Business, Finance & Economics

Disgraced British bank chief won't give up pension

MARCO WERMAN: British business reporters dubbed him ?Fred the Shred? because of his aggressive cost-cutting. Today, they're looking for a new nickname for former banking executive Sir Fred Goodwin, a moniker to fit Goodwin and his princely pension. He refuses to give any of the money back, even though the bank was driven close to collapse on his watch. The World's Laura Lynch reports.

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LAURA LYNCH: Fred Goodwin got his monthly pension check a couple of weeks ago ? about $83,000 before tax. All that and he's only 50 years old; he can count on the same size check for the rest of his life. Sir Fred, as the beknighted former bank president is called, walked away from the Royal Bank of Scotland last year with a million dollar pension deal. But it only came to light yesterday, at the same time his former bank reported the biggest corporate loss in British history ? $34.5 billion dollars. Goodwin took the bank to the brink of collapse before the government bailed it out. Little wonder so many members of the public see him as one of the biggest villains of the whole financial mess.

WOMAN: I just can't believe that so many people have made so many terrible mistakes, really, and they've been allowed to get away with it.

MAN: He's brought down one of the largest banks in Europe. The bank has been bailed out by the taxpayers so he should have been fired with no pension.

LYNCH: Just two weeks ago, Goodwin appeared before British lawmakers to explain his role in the banking crisis, and he insisted he was just like everybody else.

GOODWIN: My pension is the same as everyone else in the bank who is in a defined benefit pension scheme. It's determined in the same way as anyone else and anyone else who is in the same benefit pension scheme.

LYNCH: All that's true, but what Goodwin didn't talk about was the size of his pension. He's unwilling to give any of it back, so Prime Minister Gordon Brown is looking at taking Goodwin to court.

PRIME MINISTER GORDON BROWN: When it comes to this pension, it is completely unacceptable. And that's why I've said we're considering every means at our disposal to take legal action if it happens that after the pleas of the public, the ? Sir Fred is not prepared to reduce his pension entitlement.

LYNCH: But the government is also under fire for its role in all of this. It wanted Goodwin out of the bank last fall -- it's price for stepping in with a rescue package. And its own Treasury Minister signed off on the pension deal. That same minister now says he wasn't aware he could have challenged the size of the payment. A former advisor on pensions to the government, Ros Altman, calls that a big problem.

ROS ALTMAN: It does highlight serious concerns as to how on top of pension issues in general people at the Treasury really are, and I think, you know, we all need to be very concerned about how on top of negotiating with the big banks, the Treasury is on our behalf. You know, at the end of the day, it's the banks that were coming cap in hand to us -- but it seems as if they're calling the shots.

LYNCH: Legal experts say the government really doesn't have much of a case against Goodwin. But that may not matter. All the fighting about a million-dollar pension payout is drawing attention away from a much bigger bottom line. British taxpayers are already spending tens of billions of dollars propping up Sir Fred's former bank. For The World, I'm Laura Lynch, in London.

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