FINE GAEL leader Enda Kenny has again questioned whether the severance package for the former managing director of Fás was in accordance with Department of Finance guidelines, after three department officials expressed concern that it was outside those guidelines.

Taoiseach Brian Cowen defended the €1.1 million top-up arrangement for Rody Molloy and said it was broadly in line with what he might have sought, if the contract had been ended by Fás, rather than through his resignation. Mr Molloy resigned in the wake of an expenses controversy at the State training agency.

Mr Kenny raised the issue in the Dáil following newspaper reports of correspondence showing three department officials referred to the package Mr Molloy was to receive as outside the guidelines.

Mr Kenny noted that the Taoiseach had said last month that the additional €1.1 million package for Mr Molloy was in according with established guidelines. The Fine Gael leader asked if Mr Cowen stood by the package or “does he wish to correct the public record in that regard”.

But the Taoiseach said “the situation as has emerged has not changed the position”. 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 added that “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”.

Mr Kenny said, however, the guidelines stated it was not “appropriate to make payments where the initiative for the termination of a contract comes from the chief executive concerned”. This was “very clear and in this case Mr Molloy was not sacked”, the Fine Gael leader said. “The Taoiseach himself clarified that there was no threat of legal action. Mr Molloy resigned.”

Mr Kenny said despite being clearly outside the guidelines, “it was given sanction in what was deemed to be an exceptional case”. If it was exceptional “why was no Government decision made to authorise it?” He also asked who made the decision to overrule the guidelines.

Mr Cowen said the arrangement was that the Fás board would discuss the matter with Mr Molloy, refer it to the Department of Enterprise and obtain the approval of the Department of Finance. “That was the arrangement that was made and followed in this case.”