MPs 'appalled' at UKFI

Tuesday 3rd March 2009

MPs today hit out about how the body charged with overseeing the government holding in banks could ever be taken seriously.

The Treasury select committee today quizzed the heads of UKFI, with MPs riled by the failure of John Kingman, chief executive and civil servant on secondment from the Treasury, to provide information on bonuses.

Committee chairman John McFall hit out at Mr Kingman for not providing data on bank bonuses over £100,000 and £1 million despite being called on Friday and asked to provide it.

"Mr Kingman, are you going to be a serious body here?" Mr McFall said.

"You got a simple request on Friday and you don't seem to be ready to apologise."

He added Mr Kingman was being smug and highly discourteous to the committee.

"The clerk tells me you were phoned," Mr McFall said.

"That is scandalous and a bad start for UKFI. If you are serious body looking after taxpayers' money, you have to be serious. We are appalled."

Glenn Moreno, UKFI chairman and chairman of Financial Times publisher Pearson, stepped in to aid Mr Pearson, stating while banks have announced bonus budget, they will not have decided how much specific workers will receive.

Mr Kingman was later accused of being "demob happy", working in his new role outside the Treasury - a claim he denied.

Turning to the issue of the pension for former Royal Bank of Scotland chief executive Sir Fred Goodwin, Mr Kingman stated UKFI was taking legal advice, and any action would be "weeks, not days" away.

He added the decision not to sack Sir Fred Goodwin but allow him to retire early – and so qualify for a higher pension pot – was made solely by Royal Bank of Scotland and not the Treasury, which he was working for at the time.

In particular he highlighted Key decision-makers Bob Scott, RBS senior remuneration director and former RBS chairman Sir Tom McKillop, as being behind the move, and not City minister Lord Myners.

Mr Moreno said: I regard [Sir Fred's pension] as reward for failure. It was wrong.

"The remuneration committee or board should not have affectively doubled his pension."

He also hit out at RBS for making "no attempt to make this clear. Neither pointed out significant change was made."

"If signed at 02:00 GMT, it is not the normal way remunerations to operate," Mr Moreno said.

He added it looked like a "parachute payment" and was wrong.

Mr Moreno added governance of banks was a massive issue and "caused a body blow to the economy."

Mr Kingman also maintained the line the best role for UKFI was not to run the banks, but look after the state's holding of bank shares.

"The best way to get banks on their feet was commercially and for boards to run banks," he said.

"Our role is to manage shareholding, and have all the dialogue [with banks]. If we were running we would not have the quick exit the government wants.

"One of lessons learnt was the remunerations were wrong and as shareholder we care about that."

Mr Moreno stated the UKFI could play a significant role in reforming banking and in particular in governance and remuneration.

"But it usually takes half a generation for bankers to go back to their foolish ways," Mr Moreno quipped

Mr Kingman also hit at information flows at RBS and in particular to the board over risk.

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