting this response: “I am a relatively new minister” and thus am inexperienced. The Tories scented a scalp. “Would an elected politician have found themselves in your position?” Myners thought they would have done; nobody agreed. It was becoming clear that Myners is incompetent; negligence implies that the perpetrator should have been aware of his duties and Myners plainly had no inkling of his duty to taxpayers. It was about to get worse.
Under RBS’ pension scheme, laid out in the 2007 annual report, an employee is entitled to a non-discounted pension when made redundant voluntarily. As Pete points out, it is astonishing that Myners did not know that the pension settlement was discretionary as is his assertion that the board’s “elaborate ruse” to double Sir Fred’s pension entitlement “was not explained” to him. His incompetence or the board’s deviance rests on whether Goodwin was made redundant at the request or requirement of the board: if Goodwin was required to leave his job it follows that he was not entitled to an undiscounted pension, let alone a deliberately inflated one. Myners grasps this now; he did not at the time. Michael Fallon raised Goodwin’s assertion, made in his letter to Lord Myners, that the minister had been “aware of the extent of my entitlement”. How did this square with Myners’ claim that he “was not told the full story” until Sir Fred appeared before the committee last month? Myners continued to say he was aware of this. Then Fallon referred to page 109 of the annual report which clarifies the entitlement to which Goodwin is obliged providing he was not requested to leave his post. Myners said he had no idea if Goodwin was being asked to resign or threatened with dismissal. Fallon produced a snippet from a document seen by Myners that settles the issue. “Sir Fred was leaving at REQUEST of RBS”.
Myner’s finds the board’s treatment of Goodwin “extraordinary, beyond my comprehension”, as indeed does everyone else; the difference is that Myners was in a position to stop it. He could have blocked the feathering of Goodwin’s bed because he had no entitlement to it under the original protocol. Myners has consistently agreed with the second half of that statement: Goodwin had no entitlement under the old contract. The problem is that the new contract, which Goodwin is perfectly entitled to, seems to have been drawn up on Myners’ watch. In consequence, Goodwin will take up his pension and legal action can only be taken against the RBS board, which by Myners’ own admission “will be difficult”. As Pete says, the oversight is entirely Myners’. All the relevant information was available to the lowliest of shareholders; a government about to take a 70% share in the company should have acted. Michael Fallon put the knife in with the pithy soundbite, “Either you were party to very expensive back-scratching, or you neglected your duty to the taxpayer”. Myners pleaded “neither” to the charges of being negligent or misled. He and the government were in fact “both”. Myners should either be “requested or required” to resign.