By politics.co.uk staff
Former Royal Bank of Scotland chief executive Sir Fred Goodwin has defied the government, saying he has no intention of 'doing the right thing' and giving up his £693,000 pension.
Hours after RBS announced annual losses of £24.1 billion, the worst annual results in UK corporate history, chancellor Alistair Darling called on Sir Fred, who earned his 'the Shred' nom de guerre over a reputation for cost-cutting, to forego the pension.
But after telling MPs that the "ball is in his court", it emerged that Sir Fred had written to the Treasury to confirm he would be doing no such thing.
It has been revealed that when the government was in talks over bailing RBS out - the bank is now 70 per cent owned by the taxpayer - Sir Fred agreed to a series of "gestures", including giving up a bonus equivalent to a 15-month salary.
But the Treasury did not specify that he could not claim his pension, which takes into account previous jobs.
"You indicated you were aware of my entitlement and that no further 'gestures' would be required," Sir Fred said in his letter to Treasury minister Lord Myners.
The government is claiming it did not prevent Sir Fred from claiming his pension - which he is already doing despite being only 50 - during bailout talks because it misunderstood the nature of Sir Fred's pension arrangements.
Mr Darling told MPs: "We previously understood that his pension arrangements were an unavoidable commitment, but we did not know - we became aware of it only very recently - that the decision of the previous board of RBS 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."
For Sir Fred to be stripped of his pension, it would have to be proved he was negligent, which is thought to be unlikely.
A spokesperson for RBS explained the bank's lawyers were making further investigations into the issue.
"The company is taking further legal advice in respect of certain aspects of Sir Fred Goodwin's contractual arrangement," she said.
She added the bank was also in discussions with the UK Financial Investments (UKFI) - the government body that is managing the taxpayer's bank holdings - about Sir Fred's pension.
"I think that is a scandal," Treasury select committee chairman John McFall told the BBC.
"He is leaving with not just good pension, but a pension that is eye-watering."