I congratulate the Ceann Comhairle on his first day in office. I notice he has dispensed with the English prayer and this may be a new precedent he is setting. He will get used to the words in the vernacular after a while.

In the last period we have had a number of what I consider to be very sizable severance payments and golden handshakes to people in this country. Yesterday, there was the announcement of the €70,000 bonus to the chief of the Health Service Executive. This may be the norm or what the Taoiseach considers to be the norm but it is certainly not the norm for people outside.

I return to the severance package given to the former director general of FÁS, Mr. Rody Molloy. On 25 September at a press conference in NUI Galway when asked a question about this matter, the Taoiseach stated in respect of the additional golden €1.1 million package for Mr. Molloy that the matter was dealt with in accordance with established guidelines from the Department of Finance. I understand from newspaper reports and internal e-mails from November last, released under the Freedom of Information Act, that three officials in the Department, all with expertise in the pension area, referred to this enhanced package and stated it was outside the guidelines issued by the Department of Finance. In fact the letter sent from the Department of Finance to the Department of Enterprise, Trade and Employment on 26 November stated:

I note that the terms offered by your Department to Mr. Molloy are not fully in accordance with those of the circular letter of 26 May 1998 from this Department to all heads of Department. Nonetheless, I am to convey sanction to the proposed terms and conditions, that this is an exceptional case and that your Department is satisfied that these terms are appropriate in the circumstances.

Does the Taoiseach still stand by his comment that the additional package awarded to Mr. Molloy is in accordance with the Department of Finance guidelines, or does he wish to correct the public record in that regard?

The situation as has emerged has not changed the position in respect of this matter. The correspondence simply reflects the fact that the FÁS director general's severance arrangements were informed by what he could have claimed under the 1998 guidelines if his contract had been terminated. It has been quite clear all along that the terms he received were broadly in line with what he might have sought if the contract had been ended by the FÁS board.

He offered to resign.

That was the issue that arose. It was clearly the case that it was regarded as in the best interests of the organisation that the change take place. Therefore, as far as the board was concerned the arrangements made were analogous to those if the contract had been extended. If one considers the guidelines in place, they relate to the severance arrangements whereby people have an entitlement to increased severance arrangements where their contract ends before the termination of the contract itself.

In the exceptional circumstances of this case, that is, the need to allow FÁS to move forward, the severance arrangements were approved by the Departments under the provisions of the Labour Services Act 1987 which covers the DG's remuneration and superannuation terms.

They threw in a car and all.

I have examined the guidelines and I am still not clear as to how this happened. The guidelines to all heads of Department on 26 May 1998 state at No. 3: "It is not, therefore, appropriate to make payments where the initiative for the termination of a contract comes from the CEO concerned". That is very clear and in this case Mr. Molloy was not sacked. The Taoiseach himself clarified that there was no threat of legal action. Mr. Molloy resigned. According to the guidelines issued in 1998 it was not appropriate to make that payment.

On 26 November an official stated:

I understand from news media that Mr. Molloy resigned voluntarily from his job in FÁS. If this is correct then the terms set out in the draft letter are outside those permitted in the letter of 26 May 1998 regarding severance and early retirement for chief executives of State sponsored bodies.

Correspondence from 26 November states:

I understand that Mr. Molloy has resigned voluntarily. If that is the case then our letter of May 1998 regarding severance terms for CEOs does not apply.

A further e-mail of 26 November states: "Given that the terms are different from the delegated sanction under the 1998 letter, should we not get this package referred to Government for approval where we deviate from the terms?" Clearly, this was the situation in so far as Mr. Molloy was concerned. There were three senior Ministers involved, namely, the Taoiseach, the Minister for Finance and the Tánaiste and Minister for Enterprise, Trade and Employment. All three were involved in some form or other in dealing with this——

Sweetheart deal.

The point is this was clearly outside the guidelines referred to in the letter from the Department of Finance and yet it was given sanction in what was deemed to be an exceptional case. If this was deemed to be an exceptional case why was no Government decision made to authorise it? If it did not go to Government who overruled whom? Clearly, the Department of Finance stated this was not appropriate. However, someone gave a direction that this would be deemed to be an exceptional case without the matter going to Cabinet. I wish to find out who that person was, or on whose instructions this was given. The Taoiseach may be able to answer that.

The Deputy is wrong in the contention he makes. The arrangements were that the FÁS board would discuss the matter with the outgoing CEO at that time, refer it to the Department of Enterprise, Trade and Employment, and obtain the approval of the Department of Finance. That was the arrangement that was made and followed in this case. There was no other arrangement required in that respect.

Second, as I have already said, severance arrangements were approved by the Department under the provisions of the Labour Services Act 1987, which cover the remuneration and superannuation terms. We are talking here about moving the situation on and a change at the top of the organisation. The issues that arose and to which the Deputy is referring, concern the fact that had the outgoing chief executive decided to stay and the FÁS board decided subsequently to terminate the contract——

He offered to resign.

Excuse me. Will the Deputy let me explain the situation?

I do not think the Taoiseach can.

Had they decided to terminate the contract, under the terms and conditions of employment he would have been entitled to seek those increased severance arrangements. That is the point. In the interests of the organisation, both were coming to the conclusion that this was the right thing to do. He was prepared to go on the basis of being dealt with, as he would claim, fairly. Had the contract been terminated he would have been entitled to those enhanced severance arrangements as well.

Who signed off on it?

The signing off was by the Department of Finance and the Department of Enterprise, Trade and Employment.

If they say that is not appropriate, it should have gone to the Cabinet.

Excuse me, I have explained to the Deputy that one has got to move on with the correspondence.

The Taoiseach, without interruption, please.

The severance arrangements were approved by the Departments under the provisions of the Labour Services Act 1987. That was the legislative basis upon which the decisions were taken. It was under that legislation that the remuneration and superannuation entitlements of the director general applied.

The decision should have been taken by the Cabinet.

The Deputy is talking about the normal practice of any office in discussing the pros and cons of issues as they are debated. However, the issue emerged that it was in the interests of the organisation that it be moved on and that it would be decided under the terms of the Labour Services Act. The point I was making about the Department of Finance guidelines was that if the contract had been terminated the enhanced severance arrangements, in line with those guidelines, would have been applicable in this case.

They were 1998 guidelines.

They were applied in this case.

God save us.

That is contradicting the correspondence.

We must move on to the second question, and I call Deputy Gilmore.