Q&A: BBC pay-off scandal

Lord Patten and Mark Thompson Lord Patten and Mark Thompson are at loggerheads over BBC pay-offs

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The BBC has been criticised for paying £25m to 150 outgoing senior executives between 2009 and 2012 - some £2m more than their contracts stipulated.

Executives, including former director general Mark Thompson and BBC Trust chairman Lord Patten, are being questioned by politicians over the payments.

Here's how the situation arose, who is involved and what might happen next.

What prompted the investigation into BBC pay-offs?

MPs took issue with director general George Entwistle's severance payment following his resignation in November 2012 in the wake of the Jimmy Savile scandal.

Mr Entwistle received £450,000, after spending 54 days in the job.

The figure amounted to one year's salary rather than the six months he was entitled to under the terms of his contract. Chairman of the BBC Trust, Chris Patten, issued a letter explaining the trust's decision, saying the amount was "justified and necessary".

What happened next?

The National Audit Office (NAO) asked if it could investigate Mr Entwistle's severance pay, but the BBC said a broader look at severance packages was more appropriate.

Around the same time, it was disclosed that redundancy payments at the corporation had doubled to £58m between 2010 and 2011. The figures came to light as part of a Freedom of Information request by the Telegraph.

The biggest pay-off was awarded to Mark Byford, the former deputy director general, whose total severance package amounted to £1,022,000.

What did the investigation find?

In its report, published in July, the NAO found that the BBC had paid £25m in severance payments to 150 senior staff. Furthermore, it showed that the BBC had paid 14 staff more than it had been contractually obliged to.

The top 10 payments amounted to £5,298,900 - 20% of the total. They included the £1,022,000 paid to Mr Byford in 2011 and a payment of £670,000 to the former chief operating officer, Caroline Thompson, who left in September 2012.

The NAO also discovered instances in which departing managers were given large pay-offs even after they had found work elsewhere, and examples of staff who were offered consultancy roles at the time of their departure.

"The BBC has breached its own policies on severance too often without good reason," concluded the report, published in July.

"Weak governance arrangements have led to payments that exceeded contractual entitlements and put public trust at risk. Severance payments for senior BBC managers have, therefore, provided poor value for money for licence fee payers."

Biggest BBC payments in three years to December 2012

Role Severance package Years service

Source: NAO/BBC

Mark Byford, deputy director general

£1,022,000

31

Jana Bennett, executive director

£687,333

33

Departmental director

£866,300

25

Caroline Thomson,

Chief Operating Officer

£680,400

17

Controller

£476,700

31

George Entwistle,

Director General

£470,300

23

Departmental director

£394,500

2

Controller

£381,600

26

Roly Keating,

Departmental director

£376,000

(money returned minus tax)

29

Project director

£356,200

19

Head of department

£347,900

33

Note: The top 10 pay-outs were revealed in a National Audit Office report in July, except Jana Bennett's, which was detailed in a later report. The money has since been recovered from BBC Worldwide - the commercial arm of the BBC.

How did the BBC respond?

"Deeply worrying" and "unacceptable" - that's how BBC trustee Anthony Fry described the NAO report in July.

Called in front of the Public Accounts Committee, BBC Trust chairman Lord Patten called the payments a matter of "shock and dismay".

Both men suggested they had been misled by Mark Thompson, the BBC's former director general, about the scale of severance payments to executives. Lord Patten told the committee he would "be as interested as you are why we didn't know".

Mr Thompson was not present at the hearing, but denied the accusations. In a submission to the committee, leaked in early September, he accused Lord Patten and his counterpart of giving "fundamentally misleading" testimonies.

"The insinuation that they were kept in the dark by me or anyone else is false and is not supported by the evidence."

The BBC Trust has denied Lord Patten had been fully briefed and described Thompson's statement as "bizarre".

Lucy Adams, the outgoing director of human resources at the BBC, also appeared before the committee. She said Mr Byford's £949,000 payout had been part of "custom and practice" at the time.

When asked about why there had been overpayments, she said: "The overwhelming focus was to get numbers out of the door as quickly as possible."

Were any criminal proceedings launched as a result of the report's conclusions?

Police received allegations of misconduct and fraud but said an assessment of the material found "insufficient evidence of dishonesty or criminal misconduct". It said no further action would be taken in relation to the payouts.

What happened next?

The Public Accounts Committee asked the NAO to make a more detailed report, looking at all senior staff pay-offs from 2009 to 2012.

Its analysis of 90 settlements showed eight managers received more than they were contractually entitled to, costing more than £200,000. Added to the figures in the previous report, it meant the BBC had given out £1.4m more than it needed.

The BBC also commissioned a separate report by auditors KPMG, looking into severance pay between July 2006 and December 2009. It found over-spending of £1.5m on another 30 cases.

In total, it means £2.9m was overpaid in 2006-12.

Have BBC redundancy policies changed as a result?

In April, the BBC capped severance pay for senior staff at £150,000, or 12 months' salary, whichever is lower.

"We have to limit the size of these payments," said the new director general, Tony Hall. "This isn't something done lightly, but I think it responds to the public mood out there."

"These are difficult economic times for people across the country and the BBC is not immune from them. The financial settlements of the past cannot be justified in the future."

The £150,000 cap was extended to all staff in September.

Was any money recouped?

Some of it. Roly Keating, previously the BBC's director of archive content, decided to give back his severance payment in June, after helping the NAO compile its report.

Mr Keating, who left the BBC in 2012 to become chief executive of the British Library, said in a letter to Tony Hall: "You will understand that as a matter of principle I would never wish to benefit from a payment that could not be demonstrated to have been fully and appropriately authorised."

The BBC also clawed back a £687,333 redundancy payment it had made to Jana Bennett in 2012.

Ms Bennett had been director of BBC Vision, putting her in charge of the BBC's licence-fee-funded TV channels, but moved to a new role at the BBC's commercial operation, BBC Worldwide, in 2011.

When she was made redundant the following year, the BBC thought it was obliged to pay her redundancy and met the cost - unbeknownst to Ms Bennett. It later reconsidered, and recouped the money from BBC Worldwide, which does not derive its income from the licence fee.

Did the BBC lose the plot?

Mark Thompson says not.

The former director general - who is now chief executive of the New York Times newspaper - was called to give evidence to MPs on 9 September.

He said the reason for the large severance payments while he was director general was that he was cutting senior staff to reduce costs.

The "savings were so large" that one month's delay would have cost £1m, he argued.

However, MP Margaret Hodge, who chaired the hearing, said the impression had been created that "a small elite of senior managers" got "the most generous" redundancy pay-offs but "ordinary" staff did not.

She also criticised the BBC Trust for not challenging the sums involved, which she described as "grossly excessive".

Former BBC Trust chairman Sir Michael Lyons acknowledged that the payments looked "eye-watering" to the "ordinary person in the street", but argued they matched those in the civil service and private sector.

His replacement, Lord Patten, took a stronger line, saying: "The way we've been running this system has been unfair."

"This is a reflection, not just of having to manage things occasionally by spraying money over people [but of[ a cultural issue," he said. "We have to grip it."

Could this spell the end of the BBC Trust?

The Trust oversees the operation of the BBC and is meant to represent the voice of the licence fee payer.

Reports in certain newspapers suggested ministers were planning to axe the body and hand responsibility for governing the BBC to media regulator Ofcom.

Speaking at the September 9 meeting of the Public Accounts Committee, MP Richard Bacon said the case for changing the BBC management setup had been "overwhelmingly proven".

"The bicycle is not working properly and it needs fixing now," he added.

Lord Patten responded by saying he believed the Trust and the executive would "have a different and good relationship" in coming years.

However, he conceded, "You may well have to look at how a supervisory body is more involved in remuneration."

Any change to the BBC Trust would require new legislation and would only take effect from the start of the BBC's next charter, which begins in January 2017.

Ofcom already regulates the BBC on matters of obscenity, privacy and harm, but the corporation has maintained its independence on questions of editorial impartiality.

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