Taoiseach Brian Cowen has said there was no need for the Green Party ministers to be informed of negotiations that led to former Fás director-general Rody Molloy being given a €1 million "golden handshake" in return for his resignation as formal Cabinet approval was not required.
Earlier today Mr Molloy resigned as chairman of the board of the Institute of Public Administration (IPA).
Speaking in Galway this afternoon, Mr Cowen said the severance agreement was in accordance within the Department of Finance's guidelines.
"This is an issue that is dealt with under the guidelines where the people involved are the ministers concerned. Formal Cabinet approval isn't required in respect of these matters, it is a question of the guidelines being applied and the proposals being made to the Department of Trade, Enterprise and Employment and approval and consent being obtained from the Department of Finance. Those arrangements were adhered too,” he said.
Mr Cowen added that Mr Molloy had acted “honourably in that he did accept responsibility for the activities in Fás while he was director”.
At a meeting of the Public Accounts Committee earlier this week, it was revealed that Mr Molloy's length of service was increased by an extra four-and-a-half nominal years, which increased the size of his lump sum payment by approximately €50,000 and his annual pension by about €11,000 per annum.
The actuarial total cost of the deal, on a presumption that Mr Molloy lived for another 30 years, was €1 million.
The Green Party has denied any involvement in negotiations that led to the agreement.
Party chairman Dan Boyle said as far as he was aware, no members of his party knew about Mr Molloy's threat of legal action until it was revealed at the Dáil Committee on Public Accounts yesterday.
Speaking on RTÉ's Morning Ireland,Mr Boyle refused to be drawn on whether Tánaiste and Minister for Enterprise, Trade and Employment Mary Coughlan had the party's support.
The Tánaiste has announced she is to review the increased pension entitlements made to Mr Molloy.
Green Party leader and Minister for the Environment John Gormley today said he was confident the Tánaiste’s actions would resolve the controversy.
Elsewhere, Fine Gael leader Enda Kenny said that he did not believe the Cabinet was unaware of the deal agreed with Mr Molloy.
“Because of it being such a high profile position it would be incomprehensible that a decision like that would be made without having sought State legal advice and the Cabinet should be informed of it."
The Labour Party added that the Tánaiste's decision to undertake a review of the circumstances surrounding Mr Molloy's resignation was "a clear case of trying to bolt the stable door after the horse has bolted."
"It defies belief that no legal advice was sought on this matter at the time when Mr Molloy's departure was being sought in the wake of shocking disclosures about the waste of taxpayers' money in Fás," Labour TD Roisin Shortall, a member of the Public Accounts Committee, said.
However, in a statement released to the media this evening the Department of Trade, Enterprise and Employment said it did not seek any legal advice at the time because Mr Molloy’s severance arrangements were “broadly in line” with what he could have claimed had his contract been terminated.
The statement read: “The issue of legal advice in respect of any possible legal action by Mr Molloy did not arise, as, although present, concern over legal action was not the deciding factor.
“In the light of the fact that the Attorney General’s advice is being sought, and that the Public Accounts Committee has indicated that these matters will be the subject of a further hearing in the coming weeks, it would not be appropriate to comment further at this stage,” it concluded.
