ALLIED IRISH BANKS did not offer any defence to a case taken by a currency trader which led to the bank having to pay out €40m in bonuses to 2,400 staff, it is reported this morning.
The Sunday Business Post reports that the test case, taken by trader John Foy against AIB Capital Markets, saw the bank decline to enter a defence – meaning the High Court had no option but to find in his favour.
That test case, taken in respect of a bonus of €160,000, resulted in the bank having to shell out up to €40m in unpaid bonuses for the 2008 year, despite having originally withheld them on the recommendation of a government-appointed committee.
The development means that, contrary to suggestions by Brian Lenihan and European Commission president Jose Manuel Barroso, the requirement to pay the bonuses was not dictated by the courts, but was caused by AIB’s own decision not to contest the court action.
TheJournal.ie asked AIB on Friday evening if they had in fact put up a defence to the John Foy case. The submission of documents in the case, as can be publicly viewed at the case file on Courts.ie, appeared to indicate that they had not.
An AIB spokesperson told TheJournal.ie over the weekend:
The Bank was required to submit a defence to the claim by swearing an affidavit that the Bank had a bona fide defence and that the defence was not being entered solely for the purpose of delaying judgement being entered.
The Bank was in possession of legal advice that the bonus awards were contractual obligations and it had no grounds for denying this. Having reviewed the Master of the High Court’s findings, the Bank’s external legal advisor expressed his view that this was designed to send a message to the Bank not to force other employees to come before him to enforce their entitlement to bonus.
Foy’s case came before the High Court in the first week of November and AIB Capital Markets had confirmed the following week that it would be paying out all of the bonuses as required.
Foy in particular had been told by his line manager in January 2009 that he would be due a bonus of €160,000, which was due to have been paid by the following month.
He had claimed in court, the Irish Times reported at the time, that the non-payment of the bonus had caused him and his family “financial hardship”.
Additional reporting by Susan Daly
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